-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Gv6q7ZQ06b+QnNTOI/pFAoORzpQnAnLOG9nwrRRmNNRQsjRo5WWrHrqx8xkDD/Tj szu6+EVNOqLW7eDofcAbiA== 0001019687-04-001365.txt : 20040617 0001019687-04-001365.hdr.sgml : 20040617 20040617173123 ACCESSION NUMBER: 0001019687-04-001365 CONFORMED SUBMISSION TYPE: SB-2/A PUBLIC DOCUMENT COUNT: 16 FILED AS OF DATE: 20040617 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MARKLAND TECHNOLOGIES INC CENTRAL INDEX KEY: 0001102833 STANDARD INDUSTRIAL CLASSIFICATION: MEASURING & CONTROLLING DEVICES, NEC [3829] IRS NUMBER: 841331134 STATE OF INCORPORATION: FL FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SB-2/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-115395 FILM NUMBER: 04869470 BUSINESS ADDRESS: STREET 1: 54 DANBURY ROAD STREET 2: #207 CITY: RIDGEFIELD STATE: CT ZIP: 06877 BUSINESS PHONE: 203-894-9700 MAIL ADDRESS: STREET 1: 54 DANBURY ROAD STREET 2: #207 CITY: RIDGEFIELD STATE: CT ZIP: 06877 FORMER COMPANY: FORMER CONFORMED NAME: QUEST NET CORP DATE OF NAME CHANGE: 20000320 FORMER COMPANY: FORMER CONFORMED NAME: PARPUTT ENTERPRISES INC DATE OF NAME CHANGE: 20000107 SB-2/A 1 markland_sb2a1-061604.txt AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 17, 2004 REGISTRATION NO. 333-115395 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 AMENDMENT NO. 1 TO FORM SB-2 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ________________ MARKLAND TECHNOLOGIES, INC. --------------------------- (Name of small business issuer in its charter) FLORIDA 84-1334434 ------- ---------- (State or other jurisdiction (I.R.S. employer of incorporation or organization) identification number) 3829 ---- (Primary Standard Industrial Classification Code Number) 54 DANBURY ROAD, #207 RIDGEFIELD, CT 06877 (203) 894-9700 (Address and telephone number of principal executive offices) KENNETH DUCEY, JR. PRESIDENT AND CHIEF FINANCIAL OFFICER 54 DANBURY ROAD, #207 RIDGEFIELD, CT 06877 (203) 894-9700 (Name, address and telephone number of agent for service) COPIES TO: DAVID A. BROADWIN, ESQ. FOLEY HOAG LLP 155 SEAPORT BOULEVARD BOSTON, MASSACHUSETTS 02210 (617) 832-1000 ________________ APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box. [X] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, as amended, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] ________________ CALCULATION OF REGISTRATION FEE ====================================== ====================== ================= ==================== ================= PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF TITLE OF EACH CLASS OF SECURITIES TO AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION BE REGISTERED REGISTERED (1) PER SHARE (2) PRICE (2) FEE (2) ====================================== ====================== ================= ==================== ================= Common Stock, par value $.0001 per 16,669,133(3) $1.315 $21,919,909.90 $3,020.23(8) share - -------------------------------------- ---------------------- ----------------- -------------------- ----------------- Common Stock, par value $.0001 per 14,486,882(4)(5)(6) (7) $19,847,824.12 $2,514.72(8) share ====================================== ====================== ================= ==================== =================
(1) Pursuant to Rule 416 promulgated under the Securities Act of 1933, as amended, there are also registered hereunder such indeterminate number of additional shares as may be issued to the selling stockholders to prevent dilution resulting from stock splits, stock dividends or similar transactions pursuant to the terms of our common stock purchase warrants. (2) Estimated solely for the purpose of determining our registration fee pursuant to Rule 457(c), based on the average of the high and low sales prices of our common stock on May 10, 2004, as reported over-the-counter on the OTC Bulletin Board by the National Association of Securities Dealers, Inc., of $1.41 and $1.22, respectively. (3) Includes 125% of the 5,833,333 shares of our common stock that were sold to certain selling stockholders pursuant to the Securities Purchase Agreements entered into between the selling stockholders and our company dated April 2, 2004 and April 16, 2004, to cover shares of our common stock, if any, issuable to these selling stockholders as liquidated damages for breach of certain covenants contained in or as a result of adjustments contemplated by certain provisions of the respective Securities Purchase Agreements or the related Registration Rights Agreement. (4) Represents shares of common stock issuable upon exercise of warrants evidencing the right to purchase shares of common stock. (5) Includes 110% of the 6,166,666 shares of our common stock that are issuable to certain selling stockholders upon exercise of warrants issued in connection with the Securities Purchase Agreements entered into between the selling stockholders and our company dated April 2, 2004 and April 16, 2004, to cover shares of our common stock, if any, issuable to these selling stockholders as a result of adjustments to the warrants to be made as liquidated damages for breach of certain covenants contained in or as a result of adjustments contemplated by certain provisions of the respective Securities Purchase Agreements or the related Registration Rights Agreement. (6) Includes 921,466 shares of our common stock that are issuable to selling stockholders upon exercise of the warrants issued as finder's fee in connection with the Securities Purchase Agreements entered into between certain selling stockholders and our company dated April 2, 2004, April 16, 2004 and May 3, 2004. (7) Estimated solely for the purpose of determining our registration fee pursuant to Rule 457(g), based on 3,716,666 warrants with an exercise price of $1.00 per share, 366,666 warrants with an exercise price of $1.40 per share, 10,378,550 warrants with an exercise price $1.50 per share, and 25,000 warrants with an exercise price of $2.00 per share. (8) Previously paid. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. ================================================================================ THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED WITHOUT NOTICE. THE SELLING STOCKHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES, AND THE SELLING STOCKHOLDERS ARE NOT SOLICITING OFFERS TO BUY THESE SECURITIES, IN ANY STATE WHERE THE OFFER OR SALE OF THESE SECURITIES IS NOT PERMITTED. SUBJECT TO COMPLETION DATED JUNE 17, 2004 PROSPECTUS 31,156,016 SHARES OF COMMON STOCK MARKLAND TECHNOLOGIES, INC. ______________________ This prospectus relates to the resale, from time to time, of up to 31,156,016 shares of our common stock by the stockholders referred to throughout this prospectus as "selling stockholders." 15,210,800 shares of our common stock offered in this prospectus are currently outstanding, 13,870,216 shares of our common stock are issuable upon the exercise of warrants and 3,533,333 may be issued as liquidated damages or as a result of adjustments contemplated by our agreements with certain selling stockholders. The selling stockholders may sell the common stock being offered by this prospectus from time to time (directly or through agents or dealers) on terms to be determined at the time of sale. The prices at which the selling stockholders may sell their shares may be determined by the prevailing market price for the shares or in negotiated transactions. The selling stockholders will receive all of the proceeds from the sales made under this prospectus. Accordingly, we will receive no part of the proceeds from sales made under this prospectus. We are paying the expenses incurred in registering the shares, but all selling and other expenses incurred by the selling stockholders will be borne by the selling stockholders. ______________________ Our common stock is quoted on the OTC Bulletin Board by the National Association of Securities Dealers, Inc. under the symbol "MRKL.OB." On June 16, 2004, the last reported sale price of our common stock on the OTC Bulletin Board was $1.08 per share. ______________________ INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE RISK FACTORS BEGINNING ON PAGE 5 OF THIS PROSPECTUS. ______________________ NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED ON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ______________________ The date of this prospectus is June 18, 2004 TABLE OF CONTENTS PROSPECTUS SUMMARY.............................................................1 RISK FACTORS...................................................................5 SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS.............................14 USE OF PROCEEDS...............................................................14 PRICE RANGE FOR COMMON STOCK AND DIVIDEND POLICY..............................15 SELLING STOCKHOLDERS..........................................................15 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS....................................................24 CHANGES IN ACCOUNTANTS........................................................34 BUSINESS......................................................................35 PROPERTY......................................................................43 DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS..................43 COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS..............................44 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT................48 DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR SECURITIES ACT LIABILITIES...............................................49 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................................50 DESCRIPTION OF SECURITIES.....................................................52 PLAN OF DISTRIBUTION..........................................................56 AVAILABLE INFORMATION.........................................................57 LEGAL MATTERS.................................................................58 EXPERTS.......................................................................58 ________________ No dealer, salesperson or other person has been authorized to give any information or to make any representations other than those contained or incorporated by reference in this prospectus in connection with the offer contained in this prospectus and, if given or made, such information or representations must not be relied upon as having been authorized by us. Neither the delivery of this prospectus nor any sale made hereunder shall under any circumstances create an implication that there has been no change in our affairs since the date hereof. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy securities other than those specifically offered hereby or of any securities offered hereby in any jurisdiction where, or to any person to whom, it is unlawful to make such offer or solicitation. The information contained in this prospectus speaks only as of the date of this prospectus unless the information specifically indicates that another date applies. This prospectus has been prepared based on information provided by us and by other sources that we believe are reliable. This prospectus summarizes certain documents and other information in a manner we believe to be accurate, but we refer you to the actual documents, if any, for a more complete understanding of what we discuss in this prospectus. In making a decision to invest in the common stock, you must rely on your own examination of our company and the terms of the offering and the common stock, including the merits and risks involved. We are not making any representation to you regarding the legality of an investment in the common stock by you under any legal investment or similar laws or regulations. You should not consider any information in this prospectus to be legal, business, tax or other advice. You should consult your own attorney, business advisor and tax advisor for legal, business and tax advice regarding an investment in the common stock. ________________ In this prospectus, "Markland," "the Company," "we," "us" and "our" refer to Markland Technologies, Inc. and its subsidiaries, taken as a whole, unless the context otherwise requires. ________________ The information in this prospectus reflects our 1-for-60 reverse stock split effective October 27, 2003. PROSPECTUS SUMMARY THE FOLLOWING SUMMARY HIGHLIGHTS CERTAIN MATERIAL ASPECTS OF THE OFFERING FOR RESALE OF COMMON STOCK BY THE SELLING STOCKHOLDERS COVERED BY THIS PROSPECTUS BUT MAY NOT CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU. YOU SHOULD READ THIS SUMMARY TOGETHER WITH THE MORE DETAILED INFORMATION REGARDING OUR COMPANY, OUR COMMON STOCK AND OUR FINANCIAL STATEMENTS AND NOTES TO THOSE STATEMENTS APPEARING ELSEWHERE IN THIS PROSPECTUS, INCLUDING THE "RISK FACTORS" BEGINNING ON PAGE 5. BUSINESS Markland Technologies, Inc. is incorporated in Florida and is the successor to a variety of businesses dating back to 1995. Our business, as it exists today, consists of three business areas: chemical detectors, border security and advanced technologies. Our primary sources of operating revenue are sales of our automatic chemical agent detection and alarm system, border security logistics products and services, and Small Business Investment Research ("SBIR") funded research grants for the development of gas plasma antenna technology. o We have a contract with the U.S. Navy to be the sole producer of the Navy's shipboard automatic chemical agent detection and alarm system used to detect all classic nerve and blister agents as well as other chemical warfare agent vapors. o We have a contract with the Department of Homeland Security to maintain, integrate, and implement design enhancements to border security systems installed at five U.S. land ports of entry. o We have three ongoing funded SBIR government research grants and nine issued and pending U.S. patents related to gas plasma antenna technology. RECENT PRIVATE PLACEMENTS PRIVATE PLACEMENT TRANSACTION COMPLETED ON APRIL 2, 2004 The selling stockholders are offering up to 6,999,999 shares of our common stock of which 3,333,333 are issuable upon exercise of our outstanding three-year common stock purchase warrants having an exercise price of $1.00 per share that were sold in a private placement completed on April 2, 2004, and 333,333 shares of common stock are issuable upon exercise of similar outstanding common stock purchase warrants having an exercise price of $1.40 issued as a finder's fee in this private placement transaction. We have agreed to register for resale 125% of the 3,333,333 shares of our common stock in this offering and 110% of the 3,333,333 shares of our common stock that are issuable upon exercise of the warrants sold in this private placement, to cover the shares of our common stock, if any, issuable as liquidated damages for breach of certain covenants contained in or as a result of adjustments contemplated by certain provisions of the Securities Purchase Agreement dated as of April 2, 2004 or the Registration Rights Agreement dated as of April 2, 2004. We agreed to register 110% of the 333,333 shares of our common stock issuable upon exercise of the warrants issued as finder's fee in this private placement. We received gross proceeds of $2,000,000 and net proceeds of $1,750,000 (after deducting finders' fees and transactions costs) from this private placement. -1- PRIVATE PLACEMENT TRANSACTION COMPLETED ON APRIL 16, 2004 The selling stockholders are offering up to 5,025,000 shares of our common stock, of which 2,500,000 are issuable upon exercise of our outstanding three-year common stock purchase warrants having an exercise price of $1.50 per share that were sold in a private placement transaction completed on April 16, 2004, and 25,000 shares of common stock issuable upon exercise of similar outstanding common stock purchase warrants having an exercise price of $2.00 per share issued as a finder's fee in this private placement transaction. We have agreed to register for resale 125% of the 2,500,000 shares of our common stock and 110% of the 2,500,000 shares of our common stock that are issuable upon exercise of the warrants sold in this private placement, to cover the shares of our common stock, if any, issuable as liquidated damages for breach of certain covenants contained in or as a result of adjustments contemplated by certain provisions of the Securities Purchase Agreement dated as of April 16, 2004. We received gross proceeds of $2,000,000 and net proceeds of $1,890,000 (after deducting finders' fees and transactions costs) from this private placement. PRIVATE PLACEMENT TRANSACTION COMPLETED ON MAY 3, 2004 The selling stockholders are offering up to 14,727,300 shares of our common stock of which 7,098,750 are issuable upon exercise of our outstanding three-year redeemable common stock purchase warrants having an exercise price of $1.50 per share that were sold in a private placement transaction completed on May 3, 2004, and 529,800 are issuable upon exercise of redeemable common stock purchase warrants issued as finders' fees in this private placement transaction. We received gross proceeds of $5,679,000 and net proceeds of $5,133,860 (after deducting finders' fees and transactions costs) from this private placement. ADDITIONAL SELLING STOCKHOLDERS WITH PIGGY-BACK REGISTRATION RIGHTS Some of our stockholders have outstanding piggy-back registration rights. These selling stockholders are offering up to 2,328,717 shares of our common stock consisting of: o 637,721 shares of our common stock issued to current and former consultants, directors and employees pursuant to consulting and employment agreements for services rendered to us; o 266,334 shares of our common stock issued to ASI Technology Corporation pursuant to a Technology Purchase Agreement dated March 19, 2003; o 1,074,662 shares of our common stock issued to the sole stockholder of Science and Technology Research, Inc. pursuant to an Agreement and Plan of Merger dated September 30, 2003; o 300,000 shares of our common stock issued to investors in our April 2, 2004 private placement in consideration of their consent to the April 16, 2004 private placement; and o 50,000 shares issuable upon exercise of a common stock purchase warrant issued to counsel for the investors in our April 2, 2004 private placement. -2- THE OFFERING The selling stockholders are offering up to 31,156,016 shares of our common stock consisting of 15,210,800 shares of our common stock, 13,870,216 shares of common stock issuable upon the exercise of warrants and 3,533,333 shares of our common stock which may be issued as liquidated damages or as a result of adjustments contemplated by our agreements with certain of the selling stockholders. ISSUER: Markland Technologies, Inc. SECURITIES OFFERED: 32,614,349 shares of Markland's common stock. OTC SYMBOL: MRKL.OB USE OF PROCEEDS: We will not receive any of the proceeds from the sale by any selling stockholder of the common stock. OFFERING PRICE: To be determined by the prevailing market price for the shares at the time of the sale or in negotiated transactions. RISK FACTORS: You should read the "Risk Factors" section beginning on page 5 (along with other matters referred to and incorporated by reference in this prospectus) to ensure that you understand the risks associated with an investment in our common stock. TERMS OF THE SALE: To be determined at the time of the sale. TOTAL SHARES OF OUR COMMON 31,681,793 STOCK OUTSTANDING AS OF JUNE 16, 2004: RECENT DEVELOPMENTS We have identified a specific acquisition candidate and we are currently negotiating the terms of that potential acquisition. This acquisition candidate is a privately held company with expertise in sensor technology whose primary customer is the U.S. Department of Defense. If this acquisition is completed, it will be material to us. We expect the purchase price to be approximately $19,000,000 and to be paid in cash and secured notes. To finance this transaction, we expect to use a substantial portion of our available cash and to raise additional cash through sales of our securities. In the event that we obtain financing, it may be on terms that are dilutive to our existing stockholders and it may limit, among other things, our ability to acquire other businesses, invest in capital assets, sell or otherwise dispose of our existing assets or incur additional indebtedness. We may be unable to successfully negotiate or finance this acquisition, or if the acquisition is consummated, effectively integrate the acquired business into ourexisting business. The negotiation of this acquisition and the integration of the acquired business operations may require a disproportionate amount of management's attention and our resources. Furthermore, the success of this transaction may also depend on a number of other factors, including the ability to estimate accurately rates of future production and future net revenues and to assess possible liabilities. Even though we will have performed a review of, among other things, the business operations of the candidate before we close this acquisition, it may not necessarily reveal existing or potential problems or permit us to become familiar enough with the business to assess fully its deficiencies or potential. SUMMARY FINANCIAL INFORMATION The following table provides selected financial and operating data for the years ended June 30, 2003 and June 30, 2002 and the nine months ended March 31, 2004 and March 31, 2003.
NINE MONTHS ENDED MARCH 31, YEAR ENDED JUNE 30, (UNAUDITED) --------------------------- --------------------------- 2003 2002 2004 2003 ------------ ------------ ------------ ------------ Revenue $ 658,651 -- $ 5,382,341 $ 322,451 Gross Profit (Loss) 213,433 -- 895,829 236,653 Profit (Loss) from Continuing Operations (3,835,594) (247,677) (4,609,836) (1,920,342) Net profit (Loss) (2,836,881) (2,460,965) (4,876,796) (2,093,212 Current Assets 342,604 26,661 2,214,896 193,216 Current Liabilities 1,577,910 6,932,525 2,802,354 1,894,414 Total Assets 2,040,936 -- 10,332,836 1,859,882 Long Term Debt 416,666 -- -- 405,083
________________ -3- Our executive offices are located at 54 Danbury Road, #207, Ridgefield, CT 06877, and our phone number is (203) 894-9700. ________________ -4- RISK FACTORS YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW BEFORE MAKING AN INVESTMENT DECISION. THE RISKS AND UNCERTAINTIES DESCRIBED BELOW ARE NOT THE ONLY ONES FACING US. ADDITIONAL RISKS AND UNCERTAINTIES NOT PRESENTLY KNOWN TO US OR THAT WE CURRENTLY DEEM IMMATERIAL MAY ALSO IMPAIR OUR BUSINESS. IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCUR, OUR BUSINESS COULD BE ADVERSELY AFFECTED. IN THOSE CASES, THE TRADING PRICE OF OUR COMMON STOCK COULD DECLINE, AND YOU MAY LOSE ALL OR PART OF YOUR INVESTMENT. RISKS RELATED TO OUR BUSINESS WE HAVE A HISTORY OF OPERATING LOSSES, AND THERE IS NO ASSURANCE THAT WE WILL ACHIEVE PROFITABILITY IN THE FUTURE. We have a history of operating losses. We cannot predict when, or if, we will ever achieve profitability. Our current business operations began in 2002 and have resulted in losses in each fiscal year. As of March 31, 2004, we had an accumulated deficit of approximately $14,649,531. If we continue to experience operating losses, an investment in our common stock is at risk of being lost. WE HAVE A GOING-CONCERN QUALIFICATION IN THE REPORT BY OUR INDEPENDENT AUDITORS FOR OUR FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2003, WHICH MAY MAKE CAPITAL RAISING MORE DIFFICULT AND MAY REQUIRE US TO SCALE BACK OR CEASE OPERATIONS, PUTTING OUR INVESTORS' FUNDS AT RISK. The report of our independent auditors dated September 15, 2003 includes a going-concern qualification, which indicates an absence of obvious or reasonably assured sources of future funding that will be required by us to maintain ongoing operations. If we are unable to obtain additional funding, we may not be able to continue operations. Since January 1, 2004, we have raised a total of $12,336,000 in new capital. There is no guarantee that we will be able to attract additional equity or debt investors. To date, we have funded our operations through equity investments and issuances of debt. Additionally, we have an accumulated deficit of approximately $14,649,531 as of March 31, 2004. This deficit indicates that we may be unable to meet our future obligations unless additional funding sources are obtained. WE MAY BE UNABLE TO OBTAIN ADDITIONAL CAPITAL REQUIRED TO FUND OUR OPERATIONS AND FINANCE OUR GROWTH. The development of our technologies will require additional capital, and our business plan is to acquire additional revenue-producing assets. We incurred net losses of $4,876,796 and $2,093,212 for the nine months ended March 31,2004 and 2003, respectively. Additionally, we had a working capital deficiency of $587,458 at March 31, 2004. We may be unable to obtain additional funds in a timely manner or on acceptable terms, which would render us unable to fund our operations or expand our business. If we are unable to obtain capital when needed, we may have to restructure our business or delay or abandon our development and expansion plans. Although we have been successful in the past in obtaining financing for working capital and capital expenditures, we will have ongoing capital needs as we expand our business. If we raise additional funds through the sale of equity or convertible securities, your ownership percentage of our common stock will be reduced. In addition, these transactions may dilute the value of our common stock. We may have to issue securities that have rights, preferences and privileges senior to our common stock. The terms of any additional indebtedness may include restrictive financial and operating covenants that would limit our ability to compete and expand. -5- OUR CURRENT AND FUTURE EXPECTED REVENUES ARE DERIVED FROM A SMALL NUMBER OF CUSTOMERS SUCH THAT THE LOSS OF ANY ONE ULTIMATE CUSTOMER COULD MATERIALLY REDUCE OUR REVENUES. During the nine months ended March 31, 2004, we derived more than 95% of our revenues from two customers. We have a contract with the U.S. Navy that may provide for revenues of up to approximately $37,000,000 depending upon the U.S. Navy's needs of which STR, our subsidiary, recognized approximately $14,411,000 in revenues for the three-year period ended March 31, 2004 and a subcontract agreement with Computer Sciences Corporation may provide for revenues of up to approximately $2,000,000 of which Ergo Systems, Inc., our subsidiary, has generated approximately $1,511,834 in revenues. The loss of any one of these customers due to cutbacks, competition, or other reasons would materially reduce our revenue base. Annual or quarterly losses may occur if there are material gaps or delays in orders from one of our largest customers that are not replaced by other orders or other sources of income. THE LEASE ON OUR PRIMARY MANUFACTURING FACILITY IN FREDERICKSBURG, VIRGINIA, IS MONTH-TO-MONTH. IF THIS LEASE IS TERMINATED, IT MAY SUBSTANTIALLY IMPAIR OUR ABILITY TO SERVICE OUR CONTRACTS AND MAY ADVERSELY AFFECT OUR OPERATIONS. We lease our manufacturing facility in Fredericksburg, Virginia, on a month-to-month basis, and the owner of this property may terminate our lease upon 30 day's notice for any reason. If the owner of the property terminates the lease, we would have to relocate our manufacturing operations. No assurance can be given that we would be able to relocate to a new facility without severely disrupting the production of our goods. Such a disruption could result in a failure to fulfill our delivery obligations to our customers, including the U.S. Navy and Computer Sciences Corporation. Our failure to perform under our contracts may result in the dissatisfaction of our customers and might impair our ability to obtain future business, which would have a material adverse effect on our business and financial condition, results of operations and future prospects. MANY OF OUR TECHNOLOGIES ARE UNPROVEN AND THEIR SUCCESS IN THE MARKETPLACE IS UNKNOWN. Our Gas plasma antenna, Vehicle stopping system, Acoustic Core(TM) signature analysis, APTIS(TM) human screening portal, and cryptography software have not reached commercial viability. There is no guarantee that these products will be successful in the marketplace. Although we currently sell automatic chemical detection and alarm systems, we do not know for how long the U.S. Navy will continue to buy this product, nor do we know if we will be able to sell this product or others like it to other customers. If we do not successfully exploit our technology, our financial condition, results of operations and business prospects would be adversely affected. The development of our technology is subject to certain factors beyond our control, including the production of certain components by our suppliers. Commercially viable plasma antenna technology systems may not be successfully and timely produced by our original equipment manufacturers due to the inherent risk of technology development, new product introduction, limitations on financing, competition, obsolescence, loss of key technical personnel or other factors. The development and introduction of our technologies could be subject to additional delays. Our various projects are high risk in nature, and unanticipated technical obstacles can arise at any time and result in lengthy and costly delays or a determination that further exploitation is unfeasible. THE HOMELAND SECURITY INDUSTRY IS CHARACTERIZED BY RAPID TECHNOLOGICAL CHANGE AND EVOLVING INDUSTRY STANDARDS, AND UNLESS WE KEEP PACE WITH THE CHANGING TECHNOLOGIES, WE COULD LOSE CUSTOMERS AND FAIL TO WIN NEW CUSTOMERS. Our future success will depend, in part, upon our ability to develop and introduce a variety of new products and services and enhancements to these new product and services in order to address the changing and sophisticated -6- needs of the homeland security marketplace. Delays in introducing new products, services and enhancements, the failure to choose correctly among technical alternatives or the failure to offer innovative products and services at competitive prices may cause customers to forego purchases of our products and services and purchase those of our competitors. Frequently, technical development programs in the homeland security industry require assessments to be made of the future directions of technology and technology markets generally, which are inherently risky and difficult to predict. WE FACE INTENSE COMPETITION, WHICH COULD RESULT IN LOWER REVENUES AND HIGHER RESEARCH AND DEVELOPMENT EXPENDITURES AND COULD ADVERSELY AFFECT OUR RESULTS OF OPERATIONS. Current political tensions throughout the world have heightened interest in the homeland security industry, and we expect competition in this field, which is already substantial, to intensify. If we do not develop new and enhanced products, or if we are not able to invest adequately in our research and development activities, our business, financial condition and results of operations could be negatively impacted. Many of our competitors have significantly more cash and resources than we have. Our competitors may introduce products that are competitively priced, have increased performance or functionality, or incorporate technological advances that we have not yet developed or implemented. To remain competitive, we must continue to develop, market and sell new and enhanced systems and products at competitive prices, which will require significant research and development expenditures. SOME OF OUR COMPETITORS ARE MUCH LARGER THAN WE ARE, HAVE BETTER NAME RECOGNITION THAN WE DO AND HAVE FAR GREATER FINANCIAL AND OTHER RESOURCES THAN WE DO. With the U.S. government's large appropriation of money for homeland security programs, many companies are competing for the same homeland security contracts and there can be no assurance that Markland will effectively compete with large companies who have more resources and funds than we do. Several companies have been working on issues relevant to the safety of the American people for the past several years. Lockheed Martin and Northrop Grumman are providers of hardware engineering and systems engineering solutions. Computer Sciences Corporation and EDS provided computer and computer software solutions. Defense companies, such as General Dynamics, Boeing and Raytheon are solutions providers that could easily expand their business into the homeland security business and are currently allocating resources to develop programs in this area. Because of the services and additional human and financial resources that these larger companies can provide, they may be more attractive to the U.S. Government. IF WE CANNOT EFFECTIVELY MANAGE OUR GROWTH, OUR BUSINESS MAY SUFFER. Recently, we have expanded our operations to pursue existing and potential new market opportunities. This growth has placed, and is expected to continue to place, a strain on our personnel, management, financial and other resources. To manage our growth effectively, we must, among other things: o upgrade and expand our manufacturing facilities and capacity in a timely manner; o successfully attract, train, motivate and manage a larger number of employees for manufacturing, sales and customer support activities; o control higher inventory and working capital requirements; and -7- o improve the efficiencies within our operating, administrative, financial and accounting systems, procedures and controls. If we fail to manage our growth properly, we may incur unnecessary expenses and the efficiency of our operations may decline. WE MAY BE UNABLE TO HIRE AND RETAIN THE SKILLED PERSONNEL WE NEED TO EXPAND OUR OPERATIONS. To meet our growth objectives, we must attract and retain highly skilled technical, operational, managerial and sales and marketing personnel. If we fail to attract and retain the necessary personnel, we may be unable to achieve our business objectives and may lose our competitive position, which could lead to a significant decline in net sales. We face significant competition for these skilled professionals from other companies, research and academic institutions, government entities and other organizations. OUR SUCCESS DEPENDS ON THE SERVICES OF OUR EXECUTIVE OFFICERS AND KEY EMPLOYEES. Our future success depends to a significant degree on the skills and efforts of Robert Tarini, our chief executive officer. If we lost the services of Mr. Tarini, our business and operating results could be adversely affected. We also depend on the ability of our other executive officers and members of senior management to work effectively as a team. The loss of one or more of our executive officers or senior management members could impair our ability to manage our business effectively. OUR LARGEST CUSTOMERS ARE THE U.S. NAVY, COMPUTER SCIENCES CORPORATION AND THE DEPARTMENT OF HOMELAND SECURITY, WHOSE OPERATIONS ARE SUBJECT TO UNIQUE POLITICAL AND BUDGETARY CONSTRAINTS, INVOLVE COMPETITIVE BIDDING, AND OUR CONTACTS WITH THESE CUSTOMERS MAY BE SUBJECT TO CANCELLATION WITH OR WITHOUT PENALTY, WHICH MAY PRODUCE VOLATILITY IN OUR EARNINGS AND REVENUE. Our largest customers are the U.S. Navy and Computer Sciences Corporation, with whom we have entered into a subcontracting agreement for the Department of Homeland Security. Due to political and budgetary processes and other scheduling delays that may frequently occur relating to the contract or bidding process, some government agency orders may be canceled or delayed, and the receipt of revenues or payments may be substantially delayed. This irregular and unpredictable revenue stream makes it difficult for our business to operate smoothly. Obtaining contracts from government agencies is challenging, and government contracts often include provisions that are not standard in private commercial transactions. For example, government contracts may: o include provisions that allow the government agency to terminate the contract without penalty under some circumstances; o be subject to purchasing decisions of agencies that are subject to political influence; o contain onerous procurement procedures; and o be subject to cancellation if government funding becomes unavailable. In addition, federal government agencies routinely audit government contracts. These agencies review a contractor's performance on its contract, pricing practices, cost structure and compliance with applicable laws, regulations and standards. These audits may occur several years after completion of the audited work. An audit could result in a substantial adjustment to our revenues because we would not be reimbursed for any costs improperly allocated to a specific contract, and we would be forced to refund any improper costs already reimbursed. If a government audit uncovers improper or illegal -8- activities, we may be subject to civil and criminal penalties and administrative sanctions, including termination of contracts forfeiture of profits, suspension of payments, fines and suspension or debarment from doing business with federal government agencies. In addition, our reputation could be harmed if allegations of impropriety were made against us. OUR BUSINESS MAY SUFFER IF WE CANNOT PROTECT OUR PROPRIETARY TECHNOLOGY. Our ability to compete depends significantly upon our patents, our trade secrets, our source code and our other proprietary technology. The steps we have taken to protect our technology may be inadequate to prevent others from using what we regard as our technology to compete with us. Our patents could be challenged, invalidated or circumvented, in which case the rights we have under our patents could provide no competitive advantages. Existing trade secrets, copyright and trademark laws offer only limited protection. In addition, the laws of some foreign countries do not protect our proprietary technology to the same extent as the laws of the United States, which could increase the likelihood of misappropriation. Furthermore, other companies could independently develop similar or superior technology without violating our intellectual property rights. Any misappropriation of our technology or the development of competing technology could seriously harm our competitive position, which could lead to a substantial reduction in net sales. If we resort to legal proceedings to enforce our intellectual property rights, the proceedings could be burdensome, disruptive and expensive, distract the attention of management, and there can be no assurance that we would prevail. CLAIMS BY OTHERS THAT WE INFRINGE THEIR INTELLECTUAL PROPERTY RIGHTS COULD HARM OUR BUSINESS AND FINANCIAL CONDITION. Our industries are characterized by the existence of a large number of patents and frequent claims and related litigation regarding patent and other intellectual property rights. We cannot be certain that our products do not and will not infringe issued patents, patents that may be issued in the future, or other intellectual property rights of others. We do not conduct exhaustive patent searches to determine whether the technology used in our products infringes patents held by third parties. In addition, product development is inherently uncertain in a rapidly evolving technological environment in which there may be numerous patent applications pending, many of which are confidential when filed, with regard to similar technologies. We may face claims by third parties that our products or technology infringe their patents or other intellectual property rights. Any claim of infringement could cause us to incur substantial costs defending against the claim, even if the claim is invalid, and could distract the attention of our management. If any of our products are found to violate third-party proprietary rights, we may be required to pay substantial damages. In addition, we may be required to re-engineer our products or obtain licenses from third parties to continue to offer our products. Any efforts to re-engineer our products or obtain licenses on commercially reasonable terms may not be successful, which would prevent us from selling our products, and, in any case, could substantially increase our costs and have a material adverse effect on our business, financial condition and results of operations. WE RELY ON THIRD PARTIES TO DEVELOP AND PROVIDE KEY COMPONENTS FOR OUR GAS PLASMA ANTENNAS, CRYPTOGRAPHY SOFTWARE, ACOUSTIC CORE(TM) AND APTIS(TM) HUMAN SCREENING PORTAL PRODUCTS. We rely on third-party suppliers to supply key components that we will use in our gas plasma antennas, Acoustic Core(TM) and APTIS(TM) human screening portal products. If those suppliers fail to develop and supply these components -9- in a timely manner or at all, or fail to develop or supply components that meet our quality, quantity or cost requirements, and we are unable to obtain substitute sources of these components on a timely basis or on terms acceptable to us, we may not be able to manufacture our products. In addition, to the extent that our supply partners use technology or manufacturing processes that are proprietary, we may be unable to obtain comparable components from alternative sources. NEW CORPORATE GOVERNANCE REQUIREMENTS ARE LIKELY TO INCREASE OUR COSTS AND MAKE IT MORE DIFFICULT TO ATTRACT QUALIFIED DIRECTORS. We face new corporate governance requirements under the Sarbanes-Oxley Act of 2002, as well as rules adopted by the SEC. We expect that these laws, rules and regulations will increase our legal and financial compliance costs and make some activities more difficult, time-consuming and costly. We also expect that these new requirements will make it more difficult and more expensive for us to obtain director and officer liability insurance. We may be required to accept reduced coverage or incur significantly higher costs to obtain coverage. These new requirements are also likely to make it more difficult for us to attract and retain qualified individuals to serve as members of our board of directors or committees of the board, particularly the audit committee. FUTURE ACQUISITIONS OF OTHER COMPANIES MAY RESULT IN DISRUPTIONS TO OUR BUSINESS AND ADDITIONAL EXPENSES. We have completed the acquisitions of several companies, we plan to review potential acquisition candidates, and our business and our strategy may include building our business through acquisitions. However, acceptable acquisition candidates may not be available in the future or may not be available on terms and conditions acceptable to us. Acquisitions involve numerous risks including among others, difficulties and expenses incurred in the consummation of acquisitions and assimilations of the operations, personnel, and services and products of the acquired companies. Additional risks associated with acquisitions include the difficulties of operating new businesses, the diversion of management's attention from other business concerns and the potential loss of key employees of the acquired company. If we do not successfully integrate the businesses we may acquire in the future, our business will suffer. WE FACE RISKS ASSOCIATED WITH OUR PLANS TO MARKET, DISTRIBUTE AND SERVICE OUR PRODUCTS INTERNATIONALLY. We intend to market, distribute and service our products internationally subject to applicable U.S. Governmental approval and regulation on sales of sensitive U.S. technology. Our success in international markets will depend, in part, on our ability to secure relationships with foreign sub-distributors and on our ability to meet foreign regulatory and commercial requirements. In March 2004, Markland signed an agreement with Tradeways, Ltd. Tradeways, founded in 1974, is the principal worldwide exporter of U.S. Military Special Nuclear, Biological and Chemical (NBC) Equipment, and has fulfilled contracts for NBC products in more than 30 countries. Tradeways provides a complete range of NBC products, as well as training and service. The process of selling to foreign militaries is lengthy, and Markland cannot give any assurances that it will be successful. If Tradeways is unsuccessful in selling Markland's products, it would greatly decrease Markland's success with foreign military sales. To date, we have not sold any products through this channel. -10- OUR CEO AND PRESIDENT HAVE THE ABILITY TO CONTROL OUR AFFAIRS, AND THEIR INTERESTS MAY CONFLICT WITH THOSE OF OTHER STOCKHOLDERS Robert Tarini and Kenneth Ducey, Jr., are the CEO and President, respectively, and the sole directors of the Company. As of June 16, 2004, they directly or indirectly controlled 14.34% of our common stock. In May 2004, we entered into employment contracts with them under which they each have the potential to receive stock grants, calculated on a fully-diluted basis, over a period of five years equal to approximately 7.5% of our outstanding shares of our common stock. (Tarini and Ducey each have already received a number of shares equal to 2.5% of our fully-diluted common stock under these agreements.) As a result of the amount of our outstanding stock they currently own or control and the amounts they may acquire in the future under our agreements with them, they may be able to: o control our management and policies; o prevent or cause a change control of our company; o affect the outcome of all matters entrusted to our board of directors; and o influence the election of our directors and the outcome of other matters submitted to our stockholders for approval, including amendments to our charter, acquisition or disposition of assets, future issuances of common stock or other securities and compensation. Notwithstanding the exercise of their fiduciary duties as directors and executive officers and any other duties that Mr. Tarini and Mr. Ducey may have to us or our stockholders in general, they may have interests different than yours. WE ARE NOT SUBJECT TO THE SAME CORPORATE GOVERNANCE STANDARDS AS LISTED COMPANIES, INCLUDING WITHOUT LIMITATION, THE REQUIREMENT THAT THE COMPANY HAVE A MAJORITY OF INDEPENDENT DIRECTORS. Registered exchanges and the Nasdaq National Market have enhanced corporate governance requirements that apply to issuers that list their securities on those markets. Our common stock is quoted on the OTC Bulletin Board which does not have comparable requirements. For instance, we are not required to have any independent directors or to adopt a code of ethics. Currently, we have no independent directors and therefore management has significant influence over decisions made on behalf of the stockholders. In certain circumstances, management may not have the same interests as the shareholders and conflicts of interest may arise. Furthermore, certain relationships with our officers, directors and affiliates may also involve inherent conflicts of interest. We do not have a policy to resolve conflicts of interest. Notwithstanding the exercise of their fiduciary duties as directors and executive officers and any other duties that's they may have to us or our other stockholders in general, these persons may have interests different than yours. RISKS RELATED TO OUR COMMON STOCK IT MAY BE DIFFICULT FOR YOU TO RESELL YOUR SHARES IF AN ACTIVE AND LIQUID MARKET FOR OUR COMMON STOCK DOES NOT DEVELOP Our common stock is not actively traded on a registered securities exchange and we do not meet the initial listing criteria for any registered securities exchange or the NASDAQ National Market System. It is quoted on the less recognized OTC Bulletin Board. This factor may further impair your ability to sell your shares when you want and/or could depress our stock price. As a result, you may find it difficult to dispose of, or to obtain accurate quotations of the price of, our securities because smaller quantities of shares -11- could be bought and sold, transactions could be delayed and security analyst and news coverage of our company may be reduced. These factors could result in lower prices and larger spreads in the bids and ask prices for our shares. Due to the current price of our common stock, many brokerage firms may not be willing to effect transactions in our securities, particularly because low-priced securities are subject to an SEC rule that imposes additional sales requirements on broker-dealers who sell low-priced securities (generally those below $5.00 per share). These factors severely limit the liquidity of our common stock, and would likely have a material adverse effect on its market price and on our ability to raise additional capital. We cannot predict the extent to which investor interest in our stock, if any, will lead to an increase in its market price or the development of a more active trading market or how liquid that market might become. THE MARKET PRICE OF OUR COMMON STOCK MAY BE VOLATILE. Our stock price has been volatile. From April 1, 2003 to June 16, 2004, the trading price of our common stock ranged from $0.69 to $15.00. Many factors may cause the market price of our common stock to fluctuate, including: o variations in our quarterly results of operations; o the introduction of new products by us or our competitors; o acquisitions or strategic alliances involving us or our competitors; o future sales of shares of common stock in the public market; and o market conditions in our industries and the economy as a whole. In addition, the stock market has recently experienced extreme price and volume fluctuations. These fluctuations are often unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the market price of our common stock. When the market price of a company's stock drops significantly, stockholders often institute securities class action litigation against that company. Any litigation against us could cause us to incur substantial costs, divert the time and attention of our management and other resources or otherwise harm our business. IF WE ISSUE SUBSTANTIAL SHARES OF OUR COMMON STOCK (I) PURSUANT TO OUR PRIVATE EQUITY CREDIT AGREEMENT, (II) UPON CONVERSION OF THE OUTSTANDING SERIES D CONVERTIBLE PREFERRED STOCK AND (III) UPON EXERCISE OF OUR COMMON STOCK PURCHASE WARRANTS, YOU COULD SUFFER SUBSTANTIAL DILUTION OF YOUR INVESTMENT AND OUR STOCK PRICE COULD DECLINE SIGNIFICANTLY. We have entered into a private equity credit agreement with Brittany Capital Management Limited, an offshore investment fund, on September 10, 2003 whereby we can force Brittany Capital to purchase up to $10 million of our common stock, provided we have an effective registration statement on file with the SEC covering these shares. While we have not filed a registration statement with the SEC to cover these shares of common stock, we intend to file one in the future. In addition, we are obligated to issue a substantial number of shares of common stock upon the conversion of our Series D convertible preferred stock and common stock purchase warrants. Should a significant number of these securities be issued, exercised or converted, the resulting increase in the amount of the common stock in the public market could have a substantial dilutive effect on our outstanding common -12- stock. The conversion and exercise of a substantial amount of the aforementioned securities or the issuance of new shares of common stock may also adversely affect the terms under which we could obtain additional equity capital. The price, which we may receive for the shares of common stock, that are issuable upon conversion or exercise of such securities, may be less than the market price of the common stock at the time of such conversions or exercise. FLUCTUATIONS IN OUR QUARTERLY NET SALES AND RESULTS OF OPERATIONS COULD DEPRESS THE MARKET PRICE OF OUR COMMON STOCK. Our future net sales and results of operations are likely to vary significantly from quarter to quarter due to a number of factors, many of which are outside our control. Accordingly, you should not rely on quarter-to-quarter comparisons of our results of operations as an indication of future performance. It is possible that our net sales or results of operations in a quarter will fall below the expectations of securities analysts or investors. If this occurs, the market price of our common stock could fall significantly. Our results of operations in any quarter can fluctuate for many reasons, including: o Timing of orders from our largest customers, the U.S. Navy and Computer Sciences Corporation; o our ability to manufacture, test and deliver products in a timely and cost-effective manner; o our success in winning competitions for orders; o the timing of new product introductions by us or our competitors; o the mix of products we sell; o competitive pricing pressures; and o general economic climate. A large portion of our expenses, including expenses for facilities, equipment, and personnel, are relatively fixed. Accordingly, if our net sales decline or do not grow as much as we anticipate, we might be unable to maintain or improve our operating margins. Any failure to achieve anticipated net sales could therefore significantly harm our operating results for a particular fiscal period. THE HOLDERS OF OUR PREFERRED STOCK HAVE CERTAIN RIGHTS AND PRIVILEGES THAT ARE SENIOR TO OUR COMMON STOCKHOLDERS, AND WE MAY ISSUE ADDITIONAL SHARES OF PREFERRED STOCK WITHOUT STOCKHOLDER APPROVAL THAT COULD ADVERSELY AFFECT THE PRICE OF OUR COMMON STOCK. Our board of directors has the authority to issue, without any further vote or action by you and the other common stockholders, a total of up to 5,000,000 shares of preferred stock and to fix the rights, preferences, privileges, and restrictions, including voting rights, of the preferred stock, which typically are senior to the rights of the common stockholders. We have issued and outstanding 30,000 shares of our Series A Non-Voting Redeemable Convertible Preferred Stock, 19,286 shares of our Series D Convertible Preferred Stock and may, from time to time in the future, issue additional preferred stock for financing or other purposes with rights, preferences or privileges senior to the common stock. Your rights will be subject to, and may be adversely affected by, the rights of the holders of the preferred stock that have been issued or might be issued in the future. Preferred stock also could make it more difficult for a third party to acquire a majority of our outstanding voting stock. This -13- could delay, defer or prevent a change in control. Furthermore, holders of preferred stock may have other rights, including economic rights, senior to the holders of our common stock. As a result, their existence and issuance could have a material adverse effect on the market value of the common stock. WE WILL HAVE BROAD DISCRETION IN USING THE PROCEEDS, IF ANY, FROM THE EXERCISE OF OUR COMMON STOCK PURCHASE WARRANTS. We intend to use the proceeds, if any, from the exercise of our common stock purchase warrants, $19,092,824 if all warrants are exercised in their entirety, for general corporate purposes, including capital expenditures, working capital and possible acquisitions. Accordingly, we will have broad discretion in using these proceeds. You will not have the opportunity to evaluate the economic, financial or other information that we will consider in determining how to use the proceeds. We may use the proceeds for purposes that do not result in any increase in our market value or any improvement in our results of operations. WE HAVE NEVER PAID DIVIDENDS ON OUR CAPITAL STOCK, AND WE DO NOT ANTICIPATE PAYING DIVIDENDS IN THE FORESEEABLE FUTURE. We have not paid dividends on any of our classes of capital stock to date, and we currently intend to retain our future earnings, if any, to fund the development and growth of our business. As a result, capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable future. In addition, the terms of our Exchange Agreement with Eurotech, Ltd. prohibit us from declaring dividends. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS Except for historical facts, the statements in this prospectus are forward-looking statements. Forward-looking statements are merely our current predictions of future events. These statements are inherently uncertain, and actual events could differ materially from our predictions. Important factors that could cause actual events to vary from our predictions include those discussed under the headings "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business." We assume no obligation to update our forward-looking statements to reflect new information or developments. We urge readers to review carefully the risk factors described in this prospectus and the other documents that we file with the Securities and Exchange Commission. You can read these documents at WWW.SEC.GOV. WE UNDERTAKE NO OBLIGATION TO PUBLICLY UPDATE OR REVISE ANY FORWARD-LOOKING STATEMENTS WHETHER AS A RESULT OF NEW INFORMATION, NEW EVENTS OR ANY OTHER REASON, OR REFLECT ANY EVENTS OR CIRCUMSTANCES AFTER THE DATE OF THIS PROSPECTUS OR THE DATE OF ANY APPLICABLE PROSPECTUS SUPPLEMENT OR THE DATE OF DOCUMENTS INCORPORATED BY REFERENCE INTO THIS PROSPECTUS THAT INCLUDE FORWARD-LOOKING STATEMENTS. USE OF PROCEEDS The shares of common stock offered by this prospectus are being offered by the selling stockholders. We will not receive any proceeds from the sale of shares by the selling stockholders. For information about the selling stockholders, see "Selling Stockholders." -14- PRICE RANGE FOR COMMON STOCK AND DIVIDEND POLICY MARKET INFORMATION Our common stock is quoted on the OTC Bulletin Board by The National Association of Securities Dealers, Inc. under the symbol "MRKL.OB." The following table provides, for the periods indicated, the high and low closing prices for our common stock as reported on the OTC Bulletin Board. These over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions. The prices reflect a 1-for-60 reverse stock split effective October 27, 2003. Prior to December 2003, the common stock of the Company was thinly traded. We believe that the variability of the share price may, in part, be due to thin trading. YEAR ENDED JUNE 30, 2002 HIGH LOW - ----------------------------------------- ------------------ -------------- First quarter $30.59 $3.00 Second quarter 28.79 3.00 Third quarter 4.80 1.50 Fourth quarter 4.80 1.20 YEAR ENDED JUNE 30, 2003 - ----------------------------------------- ------------------ -------------- First quarter 1.20 1.20 Second quarter 33.00 0.60 Third quarter 18.60 7.80 Fourth quarter 15.00 3.36 YEAR ENDED JUNE 30, 2004 - ----------------------------------------- ------------------ -------------- First quarter 9.00 2.40 Second quarter 5.70 1.90 Third quarter 2.70 0.69 Fourth quarter through June 16, 2004 4.40 1.05 On June 16, 2004, the last sale price of our common stock as reported on the OTC Bulletin Board was $1.08 per share. On that date, we had approximately 739 holders of record of our common stock. This number does not include stockholders for whom shares were held in a "nominee" or "street" name. We have never declared or paid cash dividends on our capital stock, and we do not plan to pay any cash dividends in the foreseeable future. We currently intend to retain any future earnings to finance our operations and future growth. In addition, the terms of our Exchange Agreement with Eurotech, Ltd. prohibit us from declaring dividends. SELLING STOCKHOLDERS Up to 31,156,016 shares are being offered by this prospectus, all of which are being registered for sale for the account of the selling stockholders. PRIVATE PLACEMENT TRANSACTION COMPLETED ON APRIL 2, 2004 The investors in a private placement transaction completed on April 2, 2004, each a selling stockholder, are offering up to 6,999,999 shares of our common stock acquired in this private placement, consisting of: o 3,333,333 shares of our common stock; -15- o 3,333,333 shares of our common stock to be obtained by exercising common stock purchase warrants with an exercise price of $1.00 per share; and o 333,333 shares of our common stock to be obtained by exercising common stock purchase warrants with an exercise price of $1.40 per share that were issued as finder's compensation. We have agreed to register for resale 125% of the 3,333,333 shares of our common stock and 110% of the 3,333,333 shares of our common stock that are issuable upon exercise of the warrants sold in the April 2, 2004 private placement, to cover the shares of our common stock issuable as liquidated damages for breach of certain covenants contained in or as a result of adjustments contemplated by certain provisions of the Securities Purchase Agreement dated as of April 2, 2004 or the Registration Rights Agreement dated as of April 2, 2004. We also agreed to register 110% of the 333,333 shares of our common stock that are issuable upon exercise of the warrants issued as finder's fee in this private placement. We received gross proceeds of $2,000,000 and net proceeds of $1,750,000 (after deducting finders' fees and transaction costs) from this private placement. Under an agreement signed in connection with the April 2, 2004 private placement transaction, we granted the investors in that transaction the right to receive additional shares under some conditions. Subject to certain exceptions, if we offer or sell our common stock, warrants, or convertible securities either (i) before the SEC declares this registration statement effective or (ii) within 180 days after the SEC declares this registration statement effective at a price per share (or, in the case of convertible securities, a price per conversion share) below $0.60 or if the registration statement is suspended twice or more during any consecutive twelve-month period and each suspension period is either for more than ten days or begins less than 10 business days after the last day of the preceding suspension, we must make the following adjustments: (a) We must issue that number of shares and warrants to each investor which, when combined with the shares and warrants purchased by such investor in the April 2, 2004 private placement, will equal the number of shares and warrants the investor would have received for his or her investment had the purchase price per share been the lowest of (i) the lowest price per share of the new securities, (ii) if the securities are convertible, the price per share of the conversion shares, and (iii) if the new transaction takes place prior to the SEC declaring this registration statement effective, $0.40. Under the April 2, 2004 transaction, for each share of our common stock an investor purchased, the investor received a warrant to purchase one additional share; (b) If, in the new transaction, we issue warrants to purchase a number of shares in excess of the number of shares of our common stock sold in the new transaction, we must issue to each investor in the private placement a number of warrants (in addition to any warrants issued pursuant to the anti-dilution adjustment described in (a) above) equal to the number of warrants held by that investor (including any warrants issued pursuant to the anti-dilution adjustment described in (a) above) times the percentage by which the number of shares issuable on exercise of the new warrants exceeds the number of shares of our stock issued in the new transaction; and (c) If we issue new warrants on terms more favorable than those issued to the private placement investors (including, but not necessarily limited to, lower exercise prices and longer periods between issuance and expiration), we must change the terms of their warrants to be similar to those of the new warrants. -16- PRIVATE PLACEMENT TRANSACTION COMPLETED ON APRIL 16, 2004 The investors in a private placement transaction completed on April 16, 2004, each a selling stockholder, are offering up to 5,025,000 shares of our common stock acquired in this private placement, consisting of: o 2,500,000 shares of our common stock; o 2,500,000 shares of our common stock to be obtained by exercising common stock purchase warrants with an exercise price of $1.50 per share; and o 25,000 shares of our common stock to be obtained by exercising common stock purchase warrants with an exercise price of $2.00 per share that were issued as finder's compensation. We have agreed to register for resale 125% of the 2,500,000 shares of our common stock and 110% of the 2,500,000 shares of our common stock that are issuable to certain stockholders upon exercise of the warrants, to cover the shares of our common stock, issuable as liquidated damages for breach of certain covenants contained in or as a result of adjustments contemplated by certain provisions of the Securities Purchase Agreement dated as of April 16, 2004. We received gross proceeds of $2,000,000 and net proceeds of $1,890,000 (after deducting finders' fees and transaction costs) from this private placement. PRIVATE PLACEMENT TRANSACTION COMPLETED ON MAY 3, 2004 The investors in the private placement transaction completed on May 3, 2004, each a selling stockholder, are offering up to 14,727,300 shares of our common stock acquired in this private placement, consisting of: o 7,098,750 shares of our common stock; o 7,098,750 shares of our common stock to be obtained by exercising redeemable common stock purchase warrants with an exercise price of $1.50 per share; and o 529,800 shares of our common stock to be obtained by exercising redeemable common stock purchase warrants with an exercise price of $1.50 per share that were issued as finder's compensation. We received gross proceeds of $5,679,000 and net proceeds of $5,133,860 (after deducting finders' fees and transaction costs) from this private placement. REGISTRATION RIGHTS We entered into agreements with investors in private placements completed on April 2, 2004, April 16, 2004 and May 3, 2004. Pursuant to these agreements, we agreed to file with the SEC a registration statement covering the resale of all our common stock covered by this prospectus pursuant to Rule 415 of the Securities Act. We are required to register for resale 125% of the common stock that we issued in the private placement transactions completed on April 2, 2004 and April 16, 2004, and 110% of the common stock issuable upon exercise of the common stock purchase warrants issued in connection with these two private placement transactions, to cover the shares of our common stock, if any, -17- issuable to certain selling stockholders as liquidated damages for breach of certain covenants contained in or as a result of adjustments contemplated by certain provisions of the Securities Purchase Agreement dated as of April 2, 2004 and April 16, 2004 or the related Registration Rights Agreement. We will be required to amend this registration statement or file an additional registration statement, of which this prospectus is a part, at any time if the remaining number of shares of common stock or the common stock issuable upon exercise of the common stock purchase warrants exceeds 90% of the number of shares of common stock registered by this registration statement, of which this prospectus is a part. Accordingly, we filed a Registration Statement on Form SB-2, of which this prospectus forms a part, on May 11, 2004, with respect to the resale of these shares from time to time. In addition, we agreed to use our commercially reasonable efforts to cause the registration statement to be declared effective under the Securities Act as promptly as possible thereafter, and to keep the registration statement effective for two years following its effective date, unless the shares of our common stock covered by this prospectus have been sold or may be sold pursuant to Rule 144(k) of the Securities Act, subject to certain restrictions. Under the Registration Rights Agreement dated April 2, 2004, and the Securities Purchase Agreement entered into on April 16, 2004, we will be obligated to pay liquidated damages to the holders of our common stock who are parties to those agreements, if this registration statement is not filed by forty-five (45) days after the close of the private placement, and if it is not declared effective by the earlier of five (5) trading days after oral or written notice by the SEC that it may be declared effective or ninety (90) days after the close of the private placement. The amount that we must pay will be equal to two percent (2%) of the purchase price paid by each holder in the April 2, 2004 and April 16, 2004 private placements for each thirty-day (30) period (and pro rata for any period less than thirty days) for which we fail to meet the relevant filing date or the relevant effective date. ADDITIONAL SELLING STOCKHOLDERS WITH PIGGY-BACK REGISTRATION RIGHTS The selling stockholders with piggy-back registration rights are offering up to 2,328,717 shares of our common stock being registered for resale by this registration statement, of which this prospectus is part, consisting of: o 637,721 shares of our common stock obtained by current and former consultants, directors and employees pursuant to consulting and employment agreements for services rendered to us; o 266,334 shares of our common stock obtained by ASI Technology Corporation pursuant to a Technology Purchase Agreement dated March 19, 2003; o 1,074,662 shares of our common stock obtained by the sole stockholder of Science and Technology Research, Inc. pursuant to an Agreement and Plan of Merger dated September 30, 2003; o 300,000 shares of our common stock issued to investors in our April 2, 2004 private placement in consideration of their consent to the April 16, 2004 private placement; and o 50,000 shares of our common stock issuable upon exercise of a common stock purchase warrant issued to counsel for the investors in our April 2, 2004 private placement. -18- SELLING STOCKHOLDERS TABLE Based on the information supplied to us by each selling stockholder, the following table sets forth the approximate number of shares beneficially owned as of June 16, 2004, by each of the selling stockholders and their pledgees, assignees and successors in interest. The "Right to Acquire" column reflects beneficial ownership of shares subject to warrants and convertible preferred stock that may be exercised and converted within 60 days after June 15, 2004. The "Shares Offered" column reflects all of the shares that each selling stockholder may offer under this prospectus. Percentage ownership is based on 31,681,793 shares issued and outstanding as of June 16, 2004. The table assumes that the selling stockholders will sell all of the shares. Although we have assumed for purposes of the table below that the selling stockholders will sell all of the shares offered by this prospectus, because the selling stockholders may offer from time to time all or some of their shares covered under this prospectus, or in another permitted manner, no assurances can be given as to the actual number of shares that will be resold by the selling stockholders or that will be held by the selling stockholders after completion of the resales. The terms of the common stock purchase warrants provide that the number of shares to be obtained by each of the holders of the warrants, upon exercise of our common stock purchase warrants cannot exceed the number of shares that, when combined with all other shares of common stock and securities then owned by each of them, would result in any one of them owning more than 4.99% (or, in some cases, 9.99%) of our outstanding common stock at any given point in time. In addition, the selling stockholders may have sold, transferred or otherwise disposed of the warrants issued in the private placements completed on April 2, 2004, April 16, 2004 and May 3, 2004 in transactions exempt from the registration requirements of the Securities Act since the date the selling stockholders provided the information regarding their securities holdings. Information concerning the selling stockholders may change from time to time and changed information will be presented in a supplement to this prospectus if and when necessary and required. Except as described above, there are currently no agreements, arrangements or understandings with respect to the resale of any of the shares covered by this prospectus. The applicable percentages of ownership are based on an aggregate of 31,681,793 shares of our common stock issued and outstanding on June 16, 2004. The number of shares beneficially owned by the selling stockholders is determined under rules promulgated by the SEC.
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP PRIOR TO OFFERING AFTER OFFERING -------------------------------------- ----------------------------- RIGHT TO SHARES OUT- RIGHT TO NAME OF BENEFICIAL OWNER OUTSTANDING ACQUIRE TOTAL OFFERED STANING ACQUIRE PERCENT - ----------------------------------------- ----------- ----------- ----------- --------------- ------- -------- -------- PRIVATE PLACEMENT TRANSACTION COMPLETED ON APRIL 2, 2004 Elite Properties Ltd. ................... 1,183,333 1,083,333 2,266,666 2,266,666 (1) 0 0 * Montana View Corporation ................ 1,350,000 1,250,000 2,600,000 2,600,000 (1) 0 0 * Sparrow Ventures, Inc. .................. 1,100,000 1,000,000 2,100,000 2,100,000 (1) 0 0 * West Hastings Ltd. ...................... 0 333,333 333,333 333,333 (1)(2) 0 0 * PRIVATE PLACEMENT TRANSACTION COMPLETED ON APRIL 16, 2004 Castlerigg Master Investments, Ltd.. .... 1,000,000 1,000,000 2,000,000 2,000,000 (1) 0 0 * Spectra Capital Management, LLC ......... 500,000 500,000 1,000,000 1,000,000 (1) 0 0 * AS Capital Partners, LLC ................ 250,000 250,000 500,000 500,000 (1) 0 0 * -19- BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP PRIOR TO OFFERING AFTER OFFERING -------------------------------------- ----------------------------- RIGHT TO SHARES OUT- RIGHT TO NAME OF BENEFICIAL OWNER OUTSTANDING ACQUIRE TOTAL OFFERED STANING ACQUIRE PERCENT - ----------------------------------------- ----------- ----------- ----------- --------------- ------- -------- -------- Vestcap International Management, Ltd. .. 250,000 250,000 500,000 500,000 (1) 0 0 * OTAPE Investments, LLC .................. 125,000 125,000 250,000 250,000 (1) 0 0 * Basso Holding, Ltd. ..................... 83,334 83,334 166,668 166,668 (1) 0 0 * Basso Eq Op Hld Fund, Ltd. .............. 83,333 83,333 166,666 166,666 (1) 0 0 * Basso Multi Strategy Hldg Fund, Ltd. .... 83,333 83,333 166,666 166,666 (1) 0 0 * Fredrick Berdon & Co. L.P. .............. 62,500 62,500 125,000 125,000 (1) 0 0 * SRG Capital, LLC ........................ 62,500 62,500 125,000 125,000 (1) 0 0 * Baker Consulting......................... 0 25,000 25,000 25,000 (1)(2) 0 0 * PRIVATE PLACEMENT TRANSACTION COMPLETED ON MAY 3, 2004 Gamma Opportunity Capital Partners, LP... 625,000 625,000 1,250,000 1,250,000 0 0 * Alpha Capital AG......................... 625,000 625,000 1,250,000 1,250,000 0 0 * Stonestreet LP........................... 562,500 562,500 1,125,000 1,125,000 0 0 * Bristol Investment Fund, Ltd. ........... 500,000 500,000 1,000,000 1,000,000 0 0 * IAB Island Ventures SA................... 375,000 375,000 750,000 750,000 0 0 * Ellis International Limited, Inc. ....... 312,500 312,500 625,000 625,000 0 0 * Winton Capital Holdings, Ltd. ........... 312,500 312,500 625,000 625,000 0 0 * Rock II, LLC............................. 300,000 300,000 600,000 600,000 0 0 * Professional Traders Fund, LLC........... 250,000 250,000 500,000 500,000 0 0 * Platinum Long Term Growth................ 250,000 250,000 500,000 500,000 0 0 * DKR Sound Shore Oasis Holding Fund, Ltd. .................................... 375,000 375,000 750,000 750,000 0 0 * Congregation Mishkan Shalom.............. 250,000 250,000 500,000 500,000 0 0 * Jay Goldman Master Limited Partners...... 200,000 200,000 400,000 400,000 0 0 * SRG Capital, LLC......................... 187,500 187,500 375,000 375,000 0 0 * Greenwich Growth Fund Limited............ 187,500 187,500 375,000 375,000 0 0 * David A. Lyons........................... 156,250 156,250 312,500 312,500 0 0 * Whalehaven Fund Limited.................. 156,250 156,250 312,500 312,500 0 0 * South Ferry L.P. #2...................... 125,000 125,000 250,000 250,000 0 0 * Blair Capital Corporation................ 125,000 125,000 250,000 250,000 0 0 * Michael Hamblet.......................... 100,000 127,411 227,411 227,411 0 0 * MEA Group, LLC........................... 62,500 62,500 125,000 125,000 0 0 * Iron Grid, Ltd. ......................... 46,875 46,875 93,750 93,750 0 0 * Gordon Gregoretti........................ 37,500 37,500 75,000 75,000 0 0 * Gerard Caviston.......................... 30,000 30,000 60,000 60,000 0 0 * Quentin Olwell........................... 15,625 15,625 31,250 31,250 0 0 * Michael Gleason.......................... 15,625 15,625 31,250 31,250 0 0 * Wolfe, L.P. ............................. 15,625 15,625 31,250 31,250 0 0 * -20- BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP PRIOR TO OFFERING AFTER OFFERING -------------------------------------- ----------------------------- RIGHT TO SHARES OUT- RIGHT TO NAME OF BENEFICIAL OWNER OUTSTANDING ACQUIRE TOTAL OFFERED STANING ACQUIRE PERCENT - ----------------------------------------- ----------- ----------- ----------- --------------- ------- -------- -------- Global Opportunity Fund Limited.......... 12,500 12,500 25,000 25,000 0 0 * Apex Opportunity Fund, L.P. ............. 100,000 100,000 200,000 200,000 0 0 * Richard Molinsky......................... 100,000 100,000 200,000 200,000 0 0 * Technology Transfer Venture Fund, LP..... 375,000 375,000 750,000 750,000 0 0 * Lone Star Holding Partnership, LP........ 125,000 125,000 250,000 250,000 0 0 * Brickman Investments..................... 125,000 125,000 250,000 250,000 0 0 * Solomon Yakoby........................... 62,500 62,500 125,000 125,000 0 0 * Alberdale Capital LLC.................... 0 162,500 162,500 162,500 (2) 0 0 * Starboard Capital Markets LLC............ 0 13,707 13,707 13,707 (2) 0 0 * Anthony Spatacco, Jr. ................... 0 13,707 13,707 13,707 (2) 0 0 * Richard F. Sands......................... 0 10,925 10,925 10,925 (2) 0 0 * Richard F. Sands 1999 Family Trust DTD 12/20/1999............................. 0 3,000 3,000 3,000 (2) 0 0 * Wayde Walker............................. 0 3,000 3,000 3,000 (2) 0 0 * Kevin Wilson............................. 0 1,000 1,000 1,000 (2) 0 0 * Richard Brewster......................... 0 1,000 1,000 1,000 (2) 0 0 * Rafael Vasquez........................... 0 1,000 1,000 1,000 (2) 0 0 * Matthew Eitner........................... 0 1,000 1,000 1,000 (2) 0 0 * Matthew Richard McGovern Living Trust Dated 7/28/2000........................ 0 9,000 9,000 9,000 (2) 0 0 * Nathaniel Clay........................... 0 200 200 200 (2) 0 0 * William Poon............................. 0 1,000 1,000 1,000 (2) 0 0 * Shraga Faskowitz......................... 0 1,000 1,000 1,000 (2) 0 0 * Richard Michalski........................ 0 200 200 200 (2) 0 0 * Brian Smith.............................. 0 200 200 200 (2) 0 0 * James Ahern.............................. 0 200 200 200 (2) 0 0 * Scott Kenneth Steele..................... 0 1,000 1,000 1,000 (2) 0 0 * Anthony Miller........................... 0 100 100 100 (2) 0 0 * Alan Feldman............................. 0 1,000 1,000 1,000 (2) 0 0 * Charles Savage........................... 0 1,000 1,000 1,000 (2) 0 0 * David Bloom.............................. 0 100 100 100 (2) 0 0 * Matthew E. Donohue....................... 0 100 100 100 (2) 0 0 * Kent Mitchell............................ 0 100 100 100 (2) 0 0 * Ian O'Brien Rupert....................... 0 100 100 100 (2) 0 0 * Jason Lyons.............................. 0 221,000 221,000 221,000 (2) 0 0 * Mark Groussman........................... 0 55,250 55,250 55,250 (2) 0 0 * -21- BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP PRIOR TO OFFERING AFTER OFFERING -------------------------------------- ----------------------------- RIGHT TO SHARES OUT- RIGHT TO NAME OF BENEFICIAL OWNER OUTSTANDING ACQUIRE TOTAL OFFERED STANING ACQUIRE PERCENT - ----------------------------------------- ----------- ----------- ----------- --------------- ------- -------- -------- ADDITIONAL SELLING STOCKHOLDERS WITH PIGGY-BACK REGISTRATION RIGHTS ASI Technology Corporation (4) .......... 306,284 0 306,284 266,334 0 0 * Commonwealth Acquisitions, Ltd. ........ 16,667 0 16,667 16,667 0 0 * David Danovitch.......................... 3,334 0 3,334 3,334 0 0 * Dean Denuccio ........................... 280,000 0 280,000 280,000 0 0 * Rodney Dodd ............................. 7,937 0 7,937 7,937 0 0 * ECON Investor Relations, Inc. ........... 18,507 0 18,507 12,049 6,458 0 * Oscar Hayes ............................. 21,035 0 21,035 21,035 0 0 * Edward Kessler ......................... 7,937 0 7,937 7,937 0 0 * Delmar Kintner ......................... 122,116 0 122,116 119,303 2,813 0 * Samuel Krieger........................... 0 25,000 25,000 25,000 (3) 0 0 * MarketShare Recovery, Inc. .............. 27,272 0 27,272 27,272 0 0 * George Martin............................ 4,546 0 4,546 4,546 0 0 * Ernie Mercier ........................... 8,334 0 8,334 8,334 0 0 * Jo-Ann Nichols .......................... 3,571 0 3,571 3,571 0 0 * Ronald Nussbaum.......................... 0 25,000 25,000 25,000 (3) 0 0 * Joe O'Neill ............................. 8,334 0 8,334 8,334 0 0 * John Readey ............................. 65,000 0 65,000 65,000 0 0 * Larry Shatsoff .......................... 1,667 0 1,667 1,667 0 0 * Stuart Siller ... ....................... 13,636 0 13,636 13,636 0 0 * The Research Works, Inc. ... ............ 37,099 0 37,099 37,099 0 0 * George Yang (5) ......................... 1,074,662 0 1,074,662 1,074,662 0 0 * ___________________________ * Less than 1%
(1) We are registering shares equal to 125% of the shares of common stock sold to the stockholder plus 110% of the shares issuable to the stockholder upon exercise of those warrants to include shares of our common stock which might be issuable to the selling stockholder as adjustment in the event of the breach of certain covenants contained in Securities Purchase Agreements dated April 2, 2004 and April 16, 2004 and the related Registration Rights Agreement dated April 2, 2004. All such shares are also being offered pursuant to this Offering. (2) Shares issuable with respect to warrants issued as finders' fees in connection with the private placements. (3) Shares issuable with respect to warrants issued in connection with consents for the third private placement. (4) Shares acquired pursuant to sublicense agreement dated March 13, 2004 (5) Shares acquired pursuant to an Agreement and Plan of Merger dated September 30, 2003. -22- VOTING AND INVESTMENT CONTROL The table below sets forth selling stockholders that are entities and the names of individuals having voting and investment control over the securities held by these entities. We determined beneficial ownership based upon information supplied to us by the selling stockholders and in accordance with rules promulgated by the Securities and Exchange Commission, and the information is not necessarily indicative of beneficial ownership for any other purpose. Except as otherwise indicated, we believe that the persons or entities named in the following table have voting and investment power with respect to all shares of common stock shown as beneficially owned by them, subject to community property laws where applicable, and have not held any office or maintained any material relationship, except as investor, with us, or any of our predecessors or affiliates, over the past three years. Certain of the individuals with voting and investment control have indicated that they exercise such control through a corporate or other organizational structure, which structural information has not been included.
ENTITY VOTING AND INVESTMENT CONTROL - ------ ----------------------------- Elite Properties Ltd. Shai Granot Montana View Corporation Touvia Strauss Sparrow Ventures, Inc. Michal Raviv West Hastings, Ltd. Bernhard Korolnik Castlerigg Master Investments, Ltd. Thomas Sandell Spectra Capital Management, LLC Gregory Porges AS Capital Partners, LLC Michael Coughlan Vestcap International Management Ltd. Rima Salam OTAPE Investments, LLC Ira Leventhal Basso Holdings Ltd. Howard I. Fischer Basso Equity Opportunity Holding Fund Ltd. Howard I. Fischer Basso Multi-Strategy Holding Fund Ltd. Howard I. Fischer Fredrick Berdon & Co. L.P. Fredrick Berdon SRG Capital, LLC Tai May Lee and Edwin McCabe Baker Consulting Philip Baker Gamma Opportunity Capital Partners, LP Jonathan Knight Alpha Capital AG Conrad Ackerman Stonestreet LP Elizabeth Leonard and Michael Finkelstein Bristol Investment Fund, Ltd. Paul Kestler IAB Island Ventures SA Margot Hutchinson Ellis International Limited, Inc. Wilhelm Ungar Winton Capital Holdings, Ltd. Marc Belzberg Rock II, LLC Howard Chalfin Professional Traders Fund, LLC Howard Berger Platinum Long Term Growth Mark Nordlicht DKR Sound Shore Oasis Holding Fund, Ltd. Seth Fischer Congregation Mishkan Shalom Menachem Lipskier Jay Goldman Master Limited Partners Jay Goldman Greenwich Growth Fund Limited Evan Schemenaur Whalehaven Fund Limited Evan Schemenaur South Ferry L.P. #2 Abraham Wolfson Blair Capital Neil Sullivan MEA Group, LLC Albert Shabbat Iron Grid, Ltd. William King Wolfe, L.P. Gerald Wolfe Global Opportunity Fund Limited Heiko Thieme Apex Opportunity Fund, L.P. Eric Vaughan Technology Transfer Venture Fund, LP William Custer Lone Star Holding Partnership, LP William Custer Brickman Investments Vanessa Andrade Alberdale Capital LLC Courtland Miller Starboard Capital Markets LLC James Dotzman and W. Tyson Perry III
-23- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION WITH THE OTHER FINANCIAL INFORMATION AND CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES APPEARING ELSEWHERE IN THIS PROSPECTUS. THIS DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THE FORWARD-LOOKING STATEMENTS AS A RESULT OF A VARIETY OF FACTORS, INCLUDING THOSE DISCUSSED IN "RISK FACTORS" AND ELSEWHERE IN THIS PROSPECTUS AND THE DOCUMENTS INCORPORATED BY REFERENCE. ALL INFORMATION IN THIS PROSPECTUS REFLECTS A 1-FOR-60 REVERSE STOCK SPLIT EFFECTIVE OCTOBER 27, 2003. The following management's discussion and analysis of financial condition and results of operations is organized as follows: o OVERVIEW. This section provides a general description of Markland, as well as recent developments and events that have occurred since 2001 that we believe are important in understanding the results of operations and financial condition and to anticipate future trends. In addition, we have provided a brief description of significant transactions and events that impact the comparability of the results being analyzed. o RESULTS OF OPERATIONS. This section provides an analysis of Markland's results of operations for the fiscal years ended June 30, 2003 and June 30, 2002, and the nine months ended March 31, 2004 and March 31, 2003. This analysis is presented on a consolidated basis. o FINANCIAL CONDITION AND LIQUIDITY. This section provides an analysis of Markland's cash flows for the fiscal years ended June 30, 2003 and 2002 and the nine months ended March 31, 2004, and March 31, 2003, as well as a discussion of recent financing arrangements. o CRITICAL ACCOUNTING POLICIES. This section discusses certain critical accounting policies that we consider important to Markland's financial condition and results of operations, and that required significant judgment and estimates on the part of management in application. Markland's significant accounting policies, including the critical accounting policies discussed in this section, are summarized in the notes to the accompanying consolidated financial statements. Background GENERAL. We have undergone material changes to our business and our financial structure during the period covered by the financial statements included in this prospectus (our financial statements for the fiscal years ended June 30, 2002 and June 30, 2003 and for the nine-month periods ended March 31, 2003 and March 31, 2004). We have a limited operating history in the businesses we are currently pursuing. Our business, as it exists today, consists of three business areas: chemical detectors, border security and advanced technologies. Our primary sources of operating revenue are sales of our automatic chemical agent detection and alarm system, border security logistics products and services, and three SBIR funded research grants for the development of gas plasma antenna -24- technology. In fiscal year 2003 and in the nine months ended March 31, 2004, we derived revenue of approximately $546,400 and $752,000, respectively, from our border security products and services, and approximately $112,251 and $261,000 respectively from SBIR research grants performed for the development of gas plasma antenna technology. In the nine months ended March 31, 2004 we derived revenue of approximately $4,369,000 from sales of our automatic chemical agent detection and alarm system. During the fiscal year ended June 30, 2003 we incurred a net loss of approximately $2,837,000. During the nine months ended March 31, 2004, we incurred a net loss of approximately $4,876,796. Our strategy is to grow through acquisitions and marketing of our products. No assurances can be given that we can complete an acquisition of revenue producing assets. Recent Developments We have identified a specific acquisition candidate and we are currently negotiating the terms of that potential acquisition. This acquisition candidate is a privately held company with expertise in sensor technology whose primary customer is the U.S. Department of Defense. If this acquisition is completed, it will be material to us. We expect the purchase price to be approximately $19,000,000 and to be paid in cash and secured notes. To finance this transaction, we expect to use a substantial portion of our available cash and to raise additional cash through sales of our securities. In the event that we obtain financing, it may be on terms that are dilutive to our existing stockholders and it may limit, among other things, our ability to acquire other businesses, invest in capital assets, sell or otherwise dispose of our existing assets or incur additional indebtedness. We may be unable to successfully negotiate or finance this acquisition, or if the acquisition is consummated, effectively integrate the acquired business into ourexisting business. The negotiation of this acquisition and the integration of the acquired business operations may require a disproportionate amount of management's attention and our resources. Furthermore, the success of this transaction may also depend on a number of other factors, including the ability to estimate accurately rates of future production and future net revenues and to assess possible liabilities. Even though we will have performed a review of, among other things, the business operations of the candidate before we close this acquisition, it may not necessarily reveal existing or potential problems or permit us to become familiar enough with the business to assess fully its deficiencies or potential. EVENTS PRIOR TO FISCAL 2002. Markland, previously known as Quest Net, was incorporated in Colorado in November 1995, under the name "A.P. Sales Inc." In December 1998, A.P. Sales Inc. dissolved as a Colorado corporation, redomiciled in Florida and changed its name to Quest Net Corp. In 2001, before the period covered by the financial statements included in this prospectus, our only asset was the stock of a subsidiary, CWTel, Inc., a company in the telecommunications business. We acquired this company in March 2000 and secured our payment obligations with 30,000 shares of our Series A Non-Voting Redeemable Convertible Preferred Stock. CWTel filed for bankruptcy and was liquidated on March 11, 2002. After the bankruptcy of our subsidiary, we had no active business operations. On June 30, 2003, we issued 30,000 shares of our Series A Non-Voting Redeemable Convertible Preferred Stock in satisfaction of our remaining obligations to the holder of the security interest. On March 15, 2001, we acquired all the outstanding capital stock of a company called Vidikron of America, Inc. Vidikron was a development stage company in the business of creating digital broadband and wireless networking solutions for the internet. The sole stockholder of Vidikron was Markland LLC. To acquire Vidikron we issued 10 shares of our convertible Series B Preferred Stock to Markland LLC. Markland LLC converted all of its Series B Preferred Stock in June 2001, which, resulted in Markland LLC owning approximately 85% of our then outstanding common stock. There is no Series B Preferred Stock outstanding. At this time we changed our name to Markland Technologies, Inc. On October 19, 2000 we executed a promissory note for $3,500,000 in favor of James LLC. In July 2001, after the Vidikron acquisition, James LLC elected to convert $2,500,000 of the principal amount of its $3,500,000 promissory note, together with $125,000 accrued interest, into shares of our common stock. In September 2001, we assumed all of Vidikron's rights and obligations under a $3,500,000 secured revolving credit facility with Market LLC. These transactions made Market LLC our senior secured lender. EVENTS DURING FISCAL 2002. In May 2002, we received a notice of default from Market LLC. In June of 2002, we transferred all the stock of Vidikron to Market in partial satisfaction of our indebtedness to Market. After this partial payment, we still owed Market $500,000. Our disposition of the business of Vidikron has been treated as a discontinued operation. As a result, we recorded a loss of $3,259,421 for the fiscal year ended June 30, 2002 resulting from discontinued operations. At this point in our history we again had no active business operations. In fiscal 2003, we recorded income of $998,713 for the fiscal year ended June 30, 2003 resulting from the settlement of certain liabilities and obligations recorded in previous periods in connection with the discontinued operations. EVENTS DURING FISCAL 2003. In December 2002, we entered into a transaction with Eurotech Ltd., ipPartners, Inc., Market LLC, and James LLC. Pursuant to this transaction, the following took place: o We formed a subsidiary corporation called Security Technology, Inc. -25- o Eurotech transferred certain rights to its Acoustic Core Technology(TM) to our subsidiary. o Crypto.com Inc. (a subsidiary of Eurotech) and ipPartners, Inc. transferred certain rights to their cryptology technologies to our subsidiary. o 90% of the shares of our common stock held by Market LLC and James LLC were retired. o We issued shares of common stock representing 80% of our then issued and outstanding common stock to Eurotech, Ltd. and shares of common stock representing 10% of our then issued and outstanding shares of common stock to ipPartners, Inc. o We issued $5,225,000 in stated value of our Series C 5% Cumulative Convertible Preferred Stock to Market LLC and James LLC in satisfaction of $5,225,000 of convertible notes held by Market LLC and James LLC and in exchange for their agreement to surrender 4,498,638 shares of our common stock. We are no longer a majority-owned subsidiary of Eurotech, Ltd. due to the issuances of additional common stock. In January of 2003, we acquired all of the common stock of Ergo Systems, Inc., a provider of security logistic support and related product development services. Ergo has a contract with the United States government to provide border security logistic support at five ports of entry. In consideration for this acquisition, we agreed to pay $400,000 in cash, payable at certain milestones related to our research efforts. During the nine-month period ended March 31, 2004, we realized $752,000 from these services. EVENTS OCCURRING AFTER FISCAL 2003. In March of 2003, we entered into an agreement to acquire the intellectual property (including patents), equipment and government contracts relating to our gas plasma antenna technology from ASI Technology Corporation, but this transaction did not close until September 30, 2003. In consideration for this acquisition we issued 283,333 shares of common stock and agreed to pay $1,000,000. During the nine months ended March 31, 2004 we realized revenue of $261,000 from SBIR research grants related to this technology. In October of 2003, we acquired all of the common stock of Science and Technology Research Corporation, Inc. This company is the producer of the U.S. Navy's shipboard automatic chemical agent detection and alarm system. In consideration for this acquisition, we issued 1,539,779 shares of common stock and agreed to pay $900,000 in cash, and issued a promissory note for $375,000. During the nine months ended March 31, 2004, we realized revenue of $4,369,000 from sales of our automatic chemical agent detection and alarm system to the U.S. Navy. FINANCING ACTIVITIES. We have financed our business activities through borrowings and private placements of our securities to institutional investors. We have engaged in the following financing activities: o In October 2003, we borrowed $1,400,000 from Bay View Capital, LLC. This borrowing was repaid in April 2004. o At various times between April 2003 and March 2004 we have raised an aggregate of approximately $3,832,000 through private placements of our Series D Preferred Stock to an institutional investor. -26- o On April 2, 2004, we sold 3,333,333 shares of common stock and warrants to purchase 3,333,333 shares of our common stock for gross proceeds of $2,000,000 to three investors in a private placement. o On April 16, 2004, we sold 2,500,000 shares of our common stock and warrants to purchase 2,500,000 shares of our common stock for gross proceeds of $2,000,000 to ten investors in a private placement. o On May 3, 2004, we sold 7,098,750 shares of our common stock and warrants to purchase 7,098,750 shares of our common stock for gross proceeds of $5,679,000 to 34 investors in a private placement. o As of April 2004, all of our Series C Cumulative Convertible Preferred Stock has been converted into common stock and none remains outstanding. RESULTS OF OPERATIONS The following selected consolidated financial data reflects the combined results of operations of Markland Technologies and Science and Technology Research, which was acquired by us on September 30, 2003, restated for all periods presented pursuant to the purchase method of accounting. This acquisition of Science and Technology Research is more fully described in Note 4 to our audited consolidated financial statements included as part of Item 22 of this Registration Statement. The selected consolidated financial data for the years ended June 30, 2003 and 2002 for each of the nine-month periods ended March 31, 2004 and 2003 and for the three-month periods ended March 31, 2004 and 2003. have been derived from the audited consolidated financial statements of Markland which are included elsewhere in this prospectus. The historical results presented are not necessarily indicative of future results. You should read the data set forth below in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements and related notes included in this Registration Statement.
UNAUDITED NINE MONTHS ENDING MARCH 31, YEAR ENDING JUNE 30, --------------------------- --------------------------- 2004 2003 2003 2002 ------------ ------------ ------------ ------------ Revenue 5,382,341 322,451 658,651 Cost of revenue 4,486,512 85,798 445,218 -- Selling, general and administrative 2,337,298 643,193 1,186,379 247,677 Compensatory element of stock issuances 2,543,561 1,480,468 2,051,822 -- Research and development 49,139 -- 522,657 -- Amortization & Depreciation Expense 575,667 33,334 66,668 -- Interest and other expenses 266,960 172,870 221,501 -- Loss from Continuing Operations -- -- (3,835,594) (247,677) Gain on Disposition -- -- -- 1,046,133 Gain (loss) from discontinued Operations -- -- 998,713 (3,259,421) Net income (loss) (4,876,796) (2,093,212) (2,836,881) (2,460,965)
-27- RESULTS OF OPERATIONS COMPARISON OF FISCAL 2002 AND FISCAL 2003 REVENUE: During the fiscal year ended June 30, 2002, we had no revenue from continuing operations. Revenue for the fiscal year ended June 30, 2003 was $658,651. Of our revenues, approximately $546,400 was from sales of our border security products and services and approximately $112,251 was from SBIR grants for the development of our gas plasma antenna technology. COST OF REVENUES: During the fiscal year ended June 30, 2002, we had no revenue from continuing operation and therefore there was no cost of revenues from continuing operations. Cost of revenues for the year ended June 30, 2003 was $445,218. Gross profits for the year ended June 30, 2003 was $213,433. We had a gross profit margin of approximately 32% for the year ended June 30, 2003. Our contract with the U.S. government for border security products and services provided for the majority of our gross profit. The majority of our cost of revenues was payroll and benefits. In addition, we incurred significant costs from subcontractors and labor. A portion was also from materials used at the Dedicated Commuter Lane. SELLING, GENERAL AND ADMINISTRATIVE: Selling, general and administrative expense for the year ended June 30, 2002 was $247,677. This expense was primarily composed of payments to employees, consultants and vendors. Selling, general and administrative expense for the year ended June 30, 2003 was $1,186,379. Selling, general and administrative expense was primarily composed of payments to employees, consultants and vendors. The increase in selling, general and administrative expense was primarily due to increases in staff resulting from the acquisition of the Acoustic Core Technology(TM) from Eurotech and the acquisition of Ergo Systems and related sales growth. We expect this expense to increase with the size of our business and with any acquisitions we may make. RESEARCH AND DEVELOPMENT: We did not spend any money on research and development during the fiscal year ending June 30, 2002 because we were not an operating business. During the fiscal year ended 2003, $522,657 was spent on research and development activities. Included in research and development costs for the year ended June 30, 2003 is $300,000 payable to Syqwest, a related party, for development costs related to a vehicle stopping technology designed for use in protecting our borders. COMPENSATORY ELEMENT OF STOCK ISSUANCES FOR SELLING, GENERAL AND ADMINISTRATIVE FEES: During the fiscal year ended June 30, 2002, we had no charges for compensatory stock issuances. Compensatory element of stock issuances for selling, general and administrative fees for the year ended June 30, 2003 was $2,051,822. We use our equity to compensate management and consultants who provide services to us. We expect to continue to do so in the future. For this reason, we expect to continue to incur such charges. OPERATING LOSS FROM CONTINUING OPERATIONS. Operating loss from continuing operations during the year ended June 30, 2002 was $247,677. This loss resulted from the existence of selling general and administrative expenses without offsetting revenues. Operating loss from continuing operations for the year ended June 30, 2003 was $3,614,093. This loss resulted primarily from non-cash charges for the compensatory element of stock issuances of $2,051,822 and from selling, general and administrative expenses, which were offset to a small extent by gross profit. INTEREST EXPENSE: During the fiscal year ended June 30, 2002, we had no interest expense. Interest expense for the year ended June 30, 2003 was $226,751. Interest and financing expense was from our notes payable and our outstanding shares of preferred stock. We expect to satisfy our need for working capital with additional equity and/or debt financing. To the extent that we incur additional indebtedness, we expect interest expense to increase. -28- GAIN (LOSS) FROM DISCONTINUED OPERATIONS: Loss from discontinued operations during the year ended June 30, 2002 was $2,213,288. This loss resulted from the disposition of our Vidikron subsidiary. Income from discontinued operations for the year ended June 30, 2003 was $998,713. This resulted from the settlement of certain liabilities and obligations previously recorded in connection with the discontinued operations. NET LOSS: Net loss during the year ended June 30, 2002 was $2,460,965 ($0.01 per share). This loss resulted primarily from the loss from discontinued operations. Net loss for the year ended June 30, 2003, was $2,836,881 ($.03 per share). This loss resulted primarily from operating losses. PREFERRED STOCK DIVIDENDS: Accrued stated dividends on the Series C Preferred Stock for the year ended June 30, 2003 totaled $152,716. Deemed dividends related to the holder of our Series D Preferred Stock of $4,107,500 represent non-cash charges for beneficial conversion features of such securities. We expect to continue to finance our operations with additional debt and equity financing including, possibly, additional sales of our Series D Preferred Stock. Such financing could result in additional charges for preferred stock dividends. NET LOSS APPLICABLE TO COMMON STOCKHOLDERS: Net loss applicable to common stockholders for the year ended June 30, 2002 was $2,460,965 ($0.01 per share). Net loss applicable to common stockholders for the year ended June 30 2003 was $7,598,852 ($0.03 per share). RESULTS OF OPERATIONS COMPARISON OF THE NINE MONTHS ENDED MARCH 31, 2004 AND MARCH 31, 2003, AND THE THREE MONTHS ENDED MARCH 31, 2004 AND MARCH 31, 2003. Because we had very little activity during the three month period ended March 31, 2003, we have not provided a separate comparison of this period to the three months ended March 31, 2004. REVENUE. During the nine month period ended March 31, 2003 we recognized revenue of $322,451. Revenue for the nine months ended March 31, 2004 was $5,382,341. Of our revenues, approximately $4,369,000 was from sales of our automatic chemical agent detection and alarm system to the U.S. Navy. Our contract with the U.S. Navy provides for up to $37,000,000 in sales of this product for the life of the product. Through March 2004 our subsidiary STR recognized approximately $14,411,000 in revenues under this contract. We expect sales will continue, but we cannot give any assurance that they will continue because orders depend upon the U.S. Navy's needs. Approximately $752,000 of revenue was derived from border security products and services provided by our subsidiary, Ergo Systems, Inc. Our contract with the U.S. government for border security products and services provides for payments of up to $2,000,000. Our SBIR grants provide for payments of $1,000,000 over a 12-month period. Approximately $261,000 of revenue was derived from funded SBIR research performed for the U.S. military for gas plasma antenna technology. COST OF REVENUES: Cost of revenues for the nine months ended March 31, 2004 was $4,486,512. We had a gross profit of $895,829 for the nine months ended March 31, 2004. Our cost of revenues for long term contracts includes direct labor and related fringe benefits, subcontracting costs, material purchases, and allocable general and administrative expenses. During the quarter ended March 31, 2004, we closed out a purchase order under our U.S. Navy contract. Our actual costs of goods exceeded our estimated costs of goods for products delivered to the U.S. Navy, and we recorded an adjustment in the quarter ended March 31, 2004. In addition, our deliveries during this period also reflect higher contract costs and consequently a lower gross margin. SELLING, GENERAL AND ADMINISTRATIVE EXPENSE: Selling, general and administrative expense for the nine months ended March 31, 2003 was $643,193. Selling, general and administrative expense for the nine months ended March 31, -29- 2004 was $2,337,298. Selling, general and administrative expense was primarily composed of payments to employees, consultants and vendors. The increase in selling, general and administrative expense was primarily due to a $600,000 accrual for bonus compensation paid to Verdi Consulting and increases in staff resulting from the acquisition of Science and Technology Research Corporation and related sales growth. We expect this expense to increase with the size of our business and with any acquisitions we may make. COMPENSATORY ELEMENT OF STOCK ISSUANCES: During the nine months ended March 31, 2003 we had $1,480,468 charges for compensatory element of stock issuances. Compensatory element of stock issuances for selling, general and administrative fees for the nine months ended March 31, 2004 was $2,543,561. We use our equity to compensate management and consultants who provide services to us. We expect to continue to do so in the future. For this reason we expect to continue to incur such charges. INTEREST AND FINANCING: Interest expense increased to $119,232 for the quarter ended March 31, 2004, from $28,334 for the comparable period of 2003. Interest expense for the nine months ended March 31, 2003 was $198,120. Interest and financing expense for the nine months ended March 31, 2004 was $266,960. Interest and financing expense was from our loan payable to Bay View Capital, LLC, and other notes payable. The loan to Bay View Capital was paid in full in April of 2004. NET LOSS: Net loss for the nine months ended March 31, 2003 was $2,093,212. For the nine months ended March 31, 2004, we incurred a net loss of $4,876,796. This net loss was primarily due to the increase in selling, general, and administrative expense, and compensatory element of stock issuances for selling, general and administrative fees for the nine months ended March 31, 2004. PREFERRED STOCK DIVIDENDS: Our Series C Preferred Stock accrues dividends at a stated rate of five percent (5%) per year on the sum of the liquidation preference and any accrued and unpaid dividends. Accrued stated dividends for the Series C Preferred Stock for the nine months ended March 31, 2004 and 2003 totaled $186,322 and $81,007, respectively. Our Series C and Series D Preferred Stock accumulate deemed dividends which are non-cash charges for the beneficial conversion features of such securities Deemed dividends related to our Series C and Series D Preferred Stock were $1,044,250 and $1,180,500 for the three months and nine months ended March 31, 2004, respectively. Deemed dividends for the comparable periods of 2003 were $272,502 and $320,882. NET LOSS APPLICABLE TO COMMON STOCKHOLDERS: Net loss applicable to common stockholders for the nine months ended March 31, 2004 was $6,243,618 ($.97 per share). Net loss applicable to common stockholders for the nine months ended March 31, 2003 was $2,495,101 ($.50 per share). LIQUIDITY AND CAPITAL RESOURCES During fiscal 2003, we experienced $764,550 of negative cash flow from operating activities. This negative cash flow was the result of a loss from continuing operations of approximately $3,836,000 mitigated by non-cash charges of approximately $2,160,000 and increases in accounts payable and other liabilities of approximately $940,000. In addition, we experienced $191,900 of negative cash flow from investing activities. These investment activities consisted of payments made in connection with our acquisition of Ergo System Inc. and ASI Technology Corporation. Cash flows from financing activities for the year ended June 30, 2003 approximated $957,000. We financed our operations and acquisition activities primarily through sales of common stock and preferred stock as well as through margins from sales of our products and services. We experienced significant revenue growth during this period. This revenue growth helped offset our negative cash flow. We expect our revenues will be variable and unpredictable. During fiscal 2003, we raised $340,000 from sales of our common stock, $170,000 from sales of our Series C Preferred Stock, and $430,000 from sales of our Series D Preferred Stock. -30- During the nine months ended March 31, 2004, we experienced $2,360,283 of negative cash flow from operating activities. The negative cash flow was a result of a net loss of $4,876,796, an increase of accounts receivable of approximately $875,041, mitigated by non-cash charges of $3,181,731, and increased accounts payable and accrued expenses of $133,935. In addition, we experienced $934,170 of negative cash flow from investing activities. These investment activities consisted of payments made in connection with our acquisition of Science and Technology Research Corporation. We financed our operations and acquisition activities primarily through borrowings, sales of preferred stock as well as through margins from sales of our products and services. During this period we borrowed $1,400,000 from Bay View Capital, LLC and repaid $1,050,231 of that amount. We also raised an aggregate of $3,402,000 from sales of our Series D Preferred Stock. We believe that required investment capital will be available to us, but there can be no assurance that we will be able to raise funds on terms acceptable to us, or at all. We have the ability to adjust the level of research and development and selling and administrative expenses to some extent based on the availability of resources. However, reductions in expenditures could delay development and adversely affect our ability to generate future revenues. Any equity-based source of additional funds could be dilutive to existing equity holders and the dilution could be material. The lack of sufficient funds from operations or additional capital could force us to curtail or scale back operations and would therefore have an adverse effect on our business. Other than cash and cash equivalents, we have no unused sources of liquidity at this time. We expect to incur additional operating losses as a result of expenditures for research and development and marketing costs for our security products and technologies. The timing and amounts of these expenditures and the extent of our operating losses will depend on many factors, some of which are beyond our control. Accordingly, there can be no assurance that our current expectations regarding required financial resources will prove to be accurate. We anticipate that the commercialization of our technologies may require increased operating costs; however, we cannot currently estimate the amounts of these costs. GOING CONCERN For the fiscal year ended June 30, 2003, we incurred a net loss from continuing operations of $3,835,594 and had a working capital deficiency of $1,235,306. We had limited finances and required additional funding in order to market and license our products. There was no assurance that we could reverse our operating losses, or that we could raise additional capital to allow us to continue our planned operations. These factors raised substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern remains dependent upon our ability to obtain additional financing or through the generation of positive cash flows from continuing operations. FINANCING IN 2004 Since January 1, 2004, we have raised an aggregate of $12,448,000 (net of finders' fees) in new equity capital through private placements of our Series D Preferred Stock and common stock and warrants. At various times between March 1, 2004 and May 3, 2004 we raised aggregate proceeds of $2,657,000 (net of finders' fees) through private placements of our Series D Preferred Stock to an institutional investor. On April 2, 2003, we sold 3,333,333 shares of common stock and warrants to purchase 3,333,333 shares of our common stock for $2,000,000 to three investors in a private placement. After deducting expenses, we received approximately $1,750,000 in cash proceeds from this transaction. On April 16, 2003, we sold 2,500,000 shares of our common stock and warrants to purchase 2,500,000 shares of our common stock for $2,000,000 to ten investors in a private placement. After deducting expenses, we received approximately $1,890,000 in cash proceeds from this transaction. On May 3, 2004, we sold -31- 7,089,750 shares of our common stock and warrants to purchase 7,098,750 shares of our common stock for $5,679,000 to 34 investors. We paid $533,140 and issued warrants to purchase 529,800 shares of common stock to finders in connection with these private placements. If the common stock purchase warrants sold in the three private placements are exercised in their entirety, we will receive up to $19,092,824. We used the net proceeds of these private placements for working capital and to repay approximately $2,000,000 of indebtedness including approximately $1,200,000 we owed to Bay View Capital, LLC. As of May 31, 2004, we had approximately $7,072,727 in cash. CONTRACTUAL OBLIGATIONS The following summarizes our contractual cash obligations and commercial commitments at March 31, 2004, and the effect such obligations are expected to have on liquidity and cash flows in the future periods. Contracted Obligations LONG-TERM DEBT TERM LESS THAN 1 YEAR - -------------- ---- ---------------- Secured convertible note $ 479,169 $ 479,169 (a) Note payable - Bay View Capital 349,769 349,769 (b) Insurance premium financing 20,069 20,069 Acquisition note 375,000 375,000 ----------- ----------- Total contractual obligations $ 1,224,007 $ 1,224,007 Commercial commitments $ 0 $ 0 _______________________ (a) converted to common stock April 2004. (b) repaid out of private placements completed in April 2004. CRITICAL ACCOUNTING POLICIES The preparation of Markland's financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities as of the date of the financial statements and revenues and expenses during the periods reported. We base our estimates on historical experience, where applicable, and other assumptions that we believe are reasonable under the circumstances. Actual results may differ from our estimates under different assumptions or conditions. The sections below present information about the nature of and rationale for our critical accounting policies. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of Markland and its wholly-owned subsidiaries, Security Technology, Inc. and Ergo Systems, Inc. We have eliminated all significant inter-company balances and transactions in consolidation. -32- CONCENTRATION OF CREDIT RISK Statement of Financial Accounting Standards ("SFAS") No. 105, "Disclosure of Information about Financial Instruments With Off-Balance-Sheet Risk and Financial Instruments with Concentrations of Credit Risk," requires that we disclose any significant off-balance-sheet and credit risk concentrations. We are subject to concentrations of credit risk because the majority of our revenues and accounts receivable are derived from the US Navy, Computer Sciences Corporation and The Department of Homeland Security, none of whom is required to provide collateral for amounts owed to us. We do not believe that we are subject to any unusual credit risks, other than the normal level of risk attendant to operating our business. For the nine months ended March 31, 2004, the US Navy and the Department of Homeland Security accounted for 81% and 14% of total revenues, respectively. RESEARCH AND DEVELOPMENT We charge research and development costs to expense as incurred. We capitalize costs related to acquired technologies that have achieved technological feasibility and have alternative uses. We expense acquired technologies which are in-process at the date of acquisition or have no alternative uses as research and development costs. Included in research and development costs for the year ended June 30, 2003 is $300,000 payable to Syqwest, a related party, for development costs related to a vehicle stopping technology. LOSS PER SHARE We compute basic net loss per common share based on the weighted average number of shares of common stock outstanding during the periods presented. Common stock equivalents, consisting of a secured convertible promissory note, Series A and D Convertible Preferred Stock and Series C 5% Cumulative Convertible Preferred Stock, discussed in the notes to consolidated financial statements, were not included in the calculation of the diluted loss per share because their inclusion would have had the effect of decreasing the loss per share otherwise computed. IMPAIRMENT OF LONG-LIVED ASSETS We continually monitor events and changes in circumstances indicating that carrying amounts of our long-lived assets, including intangible assets, may not be recoverable. We recognize an impairment loss when expected cash flows are less than an asset's carrying value. Accordingly, when indicators of impairment are present, we evaluate the carrying value of such assets in relation to the operating performance and future undiscounted cash flows of our underlying business. Our policy is to record an impairment loss when it is determined that the carrying amount of the asset may not be recoverable. REVENUE RECOGNITION We recognize revenue when the following criteria are met: (1) we have persuasive evidence of an arrangement, such as agreements, purchase orders or written requests; (2) we have completed delivery and no significant obligations remain; (3) our price to our customer is fixed or determinable, and (4) collection is probable. We recognize revenues at the time we perform services related to border security logistic support. With respect to our revenues from our chemical detectors, we recognize revenue under the units-of-delivery method. At the time the units are shipped to the warehouse of the United States Navy, the Company recognizes as revenues the contract price of each unit and recognizes the applicable cost of each unit shipped. -33- ALLOWANCE FOR DOUBTFUL ACCOUNTS The allowance for doubtful accounts reflects management's best estimate of probable losses inherent in the accounts receivable balance. Management determines the allowance based on known trouble accounts, historical experiences and other currently available evidence. The Company's receivables are from government contracts. The Company has not experienced any losses in accounts receivable and has provided no allowance as of March 31, 2004. ESTIMATED USEFUL LIVES OF INTANGIBLE ASSETS We amortize our amortizable intangible assets over the shorter of the contractual/legal life or the estimated economic life of the asset. We are amortizing the intangible assets acquired as of a result of the Ergo Systems Inc. and ASI acquisitions over a three-year life commencing with the date of acquisition. With respect to the Science & Technology Research, Inc. acquisition, we currently hired an independent firm to perform an independent valuation. The valuation was not completed as of the date of this registration statement. The March 31, 2004 financial statements were prepared assuming that 50% of the excess of the purchase price over the net intangible assets ($3,000,000) was allocated to amortizable intangible assets and accordingly, amortization expense of $300,000 was included in the March 31, 2004 statement of operations. RECOVERY OF GOODWILL In accordance with SFAS No. 142, "Goodwill and Other Intangible Assets," we review goodwill for impairment annually, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of our business enterprise below its carrying value. The impairment test requires us to estimate the fair value of our overall business enterprise down to the reporting unit level. We estimate fair value using both a discounted cash flows model, as well as an approach using market comparables, both of which are weighted equally to determine fair value. Under the discounted cash flows method, we utilize estimated long-term revenue and cash flows forecasts developed as part of our planning process, as well as assumptions of terminal value, together with an applicable discount rate, to determine fair value. Under the market approach, fair value is determined by comparing us to similar businesses (or guideline companies). Selection of guideline companies and market ratios require management's judgment. The use of different assumptions within our discounted cash flows model or within our market approach model when determining fair value could result in different valuations for goodwill. CHANGES IN ACCOUNTANTS On January 23, 2003, our board of directors determined not to further retain Sherb & Co., LLP, Markland's independent accountants for the year ending June 30, 2003. On January 24, 2003, Marcum & Kliegman LLP was engaged as our new independent accountants. Sherb & Co., LLP's reports on Markland's financial statements for the year ended June 30, 2002, the six months ended June 30, 2001 and the year ended December 31, 2000 did not contain an adverse opinion or a disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principle, except that the opinion on the year ended June 30, 2002, the six months ended June 30, 2001 and the year ended December 31, 2000 financial statements included an explanatory paragraph expressing substantial doubt regarding the Company's ability to continue as a going concern. In addition, during our two most recent fiscal years and through January 23, 2003, there was no disagreement with Sherb & Co., LLP on any matter -34- of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement, if not resolved to their satisfaction, would have caused them to make reference to the subject matter of the disagreement in connection with its reports. During the year ended June 30, 2002, the six months ended June 30, 2001 and the year ended December 31, 2000 and through the date hereof, the Company did not consult Marcum & Kliegman LLP regarding any matters or events set forth in Item 304(a)(1)(iv) of Regulation S-B and related instructions. BUSINESS BUSINESS HISTORY Markland Technologies, Inc. is the successor to A. P. Sales Inc., a corporation incorporated in Colorado in 1995. In December 1998, A. P. Sales was dissolved as a Colorado corporation and re-domiciled in Florida under the name Quest Net Corporation. In March 2000, Quest Net acquired CWTel, Inc., a Florida corporation. CWTel filed a voluntary bankruptcy petition in November 2001 and was issued a final decree in March 2002. In March 2000, Quest Net acquired all of the outstanding stock of Vidikron of America, Inc., a Delaware corporation. As a result, Vidikron's sole stockholder, Market LLC, a Cayman Islands limited liability company, became Quest Net's majority stockholder and Vidikron became a wholly-owned subsidiary of Quest Net. Quest Net subsequently changed its name to Markland Technologies, Inc. In order to cure a default in our obligations to Market LLC, we transferred all of our interest in Vidikron to Market LLC in June 2002. As a result, at the end of fiscal 2002 we had no active business operations. In December of 2002, we entered into a transaction with Eurotech, Ltd., ipPartners, Inc., Market LLC, and James LLC. Pursuant to this transaction to following took place: o We formed a subsidiary corporation called Security Technology, Inc. o Eurotech transferred certain rights to its acoustic core technology relating to illicit material detection to our subsidiary. o Crypto.com Inc. (a subsidiary of Eurotech) and ipPartners transferred certain rights to their cryptology technologies to our subsidiary. o 90% of the shares of our common stock held by Market LLC and James LLC were retired. o We issued shares of common stock representing 80% of our then issued and outstanding common stock to Eurotech and shares of common stock representing 10% of our then issued and outstanding shares of common stock to ipPartners. o We issued $5,225,000 in stated value of our Series C 5% Cumulative Convertible Preferred Stock to Market LLC and James LLC in satisfaction of $5,225,000 of convertible notes held by Market LLC and James LLC as well as for their agreement to surrender 4,498,638 shares of our common stock. In January 2003, we acquired all the common stock of Ergo Systems, Inc., a company in the business of providing border security logistic support and product development services to the U.S. government. Ergo Systems Inc. has a contract with the Department of Homeland Security to maintain, integrate and -35- implement design enhancements to border security systems installed at five U.S. ports of entry San Ysidro, California, Otay Mesa, California, El Paso, Texas, Detroit, Michigan, and Buffalo, New York. In consideration for this acquisition we agreed to pay $400,000 in cash, payable at certain milestones which are related to research efforts. In March 2003, we entered into an agreement to acquire the intellectual property (including patents), equipment, and government contracts for certain gas plasma antenna technology from ASI Technology Corporation. We closed this transaction in September 2003. We paid a purchase price of $150,000 in cash and 283,333 shares of our common stock. In October of 2003, we acquired all of the common stock of Science and Technology Research Corporation, Inc. This company is the producer of the U.S. Navy's Shipboard Automatic Chemical Agent Detection and Alarm System. In consideration for this acquisition, we issued 1,539,779 shares of common stock, agreed to pay $900,000 in cash and issued a promissory note for $375,000. BUSINESS OVERVIEW We have three business areas: chemical detectors, border security and advanced technologies. We focus on providing products, services and emerging technologies to protect our country's borders, infrastructure assets and personnel. Our mission is to build world-class integrated solutions for border systems and threat detection through the expansion of our existing contracts, development of our emerging technologies and acquisition of revenue producing assets. Our primary sources of operating revenue are sales of the Automatic Chemical Agent Detection and Alarm System, border security logistics products and services and SBIR funded research programs in the development of gas plasma antenna technology. In fiscal year 2003 and in the nine months ended March 31, 2004, we derived revenue of approximately $546,400 and $752,000, respectively, from our border security products and services, and $112,251 and $261,000, respectively, from SBIR research grants related to the development of gas plasma antenna technology. In the nine months ended March 31, 2004 we derived revenue of approximately $4,369,000 from sales of our Automatic Chemical Agent Detection and Alarm System. RECENT DEVELOPMENTS We have identified a specific acquisition candidate and we are currently negotiating the terms of that potential acquisition. This acquisition candidate is a privately held company with expertise in sensor technology whose primary customer is the U.S. Department of Defense. If this acquisition is completed, it will be material to us. We expect the purchase price to be approximately $19,000,000 and to be paid in cash and secured notes. To finance this transaction, we expect to use a substantial portion of our available cash and to raise additional cash through sales of our securities. In the event that we obtain financing, it may be on terms that are dilutive to our existing stockholders and it may limit, among other things, our ability to acquire other businesses, invest in capital assets, sell or otherwise dispose of our existing assets or incur additional indebtedness. We may be unable to successfully negotiate or finance this acquisition, or if the acquisition is consummated, effectively integrate the acquired business into ourexisting business. The negotiation of this acquisition and the integration of the acquired business operations may require a disproportionate amount of management's attention and our resources. Furthermore, the success of this transaction may also depend on a number of other factors, including the ability to estimate accurately rates of future production and future net revenues and to assess possible liabilities. Even though we will have performed a review of, among other things, the business operations of the candidate before we close this acquisition, it may not necessarily reveal existing or potential problems or permit us to become familiar enough with the business to assess fully its deficiencies or potential. CHEMICAL DETECTORS In October 2003, our subsidiary, Security Technology, Inc., acquired all of the common stock of Science and Technology Research, Inc., a chemical detector manufacturer, as part of our ongoing business strategy of creating an integrated portfolio of homeland security solutions. We have a contract with the U.S. Navy to be the sole producer of the U.S. Navy's shipboard Automatic Chemical Agent Detection and Alarm System used to detect all classic nerve and blister agents as well as other chemical warfare agent vapors. This is our primary source of operating revenue. Our contract provides that the U.S. Navy may order up to $37,000,000 worth of the Automatic Chemical Agent Detection and Alarm System. Our subsidiary STR has recognized approximately $14,411,000 of revenue from this contract through March 31, 2004, and we expect to receive additional orders. The U.S. Navy accounted for 91% of our revenue in the 9 months ended March 31, 2004 and 0% in the year ended June 30, 2003. Designed and patented by the U.S. Navy, our system is designed to operate in a shipboard environment and to detect agents at low concentrations in real time while ignoring the presence of common vapor interferents. Our system has visible and audible alarms. The ability of the system to disregard common shipboard interferents, thus minimizing false alarms, distinguishes it from other systems on the market. Our system is designed to be easily upgradeable for new nerve and blister agents. -36- Our system analyzes vapor using two ion-mobility spectroscopy cells, a radioactive source, sealed inside each cell and issued as an ionizer. The operational performance of our shipboard Automatic Chemical Agent Detection and Alarm System has been successfully tested in the field and laboratories against live agents and against various interferents present in shipboard environments. Our shipboard Automatic Chemical Agent Detection and Alarm System can operate approximately three hours on its rechargeable battery box and indefinitely on its 110V AC power cord. We are presently working on the design of a next generation chemical detector product, which will also operate using ion mobility spectrography cell technology and provide networked wireless communication capability. On December 23, 2003, the U.S. Navy signed a ten-year non-exclusive license agreement with us to transfer certain chemical detection technology intellectual property rights to us. We believe the license will allow us to further expand the applications for the chemical detection technology and market the technology to non-defense customers such as foreign governments and commercial entities. We expect to continue to manufacture the Automatic Chemical Agent Detection and Alarm System for the U.S. Navy and simultaneously pursue opportunities with the Department of Homeland Security as well as foreign military sales. We recently entered into an international distribution agreement with Tradeways, Ltd, to market and sell Markland's Shipboard ACADA chemical detection systems to foreign militaries to market our product in Argentina, Australia, Austria, Bahrain, Canada, Chile, Croatia, Denmark, Egypt, Estonia, Finland, Greece, Ireland, Israel, Italy, Japan, Jordan, Korea, Kuwait, Malaysia, The Netherlands, New Zealand, Norway, Oman, Pakistan, Portugal, Qatar, Saudi Arabia, Spain, Sweden, Taiwan, Turkey, and the United Arab Emirates. To date, we have not sold any products through this channel. BORDER SECURITY We acquired the assets of Ergo Systems, Inc., in January 2003. This acquisition provided us with contracts with the Department of Homeland Security to maintain, integrate, and implement design enhancements to border security systems installed at five U.S. ports of entry: San Ysidro, California; Otay Mesa, California; El Paso, Texas; Detroit, Michigan; and Buffalo, New York. Our system, named the Dedicated Commuter Lane, is part of a larger U.S. Customs and Immigration and Naturalization Service initiative to reduce wait times, improve data accuracy, and improve overall efficiencies at all border crossings for both freight and passengers. The Dedicated Commuter Lane integrates several important security checks. It employs automatic vehicle identification technology, which allows participants to pass through the border crossing more efficiently than without automatic screening. Participants run a card through a swipe card reader, which instantaneously sends patron information, including a photograph, to the inspector's screen for clearance. The gate rises and allows the patron through. The whole process takes about 30 seconds. The Dedicated Commuter Lane software also controls a variety of security subsystems, including video surveillance, gates, and tire shredders. We entered into a contract with Computer Sciences Corporation to subcontract a portion of their border maintenance services in San Ysidro and Otay Mesa, California, from December 2003 to September 2004. Computer Sciences Corporation is one of three potential contractors for the U.S. VISIT program. We believe that we could benefit by receiving additional subcontract revenues from that contract if it is awarded to Computer Sciences Corporation. We cannot provide any assurance that this contract will be awarded to Computer Sciences Corporation or that they will subcontract any part of it to us. -37- These systems are part of a larger Department of Homeland Security initiative to increase security, reduce wait times, improve data accuracy, and improve overall efficiencies at all border crossings for both freight and passengers by creating and implementing a "trusted traveler" concept of traffic flow. The "trusted traveler" concept is designed for frequent border crossers who are willing to undergo a background check and travel under certain restrictions in exchange for the use of a commuter lane. This dedicated commuter lane substantially decreases the amount of time it takes to drive through the border. We believe that our experience in integrating solutions will be attractive to the Department of Homeland Security as it confronts the various issues of protecting our borders although there can be no assurances that the trusted traveler concept will result in an increase in our sales or revenues. ADVANCED TECHNOLOGIES Through research and development as well as intellectual property acquisitions, we have established a portfolio of advanced and emerging technologies, which we intend to commercialize and utilize within our own proprietary products or license out for the purpose of revenue generation. These advanced technologies and intellectual property are as follows: o Gas plasma antenna, o Vehicle stopping system, o Acoustic Core(TM) signature analysis, o APTIS(TM) human screening portal, and o Cryptography software. GAS PLASMA ANTENNA: We acquired gas plasma antenna technology assets and a sub-license for plasma sterilization and decontamination from ASI Technology Corporation in August 2003. The assets include three ongoing funded SBIR government contracts and nine issued and pending U.S. patents related to gas plasma antenna technology with demonstrated applications in the fields of ballistic missile defense, phased array radar, and forward deployed decontamination. A plasma antenna's performance equals that of a metal antenna, but the gas plasma antenna is lighter. These antennae can be used for any purpose for which a metal antenna is used. A gas plasma antenna weighs substantially less than metal antennas of comparable performance. When a plasma antenna is turned off, it is transparent, immune to electronic countermeasures and allows other adjacent antennas to transmit or receive without interference. Plasma antenna technology employs ionized gas enclosed in a tube (or other enclosure) as the conducting element of an antenna. This is a fundamental change from traditional antenna design that generally employs solid metal wires as the conducting element. Ionized gas is an efficient conducting element with a number of important advantages over wire. Since the gas is ionized only for the time of transmission or reception, "ringing" and associated effects of solid wire antenna design are eliminated. The design allows for extremely short pulses, a feature important to many forms of digital communication and radars. The design further provides the opportunity to construct an antenna that can be compact and dynamically reconfigured for frequency, direction, bandwidth, gain and beam width. We believe plasma antenna technology will enable the design of antennas that are more efficient, lower in weight and smaller in size than traditional solid wire antennas. We believe our plasma antenna offers numerous advantages over traditional wire antennas including stealth for military applications and higher digital performance in commercial applications. We are developing the plasma technology for military and commercial applications. However, we cannot predict when these products will be ready for commercial or military use. -38- Our gas plasma research team has been awarded US patent # 6,710,746 for a gas plasma antenna element demonstrating reconfigurable length. The development of this technology has been funded to date through grants from the US Navy and Army. US patent #6,710,746, which has SBIR origins, relates to plasma antennas having re-configurable length, beam width, and bandwidth. Traditionally, antennas have been defined as metallic devices for radiating or receiving radio waves, or as a conducting wire which is sized to emit radiation at one or more selected frequencies. As a result, the paradigm for antenna design has heretofore been focused on antenna geometry and physical dimensions. We believe that our gas plasma antenna design will result in antennas with greater flexibility and security than conventional antennas. VEHICLE STOPPING SYSTEM: Under a funded government contract, we developed a vehicle stopping system to address the increasing risks of unauthorized and illegal entry into the U.S. Our vehicle stopping system is designed to safely capture vehicles that are trying to gain entry without authorization. Our vehicle stopping system consists of a net, buried beneath the road, that will spring up when a car or truck attempts to speed across the border illegally. The net is attached to two spindles that unwind with increasing tension as the illegal car is trapped. Our Vehicle Stopping System is capable of stopping a vehicle attempting to gain illegal entry at speeds in excess of 65 miles per hour and without personal injury to occupants and U.S. government border personnel. The vehicle stopping system was successfully tested in June 2003 at the San Ysidro, California port of entry. As a result, we expect to market the vehicle stopping system to the Department of Homeland Security as well as Department of Defense and local traffic and highway authorities. However, we do not have any purchase commitments for this system. ACOUSTIC CORE(TM): We acquired rights to the Acoustic Core(TM) technology, as it related to illicit material detection, from Eurotech, Ltd. in December 2002. The Acoustic Core(TM) technology utilizes acoustics sensing and signature analysis technologies to detect a variety of materials. Acoustic Core(TM) is a non-intrusive acoustic remote sensing technology, which exhibits the potential for the automated detection of a large variety of potentially harmful materials such as C4, plastic flare guns, and ceramics. This technology is capable of computerized automatic screening of containers, vehicles and humans. It can detect a broad range of illegal materials even if the materials are moving at a high rate of speed, with low false alarm rates, and it utilizes low frequency acoustic energy, which is safe for humans. This speed and accuracy makes the technology suitable for primary screening applications where large volumes of containers or humans need to be screened quickly and accurately, such as in an airport or at a border crossing. The product of almost a decade of intensive laboratory and field research, we believe the Acoustic Core(TM) technology has the potential to enter the security marketplace to fill high-priority homeland security needs. Because Acoustic Core(TM) technology can utilize the unique and independent acoustic signatures of various materials, products can be developed and programmed to detect a large array of harmful substances, including explosives, and bio-hazardous and radioactive compounds. We believe that the Acoustic Core(TM) technology can screen large containers while they are in motion, such as during transport via truck or railcar. Primary screening of containers in this manner allows for segregation of suspicious containers for secondary screening by a handheld version of the remote sensing products. We completed a project with the U.S. Air Force through a Co-Operative Research and Development Agreement which used our proprietary Acoustic Core(TM) technology to inspect cargo. While this contract did not generate revenue for us, we expect to develop the technology for use in commercially viable products. However, we cannot predict when these products will be ready for commercial or military use. -39- APTIS(TM): We are involved in the design and testing of APTIS(TM), an acoustic screening portal intended to facilitate screening of humans for concealed metallic and non-metallic weapons such as ceramic knives and plastic guns and explosives. The technology is very flexible and can be incorporated into existing entry portal systems such as metal detectors, eliminating the need to replace these systems used to safely screen humans for explosives. Although we continue to develop this prototype, we cannot predict when it will be ready for commercial use. CRYPTOLOGY: We have cryptology assets in the form of cryptographic algorithms and software that are under development for telecommunications and commercial encryption applications. We acquired this technology from Eurotech's subsidiary, Crypto.com, Inc., in December 2002. We believe the need for increased cyber security has never been as critical as at the present time. To meet the fundamental confidentiality, integrity, and availability objectives of computer security, better encryption than that currently employed is required to defend against unauthorized access to data and communications. This need for better encryption systems also extends to protection that cannot be decrypted today or in the future, even in the face of much improved computer speed and capacity. Our cryptology provides encryption security and forms the basis for a series of government and commercial computer and communications security software packages. The standards in the industry use encryption technologies with either secret key or a public/private key encryption method, which becomes part of a system, transmitted to another party for decoding purposes or is stored in password protected electronic files. These secret keys are vulnerable to intruders. Our cryptology is a double cipher, keyless transmission system, with no transmitted key subject to compromise. This is a new class of cryptology that prevents decipher of intercepted messages by powerful methods or computers. Our cryptology software is still under development and not yet ready for commercial sale. We believe that as decryption methods become more efficient and computing power more available, the current industry standards will become more vulnerable, while requiring more and more bandwidth, to prolong their inevitable compromise. Because of our keyless transmission system, we expect that our cryptology will remain invulnerable to compromise without requiring ever-increasing bandwidth to stay ahead of attacks. Our cryptology is adaptable to telephone conversations, networked systems, private email messages, file transfers, and can be adapted to levels of security appropriate to the communication link. It provides a high level of security available for transmission of large files, email, and graphics, as well as for important small files such as passwords, credit card information, ID card, and personal authentication. Alpha stage demonstrations of software implementations of our VYN(TM) algorithm for communications, file transfers, passwords, and credit cards have demonstrated the applicability of the mathematical approach to the generation of secure encryption algorithms. Our encryption technology development has proceeded to the stage where it is ready for adaptation to computer operating systems, programming languages, communications protocols, and hardware device drivers. COMPETITION The markets for our products and solutions are extremely competitive and are characterized by rapid technological change as a result of technical developments exploited by competitors, the changing technical needs of the customers, and frequent introductions of new features. We expect competition to increase as other companies introduce products that are competitively priced, that may have increased performance or functionality, or that incorporate -40- technological advances not yet developed or implemented by us. Some of our present and potential competitors may have financial, marketing, and research resources substantially greater than ours. In order to compete effectively in this environment, we must continually develop and market new and enhanced products at competitive prices, and have the resources to invest in significant research and development activities. There is a risk that we may not be able to make the technological advances necessary to compete successfully. Existing and new competitors may enter or expand their efforts in our markets, or develop new products to compete against ours. Our competitors may develop new technologies or enhancements to existing products or introduce new products that will offer superior price or performance features. New products or technologies may render our products obsolete. Many of our primary competitors are well established companies that have substantially greater financial, managerial, technical, marketing, personnel and other resources than we do. We have certain proprietary technologies, some of which have been developed, and others that are in development. We will focus on our proprietary technologies, or leverage our management experience, in order to differentiate ourselves from these organizations. There are many other technologies being presented to the Department of Homeland Security that directly compete with our technologies. The Department of Homeland Security may pursue solutions different from ours. INTELLECTUAL PROPERTY Our ability to compete effectively depends to a significant extent on our ability to protect our proprietary information. We rely primarily on patents and trade secret laws, confidentiality procedures and licensing arrangements to protect our intellectual property rights. We own nine U.S. and foreign patents. We enter into confidentiality agreements with our consultants and key employees, and maintain controls over access to and distribution of our technology, software and other proprietary information. The steps we have taken to protect our technology may be inadequate to prevent others from using what we regard as our technology to compete with us. We do not generally conduct exhaustive patent searches to determine whether the technology used in our products infringes patents held by third parties. In addition, product development is inherently uncertain in a rapidly evolving technological environment in which there may be numerous patent applications pending, many of which are confidential when filed, with regard to similar technologies. We may face claims by third parties that our products or technology infringe their patents or other intellectual property rights in the future. Any claim of infringement could cause us to incur substantial costs defending against the claim, even if the claim is invalid, and could distract the attention of our management. If any of our products are found to violate third-party proprietary rights, we may be required to pay substantial damages. In addition, we may be required to re-engineer our products or seek to obtain licenses from third parties to continue to offer our products. Any efforts to re-engineer our products or obtain licenses on commercially reasonable terms may not be successful, which would prevent us from selling our products, and, in any case, could substantially increase our costs and have a material adverse effect on our business, financial condition and results of operations. RESEARCH AND DEVELOPMENT We did not spend any money on research and development during the fiscal year ending June 30, 2002 because we were not an operating business. During the fiscal year ended 2003, we spent $522,657 on research and development. -41- Our research and development activities consist of projects funded by us and projects funded with the assistance of SBIR grants, and SBIR projects are generally directed towards the discovery of specific information requested by the government research sponsor. We believe that focused investments in research and development are critical to our future growth and competitive position in the marketplace. Our research and development efforts are directed to timely development of new and enhanced products that are central to our business strategy. The industries in which we compete are subject to rapid technological developments, evolving industry standards, changes in customer requirements, and new product introductions and enhancements. As a result, our success depends in part upon our ability, on a cost-effective and timely basis, to continue to enhance our existing products, and to develop and introduce new products that improve performance and meet customers' operational and cost requirements. We may be unable to successfully develop products to address new customer requirements or technological changes, and any products we develop may not achieve market acceptance. DEPENDENCE ON GOVERNMENT CONTRACTS For the nine months ended March 31, 2004, sales to the U.S. Navy, our largest customer accounted for 81% of our sales. If the U.S. Navy terminates this contract or ceases or materially diminishes orders under it, we will lose our primary source of revenue. GOVERNMENT REGULATION Most of our U.S. Government business is subject to unique procurement and administrative rules based on both laws and regulations, including the U.S. Federal Acquisition Regulation that provide various profit and cost controls, rules for allocations of costs, both direct and indirect, to contracts and non-reimbursement of unallowable costs such as interest expenses and certain costs related to business acquisitions, including for example the incremental depreciation and amortization expenses arising from fair value increases to the historical carrying values of acquired assets. Companies supplying defense-related equipment to the U.S. Government are subject to certain additional business risks specific to the U.S. defense industry. Among these risks are the ability of the U.S. Government to unilaterally suspend a company from new contracts pending resolution of alleged violations of procurement laws or regulations. In addition, U.S. Government contracts are conditioned upon the continuing availability of Congressional appropriations. Congress usually appropriates funds for a given program on a September 30 fiscal year basis, even though contract performance may take several years. Consequently, at the outset of a major program, the contract is usually partially funded, and additional monies are normally committed to the contract by the procuring agency only as appropriations are made by Congress for future fiscal years. U.S. Government contracts are, by their terms, subject to unilateral termination by the U.S. Government either for its convenience or default by the contractor if the contractor fails to perform the contracts' scope of work. Upon termination other than for a contractor's default, the contractor will normally be entitled to reimbursement for allowable costs and an allowance for profit. Foreign defense contracts generally contain comparable provisions permitting termination at the convenience of the government. To date, none of our significant contracts have been terminated. As is common in the U.S. defense industry, we are subject to business risks, including changes in the U.S. Government's procurement policies (such as greater emphasis on competitive procurement), governmental appropriations, national defense policies or regulations, service modernization plans, and availability of funds. A reduction in expenditures by the U.S. Government for products and services of the type we manufacture and provide, lower margins -42- resulting from increasingly competitive procurement policies, a reduction in the volume of contracts or subcontracts awarded to us or the incurrence of substantial contract cost overruns could materially adversely affect our business. Certain of our sales are direct commercial sales to foreign governments. These sales are subject to U.S. Government approval and licensing under the Arms Export Control Act. Legal restrictions on sales of sensitive U.S. technology also limit the extent to which we can sell our products to foreign governments or private parties. Currently we do not have any sales from overseas customers. SALES AND MARKETING We currently divide the marketing efforts of our products and services into three areas: (1) directly to federal or local government agencies, (2) to large partners who may represent an opportunity for us as subcontractors, and (3) to commercial entities. These marketing duties are divided among upper management. MANUFACTURING Our primary manufacturing facilities are located in Fredericksburg, VA. There are approximately 20 employees in that facility who produce ACADA shipboard chemical detection equipment. We utilize our offices in Providence, RI as manufacturing prototype development facilities. Manufacturing of chemical detectors is overseen by Mr. Edward Kessler and manufacturing of production prototypes is overseen by Mr. Michael Curran. EMPLOYEES As of April 2004, we employed approximately 30 full-time employees. We believe our future success will depend upon the continued service of our key technical and senior management personnel and upon our continued ability to attract and retain highly qualified technical and managerial personnel. None of our employees is represented by a labor union. We have never experienced a work stoppage and consider our relationship with our employees to be good. PROPERTY We have a one year lease for our executive offices of approximately 1,000 square feet located in Ridgefield, Connecticut and a month-to-month lease for a manufacturing facility of approximately 5,000 square feet located in Fredericksburg, Virginia. We also have an administrative office in Providence, RI which is utilized under a monthly sublease comprising approximately 4,000 square feet. We believe that our present facilities are adequate to meet our current needs. If new or additional space is required, we believe that adequate facilities are available at competitive prices. However, we may not be able to relocate to a new facility without severely disrupting the production of our goods. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS Each director serves as director until his successor is duly elected and qualified. Our executive officers are elected by, and serve at the discretion of, our board of directors. There are no family relationships between our executive officers and directors. Our executive officers and directors are as follows: -43-
NAME AGE POSITION YEAR BEGAN - ---- --- -------- ---------- Robert Tarini............ 44 Chief Executive Officer, Chairman of the 2002 Board of Directors Kenneth Ducey, Jr........ 38 President, Chief Financial Officer and 2002 Director
ROBERT TARINI, has served as our chief executive officer since November 14, 2003 and as our chairman of the board of directors since December 9, 2002. In April 2003, Mr. Tarini founded Syqwest Inc., a firm which specializes in the design and manufacture of acoustic remote sensing devices utilized in marine and land based applications. In April 2001, Mr. Tarini founded Trylon Metrics Corp., a developer of acoustic remote sensing technology, and acted as President of Trylon from April 2001 to present. In May 2001, Mr. Tarini founded ipPartners Inc. and has served as its President to present. ipPartners Inc. specializes in the development of acoustic remote sensing devices. Since 1999, Mr. Tarini has served as the chief executive officer of Ocean Data Equipment Corporation, where he oversaw the design and development of a complete line of scientific instruments targeted fro geophysical and hydrographic research and developed a remote sensing technique, which is currently being applied to detecting illicit materials. From June 1982 to July 1990, Mr. Tarini worked at Raytheon, where he designed active sonar and sonar trainers for US and foreign customers which were installed onto every 688 class attack submarine and every SQQ-89 surface ship combat system, over 100 seafaring vessels in total. KENNETH P. DUCEY, JR., has served as our president, chief financial officer and member of our board of directors since December 2002. From 1998 to 2002, Mr. Ducey led three small technology companies while working at the venture capital firm Spencer Trask. Mr. Ducey was responsible for developing new business, typically in segments in which the company was not yet practicing. In 1988, Mr. Ducey launched Palmtop Utilities, a consulting company that developed the first link between the Sharp Wizard and ACT! Contact management software. Mr. Ducey led Palmtop Utilities to become the largest dealer of Sharp Wizards, and secured licensing arrangements with Sharp, Contact Software International, and Microsoft. After successfully selling the assets of Palmtop Utilities in 1992, Mr. Ducey helped to develop The Outsourcing Institute, where he developed and sold multi-million dollar contracts to MCI and PricewaterhouseCoopers. From 1985 to 1986, Mr. Ducey was a trader at Salomon Brothers where he was responsible for actively traded technology companies listed on the NASDAQ National Market. Mr. Ducey was nationally recognized in September 2000 by Business Week as a leading expert in outsourcing. COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS DIRECTOR COMPENSATION We do not, as a standard practice, compensate our directors for their service. However, all of our current directors also serve us as either officers or consultants, and we compensate them for their service in such capacities. In addition, during the last completed fiscal year, we granted David Danovitch, who had been serving as a director, 3,334 shares of our common stock, with a fair market value of approximately $10,000 as of the date of grant, in connection with his resignation in November 2002. EXECUTIVE OFFICER COMPENSATION SUMMARY COMPENSATION TABLE The following table provides summary information concerning the compensation earned by our chief executive officer and our other executive officers for services rendered for the fiscal years ended June 30, 2001, 2002 -44- and 2003. Delmar Kintner served as our chief executive officer until November 2003, and Larry Shatsoff served as our Chief Executive Officer until December 2002.
ANNUAL COMPENSATION (1) ALL OTHER ------------------------------ COMPENSATION NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) (2) ($) - --------------------------- ---- ------------ ------------- ------------ Delmar R. Kintner............................... 2003 $ 120,000 $ 128,051 $ 343,097 (3) Chief Executive Officer 2002 2001 Robert Tarini................................... 2003 $ 120,000 $ 76,667 $ 650,268 (5) Chief Executive Officer and Chairman of the 2002 Board of Directors (4) 2001 Kenneth P. Ducey, Jr. .......................... 2003 $ 180,000 $ 76,667 $ 650,268 (5) President and Chief Financial Officer 2002 2001 Lawrence Shatsoff............................... 2003 $ 120,000 $ 76,667 $ 5,000 (6) President and Director 2002 2001 ________________________
(1) Other than as described in this table or the footnotes to this table, we did not pay any executive officer any compensation, including incidental personal benefits, in excess of 10% of such executive officer's salary. (2) Figures contained in this column reflect the fair market value of stock grants made to each named executive officer during the last completed fiscal year. (3) Under our employment agreement with Mr. Kintner, we were required to issue in five installments over the course of the agreement a number of shares of our common stock equal to 2.27% of the total outstanding shares of equity securities of the company (including common stock issuable upon conversion of our outstanding preferred stock or exercise of outstanding purchase warrants). Mr. Kintner's employment with us was terminated in November 2003 prior to the expiration of his employment agreement. The figure contained in this column represents the fair market value as of the date of grant of the actual number of shares granted to Mr. Kintner under his employment agreement, less any amounts granted in the last completed fiscal year. Mr. Kintner is entitled to no further compensation in relation to his employment with us. (4) Mr. Tarini assumed the rule of Chief Executive Officer upon Mr. Kintner's resignation in November 2003. (5) Under our employment agreements with Messrs. Tarini and Ducey, dated January 1, 2003, we were required to issue a number of shares of our stock equal to 2.27% of the total outstanding shares of equity securities of the company (including common stock issuable upon conversion of our outstanding preferred stock or exercise of outstanding purchase warrants), provided certain performance criteria were met. As of January 2004, all of the performance criteria had been met, and all of the stock grants provided for under these agreements have been made. The figures contained in this column reflect the fair market value of all of the stock granted under these agreements, less any amounts granted in the last completed fiscal year. (6) Cash payment in lieu of a stock grant in connection with the resignation of Mr. Shatsoff in December 2002. EMPLOYMENT ARRANGEMENTS ROBERT TARINI AND KENNETH DUCEY, JR. On May 12, 2004, the Company entered into five-year compensation agreements with Robert Tarini, our Chairman and Chief Executive Officer, Kenneth Ducey, Jr., our President and Chief Financial Officer, and Asset Growth Company. Asset Growth Company is wholly owned by Kenneth Ducey, Jr., and in the information provided below, the compensation terms of our agreements with Asset Growth Company and Kenneth Ducey, Jr., are aggregated basis. These agreements, as amended on June 14, 2004, provide for the following remuneration to each of Robert Tarini and Kenneth Ducey, Jr. (including Asset Growth Company): o Base annual remuneration of $300,000 payable over the five-year period ending January 2, 2009; o Discretionary bonuses over the term of the agreement of up to 300% of the base remuneration; -45- o Conditional stock grants over the period commencing April 1, 2004 through January 2, 2008, based on defined performance criteria. The stock grants, if all earned, entitle each of Messrs. Tarini and Ducey (including Asset Growth Company) to receive up to 7.5% of the Company's common stock on a fully diluted basis. These grants are earned according to the following schedule: STOCK PERCENTAGE GRANT DATE ------------------- -------------------------- ------------------------- Grant 1 2.5% May 12, 2004 Grant 2 1.0% July 1, 2004 Grant 3 1.0% October 1, 2004 Grant 4 1.0% January 2, 2005 Grant 5 1.0% January 2, 2006 Grant 6 0.5% January 2, 2007 Grant 7 0.5% January 2, 2008 The number of shares of common stock to be granted on each grant date is equal to the product of (a) the number of fully diluted shares outstanding at the grant date and (b) the stock percentage associated with that grant date; o In the event of a change in control of the Company during the period covered by the agreement, each executive/consultant will automatically be granted all remaining stock grants and will be due cash and expense compensation for the shorter of (i) three years from the date of the change in control, or (ii) until the end of the term of the agreement. A change in control is defined by the agreements as a change in the majority ownership of the equity of the company, the resignation or termination of the majority of the board of directors within a two month period, or the replacement of the CEO or the President of the Company; and o Expense allowance for all reasonable and necessary expenses of $5,000 per month. The new agreements supersede our prior employment or consulting arrangements with Messrs. Tarini and Ducey, the terms of which are summarized below: Pursuant to our consulting agreement with Mr. Tarini, he served as our chairman and chief executive officer for an initial term of three years at a base consulting fee of $10,000 per month. We also agreed to reimburse Mr. Tarini for all reasonable and necessary out-of-pocket expenses related to the performance of his duties under this agreement. We issued 430,474 shares of our common stock in connection with the execution of the agreement and satisfaction of stated performance criteria. Mr. Tarini was eligible to receive a performance-based bonus of up to four times his annual base salary upon the conclusion of the term of the agreement. He was also eligible to participate in any bonus or incentive compensation program established by our board of directors. -46- In the event that we terminated Mr. Tarini's engagement without cause, or he terminated his engagement for "good reason" (defined in the agreement as, among other things, the assignment of duties inconsistent with Mr. Tarini's position or any material breach by us of the consulting agreement), we would have been obligated to continue payments until the earlier of (a) three months from the date of termination or (b) the date on which Mr. Tarini obtained a full-time engagement elsewhere. This agreement also subjected Mr. Tarini's to certain restrictive covenants, including an obligation to maintain confidential information. Under our employment agreement with Mr. Ducey, he served as our president and chief financial officer for an initial term of three years at an annual base salary of $185,000. The agreement also provided for up to $1,200 a month for his expenses, including his automobile, health insurance and reasonable expenses associated with setting up and maintaining a home office. The remaining terms of his agreement, including provisions for grants of common stock, bonuses and severance pay, were substantially the same as those of Mr. Tarini's agreement. DELMAR R. KINTNER. We entered into an employment agreement with Mr. Kintner in January 2003 whereby he would serve as our chief executive officer for an initial term of one year at an annual base salary of $150,000. The agreement provided for a grant of up to 2.27% of our common stock on a fully-diluted basis provided certain performance criteria were met. It also provided for up to $1,200 a month for his expenses, including his automobile, health insurance and reasonable expenses associated with setting up and maintaining a home office. This agreement was terminated in November 2003. Prior to termination, Mr. Kintner was granted 119,303 shares of our common stock, with a fair market value of $343,097 as of the date of grant. We are not required under the agreement with Mr. Kintner to provide for any further compensation, including any additional grants of our common stock. EQUITY COMPENSATION PLAN DISCLOSURE The following table sets forth certain information as of June 30, 2003, regarding securities authorized for issuance under our equity compensation plans, including individual compensation arrangements. We issue equity compensation in the form of grants of common stock in connection with various employment and consulting agreements. While the amounts vary by agreement, they are generally structured as incentive-based grants made upon the achievement of performance milestones.
WEIGHTED-AVERAGE NUMBER OF SECURITIES NUMBER OF SECURITIES TO EXERCISE PRICE OF REMAINING AVAILABLE FOR BE ISSUED UPON EXERCISE OF OUTSTANDING FUTURE ISSUANCE UNDER OUTSTANDING OPTIONS, OPTIONS, WARRANTS EQUITY COMPENSATION PLAN CATEGORY WARRANTS AND RIGHTS AND RIGHTS PLANS - ------------------------------------- -------------------------- -------------------- ----------------------- Equity Compensation Plans Approved by Security Holders 0 $0 0 Equity Compensation Plans Not Approved by Security Holders 1,430,467 (1)(2) $0 0 TOTAL 1,430,467 $0 0 ________________________
(1) Consists of conditional stock grants pursuant to employment and consulting agreements approved by the Board of Directors. (2) Figure represents the actual number of shares of our common stock issued as of the date of this prospectus pursuant to employment and consulting agreements that were in effect at the close of the last completed fiscal -47- year. As of the date of this prospectus, there are no securities remaining to be issued under any of these agreements. However, the Company has entered into new agreements with certain of its employees and consultants that provide for equity compensation, the terms of which are disclosed elsewhere in this prospectus, including under this section and the section entitled "Certain Relationships and Related Transactions." SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT At the close of business on June 16, 2004, there were issued and outstanding 31,681,793 shares of our common stock. The following table provides information regarding beneficial ownership of our common stock as of June 16, 2004 by: o each person known by us to be the beneficial owner of more than five percent of our common stock; o each of our directors; o each executive officer named in the summary compensation table and three former executive officers; and o all of our current directors and executive officers as a group. The persons named in this table have sole voting and investment power with respect to the shares listed, except as otherwise indicated. The inclusion of shares listed as beneficially owned does not constitute an admission of beneficial ownership. Shares included in the "Right to Acquire" column consist of shares that may be purchased through the exercise of options that vest within 60 days of June 16, 2004.
SHARES BENEFICIALLY OWNED ----------------------------------------------------------------- NAME AND ADDRESS OF BENEFICIAL OWNER (1) OUTSTANDING RIGHT TO ACQUIRE TOTAL PERCENT - ------------------------------------------------------- ------------------ ----------------- -------------- ------------- James LLC......................................... -- 3,519,808 3,519,808 9.999% Robert Tarini (1)................................. 2,591,571 -- 2,591,571 8.180% Eurotech, Ltd. (2)................................ 2,034,870 -- 2,034,870 6.423% 8665 Sudley Road, #608 Manassas, VA 20110-4588 Castlerigg Master Investments, Ltd. (3) .......... 1,000,000 1,000,000 2,000,000 6.120% 1251 Avenue of the Americas New York, New York 10020 Kenneth P. Ducey, Jr (4).......................... 1,905,722 -- 1,905,722 6.015% Delmar Kintner (5) ............................... 122,116 -- 122,116 * David Danovitch (6) .............................. 3,334 -- 3,334 * Larry Shatsoff (7) ............................... 1,667 -- 1,667 * All directors and executive officers as a group (5 4,624,410 -- 4,624,410 14.596% persons)...................................... _____________________
* Represents beneficial ownership of less than 1.0%. -48- (1) Mr. Tarini is the beneficial owner of 499,849 shares of common stock issued to ipPartners and 136,000 shares of common stock issued to Syqwest, Inc. (2) Information is based on a Schedule 13D/A filed by Eurotech, Ltd. with the Securities and Exchange Commission on October 24, 2003. The Schedule 13D/A states that Eurotech granted Woodward LLC a security interest in 58,333 shares of its common stock as security for the repayment of indebtedness owed to Woodward under three promissory notes in the aggregate principal amount of $120,000. The Schedule 13D/A also states that Eurotech has the sole power to vote these shares. (3) Information is based on a 13G filed by Castlerigg Master Investments, Ltd. with the Securities and Exchange Commission on April 29, 2004. (4) Mr. Ducey is the beneficial owner of 1,220,198 shares of common stock issued to Asset Growth Company. (5) Mr. Kintner resigned from our company in November 2003. (6) Mr. Danovitch resigned from our company in December 2002. (7) Mr. Shatsoff resigned from our company in December 2002. DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR SECURITIES ACT LIABILITIES Article X of our charter provides that, subject to Section 607.0850 of the Florida Business Corporation Act, we will indemnify our current and former officers and directors against expenses (including attorneys fees), judgments, fines and amounts paid in settlement arising out of his services as our officer or director. Section 607.0850 of the Florida Business Corporation Act states that we have the power to indemnify any person made a party to any lawsuit by reason of being our director or officer against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. Our employment agreements with our directors and officers contain provisions requiring us to indemnify them to the fullest extent permitted by Florida law. The indemnification agreements require us to indemnify our directors and officers to the extent permitted by our charter and to advance their expenses incurred in connection with a proceeding with respect to which they are entitled to indemnification. Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Act") may be permitted to directors, officers and controlling persons of the small business issuer pursuant to the foregoing provisions, or otherwise, the small business issuer has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS On December 9, 2002, our subsidiary, Security Technology, Inc., acquired intellectual property rights and assets relating the Acoustic Core(TM) technology for detecting illicit material from Crypto.com, Inc., a subsidiary of Eurotech, Ltd. pursuant to the Exchange Agreement dated December 9, 2002. In exchange for the purchased technology, we agreed to issue for 4,498,638 shares of our common stock to Eurotech, Ltd. and ipPartners, Inc. Of the shares issued, 3,998,789 were transferred to Eurotech as payment for causing Crypto.com to deliver to us the purchased technology, and 499,849 were transferred to ipPartners in exchange for their forgiveness and discharge of certain obligations owed to them by Crypto in connection to the property transferred. -49- ipPartners, Inc. is controlled by Robert Tarini, our chief executive officer, however, at the time of this transaction, Mr. Tarini was an unrelated third party. After the transaction, Eurotech, Ltd. owned eighty percent (80%) of our outstanding common stock, making us their majority-owned subsidiary. In order to accomplish this transaction, Market LLC and James LLC, our controlling shareholders at the time, agreed to a recapitalization of the Company whereby Market LLC and James LLC collectively surrendered 4,498,638 shares of our common stock, and $5,225,000 of convertible promissory notes, in exchange for $5,225,000 in stated value Series C Cumulative Convertible Preferred Stock. As of June 16, 2004, Eurotech owned less than 9% of our outstanding common stock, and all of the outstanding Series C Cumulative Convertible Preferred Stock has been converted and retired. On May 12, 2004, the Company entered into a five-year consulting agreement with Verdi consulting. Verdi Consulting has assisted us with a variety of tasks including strategic planning; identifying, structuring and closing on acquisitions; finding financing; investor relations; and general business advice. This agreement provides for the following remuneration: o Base annual remuneration of $300,000 payable over the five-year period ending January 2, 2009; o Discretionary bonuses over the term of the agreement of up to 300% of the base remuneration; and o Conditional stock grants over the period commencing April 1, 2004 through January 2, 2008, based on defined performance criteria. The stock grants, if all earned, entitle Verdi Consulting to receive up to 7.5% of the Company's common stock on a fully diluted basis. These grants are earned according to the following schedule: STOCK PERCENTAGE GRANT DATE -------------------- ------------------------- ---------------------- Grant 1 2.5% April 1, 2004 Grant 2 1.0% July 1, 2004 Grant 3 1.0% October 1, 2004 Grant 4 1.0% January 2, 2005 Grant 5 1.0% January 2, 2006 Grant 6 0.5% January 2, 2007 Grant 7 0.5% January 2, 2008 The number of shares of common stock to be granted on each grant date is equal to the product of (a) the number of fully diluted shares outstanding at the grant date and (b) the stock percentage associated with that grant date. o In the event of a change in control of the Company during the period covered by the agreement, each executive/consultant will automatically be granted all remaining stock grants and will be due cash and expense -50- compensation for the shorter of (i) three years from the date of the change in control, or (ii) until the end of the term of the agreement. A change in control is defined by the agreements as a change in the majority ownership of the equity of the company, the resignation or termination of the majority of the board of directors within a two month period, or the replacement of the CEO or the President of the Company. This agreement supersedes the prior agreement we had with Verdi Consulting, which was executed on January 1, 2003. Under this three-year agreement, we paid Verdi Consulting $12,500 per month as base compensation and provided a $1,000 per month expense allowance. In addition, as incentive compensation, we issued 315,375 shares of common stock to Verdi Consulting which vested in four installments during calendar 2003 and 115,097 shares which vested on January 1, 2004. Finally, Verdi Consulting was eligible to receive a bonus of up to $1,200,000 if Verdi Consulting is instrumental in assisting us to obtain contracts with a total value in excess of $1,000,000 during the life of the contract. We expect to award Verdi Consulting substantially all of this bonus prior to our fiscal year end. [UPDATE]. We had agreed to pay Verdi Consulting three month's base compensation if we terminated this contract without cause. During January 2003, we completed our acquisition of Ergo Systems, Inc. from Ocean Data Equipment Corporation, now called Syqwest, Inc. Robert Tarini, our chief executive officer, is also the chief executive officer of Syqwest, Inc. Ergo's main asset is an annually renewable U.S. Government General Services Administration contract to provide logistic support and product development for five U.S. ports of entry. In exchange for Ergo we agreed to pay Syqwest $400,000 in cash, due in installments that are triggered with the completion of research milestones. As of April 30, 2004, we have paid Syqwest $176,900 of which $126,900 is an advance representing partial payment for monies that will be due upon the completion of the first milestone. On March 27, 2003, we entered into an exchange agreement with Eurotech whereby Eurotech exchanged 1,666,666 shares of our common stock for 16,000 shares of our Series D Cumulative Convertible Preferred Stock. Our Series D Cumulative Convertible Preferred Stock has a stated value of $1,000 per share and has a beneficial conversion feature where each share is immediately convertible into common stock at a discount to market prices. During the past six months we have also issued shares of our Series D Cumulative Convertible Preferred Stock to James LLC. James LLC has invested a total of $3,832,000 in our Series D Cumulative Convertible Preferred Stock. As of May 9, 2004, the Series D Cumulative Convertible Preferred Stock held by James LLC was convertible into 4,128,768 shares of our common stock. On July 24, 2003, we entered into an agreement with Syqwest, Inc., in which we issued 750,000 shares of our common stock in exchange for the forgiveness of $450,000 for unpaid services performed by Syqwest in connection with research conducted in relation to our vehicle stopping technology. Robert Tarini, our chief executive officer is also the chief executive officer of Syqwest. We have the right at any time by written notice to repurchase these shares from Syqwest at a price equal to $.60 per share. In September 30, 2003 we acquired one hundred percent (100%) of the outstanding stock of Science and Technology Research, Inc., which produces our U.S. Navy shipboard automatic chemical agent detection and alarm system product. We paid the stockholder of Science and Technology Research a total of $6,475,000 consisting of $900,000 in cash, common stock valued at $5,100,000, a promissory note of $375,000, and acquisition costs of $100,000. To finance this acquisition we executed a two year, twelve percent (12%), secured Promissory Note with Bay View Capital, LLC for $1,400,000. Bay View Capital, LLC is controlled by Robert Tarini, our chief executive officer, and Chad Verdi, a consultant to Markland. The outstanding balance and accrued interest of this note were repaid in full on April, 2004. -51- The Company believes that all transactions described above were made on terms no less favorable to it than those obtainable from unaffiliated third parties. All future transactions, if any, with its executive officers, directors and affiliates will be on terms no less favorable to it than those that will be obtainable from unrelated third parties at the time such transactions are made. DESCRIPTION OF SECURITIES Our authorized capital stock consists of 500,000,000 shares of common stock, $0.0001 par value per share, and 5,000,000 shares of preferred stock, $0.0001 par value per share. As of June 16, 2004, we had 31,681,793 shares of our common stock issued and outstanding. COMMON STOCK VOTING. Holders of our common stock are entitled to one vote per share held of record on all matters to be voted upon by our stockholders. Our common stock does not have cumulative voting rights. Persons who hold a majority of the outstanding common stock entitled to vote on the election of directors can elect all of the directors who are eligible for election. DIVIDENDS. Subject to preferences that may be applicable to the holders of any outstanding shares of our preferred stock, the holders of our common stock are entitled to receive such lawful dividends as may be declared by our board of directors. LIQUIDATION AND DISSOLUTION. In the event of our liquidation, dissolution or winding up, and subject to the rights of the holders of any outstanding shares of our preferred stock, the holders of shares of our common stock will be entitled to receive pro rata all of our remaining assets available for distribution to our stockholders. OTHER RIGHTS AND RESTRICTIONS. Our charter prohibits us from granting preemptive rights to any of our stockholders. All outstanding shares are fully paid and nonassessable. LISTING. Our common stock is traded on the over-the-counter bulletin board. PREFERRED STOCK Our articles of incorporation authorize us to issue shares of our preferred stock from time to time in one or more series without stockholder approval. As of June 16, 2004, we had designated 30,000 shares as Series A preferred stock, all of which were issued and outstanding on that date, and 40,000 shares of our preferred stock as Series D Preferred Stock, 19,286 of which were issued and outstanding on that date. The following is a summary description of the principal terms of each series of our preferred stock. For a complete statement of all the terms of each series of preferred stock, please review the applicable certificate of designation that we have previously filed. SERIES A NON-VOTING REDEEMABLE CONVERTIBLE PREFERRED STOCK VOTING RIGHTS: Except as otherwise provided under Florida law, the Series A preferred stock has no voting rights. DIVIDENDS: The Series A preferred stock does not accrue dividends. CONVERSION: Each share of the Series A preferred stock is convertible at our option into one-third of one share of our common stock. -52- ANTIDILUTION: Upon the occurrence of a stock split or stock dividend, the conversion rate shall be adjusted so that the conversion rights of the Series A preferred stock stockholders shall be nearly equivalent as practicable to the conversion rights of the Series A preferred stock stockholders prior to such event. REDEMPTION: We may redeem all or any portion of the outstanding shares of the Series A preferred stock upon cash payment of $10.00 per share. DISSOLUTION: In the event of any voluntary or involuntary liquidation, dissolution or winding up of our affairs, the Series A preferred stock will be treated as senior only to our common stock. If, upon any winding up of our affairs, and after the Series D preferred stockholders are paid in full, our assets available to pay the holders of Series A preferred stock are not sufficient to permit the payment in full, then our remaining assets will be distributed to those holders on a pro rata basis. SERIES D CONVERTIBLE PREFERRED STOCK VOTING RIGHTS: Except as otherwise provided under Florida law, the Series D preferred stockholders have no right to vote with the holders of our common stock. However, our charter requires that the Series D preferred stockholders approve any amendment to the rights and preferences of the Series D preferred stock. Where the Series D preferred stockholders do have the right to vote as a series, whether under our charter or pursuant to Florida law, the affirmative vote of the holders of at least 67% of the outstanding shares of Series D preferred stock is necessary to constitute approval. DIVIDENDS: The Series D preferred stock does not accrue dividends. CONVERSION: The Series D preferred stock is convertible at the option of the stockholder at any time. The number of shares of our common stock into which each share of Series D preferred is convertible is determined by dividing $1,000 by the discounted bid price. The "discounted" bid price is the average closing bid price of our common stock during the five business days immediately preceding the conversion date multiplied by the applicable discount factor, as set forth below. AVERAGE CLOSING BID PRICE (1) DISCOUNT FACTOR - -------------------------------------------------------------- ---------------- $15.00 or less 80% more than $15.00, but less than or equal to $30.00 75% more than $30.00, but less than or equal to $45.00 70% more than $45.00 65% ____________________ (1)After an adjustment for a 1-for-60 reverse stock split effective October 27, 2003. The Series D preferred stock can be converted only to the extent that the Series D stockholder will not, as a result of the conversion, hold in excess of 9.999% of the total outstanding shares of our common stock. ANTIDILUTION: Upon the occurrence of a transaction that results in a change of control, or a split off of the company assets, a stock split or a stock dividend, the price at which the Series D preferred stock is convertible shall be adjusted so that the conversion rights of the Series D preferred stock stockholders shall be nearly equivalent as practicable to the conversion rights of the Series D preferred stock stockholders prior to the transaction. -53- REDEMPTION: We have the right to redeem any outstanding shares of our Series D preferred stock at any time. The redemption price per share is equal to $1,000 multiplied by 135%. Our Series D preferred stock is convertible, even after we have provided a notice of redemption, until the Series D stockholder has received full cash payment for the shares we are redeeming. DISSOLUTION: In the event of any voluntary or involuntary liquidation, dissolution or winding up of our affairs, the Series D preferred stock will be treated as senior to all preferred stock and our common stock. If, upon any winding up of our affairs, our assets available to pay the holders of Series D preferred stock are not sufficient to permit the payment in full, then all our assets will be distributed to those holders on a pro rata basis. COMMON STOCK PURCHASE WARRANTS WARRANTS ISSUED IN APRIL 2, 2004, PRIVATE PLACEMENT. In our private placement transaction completed on April 2, 2004, we issued common stock purchase warrants to purchase an aggregate of 3,333,333 shares of common stock with an exercise price of $1.00 per share to the investors. In addition, we issued a common stock purchase warrant to purchase 333,333 shares of our common stock with an exercise price of $1.40 per share to West Hastings Ltd. as a finder's fee. These warrants have a so-called "most favored nation" provision pursuant to which the exercise price of the warrants and the terms of the warrants will automatically be changed if we issue warrants with a lower exercise price or with terms more favorable to the holder at any time prior to 180 days after the effective date of a registration statement providing for the resale of shares issuable upon exercise of the warrant. If we issue warrants with a lower exercise price than the warrants we issued on April 2, 2004 during this period, the exercise price of the warrants we issued on April 2, 2004 will be reduced to that new lower price. If we issue warrants with terms more favorable to the warrant holder than the terms set forth in the warrants we issued on April 2, 2004, such new more favorable terms will automatically be incorporated into the April 2 warrants. WARRANTS ISSUED IN APRIL 16, 2004, PRIVATE PLACEMENT. In our private placement transaction completed on April 16, 2004, we issued common stock purchase warrants to purchase an aggregate of 2,500,000 shares of common stock with an exercise price of $1.50 per share to the investors. In addition, we issued a common stock purchase warrant to purchase 25,000 shares of our common stock with an exercise price of $2.00 per share to Baker Consulting as a finder's fee. These warrants have a "most favored nation" provision pursuant to which the exercise price of the warrants will automatically be changed (but only to the extent that such change does not itself cause a change to the warrants we issued on April 2, 2004, on account of the most favored nation clause contained in the April 2 warrants), if we issue warrants with a lower exercise price at any time prior to 180 days after the effective date of a registration statement providing for the resale of shares issuable upon exercise of the warrant. If we issue warrants with a lower exercise price than the warrants we issued on April 16, 2004 during this period, the exercise price of the warrants we issued on April 16, 2004, will be reduced to that new lower price. -54- WARRANTS ISSUED IN MAY 3, 2004 PRIVATE PLACEMENT. In our private placement transaction completed on May 3, 2004, we issued redeemable common stock purchase warrants to purchase an aggregate of 7,098,750 shares of common stock with an exercise price of $1.50 per share to the investors. These common stock purchase warrants are redeemable by us, at any time, after our common stock has a closing bid price of not less than $2.25 per share for 20 consecutive trading days after such effective date for $0.0001 per share; provided that this registration statement, of which this prospectus is a part, has been declared effective by the SEC. These warrants do not have a "most favored nation" clause. All the warrants are exercisable for a period of three (3) years. All of the warrants contain provisions that protect holders against dilution by adjusting of the exercise price in certain events such as stock dividends and distributions, stock splits, recapitalizations, mergers, consolidations, and issuances of common stock below their respective exercise price per share. The terms of the common stock purchase warrants provide that the number of shares to be obtained by each of the holders of the warrants upon exercise of our common stock purchase warrants cannot exceed the number of shares that, when combined with all other shares of common stock and securities then owned by each of them, would result in any one of them owning more than 4.99% (or, in some cases, 9.99%) of our outstanding common stock at any point in time. The holder of a warrant will not possess any rights as a stockholder until the holder exercises the warrant. FLORIDA LAW AND CERTAIN CHARTER AND BYLAW PROVISIONS Provisions of Florida law, our charter and bylaws could make it more difficult to acquire us by means of a merger, tender offer, proxy contest, open market purchases and otherwise. These provisions, which are summarized below, are expected to discourage types of coercive takeover practices and inadequate takeover bids and to encourage persons seeking to acquire control of us to first negotiate with us. We believe that the benefits of increased protection of our potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure us outweigh the disadvantages of discouraging takeover or acquisition proposals because negotiation of these proposals could result in an improvement of their terms. AUTHORIZED BUT UNISSUED STOCK. We have shares of common stock and preferred stock available for future issuance, in some cases, without stockholder approval. We may issue these additional shares for a variety of corporate purposes, including public offerings to raise additional capital, corporate acquisitions, stock dividends on our capital stock or equity compensation plans. The existence of unissued and unreserved common stock and preferred stock may enable our board of directors to issue shares to persons friendly to current management or to issue preferred stock with terms that could render more difficult or discourage a third-party attempt to obtain control of us, thereby protecting the continuity of our management. In addition, if we issue preferred stock, the issuance could adversely affect the voting power of holders of common stock and the likelihood that such holders will receive dividend payments and payments upon liquidation. SPECIAL MEETING OF STOCKHOLDERS. Our bylaws provide that special meetings may be called only by our board of directors or by holders of not less than 10% of all the votes entitled to be cast on any issue proposed to be considered at the proposed special meeting. This provision may make it more difficult for stockholders to take action opposed by our board of directors. AMENDMENT TO OUR BYLAWS. Section 607.1004 of the Florida Business Corporation Act provides that preferred stockholders have the right to vote as a class on amendments to our charter that would negatively impact their rights or preferences as preferred stockholders of such class. Our charter, however, provides that our board of directors has the exclusive authority to alter, amend or repeal them. This provision of our charter may also make it more difficult for stockholders to take action opposed by our board of directors. -55- TRANSFER AGENT The transfer agent and registrar for our common stock is Florida Atlantic Stock Transfer, Inc. PLAN OF DISTRIBUTION We are registering the shares of common stock on behalf of the selling stockholders. The selling stockholders and any of their pledgees, donees, transferees and successors-in-interest receiving shares from a named selling stockholder after the date of this prospectus may, from time to time, sell any or all of their shares of common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. The selling stockholders may use any one or more of the following methods when selling shares and these transactions may or may not involve brokers or dealers. o ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; o block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; o purchases by a broker-dealer as principal and resale by the broker-dealer for its account; o an exchange distribution in accordance with the rules of the applicable exchange; o privately negotiated transactions; o broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share; o a combination of any such methods of sale; and o any other method permitted pursuant to applicable law. The selling stockholders may also sell shares in open market transactions under Rule 144 under the Securities Act of 1933, as amended, if available, rather than under this prospectus. Broker-dealers engaged by the selling stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. The selling stockholders do not expect these commissions and discounts to exceed what is customary in the types of transactions involved. The selling stockholders may, from time to time, pledge or grant a security interest in some or all of the common stock or warrants owned by them, and if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock from time to time under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933 amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus. -56- The selling stockholders also may transfer the shares of common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus. The selling stockholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be "underwriters" within the meaning of the Securities Act of 1933 in connection with such sales. In such event, any commissions received by such broker-dealers or agents, and any profit on the resale of the shares purchased by them, may be deemed to be underwriting commissions or discounts under the Securities Act of 1933. The selling stockholders have informed us that none of them has any agreement or understanding, directly or indirectly, with any person to distribute the common stock, and there is no underwriter or coordinating broker acting in connection with the proposed sale of shares by the selling stockholders. Upon being notified by a selling stockholder that any material arrangement has been entered into with a broker-dealer for the sale of shares of our common stock through a block trade, special offering, exchange distribution or secondary distribution or a purchase by a broker or dealer, a supplement to this prospectus will be filed, if required, pursuant to Rule 424(b) under the Act, disclosing (i) the name of each such selling stockholder and of the participating broker-dealer(s), (ii) the number of shares involved, (iii) the price at which such shares were sold, (iv) the commissions paid or discounts or concessions allowed to such broker-dealer(s), where applicable, (v) that such broker-dealer(s) did not conduct any investigation to verify the information set out or incorporated by reference in this prospectus and (vi) other facts material to the transaction. In addition, upon the company being notified by a selling stockholder that a donee or pledgee intends to sell more than 500 shares of common stock, a supplement to this prospectus will be filed. We are required to pay all fees and expenses incurred by us incident to the registration of the shares of common stock. We have agreed to indemnify the selling stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act of 1933, as amended, or to contribute to payments to which such selling shareholders or their respective pledgees, donees, transferees or other successors in interest may be required to make in respect thereof. Any shares of common stock covered by this prospectus which qualify for sale pursuant to Rule 144 under the Securities Act of 1933, as amended, may be sold under Rule 144 rather than pursuant to this prospectus. AVAILABLE INFORMATION We are a public company and file annual, quarterly and special reports, proxy statements and other information with the Securities and Exchange Commission. Copies of the reports, proxy statements and other information may be read and copied at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. You can request copies of such documents by writing to the SEC and paying a fee for the copying cost. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains a web site at (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. This prospectus is part of a registration statement on Form SB-2 that we filed with the SEC. Certain information in the registration statement has been omitted from this prospectus in accordance with the rules and regulations of the SEC. We have also filed exhibits and schedules with the registration statement that are excluded from this prospectus. For further information you may: o read a copy of the registration statement, including the exhibits and schedules, without charge at the SEC's Public Reference Room; or -57- o obtain a copy from the SEC upon payment of the fees prescribed by the SEC. LEGAL MATTERS Foley Hoag LLP of 155 Seaport Boulevard, Boston, Massachusetts 02210 has advised us about the legality and validity of the shares. We know of no members of Foley Hoag who are beneficial owners of our common stock or preferred stock. EXPERTS Our consolidated financial statements as of June 30, 2003, included in this prospectus have been audited by Marcum & Kliegman LLP, registered independent public accounting firm, as stated in their report appearing herein, and have been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. Our consolidated financial statements as of June 30, 2002, included in this prospectus have been audited by Sherb & Co., LLP, independent auditors, as stated in their report appearing herein, and have been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. Financial statements as of September 30, 2003, and December 31, 2002, for Science and Technology Research Corporation, Inc. which are included in this prospectus have been audited by Marcum & Kliegman LLP, registered independent public accounting firm, as stated in their report appearing herein, and have been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. -58-
INDEX TO FINANCIAL STATEMENTS Page ---- REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM CONSOLIDATED FINANCIAL STATEMENTS FOR MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES FOR THE YEAR ENDED JUNE 30, 2003 Report of Independent Registered Public Accounting Firm of Marcum & Kliegman LLP..........................F-1 Independent Auditors' Report of Sherb & Co., LLP..........................................................F-2 Consolidated Balance Sheet at June 30, 2003...............................................................F-3 Consolidated Statements of Operations for the Years Ended June 30, 2003 and 2002..........................F-4 Consolidated Statements of Stockholders' (Deficiency) Equity for the Years Ended June 30, 2003 and 2002..................................................................................F-5 Consolidated Statements of Cash Flows for the Years Ended June 30, 2003 and 2002..........................F-8 Notes to Consolidated Financial Statements................................................................F-10 UNAUDITED QUARTERLY FINANCIAL STATEMENTS FOR MARKLAND TECHNOLOGIES, INC. FOR THE PERIOD ENDED MARCH 31, 2004 Condensed Consolidated Balance Sheet at March 31, 2004....................................................F-36 Condensed Consolidated Statement of Operations for the Nine Months Ended March 31, 2004 and 2003.................................................................................F-37 Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2004 and 2003.................................................................................F-38 Condensed Consolidated Statement of Stockholders' Equity for the Nine Months ended March 31, 2004..........................................................................................F-39 Condensed Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2004 and 2003.................................................................................F-43 Notes to Consolidated Financial Statements................................................................F-45 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM CONSOLIDATED FINANCIAL STATEMENTS FOR SCIENCE & TECHNOLOGY RESEARCH, INC. FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND THE YEAR ENDED DECEMBER 31, 2002 Report of Independent Registered Public Accounting Firm of Marcum & Kliegman LLP......................... F-62 Balance Sheets............................................................................................F-63 Statements of Operations..................................................................................F-64 Statement of Changes in Shareholder's Equity..............................................................F-65 Statements of Cash Flow...................................................................................F-66 Notes to Consolidated Financial Statements................................................................F-68 Pro Forma Consolidated Financial Statements (Unaudited)
FINANCIAL STATEMENTS MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES Board of Directors and Stockholders Markland Technologies, Inc. and Subsidiaries REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ------------------------------------------------------- We have audited the accompanying consolidated balance sheet of Markland Technologies, Inc. and Subsidiaries (the "Company") as of June 30, 2003 and the related consolidated statements of operations, stockholders' (deficiency) equity, and cash flows for the year ended June 30, 2003. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with the standards of the public company accounting oversight board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Markland Technologies, Inc. and Subsidiaries at June 30, 2003 and the results of their operations and their cash flows for the year ended June 30, 2003, in conformity with accounting principles generally accepted in the United States of America. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the consolidated financial statements, the Company incurred a net loss of approximately $2,837,000 during the year ended June 30, 2003. As of June 30, 2003, the Company had a working capital deficiency of approximately $1,235,000. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ Marcum & Kliegman LLP New York, New York September 15, 2003 F-1 Board of Directors and Stockholders Markland Technologies, Inc. and Subsidiaries INDEPENDENT AUDITORS' REPORT ---------------------------- We have audited the accompanying consolidated balance sheet of Markland Technologies, Inc. and Subsidiaries as of June 30, 2002 and the related consolidated statements of operations, stockholders' deficit, and cash flows for the year ended June 30, 2002, the six months ended June 30, 2001 and the year ended December 31, 2000. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, the consolidated financial position of Markland Technologies, Inc. and Subsidiaries at June 30, 2002 and the consolidated results of its operations and its cash flows for the year ended June 30, 2002, the six months ended June 30, 2001 and the year ended December 31, 2000, in conformity with accounting principles generally accepted in the United States of America. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred losses in each of the last two fiscal years and as more fully described in Note 2, the Company anticipates that additional funding will be necessary to sustain the Company's operations through the fiscal year ending June 30, 2002. These conditions raise substantial doubt about the Company's ability to continue as a going-concern. Management's plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ Sherb & Co., LLP ---------------- Sherb & Co., LLP Certified Public Accountants New York, New York October 4, 2002 F-2 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET JUNE 30, 2003
ASSETS ------ CURRENT ASSETS: Cash $ 5,465 Accounts receivable (including $112,251 due from related party) 314,222 Prepaid insurance 22,917 ------------- TOTAL CURRENT ASSETS 342,604 ------------- OTHER ASSETS: Advances on purchase of ASI technology - related party 65,000 Intangible assets - ERGO, net of accumulated amortization of $66,668 333,332 Technology rights (Acoustic Core) 1,300,000 ------------- TOTAL OTHER ASSETS 1,698,332 ------------- TOTAL ASSETS $ 2,040,936 ============= LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ CURRENT LIABILITIES: Accounts payable (including $573,100 due to related party) $ 1,441,636 Accrued expenses and other current liabilities 119,270 Note payable 17,004 ------------- TOTAL CURRENT LIABILITIES 1,577,910 SECURED CONVERTIBLE PROMISSORY NOTE, less debt discount of $83,334 416,666 ------------- TOTAL LIABILITIES 1,994,576 ------------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Series A redeemable convertible preferred stock - no par value; 30,000 authorized, issued and outstanding at June 30, 2003; liquidation preference of $300,000 300,000 Series B convertible preferred stock - $.0001 par value; 10 authorized and -0- issued and outstanding - Series C 5% cumulative redeemable convertible preferred stock - $.0001 par value; 8,000 - authorized; 5,395 issued and outstanding ; liquidation preference of $5,395,000 1 Series D redeemable convertible preferred stock - $.0001 par value; 40,000 authorized; 16,430 issued and outstanding; liquidation preference of $16,430,000 2 Common stock - $.0001 par value; 500,000,000 authorized; 220,294,405 shares issued and outstanding 22,029 Additional paid-in capital 13,878,442 Unearned compensation (4,381,379) Accumulated deficit (9,772,735) ------------- TOTAL STOCKHOLDERS' EQUITY 46,360 ------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,040,936 =============
The accompanying notes are an integral part of these consolidated financial statements. F-3 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended June 30, ---------------------------------- 2003 2002 -------------- -------------- REVENUES (including $112,251 of revenues from a related party) $ 658,651 $ -- COST OF REVENUES (including $99,973 of costs incurred to a related party) 445,218 -- -------------- -------------- GROSS PROFIT 213,433 -- -------------- -------------- OPERATING EXPENSES: Selling, general and administrative 1,186,379 247,677 Research & development 522,657 -- Compensatory element of stock issuances for selling, general and administrative fees 2,051,822 -- Amortization of intangible asset 66,668 -- -------------- -------------- TOTAL OPERATING EXPENSES 3,827,526 247,677 -------------- -------------- OPERATING LOSS FROM CONTINUING OPERATIONS (3,614,093) (247,677) -------------- -------------- OTHER EXPENSES (INCOME), NET: Interest expense 226,751 -- Other expense (income), net (5,250) -- -------------- -------------- TOTAL OTHER EXPENSES (INCOME), NET 221,501 -- -------------- -------------- LOSS FROM CONTINUING OPERATIONS (3,835,594) (247,677) -------------- -------------- GAIN (LOSS) FROM DISCONTINUED OPERATIONS: Gain on disposition -- 1,046,133 Gain (loss) from discontinued operations 998,713 (3,259,421) -------------- -------------- TOTAL GAIN (LOSS) FROM DISCONTINUED OPERATIONS 998,713 (2,213,288) -------------- -------------- NET LOSS (2,836,881) (2,460,965) DEEMED DIVIDEND TO PREFERRED STOCKHOLDERS - Series C 501,755 -- DEEMED DIVIDEND TO PREFERRED STOCKHOLDERS - Series D 4,107,500 -- PREFERRED STOCK DIVIDEND - Series C 152,716 -- -------------- -------------- NET LOSS APPLICABLE TO COMMON STOCKHOLDERS $ (7,598,852) $ (2,460,965) ============== ============== BASIC AND DILUTED LOSS PER COMMON SHARE: Loss from continuing operations $ (0.03) $ 0.00 Gain (loss) from discontinued operations 0.00 (0.01) -------------- -------------- Net loss $ (0.03) $ (0.01) ============== ============== WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 300,163,421 299,909,179 ============== ==============
The accompanying notes are an integral part of these consolidated financial statements. F-4 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS' (DEFICIENCY) EQUITY FOR THE YEARS ENDED JUNE 30, 2003 AND 2002
Series A Convertible Series C Convertible Common Stock Preferred Stock Preferred Stock ----------------------------- ---------------------------- ---------------------------- Shares Amount Shares Amount Shares Amount ------------- ------------- ------------- ------------- ------------- ------------- Balance - July 1, 2001 299,909,179 $ 29,990 -- $ -- -- $ -- Write-off of accounts payable-CWTEL -- -- -- -- -- -- Net Loss -- -- -- -- -- -- ------------- ------------- ------------- ------------- ------------- ------------- Balance - June 30, 2002 299,909,179 29,990 -- -- -- -- Stock cancelled in connection with December 9, 2002 exchange agreement (269,918,261) (26,992) -- -- -- -- Stock issued in connection with December 9, 2002 exchange agreement 269,918,261 26,992 -- -- -- -- Conversion of promissory notes and interest into Series C convertible preferred stock -- -- -- -- 5,225 1 Stock issued for directors' compensation, net 300,000 30 -- -- -- -- Stock issued in connection with private placement 6,800,000 680 -- -- -- -- Value assigned to beneficial conversion feature of convertible debt -- -- -- -- -- -- Preferred stock dividend - Series C -- -- -- -- -- -- Preferred stock dividend - beneficial conversion feature - Series C -- -- -- -- -- -- Value allocated to Series C preferred stock - beneficial conversion feature dividend -- -- -- -- -- -- Stock issued in connection with consulting agreement 140,000 14 -- -- -- -- Stock issued in connection with consulting agreements 7,951,706 795 -- -- -- -- Stock issued in connection with employment agreements 5,193,520 520 -- -- -- -- Amortization of consulting agreements -- -- -- -- -- -- Amortization of employment agreements -- -- -- -- -- -- Sale of 170 shares of Series C convertible preferred stock -- -- -- -- 170 -- Conversion of liabilities from discontinued operations into Series A convertible preferred stock -- -- 30,000 300,000 -- -- Conversion of common stock into Series D convertible preferred stock (100,000,000) (10,000) -- -- -- -- Sale of Series D convertible preferred stock -- -- -- -- -- -- Preferred stock dividend - beneficial conversion feature - Series D -- -- -- -- -- -- Value allocated to Series D preferred stock - beneficial conversion feature dividend -- -- -- -- -- -- Net loss -- -- -- -- -- -- ------------- ------------- ------------- ------------- ------------- ------------- Balance - June 30, 2003 220,294,405 $ 22,029 30,000 $ 300,000 5,395 $ 1 ============= ============= ============= ============= ============= =============
The accompanying notes are an integral part of these consolidated financial statements. F-5 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS' (DEFICIENCY) EQUITY FOR THE YEARS ENDED JUNE 30, 2003 AND 2002
Series D Convertible Preferred Stock -------------------------- Unearned Shares Amount Compensation ------------ ------------ ------------ Balance - July 1, 2001 -- $ -- $ -- Write-off of accounts payable-CWTEL -- -- -- Net Loss -- -- -- ------------ ------------ ------------ Balance - June 30, 2002 -- -- -- Stock cancelled in connection with December 9, 2002 exchange agreement -- -- -- Stock issued in connection with December 9, 2002 exchange agreement -- -- -- Conversion of promissory notes and interest into Series C convertible preferred stock -- -- -- Stock issued for director's compensation, net -- -- -- Stock issued in connection with private placement -- -- -- Value assigned to beneficial conversion feature of convertible debt -- -- -- Preferred stock dividend - Series C -- -- -- Preferred stock dividend - beneficial conversion feature - Series C -- -- -- Value allocated to Series C Preferred stock - beneficial conversion feature dividend -- -- -- Stock issued in connection with consulting agreement -- -- -- Stock issued in connection with consulting agreements -- -- (4,037,237) Stock issued in connection with employment agreements -- -- (3,573,966) Amortization of consulting agreements -- -- 1,178,002 Amortization of employment agreements -- -- 2,051,822 Sale of 170 shares of Series C convertible preferred stock -- -- -- Conversion of liabilities from discontinued operations into Series A convertible preferred stock -- -- -- Conversion of common stock into Series D convertible preferred stock 16,000 2 -- Sale of Series D convertible preferred stock 430 -- -- Preferred stock dividend - beneficial conversion feature - Series D -- -- -- Value allocated to Series D Preferred stock - beneficial conversion feature dividend -- -- -- Net loss -- -- -- ------------ ------------ ------------ Balance - June 30, 2003 16,430 $ 2 $(4,381,379) ============ ============ ============
The accompanying notes are an integral part of these consolidated financial statements. F-6 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS' (DEFICIENCY) EQUITY FOR THE YEARS ENDED JUNE 30, 2003 AND 2002
Total Additional Stockholders' Paid-in Accumulated (Deficiency) Capital Deficit Equity ------------- ------------- ------------- Balance - July 1, 2001 $ -- $ (5,346,191) $ (5,316,201) Write-off of accounts payable-CWTEL -- 871,302 871,302 Net Loss -- (2,460,965) (2,460,965) ------------- ------------- ------------- Balance - June 30, 2002 -- (6,935,854) (6,905,864) Stock cancelled in connection with December 9, 2002 exchange agreement 26,992 -- -- Stock issued in connection with December 9, 2002 exchange agreement 1,273,008 -- 1,300,000 Conversion of promissory notes and interest into Series C convertible preferred stock 5,224,999 -- 5,225,000 Stock issued for director's compensation, net 2,970 -- 3,000 Stock issued in connection with private placement 339,320 -- 340,000 Value assigned to beneficial conversion feature of convertible debt 125,000 -- 125,000 Preferred stock dividend - Series C (152,716) -- (152,716) Preferred stock dividend - beneficial conversion feature - Series C (501,755) -- (501,755) Value allocated to Series C Preferred stock - beneficial conversion feature dividend 501,755 -- 501,755 Stock issued in connection with consulting agreement 30,386 -- 30,400 Stock issued in connection with consulting agreements 5,214,924 -- 1,178,482 Stock issued in connection with employment agreements 4,413,385 -- 839,939 Amortization of consulting agreements (1,178,002) -- -- Amortization of employment agreements (2,051,822) -- -- Sale of 170 shares of Series C convertible preferred stock 170,000 -- 170,000 Conversion of liabilities from discontinued operations into Series A convertible preferred stock -- -- 300,000 Conversion of common stock into Series D convertible preferred stock 9,998 -- -- Sale of Series D convertible preferred stock 430,000 -- 430,000 Preferred stock dividend - beneficial conversion feature - Series D (4,107,500) -- (4,107,500) Value allocated to Series D preferred stock - beneficial conversion feature dividend 4,107,500 -- 4,107,500 Net loss -- (2,836,881) (2,836,881) ------------- ------------- ------------- Balance - June 30, 2003 $ 13,878,442 $ (9,772,735) $ 46,360 ============= ============= =============
The accompanying notes are an integral part of these consolidated financial statements. F-7 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended June 30, ------------------------------ 2003 2002 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $(2,836,881) $(2,460,965) (Gain) loss from discontinued operations (998,713) 2,213,288 ------------ ------------ Loss from continuing operations (3,835,594) (247,677) Adjustment to reconcile net loss to net cash used in operating activities: Amortization of intangible asset 66,668 -- Amortization of debt discount 41,666 -- Compensatory stock issuance 2,051,822 -- Changes in operating assets and liabilities: Accounts receivable (314,223) -- Prepaid expenses (1,167) -- Accounts payable 939,774 -- Accrued expenses and other current liabilities 328,170 -- ------------ ------------ NET CASH USED IN CONTINUING OPERATIONS (764,550) (247,677) NET CASH USED IN DISCONTINUED OPERATIONS -- (700,511) ------------ ------------ NET CASH USED IN OPERATING ACTIVITIES (764,550) (948,188) ------------ ------------ CASH USED IN INVESTING ACTIVITIES: Payments on acquisition of intangible assets - ERGO (126,900) -- Advances on purchase of ASI (65,000) -- ------------ ------------ NET CASH USED IN INVESTING ACTIVITIES (191,900) -- ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Secured line of credit -- 779,531 Proceeds in connection with premium financing agreement 44,000 -- Principal payments relating to premium financing agreement (26,996) -- Proceeds from sale of common stock in private placement 340,000 -- Proceeds from sale of Series C 5% cumulative convertible preferred stock 170,000 -- Proceeds from sale of Series D convertible preferred stock 430,000 -- ------------ ------------ NET CASH PROVIDED BY FINANCING ACTIVITIES 957,004 779,531 ------------ ------------ NET INCREASE (DECREASE) IN CASH 554 (168,657) CASH - BEGINNING OF YEAR 4,911 173,568 ------------ ------------ CASH - END OF YEAR $ 5,465 $ 4,911 ============ ============
The accompanying notes are an integral part of these consolidated financial statements. F-8 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: - ------------------------------------------------- For the Years Ended June 30, ------------------------------ 2003 2002 ------------- ------------ Cash paid during the years for: Interest $ -- $ -- ============= ============ Taxes $ -- $ -- ============= ============ Non-cash investing and financing activities: Conversion of notes payable and accrued interest into preferred stock $ 5,225,000 $ -- ============= ============ Conversion of liabilities from discontinued operations into Series A convertible preferred stock $ 300,000 $ -- ============= ============ Acquisition of technology rights by issuance of common stock $ 1,300,000 $ -- ============= ============ Conversion of common stock into Series D convertible preferred stock $ 10,000 $ -- ============= ============ Deemed dividend preferred stock - beneficial conversion Feature - Series C $ 501,755 $ -- ============= ============ Deemed dividend preferred stock - beneficial conversion Feature - Series D $ 4,107,500 $ -- ============= ============ Accrued Dividends on preferred stock $ 152,716 $ -- ============= ============ Payable on purchase of Ergo $ 273,100 $ -- ============= ============ Secured convertible promissory note debt discount $ 125,000 $ -- ============= ============
The accompanying notes are an integral part of these consolidated financial statements. F-9 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - DESCRIPTION OF BUSINESS Markland Technologies, Inc. ("Markland" or the "Company"), previously known as Quest Net, was incorporated in Colorado in November 1995, under the name "A.P. Sales Inc." In December 1998, A.P. Sales Inc. dissolved as a Colorado corporation, redomiciled in Florida and changed its name to Quest Net Corp. In March 2000, the Company acquired CWTel, Inc., a Florida-based telecommunication corporation. On November 11, 2001, CWTel filed a voluntary bankruptcy petition under Chapter 7 in the State of Florida. On March 11, 2002, a final decree was issued, the trustee discharged and the case closed. On March 15, 2001, the Company acquired all of the outstanding capital stock of Vidikron of America, Inc. ("Vidikron") As a result of this acquisition, the sole stockholder of Vidikron, Market LLC, controlled a majority of the common stock of the Company and, accordingly, the transaction was accounted for as a reverse acquisition and as a recapitalization of Vidikron, pursuant to which Vidikron was treated as the accounting acquirer. Accordingly the historical financial statements are those of Vidikron. Vidikron became a wholly-owned subsidiary of the Company. Subsequently, Quest Net changed its name to Markland Technologies, Inc. and Vidikron adopted the year-end of Quest Net. On May 28, 2002, the Company received a notice of default from Market LLC relating to a loan and security agreement and a related secured convertible revolving credit note due to the Company's failure to make payments of principal and interest due under the note. In addition, as a result of the defaults under the note, Market LLC declared all outstanding principal and interest under the note, totaling $4,213,300, to be immediately due and payable. In June of 2002, all of the shares of the Vidikron subsidiary, including all of its operating assets and liabilities, were transferred to Market LLC in partial satisfaction of the indebtedness due Market LLC of $50,000. As a result, the Company had no active business following such event. The assets and liabilities and operating results of Vidikron have been treated as a discontinued operation in the accompanying consolidated financial statements. On November 21, 2002, Security Technology, Inc. ("STI") was incorporated as a Delaware C corporation and became a wholly-owned subsidiary of Markland Technologies, Inc. On December 9, 2002, the Company, Eurotech Ltd. ("Eurotech"), ipPartners, Inc. ("ipPartners")- a related party, Market LLC and James LLC, entered into an exchange agreement ("Exchange Agreement"). On December 19, 2002, the transactions contemplated by the Exchange Agreement were consummated. Pursuant to the Exchange Agreement, Eurotech transferred to the Company certain rights to Eurotech's Acoustic Core technology, relating to illicit materials detection, and certain cryptology technology. 90% of the Company's issued and outstanding common stock held by Market LLC and James LLC, the holders of 100% of the issued and outstanding common stock of the Company, was retired. The Company issued 239,927,344 shares of common stock, representing approximately eighty percent (80%) of its outstanding common stock, to Eurotech, and 29,990,917 shares of common stock, representing approximately ten percent (10%) of its outstanding common stock, to ipPartners. As a result of this transaction, a change of control occurred and the Company became an 80%-owned subsidiary of Eurotech (see Note 4). F-10 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - DESCRIPTION OF BUSINESS (Continued) In January 2003, the Company acquired all of the common stock of Ergo Systems, Inc., a provider of security logistic support and related product development services (see Note 4). As a result of the technology acquired from Eurotech in December 2002, and the acquisition of Ergo Systems, Inc. in January 2003, Markland Technologies, Inc. plans to build a comprehensive offering of integrated security technologies and services to provide tools necessary to protect personnel, data and infrastructure assets as part of Homeland Security. Markland provides end-to-end solutions to the Department of Homeland Security ("DHS") by bringing together and integrating innovative technologies that currently exist in Universities, small companies, and large defense contractors. Markland has proprietary technologies and existing government contracts they leverage to provide these solutions. Markland's principal end customer is the United States Government. NOTE 2 - GOING CONCERN The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. However, for the year ended June 30, 2003, the Company incurred a net loss from continuing operations of $3,835,594 and had a working capital deficiency of $1,235,306. The Company has limited finances and requires additional funding in order to market and license its products. There is no assurance that the Company can reverse its operating losses, or that it can raise additional capital to allow it to continue its planned operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. During the year ended June 30, 2003, the Company funded its operations primarily from proceeds of $340,000 received from a private equity financing of 6,800,000 shares of the Company's common stock and the sale of 170 shares of Series C preferred stock for $170,000. In addition, during the year the Company sold 430 shares of Series D preferred stock for $430,000. During the second half of the year ended June 30, 2003, the Company produced revenues from operations of $658,651 as shown in the consolidated statements of operations. The Company's ability to continue as a going concern remains dependent upon the ability to obtain additional financing or through the generation of positive cash flows from continuing operations. These financial statements do not include any adjustments relating to the recoverability of recorded asset amounts that might be necessary as a result of the above uncertainty. NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation - --------------------------- The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Security Technology, Inc. ("STI"), and Ergo Systems, Inc. ("Ergo"). All significant inter-company balances and transactions have been eliminated in consolidation. F-11 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Use of Estimates - ---------------- The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents - ------------------------- For purposes of the consolidated statement of cash flows, the Company considers all investments with a maturity of three months or less when purchased to be cash equivalents. At June 30, 2003, the Company had no cash equivalents. Accounts Receivable - ------------------- The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts. The Company's estimate is based on a review of the current status of trade accounts receivable. It is reasonably possible that the Company's estimate of the allowance for doubtful accounts will change. The Company has not experienced any losses in accounts receivable and has provided no allowance at June 30, 2003. Concentration of Credit Risk - ---------------------------- Statement of Financial Accounting Standards ("SFAS") No. 105, "Disclosure of Information about Financial Instruments With Off-Balance-Sheet Risk and Financial Instruments with Concentrations of Credit Risk", requires disclosure of any significant off-balance-sheet and credit risk concentrations. The principal financial instrument that potentially subjects the Company to concentrations of credit risk is accounts receivable. The majority of the Company's revenues and accounts receivable are derived from an agency associated with the U.S. Government and a related party who are both not required to provide collateral for amounts owed to the Company. The Company does not believe that it is subject to any unusual credit risks, other than the normal level of risk attendant to operating its business. For the year ended June 30, 2003, two customers accounted for 83% and 17% (a related party) of total revenues, respectively. At June 30,2003, these two customers accounted for 64% and 36% (a related party) of accounts receivable, respectively. For the year ended June 30, 2002, there were no revenues or accounts receivable from either of these customers. F-12 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Research and Development - ------------------------ Research and development ("R&D") costs are charged to expense as incurred. The Company capitalizes costs related to acquired technologies that have achieved technological feasibility and have alternative uses. Acquired technologies, which are in-process at the date of acquisition or have no alternative uses are expensed as research and development costs. Included in research and development costs for the year ended June 30, 2003 is $300,000 payable to Syqwest, a related party, for development costs related to a vehicle stopping technology (see Note 5). Fair Value of Financial Instruments - ----------------------------------- Management believes the carrying amounts reported in the consolidated balance sheets for cash, receivable and payment amounts and accrued expenses approximate fair value because of the short maturity of these financial instruments. The Company also believes that the carrying amounts of its secured convertible promissory note approximates fair value, as the interest rates approximate a rate that the Company could have obtained under similar terms at the balance sheet date. Loss Per Share - -------------- Basic net loss per common share has been computed based on the weighted average number of shares of common stock outstanding during the periods presented. Common stock equivalents, consisting of a secured convertible promissory note, Series A and D Convertible preferred stock and Series C 5% Cumulative Convertible preferred stock, discussed in the notes to consolidated financial statements, were not included in the calculation of the diluted loss per share because their inclusion would have had the effect of decreasing the loss per share otherwise computed. At June 30, 2003, as permitted under SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure", which amended SFAS No. 123, "Accounting for Stock-Based Compensation", the Company has elected to continue to follow the intrinsic value method in accounting for its stock-based employee compensation arrangements as defined by Accounting Principles Board Opinion ("APB") No. 25, "Accounting for Stock Issued to Employees", and related interpretation including Financial Accounting Standards Board ("FASB") Interpretation No. 44, "Accounting for Certain Transactions Involving Stock Compensation", an interpretation of APB No. 25. No stock-based employee compensation cost is reflected in operations, as there are no options outstanding. F-13 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Long Lived Assets - ----------------- Intangible Assets are stated at cost less appropriate valuation allowances and accumulated amortization. Amortization is provided on the straight-line method from the date the respective asset is placed into service until the shorter of the estimated useful life of the asset or the respective term of the related contracts or agreements. As of June 30, 2003, total amortization expense recorded by the Company amounted to $66,668. Impairment of Long-Lived Assets - ------------------------------- Pursuant to SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", the Company continually monitors events and changes in circumstances that could indicate carrying amounts of long-lived assets, including intangible assets, may not be recoverable. An impairment loss is recognized when expected cash flows are less than the asset's carrying value. Accordingly, when indicators or impairment are present, the Company evaluates the carrying value of such assets in relation to the operating performance and future undiscounted cash flows of the underlying business. The Company's policy is to record an impairment loss when it is determined that the carrying amount of the asset may not be recoverable. Income Taxes - ------------ The Company accounts for income taxes using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss and tax credit carry forwards, deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. Reclassifications - ----------------- Certain prior year balances have been reclassified to conform to the current year presentation. F-14 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Impact of Recently Issued Accounting Standards - ---------------------------------------------- In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statement No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections". SFAS No. 145 requires that gains and losses from extinguishment of debt be classified as extraordinary items only if they meet the criteria in APB No. 30 ("Opinion No. 30"). Applying the provisions of Opinion No. 30 will distinguish transactions that are part of an entity's recurring operations from those that are unusual and infrequent that meets the criteria for classification as an extraordinary item. The Company adopted SFAS No. 145 in the first quarter of fiscal 2003. The adoption of the standard did not have a material impact on the Company's financial position or results of operations. In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." SFAS No. 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and nullified Emerging Issues Task Force Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including certain costs incurred in a restructuring." SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. These costs include lease, costs to consolidate facilities or relocate employees, and certain termination benefits provided to employees that are involuntarily terminated under the terms of a one-time benefit arrangement. A fundamental conclusion reached by the FASB in this statement is that an entity's commitment to a plan, by itself, does not create a present obligation to others that meets the definition of a liability. SFAS No. 146 also establishes that fair value is the objective for initial measurement of the liability. The provisions of this statement are effective for exit or disposal activities that are initiated after December 31, 2002. The adoption of the standard did not have a material impact on the financial position or results of operations. In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities." The Statement amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under Statement 133. This Statement is effective for contracts entered into or modified after June 30, 2003, except as stated below and for hedging relationships designated after June 30, 2003. The guidance should be applied prospectively. The provisions of this Statement that relate to Statement 133 Implementation Issues that have been effective for fiscal quarters that began prior to June 15, 2003, should continue to be applied in accordance with their respective effective dates. In addition, certain provisions relating to forward purchases or sales of WHEN-ISSUED securities or other securities that do not yet exist, should be applied to existing contracts as well as new contracts entered into after June 30, 2003. The adoption of SFAS No. 149 is not expected to have an impact on the Company's' financial statements. F-15 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Impact of Recently Issued Accounting Standards (Continued) - ---------------------------------------------- In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity". SFAS No. 150 establishes standards for classification and measurement in the statement of financial position of certain financial instruments with characteristics of both liabilities and equity. It requires classification of a financial instrument that is within its scope as a liability (or an asset in some circumstances). SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003 and, otherwise, is effective at the beginning of the first interim period beginning after June 15, 2003. The Company is currently evaluating the effect that the adoption of SFAS No. 150 will have on its results of operations and financial condition. In November 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others" ("FIN 45"). FIN 45 requires a company, at the time it issues a guarantee, to recognize an initial liability for the fair value of obligations assumed under the guarantee and elaborates on existing disclosure requirements related to guarantees and warranties. The Company adopted FIN 45 as of December 31, 2002 and during the quarter ended March 31, 2003. The adoption of this standard did not have a material impact on the Company's financial position or results of operations. In January 2003, the FASB issued FASB Interpretation No. 46 (" FIN 46"), "Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51." FIN 46 requires certain variable interest entities to be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46 is effective for all new variable interest entities created or acquired after January 31, 2003. For variable interest entities created or acquired prior to February 1, 2003, the provisions of FIN 46 must be applied for the first interim or annual period beginning after June 15, 2003. The Company is currently evaluating the effect that the adoption of FIN 46 will have on its results of operations and financial condition. Revenue Recognition - ------------------- The Company recognizes revenue when the following criteria are met: 1) persuasive evidence of an arrangement, such as agreements, purchase orders or written requests, exists; 2) delivery has been completed and no significant obligations remain; 3) the Company's price to the buyer is fixed or determinable; and 4) collection is probable. The Company recognizes revenues at the time services are performed related to border security logistic support. F-16 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Revenue Recognition (continued) - ------------------- During the year-ended June 30,2003, the Company produced revenues from contracts with the Department of Homeland Security("DHS") and ASI, a related party, to provide the following services: Engineering services related to the design and implementation of improvements to U.S. ports of entry, as well as, through the maintenance of booths at these ports of entry. ($423,013 for the year-ended June 30, 2003) Sale of Dedicated Commuter Lane ("DCL") transponders to the DHS. ($79,025 for the year ended June 30, 2003) Installation of the Vehicle Stopping System at a U.S. port of entry.($44,362 for the year ended June 30, 2003) Contract with related party to provide Plasma Antenna Device Research ($112,251 for the year ended June 30, 2003) NOTE 4 - TECHNOLOGY ACQUISITIONS Acoustic Core(TM) Technology - ---------------------------- On December 9, 2002, in connection with the Exchange Agreement dated as of December 9, 2002, by and among Eurotech, the Company, Crypto.com, Inc., ("Crypto" - a wholly-owned subsidiary of Eurotech), Security Technology, Inc. ("STI"), ipPartners, Inc., Market LLC and James LLC (the "Exchange"), Eurotech and Crypto agreed to license and transfer certain intellectual property to a newly-formed subsidiary of the Company, STI, in exchange for 239,927,344 shares of the Company's newly issued common stock (the "Exchange Shares"). The Exchange Shares constitute 80% of the Company's outstanding common stock making the Company a majority-owned subsidiary of Eurotech. Subsequent to year end the Company is no longer a majority-owned subsidiary of Eurotech due to the issuances of additional common stock. In addition, as part of the agreement, ipPartners was issued 29,990,917 shares of common stock in exchange for their forgiveness and discharge of certain obligations owed to ipPartners with respect to the property transferred to STI. Eurotech is a development-stage, Washington, D.C.-based, technology company, whose common stock is registered under the Exchange Act. Prior to the Exchange, Market LLC and James LLC controlled the Company. In connection with the Exchange, on December 9, 2002, the Company, Market LLC and James LLC agreed to a recapitalization of the Company, whereby $5,225,000 in stated value of a new series of preferred stock, designated Series C 5% Cumulative Convertible Preferred Stock (the "Series C Preferred Stock") was issued by the Company, in exchange for $5,225,000 of convertible promissory notes, inclusive of accrued interest, as well as, for the agreement by James LLC and Market LLC to collectively surrender 269,918,261 shares of the Company's common stock prior to the consummation of the above Exchange agreement between the Company and Eurotech, among others. F-17 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 4 - TECHNOLOGY ACQUISITIONS (Continued) Acoustic Core(TM) Technology (Continued) - ---------------------------- The rights licensed from Eurotech in the Exchange consist of certain proprietary technology known as Acoustic Core used to detect illicit substances, and certain cryptology technology held by Eurotech's subsidiary, Crypto. Since Eurotech owned 80% of the common stock of the Company on December 9, 2002, the technology acquired from Eurotech was recorded by the Company at Eurotech's carrying value of $1,300,000. Eurotech had purchased the rights to such technologies in 2001. The Company's technical employees and advisors concluded that as of December 2002, the Company has established technological feasibility for its ultimate security product to be marketed. Additional development services and testing are necessary to complete the product development. The Company will begin to amortize this asset over the economic useful life of five years when the technology is available for general release to its customers. The Company is engaged in a project with the U.S. Air Force to evaluate the Acoustic Core(TM) technology for use in the inspection of cargo. The technology utilizes acoustic waves to detect illicit materials and density changes. In addition, the Company is in the process of adapting such technology for use in the detection of concealed weapons on persons that cannot be detected by traditional metallic screeners. Acquisition of Ergo Systems, Inc. - --------------------------------- On January 14, 2003, the Company completed the acquisition of Ergo, a Virginia corporation from Ocean Data Equipment Corporation, a Delaware corporation ("ODEC") now called Syqwest, Inc.("Syqwest"). The Chairman of the Company is also the Chief Executive Officer of Syqwest. The Company agreed to pay Syqwest $400,000 in cash, payable without interest over a period of one year. This purchase price was later modified to require $50,000 due at closing, $150,000 due upon the completion of Phase I research efforts as they relate to the advancement of Acoustic Core technology in the inspection of cargo containers (of which $126,900 has been advanced to Syqwest as of June 30, 2003), $100,000 due upon completion on Phase 2 research efforts as they relate to cargo inspection, and a final payment of $100,000 due upon completion of Phase 3 research efforts as they relate to cargo inspection. At June 30, 2003, the Company was still in Phase 1 of this project (see Note 14c). The funds for this acquisition are expected to come from operating capital and future earnings. Ergo's assets consist of a U.S. Government General Services Administration contract to provide border security logistic support and product development services to the United States Government and related unpatented technology. The Company will continue to provide these support services to five U.S. Border ports of entry in the states of California, Texas, Michigan and New York. The government contract is renewable annually, unless cancelled by either party. F-18 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 4 - TECHNOLOGY ACQUISITIONS (Continued) Acquisition of Ergo Systems, Inc. (Continued) - --------------------------------- The purchase price of $400,000 was allocated entirely to this contract. The contract is being amortized over a three-year period commencing with the date of the acquisition, January 14, 2003. Amortization expense related to the contract for the year ended June 30, 2003 was $66,668. Future amortization expense to be incurred on this contract is as follows: Years Ending June 30, Amount ----------- ---------- 2004 $ 133,336 2005 133,336 2006 66,660 ---------- $ 333,332 ========== The following summarized pro forma (unaudited) information assumes the acquisition had occurred on July 1, 2001. For the Year For the Year Ended Ended June 30,2003 June 30,2002 ------------ ------------ Revenue $ 1,253,547 $ 729,896 Loss from continuing operations (4,050,099) (255,955) Gain (loss) from discontinued operations 998,713 (2,213,288) Net loss $(3,227,716) $(2,405,765) Loss per share $ (0.03) $ (0.01) Note: Results of operations of Ergo is included in consolidated financial statements commencing January 14, 2003 F-19 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 4 - TECHNOLOGY ACQUISITIONS (Continued) Acquisition of Ergo Systems, Inc. (Continued) - --------------------------------- At June 30, 2003, the Company owes ODEC $273,100 related to the purchase of Ergo's assets. This liability is included in Accounts payable in the accompanying consolidated balance sheet (see Note 5). Agreement to Acquire ASI Technology Corporation Assets - ------------------------------------------------------ On March 19, 2003, the Company and ASI Technology Corporation, a Nevada corporation, ("ASI") entered into a Technology Purchase Agreement (the "Agreement"). Under the Agreement, ASI agreed to sell and the Company agreed to purchase certain assets relating to ASI's gas plasma antenna technology, including patents, patent applications, equipment, government contract rights and other intellectual property rights. The Chief Executive Officer of the Company was a significant employee of ASI during the two years prior to this agreement. The closing of the transaction will occur on the earlier of the date the last of the government contracts are assigned to Markland or ninety days after the date of the Agreement (June 17, 2003). The transaction did not close as of June 30, 2003 and management believes that it will close during the quarter ending December 31, 2003. No assurance can be given that the transaction will close. Under an interim arrangement, the Company will receive revenues from these contracts billed for periods after April 1, 2003 and will be obligated for all related costs. Markland has agreed to use its best efforts to manage and administer the contracts during this period prior to closing and to pay ASI a fee of $2,500 per month for administrative support. These fees amounted to $7,500 as of June 30, 2003. In consideration, the Company agreed to pay ASI $1,000,000, of which $150,000 is payable in cash, $10,000 of which was paid on execution of the Agreement and $10,000 of which is payable every thirty days following the date of execution of the Agreement until the closing, at which time the remaining balance is due and payable. In addition to the cash payment, the Company is required to issue to ASI, on closing, $850,000 worth of the Company's common stock at the then current market price (see Note 14 b). In the event that the Company fails to register such stock on behalf of ASI, or if a registration statement for the shares is delayed, the Company will have to issue an additional $150,000 worth of common stock to ASI. In connection with the Agreement, ASI and the Company entered into a registration rights agreement entitling ASI to include its shares of the Company's common stock in future registration statements filed by the Company under the Securities Act of 1933 in connection with public offerings of the Company's common stock. Also in connection with the Agreement, ASI and the Company entered into a sublicense agreement pursuant to which ASI has sublicensed to the Company the right to develop and sell products to certain government, military and homeland security customers in the United States and Canada using the Company's plasma sterilization and decontamination technology. Markland has agreed to pay ASI $5,000 per month for these rights for a period of 24 months, of which $20,000 has been paid to ASI under this agreement and is included in selling, general and administrative expenses for the year ended June 30, 2003. F-20 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 4 - TECHNOLOGY ACQUISITIONS (continued) Agreement to Acquire ASI Technology Corporation Assets (continued) - ------------------------------------------------------ The closing of the purchase of the plasma antenna technology is subject to a number of conditions and the Agreement may be terminated prior to closing under certain circumstances. As of June 30, 2003, the Company has made total payments of $65,000 to ASI in connection with the Agreement, which was included in Advances on Purchase of ASI Technology in the accompanying consolidated balance sheet. As of June 30, 2003, this agreement has not yet been finalized. For the year ended June 30, 2003, the Company had total revenues of $112,251 and costs of revenues of $99,973 from this contract.(excludes administrative support and license fees) NOTE 5 - ACCOUNTS PAYABLE Included in accounts payable at June 30, 2003 are the following expenses: Research & Development costs - related party $ 300,000 Research & Development costs 222,657 Ergo purchase - related party (Note 4) 273,100 Border security logistics costs 207,229 Dividends payable 152,716 Legal and professional fees 131,243 General and administrative expenses 110,855 Sales and marketing expenses 43,836 ----------- $1,441,636 =========== NOTE 6 - ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Included in accrued expenses and other current liabilities at June 30, 2003 are the following expenses: Accrued border security logistics costs $ 72,520 Accrued expenses - other 30,000 Accrued Interest 16,750 ---------- $ 119,270 ========== F-21 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 7 - LINES OF CREDIT Secured Line of Credit - ---------------------- On May 28, 2002, the Company received a notice of default from its secured lender, Market LLC, relating to a loan and security agreement and a related secured convertible revolving credit note, due to the Company's failure to make payments of principal and interest due under the note. As settlement for this default, on June 4, 2002, the Company entered into a Debt Restructuring Agreement, whereby the Company agreed to transfer legal title to the Vidikron shares to the lender in partial satisfaction of the indebtedness in the amount of $50,000. In addition, on June 4, 2002, the Company entered into an Amended Secured Convertible Revolving Credit Note Agreement, whereby the Company could borrow up to $4,500,000. Interest under this agreement accrued at the annual interest rate of 6% per annum. The maturity date of this amended note was December 31, 2002 and was secured by various liens on the Company's assets. The balance outstanding at the date of this agreement was $4,163,300. On December 9, 2002, as part of the Company's recapitalization, in accordance with the Exchange Agreement entered between the Company and Market LLC, $3,812,000 representing principal and accrued interest under this line of credit was converted into 3,812 shares of the Company's newly issued Series C 5% Cumulative Convertible Preferred Stock (see Note 9). On December 10, 2002, the Company entered into a Restated and Amended Secured Convertible Revolving Credit Note Agreement for $500,000. Interest under this note accrues at the annual interest rate of 6% per annum. The principal and accrued interest under this note is due on June 30, 2004, however, may be prepaid by the Company at any time without penalty. As of June 30, 2003, approximately $16,750 of interest has been accrued on this note and is included in accrued expenses on the consolidated balance sheet. The note may be converted at any time, in whole or in part, into shares of the Company's common stock. The total number of shares of common stock issuable upon conversion will be determined by dividing the principal amount of this note being converted by 80% of the closing bid price of the common stock based on the average of the five trading days immediately preceding the date of conversion. The value of the beneficial conversion feature of $125,000 is being amortized as interest expense over the period ending June 30, 2004. Amortization of this debt discount for the year ended June 30, 2003 was $41,666. New Equity Line - --------------- On September 10, 2003 Markland entered into a Private Equity Credit Agreement with Brittany Capital Management, Ltd. ("Brittany"). Markland agreed to issue and sell to Brittany up to $10,000,000 worth of its common stock over the next three years. Prior to any sales, the Company is required to file a registration statement with the Securities and Exchange Commission, relating to the shares to be issued, and to have such registration statement declared effective. F-22 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 7 - SECURED LINE OF CREDIT (CONTINUED) New Equity Line (continued) - --------------- After the registration statement is declared effective, Markland would be able to put shares to Brittany according to the terms outlined in the agreement. The minimum put amount is $1,000,000 over the life of the agreement and $25,000 per put. Failure to satisfy the minimum put requirement over the life of the Private Equity Credit Agreement will result in a charge to Markland. Shares will be issued to Brittany, in connection with each put, at 92% of the average of the closing bid prices for the lowest (3) three (not necessarily consecutive) trading days during the (10) trading day period immediately following the put date. Under certain conditions, the Company will be required to issue additional shares and/or accrue financial penalties. There can be no assurances that the Company will receive any proceeds from this agreement. NOTE 8 - NOTES PAYABLE At June 30, 2002, notes payable consisted of a convertible note payable of $1,367,027, due to James LLC, which bore interest at 8% per annum. Principal and any accrued interest were due on December 31, 2002. The note payable was convertible into shares of common stock of the Company at a conversion price for each share of common stock equal to the current market price on the date of notice of conversion. On December 9, 2002, in accordance with the Exchange Agreement between the Company and James LLC, $1,413,000, including accrued interest of $45,973, was converted into 1,413 shares of the Company's newly issued Series C 5% Cumulative Convertible Preferred Stock in full settlement of the note (see Note 9). On December 4, 2002, the Company entered into a note payable agreement with Market LLC for the principal amount of $11,500. Principal, together with interest, which accrued at the rate of 10% per annum, were both due upon demand. This note was paid-off in full on March 6, 2003. In December 2002, the Company acquired one-year Directors and Officers Life Insurance Policy, effective December 9, 2002 through December 9, 2003. Terms include an option to extend the policy for an additional year at 200% of the current year's annual premium amount, which is $55,000. The Company is amortizing such amount into selling, general and administrative expense on a straight-line basis. At June 30, 2003, the total un-amortized premiums included in "prepaid insurance" in the accompanying consolidated balance sheet amounted to $22,917. F-23 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 8 - NOTES PAYABLE (Continued) On December 31, 2002, the Company entered into a premium financing agreement with a lending institution to finance the aforementioned policy. Under the terms of the agreement, the Company made an initial payment of $11,000 and commencing January 2003, is required to make 10 additional monthly installment payments of $4,549, which includes principal and interest of 7.33% per annum. As of June 30, 2003, the Company has total principal outstanding under this note in the amount of $17,004, which is included in Note Payable in current liabilities in the accompanying consolidated balance sheet. NOTE 9 - STOCKHOLDERS' (DEFICIENCY) EQUITY Preferred Stock - --------------- The Company is authorized to issue five million shares of preferred stock which may be issued in series with such designations, preferences, stated values, rights, qualifications or limitations as determined by the Board of Directors. Series A Non-Voting Redeemable Convertible Preferred Stock - ---------------------------------------------------------- On February 25, 2000, the Company entered into a Stock Purchase Agreement, effective March 1, 2000 to purchase CWTel, Inc. from Charles Wainer for the sum of $1,200,000. Of the purchase price $200,000 was paid at closing, $700,000 was paid by the issuance of 360,000 shares of the Company's restricted common stock and $300,000 was to be paid in three equal payments at 90 days, 180 days, and 270 days from closing. These payments were represented by a promissory note in the amount of $300,000, which were included in liabilities from discontinued operations at June 30, 2002 and were collateralized by 30,000 shares of Series A Non-Voting Redeemable Convertible Preferred Stock ("Series A Preferred Stock"). During the year ended June 30, 2003, the Company issued these shares to Charles Wainer pursuant to the stock purchase agreement in settlement of their obligation under this promissory note. The Series A Preferred Stock has no par value, is non-voting and has a stated value of $10 per share. The Preferred Stock is convertible at any time at the option of the Company, and cannot be converted by the holder. This stock is convertible at the rate of twenty (20) shares of common stock for each share of Series A Preferred Stock. This conversion rate may be adjusted at any time by the Company as a result of either the sale of the Company or as a result of a stock split or stock dividend that is issued by the Company while these shares remain outstanding. The Company shall have the right, but not the obligation to, at any time after the issuance of these shares to redeem all or any portion of the outstanding shares of Series A Preferred Stock from the holder in cash at the stated value of $10 per share by sending notice to the holder. The Series A Preferred Stock has a liquidation preference of $10 per share. This stock does not accrue dividends. F-24 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 9 - STOCKHOLDERS' (DEFICIENCY) EQUITY (continued) Series B Convertible Preferred Stock - ------------------------------------ On March 16, 2001, the Company issued 10 shares of its Series B convertible preferred stock to Market LLC in connection with the acquisition of Vidikron. The preferred stock was convertible into approximately 85% of the Company's outstanding common stock, on a non-diluted basis upon the effectiveness of a reverse stock split of the Company's outstanding common stock. The reverse stock split was effective June 21, 2001. The automatic conversion resulted in the Company's issuance of an aggregate of 254,911,356 shares of the Company's common stock to Market LLC on that date. As of June 30, 2003, there are no shares of Series B Preferred Stock issued and outstanding. Series C 5% Cumulative Redeemable Convertible Preferred Stock - ------------------------------------------------------------- On December 9, 2002, the Company entered into an Exchange Agreement, among the Company and Market LLC and James LLC who agreed to exchange their convertible notes payable in the amount of $3,812,000 and $1,413,000, respectively ($5,225,000 in value), inclusive of accrued interest for 5,225 shares ($1,000 stated value) of the Company's newly issued Series C Preferred Stock. The Series C Preferred Stock is non-voting and has a liquidation preference of $1,000 per share. The holders of the Series C Preferred Stock are entitled to receive dividends on each share of preferred stock, which shall accrue on a daily basis at the rate of 5% per annum on the sum of the liquidation preference plus all accumulated and unpaid dividends thereon. These dividends shall accrue whether or not they have been declared or there are legally available funds with which to pay them, and at the option of the holders are payable either in cash or in unrestricted common stock. During February 2003, the Company sold an additional 170 shares of Series C Preferred Stock to James LLC for $170,000. The Series C Preferred Stock is redeemable at any time by the Company, and cannot be converted by the holders without written permission for a period of 6 months following the issuance of the shares and then only 10% may be converted per month thereafter. The Series C Preferred Stock is convertible at the option of the holder at a conversion price ranging from 65% to 80% of the common stock's market price at the time of the conversion, subject to an adjustment pursuant to any stock split. The amount of the associated discount is dependent upon the market price at the time of the conversion. F-25 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 9 - STOCKHOLDERS' (DEFICIENCY) EQUITY (Continued) Series C 5% Cumulative Redeemable Convertible Preferred Stock (Continued) - ------------------------------------------------------------- In accordance with EITF 98-5, "Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios," the Company calculated that as of the date of issuance there was a beneficial conversion feature in the amount of $1,367,821. The Company has recorded deemed dividends of $501,755, for the year ended June 30, 2003, relating to the accretion of these beneficial conversion features on the Preferred Stock. The deemed dividends increase the loss applicable to common stockholders in the calculation of basic and diluted net loss per common share and are included in stockholders' equity as a charge to accumulated deficit and a credit to additional paid-in capital. As the Series C Preferred Stock is convertible in stages over a period of 16 months, the Company will record the accrual of the deemed dividend of the beneficial conversion feature over this same period. In addition, the Company has determined that the maximum potential exposure under the beneficial conversion feature using the assumptions that the fair market value is $0.15 at the date of conversion and accordingly a conversion price at 65% of market value should be used, amounts to approximately $2,800,000. For the year ended June 30, 2003, dividends of $152,716 were accrued for the Series C Preferred Stock. The holders are not subject to any limitations on the number of conversions of Series C Preferred Stock or subsequent sales of the corresponding common stock that they can effect, other than a prohibition on any holder having a beneficial ownership of more than 9.999% of the outstanding shares of the Company's common stock. Series D Redeemable Convertible Preferred Stock - ----------------------------------------------- On June 17, 2003, the Company issued to Eurotech 16,000 shares of Series D Redeemable Convertible Preferred Stock in exchange for 100 million shares of the Company's common stock. The Series D Redeemable Convertible Preferred Stock ("Series D Preferred Stock") has a stated value of $1,000 per share, and a total liquidation value of $16 million. These shares are non-voting and do not accrue dividends. The Series D Preferred Stock is convertible into shares of the Company's common stock at a variable percentage of the then current market price, subject to certain adjustments. If the market price of Markland common stock is less than or equal to $0.25, it is convertible at 80% of the market price. If the market price is greater than $0.25, but less than or equal to $0.50, it is convertible at 75% of the market value. If the market price is greater than $0.50, but less than or equal to $0.75, it is convertible at 70% of the market price. And if the market price is greater than $0.75, it is convertible at 65% of the market price. F-26 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 9 - STOCKHOLDERS' (DEFICIENCY) EQUITY (continued) Series D Redeemable Convertible Preferred Stock (Continued) - ----------------------------------------------- Markland can redeem the Series D Preferred Stock according to the following schedule. During the first 180 days after the closing it can be redeemed at 120% of the stated value and accrued dividends. From 181 days until 270 days it can be redeemed for 125% of the stated value and dividends. From 271 days and ending 360 days after the closing it can be redeemed for 135% of the stated value and dividends. In accordance with EITF 98-5, the Company calculated that as of the date of issuance there was a beneficial conversion feature in the amount of $4,000,000. The Company has recorded deemed dividends of $4,000,000 for the year ended June 30, 2003, relating to the accretion of these beneficial conversion features on the Series D Preferred Stock. The deemed dividends increase the loss applicable to common stockholders in the calculation of basic and diluted net loss per common share and are included in stockholders' equity as a charge to accumulated deficit and a credit to additional paid-in capital. The Series D Preferred Stock is convertible immediately. In addition, the Company has determined that the maximum potential exposure under the beneficial conversion feature using the assumptions that the fair market value of the common stock is $0.19 at the date of conversion and accordingly a conversion price at 65% of market value should be used, amounts to approximately $8,800,000. During the fourth quarter of fiscal 2003, the Company sold an additional 430 shares of Series D Preferred Stock to James LLC for net proceeds of $430,000. The Company has determined that as of the date of issuance there was a beneficial conversion feature in the aggregate amount of $107,500. The Company has recorded deemed dividends of $107,500 for the year ended June 30, 2003, relating to the accretion of these beneficial conversion features on the Series D Preferred Stock. F-27 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 9 - STOCKHOLDERS' (DEFICIENCY) EQUITY (Continued) Series D Redeemable Convertible Preferred Stock (Continued) - ----------------------------------------------- During June of 2003, the Company sold an additional 180 shares of Series D Preferred Stock for net proceeds of $180,000. This issuance of preferred stock is subject to the same rights and preferences as the other Series D Preferred Stock that was issued by the Company during the year. As a result, the Company has determined that as of the date of issuance there was a beneficial conversion feature in the aggregate amount of $45,000. The Company has recorded deemed dividends of $45,000 for the year ended June 30, 2003, relating to the accretion of these beneficial conversion features on the Series D Preferred Stock. The deemed dividends increase the loss applicable to common stockholders in the calculation of basic and diluted net loss per common share and are included in stockholders' equity as a charge to additional paid-in capital and a credit to additional paid-in capital. The Series D Preferred Stock is convertible immediately. In addition, the Company has determined that the maximum potential exposure under the beneficial conversion feature at the date of conversion using the maximum possible conversion price at 65% of market value amounted to approximately $97,000. Common Stock - ------------ - - Private Placement of Common Stock --------------------------------- In December 2002, the Company entered into a private equity-financing agreement with two investors in order to raise $340,000 of new capital to finance operations. In exchange for the capital, the investors received an aggregate of 6,800,000 shares of the Company's common stock. - - Director's Compensation ----------------------- In December 2002, the Company issued an aggregate of 400,000 shares of its common stock to two of its former directors as compensation for services rendered while employed with the Company. In February 2003, the Company agreed to pay one of the aforementioned directors $5,000 in lieu of 100,000 shares of previously issued common stock. For the year ended June 30, 2003, a charge to compensation expense related to the above transactions amounted to $8,000. F-28 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 9 - STOCKHOLDERS' (DEFICIENCY) EQUITY (continued) Net Loss Per Share - ------------------ Securities that could potentially dilute basic earnings per share ("EPS") in the future, and that were not included in the computation of diluted EPS because to do so would have been anti-dilutive for the periods presented, consists of the following:
Shares Issuable at Assumed Average Market At June 30, Price at June 30, 2003 2003 ($0.06) ------------ ----------------- Convertible notes payable (Converted at 80% of market) $ 500,000 10,417,000 Series A Redeemable Convertible preferred stock 300,000 600,000 Series C 5% Cumulative Redeemable Convertible preferred stock (converted at 75% of market) 5,395,000 119,889,000 Series D Redeemable Convertible preferred stock (converted at 80% of market) 16,430,000 342,292,000 ------------ ------------ Total as of June 30, 2003 $22,625,000 473,198,000 ============ ============ Subsequent commitments after June 30, 2003: Common and potential common stock issued: Shares issued to consultants 1,500,000 Shares issued to ASI for purchase of assets 17,000,000 Shares issued to Syqwest, Inc. for unpaid services 45,000,000 360 shares of Series D preferred stock issued for cash (assumed average market price of $0.06 converted at 80% of market) 7,500,000 ------------ 71,000,000 ============ Common shares potentially issuable to management, directors and a consultant pursuant to compensation agreements 59,000,000 ============
F-29 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 10 - COMMITMENTS, CONTINGENCIES AND OTHER MATTERS Business Risks - -------------- The Company requires additional funds to commercialize its technologies and continue research and development efforts. The Company continues to incur substantial expenses and operating losses. No assurances can be given that the Company can complete development of any technology not yet completely developed or that, with respect to any technology that is fully developed, products incorporating the technology can be manufactured on a large scale or at a feasible cost. Further, no assurance can be given that any technology will receive market acceptance. The Company is subject to all of the risks inherent in the establishment of a new enterprise and the marketing and manufacturing of a new product, many of which are beyond the control of the Company. Compensation and Consulting Agreements - -------------------------------------- Effective January 2003, the Company entered into a one-year compensation agreement with an officer and three three-year agreements with an officer and two consultants to the Company, which provide for aggregate monthly remuneration of $47,500. One of these agreements provide for the issuance of 1.67% of the Company's outstanding common stock in three installments, 50% of the shares were issued on or about March 21, 2003, 25% of the shares on or about July 1, 2003 and 25% of the shares on or about October 1, 2003. If necessary, an additional issuance will occur on December 31, 2003, so that the total amount of shares issued up to December 31, 2003 will equal 1.67% of the outstanding common stock as of December 31, 2003. Based on approximately 220 million common shares outstanding as of June 30, 2003, a total of approximately 3,700,000 shares of common stock would be issuable under this compensation agreement, of which 2,596,760 were issued during the year ended June 30, 2003. The amount charged to operations related to this agreement for the year ended June 30, 2003 amounted to approximately $124,000. F-30 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 10 - COMMITMENTS, CONTINGENCIES AND OTHER MATTERS Compensation and Consulting Agreements (continued) - -------------------------------------- In addition, these three agreements, provide in total for the issuance of 5.01% of the Company's outstanding common stock in four installments on a fully diluted basis based upon certain performance criteria being met. Upon contract signing, the Company issued a number of shares of Common Stock then equivalent to 0.5% of the total number of shares of Common Stock then outstanding, inclusive of such Employee's/Consultant's Shares; on or about July 1, 2003, Company will issue to these Employee/Consultants a number of shares of Common Stock then equivalent to 0.5% of the total number of shares of Common Stock then outstanding, inclusive of such Employee's/Consultant's Shares if the Second Quarter gross revenue target has been met; and on or about October 1, 2003 Company will issue to these Employee/Consultants a number of shares of Common Stock then equivalent to 0.67% of the total number of shares of Common Stock then outstanding, inclusive of such Employee's/Consultant's Shares, minus the aggregate number of Shares issued to these parties in the first two installments if the Third Quarter gross revenue target has been met. If necessary, an additional issuance will occur in January 2004, so that the total amount of shares issued will equal 5.01% of the outstanding common stock calculated on a fully-diluted basis assuming the conversion of all convertible securities as of December 31, 2003. The Company determined that approximately 37,000,000 shares of common stock may be issuable under these compensation agreements, of which 6,748,465 were issued during the period ended June 30, 2003. The amount charged to operations related to these agreements for the year ended June 30, 2003 was approximately $513,000. The four agreements referred to above, also include a provision whereby each of these employees and consultants are eligible for an additional stock award which will be vested and issued after the first year anniversary of employment (such anniversary being January 1, 2004) equal to 0.6% of the Equity, then outstanding (2.4% in the aggregate). As of June 30, 2003, the Company has determined that the total number of shares which may issued under this award, amounts to approximately 18,000,000 shares, of which none have been issued during the year ended June 30, 2003. The amount charged to operations related to this award for the year ended June 30, 2003 amounted to approximately $1,100,000. During December 2002 and amended on January 18, 2003, the Company entered into a consulting agreement for six months with an option to renew for an additional six months for services relating to corporate communications. The agreement provides for monthly fees of $7,000, plus expenses, and 20,000 shares of the Company's common stock. For the year ended June 30, 2003, the Company has issued this consultant 140,000 shares of restricted common stock total and has charged approximately $30,000 to operations related to these stock issuances. During the months of February and March 2003, the Company entered into four new one-year consulting agreements, which provide for aggregate monthly remuneration of $3,000. In connection with those agreements, the Company issued 3,800,000 shares of restricted common stock. The shares were valued at $600,000, of which approximately $285,000 was charged to operations during the year ended June 30, 2003. F-31 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 10 - COMMITMENTS, CONTINGENCIES AND OTHER MATTERS (continued) Litigation - ---------- The Quest Net Corp. and CWTel, Inc. were named defendants in a lawsuit filed in the Circuit Court in Broward County, Florida. The lawsuit alleges the Company has failed to pay a promissory note dated September 8, 2000 in the amount of $66,672 and issued a check as payment on the note that was returned due to insufficient funds. As of August 15, 2003 there has been no active litigation activity on the case for approximately twenty months. There have been some sporadic settlement discussions but no agreement has been reached at this time. No estimate can be given as to the ultimate loss which would be suffered by the Company should it lose this lawsuit. The Company is also subject to various matters of litigation during its normal course of operations. Management believes that the eventual outcome of these matters will not have a material adverse effect on the Company's financial position, results of operations, or cash flows. NOTE 11 - DISCONTINUED OPERATIONS The Company has treated the disposition of CWTel in March 2002 and Vidikron in May 2002 as discontinued operations. The following information summarizes the operating results and liabilities of the discontinued operations included in the consolidated financial statements: For the Year For the Year Ended Ended June 30, June 30, 2003 2002 ------------ ------------ Revenues $ - $ 1,887,927 ============ ============ Income (loss) from operations 998,713 (3,259,421) Gain on disposition - 1,046,133 ------------ ------------ Income (loss) from discontinued operations $ 998,713 $(2,213,288) ============ ============ The income from discontinued operations for the year ended June 30, 2003 of $998,713 is a result of management of the Company completing an analysis of various obligations related to the discontinued operations. Management determined that $297,404 of liabilities related to the discontinued operations were either three years old (past the statute of limitations) or represented an overestimate of an accrual. In addition, a real estate lease obligation, which had been recorded in previous years at $706,309, was settled for $5,000. F-32 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 11 - DISCONTINUED OPERATIONS (Continued) During the year ended June 30, 2003, the Company converted a $300,000 promissory note related to the discontinued operations into 30,000 shares of Series A non-voting redeemable preferred stock (see Note 9). As of June 30, 2003, there were no assets or liabilities remaining from discontinued operations. The gain on disposition of discontinued operations for the year ended June 30, 2002 of $1,046,133 (net of $0 of income taxes) represented a gain from the discharge of indebtedness of the liabilities of CWTel, Inc. pursuant to a voluntary bankruptcy petition under Chapter 7, which was concluded in March 2002. NOTE 13 - INCOME TAXES The tax effects of temporary differences and net operating loss carry forwards that give rise to deferred tax assets or liabilities at June 30, 2003 are summarized as follows: Net operating loss carry forward $ 3,400,000 Valuation allowance on net deferred tax asset (3,400,000) ------------ Deferred Tax Asset, Net $ - ============ The Company has provided for a full valuation allowance on the net deferred tax asset due to the uncertainty of its realization. There were no provisions for income taxes during the years ended June 30, 2003 and 2002 due to the Company's net losses. The Company has estimated federal net operating loss carryforwards to be approximately $9,740,000, which are available to offset future taxable income, if any, expiring through 2023. These losses may be subject to substantial limitations as a result of IRC Section 382 rules governing changes in control. Further, the Company has not filed any federal, state or local income or franchise tax returns for the previous three years. Such failure may have a material adverse effect on the amount of any net operating loss carryforwards and may subject the Company to fines. F-33 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 14 - SUBSEQUENT EVENTS a. In July 2003, the Company entered into a consulting agreement with Emerging Concepts, a California entity, whereby the Company issued to them 1,500,000 shares of its restricted common stock in exchange, for consulting services, which will be provided for a period of one year commencing on July 7 2003 and expiring on July 7 2004, unless terminated by either party, as defined in the agreement. b. On July 10, 2003, the Company issued 17,000,000 shares of common stock to ASI in settlement of their obligation to issue $850,000 worth of common stock in connection with the Company's purchase of ASI technology. (Note 4) c. On July 24, 2003, the Company entered into an Amended and Restated Exchange Agreement (the "Amended Exchange Agreement") with Syqwest, Inc., a Rhode Island corporation, and related party, formerly known as Ocean Data Equipment Corporation ("Syqwest"). Under this Amended Exchange Agreement, Syqwest agreed to receive 45,000,000 shares of the Company's restricted common stock, which was valued at $0.01 per share, as payment for $450,000 of unpaid services, which were performed by Syqwest in connection with the research efforts as it relates to the Vehicle Stopping Technology. (see Note 3). Pursuant to the Amended Exchange Agreement, the Company has the right at any time by written notice to repurchase from Syqwest these 45,000,000 shares of restricted common stock at a purchase price of $0.01 per share. d. During July and August 2003, the Company sold to a third party an additional 360 shares of Series D Preferred Stock for gross proceeds of $360,000. The Company has determined that as of the date of issuance there was a beneficial conversion feature in the aggregate amount of $90,000. The Company will record this deemed dividend of $90,000 in the first quarter of 2003, relating to the accretion of these beneficial conversion features on the Series D Preferred Stock. The deemed dividends increase the loss applicable to common stockholders in the calculation of basic and diluted net loss per common share and are included in stockholders' equity as a charge to additional paid-in capital and a credit to additional paid-in capital. The Series D Preferred Stock is convertible immediately. The Company has determined that the maximum potential exposure under the beneficial conversion feature at the date of conversion using the maximum possible conversion price at 65% of market value amounted to approximately $129,000. e. On September 4, 2003, the Company signed a term sheet with Bay View Capital, LLC, a related party, in order to obtain a $1,400,000 bridge financing loan. This loan is not anticipated to cause any stock dilution and the proceeds from this loan will be used by the Company to fund the acquisitions of the Ergo and ASI assets (see Note 4). For consideration, the Company is required to make 24 monthly payments of principal and interest. Principal is calculated on a monthly basis using a "Cash Flow Recapture Mechanism" as defined in the agreement. Interest is payable at a rate of 12% per annum. The note is secured by, among other things, a first security interest in all assets of the Company. F-34 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 14 - SUBSEQUENT EVENTS (Continued) f. On September 4, 2003, The Company's Board of Directors approved a resolution to affect a one-for-sixty reverse stock split. As a result, each sixty shares of common stock will be converted automatically into one share of common stock. To avoid the issuance of fractional shares of common stock, each fractional share resulting from the reverse split will be rounded up to a whole share. The reverse stock split does not reduce the 500,000,000 shares of common stock that the Company is authorized to issue. The resolution, which impacts shareholders of record as of September 5, 2003, is expected to become effective on or about October 26, 2003. g. On September 4, 2003, The Company's Board of Directors approved a resolution to cancel its Series B convertible preferred stock. h. During July 2003, 570 shares of Series C 5% Cumulative Redeemable Preferred Stock were converted into 12,500,000 shares of the Company's common stock. F-35 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) AT MARCH 31, 2004 ASSETS ------ CURRENT ASSETS: Cash $ 445,777 Accounts receivable (including $373,326 due from related party) 474,612 Accounts receivable - long-term contracts 1,153,446 Inventoried costs relating to long-term contracts in process, net of progress payments 67,615 Other current assets 73,446 ------------- TOTAL CURRENT ASSETS 2,214,896 ------------- OTHER ASSETS: Property and Equipment, net of accumulated depreciation of $9,000 44,467 Intangible assets - ERGO, net of amortization of $166,669 233,331 Intangible assets - ASI, net of amortization of $166,666 833,334 Technology rights (Acoustic Core) 1,300,000 Intangible assets - STR, net of amortization of $300,000 5,706,808 ------------- TOTAL OTHER ASSETS 8,117,940 ------------- TOTAL ASSETS $ 10,332,836 ============= LIABILITIES AND STOCKHOLDERS' DEFICIENCY ---------------------------------------- CURRENT LIABILITIES: Accounts payable (including $288,256 due to related party) $ 985,649 Accrued expenses and other current liabilities 440,898 Secured Convertible Promissory Note, less debt discount of $20,831 479,169 Notes payable 744,838 Income taxes payable 151,800 ------------- TOTAL LIABILITIES 2,802,354 ------------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Series A redeemable convertible preferred stock - no par value; 30,000 authorized, issued and outstanding 300,000 Series C 5% cumulative convertible preferred stock - $.0001 par value; 8,000 authorized; 1,774 issued and outstanding; liquidation preference of $1,911,000 1 Series D convertible preferred stock - $.0001 par value; 40,000 authorized; 20,096 issued and outstanding; liquidation preference of $20,096,000 2 Common stock - $.0001 par value; 500,000,000 authorized; 11,307,676 shares issued and outstanding 1,132 Additional paid-in capital 24,706,912 Unearned compensation (2,828,034) Accumulated deficit (14,649,531) ------------- TOTAL STOCKHOLDERS' EQUITY 7,530,482 ------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 10,332,836 ============= See accompanying notes to condensed consolidated financial statements. F-36
MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED March 31, 2004 AND 2003 (UNAUDITED) 2004 2003 ------------ ------------ REVENUES (including $261,074 of revenue from related parties) $ 5,382,341 $ 322,451 COST OF REVENUES (including $260,934 of costs incurred to a related party) 4,486,512 85,798 ------------ ------------ GROSS PROFIT 895,829 236,653 ------------ ------------ OPERATING EXPENSES: Research and development expenses 49,139 -- Selling, general and administrative 2,337,298 643,193 Compensatory element of stock issuances for selling, general and administrative fees 2,543,561 1,480,468 Amortization of intangible assets 566,667 -- Depreciation and amortization 9,000 33,334 ------------ ------------ TOTAL OPERATING EXPENSES 5,505,665 2,156,995 ------------ ------------ OPERATING LOSS (4,609,836) (1,920,342) ------------ ------------ OTHER EXPENSES, NET: Interest expense 266,960 198,120 Other expense (income) -- (25,250) ------------ ------------ TOTAL OTHER EXPENSES, NET 266,960 172,870 ------------ ------------ NET LOSS (4,876,796) (2,093,212) DEEMED DIVIDEND TO PREFERRED STOCKHOLDERS 1,180,500 320,882 PREFERRED STOCK DIVIDEND - SERIES C 186,322 81,007 ------------ ------------ NET LOSS APPLICABLE TO COMMON STOCKHOLDERS $(6,243,618) $(2,495,101) ============ ============ BASIC AND DILUTED LOSS PER COMMON SHARE $ (0.97) $ (0.50) ============ ============ WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 6,438,758 4,998,495 ============ ============ See accompanying notes to condensed consolidated financial statements. F-37 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2004 AND 2003 (UNAUDITED) 2004 2003 ------------ ------------ REVENUES (including $35,864 of revenue from related parties) $ 1,818,846 $ 322,451 COST OF REVENUES (including $68,000 of costs incurred to a related party) 2,156,931 85,798 ------------ ------------ GROSS PROFIT (LOSS) (338,085) 236,653 ------------ ------------ OPERATING EXPENSES: Research and development expenses 49,139 -- Selling, general and administrative 1,210,332 475,641 Compensatory element of stock issuances for selling, general and administrative fees 1,004,419 1,476,468 Amortization of intangible assets 416,666 33,334 Depreciation and amortization (222) -- ------------ ------------ TOTAL OPERATING EXPENSES 2,680,334 1,985,443 ------------ ------------ OPERATING LOSS (3,018,419) (1,748,790) ------------ ------------ OTHER EXPENSES, NET: Interest expense 119,232 28,334 Other expense (income) -- 403 ------------ ------------ TOTAL OTHER EXPENSES, NET 119,232 28,737 ------------ ------------ NET LOSS (3,137,651) (1,777,527) DEEMED DIVIDEND TO PREFERRED STOCKHOLDERS 1,044,250 272,502 PREFERRED STOCK DIVIDEND - SERIES C 55,782 65,018 ------------ ------------ NET LOSS APPLICABLE TO COMMON STOCKHOLDERS $(4,237,683) $(2,115,047) ============ ============ BASIC AND DILUTED LOSS PER COMMON SHARE $ (0.50) $ (0.41) ============ ============ WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 8,458,556 5,135,109 ============ ============ See accompanying notes to condensed consolidated financial statements. F-38 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY FOR THE NINE MONTHS ENDED MARCH 31, 2004 (UNAUDITED)
Series A Convertible Common Stock Preferred Stock ----------------------- ----------------------- Shares Amount Shares Amount ---------- ---------- ---------- ---------- (1) Balance - July 1, 2003 3,671,573 $ 367 30,000 $ 300,000 Issuance of Series D convertible preferred stock -- -- -- -- Preferred stock dividend - beneficial conversion feature - Series D -- -- -- -- Preferred stock dividend - beneficial conversion feature - Series D -- -- -- -- Conversion of Series C convertible preferred stock into common stock 3,630,376 363 -- -- Stock issued in connection with settlement of liabilities to a related party 750,000 75 -- -- Stock issued in connection with consulting agreement 1,000 -- -- -- Stock issued in connection with acquisition of ASI assets 283,333 28 -- -- Stock issued in connection with consulting agreements 30,000 3 -- -- Additional stock issued in connection with employee/consulting agreements 1,231,077 124 -- -- Variable accounting adjustment of prior/ Unearned compensation -- -- -- -- Preferred stock dividend - Series C ($12.50 per share) -- -- -- -- Stock issued in connection with consulting agreements 159,029 17 -- -- Stock issued in connection with employment agreement 11,509 1 -- -- Acquisition of Science and Technology Research Corporation, Inc. 1,539,779 154 -- -- Amortization of employment/ and consulting agreements -- -- -- -- Net loss -- -- -- -- ---------- ---------- ---------- ---------- Balance - March 31, 2004 11,307,676 $ 1,132 30,000 $ 300,000 ========== ========== ========== ========== (1) Share amounts have been restated to reflect the 1-for-60 reverse stock split effected on October 27, 2003. See accompanying notes to condensed consolidated financial statements. F-39
MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY FOR THE NINE MONTHS ENDED MARCH 31, 2004 (UNAUDITED)
Series C Convertible Series D Convertible Preferred Stock Preferred Stock ------------------------ ----------------------- Shares Amount Shares Amount ---------- ---------- ---------- ---------- Balance - July 1, 2003 5,395 $ 1 16,430 $ 2 Issuance of Series D convertible preferred stock -- -- 3,666 -- Preferred stock dividend - beneficial conversion feature - Series D -- -- -- -- Preferred stock dividend - beneficial conversion feature - Series D -- -- -- -- Conversion of Series C convertible preferred stock into common stock (3,621) -- -- -- Stock issued in connection with settlement of liabilities to a related party -- -- -- -- Stock issued in connection with consulting agreement -- -- -- -- Stock issued in connection with acquisition of ASI assets -- -- -- -- Stock issued in connection with consulting agreements -- -- -- -- Additional stock issued in connection with employee/consulting agreements -- -- -- -- Variable accounting adjustment of prior unearned compensation -- -- -- -- Preferred stock dividend - Series C ($12.50 per share) -- -- -- -- Stock issued in connection with consulting agreement -- -- -- -- Stock issued in connection with employment agreement -- -- -- -- Acquisition of Science and Technology Research Corporation, Inc. -- -- -- -- Amortization of employment/ and consulting agreements -- -- -- -- Net loss -- -- -- -- ---------- ---------- ---------- ---------- Balance - March 31, 2004 1,774 $ 1 20,096 $ 2 ========== ========== ========== ========== See accompanying notes to condensed consolidated financial statements. F-40
MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY FOR THE NINE MONTHS ENDED MARCH 31, 2004 (UNAUDITED) Additional Unearned Paid-in Compensation Capital ------------- ------------- Balance - July 1, 2003 $ (4,381,379) $ 13,900,104 Issuance of Series D convertible preferred stock -- 3,402,000 Preferred stock dividend - beneficial conversion feature - Series D -- 1,180,500 Preferred stock dividend - beneficial conversion feature - Series D -- (1,180,500) Conversion of Series C convertible preferred stock into common stock -- 201,315 Stock issued in connection with settlement of liabilities to a related party -- 449,925 Stock issued in connection with consulting agreement (11,400) 11,400 Stock issued in connection with acquisition of ASI assets -- 849,972 Stock issued in connection with consulting agreements (123,000) 122,996 Additional stock issued in connection with employee/consulting agreements -- 730,455 Variable accounting adjustment of prior unearned compensation 273,633 (273,633) Preferred stock dividend - Series C ($12.50 per share) -- (186,322) Stock issued in connection with consulting agreements (350,000) 366,058 Stock issued in connection with employment agreements -- 32,796 Acquisition of Science and Technology Research Corporation, Inc. -- 5,099,846 Amortization of employment/and consulting agreements 1,764,112 -- Net loss -- -- ------------- ------------- Balance - March 31, 2004 $ (2,828,034) $ 24,706,912 ============= ============= See accompanying notes to condensed consolidated financial statements. F-41 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY FOR THE NINE MONTHS ENDED MARCH 31, 2004 (UNAUDITED) Total Accumulated Stockholders' Deficit Equity ------------- ------------- Balance - July 1, 2003 $ (9,772,735) $ 46,360 Issuance of Series D convertible preferred stock -- 3,402,000 Preferred stock dividend - beneficial conversion feature - Series D -- 1,180,500 Preferred stock dividend - beneficial conversion feature - Series D -- (1,180,500) Conversion of Series C convertible preferred stock into common stock -- 201,678 Stock issued in connection with settlement of liabilities to a related party -- 450,000 Stock issued in connection with consulting agreement -- -- Stock issued in connection with acquisition of ASI assets -- 850,000 Stock issued in connection with consulting agreements -- -- Additional stock issued in connection with employee/consulting agreements -- 730,579 Variable accounting adjustment of prior unearned compensation -- -- Preferred stock dividend - Series C ($12.50 per share) -- (186,322) Stock issued in connection with consulting agreements -- 16,075 Stock issued in connection with employment agreement -- 32,796 Acquisition of Science and Technology Research Corporation, Inc. -- 5,100,000 Amortization of employment/and consulting agreements -- 1,764,112 Net loss (4,876,796) (4,876,796) ------------- ------------- Balance - March 31, 2004 $(14,649,531) $ 7,530,482 ============= ============= See accompanying notes to condensed consolidated financial statements. F-42 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED MARCH 31, 2004 AND 2003 (UNAUDITED) For the Nine Months Ended March 31, 2004 2003 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $(4,876,796) $(2,093,212) Adjustment to reconcile net loss to net cash used in operating activities: Amortization of intangible assets 566,667 33,334 Compensatory stock issuances 2,543,561 1,480,468 Amortization of debt discount 62,503 -- Depreciation expense 9,000 -- Changes in operating assets and liabilities: Accounts receivable (875,041) (158,287) Inventoried costs 28,915 -- Prepaid expenses and other current assets (18,027) 21,750 Advances on purchase of ASI 65,000 (15,000) Accounts payable 29,439 (49,143) Accrued expenses and other current liabilities 104,496 408,828 ------------ ------------ NET CASH USED IN OPERATING ACTIVITIES (2,360,283) (371,262) ------------ ------------ CASH USED IN INVESTING ACTIVITIES: Cash used for acquisitions, net of cash acquired (934,170) (112,220) ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of note payable - James LLC -- (11,500) Proceeds from sale of common stock in private placement -- 340,000 Convertible preferred stock 3,402,000 170,000 Proceeds from note payable - Bayview 1,400,000 -- Repayments of note payable - Bayview (1,050,231) -- Principal payments on note payable - insurance financing (17,004) -- ------------ ------------ NET CASH PROVIDED BY FINANCING ACTIVITIES 3,734,765 498,500 ------------ ------------ NET INCREASE IN CASH AND CASH EQUIVALENTS 440,312 15,018 CASH AND CASH EQUIVALENTS - BEGINNING 5,465 4,911 ------------ ------------ CASH AND CASH EQUIVALENTS - ENDING $ 445,777 $ 19,929 ============ ============ See accompanying notes to condensed consolidated financial statements. F-43 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED MARCH 31, 2004 AND 2003 (UNAUDITED) SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: - ------------------------------------------------- 2004 2003 ----------- ----------- Cash paid during the periods for: Interest $ -- $ -- =========== =========== Taxes $ -- $ -- =========== =========== Non-cash investing and financing activities: Conversion of notes payable, accrued interest and dividends into preferred stock $ 201,678 $ 5,225,000 =========== =========== Acquisition of technology rights by issuance of common stock $ -- $ 1,300,000 =========== =========== Deemed dividend preferred beneficial conversion feature $ 1,180,500 $ 320,882 =========== =========== Dividends on preferred stock $ 186,322 $ 81,007 =========== =========== Conversion of accounts payable into common stock $ 450,000 $ -- =========== =========== During the nine months ended March 31, 2004 and 2003, the Company acquired the assets and assumed the liabilities of various entities. The transactions had the following non-cash impact on the balance sheet: 2004 2003 ----------- ----------- Accounts receivable $ 438,795 -- Inventoried costs 96,530 -- Equipment 53,467 -- Other current assets 32,502 -- Intangibles 7,006,808 400,000 Accrued liabilities (368,932) -- Notes payable to sellers (375,000) (287,780) Equity (5,950,000) -- ----------- ----------- Net Cash Used for Acquisitions, net of cash acquired of $215,830 $ 934,170 $ 112,220 =========== =========== See accompanying notes to condensed consolidated financial statements. F-44 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF PRESENTATION --------------------- The accompanying unaudited condensed consolidated financial statements of Markland Technologies, Inc. and Subsidiaries (the "Company") have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, without being audited, pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary to make the financial statements not misleading have been included. Operating results for the nine months ended March 31, 2004 are not necessarily indicative of the result that may be expected for the year ending June 30, 2004. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes included in the Company's 10-KSB for the year ended June 30, 2003 filed with the Securities and Exchange Commission. In December 2002, Markland purchased an acoustic core technology (`Acoustic Core"). In January 2003, Markland purchased the assets of Ergo Systems, Inc. ("Ergo"). In September 2003, Markland purchased the intangible assets of ASI Technology Corporation ("ASI"). In October 2003, Markland completed a business combination with Science and Technology Research Corporation, Inc. ("STR"). As a result of these transactions, Markland began to provide end-to-end solutions to the Department of Homeland Security ("DHS"). Markland's principal end customer is the United States Government. STR provides a full range of electrical and mechanical engineering support as well as fabrication and assembly of electrical and mechanical systems. STR is a producer of the United States Navy's Shipboard Automatic Chemical Agent Detection and Alarm System (ACADA). The Navy deploys the "man-portable" point detection system to detect all classic nerve and blister agents as well as other chemical warfare agent (CWA) vapors. The Company is subject to risks common to companies in the Homeland Defense Technology industry, including but not limited to, development by its competitors of new technological innovations, dependence on key personnel, protection of proprietary technology and loss of significant customers. Since the United States Government represents substantially all of the Company's current revenue, the loss of this customer would have a material adverse effect on the Company's future operations. The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. The Company has incurred net losses of $4,876,796 and $2,093,212 for the nine months ended March 31, 2004 and 2003, respectively. Additionally, the Company had a working capital deficiency of $587,458 at March 31, 2004. The Company has limited finances and requires additional funding in order to market and license its products. Subsequent to March 31, 2004, the Company sold equity securities and received net proceeds of approximately $9 million (see Note 13). There is no assurance that the Company can reverse its operating losses, or that it can raise additional capital to allow it to continue its planned operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. The Company's ability to continue as a going concern remains dependent upon the ability to obtain additional financing or through the generation of positive cash flows from continuing operations. These financial statements do not include any adjustments relating to the recoverability of recorded asset amounts that might be necessary as a result of the above uncertainty. F-45 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ------------------------------------------ Use of Estimates in Preparation of Financial Statements - ------------------------------------------------------- The preparation of the accompanying condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates that are particularly susceptible to change are those assumptions used in determining the allowance for doubtful accounts receivable and capitalized contract costs and related gross margins. Cash - ---- The Company has cash balances in banks in excess of the maximum amount insured by the FDIC as of March 31, 2004. Allowance for Doubtful Accounts - ------------------------------- The allowance for doubtful accounts reflects management's best estimate of probable losses inherent in the accounts receivable balance. Management determines the allowance based on known trouble accounts, historical experience and other currently available evidence. The Company's receivables are from government contracts. The Company has not experienced any losses in accounts receivable and has provided no allowance at March 31, 2004. Inventoried Costs - ----------------- Inventoried costs relating to long-term contracts are stated at the actual production costs, including factory overhead, allocable general and administrative costs, initial tooling and other related non-recurring costs, incurred to date reduced by amounts attributed to with revenue recognized on units delivered. Inventoried costs relating to long-term contracts are reduced by charging any amounts in excess of estimated realizable value to cost of sales. Property and Equipment - ---------------------- Property and equipment are valued at cost and are being depreciated over a three-year life using the straight-line method for financial reporting. Upon sale or retirement, the asset cost and its related accumulated depreciation are eliminated from the respective accounts and any resulting gain or loss is recognized in income. Routine maintenance and repairs are charged to expense as incurred. Expenditures, which materially increase the value or extend useful lives, are capitalized. Revenue Recognition/Concentration of Credit Risk - ------------------------------------------------ The Company's accounts receivable and revenue for the periods covered by these financial statements are substantially all from three fixed-price contracts with the United States Navy. Under these three contacts, the Company recognizes revenue under the units-of-delivery method. At the time the units are shipped to the warehouse of the United States Navy, the Company recognizes as revenue the contract price of each unit and recognizes the applicable cost of each unit shipped. As of March 31, 2004, two of these contracts were completed and a third Contract has unshipped backlog of approximately $1,001,000. F-46 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) ------------------------------------------ Fair Value of Financial Instruments - ----------------------------------- The financial statements include various estimated fair value information at March 31, 2004, as required by Statement of Financial Accounting Standards No. 107, "Disclosures about Fair Value of Financial Instruments." Such information, which pertains to the Company's financial instruments, is based on the requirements set forth in that statement and does not purport to represent the aggregate net fair value to the Company. The carrying amounts of current assets and current liabilities approximate their fair market values. Advertising Costs - ----------------- Advertising costs are expensed as incurred. For the nine months ended March 31, 2004 and 2003, advertising and promotion expenses were approximately $8,849 and $-0-, respectively. Shipping Costs - -------------- Delivery and shipping costs are included in contract costs in the accompanying condensed consolidated statements of operations. Research and Development - ------------------------ Research and development costs are charged to expense as incurred. The Company capitalizes costs related to acquired technologies that have achieved technological feasibility and have alternative uses. Acquired technologies, which are in process at the date of acquisition or have no alternative uses are expensed as research and development costs. Reverse Stock-Split/Loss Per Share - ----------------------------------- Share amounts and per share data have been restated to reflect a 1 for 60 reverse stock split effective as of October 27, 2003. Basic and diluted net loss per common share has been computed based on the weighted average number of shares of common stock outstanding during the periods presented. Common stock equivalents, consisting of a secured convertible promissory note, Series A and D Convertible preferred stock and Series C 5% Cumulative Convertible preferred stock, discussed in the notes to condensed consolidated Financial statements, were not included in the calculation of the diluted loss per share because their inclusion would have had the effect of decreasing the loss per share otherwise computed. At March 31, 2004, as permitted under SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure", which amended SFAS No. 123, "Accounting for Stock-Based Compensation", the Company has elected to continue to follow the intrinsic value method in accounting for its stock-based employee compensation arrangements as defined by Accounting Principles Board Opinion ("APB") No. 25, "Accounting for Stock Issued to Employees", and related interpretation including Financial Accounting Standards Board ("FASB") Interpretation No. 44, "Accounting for Certain Transactions Involving Stock Compensation", an interpretation of APB No. 25. No stock-based employee compensation cost is reflected in operations, as there are no options outstanding. F-47 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) ------------------------------------------ Impact of Recently Issued Accounting Standards - ---------------------------------------------- In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities." The Statement amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under Statement 133. This Statement is effective for contracts entered into or modified after June 30, 2003, except as stated below and for hedging relationships designated after June 30, 2003. The guidance should be applied prospectively. The provisions of this Statement that relate to Statement 133 Implementation Issues that have been effective for fiscal quarters that began prior to June 15, 2003, should continue to be applied in accordance with their respective effective dates. In addition, certain provisions relating to forward purchases or sales of when-issued securities or other securities that do not yet exist, should be applied to existing contracts as well as new contracts entered into after June 30, 2003. The adoption of SFAS No. 149, which became effective for contracts entered into or modified after June 30, 2003, did not have any impact on the Company's' financial position, results of operations or cash flows. In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity". SFAS No. 150 establishes standards for classification and measurement in the statement of financial position of certain financial instruments with characteristics of both liabilities and equity. It requires classification of a financial instrument that is within its scope as a liability (or an asset in some circumstances). SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003 and, otherwise, is effective at the beginning of the first interim period beginning after June 15, 2003. The adoption of SFAS No. 150 did not have any impact on the Company's consolidated results of operations, financial condition or cash flows. In January 2003, the FASB issued Interpretation Number 46, "Consolidation of Variable Interest Entities" ("FIN No. 46"). This interpretation of Accounting Research Bulletin ("ARB") No. 51, "Consolidated Financial Statements," provides guidance for identifying a controlling interest in a variable interest entity ("VIE") established by means other than voting interests. FIN No. 46 also requires consolidation of a VIE by an enterprise that holds such a controlling interest. In December 2003, the FASB completed its deliberations regarding the proposed modification to FIN No. 46 and issued Interpretation Number 46(R), "Consolidation of Variable Interest Entities - an Interpretation of ARB No. 51" ("FIN No. 46(R)"). The decisions reached included a deferral of the effective date and provisions for additional scope exceptions for certain types of variable interests. Application of FIN No. 46(R) is required in financial statements of public entities that have interests in VIEs or potential VIEs commonly referred to as special-purpose entities for periods ending after December 15, 2003. Application by public entities (other than small business issuers) for all other types of entities is required in financial statements for periods ending after December 15, 2004. The adoption of FIN No. 46(R) is not expected to have an impact on the Company's consolidated financial position, results of operations or cash flows. F-48 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 3. INVENTORIED COSTS ----------------- Inventoried cost relating to long-term contracts include the following: Inventoried costs relating to U.S. Government contracts, net of amounts attributed to revenues recognized to date $ 504,497 Progress billings 436,882 ----------- Net $ 67,615 =========== The Company receives progress payments on a monthly basis equal to 95% of the allowable costs incurred for each month. Under the contracts, the United States Navy has ownership of the inventory when the progress payments are remitted to the Company. The aggregate amount of general and administrative costs incurred by STR During the nine months ended March 31, 2004 was $212,257. As stated in Note 2, the Company allocates general and administrative costs to certain types of Government contracts. The amounts of general and administrative costs remaining in inventoried costs at March 31, 2004 are estimated at $30,270. Such estimates assume that the costs have been removed from inventories on a basis proportional to the amounts of each cost element expected to be charged to cost of sales. 4. ACQUISITIONS ------------ Purchase of Intangible Assets of ASI Technology Corporation - ----------------------------------------------------------- On March 19, 2003, the Company and ASI Technology Corporation, a Nevada corporation, ("ASI") closed its Technology Purchase Agreement (the "Agreement"). Under the Agreement, ASI agreed to sell and the Company agreed to purchase certain assets relating to ASI's gas plasma antenna technology, including patents, patent applications, equipment, government contract rights and other intellectual property rights. The Chief Executive Officer of the Company was a significant employee of ASI during the two years prior to this agreement. Under an interim arrangement, the Company had received revenues from these contracts billed for periods after April 1, 2003 and was obligated for all related costs. Markland had agreed to use its best efforts to manage and administer the contracts during this period prior to closing and to pay ASI a fee of $2,500 per month for administrative support. These fees amounted to $15,000. The closing of this transaction occurred on September 30, 2003. The purchase price of the ASI assets consisted of $150,000 in cash, of which $65,000 was paid by June 30, 2003 and $85,000 was paid by December 31, 2003 and 283,333 shares of common stock valued at $850,000. In connection with the Agreement, ASI and the Company entered into a registration rights agreement entitling ASI to include its shares of the Company's common stock in future registration statements filed by the Company under the Securities Act of 1933 in connection with public offerings of the Company's common stock. In the event that the Company fails to register such stock on behalf of ASI, or if a registration statement for the shares is delayed, the Company will have to issue an additional $150,000 worth of common stock to ASI. F-49 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 4. ACQUISITIONS (Continued) ------------ Purchase of Intangible Assets of ASI Technology Corporation (Continued) - ----------------------------------------------------------- Also in connection with the Agreement, ASI and the Company entered into a sublicense agreement pursuant to which ASI has sublicensed to the Company the right to develop and sell products to certain government, military and homeland security customers in the United States and Canada using the Company's plasma sterilization and decontamination technology. Markland has agreed to pay ASI $5,000 per month for these rights for a period of 24 months, of which $45,000 has been paid to ASI under this agreement and is included in selling, general and administrative expenses for the nine months ended March 31, 2004. Purchase of Science and Technology Research, Inc. - ------------------------------------------------- On October 27, 2003, the Company completed the acquisition of 100% of the common stock of Science and Technology Research Corporation, Inc., a Maryland corporation ("STR"), by its subsidiary, Security Technology, Inc., a Delaware Corporation ("STI"), through a merger of STI with newly formed STR Acquisition Corporation, a Maryland Corporation. STR is a producer of the U.S. Navy's Shipboard Automatic Chemical Agent Detection and Alarm System (ACADA). The Navy deploys the "man-portable" point detection system to detect all classic nerve and blister agents as well as other chemical warfare agent (CWA) vapors. The purchase price for the STR totaled $6,475,000 and consisted of $900,000 in cash, which was paid in October 2003, 1,539,779 shares of common stock valued at $5,100,000, a promissory note of $375,000 and acquisition costs of $100,000. The promissory note bears no interest. Holders of the shares of common stock were granted piggy-back registration rights. The promissory note is collateralized by all of the assets of STR and 40% of the Common Stock of STR held by the Company. The promissory note is payable, as amended, as follows: June 15, 2004 $ 75,000 July 15, 2004 75,000 August 15, 2004 75,000 September 15, 2004 75,000 October 15, 2004 75,000 -------- $375,000 ======== F-50 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 4. ACQUISITIONS (Continued) ------------ Purchase of Science and Technology Research, Inc. (Continued) - ------------------------------------------------- A summary of the allocation of the aggregate consideration for the merger to the fair value of the assets acquired and liabilities assumed is as follows: Cash $ 900,000 Promissory note 375,000 Common Stock 5,100,000 Acquisition costs 100,000 ---------- Total Purchase Price $6,475,000 ---------- Fair value of net assets acquired: Current assets, including cash of $215,830 $ 783,657 Property and equipment 53,467 Liabilities assumed: Accounts payable & accrued expenses and taxes (368,932) ---------- Fair value of identifiable net tangible assets acquired 468,192 Intangible assets (a) 6,006,808 ---------- Total Purchase Price 6,475,000 ========== (a) The company has currently hired an independent firm to value the intangible assets and allocate the purchase price in accordance with FASB Statement #141. The Company funded the cash portion of the acquisition from a loan provided by Bay View Capital, LLC, ("Bay View"). Robert Tarini, Markland's Chairman is affiliated with Bay View. The entire amount of the loan provided by Bay View was $1,400,000. The results of operations of STR have been included in the Company's condensed consolidated Statements of operations commencing October 1, 2003. Unaudited proforma financial information for the nine months ended March 31, 2004 and 2003, had the acquisition been completed as of July 1, 2002, is as follows: 2004 2003 --------------- --------------- Revenues $ 6,721,000 $ 3,259,000 Loss from operations $ (4,664,000) $ (2,181,000) Net loss $ (4,974,000) $ (2,843,000) Net loss per common share $ (0.98) $ (0.57) F-51 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 5. AMORTIZATION OF INTANGIBLE ASSETS --------------------------------- The purchase price of $400,000 related to the January 2003 acquisition of Ergo was allocated entirely to a contract with the United States Government. The contract is being amortized over a three-year period commencing with the date of the acquisition, January 14,2003. Amortization expense related to the contract for the nine months ended March 31,2004 was $100,000. The intangible assets acquired from ASI on September 30, 2003 totaled $1,000,000. These assets are being amortized over a three-year period commencing October 1,2003. Amortization expense related to this contract for the nine months ended March 31,2004 was $166,666. The excess of the purchase price of STR over the net tangible assets acquired is $6,006,808. This amount was initially allocated 50% to goodwill and 50% to amortizable intangible assets with a five-year estimated economic life resulting in amortization expense of $300,000 for the six months ended March 31, 2004. The Company has retained the services of an independent appraiser to perform a FASB #141 valuation, which is expected to be completed by the filing of its June 30, 2004 10-KSB. Future amortization expense related to the above-acquired intangible assets is as follows: Years Ending June 30, Amount --------------- ---------- 2004 (3 months) $ 266,666 2005 1,066,669 2006 999,993 2007 683,334 2008 600,000 2009 150,000 ---------- $3,166,662 ========== The intangible assets entitled "Acoustic Core" which has a carrying value of $1,300,000 are not available for commercial sale as of March 31, 2004. Accordingly, no amortization expense has been recorded through March 31, 2004. 6. SECURED LINE OF CREDIT ---------------------- On December 10, 2002, the Company entered into a Restated and Amended Secured Convertible Revolving Credit Note Agreement for $500,000. Interest under this note accrues at the interest rate of 6% per annum. The principal and accrued interest under this note is due on June 30, 2004, however, may be prepaid by the Company at any time without penalty. As of March 31, 2004, approximately $39,250 of interest has been accrued on this note and is included in accrued expenses on the condensed consolidated balance sheet. The note may be converted at any time, in whole or in part, into shares of the Company's common stock. The total number of shares of common stock issuable upon conversion will be determined by dividing the principal amount of this note being converted by 80% of the closing bid price of the common stock based on the average of the five trading days immediately preceding the date of conversion. The value of the beneficial conversion feature of $125,000 is being amortized as interest expense over the period ending June 30, 2004. Amortization of this debt discount for the nine months ended March 31, 2004 was $62,503. Subsequent to March 31, 2004, the remaining principal and accrued interest were converted into 404,265 shares of the Company's common stock. F-52 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 7. NEW EQUITY LINE --------------- On September 10, 2003, Markland entered into a Private Equity Credit Agreement with Brittany Capital Management, Ltd. ("Brittany"). Markland agreed to issue and sell to Brittany up to $10,000,000 worth of its common stock over the next three years. Prior to any sales, the Company is required to file a registration statement with the Securities and Exchange Commission, relating to the shares to be issued, and to have such registration statement declared effective. After the registration statement is declared effective, Markland would be able to put shares to Brittany according to the terms outlined in the agreement. The minimum put amount is $1,000,000 over the life of the agreement and $25,000 per put. Failure to satisfy the minimum put requirement over the life of the Private Equity Credit Agreement will result in a charge to Markland. Shares will be issued to Brittany, in connection with each put, at 92% of the average of the closing bid prices for the lowest three (3) (not necessarily consecutive) trading days during the ten (10) trading day period immediately following the put date. Under certain conditions, the Company will be required to issue additional shares and/or accrue financial penalties. There can be no assurances that the Company will receive any proceeds from this agreement. As of March 31, 2004, the Company has not drawn down on this equity line. 8. NOTES PAYABLE ------------- Note Payable - NPAI - ------------------- In December 2003, the Company signed a note to finance an insurance premium. The unpaid balance of this note was $20,069. Note Payable - Bay View Capital - ------------------------------- On September 4, 2003, the Company signed a term sheet with Bay View Capital, LLC, a related party, and received in October, 2003 a $1,400,000 bridge-financing loan of which the Company immediately repaid $211,000. The proceeds from this loan were used by the Company to fund the acquisition of STR (Note 4). The loan agreement provides for the Company to make 24 monthly payments of principal and interest. Principal is calculated on a monthly basis using a "Cash Flow Recapture Mechanism" as defined in the agreement. Interest is payable at a rate of 12% per annum payable monthly in arrears. The note requires monthly payments in the amount equal to twenty five percent of the gross revenue of STR for the immediately preceding calendar month. The entire principal amount together with any unpaid interest is payable in full on October 27, 2005. If the monthly payments relating to the gross monthly revenues are not paid there is a 5% percent penalty and the interest will change to 18% for the reminder of the loan. The note is secured by, among other things, a security interest in all assets of the Company. The balance due Bay View Capital at March 31, 2004 was $349,769 and is currently classified as a current liability. The balance of the note, plus accrued interest, was paid in full in April of 2004. F-53 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 9. STOCKHOLDERS' EQUITY -------------------- Preferred Stock: - --------------- - - Series B Convertible Preferred Stock ------------------------------------ On September 4, 2003, the Company's board of directors approved a resolution to cancel its Series B convertible preferred stock. - - Series C 5% Cumulative Convertible Preferred Stock -------------------------------------------------- The shares of the Series C Preferred Stock are non-voting and have a liquidation preference of $1,000 per share. The holders of the Series C Preferred Stock are entitled to receive dividends on each share of preferred stock, which shall accrue on a daily basis at the rate of 5% per annum of the liquidation preference, plus all accumulated and unpaid dividends thereon. These dividends shall accrue whether or not they have been declared or there are legally available funds with which to pay them, and at the option of the holders are payable either in cash or in common stock. The Series C Preferred Stock is redeemable at any time by the Company, and cannot be converted by the holders without written permission for a period of 6 months following the issuance of the shares and then only 10% may be converted per month thereafter. The Series C Preferred Stock is convertible at the option of the holder at a conversion price ranging from 65% to 80% of the common stock's market price at the time of the conversion. During February 2003, the Company sold 170 shares of Series C Preferred Stock for $170,000. During July 2003, 570 shares of Series C 5% Cumulative Preferred Stock were converted into 208,333 shares of the Company's common stock. During the quarter ended March 31, 2004, the holder of Series C Convertible Preferred Stock converted 3,051 shares of Series C Convertible Preferred Stock together with accrued dividends of $201,679 into 3,422,043 shares of the Company's common stock. As of March 31, 2004, accumulated dividends of $137,360 were accrued for the Series C Preferred Stock. Series D Convertible Preferred Stock - ------------------------------------ Shares of the Series D Convertible Preferred Stock have a liquidation preference of $1,000 per share, are non-voting, do not accrue dividends, are redeemable by the Company anytime and are convertible into shares of the Company's common stock at a conversion price ranging from 65% to 80% of the common stock's market price at the time of the conversion. During the nine months ended March 31,2004, the Company sold to a third party 3,666 shares of Series D Preferred Stock for gross proceeds of $3,402,000. The Company has determined that as of the date of issuance there was a beneficial conversion feature in the aggregate amount of $1,180,500. The Company recorded this deemed dividend of $1,180,500 during the nine months ended March 31, 2004, relating to the accretion of these beneficial conversion features on the Series D Preferred Stock. The deemed dividends increases the loss applicable to common shareholders in the calculation of basic and diluted net loss per common share and is included in stockholders' equity as a charge to additional paid-in capital and a credit to additional paid-in capital. F-54 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 9. STOCKHOLDERS' (DEFICIENCY) EQUITY (Continued) -------------------- Reverse Stock Split - ------------------- On September 4, 2003, the Company's board of directors approved a resolution to effect a one-for-sixty reverse stock split. As a result, each sixty shares of common stock was converted automatically into one share of common stock. To avoid the issuance of fractional shares of common stock, each fractional share resulting from the reverse split was rounded up to a whole share. The reverse stock split did not reduce the 500,000,000 shares of common stock that the Company is authorized to issue. The resolution, which impacts shareholders of record as of September 5, 2003 became effective on October 27, 2003. Common Stock Issuances - ---------------------- In July 2003, the Company entered into a consulting agreement with Emerging Concepts, a California entity, whereby the Company issued to them 25,000 shares of its common stock in exchange for consulting services which will be provided for a period of one year commencing on July 7, 2003 and expiring on July 7 2004, unless terminated by either party, as defined in the agreement. On July 24, 2003, the Company entered into an Agreement (the "Agreement") with Syqwest, Inc., a Rhode Island corporation, and related party, formerly known as Ocean Data Equipment Corporation ("Syqwest"). Under this Agreement, Syqwest agreed to receive 750,000 shares of the Company's restricted common stock as full consideration for $450,000 of unpaid services, which were performed by Syqwest in connection with the research efforts as it relates to the Vehicle Stopping Technology. Pursuant to the Agreement, the Company has the right at any time by written notice to repurchase from Syqwest these 750,000 shares of restricted common stock at a purchase price of $0.60 per share. Based on this redemption right and the restriction on the sale of such securities, the Company has valued these shares at the redemption price of $450,000. During September and October 2003, the Company issued to a consultant a bonus of 5,000 shares of common stock valued at $20,500. These shares were issued for enhanced media and corporate communications programs between June and December 2003. In Addition, the Company issued 1,000 shares of it common stock valued at $11,400, as part of the consultant's quarterly compensation. In November 2003, the Company entered into an agreement with MarketShare Recovery, Stuart Siller, and George Martin to perform certain services with regard to investor relations for the Company. In consideration for these services, the Company agreed to issue a cumulative total of 90,908 shares of its common stock of which 22,727 shares were issued valued at $62,500 during the quarter ended December 31, 2003. In November 2003, the Company entered into an agreement with Research Works to prepare an equity research report. In consideration for these services, the Company issued Research Works a total of 37,099 shares valued at $100,000. During the six months ended December 31, 2003 the Company also awarded three non-officer employees of the company a total of 11,509 shares valued at $34,020 for services rendered during the period. During the quarter ended March 31, 2004, the Company issued to various consultants 116,203 shares of its common stock for services rendered valued at $192,436. F-55 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 10. NET LOSS PER SHARE ------------------ Securities that could potentially dilute basic earnings per share ("EPS") in the future, and that were not included in the computation of diluted EPS because to do so would have been anti-dilutive for the periods presented, consists of the following:
Shares Potentially Issuable --------------------------- Convertible notes payable (convertible at 80% of market) 404,266 Series A Redeemable Convertible Preferred Stock 30,000 Series C 5% Cumulative Convertible Preferred Stock plus accrued dividends (convertible at 80% of market) 1,526,036 Series D Convertible Preferred Stock (convertible at 80% of market) 20,096,000 ------------ Total as of March 31, 2004 22,056,302 ============ Subsequent equity issuances: Conversion of convertible debt 404,266 Common shares and warrants issued in connection with Private Placements 26,752,299 Conversion of Series C Convertible Preferred Stock 1,526,036 Conversion of Series D Convertible Preferred Stock 604,839 Shares issuable under compensation agreements (see note 13)
F-56 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 11. COMMITMENTS ----------- Facility Rental - --------------- STR leases its location in Fredericksburg, Virginia, on a month-to-month basis without a formal agreement. Rent expense relating to this location for the nine months ended March 31, 2004 was $46,561. Compensation Agreements - ----------------------- Effective January 2003, the Company entered into a one-year compensation agreement with an officer and three three-year agreements with an officer and two consultants to the Company, which provide for aggregate monthly remuneration of $47,500. New agreements were entered into in May of 2004 (see Note 13). During the quarter ended March 31, 2004, the Company accrued $600,000 of bonus compensation under these agreements. One of these agreements provide for the issuance of 1.67% of the Company's outstanding common stock in three installments, 50% of the shares were issued on or about March 21, 2003, 25% of the shares on or about July 1, 2003 and 25% of the shares on or about October 1, 2003. If necessary, an additional issuance will occur on December 31, 2003, so that the total amount of shares issued up to December 31, 2003 will equal 1.67% of the outstanding common stock as of December 31, 2003. The three three-year compensation agreements provide in total for the issuance of 5.01% of the Company's outstanding common stock in four installments on a fully diluted basis based upon certain performance criteria being met. All of the shares issuable under the four agreements were earned as of January 1, 2004. Accordingly, a total of 1,410,723 shares were issued, of which 155,754 were issued during the year ended June 30, 2003 and 1,254,969 were issued during the nine months ended March 31, 2004. In connection with the STR acquisition, the Company entered into a one year consulting agreement, as amended on March 17, 2004, with the former President and principal of STR ("Consultant"). In consideration for the consulting services to be rendered by Consultant, the Company shall pay to Consultant the sum of $285,000 (the "FEE"). The fee shall be payable as follows: $25,000 is payable on July 15, 2004, a second payment in the amount of $35,000, is payable on August 15, 2004, a third payment in the amount of $60,000 is payable on September 15, 2004, a fourth payment in the amount of $60,000 is payable on October 15, 2004, a fifth payment in the amount of $60,000 is payable on November 15, 2004 and the sixth and final payment in the amount of $45,000 is payable on December 15, 2004. F-57 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 12. LITIGATION ---------- The Company is also subject to various matters of litigation during its normal course of operations. Management believes that the eventual outcome of these matters will not have a material adverse effect on the Company's financial position, results of operations, or cash flows. 13. SUBSEQUENT EVENTS ----------------- Conversion of Preferred Stock - ----------------------------- Subsequent to March 31, 2004, the holders of the Series C Convertible Preferred Stock converted all of the shares of Series C Convertible Preferred stock together with accrued dividends into 1,526,036 shares of Markland common stock. Subsequent to March 31, 2004, the holders of Series D Convertible Preferred Stock converted 810 shares of Series D Convertible Preferred Stock into 604,839 shares of common stock. Conversion of Convertible Secured Debt. - -------------------------------------- Subsequent to March 31, 2004, a secured lender converted the principal amount of $500,000 and all accrued interest into 404,266 shares of Markland's common stock. Private Placement Transaction Completed on April 2, 2004 - -------------------------------------------------------- Pursuant to a private placement transaction completed on April 2, 2004, Markland issued the following: o 3,333,333 shares of Markland common stock; o 3,333,333 shares of Markland common stock to be obtained by exercising three-year common stock purchase warrants with an exercise price of $1.00 per share; o 333,333 shares of Markland common stock to be obtained by exercising three-year common stock purchase warrants with an exercise price of $1.40 per share that were issued as finder's compensation. F-58 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 13. SUBSEQUENT EVENTS (Continued) ----------------- Private Placement Transaction Completed on April 2, 2004 (Continued) - -------------------------------------------------------- Markland agreed to register for resale 150% of the 3,333,333 shares of its common stock in this offering and 110% of the 3,333,333 shares of its common stock that are issuable to certain stockholders upon exercise of the warrants to cover the shares of its common stock, if any, issuable to certain selling stockholders as liquidated damages for breach of certain covenants contained in or as a result of adjustments contemplated by certain provisions of the Securities Purchase Agreement dated as of April 2, 2004 or the Registration Rights Agreement dated as of April 2, 2004. Markland also agreed to register 110% of the 333,333 shares of its common stock that are issuable to certain stockholders upon exercise of the warrants issued as finder's fee. Markland received gross proceeds of $2,000,000 and net proceeds of $1,750,000 (after deducting finders' fees and transaction costs) from this private placement. Private Placement Transaction Completed on April 16, 2004 - --------------------------------------------------------- Pursuant to a private placement transaction completed on April 16, 2004, Markland issued the following: o 2,500,000 shares of Markland common stock; o 2,500,000 shares of Markland common stock to be obtained by exercising three-year common stock purchase warrants with an exercise price of $1.50 per share; o 25,000 shares of Markland common stock to be obtained by exercising three-year common stock purchase warrants with an exercise price of $2.00 per share that were issued as finder's compensation. Markland agreed to register for sale 150% of the 2,500,000 shares of its common stock sold to certain selling stockholders pursuant to the Securities Purchase Agreement dated April 16, 2004 and 110% of the 2,500,000 shares of its common stock that are issuable to certain stockholders upon exercise of the warrants sold in this private placement, to cover the shares of its common stock, if any, issuable to certain selling stockholders as liquidated damages for breach of certain covenants contained in or as a result of adjustments contemplated by certain provisions of the Securities Purchase Agreement dated as of April 16, 2004 or the Registration Rights Agreement dated as of April 16, 2004. Markland received gross proceeds of $2,000,000 and net proceeds of $1,890,000 (after deducting finders' fees and transaction costs) from this private placement. Private Placement Transaction Completed on May 3, 2004 - ------------------------------------------------------ Pursuant to a private placement transaction completed on May 3, 2004, Markland issued the following: o 7,098,750 shares of its common stock; o 7,098,750 shares of its common stock to be obtained by exercising three-year redeemable common stock purchase warrants with an exercise price of $1.50 per share; o 529,800 shares of its common stock to be obtained by exercising three-year redeemable common stock purchase warrants with an exercise price of $1.50 per share. F-59 MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 13. SUBSEQUENT EVENTS (Continued) ----------------- Private Placement Transaction Completed on May 3, 2004 (Continued) - ------------------------------------------------------ Markland received gross proceeds of $5,679,000 and net proceeds of $5,133,860 (after deducting finders' fees and transaction costs) from this private placement Under certain conditions, Markland can redeem the warrants issued in the May 3, 2004 private placement at a price of $.0001 per warrant. Note Payable - Bay View Capital - ------------------------------- Subsequent to March 31, 2004, the Company paid in the full balance of a note payable to Bay View Capital of $349,769 and all accrued interest. Compensation Agreements - ----------------------- On May 12, 2004, the Company entered into five-year compensation agreements with two executives and a consultant. These agreements provide for the following remuneration: o Base annual remuneration of $300,000 each (an aggregate of $900,000) payable over the five-year period ending January 2, 2009; o Discretionary bonuses over the term of the agreement of up to 300% of the base remuneration; and o Conditional stock grants over the period commencing April 1, 2004 through January 2, 2008, based on defined performance criteria. The stock grants, if all earned, entitle each of the three parties to receive up to 7.5% of the Company's common stock on a fully diluted basis. These grants are earned according to the following schedule: ---------------------- ------------------- -------------------- Grant 1 2.5% April 1, 2004 ---------------------- ------------------- -------------------- Grant 2 1.0% July 1, 2004 ---------------------- ------------------- -------------------- Grant 3 1.0% October 1, 2004 ---------------------- ------------------- -------------------- Grant 4 1.0% January 2, 2005 ---------------------- ------------------- -------------------- Grant 5 1.0% January 2, 2006 ---------------------- ------------------- -------------------- Grant 6 0.5% January 2, 2007 ---------------------- ------------------- -------------------- Grant 7 0.5% January 2, 2008 ---------------------- ------------------- -------------------- The number of shares of common stock to be granted on each grant date is equal to the product of (a) the number of fully diluted shares outstanding at the grant date and (b) the stock percentage associated with that grant date. o In the event of a change in control of the Company during the period covered by the agreement, each executive/consultant will automatically be granted all remaining stock grants and will be due cash and expense compensation for the shorter of (i) three years from the date of the change in control, or (ii) until the end of the term of the agreement. A change in control is defined by the agreements as a change in the majority ownership of the equity of the company, or the resignation or termination of the majority of the board of directors within a two month period, or the replacement of the CEO or the President of the Company. F-60 SCIENCE & TECHNOLOGY RESEARCH, INC. FINANCIAL STATEMENTS For the Nine Months Ended September 30, 2003 and the Year Ended December 31, 2002 F-61 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM - ------------------------------------------------------- To the Stockholder of Science & Technology Research, Inc. We have audited the accompanying balance sheet of Science & Technology Research, Inc. as of September 30, 2003, and the related statements of operations, changes in stockholder's equity, and cash flows for the nine-month period ended September 30, 2003 and the year ended December 31, 2002. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the public company accounting oversight board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Science & Technology Research, Inc. as of September 30, 2003, and the results of its operations and cash flows for the nine month period ended September 30, 2003 and the year ended December 31, 2002 in conformity with accounting principles generally accepted in the United States of America. As discussed in Note 1 to the financial statements, effective October 1, 2003, Science & Technology Research, Inc. was acquired by Markland Technologies, Inc., a publicly traded company. /s/ Marcum & Kliegman LLP February 25, 2004 New York, New York F-62 SCIENCE & TECHNOLOGY RESEARCH, INC. BALANCE SHEET September 30, 2003 - --------------------------------------------------------------------------------------------------
ASSETS ------ CURRENT ASSETS - -------------- Cash $ 215,830 Accounts receivable - long-term contracts 438,795 Inventoried costs relating to long-term contracts in process net of progress payments 96,530 Other current assets 32,502 ------------- Total Current Assets $ 783,657 PROPERTY AND EQUIPMENT, Net 53,467 - ---------------------- ------------- TOTAL ASSETS $ 837,124 ============= LIABILITIES AND STOCKHOLDER'S EQUITY ------------------------------------ CURRENT LIABILITIES - ------------------- Accounts payable $ 131,351 Income taxes payable 150,000 Accrued expenses and other current liabilities 87,581 ------------- TOTAL LIABILITIES $ 368,932 ------------- COMMITMENTS AND CONTINGENCIES - ----------------------------- STOCKHOLDER'S EQUITY - -------------------- Common stock, par value $.01; 100,000 shares authorized; 12,000 shares issued and outstanding 120 Additional paid in capital 79,880 Retained earnings 388,192 ------------- TOTAL STOCKHOLDER'S EQUITY 468,192 ------------- TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 837,124 ============= The accompanying notes are an integral part of these financial statements. F-63
SCIENCE & TECHNOLOGY RESEARCH, INC. STATEMENTS OF OPERATIONS For the Nine Months Ended September 30, 2003 and Year Ended December 31, 2002 - -------------------------------------------------------------------------------- 2003 2002 ------------ ------------ NET SALES $ 5,502,455 $ 2,206,849 - --------- CONTRACT COSTS 4,771,784 1,856,113 - -------------- ------------ ------------ GROSS PROFIT 730,671 350,736 ------------ ------------ OPERATING EXPENSES - ------------------ Research and development expenses 203,775 84,114 General and administrative expenses 134,194 150,923 ------------ ------------ TOTAL OPERATING EXPENSES 337,969 235,037 ------------ ------------ OPERATING INCOME 392,702 115,699 ------------ ------------ OTHER INCOME (EXPENSE) - ---------------------- Interest income 17 104 Interest expense (5,986) (22,487) ------------ ------------ TOTAL OTHER EXPENSE (5,969) (22,383) ------------ ------------ INCOME BEFORE INCOME TAXES 386,733 93,316 INCOME TAXES 169,095 33,487 - ------------ ------------ ------------ NET INCOME $ 217,638 $ 59,829 ============ ============ The accompanying notes are an integral part of these financial statements. F-64 SCIENCE & TECHNOLOGY RESEARCH, INC. STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY - ----------------------------------------------------------------------------------------------
Common Stock Additional ---------------------- Paid-In Retained Shares Amount Capital Earnings Total --------- --------- --------- --------- --------- BALANCE - January 1, 2002 12,000 $ 120 $ 79,880 $110,725 $190,725 Net income -- -- -- 59,829 59,829 --------- --------- --------- --------- --------- BALANCE - December 31, 2002 12,000 120 79,880 170,554 250,554 Net income -- -- -- 217,638 217,638 --------- --------- --------- --------- --------- BALANCE - September 30, 2003 12,000 $ 120 $ 79,880 $388,192 $468,192 ========= ========= ========= ========= ========= The accompanying notes are an integral part of these financial statements. F-65
SCIENCE & TECHNOLOGY RESEARCH, INC. STATEMENTS OF CASH FLOWS For the Nine Months Ended September 30, 2003 and Year Ended December 31, 2002 - ------------------------------------------------------------------------------------------------
2003 2002 ------------- ------------- CASH FLOWS FROM OPERATING ACTIVITIES - ------------------------------------ Net income $ 217,638 $ 59,829 ------------- ------------- Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 12,172 13,928 Changes in operating assets and liabilities: Accounts receivable (68,583) 166,471 Inventoried costs, net 260 (26,320) Prepaid expenses and other current assets (25,136) 11,273 Accounts payable 22,237 (96,597) Income tax payable 116,513 33,487 Accrued expenses and other current liabilities 12,547 50,169 ------------- ------------- TOTAL ADJUSTMENTS 70,010 152,411 ------------- ------------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 287,648 212,240 ------------- ------------- CASH FLOWS FROM INVESTING ACTIVITIES - ------------------------------------ Purchases of property and equipment (26,800) -- ------------- ------------- NET CASH USED IN INVESTING ACTIVITIES $ (26,800) $ -- ------------- ------------- The accompanying notes are an integral part of these financial statements. F-66
SCIENCE & TECHNOLOGY RESEARCH, INC. STATEMENTS OF CASH FLOWS, Continued For the Nine Months Ended September 30, 2003 and Year Ended December 31, 2002 - -------------------------------------------------------------------------------------
2003 2002 ------------- ------------- CASH FLOWS FROM FINANCING ACTIVITIES - ------------------------------------ Repayment of note payable (32,083) (23) Repayment of advances from affiliates (137,750) (216,365) ------------- ------------- NET CASH USED IN FINANCING ACTIVITIES (169,833) (216,388) ------------- ------------- NET INCREASE (DECREASE) IN CASH 91,015 (4,148) CASH - Beginning 124,815 128,963 ------------- ------------- CASH - Ending $ 215,830 $ 124,815 ============= ============= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION - ------------------------------------------------- Cash paid during the periods for: Interest $ 5,986 $ 22,456 Income taxes $ 52,582 $ -- The accompanying notes are an integral part of these financial statements. F-67
SCIENCE & TECHNOLOGY RESEARCH, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- NOTE 1 - Nature of Operations and Merger ------------------------------- Science & Technology Research, Inc. (the "Company") was incorporated on November 14, 1988, under the laws of the State of Maryland. Effective October 1, 2003, Markland Technologies, Inc., a publicly-traded Florida corporation, ("Markland") completed the acquisition of the Company, through a merger of STI with newly formed STR Acquisition Corporation, a Maryland Corporation. Markland agreed to pay the stockholder of the Company $6,375,000 which consisted of $900,000 in cash, $5,100,000 worth of Markland common stock, and a promissory note of $375,000. As a result of this transaction, the Company became a wholly owned subsidiary of STI effective October 1, 2003. The Company provides a full range of electrical and mechanical engineering support as well as fabrication and assembly of electrical and mechanical systems. The Company is a producer of the United States Navy's Shipboard Automatic Chemical Agent Detection and Alarm System (ACADA). The Navy deploys the "man-portable" point detection system to detect all classic nerve and blister agents as well as other chemical warfare agent (CWA) vapors. The Company has three contracts with the United States Navy in the aggregate of approximately $15,368,000. One of these contracts commenced in the year 2000. The Company is subject to risks common to companies in the Homeland Defense Technology industry, including but not limited to, development by its competitors of new technological innovations, dependence on key personnel, protection of proprietary technology and loss of significant customers. Since the U.S. Navy represents substantially all of the Company's current revenue, the loss of this customer would have a material adverse effect on the Company's future operations. NOTE 2 - Summary of significant Accounting Policies ------------------------------------------ Use of Estimates in Preparation of Financial Statements ------------------------------------------------------- The preparation of the accompanying financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates that are particularly susceptible to change are those assumptions used in determining the allowance for doubtful accounts receivable and capitalized contract costs and related gross margins. Cash ---- The Company has cash balances in banks in excess of the maximum amount insured by the FDIC as of September 30, 2003. F-68 SCIENCE & TECHNOLOGY RESEARCH, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- NOTE 2 - Summary of Significant Accounting Policies, continued ------------------------------------------ Allowance for Doubtful Accounts ------------------------------- The allowance for doubtful accounts reflects management's best estimate of probable losses inherent in the accounts receivable balance. Management determines the allowance based on known trouble accounts, historical experience and other currently available evidence. The Company's receivables are from government contracts. The Company has not experienced any losses in accounts receivable and has provided no allowance at September 30, 2003. Inventoried Costs ----------------- Inventoried costs relating to long-term contracts are stated at the actual production costs, including factory overhead, allocable general and administrative costs, initial tooling and other related non-recurring costs, incurred to date reduced by amounts attributed to with revenue recognized on units delivered. Inventoried costs relating to long-term contracts are reduced by charging any amounts in excess of estimated realizable value to cost of sales. Property and Equipment ---------------------- Property and equipment are valued at cost and are being depreciated using the straight-line method for financial reporting. Upon sale or retirement, the asset cost and its related accumulated depreciation are eliminated from the respective accounts and any resulting gain or loss is recognized in income. Routine maintenance and repairs are charged to expense as incurred. Expenditures, which materially increase the value or extend useful lives, are capitalized. Revenue Recognition/Concentration of Credit Risk ------------------------------------------------ The Company's accounts receivable and revenue for the periods covered by these financial statements are substantially all from three fixed-price contracts with the United States Navy. One contract for approximately $4.6 million was completed during December 2002. Another contract for approximately $8.4 million had approximately $2.9 million remaining to be billed (backlog) as of September 30, 2003. The third contract has no revenue to date and had approximately $2.3 million remaining to be billed (backlog) as of September 30, 2003. Under these three contacts, the Company recognizes revenue under the units-of-delivery method. At the time the units are shipped to the warehouse of the United States Navy, the Company recognizes as revenue the contract price of each unit and recognizes the applicable cost of each unit shipped. F-69 SCIENCE & TECHNOLOGY RESEARCH, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- NOTE 2 - Summary of Significant Accounting Policies, continued ------------------------------------------ Fair Value of Financial Instruments ----------------------------------- The financial statements include various estimated fair value information at September 30, 2003, as required by Statement of Financial Accounting Standards No. 107, "Disclosures about Fair Value of Financial Instruments." Such information, which pertains to the Company's financial instruments, is based on the requirements set forth in that statement and does not purport to represent the aggregate net fair value to the Company. The carrying amounts of current assets and current liabilities approximate their fair market values. Advertising Costs ----------------- Advertising costs are expensed as incurred. For the nine months ended September 30, 2003 and the year ended December 31, 2002 advertising and promotion expenses were approximately $700 and $1,100, respectively. Shipping Costs -------------- Delivery and shipping costs are included in contract costs in the accompanying statements of operations. Research and Development ------------------------ Research and development costs are charged to expense as incurred. The Company capitalizes costs related to acquired technologies that have achieved technological feasibility and have alternative uses. Acquired technologies, which are in process at the date of acquisition or have no alternative uses are expensed as research and development costs. Income Taxes ------------ Income taxes are accounted for in accordance with Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes". SFAS No. 109 employs an asset and liability method of accounting for income taxes. Under the asset and liability method, deferred income taxes are recognized for tax consequences of temporary differences by applying enacted statutory tax rates applicable to future years to the difference between the financial statement carrying amounts and the tax bases of existing assets and liabilities. Under SFAS No. 109, the effect on deferred income taxes of a change in tax rates is recognized in income in the period that includes the enactment date. As of September 30, 2003, there were no significant temporary differences and accordingly, there were no deferred tax assets or deferred tax liabilities. F-70 SCIENCE & TECHNOLOGY RESEARCH, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- NOTE 2 - Summary of Significant Accounting Policies, continued ------------------------------------------ Income Taxes, continued ----------------------- The components of income tax expense are as follows: For the nine months For the year ended ended September 30, 2003 December 31, 2002 ------------------ ----------------- Federal $122,687 $ 25,459 State 46,408 8,028 --------- --------- $169,095 $ 33,487 ========= ========= New Pronouncements ------------------ In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," which supercedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" and certain provisions of APB Opinion No. 30, "Reporting Results of Operations - Reporting the Effects of Disposal of a Segment of a Business and Extraordinary, Unusual and Infrequently Occurring Events and Transactions." SFAS No. 144 requires that long-lived assets to be disposed of by sale, including discontinued operations, be measured at the lower of carrying amount or fair value, less cost to sell, whether reported in continuing operations or in discontinued operations. SFAS No. 144 also broadens the reporting requirements of discontinued operations to include all components of an entity that have operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the entity. The provisions of SFAS No. 144 are effective for fiscal years beginning after December 15, 2001. Adoption of SFAS No. 144 did not have a material effect on the Company's financial position or results of operations. In April 2002, the FASB issued SFAS No. 145, "Rescission of SFAS Statement No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections". SFAS No. 145 requires that gains and losses from extinguishment of debt be classified as extraordinary items only if they meet the criteria in Accounting Principles Board Opinion No. 30 ("Opinion No. 30"). Applying the provisions of Opinion No. 30 will distinguish transactions that are part of an entity's recurring operations from those that are unusual and infrequent that meet the criteria for classification as an extraordinary item. Adoption of SFAS No. 145 did not have a material effect on the Company's financial position or results of operations. F-71 SCIENCE & TECHNOLOGY RESEARCH, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- NOTE 2 - Summary of Significant Accounting Policies, continued ------------------------------------------ New Pronouncements, continued ----------------------------- In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." SFAS No. 146 addresses accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (Including Certain Costs Incurred in a Restructuring)". SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized and measured initially at fair value when the liability is incurred. SFAS No. 146 is effective for exit or disposal activities that are initiated after December 31, 2002, with early application encouraged. Adoption of SFAS No. 146 did not have a material effect on the Company's financial position or results of operations. On December 31, 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure". SFAS No. 148 amends SFAS No. 123, "Accounting for Stock-Based Compensation", to provide alternative methods of transition to SFAS No. 123's fair value method of accounting for stock-based employee compensation. SFAS No. 148 also amends the disclosure provisions of SFAS No. 123 and APB Opinion No. 28, `Interim Financial Reporting", to require disclosure in the summary of significant accounting policies of the effects of an entity's accounting policy with respect to stock-based employee compensation on reported net income and earnings per share in annual and interim financial statements. While the statement does not amend SFAS No. 123 to require companies to account for employee stock options using the fair value method, the disclosure provisions of SFAS No. 148 are applicable to all companies with stock-based employee compensation, regardless of whether they account for that compensation using the fair value method of SFAS No. 123, or the intrinsic value method of APB Opinion 25. The Company will continue to account for stock-based compensation according to APB 25, while its adoption of SFAS No. 148 requires the Company to provide prominent disclosures about the effect of SFAS No. 123 on reported income and will require the Company to disclose these effects in the interim financial statements as well. No stock-based employee compensation cost is reflected in operations, as there are no options or other common stock equivalents outstanding. In November 2002, the FASB issued Interpretation No. 45, ("FIN 45"), "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others." FIN 45 requires a company, at the time it issues a guarantee, to recognize an initial liability for the fair value of obligations assumed under the guarantee and elaborates on existing disclosure requirements related to guarantees and warranties. The initial recognition requirements of FIN 45 are effective for guarantees issued or modified after December 31, 2002 and adoption of the disclosure requirements are effective for the Company as of December 31, 2002. The adoption of FIN 45 did not have a significant impact on the Company's financial position or results of operations. F-72 SCIENCE & TECHNOLOGY RESEARCH, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- NOTE 2 - Summary of Significant Accounting Policies, continued ------------------------------------------ New Pronouncements, continued ----------------------------- In January 2003, as amended in December 2003, the FASB issued FASB Interpretation No. 46 (" FIN 46"), "Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51." FIN 46 requires certain variable interest entities to be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46 is effective for all new variable interest entities created or acquired after January 31, 2003. For variable interest entities created or acquired prior to February 1, 2003, the provisions of FIN 46 must be applied for the first interim or annual period ending after December 15, 2004. The Company is currently evaluating the effect that the adoption of FIN 46 will have on its results of operations and financial condition. Impairment of Long-Lived Assets ------------------------------- Pursuant to SFAS No. 144, the Company continually monitors events and changes in circumstances that could indicate carrying amounts of long-lived assets, including intangible assets, may not be recoverable. An impairment loss is recognized when expected cash flows are less than the asset's carrying value. Accordingly, when indicators or impairment are present, the Company evaluates the carrying value of such assets in relation to the operating performance and future undiscounted cash flows of the underlying business. The Company's policy is to record an impairment loss when it is determined that the carrying amount of the asset may not be recoverable. F-73 SCIENCE & TECHNOLOGY RESEARCH, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- NOTE 3 - Accounts Receivable ------------------- The accounts receivable at September 30, 2003 consists of the following: United States Government: Amount billed $ 78,795 Accrued profit on units delivered 360,000 ---------- Total $ 438,795 ========== Accrued profit represents revenue recognized on units delivered to the U.S. Navy for which the Company was reimbursed only its recoverable costs. The amount representing the accrued profit is payable at the end of the applicable contract. It is anticipated that such accrued accounts receivable from the U.S. Navy at September 30, 2003 will be paid within the near term. NOTE 4 - Inventoried Costs ----------------- Inventoried cost relating to long-term contracts include the as following: Inventoried costs relating to U.S. Government contracts, net of amounts attributed to revenues recognized to date $3,881,510 Progress billings 3,784,980 ----------- Net $ 96,530 =========== The Company receives progress payments on a monthly basis equal to 95% of the allowable costs incurred for each month. Under the contracts, the United States Navy has ownership of the inventory when the progress payments are remitted to the Company. The aggregate amounts of general and administrative costs incurred during the nine months ended September 30, 2003 and the year ended December 31, 2002 were $356,003 and $486,723, respectively. As stated in Note 2, the Company allocates general and administrative costs to certain types of Government contracts. The amounts of general and administrative costs remaining in inventoried costs at September 30, 2003 are estimated at $233,000. Such estimates assume that the costs have been removed from inventories on a basis proportional to the amounts of each cost element expected to be charged to cost of sales. F-74 SCIENCE & TECHNOLOGY RESEARCH, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- NOTE 5 - Property and Equipment ---------------------- Property and equipment at September 30, 2003 consists of the following: Estimated Amount useful lives ---------- ------------- Office equipment and computers $ 79,724 5 - 7 years Furniture and fixtures 23,631 5 - 7 years Laboratory equipment 20,628 5 years ---------- 123,983 Less: Accumulated depreciation (70,516) ---------- Property and Equipment, Net $ 53,467 ========== Depreciation expense for the nine months ended September 30, 2003 and the year ended December 31, 2002 was $12,172 and $13,928, respectively. NOTE 6 - Loan Payable - Bank ------------------- The Company entered into a loan agreement with a bank during September 2000. The agreement provides for a loan that the Company used to finance the acquisition of equipment and furniture. The loan required monthly principal payments of $917 and the remaining outstanding balance was due at August 28, 2005. The loan carried an interest rate of Prime plus 2%. The loan was collateralized by the equipment and furniture. During August 2003 the loan was paid in full. As of September 30, 2003 and December 31, 2002 the outstanding loan payable on this loan was $0 and $32,083, respectively. NOTE 7 - Loan Payable - Officer ---------------------- An officer and sole stockholder has made advances to the Company through the normal course of business. The loan was non-interest bearing and had no defined repayment terms. As of September 30, 2003 and December 31, 2002 the outstanding loan payable on this loan was $0 and $137,750, respectively. F-75 SCIENCE & TECHNOLOGY RESEARCH, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- NOTE 8 - Commitments ----------- Facility Rental --------------- The Company leases its primary location in Fredericksburg, Virginia, on a month-to-month basis without a formal agreement. Rent expense relating to this location for the nine months ended September 30, 2003 and the year ended December 31, 2002 was $68,191 and $90,283, respectively. Employee Benefit Plan --------------------- The Company has a 408(k) plan covering all eligible employees of the Company. Contributions to the plan are at the discretion of the Company, up to 3% and not less than 1% of the employees' contribution. For the nine months ended September 30, 2003 and the year ended December 31, 2002, the Company contributed $12,897 and $9,864 to the plan, respectively. F-76 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 607.0850 the Florida Business Corporation Act permits the indemnification of directors and officers of Florida corporations. Our charter provides that we shall indemnify our directors and officers to the fullest extent permitted by Florida law. Under Florida law, we have the power to indemnify our directors and officers against claims arising in connection with their service to us except when an director's or officer's conduct involves: (a) violations of criminal laws, unless the director had reasonable cause to believe his conduct was lawful or had no reasonable cause to believe his conduct was unlawful; (b) deriving an improper personal benefit from a transaction; (c) voting for or assenting to an unlawful distribution; or (d) willful misconduct or conscious disregard for our best interests in a proceeding by or in the right of a shareholder. In addition, we have entered into employment agreements with our directors and officers that contain provisions requiring us to indemnify them to the fullest extent permitted by Florida law. The indemnification agreements require us to indemnify our directors and officers to the extent permitted by our charter and to advance their expenses incurred in connection with a proceeding with respect to which they are entitled to indemnification. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers or persons in control pursuant to the foregoing provisions, we have been informed that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the act and is therefore unenforceable. Article II, Section 4 of our bylaws limits the liability of current and former directors for monetary damages if they have acted in good faith and conformed to a standard of reasonable care. Furthermore, and notwithstanding anything to the contrary in our charter or bylaws, Section 607.0831 of the Florida Business Corporation Act limits the liability of directors for monetary damages for any statement, vote, decision or failure to act relating to management or policy of us unless he or she breached or failed to perform her duties as a director, and the breach or failure constitutes: (a) a violation of criminal law, unless the director had reasonable cause to believe the conduct was lawful or had no reasonable cause to believe it was unlawful; (b) a transaction from which the director derived an improper personal benefit; (c) an unlawful distribution; (d) in a proceeding by or in the right of us or one or more of our shareholders, conscious disregard for our best interests or willful misconduct; or (e) in a proceeding brought by someone other than us or one or more of our shareholders, recklessness or an act or omission committed in bad faith, with malicious purpose, or in a manner exhibiting willful disregard of human rights, safety or property. We have purchased insurance with respect to, among other things, the liabilities that may arise under the statutory provisions referred to above. Our directors and officers are also insured against certain liabilities, including certain liabilities arising under the Securities Act of 1933, which might be incurred by them in such capacities and against which they are not indemnified by us. ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTIONS. The following table provides information regarding the various anticipated expenses payable by Markland in connection with the issuance and distribution of the securities being registered. We are paying the expenses incurred in registering the shares, but all selling and other expenses incurred by the selling stockholders will be borne by the selling stockholders. All amounts shown are estimates except the Securities and Exchange Commission registration fee. NATURE OF EXPENSE AMOUNT -------------------------------------------- ------------ SEC registration fee ............................... $ 5,534.95 Accounting fees and expenses ....................... 75,000 Legal fees and expenses ............................ 150,000 Transfer agent fees ................................ 1,500 Printing and related fees .......................... 25,000 Miscellaneous ...................................... 50,000 ------------ Total .............................................. $ 172,035 ============ ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES. We have issued the following unregistered securities within the last three years. The following information regarding our securities has been adjusted to reflect a 1-for-40 reverse stock split effected on June 21, 2001 and a 1-for-60 reverse stock split effected on October 27, 2003. 2001 On March 16, 2001, we issued 10 shares of our Series B Convertible Preferred Stock to Vidikron of America, Inc. The issuance of these securities was exempt under Section 4(2) of the Securities Act of 1933, as amended, as a sale not involving a public offering. On December 31, 2001, we issued a promissory note to James LLC, a Cayman Island limited liability company, in the amount of $1,314,367. The issuance of this security was exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, as a sale not involving a public offering. 2002 On December 9, 2002, we entered into an Exchange Agreement with James LLC, a Cayman Island limited liability company, and Market LLC, a Cayman Island limited liability company, wherein we issued to them an aggregate of 5,225 shares of our Series C Convertible Preferred Stock (with a stated value of $1,000 per share) in exchange for the cancellation of promissory notes in the aggregate amount of $5,250,000. The issuance of these securities was exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, as a sale not involving a public offering. On December 9, 2002, we executed an Exchange Agreement with Eurotech, Ltd., a District of Columbia corporation, and Crypto.com, Inc., a Delaware corporation, wherein we issued 3,998,789 shares of our common stock in exchange for certain assets related to the Acoustic Core(TM) technology for illicit material detection. In addition, we issued 499,848 shares of our common stock to ipPartners, Inc., a Rhode Island corporation, in connection with this acquisition of assets. The issuance of these securities was exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, as a sale not involving a public offering. On December 10, 2002, we issued a convertible promissory note to Market LLC, a Cayman Island limited liability company, in the amount of $500,000. The issuance of this security was exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, as a sale not involving a public offering. 2003 At various times during 2003, we issued to our employees, directors and consultants the following number of shares of our common stock on the following dates as compensation for their services. The issuance of these securities was exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, as a sale not involving a public offering. NAME NUMBER OF SHARES - ---------------------------------------------- ------------------------------- Commonwealth Acquisitions, Inc. (1) 16,667 David Danovitch (1) 3,334 Dean Denuccio 280,000 Rodney Dodd 7,937 Kenneth Ducey, Jr.(2)....................................221,568 ECON Investor Relations, Inc. (1) 12,049 Oscar Hayes 21,035 Edward Kessler 7,937 Delmar Kintner (2) 119,303 MarketShare Recovery, Inc. (1) 27,272 George Martin (1) 4,546 Ernie Mercier (1) 8,334 Jo-Ann Nichols (2) 3,571 Joe O'Neill (1) 8,334 John Readey 65,000 Lawrence Shatsoff (1) 1,667 Stuart Siller (1) 13,636 The Research Works, Inc. (1) 37,099 Robert Tarini(1).........................................221,568 Verdi Consulting(1)......................................201,568 (1) Acquired shares in consideration of consulting services. (2) Acquired shares pursuant to an employment agreement. On February 11, 2003, we issued 170 shares of our Series C Preferred stock to James LLC, a Cayman Island limited liability company, for a purchase price of $170,000. The issuance of these securities was exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, as a sale not involving a public offering. On March 19, 2003, we executed a Technology Purchase Agreement with ASI Technology Corporation, a Nevada corporation, wherein we acquired certain gas plasma antenna assets for 283,333 shares of our common stock. In connection with this acquisition, we also issued shares of our common stock to Patriot Scientific Corporation. The issuance of these securities was exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, as a sale not involving a public offering. On March 27, 2003, we executed an Exchange Agreement with Eurotech, Ltd. wherein we issued 16,000 shares of our Series D preferred stock in exchange for 1,666,666 shares of our common stock. The issuance of these securities was exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, as a sale not involving a public offering. In July 2003, we entered into a consulting agreement with Emerging Concepts. As consideration for the consulting services, we issued 25,000 shares of our common stock to Emerging Concepts in reliance upon the exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended, for transactions by an issuer not involving any public offering. On July 24, 2003, we issued 750,000 shares of our common stock to Syqwest, Inc., a Rhode Island corporation formerly known as Ocean Data Equipment Corporation, for unpaid services valued at $450,000. The issuance of these securities was exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, as a sale not involving a public offering. On September 30, 2003, we executed an Agreement and Plan of Merger with Science and Technology Research, Inc. In connection with the merger, we issued 1,539,779 shares of our common stock and a promissory note in the amount of $375,000 to George Yang, the sole stockholder of Science and Technology Research, Inc. The issuance of these securities was exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, as a sale not involving a public offering. On each of October 1, 2003, November 3, 2003 and December 1, 2003, we sold to James LLC, a Cayman Island limited liability company, an aggregate of 385 shares of our Series D preferred stock for an aggregate purchase price of $385,000. The issuance of these securities was exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, as a sale not involving a public offering. On November 12, 2003, we issued 37,099 shares of our common stock to Research Works, Inc., a New Jersey corporation, for the preparation of an equity research report. The issuance of these securities was exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, as a sale not involving a public offering. 2004 During January 2004, we issued 208,906 shares of our common stock to each of Kenneth Ducey, Jr., and Robert Tarini and 209,006 shares of our common stock to Verdi Consulting in connection with employment and consulting agreements. The issuance of these securities was exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, as a sale not involving a public offering. On February 2, 2004, we sold 277 shares of our Series D preferred stock to James LLC, a Cayman Island limited liability company, for $152,000. The issuance of these securities was exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, as a sale not involving a public offering. On ten different occasions between August 2003 and March 2004, we issued an aggregate of 4,096 shares of our Series D Preferred Stock to a single institutional investor for an aggregate consideration of $4,096,000. The issuance of these securities was exempt under Section 4(2) of the Securities Act of 1933, as amended, as a sale not involving a public offering. On April 2, 2004, we issued 3,333,333 shares of our common stock and warrants to purchase 3,333,333 shares of our common stock at $1.00 per share to three institutional investors for consideration of $200,000. We also issued a warrant to purchase 333,333 share of our common stock and paid $200,000 to a finder in connection with this transaction. The issuance of these securities was exempt under Section 4(2) of the Securities Act of 1933, as amended, as a sale not involving a public offering. On April 16, 2004, we issued 2,500,000 shares of our common stock and warrants to purchase 2,500,000 shares of our commons stock at $1.50 per share to ten institutional investors for consideration of $2,000,000. We also issued warrants to purchase 25,000 shares of our common stock at $2.00 per share and paid $100,000 to a finder in connection with this transaction. The issuance of these securities was exempt under Section 4(2) of the Securities Act of 1933, as amended, as a sale not involving a public offering. On April 20, 2004, we issued in the aggregate 300,000 shares to the three investors in our April 2, 2004 private placement in consideration of their consent to permit us to proceed with a private placement that was subsequently consummated on May 3, 2004. We also issued warrants to purchase 50,000 shares of our common stock to counsel for these investors in connection with this transaction. The issuance of these securities was exempt under Section 4(2) of the Securities Act of 1933, as amended, as a sale not involving a public offering. On May 3, 2004 and May 7, 2004, we issued and aggregate of 7,098,750 shares of our common stock and redeemable warrants to purchase 7,098,750 shares of our common stock at $1.50 per share to 26 institutional investors 8 individual investors for consideration of $5,679,000. We also issued redeemable warrants to purchase an aggregate of 529,800 shares of our common stock and paid an aggregate of $545,140 to five finders in connection with this transaction. The issuance of these securities was exempt under Section 4(2) of the Securities Act of 1933, as amended, as a sale not involving a public offering. On June 1, 2004, we issued 1,525,248 shares of our common stock to each of Verdi Consulting and Robert Tarini, 305,050 shares of our common stock to Kenneth Ducey, Jr., and 1,220,198 shares of our common stock to Asset Growth Company (which is wholly owned by Kenneth Ducey, Jr.) in connection with their services as employees and consultants and pursuant to the compensation terms of our agreements with them. The issuance of these securities was exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, as a sale not involving a public offering. ITEM 27. EXHIBITS.
INCORPORATED BY REFERENCE FILED WITH ----------------------------------------- EXHIBIT THIS FORM EXHIBIT NO. DESCRIPTION SB-2/1A FORM FILING DATE NO. - --------- ---------------------------------------- ----------- ------- ------------------ --------- 3.1 Articles of Incorporation of Quest Net 8-K March 20, 2000 1.3 Corp., filed with the Florida Secretary of State on December 28, 1998 3.2 Articles of Merger of Quest Net Corp. and 8-K March 20, 2000 1.2 Parputt Enterprises, Inc. filed with the Florida Secretary of State on March 15, 2000 3.3 Articles of Amendment to the Articles of 8-K April 10, 2001 3.1 Incorporation of Quest Net Corp., filed with the Florida Secretary of State on April 4, 2001 3.4 Articles of Amendment to the Articles of 10-KSB October 15, 2001 3.4 Incorporation of Quest Net Corp., filed with the Florida Secretary of State on June 21, 2001 3.5 Articles of Amendment to the Articles of SB-2 May 11, 2004 3.5 Incorporation of Markland Technologies, Inc. filed with the Florida Secretary of State on December 21, 2001 3.6 Articles of Amendment to the Articles of 10-KSB October 14, 2003 3.6 Incorporation of Markland Technologies, Inc. filed with the Florida Secretary of State on September 16, 2003 3.7 Certificate of Designations of Rights and 10-KSB October 14, 2003 3.7 Preferences of the Series A Non-Voting Convertible Preferred Stock 3.8 Certificate of Designations of Rights and 8-K December 20, 2002 3.5 Preferences of the Series C Cumulative Convertible Preferred Stock 3.9 Certificate of Designations of Rights and 10-KSB October 14, 2003 3.5 Preferences of the Series D Cumulative Convertible Preferred Stock 3.10 Amended and Restated Bylaws 8-K March 20, 2000 1.4 4.1 Form of common stock certificate of 10-QSB February 14, 2003 4.1 Markland Technologies, Inc. 4.2 Registration Rights Agreement between SB-2 May 11, 2004 4.2 Markland Technologies, Inc., Montana View Corporation, Elite Properties, Ltd., Sparrow Ventures, Inc., dated April 2, 2004 INCORPORATED BY REFERENCE FILED WITH ----------------------------------------- EXHIBIT THIS FORM EXHIBIT NO. DESCRIPTION SB-2/1A FORM FILING DATE NO. - --------- ---------------------------------------- ----------- ------- ------------------ --------- 4.3 Form of Common Stock Purchase Warrant dated SB-2 May 11, 2004 4.3 April 2, 2004 4.4 Form of Common Stock Purchase Warrant dated SB-2 May 11, 2004 4.4 April 16, 2004 4.5 Form of Common Stock Purchase Warrant dated SB-2 May 11, 2004 4.5 May 3, 2004 4.6 Registration Rights Agreement, dated March 10-KSB October 14, 2003 10.10 19, 2003, by and between ASI Technology Corporation and Markland Technologies, Inc. 4.7 Registration Rights Agreement by and 10-KSB October 14, 2003 10.17 between Markland Technologies, Inc. and Brittany Capital Management limited, dated September 10, 2003 4.8 Consulting Agreement by and between 8-K November 12, 2003 10.3 Markland Technologies, Inc. and George Yang, dated September 30, 2003 4.9 Consulting Agreement by and between X Markland Technologies, Inc. and Commonwealth Acquisitions, Ltd., dated March 24, 2003 4.10 Consulting Agreement by and between ECON SB-2 May 11, 2004 4.10 Investor Relations, Inc., dated January 18, 2003 4.11 Consulting Agreement by and between SB-2 May 11, 2004 4.11 Markland Technologies, Inc. and Marketshare Recovery, Inc., dated October 29, 2003 4.12 Consulting Agreement by and between 10-QSB February 23, 2004 10.4 Markland Technologies, Inc. and Emerging Concepts, Inc., dated July 7, 2003 4.13 Research Agreement by and between Markland SB-2 May 11, 2004 4.13 Technologies, Inc. and The Research Works, Inc., dated October 29, 2003 4.14 Employment Agreement by and between SB-2 May 11, 2004 4.14 Markland Technologies, Inc. and Jo-Ann Nichols, dated October 27, 2003 5.1 Opinion of Foley Hoag LLP X INCORPORATED BY REFERENCE FILED WITH ----------------------------------------- EXHIBIT THIS FORM EXHIBIT NO. DESCRIPTION SB-2/1A FORM FILING DATE NO. - --------- ---------------------------------------- ----------- ------- ------------------ --------- 10.1 Securities Purchase Agreement, between SB-2 May 11, 2004 10.1 Markland Technologies, Inc., Montana View Corporation, Elite Properties, Ltd., and Sparrow Ventures, Inc., dated April 2, 2004 10.2 Securities Purchase Agreement by and among SB-2 May 11, 2004 10.2 Markland Technologies, Inc. and the Investors named therein, dated April 16, 2004 10.3 Securities Purchase Agreement by and SB-2 May 11, 2004 10.3 between Markland Technologies, Inc. and the Investors named therein, dated May 3, 2004 10.4 Agreement and Plan of Merger by and among 8-K November 12, 2003 10.1 Markland Technologies, Inc. and STR Acquisition Corp., Security Technology, Inc., Science and Technology Research, Inc., and George Yang, dated September 30, 2003 10.5 Promissory Note made by Markland 8-K November 12, 2003 10.4 Technologies, Inc., in favor of George Yang, dated September 30, 2003 10.6 Security Agreement by and between Markland SB-2 May 11, 2004 10.6 Technologies, Inc. and George Yang, dated September 30, 2003 10.7 Guaranty by Markland Technologies, Inc. in SB-2 May 11, 2004 10.7 favor of George Yang, dated September 30, 2003 10.8 Amendment and Payment Extension Agreement SB-2 May 11, 2004 10.8 by and between Markland Technologies, Inc. and George Yang, dated March 17, 2004 10.9 Loan Agreement by and between Security 8-K November 12, 2003 10.2 Technology, Inc. and Bay View Capital L.L.C., dated September 30, 2003 10.10 Promissory Note by and among Markland 8-K November 12, 2003 10.5 Technologies, Inc., Security Technology, Inc., and Bay View Capital L.L.C., dated September 30, 2003 10.11 Security Agreement by and between Security SB-2 May 11, 2004 10.11 Technology, Inc. and Bay View Capital L.L.C., dated September 30, 2003 INCORPORATED BY REFERENCE FILED WITH ----------------------------------------- EXHIBIT THIS FORM EXHIBIT NO. DESCRIPTION SB-2/1A FORM FILING DATE NO. - --------- ---------------------------------------- ----------- ------- ------------------ --------- 10.12 Security Agreement by and between Markland SB-2 May 11, 2004 10.12 Technologies, Inc. and Bay View Capital L.L.C. 10.13 Sublicense Agreement by and between X Markland Technologies, Inc. and ASI Technology Corporation, dated March 19, 2004 10.14 ASI Technology Corporation SBIR Phase II X Proposal, dated October 8, 2001 10.15 ASI Technology Corporation Contract with X Air Force Office of Scientific Research, dated August 1, 2002 10.16 ASI Technology Corporation Contract with X Naval Surface Warfare Center, dated January 31, 2003 10.17 Stock Purchase Agreement by and among Ocean 8-K January 28, 2003 10.1 Data Equipment Corporation, Ergo Systems, Markland Technologies, and Security Technology, Inc., dated December 9, 2002 10.18 Exchange Agreement by and among Markland 8-K December 20, 2002 10.4 Technologies, Inc., Market LLC, and James LLC dated December 9, 2002 10.19 Exchange Agreement by and among Eurotech, 8-K December 20, 2002 10.5 Ltd., Crypto.com Inc., Markland Technologies, Inc., Security Technology, Inc., ipPartners, Inc., Market LLC, and James LLC dated December 9, 2002 10.20 First Amendment to Exchange Agreement by 10-QSB February 14, 2003 10.6 and among Eurotech, Ltd., Crypto.com Inc., Markland Technologies, Inc., Security Technology, Inc., ipPartners, Inc., Market LLC, and James LLC. dated December 9, 2002 10.21 Restated and Amended Convertible Revolving 10-QSB February 14, 2003 10.2 Credit Note Agreement by and between Markland Technologies, Inc. and Market LLC dated December 10, 2002 10.22 Letter from Sherb & Co., LLP to the 8-K/A March 17, 2003 16.1 Commission, dated March 12, 2003, concerning change in certifying accountant INCORPORATED BY REFERENCE FILED WITH ----------------------------------------- EXHIBIT THIS FORM EXHIBIT NO. DESCRIPTION SB-2/1A FORM FILING DATE NO. - --------- ---------------------------------------- ----------- ------- ------------------ --------- 10.23 Technology Purchase Agreement between 8-K April 4, 2003 10.1 Markland Technologies, Inc. and ASI Technology Corporation, dated March 19, 2003 10.24 Exchange Agreement, dated March 27, 2003, 8-K April 4, 2003 10.2 by and between Eurotech, Ltd. and Markland Technologies, Inc. 10.25 Registration Rights Agreement, dated March 10-KSB October 14, 2003 10.12 27, 2003, by and between Eurotech, Ltd. and Markland Technologies, Inc. 10.26 Amended and Restated Exchange Agreement, 8-K July 30, 2003 10.1 dated July 24, 2003, by and between Markland Technologies, Inc. and Syqwest, Inc. 10.27 Preferred Securities Purchase Agreement by 10-KSB October 14, 2003 10.14 and between Markland Technologies, Inc. and James LLC, dated February 2, 2003, relating to the issuance of 170 shares of Series C 5% Convertible Preferred Stock. 10.28 Preferred Securities Purchase Agreement by 10-KSB October 14, 2003 10.15 and between Markland Technologies, Inc., and James LLC, dated April 1, 2003, relating to the issuance of Series D Convertible Preferred Stock. 10.29 Private Equity Credit Agreement by and 10-KSB October 14, 2003 10.16 between Markland Technologies, Inc. and Brittany Capital Management Limited, dated September 10, 2003 10.30 Employment and consulting agreements, dated 10-KSB October 14, 2003 10.18 December 5, 2002, for Delmar Kintner, Kenneth Ducey, Robert Tarini, and Verdi Consulting 10.31 Nonexclusive License Agreement by and SB-2 May 11, 2004 10.31 between Science & Technology Research , Inc. and the Secretary of the Navy, dated November 4, 2003 10.32 International Distribution Agreement SB-2 May 11, 2004 10.32 between Markland Technologies, Inc. and Tradeways 10.33 Agreement by and between Science & X Technology Research and the US Navy INCORPORATED BY REFERENCE FILED WITH ----------------------------------------- EXHIBIT THIS FORM EXHIBIT NO. DESCRIPTION SB-2/1A FORM FILING DATE NO. - --------- ---------------------------------------- ----------- ------- ------------------ --------- 10.34 Subcontract Agreement by and between Ergo X Systems, Inc. and Computer Sciences Corporation, dated December 8, 2003 10.35 Lease for Property in Fredericksburg, X Virginia 10.36 Co-Operative Research and Development X Agreement between Markland Technologies, Inc. and the U.S. Air Force 10.37 Employment Agreement by and between 10-QSB May 24, 2004 10.32 Markland Technologies, Inc. and Robert Tarini, dated May 12, 2004 10.38 Employment Agreement by and between 10-QSB May 24, 2004 10.33 Markland Technologies, Inc. and Kenneth Ducey, Jr., dated May 12, 2004 10.39 Strategic Operations Contractor Agreement 10-QSB May 24, 2004 10.34 by and between Markland Technologies, Inc. and Asset Growth Company, dated May 12, 2004 10.40 Consulting Agreement by and between 10-QSB May 24, 2004 10.35 Markland Technologies, Inc. and Verdi Consulting, dated May 12, 2004 10.41 Amendment to Employment Agreement between X Markland Technologies Inc. and Robert Tarini dated June 16, 2004 10.42 Amendment to the Employment Agreement X between Markland Technologies Inc. and Kenneth P. Ducey, dated June 16, 2004 10.43 Amendment to the Consulting Agreement X between Markland Technologies Inc. and Verdi Consulting, dated June 16, 2004 10.44 Amendment to the Strategic Operations X Contractor Agreement by and between Markland Technologies, Inc. and Asset Growth Company, dated June 16, 2004 23.1 Consent of Foley Hoag LLP (included in X Exhibit 5.1) 23.2 Consent of Sherb & Co., LLP X 23.3 Consents of Marcum & Kliegman LLP X 24.1 Power of Attorney (contained on the signature page of this registration statement)
ITEM 28. UNDERTAKINGS. (a) The undersigned registrant hereby undertakes: (1) File, during any period in which it offers or sells securities, a post-effective amendment to this registration statement to: (i) Include any prospectus required by section 10(a)(3) of the Securities Act; (ii) Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and (iii) Include any additional or changed material information on the plan of distribution. (2) For determining liability under the Securities Act of 1933, treat each post-effective amendment as a new registration statement of the securities offered, and the offering of the securities at that time to be the initial bona fide offering. (3) File a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering. (b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the small business issuer pursuant to the foregoing provisions, or otherwise, the small business issuer has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. SIGNATURES In accordance with the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements of filing on Form SB-2 and authorized this registration statement to be signed on its behalf by the undersigned, in the City of Ridgefield, State of Connecticut, on June 17, 2004. MARKLAND TECHNOLOGIES, INC. By: /s/ Kenneth P. Ducey, Jr. ------------------------------------- Kenneth P. Ducey, Jr. President and Chief Financial Officer POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature appears below constitutes and appoints Kenneth P. Ducey and Robert Tarini, and each of them, his true and lawful attorney-in-fact and agent, with full power of substitution and re-substitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits and schedules thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing, which they, or either of them, may deem necessary or advisable to be done in connection with this Registration Statement, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their substitute or substitutes or any of them, may lawfully do or cause to be done by virtue hereof. In accordance with the requirements of the Securities Act of 1933, this registration statement was signed by the following persons in the capacities and on the dates stated: SIGNATURE TITLE DATE - -------------------------------------------------------------------------------- /s/ Robert Tarini Chief Executive Officer and June 17, 2004 - ------------------------- Chairman of the Board of Directors Robert Tarini /s/ Kenneth P. Ducey, Jr. President, Chief Financial Officer June 17, 2004 - ------------------------ and Director Kenneth P. Ducey, Jr. EX-4.9 2 markland_ex4-9.txt EXHIBIT 4.9 CONSULTING AGREEMENT CONSULTING AGREEMENT (this "AGREEMENT") dated as of March 24th , 2003, between Markland Technology, Inc. (including, as the context may require, its subsidiaries, the "COMPANY"), a Florida corporation, and Commonwealth Acquisitions, Ltd., a Delaware corporation, the "CONSULTANT." WHEREAS, the Company wishes to employ the Consultant to render services for the Company on the terms and conditions set forth in this Agreement, and the Consultant wishes to be retained and employed by the Company on such terms and conditions. NOW, THEREFORE, in consideration of the premises, the mutual agreements set forth below and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree as follows: 1. EMPLOYMENT - The Company hereby employs the Consultant, and the Consultant accepts such employment and agrees to perform services for the Company, for the period and upon the other terms and conditions set forth in this Agreement. 2. TERM - Unless terminated at an earlier date in accordance with Section 9 of this Agreement or otherwise extended by agreement of the parties, the term of the Consultant's employment hereunder shall be for a period of 1 Year, commencing on April 1, 2003. The period of employment may be extended by written agreement or e-mail between the parties, provided that certain provisions relating to compensation shall change upon commencement of any extension hereto. 3. POSITION AND DUTIES/SERVICE WITH COMPANY - During the term of the Consultant's employment, the Consultant agrees to perform such reasonable employment duties as the Board of Directors or Chief Executive Officer of the Company shall assign to him from time to time. Currently, the Consultant's employment shall commence as business development and technical advisory services. (b) PERFORMANCE OF DUTIES The Consultant agrees to serve the Company faithfully and to the best of his ability and to devote a reasonable amount of time, attention and efforts to the business and affairs of the Company during his employment by the Company. The Consultant hereby confirms that he is under no contractual commitments inconsistent with his obligations set forth in this Agreement and that during the term of this Agreement, he will not render or perform services for any other corporation, firm, entity or person which are inconsistent with the provisions of this Agreement. While he remains employed by the Company, the Consultant may participate in reasonable professional, charitable, and/or personal investment activities so long as such activities do not interfere with the performance of his obligations under this Agreement. 1 4. COMPENSATION (a) GRANT OF STOCK. The company agrees to grant to Consultant, as of March 24th, 2003, 1,000,000 shares of restricted stock in the Company. Such stock shall be restricted, common stock of the Company. In the event of a registration of stock, following ninety (90) days after the date of this Agreement, Consultant shall have rights to participate in such registration at Company's expense. All such stock amounts referred to in the following paragraphs of this section shall be based on 300,000,000 shares outstanding, and adjusted according for any stock splits. (b) INCENTIVE COMPENSATION. In addition to the Grant of Stock above, the Consultant shall be awarded an additional 1,000,000 shares in Markland as well as 5% of the gross contract proceeds based upon the following milestones and when appropriate: upon the government issuance of a purchase order, or the equivalent, requesting Markland to provide goods and services in excess of $3 million. (c) OTHER INCENTIVE COMPENSATION. In addition to the Grant of Stock and Incentive Compensation above, the Consultant shall be eligible to participate in any bonus or incentive compensation plans that may be established by the Board of Directors of the Company from time to time applicable to the Consultant. Additionally, for a period of five years from the date of this Agreement, Consultant shall have preemption rights in the event of any potentially dilutive event, such that Consultant may, within a reasonable time, elect to participate in such dilutive event to maintain his then current percentage interest in the Company. 5. CONFIDENTIAL INFORMATION - Except as permitted or directed by the Company's Board of Directors or Chief Executive Officer, during the term of his employment or at any time thereafter, the Consultant shall not divulge, furnish or make accessible to anyone or use in any way (other than in the ordinary course of the business of the Company) any confidential or secret knowledge or information of the Company that the Consultant has acquired or become acquainted with or will acquire or become acquainted with prior to the termination of the period of his employment by the Company (including employment by the Company or any affiliated companies prior to the date of this Agreement) whether developed by himself/herself or by others, concerning any trade secrets, confidential or secret designs, processes, formulae, plans, devices or material (whether or not patented or patentable) directly or indirectly useful in any aspect of the business of the Company, any customer or supplier lists of the Company, any confidential or secret development or research work of the Company, or any other confidential information or secret aspects of the business of the Company. The Consultant acknowledges that the above-described knowledge or information 2 constitutes a unique and valuable asset of the Company and represents a substantial investment of time and expense by the Company, and that any disclosure or other use of such knowledge or information other than for the sole benefit of the Company would be wrongful and would cause irreparable harm to the Company. Both during and after the term of his employment, the Consultant will refrain from any acts or omissions that would reduce the value of such knowledge or information to the Company. The foregoing obligations of confidentiality shall not apply to any knowledge or information that is now published or which subsequently becomes generally publicly known in the form in which it was obtained from the Company, other than as a direct or indirect result of the breach of this Agreement by the Consultant. 6. VENTURES - If, during the term of his employment the Consultant is engaged in or associated with the planning or implementing of any project, program or venture involving the Company and a third party or parties, all rights in such project, program or venture shall belong to the Company. Except as approved by the Company's Board of Directors or Chief Executive Officer, the Consultant shall not be entitled to any interest in such project, program or venture or to any commission, finder's fee or other compensation in connection therewith other than the compensation to be paid to the Consultant as provided in this Agreement. The Consultant shall not enter into any interest, direct or indirect, in any vendor or customer of the Company. 7. PATENT AND RELATED MATTERS(a) DISCLOSURE AND ASSIGNMENT - The Consultant will promptly disclose in writing to the Company complete information concerning each and every invention, discovery, improvement, device, design, apparatus, practice, process, method or product, whether patentable or not, made, developed, perfected, devised, conceived or first reduced to practice by the Consultant, either solely or in collaboration with others, during the term of this Agreement, whether or not during regular working hours, relating either directly or significantly and indirectly to the business, products, practices or techniques of the Company ("DEVELOPMENTS"). The Consultant, to the extent that he has the legal right to do so, hereby acknowledges that any and all of the Developments are the property of the Company and hereby assigns and agrees to assign to the Company any and all of the Consultant's right, title and interest in and to any and all of the Developments. At the request of the Company, the Consultant will confer with the Company and its representatives for the purpose of disclosing all Developments to the Company as the Company shall reasonably request during the period ending one year after termination of the Consultant's employment with the Company, provided such conference is at Company's expense and Consultant is compensated at no less that a rate of $250 per hour for his time for conference following termination or expiration of this Agreement. (b) LIMITATION ON SECTION 7(a) The provisions of Section 7(a) shall not apply to any Development meeting the following conditions: (i) such Development was developed entirely on the Consultant's own time without the use of any Company equipment, supplies, facility or trade secret information; and 3 (ii) such Development does not relate directly to the business of the Company to the Company's actual or demonstrably anticipated research or development; or result from any work performed by the Consultant for the Company. (c) COPYRIGHTABLE MATERIAL All right, title and interest in all copyrightable material that the Consultant shall conceive or originate, either individually or jointly with others, and which arise out of the performance of this Agreement, will be the property of the Company and are by this Agreement assigned to the Company along with ownership of any and all copyrights in the copyrightable material. Upon request and without further compensation therefor, but at no expense to the Consultant, the Consultant shall execute all papers and perform all other acts necessary to assist the Company to obtain and register copyrights on such materials in any and all countries, except that Consultant shall be compensated at no less that a rate of $250 per hour for his time for compliance with this provision following termination or expiration of this Agreement. Where applicable, works of authorship created by the Consultant for the Company in performing his responsibilities under this Agreement shall be considered "WORKS MADE FOR HIRE," as defined in the U.S. Copyright Act. (d) KNOW-HOW AND TRADE SECRETS - All know-how and trade secret information conceived or originated by the Consultant that arises out of the performance of his obligations or responsibilities under this Agreement or any related material or information shall be the property of the Company, and all rights therein are by this Agreement assigned to the Company. 8. TERMINATION OF EMPLOYMENT ; GROUNDS FOR TERMINATION - The Consultant's employment shall terminate prior to the expiration of the initial term set forth in Section 2 or any extension thereof in the event that at any time: (i) The Consultant dies, (ii) The Board of Directors of the Company elects to terminate this Agreement for "cause" and notifies the Consultant in writing of such election, (iii) The Consultant becomes "disabled," so that he cannot perform the essential functions of his position with or without reasonable accommodation, (iv) The Board of Directors of the Company elects to terminate this Agreement without "cause" and notifies the Consultant in writing of such election, or (v) The Consultant elects to terminate this Agreement and notifies the Company in writing of such election. If this Agreement is terminated pursuant to clause (i) or (ii) of this Section 9(a), such termination shall be effective immediately. If this Agreement is terminated pursuant to clause (iii), (iv) or (v) of this Section 9(a), such termination shall be effective 30 days after delivery of the notice of termination. 4 (b) "CAUSE" DEFINED "Cause" means: (i) The Consultant has breached the provisions of Section 5, 7 or 8 of this Agreement in any material respect, (ii) The Consultant has engaged in willful and material misconduct, including willful and material failure to perform the Consultant's duties as an officer or Consultant of the Company and has failed to cure such default within 30 days after receipt of written notice of default from the Company, (iii) The Consultant has committed fraud, misappropriation or embezzlement in connection with the Company's business, or (iv) The Consultant has been convicted or has pleaded NOLO CONTENDERE to criminal misconduct (except for parking violations, occasional minor traffic violations and other similar minor violations). (c) EFFECT OF TERMINATION - Notwithstanding any termination of this Agreement, the Consultant, in consideration of his employment hereunder to the date of such termination, shall remain bound by the provisions of this Agreement which specifically relate to periods, activities or obligations upon or subsequent to the termination of the Consultant's employment. (d) "DISABLED" DEFINED - "DISABLED" means any mental or physical condition that renders the Consultant unable to perform the essential functions of his position, with or without reasonable accommodation, for a period in excess of 3 months. (e) SURRENDER OF RECORDS AND PROPERTY - Upon termination of his employment with the Company, the Consultant shall deliver promptly to the Company all records, manuals, books, blank forms, documents, letters, memoranda, notes, notebooks, reports, data, tables, calculations or copies thereof that relate in any way to the business, products, practices or techniques of the Company, and all other property, trade secrets and confidential information of the Company, including, but not limited to, all documents that in whole or in part contain any trade secrets or confidential information of the Company, which in any of these cases are in his possession or under his control. Termination by Consultant for "Good Reason" shall mean: (i) the assignment to the Consultant of any duties inconsistent in any respect with the Consultant's position (including status, offices, titles and reporting requirements), authority, duties or responsibilities as contemplated by Section 3(a) or any other action by the Company which results in a diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Consultant; (ii) any termination or reduction of a material benefit under any benefits plan in which the Consultant participates unless (i) there is substituted a comparable benefit that is economically substantially equivalent to the terminated or reduced benefit prior to such termination or reduction or (ii) benefits under such plan are terminated or reduced with respect to all Consultants previously granted benefits thereunder; 5 (iii) without limiting the generality of the foregoing, any material breach of this Agreement by the Company or any successor thereto. 9. INDEMNIFICATION In the event that Consultant is made, or threatened to be made, a party to any action or proceeding, whether civil or criminal, by reason of the fact that he is or was a director, officer, or member of a committee of the Board of Directors of the Company or serves or served any other corporation, partnership, joint venture, trust, Consultant benefit plan or other enterprise in any capacity at the request of the Company, he shall be indemnified by the Company and the Company shall advance his related expenses to the fullest extent permitted by law (including without limitation, damages, costs and reasonable attorney fees), as may otherwise be provided in the Company's Certificate of Incorporation and ByLaws. 10. MISCELLANEOUS (a) COUNTERPARTS - This Agreement may be executed in separate counterparts, each of which will be an original and all of which taken together shall constitute one and the same agreement, and any party hereto may execute this Agreement by signing any such counterpart. (b) SEVERABILITY - Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law but if any provision of this Agreement is held to be invalid, illegal or unenforceable under any applicable law or rule, the validity, legality and enforceability of the other provisions of this Agreement will not be affected or impaired thereby. In furtherance and not in limitation of the foregoing, should the duration or geographical extent of, or business activities covered by, any provision of this Agreement be in excess of that which is valid and enforceable under applicable law, then such provision shall be construed to cover only that duration, extent or activities which may validly and enforceably be covered. (c) SUCCESSORS AND ASSIGNS - This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives and, to the extent permitted by subsection (e), successors and assigns. (d) ASSIGNABILITY - Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable (including by operation of law) by either party without the prior written consent of the other party to this Agreement, except that the Company may, without the consent of the Consultant, assign its rights and obligations under this Agreement to any corporation, firm or other business entity with or into which the Company may merge or consolidate, or to which the Company may sell or transfer all or substantially all of its assets, or of which 50% or more of the equity investment and of the voting control is owned, directly or indirectly, by, or is under common ownership with, the Company. Provided such assignee explicitly assumes such responsibilities, after any such assignment by the Company, the Company shall be discharged from all further liability hereunder and such assignee shall thereafter be deemed to be the Company for the purposes of all provisions of this Agreement including this Section 10. 6 (e) MODIFICATION, AMENDMENT, WAIVER OR TERMINATION - No provision of this Agreement may be modified, amended, waived or terminated except by an instrument in writing signed by the parties to this Agreement. No course of dealing between the parties will modify, amend, waive or terminate any provision of this Agreement or any rights or obligations of any party under or by reason of this Agreement. No delay on the part of the Company or Consultant in exercising any right hereunder shall operate as a waiver of such right. No waiver, express or implied, by the Company of any right or any breach by the Consultant shall constitute a waiver of any other right or breach by the Consultant. (f) NOTICES - All notices, consents, requests, instructions, approvals or other communications provided for herein shall be in writing and delivered by personal delivery, overnight courier, mail, electronic facsimile or e-mail addressed to the receiving party at the address set forth herein. All such communications shall be effective when received. If to the Company: Ken Ducey, Jr. #207 54 Danbury Road Ridgefield, CT 06877 Facsimile: 203-431-8309 Attn: CFO If to the Consultant: Christopher J. Greeley Commonwealth Acquisitions, Ltd. One Beacon Street 30th Floor Boston, MA 02108 Facsimile: 617-742-4359 Any party may change the address set forth above by notice to each other party given as provided herein. (g) HEADINGS. The headings and any table of contents contained in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement. (h) GOVERNING LAW. ALL MATTERS RELATING TO THE INTERPRETATION, CONSTRUCTION, VALIDITY AND ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF CONNECTICUT, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW PROVISIONS THEREOF. 7 (i) VENUE; FEES AND EXPENSES. Any action at law, suit in equity or judicial proceeding arising directly, indirectly, or otherwise in connection with, out of, related to or from this Agreement, or any provision hereof, shall be litigated only in the state courts located in the State of Connecticut, County of Fairfield or the federal courts in the district which covers such county. The Consultant and the Company consent to the jurisdiction of such courts. The prevailing party shall be entitled to recover its reasonable attorneys' fees and costs in any such action. (j) WAIVER OF RIGHT TO JURY TRIAL. Each party hereto hereby waives, except to the extent otherwise required by applicable law, the right to trial by jury in any legal action or proceeding between the parties hereto arising out of or in connection with this Agreement. (k) THIRD-PARTY BENEFIT - Nothing in this Agreement, express or implied, is intended to confer upon any other person any rights, remedies, obligations or liabilities of any nature whatsoever. (l) WITHHOLDING TAXES - The Company may withhold from any benefits payable under this Agreement all federal, state, city or other taxes as shall be required pursuant to any law or governmental regulation or ruling. THE PARTIES ACKNOWLEDGE THAT EACH HAS READ THIS AGREEMENT, UNDERSTANDS IT, AND AGREES TO BE BOUND BY ITS TERMS AND CONDITIONS. FURTHER, THE PARTIES AGREE THAT THIS AGREEMENT AND ANY EXHIBITS HERETO ARE THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN THE PARTIES, WHICH SUPERSEDES ALL PROPOSALS OR ALL PRIOR AGREEMENTS, ORAL OR WRITTEN, AND ALL OTHER COMMUNICATIONS BETWEEN THE PARTIES RELATING TO THE SUBJECT MATTER HEREOF. ACCEPTED AND AGREED: MARKLAND TECHNOLOGY, INC. COMMONWEALTH ACQUISITIONS, LTD. By: /S/ Ken Ducey, Jr. /S/ Christopher J. Greeley -------------------------- ------------------------------- Ken Ducey, Jr. Christopher J. Greeley, Partner Title: President Date: 3/24/03 Date: _________________________ 8 EX-5.1 3 markland_ex5-1.txt EXHIBIT 5.1 FOLEY HOAG LLP ATTORNEYS AT LAW June 17, 2004 Markland Technologies, Inc. 54 Danbury Road, #207 Ridgefield, CT 06887 Ladies and Gentlemen: We are furnishing this opinion of counsel to Markland Technologies, Inc., a Florida corporation (the "Company"), for filing as Exhibit 5.1 to the Registration Statement on Form SB-2, File No. 333-115395 (the "Registration Statement") filed by the Company with the Securities and Exchange Commission under the Securities Act of 1933, as amended, on May 11, 2004, and amended on June 17, 2004, relating to the sale of 31,156,015 shares of the common stock, $.0001 par value per share (the "Shares"), of the Company. In arriving at the opinions expressed below, we have examined and relied on the following documents: (a) the Articles of Incorporation of the Company, as amended; (b) the Bylaws of the Company; (c) the Registration Statement; and (d) the records of meetings and consents of the Board of Directors and stockholders of the Company provided to us by the Company. In addition, we have examined and relied on the originals or copies certified or otherwise identified to our satisfaction of all such corporate records of the Company and such other instruments and other certificates of public officials, officers and representatives of the Company and such other persons, and we have made such investigations of law, as we have deemed appropriate as a basis for the opinions expressed below. Based upon the foregoing, and subject to the qualifications set forth herein, we are of the opinion that when the Registration Statement shall have become effective, (a) with respect to those Shares that are currently outstanding, when sold, they will be validly and legally issued, fully paid and nonassessable, and (b) with respect to those Shares that have not yet been issued, when such shares are issued and sold, they will be validly and legally issued, fully paid and nonassessable. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement. This opinion is being delivered and is intended for use solely in regard to the transactions contemplated by the Registration Statement and may not be used, circulated, quoted in whole or in part or otherwise referred to for any purpose without our prior written consent and may not be relied upon by any person or entity other than the Company, its successors and assigns. This opinion is based upon our knowledge of law and facts as of its date. We assume no duty to communicate to you with respect to any matter which comes to our attention hereafter. Very truly yours, FOLEY HOAG LLP By: /s/ David A. Broadwin ---------------------- A Partner EX-10.13 4 markland_ex10-13.txt EXHIBIT 10.13 TECHNOLOGY PURCHASE AGREEMENT ----------------------------- This Agreement is dated this 19th-day of March, 2003 by and between ASI Technology Corporation ("ASI"), a Nevada corporation, having a principal place of business located 980 American Pacific Drive, No. 111, Henderson, Nevada 89014 and Markland Technologies, Inc., a Florida Corporation ("Markland"), having a principal place of business located at 54 Danbury Road Suite #207 Ridgefield, CT 06877. RECITALS -------- WHEREAS, ASI has acquired, developed and patented certain gas plasma antenna ("GPA") technology that utilizes ionized gas in a vessel as an antenna to both receive and transmit radio frequency signals and as a reflector/shield/filter for radio frequency signals. As a result of ASI's inventions it was awarded, by assignment and/or has pending the patents and patent applications listed on Exhibit A. WHEREAS, this GPA technology is believed to have commercial viability in both commercial and Department of Defense applications but will require further development, additional capital and research. WHEREAS, ASI desires to pursue other business ventures and desires to sell and otherwise assign all of its right, title, interest and benefit in and to its GPA technology, including the related patents, patent applications, current contracts and contract proposals and backlog and related technology, equipment and all other intellectual property rights related thereto, as defined in paragraph 1 a) hereof, to Markland according to the terms and conditions set forth below in order to allow further development of this technology to be completed. WHEREAS, ASI and Markland desire to cooperate as provided herein with respect to existing government contracts. WHEREAS, Markland is a company looking for new technology to purchase and exploit and Markland desires to purchase ASI's GPA issued and pending patents and related technology, current contracts and contract proposals and backlog and equipment according to the terms and conditions below. TERMS ----- Now, therefore, in consideration of the mutual promises described below and other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereby agree to be legally bound as follows: 1. DEFINITIONS. For purposes of this Agreement, the following definitions apply: a) "Technology" shall be defined as all right, title, interest, and benefit of ASI and all powers and privileges of ASI (including to make, have made, use, or sell under patent law; to copy, adapt, distribute, display, and perform under copyright law; and to use and disclose under trade secret law) in 1 and to all proprietary rights embodied in or comprising the GPA technology as of the Closing ("Proprietary Rights"), defined as follows: (1) All United States and foreign patents and patent applications, including, without limitation, the issued patents and patent applications listed on EXHIBIT A hereto, patent license rights and patentable inventions, any continuation or continuation-in-part of, division of, or substitution for any such applications, any United States patent issued thereon, any reissue or reexamination application filed on any such United States patent, any reissue patent or reexamined patent issuing thereon, and any extension of any such United States patent or reissue patent and any and all applications for patent in any country foreign to the United States on any invention disclosed in any of said patents or patent applications described above and any patents granted thereon; (2) All trade secrets, know-how, confidential or proprietary information, including, without limitation, the confidential and proprietary information identified in EXHIBIT B hereto, shop rights, technical data, technology licenses, concepts, drawings, schematics, prototypes, improvements, enhancements, upgrades, materials, works of authorship, derivative, and derivative works, mask works, engineering files, system documentation, flow charts, computer software code and design specifications acquired or developed by ASI or any of its affiliates that are embodied or incorporated in or derived from the Proprietary Rights or in connection with the development of the programming, inventions, processes, and apparati entailed by the Proprietary Rights; (3) The equipment identified in EXHIBIT C hereto; (4) All trademarks, service marks and trade names, including without limitation, the trademark and trade name identified in EXHIBIT D hereto (including, in the case of trademarks, service marks and trade names, all goodwill appertaining thereto), moral rights (defined as any right to claim authorship of a work, any right to object to any distortion or other modification of a work, and any similar right, existing under the law of any country in the world, or under any treaty), and copyrights; (5) All market research and information, contact lists, marketing materials, business plans, notes, documents and records pertaining in any way to any of the Proprietary Rights and any existing or future products incorporating any of the Proprietary Rights or any item described in any of the foregoing paragraphs and any agreements with any other parties to contribute to the further development of any of the Proprietary Rights; and (6) All other intellectual property rights and legal protections in every and all countries and jurisdictions owned or claimed by ASI or any of its affiliates and embodied in or comprising any of the Proprietary Rights; provided, however, that the Technology and Proprietary Rights shall not include any of ASI's rights, titles or interests in and to any of the contracts and contract proposals listed in Exhibit E hereto, the assignment of which from ASI to Markland shall be as provided in Section 5 hereof. 2 b) "Gross Revenues from Contracts" shall include all amounts actually received by ASI from the government contracts relating to the Technology existing at the Closing as listed on Exhibit E hereto or awarded to ASI prior to the Closing other than amounts received by ASI in payment of invoices issued or effective on or before the Closing. c) "Securities" shall be the shares of Markland common stock issued to ASI as part of the Technology Purchase Price. d) "Market Price" on any trading day shall be the volume weighted average price per share of Markland's common stock from the hours of 9:30 AM to 4:00 PM (Eastern) as reported by Bloomberg Financial using the AQR function. The average Market Price per share for a period shall be the average of each trading day's Market Price during such period. 2. ASSIGNMENTS; TECHNOLOGY PURCHASE PRICE. a) ASI hereby agrees to sell, assign and transfer, and at the Closing shall sell, assign and transfer, to Markland in perpetuity (or for the longest period of time otherwise permitted by law), and Markland hereby agrees to purchase and accept, all of ASI's right, title, interest and benefit in and to the Technology and Proprietary Rights. As payment for such sale, assignment and transfer, Markland agrees to pay ASI in cash an amount equal to One Hundred Fifty Thousand Dollars ($150,000) (the "Cash Payment"), payable as hereinafter provided, and to issue to ASI and its designees, in the aggregate, a number of shares of the Securities having an aggregate value of Eight Hundred Fifty Thousand Dollars ($850,000) computed as described below (collectively the "Technology Purchase Price") which the parties agree equals or exceeds the fair market value of the Technology and Proprietary Rights determined on the basis of arms-length negotiations. b) The Cash Payment shall be paid as follows: (1) A nonrefundable amount equal to Ten Thousand Dollars ($10,000) shall be paid upon execution and delivery of this Agreement. (2) A nonrefundable amount equal to Ten Thousand Dollars ($10,000) shall be paid every thirty (30) days following the execution and delivery of this Agreement and the balance of the Cash Payment shall be paid at Closing. C) The Securities constituting a portion of the Technology Purchase Price shall be issued to ASI at Closing. The number of shares of the Securities shall be equal to the quotient obtained by dividing (i) $850,000 by (ii) 85% of the average Market Price per share of Markland common stock during the twenty (20) trading days immediately preceding the date of Closing. For example: If Markland common stock average Market Price for the twenty (20) trading days immediately preceding the date of Closing is $.20/share, the number of shares of Securities issued to ASI shall be equal to $850,000 divided by $.17 (85% of $.20), resulting in 5,000,000 shares of Markland common stock. Markland acknowledges and agrees that a number of Securities equal to five percent (5%) of the number of Securities issuable to ASI hereunder shall be issued by Markland to Patriot Scientific Corporation ("Patriot") pursuant to that certain Purchase Agreement between ASI and Patriot dated as of August 20, 1999 (the "Patriot Agreement") 3 3. THE CLOSING AND CLOSING DATE. Subject to the terms and conditions of this Agreement, the sale and purchase of the Technology and the Proprietary Rights as provided for in this Agreement shall be consummated at a closing (the "Closing") to be held at the offices of ASI Technology Corporation, 980 American Pacific Drive, No. 111, Henderson, Nevada 89014 at 10:00 a.m. on the earlier of (i) the date on which the last of the contracts listed in Exhibit E hereto has been assigned to Markland and (ii) the date that is ninety (90) days from the date of this Agreement, or at such other place, time and date as ASI and Markland may mutually agree in writing. The date on which the Closing shall actually take place is herein referred to as the "Closing Date". 4. CLOSING DELIVERIES AND CONDITIONS. a) ASI'S CLOSING DELIVERIES AND CONDITIONS OF MARKLAND'S OBLIGATION . The obligations of Markland to consummate the transactions set forth in this Agreement are subject to the fulfillment on, or before, the Closing Date of each of the following conditions, any of which may be waived in writing by Markland: (1) ASI shall have duly executed and delivered to Markland the Sublicense Agreement substantially in the form attached hereto as Exhibit F (the "Sublicense Agreement") and such other instruments of transfer as may be reasonably requested by Markland to transfer the Technology and the Proprietary Rights to Markland, all in a form reasonably satisfactory to Markland; (2) No preliminary or permanent injunction or other binding order, decree or ruling issued by a court or governmental agency shall be in effect which shall have the effect of preventing the consummation of the transactions contemplated by this Agreement; (3) ASI shall have performed and complied with all covenants, agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by it on or before the Closing; and (4) The representations and warranties of ASI contained in this Agreement and any exhibits and schedules attached or referenced thereto shall be true and correct on and as of the Closing Date. b) MARKLAND'S CLOSING DELIVERIES AND CONDITIONS OF ASI'S OBLIGATION S. The obligations of ASI to consummate the transactions set forth in this Agreement are subject to the fulfillment on, or before, the Closing Date of each of the following conditions, any of which may be waived in writing by ASI: (1) Markland shall have paid all amounts of the Cash Payment due and payable prior to Closing and shall pay the unpaid balance of the Cash Payment at Closing; 4 (2) Markland shall have duly executed and delivered to ASI the Registration Rights Agreement substantially in the form attached hereto as Exhibit G (the "Registration Rights Agreement"); (3) Markland shall have duly executed and delivered to ASI share certificates registered in the names of ASI and Patriot evidencing, in the aggregate, the Securities; (4) No preliminary or permanent injunction or other binding order, decree or ruling issued by a court or governmental agency shall be in effect which shall have the effect of preventing the consummation of the transactions contemplated by this Agreement; (5) Markland shall have performed and complied with all covenants, agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by it on or before the Closing; and (6) The representations and warranties of Markland contained in this Agreement and any exhibits and schedules attached or referenced thereto shall be true and correct on and as of the Closing Date. 5. PURCHASE PRICE ADJUSTMENT ON REVERSE SPLIT. a) In the event the outstanding shares of Markland common stock shall be combined or consolidated, by reclassification, reverse stock split or otherwise, into a lesser number of shares of Markland Common Stock (a "Reverse Split") at any time during the period from Closing and ending eighteen (18) months after Closing (the "Adjustment Period"), then for each such Reverse Split, there shall be computed an adjustment in the number of shares of Markland common stock and if such adjustment is positive then the computed number of additional shares of Markland common stock shall be issued to ASI in accordance with this Section 5. The adjustment shall be computed as follows: (1) DEFINITIONS. (i) "Number of Post Split Common Shares Previously Issued" shall mean the number of shares of Markland common stock issued to ASI at Closing plus any additional shares of Markland common stock issued to ASI pursuant to the Registration Rights Agreement as adjusted by the Reverse Split. (ii) "Number of Readjusted Shares" shall mean the number of shares of Markland common stock equal to the quotient obtained by dividing (i) $850,000 by (ii) 85% of the average Market Price per share of Markland common stock during the thirty (30) trading days immediately following the effective date of the Reverse Split. The Number of Readjusted Shares so computed shall be increased by 15% if such an adjustment was made pursuant to the Registration Rights Agreement in computation of the Number of Post Split Common Shares Previously Issued. (2) If the Number of Readjusted Shares is greater than the Number of Post Split Common Shares Previously Issued then Markland shall promptly, but in no event later than five (5) business days following the end of such thirty (30) day period, issue to ASI a number of additional shares of Markland common stock equal to such difference. If the Number of Readjusted Shares is less than the Number of Post Split Common Shares Previously Issued then no adjustment shall be made. 5 As an example, if 5,000,000 shares of Markland common stock are issued at Closing, Markland subsequently effects a one-for-ten (1-for-10) Reverse Split during the Adjustment Period, and the average Market Price for the thirty (30) trading days after the Reverse Split is $1.00, then the additional shares would be computed as follows (assuming no adjustment is made pursuant to the Registration Rights Agreement): A. Number of Post Split Common Shares Previously Issued = 5,000,000 divided by 10 or 500,000. B. Number of Readjusted Shares = $850,000 divided by ($1.00 less 15% or $.85) or 1,000,000 shares. C. Since the Number of Readjusted Shares exceeds the Number of Post Rollback Common Shares Previously Issued then Markland would issue 500,000 additional shares of Markland common stock. The above adjustment shall occur for each Reverse Split effected during the Adjustment Period. 6. GOVERNMENT CONTRACT REVENUES, COSTS AND PERSONNEL. ASI is responsible for the completion and performance of the government contracts listed in Exhibit E (the "Contracts") until completion of assignment to Markland. The parties shall use their commercially reasonable efforts to assign or transfer all Contracts from ASI to Markland as soon as practical after execution of this Agreement, each party paying their own costs of such efforts. Markland shall from April 1, 2002 use its best efforts to manage and administer such services being performed under each Contract and prepare all reports thereto in a manner consistent with normal practice and that employed by Markland under contracts it performs for the government. ASI shall pay Markland a fee equal to 100% of all Gross Revenues from Contracts billed for the periods after April 1, 2002 when and as received by ASI. Markland shall pay directly or reimburse ASI for all personnel, subcontract and other costs of performing the Contracts and plasma antenna research, development, marketing and services from and after April 1, 2002. Personnel transfers shall be handled based on the effective transfer of the Contracts and as agreed upon in writing between such personnel and the parties hereto. Markland has made its own investigation into ASI consultants and ASI makes no representations regarding the continued availability of consultants and personnel. ASI shall be paid a fee of $2,500.00 per calendar month by Markland for supporting administration of the contracts until all Contracts have been assigned or transferred to Markland. The fee shall be due and payable in cash at the end of each calendar month. 6 Markland understands the contracts can be terminated by the government pursuant to the terms of the respective contracts. Notwithstanding any provision herein to the contrary, express or implied, ASI shall in no event be liable to Markland if any Contract is terminated either prior to, upon or after such Contract is assigned or transferred to Markland. Markland acknowledges and agrees that the STTR Contract in Exhibit E relates to patented technology not included in the Technology or the Proprietary Rights but is the subject of the license under the Sublicense Agreement. 7. TERMINATION. (a) This Agreement may be terminated and abandoned prior to the Closing Date: (i) By written mutual consent of ASI and Markland; or (ii) By ASI or Markland if any court or governmental agency of competent jurisdiction shall have issued an order, decree or ruling or taken any other action which prevents, restrains, enjoins or otherwise prohibits the transactions contemplated hereby; or (iii) By ASI by delivery of written notice to Markland if.-(1) ASI discovers any material error, mistake, misstatement or omission in the representations and warranties of Markland in this Agreement, (2) Markland has breached or violated this Agreement in any material respect and, if such breach or violation is curable, has failed to cure such violations within ten (10) days of receiving written notice thereof; or (3) the Closing has not occurred by the date that is ninety (90) days from the date of this Agreement; or (iv) By Markland by delivery of written notice to ASI if: (1) Markland discovers any material error, mistake, misstatement or omission in the representations and warranties of ASI in this Agreement, (2) ASI has breached or violated this Agreement in any material respect and, if such breach or violation is curable, has failed to cure such violations within ten (10) days of receiving written notice thereof; or (2) the Closing has not occurred by the date that is ninety (90) days from the date of this Agreement. (b) In the event that this Agreement is terminated as provided in this Section 7 (a "Termination"), all further obligations of the parties under this Agreement shall terminate without further liability of any party to any other party or to the stockholders, directors or officers of any party; PROVIDED, HOWEVER, that (i) a Termination shall not relieve any party of any liability for any breach of this Agreement or for any intentional misrepresentation or intentional failure to comply with any agreement or covenant hereunder, and any such Termination shall not be deemed to be a waiver of any available remedy for any such breach, intentional misrepresentation or intentional failure to comply with any such agreement or covenant and (ii) Markland shall execute and delivery all documents and agreements and perform all acts necessary to reassign to ASI all Contracts that have been assigned to Markland. Once Markland has fully paid the Technology Purchase Price at Closing as provided in Section 2, ASI agrees that it will have no claim against Markland for the return of the Technology or the Proprietary Rights or any improvements thereto or in voiding or rescinding this Agreement and the related assignments, provided, however, that ASI reserves all other rights and remedies it may have arising out of the breach or nonperformance of this Agreement by Markland. 7 8. REPRESENTATIONS, WARRANTIES AND COVENANTS. a) ASI hereby represents and warrants to, and covenants with Markland as follows: (1) NO CONSENTS. No consents (other than necessary filings in patent offices wherein Proprietary Rights have been registered or applications therefor have been filed) of any other parties are necessary or appropriate under any agreements concerning any of the Technology or the Proprietary Rights in order for the transfer and assignment of any of the Technology and Proprietary Rights under this Agreement to be legally effective. (2) MARKETABLE TITLE. To the best of ASI's knowledge, (i) immediately prior to the Closing of this Agreement, ASI shall have good and marketable title to the Technology and the Proprietary Rights, free and clear of any and all liens, mortgages, encumbrances, pledges, security interests, or charges of any nature whatsoever (collectively, "Liens") and, (ii) upon the Closing, Markland shall receive good and marketable title to the Technology and the Proprietary Rights, free and clear of any and all Liens. (3) TECHNOLOGY AND PROPRIETARY RIGHTS. To the best of ASI's knowledge, (i) ASI is the sole owner of the entire right, title and interest in and to the Technology and the Proprietary Rights subject to a royalty payable to Patriot under the Patriot Agreement upon sale of the Technology and Proprietary Rights in the form of five percent (5%) of the Securities issuable to ASI hereunder and five percent (5%) of the Cash Payment payable to ASI hereunder, which, with respect to such portion of the Cash Payment, will be the sole obligation of ASI (the "Patriot Royalty") and (ii) the Technology and the Proprietary Rights are free of all licenses, sublicenses, royalty or similar payment obligations, liens, mortgages, encumbrances, pledges, or security interests, of any nature whatsoever, other than the Patriot Royalty, and are not subject to any outstanding injunction, judgement, order, decree, ruling, or charge. ASI has the right and authority to enter into this Agreement and to grant the rights granted herein. No facts have come to ASI's attention that would form a basis for the belief that the Technology or the Proprietary Rights or any rights thereunder owned by ASI are unenforceable or invalid and no action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand is pending or, to the best of ASI's knowledge, is threatened against ASI that challenges the legality, validity, enforceability, use, or ownership of such items. ASI has not agreed to indemnify any person for or against any interference, infringement, misappropriation, or other conflict with respect to such items. All material information affecting the patentability of the claims of the Technology, the Proprietary Rights and patent rights thereunder known to ASI has been disclosed to the United States Patent and Trademark Office and any other governing entity as relate to such rights. There have been no transfers, sales, assignments, licenses or other conveyance of any rights, title or interest in or to such items and none are pending or contemplated except as otherwise provided herein. The Technology and Proprietary Rights represent all of the patents, patent applications, rights or inventions created or owned by ASI that relate to the GPA technology. To the best of ASI's knowledge, the Technology and the Proprietary Rights and the processes represented by them will perform the functions as set forth in the patents and patent applications 8 listed in EXHIBIT A hereto and disclosed by ASI to Markland, and ASI does not have knowledge of any matter that would prevent such performance. To the best of ASI's knowledge, ASI has not, by any of its acts or acts of its agents, put any of those rights into jeopardy. (4) CONTRACT WORK. All prior government work has been completed and there are no obligations for further work, development, reporting or delivery of any items or work product except as disclosed in Exhibit E and the Contracts related thereto. (5) USE OF TECHNOLOGY AFTER CLOSING. ASI acknowledges that after the Closing, Markland shall be free to develop, abandon, transfer, sell, license or otherwise deal with the Technology without consent or claim by ASI other than as otherwise provided in this Agreement. b) Markland acknowledges and agrees that it is buying the Technology and the Proprietary Rights "AS IS", with no warranty or representation of any kind except as expressly provided herein and with no assurance of future revenues relating from the Technology or the Proprietary Rights. ASI DISCLAIMS ANY AND ALL OTHER WARRANTIES, EITHER EXPRESS, IMPLIED OR STATUTORY, OR ARISING BY COURSE OF CONDUCT OR PERFORMANCE, CUSTOM OR USAGE IN THE TRADE INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. c) Markland hereby represents and warrants to, and covenants with, ASI as follows: (1) ORGANIZATION, GOOD STANDING AND QUALIFICATION. Markland is a corporation duly organized, validly existing and in good standing under the laws of the State of Florida. Markland has all requisite corporate power and authority to own and operate its properties and assets, to execute and deliver this Agreement and to issue and sell the Securities, as hereinafter defined, and to carry out the provisions of this Agreement and to carry on its business as presently conducted and as presently proposed to be conducted. Markland is duly qualified and is authorized to do business and is in good standing as a foreign corporation in all jurisdictions in which the nature of its activities and of its properties (both owned and leased) makes such qualification necessary, except for those jurisdictions in which failure to do so would not have a material adverse effect on Markland or its business. (2) CAPITALIZATION; VOTING RIGHTS. The authorized capital stock of Markland consists of 500,000,000 shares of Common Stock, par value $.0001 per share ("Common Stock"), and 5,000,000 shares of preferred stock, par value $.0001 per share ("Preferred Stock"). As of March 14, 2003 Markland had 8,000 shares of Series C preferred stock designated with 5,225 shares outstanding and 306,709,209 shares of Common Stock outstanding. A total of 73,130,267 shares of common stock are reserved for conversion under the Series C Preferred Stock (such preferred convertible into 36,565,134 common shares at March 14, 2003) and an additional 7,161,660 shares of common stock are intended for future issuance to employees and consultants. There are no stock option grants, warrants or other convertible instruments outstanding. 9 All issued and outstanding shares of Markland common stock (a) have been duly authorized and validly issued, and (b) are fully paid and nonassessable. The Securities issued to ASI are, and any additional shares of Markland common stock issued pursuant hereto or the Registration Rights Agreement will be, validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed. (3) AUTHORIZATION; BINDING OBLIGATIONS. All corporate action on the part of Markland, its officers, directors and stockholders necessary for the authorization of this Agreement, the Registration Rights Agreement, the Sublicense Agreement (collectively, the "Transaction Documents") and the performance of all obligations of Markland hereunder and thereunder and the authorization, sale, issuance and delivery of the Securities pursuant hereto has been taken prior to the Closing. (4) TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. Markland has good and marketable title to its properties and assets, including the properties and assets reflected in the most recent balance sheet, and good title to its leasehold estates, in each case subject to no mortgage, pledge, lien, lease, encumbrance or charge, other than (a) those resulting from taxes which have not yet become delinquent, (b) minor liens and encumbrances which do not materially detract from the value of the property subject thereto or materially impair the operations of Markland, and (c) those that have otherwise arisen in the ordinary course of business. All facilities, machinery, equipment, fixtures, vehicles and other properties owned, leased or used by Markland are in good operating condition and repair and are reasonably fit and usable for the purposes for which they are being used. (5) COMPLIANCE WITH OTHER INSTRUMENTS. Markland is not in violation or default of any term of its Certificate of Incorporation or Bylaws, or of any provision of any mortgage, indenture, contract, agreement, instrument or contract to which it is party or by which it is bound or of any judgment, decree, order, writ or, to its knowledge, any statute, rule or regulation applicable to Markland which would materially and adversely affect the business, assets, liabilities, financial condition or operations of Markland. The execution, delivery, and performance of and compliance with the Transaction Documents, the issuance of the Securities and any additional shares of Markland common stock pursuant hereto, will not, with or without the passage of time or giving of notice, result in any such material violation, or be in conflict with or constitute a default under any such term, or result in the creation of any mortgage, pledge, lien, encumbrance or charge upon any of the properties or assets of Markland or the suspension, revocation, impairment, forfeiture or nonrenewal of any permit license, authorization or approval applicable to Markland, its business or operations or any of its assets or properties. (6) LITIGATION. There is no action, suit, proceeding or investigation pending or to Markland's knowledge currently threatened in writing against Markland that questions the validity of any of the Transaction Documents or the right of Markland to enter into any of such agreement, or to consummate the transactions contemplated hereby or thereby, or which might result, either individually or in the aggregate, in any material adverse change in the assets, condition or affairs of Markland, financially or otherwise, or any change in the current equity ownership of Markland, nor is Markland aware that there is any basis for the foregoing. 10 (7) COMPLIANCE WITH LAWS; PERMITS. To its knowledge, Markland is not in violation of any applicable statute, rule, regulation, order or restriction of any domestic or foreign government or any instrumentality or agency thereof in respect of the conduct of its business or the ownership of its properties which violation would materially and adversely affect the business, assets, liabilities, financial condition or operations of Markland. No governmental orders, permissions, consents, approvals or authorizations are required to be obtained and no registrations or declarations are required to be filed in connection with the execution and delivery of any of the Transaction Documents and the issuance of the Securities and any additional shares of Markland common stock, except such as has been duly and validly obtained or filed, or with respect to any filings that must be made after the Closing, as will be filed in a timely manner. Markland has all franchises, permits, licenses and any similar authority necessary for the conduct of its business as now being conducted by it, the lack of which could materially and adversely affect the business, properties, prospects or financial condition of Markland and believes it can obtain, without undue burden or expense, any similar authority for the conduct of its business as planned to be conducted. (8) SEC FILINGS; FINANCIAL STATEMENTS OF MARKLAND. (i) Markland has timely filed all forms, reports, statements and documents required to be filed by it with the Securities and Exchange Commission (the "SEC") since January 1, 2002 (collectively together with any such forms, reports, statements and documents Markland may file subsequent to the date hereof until the Closing, the "MARKLAND REPORT s"). Each Markland Report was prepared in accordance with the requirements of the Securities Act of 1933, as amend, or the Securities Exchange Act of 1934, as amended, as the case may be, and did not at the time it was filed contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. No subsidiary of Markland is subject to the periodic reporting requirements of the Exchange Act or required to file any form, report or other document with the SEC any stock exchange or any other comparable governmental entity. (ii) Except as is provided in the Markland Reports, each of the consolidated financial statements (including, in each case, any notes thereto) contained in the Markland Reports was prepared in accordance with generally accepted accounting principles ("GAAP") applied on a consistent basis throughout the periods indicated (except as may be indicated in the notes thereto) and each presented fairly, in all material respects, the consolidated financial position of Markland and the consolidated subsidiaries of Markland as at the respective dates thereof and for the respective periods indicated therein, except as otherwise noted therein (subject, in the case of unaudited statements, to normal recurring immaterial year-end adjustments and the absence of notes). (iii) Except as and to the extent set forth or reserved against on the consolidated balance sheet of Markland and the subsidiaries of Markland as reported in the Markland Reports, including the notes thereto, none of Markland or any subsidiary of Markland has any liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) that would be required to be reflected on a balance sheet or in notes thereto prepared in accordance with GAAP, except for liabilities or obligations incurred in the ordinary course of business consistent with past practice since the date of the most recent Markland Report that have not had and could not reasonably be expected to have, individually or in the aggregate, a material adverse effect on the condition (financial or otherwise), properties, assets (including intangible assets), liabilities, business, operations or results of operations of Markland 11 9. INDEMNIFICATION. a) ASI INDEMNIFICATION. ASI shall indemnify, defend, and hold harmless Markland against and in respect of any and all claims, demands, losses, costs, expenses, obligations, liabilities, damages, recoveries, and deficiencies, including interest, penalties, and reasonable attorneys' fees, that Markland shall incur or suffer, that arise, result from, or relate to any breach of, or failure by ASI to perform, any of its representations, warranties, covenants, or agreements in this Agreement or in any schedule, certificate, exhibit, or other instrument furnished or to be furnished by ASI under this Agreement. Notwithstanding the foregoing, the indemnification obligations of ASI with respect to matters described in clause (i) above shall be limited in dollar amount to the amount of the Technology Purchase Price and any additional amounts paid in cash by Markland to ASI pursuant to this Agreement. b) MARKLAND INDEMNIFICATION. Markland shall indemnify, defend, and hold harmless ASI against and in respect of any and all claims, demands, losses, costs, expenses, obligations, liabilities, damages, recoveries, and deficiencies, including interest, penalties, and reasonable attorneys' fees, that ASI shall incur or suffer, that arise, result from, or relate to any (i) claim that any modifications, improvements or other changes to the Technology or the Proprietary Rights made by Markland after Closing or any other technologies or inventions originating with Markland after the Closing infringes or misappropriates the intellectual property rights of any third party or (ii) any breach of, or failure by Markland to perform, any of its representations, warranties, covenants, or agreements in this Agreement or in any schedule, certificate, exhibit, or other instrument furnished or to be furnished by Markland under this Agreement. c) A party entitled to indemnification hereunder (an "Indemnified Party") shall promptly notify the other party hereto (the "Indemnifying Party") of the existence of any claim, demand, or other matter to which the Indemnifying Party's indemnification obligations would apply, and shall give it a reasonable opportunity to defend the same at its own expense and with counsel of its own selection; provided that the Indemnified Party shall at all times also have the right to fully participate in the defense at its own expense. If the Indemnifying Party shall, within a reasonable time after this notice, fail to defend, the Indemnified Party shall have the right, but not the obligation, to undertake the defense of, and to compromise or settle (exercising reasonable business judgment), the claim or other matter on behalf, for the account, and at the risk, of the Indemnifying Party. If the claim is one that cannot by its nature be defended solely by the Indemnifying Party (including, without limitation, any federal or state tax proceeding), then the Indemnified Party shall make available all information and assistance that the Indemnifying Party may reasonably request. 12 10. MISCELLANEOUS TERMS. a) Each party shall execute and deliver, from time to time at or after the date of the Closing upon the request of the other party, such further conveyance instruments, and take such further actions, as may be necessary or desirable to evidence more fully the conveyance of interest in and to all the Technology and Proprietary Rights and the assignment of the Contracts to Markland, on the part of the Markland, to the fullest extent reasonably possible. Each party therefore agrees to: (1) Execute, acknowledge, and deliver any affidavits or documents of assignment and conveyance regarding the Technology or the Proprietary Rights; (2) Provide testimony in connection with any proceeding affecting the right, title, interest, or benefit of the Markland and to the Technology or the Proprietary Rights; and (3) Perform any other acts reasonably necessary to carry out the intent of this Agreement. b) In furtherance of, but subject to the terms and conditions of, this Agreement, ASI hereby acknowledges that, from and after the Closing, Markland will have acquired all of ASI's right, title, and standing to: (1) Receive all rights and benefits pertaining to the Technology and the Proprietary Rights as the sole owner thereof; (2) Institute and prosecute all suits and proceedings and take all actions that Markland, in its sole discretion, may deem necessary or proper to collect, assert, or enforce any claim, right or title of any kind in and to any and all of the Technology and Proprietary Rights; (3) Defend and compromise any and all such actions, suits, or proceedings relating to such transferred and assigned rights, title, interest, and benefits, and do all other such acts and things in relation thereto as the Markland, in its sole discretion, deems advisable; and (4) To sell, assign, transfer, modify, further develop and license such rights and receive royalties and other payment for such rights. C) The parties agree that ASI shall pay all costs and fees (legal and otherwise) necessary to maintain or prosecute the patents identified in Exhibit A through the date of the Closing. After the Closing, the parties agree that Markland shall pay all such costs and fees thereafter. d) ASI agrees that Markland may retain the services of the law firm of Thorpe, North &Western, including specifically Vaughn North, to act as Markland's patent counsel subsequent to the Closing of this Agreement and as such ASI hereby waives any potential conflict of interest that may exist now or in the future. 13 e) Markland intends to employ Dr. Ted Anderson upon the Closing and to retain Dr. Igor Alexeff as a part-time consultant. f) ASI and Markland agree that each party shall be responsible for their own legal and other fees and costs relating to the preparation of this Agreement. Each party represents and warrants it has been represented by legal counsel and that there is no finder or broker involved in this transaction. g) This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof, and shall supersede all previous communications, representations, understandings and agreements, whether oral or written. This Agreement may not be changed or modified except by a written agreement signed by both parties. This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada (excluding conflicts of law principles). Any action or suit related to this Agreement shall be brought exclusively in the state or federal courts in Nevada. In case any one or more of the provisions contained in this Agreement or any application thereof shall be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and other applications thereof shall not in any way be affected or impaired thereby, and such invalidity shall be construed and limited as narrowly as practicable. h) All representations, warranties, covenants and agreements of ASI and Markland in this Agreement shall survive the execution, delivery and performance of this Agreement and the Closing for a period of one (1) year following the Closing. All representations and warranties of each party set forth in this Agreement shall be deemed to have been made again by such party at and as of the Closing Date. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. Markland Technologies, Inc. ASI Technology Corporation By:_______________________ By:_______________________ Name:_____________________ Name:_____________________ Title:____________________ Title:____________________ 14 EXHIBIT A - CONFIDENTIAL PATENTS AS OF DECEMBER 31, 2002 (SOME FOREIGN PATENTS TO BE ABANDONED) ---------------------------------------------------------------------- The items included on this Exhibit A include: - ------------------------------------------------------------------------------------------------------------------------------------ DOCKET NO. TITLE FILE SERIAL NO. ART COUNTRY APPLICANT ISSUE PATENT NO. STATUS DATE UNIT DATE - ------------------------------------------------------------------------------------------------------------------------------------ T2038.CIP.PCT.CA RUGGED GAS TUBE 1/13/98 2318041 CIP Canada Norris et 5/21/02 2318041 Issued R.F. CELLULAR al. ANTENNA - ------------------------------------------------------------------------------------------------------------------------------------ T2038.CIP.PCT.AU RUGGED GAS TUBE 1/13/98 57329/98 CIP Australia Norris et 5/2/02 742917 Issued R.F. CELLULAR al. ANTENNA - ------------------------------------------------------------------------------------------------------------------------------------ T2038.CIP.PCT RUGGED GAS TUBE 1/13/98 PCT/US98/00271 CIP PCT Norris et [???] R.F. CELLULAR al. ANTENNA - ------------------------------------------------------------------------------------------------------------------------------------ T2038.CIP RUGGED GAS TUBE 1/13/97 08/783,368 CIP U.S. Norris et 11/23/99 5,990,837 Issued R.F. CELLULAR al. ANTENNA - ------------------------------------------------------------------------------------------------------------------------------------ T2038 GAS TUBE RF 9/7/94 08/302,129 U.S. Norris et 1/14/97 5,594,456 Issued ANTENNA al. - ------------------------------------------------------------------------------------------------------------------------------------ T2038.CIP.PCT.EP RUGGED GAS TUBE 98901195.2 EPO Norris et Published R.F. CELLULAR al. ANTENNA - ------------------------------------------------------------------------------------------------------------------------------------ T8414 RECONFIGURABLE 4/5/00 09/543,031 2817 U.S. Norris et Notice of ELECTROMAGNETIC al. Allowance WAVEGUIDE Received - ------------------------------------------------------------------------------------------------------------------------------------ T8414.CIP RECONFIGURABLE 2/21/01 09/790,327 2817 U.S. Norris et Published ELECTROMAGNETIC al. WAVEGUIDE - ------------------------------------------------------------------------------------------------------------------------------------ T8414.CIP.PCT RECONFIGURABLE 2/21/02 PCT/US02/05279 PCT Norris et Filed ELECTROMAGNETIC al. WAVEGUIDE - ------------------------------------------------------------------------------------------------------------------------------------ T8414.PCT RECONFIGURABLE 4/5/01 PCT/US01/11064 PCT Norris et Filed ELECTROMAGNETIC al. WAVEGUIDE - ------------------------------------------------------------------------------------------------------------------------------------ T8414.PCT.CA RECONFIGURABLE 10/4/02 Canada Norris et Filed ELECTROMAGNETIC al. WAVEGUIDE - ------------------------------------------------------------------------------------------------------------------------------------ 15 - ------------------------------------------------------------------------------------------------------------------------------------ DOCKET NO. TITLE FILE SERIAL NO. ART COUNTRY APPLICANT ISSUE PATENT NO. STATUS DATE UNIT DATE - ------------------------------------------------------------------------------------------------------------------------------------ T8414.PCT.JP RECONFIGURABLE 10/4/02 Japan Norris et Closed ELECTROMAGNETIC al. WAVEGUIDE - ------------------------------------------------------------------------------------------------------------------------------------ T8414.PCT.UK RECONFIGURABLE 4/5/01 0224623.9 United Norris et Filed ELECTROMAGNETIC Kingdom al. WAVEGUIDE - ------------------------------------------------------------------------------------------------------------------------------------ T8415 A RECONFIGURABLE 4/5/00 09/543,445 2821 U.S. Norris et 4/9/02 6,369,763 Issued PLASMA ANTENNA al. - ------------------------------------------------------------------------------------------------------------------------------------ T8415.PCT A RECONFIGURART 4/5/01 PCT/USO1/11063 2821 PCT Norris et Filed PLASMA ANTENNA al. - ------------------------------------------------------------------------------------------------------------------------------------ T8415.PCT.CA A RECONFIGURART 10/4/02 Canada Norris et Filed PLASMA ANTENNA al. - ------------------------------------------------------------------------------------------------------------------------------------ T8415.PCT.JP A RECONFIGURABLE Japan Norris et Closed PLASMA ANTENNA al. - ------------------------------------------------------------------------------------------------------------------------------------ T8415.PCT.UK A RECONFIGURART 10/23/02 0224619.7 United Norris et Filed PLASMA ANTENNA Kingdom al. - ------------------------------------------------------------------------------------------------------------------------------------ T8614 EXPANDIBLE 1/17/01 09/764,801 2821 U.S. Alexeff et Published/ ANTENNA al. Notice of Allowance Received - ------------------------------------------------------------------------------------------------------------------------------------ 20040 PLASMA FILTER 2/25/02 10/084,259 2821 U.S. Alexeff et Filed ANTENNA SYSTEM al. - ------------------------------------------------------------------------------------------------------------------------------------ 21012.PROV EXPANDABLE AND 7/17/02 60/396,641 U.S. Alexeff et Filed RECONFIGURABLE al. ANTENNAS - ------------------------------------------------------------------------------------------------------------------------------------ 21013 ANTENNA ELEMENT 9/30/02 10/263,355 2821 U.S. Anderson Filed HAVING et al. RECONFIGURABLE LENGTH - ------------------------------------------------------------------------------------------------------------------------------------
16 EXHIBIT B --------- CONFIDENTIAL AND PROPRIETARY INFORMATION TRANSFERRED ---------------------------------------------------- The items included on this Exhibit B include: The information in the patent applications and documents included in Exhibit A. 17 EXHIBIT C --------- EQUIPMENT TRANSFERRED --------------------- The items included in this Exhibit C include: Prototype plasma antenna devices 18 EXHIBIT D --------- TRADEMARKS AND TRADENAMES TRANSFERRED ------------------------------------- The items included on this Exhibit D include: 1. Any and all trademark/tradename rights that ASI may have in the name "Plasma Scientific Corporation". 19 EXHIBIT E --------- GOVERNMENT CONTRACTS -------------------- CONTRACT SUMMARY 28-Feb-03 UNDER CONTRACT: Remaining Contract Contract Contract Billed To Amount Subcontract Sub- Type Sponsor Date Term Title Amount Date Billed To Pay contractor ---- ------- ---- ---- ----- ------ ---- ------ ------ ---------- Ballistic Missile Tracking and Malibu SBIR Ph II MDA 4/23/02 24 Months Detection with Plasma Antenna (1) $ 595,609 2/28/03 $312,521 $123,801 Research Biological Decontamination for Eastern STTR Air Force 8/1/02 12 Months Forward-Deployed Airbase $ 99,333 1/31/03 $ 49,667 $ 30,000 Virg Med Using Low Temperature Air Plasmas School Plasma Phased Array Radar Antenna Malibu SBIR NAVY 1 /31/03 Six Months Architecture (2) $ 68,587 2/28/03 $ 11,000 $ 13,355 Research (1) ACRN funded to $300,000 to date. Orally advised this has been awarded. (2) Plus Phase I Option possible for $29,490.
20 EXHIBIT F --------- SUBLICENSE AGREEMENT -------------------- 21 EXHIBIT F SUBLICENSE AGREEMENT THIS AGREEMENT, effective the 19th day of March 2003, (the "Effective Date") by and between ASI Technology Corporation, a Nevada corporation ("ASI"), having a principal place of business located at 980 American Pacific Drive, No. 111, Henderson, Nevada 89014 and Markland Technologies, Inc., a Florida Corporation ("MARKLAND"), having a principal place of business located at 54 Danbury Road Suite #207, Ridgefield, CT 06877. INTRODUCTION WHEREAS, MARKLAND is involved in the development of military and homeland security technologies. WHEREAS, Professor Igor Alexeff ("ALEXEFF") has invented and is assisting ASI in the development of the following technology: Direct Current Energy Discharge System for use in the fields of decontamination, sterilization and industrial processing using plasma generated by methods or apparatuses claimed under U.S. patent # 6,232,723 (the "Patent"), including but not limited to, sterilization or decontamination of equipment, facilities or areas, and modification of chemical properties of such things as areas, surfaces or compounds. A copy of the Patent has been provided to MARKLAND. WHEREAS, ASI is the exclusive licensor of certain Technology Rights and Patent Rights as herein defined pursuant to that certain Patent License Agreement effective as of January 1, 2003 by and between ASI and ALEXEFF (the "Patent License Agreement") and is willing to grant MARKLAND an exclusive sublicense to make, use and sell products incorporating such Technology Rights and Patent Rights in the United States and Canada to certain customers as provided herein; and WHEREAS, ASI believes it is in its best interest to grant MARKLAND this sublicense as set forth below; and WHEREAS, MARKLAND has evaluated the potential and risks of this sublicense and wishes to enter into this sublicense: NOW THEREFORE, in consideration of the premises and mutual covenants set forth herein, and intending to be legally bound, the parties agree as follows: 1. DEFMITIONS A. "Affiliate" means a corporation or other entity controlled by, controlling, or under common control with MARKLAND. For the purpose of this Agreement, "control" or "controlling" mean (a) the ownership, directly or indirectly, of more than fifty percent (50%) of the voting stock or analogous interest in such corporation or other entity; or (b) the existence of any other relationship between MARKLAND and such other corporation or entity which results in effective managerial control by one over the other, regardless of whether such control is continuously exercised. B. "Licensed Field(s)" means the fields of decontamination, sterilization and industrial processing using plasma generated by methods or apparatuses claimed under the Page 1 of 11 EXHIBIT F Patent, including but not limited to, sterilization or decontamination of equipment, facilities or areas, and modification of chemical properties of such things as areas, surfaces or compounds. C. "Licensed Product" means any product, system, device or apparatus Used or Sold by MARKLAND or an Affiliate comprising, derived from, incorporating or otherwise utilizing Licensed Subject Matter, or any part thereof, or any other product, system, device or apparatus Used or Sold by MARKLAND or an Affiliate wherein the manufacture, use, offer for sale, sale or importation of such product, system, device or apparatus by MARKLAND or an Affiliate would, but for the rights and license granted herein, constitute an infringement of the Patent or any of the Patent Rights or Technology Rights. D. "Licensed Subject Matter" means inventions and discoveries covered by Patent Rights or Technology Rights within the Licensed Fields. E. "Licensed Territory" or "Territory" means the United States of America and Canada. F. "Net Sales" means the total gross billings of MARKLAND for the Use or Sale of Licensed Products less sales and/or use taxes actually paid, import and/or export duties actually paid, outbound transportation prepaid or allowed, and amounts allowed or credited due to returns (not to exceed the original billing or invoice amount). G. "Patent Rights" means ASI's rights, to the extent and only to the extent licensed to ASI under the Patent License Agreement, in information or discoveries claimed by the Patent and subsequent patent applications based thereon, including all divisions, continuations, continuations-in-part, reissues, reexaminations or extensions thereof, and any letters patent that issue thereon, whether foreign or domestic. H. "Sale or Sold" means the sale, transfer or other disposition of a Licensed Product or grant of use of Licensed Subject Matter for value to a party other than MARKLAND. "Sell" has the corollary meaning ascribed thereto. The terms "Sale," "Sold" and "Sell" include without limitation leases and other transfers and similar transactions. I. "Technology Rights" means ASI's rights, to the extent and only to the extent licensed to ASI under the Patent License Agreement, in technical information, know-how, processes, procedures, compositions, devices, methods, formulas, protocols, techniques, software, designs, drawings or data created by Alexeff or ASI which are not covered by Patent Rights but which are necessary for practicing the invention(s) covered by Patent Rights. J. "Use" or "Used" means the use of a Licensed Product by MARKLAND or an Affiliate in performing services for a Customer. K. "Customers" means the customers listed in Attachment A. L. "Improvements" means all PATENTABLE AND NON-PATENTABLE inventions, discoveries, findings, additions, modifications, changes, technology and information of any type whatsoever, including without limitation, methods, processes, technical information, knowledge, experience and know-how, which utilize, incorporate, derive from, or are based on the Patent Rights, the Technology Rights or the Licensed Subject Matter or could not be conceived, developed or reduced to practice but for the use of the Patent Rights, the Technology Rights or the Licensed Subject Matter. Page 2 of 11 EXHIBIT F II. GRANT Subject to the terms and conditions of this Agreement, ASI hereby grants to MARKLAND and its Affiliates, and MARKLAND hereby accepts, an exclusive right and license under the Licensed Subject Matter to make, have made, use, import, sell and offer to sell and have sold Licensed Products to Customers in the Territory. MARKLAND shall not have the right to grant sublicenses hereunder or otherwise assign any of its rights hereunder without the prior written consent of ASI, which consent may be withheld in ASI's sole and absolute discretion. III. BEST EFFORTS MARKLAND shall use its best efforts to develop, Use and Sell MARKLAND developed Licensed Products to Customers in the Territory. MARKLAND recognizes the Licensed Subject Matter is in an early stage of development and no products have yet been developed by ASI or others related thereto. No regulatory approvals have been obtained for any products and there can be no assurance that any products meeting the requirements of Customers can be developed. IV. LICENSE FEES, RUNNING ROYALTIES AND MINIMUM ROYALTIES MARKLAND agrees to pay an initial license fee, running royalties and minimum royalties (all payable to ASI in United States Dollars) as follows: A. An initial nonrefundable license fee of $5,000.00 payable upon execution of this Agreement. B. Running Royalties equal to Twelve and One Half Percent (12.5%) of the Net Sales resulting from Sale or Use by MARKLAND or any Affiliate of Licensed Products to the Customers in the Territory, payable on a monthly basis. C. Minimum monthly royalty payments for the first 24 months of this Agreement at the rate of $5,000.00 per month due and payable on the first day of each calendar month following execution of this Agreement. V. PATENT PROSECUTION AND INFRINGEMENT The filing, prosecution and maintenance of all Patent Rights shall be at the sole discretion of ASI and it shall be entitled to retain any and all judgements or other recovery from such enforcement. In any infringement suit or dispute, MARKLAND shall, and shall cause each of its Affiliates to, cooperate fully with ASI and at the request and expense of ASI, MARKLAND will permit access to all relevant personnel, records, papers, information, samples, specimens, etc., during regular business hours. VI. ASSIGNABILITY MARKLAND may not sublicense any of its rights under this Agreement or assign this Agreement to any person or entity without ASI's prior written consent, which consent may be withheld in ASI's sole and absolute discretion. Page 3 of 11 EXHIBIT F VII. ASI COVENANT ASI covenants that it will not sublicense to any of the Customers in the Territory any of the rights under the Patent Rights, Technology Rights or the Licensed Subject Matter that are sublicensed to MARKLAND under this Agreement, and will not itself exercise any of the rights sublicensed to MARKLAND hereunder to any Customer in the Territory, unless: A. Authorized by this Agreement, or B. MARKLAND becomes insolvent, or C. A lien is filed against this Agreement, the Patent Rights, the Technology . Rights or the Licensed Subject Matter licensed to MARKLAND hereunder, or D. MARKLAND takes any action, or fails to take any action, the result of which gives a third party the right to acquire a security interest in this Agreement or the Patent Rights, Technology Rights or the Licensed Subject Matter licensed to MARKLAND hereunder, or E. MARKLAND files for bankruptcy or a receiver is appointed, or F. MARKLAND ceases to carry on its business as it is presently conducted, or G. MARKLAND materially breaches this Agreement in a manner that causes the Agreement to terminate or gives ASI the right to terminate under Section XI. If any of the events listed in clauses A through G occurs, ASI shall have the right at its option to (i) to change the license granted hereunder to a non-exclusive license, with all other provisions of this Agreement remaining if full force and effect, or (ii) terminate this Agreement, as provided in Section XI. VIII. INDEMNIFICATION; PRODUCT LIABILITY INSURANCE MARKLAND shall, at all times during the term of this Agreement and thereafter, be solely responsible for, and defend, hold harmless and indemnify ASI, its officers, employees, agents and other representatives, from and against any losses, damages, claims and expenses, including legal expenses and reasonable attorney's fees, arising out of (i) the USE of Sale by MARKLAND or any Affiliate of any Licensed Product, including, without limitation, the death of or injury to any person or property based upon any Licensed Product or any other products and/or services produced, provided or developed for, or by MARKLAND or any Affiliate, or commercially exploited by MARKLAND or any Affiliate pursuant to its rights under this Agreement. MARKLAND shall obtain and carry in full force and effect product liability insurance, in amounts customary in the relevant industry in which MARKLAND commercially exploits its products and services which shall protect ASI, its officers, employees, and agents in regard to the foregoing events at such time as MARKLAND begins to Use or Sell Licensed Products. IX. RECORD KEEPING MARKLAND shall keep full, true and accurate books of account containing all particulars that may be necessary for the purpose of showing the amounts payable to ASI hereunder. Said books of account shall be kept at MARKLAND's principal place of business. Said books and the supporting data shall be open at all Page 4 of 11 EXHIBIT F reasonable times, with reasonable advanced notice for five (5) years following the end of the calendar year to which they pertain, to the inspection of ASI or its agents for the purpose of verifying MARKLAND's royalty statement or compliance in other respects with this Agreement. MARKLAND within twenty (20) days after each calendar month, shall deliver to ASI true and accurate reports, giving such particulars of the business conducted by MARKLAND during the month as shall be pertinent to royalty accounting hereunder. These shall include at least the following: A. The number or amount of Licensed Products Sold by MARKLAND to Customers, if any, B. The Net Sales derived by MARKLAND from the Use and Sale of Licensed Products, if any, and the royalties due pursuant to Section IV. With each such report submitted, MARKLAND shall pay the royalties and any other consideration due and payable under this Agreement. If no royalties, fees or other consideration shall be due, MARKLAND shall so report. The payments for royalties, fees or other consideration set forth in this Agreement shall, if overdue, bear interest until payment at the monthly rate of one percent (1%). The payment of such interest shall not foreclose ASI from exercising any other rights it may have as a consequence of the lateness of any payment. X. NON USE OF NAMES MARKLAND shall not use the names of ASI or Alexeff nor any adaptation or either, in any advertising, promotional or sales literature without the prior written consent of ASI in each case, which consent may be withheld in ASI's sole and absolute discretion, except that MARKLAND may state that it is licensed by ASI under one or more of the patents and/or applications comprising the Patent Rights. XI. TERM AND TERMINATION A. Unless sooner terminated as provided herein, this Agreement and all rights of MARKLAND hereunder shall terminate ten (10) years from the Effective Date. B. This Agreement and all rights of MARKLAND hereunder shall terminate immediately upon the termination of the Patent License Agreement or ASI's sublicense rights thereunder. C. In the event MARKLAND files for bankruptcy or a receiver is appointed, this Agreement may immediately thereafter be terminated by ASI upon written notice to MARKLAND. D. Should MARKLAND fail to pay the royalties, and/or other consideration due and payable hereunder, ASI shall have the right to terminate this Agreement on thirty (30) days written notice. Upon the expiration of the thirty (30) day period, if MARKLAND shall not have paid all such royalties, other consideration and interest thereon, ASI shall have the right to terminate this Agreement. Upon any material breach or default of this Agreement by MARKLAND, other than those Page 5 of 11 EXHIBIT F occurrences set out herein above which shall always take precedence in that order over any material breach or default referred to in this Section, ASI shall have the right to terminate this Agreement and the rights, privileges and license granted hereunder upon thirty (30) days written notice to MARKLAND. Such termination shall become effective unless MARKLAND shall have cured any such breach or default prior to the expiration of thirty (30) days from the date MARKLAND receives notice of the breach or default. E. Upon termination of this Agreement for any reason, nothing herein shall be construed to release either party from any obligation that matured prior to the effective date of such termination. MARKLAND may, however, after the effective date of such termination, complete the Sale of Licensed Products for which MARKLAND has received consideration from a Customer at the time of such termination, provided that MARKLAND shall pay to ASI the royalties or other consideration thereon as required under the provisions of Section IV of this Agreement, and shall submit the reports required under Section IX regarding the Sale of the Licensed Products. F. Upon termination of this Agreement for any reason, all rights sublicensed hereunder, including without limitation, all Patent Rights and all Technology Rights shall revert to ASI, and MARKLAND shall have no further right thereto or continuing interest therein. G. MARKLAND, its successors or assigns, shall have the option to terminate this Agreement upon thirty (30) days written notice to ASI and in that event, MARKLAND shall cease using the Patent Rights and Technology Rights and return same to ASI. H. Any time after three (3) years of the date of this Agreement, ASI shall have the right to terminate this Agreement if MARKLAND within thirty (30) days after receiving written notice from ASI of intended termination fails to provide reasonably satisfactory written evidence that MARKLAND has reasonably and continually maintained an effective, ongoing and active research, development, manufacturing, marketing or sales program as appropriate, directed toward obtaining regulatory approval, production or Sales of Licensed Products in the Territory. XII. PAYMENTS, NOTICES AND OTHER COMMUNICATIONS Any payment, notice or other communication made to any party pursuant to this Agreement shall be sufficiently made or given on the date of mailing if sent to such party by certified first class mail or air courier, postage prepaid, addressed to it at its address below, or at such other address as it shall have designated by written notice given to the other party. MARKLAND: Ken Ducey Markland Technologies, Inc. 54 Danbury Road Suite #207 Ridgefield, CT 06877 Page 6 of 11 EXHIBIT F Jerry E. Polis ASI Technology Corporation 980 American Pacific Drive, Suite #111 Henderson, Nevada 89014 XIII. INFRINGEMENT MARKLAND understands that ASI makes no representation and provides no assurance that the Sale or other commercial exploitation of Licensed Products under this Agreement does not and will not in the future, infringe or otherwise violate the rights of others. ASI makes no representation as to the operability or fitness for any use, safety, efficacy, ability to obtain regulatory approval, patentability, or breadth of the Licensed Subject Matter. ASI makes no representation as to whether there are any patents now held, or which will be held, by others in the Licensed Field, nor does ASI make any representation that the inventions contained in Patent Rights do not infringe any other patents or other intellectual property rights now held or that will be held by others. MARKLAND recognizes that ASI or its licensees may offer or sell Licensed Products targeted for Customers in located in geographic areas other than the Territory or for customers or others that are not defined Customers. These products may be of similar quality or features as those developed or offered by MARKLAND and at similar or different prices. Except for the exclusivity relating to Customers and Territory set forth herein, nothing in this Agreement shall be construed to prevent ASI or its licensees from offering products of any kind to others. There can be no assurance that Customers will not acquire such products offered through distribution channels targeted at non-Customers or to Customers from outside the Territory. XIV. IMPROVEMENTS MARKLAND acknowledges that the Patent License Agreement provides, and MARKLAND hereby agrees, that Improvements made by MARKLAND, any Affiliate, or any of their respective employees or agents shall be the sole and exclusive property of ALEXEFF; provided, however, that any such Improvement shall be deemed to be included within the Licensed Subject Matter under this Agreement without the payment of any additional royalties other than as provided in Section IV. During the term of this Agreement, MARKLAND shall give written notice (each, an "Improvement Notice") to ASI within thirty (30) days of any actual or constructive reduction to practice of any Improvement made by MARKLAND, any Affiliate, or any of their respective employees or agents. The Improvement Notice shall set forth the particulars of the nature of the Improvement and any test data obtained by MARKLAND with respect thereto. At the request of ASI, MARKLAND shall promptly execute and deliver all documents reasonably necessary to vest in ALEXEFF full right, title and interest in any such Improvement. Page 7 of 11 EXHIBIT F XV. CONFIDENTIAL INFORMATION Each party agrees to protect the confidentiality of any information concerning the other party, the other party's customers, trade secrets, business methods, processes, or procedures, or other information learned during the course of performance under this Agreement and marked "Confidential," any information transferred incident to any prior non-disclosure agreement between the parties, and any information that by its nature is normally and reasonably considered confidential (collectively, the "Confidential Information"), with the same degree of care that it regularly uses to protect its own similar confidential information, and to use the other party's Confidential Information solely for the purpose of carrying out this Agreement. The parties agree and acknowledge that each has received Confidential Information from the other in expectation of entering into this Agreement. If the party receiving Confidential Information from the other is required by any governmental authority or court order to disclose the disclosing party's Confidential Information to a third party, the receiving party shall promptly advise the disclosing party of the requirement or order to permit the disclosing party the opportunity to object and/or seek other relief. ASI and MARKLAND each agree that all information contained in documents marked "confidential" or any other Confidential Information forwarded to one by the other are to be (i) received in strict confidence, (ii) used only for the purposes of this Agreement, and (iii) not disclosed by the recipient party, its agents or employees without the prior written consent of the other party, except to the extent that the recipient party can establish competent written proof that such information: a. was in the public domain at the time of disclosure; b. later became part of the public domain through no act or omission of the recipient party, its employees, agents, successors or assigns; c. was lawfully disclosed to the recipient party without an obligation of confidentiality by a third party having the right to so disclose it; d. was already known by the recipient party at the time of disclosure and not under an obligation of confidentiality; e. was independently developed by the recipient party; or f. is required by law or regulation to be disclosed. Each party's obligation of confidence hereunder shall be fulfilled by using at least the same degree of care with the other party's confidential information as it uses to protect its own confidential information of a similar nature, which shall not be less than a reasonable degree of care. This obligation shall exist while this Agreement is in force and for a period of 2 years thereafter. XVI. ALTERNATE DISPUTE RESOLUTION Any dispute or controversy arising out of or relating to this Agreement, its construction or its actual or alleged breach will be first taken to mediation. If the mediation does not result in a resolution of such dispute or controversy, it will be finally decided by an appropriate method of alternate dispute resolution agreed to by the parties, and if the parties are unable to agree, by arbitration conducted in the city of Las Vegas, Nevada in accordance with the Commercial Dispute Resolution Procedures [http://www.adr.org/rules/commercial-rules.html] of the Page 8 of 11 EXHIBIT F American Arbitration Association. The arbitration panel will include members knowledgeable in the area of patent license agreements. Judgment upon the award rendered may be entered in the highest court or forum having jurisdiction, state or federal. The provisions of this Article XVI will not apply to decisions on the validity of patent claims or to any dispute or controversy as to which any treaty or law prohibits such arbitration. The decision of the arbitration must be sanctioned by a court of law having jurisdiction to be binding upon and enforceable by the parties. XVII. MISCELLANEOUS PROVISIONS A. Each party represents and warrants that it has the authority to enter into this Agreement and that the execution, delivery and performance of this Agreement does not conflict with any agreement, or understanding, either written or oral, to which it is a party or to which it is otherwise bound. B. This Agreement shall be construed, governed, interpreted and applied in accordance with the laws of the State of Nevada, U.S.A without regard to conflict principles. C. The parties hereto acknowledge that this Agreement sets forth the entire agreement and understanding of the parties, hereto as to the subject matter hereof, and shall not be subject to any change or modification except by the execution of a written instrument subscribed to by the parties hereto. D. If any term, covenant or condition of this Agreement or the application thereof to any party or circumstance shall, to any extent be held to be invalid or unenforceable, 1. The remainder of this Agreement, or the application of such term, covenant or condition to the parties or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby and each term, covenant or condition of this Agreement shall be valid and be enforced to the fullest extent permitted by law, and 2. The parties hereto covenant and agree to renegotiate any such term, covenant or application hereof in good faith in order to provide a reasonably acceptable alternative to the term, covenant or condition of this Agreement or the application thereof that is invalid or unenforceable, it being the intent of the parties that the basic purpose of this Agreement are to be effectuated. E. The failure of any party to asserts a right hereunder or to insist upon compliance with any term or condition of this Agreement shall not constitute a waiver of that right or excuse a similar subsequent failure to perform any such term or condition by the other party. F. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, ASI MAKES NO REPRESENTATION AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESSED OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY, FITNESS, AND VALIDITY OF THE PATENT RIGHTS OR TECHNOLOGY RIGHTS. H. Notwithstanding any provision herein to the contrary, this Agreement shall be subject to the Patent License Agreement. In the event of any conflict between this Agreement and the Patent License Agreement, the Patent License Agreement shall control. It is understood and agreed that ALEXEFF is a third party beneficiary of this Agreement. Page 9 of 11 EXHIBIT F IN WITNESS WHEREOF, the parties have hereunto set their hands and seals and duly executed this Agreement the day and year set forth below. Sublicensee: Licensor: Markland Technologies, Inc. ASI Technology Corporation By:_________________________ By:_________________________ Name:_______________________ Name:_______________________ Title:______________________ Title:______________________ Page 10 of 11 EXHIBIT F ATTACHMENT A ------------ LISTING OF CUSTOMERS CUSTOMERS - --------- U.S. Department of Defense including: US Army US Navy US Marine Corps US Air Force SOCOM DARPA DTRA National Laboratories (Sandia, Livermore, etc.) Dept. of Homeland Security including: US Coast Guard Immigration and Naturalization Service / Border Patrol Customs Service Federal Protective Services Transportation Security Agency Federal, State and Local Agencies / organizations / entities National Guard Embassies DEA CIA Page 11 of 11 EXHIBIT G --------- REGISTRATION RIGHTS AGREEMENT ----------------------------- REGISTRATION RIGHTS AGREEMENT THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is dated effective as of March 19, 2003 by and between ASI Technology Corporation ("ASI"), a Nevada corporation, having a principal place of business located 980 American Pacific Drive, No. 111, Henderson, Nevada 89014 and Markland Technologies, Inc., a Florida corporation (the "Company"), having a principal place of business located at 54 Danbury Road Suite #207 Ridgefield, CT 06877. RECITALS -------- The Company and ASI are parties to a Technology Purchase Agreement dated as of March 19, 2003 (the "Purchase Agreement") that provides that as a condition to the consummation of the transactions thereunder, ASI and the Company shall enter into this Agreement. All capitalized terms not defined herein shall have the meaning established in the Purchase Agreement. AGREEMENT --------- NOW, THEREFORE, in consideration of the mutual agreements, covenants, representations and warranties contained in this Agreement, the parties hereto hereby agree as follows: 1. DEFINITIONS. For purposes of this Agreement: (a) The term "Act" means the Securities Act of 1933, as amended. (b) The term "COMMON STOCK" means the common stock of the Company. (c) The term "HOLDER" means ASI or each assignee in accordance with Section 13 hereof. (d) The term "1934 Act" means the Securities Exchange Act of 1934, as amended. (e) The term "REGISTER," "REGISTERED," and "REGISTRATION" refer to a registration effected by preparing and filing with the SEC a registration statement or similar document in compliance with the Act, and the declaration or ordering of effectiveness of such registration statement or document. (f) The term "REGISTRABLE SECURITIES" means any and all (i) Common Stock issued pursuant to the Purchase Agreement; (ii) Common Stock issued pursuant to Section 9 of this Agreement (collectively, (i) and (ii) the "Stock"); (iii) Common Stock issued as a dividend or other distribution with respect to or in replacement of the Stock, and (iv) any Common Stock issued in any combination or subdivision of the Stock. In determining the amount of Registrable Securities held by any Person, the sum of (i), (ii), (iii) and (iv) shall be used and a Person shall be deemed to "hold" all Registrable Securities then held by and/or issuable to such Person, excluding in all cases, however, any Registrable Securities sold by a Person in a transaction in which such Person's rights under this Section 1 are not assigned in accordance with Section 4 below. As to any particular Registrable Securities, such securities shall EXHIBIT G cease to be Registrable Securities when they have been distributed to the public pursuant to an offering registered under the Securities Act or sold to the public through a broker dealer or market maker in compliance with Rule 144 under the Act (or any similar rule then in force) or repurchased or redeemed by the Company. (g) The term "SEC" shall mean the Securities and Exchange Commission. 2. COMPANY REGISTRATION. If the Company proposes to register (including for this purpose a registration effected by the Company for shareholders other than the Holders) any of its stock or other securities under the Act in connection with the public offering of such securities solely for cash (other than a registration relating solely to the sale of securities to participants in a Company stock option plan or stock purchase plan, a registration relating to a corporate reorganization or other transaction under Rule 145 of the Act, or a registration on any form that does not include substantially the same information as would be required to be included in a registration statement covering the sale of the Registrable Securities), the Company shall, at such time, promptly give each Holder written notice of such registration. Upon the written request of each Holder given within twenty (20) days after mailing of such notice by the Company in accordance with Section 14(e), the Company shall, subject to the provisions of Section 6, use its best efforts to cause to be registered under the Act all of the Registrable Securities that each such Holder has requested to be registered. 3. OBLIGATIONS OF THE COMPANY. Whenever required under Section 2 to effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible: (a) Prepare and file with the SEC a registration statement with respect to such Registrable Securities and use its best efforts to cause such registration statement to become effective, and keep such registration statement effective for a period of up to one hundred twenty (120) days or until the distribution contemplated in the Registration Statement has been completed; provided, however, that (i) such 120-day period shall be extended for a period of time equal to the period the Holder refrains from selling any securities included in such registration at the request of an underwriter of Common Stock (or other securities) of the Company; and (ii) in the case of any registration of Registrable Securities on Form S-3 which are intended to be offered on a continuous or delayed basis, such 120-day period shall be extended, if necessary, to keep the registration statement effective until all such Registrable Securities are sold, provided that Rule 415, or any successor rule, under the Act, permits an offering on a continuous or delayed basis, and provided further that applicable rules under the Act governing the obligation to file a post-effective amendment permit, in lieu of filing a post-effective amendment which (I) includes any prospectus required by Section 10(a)(3) of the Act or (II) reflects facts or events representing a material or fundamental change in the information set forth in the registration statement, the incorporation by reference of information required to be included in (I) and (II) above to be contained in periodic reports filed pursuant to Section 13 or 15(d) of the 1934 Act in the registration statement. 2 EXHIBIT G (b) Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Act with respect to the disposition of all securities covered by such registration statement. (c) Furnish to the Holders such numbers of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them. (d) Use its best efforts to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders; provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions, unless the Company is already subject to service in such jurisdiction and except as may be required by the Act. (e) In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering. Each Holder participating in such underwriting shall also enter into and perform its obligations under such an agreement. (f) Notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing. (g) Cause all such Registrable Securities registered pursuant hereunder to be listed on each securities exchange on which similar securities issued by the Company are then listed. (h) Provide a transfer agent and registrar for all Registrable Securities registered pursuant hereunder and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration. (i) Furnish, at the request of any Holder requesting registration of Registrable Securities pursuant to Section 2, on the date that such Registrable Securities are delivered to the underwriters for sale in connection with a registration pursuant to this Agreement, if such securities are being sold through underwriters, or, if such securities are not being sold through underwriters, on the date that the registration statement with respect to such securities becomes effective, (i) an opinion, dated such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to the Holders requesting registration of Registrable Securities and (ii) a letter dated such date, from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to the Holders requesting registration of Registrable Securities. 3 4. FURNISH INFORMATION. It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Sections 2 and 3 with respect to the Registrable Securities of any selling Holder that such Holder shall furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of such securities as shall be required to effect the registration of such Holder's Registrable Securities. 5. EXPENSES OF REGISTRATION. The Company shall bear and pay all expenses incurred in connection with any registration, filing or qualification of Registrable Securities with respect to the registrations pursuant to Section 2 for each Holder, including all registration, filing, and qualification fees, and printers and accounting fees relating or apportionable thereto selected by them, but excluding underwriting discounts and commissions and fees and disbursements of counsel for the Holders, except that the Company shall be required to pay the reasonable fees and expenses incurred by one special counsel to such selling Holders. 6. UNDERWRITING REQUIREMENTS. In connection with any offering pursuant to Section 2 involving an underwriting of shares of the Company's capital stock, the Company shall not be required under Section 2 to include any of the Holders' securities in such underwriting unless they accept the terms of the underwriting as agreed upon between the Company and the underwriters selected by it (or by other persons entitled to select the underwriters), and then only in such quantity, if any, as the underwriters determine in their sole discretion will not jeopardize the success of the offering by the Company. If the total amount of securities, including Registrable Securities, requested by shareholders to be included in such offering exceeds the amount of securities sold other than by the Company that the underwriters determine in their sole discretion is compatible with the success of the offering, then in such event the Company shall be required to include in the offering only that number of such securities, including Registrable Securities, which the underwriters determine in their sole discretion will not jeopardize the success of the offering; PROVIDED, however that any such limitation by the underwriters will be apportioned as follows: (i) first the Common Stock held by officers, directors or affiliates of the Company will be excluded from the registration, (ii) next the securities other than Registrable Securities will be excluded from the registration, and (iii) last the Registrable Securities requested to be registered by the Holders of Registrable Securities shall be excluded from such registration to the extent required by the underwriters. If a limitation of the number of shares is still required, the number of shares of Registrable Securities that may be included in the registration and underwriting shall be allocated among all selling Holders in proportion, as nearly as practicable, to the total amount of securities entitled to be included therein owned by each selling Holder or in such other proportions as shall mutually be agreed to by such selling Holders. No Registrable Securities or other securities excluded from the underwriting by reason of this Section 6 shall be included in such registration statement. For purposes of the preceding sentence concerning apportionment, for any selling shareholder who is a Holder of Registrable Securities and who is a partnership or corporation, the partners, retired partners, parent corporations, shareholders and affiliates of such Holder, or the estates and family members of any such partners and retired partners and any trusts for the benefit of any of the foregoing persons shall be deemed to be a single "selling shareholder," and any pro-rata reduction with respect to such "selling shareholder" shall be based upon the aggregate amount of shares carrying registration rights owned by all entities and individuals included in such "selling shareholder," as defined in this sentence. Notwithstanding the foregoing, in the case of any registered public offering subsequent to the Company's initial public offering, the number of Registrable Securities included in such registration and underwriting shall not be reduced below 30% of the securities included in such registration. 4 EXHIBIT G 7. DELAY OF REGISTRATION. No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any such registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Agreement. 8. INDEMNIFICATION. In the event any Registrable Securities are included in a registration statement under this Agreement: (a) To the extent permitted by law, the Company will indemnify and hold harmless each Holder, the partners or officers, members, directors and shareholders of each Holder, any underwriter (as defined in the Act) for such Holder and each person, if any, who controls such Holder or underwriter for such Holder within the meaning of the Act or the 1934 Act, against any losses, claims, damages, or liabilities (joint or several) to which they may become subject under the Act, the 1934 Act or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively a "VIOLATION"): (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading, or (iii) any violation or alleged violation by the Company of the Act, the 1934 Act, any state securities law or any rule or regulation promulgated under the Act, the 1934 Act or any state securities law; and the Company will reimburse each such Holder, member, partner or officer, director or shareholder of each such Holder, underwriter or controlling person, any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability, or action; provided, however, that the indemnity agreement contained in this subsection 8(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability, or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable in any such case for any such loss, claim, damage, liability, or action to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with written information furnished for use in connection with such registration by any such Holder, underwriter or controlling person. (b) To the extent permitted by law, each selling Holder will indemnify and hold harmless the Company, each of its directors, each of its officers who has signed the registration statement, each person, if any, who controls the Company within the meaning of the Act, any underwriter, any other Holder selling securities in such registration statement and any controlling person of any such underwriter or other Holder, against any losses, claims, damages, or liabilities (joint or several) to which any of the foregoing persons may become subject, under the Act, the 1934 Act or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereto) arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by such Holder for use in connection with such registration; and each such Holder will pay any legal or other expenses reasonably incurred by any person intended to be indemnified pursuant to this 5 EXHIBIT G subsection 8(b), in connection with investigating or defending any such loss, claim, damage, liability, or action; provided, however, that the indemnity agreement contained in this subsection 8(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Holder (which consent shall not be unreasonably withheld); and provided further, that, in no event shall any indemnity under this subsection 8(b) exceed the net proceeds from the offering received by such Holder. (c) Promptly after receipt by an indemnified party under this Section 8 of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 8, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party (together with all other indemnified parties which may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, if prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 8, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 8. (d) If the indemnification provided for in this Section 8 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim, damage, or expense referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage, or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions that resulted in such loss, liability, claim, damage, or expense as well as any other relevant equitable considerations; provided, however, that no person guilty of fraudulent misrepresentation (within the meaning of Section I I (f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties' relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission. Notwithstanding the provisions of this paragraph of Section 8, in no case shall any one Holder be liable or responsible for any amount in excess of the net proceeds received by such Holder from the offering of Registrable Securities. Any party entitled to contribution will, promptly after receipt of notice of commencement of any action, suit or proceeding against such party in respect of which a claim for contribution may be made against another party or parties under this Section, notify such party or parties from whom contribution may be sought, but the 6 EXHIBIT G omission so to notify such party or parties from whom contribution may be sought shall not relieve such party from any other obligation it or they may have thereunder or otherwise under this Section. No party shall be liable for contribution with respect to any action, suit, proceeding or claim settled without its prior written consent, which consent shall not be unreasonably withheld. (e) The obligations of the Company and Holders under this Section 8 shall survive the completion of any offering of Registrable Securities in a registration statement under this Agreement, and otherwise. 9. ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. In the event that a registration statement is not filed by the Company with respect to the Registrable Securities and declared effective by the SEC within one hundred fifty (150) days from the Closing Date (the "FINAL REGISTRATION DATE"), the Company shall promptly, and in no event later than ten (10) days following the Final Registration Date, issue to each Holder a number of shares of Common Stock equal to fifteen percent (15%) of the number of shares of Common Stock then held by such Holder. 10. REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a view to making available to the Holders the benefits of Rule 144 promulgated under the Act and any other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without registration, the Company agrees to: (a) make and keep public information available, as those terms are understood and defined in SEC Rule 144, at all times after ninety (90) days after the effective date of the first registration statement filed by the Company for the offering of its securities to the general public; (b) take such action, including the voluntary registration of its Common Stock under Section 12 of the 1934 Act, as is necessary to enable the Holders to utilize Form S-3 for the sale of their Registrable Securities, such action to be taken as soon as practicable after the end of the fiscal year in which the first registration statement filed by the Company for the offering of its securities to the general public is declared effective; (c) file with the SEC in a timely manner all reports and other documents required of the Company under the Act and the 1934 Act; and (d) furnish to any Holder, so long as the Holder owns any Registrable Securities, forthwith upon request (i) a written statement by the Company that it has complied with the reporting requirements of SEC Rule 144 (at any time after ninety (90) days after the effective date of the first registration statement filed by the Company), the Act and the 1934 Act (at any time after it has become subject to such reporting requirements), or that it qualifies as a registrant whose securities may be resold pursuant to Form S-3 (at any time after it so qualifies), (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested in availing any Holder of any rule or regulation of the SEC which permits the selling of any such securities without registration or pursuant to such form. 7 EXHIBIT G 11. "MARKET STAND-OFF" AGREEMENT. Each Holder hereby agrees that, during the period of duration specified by the Company and an underwriter of Common Stock or other securities of the Company, following the effective date of the first registration statement of the Company filed under the Act, it shall not, to the extent requested by the Company and such underwriter, directly or indirectly sell, offer to sell, contract to sell (including, without limitation, any short sale), grant any option to purchase or otherwise transfer or dispose of (other than to donees who agree to be similarly bound) any securities of the Company held by it at any time during such period except Common Stock included in such registration; provided, however, that: (a) all executive officers and directors of the Company and greater than two and one-half percent (2.5%) stockholders of the Company enter into or are subject to similar agreements; and (b) such market stand-off time period shall not exceed 180 days. In the event that any executive officer, director or 2.5% stockholder of the Company is released from any standoff obligation in connection the first registration statement of the Company filed under the Act, (i) the Company shall concurrently therewith cause the same pro rata portion of the Company's outstanding securities then held by each Holder to be released from any standoff obligations, and (ii) the Company shall notify each Holder in writing of such release within three (3) business days of such release. In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to the Registrable Securities of each Holder (and the shares or securities of every other person subject to the foregoing restriction) until the end of such period. Notwithstanding the foregoing, the obligations described in this Section 11 shall not apply to a registration relating solely to employee benefit plans on Form S-1 or Form S-8 or similar forms which may be promulgated in the future, or a registration relating solely to an SEC Rule 145 transaction on Form S-14 or Form S-15 or similar forms which may be promulgated in the future. 12. TERMINATION OF REGISTRATION RIGHTS. No Holder shall be entitled to exercise any right provided for in this Section 1 after four (4) years following the consummation of the sale of securities pursuant to a registration statement filed by the Company under the Act in connection with the initial firm commitment underwritten offering of its securities to the general public, or, with respect to any individual Holder or its transferee, when all Registrable Securities held by such Holder or such transferee may be sold under Rule 144 under the Act within a given 90-day period. 13. ASSIGNMENT OF RIGHTS. Notwithstanding anything herein to the contrary, the registration rights of a Holder under this Agreement may be assigned only to: (i) any subsidiary, parent, partner, limited partner, member, retired partner, affiliate or stockholder of a Holder; (ii) any family member or trust for the benefit of any Holder who is an individual; and (iii) any transferee who, after such assignment or transfer, holds at least 100,000 shares of Registrable Securities (as adjusted for any stock dividends, combinations or splits with respect to such shares); PROVIDED, HOWEVER, that no party may be assigned any of the foregoing rights unless the Company is given written notice by the assigning 8 EXHIBIT G party within a reasonable time after such assignment or transfer stating the name and address of the assignee and identifying the securities of the Company as to which the rights in question are being assigned; and PROVIDED FURTHER, that any such assignee shall receive such assigned rights subject to all the terms and conditions of this Agreement, including without limitation the provisions of this Section 13. 15. MISCELLANEOUS. (a) SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties (including transferees of any shares of Registrable Securities). Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. (b) GOVERNING LAW. This Agreement shall be governed by and construed under the internal laws of the State of Nevada without giving effect to the principles of conflicts of laws thereof. (c) COUNTEMARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. (d) TITLES AND SUBTITLES. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. (e) NOTICES. Unless otherwise provided, any notice required or permitted under this Agreement shall be given in writing and shall be deemed effectively given upon personal delivery to the party to be notified or upon deposit with the United States Post Office, by registered or certified mail, postage prepaid and addressed to the party to be notified at the address indicated for such party first written above, or at such other address as such party may designate by ten (10) days' advance written notice to the other parties. (f) EXPENSES. If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorneys' fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled. (g) AMENDMENTS AND WAIVERS. Any term hereof may be amended and the observance of any term hereof may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of each of (a) the Company; (b) the Holders and their respective successors and assigns holding at least a majority of the Registrable Securities. Any amendment or waiver so effected shall be binding upon the Company, the Holders and all of their respective successors and assigns whether or not such party, assignee or other shareholder entered into or approved such amendment or waiver. (h) SEVERABILITY. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms. 9 EXHIBIT G (i) AGGREGATION OF STOCK. All shares of Registrable Securities held or acquired by affiliated entities or persons shall be aggregated together for the purpose of determining the availability of any rights or the imposition of any obligations under this Agreement. (j) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between and among the parties hereto pertaining to the subject matter hereof and any other written or oral agreements between and among the parties hereto pertaining thereto are expressly cancelled. [Signature page follows] 10 EXHIBIT G IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first above written. COMPANY: MARKLAND TECHNOLOGIES, INC. By:__________________________ Name:________________________ Title:_______________________ HOLDER: ASI TECHNOLOGY CORPORATION By:__________________________ Name:________________________ Title:_______________________ 11 EX-10.14 5 markland_ex10-14.txt EXHIBIT 10.14 AWARD/CONTRACT PAGE OF PAGES 1 | 16 1. THIS CONTRACT IS A RELATED ORDER UNDER DPAS (15 CFR 350) RATING - -------------------------------------------------------------------------------- 2. CONTRACT (PROC. INST. IDENT.) DASG60-02-C-0055 - -------------------------------------------------------------------------------- 3. EFFECTIVE DATE 23 APR 02 - -------------------------------------------------------------------------------- 4. REQUISITION/PURCHASE REQUEST/PROJECT NO. VH1A8A0300-01 - -------------------------------------------------------------------------------- 5. ISSUED BY CODE DASG60 US ARMY SPACE AND MISSILE DEFENSE SMDC-CM-CT, PHIFER PO BOX 1500 HUNTSVILLE, AL 35807-3801 - -------------------------------------------------------------------------------- 6. ADMINISTERED BY (IF OTHER THAN ITEM 6) CODE S0513A DCM SANTA ANA 34 CIVIC CENTER PLAZA PO BOX C 12700 SANTA ANA, CA 92712-2700 - -------------------------------------------------------------------------------- 7. NAME AND ADDRESS OF CONTRACTOR (NO., STREET, CITY, COUNTY STATE AND ZIP CODE) ASI TECHNOLOGY CORPORATION 980 AMERICAN PACIFIC DRIVE SUITE 111 HENDERSON NV 89014 - -------------------------------------------------------------------------------- 8. DELIVERY [ ] FOB Origin [X] Other (see below) - -------------------------------------------------------------------------------- 9. DISCOUNT FOR PROMPT PAYMENT - -------------------------------------------------------------------------------- 10. SUBMIT INVOICES (4 COPIES UNLESS OTHERWISE SPECIFIED) TO THE ADDRESS SHOWN IN ITEM - -------------------------------------------------------------------------------- CODE 1TPQ4 FACILITY CODE - -------------------------------------------------------------------------------- 11. SHIP TO/MARK FOR CODE N00164 SEE SCHEDULE - -------------------------------------------------------------------------------- 12. PAYMENT WILL BE MADE BY CODE HQ0338 DFAS-COLUMBUS CENTER DFAS-CO/WEST ENTITLEMENT OPERATION PO BOX 182381 COLUMBUS OH 43218-22381 - -------------------------------------------------------------------------------- 13. AUTHORITY FOR OTHER THAN FULL AND OPEN COMPETITION [ ] 10 U.S.C. 2304(c)(5) [ ] 41 U.S.C. 253(c)( ) - -------------------------------------------------------------------------------- 14. ACCOUNTING AND APPROPRIATION DATA SEE SCHEDULE - -------------------------------------------------------------------------------- 15A. ITEM NO. 15B. SUPPLIES/SERVICES SEE SCHEDULE - -------------------------------------------------------------------------------- 15C. QUANTITY 15D. UNIT 15E. UNIT PRICE 15F. AMOUNT - -------------------------------------------------------------------------------- 15G. TOTAL AMOUNT OF CONTRACT: $595,609.00 - -------------------------------------------------------------------------------- 16. Table of Contents SEC DESCRIPTION PAGE(S) PART I - THE SCHEDULE X A SOLICITATION/CONTRACT FORM 1-1 X B SUPPLIES OR SERVICES AND PRICES/COSTS 2 C DESCRIPTION/SPECS./WORK STATEMENT D PACKAGING AND MARKING X E INSPECTION AND ACCEPTANCE 4 X F DELIVERIES OR PERFORMANCE 5 X G CONTRACT ADMINISTRATION DATA 6 X H SPECIAL CONTRACT REQUIREMENTS 8 PART II - CONTRACT CLAUSES X I CONTRACT CLAUSES 12 PART III - LIST OF DOCUMENTS, EXHIBITS & ATTACHMENTS X J LIST OF ATTACHMENTS 16 PART IV - REPRESENTATIONS AND INSTRUCTIONS K REPRESENTATIONS, CERTIFICATIONS OTHER STATEMENTS OF OFFERORS L INSTRS. CONDS., AND NOTICES TO M EVALUATION FACTORS FOR AWARD CONTRACTING OFFICER WILL COMPLETE ITEM 17 OR 18 AS APPLICABLE - -------------------------------------------------------------------------------- 17. [X] CONTRACTOR'S NEGOTIATED AGREEMENT (Contractor is required to sign this document and return 1 copies to issuing office). Contractor agrees to furnish and deliver all items or perform all services set forth or otherwise identified above and on any continuation sheets for the consideration stated herein. The rights and obligations of the parties to this contract shall be subject to and governed by the following documents; (a) this award/contract, (b) the solicitation, if any, and (c) such provisions, representations, certifications, and specifications, as are attached or incorporated by reference herein. (Attachments are listed herein.) - -------------------------------------------------------------------------------- 18. [ ] AWARD (Contractor is not required to sign this document). Your offer on solicitation number including the additions or changes made by you which additions or changes set forth in full above, is hereby accepted as to items listed above and on any continuation sheets. This award consummates the contract which consists of the following documents: (a) the Government's solicitation and your offer, and (b) this award/contract. No further contractual document is necessary. - -------------------------------------------------------------------------------- 19A. NAME AND TITLE OF SIGNER (TYPE OR PRINT) Jerry E. Polis, Pres. - -------------------------------------------------------------------------------- 19B. NAME OF CONTRACTOR ASI TECHNOLOGY CORPORATION BY /s/ Jerry E. Polis --------------------------------------- (Signature of person authorized to sign) - -------------------------------------------------------------------------------- 19C. DATE SIGNED - -------------------------------------------------------------------------------- 20A. NAME OF CONTRACTING OFFICER ROBBIE H. PHIFER CONTRACTING OFFICER - -------------------------------------------------------------------------------- 20B. UNITED STATES OF AMERICAN BY /s/ Robbie H. Phifer ---------------------------------- (Signature of Contracting Officer) - -------------------------------------------------------------------------------- 20C. DATE SIGNED 23 Apr 02 - -------------------------------------------------------------------------------- AWARD/CONTRACT PAGE OF PAGES 1 | 16 1. THIS CONTRACT IS A RELATED ORDER UNDER DPAS (15 CFR 350) RATING - -------------------------------------------------------------------------------- 2. CONTRACT (PROC. INST. IDENT.) DASG60-02-C-0055 - -------------------------------------------------------------------------------- 3. EFFECTIVE DATE 23 APR 02 - -------------------------------------------------------------------------------- 4. REQUISITION/PURCHASE REQUEST/PROJECT NO. VH1A8A0300-01 - -------------------------------------------------------------------------------- 5. ISSUED BY CODE DASG60 US ARMY SPACE AND MISSILE DEFENSE SMDC-CM-CT, PHIFER PO BOX 1500 HUNTSVILLE, AL 35807-3801 - -------------------------------------------------------------------------------- 6. ADMINISTERED BY (IF OTHER THAN ITEM 6) CODE S0513A DCM SANTA ANA 34 CIVIC CENTER PLAZA PO BOX C 12700 SANTA ANA, CA 92712-2700 - -------------------------------------------------------------------------------- 7. NAME AND ADDRESS OF CONTRACTOR (NO., STREET, CITY, COUNTY STATE AND ZIP CODE) ASI TECHNOLOGY CORPORATION 980 AMERICAN PACIFIC DRIVE SUITE 111 HENDERSON NV 89014 - -------------------------------------------------------------------------------- 8. DELIVERY [ ] FOB Origin [X] Other (see below) - -------------------------------------------------------------------------------- 9. DISCOUNT FOR PROMPT PAYMENT - -------------------------------------------------------------------------------- 10. SUBMIT INVOICES (4 COPIES UNLESS OTHERWISE SPECIFIED) TO THE ADDRESS SHOWN IN ITEM - -------------------------------------------------------------------------------- CODE 1TPQ4 FACILITY CODE - -------------------------------------------------------------------------------- 11. SHIP TO/MARK FOR CODE N00164 SEE SCHEDULE - -------------------------------------------------------------------------------- 12. PAYMENT WILL BE MADE BY CODE HQ0338 DFAS-COLUMBUS CENTER DFAS-CO/WEST ENTITLEMENT OPERATION PO BOX 182381 COLUMBUS OH 43218-22381 - -------------------------------------------------------------------------------- 13. AUTHORITY FOR OTHER THAN FULL AND OPEN COMPETITION [ ] 10 U.S.C. 2304(c)(5) [ ] 41 U.S.C. 253(c)( ) - -------------------------------------------------------------------------------- 14. ACCOUNTING AND APPROPRIATION DATA SEE SCHEDULE - -------------------------------------------------------------------------------- 15A. ITEM NO. 15B. SUPPLIES/SERVICES SEE SCHEDULE - -------------------------------------------------------------------------------- 15C. QUANTITY 15D. UNIT 15E. UNIT PRICE 15F. AMOUNT - -------------------------------------------------------------------------------- 15G. TOTAL AMOUNT OF CONTRACT: $595,609.00 - -------------------------------------------------------------------------------- 16. Table of Contents SEC DESCRIPTION PAGE(S) PART I - THE SCHEDULE X A SOLICITATION/CONTRACT FORM 1-1 X B SUPPLIES OR SERVICES AND PRICES/COSTS 2 C DESCRIPTION/SPECS./WORK STATEMENT D PACKAGING AND MARKING X E INSPECTION AND ACCEPTANCE 4 X F DELIVERIES OR PERFORMANCE 5 X G CONTRACT ADMINISTRATION DATA 6 X H SPECIAL CONTRACT REQUIREMENTS 8 PART II - CONTRACT CLAUSES X I CONTRACT CLAUSES 12 PART III - LIST OF DOCUMENTS, EXHIBITS & ATTACHMENTS X J LIST OF ATTACHMENTS 16 PART IV - REPRESENTATIONS AND INSTRUCTIONS K REPRESENTATIONS, CERTIFICATIONS OTHER STATEMENTS OF OFFERORS L INSTRS. CONDS., AND NOTICES TO M EVALUATION FACTORS FOR AWARD CONTRACTING OFFICER WILL COMPLETE ITEM 17 OR 18 AS APPLICABLE - -------------------------------------------------------------------------------- 17. [X] CONTRACTOR'S NEGOTIATED AGREEMENT (Contractor is required to sign this document and return 1 copies to issuing office). Contractor agrees to furnish and deliver all items or perform all services set forth or otherwise identified above and on any continuation sheets for the consideration stated herein. The rights and obligations of the parties to this contract shall be subject to and governed by the following documents; (a) this award/contract, (b) the solicitation, if any, and (c) such provisions, representations, certifications, and specifications, as are attached or incorporated by reference herein. (Attachments are listed herein.) - -------------------------------------------------------------------------------- 18. [ ] AWARD (Contractor is not required to sign this document). Your offer on solicitation number including the additions or changes made by you which additions or changes set forth in full above, is hereby accepted as to items listed above and on any continuation sheets. This award consummates the contract which consists of the following documents: (a) the Government's solicitation and your offer, and (b) this award/contract. No further contractual document is necessary. - -------------------------------------------------------------------------------- 19A. NAME AND TITLE OF SIGNER (TYPE OR PRINT) Jerry E. Polis, Pres. - -------------------------------------------------------------------------------- 19B. NAME OF CONTRACTOR ASI TECHNOLOGY CORPORATION BY /s/ Jerry E. Polis --------------------------------------- (Signature of person authorized to sign) - -------------------------------------------------------------------------------- 19C. DATE SIGNED - -------------------------------------------------------------------------------- 20A. NAME OF CONTRACTING OFFICER - -------------------------------------------------------------------------------- 20B. UNITED STATES OF AMERICAN BY ---------------------------------- (Signature of Contracting Officer) - -------------------------------------------------------------------------------- 20C. DATE SIGNED - -------------------------------------------------------------------------------- DASG60-02-C-0055 Page 2 of 16 SECTION B Supplies or Services and Prices ITEM NO SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT 0001 4,749.00 DPPH $125.41777 $595,609.00 SBIR Phase II FFP-LOE - Work as set forth in ASI Technology Corporation proposal, dated 8 Oct 01, entitled, "Ballistic Missile Tracking and Detection with Plasma Antenna", pages 12 through 15, incorporated herein by reference as set forth in Section J. --------------- NET AMT $595,609.00 ACRN AA Funded Amount $300,000.00 ITEM NO SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT 0002 $ $ NSP Contract Data Requirements List (CDRLs) FFP-LOE - Data to be delivered under this contract shall be that cited in CDRLs DD Form 1423, Exhibit A, consisting of Line Item Nos. A001 through A004. --------------- NET AMT $ CLAUSES INCORPORATED BY FULL TEXT LEVEL OF EFFORT: - ---------------- a. In the performance of CLIN 0001 of this contract, the contractor shall provide the following level of effort within the time period as set forth in Section F hereof: DIRECT PRODUCTIVE PERSON HOURS COMPOSITE RATE LEVEL OF EFFORT PER HOUR TOTAL - --------------- -------- ----- DASG60-02-C-0055 Page 3 of 16 4,749 125.41777 $595,609 b. DPPH are defined as prime contractor, subcontractor, and consultant actual direct labor hours exclusive of vacation, holiday, sick leave, and other absences. c. In accordance with FAR 16.207-2, entitlement to payment is based on the effort expended and the determination by the Government that the effort, materials/equipment, and reports called for have been provided and are acceptable. DASG60-02-C-0055 Page 4 of 16 SECTION E Inspection and Acceptance CLAUSES INCORPORATED BY REFERENCE: 52.246-16 Responsibility For Supplies APR 1984 252.246-7000 Material Inspection And Receiving Report DEC 1991 DASG60-02-C-0055 Page 5 of 16 SECTION F Deliveries or Performance CLAUSES INCORPORATED BY REFERENCE: 52.242-15 Stop-Work Order AUG 1989 52.247-34 F.O.B. Destination NOV 1991 CLAUSES INCORPORATED BY FULL TEXT PERIOD OF PERFORMANCE: - ---------------------- The contractor shall provide all level of effort, material/equipment, data, and reports required by CLINs 0001 and 0002 within twenty-four (24) months after the effective date of the contract. DELIVERY OF DATA: - ----------------- a. All data shall be delivered IAW FAR 52.247-34, F.O.B. Destination, as specified in Block 14 of DD Form 1423. The contractor shall furnish the Contracting Officer one (1) copy of the transmittal letters submitting data requirements to the Technical Monitor. The extent of the Government's rights in data delivered under the contract shall be governed by Contract Clause 252.227-7018 titled, "Rights in Noncommercial Technical Data and Computer Software - Small Business Innovative Research (SBIR) Program." b. Acceptance by the Government of all items delivered hereunder shall be at destination. DASG60-02-C-0055 Page 6 of 16 SECTION G Contract Administration Data ACCOUNTING AND APPROPRIATION DATA AA: 9710400.2501 36-6011 P60605502COO-255Y VH1A0300 S01021 VH1A8A030/IHHPO1/ H000000000000 AMOUNT: $300.000.00 CLAUSES INCORPORATED BY REFERENCE: 252.242-7000 Postaward Conference DEC 1991 CLAUSES INCORPORATED BY FULL TEXT INVOICING AND VOUCHERING: - ------------------------- a. Public vouchers (SF 1034) or contractor equivalent shall be submitted to the Administrative Contracting Officer (ACO) set forth on the DD Form 1155, Block 7, prior to payment by the Defense Finance and Accounting Service (DFAS) specified in Block 15. The ACO will approve and forward the approved voucher to the DFAS Paying Office. b. The Paying Office shall ensure that the voucher is disbursed for each ACRN as indicated on the voucher (or as specified herein). c. The contractor shall identify on each public voucher/invoice: (1) the contract number, (2) the accounting classification reference number (ACRN) assigned to the accounting classification which pertains to the charges billed, e.g. "ACRN: AA," and, (3) in the address block, the Tax Identification Number, a point of contact, and the telephone number (See Section 1 for sample), d. Department of Defense requires that the Taxpayer Identification Number (TIN) be placed on all certified payment vouchers, including non-profit organizations, when submitting payment to the disbursing office. The only exception is foreign vendors, which will have the word "foreign" in the TIN field. Invoices will be returned to the vendor without payment if a TIN is not provided. e. The contractor may submit public vouchers, not more frequently than monthly, based on the level of effort expended under this contract. The voucher/invoice shall be computed based on the composite rate per hour specified in Section B of this contract. The contractor is not authorized to voucher in excess of 95% of the contract value prior to acceptance of the final report by the Technical Monitor. The last or final voucher/invoice will not be paid until the Technical Monitor has accepted the final report. f. The contractor shall submit the following certificate of conformance for each invoice/voucher as certification of having performed the number of hours being billed. CERTIFICATE OF CONFORMANCE I certify that on, (insert inclusive dates) _____________ (Insert Contractor's Name) furnished the supplies or services called for by contract No. (Insert Contract Number) and/or has performed the Direct Productive Person Hours (DPPH) identified on this invoice/voucher in accordance with Section B of contract and all other applicable requirements. I further certify that the supplies or services are of the quality specified and conform in all DASG60-02-C-0055 Page 7 of 16 respects with the contract requirements, including specifications, drawings, preservation, packaging, packing, marking requirements, and physical item identification (part number), and are in the quantity shown on this or on the attached acceptance document. Date of Execution:______________________ Signature:______________________________ Title:__________________________________ CONTRACT ADMINISTRATION: Administration of this contract will be performed by the cognizant office as shown in Block 7, Page 1, Section A, of DD Form 1155. No changes, deviations, or waivers shall be effective without a modification of the contract executed by the Contracting Officer or his duly authorized representative authorizing such changes, deviations, or waivers. IDENTIFICATION OF CORRESPONDENCE: All correspondence and data submitted by the contractor under this contract shall reference the contract number. CONTRACTING ACTIVITY REPRESENTATIVES: - -------------------------------------
Contractual Matters Technical Matters - -------------------------------------------------------------------------------------------------------------- NAME: Robbie Phifer Dr. Larry Altgilbers ORGANIZATION CODE: SMDC-CM-AK SMDC-TC-MT-A TELEPHONE NUMBERS: COMMERCIAL: (256) 955-3693 (256) 955-1488 DEFENSE SWITCHED NETWORK (DSN): 645-3693 645-1488 EMAIL: Robbie.phifer@smdc.army.mil Larry. altgilbers@smdc.army.mil - --------------------------------------------------------------------------------------------------------------
DASG60-02-C-0055 Page 8 of 16 SECTION H Special Contract Requirements CLAUSES INCORPORATED BY FULL TEXT PUBLIC RELEASE OF INFORMATION: - ------------------------------ a. In accordance with DFARS 252.204-7000, Disclosure of Information, The Contractor shall not release to anyone outside the Contractor's organization any unclassified information, regardless of medium (e.g., film, tape, document), pertaining to any part of this contract or any program related to this contract, unless the Contractor has written approval or the information is otherwise in the public domain before the date of release. b. Requests for approval shall identify the specific information to be released, the medium to be used, and the purpose for the release. The Contractor shall submit its request to the Technical Monitor noted in the contract, Section H, at least 45 days before the proposed date for release. All material to be cleared shall be sent by certified mail/return receipt requested to: _ U.S. Army Space and Missile Defense Command ATTN: Insert Technical Office POC P. O. Box 1500 Huntsville, AL 35807-3801 c. The Technical Monitor shall process the request in accordance with SM_DC form 614-R. d. If there is no response within 30 days, the Contractor shall resubmit the request to: U.S. Army Space and Missile Defense Command ATTN: SMDC-PA P. O. Box 1500 Huntsville, AL 35807-3801 e. The Contractor agrees to include a similar requirement in each subcontract under this contract. Subcontractors shall submit requests for authorization to release through the prime contractor. DISTRIBUTION CONTROL OF TECHNICAL INFORMATION: - ---------------------------------------------- a. The following terms applicable to this clause are defined as follows: (1) Technical Document. Any recorded information that conveys scientific and technical information or technical data. (2) Scientific and Technical Information. Communicable knowledge or information resulting from or pertaining to conducting and managing a scientific or engineering research effort. (3) Technical Data. Recorded information related to experimental, developmental, or engineering works that can be used to define an engineering or manufacturing process or to design, procure, produce, support, maintain, operate, repair, or overhaul material. The data may be graphic or pictorial delineations in media such as drawings or photographs, text in specifications or related performance or design type documents, or computer printouts. Examples of technical data include research and engineering data, engineering drawings, and associated lists, specifications, standards, process sheets, manuals, technical reports, catalog-item identifications, and related information and computer software documentation. DASG60-02-C-0055 Page 9 of 16 b. Except as may otherwise be set forth in the Contract Data Requirements List (CDRL), DD Form 1423, (i) the distribution of any technical document prepared under this contract, in any stage of development or completion, is prohibited without the approval of the Contracting Officer and (ii) all technical documents prepared under this contract shall initially be marked with the following distribution statement, warning, and destruction notice: (1) DISTRIBUTION STATEMENT B - Distribution authorized to U.S. Government agencies only due to proprietary information and/or Arms Export Control Act Information. Other request for this document shall be referred to SMDC-IM-PA. (2) WARNING - This document contains technical data whose export is restricted by the Arms Export Control Act (Title 22, U.S.C., Sec 2751 et seq.) or the Export Administration Act of 1979, as amended, Title 50, U.S.C., app 2401 et seq. Violation of these export laws are subject to severe criminal penalties. Disseminate in accordance with provisions of DOD Directive 5230.25. (3) DESTRUCTION NOTICE - For classified documents, follow the procedures in DOD 5220.22-M, National Industrial Security Program Operating Manual (NISPOM), Chapter 5, Section 7, or DOD 5200.1-R, Information Security Program Regulation, Chapter IX. For unclassified, limited documents, destroy by any method that will prevent disclosure of contents or reconstruction of the document. c. As a part of the review of preliminary or working draft technical documents, the Government will determine if a distribution statement less restrictive than the statement specified above would provide adequate protection. If so, the Government's approval/comments will provide specific instructions on the distribution statement to be marked on the final technical documents before primary distribution. TECHNICAL COGNIZANCE AND TECHNICAL DIRECTION: - --------------------------------------------- a. The U.S. Army Space and Missile Defense Command is the cognizant Government technical organization for this contract and will provide technical direction as defined herein. Technical direction shall be exercised by the following Project Engineer: Name Office symbol Phone Number Dr. Larry Altgilbers SMDC-TC-MT-A (256) 955-1488 b. Technical direction, as defined in this clause is the process by which the progress of the contractor's technical efforts are reviewed and evaluated and guidance for the continuation of the effort is provided by the Government. It also includes technical discussions and, to the extent required and specified elsewhere in this contract, defining interfaces between contractors; approving test plans; approving preliminary and critical design reviews; participating in meetings; providing technical and management information; and responding to request for research and development planning data on all matters pertaining to this contract. The contractor agrees to accept technical direction only in the form and procedure set forth herein below. e. Except for routine discussions having no impact on contractor performance, any and all technical direction described in paragraph b. above shall only be authorized and binding on the contractor when issued in writing and signed by a Government official designated in a. above. The Technical Direction shall not effect or result in a change within the meaning of the "CHANGES" clause, or any other change in the Scope of Work, price, schedule, or the level of effort required by the contract. Such changes must be executed by the Contracting Officer as a Modification-Change Order, or as a Modification-Supplemental Agreement, as appropriate. It is emphasized that such changes are outside the authority of the Government officials designated in a. above who are not authorized to issue any directions which authorize the contractor to exceed or perform less than the contract requirements. Notwithstanding any provision to the contrary in any Technical Directive, the estimated cost of this contract, and, if this contract is incrementally funded, the amount of funds allotted, shall not be increased or deemed to be increased by issuance thereof. DASG60-02-C-0055 Page 10 of 16 KEY PERSONNEL: Key personnel (e.g., Principal Investigator, Principal .Engineer, or equivalent) must be employed with the firm at the time of award and shall be maintained, to the maximum extent possible, throughout this program. The Principal Investigator must spend more than one-half of his/her time with the firm. Should changes be necessary, the contractor shall notify the Government in writing of the proposed substitutes and their qualifications. Implementation of the changes shall be subject to Government approval. CONTRACT SECURITY CLASSIFICATION: - --------------------------------- a. This contract is unclassified and does not contain security requirements or a Contract Security Classification Specification, DD Form 254. b. In accordance with restrictions required by Executive Order 12470, the Arms Export Control Act (Title 22, USC) (See 275), the International Traffic in Arms Regulation (ITAR), or DoD Directive 5234.25, Withholding of Unclassified Technical Data from Public Disclosure, no foreign nationals will be permitted to work on a contract without the express permission of the Contracting Officer. c. Should the government determine that the technology has developed to a point where the information warrants protection under Executive Order 12958, Classified National Security Information, a DD Form 254 and an approved classification guide will be issued to the contractor and appropriate steps will be taken under the contract to protect the material. METRIC AND PRODUCT ASSURANCE REQUIREMENTS: The contractor shall assure that all deliverables under this contract shall meet industry standards of quality and, where practical, metric measurements. SAFETY HAZARDS: The contractor shall identify, control, and document the hazards associated with this effort and the control methods necessary to eliminate or control the hazards, Significant items shall be addressed in status meetings and included in the final report. ENVIRONMENTAL: The contractor agrees to the following: a. All activities performed under this contract shall be conducted in accordance with Federal, State, and local environmental laws and regulations. b. Any facility to be used in the performance of this contract shall be in compliance with all Federal, State, and local environmental laws and regulations for its intended use. PROPOSAL. PAGES WITH PROPRIETARY MARKINGS: Pages 12 through 15 of the contractor's SSIR Phase I proposal are incorporated by reference only. With regard to the restriction set forth in the proprietary legend at the bottom of page 1 of contractor's proposal, the contractor agrees that the Government, including Government support contractors who have signed appropriate non-disclosure agreements, may duplicate, use and/or disclose the proprietary pages of his proposal within the Government, to the extent necessary to implement and administer this contract. Such proprietary pages shall retain the proprietary markings placed thereon by the contractor. This special provision does not address or affect the respective rights of the parties in technical data/software delivered to the Government under this contract. MATERIAL/EQUIPMENT: The contractor will provide all material/equipment necessary for performance of this effort. The Government will acquire title to the following listed equipment when it is acquired, produced, or first used by the contractor in the performance of this contract. The Contracting Officer will give disposition instructions for such property at the end of the contract period of performance. DESCRIPTION ----------- DASG60-02-C-0055 Page 11 of 16 Power Supply PATENTS - REPORTING OF SUBJECT INVENTIONS: - ------------------------------------------ a. The interim and final invention reports shall be submitted on DD Form 882, Report of Inventions and Subcontracts, see http://www.smdc.army.mil/Contracts/Contracts.html and click on the Special Announcements link to see the instructions. In accordance with DFARS 252.227-7039 and FAR 52.227-12, interim reports shall be furnished every twelve (12) months and final reports shall be furnished within three (3) months after completion of the contracted work. In accordance with FAR 27.305-3(e), when a contractor fails to disclose a subject invention the applicable withholding of payments provision may be invoked. b. The contractor shall include the clause at DFARS 252.227-7039 in all subcontracts with small businesses and non profit organizations, regardless of tier, for experimental, developmental, or research work. c. The prime contractor shall account for the interim and final invention reports submitted by the subcontractor. ELECTRONIC DELIVERY OF DATA AND OTHER CORRESPONDENCE TO CONTRACTING ACTIVITY REPRESENTATIVES: a. This contract requires the delivery of contractual correspondence and CDRL items to the Contracting Activity Representatives (the Contract Specialist and the Technical Monitor identified in this contract). It is highly desired, but not required, that these documents be delivered electronically by e-mail/e-mail attachment. (The remainder of CDRL distribution shall be by hardcopy.) Delivery of data and correspondence via e-mail typically provides for quicker and more efficient communications between the contractor and the Contracting Activity Representatives and better serves the needs of all involved. b. If the contractor elects to utilize electronic delivery, the following guidelines shall to be used: 1. When printed as well as electronic copies are delivered, the electronic version of a document must be identical to the printed copy delivered. 2. As a standard file naming convention, each e-mail message subject line shall begin with "SBIR Contract DASG60-__-__-_____, (complete using the Contract Number of this Contract) and be followed by an additional as appropriate. Example: "SBIR Contract DASG60-01-M-0000, CDRL 0001 Submission" 3. Submittals should be readable on Windows NT 4.0 platforms using Microsoft Office 2000. YEAR 2000 COMPLIANCE. - --------------------- The Contractor shall ensure products provided under this contract, to include hardware, software, firmware, and middleware, whether acting alone or combined as a system, are Year 2000 compliant as defined in FAR Part 39. DASG60-02-C-0055 Page 12 of 16 SECTION I Contract Clauses CLAUSES INCORPORATED BY REFERENCE: 52.202-1 Definitions DEC 2001 52.203-3 Gratuities APR 1984 52.203-5 Covenant Against Contingent Fees APR 1984 52.203-6 Restrictions On Subcontractor Sales To The Government JUL 1995 52.203-7 Anti-Kickback Procedures JUL 1995 52.203-8 Cancellation, Rescission, and Recovery of Funds for Illegal or JAN 1997 Improper Activity 52.203-10 Price Or Fee Adjustment For Illegal Or Improper Activity JAN 1997 52.203-12 Limitation On Payments To Influence Certain Federal Transactions JUN 1997 52.204-4 Printed or Copied Double-Sided on Recycled Paper AUG 2000 52.209-6 Protecting the Government's Interest When Subcontracting With JUL 1995 Contractors Debarred, Suspended, or Proposed for Debarment 52.211-15 Defense Priority And Allocation Requirements SEP 1990 52.215-2 Audit and Records--Negotiation JUN 1999 52.215-8 Order of Precedence--Uniform Contract Format OCT 1997 52.215-11 Price Reduction for Defective Cost or Pricing Data--Modifications OCT 1997 52.215-13 Subcontractor Cost or Pricing Data--Modifications OCT 1997 52.215-14 Integrity of Unit Prices OCT 1997 52.215-15 Pension Adjustments and Asset Reversions DEC 1998 52.215-17 Waiver of Facilities Capital Cost of Money OCT 1997 52.215-18 Reversion or Adjustment of Plans for Postretirement Benefits OCT 1997 (PRB) Other than Pensions 52.219-4 Notice of Price Evaluation Preference for FIUBZone Small Business JAN 1999 Concerns 52.219-6 Notice Of Total Small Business Set-Aside JUL 1996 52.219-8 Utilization of Small Business Concerns OCT 2000 52.219-14 Limitations On Subcontracting DEC 1996 52.222-3 Convict Labor AUG 1996 52.222-21 Prohibition Of Segregated Facilities FEB 1999 52.222-26 Equal Opportunity APR 2002 52.222-35 Equal Opportunity For Disabled Veterans, Veterans of the Vietnam DEC 2001 Era and Other Eligible Veterans 52.222-36 Affirmative Action For Workers With Disabilities JUN 1998 52.222-37 Employment Reports On Special Disabled Veterans, Veterans Of DEC 2001 The Vietnam Era and Other Eligible Veterans 52.223-6 Drug Free Workplace MAY 2001 52.223-14 Toxic Chemical Release Reporting OCT 2000 52.225-13 Restrictions on Certain Foreign Purchases JUL 2000 52.226-1 Utilization Of Indian Organizations And Indian-Owned Economic JUN 2000 Enterprises 52.227-1 Authorization and Consent JUL 1995 52.227-2 Notice And Assistance Regarding Patent And Copyright AUG 1996 Infringement 52.227-11 Patent Rights--Retention By The Contractor (Short Form) JUN 1997 52.229-3 Federal, State And Local Taxes JAN 1991 52.229-5 Taxes--Contracts Performed in U S Possessions Or Puerto Rico APR 1984 52.232-2 Payments Under Fixed-Price Research And Development Contracts APR 1984 52.232-9 Limitation On Withholding Of Payments APR 1984 DASG60-02-C-0055 Page 13 of 16 52.232-17 Interest JUN 1996 52.232-23 Alt IAssignment of Claims (Jan 1986) - Alternate I APR 1984 52.232-25 Prompt Payment FEB 2002 52.232-33 Payment by Electronic Funds Transfer--Central Contractor MAY 1999 Registration 52.233-1 Disputes DEC 1998 52.233-3 Protest After Award AUG 1996 52.242-13 Bankruptcy JUL 1995 52.243-1 Alt V Changes--Fixed-Price (Aug 1987) - Alternate V APR 1984 52.244-6 Subcontracts for Commercial Items DEC 2001 52.245-2 Alt I Government Property (Fixed Price Contracts Alt 1) (Deviation) APR 1998 (Dev) 52.248-1 Value Engineering FEB 2000 52.249-2 Termination For Convenience Of The Government (Fixed-Price) SEP 1996 52.249-9 Default (Fixed-Priced Research And Development) APR 1984 52.252-2 Clauses Incorporated By Reference FEB 1998 52.252-6 Authorized Deviations In Clauses APR 1984 52.253-1 Computer Generated Forms JAN 1991 252.203-7001 Prohibition On Persons Convicted of Fraud or Other Defense- MAR 1999 Contract-Related Felonies 252.204-7003 Control Of Government Personnel Work Product APR 1992 252.204-7004 Required Central Contractor Registration NOV 2001 252.205-7000 Provisions Of Information To Cooperative Agreement Holders DEC 1991 252.209-7000 Acquisition From Subcontractors Subject To On-Site Inspection NOV 1995 Under The Intermediate Range Nuclear Forces (INF) Treaty 252.209-7004 Subcontracting With Firms That Are Owned or Controlled By The MAR 1998 Government of a Terrorist Country 252.225-7012 Preference For Certain Domestic Commodities AUG 2000 252.225-7026 Reporting Of Contract Performance Outside The United States JUN 2000 252.226-7001 Utilization of Indian Organizations and Indian-Owned Economic SEP 2001 Enterprises-DoD Contracts 252.227-7018 Rights in Noncommercial Technical Data and Computer Software-- JUN 1995 Small Business Innovation Research (SBIR) Program 252,227-7019 Validation of Asserted Restrictions--Computer Software JUN 1995 252.227.7027 Deferred Ordering Of Technical Data Or Computer Software APR 1988 252.227-7030 Technical Data--Withholding Of Payment MAR 2000 252.227-7034 Patents--Subcontracts APR 1984 252.227-7036 Declaration of Technical Data Conformity JAN 1997 252.227-7037 Validation of Restrictive Markings on Technical Data SEP 1999 252.227-7039 Patents--Reporting Of Subject Inventions APR 1990 252.235-7011 Final Scientific or Technical Report SEP 1999 252.243-7001 Pricing Of Contract Modifications DEC 1991 252.243-7002 Requests for Equitable Adjustment MAR 1998 252.244-7000 Subcontracts for Commercial Items and Commercial Components MAR 2000 (DoD Contracts) 252.247-7023 Transportation of Supplies by Sea MAR 2000 252.247-7024 Notification Of Transportation Of Supplies By Sea MAR 2000
CLAUSES INCORPORATED BY FULL TEXT 252.232-7007 LIMITATION OF GOVERNMENT'S OBLIGATION (AUG 1993) (a) Contract line item(s) 0001 through 0002 are incrementally funded. For these item(s), the sum of $300,000 of the total price is presently available for payment and allotted to this contract. An allotment schedule is set forth in paragraph (i) of this clause. (b) For items(s) identified in paragraph (a) of this clause, the Contractor agrees to perform up to the point at which the total amount payable by the Government, including reimbursement in the event of termination of those item(s) for the Government's convenience, approximates the total amount currently allotted to the contract. The Contractor will not be obligated to continue work on those item(s) beyond that point. The Government will not be obligated in any event to reimburse the Contractor in excess of the amount allotted to the contract for those item(s) regardless of anything to the contrary in the clause entitled "TERMINATION FOR THE CONVENIENCE OF THE GOVERNMENT"." As used in this clause, the total amount payable by the Government in the event of termination of applicable contract line item(s) for convenience includes costs, profit and estimated termination settlement costs for those item(s). (e) Notwithstanding the dates specified in the allotment schedule in paragraph (i) of this clause, the Contractor will notify the Contracting Officer in writing at least ninety days prior to the date when, in the Contractor's best judgment, the work will reach the point at which the total amount payable by the Government, including any cost for termination for convenience, will approximate 85 percent of the total amount then allotted to the contract for performance of the applicable item(s). The notification will state (1) the estimated date when that point will be reached and (2) an estimate of additional funding, if any, needed to continue performance of applicable line items up to the next scheduled date for allotment of funds identified in paragraph (i) of this clause, or to a mutually agreed upon substitute date. The notification will also advise the Contracting Officer of the estimated amount of additional funds that will be required for the timely performance of the item(s) funded pursuant to this clause, for subsequent period as may be specified in the allotment schedule in paragraph (i) of this clause, or otherwise agreed to by the parties. If after such notification additional funds are not allotted by the date identified in the Contractor's notification, or by an agreed substitute date, the Contracting Officer will terminate any item(s) for which additional funds have not been allotted, pursuant to the clause of this contract entitled "TERMINATION FOR THE CONVENIENCE OF THE GOVERNMENT". (d) When additional funds are allotted for continued performance of the contract line item(s) identified in paragraph (a) of this clause, the parties will agree as to the period of contract performance which will be covered by the funds. The provisions of paragraph (b) through (d) of this clause will apply in like manner to the additional allotted funds and agreed substitute date, and the contract will be modified accordingly. (e) If, solely by reason of failure of the Government to allot additional funds, by the dates indicated below, in amounts sufficient for timely performance of the contract line item(s) identified in paragraph (a) of this clause, the Contractor incurs additional costs or is delayed in the performance of the work under this contract and if additional funds are allotted, an equitable adjustment will be made in the price or prices (including appropriate target, billing, and ceiling prices where applicable) of the item(s), or in the time of delivery, or both. Failure to agree to any such equitable adjustment hereunder will be a dispute concerning a question of fact within the meaning of the clause entitled "disputes." (f) The Government may at any time prior to termination allot additional funds for the performance of the contract line item(s) identified in paragraph (a) of this clause. (g) The termination provisions of this clause do not limit the rights of the Government under the clause entitled "DEFAULT." The provisions of this clause are limited to work and allotment of funds for the contract line item(s) set forth in paragraph (a) of this clause. This clause no longer applies once the contract if fully funded except with regard to the rights or obligations of the parties concerning equitable adjustments negotiated under paragraphs (d) or (e) of this clause. (h) Nothing in this clause affects the right of the Government to this contract pursuant to the clause of this contract entitled "TERMINATION FOR CONVENIENCE OF THE GOVERNMENT." DASG60-02-C-0055 Page 15 of 16 (i) The parties contemplate that the Government will allot funds to this contract in accordance with the following schedule: On execution of contract ........$300,000 FY03 ........$295,609 (End of clause) DASG60-02-C-0055 Page 16 of 16 SECTION J List of Documents, Exhibits and Other Attachments PART III - LIST OF DOCUMENTS EXHIBITS AND OTHER ATTACHMENTS ----------------------------------------------------------- SECTION J - LIST OF ATTACHMENTS -------------------------------
TITLE DATE # OF PAGES - ----------------------------------------- --------- ------------- Contract Data Requirements List (DD Form 1423) 12 Jan 2002 5 Exhibit A with Distribution List, and Data Item Descriptions (DD Forms 1664) The DIDs are available on the USASMDC Web site at http://www.smdc.army.mil. Click on Business, click on Commerce Business Daily, Click on Small Business Innovative Research (SBIR). Small Business Innovation Research Program Proposal 8 Oct 2001 4 Titled, "Ballistic Missile Tracking and Detection With Plasma Antenna," pages 12 through 15, incorporated herein by reference Contractor's Representations and Certifications are incorporated herein by reference. Public Voucher for Purchases and Services NA 2 Other than Personal/Standard Form 1034 (Sample and Blank Form)
CONTRACT DATA REQUIREMENTS LIST A. CONTRACT LINE ITEM NO. 0002 B. EXHIBIT A C. CATEGORY TDP___ TM___ OTHER D. SYSTEM/ITEM Detection with Plasma Arrays E. CONTRACT/PR NO. F. CONTRACTOR Corporation - -------------------------------------------------------------------------------- 1. DATA ITEM NO. A001 2. TITLE OF DATA ITEM Technical Report-Study/Services 3. SUBTITLE Special Technical Summary 4. AUTHORITY DI-MISC-80508A 5. CONTRACT REFERENCE 6. REQUIRING OFFICE SMDC-TC-MT-A 7. DD 250 REQ. LT 8. APP CODE N 9. DIST STATEMENT REQUIRED B 10. FREQUENCY ONE/R 11. AS OF DATE 12. DATE OF FIRST SUBMISSION See 16 13. DATE OF SUBSEQUENT SUBMISSION See 16 - -------------------------------------------------------------------------------- 14. DISTRIBUTION a. ADDRESSEE b. COPIES Draft Final Reg Report TC-MT-A 1 Larry Altgilbers TC-MT-A 1 S.Rick CM-AR * MDA 1 MDA-CS 1 MDA-SE 1 DTIC 2 PEO 1 PEO- 1 PEO-PE 1 15. TOTAL 10 - -------------------------------------------------------------------------------- 16. REMARKS Update the one-page abstract and one-page diagram submitted under the Phase I Contract. Include new information obtained during the Phase I effort. Submit 30 days after contract award date. * Copy of transmittal letter only All copies are to be of reproducible quality G. PREPARED BY L. Altgilber H. DATE 1-17-2002 I. APPROVED BY /s/ signature J. DATE 1-17-2002 - -------------------------------------------------------------------------------- Page 1 of 4 Pages CONTRACT DATA REQUIREMENTS LIST A. CONTRACT LINE ITEM NO. 0002 B. EXHIBIT A C. CATEGORY TDP___ TM___ OTHER D. SYSTEM/ITEM Detection with Plasma Arrays E. CONTRACT/PR NO. F. CONTRACTOR Corporation - -------------------------------------------------------------------------------- 1. DATA ITEM NO. A001 2. TITLE OF DATA ITEM Technical Report-Study/Services 3. SUBTITLE Special Technical Summary 4. AUTHORITY DI-MISC-80508A 5. CONTRACT REFERENCE 6. REQUIRING OFFICE SMDC-TC-MT-A 7. DD 250 REQ. LT 8. APP CODE N 9. DIST STATEMENT REQUIRED B 10. FREQUENCY ONE/R 11. AS OF DATE 12. DATE OF FIRST SUBMISSION See 16 13. DATE OF SUBSEQUENT SUBMISSION See 16 - -------------------------------------------------------------------------------- 14. DISTRIBUTION a. ADDRESSEE b. COPIES Draft Final Reg Report TC-MT-A 1 Larry Altgilbers TC-MT-A 1 S.Rick CM-AR * MDA 1 MDA-CS 1 MDA-SE 1 DTIC 2 PEO 1 PEO- 1 PEO-PE 1 15. TOTAL 10 - -------------------------------------------------------------------------------- 16. REMARKS Submit final draft 60 days prior to end of the contract. The government's comments will be provided within 30 days. A final version shall be delivered at the end of the contract. The contractor shall identify, control and document any hazards and control procedures associated with the process and include this documentation in the final report. Approval: G30/C30 * Copy of transmittal letter only All copies are to be of reproducible quality G. PREPARED BY LARRY ALTGILBERS H. DATE I. APPROVED BY J. DATE - -------------------------------------------------------------------------------- Page 2 of 4 Pages CONTRACT DATA REQUIREMENTS LIST A. CONTRACT LINE ITEM NO. 0002 B. EXHIBIT A C. CATEGORY TDP___ TM___ OTHER D. SYSTEM/ITEM Detection with Plasma Arrays E. CONTRACT/PR NO. F. CONTRACTOR Corporation - -------------------------------------------------------------------------------- 1. DATA ITEM NO. A001 2. TITLE OF DATA ITEM Technical Report-Study/Services 3. SUBTITLE Special Technical Summary 4. AUTHORITY DI-MISC-80508A 5. CONTRACT REFERENCE 6. REQUIRING OFFICE SMDC-TC-MT-A 7. DD 250 REQ. LT 8. APP CODE N 9. DIST STATEMENT REQUIRED B 10. FREQUENCY ONE/R 11. AS OF DATE 12. DATE OF FIRST SUBMISSION See 16 13. DATE OF SUBSEQUENT SUBMISSION See 16 - -------------------------------------------------------------------------------- 14. DISTRIBUTION a. ADDRESSEE b. COPIES Draft Final Reg Report TC-MT-A 1 Larry Altgilbers TC-MT-A 1 S.Rick CM-AR * MDA 1 MDA-CS 1 MDA-SE 1 DTIC 2 PEO 1 PEO- 1 PEO-PE 1 15. TOTAL 10 - -------------------------------------------------------------------------------- 16. REMARKS Initial report is to cover period ending first 3 months following contract award. Report is due 15 days after completion of each quarter's effort. When report is Presented orally, provide copies of viewgraphs and narrative to attendees. * Copy of transmittal letter only All copies are to be of reproducible quality G. PREPARED BY LARRY ALTGILBERS H. DATE I. APPROVED BY J. DATE - -------------------------------------------------------------------------------- Page 3 of 4 CONTRACT DATA REQUIREMENTS LIST A. CONTRACT LINE ITEM NO. 0002 B. EXHIBIT A C. CATEGORY TDP___ TM___ OTHER D. SYSTEM/ITEM Detection with Plasma Arrays E. CONTRACT/PR NO. F. CONTRACTOR Corporation - -------------------------------------------------------------------------------- 1. DATA ITEM NO. A001 2. TITLE OF DATA ITEM Technical Report-Study/Services 3. SUBTITLE Special Technical Summary 4. AUTHORITY DI-MISC-80508A 5. CONTRACT REFERENCE 6. REQUIRING OFFICE SMDC-TC-MT-A 7. DD 250 REQ. LT 8. APP CODE N 9. DIST STATEMENT REQUIRED B 10. FREQUENCY ONE/R 11. AS OF DATE 12. DATE OF FIRST SUBMISSION See 16 13. DATE OF SUBSEQUENT SUBMISSION See 16 - -------------------------------------------------------------------------------- 14. DISTRIBUTION a. ADDRESSEE b. COPIES Draft Final Reg Report TC-MT-A 1 Larry Altgilbers TC-MT-A 1 S.Rick CM-AR * MDA 1 MDA-CS 1 MDA-SE 1 DTIC 2 PEO 1 PEO- 1 PEO-PE 1 15. TOTAL 10 - -------------------------------------------------------------------------------- 16. REMARKS Contractor format is acceptable. This report shall be submitted within 30 days after each significant technical achievement as directed by the COR. * Copy of transmittal letter only All copies are to be of reproducible quality G. PREPARED BY LARRY ALTGILBERS H. DATE I. APPROVED BY J. DATE - -------------------------------------------------------------------------------- Page 4 of 4 DISTRIBUTION ADDRESSEE CODE LIST -------------------------------- DAT PROGRAM 1. MAILING ADDRESS FOR REQUIRED REPORTS DISTRIBUTION TO U.S. Army Space & Missile Defense Command IS BELOW. USE THIS ADDRESS FOR ALL CODES PRECEDED BY A HYPEN IN BLOCK 14 OF THE DD FORM 1423. Commanding General SMDC-(CODES PRECEDED BY A HYPEN) U.S. Army Space & Missile Defense Command P.O. Box 1500 Huntsville, AL 35807-3801 2. MAILING ADDRESSES FOR ALL OTHER CODES IN BLOCK 14, DD FORM 1423, ARE AS FOLLOWS: - -------------------------------------------------------------------------------- CODE ADDRESS CODE ADDRESS - -------------------------------------------------------------------------------- MDA SB/SBIR (Rucky) MDA-CS CS (Infosino) Frank Rucky Dr. Charles Infosino 7100 Defense Pentagon 7100 Defense Pentagon Washington, DC 20301-7100 Washington, DC 20301-7100 DTIC DTIC (Pat Nawby) PEO-PE PEO-PE Defense Technical Information Center Dr. Pashang Esfandiari 9725 John J. Klingman Rd 2231 Crystal Drive Suite 0944 Suite 204 Ft. Belvoir, VA 22060-6218 Arlington, VA 22202 MDA-SE MDA/SE Dr. Erwin Myrick and Keith Englander 7100 Defense Pentagon Washington, DC 20301-7100 PEO PEO/TSC PMS451 Mr. Mario Miranda 2351 Jefferson Davis Highway Arlington, VA 22242 PEO-JJ SFAE-AMD James Jordan P.O. Box 1500 Huntsville, AL 35807-3801
SBIR SAMPLE FORM HERE CERTIFICATE OF CONFORMANCE I certify that on, (insert inclusive dates) ________________ (insert Contractor's Name) furnished the supplies or services called for __ contract No. _______________ (Insert Contract Number) and/or has performed the Direct Productive Person Hours (DPPH) identified on this invoice/voucher in accordance with Section B of contract and all other applicable requirements. I further certify that the supplies or services are of the quality specifiers and conform in all respects with the contract requirements, including specifiications, drawings, preservation, packaging, packing, marking requirements, and physical item identification (part number), and are in the quantity shown on this or on the attached acceptance document. Date of Execution:__________________ Signature:__________________________ Title:______________________________ EX-10.15 6 markland_sb2ex10-15.txt EXHIBIT 10.15 AWARD/CONTRACT PAGE OF PAGES 1 | 14 1. THIS CONTRACT IS A RELATED ORDER UNDER DPAS (15 CFR 350) RATING DD-C9 - -------------------------------------------------------------------------------- 2. CONTRACT (PROC. INST. IDENT.) NO. F49620-02-C-0052 - -------------------------------------------------------------------------------- 3. EFFECTIVE DATE 01 AUG 2002 - -------------------------------------------------------------------------------- 4. REQUISITION/PURCHASE REQUEST/PROJECT NO. See Section G - -------------------------------------------------------------------------------- 5. ISSUED BY AFOSR/PK1 USAF, AFRL AF OFFICE OF SCIENTIFIC RESEARCH 4015 WILSON BLVD ROOM 713 ARLINGTON VA 22203 DONNA L. MORAN 703-696-5926 donna.moran@afosr.af.mil - -------------------------------------------------------------------------------- 6. ADMINISTERED BY (IF OTHER THAN ITEM 6) CODE S0513A DCMA SANTA ANA 34 CIVIC CENTER PLZ ROOM 813A SANTA ANA CA 92701 SDC: C PAS: (NONE) - -------------------------------------------------------------------------------- 7. NAME AND ADDRESS OF CONTRACTOR (NO., STREET, CITY, COUNTY STATE AND ZIP CODE) ASI TECHNOLOGY CORPORATION 980 AMERICAN PACIFIC DRIVE SUITE 111 HENDERSON NV 89014 - -------------------------------------------------------------------------------- 8. DELIVERY [ ] FOB Origin [X] Other (see below) - -------------------------------------------------------------------------------- 9. DISCOUNT FOR PROMPT PAYMENT N - -------------------------------------------------------------------------------- 10. SUBMIT INVOICES (4 COPIES UNLESS OTHERWISE SPECIFIED) TO THE ADDRESS SHOWN IN ITEM See Block 12 - -------------------------------------------------------------------------------- CAGE CODE 1TQPQ4 - -------------------------------------------------------------------------------- 11. SHIP TO/MARK FOR See Section F - -------------------------------------------------------------------------------- 12. PAYMENT WILL BE MADE BY DFAS-COLUMBUS WEST ENTITLEMENT OPERATIONS PO BOX 182381 COLUMBUS OH 43218-2381 SEE E006 FOR INVOICE INSTRUCTIONS EFT: T - -------------------------------------------------------------------------------- 13. AUTHORITY FOR OTHER THAN FULL AND OPEN COMPETITION - -------------------------------------------------------------------------------- 14. ACCOUNTING AND APPROPRIATION DATA See Section G - -------------------------------------------------------------------------------- 15A. ITEM NO - See Section B 15B. SUPPLIES/SERVICES 15C. QUANTITY 15D. UNIT 15E. UNIT PRICE 15F. AMOUNT 15G. TOTAL AMOUNT OF CONTRACT: $99,333.00 - -------------------------------------------------------------------------------- 16. Table of Contents SEC DESCRIPTION PAGE(S) PART I - THE SCHEDULE X A SOLICITATION/CONTRACT FORM 1 X B SUPPLIES OR SERVICES AND PRICES/COSTS 2 X C DESCRIPTION/SPECS./WORK STATEMENT 5 X D PACKAGING AND MARKING 6 X E INSPECTION AND ACCEPTANCE 7 X F DELIVERIES OR PERFORMANCE 8 X G CONTRACT ADMINISTRATION DATA 9 X H SPECIAL CONTRACT REQUIREMENTS 11 PART II - CONTRACT CLAUSES X I CONTRACT CLAUSES 12 PART III - LIST OF DOCUMENTS, EXHIBITS & ATTACHMENTS S J LIST OF ATTACHMENTS 14 PART IV - REPRESENTATIONS AND INSTRUCTIONS K REPRESENTATIONS, CERTIFICATIONS OTHER STATEMENTS OF OFFERORS L INSTRS. CONDS., AND NOTICES TO M EVALUATION FACTORS FOR AWARD CONTRACTING OFFICER WILL COMPLETE ITEM 17 OR 18 AS APPLICABLE - -------------------------------------------------------------------------------- 17. [X] CONTRACTOR'S NEGOTIATED AGREEMENT (Contractor is required to sign this document and return 1 copies to issuing office). Contractor agrees to furnish and deliver all items or perform all services set forth or otherwise identified above and on any continuation sheets for the consideration stated herein. The rights and obligations of the parties to this contract shall be subject to and governed by the following documents; (a) this award/contract, (b) the solicitation, if any, and (c) such provisions, representataions, certifications, and specifications, as are attached or incorporated by reference herein. (Attachments are listed herein.) - -------------------------------------------------------------------------------- 18. [ ] AWARD (Contractor is not required to sign this document). Your offer on solicitation number including the additions or changes made by you which additions or changes set forth in full above, is hereby accepted as to items listed above and on any continuation sheets. This award sonsummates the contract which consists of the following documents: (a) the Government's solicitation and your offer, and (b) this award/contract. No further contractual document is necessary. - -------------------------------------------------------------------------------- 19A. NAME AND TITLE OF SIGNER (TYPE OR PRINT) JERRY E. POLIS - -------------------------------------------------------------------------------- 19B. NAME OF CONTRACTOR ASI TECHNOLOGY CORPORATION BY /S/ JERRY E. POLIS --------------------------------------- (Signature of person authorized to sign) - -------------------------------------------------------------------------------- 19C. DATE SIGNED 7/30/02 - -------------------------------------------------------------------------------- 20A. NAME OF CONTRACTING OFFICER KAREN C. MILLISOR - -------------------------------------------------------------------------------- 20B. UNITED STATES OF AMERICAN BY /S/ KAREN C. MILLISOR ---------------------------------- (Signature of Contracting Officer) - -------------------------------------------------------------------------------- 20C. DATE SIGNED 7/31/02 - -------------------------------------------------------------------------------- AWARD/CONTRACT PAGE OF PAGES 1 | 14 1. THIS CONTRACT IS A REATED ORDER UNDER DPAS (15 CFR 350) RATING DD-C9 - -------------------------------------------------------------------------------- 2. CONTRACT (PROC. INST. IDENT.) NO. F49620-02-C-0052 - -------------------------------------------------------------------------------- 3. EFFECTIVE DATE 01 AUG 2002 - -------------------------------------------------------------------------------- 4. REQUISITION/PURCHASE REQUEST/PROJECT NO. See Section G - -------------------------------------------------------------------------------- 5. ISSUED BY AFOSR/PK1 USAF, AFRL AF OFFICE OF SCIENTIFIC RESEARCH 4015 WILSON BLVD ROOM 713 ARLINGTON VA 22203 DONNA L. MORAN 703-696-5926 donna.moran@afosr.af.mil - -------------------------------------------------------------------------------- 6. ADMINISTERED BY (IF OTHER THAN ITEM 6) CODE S0513A DCMA SANTA ANA 34 CIVIC CENTER PLZ ROOM 813A SANTA ANA CA 92701 SDC: C PAS: (NONE) - -------------------------------------------------------------------------------- 7. NAME AND ADDRESS OF CONTRACTOR (NO., STREET, CITY, COUNTY STAE AND ZIP CODE) ASI TECHNOLOGY CORPORATION 980 AMERICAN PACIFIC DRIVE SUITE 111 HENDERSON NV 89014 - -------------------------------------------------------------------------------- 8. DELIVERY [ ] FOB Origin [X] Other (see below) - -------------------------------------------------------------------------------- 9. DISCOUNT FOR PROMPT PAYMENT N - -------------------------------------------------------------------------------- 10. SUBMIT INVOICES (4 COPIES UNLESS OTHERWISE SPECIFIED) TO THE ADDRESS SHOWN IN ITEM See Block 12 - -------------------------------------------------------------------------------- CAGE CODE 1TQPQ4 - -------------------------------------------------------------------------------- 11. SHIP TO/MARK FOR See Section F - -------------------------------------------------------------------------------- 12. PAYMENT WILL BE MADE BY DFAS-COLUMBUS WEST ENTITLEMENT OPERATIONS PO BOX 182381 COLUMBUS OH 43218-2381 SEE E006 FOR INVOICE INSTRUCTIONS EFT: T - -------------------------------------------------------------------------------- 13. AUTHORITY FOR OTHER THAN FULL AND OPEN COMPETITION - -------------------------------------------------------------------------------- 14. ACCOUNTING AND APPROPRIATION DATA See Section G - -------------------------------------------------------------------------------- 15A. ITEM NO - See Section B 15B. SUPPLIES/SERVICES 15C. QUANTITY 15D. UNIT 15E. UNIT PRICE 15F. AMOUNT 15G. TOTAL AMOUNT OF CONTRACT: $99,333.00 - -------------------------------------------------------------------------------- 16. Table of Contents SEC DESCRIPTION PAGE(S) PART I - THE SCHEDULE X A SOLICITATION/CONTRACT FORM 1 X B SUPPLIES OR SERVICES AND PRICES/COSTS 2 X C DESCRIPTION/SPECS./WORK STATEMENT 5 X D PACKAGING AND MARKING 6 X E INSPECTION AND ACCEPTANCE 7 X F DELIVERIES OR PERFORMANCE 8 X G CONTRACT ADMINISTRATION DATA 9 X H SPECIAL CONTRACT REQUIREMENTS 11 PART II - CONTRACT CLAUSES X I CONTRACT CLAUSES 12 PART III - LIST OF DOCUMENTS, EXHIBITS & ATTACHMENTS S J LIST OF ATTACHMENTS 14 PART IV - REPRESENTATIONS AND INSTRUCTIONS K REPRESENTATIONS, CERTIFICATIONS OTHER STATEMENTS OF OFFERORS L INSTRS. CONDS., AND NOTICES TO M EVALUATION FACTORS FOR AWARD CONTRACTING OFFICER WILL COMPLETE ITEM 17 OR 18 AS APPLICABLE - -------------------------------------------------------------------------------- 17. [X] CONTRACTOR'S NEGOTIATED AGREEMENT (Contractor is required to sign this document and return 1 copies to issuing office). Contractor agrees to furnish and deliver all items or perform all services set forth or otherwise identified above and on any continuation sheets for the consideration stated herein. The rights and obligations of the parties to this contract shall be subject to and governed by the following documents; (a) this award/contract, (b) the solicitation, if any, and (c) such provisions, representataions, certifications, and specifications, as are attached or incorporated by reference herein. (Attachments are listed herein.) - -------------------------------------------------------------------------------- 18. [ ] AWARD (Contractor is not required to sign this document). Your offer on solicitation number including the additions or changes made by you which additions or changes set forth in full above, is hereby accepted as to items listed above and on any continuation sheets. This award sonsummates the contract which consists of the following documents: (a) the Government's solicitation and your offer, and (b) this award/contract. No further contractual document is necessary. - -------------------------------------------------------------------------------- 19A. NAME AND TITLE OF SIGNER (TYPE OR PRINT) - -------------------------------------------------------------------------------- 19B. NAME OF CONTRACTOR BY --------------------------------------- (Signature of person authorized to sign) - -------------------------------------------------------------------------------- 19C. DATE SIGNED - -------------------------------------------------------------------------------- 20A. NAME OF CONTRACTING OFFICER KAREN C. MILLISOR - -------------------------------------------------------------------------------- 20B. UNITED STATES OF AMERICAN BY ---------------------------------- (Signature of Contracting Officer) - -------------------------------------------------------------------------------- 20C. DATE SIGNED - -------------------------------------------------------------------------------- PART I - THE SCHEDULE SECTION B - SUPPLIES OR SERVICES AND PRICES/COSTS - -------------------------------------------------------------------------------- Qty Unit Price ITEM SUPPLIES OR SERVICES Purch Unit Total Item Amount 0001 Noun: RESEARCH AND DATA Descriptive Data: Conduct research entitled "(STTR PH1) Biological Decontamination for Forward-Deployed Airbase Using Low Temperature Air Plasmas" dated 12 Apr 02, in accordance with Section I, AFMCFARS 5352.215-9005, "Incorporation of Contractor's Technical Proposal." Prepare data in accordance with Exhibit A, Reporting Requirements Under SBIR/STTR Phase I Contracts. 0001 AA $24,834.00 Noun: STATUS REPORT 1 ACRN: AA DD1423 is Exhibit: A Contract type: J - FIRM FIXED PRICE Completion Date: 31 OCT 2002 Descriptive Data: Prepare data in accordance with Exhibit A. 0001AB $24,833,00 Noun: STATUS REPORT 2 ACRN: AA DD1423 is Exhibit: A Contract type: J - FIRM FIXED PRICE Completion Date: 31 JAN 2003 Descriptive Data: Prepare data in accordance with Exhibit A. 0001AC $24,833.00 Noun: STATUS REPORT 3 ACRN: AA DD 1423 is Exhibit: A Contract type: J - FIRM FIXED PRICE Completion Date: 30 APR 2003 Descriptive Data: Prepare data in accordance with Exhibit A PAGE 2 OF 14 PART I -THE SCHEDULE SECTION B - SUPPLIES OR SERVICES AND PRICES/COSTS - -------------------------------------------------------------------------------- Qty Unit Price ITEM SUPPLIES OR SERVICES Purch Unit Total Item Amount 0001AD $24,833.00 Noun: FINAL TECHNICAL REPORT/INVENTION REPORT ACRN: AA DD1423 is Exhibit: A Contract type: J - FIRM FIXED PRICE Completion Date: 31 JUL 2003 Descriptive Data: Prepare data in accordance with Exhibit A. PAGE 3 OF 14 PART I -THE SCHEDUTLE SECTION B - SUPPLIES OR SERVICES AND PRICES/COSTS - -------------------------------------------------------------------------------- NOTICE: The following contract clauses pertinent to this section are hereby incorporated in full text: OTHER CONTRACT CLAUSES IN FULL TEXT - ----------------------------------- B028 CONTRACT TYPE: FIRM FMD PRICE (FEB 1997). Total Price $99,333.00 Applicable to following Line Items: ALL PAGE 4 OF 14 PART I-THE SCHEDULE SECTION C - DESCRIPTION/SPECS./WORK STATEMENT - -------------------------------------------------------------------------------- NOTICE. The following contract clauses pertinent to this section are hereby incorporated in full text: OTHER CONTRACT CLAUSES IN FULL TEXT - ----------------------------------- C003 INCORPORATED DOCUMENTS/REQUIRETMENTS (APR 1998) The items set forth in Section B hereof shall be performed, produced, tested and delivered in accordance with the Contractor's technical proposal entitled " (STTR PHI) Biological Decontamination for Forward-Deployed Airbase Using Low Temperature Air Plasmas" dated 12 Apr 02. See Section I Clause, AFMCFARS 5352.215-9005, Incorporation of Contractor's Technical Proposal. PAGE 5 OF 14 PART I - THE SCHEDULE SECTION D - PACKAGING AND MARKING - -------------------------------------------------------------------------------- NOTICE: The following contract clauses pertinent to this section are hereby incorporated by reference: AIR FORCE MATERIEL COMMAND FEDERAL ACQUISITION REGULATION SUPPLEMENT CONTRACT - ----------------------------------------------------------------------------- CLAUSES - ------- 5352.247-9048 CONTRACTOR COMMERCIAL PACKAGING (AFMC) (SEP 1998) PAGE 6 OF 14 PART I - THE SCHEDULE SECTION E - INSPECTION AND ACCEPTANCE - -------------------------------------------------------------------------------- 1. NOTICE. The following contract clauses pertinent to this section are hereby incorporated by reference: insert A. FEDERAL ACQUISITION REGULATION CONTRACT CLAUSES - -------------------------------------------------- 52.246-09 INSPECTION OF RESEARCH AND DEVELOPMENT (SHORT FORM) (APR 1984) B. DEFENSE FEDERAL ACQUISITION REGULATION SUPPLEMENT CONTRACT CLAUSES - --------------------------------------------------------------------- 252.246-7000 MATERIAL INSPECTION AND RECEIVING REPORT (DEC 1991) II. NOTICE: The following contract clauses pertinent to this section are hereby incorporated in full text: OTHER CONTRACT CLAUSES IN FULL TEXT - ----------------------------------- E006 RECEIVING REPORT (DD FORM 250) MAILING ADDRESS (APR 1998) (TAILORED) (a) Submit original DD Form(s) 250 for all items deliverable under this contract (e.g. hardware, software, exhibit line items, status reports, services, etc.) to the following address: Air Force Office of Scientific Research/PKC FURTHER MARKED: Expedite--DD Form 250 4015 Wilson Blvd, Room 713 Arlington, VA 22203 (b) In accordance with DFARS Appendix F -- Material Inspection and Receiving Report (25 Oct 00); Part 3; subparagraph (b) of Paragraph F-306 entitled "Invoice Instructions", ensure original DD Form 250 is marked in letters approximately one inch high "ORIGINAL INVOICE". (c) In addition, a copy of the DD Form 250 shall accompany each shipment for all deliverable items. (d) Any inquiry as to the processing status of a DD Form 250 should be made to the following office: AFOSR/PKC 703-696-7286 pkcontracting@afosr.af.mil E007 INSPECTION AND ACCEPTANCE AUTHORITY (APR 1998) (TAILORED) Inspection and acceptance for all Contract and Exhibit Lines or Subline Items shall be accomplished by the Air Force Research Laboratory, AFOSR/NE (Dr. Robert Barker); 4015 Wilson Blvd, Room 713; Arlington VA 22203. PAGE 7 OF 14 PART I - THE SCHEDULE SECTION F -DELIVERIES OR PERFORMANCE - ------------------------------------------------------------------------------- I. NOTICE: The following contract clauses pertinent to this section are hereby incorporated by reference: FEDERAL ACQUISITION REGULATION CONTRACT CLAUSES - ----------------------------------------------- 52.242-15 STOP-WORK ORDER (AUG 1989) 52.247-34 F.O.B. DESTINATION (NOV 1991) II. NOTICE: The following contract clauses pertinent to this section are hereby incorporated in full text: OTHER CONTRACT CLAUSES IN FULL TEXT - ----------------------------------- F002 PERIOD OF PERFORMANCE (FEB 1997) Period of performance under this contract shall be 1 August 2002 through 31 July 2003. F003 CONTRACT DELIVERIES (FEB 1997) The following terms, if used within this contract in conjunction with contract delivery requirements (including data deliveries), are hereby defined as follows: (a) "MAC" and "MARO" mean "months after the effective date for award of the contractual action (as shown in block 3, Section A, Sr 26)". (b) "WARD" means "weeks after the effective date for award of the contractual action". (c) "DARO" means "days after the effective date for award of the contractual action". (d) "ASREQ" means "as required". Detailed delivery requirements are then specified elsewhere in Section F. F007 SHIPMENT ADDRESS (5EP 1997) All reports and/or correspondence submitted under this contract shall include the contract number and be forwarded prepaid. A copy of the letter of transmittal shall be delivered to the Air Force Contract Negotiator whenever reports/correspondence are delivered to the Air Force Program Manager. The Contract Negotiator's address is shown on the contract award cover page, block 5- Interim and final reports shall be submitted to the Program Manager listed below: AFOSR/NE (Dr. Robert Barker) 4015 Wilson Blvd, Room 713 Arlington VA 22203 PAGE 8 OF 14 PART I - THE SCHEDULE SECTION G - CONTRACT ADMINISTRATION DATA - -------------------------------------------------------------------------------- Obligation ACRN Appropriation/Lmt Subhead/Supplemental Accounting Data Amount - -------------------------------------------------------------------------------- AA $99,333.00 57 23600 292 47B1 66STTR 6RNE23 592E0 65502F 525700 F25700 Funding breakdown: On CLIN 0001AA: $24,834.00 On CLIN 0001AB: $24,833.00 On CLIN 0001AC: $24,833.00 On CLIN 0001AD: $24,833.00 PR/MIPR: FQ867100201293 $99,333.00 PAGE 9 OF 14 PART I - THE SCHEDULE SECTION G - CONTRACT ADMINISTRATION DATA - -------------------------------------------------------------------------------- NOTICE: The following contract clauses pertinent to this section are hereby incorporated in full text: OTHER CONTRACT CLAUSES IN FULL TEXT - ----------------------------------- G002 PROGRAM MANAGER (MAY 1997) Program Manager: Dr. Robert Barker AFOSR/NE 4015 Wilson Blvd, Room 713 Arlington VA 22203 Phone: 703-696-7314 email: robert.barker@afosr.af.mil G014 IMPLEMENTATION OF PATENT RIGHTS CLAUSE (SEP 1999) (TAILORED) All documents and information required by the patent rights and/or patent reporting clauses set forth in Section 1 of this contract shall be submitted to the Administrative Contracting Officer (see block 6 of AF 26 for address) and to the Patent Counsel at Air Force Office of Scientific Research; AFOSR/JA, 4015 Wilson Blvd, Room 713, Arlington, VA 22203. The AFOSR/JA patent administrator can be reached at 703-696-9500. This notice also constitutes a request (see FAR 52.227-12(f)(10) or DFARS 252.227-7039(c), as applicable) for submission of a copy of the patent application, when filed, along with the patent application serial number, filing date, subsequent U.S. patent number and issue date, as received. G016 SBIR INFORMATION AVAILABLE ON WORLD WIDE WEB (MAR 1999) (TAILORED) Information, instructions, and the associated 'hyperlinks' for STTR actions are available on the World Wide Web at URL 'http-//www.afosr.af.mil/oppts/afrsmall2.htm' for the following: 'Air Force Proposal Preparation Instructions' (for STTR Phase 11 proposals); 'Report Documentation Page', 'SF 298', 'Fast Track Procedures'; and 'Sample DD 250' (for using the DD 250 as an invoice). PAGE 10 OF 14 PART I - THE SCHEDULE SECTTON H - SPECIAL CONTRACT REQUIREMFNTS - -------------------------------------------------------------------------------- NOTICE: The following contract clauses pertinent to this section are hereby incorporated in full text: OTHER CONTRACT CLAUSES IN FULL TEXT - ----------------------------------- H029 IMPLEMENTATION OF DISCLOSURE OF INFORMATION (OCT 1997) (TAILORED) In order to comply with DFARS 252.204-7000, Disclosure of Information, the following copies of the information to be released are required at least 45 days prior to the scheduled release date: (a) i copy(ies) to: Office of Public Affairs, AFOSR/PI ATTN: Public Affair Analyst, 4015 Wilson Blvd, Room 713; Arlington VA 22203. (b) 1 copy(ies) to: Contracting Officer, AFOSR/PKA, 4015 Wilson Blvd, Room 713; Arlington VA 22203. (c) 2 copy(ies) to: Program Manager, AFOSR/NE (Dr. Robert Barker)- 4015 Wilson Blvd, Room 713; Arlington VA 22203. H033 SOLICITATION NUMBER (APR 1998) Solicitation Number: STIR Program Solicitation FY 2002. This solicitation is incorporated herein by reference. PAGE 11 OF 14 PART II - CONTRACT CLAUSES SECTION I - CONTRACT CLAUSES - -------------------------------------------------------------------------------- Contract Clauses in this section are from the FAR, Defense FAR Sup, Air Force FAR Sup, and the Air Force Materiel Cormnand FAR Sup, and are current through the following updates: Database_Version: 5.0.x.300; Issued: 612712002; Clauses: are up-to-date through:; FAR: FAC 2001-07; DFAR: DCN20020531; DL.: DL 98-021; Class Deviations: CD 200200003; AFFAR: 1996 Edition; AFMCFAR: AFMCAC 97-8; AFAC: AFAC 96-5; IPN: 98-009 I. NOTICE: The following contract clauses pertinent to this section are hereby incorporated by reference: A FEDERAL ACQUISITION REGULATION CONTRACT CLAUSES - ------------------------------------------------- 52.209-06 PROTECTING THE GOVERNMENT'S INTEREST WHEN SUBCONTRACTING WITH CONTRACTORS DEBARRED, SUSPENDED, OR PROPOSED FOR DEBARMENT (JUL 1995) 52.211-15 DEFENSE PRIORITY AND ALLOCATION REQUIREMENTS (SEP 1990) 52.215-08 ORDER OF PRECEDENCE--UNIFORM CONTRACT FORMAT (OCT 1997) 52.215-17 WAIVER OF FACILITIES CAPITAL, COST OF MONEY (OCT 1997) 52.219-06 NOTICE OF TOTAL SMALL BUSINESS SET-ASIDE (JUL 1996) 52.222-03 CONVICT LABOR (AUG 1996) 52.222-21 PROHIBITION OF SEGREGATED FACILITIES (FEB 1999) 52.222-26 EQUAL OPPORTUNITY (APR 2002) 52.222-35 EQUAL OPPORTUNITY FOR SPECIAL DISABLED VETERANS, VETERANS OF THE VIETNAM ERA, AND OTHER ELIGIBLE VETERANS (DEC 2001) 51.222-36 AFFIRMATIVE ACTION FOR WORKERS WITH DISABILITIES (JUN 1998) 52.222-37 EMPLOYMENT REPORTS ON SPECIAL DISABLED VETERANS, VETERANS OF THE VIETNAM ERA, AND OTT TER ELIGIBLE VETERANS (DEC 2001) 52.225-13 RESTRICTIONS ON CERTAIN FOREIGN PURCHASES (JUL 2000) 52.227-01 AUTHORIZATION AND CONSENT (JUL 1995) - ALTERNATE I (APR 1984) 52.227-11 PATENT RIGHTS -- RETENTION BY THE CONTRACTOR (SHORT FORM) (JUN 1997) Para (1), Communications: 'See Section G, paragraph. G014, Implementation of Patent Rights Clause.' 52.232-02 PAYMENTS UNDER FIXED-PRICE RESEARCH AND DEVELOPMENT CONTRACTS (APR 1984) 52.232-09 LIMITATION ON WITHHOLDING OF PAYMENTS (APR 1984) 52.232-23 ASSIGNMENT OF CLAIMS (JAN 1986) - ALTERNATE I (APR 1984) 52.232-25 PROMPT PAYMENT (FEB 2002) 52.232-33 PAYMENT BY ELECTRONIC FUNDS TRANSFER--CENTRAL CONTRAC'T'OR REGISTRATION (MAY 1999) 52.233-01 DISPUTES (DEC 1998) 52.233-03 PROTEST AFTER AWARD (AUG 1996) 52.243-01 CHANGES -- FIXED-PRICE (AUG 1987) - ALTERNATE V (APR 1984) 52.244-06 SUBCONTRACTS FOR COMMERCIAL ITEMS (MAY 2002) 52.245-02 GOVERNMENT PROPERTY (FIXED-PRICE CONTRACTS) (DEVIATION) (DEC 1989) 52.249-01 TERMINATION FOR CONVENTENCE OF THE GOVERNMENT (FIXED-PRICE) (SHORT FORM) (APR 1984) 52.253-01 COMPUTER GENERATED FORMS (JAN 1991) B. DEFENSE FEDERAL ACQUISITION REGULATION SUPPLEMENT CONTRACT CLAUSES - --------------------------------------------------------------------- 252.204-7000 DISCLOSURE OF INFORMATION (DEC 1991) 252.204-7003 CONTROL OF GOVERNMENT PERSONNEL WORK PRODUCT (APR 1992) 252.204-7004 REQUIRED CENTRAL CONTRACTOR REGISTRATION (NOV 2001) PAGE 12 OF 14 PART II - CONTRACT CLAUSES SECTION I - CONTRACT CLAUSES - -------------------------------------------------------------------------------- 252.225-7016 RESTRICTION ON ACQUISITION OF BALL AND ROLLER BEARINGS (DEC 2000) 252-225-7016 RESTRICTION ON ACQUISITION OF BALL AND ROLLER BEARINGS (DEC 2000) - ALTERNATE I (DEC 2000) 252.227-7016 RIGHTS IN BID OR PROPOSAL INFORMATION (JUN 1995) 252.227-7018 RIGHTS IN NONCOMMERCIAL TECHNICAL DATA AND COMPUTER SOFTWARE-- SMALL BUSINESS INNOVATION RESEARCH (SBIR) PROGRAM (JUN 1995) 252.227-7019 VALIDATION OF ASSERTED RESTRICTIONS--COMPUTER SOFTWARE (JUN 1995) 252.227-7030 TECHNICAL DATA--WITHHOLDING OF PAYMENT (MAR 2000) 252.227-7034 PATENTS--SUBCONTRACTS (APR 1984) 252.227-7036 DECLARATION OF TECHNICAL DATA CONFORMITY (JAN 1997) 252.227-7037 VALIDATION OF RESTRICTIVE MARKINGS ON TECHNICAL DATA (SEP 1999) 252.227-7039 PATENT'S--REPORTING OF SUBJECT INVENTIONS (APR 1990) 252.231-7000 SUPPLEMENTAL COST PRINCIPLES (DEC 1991) 252.235-7010 ACKNOWLEDGMENT OF SUPPORT AND DISCLAIMER (MAY 1995) Para (a), name of contracting agency(ies): 'United States Air Force' Para (a), contract number(s): 'F49620-02-C-4052' Para (b), name of contracting agency(ies): 'United States Air Force' 252.235-7011 FINAL SCIENTIFIC OR TECHNICAL REPORT (SEP 1999) 252.242-7000 POSTAWARD CONFERENCE (DEC 1991) 252.243-7001 PRICING OF CONTRACT MODIFICATIONS (DEC 1991) C. AIR FORCE MATERIEL COMMAND FEDERAL ACQUISITION REGULATION SUPPLEMENT CONTRACT - -------------------------------------------------------------------------------- CLAUSES - ------- 5352.215-9005 INCORPORATION OF CONTRACTOR'S TECHNICAL PROPOSAL (AFMC) (AUG 1998) Para (a), Paragraph Numbers: 'all' Para (a), Paragraph Numbers: 'all' Para (a), Version Number(s): '1' Para (a), Dated: '12 Apr 02' Para (a), Entitled: 'Biological Decontamination for Forward-Deployed Airbase Using Low Temperature Air Plasmas' Para (b), Rank order: `last' 5352.235-9001 KEY POSITIONS AND MINIMUM QUALIFICATIONS (AFMC) (JUL 1997) Para (a), job title 'Dr. Theodore Anderson, Principal Investigator' Para (a), qualifications required 'As Proposed' II. NOTICE: The following contract clauses pertinent to this section are hereby incorporated in full text: FEDERAL ACQUISITION REGULATION CONTRACT CLAUSES IN FULL TEXT - ------------------------------------------------------------ 52.252-02 CLAUSES LiNCORPORATED BY REFERENCE (FED 1998) This contract incorporates one or more clauses by reference, with the same force and effect as if they were given in full text. Upon request, the Contracting Officer will make their full text available. Also, the full text of a clause may be accessed electronically at this/these address(es): http://farsite.hill.af.mil/ 52.252-06 AUTHORIZED DEVIATIONS IN CLAUSES (APR 1984) (a) The use in this solicitation or contract of any Federal Acquisition Regulation (48 CFR Chapter 1) clause with an authorized deviation is indicated by the addition of "(DEVIATION)" after the date of the clause. (b) The use in this solicitation or contract of any Defense Federal Acquisition Regulation Supplement (48 CFR Chapter 2) clause with an authorized deviation is indicated by the addition of "(DEVIATION)" after the name of the regulation. PAGE 13 OF 14 PART III - LIST OF DOCUMENTS, EXHIBITS & ATTACHMENTS SECTION J -LIST OF ATTACHMENTS - -------------------------------------------------------------------------------- DOCUMENT PGS DATE TITLE - -------------------------------------------------------------------------------- EXHIBITA 2 18 JUN 2002 Reporting Requirements Under SBIR/STTR Phase I Contracts PAGE 14 OF 14 Exhibit A REPORTING REQUIREMENTS UNDER SBIR/STTR PHASE I CONTRACTS This document details the reporting requirements for contracts issued by the Air Force Office of Scientific Research (AFOSR). The reports shall be prepared in accordance with these instructions. To meet contractual requirements, ensure reports are marked with contract number and contract line item number and delivered as specified under Distributing Project Results and Delivery of Reports (see paragraphs 4 and 5 below, respectively). 1. TYPES OF REPORTS ---------------- Reports described in this exhibit are: a. Status Reports b. Final Technical Report c. Informal Technical Reports d. Invention Reports e. Publications 2. GENERAL REQUIREMENTS -------------------- Use professionally accepted standards for writing scientific and technical reports. Contractors are encouraged to submit reports that are printed/copied double sided on recycled paper that has at least 20% postconsumer material. All pages should be of good quality for copying purposes. No pages should be missing. 3. CONTENT OF REPORTS ------------------ a. STATUS REPORT- The status report covers the progress made in achieving the research objectives during the reporting period as listed in Section F. The report should not exceed 3 pages in length. b. FINAL TECHNICAL REPORT. A comprehensive final technical report is required at the end of an effort, due on the date specified in the contract document. The purpose of the final report is to document and to transition the results of the effort into the Air Force and DoD applied research community. A final report must contain in detail the project objectives, work performed, results obtained, and estimates of technical feasibility. (1) COVER AND TITLE PAGE. A completed Standard Form (SF) 298, Report Documentation Page, will be used as the first page of the report. (A blank SF298 is available in various formats on the world wide web at; http://www.afosr.af.mil/oppts/forms.htm (a) BLOCK 12. For each unclassified report, the company submitting the report should fill in block 12 (Distribution/Availability Statement) of the SF298 with one of the following statements: o Approved for public release; distribution unlimited. o Distribution authorized. to U.S. Government Agencies only; contains proprietary information. Note: The sponsoring DOD activity, after reviewing the company's entry in bkxk 12, has final responsibility for assigninga distribution statement. If the report is classified, the sponsoring DOD activity will provide special submission instructions. (b) BLOCK 14. The Abstract (100-200 words) mast identify the purpose of the work and briefly describe work carried out, the finding or results and the potential applications of the effort. The first sentence must state, "Report developed under SBIR/STTR (delete one) contract for topic (inert solicitation topic number)". Jargon, special symbols or notations, subscripts, mathematical symbols or foreign alphabet letters are not permitted. The summary must not conain proprietary or classified information. (c) BLOCK 15. Subject Terms must include the term "STTR Report" or SBIR Report" as appropriate. (2) REPORT CONTENT: The final technical report should indicate in detail the project objectives, work carried out, results obtained, and estimate of technical feasibility. Where it is not readily accessible in published form, the report should (a) Clearly describe and illustrate the experimental equipment, set up, and procedures; (b) Characterize and tabulate collected/computed data in an appendix; and (c) Sufficiently describe computational codes so they can be reproduced. Include a listing of the code in an appendix if possible and appropriate. The report shall include a cumulative list of people involved in and publications stemming from the research effort. Clearly reference published documents or articles, but do not include copies in the final technical report. C. INFORMAL TECHNICAL REPORT. The AFOSR program manager may request short informal reports for the purposes of collecting infomtation or preparing for meetings and workshops. The reports should be only a few pages in length with the format, content, and timing specified by the AFOSR program manager. All informal reports shall be sent to the AFOSR program manager. d. INVENTION REPORT - DD Form 882. Report of Inventions and Subcontracts will be used for reports required by the Patent Rights clause. Invention Reports shall be prepared in accordance with the instructions shown on the reverse side of the DD Form 882. If an invention is discovered, additional reporting will be required. e. PUBLICATIONS. The Contractor is encouraged to publish results of the project, unless classified, in appropriate journals as determined by the Principal Investigator. Be sure to comply with Defense Federal Acquisition ReZulation Supplement (DFARS) 252.235-7010 Acknowledgment of Support and Disclaimer Exhibit A, Page 1 of 2 4. DISTRIBUTING PROTECT RESULTS a. PHOTOGRAPHS. The Contractor may photograph the progress or results of the project, including phenomena discovered, special equipment used, or special laboratory techniques designed. Copies of such photographs, suitable for reproduction, should be made available to the AFOSR as part of the project/scientific documentation. These photographs may be used later for other Government publications. b. MARKING AND DISTRIBUTION REQUIREMENTS. Mark all data delivered with a distribution statement following the instructions for SF 298, Block 12. & DoDD 5230.24. 5. DELIVERY OF REPORTS a. GENERAL REQUIREMENTS Submit original DD Form(s) 250 and a copy of the report transmittal letter for all items to AFOSR/PKC at the address in Section E. (1) Markings: In order to ensure prompt receipt and acceptance, mark the outside of the package clearly to indicate the contract number and type of report. When submitting deliverable report also add: "Expedite--DD Form 250." (2) A copy of all transmittal letters shall be submitted to the Contract Administration Office (CAO) identified in Block 6, SF 26. (3) The contractor shall submit a DD Form 250 with the suffix "Z" with the Final Technical Report. Final Payment will not be made until receipt and acceptance of the Final Technical and Invention Reports. For more. information on getting paid: http://home.hiwaay.net/~bobsbir/dod/dodsbir.htm b. SPECIFIC REQUIREMENTS (1) STATUS REPORTS: Submit to the Program Manager (Section G). Status reports will be due as shown in Section F of the contract. Submit an original and one reproducible copy to the Program Manager. (2) FINAL TECHNICAL REPORTS: Submit one original and one copy to the Program Manager (Section G) on or before the specified due date (Section F). Once the Program Manager provides written notification that the final technical report has been accepted, the Contractor shall submit two copies of the approved final report to DTIC as required by DFARS 252.235-7011. DTIC's address is: Defense Technical Information Center/OCA 8725 Hohn J Kingman Road, Suite 0944 Fort Belvoir VA 22060-6218 (703) 767-8023 or 1-800-225-3842 For submission of reports in other than paper copy, contact DTIC/OCA. (3) INFORMAL TECHNICAL REPORTS: Submit as requested to the program manager. (4) INVENTION REPORTS: Submit an original and two copies to the Patent Counsel (Section G) on or before the specified due dated (Section F). (5) PUBLICATIONS. Submit one copy of each article planned for publication to the program manager (Section G) simultaneously with its submission for publication. One Reprint of all publications resulting from the project shall be forwarded to the program manager as they become available. Exhibit A, Page 2 of 2 EX-10.16 7 markland_sb2ex10-16.txt EXHIBIT 10.16 AWARD/CONTRACT 1. THIS CONTRACT IS A RATED ORDER UNDER DPAS (15 CFR 350) PAGE OF PAGES RATING DO-S10 1 | 26 - -------------------------------------------------------------------------------- 2. CONTRACT (PROC. INST. IDENT.) NO. N00178-03-C-1013 - -------------------------------------------------------------------------------- 3. EFFECTIVE DATE 31 January 2003 - -------------------------------------------------------------------------------- 4. REQUISITION/PURCHASE REQUEST/PROJECT NO. B04000/23453508 - -------------------------------------------------------------------------------- 5. ISSUED BY CODE N00178 Contracting Officer Naval Surface Warfare Center Dahlgren Division 17320 Dahlgren Road, Dahlgren, VA 22448 Attn: Constance M. Salisbury, Contract Specialist - -------------------------------------------------------------------------------- 6. ADMINISTERED BY (IF OTHER THAN ITEM 6) CODE SEE ITEM 5 - -------------------------------------------------------------------------------- 7. NAME AND ADDRESS OF CONTRACTOR (NO., STREET, CITY, COUNTY STATE AND ZIP CODE) ASI Technology Corporation Attn: Mr. Jerry E. Polis 980 American Pacific Drive Suite 111 Henderson, NV 89014 - -------------------------------------------------------------------------------- 8. DELIVERY [ ] FOB Origin [X] Other (see below) - -------------------------------------------------------------------------------- 9. DISCOUNT FOR PROMPT PAYMENT net 30 - -------------------------------------------------------------------------------- 10. SUBMIT INVOICES (4 COPIES UNLESS OTHERWISE SPECIFIED) TO THE ADDRESS SHOWN IN: ITEM Section G - -------------------------------------------------------------------------------- CAGE CODE 1TQPQ4 FACILITY CODE - -------------------------------------------------------------------------------- 11. SHIP TO/MARK FOR CODE N00173 Naval Surface Warfare Center, Dahlgren Division Attn: Dr. M. Arthur, N00178-03-C-1013 17320 Dahlgren Road; Dahlgren, VA 22448 - -------------------------------------------------------------------------------- 12. PAYMENT WILL BE MADE BY CODE N68892 DFAS CHASN OPLOC FP VENDOR PAY AND TRAVEL DIVISION P.O. BOX 118054; CHARLESTON, SC 29423-8054 - -------------------------------------------------------------------------------- 13. AUTHORITY FOR OTHER THAN FULL AND OPEN COMPETITION [ ] 10 U.S.C. 2304 (c) [ ] 41 U.S.C. 253 (c) - -------------------------------------------------------------------------------- 14. ACCOUNTING AND APPROPRIATION DATA See Section - -------------------------------------------------------------------------------- 15A. ITEM NO - See Section B 15B. SUPPLIES/SERVICES SEE SCHEDULE 15C. QUANTITY 15D. UNIT 15E. UNIT PRICE 15F. AMOUNT 15G. TOTAL AMOUNT OF CONTRACT: $68,587.00 - -------------------------------------------------------------------------------- 16. Table of Contents SEC DESCRIPTION PAGE(S) PART I - THE SCHEDULE X A SOLICITATION/CONTRACT FORM 2 X B SUPPLIES OR SERVICES AND PRICES/COSTS 4 X C DESCRIPTION/SPECS./WORK STATEMENT 7 X D PACKAGING AND MARKING 10 X E INSPECTION AND ACCEPTANCE 11 X F DELIVERIES OR PERFORMANCE 11 X G CONTRACT ADMINISTRATION DATA 13 X H SPECIAL CONTRACT REQUIREMENTS 17 PART II - CONTRACT CLAUSES X I CONTRACT CLAUSES 19 PART III - LIST OF DOCUMENTS, EXHIBITS & ATTACHMENTS X J LIST OF ATTACHMENTS 26 PART IV - REPRESENTATIONS AND INSTRUCTIONS K REPRESENTATIONS, CERTIFICATIONS OTHER STATEMENTS OF OFFERORS L INSTRS. CONDS., AND NOTICES TO M EVALUATION FACTORS FOR AWARD CONTRACTING OFFICER WILL COMPLETE ITEM 17 OR 18 AS APPLICABLE - -------------------------------------------------------------------------------- 17. [X] CONTRACTOR'S NEGOTIATED AGREEMENT (Contractor is required to sign this document and return 1 copies to issuing office). Contractor agrees to furnish and deliver all items or perform all services set forth or otherwise identified above and on any continuation sheets for the consideration stated herein. The rights and obligations of the parties to this contract shall be subject to and governed by the following documents; (a) this award/contract, (b) the solicitation, if any, and (c) such provisions, representations, certifications, and specifications, as are attached or incorporated by reference herein. (Attachments are listed herein.) - -------------------------------------------------------------------------------- 18. [ ] AWARD (Contractor is not required to sign this document). Your offer on solicitation number including the additions or changes made by you which additions or changes set forth in full above, is hereby accepted as to items listed above and on any continuation sheets. This award consummates the contract which consists of the following documents: (a) the Government's solicitation and your offer, and (b) this award/contract. No further contractual document is necessary. - -------------------------------------------------------------------------------- 19A. NAME AND TITLE OF SIGNER (TYPE OR PRINT) - -------------------------------------------------------------------------------- 19B. NAME OF CONTRACTOR ASI TECHNOLOGY CORPORATION BY --------------------------------------- (Signature of person authorized to sign) - -------------------------------------------------------------------------------- 19C. DATE SIGNED - -------------------------------------------------------------------------------- 20A. NAME OF CONTRACTING OFFICER GARY W. BYRAM - -------------------------------------------------------------------------------- 20B. UNITED STATES OF AMERICAN BY ---------------------------------- (Signature of Contracting Officer) - -------------------------------------------------------------------------------- 20C. DATE SIGNED - -------------------------------------------------------------------------------- N00178-03-C-1013 Page 2 of 26 - -------------------------------------------------------------------------------- SECTION A - SOLICITATION/CONTRACT FORM - -------------------------------------- CLAUSES INCORPORATED BY FULL TEXT DDI-A1 SBIR PROGRAM DATA - ------------------------ SBIR Topic: N02-140 Ddl-A20 NOTICE TO CONTRACTORS - ----------------------------- NOTICE TO CONTRACTORS THE PURPOSE OF THIS NOTICE IS TO BRING MATTERS TO YOUR ATTENTION WHICH CAN AFFECT PAYMENT OF YOUR INVOICES. CCR ANNUAL RENEWAL YOU MUST CONFIRM YOUR REGISTRATION IN TILE CENTRAL CONTRACTOR REGISTRATION (CCR) DATABASE OR THE DEFENSE FINANCE AND ACCOUNTING SERVICE (DFAS) MAY NOT PROCESS YOUR INVOICE. YOU MAY OBTAIN MORE INFORMATION ON THIS ANNUAL RENEWAL CONFIRMATION PROCESS BY CALLING 1-888-227-2423 OR VIA THE INTERNET AT http://www.ccr2000.com/ EFTS ELECTRONIC FUNDS TRANSFER (EFT) PAYMENT'S ARE BASED ON THE EFT INFORMATION CONTAINED IN THE CCR DATABASE. IT IS CRITICAL THAT YOU ENSURE THAT YOUR EFT INFORMATION IN THE CCR DATABASE REMAINS CURRENT AND CORRECT. INVOICES INVOICES MUST BE PREPARED AS PRESCRIBED BY THIS CONTRACT/ORDER OR THEY MAY BE REJECTED BY THE PAYING OFFICE. THIS CONTRACT/ORDER INCORPORATES ONE OR MORE OF THE FOLLOWING CLAUSES REGARDING PREPARATION AND SUBMISSION OF INVOICES: FAR 52.232-25 - Prompt Payment NAPS 5252.232-9000 - Submission of Invoices (Fixed Price) - This clause encourages the use of the Material Inspection and Receiving Report (DD Dorm 250) as an invoice. PLEASE INSURE THAT INVOICES ARE PREPARED AND SUBMITTED IN ACCORDANCE. WITH THESE CLAUSES AND THE FOLLOWING ADDITIONAL INFORMATION: N00178-03-C-1013 Page 3 of 26 - -------------------------------------------------------------------------------- INVOICE PREPARATION - PLEASE ENSURE THAT YOUR INVOICE CLEARLY REFLECTS: (l) INVOICE NUMBER, (2) DATE OF INVOICE, (3) COMPANY NAME AND REMIT TO ADDRESS (COMPANY NAME ON THE INVOICE MUST MATCH THE COMPANY NAME ON THE CONTRACT), (4) CONTRACT NUMBER, AND (5) INVOICE AMOUNT. (6) INCLUDE THE COMPLETE LINE OF ACCOUNTING AND FUNDING DOCUMENT NUMBER IN BLOCK 23 OF THE DD FORM 250. THESE DATA ARE FOUND AT THE BEGINNING OF SECTION G OF THIS CONTRACT. INVOICE SUBMISSION - SUMMIT THE ORIGINAL OF EACH INVOICE TO THE CONTRACT TECHNICAL POINT OF CONTACT. YOU MAY SUBMIT THE INVOICE (DD FORM 250) BY REGULAR MAIL OR BY EMAIL. IN ADDITION, SUBMIT ONE COPY OF EACH INVOICE T0 THE CONTRACT SPECIALIST. NAMES, MAILING ADDRESSES AND EMAIL ADDRESSES ARE PROVIDED IN SECTION G OF THIS CONTRACT. N00178-03-C-1013 Page 4 of 26 - -------------------------------------------------------------------------------- SECTION B - SUPPLIES OR SERVICES AND PRICES ------------------------------------------- ITEM NO SUPPLIES/SERVICES - ------- ----------------- 0001 SBIR RESEARCH AND DEVELOPMENT Firm Fixed Price The contractor shall perform research and development efforts in accordance with Section C and the Contractor's SBIR Phase I proposal dated September 2002 in response to SBIR Topic N02-140 ITEM SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT NO 0001AA Monthly Status Report 1 LOT $11,000.00 $11,000.00 The contractor shall perform research and development efforts and provide the First Monthly Status Report in accordance with CDRL AO01. ITEM SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT NO 0001AB Monthly Status Report 1 LOT $11,000.00 $11,000.00 The contractor shall perform research and development efforts and provide the Second Monthly Status Report in accordance with CDRL A00I ITEM SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT NO 0001AC Monthly Status Report 1 LOT $11,000.00 $11,000.00 The contractor shall perform research and development efforts and provide the Third Monthly Status Report in accordance with CDRL A001. ITEM SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT NO 0001AC Monthly Status Report 1 LOT $11,000.00 $11,000.00 Phase 11 Program plan The contractor shall perform research and development efforts and provide the Fourth Monthly Status Report in accordance with CDRL A001 and the Phase 11 Program Plan in accordance with CDRL. A002. N00178-03-C-1013 Page 5 of 26 - -------------------------------------------------------------------------------- ITEM SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT NO 0001AE Monthly Status Report/ 1 LOT $11,000.00 $11,000.00 Preliminary Report The contractor shall perform research and development efforts and provide the Fifth Monthly Status Report in accordance with CDRL A001 and the Phase I Preliminary Report in accordance with CDRL A003. ITEM SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT NO 0001AF Contract Summary 1 LOT $13,587.00 $13,587.00 Report The contractor shall perform research and development efforts and provide the Phase I Final Report in accordance with CDRL A004. CLIN 0001 TOTAL $68,587.00 ITEM SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT NO 0002 DATA 1 LOT *NSP *NSP DELIVERABLES Firm Fixed Price The contractor shall provide the data deliverables in support of CLIN 0001 in accordance with attached CDRLs. * - Not Separately Priced ITEM NO SUPPLIES/SERVICES - ------- ----------------- 0003 OPTION CLIN SBIR RESEARCH AND DEVELOPMENT Firm Fixed Price The contractor shall perform research and development efforts in accordance with Section C and the Contractor's SBIR Phase I proposal dated September 2002 in response to SBIR Topic N02-140. N00178-03-C-1013 Page 6 of 26 - -------------------------------------------------------------------------------- ITEM SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT NO 0003AA Monthly Status Report 1 LOT $9,000.00 $9,000.00 The contractor shall perform research and development efforts and provide the First Monthly Status Report in accordance with CDRL A001. ITEM SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT NO 0003AB Monthly Status Report 1 LOT $9,000.00 $9,000.00 The contractor shall perform research and development efforts and provide the Second Monthly Status Report in accordance with CDRL AOO1. ITEM SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT NO 0003AC Contract Summary 1 LOT $11,490.00 $11,490.00 The contractor shall perform research and development efforts and provide the Phase 1 Final Report in accordance with CDRL A004. CLIN 0003 TOTAL $29,490.00 ---------- ITEM SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT NO 0004 OPTION CLIN 1 LOT *NSP *NSP DATA DELIVERABLES Firm Fixed Price The contractor shall provide the data deliverables in support of CLIN 0003 in accordance with attached CDRLs. * - Not Separately Priced CLINS 0001 - 0004 TOTAL $98,077.00 ---------- N00178-03-C-1013 Page 7 of 26 - -------------------------------------------------------------------------------- SECTION C - DESCRIPTIONS AND SPECIFICATIONS - ------------------------------------------- CLAUSES INCORPORATED BY FULL TEXT - --------------------------------- Ddl-C10 STATEMENT OF WORK (SBIR) - -------------------------------- Performance of this contract by the Contractor shall be in accordance with the detailed obligations to which the Contractor committed itself in the Contractor's proposal entitled "Plasma Phased Array Radar Antenna Architecture", dated September 2002, submitted in response to the DOD Program Solicitation, SBIR Topic N02-140, entitled "Design and Build a Revolutionary Phased Array Radar System". The technical volume of the Contractor's proposal is incorporated by reference and hereby made subject to the provisions of this contract, as if included in full text herein Periodic progress reports and a final report shall be delivered in accordance with Contract Data Requirements List, DD 1423, Exhibit A. All reports delivered by the Contractor to the Government under this contract shall prominently show on the cover of the report the following information (a) Name and business address of contractor. (b) Contract number. (c) Contract dollar amount. (d) SBIR Topic Number. (e) Technical Point of Contact (TPOC) or Contracting Officer Representative (COR) name, code and activity (f) Sponsor (if identified in Section G of this contract). (g) Contracting Office: Naval Surface Warfare Center, Dahlgren Division (NSWCDD), Dahlgren, VA, 22448 In addition to the complete hard copy of the Final Report, the Contractor shall provide the following NON-PROPRIETARY summary reports: (a) A Final Summary Report for Phase I SBIR contracts (b) A First Year Summary Report and a Final Summary Report for Phase II SBIR contracts. The summary reports will be submitted directly to the Navy SBIR/STTR Web page at http://www.navysbir.brtrc.com/ select "Submission" then select "Submit a Phase I or Phase 11 Summary Report;" follow the directions.
DD 1423 DELIVERABLE SUMMARY DD l 423 Due Date (D 1423 CDRL Description (DD 1423 Blk. 3) Blks 12 & 13) Reference - -------------------------------------------------------------------------------------------- A001 Phase I Monthly Status Retort 35 days after beginning of contract and every month thereafter N00178-03-C-1013 Page 8 of 26 - -------------------------------------------------------------------------------- A002 Phase II Plan 120 days after beginning of contract A003 Phase I Preliminary Report 30 days prior to contract completion A004 Phase I Final Report Completion of contract A005 Patents -- Reporting of Subject Within 180 days after completion of Inventions all contract work
Ddl-C11 S13IR PHASE II PROPOSAL INSTRUCTIONS - -------------------------------------------- A Phase II proposal can be submitted only by a Phase I awardee. Phase II proposals are NOT to be submitted unless and until the Government issues an imitation for the proposal; such invitations will be issued by letter from the Contracting Officer or SBIR Program Manager. The invitation letter will contain instructions for preparation and submission of the proposal. Invitation letters for Phase II proposals w1H be issued approximately 4 months after effective date of the Phase I contract; Phase II proposals will normally be due no later than 30 days after date of the invitation letter. Ddl-C21 COPYRIGHT OF COMPUTER SOFTWARE - -------------------------------------- The contractor shall: (1) apply for copyright registration of the computer program code developed by the contractor, (2) place the copyright notice on the screen, in addition to the diskettes and manuals produced, and (3) place, next to the copyright notice, the additional phrase: "The U. S. Government has rights as specified in contract N00178-03-C-1013. Ddl-C40 INFORMATION SYSTEMS (IS) SECURITY AND ACCREDITATION - ----------------------------------------------------------- Contractor Provision of IS Resources Except in special circumstances explicitly detailed elsewhere in this document, the Contractor shall provide all IS resources needed in the performance of this contract. IS resources include, but are not limited to, computers, software, networks, and addresses. Contractor Use of NSWCDD IS Resources In the event that the contractor is required to have access to NSWCDD IS resources, the login name (common id) and associated information shall be registered with the NSWCDD site issuing authority. If this contract requires that the contractor be granted access and use of NSWCDD IS resources (at any site), the IS shall be accredited for contractor use in accordance with procedures specified by the IS Security Office The accreditation shall include COR certification that the use and access is required by this contract. Connections Between NSWCDD and Contractor Facilities N00178-03-C-1013 Page 9 of 26 - -------------------------------------------------------------------------------- If there is a requirement (specifically delineated elsewhere in this contract) for interconnection between any facilities and/or ISs owned or operated by the contractor, such interconnection shall tape place only after approval from the NSWCDD IS Security Office. All such connections as well as the ISs connected thereto will be accredited (operated at an acceptable risk) by the appropriate NSWCDD Designated Approving; Authority (DAA) and comply with the requirements of DODDIR 5200.28 regarding Memorandums of Agreement. All such connections will be made outside the appropriate NSWCDD firewall. Accreditation of Contractor-owned ISs The Government reserves the right to have all contractor, owned ISs used in the performance of this contract accredited by the cognizant DAA. Use of Contractor Personnel to Perform IS Security Tasking General - Personnel performing IS security related tasking; must have successfully completed training and demonstrate proficiency in the following; areas: Information System Security Awareness, Security Domains, Incident Handling, and Auditing Concepts. Architecture Specific - Personnel assigned to perform IS security related tasking for a specific area must be trained and demonstrate proficiency in that area. Typical examples include, but are not limited to: networking, processing classified information, Internet Protocols, Unix, Novell, and Microsoft operating systems. Replacement or New IS Security Personnel - The contractor shall provide evidence that new and replacement IS personnel, unless they are Key Personnel, meet the above requirements and forward such information to the COR for review and approval by the Information Systems Security Office. Failure to meet the requirements herein may result in rejection of the person or persons. Replacement of IS personnel designated as Key Personnel will be in accordance with the Key Personnel provision contained herein. HQ C-2-0011 COMPUTER SOFTWARE AND/OR COMPUTER DATABASE(S) DELIVERED TO AND/OR - ----------------------------------------------------------------------------- RECEIVED FROM THE GOVERNMENT (NAVSEA) (NOV 1996) - ------------------------------------------------ (a) The Contractor agrees to test for viruses all computer software and/or computer databases, as defined in the clause entitled "RIGHTS IN NONCOMMERCIAL COMPUTER SOFTWARE AND NONCOMMERCIAL COMPUTER SOFTWARE DOCUMENTATION" (DFARS 252.227-7014), before delivery of that computer software or computer database in whatever media and can whatever system the software is delivered. The Contractor warrants that any such computer software and/or computer database will be free of viruses when delivered. (b) The Contractor agrees to test any computer software and/or computer database(s) received from the Government for viruses prior to use under this contract N00178-03-C-1013 Page 10 of 26 - -------------------------------------------------------------------------------- (c) Unless otherwise agreed in writing, any license agreement governing the use of any computer software to be delivered as a result of this contract must be paid-up and perpetual, or so nearly perpetual as to allow the use of the computer software or computer data base with the equipment for which it is obtained, or any replacement equipment, for so long as such equipment is used. Otherwise the computer software or computer data base does not meet the minimum functional requirements of this contract. In the event there is any routine to disable the computer software or computer data base in the future, that date certain shall not be less than 25 years after the delivery date of the computer software or computer database. (d) No copy protection devices or systems shall be used in any computer software or computer database delivered under this contract to restrict or limit the Government from making copies. This does not prohibit license agreements from specifying the maximum amount of copies that can be made. (e) Delivery by the Contractor to the Government of certain technical data and other data is now frequently required in digital form rather than as hard copy. Such delivery may cause confusion between data rights and computer software rights. It is agreed that, to the extent that any such data is computer software by virtue of its delivery in digital form, the Government will be licensed to use that digital-form data with exactly the same rights and limitations as if the data had been delivered as hard copy. (f) Any limited rights legends or other allowed legends placed by a Contractor on technical data or other data delivered in digital form shall be digitally included on the same media as the digital-form data and must be associated with the corresponding digital-form technical data to which the legends apply to the extent possible. Such legends shall also be placed in human-readable forth on a visible surface of the media carrying the digital-form data as delivered; to the extent possible. SECTION D - PACKAGING AND MARKING - --------------------------------- CLAUSES INCORPORATED BY FULL TEXT - --------------------------------- HQ D-1-0001 DATA PACKAGING LANGUAGE - ----------------------------------- All unclassified data shall be prepared for shipment in accordance with best commercial practice. Classified reports: data, and documentation shall be prepared for shipment in accordance with National Industrial Security Program Operating Manual (NISPOM), DOD 5220.22-M dated January 1995. N00178-03-C-1013 Page 11 of 26 - -------------------------------------------------------------------------------- SECTION E - INSPECTION AND ACCEPTANCE - ------------------------------------- INSPECTION AND ACCEPTANCE TERMS - ------------------------------- Supplies/services for CLINS 0001-0004 will be inspected/accepted by the Government at Destination: CLAUSES INCORPORATED BY REFERENCE: - ---------------------------------- 52.246-9 Inspection Of Research And Development (Short Form) APR 1984 52.246-16 Responsibility For Supplies APR 1984 252.246-7000 Material Inspection And Receiving Report DEC 1991 SECTION F - DELIVERIES OR PERFORMANCE - ------------------------------------- DELIVERY INFORMATION CLINS DELIVERY DATE UNIT OF QTY FOB SHIP TO ADDRESS ISSUE (CLINS 0001-0004) 0001 Dest. Dr. Michael Arthur 0001AA 7 March 2003 Lot 1 NSWCDD 0001AB 7 April 2003 Lot 1 17320 Dahlgren Road OOO1AC 7 May 2003 Lot 1 0001AD 6 June 2003 Lot l 0001AE 7 July 2003 Lot l 0001AF 6 August 2003 Lot 1 0002 Lot 1 Dest. 0003 Dest. 0003AA 35 Days After Lot 1 Option Exercise 0003AB 65 Days After Lot 1 Option Exercise 0003AC 95 Days After Lot 1 Option Exercise 0004 Lot 1 Dest. CLAUSES INCORPORATED BY REFERENCE: 52.242-15 Stop-Work Order AUG 1989 52.247-34 F.O.B. Destination NOV 1991 CLAUSES INCORPORATED BY FULL TEXT - --------------------------------- Ddl-F10 DURATION OF CONTRACT PERIOD (SBIR PHASE I) - -------------------------------------------------- N00178-03-C-1013 Page 12 of 26 - -------------------------------------------------------------------------------- This contract shall become effective on 31 January 2003 or on the date of the award, whichever is later, and shall continue until 5 August 2003. The Government DOES NOT contemplate granting any extensions to the Phase I period of performance To maintain programmatic schedules and to allow timely evaluation and contract award of Phase 11 contracts, extensions to the Phase I contract period of performance will be considered only for fully-justified, extremely exceptional circumstances. The contractor acknowledges that any extension to the Phase I period of performance may preclude consideration for a Phase II contract. The option quantity (if applicable and if exercised) shall be performed from the effective date of the written modification exercising the option and continue for a period of 90 days thereafter. Ddl-F20 RECEIVING HOURS OF OPERATION - ------------------------------------ All deliveries to the Receiving Officer, Dahlgren Division, Naval Surface Warfare Center, Dahlgren, VA shall be made Monday through Friday from 7:00 a.m. to 2:30 p.m., local time. Deliveries will not be accepted after 2:30 p.m. No deliveries will be made can government holidays. Ddl-F40 CONTRACTOR NOTICE REGARDING LATE DELIVERY - ------------------------------------------------- In the event the contractor anticipates or encounters difficulty in complying with the contract delivery schedule or date, he/she shall immediately notify, in writing, the Contracting Officer and the cognizant Contract Administration Services Office, if assigned. The notice shall give the pertinent details; however such notice shall riot be construed as a waiver by the Government of any contract delivery schedule, or of any rights or remedies provided by law or under this Contract. N00178-03-C-1013 Page 13 of 26 - -------------------------------------------------------------------------------- SECTION G - CONTRACT ADMINISTRATION DATA - ---------------------------------------- ACCOUNTING AND APPROPRIATION DATA - --------------------------------- ACRN AA: 1731319 86ED 255 SAS05 0 068342 2D 009510 S18140000020 $68,587.00 (NSWCDD STUB NO. B04000/23453508, REF N0002403RX10996, ACRN AA) (FUNDS EXPIRE 31 DEC 03) CLAUSES 1NCORPORATED BY REFERENCE: - ---------------------------------- 252.242-7000 Postaward Conference DEC 1991 CLAUSES INCORPORATED BY FULL TEXT - --------------------------------- Ddl-G1 PAYMENT INSTRUCTIONS FOR MULTIPLE ACCOUNTING CLASSIFICATION CITATIONS - ---------------------------------------------------------------------------- The payment office shall ensure that each payment under this contract is made in accordance with the accounting classification reference numbers (ACRNs) shown on each individual invoice. ACRNs are cited by the contractor on each invoice in accordance with clause 5252.232-9000, 5252.232-9001, or 5252.232-9003, as appropriate. Ddl-G10 GOVERNMENT CONTRACT ADMINISTRATION POINTS-OF-CONTACT AND - ---------------------------------------------------------------- RESPONSIBILITIES - ---------------- [1] Procuring Contracting Officer (PCO). - ---------------------------------------- (a) Contact Information: NAME/CODE: Gary W. Byram ADDRESS: Naval Surface Warfare Center, Dahlgren Division 17320 Dahlgren Road Dahlgren, Virginia 22448-5100 PHONE: (540) 653-7478 FAX: (540) 653-7088 EMAIL: byramgy@nswc.navy.mi1 (b) PCO responsibilities are outlined in FAR 1.602-2 The PCO is the only person authorized to approve changes in any of the requirements of this contract or orders issued thereunder and, notwithstanding provisions contained elsewhere in this contract, the said authority remains solely the PCO's. The contractor shall not comply with any order, direction or request of Government personnel unless it is issued in writing and signed by the Contracting Officer or is-p~g5u4nt to specific authority otherwise included as art of this contract. In the event the contractor effects any change at the direction of any person other than the PCO, the change will be considered to be unauthorized. N00178-03-C-1013 Page 14 of 26 - -------------------------------------------------------------------------------- [2] Contract Specialist: - ------------------------ (a) Contact Information: NAME/CODE: Constance M. Salisbury ADDRESS: Naval Surface Warfare Center, Dahlgren Division 17320 Dahlgren Road Dahlgren, Virginia 22448-51001 PHONE: (540) 653-7478 FAX: (540) 653-7098 EMAIL: salisbury@nswc.navy.mil (b) The Contract Specialist is the representative of the Contracting Officer for all contractual matters. [3] Technical Point of Contact (TPOC) - ------------------------------------- (a) Contact Information: NAME/CODE: Dr. Michael Arthur ADDRESS: Naval Surface Warfare Center, Dahlgren Division 17320 Dahlgren Road Dahlgren, Virginia 22448-5100 PHONE: (540) 653-4781 FAX: EMAIL: arthurmd@nswc.navy.mil (b) The TPOC is the PCO's representative for technical matters when a COR is not appointed. The TPOC is responsible for technical issues of contract administration, such as providing all items of Government Furnished Information (GFI), Government Furnished Material (GFM) and Government Furnished Equipment (GFE) as/if specified in the contract as well as the inspection and acceptance of all contract deliverables. [4] Division Sponsor (SBIR) - --------------------------- (a) Contract Information: NAME/CODE: Douglas Marker ADDRESS: c/o Cheryl Reckeweg Naval Surface Warfare Center, Dahlgren Division 17320 Dahlgren Road Dahlgren, Virginia 22448-5100 PHONE: (540)653-2633 FAX: EMAIL: reckewegcm@nswc.navy.mil N00178-03-C-1013 Page 15 of 26 - -------------------------------------------------------------------------------- (b) The Division Sponsor is the PEO or NAVSEA Directorate whose SBIR funds are being used under the contract. The Division Sponsor authorizes the expenditure of SBIR funds for the contract. [5] Sponsor (SBIR) - ------------------ (a) Contract Information: NAME/CODE: Richard Milligan ADDRESS: C/o Pegoy Medrow SEA 05R1, Building 197/2W-3251 Isaac Hull Avenue, S.E. Washington, DC 20376 PHONE: (202)781-3745 FAX: EMAIL: medrowpp@navsca.navy.mil (b) The Sponsor is the command office (NAVSEA, NAVAIR, ONR, etc.) that has overall responsibility for the agency's SBIR Program. [6] Paving Office - ----------------- (a) Address NAME/CODE: DFAS Charleston, OPLOC FP, Vendor Pay & Travel Division, Code N68892 ADDRESS: P.O. Box 118054 Charleston, S.C. 29423-804 (b) The Paying Office makes all payments under the contract. (c) For the status of invoices and for payments of all types of commercial orders, contact DFAS Charleston Operation, Customer Service, Charleston, S.C. on (800) 755-3642 or (843) 746-6211. The office is open from 8:00 AM to 4:00 PM local time. Additionally, you can register at the following website, http://vendorpay.dfas.mil/newuser, to monitor the status of your invoices. This is the vendor pay inquiry system-mocas user registration. N00178-03-C-1013 Page 16 of 26 - -------------------------------------------------------------------------------- Ddl-G12 POST-AWARD CONFERENCE - ----------------------------- (a) A Post-Award Conference with the successful offeror will be conducted within 30 days after award of the contract. The conference will be held at the address below: Location/Address: Naval Surface Warfare Center Dahlgren, Virginia (b) The contractor will be given five working days notice prior to the date of the conference by the Contracting Officer. (c) The requirement for a post-award conference shall in no event constitute grounds for excusable delay by the Contractor its performance of any provisions in the contract. NAPS 5252.232-9000 SUBMISSION OF INVOICES (FIXED PRICES (JUL 1992) - ------------------------------------------------------------------ (a) "Invoice" as used in this clause does not include contractor requests for progress payments. (b) The contractor shall submit original invoices to the addresses identified in the solicitation/contract paragraph entitled "Notice to Contractors" found on page 2 of this contract. (c) The use of copies of the Material Inspection and Receiving Report (MIRR), DD Form 250, as an invoice is encouraged. DFARS Appendix F-306 provides instructions for such use. Copies of the MIRR used as an invoice are in addition to the standard distribution stated in DFARS F-401. (d) In addition to the requirements of the Prompt Payment clause of this contract, the contractor shall cite on each invoice the contract line item number (CLIN); the contract subline item number (SLIN), if applicable; the accounting classification reference number (ACRN) as identified on the financial accounting data sheets, and the payment terms. (e) The contractor shall prepare a separate invoice for each activity designated to receive the supplies or services: (f) if acceptance is at origin, the contractor shall submit the MIRR or other acceptance verification directly to the designated payment office. If acceptance is at destination, the consignee will forward acceptance verification to the designated payment office. N00178-03-C-1013 Page 17 of 26 - -------------------------------------------------------------------------------- SECTION H - SPECIAL, CONTRACT REQUIREMENTS - ------------------------------------------ CLAUSES INCORPORATED BY FULL TEXT - --------------------------------- Ddl-H10 EMPLOYMENT OF US GOVERNMENT PERSONNEL RESTRICTED - -------------------------------------------------------- In performing this contract, the Contractor shall not use as a consultant or employ (on either a full or part time basis) any active duty U.S. Government personnel (civilian or military) without the prior written approval of the Contracting Officer. Such approval may be given only in circumstances where it is clear that no laws and no DOD or U.S. Government instructions, regulations, or policies might possibly be contravened and no appearance of a conflict of interest will result. Ddl-H11 CHANCES IN KEY PERSONNEL - -------------------------------- (a) The Contractor agrees that a partial basis for award of this contract is the list of key personnel proposed. Accordingly, the Contractor agrees to assign to this contract those key persons whose resumes were submitted with the proposal necessary to fulfill the requirements of the contract. No substitution shall be made, without prior notification to and concurrence of the Contracting; Officer in accordance with this requirement. (b) The contractor agrees that no key personnel substitutions will be permitted unless such substitutions are necessitated by an individual's sudden illness, death, or termination of employment. All proposed substitutions shall have qualifications equal to or higher than the qualifications of the person to be replaced. The Contracting Officer shall be notified in writing of any proposed substitution at least fifteen (15) days, or thirty (30) days if a security clearance is to be obtained, in advance of the proposed substitution. Such notification shall include: (1) An explanation of the circumstances necessitating; the substitution; (2) A complete resume of the proposed substitute; (3) The hourly rates of the incumbent and the proposed substitute; and (4) Any other information requested by the Contracting; Officer to enable him/her to judge whether or not the Contractor is maintaining the same high quality of personnel that provided the partial basis for award. (c) In the event a requirement to increase the specified level of effort for a designated labor category, but not the overall level of effort of the contract, occurs, the Contractor shall submit to the Contracting Officer a written request for approval to add personnel to the designated labor category. The same information as specified in paragraph (b) above is to be submitted with the request. (d) The Contracting Officer shall evaluate requests for changes in personnel and promptly notify the Contractor, in writing, whether the request is approved or disapproved. N00178-03-C-1013 Page 18 of 26 - -------------------------------------------------------------------------------- Ddl-H42 SPECIAL PROVISIONS FOR SBIR CONTRACTS - --------------------------------------------- (a) Research and Analytical Work. The contractor shall perform the proportion listed below of the research and/or analytical work under this contract unless an exception has been approved in advance, in writing, by the contracting officer: Phase I contracts - at least two-thirds (2/3) Phase II contract -at least one-half (1/2) (b) Principal Investigator Primary Employment. The primary employment of the principal investigator shall be with the contractor during the conduct of this contract. Primary employment means that more than one-half of the principal investigator's time is spent with the contractor and precludes full-time employment with another organization. (c) Place of Performance. The research or research and development work under this contract shall be performed in the United States. "United States" means the fifty states, the Territories and possessions of the United States, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, the Trust Territory of the Pacific Islands, and the District of Columbia. (d) American-made equipment and products. When purchasing any equipment or a product as a direct charge to the contract, the contractor shall purchase only American-made equipment and products to the extent possible in keeping with the overall purposes of the program. Ddl-H50 NOTICE OF INCORPORATION OF SECTION K - -------------------------------------------- Section K of the solicitation (Representation, Certifications and Other Statements of Offerors) will not be distributed with the contract; however, it is incorporated in and forms a part of the resultant contract as though furnished in hill text therewith. N00178-03-C-1013 Page 19 of 26 - -------------------------------------------------------------------------------- SECTION I - CONTRACT CLAUSES - ---------------------------- CLAUSES INCORPORATED BY REFERENCE: - ---------------------------------- 52.209-6 Protecting the Government's Interest When Subcontracting JUL 1995 With Contractors Debarred, Suspended, or Proposed for Debarment 52.211-15 Defense Priority And Allocation Requirements SEP 1990 52.215-8 Order of Precedence--Uniform Contract Format OCT 1997 52.219-6 Notice Of Total Small Business Set-Aside JUL 1996 52.222-3 Convict Labor AUG 1996 52.222-21 Prohibition Of Segregated Facilities FEB 1999 52.222-26 Equal Opportunity APR 2002 52.222-35 Equal Opportunity For Special Disabled Veterans, DEC 2001 Veterans of the Vietnam Era and Other Eligible Veterans 52.222-36 Affirmative Action For Workers With Disabilities JUN 1998 52.222-37 Employment Reports On Special Disabled Veterans, DEC 2001 Veterans Of The Vietnam Era and Other Eligible Veterans 52.225-13 Restrictions on Certain Foreign Purchases JUL 2000 52.227-1 Alt I Authorization And Consent (Jul 1995) - Alternate 1 APR 1984 52.232-2 Payments Under Fixed-Price Research And Development APR 1984 Contracts 52.232-23 Assignment Of Claims JAN 1985 52.232-25 Prompt Payment FEB 2002 52.232-33 Payment by Electronic Funds Transfer-Central Contractor MAY 1999 Registration 52.233-1 Disputes JUL 2002 52.233-3 Protest After Award AUG 1996 52.243-1 Alt V Changes-Fixed-Price (Aug 1987) - Alternate V APR 1984 52.244-6 Subcontracts for Commercial Items MAY 2002 52.249-1 Termination For Convenience Of The Government (Fixed APR 1984 Price) (Short Form) 52.249-9 Default (Fixed-Priced Research And Development) APR 1984 252.204-7003 Control Of Government Personnel Work Product APR 1992 252.204-7004 Required Central Contractor Registration NOV 2001 252.209-7004 Subcontracting With Firms That Are Owned or Controlled MAR 1998 By The Government of a Terrorist Country 252.225-7012 Preference For Certain Domestic Commodities APR 2002 252.227-7016 Rights in Bid or Proposal Information JUN 1995 252.227-7018 Rights in Noncommercial Technical Data and Computer JUN 1995 Software--Small Business Innovation Research (SBIR) Program 252.227-7019 Validation of Asserted Restrictions--Computer Software JUN 1995 252.227-7025 Limitations on the Use or Disclosure of Government- JUN 1995 Furnished Information Marked with Restrictive Legends 252.227-7030 Technical Data--Withholding of Payment MAR 2000 N00178-03-C-1013 Page 20 of 26 - -------------------------------------------------------------------------------- 252.227-7034 Patents--Subcontracts APR 1984 252.227-7036 Declaration of Technical Data Conformity JAN 1997 252.227-7037 Validation of Restrictive Markings on Technical Data SEP 1999 252.227-7039 Patents--Reporting Of Subject Inventions APR 1990 252.231-7000 Supplemental Cost Principles DEC 1991 252.235-7011 Final Scientific or Technical Report SEP 1999 252.243-7001 Pricing Of Contract Modifications DEC 1991 CLAUSES 1NCORPORATFD BY FULL TEXT - --------------------------------- 52.217-7 OPTION FOR INCREASED QUANTITY--SEPARATELY PRICED LINE ITEM (MAR 1989) - ------------------------------------------------------------------------------- The Government may require the delivery of the numbered line item, identified in the Schedule as an option item, in the quantity and at the price stated in the Schedule. The Contracting Officer may exercise fire option by written notice to the Contractor within 180 days after completion of the CL1N 0001 effort. Delivery of added items shall continue at the same rate that like items are called for under the contract, unless the parties otherwise agree. 52.227-11 PATENT RIGHTS--RETENTION BY THE CONTRACTOR (SHORT FORM) (JUNE 1997) - ------------------------------------------------------------------------------ (a) Definitions. (1) "Invention" means any invention or discover which is or may be patentable or otherwise protectable under title 35 of the United Suites Code, or any novel variety of plant which is or may be protected under the Plant Variety Protection Act (7 U.S.C. 2321, et seq.). (2) "Made" when used in relation to any intention means the conception or first actual reduction to practice of such invention. (3) "Nonprofit organization" means a university or other institution of higher education or an organization of the type described in section 501(c)(3) of the Internal Revenue Code of 1454 (26 U.S.C. 501(e)) and exempt from taxation under section 501(a) of the Internal Revenue Code (26 U.S.C. 501(a)) or any not profit scientific or educational organization qualified under a state, nonprofit organization statute. (4) "Practical application" means to manufacture, in the case of a composition of product; to practice, in the case of a process or method, or to operate, in the case of a machine or system; and, in each case, under such conditions as to establish that the invention is being utilized and that is benefits are, to the extant permitted by law or Government regulations, available to the public on reasonable terms. (5) "Small business firm" means a small business concern as defined at section 2 of Pub. L, 85-536 (15 U.S.C. 632) and implementing regulations of the Administrator of the Small Business Administration. For the purpose of this clause, the size standards for small business N00178-03-C-1013 Page 21 of 26 - -------------------------------------------------------------------------------- concerns involved in Government procurement and subcontracting at 13 CFR 1213-8 and 13 CFR 121.3-12, respectively, will be used. (6) "Subject invention" means any invention of the contractor conceived or first actually reduced to practice in the performance of work under this contract, provided that in the case of a variety of plant, the date of determination (as defined in section 41(d) of the Plant Variety Protection Act, 7 U.S.C. 2401(d)) must also occur during the period of contract performance. (b) Allocation of principal rights. The Contractor may retain the entire right, title, and interest throughout the world to each subject invention subject to the provisions of this clause and 35 U.S.C. 203. With respect to any subject invention in which the Contractor retains title, the Federal Government shall have a nonexclusive, nontransferable, irrevocable, paid-up license to practice or have practiced for or on behalf of the United States the subject invention throughout the world. (c) Invention disclosure, election of title, and tiling of patent application by Contractor. (1) The Contractor will disclose each subject invention to the Federal agency within 2 months after the inventor discloses it in writing to Contractor personnel responsible for patent matters. The disclosure to the agency shall be in the farm of a written report and shall identify the contract under which ire invention was made and the inventor(s). It shall be sufficiently complete in technical detail to convey a clear understanding to the extent known at the time of the disclosure, of the nature, purpose, operation, and the physical, chemical, biological or electrical characteristics of the invention, The disclosure shall also identify any publication, on sale or public use of the invention and whether a manuscript describing; the invention has been submitted for publication and, if so, whether it has been accepted for publication at the time of disclosure. In addition, after disclosure to the agency, the Contractor will promptly notify the agency of the acceptance of any manuscript describing the invention for publication or of any on sale or public use planned by the Contractor. (2) The Contractor will elect in writing whether or not to retain title to any such invention by notifying the Federal agency within 2 years of disclosure to the Federal agency. However, in any case inhere publication, on sale or public use has initiated the 1-year statutory period wherein valid patent protection can still be obtained in the United States, the period for election of title may be shortened by the agency to a date that is no more than 60 days prior to the end of the statutory period. (3) The Contractor will file its initial patent application on a subject invention to which it elects to retain title within I year after election of title or, if earlier, prior to the end of any statutory period wherein valid patent protection can he obtained in the United States after a publication, on sale, or public use. The Contractor will file patent applications in additional countries or international patent offices within either 10 months of the corresponding initial patent application or 6 months from the (late permission is granted by the Commissioner of Patents and Trademarks to file foreign patent applications where such filing has been prohibited by a Secrecy Order. N00178-03-C-1013 Page 22 of 26 - -------------------------------------------------------------------------------- (4) Requests for extension of the time for disclosure election, and filing under subparagraphs (c)(1), (2), and (3) of this clause may, at the discretion of the agency, be granted. (d) Conditions when the Government may obtain title. The Contractor will convey to the Federal agency, upon written request, title to any subject invention-- (1) If the Contractor fails to disclose or elect title to the subject invention within the tunes specified in paragraph (c) of this clause, or elects not to retain title, provided, that the agency may only request title within 60 days after learning of the failure of the Contractor to disclose or elect within the specified tines. (2) In those countries in which the Contractor fails to file patent applications within the times specified in paragraph (c) of this clause; provided however, that if the Contractor has filed a patent application in a country after the times specified in paragraph (c) of this clause, but prior to its receipt of the written request or the federal agency, the Contractor shall continue to retain title in that country. (3) In any country in which the Contractor decides not to continue the prosecution of any application for, to pay the maintenance fees on, or defend in reexamination or opposition proceeding on, a patent on a subject invention. (e) Minimum rights to Contractor and protection of the Contractor right to file. (1) The Contractor will retain a nonexclusive royalty-free license throughout the world in each subject invention to which the Government obtains title, except if the Contractor fails to disclose the invention within the times specified in paragraph (c) of this clause. The Contractor's license extends to its domestic subsidiary and affiliates, if any, within the corporate structure of which the Contractor is a party and includes the right to grant sublicenses of the same scope to the extent the Contractor was legally obligated to do so at the time the contract was awarded. The license is transferable only with the approval of the federal agency, except when transferred to the successor of that part of the Contractor's business to which the invention pertains. (2) The Contractor's domestic license may be revoked or modified by the funding Federal agency to the extent necessary to achieve expeditious practical application of subject invention pursuant to an application for an exclusive license submitted in accordance with applicable provisions at 37 CFR Part 404 and agency licensing regulations (if any). This license will not be revoked in that field of use or the geographical areas in which the Contractor has achieved practical application and continues to make the benefits of the invention reasonably accessible to the public. The license in any foreign country may be revoked or modified at the discretion of the funding Federal agency to the extent the Contractor, its licensees, or the domestic subsidiaries or affiliates have failed to achieve practical application in that foreign country. (3) Before revocation or modification of the license, the funding Federal agency will furnish the Contractor a written notice of its intention to revoke or modify the license, and the Contractor will be allowed 30 days (or such either time as may be authorized by the funding Federal agency for good cause shown by the Contractor) after the notice to show cause why the N00178-03-C-1013 Page 23 of 26 - -------------------------------------------------------------------------------- license should not be revoked or modified. The Contractor has the right to appeal, in accordance with applicable regulations in 37 CFR Part 404 and agency regulations if any, concerning the licensing of Government-owned inventions, any decision concerning the revocation or modification of the license. (f) Contractor action to protect the Government's interest. (1) The Contractor agrees try execute or to have executed and promptly deliver to the Federal agency all instruments necessary to (i) establish or confirm the rights the Government has throughout, the world in those subject inventions to which the Contractor elects to retain title, and (ii) convey title to the Federal agency when requested under paragraph (d) of this clause and to enable the Government to obtain patent protection throughout the world in that subject invention. (2) The Contractor agrees to require, by written agreement, its employees, other than clerical and nontechnical employee's, to disclose promptly in writing to personnel identified as responsible for the administration of patent matters and in a format suggested by the Contractor each subject invention made under contract in order that the Contractor can comply with the disclosure provisions of paragraph (c) of this clause, and to execute all papers necessary to file patent applications on subject inventions and to establish the Government's rights in the subject inventions. This disclosure format should require, as a minimum, the information required by subparagraph (c)(1) of this clause. The Contractor shall instruct such employees, through employee agreements or other suitable educational programs, on the importance of reporting inventions in sufficient time to permit the filing of patent applications prior to U.S. or foreign statutory bars. (3) The Contractor will notify the Federal agency of any decisions not to continue the prosecution of a patent application, pay maintenance fees, or defend in a reexamination or opposition proceeding on a patent, in any country, now less than 30 days before the expiration of the response period required by the relevant patent office. (4) The Contractor agrees to include, within the specification of any United States patent application and any patent issuing thereon covering a subject invention, the following statement, "This invention was made with Government support under (identify the contract) awarded by (identify the Federal agency). The Government has certain rights in the invention." (g) Subcontracts. (1) The Contractor will include this clause, suitably modified to identify the parties, in all subcontracts, regardless of tier, for experimental, developmental, or research work to be performed by a small business firm or domestic nonprofit organization. The subcontractor will retain all rights provided for the Contractor in this clause, and the Contractor will not, as part of the consideration for awarding the subcontract, obtain rights in the subcontractor's subject inventions. N00178-03-C-1013 Page 24 of 26 - -------------------------------------------------------------------------------- (2) The Contractor will include in all other subcontracts, regardless of tier, for experimental, developmental, or research work the patent rights clause required by Subpart 27.3. (3) In the case of subcontracts, at any tier, the agency, subcontractor, and the Contractor agree that the mutual obligations of the parties created by this clause constitute a contract between the subcontractor and the Federal agency with respect to the matters covered by the clause; provided, however, that nothing in this paragraph is intended to confer any jurisdiction under the Contract Disputes Act in connection with proceedings under paragraph (j) of this clause, (h) Reporting on utilization of subject inventions. The Contractor agrees to submit, on request, periodic reports no more frequently than annually on the utilization of a subject invention or on efforts at obtaining such utilization that are being made by the Contractor or its licensees or assignees, Such reports shall include information regarding the status of development, date of first commercial sale or use, grass royalties received by the Contractor, and such other data and information as the agency may reasonably specify. The Contractor also agrees to provide additional reports as may be requested by the agency in connection with any march-in proceeding undertaken by the, agency in accordance with paragraph (j) of this clause. As required by 35 U.S.C, 202(c)(5), the agency agrees it will not disclose such information to persons outside the Government without permission of the Contractor. (i) Preference for United States industry. Notwithstanding any other provision of this clause, the Contractor agrees that neither it nor any assignee will grant to any person the exclusive right to use or sell any subject invention in the United States unless such person agrees that any product embodying the subject invention or produced through the use of the subject invention will be manufactured substantially in the United States, However, in individual cases, the requirement for such an agreement may be, waived by the Federal agency upon a showing by the Contractor or its assignee that reasonable but unsuccesful efforts have been made to grant licenses can similar terms to potential licensees that would be likely to manufacture substantially in the United States or that under the circumstances domestic manufacture is not commercially feasible. (j) March-in rights. The Contractor agrees that, with respect to any subject invention in which it has acquired title, the Federal agency has the right in accordance with the procedures in 37 CFR 401.6 and any supplemental regulations of the agency to require the Contractor, an assignee or exclusive licensee of a subject invention to grant a nonexclusive, partially exclusive, or exclusive license in any field of use to a responsible applicant or applicants, upon terms that are reasonable under the circumstances, and if the Contractor, assignee, or exclusive licensee refuses such a request the Federal agency has the right to grant such a license itself if the Federal agency determines that-- (1) Such action is necessary because the Contractor or assignee has not taken, or is not expected to take within a reasonable time, effective steps to achieve practical application of the subject invention in such field of use; (2) Such action is necessary to alleviate health or safety needs which are not reasonably N00178-03-C-1013 Page 25 of 26 - -------------------------------------------------------------------------------- satisfied by the Contractor, assignee, or their licensees; (3) Such action is necessary to meet requirements for public use specified by Federal regulations and such requirements are not reasonably satisfied by the Contractor, assignee, or licensees; or (4) Such action is necessary because the agreement required by paragraph (i) of this clause has not been obtained or waived or because a licensee of the exclusive right to use or sell any subject invention in the United States is in breach of such agreement. (k) Special provisions for contracts with nonprofit organizations. If the Contractor is a nonprofit organization, it agrees that-- (1) Rights to a subject invention in the United States may not be assigned without the approval of the Federal agency, except where such assignment is made to an organization which has as one of its primary functions the management of inventions; provided, that such assignee will be subject to the same provisions as the Contractor; (2) The Contractor will share royalties collected on a subject invention with the inventor, including Federal employee co-inventors (when the agency deems it appropriate) when the subject invention is assigned in accordance with 35 U.S.C. 202(e) and 37 CFR 401.10; (3) The balance of any royalties or income earned by the Contractor with respect to subject inventions, after payment of expenses (including payments to inventors) incidental to the administration of subject inventions will be utilized for the support of scientific research or education, and (4) It will make efforts that are reasonable under the circumstances to attract licensees of subject inventions that are small business firms, and that it will give a preference to a small business firm when licensing a subject invention if the Contractor determines that the small business firm has a plan or proposal for marketing the invention which, if executed, is equally as likely to bring the invention to practical application as any plans or proposals from applicants that are not small business firms; provided, that the Contractor is also satisfied that the small business firm has the capability and resources to carry out its plan or proposal. The decision whether to give a preference in any specific case will be at the discretion of the contractor. However, the Contractor agrees that the Secretary of Commerce may review the Contractor's licensing program and decisions regarding small business applicants, and the Contractor will negotiate changes to its licensing policies, procedures, or practices with the Secretary of Commerce when the Secretary's review discloses that the Contractor could take reasonable steps to more effectively implement the requirements of this subparagraph (k)(4). (1) Communications. The contractor shall report inventions in accordance with DFARS 252.227-4039 incorporated by reference in this contract. N00178-03-C-1013 Page 26 of 26 - -------------------------------------------------------------------------------- 52.252-2 CLAUSES INCORPORATED BY REFERENCE (FEB 1998) - ----------------------------------------------------- This contract incorporates one or more clauses by reference, with the same force and effect as if they were given in full text. Upon request, the Contracting Officer will make their full text available. Also, the full text of a clause may be accessed electronically at this/these address(es). http://www.arnet.gov/far/ http://www.acq.osd.mil/dp/dars/dfars 52.252-6 AUTHORIZED DEVIATIONS IN CLAUSES (APR 1984) - ---------------------------------------------------- (a) The use in this solicitation or contract of any Federal Acquisition Regulation (48 CFR Chapter 2) clause with an authorized deviation is indicated by the addition of "(DEVIATION)" after the date of the clause. (b) The use in this solicitation or contract of any DFARS (48 CFR Chapter 2) clause with an authorized deviation is indicated by the addition of "(DEVIATION)" after the name of the regulation. 252.235-7010 Acknowledgment of Support and Disclaimer. (MAY 1995) - ----------------------------------------------------------------- (a) The Contractor shall include an acknowledgment of the Government's support in the publication of any material based on or developed under this contract, stated in the following terms: This material is based upon work supported by the Naval Surface Warfare Center, Dahlgren Division under Contract Number N00178-03-C-1013. (b) All material, except scientific articles or papers published in scientific journals, must, in addition to any notices or disclaimers by the Contractor, also contain the following; disclaimer: Any opinions, findings and conclusions or recommendations expressed in this material are those of the author(s) and do not necessarily reflect the mews of the Naval Surface Warfare Center, Dahlgren Division. SECTION J - LIST OF DOCUMENTS, EXHIBITS, AND OTHER ATTACHMENTS - -------------------------------------------------------------- CLAUSES INCORPORATED BY FULL TEXT Ddl-J10 LIST OF ATTACHMENTS - --------------------------- Attachment J.1 - Contract Data Requirements List. DD1423 CONTRACT DATA REQUIREMENTS LIST A. CONTRACT LINE ITEM NO. SEE 16 B. EXHIBIT C. CATEGORY D. SYSTEM/ITEM Small Business Innovation Research E. CONTRACT/PR NO. N00178-03-C-1013 F. CONTRACTOR ASI Technology Corporation - -------------------------------------------------------------------------------- 1. DATA ITEM NO. A001 2. TITLE OF DATA ITEM Status Report 3. SUBTITLE Phase I Monthly Status Report 4. AUTHORITY DI-MGMT-80368 5. CONTRACT REFERENCE 6. REQUIRING OFFICE NSWCDD Code B04-SBIR 7. DD 250 REQ. LT 8. APP CODE -- 9. DIST STATEMENT REQUIRED B 10. FREQUENCY MTHLY 11. AS OF DATE SEE 16 12. DATE OF FIRST SUBMISSION 35 DAC 13. DATE OF SUBSEQUENT SUBMISSION SEE 16 - -------------------------------------------------------------------------------- 14. DISTRIBUTION a. ADDRESSEE b. COPIES Draft Final Reg Report TPOC 0 1 0 Dr. Michael Arthur NSWCDD Procurement Div. 0 1 0 Salisbury/SDS11C ATL TPOC 0 1 0 If Identified PEO SPONSOR 0 1 0 Douglas Marker 15. TOTAL 4 - -------------------------------------------------------------------------------- 16. REMARKS Monthly Status Report. Report, signed by a Corporate Officer, to be delivered 35 days after beginning of contract and every month thereafter. Cost based on contractor format is acceptable. CI-MGMT-80368 Section 10.2.2.3 is not required. Address all work (conducted or completed) during the report period, include a point of contact for additional information. Inventions and Computer programs originating during the report period shall be identified in the report; if none are originated, a statement to that effect shall be made. Submit the report with the above Block 3 Subtitle, the Contract Number, and the report submission date. Block A and 5: Applied to all CLINS and sub-CLINS which reference CDRL A001. Block 9: Distribution statement B applies - "Distribution authorized to US Government agencies only. Other requests for this document must be referred to NSWCDD/B04"; to protect information not owned by the US Government and protected by a SBIR Contractor's "Limited Rights" as described in the SBIR Solicitation. Date of Limited Rights determination is the date of Contractor's proposal to employ proprietary information in the conduct of a SBIR contract. G. PREPARED BY C.S. STOUT, B049 H. DATE I. APPROVED BY R.G. VERMILLION, B04 J. DATE CONTRACT DATA REQUIREMENTS LIST A. CONTRACT LINE ITEM NO. SEE 16 B. EXHIBIT C. CATEGORY D. SYSTEM/ITEM Small Business Innovation Research E. CONTRACT/PR NO. N00178-03-C-1013 F. CONTRACTOR ASI Technology Corporation - -------------------------------------------------------------------------------- 1. DATA ITEM NO. A002 2. TITLE OF DATA ITEM Contract Summary Report 3. SUBTITLE Phase I Preliminary Report 4. AUTHORITY DI-ADMN 80447 5. CONTRACT REFERENCE 6. REQUIRING OFFICE NSWCDD Code B04-SBIR 7. DD 250 REQ. LT 8. APP CODE -- 9. DIST STATEMENT REQUIRED B 10. FREQUENCY OTIME 11. AS OF DATE 12. DATE OF FIRST SUBMISSION 30 DPCC 13. DATE OF SUBSEQUENT SUBMISSION NONE - -------------------------------------------------------------------------------- 14. DISTRIBUTION a. ADDRESSEE b. COPIES Draft Final Reg Report TPOC 0 3 0 Dr. Michael Arthur ATL TPOC 0 1 0 If Identified NSWCDD Procurement Div. Salisbury/XDS11C Letter of Transmittal Only 15. TOTAL 4 - -------------------------------------------------------------------------------- 16. REMARKS Phase I Preliminary Report. Preliminary Report to be delivered 30 calendar prior to completion of contract. Block 3: Preliminary report shall be a draft of CDRL A003 "Final Report", outlining and synopsizing the critical information to be presented in the Final Report, and shall be submitted expressly for COTR Comment. Identification of all Technical Data Rights to be claimed by the Contractor and preserved for the Government shall be included in this draft report. Block A and 5: Applies to all CLINS and sub-CLINS which reference CDRL A002. Block 9: Distribution statement B applies - "Distribution authorized to US Government agencies only. Other requests for this document must be referred to NSWCDD/B04"; to protect information not owned by the US Government and protected by a SBIR Contractor's "Limited Rights" as described in the SBIR Solicitation. Date of Limited Rights determination is the date of Contractor's proposal to employ proprietary information in the conduct of a SBIR contract. G. PREPARED BY C.S. STOUT, B049 H. DATE I. APPROVED BY R.G. VERMILLION, B04 J. DATE CONTRACT DATA REQUIREMENTS LIST A. CONTRACT LINE ITEM NO. SEE 16 B. EXHIBIT C. CATEGORY D. SYSTEM/ITEM Small Business Innovation Research E. CONTRACT/PR NO. N00178-03-C-1013 F. CONTRACTOR ASI Technology Corporation - -------------------------------------------------------------------------------- 1. DATA ITEM NO. A003 2. TITLE OF DATA ITEM Contract Summary Report 3. SUBTITLE Phase I Final Report 4. AUTHORITY DI-ADMN-80447 5. CONTRACT REFERENCE 6. REQUIRING OFFICE NSWCDD Code B04-SBIR 7. DD 250 REQ. DD 8. APP CODE A 9. DIST STATEMENT REQUIRED C 10. FREQUENCY OTIME 11. AS OF DATE 12. DATE OF FIRST SUBMISSION CC 13. DATE OF SUBSEQUENT SUBMISSION 15 DARC - -------------------------------------------------------------------------------- 14. DISTRIBUTION a. ADDRESSEE b. COPIES Draft Final Reg Report TPOC 0 5 0 Dr. Michael Arthur ATL TPOC 0 2 0 If Identified NSWCDD Code B04-SBIR Attn: R. Vermillion 0 1 0 NSWCDD Procurement Div. 0 0 0 Salisbury/XDS11C Letter of Transmittal Only Salisbury/XDS11C SPONSOR 0 1 0 Richard Milligan 15. TOTAL 9 - -------------------------------------------------------------------------------- 16. REMARKS Phase I Final Report. Report to be delivered at completion of contract. Block 3: Typed report, with cover page bearing: the Block 3 Subtitle; the Contract Number; the SBIR Topic Number; and the report submission date. Report shall include a single page project summary per SBIR Program Solicitation paragraph entitled "Reports" providing the inception dates of each Invention and Computer Program originating under the contract, and provide respective patent and copyright application data. Report body shall present the work completed in sufficient detail to permit independent verification of the results obtained; shall detail major accomplishments and Phase III transition plans (including patent and copyright applications); and shall cite applicable prior and existing Technical Data Rights utilized in performance of the Contract (if any). Block A and 5: Applies to all CLINS and sub-CLINS which reference CDRL A004. Block 8: Approval will be based on compliance with work statement requirements and technical content. Block 9: Distribution statement B applies - "Distribution authorized to US Government agencies only. Other requests for this document must be referred to NSWCDD/B04"; to protect information not owned by the US Government and protected by a SBIR Contractor's "Limited Rights" as described in the SBIR Solicitation. Date of Limited Rights determination is the date of Contractor's proposal to employ proprietary information in the conduct of a SBIR contract. G. PREPARED BY C.S. STOUT, B049 H. DATE I. APPROVED BY R.G. VERMILLION, B04 J. DATE CONTRACT DATA REQUIREMENTS LIST A. CONTRACT LINE ITEM NO. SEE 16 B. EXHIBIT C. CATEGORY D. SYSTEM/ITEM Small Business Innovation Research E. CONTRACT/PR NO. N00178-03-C-1013 F. CONTRACTOR ASI Technology Corporation - -------------------------------------------------------------------------------- 1. DATA ITEM NO. A004 2. TITLE OF DATA ITEM Report of Invention and Disclosure 3. SUBTITLE Patent Application for Invention 4. AUTHORITY "37-CFR Chapter 1" 5. CONTRACT REFERENCE SEE BLOCK 16 6. REQUIRING OFFICE NSWCDD Code B04-SBIR 7. DD 250 REQ. LT 8. APP CODE A 9. DIST STATEMENT REQUIRED B 10. FREQUENCY ONE/R 11. AS OF DATE 12. DATE OF FIRST SUBMISSION See Blk 16 13. DATE OF SUBSEQUENT SUBMISSION 15 DARC - -------------------------------------------------------------------------------- 14. DISTRIBUTION a. ADDRESSEE b. COPIES Draft Final Reg Report TPOC 0 1 0 NSWCDD Code B04-SBIR Attn: R. Vermillion 0 1 0 NSWCDD Procurement Div. Letter of Transmittal Only Salisbury/XDS11C 15. TOTAL 2 - -------------------------------------------------------------------------------- 16. REMARKS Block 3: A Patent application prepared in accordance with the Rules of Practice of the United States Patent and Trademark Office (PTO) (as set forth in 37 CFR Chapter 1), including Specification, Drawings, Abstract, and one or more Claims, together with an appropriate declaration executed by the inventor or inventors, all in accordance with 37 CFR. The Patent Application shall be accompanied by one of the two instruments described below: 1. An assignment of the invention by the Contractor to the Government of the United States of America as represented by the Secretary of the Navy shall be delivered to the Contracting Officer upon exercise of the Contractor's election under FAR 52.227-11 to not apply to the PTO for Patent (the Government applies for patent and you receive use license). 2. A confirmatory instrument identifying the Patent by PTO application serial number and filing date and confirming nonexclusive, non transferable, irrevocable, paid-up license to practice or have practiced the invention for or on behalf of the United States, and also granting the Government in irrevocable power to inspect and make copies of the application and related papers in the PTC, shall be delivered to the Contracting Officer upon exercise of the Contractor's selection under FAR 52.227-11 to apply to the PTO for Patent. (The Government received license to use your Patent.) Block A and 5: Applies to all CLINS and sub-CLINS which reference CDRL A004. Block 9: Distribution statement B applies - "Distribution authorized to US Government agencies only. Other requests for this document must be referred to NSWCDD/B04"; to protect information not owned by the US Government and protected by a SBIR Contractor's "Limited Rights" as described in the SBIR Solicitation. Date of Limited Rights determination is the date of Contractor's proposal to employ proprietary information in the conduct of a SBIR contract. Block 12: per FAR 52 G. PREPARED BY C.S. STOUT, B049 H. DATE I. APPROVED BY R.G. VERMILLION, B04 J. DATE CONTRACT DATA REQUIREMENTS LIST A. CONTRACT LINE ITEM NO. SEE 16 B. EXHIBIT C. CATEGORY D. SYSTEM/ITEM Small Business Innovation Research E. CONTRACT/PR NO. N00178-03-C-1013 F. CONTRACTOR ASI Technology Corporation - -------------------------------------------------------------------------------- 1. DATA ITEM NO. A005 2. TITLE OF DATA ITEM Contract Summary Report 3. SUBTITLE Phase II Plan 4. AUTHORITY DI-ADMN 80447 5. CONTRACT REFERENCE 6. REQUIRING OFFICE NSWCDD, Code B04-SBIR 7. DD 250 REQ. LT 8. APP CODE 9. DIST STATEMENT REQUIRED B 10. FREQUENCY OTIME 11. AS OF DATE 12. DATE OF FIRST SUBMISSION See 16 13. DATE OF SUBSEQUENT SUBMISSION NONE - -------------------------------------------------------------------------------- 14. DISTRIBUTION a. ADDRESSEE b. COPIES Draft Final Reg Report TPOC 0 3 0 Dr. Michael Arthur NSWCDD Code B04-SBIR Attn: R. Vermillion 0 1 0 NSWCDD Procurement Div. Letter of Transmittal Only Salisbury/XDS11C ALT TPOC 0 2 0 If Identified DIV Sponsor 0 2 0 If Identified 15. TOTAL 8 - -------------------------------------------------------------------------------- 16. REMARKS The 5 Page Phase II plan to be delivered 120 days after contract award is used to gain a better understanding of what the SBIR contractor plans to accomplish under a Phase II effort. This plan along with the Phase I final report will be used to decide whether or not a full Phase II proposal will be requested. The following should be used as a format for the 5 Page Phase II Plan: 1. The cover (which will not count as a page) should have the Proposal Title, Principal Investigator, (with phone and E-mail), Phase I contract #, Phase I award start and end dates, Indication of whether a Phase I option was awarded under the current contract and the name of the Government Technical Monitor. 2. The body of plan you should include all of the following: a brief reference of the relevant Phase I solicitation topic and technical objective, a detailed description of the proposed Phase II objective, work plan, anticipated benefits, transition plans, commercialization applications, any matching dollars that will be applied to the Phase II effort, qualifications of key personnel, proposed facilities/equipment, and estimated costs. The potential to transition the technology into the Navy fleet is a critical evaluation criteria. Your detailed plans describing how the technology will be transitioned along with your success in transition past SBIR/STTR or other work will be included as part of this evaluation. 3. You may include also include discussions of related work and the companies ability to successful transition other efforts, but this will be included as part of the 5 page limit. 4. You may attach letters of endorsement from within the DOD or private sector which discuss the direct benefit of the technology to them and their intent of follow on funding either during Phase II or under a Phase III award. Letters of endorsement are strongly encouraged and are important to show a clear Navy need for the technology and an indication from the transition partners that they are on board and support the technology. Letters of endorsement will not be counted towards your 5 page limit. Block A and 5: Applies to all CLINS and sub-CLINS which reference CDRL A005. G. PREPARED BY C.S. STOUT, B049 H. DATE I. APPROVED BY R.G. VERMILLION, B04 J. DATE EX-10.33 8 markland_ex10-33.txt EXHIBIT 10.33 AWARD/CONTRACT PAGE OF PAGES 1 | 50 1. THIS CONTRACT IS A RELATED ORDER UNDER DPAS (15 CFR 350) RATING DO-C9E - -------------------------------------------------------------------------------- 2. CONTRACT (PROC. INST. IDENT.) N00164-01-D-0042 - -------------------------------------------------------------------------------- 3. EFFECTIVE DATE 27 September 2001 - -------------------------------------------------------------------------------- 4. REQUISITION/PURCHASE REQUEST/PROJECT NO. See Individual Delivery Orders - -------------------------------------------------------------------------------- 5. ISSUED BY CODE N00164 CONTRACTING OFFICER, NSWC CRANE 300 HWY 361 CRANE IN 47522-5001 ATTN: M Siddons 812 854-3856 - -------------------------------------------------------------------------------- 6. ADMINISTERED BY (IF OTHER THAN ITEM 6) CODE S2101A DCM BALTIMORE 217 E REDWOOD STREET, SUITE 1800 BALTIMORE MD 21202-5299 ATTN: G Ropiski 410 962-9257 - -------------------------------------------------------------------------------- 7. NAME AND ADDRESS OF CONTRACTOR (NO., STREET, CITY, COUNTY STATE AND ZIP CODE) SCIENCE AND TECHNOLOGY RESEARCH INC 10075 TYLER PLACE, SUITE 17 IJAMSVILLE MD 21754 ATTN Ed Kessler 540 752-8080 - -------------------------------------------------------------------------------- 8. DELIVERY [ ] FOB Origin [X] Other (see below) - -------------------------------------------------------------------------------- 9. DISCOUNT FOR PROMPT PAYMENT NONE - -------------------------------------------------------------------------------- 10. SUBMIT INVOICES (4 COPIES UNLESS OTHERWISE SPECIFIED) TO THE ADDRESS SHOWN IN ITEM SEE SECTION "G" HEREIN - -------------------------------------------------------------------------------- CODE OXNU6 - -------------------------------------------------------------------------------- 11. SHIP TO/MARK FOR CODE N00164 RECEIVING OFFICER MARK FOR: NSWC CRANE S CLARK/805 300 HWY 361 BLDG 3324 CRANE IN 47522-5001 - -------------------------------------------------------------------------------- 12. PAYMENT WILL BE MADE BY CODE HQ0338 DFAS-COLUMBUS CENTER DFAS-CO SOUTH ENTITLEMENT PO BOX 182264 COLUMBUS OH 43218-2264 - -------------------------------------------------------------------------------- 13. AUTHORITY FOR OTHER THAN FULL AND OPEN COMPETITION [X] 10 U.S.C. 2304(c)(5) [ ] 41 U.S.C. 253(c)( ) - -------------------------------------------------------------------------------- 14. ACCOUNTING AND APPROPRIATION DATA SEE INDIVIDUAL DELIVERY ORDERS - -------------------------------------------------------------------------------- 15A. ITEM NO. 15B. SUPPLIES/SERVICES 0001 SHIP ACADA IAW SECTION "C" HEREIN 0002 PROVISION ITEM ORDER 0003 DATA IAW DD1423s - -------------------------------------------------------------------------------- 15C. QUANTITY 0001 0002 0003 MIN: 362 TBD 1 MAX: 1,000 15D. UNIT EA EA TBD EA 15E. UNIT PRICE SEE PRICES HEREIN TBD NSP 15F. AMOUNT TBD NSP MAXIMUM - -------------------------------------------------------------------------------- 15G. TOTAL AMOUNT OF CONTRACT: $39,082,526.00 - -------------------------------------------------------------------------------- 16. Table of Contents SEC DESCRIPTION PAGE(S) PART I - THE SCHEDULE X A SOLICITATION/CONTRACT FORM 1 X B SUPPLIES OR SERVICES AND PRICES/COSTS 2 X C DESCRIPTION/SPECS./WORK STATEMENT 3-15 X D PACKAGING AND MARKING 16-17 X E INSPECTION AND ACCEPTANCE 18-19 X F DELIVERIES OR PERFORMANCE 20-21 X G CONTRACT ADMINISTRATION DATA 22-24 X H SPECIAL CONTRACT REQUIREMENTS 25 PART II - CONTRACT CLAUSES X I CONTRACT CLAUSES 26-49 PART III - LIST OF DOCUMENTS, EXHIBITS & ATTACHMENTS X J LIST OF ATTACHMENTS 50 PART IV - REPRESENTATIONS AND INSTRUCTIONS K REPRESENTATIONS, CERTIFICATIONS OTHER STATEMENTS OF OFFERORS L INSTRS. CONDS., AND NOTICES TO M EVALUATION FACTORS FOR AWARD CONTRACTING OFFICER WILL COMPLETE ITEM 17 OR 18 AS APPLICABLE - -------------------------------------------------------------------------------- 17. [X] CONTRACTOR'S NEGOTIATED AGREEMENT (Contractor is required to sign this document and return 1 copies to issuing office). Contractor agrees to furnish and deliver all items or perform all services set forth or otherwise identified above and on any continuation sheets for the consideration stated herein. The rights and obligations of the parties to this contract shall be subject to and governed by the following documents; (a) this award/contract, (b) the solicitation, if any, and (c) such provisions, representations, certifications, and specifications, as are attached or incorporated by reference herein. (Attachments are listed herein.) - -------------------------------------------------------------------------------- 18. [ ] AWARD (Contractor is not required to sign this document). Your offer on solicitation number including the additions or changes made by you which additions or changes set forth in full above, is hereby accepted as to items listed above and on any continuation sheets. This award consummates the contract which consists of the following documents: (a) the Government's solicitation and your offer, and (b) this award/contract. No further contractual document is necessary. - -------------------------------------------------------------------------------- 19A. NAME AND TITLE OF SIGNER (TYPE OR PRINT) Edward L. Kessler General Manager - -------------------------------------------------------------------------------- 19B. NAME OF CONTRACTOR ASI TECHNOLOGY CORPORATION BY /s/ Edward L. Kessler --------------------------------------- (Signature of person authorized to sign) - -------------------------------------------------------------------------------- 19C. DATE SIGNED 22 Oct 01 - -------------------------------------------------------------------------------- 20A. NAME OF CONTRACTING OFFICER MARY E SHEETZ/CONTRACTING OFFICER - -------------------------------------------------------------------------------- 20B. UNITED STATES OF AMERICAN BY /s/ Mary E. Scheetz ---------------------------------- (Signature of Contracting Officer) - -------------------------------------------------------------------------------- 20C. DATE SIGNED 30 Oct 01 - -------------------------------------------------------------------------------- N00164-01-D-0042 PAGE 2 OF 50 SECTION "B" LOT II AWARDED 0001 Shipboard Automatic Chemical Agent Detector and Alarm (ACADA) systems manufactured in accordance with (IAW) Product Specification PS/01/88551002, NAVSEA Drawing 53711-7344570, Technical Manual SW073-AF-MMO Shipboard ACADA Systems Production Units, and as delineated in Statement of Work Paragraph 3.2.5.1 herein CONTRACT MINIMUM QUANTITY 362 each CONTRACT MAXIMUM QUANTITY 1,000 each Shipboard ACADA YEAR 1 Price YEAR 2 Price YEAR 3 Price Production Units, same Each Each Each as CLIN 0001. Order Quantity 1-49 each $29,414.00 $47,795.00 $49,657.00 Order Quantity 50-150 $27,705.00 $33,161.00 $34,634.00 Order Quantity 151-300 $22,476.00 $24,984.00 $26,078.00 Order Quantity 301-400 $21,708.00 $24,074.00 $25,071.00 Order Quantity 401-600 $20,783.00 $22,938.00 $24,107.00 Order Quantity 601-70 $20,284.00 $22,386.00 $23,344.00 0002 PROVISION ITEM ORDER FOR SHIP ACADA TBD TBD TBD TBD *Quantities and Prices to be established prior to any order for this CLIN. Estimated maximum amount is Not to exceed $950,000.00 0003 DATA IAW DD1423 is section "J". 1 LO NSP NSP For stair step pricing the quantity pricing is the total quantity for all orders issued on a given day. Pricing will be based on the unit price for the quantity required in the year in which the order is placed. If cumulative price is applicable so indicate SECTION "B" NOTES: SECTION "K" of Request For Proposal (RFP) N00164-01-R-0117 is hereby incorporated by reference and made 2 material part of this contract in accordance with FAR 15.406-1(b). N00164-01-D-0042 PAGE 3 OF 50 SECTION "C" - DESCRIPTION/SPECIFICATIONS/WORK STATEMENT SHIPBOARD AUTOMATIC CHEMICAL DETECTOR and ALARM (Shipboard ACADA) MK 27 MOD 0 STATEMENT OF WORK 1.0 SCOPE. This statement of work establishes the requirements for the manufacture, operation, test and acceptance of the Shipboard Automatic Chemical Agent Detector and Alarm (Shipboard ACADA, MK 27 MOD 0) hereinafter referred to as Shipboard ACADA. 1.1 BACKGROUND. Shipboard ACADA is a man-portable point detection system used by U.S Naval forces to detect and alarm for chemical-agent vapor contamination of the air in interior and exterior spaces of the ship. It responds to nerve (G, V) and blister (H) chemical warfare agents. The most important operational feature of Shipboard ACADA is that it monitors the ship's interior ambient air in real time and detects agents at low concentrations while ignoring the presence of common Shipboard interferents. Audible and visual alarm occurs in less than 60 sec. 2.0 APPLICABLE DOCUMENTS. 2.1 SPECIFICATIONS AND STANDARDS. The following specifications and standards form a part of this document to the extent specified herein. Unless otherwise specified, the issues of these documents are those listed in the latest issue of the Department of Defense Index of Specifications and Standards (DODISS) and supplement thereto, cited in the solicitation. Military Specifications. MIL-P-116 Preservation, Methods of. MIL-S-901 Shock Test, H.I. (High Impact); Shipboard Machinery, Equipment And Systems, Requirements for MIL-E-17555 Electronic and Electrical Equipment Accessories, and Provisioned Items (Repair Parts); Packaging of MIL-STD-129 Marking for Shipment and Storage MIL-STD-167-1 Mechanical Vibrations of Shipboard Equipment (Type I - Environmental And Type 11- Internally Excited) MIL-STD-461 Requirements for the Control of Electromagnetic Interference Emission and Susceptibility MIL-STD-462 Electromagnetic Interference Characteristics, Measurement of MIL-STD-882 System Safety Program Requirements N00164-01-D-0042 PAGE 4 OF 50 2.2 OTHER GOVERNMENT DOCUMENTS. The following Government documents form a part of this statement of work to the extent specified herein. DRAWING ------- NAVAL SEA SYSTEMS COMMAND (NAVSEA) 53711 - 7344570 Shipboard Automatic Chemical Agent Detector and Alarm PRODUCT SPECIFICATION --------------------- PS/01/8855/002 Shipboard Automatic Chemical Agent Detector and Alarm, Product Specification PUBLICATION ----------- SW073-AF-MMO-010 / MK 27 MOD 0 Shipboard Automatic Chemical Agent Detector and Alarm, Technical Manual 2.3 NON-GOVERNMENT PUBLICATIONS. The following document(s) form a part of this document to the extent specified herein. American Society for Testing and Materials (ASTM) ASTM 6 117 Standard Practice for Operating Salt Spray (Fog) Testing Apparatus (Applications for copies should be addressed to the American Society for Testing and Materials, 1916 Race Street, Philadelphia, PA 19103-1187.) International Organization for Standardization (ISO) ISO 9001 Quality systems - Model for quality assurance in design, development, production, installation and servicing. (Applications for copies should be addressed to International Organization for Standardization, Case Postal 56, CH-1211 Geneva 20, Switzerland.) 2.4 SOFTWARE. The following software will be provided to the contractor by the contracting agency (GFI). DRAWING NAVAL SEA SYSTEMS COMMAND (NAVSEA) 53711-7344557 - Software Program, Eprom SACADADSP.B3 53711-7343958 - Soft Program, Troubleshooting/Signature, Detection Unit (PC Based) 53711-7344562 - Software Program, PAL SACADA.JED 53711-7344558 - Software Program, Eprom SACADADSP.B2 N00164-01-D-0042 PAGE 5 OF 50 53711-7344559 - Software Program, Eprom SACADCDSP.B1 53711-7344560 - Software Program, Eprom SACADADSP.B0 53711-7344561 - Software Program Eprom SACADAMICRO.HEX 53711- 7497300 - Software Program, PAL, Battery Box 53711-7497299 - Software Program, Eprom, Battery Box 53711-7497298 - Microcircuit, Programmed, PAL, Battery Box 53711-7497297 - Microcircuit, Programmed, Eprom, Battery Box 3.0 REQUIREMENTS. 3.1 GENERAL. The work required by this contract shall be performed in accordance with the NAVSEA Drawing 53711-7344570, Shipboard ACADA Product Specification (PS/01/8855/002), Technical Manual (SW073-AF-MMO-010/MK 27 MOD 0) and this Statement of Work (SOW). The contractor shall fabricate and test first article and production units as listed in Section C of this contract to meet the performance criteria specified in Product Specification PS101/88551002 and the detailed requirements of paragraph 3.2.1 through 3.2.9. For all production units, If the performance criteria are not met, NSWC Crane procuring contracting Officer shall be notified, and a determination will be made regarding the cause of the performance failure. If the performance failure is determined to be caused by a defective drawing, a change to the drawing package will be implemented in accordance with the Engineering Change Proposal DD Form 1423 A009 herein. In the event the performance failure is determined to be caused by the failure of the Contractor to manufacture the unit in accordance with the Government drawing package, NAVSEA 53711-7343940, acceptance/rejection of the failed unit will be in accordance with the terms and conditions of the contract. The contractor shall provide program management in accordance with the detailed requirements of 3.2.10 below. The following changes to NAVSEA Top Drawing Number 53711-7344570 referenced above: Note: Drawing Number 53711-7343940, Power Supply Assembly, Parts List Find No. 1 is changed from 53711-7243941 to 53711-7343941. This correction will be updated in the next drawing revision. Note: Drawing Number 53711-734450, Automatic Chemical Agent Detector Alarm, Parts List Find No. 2 is changed from 53711-7243940 to 53711-7343940. This correction will be updated in the next drawing revision. 3. 1.1 LICENSING. The contractor shall be required to deliver the Shipboard ACADA System as an exempt -Item. That is, an item incorporating a gas and aerosol detector, containing byproduct radioactive N00164-01-D-0042 PAGE 6 OF 50 material, such that any person using the Shipboard ACADA System is exempt from the U.S. Nuclear Regulatory Commission's (NRC) regulatory requirements. Fabrication, initial distribution, and use of devices containing radioactive - -material is regulated by the NRC. The contractor/manufacturer would be expected to obtain all appropriate NRC licenses to manufacture and distribute the gas and aerosol detector. Delivery (distribution) of the gas and aerosol detector must be in accordance with the Title 10, Code of Federal Regulations Parts 30 and 32, in particular ss.30.20 and ss.32.26. 3.2 DETAIL TASKS: 3.2.1 FABRICATION. The contractor shall use the furnished Technical Data Package (Top Drawing Number 53711-7344570), Product Specification (PS/01/8855/002) and the Technical Manual (SW073-AF-MMO-010 / MK 27 MOD 0) to produce the required first article test units and production units. 3.2.2 ON-BOARD SPARES. The contractor shall provide one (1) lot of on-board spares for each system. Each lot shall consist of the following: Item P/N or NSN Quantity - ---- ---------- -------- Desiccant Filter Assembly 53711-7243490 3 ea. Purge Filters NSN 4240-01-206-1077 6 ea. Power Supply Assembly 53711-7343940 1 ea. Particulate Filters NSN 6640-01-323-5141 10 ea. Tefzel Tubing 250 X.031 NAT EFTE 5 Ft 3.2.3 TEST AND EVALUATION. The contractor shall conduct and evaluate the results of performance and quality conformance tests on production units to demonstrate full compliance of all equipment and software with PS/01/8855/002. 3.2.3.1 REFURBISHMENT OF FIRST ARTICLE UNITS. After successful completion and approval of first article testing, first article units shall be refurbished as necessary to meet all operational requirements. Any Shipboard ACADA component that has been live agent tested must be certified to be no less than "XXX" (Triple X) clean as specified in U.S. Army Regulation, AR 385-61, 3 Nov 1992. Each first article component shall have a permanent label affixed indicating "First Article Test (FAT) Equipment. Not for shipboard installation." After refurbishment and labeling, the items shall be prepared for delivery as directed in the contract and delivered to the Contracting Activity. 3.2.4 INSPECTION. Unless otherwise specified in the contract, the contractor is responsible for the performance of all inspection requirements (examinations and tests) as specified in PS/01/8855-002. Except as otherwise specified in the contract, the contractor may use his own or any other facilities suitable for the performance of the inspection requirements specified herein, acceptable to the Government. The Government reserves the right to perform any of the inspections set forth in PS/01/8855/002 where such inspections are deemed necessary to ensure supplies and services on form to prescribed requirements. N00164-01-D-0042 PAGE 7 OF 50 3.2.4.1 INSPECTION LOTS. Inspection lots shall be one complete ship system as described in paragraph 2 of PS/01/88551002. 3.2.4.2 INSPECTION AND TEST REPORTS. The contractor shall document the results of all examinations and tests performed on the contract items and provide objective quality evidence that the required inspections and tests have complied with the requirements, specifications, and standards set forth in the contract. 3.2.4.3 FIRST ARTICLE INSPECTION AND TEST. FIRST ARTICLE REQUIREMENTS WAIVED 3.2.4.4 QUALITY CONFORMANCE INSPECTION. The quality conformance inspection shall verify that all applicable characteristics of sections 3 and 5 of PS/01/8855/002 and this contract have been met. The Shipboard ACADA shall be inspected and tested in the sequence specified in Table 7.1. 3.2.5 PREPARATION FOR DELIVERY. 3.2.5.1 SYSTEMS. The complete Shipboard ACADA is intended for shipboard use. The complete Shipboard ACADA and accessories shall be packed in a single exterior container. Packing shall be to commercial standards, except that interior packaging of the major components shall be in accordance with MIL-E-17555, Level A. A complete Shipboard ACADA system (including spares listed in 3.2.2) and accessories consists of: Item P/N or NSN Quantity - ---- ---------- -------- Detector Unit (DU) 53711-7243432 1 ea. Power Supply Assembly 53711-7343940 2 ea. Desiccant Filter Assembly 53711-7243490 3 ea. Purge Filter Assembly 53711-7344584 1 ea. Purge Filters NSN 4240-01-206-1077 6 ea. Particulate Filter Assembly 53711-7343945 1 ea. Particulate Filters NSN 6640-01-323-5141 10 ea. Rain Hood Assembly 53711-7343944 1 ea. Wand Assembly 53711-7344583 1 ea. Unit container 53711-7537885 1 ea. Inlet Nozzle Lanyard 53711-7343946 1 ea. Exhaust Nozzle Lanyard 53711-7243943 1 ea. AC Power Cable 53711-7343949 1 ea. DU Power Cable 53711-7343948 1 ea. Tefzel Tubing .250 X .031 NAT EFTE 5 Ft Power Strip 1 ea. Carrying Strap 10899 1 ea. Simulent Tube NSN 6665-01-382-7081 1 ea. N00164-01-D-0042 PAGE 8 OF 50 3.2.5.2 COMPONENTS. Shipboard ACADA components shall be cleaned, preserved, and unit packaged, one item to a package to conform to MIL-E-17555, Level A protection requirements. Level A interior packaging of the components is necessary since some components are spared and are subject to user shipboard storage environments for extended periods. Unit packaging for items containing radioactive material shall conform to the special requirements of MIL-E-17555 pertaining to radioactive material. 3.2.5.3 CONTAINERS. Single Unit containers shall be of the reusable type similar to PIN D614-2281 (USN) vendor CAGE CODE U3092, or similar container approved by NSWC Crane, Code 805D, to facilitate storage on-board ship and for return of repairable items to a depot for maintenance. The Shipboard ACADA and accessories shall be packaged in the single unit container containing items fisted in 3.2.5.1, except for the spare Battery Box assembly, which will be unit packaged and included with the Shipboard ACADA system in the single exterior container. 3.2.5.4 ITEM (S) - DATA REQUIREMENTS (NAVSEA) (SEP 1992) The data to be furnished hereunder shall be prepared in accordance with the Contract Data Requirements List, DD Form 1423, Exhibit(s), attached hereto. 3.2.6 PHYSICAL CONFIGURATION AUDIT (PCA). The contractor shall accommodate government personnel in Physical Configuration Audit (PCA) of a production unit: at the Contractor's facility, from the first lot to be delivered in accordance with the contractor provided PCA Plan approved by NSWC Crane, Code 805D. The PCA shall be a formal examination of the as-built configuration against its design documentation. The contractor shall formally report the results of the PCA and prepare formal Engineering Change Proposals (ECPs) and Notice of Revisions (NORs) with supporting documentation for any required changes discovered during the process. NSWC Crane, Code 805D, shall approve any required changes. 3.2.6.1 REFURBISHMENT OF PCA UNIT(S). After successful completion and approval of the PCA, PCA units shall be refurbished as necessary to meet all operational requirements. After refurbishment, the item(s) shall be prepared for delivery as directed in the contract and delivered to the Contracting Activity. 3.2.7 TECHNICAL MANUALS. The contractor shall produce technical manuals from digital files provided by the contracting activity as Government Furnished Information. The contractor shall package one (1) technical manual with each system delivered. 3.2.8 PROVISIONING TECHNICAL DOCUMENTATION (PTD). The contractor shall provide PTD for all new and alternate parts or components that occur as a result of changes to the Technical Data Package (Top Drawing Number 53711-7344570). 3.2.9 PROGRAM PLANNING 3.2.9.1 PROGRAM MANAGEMENT. The contractor shall establish and maintain management operations including the following areas: N00164-01-D-0042 PAGE 9 OF 50 (a) Program Planning and Control (b) Subcontractor Control (c) Financial Management (d) Configuration Management (e) Management and Accountability for Government Furnished Equipment, Material or Information (f) Quality Assurance (g) Safety Program The contractor shall report progress in a manner continuously affording the Government visibility into the contractor's progress. The contractor shall participate in informal Integrated Product Teams (IPTs) and In-Progress Review (IPR) meetings weekly and an initial start of Work meeting. In support of this effort the Contractor is required to prepare meeting minutes. 3.2.9.2 CONFIGURATION MANAGEMENT. The contractor shall provide a configuration management plan 30 days after award of contract. The contractor may propose changes to the configuration baseline. When a change is being considered, the contractor shall submit Engineering Change Proposals (ECPs) with Notice of Revisions (NORs), Request for Deviations (RFDs), and/or Requests for Waivers (RFWs) as applicable, via DCMC to NSWC Crane. An ECP includes both engineering change and documentation by which a change is suggested and described. A RFD describes a proposed (prior to manufacture) departure from the configuration baseline for a specific number of units or for a specified period of time. A RFW is used to obtain authorization to deliver non-conforming material which does not meet the prescribed configuration documentation, but is suitable for use "as-is" or after repair. A NOR depicts changes that must be made to technical documentation controlled by another contractor or Government activity following approval of an ECP. No changes to the baseline shall be made unless approved by the Government in writing. ECPs shall be classified as Class I or Class II. The change shall be Class I if: a. The Functional Configuration is affected to the extent that any of the following requirements would be outside specified limits or specified tolerances: (1) Performance (2) Reliability, maintainability or survivability (3) Weight, balance, moment of inertia (4) Interface characteristics (5) Electromagnetic characteristics N00164-01-D-0042 PAGE 10 OF 50 b. A change to the Product Configuration documentation will affect the Functional configuration or will impact one or more of the following: (1) GFE (2) Safety (3) Compatibility or specified interoperability with interfacing Configuration Items (CI), support equipment or support software, spares, trainers or training devices/equipment/software (4) Configuration to the extent that retrofit action is required (5) Delivered operation and maintenance manuals for which adequate change/revision funding is not provided in existing contract (6) Preset adjustments or schedules affecting operating limits or performance to such extent as to require assignment of a new identification number (7) interchangeability, substitutability, or replaceability as applied to CI and to all subassemblies and parts except the pieces and parts of non-reparable subassemblies (8) Sources of CIs or repairable items at any level defined by source-control drawings (9) Skills, manning, training, biomedical factors or human-engineering design c. Any of the following contractual factors are affected: (1) Cost to the Government including incentives and fees (2) Contract guarantees or warranties (3) Contractual deliveries (4) Scheduled contract milestones An engineering change which impacts none of the Class I factors specified above shall be classified as Class II ECPs. 3.2.9.3 MANAGEMENT AND ACCOUNTABILITY FOR GOVERNMENT FURNISHED EQUIPMENT, MATERIAL OR INFORMATION. When the government furnishes equipment, material or information, the contractor's procedures shall include at least the following: (a) Examination upon receipt, consistent with practicality, to detect damage in transit; (b) Inspection for completeness and proper type; (c) Periodic inspection and precautions to assure adequate storage conditions and to guard against damage from handling and deterioration during storage; (d) Functional testing, either prior to or after installation, or both, as required by contract to determine satisfactory operation; Identification and protection from improper use or disposition; and (f) Verification of quantity. The contractor shall report to the government any government-furnished property found damaged, malfunctioning, or otherwise unsuitable for use. In the event of damage or malfunction during or after installation, the supplier shall determine and record probable cause and necessity for withholding material from use. N00164-01-D-0042 PAGE 11 OF 50 The contractor shall establish procedures for the adequate storage, maintenance, and inspection of government property. Records of all inspections and maintenance performed on property shall be maintained. These procedures and records shall be subject to review by the government. As used in the foregoing, the term "material" applies to government-furnished equipment to be installed in or furnished with the end item. The term "property" is government equipment that is used in the fabrication or assembly of the end item, and is not delivered as part of the end item. 3.2.9.4 QUALITY ASSURANCE The contractor shall establish, implement, document and maintain a Quality Assurance Program that ensures conformance to contractual requirements and meets the requirements of ANSI/ASQC Q9001, or an equivalent quality system model. 3.2.9.4.1 CALIBRATION AND INSTRUMENTATION. A calibration and maintenance program shall be established and maintained to assure the accuracy of measuring devices used in the performance of this program. Measuring devices include test and inspection equipment, test support equipment, interface gages, standards, and equipment controlling special processes. Measurement devices also include production tools, jigs and fixtures used to provide evidence of quality conformance. 3.2.9.5 SAFETY PROGRAM. A total safety system program shall be established and maintained to reflect the requirements of the production phase, using MIL-STD-882 as a guide. The contractor shall comply with all local, state and federal regulations regarding the handling and disposal of hazardous materials and waste. The contractor shall comply with all of Section 4 and Figure 1. Appendix A shall be used to prioritize hazards and determine the acceptable level of risks. 3.2.9.5.1 SAFETY ASSESSMENT REPORT (SAR). The contractor shall provide a Safety Assessment Report (SAR) poor to the first system test, the SAR shall utilize MIL-STD-882 as a guide. 3.2.9.5.2 TEST AND EVALUATION SAFETY. The contractor shall provide production test and evaluation safety for First Article and Production testing, utilizing MIL-STD-882 as a guide. 3.2.9.5.3 ENGINEERING CHANGE PROPOSALS AND DEVIATIONS/WAIVERS. The contractor shall determine the hazards and associated risks with Engineering Change Proposals (ECPs), Deviations and Waivers utilizing MIL-STD-882 Task 303 as a guideline. If the contractor determines that the proposed ECP, deviation, or waiver affects system safety, he shall include a description of the impact in the proposal. If he makes such a determination after submitting the documentation, he shall notify the Government in writing within 5 days of discovery. ITEM(S) - LOT 1 CLIN 0004 or LOT 11 CLIN 0003 - DATA REQUIREMENTS (NAVSEA) (SEP 1992)-(5402) The data to be furnished hereunder shall be prepared in accordance with the Contract Data ~ Requirements List, DD Form 1423, Exhibit(s), attached hereto. N00164-01-D-0042 PAGE 12 OF 50 ITEM(S) LOT I CLIN 0003 or LOT II CLIN 0002 - PROVISIONED ITEMS ORDER (NAVSEA) (APR 1999) - (5404) (a) General. The Contractor agrees that it will furnish the supplies or services ordered by the Government in accordance with the procedures specified herein. Orders may be placed by the Contracting Officer, Provisioning Activity or Administrative Contracting Officer as unilateral or bilateral modifications to this contract on SF 30, Amendment of Solicitation/Modification of Contract. Any amounts shown in Section B at time of award of the initial contract for each provisioned line item are estimated amounts only and are subject to upward or downward adjustment by the issuing activity. If no amounts are shown, funding will be obligated before or at time of order issuance. It is understood and agreed that the Government has no obligation under this contract to issue any orders hereunder. (b) Priced Orders. For each proposed order, the Contractor agrees that it will submit such cost or pricing data as the Contracting Officer may require. Promptly thereafter, the Contractor and the Contracting Officer shall negotiate the price and delivery schedule for the proposed order. Upon execution and receipt of the priced order, the Contractor shall promptly commence the work specified in the order. (c) Undefinitized Orders. Whenever the Contracting Officer determines that urgent demands or requirements prevent the issuance of a priced order, he/she may issue an unpriced order. Such order may be unilateral or bilateral and shall establish a limitation on Government liability, a maximum ceiling amount, and a schedule for definitization, as described in subparagraph (e)(2) below. Upon request the Contractor shall submit a maximum ceiling amount proposal before the undefinitized order is issued. The maximum ceiling amount is. the maximum price at which the order may be definitized. The Contractor shall begin performing the undefinitized order upon receipt, except as provided in paragraph (d)below. The clause entitled "CONTRACT DEFINITIZATION" (DFARS 252.217-7027) shall be included in any undefinitized order. (d) Rejection of Unilateral Orders. The Contractor may reject any unilateral order if the Contractor determines that it cannot feasibly perform the order, or if the Contractor does not concur with the maximum ceiling amount. However, each unilateral order shall be deemed to have been accepted by the Contractor unless within fifteen days of issuance of the order, the Contractor notifies the Contracting Officer in writing of its rejection of the order. (e) Definitization of Undefinitized Orders. (1) The Contractor agrees that following the issuance of an undefinitized order, it will promptly begin negotiating with the Contracting Officer the price and terms of a definitive order that will include: (A) all clauses required by regulation on the date of the order; (B) all clauses required by law on the date of execution of the definitive order; and, (C) any other mutually agreeable clauses, terms and conditions. No later than sixty (60) days after the undefinitized order is issued, the contractor agrees to submit a cost proposal with sufficient data to support the accuracy and derivation of its price; and, when required by FAR, cost or pricing data, including SF 1411. if additional cost information is available prior to the conclusion of negotiations, the Contractor shall provide that information to the Contracting Officer. The price agreed upon shall be set forth in a bilateral modification to the order. In no event shall the price exceed the maximum ceiling amount specified in the undefinitized order. (2) Each undefinitized order shall contain a schedule for definitization which shall include a target ate for definitization and dates for submission of a qualifying proposal, beginning of negotiations and, if appropriate, submission of make-or-buy and subcontracting plans and cost or pricing data. Submission N00164-01-D-0042 PAGE 13 OF 50 of a qualifying proposal in-accordance with the definitization schedule is a material element of the order, The schedule shall provide for definitization of the order by the earlier of: (i) a specified target date which is not more than 180 days after the issuance of the undefinitized order. However, that target date maybe extended by the Contracting Officer for up to 180 days after the Contractor submits a qualifying proposal as defined in DFARS 217.7401; or (ii) the date on which the amount of funds expended by the Contractor under the undefinitized order exceed fifty percent (50%) of the order's maximum ceiling amount, except as provided in subparagraph (f)(3) below. (3) If agreement on a definitive order is not reached within the time provided pursuant to subparagraph (e)(2) above, the Contracting Officer may, with the approval of the Head of the Contracting Activity, determine a reasonable price in accordance with Subpart 15.8 and Part 31 of the FAR, and issue a unilateral order subject to Contractor appeal as provided in the "DISPUTES" clause (FAR 52.233-1). In any event, the Contractor shall proceed with completion of the order, subject to the "LIMITATION OF GOVERNMENT LIABILITY" clause (FAR 52.216-24). (f) Limitation of Government Liability. (1) Each undefinitized order shall set forth the limitation of Government liability, which shall be the maximum amount that the Government will be obligated to pay the Contractor for performance of the order until the order is definitized. The Contractor is not authorized to make expenditures or incur obligations exceeding the limitation of Government liability set forth in the order. If such expenditures are made, or if such obligations are incurred, they will be at the Contractor's sole risk and expense. Further, the limitation of liability shall be the maximum Government liability if the order is terminated. The "LIMITATION OF GOVERNMENT LIABILITY" clause shall be included in any undefinitized order. (2) Except for undefinitized orders for Foreign Military Sales; purchases of less than $25,000; special access programs; and Congressionally-mandated long-lead procurements; and except as otherwise provided in subparagraph (f)(3) below, the limitation of Government liability shall not exceed fifty percent (50%) of the ceiling amount of an undefinitized order. In the case of orders within these excepted categories, however, the procedures set forth herein shall be followed to the maximum extent practical. (3) If the Contractor submits a qualifying proposal (as defined in DFARS 217.7401) to definitize an order before the Contractor has incurred costs in excess of fifty percent (50%) of the ceiling amount, the Contracting Officer may increase the limitation of Government liability to up to seventy-five percent (75%) of the maximum ceiling amount or up to seventy-five percent (75%) of the price proposed by the Contractor, whichever is less. (4) If at any time the Contractor believes that its expenditure under an undefinitized order will exceed the limitation of Government liability, the Contractor shall so notify the Contracting Officer, in writing, and propose an appropriate increase in the limitation of Government liability of such order. Within thirty (30) days of such notice, the Contracting Officer will either (1) notify the Contractor in writing of such appropriate increase, or (ii) instruct the Contractor how and to what extent the work shall be continued; provided, however, that in no event shall the Contractor be obligated to proceed with work on an undefinitized order beyond the point where its costs incurred plus a reasonable profit thereon exceed the limitation of Government liability, and provided also that in no event shall the Government be obligated to pay the Contractor any amount in excess of the limitation of Government liability specified in any such order prior to establishment of firm prices. (g) Initial Spares. The limitations set forth in paragraph (c) and subparagraphs (e)(2), (f)(2) and (f)(3) not apply to undefinitized orders for the purchase of initial spares. (h) Terminal Date for Placement of Orders. The Contractor shall not be obligated to accept any orders N00164-01-D-0042 PAGE 14 OF 50 placed hereunder beyond 180 days after delivery of the last end item. (i) Segregation of Costs. The Contractor shall segregate the costs of performance of each undefinitized order from the cost of performance of any other work performed by the Contractor. ASSIGNMENT AND USE OF NATIONAL STOCK NUMBERS (NAUSEA) (MAY 1993) - (5407) To the extent that National Stock Numbers (NSNs) or preliminary NSNs are assigned by the Government for the identification of parts, pieces, items, subassemblies or assemblies to be furnished under this contract, the Contractor shall use such NSNs or preliminary NSNs in the preparation of provisioning lists, package labels, packing lists, shipping containers and shipping documents as required by applicable specifications, standards or Data Item Descriptions of the contract or as required by orders for spare and repair parts. The cognizant Government Contract Administration Office shall be responsible for providing the Contractor such NSNs or preliminary NSNs which may be assigned and which are not already in possession of the Contractor. INFORMATION AND DATA FURNISHED BY THE GOVERNMENT - ALTERNATE Ii (NAVSEA) (MAY 1993) - (5413) (a) NAVSEA Form 434012 or Schedule C, as applicable, Government Furnished Information, attached hereto, incorporates by listing or specific reference all the data or information which the Government has provided or will provide to the Contractor except for - (1) The specifications set forth in Section C, and (2) Government specifications, including drawings and other Government technical documentation which are referenced directly or indirectly in the specifications set forth in Section C and which are applicable to this contract as specifications, and which are generally available and provided to Contractors or prospective Contractors upon proper request, such as Federal or Military Specifications, and Standard Drawings, etc. (b) Except for the specifications referred to in subparagraphs (a)(1) and (2) above, the Government will not be obligated to provide to the Contractor any specification, drawing, technical documentation or other publication which is not listed or specifically referenced in NAVSEA Form 434012 or Schedule C, as applicable, notwithstanding anything to the contrary in the specifications, the publications listed or specifically referenced in NAVSEA Form 434012 or Schedule C, as applicable, the clause entitled "GOVERNMENT PROPERTY (FIXED-PRICE CONTRACTS)" (FAR 52.245-2), or "GOVERNMENT PROPERTY (COST-REIMBURSEMENT, TIME-AND-MATERIAL, OR LABOR-HOUR CONTRACTS)" (FAR 52.245-5), as applicable, or any other term or condition of this contract. (c) (1) The Contracting Officer may at any time by written order: (i) delete, supersede, or revise, in whole or in part, data listed or specifically referenced in NAVSEA Form 4340/2 or Schedule C, as applicable; or (ii) add items of data or information to NAVSEA Form 4340/2 or Schedule C, as applicable; or (iii) establish or revise due dates for items of data information in NAVSEA Form 4340/2 or Schedule C, as applicable. (2) If any action taken by the Contracting Officer pursuant to subparagraph (c)(1) immediately above causes an increase or decrease in the costs of; or the time required for performance of any part of the work under this contract an equitable adjustment shall be made in the contract amount and delivery schedule in accordance with the procedures provided for in the "CHANGES" clause of this contract. N00164-01-D-0042 PAGE 15 OF 50 PERMITS AND RESPONSIBILITIES (NAVSEA) (SEP 1990) - (5416) The Contractor shall, without additional expense to the Government, be responsible for obtaining any necessary licenses and permits, and for complying with any applicable Federal, State, and Municipal laws, codes, and regulations, in connection with any movement over the public highways of overweight/overdimensional materials. UPDATING SPECIFICATIONS AND STANDARDS (NAVSEA) (AUG 1994)(5420) If, during the performance of this or any other contract,. the contractor believes that any contract contains outdated or different versions of any specifications or standards, the contractor may request that all of its contracts be updated to-include the current version of the applicable specification or standard. Updating shall not affect the form, fit or function of the deliverable item or increase the cost/price of the item to the Government. The contractor should submit update requests to the Procuring Contracting Officer with copies to the Administrative Contracting Officer and cognizant program office representative for approval. The contractor shall perform the contract in accordance with the existing specifications and standards until notified of approval/disapproval by the Procuring Contracting Officer. Any approved alternate specifications or standards will be incorporated into the contract. N00164-01-D-0042 PAGE 16 OF 50 SECTION "D" - PACKAGING AND MARKING PROHIBITED PACKING MATERIALS The use of asbestos, excelsior, newspaper or shredded paper (all types including waxed paper, computer paper and similar hygroscopic or non-neutral material) is prohibited. In addition, loose fill polystyrene is prohibited for shipboard use. PREPARATION FOR DELIVERY (5510) (1) PRESERVATION-PACKAGING. Preservation-packaging for Item(s) ALL shall be in accordance with the requirements of MIL-E-17555, Level A as specified in the Statement of Work. (2) PACKING. Item(s) ALL preserved-packaged as above shall be packed level MIL-E-17555, Level A as specified in the Statement of Work. DATA PACKAGING LANGUAGE (5503) All unclassified data shall be prepared for shipment in accordance with best commercial practice. lassoed reports, data, and documentation shall be prepared for shipment in accordance with National Industrial Security Program Operating Manual (NISPOM), DOD 5220.22-M dated January 1995. IDENTIFICATION MARKING OF PARTS (NAVSEA) (NOV 1996) (5504) (a) Identification marking of individual parts within the systems, equipment, assemblies, subassemblies, components, groups, sets or kits, and of spare and repair parts shall be done in accordance with applicable specifications and drawings. To-the extent identification marking of such parts is not specified in applicable specifications or drawings, such marking shall be accomplished in accordance with the following: (1) Parts shall be marked in accordance with generally accepted commercial practice. (2) In cases where parts are so small as not to permit identification marking as provided above, such parts shall be appropriately coded so as to permit ready identification. MARKING AND PACKING LIST(S) (NAVSEA) (NOV 1996) (5505) (a) Marking. Shipments, shipping containers and palletized unit loads shall be marked in accordance with best commercial practice. (b) Packing List(s). A packing list (DD Form 250 Material Inspection and Receiving Report may be used) identifying the contents of each shipment, shipping container or palletized unit load shall be provided by the Contractor with each shipment. When a contract line item identified under a single stock number includes an assortment of related items such as kit or set components, detached parts or accessories, installation hardware or material, the packing list(s) shall identify the assorted items. Where assortment of related items is included in the shipping container, a packing list identifying the contents shall be furnished. N00164-01-D-0042 PAGE 17 OF 50 (c) Master Packing List. In addition to the requirements in paragraph (b) above, a master packing list shall be prepared where more than one shipment, shipping container or palletized unit load comprise the contract line item being shipped. The master packing list shall be attached to the number one container and so identified. (d) Part Identification. All items within the kit, set, installation hardware or material shall be suitably segregated and identified within the unit pack(s) or shipping container by part number and/or national stock number. MARKING OF WARRANTED ITEMS (NAVSURFWARCENDIV)(5508) (a) Each item covered by a warranty shall be stamped or marked in accordance with MIL-STD-129, Marking for Shipment and Storage. Where this is impracticable, written notice shall be attached to or furnished with the warranted item. (b) Warranted items shall be marked with the following information: (1) National stock number or manufacturer's part number (2) Serial number or other item identifier (if the warranty applies to uniquely identified items) (3) Contract number (4) Indication that a warranty applies (5) Manufacturer or entity (if other than the contractor) providing the warranty (6) Date or time when the warranty expires (7) Indication of whether or not attempted on-site repair by Government personnel will void the warranty. MARKING FOR SHIPMENT (5511) The Contractor shall mark all shipments under a resulting contract to include the following items: Contract Number, item Number; Lot Number (when applicable); Part Number; National Stock Number; Contractor Model Number; Serial Number; Packing Date; Attn: S CLARK Code 805 , Bldg. 3324 INSTRUCTIONS FOR MARKING DISTRIBUTION STATEMENT (5513) The Contractor shall comply with the instructions cited below for placement of the distribution statement associated with data. The applicable distribution statement is identified on each Contract Data Requirements List (DD Form 1423-1). The distribution statement shall be displayed conspicuously on technical documents so as to be recognized readily by receipts. The distribution statement shall appear on each front cover and title page of a report. If the technical document does not have a cover or title page, the applicable distribution statement shall be stamped or typed on the front page in a conspicuous position. N00164-01-D-0042 PAGE 18 OF 50 SECTION "E" - INSPECTION AND ACCEPTANCE 1. FEDERAL ACQUISITION REGULATION (FAR) (48 CFR CHAPTER 1) CLAUSES 11. DEFENSE FAR SUPPLEMENT (DFARS) (48 CFR CHAPTER 2) CLAUSES PART I ------ ---------------------------------------------------------------------------- FAR Title Date --- ----- ---- Subsection ---------- ---------------------------------------------------------------------------- 52.246-02 Inspection of Supplies-Fixed-Price Aug 1996 ---------------------------------------------------------------------------- 52.246-16 Responsibility for Supplies Apr 1984 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- PART II ---------------------------------------------------------------------------- 252.246-7000 Material Inspection and Receiving Report Dec 1991 ---------------------------------------------------------------------------- CLAUSES IN FULL TEXT -------------------- HIGHER-LEVEL CONTRACT QUALITY REQUIREMENT (FEB 1999) (FAR 52.246-11) The Contractor shall comply with the higher-level quality standard selected below. Title Number Date Tailoring ANSI/ASQC Q9001 OR EQUIVALENT --------- ------------------- ------------- ----------- INSPECTION AND ACCEPTANCE LANGUAGE FOR DATA (5602) Inspection and acceptance of all data shall be as specified on the attached Contract Data Requirements List(s), DD Form 1423. INSPECTION AND ACCEPTANCE LANGUAGE FOR F.O.B. DESTINATION (5604) Item(s) ALL CLINS - Final Inspection and acceptance shall be made at destination by a representative of the Government. INSPECTION AND ACCEPTANCE (SPECIAL CONDITIONS) (5606) (a) Initial inspection of the supplies to be furnished hereunder shall be made by DCM QAR PERSONNEL at the contractor's or subcontractor's plant located at TBD. The cognizant inspector shall be notified 10 days In advance of when the material is available for inspection. The place designated for such actions may not be changed without authorization of the Contracting Officer. Final inspection and acceptance shall be made by REQUIRING TECHNICAL ACTIVITY within 30 days after RECEIPT OF SYSTEMS. (b) Initial inspection shall consist of quality assurance at point of manufacture and/or assembly and check/test prior to shipment. Final inspection and acceptance will be made by the Receiving Activity after installation/check out/testing of the supplies. N00164-01-D-0042 PAGE 19 OF 50 INSPECTION AND TEST RECORDS (MAY 1995) (5612) INSPECTION AND TEST RECORDS: Inspection and test records shall, as a minimum, indicate the nature of the observations, number of observations made, and the number and type of deficiencies found_ Data included in inspection and test records shall be complete and accurate, and shall be used for trend analysis and to assess corrective action and effectiveness. QUALITY SYSTEM -REQUIREMENTS (NAVSEA) (MAY 1995) (5614) QUALITY SYSTEM REQUIREMENTS: The Contractor shall provide and maintain a quality system that, as a minimum, adheres to the requirements of ANSI/ASQC Q9001-1994 Quality Systems-Model for Quality Assurance in Design/Development, Production, Installation, and Servicing and supplemental requirements imposed by this contract. The quality system procedures, planning, and all other documentation and data that comprise the quality system shall be made available to the Government for review. Existing quality documents that meet the requirements of this contract may continue to be used. The Government may perform any necessary inspections, verifications, and evaluations to ascertain conformance to requirements and the adequacy of the implementing procedures. The Contractor shall require of subcontractors a quality system achieving control of the quality of the services and/or supplies provided. The Government reserves the right to disapprove the quality system `* portions thereof when it fails to meet the contractual requirements. USE OF CONTRACTOR'S INSPECTION EQUIPMENT (NAVSEA) (MAY 1995) (5616) USE OF CONTRACTOR'S INSPECTION EQUIPMENT: The contractors gages, and measuring and testing devices shall be made available for use by the Government when required to determine conformance with contract requirements. If conditions warrant, the contractor's personnel shall be made available for operations of such devices and for verification of their accuracy and condition. N00184-01-D-0042 PAGE 20 OF 50 SECTION "F" - DELIVERIES OR PERFORMANCE PART I ------
------------------------------------------------------------------------------------------------------- FAR Title Date --- ----- ---- Subsection ---------- ------------------------------------------------------------------------------------------------------- 52.242-15 Stop Work Order Aug 1989 ------------------------------------------------------------------------------------------------------- 52.242-17 Government Delay of Work Apr 1984 ------------------------------------------------------------------------------------------------------- 52.247-34 F.o.b. Destination Nov 1991 ------------------------------------------------------------------------------------------------------- 52.247-55 F.o.b. Point for Delivery of Government-Furnished Property Apr 1984 -------------------------------------------------------------------------------------------------------
CLAUSES IN FULL TEXT -------------------- TIME OF DELIVERY (JUNE 1997) (FAR 52.211-8) (a) The Government requires delivery to be made according to the following schedule: REQUIRED DELIVERY SCHEDULE - -------------------------------------------------------------------------------- ITEM NO. QUANTITY WITHIN DAYS AFTER DATE OF CONTRACT 0001 ALL ORDERS WILL 300 DAYS FROM EFFECTIVE DATE OF ORDER. AND BE ISSUED WITH THE 30 EACH THEREAFTER EVERY 30 DAYS UNTIL THE DELIVERY QUANTITY QUANTITY IS COMPLETE. EACH SUBSEQUENT ORDER TBD ON INDIVIDUAL WILL ESTABLISH THE DELIVERY SCHEDULE TO BE DELIVERY ORDERS AT A RATE NOT TO EXCEED 30 EVERY 30 DAYS 0002 TBD ON INDIVIDUAL TBD ON INDIVIDUAL DELIVERY ORDERS DELIVERY ORDER 0003 1 LO IAW DD1423'S The Government will evaluate equally, as regards time of delivery, offers that propose delivery of each quantity within the applicable delivery period specified above. Offers that propose delivery that will not clearly fall within the applicable required delivery period specified above, will be considered nonresponsive and rejected. The Government reserves the right to award under either the required delivery schedule or the proposed delivery schedule, when an offeror offers an earlier delivery schedule than required above. If the offeror proposes no other delivery schedule, the required delivery schedule above will apply. DELIVERY LANGUAGE FOR F.O.B. DESTINATION (5704) All supplies hereunder shall be delivered with all transportation charges prepaid, in accordance with the clause hereof entitled "F.O.B. DESTINATION" (FAR 52.247-34). The Contractor shall not ship directly to a military air or water port terminal without authorization by the cognizant Contract Administration Office. Except when the Material Inspection and Receiving Report (MIRR) (DD 250) is used as an invoice, the Contractor shall enter unit prices on all MIRR copies. Contract line items shall be priced using actual prices, or if not available, estimated prices. When the price is estimated, an "E" shall be entered after the price. All data to be furnished under this contract shall be delivered prepaid to destination(s) at the time(s) specified on the Contract Data Requirements List(s), DD Form 1423. N00164-01-D-0042 PAGE 21 OF 50 PLACE OF DELIVERY (5707) The material to be furnished hereunder shall be delivered F.o.b. destination with all transportation charges paid by the supplier to: RECEIVING OFFICER; 3324 CODE 80513; NAVSURFWARCDIV; CRANE, IN 47522-5011; Mark For Attn: CLEVE BENTON/SANDY CLARK, CODE 805 The contractor shall schedule deliveries under this contract to ensure arrival at destination only on Monday through Friday (excluding holidays) between the hours of 7:00 AM and 2:00 PM EST. The receiving facility for this material is CLOSED on Saturdays and Sundays. N00164-01-0-0042 PAGE 22 OF 50 SECTION "G" - CONTRACT ADMINISTRATION DATA GENERAL PROCUREMENT INFORMATION SUBMISSION OF INVOICES (FIXED PRICE) (JUL 1992) (NAPS 5252.232-9000) (a) "Invoice" as used in this clause does not include contractor's requests for progress payments. (b) The contractor shall submit original invoices with 4 copies to the address identified in the solicitation/contract award form (SF 26 - Block 10; SF 33 - Block 23; SF 1447 - Block 14), unless delivery orders are applicable, in which case invoices will be segregated by individual order and submitted to the address specified in the order (DD 1155 - Block 13 or SF 26 Block 10) NOTE: DELIVERY ORDERS WILL SPECIFY INVOICES BE SUBMITTED TO: Crane Division, Naval Surface Warfare Center VENDOR PAY, CODE 0561, BLDG. 2701 300 HIGHWAY 361 CRANE IN 47522-5001 (c) The use of copies of the Material Inspection and Receiving Report (MIRK), DD Form 250, as an invoice is encouraged. DFARS Appendix F-306 provides instructions for such use. Copies of the MIRR used as an invoice are in addition to the standard distribution stated in DFARS F-401. (d) In addition to the requirements of the Prompt Payment clause of this contract, the contractor shall cite on each invoice the contract line item number (OLIN); the contract subline item number (SLIN), if applicable; the accounting classification reference number (ACRN) as identified on the financial accounting data sheets, and the payment terms. (e) The contractor shall prepare: __a separate invoice for each activity designated to receive the supplies or services. __a consolidated invoice covering all shipments delivered under an individual order. * either of the above. --- (f) If acceptance is at origin, the contractor shall submit the MIRR or other acceptance verification directly to the designated payment office. If acceptance is at destination, the consignee will forward acceptance verification to the designated payment office. CONTRACT ADMINISTRATION DATA LANGUAGE (5802) Enter below the address (street and number, city, county, state and zip code) of the Contractor's facility which will administer the contract if such address is different from the address shown on the SF26 or SF33 as applicable. 112 JULIAD COURT, SUITE 200; FREDERICKSBURG, VA 22406 N00164-01-D-0042 PAGE 23 OF 50 PURCHASING OFFICE REPRESENTATIVE LANGUAGE (5804) PURCHASING OFFICE REPRESENTATIVE: COMMANDER; ATTN, CODE 1165ZS BLDG 3291 NAVAL SURFACE WARFARE CENTER; CRANE DIVISION Attn: Marlene Siddons CRANE IN 47522-5011; Telephone No. 812-854-3856 BUSINESS HOURS Crane Division, Naval Surface Warfare Center, Crane, Indiana, allows flexible working hours for its employees. The normal eight-hour shift may be worked between the hours of 6:30 AM and 5:30 PM EST. Many of our employees work 6:30 AM to 3:00 PM as a regular practice. The core time, when all employees are scheduled to work, is 9:00 AM to 3:00 PM. EXPEDITING CONTRACT CLOSEOUT (NAVSEA) (DEC 1995) (a) As part of the negotiated fixed price or total estimated amount of this contract, both the Government and the Contractor have agreed to waive any entitlement that otherwise might accrue to either party in any residual dollar amount of $500 or less at the time of final contract closeout. The term "residual dollar amount" shall include all money that would otherwise be owed to either party at the end of the contract except that, amounts connected in any way with taxation, allegations of fraud and/or antitrust violations shall be excluded. For purposes of determining residual dollar amounts, offsets of money owed by one party against money that would otherwise be paid by that party may be considered to the extent permitted by law. (b) This agreement to waive entitlement to residual dollar amounts has been considered by. both parties. It is agreed that the administrative costs for either party associated with collected such small dollar amounts could exceed the amount to be recovered. OTHER NOTES: (1) The agency authorized to place delivery orders against this contract is: Crane Division, Naval Surface Warfare Center, Crane, IN 47522. (2) Delivery orders shall be placed against this contract using a DD 1155. (3) Delivery orders placed under this contract shall be placed no later than 26 September 2004 N00464-01-D-0042 PAGE 25 OF 50 SECTION "H" - SPECIAL CONTRACT REQUIREMENTS ADDITIONAL DEFINITIONS (MAY 1993) (NAVSEA 5252.202.9101) As used throughout this contract, the following terms shall have the meanings set forth below: (a) DEPARTMENT - means the Department of the Navy. (b) REFERENCES TO THE FEDERAL ACQUISITION REGULATION (FAR) - All references to the FAR in this contract shall be deemed to also reference the appropriate sections of the Defense FAR Supplement (DFARS), unless clearly indicated otherwise. (c) REFERENCES TO ARMED SERVICES PROCUREMENT REGULATION OR DEFENSE ACQUISITION REGULATION - All references in this document to either the Armed Services Procurement Regulation (ASPR) or the Defense Acquisition Regulation (DAR) shall be deemed-to be references to the appropriate sections of the FAR/DFARS. (d) NATIONAL STOCK NUMBERS - Whenever the term Federal Item Identification Number and its acronym FIIN or the term Federal Stock Number and its acronym FSN appear in the contract, order or their cited specifications and standards, the terms and acronyms shall be interpreted as National Item Identification Number (NIIN) and National Stock Number (NSN) respectively which shall be defined as follows: (1) National Item Identification Number (NIIN). The number assigned to each approved Item Identification under the Federal Cataloging Program. It consists of nine numeric characters, the first two of which are the. National Codification Bureau (NCB) Code. The remaining positions consist of a seven digit non-significant number. (2) National Stock Number (NSN). The National Stock Number (NSN) for an item of supply consists of the applicable four position Federal Supply Class (FSC) plus the applicable nine position NIIN assigned to the item of supply. GOVERNMENT-INDUSTRY DATA EXCHANGE PROGRAM (AUG 1997) (NAVSEA 5252.227-9113) (a) The Contractor shall participate in the appropriate interchange of the Government-Industry Data Exchange Program (GIDEP) in accordance with NAVSEA S0300-BU-GYD-010 dated November 1994. Data entered is retained by the program and provided to qualified participants. Compliance with this requirement shall not relieve the Contractor from complying with any other requirement of the contract. (b) The Contractor agrees to insert paragraph (a) of this requirement in any subcontract hereunder exceeding $500,000.00. When so inserted, the word "Contractor" shall be changed to "Subcontractor". (c) GIDEP materials, software and information are available without charge from: GIDEP Operations Center P.O. Box 8000 Corona, CA 91718-8000 Phone: (909) 273-4677 or DSN 933-4677 3 FAX: (909) 273-5200 Internet: http://www.gidep.corona.navy.mil N00164-01-0-0042 PAGE 24 OF 50 CONTRACTOR PERFORMANCE ASSESSMENT RATING SYSTEM (CPARS) (JAN 2001) (a) Pursuant to FAR 42.1502, this contract is subject to DoD's Contractor Performance Assessment System (CPARS). CPARS is an automated centralized information system accessible via the Internet that maintains reports of contractor performance for each contract. CPARS is located at http://www.cpars.navy.mil/. Further information on CPARS is available at that web-site. (b) Under CPARS, the Government will conduct annual evaluations of the contractor's performance. The contractor has thirty (30) days after the Government's evaluation is completed to comment on the evaluation. The opportunity to review and comment is limited to this time period and will not be extended. Failure to review the report at this time will not prevent the Government from using the report. (c) The contractor may request a meeting to discuss the CPAR. The meeting is to be requested via e-mail to the CPARS Program Manager no later than seven days following receipt of the CPAR. A meeting will then be held during the contractor's 30-day review period. (d) The CPARS system requires the Government to assign the contractor a UserlD and password in order to view and comment on the evaluation. Provide the name(s) of at least one individual (not more than three) that will be assigned as your Defense Contractor Representative for CPARS. Name Phone E-mail Address (optional) ---- ----- ------------------------- _____________________ ________________ ______________________________ _____________________ ________________ ______________________________ _____________________ ________________ ______________________________
N00164-01-D-0042 PAGE 26 OF 50 SECTION "I" - CONTRACT CLAUSES PART I ------ - --------------------------------------------------------------------------------------------------------------------------------- FAR Subsection Title Date -------------- ----- ---- - --------------------------------------------------------------------------------------------------------------------------------- 52.202-01 Definitions Oct 1995 - --------------------------------------------------------------------------------------------------------------------------------- 52.203-03 Gratuities Apr 1984 - --------------------------------------------------------------------------------------------------------------------------------- 52.203-05 Covenant Against Contingent Fees Apr 1984 - --------------------------------------------------------------------------------------------------------------------------------- 52.203-06 Restrictions on Subcontractor Sales to the Government Jul 1995 - --------------------------------------------------------------------------------------------------------------------------------- 52.203-07 Anti-Kickback Procedures Jul 1995 - --------------------------------------------------------------------------------------------------------------------------------- 52.203-08 Cancellation, Rescission, and Recovery of Funds for illegal or Improper Jan 1997 Activity - --------------------------------------------------------------------------------------------------------------------------------- 52.203-10 Price or Fee Adjustment for Illegal or Improper Activity Jan 1997 - --------------------------------------------------------------------------------------------------------------------------------- 52.203-12 Limitation on Payments to Influence Certain Federal Transactions Jun 1997 - --------------------------------------------------------------------------------------------------------------------------------- 52.204-04 Printing/Copying Double-Sided on Recycled Paper Aug 2000 - --------------------------------------------------------------------------------------------------------------------------------- 52.209-06 Protecting the Government's Interest When Subcontracting with Jul 1995 Contractors Debarred, Suspended, or Debarment - --------------------------------------------------------------------------------------------------------------------------------- 52.211-05 Material Requirements Aug 2000 - --------------------------------------------------------------------------------------------------------------------------------- 52.211-15 Defense Priority and Allocation Requirements Sep 1990 - --------------------------------------------------------------------------------------------------------------------------------- 52.215-02 Audit and Records Negotiation Jun 1999 - --------------------------------------------------------------------------------------------------------------------------------- 52.215-08 Order of Precedence-Uniform Contract Format Oct 1997 - --------------------------------------------------------------------------------------------------------------------------------- 52.215-11 Price Reduction for Defective Cost or Pricing Data-Modifications Oct 1997 - --------------------------------------------------------------------------------------------------------------------------------- 52.215-13 Subcontractor Cost or Pricing Data-Modifications Oct 1997 - --------------------------------------------------------------------------------------------------------------------------------- 52.215-14 Integrity of Unit Prices Oct 1997 - --------------------------------------------------------------------------------------------------------------------------------- 52.219-08 Utilization of Small Business Concerns Oct 2000 - --------------------------------------------------------------------------------------------------------------------------------- 52.219-14 Limitations on Subcontracting Dec 1996 - --------------------------------------------------------------------------------------------------------------------------------- 52.222-19 Child Labor -Cooperation with Authorities and Remedies Feb 2001 - --------------------------------------------------------------------------------------------------------------------------------- 52.222-20 Walsh-Healey Public Contracts Act Dec 1996 - --------------------------------------------------------------------------------------------------------------------------------- 52.222-21 Prohibition of Segregated Facilities Feb 1999 - --------------------------------------------------------------------------------------------------------------------------------- 52.222-26 Equal Opportunity Feb 1999 - --------------------------------------------------------------------------------------------------------------------------------- 52.222-35 Affirmative Action for Disabled Veterans and Veterans of the Vietnam Apr 1998 Era - --------------------------------------------------------------------------------------------------------------------------------- 52.222-36 Affirmative Action for Workers with Disabilities Jun 1998 - --------------------------------------------------------------------------------------------------------------------------------- 52.222-37 Employment Reports on Disabled Veterans and Veterans of the Vietnam Jan 1999 Era - --------------------------------------------------------------------------------------------------------------------------------- 52.223-06 Drug-Free Workplace Jan 1997 - --------------------------------------------------------------------------------------------------------------------------------- 52.223-14 Toxic Chemical Release Reporting Oct 2000 - --------------------------------------------------------------------------------------------------------------------------------- 52.225-08 Duty-Free Entry Feb 2000 - --------------------------------------------------------------------------------------------------------------------------------- 52.225-13 Restrictions on Certain Foreign Purchases Jul 2000 - --------------------------------------------------------------------------------------------------------------------------------- 52.226-01 Utilization of Indian Organizations and Indian-Owned Economic Jun 2000 Enterprises - --------------------------------------------------------------------------------------------------------------------------------- N00164-01-D-0042 PAGE 27 OF 50 - --------------------------------------------------------------------------------------------------------------------------------- 52.227-01 Authorization and Consent Jul 1995 - --------------------------------------------------------------------------------------------------------------------------------- 52.227-02 Notice and Assistance Regarding Patent and Copyright Infringement Aug 1996 - --------------------------------------------------------------------------------------------------------------------------------- 52.229-03 Federal, State, and Local Taxes Jan 1991 - --------------------------------------------------------------------------------------------------------------------------------- 52.229-05 Taxes-Contracts performed in U.S. Possessions or Puerto Rico Apr 1984 - --------------------------------------------------------------------------------------------------------------------------------- 52.232-01 Payments Apr 1984 - --------------------------------------------------------------------------------------------------------------------------------- 52.232-08 Discounts for Prompt Payment May 1997 - --------------------------------------------------------------------------------------------------------------------------------- 52.232-11 Extras Apr 1984 - --------------------------------------------------------------------------------------------------------------------------------- 52.232-16 Progress Payments Alternate I Mar 2000 - --------------------------------------------------------------------------------------------------------------------------------- 52.232-17 Interest Jun 1996 - --------------------------------------------------------------------------------------------------------------------------------- 52.232-23 Assignment of Claims (Jan 1986)-Alternate I Apr 1984 - --------------------------------------------------------------------------------------------------------------------------------- 52.232-25 Prompt Payment May 2001 - --------------------------------------------------------------------------------------------------------------------------------- 52.232-33 Payment by Electronic Funds Transfer-Central Contractor May 1999 Registration - --------------------------------------------------------------------------------------------------------------------------------- 52.233-01 Disputes Dec 1998 - --------------------------------------------------------------------------------------------------------------------------------- 52.233-03 Protest After Award Aug 1996 - --------------------------------------------------------------------------------------------------------------------------------- 52.242-13 Bankruptcy Jul 1995 - --------------------------------------------------------------------------------------------------------------------------------- 52.243-01 Changes Aug 1987 - --------------------------------------------------------------------------------------------------------------------------------- 52.243-06 Change Order Accounting Apr 1984 - --------------------------------------------------------------------------------------------------------------------------------- 52.246-24 Limitation of Liability- High Value Items Feb 1997 - --------------------------------------------------------------------------------------------------------------------------------- 52.247-64 Preference for Privately owned U.S.-Flag Commercial Vessels Jun 2000 =X2.247-64 - --------------------------------------------------------------------------------------------------------------------------------- 52.249-02 Termination for Convenience of the Government (Fixed-Price) Sep 1996 - --------------------------------------------------------------------------------------------------------------------------------- 52.249-08 Default (Fixed-Price Supply and Service) Apr 1984 - --------------------------------------------------------------------------------------------------------------------------------- 52.253-01 Computer Generated Forms Jan 1991 - --------------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------------- PART Il - --------------------------------------------------------------------------------------------------------------------------------- DFARS Title Date ----- ----- ---- Subsection ---------- - --------------------------------------------------------------------------------------------------------------------------------- 252.203-7001 Prohibition on Persons Convicted of Fraud or Other Defense-Contract- Mar 1999 Related Felonies - --------------------------------------------------------------------------------------------------------------------------------- 252.203-7002 Display of DOD Hotline Poster Dec 1991 - --------------------------------------------------------------------------------------------------------------------------------- 252.204-7003 Control of Government Personnel Work Product Apr 1992 - --------------------------------------------------------------------------------------------------------------------------------- 252.204-7004 Commercial and Government Entity (CAGE) Code Reporting Mar 2000 - --------------------------------------------------------------------------------------------------------------------------------- 252.205-7000 Provision of Information to Cooperative Agreement Holders Dec 1991 - --------------------------------------------------------------------------------------------------------------------------------- 252.209-7000 Acquisition from Subcontractors Subject to On-Site Inspection Under the Nov 1995 Intermediate-Range Nuclear Forces (INF) Treaty - --------------------------------------------------------------------------------------------------------------------------------- 252.209-7004 Subcontracting with Firms that are owned or controlled by the May 1998 Government of a Terrorist Country - --------------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------------- 252.223-7006 Prohibition on Storage and Disposal of Toxic and Hazardous Materials Apr 1993 - --------------------------------------------------------------------------------------------------------------------------------- 252.225-7001 Buy American Act and Balance of Payments Program Apr 2000 - --------------------------------------------------------------------------------------------------------------------------------- 252.225-7002 Qualifying Country Sources as Subcontractors Dec 1991 - --------------------------------------------------------------------------------------------------------------------------------- N00164-01-0-0042 PAGE 28 OF 50 - -------------------------------------------------------------------------------------------------------------------------------- 252.225-7009 Duty-Free Entry--Qualifying Country End Products and Supplies Aug 2000 - -------------------------------------------------------------------------------------------------------------------------------- 252.225-7010 Duty-Free Entry-Additional Provisions Au 2000 - -------------------------------------------------------------------------------------------------------------------------------- 252.225-7012 Preference for Certain Domestic Commodities Aug 2000 - -------------------------------------------------------------------------------------------------------------------------------- 252.225-7016 Restriction on Acquisition of Bail or Roller Bearings Dec 2000 - -------------------------------------------------------------------------------------------------------------------------------- 252.225-7025 Restrictions on Acquisitions of Forgings Jun 1997 - -------------------------------------------------------------------------------------------------------------------------------- 252.225-7026 Reporting of Contract Performance Outside the United States Jun 2000 - -------------------------------------------------------------------------------------------------------------------------------- 252.225-7031 Secondary Arab Boycott of Israel Jun 1992 - -------------------------------------------------------------------------------------------------------------------------------- 252.227-7016 Rights in Bid or Proposal Information Jun 1995 - -------------------------------------------------------------------------------------------------------------------------------- 252.227-7030 Technical Data-Withholding of Payment Mar 2000 - -------------------------------------------------------------------------------------------------------------------------------- 252.227-7036 Declaration Of Technical Data Conformity Jan 1997 - -------------------------------------------------------------------------------------------------------------------------------- 252.227-7037 Validation of Restrictive Markings on Technical Data Nov 1995 - -------------------------------------------------------------------------------------------------------------------------------- 252.231-7000 Supplemental Cost Principles Dec 1991 - -------------------------------------------------------------------------------------------------------------------------------- 252.232-7004 DOD Progress Payment Rates Feb 1996 - -------------------------------------------------------------------------------------------------------------------------------- 252.243-7001 Pricing of Contract Modifications Dec 1991 - -------------------------------------------------------------------------------------------------------------------------------- 252.243-7002 Request for Equitable Adjustment Mar 1998 - -------------------------------------------------------------------------------------------------------------------------------- 252.244-7000 Subcontracts for Commercial Items_ and Commercial Components Mar 2000 (DOD Contracts) - -------------------------------------------------------------------------------------------------------------------------------- 252.246-7000 Material Inspection and Receiving Report Dec 1991 - -------------------------------------------------------------------------------------------------------------------------------- 252.247-7023 Transportation of Supplies by Sea Mar 2000 - --------------------------------------------------------------------------------------------------------------------------------
CLAUSES IN FULL TEXT ----------------------------- ORDERING (OCT 1995) (FAR 52.216-18) (a) Any supplies and services to be furnished under this contract shall be ordered by issuance of delivery orders or task orders by the individuals or activities designated in the Schedule. Such orders may be issued from EFFECTIVE DATE OF CONTRACT through 3 YEARS FROM EFFECTIVE DATE OF CONTRACT. (b) All delivery orders or task orders are subject to the terms and conditions of this contract: In the event of conflict between a delivery order or task order and this contract, the contract shall control. (c) If mailed, a delivery order or task order is considered "issued" when the Government deposits the order in the mail. Orders may be issued orally, by facsimile, or by electronic commerce methods only if authorized in the Schedule. ORDER LIMITATIONS (OCT 1995) (FAR 52.216-19) (a) Minimum Order. When the Government requires supplies or services covered by this contract in an amount of less than 1 EACH, the Government is not obligated to purchase, nor is the Contractor obligated to furnish, those supplies or services under the contract. N00164-01-D-0042 PAGE 29 OF 50 (b) Maximum Order. The Contractor is not obligated to honor-- (1) Any order for a single item in excess of 1,000 EACH (2) Any order for a combination of items in excess of 1,000 EACH: or (3) A series of orders from the same ordering office within 1,095 days that together call for quantities exceeding the limitation in subparagraph (1) or (2) of this section. (c) If this is a requirement contract (i.e., includes the Requirements clause at subsection 52.216-21 of the Federal Acquisition Regulation (FAR), the Government is not required to order a part of any one requirement from the Contractor if that requirement exceeds the maximum-order limitations in paragraph (b) above. (d) Notwithstanding paragraphs (b) and (c) above, the Contractor shall honor any order exceeding the maximum order limitations in paragraph (b), unless that order (or orders) is returned to the ordering office within 14 days after issuance, with written notice stating the Contractor's intent not to ship the item (or items) called for the reasons. Upon receiving this notice, the Government may acquire the supplies or service from another source. INDEFINITE QUANTITY (OCT 1995) (FAR 52.216-22) (a) This is an indefinite-quantity contract for the supplies or services specified, and effective for the period stated, in the Schedule. The quantities of supplies and services specified in the Schedule are estimates only and are not purchased by this contract. (b) Delivery or performance shall be made only as authorized by orders issued in accordance with the Ordering clause. The Contractor shall furnish to the Government, when and if ordered, the supplies or services specified in the Schedule up to and including the quantity designated in the Schedule as the "maximum". The Government shall order at least the quantity of supplies or services designated in the Schedule as the "minimum." (c) Except for any limitations on quantities in the Order Limitations clause or in the Schedule, there is no limit on the number of orders that may be issued. The Government may issue orders requiring delivery to multiple destinations or performance at multiple locations. (d) Any order issued during the effective period of this contract and not completed within that period shall be completed by the Contractor within the time specified in the order. The contract shall govern the Contractor's and Government's rights and obligations with respect to that order to the same extent as if the order were completed during the contract's effective period; provided, that the Contractor shall not be required to make any deliveries under this contract after The required delivery schedule established in any order issued within the ordering period of 3 years from effective date of contract. NOTIFICATION OF COMPETITION LIMITED TO ELIGIBLE 8(A) CONCERNS (NOV 1999) (FAR 52.219-18) DFARS 252.219-7010 ALTERNATE A (JUNE 1998) (a) Offers are solicited only from small business concerns expressly certified by the Small Business Administration (SBA) for participation in the SBA's 8(a) Program and which meet the following criteria at the time of submission of offer - - [ ] ([1]) The Offeror is in conformance with the 8(a) support limitation set forth in its approved business plan; and N00164-01-D-0042 PAGE 30 OF 50 ([2]) The Offeror is in conformance with the Business Activity Targets set forth in its approved business plan or any remedial action directed by the SBA. (b) By submission of its offer, the Offeror represents that it meets all of the criteria set forth in paragraph (a) of this clause. (c) Any award resulting from this solicitation will be directly by the Contracting Officer to the successful 8(a) offeror selected through the evaluation criteria set forth in this solicitation. (1) AGREEMENT. A small business concern submitting an offer in its own name agrees to furnish, in performing the contract, only end items manufactured or produced by small business concerns in the United States. The term "United States" includes its territories and possessions, the Commonwealth of Puerto Rico, the trust territory of the Pacific Islands, and the District of Columbia. If this procurement is processed under simplified acquisition procedures and the total amount of this contract does not exceed $25,000,-a small business concern may furnish the product of any domestic firm. This subparagraph does not apply in connection with construction or service contracts. (2) THE SCIENCE AND TECHNOLOGY, INC contractor will notify the listed in block 7 on page 1 Contracting Officer in writing immediately upon entering an agreement (either oral or written) to transfer all or part of its stock or other ownership interest to any other party. (End of Clause) PROHIBITION OF SEGREGATED FACILITIES (52.222-21) (FEB 1999) (a)"Segregated facilities," as used in this clause, means any waiting rooms, work areas, rest rooms and wash rooms, restaurants and other eating areas, time clocks, locker rooms and other storage or dressing areas, parking lots, drinking fountains, recreation or entertainment areas, transportation, and housing facilities provided for employees, that are segregated by explicit directive or are in fact segregated on the basis of race, color, religion, sex or national origin because of written or oral policies or employee custom. The term does not include separate or single-user rest rooms and necessary dressing or sleeping areas, which shall be provided to assure privacy between the sexes. (b) The Contractor agrees that it does not and will not maintain or provide for its employees any segregated facilities at any of its establishments, and that it does not and will not permit its employees to perform their services at any location under its control where segregated facilities are maintained. The Contractor agrees that a breach of this clause is a violation of the Equal Opportunity clause in this contract. (c) The Contractor shall include this clause in every subcontract and purchase order that is subject to the Equal Opportunity clause of this contract. HAZARDOUS MATERIAL IDENTIFICATION AND MATERIAL SAFETY DATA (JAN 1997)(FAR 52.223-3) (a) "Hazardous material," as used in this clause, includes any material defined as hazardous under the latest version of Federal Standard No. 313 (including revisions adopted during the term of the contract). (b) The offeror must list any hazardous material, as defined in paragraph (a) of this clause, to be delivered under this contract. The hazardous material shall be properly identified and include any applicable identification number, such as National Stock Number or Special Item Number. This N00164-01-D-0042 PAGE 31 OF 50 information shall also be included on the Material Safety Data Sheet submitted under this contract. Material Identification No. (If none, insert "None") --------------------------------- --------------------------------- NONE --------------------------------- --------------------------------- --------------------------------- --------------------------------- --------------------------------- --------------------------------- --------------------------------- --------------------------------- (c) This list must be updated during performance of the contract whenever the Contractor determines that any other material to be delivered under this contract is hazardous. (d) The apparently successful offeror agrees to submit, for each item as required prior to award, a Material Safety Data Sheet, meeting the requirements of 29 CFR 1910.1200(g) and the latest version of Federal Standard No. 313, for all hazardous material identified in paragraph (b) of this clause. Data shall be submitted in accordance with Federal Standard No. 313, whether or not the apparently successful offeror is the actual manufacturer of these items. Failure to submit the Material Safety Data Sheet prior to award may result in the apparently successful offeror being considered nonresponsible and ineligible for award. (e) If, after award, there is a change in the composition of the item(s) or a revision to Federal Standard No. 313, which renders incomplete or inaccurate the data submitted under paragraph (d) of this clause, the Contractor shall promptly notify the Contracting Officer and resubmit the data. (f) Neither the requirements of this clause nor any actor failure to act by the Government shall relieve ~e Contractor of any responsibility or liability for the safety of Government, Contractor, or subcontractor personnel or property. (g) Nothing contained in this clause shall relieve the Contractor from complying with applicable Federal, State, and local laws, codes, ordinances, and regulations (including the obtaining of licenses and permits) in connection with hazardous material. (h) The Government's rights in data furnished under this contract with respect to hazardous material are as follows: (1) To use, duplicate and disclose any data to which this clause is applicable. The purposes of this right are to -- (i) Apprise personnel of the hazards to which they may be exposed in using, handling, packaging, transporting, or disposing of hazardous materials; (ii) Obtain medical treatment for those affected by the material; and (iii) Have others use, duplicate, and disclose the data for the Government for these purposes. (2) To use, duplicate, and disclose data furnished under this clause, in accordance with subparagraph (h)(1) of this clause, in precedence over any other clause of this contract providing for rights in data. (3) The Government is not precluded from using similar or identical data acquired from other sources. (End of Clause) HAZARD WARNING LABELS (DEC 1991) (DFAR 252.223-7001) (a) "Hazardous material," as used in this clause, is defined in the Hazardous Material Identification and Material Safety Data clause of this contract. N00164-01-D-0042 PAGE 32 OF 50 (b) The Contractor shall label the item package (unit container) of any hazardous material to be delivered under this contract in accordance with the Hazard Communication Standard (29 CFR 1910.1200 et seq). The Standard requires that the hazard warning label conform to the requirements of the standard unless the material is otherwise subject to the labeling requirements of one of the following statutes: (1) Federal Insecticide, Fungicide and Rodenticide Act; (2) Federal Food, Drug and Cosmetics Act; (3) Consumer Product Safety Act; (4) Federal Hazardous Substances Act; or (5) Federal Alcohol Administration Act. (c) The Offeror shall list which hazardous material listed in the Hazardous Material Identification and Material Safety Data clause of this contract will be labeled in accordance with one of the Acts in paragraphs (b)(1) through (5) of this clause instead of the Hazard Communication Standard. Any hazardous material not listed will be interpreted to mean that a label is required in accordance with the Hazard Communication Standard. MATERIAL ACT (If None, Insert "None") NONE --------------------------------- --------------------------------- --------------------------------- --------------------------------- (d) The apparently successful Offeror agrees to submit, before award, a copy of the hazard warning label for all hazardous materials not listed in paragraph (c) of this clause. The Offeror shall submit the label with the Material Safety Data Sheet being furnished under the Hazardous Material Identification and Material Safety Data clause of this contract. (e) The Contractor shall also comply with MIL-STD-129, Marking for Shipment and Storage (including revisions adopted during the term of this contract). HAZARDOUS MATERIALS (6002) (a) Packaging, Packing, Marking and Labeling Hazardous materials to be shipped by any mode or combination of transportation modes shall be prepared (properly classed, described, packaged, marked, labeled, transport vehicle placarded, etc.) for shipment in accordance with MIL-STD-129 and all applicable government and carrier regulations in effect at time of shipment. (b) In the event of a conflict between specific requirements in the contract or order and existing applicable regulations, the regulations take precedence. Under no circumstances shall the contractor knowingly use materials, markings or procedures which are not in accordance with laws and regulations applicable to the mode of transportation employed. TYPE OF SHIPMENT APPLICABLE REGULATIONS ---------------- ---------------------- 1. Domestic A 2. Domestic Air Commercial A, B, C 3. Domestic Air Military A, F *4. Export Surface A, E, G *5. Export Air Commercial A, D, G *6. Export Air Military (MAC) F, G N00164-01-D-0042 PAGE 33 OF 50 LIST OF REGULATIONS A. Code of Federal Regulations Title: 49 Transportation Parts 100-199 B. Official Air Transport Restricted Articles Tariff No. 6-D C.A.B. 82 C. Official Air Transport Restricted Articles Circular No. 6-D D. International Air Transport Association Restricted Articles Regulations E. International Maritime Dangerous Goods Code F. Air Force Regulation 71-4 Preparation of Hazardous Materials for Military Shipment *G. Export shipments are also subject to the domestic regulations indicated to the port of embarkation. NOTICE OF RADIOACTIVE MATERIALS (JAN 1997) (FAR 52.223-7) (a) The Contractor shall notify the Contracting Officer or designee, in writing, 7 days prior to the delivery of, or prior to completion of any servicing required by this contract of, items containing either (1) radioactive material requiring specific licensing under the regulations issued pursuant to the Atomic Energy Act of 1954, as amended, as set forth in Title 10 of the Code of Federal Regulations, in effect on the date of this contract, or (2) other radioactive material not requiring specific licensing in which the specific activity is greater than 0.002 microcuries per gram or the activity per item equals or exceeds 0.01 microcuries. Such notice shall specify the part or parts of the items which contain radioactive materials, a description of the materials, the name and activity of the isotope, the manufacturer of the materials, and any other information known to the Contractor which will put users of the items on notice as to the hazards involved (OMB No. 9000-0107). (b) If there has been no change affecting the quantity of activity, or the characteristics and composition of the radioactive material from deliveries under this contract or prior contracts, the Contractor may request that the Contracting Officer or designee waive the notice requirement in paragraph (a) of this clause. Any such request shall-- (1) Be submitted in writing; (2) State that the quantity of activity, characteristics, and composition of the radioactive material have not changed; and (3) Cite the contract number on which the prior notification was submitted and the contracting office to which it was submitted. (c) All items, parts, or subassemblies which contain radioactive materials in which the specific activity is greater than 0.002 microcuries per gram or activity per item equals or exceeds 0.01 microcuries, and all containers in which such items, parts or subassemblies are delivered to the Government shall be clearly marked and labeled as required by the latest revision of MIL-STD-129 in effect on the date of the contract. (d) This clause, including this paragraph (d), shall be inserted in all subcontracts for radioactive materials meeting the criteria in paragraph (a) of this clause. VALUE ENGINEERING (FEB 2000) (FAR 52.248-1) As prescribed in 48.201, insert the following clause: (a) GENERAL. The Contractor is encouraged to develop, prepare, and submit value engineering change proposals (VECP's) voluntarily. The Contractor shall share in any net acquisition savings realized from accepted VECP's, in accordance with the incentive sharing rates in paragraph (f) below. (b) DEFINITIONS. N00164-01-0-0042 PAGE 34 OF 50 "ACQUISITION SAVINGS, "as used in this clause, means savings resulting from the application of a VECP to contracts awarded by the same contracting office or its successor for essentially the same unit. Acquisition savings include -- (1) Instant contract savings, which are the net cost reductions on this, the instant contract, and which are equal to the instant unit .cost reduction multiplied by the number of instant contract units affected by the VECP, less the Contractor's allowable development and implementation costs; (2) Concurrent contract savings, which are net reductions in the prices of other contracts that are definitized and ongoing at the time the VECP is accepted; and (3) Future contract savings, which are the product of the future unit cost reduction multiplied by the number of future contract units in the sharing base. On an instant contract, future contract savings include savings on increases in quantities after VECP acceptance that are due to contract modifications, exercise of options, additional orders, and funding of subsequent year requirements on a multiyear contract. "COLLATERAL COSTS," as used in this clause, means agency cost of operation, maintenance, logistic support, or Government-furnished property. "COLLATERAL SAVINGS," as used in this clause, means those measurable net reductions resulting from a VECP in the agency's overall projected collateral costs, exclusive of acquisition savings, whether or not the acquisition cost changes. "CONTRACTING OFFICE" includes any contracting office that the acquisition is transferred to, such as another branch of the agency or another agency's office that is performing a joint acquisition action. "CONTRACTOR'S DEVELOPMENT AND IMPLEMENTATION COSTS," as used in this clause, means those costs the Contractor incurs on a VECP specifically in developing, testing, preparing, and submitting the VECP, as well as those costs the Contractor incurs to make the contractual changes required by Government acceptance of a VECP. "FUTURE UNIT COST REDUCTION," as used in this clause, means the instant unit cost reduction adjusted as the Contracting Officer considers necessary for projected learning or changes in quantity during the sharing period. It is calculated at the time the VECP is accepted and applies either - (1) Throughout the sharing period, unless the Contracting Officer decides that recalculation is necessary because conditions are significantly different from those previously anticipated; or (2) To the calculation of a lump-sum payment, which cannot later be revised. "GOVERNMENT COSTS," as used in this clause, means those agency costs that result directly from developing and implementing the VECP, such as any net increases in the cost of testing, operations, maintenance, and logistics support. The term does not include the normal administrative costs of processing the VECP or any increase in this contract's cost or price resulting from negative instant contract savings. "INSTANT CONTRACT," as. used in this clause, means this contract, under which the VECP is submitted. It does not include increases in quantities after acceptance of the VECP that are due to contract modifications, exercise of options, or additional orders. If this is a multiyear contract, the term does not include quantities funded after VECP acceptance. If this contract is a fixed-price contract with prospective price redetermination, the term refers to the period for which firm prices have been established. N00164-01-D-0042 PAGE 35 OF 50 "INSTANT UNIT COST REDUCTION" means the amount of the decrease in unit cost of performance (without deducting any Contractor's development or implementation costs) resulting from using the VECP on this, the instant contract. If this is a service contract, the instant unit cost reduction is normally equal to the number of hours per line-item task saved by using the VECP on this contract, multiplied by the appropriate contract labor rate. "NEGATIVE INSTANT CONTRACT SAVINGS" means the increase in the cost or price of this contract when the acceptance of a VECP results in an excess of the Contractor's allowable development and implementation costs over the product of the instant unit cost reduction multiplied by the number of instant contract units affected. "NET ACQUISITION SAVINGS" means total acquisition savings, including instant, concurrent, and future contract savings, less Government costs. "SHARING BASE," as used in this clause, means the number of affected end items on contracts of the contracting office accepting the VECP. "SHARING PERIOD," as used in this-clause, means the period beginning with acceptance of the first unit incorporating the VECP and ending at a calendar date or event determined by the contracting officer for each VECP. "UNIT," as used in this clause, means the item or task to which the Contracting Officer and the Contractor agree the VECP applies. "Value engineering change proposal (VECP)" means a proposal that - (1) Requires a change to this, the instant contract, to implement; and (2) Results in reducing the overall projected cost to the agency without impairing essential functions or characteristics; provided, that it does not involve a change -- (i) in deliverable end item quantities only; (ii)In research and development (R&D) end items or R&D test quantities that is due solely to results of previous testing under this contract; or (iii) To the contract type only. (c) VECP PREPARATION. As a minimum, the Contractor shall include in each VECP the information described in subparagraphs (c)(1) through (8) below. If the proposed change is affected by contractually required configuration management or similar procedures, the instructions in those procedures relating to format, identification, and priority assignment shall govern VECP preparation. The VECP shall include the following: (1) A description of the difference between the existing contract requirement and the proposed requirement, the comparative advantages and disadvantages of each, a justification when an item's function or characteristics are being altered, the effect of the change on the end item's performance, and any pertinent objective test data. (2) A list and analysis of the contract requirements that must be changed if the VECP is accepted, including any suggested specification revisions. (3) identification of the unit to which the VECP applies. (4) A separate, detailed cost estimate for (i)the affected portions of the existing contract requirement and (ii) the VECP. The cost reduction associated with the VECP shall take into account the Contractor's allowable development and implementation costs, including any amount attributable to subcontracts under the Subcontracts paragraph of this clause, below. (5) A description and estimate of costs the Government may incur in implementing the VECP, such as test and evaluation and operating and support costs. N00164-01-D-0042 PAGE 36 OF 50 (6) A prediction of any effects the proposed change would have on collateral costs to the agency. (7) A statement of the time by which a contract modification accepting the VECP must be issued in order to achieve the maximum cost reduction, noting any effect on the contract completion time or delivery schedule. (8) Identification of any previous submissions of the VECP, including the dates submitted, the agencies and contract numbers involved, and previous Government actions, if known. (d) SUBMISSION. The Contractor shall submit VECP's to the Contracting Officer, unless this contract states otherwise. If this contract is administered by other than the contracting office, the Contractor shall submit a copy of the VECP simultaneously to the Contracting Officer and to the Administrative Contracting Officer. (e) GOVERNMENT ACTION. (1) The Contracting Officer [will] notify the Contractor of the status of the VECP within 45 calendar days after the contracting office receives it. If additional time is required, the Contracting Officer [will] notify the Contractor within the 45-day period and provide the reason for the delay and the expected date of the decision. The Government will process VECP's expeditiously; however, it [will] not be liable for any delay in acting upon a VECP. (2) If the VECP is not accepted, the Contracting Officer [will] notify the Contractor in writing, explaining the reasons for rejection. The Contractor may withdraw any VECP, in whole or in part, at any time before it is accepted by the Government. The Contracting Officer may require that the Contractor provide written notification before undertaking significant expenditures for VECP effort. (3) Any VECP may be accepted, in whole or in part, by the Contracting Officer's award of a modification to this contract citing this clause and made either before or within a reasonable time after contract performance is completed. Until such a contract modification applies a VECP to this contract, the Contractor shall perform in accordance with the existing contract. The [ ] decision to accept or reject all or part of any VECP [is a unilateral decision made solely at the discretion of the Contracting Officer.] (f) SHARING RATES. If a VECP is accepted, the Contractor shall share in net acquisition savings according to the percentages shown in the table below. The percentage paid the Contractor depends upon - (1) This contract's type (fixed-price, incentive, or cost-reimbursement); (2) The sharing arrangement specified in paragraph (a) above (incentive, program requirement, or a combination as delineated in the Schedule); and (3) The source of the savings (the instant contract, or concurrent and future contracts), as follows: CONTRACTOR'S SHARE OF NET ACQUISITION SAVINGS (Figures in percent) Contract Type Incentive (Voluntary) Program Requirement (Mandatory) Instant Contract Concurrent and Instant Contract Concurrent and Rate Future Contract Rate Future Contract Rate Rate N00164-01-D-0042 PAGE 37 OF 50 Fixed-price (1) 50 (1) 50 (1) 25 25 (includes fixed- price-award- fee; excludes other fixed- price incentive contracts) Incentive (fixed- (2) (1) 50 (2) 25 price or cost) (other than award fee) Cost- (3) 25 (3) 25 15 15 reimbursement (includes cost- plus-award-fee; excludes other cost-type incentive Contracts) (1) The Contracting Officer may increase the Contractor's sharing rate to as high as 75 percent for each VECP. (2) Same sharing arrangement as the contract's profit or fee adjustment formula. (3) The Contracting Officer may increase the Contractor's sharing rate to as high as 50 percent for each VECP. (g)CALCULATING NET ACQUISITION SAVINGS. (1) Acquisition savings are realized when (i) the cost or price is reduced on the instant contract, (ii) reductions are negotiated in concurrent contracts, (iii) future contracts are awarded, or (iv) agreement is reached on a lump-sum payment for future contract savings (see subparagraph (i)(4) below). Net acquisition savings are first realized, and the Contractor shall be paid a share, when Government costs and any negative instant contract savings have been fully offset against acquisition savings, (2) Except in incentive contracts, Government costs and any price or cost increases resulting from negative instant contract savings shall be offset against acquisition savings each time such savings are realized until they are fully offset. Then, the Contractor's share is calculated by multiplying net acquisition savings by the appropriate Contractor's percentage sharing rate (see paragraph (f) above). Additional Contractor shares of net acquisition savings shall be paid to the Contractor at the time realized. (3) If this is an incentive contract, recovery of Government costs on the instant contract shall be deferred and offset against concurrent and future contract savings. The Contractor shall share through the contract incentive structure in savings on the instant contract items affected. Any negative instant contract savings shall be added to the target cost or to the target price and ceiling price, and the amount shall be offset against concurrent and future contract savings. N00164-01-D-0042 PAGE 38 OF 50 (4) If the Government does not receive and accept all items on which it paid the Contractor's share, the Contractor shall. reimburse the Government for the proportionate share of these payments. (h) CONTRACT ADJUSTMENT. The modification accepting the VECP (or a subsequent modification issued as soon as possible after any negotiations are completed) shall -- (1) Reduce the contract price or estimated cost by the amount of instant contract savings, unless this is an incentive contract; (2) When the amount of instant contract savings is negative, increase the contract price, target price and ceiling price, target cost, or estimated cost by that amount; . (3) Specify the Contractor's dollar share per unit on future contracts, or provide the lump-sum payment; (4) Specify the amount of any Government costs or negative instant contract savings to be offset in determining net acquisition savings realized from concurrent or future contract savings; and (5) Provide the Contractor's share of any net acquisition savings under the instant contract in accordance with the following: (i) Fixed-price contracts - add to contract price. (ii) Cost-reimbursement contracts - add to contract fee. (i) CONCURRENT AND FUTURE CONTRACT SAVINGS. (1) Payments of the Contractor's share of concurrent and future contract savings shall be made by a modification to the instant contract in accordance with subparagraph (h)(5) above. For incentive contracts, shares shall be added as a separate firm-fixed-price line item on the instant contract. The Contractor shall maintain records adequate to identify the first delivered unit for 3 years after final payment under this contract. (2) The Contracting Officer shall calculate the Contractor's share of concurrent contract savings by -- (i)Subtracting from the reduction in price negotiated on the concurrent contract any Government costs or negative instant contract savings not yet offset; and (ii) Multiplying the result by the Contractors sharing rate. (3) The Contracting Officer shall calculate the Contractor's share of future contract savings by -- (i) Multiplying the future unit cost reduction by the number of future contract units scheduled for delivery during the sharing period; (ii) Subtracting any Government costs or negative instant contract savings not yet offset; and (iii) Multiplying the result by the Contractor's sharing rate. (4) When the Government wishes and the Contractor agrees, the Contractor's share of future contract savings may be paid in a single lump sum rather than in a series of payments over time as future contracts are awarded. Under this alternate procedure, the future contract savings may be calculated when the VECP is accepted, on the basis of the Contracting Officer's forecast of the number of units that will be delivered during the sharing period. The Contractor's share shall be included in a modification to this contract (see subparagraph (h)(3) above) and shall not be subject to subsequent adjustment. (5) Alternate no-cost settlement method. When, in accordance with subsection 48.104-4 of the Federal Acquisition Regulation, the Government and the Contractor mutually agree to use the no-cost settlement method, the following applies: (i) The Contractor will keep all the savings on the instant contract and on its concurrent contracts only. N00164-01-D-0042 PAGE 39 OF 50 (ii) The Government will keep all the savings resulting from concurrent contracts placed on other sources, savings from all future contracts, and all collateral savings. (j) COLLATERAL SAVINGS. If a VECP is accepted, [the Contracting Officer will increase] the instant contract amount[ ], as specified in paragraph (h)(5) of this clause, by a rate from 20 to 100 percent, as determined by the Contracting Officer, of any projected collateral savings determined to be realized in a typical year of use after subtracting any Government costs not previously offset. However, the Contractor's share of collateral savings [will] not exceed[ ] the contract's firm-fixed-price, target price, target cost, or estimated cost, at the time the VECP is accepted, or [ ] $100,000, whichever is greater. The Contracting Officer [will] be the sole determiner of the amount of collateral savings[ ]. (k) RELATIONSHIP TO OTHER INCENTIVES. Only those benefits of an accepted VECP not rewardable under performance, design-to-cost (production unit cost, operating and support costs, reliability and maintainability), or similar incentives shall be rewarded under this clause. However, the targets of such incentives affected by the VECP shall not be adjusted because of VECP acceptance. If this contract specifies targets but provides no incentive to surpass them, the value engineering sharing shall apply only to the amount of achievement better than target. (l) SUBCONTRACTS. The Contractor shall include an appropriate value engineering clause in any subcontract of $100,000 or more and may include one in subcontracts of lesser value. In calculating any adjustment in this contract's price for instant contract savings (or negative instant contract savings), the Contractor's allowable development and implementation costs shall include any subcontractor's allowable development and implementation costs, and any value engineering incentive payments to a subcontractor, clearly resulting from a VECP accepted by the Government under this contract. The Contractor may choose any arrangement for subcontractor value engineering incentive payments; provided, that the payments shall not reduce the Government's share of concurrent or future contract savings or collateral savings. (m) DATA. The Contractor may restrict the Government's right to use any part of a VECP or the supporting data by marking the following legend on the affected parts: These data, furnished under the Value Engineering clause of contract _________, shall not be disclosed outside the Government or duplicated, used, or disclosed, in whole or in part, for any purpose other than to evaluate a value engineering change proposal submitted under the clause. This restriction does not limit the Government's right to use information contained in these data if it has been obtained or is otherwise available from the Contractor or from another source without limitations. If a VECP is accepted, the Contractor hereby grants the Government unlimited rights in the VECP and supporting data, except that, with respect to data qualifying and submitted as limited rights technical data, the Government shall have the rights specified in the contract modification implementing the VECP and shall appropriately mark the data. (The terms "unlimited rights" and "limited rights" are defined in Part 27 of the Federal Acquisition Regulation.) (End of Clause) CLAUSES INCORPORATED BY REFERENCE (FEB 1998) (52.252-2) This contract incorporates one or more clauses by reference, with the same force and effect as if they were given in full text. Upon request, the Contracting Officer will make their full text available. Also, the Jull text of a clause may be accessed electronically at this/these addresses*(es): http://www.arnet.aov/far N00164-01-D-0042 PAGE 40 OF 50 SUBSTITUTIONS FOR MILITARY OR FEDERAL SPECIFICATIONS AND STANDARDS (AUG 2000) (DFARS 252.211.7005) (a) * * * Under SPI, these processes are reviewed and accepted by a Management Council, which includes representatives-of the Contractor, the Defense Contract Management Agency, the Defense Contract Audit Agency, and the military departments. (b) Offerors are encouraged to propose SPI processes in lieu of military or Federal specifications and standards cited in the solicitation. A listing of SPI processes accepted at specific facilities is available via the Internet in PDF format at http://www.dcmc.hq.dia.mil/dcmc_o/oc/spi/files/dbreport/files/modified. pdf and in Excel format at http://www.dcmc.hq.dia.mil/dcmco/oc/spi/ files/dbreport/files/modified.xls. SECTION 8(a) DIRECT AWARD (JUN 1998) (252.219-7009) (a) This contract is issued as a direct award between the contracting office and the 8(a) Contractor pursuant to the Memorandum of Understanding dated May 6, 1998, between the Small Business Administration (SBA) and the Department of Defense. Accordingly, the SBA is not a party to this contract. SBA does retain responsibility for 8(a) certification, for 8(a) eligibility determinations and related issues, and for providing counseling and assistance to the 8(a) Contractor under the 8(a) Program. The cognizant SBA district office is: BALTIMORE DISTRICT OFFICE CITY CRESCENT BLDG., 6TH FLOOR 10 S HOWARD STREET BALTIMORE, MD 21201 (b) The contracting office is responsible for administering the contract and for taking any action on behalf of the Government under the terms and conditions of the contract; provided that-the contracting office shall give advance notice to the SBA before it issues a final notice terminating performance, either in whole or in part, under the contract. The contracting office also shall coordinate with the SBA prior to processing any novation agreement. The contracting office may assign contract administration functions to a contract administration office. (c) The Contractor agrees that- (1) It will notify the Contracting Officer, simultaneous with its notification to the SBA (as required by SBA's 8(a) regulations at 13 CFR 124.308), when the owner or owners upon whom 8(a) eligibility is based plan to relinquish ownership or control of the concern. Consistent with Section 407 of Pub. L. 100-656, transfer of ownership or control shall result in termination of the contract for convenience, unless the SBA waives the requirement for termination prior to the actual relinquishing of ownership and control; and (2) It will not subcontract the performance of any of the requirements of this contract without the prior written approval of the SBA and the Contracting Officer. (End of clause) N00164-01-D-0042 PAGE 41 OF 50 RIGHTS IN TECHNICAL DATA--NONCOMMERCIAL ITEMS (NOV 1995) (DFAR 252.227-7013 (Alt 1)) (a) Definitions. As used in this clause: (1) "Computer data base" means a collection of data recorded in a form capable of being processed by a computer. The term does not include computer software. (2) "Computer program" means a set of instructions, rules, or routines recorded in a form that is capable of causing a computer to perform a specific operation or series of operations. (3) "Computer software" means computer programs, source code, source code listings, object code listings, design details, algorithms, processes, flow charts, formulae and related material that would enable the software to be reproduced, recreated, or recompiled. Computer software does not include computer data bases or computer software documentation. (4) "Computer software documentation" means owner's manuals, user's manuals, installation instructions, operating instructions, and other similar items, regardless of storage medium, that explain the capabilities of the computer software or provide instructions for using the software. (5) "Detailed manufacturing or process data" means technical data that describe the steps, sequences, and conditions of manufacturing, processing or assembly used by the manufacturer to produce an item or component or to perform a process. (6) "Developed" means that an item, component, or process exists and is workable. Thus, the item or component must have been constructed or the process practiced. Workability is generally established when the item, component, or process has been analyzed or tested sufficiently to :demonstrate to reasonable people skilled in the applicable art that there is a high probability that it will operate as intended. Whether, how much, and what type of analysis or testing is required to establish workability depends on the nature of the item, component, or process, and the state of the art. To be considered "developed," the item, component, or process need not be at the stage where it could be offered for sale or sold on the commercial market, nor must the item, component, or process be actually reduced to practice within the meaning of Title 35 of the United States Code. (7) "Developed exclusively at private expense" means development was accomplished entirely with costs charged to indirect cost pools, costs not allocated to a government contract, or any combination thereof. (i) Private expense determinations should be made at the lowest practicable level. (ii) Under fixed-price contracts, when total costs are greater than the firm-fixed-price or ceiling price of the contract, the additional development costs necessary to complete development shall not be considered when determining whether development was at government, private, or mixed expense. (8) "Developed exclusively with government funds" means development was not accomplished exclusively or partially at private expense. (9) "Developed with mixed funding" means development was accomplished partially with costs charged to indirect cost pools and/or costs not allocated to a government contract, and partially with costs charged directly to a government contract. (10) "Form, fit, and function data" means technical data that describes the required overall physical, functional, and performance characteristics (along with the qualification requirements, if applicable) of an item, component, or process to the extent necessary to permit identification of physically and functionally interchangeable items. NOO 164-01-D-0042 PAGE 42 OF 50 (11) "Government purpose" means any activity in which the United States Government is a party, including cooperative agreements with international or multi-national defense organizations, or sales or transfers by the United States Government to foreign governments or international organizations. Government purposes include competitive procurement, but do not include the rights to use, modify, reproduce, release, perform, display, or disclose technical data for commercial purposes or authorize others to do so. (12) "Government purpose rights" means the rights to- (i) Use, modify, reproduce, release, perform, display, or disclose technical data within the Government without restriction; and (ii) Release or disclose technical data outside the Government and authorize persons to whom release or disclosure has been made to use, modify, reproduce, release, perform, display, or disclose that data for United States government purposes. (13) "Limited rights" means the rights to use, modify, reproduce, release, perform, display, or disclose technical data, in whole or, in. part, within the Government. The Government may not, without the written permission of the party asserting limited rights, release or disclose the technical data outside the Government, use the technical data for manufacture, or authorize the technical data to be used by another party, except that the Government may reproduce, release or disclose such data or authorize the use or reproduction of the data by persons outside the Government if reproduction, release, disclosure, or use is- (i) Necessary for emergency repair and overhaul; or (ii) A release or disclosure of technical data (other than detailed manufacturing or process any data) to, or use of such data by, a foreign government that is in the interest of the Government and is required for evaluational or informational purposes; (iii) Subject to a prohibition on the further reproduction, release, disclosure, or use of the technical data; and (iv) The contractor or subcontractor asserting the restriction is notified of such reproduction, release, disclosure, or use. (14) "Technical data" means recorded information, regardless of the form or method of the recording, of a scientific or technical nature (including computer software documentation). The term does not include computer software or data incidental to contract administration, such as financial and/or management information. (15) "Unlimited rights" means rights to use, modify, reproduce, perform, display, release, or disclose technical data in whole or in part, in any manner, and for any purpose whatsoever, and to have or authorize others to do so. (b) Rights in technical data. The Contractor grants or shall obtain for the Government the following royalty free, world-wide, nonexclusive, irrevocable license rights in technical data other than computer software documentation (see the Rights in Noncommercial Computer Software and Noncommercial Computer Software Documentation clause of this contract for rights in computer software documentation): (1) Unlimited rights. The Government shall have unlimited rights in technical data that are- (i) Data pertaining to an item, component, or process which has been or will be developed exclusively with Government funds; (ii) Studies, analyses, test data, or similar data produced for this contract, when the study, analysis, test, or similar work was specified as an element of performance; N00164-01-D-0042 PAGE 43 OF 50 (iii) Created exclusively with Government funds in the performance of a contract that does not require the development, manufacture, construction, or production of items, components, or processes; (iv) Form, fit, and function data; (v) Necessary for installation, operation, maintenance, or training purposes (other than detailed manufacturing or process data); (vi) Corrections or changes to technical data furnished to the Contractor by the Government; (vii) Otherwise publicly available or have been released or disclosed by the Contractor or subcontractor without restrictions on further use, release or disclosure, other than a release or disclosure resulting from the sale, transfer, or other assignment of interest in the technical data to another party or the sale or transfer of some or all of a business entity or its assets to another party; (viii) Data in which the Government has obtained unlimited rights under another Government contractor as a result of negotiations; or (ix) Data furnished to the Government, under this or any other Government contract or subcontract thereunder, with- (A) Government purpose license rights or limited rights and the restrictive condition(s) has/have expired; or (B) Government purpose rights and the Contractor's exclusive right to use such data for commercial purposes has expired. (2) Government purpose rights. (i) The Government shall have government purpose rights for a five-year period, or such other period as may be negotiated, in technical data- (A) That pertain to items, components, or processes developed with mixed funding except F-' hen the Government is entitled to unlimited rights in such data as provided in paragraphs (b)(H) and (b)(iv) through (b)(ix) of this clause; or (B) Created with mixed funding in the performance of a contract that does not require the development, manufacture, construction, or production of items, components, or processes. (ii) The five-year period, or such other period as may have been negotiated, shall commence upon execution of the contract, subcontract, letter contract (or similar contractual instrument), contract modification, or option exercise that required development of the items, components, or processes or creation of the data described in paragraph (b)(2)(i)(B) of this clause. Upon expiration of the five-year or other negotiated. period, the Government shall have unlimited rights in the technical data. (iii) The Government shall not release or disclose technical data in which it has government purpose rights unless- (A) Prior to release or disclosure, the intended recipient is subject to the non-disclosure agreement at 227.7103-7 of the Defense Federal Acquisition Regulation Supplement (DFARS); or (B) The recipient is a Government contractor receiving access to the data for performance of a Government contract that contains the clause at DFARS 252.227-7025, Limitations on the Use or Disclosure of Government-Furnished Information Marked with Restrictive Legends. (iv) The Contractor has the exclusive right, including the right to license others, to use technical data in which the Government has obtained government purpose rights under this contract for any commercial purpose during the time period specified in the government purpose rights legend prescribed in paragraph (f)(2) of this clause. (3) Limited rights. (i) Except as provided in paragraphs (b)(1)(ii) and (b)(1)(iv) through (b)(1)(ix) of this clause, the Government shall have limited rights in technical data- N00164-01-D-0042 PAGE 44 OF 50 (A) Pertaining to items, components, or processes developed exclusively at private expense and marked with the limited rights legend prescribed in paragraph (f) of this clause; or (B) Created exclusively at private expense in the performance of a contract that does not require the development, manufacture, construction, or production of items, components, or processes. (ii) The Government shall require a recipient of limited rights data for emergency repair or overhaul to destroy the data and all copies in its possession promptly following completion of the emergency repair/overhaul and to notify the Contractor that the data have been destroyed. (iii) The Contractor, its subcontractors, and suppliers are not required to provide the Government additional rights to use, modify, reproduce, release, perform, display, or disclose technical data furnished to the Government with limited rights. However, if the Government desires to obtain additional rights in technical data in which it has limited rights, the Contractor agrees to promptly enter into negotiations with the Contracting Officer to determine whether there are acceptable terms for transferring such rights. All technical data in which the Contractor has granted the Government additional rights shall be listed or described in a license agreement made part of the contract. The license shall enumerate the additional rights granted the Government in such data. (4) Specifically negotiated license rights. The standard license rights granted to the Government under paragraphs (b)(1) through (b)(3) of this clause, including the period during which the Government shall have government purpose rights in technical data, may be modified by mutual agreement to provide such rights as the parties consider appropriate but shall not provide the Government lesser rights than are enumerated in paragraph (a)(13) of this clause. Any rights so negotiated shall be identified in a license agreement made part of this contract. (5) Prior government rights. Technical data that will be delivered, furnished, or otherwise provided o the Government under this contract, in which the Government has previously obtained rights shall be delivered, furnished, or provided with the pre-existing rights, unless- (i) The parties have agreed otherwise; or (ii) Any restrictions on the Government's rights to use, modify, reproduce, release, perform, display, or disclose the data have expired or no longer apply. (6) Release from liability. The Contractor agrees to release the Government from liability for any release or disclosure of technical data made in accordance with paragraph (a)(13) or (b)(2)(iii) of this clause, in accordance with the terms of a license negotiated under paragraph (b)(4) of this clause, or by others to whom the recipient has released or disclosed the data and to seek relief solely from the party who has improperly used, modified, reproduced, released, performed, displayed, or disclosed Contractor data marked with restrictive legends. (c) Contractor rights in technical data. All rights not granted to the Government are retained by the Contractor. (d) Third party copyrighted data. The Contractor shall not, without the written approval of the Contracting Officer, incorporate any copyrighted data in the technical data to be delivered under this contract unless the Contractor is the copyright owner or has obtained for the Government the license rights necessary to perfect a license or licenses in the deliverable data of the appropriate scope set forth in paragraph (b) of this clause, and has affixed a statement of the license or licenses obtained on behalf of the Government and other persons to the data transmittal document. (e) Identification and delivery of data to be furnished with restrictions on use, release, or disclosure. (1) This paragraph does not apply to restrictions based solely on copyright. N00164-01 -D-0042 PAGE 45 OF 50 (2) Except as provided in paragraph (e)(3) of this clause, technical data that the Contractor asserts should be furnished to the Government with restrictions on use, release, or disclosure are identified in an attachment to this contract (the Attachment). The Contractor shall not deliver any data with restrictive markings unless the data are listed on the Attachment. (3) In addition to the assertions made in the Attachment, other assertions may be identified after award when based on new information or inadvertent omissions unless the inadvertent omissions would have materially affected the source selection decision. Such identification and assertion shall be submitted to the Contracting Officer as soon as practicable prior to the scheduled .date for delivery of the data, in the following format, and signed by an official authorized to contractually obligate the Contractor: Identification and Assertion of Restrictions on the Government's Use, Release, or Disclosure of Technical Data. The Contractor asserts for itself, or the persons identified below, that the Government' rights to use, release, or disclose the following technical data should be restricted-
-------------------------------------------------------------------------------------------------------------------------------- Technical Data to be Basis for Assertion Asserted Rights Name of Person Furnished With Category Asserting Restrictions Restrictions -------------------------------------------------------------------------------------------------------------------------------- List * List** List*** List**** --------------------------------------------------------------------------------------------------------------------------------
*If the assertion is applicable to items, components, or processes developed at private expense, identify both the data and each such item, component, or process. **Generally, the development of an item, component, or process at private expense, either exclusively or partially, is the only basis for asserting restrictions on the Government's rights to use, release, or disclose technical data pertaining to such items, components, or processes. Indicate whether development was exclusively or partially at private expense. If development was not at private expense, enter the specific reason for asserting that the Government's rights should be restricted. ***Enter asserted rights category (e.g., government purpose license rights from a prior contract, rights in SBIR data generated under another contract, limited or government purpose rights under this or a prior contract, or specifically negotiated licenses). ****Corporation, individual, or other person, as appropriate. Date _______________________________________ Printed Name and Title _______________________________________ _______________________________________ Signature _______________________________________ (End of identification and assertion) N00164-01-D-0042 PAGE 46 OF 50 (4) When requested by the Contracting Officer, the Contractor shall provide sufficient information to enable the Contracting Officer to evaluate the Contractor's assertions. The Contracting Officer reserves the right to add the Contractor's assertions to the Attachment and validate any listed assertion, at a later date, in accordance with the procedures of the Validation of Restrictive Markings on Technical Data clause of this contract. (f) Marking requirements. The Contractor, and its subcontractors or suppliers, may only assert restrictions on the Government's rights to use, modify, reproduce, release, perform, display, or disclose technical data to be delivered under this contract by marking the deliverable data subject to restriction. Except as provided in paragraph (f)(5) of this clause, only the following legends are authorized under this contract: the government purpose rights legend at paragraph (f)(2) of this clause; the limited rights legend at paragraph (0(3) of this clause; or the special license rights legend at paragraph (f)(4) of this clause; and/or a notice of copyright as prescribed under 17 U.S.C. 401 or 402. (1) General marking instructions. The Contractor, or its subcontractors or suppliers, shall conspicuously and legibly mark the appropriate legend on all technical data that qualify for such markings. The authorized legends shall be placed on the transmittal document or storage container and, for printed material, each page of the printed material containing technical data for which restrictions are asserted. When only portions of a page of printed material are subject to the asserted restrictions, such portions shall be identified by circling, underscoring, with a note, or other appropriate identifier. Technical data transmitted directly from one computer or computer terminal to another shall contain a notice of asserted restrictions. Reproductions of technical data or any portions thereof subject to asserted restrictions shall also reproduce the asserted restrictions. (2) Government purpose rights markings. Data delivered or otherwise furnished to the Government with government purpose rights shall be marked as follows: GOVERNMENT PURPOSE RIGHTS Contract No. Contractor Name Contractor Address Expiration Date The Government's rights to use, modify, reproduce, release, perform, display, or disclose these technical data are restricted by paragraph (b)(2) of the Rights in Technical Data-Noncommercial Items clause contained in the above identified contract. No. restrictions apply after the expiration date shown above. Any reproduction of technical data or portions thereof marked with this legend must also reproduce the markings. (End of legend) (3) Limited rights markings. Data delivered or otherwise furnished to the Government with limited rights shall be marked with the following legend: LIMITED RIGHTS Contract No. Contractor Name Contractor Address N00164-01-D-0042 PAGE 47 OF 50 The Government's rights to use, modify, reproduce, release, perform, display, or disclose these technical data are restricted by paragraph (b)(3) of the Rights in Technical Data--Noncommercial Items clause contained in the above identified contract. Any reproduction of technical data or portions thereof marked with this legend must also reproduce the markings. Any person, other than the Government, who has been provided access to such data must promptly notify the above named Contractor. (End of legend) (4) Special license rights markings. (i) Data in which the Government's rights stem from a specifically negotiated license shall be marked with the following legend: SPECIAL LICENSE RIGHTS The Government's rights to use, modify, reproduce, release, perform, display, or disclose these data are restricted by Contract No. ____ (Insert contract number) ____, License No. ____ (Insert license identifier)____. Any reproduction of technical data or portions thereof marked with this legend must also reproduce the markings. (End of legend) (ii) For purposes of this clause, special licenses do not include government purpose license " . rights acquired under a prior contract (see paragraph (b)(5) of this clause). (5) Pre-existing data markings. If the terms of a prior contract or license permitted the Contractor to restrict the Government's rights to use, modify, reproduce, release, perform, display, or disclose technical data deliverable under this contract, and those restrictions are still applicable, the Contractor may mark such data with the appropriate restrictive legend for which the data qualified under the prior contract or license. The marking procedures in paragraph (f)(1) of this clause shall be followed. (g) Contractor procedures and records. Throughout performance of this contract, the Contractor and its subcontractors or suppliers that deliver technical data with other than unlimited rights, shall- (1) Have, maintain, and follow written procedures sufficient to assure that restrictive markings are used only when authorized by the terms of this clause; and (2) Maintain records sufficient to justify the validity of any restrictive markings on technical data delivered under this contract. (h) Removal of unjustified and nonconforming markings. (1) Unjustified technical data markings. The rights and obligations of the parties regarding the validation of restrictive markings on technical data furnished or to be furnished under this contract are contained in the Validation of Restrictive Markings on Technical Data clause of this contract. Notwithstanding any provision of this contract concerning inspection and acceptance, the Government may ignore or, at the Contractor's expense, correct or strike a marking if, in accordance with the procedures in the Validation of Restrictive Markings on Technical Data clause of this contract, a restrictive marking is determined to be unjustified. N00164-01-D-0042 PAGE 48 OF 50 (2) Nonconforming technical data markings. A nonconforming marking is a marking placed on technical data delivered or otherwise furnished to the Government under this contract that is not in the format authorized by this contract. Correction of nonconforming markings is not subject to the Validation of Restrictive Markings on Technical Data clause of this contract. If the Contracting Officer notifies the Contractor of a nonconforming marking and the Contractor fails to remove or correct such marking within sixty (60) days, the Government may ignore or, at the Contractor's expense, remove or correct any nonconforming marking. (i) Relation to patents. Nothing contained in this clause shall imply a license to the Government under any patent or be construed as affecting the scope of any license or other right otherwise granted to the Government under any patent. (j) Limitation on charges for rights in technical data. (1) The Contractor shall not charge to this contract any cost, including, but not limited to, license fees, royalties, or similar charges, for rights in technical data to be delivered under this contract when- (i) The Government has acquired, by any means, the same or greater rights in the data; or (ii) The data are available to the public without restrictions. (2) The limitation in paragraph 0)(1) of this clause- (i) Includes costs charged by a subcontractor or supplier, at any tier, or costs incurred by the Contractor to acquire rights in subcontractor or supplier technical data, if the subcontractor or supplier :-has been paid for such rights under any other Government contract or under a license conveying the rights to the Government; and (ii) Does not include the reasonable costs of reproducing, handling, or mailing the documents or other media in which the technical data will be delivered. (k) Applicability to subcontractors or suppliers. (1) The Contractor shall ensure that the rights afforded its subcontractors and suppliers under 10 U.S.C. 2320, 10 U.S.C. 2321, and the identification, assertion, and delivery processes of paragraph (e) of this clause are recognized and protected. (2) Whenever any technical data for noncommercial items is to be obtained from a subcontractor or supplier for delivery to the Government under this contract, the Contractor shall use this same clause in the subcontract or other contractual instrument, and require its subcontractors or suppliers to do so, without alteration, except to identify the parties. No other clause shall be used to enlarge or diminish the Government's, the Contractor's, or a higher-tier subcontractor's or supplier's rights in a subcontractor's or supplier's technical data. (3) Technical data required to be delivered by a subcontractor or supplier shall normally be delivered to the next higher-tier contractor, subcontractor, or supplier. However, when there is a requirement in the prime contract for data which may be submitted with other than unlimited rights by a subcontractor or supplier, then said subcontractor or supplier may fulfill its requirement by submitting such data directly to the Government, rather than through a higher-tier contractor, subcontractor, or supplier. N00164-01-D-0042 PAGE 49 OF 50 (4) The Contractor and higher-tier subcontractors or suppliers shall not use their power to award contracts as economic leverage to obtain rights in technical data from their subcontractors or suppliers. (5) In no event shall the Contractor use its obligation to recognize and protect subcontractor or supplier rights in technical data as an excuse for failing to satisfy its contractual obligation to the Government. (End of clause) STANDARD COMMERCIAL WARRANTY (6001) The contractor shall extend to the Government the full coverage of any standard commercial warranty normally offered in a similar commercial sale, provided such warranty is available at no additional cost to the Government. Acceptance of the standard commercial warranty does not waive the Government's rights under the "Inspection" clause-nor does it limit the Government's rights with regard to the other terms and conditions of this contract. In the event of a conflict, the terms and conditions of the contract shall take precedence over the standard commercial warranty. The standard commercial warranty period shall begin upon final acceptance of the applicable material and/or services listed in the Schedule. The contractor shall provide a copy of its standard commercial warranty (if applicable) with its offer. The warranty covers a period of \ 6 \ months. PERFORMANCE EVALUATION (6008) The Government will evaluate the performance of the contractor awarded the contract resulting from this solicitation, in accordance with FAR 42.15. The following performance rating factors will be utilized: Quality; Cost Control; Timeliness of Performance; Business Relations; Customer Satisfaction.
N00164-01-D-0042 PAGE 50 OF 50 SECTION "J" LIST OF ATTACHMENTS Exhibit "A" - Contract Data Requirements List (CDRL): - ----------- - --------------------------------------------------------------------------------------------------------------------------------- Description Date No. of Pages ----------- ---- ------------ - --------------------------------------------------------------------------------------------------------------------------------- CDRL A001 Quality System Plan 29 JUNE 2001 1 - --------------------------------------------------------------------------------------------------------------------------------- CDRL A002 Contractor's Configuration Management 29 JUNE 2001 1 Plan - --------------------------------------------------------------------------------------------------------------------------------- CDRL A004 Test Procedure-Production 29 JUNE 2001 1 - --------------------------------------------------------------------------------------------------------------------------------- CDRL A005 Test/inspection Report 29 JUNE 2001 1 - --------------------------------------------------------------------------------------------------------------------------------- CDRL A006 Configuration Audit Report 29 JUNE 2001 1 - --------------------------------------------------------------------------------------------------------------------------------- CDRL A007 Provisioning Technical Documentation 29 JUNE 2001 1 - --------------------------------------------------------------------------------------------------------------------------------- CDRL A008 Recommended Spare Parts List 29 JUNE 2001 1 - --------------------------------------------------------------------------------------------------------------------------------- CDRL A009 Engineering Change Proposals 29 JUNE 2001 1 - --------------------------------------------------------------------------------------------------------------------------------- CDRL A010 Request for Deviation 29 JUNE 2001 1 - --------------------------------------------------------------------------------------------------------------------------------- CDRL A011 Request for Waiver 29 JUNE 2001 1 - --------------------------------------------------------------------------------------------------------------------------------- CDRL A0012 Notice of Revision 29 JUNE 2001 1 - --------------------------------------------------------------------------------------------------------------------------------- CDRL A013 Failure Analysis and Corrective Action 29 JUNE 2001 1 Report - --------------------------------------------------------------------------------------------------------------------------------- CDRL A014 Conference Minutes 29 JUNE 2001 1 - --------------------------------------------------------------------------------------------------------------------------------- CDRL A015 Conference Agenda 29 JUNE 2001 1 - --------------------------------------------------------------------------------------------------------------------------------- CDRL A016 Contractor's Progress, Status and 29 JUNE 2001 1 Management Report - --------------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------------- Exhibit "B" - ----------- - --------------------------------------------------------------------------------------------------------------------------------- PRODUCT SPECIFICATION PS/01/8855/002 27 SEPTEMBER 2001 14 - --------------------------------------------------------------------------------------------------------------------------------- TECHNICAL MANUAL FOR SHIPBOARD ACADA JUNE 2001 32 SW073-AF-MMO-010/MK 27 MOD 0 - --------------------------------------------------------------------------------------------------------------------------------- DIDs are available at http://www.dtic.mii/dps-phiia/.
CONTRACT DATA REQUIREMENTS LIST A. CONTRACT LINE ITEM NO. B. EXHIBIT A C. CATEGORY TDP TM OTHER [X] D. SYSTEM/ITEM E. CONTRACT/PR NO. N00164-01-D-0042 F. CONTRACTOR STR - -------------------------------------------------------------------------------- 1. DATA ITEM NO. A001 2. TITLE OF DATA ITEM QUALITY SYSTEM PLAN 3. SUBTITLE 4. AUTHORITY DI-QCIC-81449 5. CONTRACT REFERENCE 3.2.9.1 and 3.2.9.4 6. REQUIRING OFFICE NSWC, CRANE, CODE 805D 7. DD 250 REQ. LT 8. APP CODE A 9. DIST STATEMENT REQUIRED SEE BLK 16 10. FREQUENCY OTIME 11. AS OF DATE 12. DATE OF FIRST SUBMISSION SEE BLK 16 13. DATE OF SUBSEQUENT SUBMISSION SEE BLK 16 - -------------------------------------------------------------------------------- 14. DISTRIBUTION a. ADDRESSEE b. COPIES Draft Final Reg Report AL-01-DCMC 1 AL-02-CODE 805D 1 15. TOTAL 2 - -------------------------------------------------------------------------------- 16. REMARKS BLOCK 7 - Submit one info copy only of LT to: COMMANDER, CODE 1165 B-3291 ATT M SIDDONS, NAVAL SURFACE WARFARE CENTER (NSWC) 300 HIGHWAY 361, CRANE IN 47522-5001 or electronically to: siddons_marlene@crane.navy.mil BLOCK 8 - Government will review the draft plan for technical adequacy and content IAW of the SOW. Written comments to be incorporated into the final will be provided by the Government within 15 days after receipt of the draft. Block 9 - Distribution Statement C: Distribution Authorized to U.S. Government Agencies and their contractors; Administrative/Operational use; OCT 1999. Other requests for this document shall be referred to Naval Sea Systems Command (SEA-005R1) DESTRUCTION NOTICE. "For unclassified, limited documents, destroy by any method that will prevent disclosure of contents or reconstruction of the document. BLOCKS 12 and 13 - Submit the draft 60 days after award of contract. Submit the final within 20 days after receipt of Government comments. Block 14 - addressee List (AL) AL-01 is DCMC AL-02 COMMANDER CODE 805 BLDG 3324 ATT S CLARK NAVAL SURFACE WARFARE CENTER, CRANE 300 HIGHWAY 361 CRANE IN, 47522-5001 Or electronically to: clark_sandra@crane.navy.mil Electronic submissions shall be compatible with Windows 98 and in MS Office applications or other format agreed upon at award. - -------------------------------------------------------------------------------- G. PREPARED BY H. DATE I. APPROVED BY Theresa Andis, Crane Data Manager J. DATE CONTRACT DATA REQUIREMENTS LIST A. CONTRACT LINE ITEM NO. B. EXHIBIT A C. CATEGORY TDP TM OTHER [X] D. SYSTEM/ITEM E. CONTRACT/PR NO. N00164-01-D-0042 F. CONTRACTOR STR - -------------------------------------------------------------------------------- 1. DATA ITEM NO. A002 2. TITLE OF DATA ITEM CONTRACTOR'S CONFIGURATION MANAGEMENT PLAN 3. SUBTITLE 4. AUTHORITY DI-CMAN-80858B 5. CONTRACT REFERENCE 3.2.6 6. REQUIRING OFFICE NSWC, CRANE, CODE 805D 7. DD 250 REQ. LT 8. APP CODE A 9. DIST STATEMENT REQUIRED SEE BLK 16 10. FREQUENCY OTIME 11. AS OF DATE 12. DATE OF FIRST SUBMISSION 30 DAC 13. DATE OF SUBSEQUENT SUBMISSION 15 DARC - -------------------------------------------------------------------------------- 14. DISTRIBUTION a. ADDRESSEE b. COPIES Draft Final Reg Report AL-01-DCMC 1 AL-02-CODE 805D 1 15. TOTAL 2 - -------------------------------------------------------------------------------- 16. REMARKS BLOCK 7 - Submit one info copy only of LT to: COMMANDER, CODE 1165 B-3291 ATT M SIDDONS, NAVAL SURFACE WARFARE CENTER (NSWC) 300 HIGHWAY 361, CRANE IN 47522-5001 or electronically to: siddons_marlene@crane.navy.mil BLOCK 8 - Submit the draft plan 30 days after award. The Government will review the draft for technical adequacy and in accordance with (IAW) the SOW. Written comments to be incorporated into the final plan will be provided within 15 days after receipt of draft. Block 9 - Distribution Statement C and DESTRUCTION NOTICE APPLIES. Block 14 - addressee List (AL) AL-01 is DCMC AL-02 COMMANDER CODE 805 BLDG 3324 ATT S CLARK NAVAL SURFACE WARFARE CENTER, CRANE 300 HIGHWAY 361 CRANE IN, 47522-5001 Or electronically to: clark_s@crane.navy.mil - -------------------------------------------------------------------------------- G. PREPARED BY H. DATE I. APPROVED BY Theresa Andis, Crane Data Manager J. DATE CONTRACT DATA REQUIREMENTS LIST A. CONTRACT LINE ITEM NO. B. EXHIBIT A C. CATEGORY TDP TM OTHER [X] D. SYSTEM/ITEM E. CONTRACT/PR NO. N00164-01-D-0042 F. CONTRACTOR STR - -------------------------------------------------------------------------------- 1. DATA ITEM NO. A004 2. TITLE OF DATA ITEM TEST PROCEDURE 3. SUBTITLE Production 4. AUTHORITY DI-RELI-80603 5. CONTRACT REFERENCE 3.2.4.2 6. REQUIRING OFFICE NSWC, CRANE, CODE 805D 7. DD 250 REQ. DD 8. APP CODE A 9. DIST STATEMENT REQUIRED SEE BLK 16 10. FREQUENCY OTIME 11. AS OF DATE 12. DATE OF FIRST SUBMISSION SEE BLK 16 13. DATE OF SUBSEQUENT SUBMISSION SEE BLK 16 - -------------------------------------------------------------------------------- 14. DISTRIBUTION a. ADDRESSEE b. COPIES Draft Final Reg Report AL-01-DCMC 1 AL-02-CODE 805D 1 15. TOTAL 2 - -------------------------------------------------------------------------------- 16. REMARKS BLOCK 8 - The Government will review the draft for technical adequacy in accordance with (IAW) the requirements of the SOW. Written comments to be incorporated into the final will be provided by the Government within 15 days after receipt of the draft. Block 9 - Distribution Statement C and DESTRUCTION NOTICE APPLIES. BLOCKS 12 and 13 - Submit the draft 30 days after receipt of production authorization. Submit the final within 15 days after receipt of Government comments. Block 14 - addressee List (AL) AL-01 is DCMC AL-02 COMMANDER CODE 805 BLDG 3324 ATT S CLARK NAVAL SURFACE WARFARE CENTER, CRANE 300 HIGHWAY 361 CRANE IN, 47522-5001 Or electronically to: clark_s@crane.navy.mil - -------------------------------------------------------------------------------- G. PREPARED BY H. DATE I. APPROVED BY Theresa Andis, Crane Data Manager J. DATE CONTRACT DATA REQUIREMENTS LIST A. CONTRACT LINE ITEM NO. B. EXHIBIT A C. CATEGORY TDP TM OTHER [X] D. SYSTEM/ITEM E. CONTRACT/PR NO. N00164-01-D-0042 F. CONTRACTOR STR - -------------------------------------------------------------------------------- 1. DATA ITEM NO. A005 2. TITLE OF DATA ITEM TEST/INSPECTION REPORT 3. SUBTITLE 4. AUTHORITY DI-NDTI-80809B 5. CONTRACT REFERENCE 3.2.4.2 6. REQUIRING OFFICE NSWC, CRANE, CODE 805D 7. DD 250 REQ. LT 8. APP CODE 9. DIST STATEMENT REQUIRED SEE BLK 16 10. FREQUENCY OTIME 11. AS OF DATE 12. DATE OF FIRST SUBMISSION SEE BLK 16 13. DATE OF SUBSEQUENT SUBMISSION SEE BLK 16 - -------------------------------------------------------------------------------- 14. DISTRIBUTION a. ADDRESSEE b. COPIES Draft Final Reg Report AL-01-DCMC 1 AL-02-CODE 805D 1 15. TOTAL 2 - -------------------------------------------------------------------------------- 16. REMARKS BLOCK 7 - Submit one info copy only of LT to: COMMANDER, CODE 1165 B-3291 ATT M SIDDONS, NAVAL SURFACE WARFARE CENTER (NSWC) 300 HIGHWAY 361, CRANE IN 47522-5001 or electronically to: siddons_marlene@crane.navy.mil Block 9 - Distribution Statement C and DESTRUCTION NOTICE APPLIES. BLOCKS 12 and 13 - Submit the report within 10 days after completion of the First Article Unit testing. Submit the report concurrent with each delivery. Block 14 - addressee List (AL) AL-01 is DCMC AL-02 COMMANDER CODE 805 BLDG 3324 ATT S CLARK NAVAL SURFACE WARFARE CENTER, CRANE 300 HIGHWAY 361 CRANE IN, 47522-5001 Or electronically to: clark_s@crane.navy.mil - -------------------------------------------------------------------------------- G. PREPARED BY H. DATE I. APPROVED BY Theresa Andis, Crane Data Manager J. DATE CONTRACT DATA REQUIREMENTS LIST A. CONTRACT LINE ITEM NO. B. EXHIBIT A C. CATEGORY TDP TM OTHER [X] D. SYSTEM/ITEM E. CONTRACT/PR NO. N00164-01-D-0042 F. CONTRACTOR STR - -------------------------------------------------------------------------------- 1. DATA ITEM NO. A006 2. TITLE OF DATA ITEM CONFIGURATION AUDIT REPORT 3. SUBTITLE PCA 4. AUTHORITY DI-CMAN-81022C 5. CONTRACT REFERENCE 3.2.6 6. REQUIRING OFFICE NSWC, CRANE, CODE 805D 7. DD 250 REQ. LT 8. APP CODE 9. DIST STATEMENT REQUIRED SEE BLK 16 10. FREQUENCY OTIME 11. AS OF DATE 12. DATE OF FIRST SUBMISSION SEE BLK 16 13. DATE OF SUBSEQUENT SUBMISSION SEE BLK 16 - -------------------------------------------------------------------------------- 14. DISTRIBUTION a. ADDRESSEE b. COPIES Draft Final Reg Report AL-01-DCMC 1 AL-02-CODE 805D 1 15. TOTAL 2 - -------------------------------------------------------------------------------- 16. REMARKS BLOCK 7 - Submit one info copy only of LT to: COMMANDER, CODE 1165 B-3291 ATT M SIDDONS, NAVAL SURFACE WARFARE CENTER (NSWC) 300 HIGHWAY 361, CRANE IN 47522-5001 or electronically to: siddons_marlene@crane.navy.mil Block 9 - Distribution Statement C and DESTRUCTION NOTICE APPLIES. BLOCKS 12 and 13 - Submit the report within 21 days after completion of the PCA. Block 14 - addressee List (AL) AL-01 is DCMAO AL-02 COMMANDER CODE 805 BLDG 3324 ATT S CLARK NAVAL SURFACE WARFARE CENTER, CRANE 300 HIGHWAY 361 CRANE IN, 47522-5001 Or electronically to: clark_s@crane.navy.mil - -------------------------------------------------------------------------------- G. PREPARED BY H. DATE I. APPROVED BY Theresa Andis, Crane Data Manager J. DATE CONTRACT DATA REQUIREMENTS LIST A. CONTRACT LINE ITEM NO. B. EXHIBIT A C. CATEGORY TDP TM OTHER [X] D. SYSTEM/ITEM E. CONTRACT/PR NO. N00164-01-D-0042 F. CONTRACTOR STR - -------------------------------------------------------------------------------- 1. DATA ITEM NO. A007 2. TITLE OF DATA ITEM PROVISIONING TECHNICAL DOCUMENTATION 3. SUBTITLE 4. AUTHORITY DI-ILSS-81285 5. CONTRACT REFERENCE 3.2.8 6. REQUIRING OFFICE NSWC, CRANE, CODE 805D 7. DD 250 REQ. LT 8. APP CODE A 9. DIST STATEMENT REQUIRED SEE BLK 16 10. FREQUENCY OTIME 11. AS OF DATE 12. DATE OF FIRST SUBMISSION AS REQ 13. DATE OF SUBSEQUENT SUBMISSION AS REQ - -------------------------------------------------------------------------------- 14. DISTRIBUTION a. ADDRESSEE b. COPIES Draft Final Reg Report AL-01-DCMC 1 AL-02-CODE 805D 1 15. TOTAL 2 - -------------------------------------------------------------------------------- 16. REMARKS BLOCK 7 - Submit one info copy only of LT to: COMMANDER, CODE 1165 B-3291 ATT M SIDDONS, NAVAL SURFACE WARFARE CENTER (NSWC) 300 HIGHWAY 361, CRANE IN 47522-5001 or electronically to: siddons_marlene@crane.navy.mil Block 9 - Distribution Statement C and DESTRUCTION NOTICE APPLIES. BLOCKS 12 and 13 - Submit the report within 10 days after completion of the First Article Unit testing. Submit the report concurrent with each delivery. Block 14 - addressee List (AL) AL-01 is DCMC AL-02 COMMANDER CODE 805 BLDG 3324 ATT S CLARK NAVAL SURFACE WARFARE CENTER, CRANE 300 HIGHWAY 361 CRANE IN, 47522-5001 Or electronically to: clark_sandra@crane.navy.mil Electronic submissions shall be compatible with Windows 98 and in MS Office applications or other format agreed upon at award. - -------------------------------------------------------------------------------- G. PREPARED BY H. DATE I. APPROVED BY Theresa Andis, Crane Data Manager J. DATE ORDER FOR SUPPLIES OR SERVICES PAGE 1 OF 4 - -------------------------------------------------------------------------------- 1. CONTRACT/PURCH ORDER NO. N00178-01-D-3008 2. DELIVERY ORDER NO. 0001 3. DATE OF ORDER(YYYMMMDD) 20010208 4. REQUISITION/PURCH REQUEST NO. See Page 2 5. PRIORITY - -------------------------------------------------------------------------------- 6. ISSUED BY CODE N00178 Naval Surface Warfare Center, Dahlgren Division Attn: M. Piersall, SD139, piersallmf@nswc.navy.mil 17320 Dahlgren Road Dahlgren, VA 22448-5100 - -------------------------------------------------------------------------------- 7. ADMINISTERED BY (If other than 6) CODE S2101A DCMA Baltimore 217 E Redwood Street, Suite 1800 Baltimore, MD 21202-5299 - -------------------------------------------------------------------------------- 8. DELIVERY FOB [X] DEST [ ] OTHER (See Schedule if other) - -------------------------------------------------------------------------------- 9. CONTRACTOR CODE OXNU6 FACILITY 79-613-4492 NAME AND ADDRESS SCIENCE AND TECHNOLOGY RESEARCH, INC. 10075 Tyler Place, Suite 17 Ijamsville, MD 21754 - -------------------------------------------------------------------------------- 10. DELIVER TO FOB POINTBY 20020208 - -------------------------------------------------------------------------------- 11. X IF BUSINESS IS [ ] SMALL [X] SMALL DISADVANTAGES [ ] WOMAN-OWNED - -------------------------------------------------------------------------------- 12. DISCOUNT TERMS NONE 13. MAIL INVOICES TO ADDRESS IN BLOCK 6, Attn: MD241 - -------------------------------------------------------------------------------- 14. SHIP TO CODE N00178 Naval Surface Warfare Center, Dahlgren Division Attn: Carlos Lama/B53 17320 Dahlgren Road Dahlgren, VA 22448-5100 - -------------------------------------------------------------------------------- 15. PAYMENT WILL BE MADE BY CODE HQ0338 DFAS-CO/South Entitlement Division P.O. BOX 182264 Columbus, OH 43218-2264 - -------------------------------------------------------------------------------- MARK ALL PACKAGES AND PAPERS WITH IDENTIFICATION NUMBERS IN BLOCKS 1 AND 2. - -------------------------------------------------------------------------------- 16. TYPE OF ORDER DELIVERY/CALL [X] This delivery order/call is issued on another Government agency or in accordance with and subject to terms and conditions of above numbered contract. PURCHASE [ ] Reference you __________________ furnish the following on terms specified herein. ACCEPTANCE. THE CONTRACTOR HEREBY ACCEPTS THE OFFER REPRESENTED BY THE NUMBERED PURCHASE ORDER AS IT MAY PREVIOUSLY HAVE BEEN OR IS NOW MODIFIED, SUBJECT TO ALL OF THE TERMS AND CONDITIONS SET FORTH, AND AGREES TO PERFORM THE SAME. SCIENCE AND TECHNOLOGY RESEARCH INC. - --------------------------------- --------------------------------- NAME OF CONTRACTOR SIGNATURE - --------------------------------- --------------------------------- TYPED NAME AND TITLE DATE SIGNED [ ] if this box is marked, supplier must sign Acceptance and return the following number of copies: - -------------------------------------------------------------------------------- 17. ACCOUNTING AND APPROPRIATION DATA/LOCAL USE - -------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------- 18. ITEM NO. 19. SCHEDULE OF SUPPLIES/SERVICES 20. QUANTITY 21. 22. UNIT 23. AMOUNT ORDERED/ UNIT PRICE ACCEPTED* SEE PAGES 2-4 - -----------------------------------------------------------------------------------------------------------------------
* If quantity accepted by the Government is same as quantity ordered, indicate by X. If different, enter actual quantity accepted below quantity ordered and encircle. - -------------------------------------------------------------------------------- 24. UNITED STATES OF AMERICA BY J.E. THOMSON /s/ J.E. Thomson CONTRACTING/ORDERING OFFICER - -------------------------------------------------------------------------------- 25. TOTAL $48,883.00 - -------------------------------------------------------------------------------- 26. QUANTITY IN COLUMN 20 HAS BEEN [ ] INSPECTED [ ] RECEIVED [ ] ACCEPTED, AND CONFORMS TO THE CONTRACT EXCEPT AS NOTED ------------- ------------------------------------------------- DATE SIGNATURE OF AUTHORIZED GOVERNMENT REPRESENTATIVE - -------------------------------------------------------------------------------- 27. SHIP. NO. 28. D.O. VOUCHER NO. 29. DIFFERENCES 30. INITIALS 31. PAYMENT [ ] COMPLETE [ ] PARTIAL [ ] FINAL 32. PAID BY 33. AMOUNT VERIFIED CORRECT FOR 34. CHECK NUMBER 35. BILL OF LADING NO. - -------------------------------------------------------------------------------- 36. I certify this account is correct and proper for payment ------------- ------------------------------------------------- DATE SIGNATURE AND TITLE OF CERTIFYING OFFICIAL - -------------------------------------------------------------------------------- 37. RECEIVED AT 38. RECEIVED BY 39. DATE RECEIVED 40. TOTAL CONTAINERS 41. S/R ACCOUNT NUMBER 42. S/R VOUCHER NO. ACCOUNTING AND APPROPRIATION DATA The following line of accounting obligated at contract award is applied to this order. DO NOT RE-OBLIGATE: ACRN: AA 97X4930 NH1E 000 77777 0 000178 2F 000000 21B300ACPRC $25,000 B53000/03494170 ITEM DESCRIPTION QUANTITY AMOUNT 0001 The contractor shall provide engineering development support for chemical detection systems in accordance with the statement of work. 1 Lot Est. Cost $45,473 Fixed Fee 3,410 Total ECPFF $48,883 0002 Contract Data Requirements List Not Separately Priced (DD Form 1423) in support of CLIN 0001. 2. The following details funding to date: TOTAL FUNDS THIS PREVIOUS FUNDS BALANCE ORDER CPFF ACTION FUNDING AVAILABLE UNFUNDED - -------------------------------------------------------------------------------- $48,883 $25,000 $0 $25,000 $23,883 3. NAVSEA 5252.232-9104 ALLOTMENT OF FUNDS (MAY 1993) -------------------------------------------------- (a) This order is incrementally funded with respect to both cost and fee. The amount(s) presently available and allotted to this order for payment of fee for incrementally funded order line item number 0001, subject to the clause entitled "FIXED FEE" (FAR 52.216-8) or "INCENTIVE FEE" (FAR 52.216-10), as appropriate, is specified below. The amount(s) presently available and allotted to this order for payment of cost for incrementally funded CLIN 0001 is set forth below. As provided in the clause of this contract entitled "LIMITATION OF FUNDS" (FAR 52.232-22), the CLIN covered thereby, and the period of performance for which it is estimated the allotted amount(s) will cover are as follows: ITEMS ALLOTTED TO ALLOTTED TO ESTIMATED PERIOD OF COST FEE PERFORMANCE - -------------------------------------------------------------------------------- CLIN 0001 $23,256 $1,744 2/8/01 - 5/8/01 (b) The parties contemplate that the Government will allot additional amounts to this order from time to time for the incrementally funded CLIN 0001 by unilateral contract modification, and any such modification shall state separately the amount(s) allotted for cost, the amount(s) allotted for fee, the CLINs covered thereby, and the period of performance which the amount(s) are expected to cover. STATEMENT OF WORK As provided for under the contract Statement of Work paragraph C.2.1 and C.2.1.2, the contractor shall provide engineering development support as well as procurement of materials to accomplish the following tasks in support of chemical detection systems at the Naval Surface Warfare Center, Dahlgren Division. C.1 SHIPBOARD AUTOMATIC CHEMICAL AGENT DETECTOR & ALARM (SHIP ACACA). C.1.1 Provide technical support for the procurement of parts to maintain fifteen (15) Ship ACADA prototype units. C.1.2 Provide EMI tests RE102, RS103, and test report, per MIL-STD-461D, for (1) Ship ACADA system. Provide technical support during two (2) days of testing. The contractor shall provide test planning in coordination with NSWCDD technical personnel. C.1.3 Investigate modifications of detector cables to mitigate EMI. Supply one (1) set of modified cables. C.1.4 Provide live agent testing for one (1) Ship ACADA system at an approved surety laboratory. Provide technical support during four (4) days of testing. The live agent tests will be limited to three agents: Lewisite, CK and HD. The contractor shall provide test planning and coordination with NSWCDD technical personnel. GOVERNMENT FURNISHED MATERIALS None. TRAVEL REQUIREMENTS Travel requirements are as follows: Purpose Destination Person(s) Day(s) Trip(s) - -------------------------------------------------------------------------------- EMI Test Annapolis, MD 1 1 2 Live Agent Test Gaithersburg, MD 1 1 4 EMI (Cable Design) Annapolis, MD 2 1 1 EMI (Cable/Filter Design) Amherst, NH 2 2 1 PERIOD OF PERFORMANCE The period of performance shall be 12 months from the start of the delivery order. DATA REQUIREMENTS Project/Task Description: Support for Ship ACADA systems. Data shall be provided in accordance with the contractor's Contract Data Requirement List (CDRL). CDRL Sequence Number: A0007 Title: Contractor's Progress, Status and Management Report Applicability: Task C.1 Date due: Monthly B53/Lama B53/Lamoy B53/Fitzgerald S13-9/Piersall (cover letter only) CDRL Sequence Number: A0009 Title: Test Report Applicability: Task C.1.2 and C.1.3 Date due: 30 days after test completion B53/Lama B53/Lamoy B53/Fitzgerald S13-9/Piersall (cover letter only) DISTRIBUTION - ------------ EDA Contractor B53/Lama AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT PAGE OF PAGES - -------------------------------------------------------------------------------- 1. CONTRACT ID CODE U 1 | 4 - -------------------------------------------------------------------------------- 2. AMENDMENT/MODIFICATION NO. 0001-01 3. EFFECTIVE DATE See Blk 16 4. REQUISITION/PURCHASE REG. NO. B53000/11416658 5. PROJ NO. (if applicable) - -------------------------------------------------------------------------------- 6. ISSUED BY CODE N00178 Contracting Officer Attn: Maryann F. Piersall, SD13-9 (540) 653-7765 Naval Surface Warfare Center piersallmf@nswc.navy.mil 17320 Dahlgren Rd., Dahlgren, VA 22448-5100 - -------------------------------------------------------------------------------- 7. ADMINISTERED BY (if other than Item 6) CODE S2101A DCMA Baltimore 217 E Redwood St. Ste. 1800 Baltimore, MD 21202-5299 - -------------------------------------------------------------------------------- 8. NAME AND ADDRESS OF CONTRACTOR (No., street, State and ZIP Code) SCIENCE AND TECHNOLOGY RESEARCH INC 10075 Tyler Place, Suite 17 Ijamsville MD 21754 - -------------------------------------------------------------------------------- CAGE CODE OXNU6 FACILITY CODE - -------------------------------------------------------------------------------- 9A. AMENDMENT OF SOLICITATION NO. [X] 9B. DATED (SEE ITEM 11) 10A. MODIFICATION OF CONTRACT/ORDER NO. N00178-01-D-3008, 0001 10B. DATED (SEE ITEM 13) 8 Feb 01 - -------------------------------------------------------------------------------- 11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS [ ] The above numbered solicitation is amended at set forth in Item 14. The hour and date specified for receipt of Offers [ ] is extended. [ ] is not extended. Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended by on of the following methods: (a) by completing items 8 and 15, and returning __ copies of the amendment; (b) By acknowledging receipt of this amendment on each copy of the offer submitted; or (c) By separate letter or telegram which includes a reference to the solicitation and amendment numbers. FAILURE OF YOUR ACKNOWLEDGEMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and this amendment, and is received prior to the opening hour and date specified. - -------------------------------------------------------------------------------- 12. ACCOUNTING AND APPROPRIATION DATA (If required) - -------------------------------------------------------------------------------- 13. THIS ITEM APPLIES ONLY TO MODIFICATIONS AND CONTRACTS/ORDERS, IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14. - -------------------------------------------------------------------------------- [X] A. THIS CHANGE ORDER IS ISSUED PURSUANT TO (Specify authority) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A. - -------------------------------------------------------------------------------- B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office, appropriation data, etc.) SET FORTH IN ITEM 14, PURSUANT TO THE AUTHORITY OF FAR 43.103(b). - -------------------------------------------------------------------------------- [X] C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OF: FAR 52.243-2, Changes - Cost Reimbursement - -------------------------------------------------------------------------------- D. OTHER (Specify type of modification and authority.) - -------------------------------------------------------------------------------- E. IMPORTANT: Contractor ( ) is not, (X) is required to sign this document and return 1 copies to the issuing office. - -------------------------------------------------------------------------------- 14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organization by UCF section headings, including solicitation/contract subject matter where feasible.) See Attached Pages Except as provided herein, all terms and conditions referenced in Item 9A and 10A, as heretofore changed, remains unchanged and in full force and effect. - -------------------------------------------------------------------------------- 15A. NAME AND TITLE OF SIGNER (Type or print) Edward L. Kessler GEN. MGR. 15B. CONTRACTOR/OFFEROR /s/ Edward L. Kessler ---------------------------------------- (Signature of person authorized to sign) 15C. DATED SIGNED 6-4-01 - -------------------------------------------------------------------------------- 16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print) J.E. THOMSON 16B. UNITED STATES OF AMERICA BY /s/ J.E. Thomson ---------------------------------------- (Signature of Contracting Officer) 16C. DATE SIGNED 6/7/01 ACCOUNTING AND APPROPRIATION DATA CLIN 0001, Requisition No.: B53000/11416658 ACRN: AC 97X4930 NH1E 000 77777 0 000178 2F 000000 21B5301ACADA $15,000 The following line of accounting obligated at contract award is applied to this order. DO NO RE-OBLIGATE: CLIN 0001, Requisition No.: B53000/03494172 ACRN: AB 97X4930.NH1E 000 77777 0 000178 2F 000000 21B5301LSDAH $10,000 This modification is issued to increase the estimated cost-plus-fixed-fee as a result of a modification to the statement of work. 1. As a result of this modification, the order is increased as follows: CURRENT THIS REVISED AMOUNT ACTION AMOUNT - -------------------------------------------------------------------------------- EST. COST $45,473 $10,715 $56,188 FIXED FEE 3,410 804 4,214 TOTAL CDFF $48,883 $11,519 $60,402 2. The following details funding to date: TOTAL FUNDS THIS PREVIOUS FUNDS BALANCE ORDER CPFF ACTION FUNDING AVAILABLE UNFUNDED - -------------------------------------------------------------------------------- $60,402 $25,000 $25,000 $50,000 $10,402 3. NAVSEA 5252.232-9104 ALLOTMENT OF FUNDS (MAY 1993) -------------------------------------------------- (a) This order is incrementally funded with respect to both cost and fee. The amount(s) presently available and allotted to this order for payment of fee for incrementally funded order line item number 0001, subject to the clause entitled "FIXED FEE" (FAR 52.216-8) or "INCENTIVE FEE" (FAR 52.216-10), as appropriate, is specified below. The amount(s) presently available and allotted to this order for payment of cost for incrementally funded CLIN 0001 is set forth below. As provided in the clause of this contract entitled "LIMITATION OF FUNDS" (FAR 52.232-22), the CLIN covered thereby, and the period of performance for which it is estimated the allotted amount(s) will cover are as follows: ITEMS ALLOTTED TO ALLOTTED TO ESTIMATED PERIOD OF COST FEE PERFORMANCE - -------------------------------------------------------------------------------- CLIN 0001 $46,512 $3,488 2/8/01 - 12/8/01 (b) The parties contemplate that the Government will allot additional amounts to this order from time to time for the incrementally funded CLIN 0001 by unilateral contract modification, and any such modification shall state separately the amount(s) allotted for cost, the amount(s) allotted for fee, the CLINs covered thereby, and the period of performance which the amount(s) are expected to cover. The revised statement of work is shown below: DELIVERY ORDER 0001 UNDER CONTRACT N00178-01-D-3008 (Mod. 01) As provided for under the contract Statement of Work paragraph C.2.1 and C.2.1.2, the contractor shall provide engineering development support as well as procurement of materials to accomplish the following tasks in support of chemical detection systems at the Naval Surface Warfare Center, Dahlgren Division. REVISED STATEMENT OF WORK C.1 SHIPBOARD AUTOMATIC CHEMICAL AGENT DETECTOR & ALARM (SHIP ACACA). C.1.1 Provide technical support for the procurement of parts and modification, assembly, and functional testing as necessary to maintain fifteen (15) Ship ACADA prototype units. C.1.2 Provide preliminary EMI testing using methods RE102 and RS103 per MIL-STD-461D, for (1) Ship ACADA system to verify EMI mitigation design changes. Provide technical support during two (2) days of testing. Upon successful completion of preliminary testing of various system configurations, conduct a complete EMI test using methods CE101, CE102, CS114, CS116, RS101, RE102, and RS103, per MIL-STD-461D. Provide test report for the complete EMI tests. The contractor shall provide test planning in coordination with NSWCDD technical personnel. C.1.3 Provide live agent testing for one (1) Ship ACADA system at an approved surety laboratory. Provide technical support during four (4) days of testing. The live agent tests will be limited to three agents: Lewisite, CK and HD. The contractor shall provide test planning and coordination with NSWCDD technical personnel. GOVERNMENT FURNISHED MATERIALS None. TRAVEL REQUIREMENTS Travel requirements are as follows: Purpose Destination Person(s) Day(s) Trip(s) - -------------------------------------------------------------------------------- EMI Test Annapolis, MD 1 1 2 Live Agent Test Gaithersburg, MD 1 1 4 EMI (Cable Design) Annapolis, MD 2 1 1 EMI (Cable/Filter Design) Amherst, NH 2 2 1 PERIOD OF PERFORMANCE The period of performance shall be 12 months from the start of the delivery order. DATA REQUIREMENTS Project/Task Description: Support for Ship ACADA systems. Data shall be provided in accordance with the contractor's Contract Data Requirement List (CDRL). CDRL Sequence Number: A0007 Title: Contractor's Progress, Status and Management Report Applicability: Task C.1 Date due: Monthly B53/Lama B53/Lamoy B53/Fitzgerald S13-9/Piersall (cover letter only) CDRL Sequence Number: A0009 Title: Test Report Applicability: Task C.1.2 and C.1.3 Date due: 30 days after test completion B53/Lama B53/Lamoy B53/Fitzgerald S13-9/Piersall (cover letter only) DISTRIBUTION - ------------ EDA Contractor B53/Lama AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT PAGE OF PAGES - -------------------------------------------------------------------------------- 1. CONTRACT ID CODE U 1 | 5 - -------------------------------------------------------------------------------- 2. AMENDMENT/MODIFICATION NO. 0001-02 3. EFFECTIVE DATE See Blk 16 4. REQUISITION/PURCHASE REG. NO. B53000/12771782 5. PROJ NO. (if applicable) - -------------------------------------------------------------------------------- 6. ISSUED BY CODE N00178 Contracting Officer Attn: Maryann F. Piersall, SD13-9 (540) 653-7765 Naval Surface Warfare Center piersallmf@nswc.navy.mil 17320 Dahlgren Rd., Dahlgren, VA 22448-5100 - -------------------------------------------------------------------------------- 7. ADMINISTERED BY (if other than Item 6) CODE S2101A DCMA Baltimore 217 E Redwood St. Ste. 1800 Baltimore, MD 21202-5299 - -------------------------------------------------------------------------------- 8. NAME AND ADDRESS OF CONTRACTOR (No., street, State and ZIP Code) SCIENCE AND TECHNOLOGY RESEARCH INC 10075 Tyler Place, Suite 17 Ijamsville MD 21754 - -------------------------------------------------------------------------------- CAGE CODE OXNU6 FACILITY CODE - -------------------------------------------------------------------------------- 9A. AMENDMENT OF SOLICITATION NO. [X] 9B. DATED (SEE ITEM 11) 10A. MODIFICATION OF CONTRACT/ORDER NO. N00178-01-D-3008, 0001 10B. DATED (SEE ITEM 13) 8 Feb 01 - -------------------------------------------------------------------------------- 11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS [ ] The above numbered solicitation is amended at set forth in Item 14. The hour and date specified for receipt of Offers [ ] is extended. [ ] is not extended. Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended by on of the following methods: (a) by completing items 8 and 15, and returning __ copies of the amendment; (b) By acknowledging receipt of this amendment on each copy of the offer submitted; or (c) By separate letter or telegram which includes a reference to the solicitation and amendment numbers. FAILURE OF YOUR ACKNOWLEDGEMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and this amendment, and is received prior to the opening hour and date specified. - -------------------------------------------------------------------------------- 12. ACCOUNTING AND APPROPRIATION DATA (If required) See Page 2 - -------------------------------------------------------------------------------- 13. THIS ITEM APPLIES ONLY TO MODIFICATIONS AND CONTRACTS/ORDERS, IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14. - -------------------------------------------------------------------------------- [X] A. THIS CHANGE ORDER IS ISSUED PURSUANT TO (Specify authority) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A. - -------------------------------------------------------------------------------- B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office, appropriation data, etc.) SET FORTH IN ITEM 14, PURSUANT TO THE AUTHORITY OF FAR 43.103(b). - -------------------------------------------------------------------------------- [X] C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OF: FAR 52.243-2, Changes - Cost Reimbursement - -------------------------------------------------------------------------------- D. OTHER (Specify type of modification and authority.) - -------------------------------------------------------------------------------- E. IMPORTANT: Contractor ( ) is not, (X) is required to sign this document and return 1 copies to the issuing office. - -------------------------------------------------------------------------------- 14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organization by UCF section headings, including solicitation/contract subject matter where feasible.) See Attached Pages Except as provided herein, all terms and conditions referenced in Item 9A and 10A, as heretofore changed, remains unchanged and in full force and effect. - -------------------------------------------------------------------------------- 15A. NAME AND TITLE OF SIGNER (Type or print) Edward L. Kessler GEN. MGR. 15B. CONTRACTOR/OFFEROR /s/ Edward L. Kessler ---------------------------------------- (Signature of person authorized to sign) 15C. DATED SIGNED 10-17-01 - -------------------------------------------------------------------------------- 16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print) J.E. THOMSON 16B. UNITED STATES OF AMERICA BY /s/ J.E. Thomson ---------------------------------------- (Signature of Contracting Officer) 16C. DATE SIGNED 10/19/01 ACCOUNTING AND APPROPRIATION DATA CLIN 0001, Requisition No.: B53000/12771782 ACRN: AD 97X4930.NH1E 000 77777 0 000178 2F 000000 21B5301ACADA $32,239 This modification is issued to increase the estimated cost-plus-fixed-fee as a result of a modification to paragraph C.1.3 of the statement of work. 1. As a result of this modification, the order is increased as follows: CURRENT THIS REVISED AMOUNT ACTION AMOUNT - -------------------------------------------------------------------------------- EST. COST $56,188 $28,129 $84,317 FIXED FEE 4,214 2,110 6,324 TOTAL CDFF $60,402 $30,239 $90,641 2. The following details funding to date: TOTAL FUNDS THIS PREVIOUS FUNDS BALANCE ORDER CPFF ACTION FUNDING AVAILABLE UNFUNDED - -------------------------------------------------------------------------------- $90,641 $32,239 $50,000 $82,239 $8,402 3. NAVSEA 5252.232-9104 ALLOTMENT OF FUNDS (MAY 1993) -------------------------------------------------- (a) This order is incrementally funded with respect to both cost and fee. The amount(s) presently available and allotted to this order for payment of fee for incrementally funded order line item number 0001, subject to the clause entitled "FIXED FEE" (FAR 52.216-8) or "INCENTIVE FEE" (FAR 52.216-10), as appropriate, is specified below. The amount(s) presently available and allotted to this order for payment of cost for incrementally funded CLIN 0001 is set forth below. As provided in the clause of this contract entitled "LIMITATION OF FUNDS" (FAR 52.232-22), the CLIN covered thereby, and the period of performance for which it is estimated the allotted amount(s) will cover are as follows: ITEMS ALLOTTED TO ALLOTTED TO ESTIMATED PERIOD OF COST FEE PERFORMANCE - -------------------------------------------------------------------------------- CLIN 0001 $46,512 $3,488 2/8/01 - 12/8/01 (b) The parties contemplate that the Government will allot additional amounts to this order from time to time for the incrementally funded CLIN 0001 by unilateral contract modification, and any such modification shall state separately the amount(s) allotted for cost, the amount(s) allotted for fee, the CLINs covered thereby, and the period of performance which the amount(s) are expected to cover. The revised to paragraph C.1.3 is shown below in the revised statement of work: DELIVERY ORDER 0001 UNDER CONTRACT N00178-01-D-3008 (Mod. 2) As provided for under the contract Statement of Work paragraph C.2.1 and C.2.1.2, the contractor shall provide engineering development support as well as procurement of materials to accomplish the following tasks in support of chemical detection systems at the Naval Surface Warfare Center, Dahlgren Division. REVISED STATEMENT OF WORK C.1 SHIPBOARD AUTOMATIC CHEMICAL AGENT DETECTOR & ALARM (SHIP ACACA). C.1.1 Provide technical and engineering support for the procurement of parts and modification, assembly, and functional testing as necessary to maintain fifteen (15) Ship ACADA prototype units. C.1.2 Provide preliminary EMI testing using methods RE102 and RS103 per MIL-STD-461D, for (1) Ship ACADA system to verify EMI mitigation design changes. Provide technical support during two (2) days of testing. Upon successful completion of preliminary testing of various system configurations, conduct a complete EMI test using methods CE101, CE102, CS114, CS116, RS101, RE102, and RS103, per MIL-STD-461D. Provide test report for the complete EMI tests. The contractor shall provide test planning in coordination with NSWCDD technical personnel. C.1.3 Provide live agent testing at an approved surety laboratory for two (2) Ship ACADA production systems and (1) Ship ACADA prototype system. Provide technical support during two (2) days of testing. The contractor shall provide test planning and coordination with NSWCDD technical personnel. The live agent tests will consist of testing the systems against nine (9) agents at a variety of concentrations per the following matrix: Agent Concentrations (mg/m(3) ----- ----------------------- GA 0.1 1.0 GB 0.1 0.25 1.0 GD 0.1 1.0 GF 0.1 1.0 VX 0.04 1.0 HD 2.0 50.0 AC 25 2,500 CK 20 L 2.0 50.0 GOVERNMENT FURNISHED MATERIALS None. TRAVEL REQUIREMENTS Travel requirements are as follows: Purpose Destination Person(s) Day(s) Trip(s) - -------------------------------------------------------------------------------- EMI Test Annapolis, MD 1 1 2 Live Agent Test Gaithersburg, MD 1 2 2 EMI (Cable Design) Annapolis, MD 2 1 1 EMI (Cable/Filter Design) Amherst, NH 2 2 1 PERIOD OF PERFORMANCE The period of performance shall be 12 months from the start of the delivery order. DATA REQUIREMENTS Project/Task Description: Support for Ship ACADA systems. Data shall be provided in accordance with the contractor's Contract Data Requirement List (CDRL). CDRL Sequence Number: A0007 Title: Contractor's Progress, Status and Management Report Applicability: Task C.1 Date due: Monthly B53/Lama B53/Lamoy B53/Fitzgerald S13-9/Piersall (cover letter only) CDRL Sequence Number: A0009 Title: Test Report Applicability: Task C.1.2 and C.1.3 Date due: 30 days after test completion B53/Lama B53/Lamoy B53/Fitzgerald S13-9/Piersall (cover letter only) DISTRIBUTION - ------------ EDA Contractor B53/Lama AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT PAGE OF PAGES - -------------------------------------------------------------------------------- 1. CONTRACT ID CODE U 1 | 5 - -------------------------------------------------------------------------------- 2. AMENDMENT/MODIFICATION NO. 0001-03 3. EFFECTIVE DATE See Blk 16 4. REQUISITION/PURCHASE REG. NO. B53000/13342911 5. PROJ NO. (if applicable) - -------------------------------------------------------------------------------- 6. ISSUED BY CODE N00178 Contracting Officer Attn: Maryann F. Piersall, SD13-9 (540) 653-7765 Naval Surface Warfare Center piersallmf@nswc.navy.mil 17320 Dahlgren Rd., Dahlgren, VA 22448-5100 - -------------------------------------------------------------------------------- 7. ADMINISTERED BY (if other than Item 6) CODE S2101A DCMA Baltimore 217 E Redwood St. Ste. 1800 Baltimore, MD 21202-5299 - -------------------------------------------------------------------------------- 8. NAME AND ADDRESS OF CONTRACTOR (No., street, State and ZIP Code) SCIENCE AND TECHNOLOGY RESEARCH INC 10075 Tyler Place, Suite 17 Ijamsville MDd 21754 - -------------------------------------------------------------------------------- CAGE CODE OXNU6 FACILITY CODE - -------------------------------------------------------------------------------- 9A. AMENDMENT OF SOLICITATION NO. [X] 9B. DATED (SEE ITEM 11) 10A. MODIFICATION OF CONTRACT/ORDER NO. N00178-01-D-3008, 0001 10B. DATED (SEE ITEM 13) 8 Feb 01 - -------------------------------------------------------------------------------- 11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS [ ] The above numbered solicitation is amended at set forth in Item 14. The hour and date specified for receipt of Offers [ ] is extended. [ ] is not extended. Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended by on of the following methods: (a) by completing items 8 and 15, and returning __ copies of the amendment; (b) By acknowledging receipt of this amendment on each copy of the offer submitted; or (c) By separate letter or telegram which includes a reference to the solicitation and amendment numbers. FAILURE OF YOUR ACKNOWLEDGEMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and this amendment, and is received prior to the opening hour and date specified. - -------------------------------------------------------------------------------- 12. ACCOUNTING AND APPROPRIATION DATA (If required) See Page 2 - -------------------------------------------------------------------------------- 13. THIS ITEM APPLIES ONLY TO MODIFICATIONS AND CONTRACTS/ORDERS, IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14. - -------------------------------------------------------------------------------- [X] A. THIS CHANGE ORDER IS ISSUED PURSUANT TO (Specify authority) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A. - -------------------------------------------------------------------------------- B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office, appropriation data, etc.) SET FORTH IN ITEM 14, PURSUANT TO THE AUTHORITY OF FAR 43.103(b). - -------------------------------------------------------------------------------- [X] C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OF: FAR 52.243-2, Changes - Cost Reimbursement - -------------------------------------------------------------------------------- D. OTHER (Specify type of modification and authority.) - -------------------------------------------------------------------------------- E. IMPORTANT: Contractor ( ) is not, (X) is required to sign this document and return 1 copies to the issuing office. - -------------------------------------------------------------------------------- 14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organization by UCF section headings, including solicitation/contract subject matter where feasible.) See Attached Pages Except as provided herein, all terms and conditions referenced in Item 9A and 10A, as heretofore changed, remains unchanged and in full force and effect. - -------------------------------------------------------------------------------- 15A. NAME AND TITLE OF SIGNER (Type or print) Edward L. Kessler GEN. MGR. 15B. CONTRACTOR/OFFEROR /s/ Edward L. Kessler ---------------------------------------- (Signature of person authorized to sign) 15C. DATED SIGNED 12-7-01 - -------------------------------------------------------------------------------- 16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print) J.E. THOMSON 16B. UNITED STATES OF AMERICA BY /s/ J.E. Thomson ---------------------------------------- (Signature of Contracting Officer) 16C. DATE SIGNED 12/10/01 ACCOUNTING AND APPROPRIATION DATA CLIN 0001, Requisition No.: B53000/13342911 ACRN: AD 97X4930.NH1E 000 77777 0 000178 2F 000000 21B5301ACPRC $21,731 This modification is issued to increase the estimated cost-plus-fixed-fee as a result of a modification to paragraph C.1.3 of the statement of work. 1. As a result of this modification, the order is increased as follows: CURRENT THIS REVISED AMOUNT ACTION AMOUNT - -------------------------------------------------------------------------------- EST. COST $84,317 $12,399 $96,716 FIXED FEE 6,324 930 7,254 TOTAL CDFF $90,641 $13,329 $103,970 2. The following details funding to date: TOTAL FUNDS THIS PREVIOUS FUNDS BALANCE ORDER CPFF ACTION FUNDING AVAILABLE UNFUNDED - -------------------------------------------------------------------------------- $103,970 $21,731 $82,239 $103,970 $0 3. NAVSEA 5252.232-9104 ALLOTMENT OF FUNDS (MAY 1993) -------------------------------------------------- (a) This order is incrementally funded with respect to both cost and fee. The amount(s) presently available and allotted to this order for payment of fee for incrementally funded order line item number 0001, subject to the clause entitled "FIXED FEE" (FAR 52.216-8) or "INCENTIVE FEE" (FAR 52.216-10), as appropriate, is specified below. The amount(s) presently available and allotted to this order for payment of cost for incrementally funded CLIN 0001 is set forth below. As provided in the clause of this contract entitled "LIMITATION OF FUNDS" (FAR 52.232-22), the CLIN covered thereby, and the period of performance for which it is estimated the allotted amount(s) will cover are as follows: ITEMS ALLOTTED TO ALLOTTED TO ESTIMATED PERIOD OF COST FEE PERFORMANCE - -------------------------------------------------------------------------------- CLIN 0001 $96,716 $7,254 2/8/01 - 2/7/02 (b) The parties contemplate that the Government will allot additional amounts to this order from time to time for the incrementally funded CLIN 0001 by unilateral contract modification, and any such modification shall state separately the amount(s) allotted for cost, the amount(s) allotted for fee, the CLINs covered thereby, and the period of performance which the amount(s) are expected to cover. (c) CLIN 0001 is fully funded and performance under this CLIN is subject to the clause of this contract entitled "LIMITATION OF COST" (FAR 52.232-20) or "LIMITATION OF COST (FACILITIES)" (FAR 52.232-21), as applicable. (d) The Contractor shall segregate costs for the performance of incrementally funded CLIN from the costs of performance. DELIVERY ORDER 0001 UNDER CONTRACT N00178-01-D-3008 (Mod. 3) As provided for under the contract Statement of Work paragraph C.2.1 and C.2.1.2, the contractor shall provide engineering development support as well as procurement of materials to accomplish the following tasks in support of chemical detection systems at the Naval Surface Warfare Center, Dahlgren Division. STATEMENT OF WORK C.1 SHIPBOARD AUTOMATIC CHEMICAL AGENT DETECTOR & ALARM (SHIP ACACA). C.1.1 Provide technical and engineering support for the procurement of parts and modification, assembly, and functional testing as necessary to maintain fifteen (15) Ship ACADA prototype units. C.1.2 Provide preliminary EMI testing using methods RE102 and RS103 per MIL-STD-461D, for (1) Ship ACADA system to verify EMI mitigation design changes. Provide technical support during two (2) days of testing. Upon successful completion of preliminary testing of various system configurations, conduct a complete EMI test using methods CE101, CE102, CS114, CS116, RS101, RE102, and RS103, per MIL-STD-461D. Provide test report for the complete EMI tests. The contractor shall provide test planning in coordination with NSWCDD technical personnel. C.1.3 Provide live agent testing at an approved surety laboratory for two (2) Ship ACADA production systems and (1) Ship ACADA prototype system. Provide technical support during two (2) days of testing. The contractor shall provide test planning and coordination with NSWCDD technical personnel. The live agent tests will consist of testing the systems against nine (9) agents at a variety of concentrations per the following matrix: Agent Concentrations (mg/m(3) ----- ----------------------- GA 0.1 1.0 GB 0.1 0.25 1.0 GD 0.1 1.0 GF 0.1 1.0 VX 0.04 1.0 HD 2.0 50.0 AC 25 2,500 CK 20 L 2.0 50.0 C.1.4 Provide appropriate disposal services for Ship ACADA prototype radiation sources. GOVERNMENT FURNISHED MATERIALS None. TRAVEL REQUIREMENTS Travel requirements are as follows: Purpose Destination Person(s) Day(s) Trip(s) - -------------------------------------------------------------------------------- EMI Test Annapolis, MD 1 1 2 Live Agent Test Gaithersburg, MD 1 2 2 EMI (Cable Design) Annapolis, MD 2 1 1 EMI (Cable/Filter Design) Amherst, NH 2 2 1 PERIOD OF PERFORMANCE The period of performance shall be 12 months from the start of the delivery order. DATA REQUIREMENTS Project/Task Description: Support for Ship ACADA systems. Data shall be provided in accordance with the contractor's Contract Data Requirement List (CDRL). CDRL Sequence Number: A0007 Title: Contractor's Progress, Status and Management Report Applicability: Task C.1 Date due: Monthly B53/Lama B53/Lamoy B53/Fitzgerald S13-9/Piersall (cover letter only) CDRL Sequence Number: A0009 Title: Test Report Applicability: Task C.1.2 and C.1.3 Date due: 30 days after test completion B53/Lama B53/Lamoy B53/Fitzgerald S13-9/Piersall (cover letter only) DISTRIBUTION - ------------ EDA Contractor B53/Lama, Coxon STR Dahlgren [strdd@crosslink.net] ORDER FOR SUPPLIES OR SERVICES PAGE 1 OF 5 - -------------------------------------------------------------------------------- 1. CONTRACT/PURCH ORDER NO. N00178-01-D-3008 2. DELIVERY ORDER NO. 0002 3. DATE OF ORDER(YYYMMMDD) 20020412 4. REQUISITION/PURCH REQUEST NO. See Page 2 5. PRIORITY - -------------------------------------------------------------------------------- 6. ISSUED BY CODE N00178 Naval Surface Warfare Center, Dahlgren Division Attn: M. Piersall, SD139, piersallmf@nswc.navy.mil 17320 Dahlgren Road Dahlgren, VA 22448-5100 - -------------------------------------------------------------------------------- 7. ADMINISTERED BY (If other than 6) CODE S2101A DCMA Baltimore 217 E Redwood Street, Suite 1800 Baltimore, MD 21202-5299 - -------------------------------------------------------------------------------- 8. DELIVERY FOB [X] DEST [ ] OTHER (See Schedule if other) - -------------------------------------------------------------------------------- 9. CONTRACTOR CODE OXNU6 FACILITY 79-613-4492 NAME AND ADDRESS SCIENCE AND TECHNOLOGY RESEARCH, INC. 10075 Tyler Place, Suite 17 Ijamsville, MD 21754 - -------------------------------------------------------------------------------- 10. DELIVER TO FOB POINTBY 20021230 - -------------------------------------------------------------------------------- 11. X IF BUSINESS IS [ ] SMALL [X] SMALL DISADVANTAGES [ ] WOMAN-OWNED - -------------------------------------------------------------------------------- 12. DISCOUNT TERMS 13. MAIL INVOICES TO ADDRESS IN BLOCK 6, Attn: MD241 - -------------------------------------------------------------------------------- 14. SHIP TO CODE N00178 Naval Surface Warfare Center, Dahlgren Division Attn: Carlos Lama/B53 17320 Dahlgren Road Dahlgren, VA 22448-5100 - -------------------------------------------------------------------------------- 15. PAYMENT WILL BE MADE BY CODE HQ0338 DFAS-CO/South Entitlement Division P.O. BOX 182264 Columbus, OH 43218-2264 - -------------------------------------------------------------------------------- MARK ALL PACKAGES AND PAPERS WITH IDENTIFICATION NUMBERS IN BLOCKS 1 AND 2. - -------------------------------------------------------------------------------- 16. TYPE OF ORDER DELIVERY/CALL [X] This delivery order/call is issued on another Government agency or in accordance with and subject to terms and conditions of above numbered contract. PURCHASE [ ] Reference you __________________ furnish the following on terms specified herein. ACCEPTANCE. THE CONTRACTOR HEREBY ACCEPTS THE OFFER REPRESENTED BY THE NUMBERED PURCHASE ORDER AS IT MAY PREVIOUSLY HAVE BEEN OR IS NOW MODIFIED, SUBJECT TO ALL OF THE TERMS AND CONDITIONS SET FORTH, AND AGREES TO PERFORM THE SAME. SCIENCE AND TECHNOLOGY RESEARCH INC. STR, Inc. /s/ E.L. Kessler - --------------------------------- --------------------------------- NAME OF CONTRACTOR SIGNATURE E.L. Kessler, General Mgr 4/16/02 - --------------------------------- --------------------------------- TYPED NAME AND TITLE DATE SIGNED [ ] if this box is marked, supplier must sign Acceptance and return the following number of copies: - -------------------------------------------------------------------------------- 17. ACCOUNTING AND APPROPRIATION DATA/LOCAL USE CLIN 0001 ACRN: AA 97X4930 NH1E 000 77777 0 000178 2F 000000 21B5302LSDAH $100,000 - -------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------- 18. ITEM NO. 19. SCHEDULE OF SUPPLIES/SERVICES 20. QUANTITY 21. 22. UNIT 23. AMOUNT ORDERED/ UNIT PRICE ACCEPTED* SEE PAGES 2-5 AID# 40683 - -----------------------------------------------------------------------------------------------------------------------
* If quantity accepted by the Government is same as quantity ordered, indicate by X. If different, enter actual quantity accepted below quantity ordered and encircle. - -------------------------------------------------------------------------------- 24. UNITED STATES OF AMERICA BY WILLIAM T. ARMSTRONG /s/ William T. Armstrong CONTRACTING/ORDERING OFFICER - -------------------------------------------------------------------------------- 25. TOTAL $207,692.00 - -------------------------------------------------------------------------------- 26. QUANTITY IN COLUMN 20 HAS BEEN [ ] INSPECTED [ ] RECEIVED [ ] ACCEPTED, AND CONFORMS TO THE CONTRACT EXCEPT AS NOTED ------------- ------------------------------------------------- DATE SIGNATURE OF AUTHORIZED GOVERNMENT REPRESENTATIVE - -------------------------------------------------------------------------------- 27. SHIP. NO. 28. D.O. VOUCHER NO. 29. DIFFERENCES 30. INITIALS 31. PAYMENT [ ] COMPLETE [ ] PARTIAL [ ] FINAL 32. PAID BY 33. AMOUNT VERIFIED CORRECT FOR 34. CHECK NUMBER 35. BILL OF LADING NO. - -------------------------------------------------------------------------------- 36. I certify this account is correct and proper for payment ------------- ------------------------------------------------- DATE SIGNATURE AND TITLE OF CERTIFYING OFFICIAL - -------------------------------------------------------------------------------- 37. RECEIVED AT 38. RECEIVED BY 39. DATE RECEIVED 40. TOTAL CONTAINERS 41. S/R ACCOUNT NUMBER 42. S/R VOUCHER NO. ITEM DESCRIPTION QUANTITY AMOUNT 0001 The contractor shall provide engineering development support for the JSLSCAD Program in accordance with the statement of work. 1 Lot Est. Cost $195,295 Fixed Fee 12,397 Total ECPFF $207,692 0002 Contract Data Requirements List Not Separately Priced (DD Form 1423) in support of CLIN 0001. 2. The following details funding to date: TOTAL FUNDS THIS PREVIOUS FUNDS BALANCE ORDER CPFF ACTION FUNDING AVAILABLE UNFUNDED - -------------------------------------------------------------------------------- $207,692 $100,000 $0 $100,000 $107,692 3. NAVSEA 5252.232-9104 ALLOTMENT OF FUNDS (MAY 1993) -------------------------------------------------- (a) This order is incrementally funded with respect to both cost and fee. The amount(s) presently available and allotted to this order for payment of fee for incrementally funded order line item number 0001, subject to the clause entitled "FIXED FEE" (FAR 52.216-8) or "INCENTIVE FEE" (FAR 52.216-10), as appropriate, is specified below. The amount(s) presently available and allotted to this order for payment of cost for incrementally funded CLIN 0001 is set forth below. As provided in the clause of this contract entitled "LIMITATION OF FUNDS" (FAR 52.232-22), the CLIN covered thereby, and the period of performance for which it is estimated the allotted amount(s) will cover are as follows: ITEMS ALLOTTED TO ALLOTTED TO ESTIMATED PERIOD OF COST FEE PERFORMANCE - -------------------------------------------------------------------------------- CLIN 0001 $94,073 $5,927 4/12/02 - 8/31/02 (b) The parties contemplate that the Government will allot additional amounts to this order from time to time for the incrementally funded CLIN 0001 by unilateral contract modification, and any such modification shall state separately the amount(s) allotted for cost, the amount(s) allotted for fee, the CLINs covered thereby, and the period of performance which the amount(s) are expected to cover. STATEMENT OF WORK As provided for under the contract Statement of Work paragraph C.2.1, the contractor shall provide engineering development support for environmental and operational testing of Chemical and Biological Defense equipment. Test support will include aerial dissemination of proposed simulants to support the shipboard testing of the Joint Service Lightweight Standoff Chemical Agent Detector (JSLSCAD). The contractor shall provide personnel, materials and travel to accomplish the following tasks in support of the JSLSCAD: C.1 JOINT SERVICE LIGHTWEIGHT STANDOFF CHEMICAL AGENT DETECTOR (JSLSCAD) SUPPORT C.1.1 Provide engineering and technical support to the JSLSCAD program by supporting shipboard test efforts. In this capacity the contractor shall assist in the preparation of detailed test plans. Provide technical support to fabricate shipboard test equipment and assist in performing shipboard tests and maintaining test equipment. Provide equipment and crew to support aerial dissemination of simulants in support of developmental and operational tests (DT and OT). Three simulants will be released from aircraft: - Triethyl phosphate (TEP) - Acetic Acid - P-Xylene Number of releases and duration of each shall be as follows for two test events DT and OT: DT Total No. Max. Qty. Simulant of Releases Duration ea. Rel. - -------------------------------------------------------------------------------- - - Triethyl phosphate 15 (max) 2 min. 44 lbs. (TEP) - - Acetic Acid 15 (max) 2 min. 44 lbs. - - P-Xylene 10 (max) 2 min. 44 lbs. 2/day (max) OT Total No. Max. Qty. Simulant of Releases Duration ea. Rel. - -------------------------------------------------------------------------------- - - Triethyl phosphate 7 (max) 2 min. 44 lbs. (TEP) - - Acetic Acid 7 (max) 2 min. 44 lbs. - - P-Xylene 7 (max) 2 min. 44 lbs.* * Maximum reporting quantities limit daily releases to 100lbs. Location for air releases shall be at sea off of: Norfolk/Little Creek, VA area C.1.2 Provide engineering and technical support by participating with US Navy representatives in the JSLSCAD program. In this capacity, the contractor shall review, and provide technical comments on test plans, and technical specifications. This task involves close coordination with NSWC engineers and participation in shipboard test planning -- in particular supporting the Test and Evaluation IPT. When necessary, contractor personnel shall attend test events at other sites to observe simulant dispersal techniques, and test instrumentation. When necessary, personnel shall attend IPT meetings to advance Navy interests in the joint program. Travel to the following locations may be necessary: Dahlgren, VA; Norfolk/Little Creek, VA; Jacksonville, FL; and Dugway, UT. Security Requirements - --------------------- Security requirements are set forth in the basic contract's DD254. A secret clearance will be required for personnel designing test hardware and supporting DT and OT test events. Government Furnished Material - ----------------------------- Technical documentation and data, as required, to support task performance. Access will also be granted to on site test facilities as required to assist in executing the Navy part of the JSLSCAD test program. Travel Requirements - ------------------- Destination Persons Days Trips - -------------------------------------------------------------------------------- NSWC - Dahlgren VA 1 1 5 Norfolk/Little Creek, VA 1 1 5 Jacksonville FL 1 3 1 Dugway, UT 1 3 2 Period of Performance - --------------------- The period of performance shall be from the effective date of the order, through 30 December 2002. Data Requirements Project/Task Description: Support for JSLSCAD Program. Data shall be provided in accordance with the contractor's Contract Data Requirement List (CDRL). CDRL Sequence Number: A007 Title of Report: Contractor's Progress Status Applicability: Tasks C.1.1, and C.1.2 Date Due: Monthly B53/Lama B53/Lamoy B53/Fitzgerald S13-9/Piersall (cover letter only) CDRL Sequence Number: A010 Title of Report: Technical Reports Applicability: Task C.1.1 Date Due: 15 days after each test event (2 test events scheduled: DT and OT, if additional test events are required a report shall follow each test event) B53/Lama B53/Driscoll B53/Fitzgerald S13-9/Piersall (cover letter only) Note: o Technical report shall capture any information relevant to the test event that may have been detected by the pilot or crew, such as equipment malfunction, weather related events, or any event that may interfere with the test. o Technical report shall contain test parameters as required by test plan as: aircraft location, altitude, heading, time of release, duration of release, amount of simulant released. DISTRIBUTION - ------------ EDA Contractor B53/Lama STR Dahlgren [strdd@crosslink.net] ORDER FOR SUPPLIES OR SERVICES PAGE 1 OF 4 - -------------------------------------------------------------------------------- 1. CONTRACT/PURCH ORDER NO. N00178-01-D-3008 2. DELIVERY ORDER NO. 0003 3. DATE OF ORDER(YYYMMMDD) 20020724 4. REQUISITION/PURCH REQUEST NO. B53000/22043463 5. PRIORITY - -------------------------------------------------------------------------------- 6. ISSUED BY CODE N00178 Naval Surface Warfare Center, Dahlgren Division Attn: M. Piersall, SD139, piersallmf@nswc.navy.mil 17320 Dahlgren Road Dahlgren, VA 22448-5100 - -------------------------------------------------------------------------------- 7. ADMINISTERED BY (If other than 6) CODE S2101A DCMA Baltimore 217 E Redwood Street, Suite 1800 Baltimore, MD 21202-5299 - -------------------------------------------------------------------------------- 8. DELIVERY FOB [X] DEST [ ] OTHER (See Schedule if other) - -------------------------------------------------------------------------------- 9. CONTRACTOR CODE OXNU6 FACILITY 79-613-4492 NAME AND ADDRESS SCIENCE AND TECHNOLOGY RESEARCH, INC. 10075 Tyler Place, Suite 17 Ijamsville, MD 21754 - -------------------------------------------------------------------------------- 10. DELIVER TO FOB POINTBY 20021024 - -------------------------------------------------------------------------------- 11. X IF BUSINESS IS [ ] SMALL [X] SMALL DISADVANTAGES [ ] WOMAN-OWNED - -------------------------------------------------------------------------------- 12. DISCOUNT TERMS 13. MAIL INVOICES TO ADDRESS IN BLOCK 6, Attn: MD241 - -------------------------------------------------------------------------------- 14. SHIP TO CODE N00178 Naval Surface Warfare Center, Dahlgren Division Attn: Carlos Lama/B53 17320 Dahlgren Road Dahlgren, VA 22448-5100 - -------------------------------------------------------------------------------- 15. PAYMENT WILL BE MADE BY CODE HQ0338 DFAS-CO/South Entitlement Division P.O. BOX 182264 Columbus, OH 43218-2264 - -------------------------------------------------------------------------------- MARK ALL PACKAGES AND PAPERS WITH IDENTIFICATION NUMBERS IN BLOCKS 1 AND 2. - -------------------------------------------------------------------------------- 16. TYPE OF ORDER DELIVERY/CALL [X] This delivery order/call is issued on another Government agency or in accordance with and subject to terms and conditions of above numbered contract. PURCHASE [ ] Reference you __________________ furnish the following on terms specified herein. ACCEPTANCE. THE CONTRACTOR HEREBY ACCEPTS THE OFFER REPRESENTED BY THE NUMBERED PURCHASE ORDER AS IT MAY PREVIOUSLY HAVE BEEN OR IS NOW MODIFIED, SUBJECT TO ALL OF THE TERMS AND CONDITIONS SET FORTH, AND AGREES TO PERFORM THE SAME. - --------------------------------- --------------------------------- NAME OF CONTRACTOR SIGNATURE - --------------------------------- --------------------------------- TYPED NAME AND TITLE DATE SIGNED [ ] if this box is marked, supplier must sign Acceptance and return the following number of copies: - -------------------------------------------------------------------------------- 17. ACCOUNTING AND APPROPRIATION DATA/LOCAL USE CLIN 0001 ACRN: AA 97X4930 NH1E 000 77777 0 000178 2F 000000 21B5302URBNA $58,505 - -------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------- 18. ITEM NO. 19. SCHEDULE OF SUPPLIES/SERVICES 20. QUANTITY 21. 22. UNIT 23. AMOUNT ORDERED/ UNIT PRICE ACCEPTED* SEE PAGES 2-4 AID# 42128 - -----------------------------------------------------------------------------------------------------------------------
* If quantity accepted by the Government is same as quantity ordered, indicate by X. If different, enter actual quantity accepted below quantity ordered and encircle. - -------------------------------------------------------------------------------- 24. UNITED STATES OF AMERICA BY WILLIAM T. ARMSTRONG /s/ William T. Armstrong CONTRACTING/ORDERING OFFICER - -------------------------------------------------------------------------------- 25. TOTAL $58,505.00 - -------------------------------------------------------------------------------- 26. QUANTITY IN COLUMN 20 HAS BEEN [ ] INSPECTED [ ] RECEIVED [ ] ACCEPTED, AND CONFORMS TO THE CONTRACT EXCEPT AS NOTED ------------- ------------------------------------------------- DATE SIGNATURE OF AUTHORIZED GOVERNMENT REPRESENTATIVE - -------------------------------------------------------------------------------- 27. SHIP. NO. 28. D.O. VOUCHER NO. 29. DIFFERENCES 30. INITIALS 31. PAYMENT [ ] COMPLETE [ ] PARTIAL [ ] FINAL 32. PAID BY 33. AMOUNT VERIFIED CORRECT FOR 34. CHECK NUMBER 35. BILL OF LADING NO. - -------------------------------------------------------------------------------- 36. I certify this account is correct and proper for payment ------------- ------------------------------------------------- DATE SIGNATURE AND TITLE OF CERTIFYING OFFICIAL - -------------------------------------------------------------------------------- 37. RECEIVED AT 38. RECEIVED BY 39. DATE RECEIVED 40. TOTAL CONTAINERS 41. S/R ACCOUNT NUMBER 42. S/R VOUCHER NO. ITEM DESCRIPTION QUANTITY AMOUNT 0001 The contractor shall provide support for Chemical and Biological defense programs in accordance with the statement of work. 1 Lot Est. Cost $54,424 Fixed Fee 4,081 Total ECPFF $58,505 0002 Contract Data Requirements List Not Separately Priced (DD Form 1423) in support of CLIN 0001. STATEMENT OF WORK ----------------- As provided for under the contract Statement of Work paragraph C.2.1, the contractor shall provide engineering support to Chemical and Biological Defense programs. The contractor shall perform the following tasks in support of chemical detection systems at the Naval Surface Warfare Center, Crane. STATEMENT OF WORK C.1 Upgrade and Repair of Shipboard ACADA Systems - ------------------------------------------------- C.1.1 Provide engineering, troubleshooting, upgrade and repair support to the Shipboard Automatic Chemical Agent Detector and Alarm (ACADA) program. The contractor shall provide the necessary personnel, facilities, and materials to receive, inspect, conduct diagnostic testing, upgrade Voltage Divider Boards and effect the necessary repairs to 33 Shipboard ACADA Detector Units (DUs) returned from the field. The units shall be restored to the original Ship ACADA Performance Specification specified in contract N00178-00-C-3009. These Units will replenish the Shipboard ACADA maintenance pool and support immediate user requirements. Upon completion of repairs, the contractor shall QA, burn-in, verify operational performance, and ship to each DU to NSWC Crane for Government acceptance. Units shall be shipped to NSWC, Crane Division, 300 Highway 361, Code 805D, Bldg. 3324, Crane, IN 47522-5001. SECURITY REQUIREMENTS --------------------- Security requirements are set forth in the basic contract's DD254. GOVERNMENT FURNISHED MATERIALS ------------------------------ Defective and/or damaged Shipboard ACADA DU's will be provided to the contractor. Twenty-five (25) units are currently at the contractor's facility. The remainder of the units will be provided when they become available. TRAVEL REQUIREMENTS ------------------- None required. PERIOD OF PERFORMANCE --------------------- All units shall be delivered no later than 3 months from the start of the Delivery Order. DATA REQUIREMENTS ----------------- Project/Task Description: Support for Ship ACADA Systems. Data shall be provided in accordance with the contractor's Contract Data Requirement List (CDRL). CDRL Sequence Number: A007 Title: Contractor's Progress, Status and Management Report Applicability: Task C.1 Date Due: Monthly The following information shall be provided to both NSWC Dahlgren and NSWC Crane: 1) Serial numbers of the units repaired during the reporting period. 2) By serial number, the following information shall be provided on each repaired unit: a) Values of all measurable airflows (in L/min) of each unit upon arrival, and after repairs are complete. b) Symptoms of malfunction. b) Diagnosis of malfunction. c) Corrective action taken. B53 / Lama (cover letter only) B53 / Naley 805D / Kuhlman (Crane) XDS13-9 / Piersall (cover letter only) DISTRIBUTION - ------------ EDA Contractor B53/Lama B53/Naley STR Dahlgren [strdd@crosslink.net] ORDER FOR SUPPLIES OR SERVICES PAGE 1 OF 5 - -------------------------------------------------------------------------------- 1. CONTRACT/PURCH ORDER NO. N00178-01-D-3008 2. DELIVERY ORDER NO. 0004 3. DATE OF ORDER(YYYMMMDD) 20021115 4. REQUISITION/PURCH REQUEST NO. B53000/23108986 5. PRIORITY - -------------------------------------------------------------------------------- 6. ISSUED BY CODE N00178 Naval Surface Warfare Center, Dahlgren Division Attn: M. Piersall, SD139, piersallmf@nswc.navy.mil 17320 Dahlgren Road Dahlgren, VA 22448-5100 - -------------------------------------------------------------------------------- 7. ADMINISTERED BY (If other than 6) CODE S2101A DCMA Baltimore 217 E Redwood Street, Suite 1800 Baltimore, MD 21202-5299 - -------------------------------------------------------------------------------- 8. DELIVERY FOB [X] DEST [ ] OTHER (See Schedule if other) - -------------------------------------------------------------------------------- 9. CONTRACTOR CODE OXNU6 FACILITY 79-613-4492 NAME AND ADDRESS SCIENCE AND TECHNOLOGY RESEARCH, INC. 10075 Tyler Place, Suite 17 Ijamsville, MD 21754 - -------------------------------------------------------------------------------- 10. DELIVER TO FOB POINTBY 20030331 - -------------------------------------------------------------------------------- 11. X IF BUSINESS IS [ ] SMALL [X] SMALL DISADVANTAGES [ ] WOMAN-OWNED - -------------------------------------------------------------------------------- 12. DISCOUNT TERMS 13. MAIL INVOICES TO ADDRESS IN BLOCK - -------------------------------------------------------------------------------- 14. SHIP TO CODE N00178 Naval Surface Warfare Center, Dahlgren Division Attn: Carlos Lama/B53 17320 Dahlgren Road Dahlgren, VA 22448-5100 - -------------------------------------------------------------------------------- 15. PAYMENT WILL BE MADE BY CODE HQ0338 DFAS-CO/South Entitlement Division P.O. BOX 182264 Columbus, OH 43218-2264 - -------------------------------------------------------------------------------- MARK ALL PACKAGES AND PAPERS WITH IDENTIFICATION NUMBERS IN BLOCKS 1 AND 2. - -------------------------------------------------------------------------------- 16. TYPE OF ORDER DELIVERY/CALL [X] This delivery order/call is issued on another Government agency or in accordance with and subject to terms and conditions of above numbered contract. PURCHASE [ ] Reference you __________________ furnish the following on terms specified herein. ACCEPTANCE. THE CONTRACTOR HEREBY ACCEPTS THE OFFER REPRESENTED BY THE NUMBERED PURCHASE ORDER AS IT MAY PREVIOUSLY HAVE BEEN OR IS NOW MODIFIED, SUBJECT TO ALL OF THE TERMS AND CONDITIONS SET FORTH, AND AGREES TO PERFORM THE SAME. SCIENCE & TECHNOLOGY RESEARCH, INC. /s/ E.L. Kessler - --------------------------------- --------------------------------- NAME OF CONTRACTOR SIGNATURE E.L. Kessler, Gen. Mgr. 20021118 - --------------------------------- --------------------------------- TYPED NAME AND TITLE DATE SIGNED [ ] if this box is marked, supplier must sign Acceptance and return the following number of copies: - -------------------------------------------------------------------------------- 17. ACCOUNTING AND APPROPRIATION DATA/LOCAL USE CLIN 0001 ACRN: AA 97X4930 NH1E 000 77777 0 000178 2F 000000 21B5302LSDAH $54,896 - -------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------- 18. ITEM NO. 19. SCHEDULE OF SUPPLIES/SERVICES 20. QUANTITY 21. 22. UNIT 23. AMOUNT ORDERED/ UNIT PRICE ACCEPTED* SEE PAGES 2-5 AID# 43357 - -----------------------------------------------------------------------------------------------------------------------
* If quantity accepted by the Government is same as quantity ordered, indicate by X. If different, enter actual quantity accepted below quantity ordered and encircle. - -------------------------------------------------------------------------------- 24. UNITED STATES OF AMERICA BY TINA CORR LYNN /s/ Tina Corr Lynn CONTRACTING/ORDERING OFFICER - -------------------------------------------------------------------------------- 25. TOTAL $54,896.00 - -------------------------------------------------------------------------------- 26. QUANTITY IN COLUMN 20 HAS BEEN [ ] INSPECTED [ ] RECEIVED [ ] ACCEPTED, AND CONFORMS TO THE CONTRACT EXCEPT AS NOTED ------------- ------------------------------------------------- DATE SIGNATURE OF AUTHORIZED GOVERNMENT REPRESENTATIVE - -------------------------------------------------------------------------------- 27. SHIP. NO. 28. D.O. VOUCHER NO. 29. DIFFERENCES 30. INITIALS 31. PAYMENT [ ] COMPLETE [ ] PARTIAL [ ] FINAL 32. PAID BY 33. AMOUNT VERIFIED CORRECT FOR 34. CHECK NUMBER 35. BILL OF LADING NO. - -------------------------------------------------------------------------------- 36. I certify this account is correct and proper for payment ------------- ------------------------------------------------- DATE SIGNATURE AND TITLE OF CERTIFYING OFFICIAL - -------------------------------------------------------------------------------- 37. RECEIVED AT 38. RECEIVED BY 39. DATE RECEIVED 40. TOTAL CONTAINERS 41. S/R ACCOUNT NUMBER 42. S/R VOUCHER NO. ITEM DESCRIPTION QUANTITY AMOUNT 0001 The contractor shall provide support for Chemical and Biological defense programs in accordance with the statement of work. 1 Lot Est. Cost $51,066 Fixed Fee 3,830 Total ECPFF $54,896 0002 Contract Data Requirements List Not Separately Priced (DD Form 1423) in support of CLIN 0001. STATEMENT OF WORK ----------------- C.1 JOINT SERVICE LIGHTWEIGHT STANDOFF CHEMICAL AGENT DETECTOR (JSLSCAD) SHOCK TEST SUPPORT. Paragraphs C.1 and C.2.1 of the contract require the contractor to provide test plans, test reports, and the necessary facilities and services for the conduct of environmental testing and evaluation in support of Chemical and Biological Defense programs. The Chemical-Biological Defense Branch (B53) has a requirement to conduct the heavyweight shock (barge) test as specified in MIL-S-901D for deck-mounted equipment. C.1.1 Provide engineering and technical support and perform the heavyweight shock (barge) test described above. Pertinent MIL-S-901D paragraph 6.2 data is as follows: a. Shock Tests, H.I. (High Impact) Shipboard Machinery, Equipment, and Systems, Requirements for: MIL-S-901D (Navy); 17 March 1989. b. N.A. c. Shock Grade. Grade A d. Equipment Class. Class II e. Shock Test Type. Type A f. Equipment mounting. Deck mounted g. Equipment mounting plane aboard ship. Base h. Equipment mounting orientation. Unrestricted as to orientation aboard ship i. Method of Mounting. Tactical configuration mounted to deck plate using Navy approved test shock mounts j. Method of simulating shipboard connections. Tactical configuration used for mechanical connections; electrical to be simulated k. Mode of equipment operation during test. Energized, per MILSTD 901D for Grade A shock classification. l. Shock test acceptance criteria and associated post-test functional testing and inspection requirements are to include power up, place in search mode, run BITs (System, Scanner, SEM, PA), and internal and external confidence checks. m. Acceptance authority/authorities. NSWC Dahlgren (B53), JSLSCAD Test Team. C.1.2 Provide additional engineering and technical support to include: a. Initial testing with an instrumented dummy load to determine mount shock attenuation characteristics and determine if they should be acceptable for a production unit. b. Selection of a facility to conduct the test. c. Development of a test plan, to include acceptance criteria, for government approval. d. Determine proper test installation, and arrange JSLSCAD system installation to the test barge. (mounts and brackets will be provided by the Government) e. Verification that the JSLSCAD is properly installed for the test. f. Ensure that the JSLSCAD is instrumented (accelerometers on three axes of SEM. g. Coordinate and perform the test. h. After test completion, visually inspect and conduct operational tests to confirm condition of system. Report any abnormalities. (The Government will provide JSLSCAD system operator training to the test operators). i. Remove system from test barge and return it to B53 in its shipping container, within 15 days of test completion. SECURITY REQUIREMENTS --------------------- Security Requirements are set forth in the basic contract's DD254. GOVERNMENT FURNISHED INFORMATION -------------------------------- Technical documentation and data will be supplied to the contractor, as required, to support task performance. These will include, but is not limited to, the following: o Technical Manual o Training Package o Test Plan o Shop Drawings of Shipboard Mount Access will also be granted to on site test facilities as required to assist in executing the Navy part of the JSLSCAD test program. Equipment to be provided is: o JSLSCAD system with Shipping Container o JSLSCAD Mount and mounting brackets PERIOD OF PERFORMANCE --------------------- The period of performance shall be from the effective date of the order, through 31 March 2003. DATA REQUIREMENTS ----------------- Data shall be provided in accordance with the contractor's Contract Data Requirements List (CDRL). 1. CDRL Sequence Number: A007 Title: Contractor's Progress, Status and Management Report Applicability: Task C.1.2 Date Due: Monthly The following information shall be provided to NSWC Dahlgren: a) Funding expended to date of report, and projection of funds required for completion of task. b) Status of completion of tasks under C.1.2. 2. CDRL Sequence Number: A009 Title: Test Plan Applicability: Task C.1.2 Date Due: 30 Nov 02 Form: Provide in both hardcopy and electronic file 3. CDRL Sequence Number: A009 Title: Test Report Applicability: Task C.1.2 Date Due: 30 days alter completion of test Form: Provide in both hardcopy and electronic file DISTRIBUTION - ------------ EDA B53/LAMA 853/Naley STR Dahlgren [strdd@crosslink.net] AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT PAGE OF PAGES - -------------------------------------------------------------------------------- 1. CONTRACT ID CODE U 1 | 7 - -------------------------------------------------------------------------------- 2. AMENDMENT/MODIFICATION NO. 0004-01 3. EFFECTIVE DATE 30 JAN 2003 4. REQUISITION/PURCHASE REG. NO. See page 2 5. PROJ NO. (if applicable) - -------------------------------------------------------------------------------- 6. ISSUED BY CODE N00178 Contracting Officer Attn: Maryann F. Piersall, SD13-9 (540) 653-7765 Naval Surface Warfare Center piersallmf@nswc.navy.mil 17320 Dahlgren Rd., Dahlgren, VA 22448-5100 - -------------------------------------------------------------------------------- 7. ADMINISTERED BY (if other than Item 6) CODE S2101A DCMA Baltimore 217 E Redwood St. Ste. 1800 Baltimore, MD 21202-5299 - -------------------------------------------------------------------------------- 8. NAME AND ADDRESS OF CONTRACTOR (No., street, State and ZIP Code) SCIENCE AND TECHNOLOGY RESEARCH INC 10075 Tyler Place, Suite 17 Ijamsville MD 21754 - -------------------------------------------------------------------------------- CAGE CODE OXNU6 FACILITY CODE - -------------------------------------------------------------------------------- 9A. AMENDMENT OF SOLICITATION NO. [X] 9B. DATED (SEE ITEM 11) 10A. MODIFICATION OF CONTRACT/ORDER NO. N00178-01-D-3008/0004 10B. DATED (SEE ITEM 13) 15 Nov 02 - -------------------------------------------------------------------------------- 11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS [ ] The above numbered solicitation is amended at set forth in Item 14. The hour and date specified for receipt of Offers [ ] is extended. [ ] is not extended. Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended by on of the following methods: (a) by completing items 8 and 15, and returning __ copies of the amendment; (b) By acknowledging receipt of this amendment on each copy of the offer submitted; or (c) By separate letter or telegram which includes a reference to the solicitation and amendment numbers. FAILURE OF YOUR ACKNOWLEDGEMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and this amendment, and is received prior to the opening hour and date specified. - -------------------------------------------------------------------------------- 12. ACCOUNTING AND APPROPRIATION DATA (If required) See page 2 - -------------------------------------------------------------------------------- 13. THIS ITEM APPLIES ONLY TO MODIFICATIONS AND CONTRACTS/ORDERS, IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14. - -------------------------------------------------------------------------------- [X] A. THIS CHANGE ORDER IS ISSUED PURSUANT TO (Specify authority) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A. - -------------------------------------------------------------------------------- B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office, appropriation data, etc.) SET FORTH IN ITEM 14, PURSUANT TO THE AUTHORITY OF FAR 43.103(b). - -------------------------------------------------------------------------------- [X] C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OF: FAR 52.243-2, Changes - Cost Reimbursement - -------------------------------------------------------------------------------- D. OTHER (Specify type of modification and authority.) - -------------------------------------------------------------------------------- E. IMPORTANT: Contractor ( ) is not, (X) is required to sign this document and return 1 copies to the issuing office. - -------------------------------------------------------------------------------- 14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organization by UCF section headings, including solicitation/contract subject matter where feasible.) See pages 2-7 AID# 44323 Except as provided herein, all terms and conditions referenced in Item 9A and 10A, as heretofore changed, remains unchanged and in full force and effect. - -------------------------------------------------------------------------------- 15A. NAME AND TITLE OF SIGNER (Type or print) Edward L. Kessler GEN. MGR. 15B. CONTRACTOR/OFFEROR /s/ Edward L. Kessler ---------------------------------------- (Signature of person authorized to sign) 15C. DATED SIGNED 2-4-03 - -------------------------------------------------------------------------------- 16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print) WILLIAM T. ARMSTRONG 16B. UNITED STATES OF AMERICA BY /s/ J.E. Thomson ---------------------------------------- (Signature of Contracting Officer) 16C. DATE SIGNED ACCOUNTING AND APPROPRIATION DATA CLIN 0001, Requisition No.: B53000/30238034 ACRN: Ab 97X4930.NH1E 000 77777 0 000178 2F 000000 21B5603LSDAH $49,326 This modification is issued to increase the estimated cost-plus-fixed-fee as a result of a modification to the statement of work. 1. As a result of this modification, the order is increased as follows: CURRENT THIS REVISED AMOUNT ACTION AMOUNT - -------------------------------------------------------------------------------- EST. COST $51,066 $45,885 $96,951 FIXED FEE 3,830 3,441 7,271 TOTAL CDFF $54,896 $49,326 $104,222 2. The following details funding to date: TOTAL FUNDS THIS PREVIOUS FUNDS BALANCE ORDER CPFF ACTION FUNDING AVAILABLE UNFUNDED - -------------------------------------------------------------------------------- $104,222 $49,326 $54,896 $104,222 $0 3. NAVSEA 5252.232-9104 ALLOTMENT OF FUNDS (MAY 1993) -------------------------------------------------- (a) This order is incrementally funded with respect to both cost and fee. The amount(s) presently available and allotted to this order for payment of fee for incrementally funded order line item number 0001, subject to the clause entitled "FIXED FEE" (FAR 52.216-8) or "INCENTIVE FEE" (FAR 52.216-10), as appropriate, is specified below. The amount(s) presently available and allotted to this order for payment of cost for incrementally funded CLIN 0001 is set forth below. As provided in the clause of this contract entitled "LIMITATION OF FUNDS" (FAR 52.232-22), the CLIN covered thereby, and the period of performance for which it is estimated the allotted amount(s) will cover are as follows: ITEMS ALLOTTED TO ALLOTTED TO ESTIMATED PERIOD OF COST FEE PERFORMANCE - -------------------------------------------------------------------------------- CLIN 0001 $96,951 7,271 11/15/2002 - 3/31/2003 (b) The parties contemplate that the Government will allot additional amounts to this order from time to time for the incrementally funded CLIN 0001 by unilateral contract modification, and any such modification shall state separately the amount(s) allotted for cost, the amount(s) allotted for fee, the CLINs covered thereby, and the period of performance which the amount(s) are expected to cover. (c) CLIN 0001 is fully funded and performance under this CLIN is subject to the clause of this contract entitled "LIMITATION OF COST" (FAR 52.232-20) or "LIMITATION OF COST (FACILITIES)" (FAR 52.232-21), as applicable. (d) The Contractor shall segregate costs for the performance of incrementally funded CLIN from the costs of performance. The revised statement of work is shown below: C.1 JOINT SERVICE LIGHTWEIGHT STANDOFF CHEMICAL AGENT DETECTOR (JSLSCAD) SHOCK TEST SUPPORT. Paragraphs C.1 and C.2.1 require the contractor to provide test plans, test reports, and the necessary facilities and services for the conduct of environmental testing and evaluation in support of Chemical and Biological Defense programs. The Chemical-Biological Defense Branch (B56) has a requirement to conduct the heavyweight shock (barge) test as specified in MIL-S-901D for deck-mounted equipment. C.1.1 Provide engineering and technical support and perform the heavyweight shock (barge) test described above. Pertinent MIL-S-901D paragraph 6.2 data is as follows: a. Shock Tests, H.I. (High Impact) Shipboard Machinery, Equipment, and Systems, Requirements for, MIL-S-901D (Navy); 17 March 19S9. b. N.A. c. Shock Grade. Grade A d. Equipment Class. Class II e. Shock Test Type. Type A f. Equipment mounting. Deck mounted g. Equipment mounting plane aboard ship. Base h. Equipment mounting orientation. Unrestricted as to orientation aboard ship i. Method of Mounting. Tactical configuration mounted to deck plate using Navy approved shock mounts j. Method of simulating shipboard connections. Tactical configuration used for mechanical connections; electrical to be simulated k. Mode of equipment operation during test. Energized, per MILSTD 901D for Grade A shock classification. l. Shock test acceptance criteria and associated post-test functional testing and inspection requirements are to include power up, place in search mode, run BITs (System, Scanner, SEM, PA), and internal and external confidence checks. m. Acceptance authority/authorities. NSWC Dahlgren (B56), JSLSCAD Test Team. C.1.2 Provide additional engineering and technical support to include: a. Select a facility to conduct the test. b. Prepare detailed test procedures for approval (CDRL 0009). c. Determine proper test installation, and arrange JSLSCAD system installation to the test barge. (mounts and brackets will be provided by the Government) d. Conduct an initial test with an instrumented dummy load (a non operational unit consisting of all three components - SEM, PA, and ODU) to determine mount shock attenuation characteristics and determine if they should be acceptable for a production unit. Three dummy load test shots shall be conducted, one at 14 +/- 2 Hz, one at 10 +/- 1 Hz, and one at 8 +/- 1 Hz. The PA and ODU will be attached without the use of resilient mounts to a structure that is tuned to 25 Hz. Instrumentation for the dummy load shall consist of one velocity meter on the Floating Shock Platform (FSP), one accelerometer on the Deck Simulation Fixture (DSF), two accelerometers mounted near the PA and ODU, three accelerometers on the top of the "tower" mounting structure for the SEM, and three additional accelerometers attached to the SEM. e. Contingent on the results of the dummy load test, the PA and ODU shall be attached with resilient mounts for the regular test shots. To identify the needed mounts in this instance and/or to possibly correct any deficiencies noted in the SEM resilient mounts, up to three isolator analyses may be required. The mounts will be provided by the Government. Work on this effort shall not commence until the contractor is notified by the COR and funding is provided. f. Verify that the JSLSCAD is properly installed for the test. g. Ensure that the JSLSCAD is instrumented with one velocity meter on the FSP, one accelerometer on the DSF, and up to eight other accelerometers. (contingent upon results of dummy testing). Work on this effort shall not commence until the contractor is notified by the COR and funding is provided. h. Coordinate and perform the test according the test plan supplied by NSWC Dahlgren and test procedures approved by NSWC Carderock. Due to specific requirements, the test must include four shots at 14 +/- 2 Hz, two at 10 +/- 1 Hz, and two at 8 +/- 1 Hz. i. After test completion, visually inspect and conduct operational tests to confirm condition of system. Report any abnormalities. (The Government will provide JSLSCAD system operator training to the test operators). j. Remove system from test barge and return it to B56 in its shipping container, within 15 days of test completion. SECURITY REQUIREMENTS Security Requirements are set forth in the basic contract's DD254. GOVERNMENT FURNISHED MATERIAL Technical documentation and data will be supplied to the contractor, as required, to support task performance. These will include, but is not limited to, the following: o Technical Manual o Training Package o Test Plan o Shop Drawings of Shipboard Mount o Installation drawings o O&M drawings o Isolator make, model and quantity o Grade and material for hold down bolts o Procedures for the operational test to be run before and after test shots o Pass/Fail criteria Access will also be granted to on site test facilities as required to assist in executing the Navy part of the JSLSCAD test program. Equipment to be provided is: o 2 JSLSCAD systems (1 non-operational "dummy load" system, 1 operational system) with Shipping Containers o JSLSCAD Mount and mounting brackets TRAVEL REQUIREMENTS Destination Persons Days Trips - -------------------------------------------------------------------------------- NSWC - Dahlgren, VA 1 1 3 Rustburg, VA 1 1 3 PERIOD OF PERFORMANCE The period of performance shall be from the effective date of the order, through 31 March 2003. DATA REQUIREMENTS Data shall be provided in accordance with the contractor's Contract Data Requirement List (CDRL). 1. CDRL Sequence Number: A007 Title: Contractor's Progress, Status and Management Report Applicability: Task C.1.2 Date due: Bi-Monthly The following information shall be provided to NSWC Dahlgren: a) Funding expended to date of report, and projection of funds required for completion of task. b) Status of completion of tasks under C.1.2 2. CDRL Sequence Number: A009 Title: Test Procedures Applicability: Task C.1.2 Date due: 30 Jan 03 Form: Provide in both hardcopy and electronic file Procedures will be approved by NSWC Carderock 3. CDRL Sequence Number: A010 Title: Dummy Load Test Report Applicability: Task C.1.2 Date due: Within 5 days after completion of dummy load test Form: Provide in both hardcopy and electronic file The following information shall be provided to NSWC Dahlgren: a) Raw data from test instrumentation. b) Sufficient interpretation and explanation of raw test data to permit understanding of test results and analysis of failed components (if applicable). 4. CDRL Sequence Number: A009 Title: Test Report Applicability: Task C.1.2 Date due: Within 30 days after completion of test Form: Provide in both hardcopy and electronic file DISTRIBUTION - ------------ EDA Contractor B56/Naley strva@str-inc.com ORDER FOR SUPPLIES OR SERVICES PAGE 1 OF 5 - -------------------------------------------------------------------------------- 1. CONTRACT/PURCH ORDER NO. N00178-01-D-3008 2. DELIVERY ORDER NO. 0005 3. DATE OF ORDER(YYYMMMDD) 20021218 4. REQUISITION/PURCH REQUEST NO. B53000/23098516 5. PRIORITY - -------------------------------------------------------------------------------- 6. ISSUED BY CODE N00178 Naval Surface Warfare Center, Dahlgren Division Attn: M. Piersall, SD139, piersallmf@nswc.navy.mil 17320 Dahlgren Road Dahlgren, VA 22448-5100 - -------------------------------------------------------------------------------- 7. ADMINISTERED BY (If other than 6) CODE S2101A DCMA Baltimore 217 E Redwood Street, Suite 1800 Baltimore, MD 21202-5299 - -------------------------------------------------------------------------------- 8. DELIVERY FOB [X] DEST [ ] OTHER (See Schedule if other) - -------------------------------------------------------------------------------- 9. CONTRACTOR CODE OXNU6 FACILITY 79-613-4492 NAME AND ADDRESS SCIENCE AND TECHNOLOGY RESEARCH, INC. 10075 Tyler Place, Suite 17 Ijamsville, MD 21754 - -------------------------------------------------------------------------------- 10. DELIVER TO FOB POINTBY 20030225 - -------------------------------------------------------------------------------- 11. X IF BUSINESS IS [ ] SMALL [X] SMALL DISADVANTAGES [ ] WOMAN-OWNED - -------------------------------------------------------------------------------- 12. DISCOUNT TERMS 13. MAIL INVOICES TO ADDRESS IN BLOCK - -------------------------------------------------------------------------------- 14. SHIP TO CODE N00178 Naval Surface Warfare Center, Dahlgren Division Attn: Carlos Lama/B53 17320 Dahlgren Road Dahlgren, VA 22448-5100 - -------------------------------------------------------------------------------- 15. PAYMENT WILL BE MADE BY CODE HQ0338 DFAS-CO/South Entitlement Division P.O. BOX 182264 Columbus, OH 43218-2264 - -------------------------------------------------------------------------------- MARK ALL PACKAGES AND PAPERS WITH IDENTIFICATION NUMBERS IN BLOCKS 1 AND 2. - -------------------------------------------------------------------------------- 16. TYPE OF ORDER DELIVERY/CALL [X] This delivery order/call is issued on another Government agency or in accordance with and subject to terms and conditions of above numbered contract. PURCHASE [ ] Reference you __________________ furnish the following on terms specified herein. ACCEPTANCE. THE CONTRACTOR HEREBY ACCEPTS THE OFFER REPRESENTED BY THE NUMBERED PURCHASE ORDER AS IT MAY PREVIOUSLY HAVE BEEN OR IS NOW MODIFIED, SUBJECT TO ALL OF THE TERMS AND CONDITIONS SET FORTH, AND AGREES TO PERFORM THE SAME. SCIENCE & TECHNOLOGY RESEARCH, INC. /s/ E.L. Kessler - --------------------------------- --------------------------------- NAME OF CONTRACTOR SIGNATURE E.L. Kessler, Gen. Mgr. 13 JAN '03 - --------------------------------- --------------------------------- TYPED NAME AND TITLE DATE SIGNED [ ] if this box is marked, supplier must sign Acceptance and return the following number of copies: - -------------------------------------------------------------------------------- 17. ACCOUNTING AND APPROPRIATION DATA/LOCAL USE CLIN 0001 ACRN: AA 97X4930 NH1E 000 77777 0 000178 2F 000000 21B5603JCDAH $23,030 - -------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------- 18. ITEM NO. 19. SCHEDULE OF SUPPLIES/SERVICES 20. QUANTITY 21. 22. UNIT 23. AMOUNT ORDERED/ UNIT PRICE ACCEPTED* SEE PAGES 2-5 AID# 43625 - -----------------------------------------------------------------------------------------------------------------------
* If quantity accepted by the Government is same as quantity ordered, indicate by X. If different, enter actual quantity accepted below quantity ordered and encircle. - -------------------------------------------------------------------------------- 24. UNITED STATES OF AMERICA BY TINA CORR LYNN /s/ Tina Corr Lynn CONTRACTING/ORDERING OFFICER - -------------------------------------------------------------------------------- 25. TOTAL $23,030.00 - -------------------------------------------------------------------------------- 26. QUANTITY IN COLUMN 20 HAS BEEN [ ] INSPECTED [ ] RECEIVED [ ] ACCEPTED, AND CONFORMS TO THE CONTRACT EXCEPT AS NOTED ------------- ------------------------------------------------- DATE SIGNATURE OF AUTHORIZED GOVERNMENT REPRESENTATIVE - -------------------------------------------------------------------------------- 27. SHIP. NO. 28. D.O. VOUCHER NO. 29. DIFFERENCES 30. INITIALS 31. PAYMENT [ ] COMPLETE [ ] PARTIAL [ ] FINAL 32. PAID BY 33. AMOUNT VERIFIED CORRECT FOR 34. CHECK NUMBER 35. BILL OF LADING NO. - -------------------------------------------------------------------------------- 36. I certify this account is correct and proper for payment ------------- ------------------------------------------------- DATE SIGNATURE AND TITLE OF CERTIFYING OFFICIAL - -------------------------------------------------------------------------------- 37. RECEIVED AT 38. RECEIVED BY 39. DATE RECEIVED 40. TOTAL CONTAINERS 41. S/R ACCOUNT NUMBER 42. S/R VOUCHER NO. ITEM DESCRIPTION QUANTITY AMOUNT 0001 The contractor shall provide support for Chemical and Biological defense programs in accordance with the statement of work. 1 Lot Est. Cost $21,423 Fixed Fee 1,607 Total ECPFF $23,030 0002 Contract Data Requirements List Not Separately Priced (DD Form 1423) in support of CLIN 0001. STATEMENT OF WORK ----------------- C.1 JOINT CHEMICAL AGENT DETECTOR (JCAD) SHOCK TEST SUPPORT. Paragraphs C.1 and C.2.1 of the contract require the contractor to provide test plans, test reports, and the necessary facilities and services for the conduct of environmental testing and evaluation in support of Chemical and Biological Defense programs. The Chemical-Biological Defense Branch (B53) has a requirement to conduct the heavyweight shock (barge) test as specified in MIL-S-901D for deck-mounted equipment. C.1.1 Provide engineering and technical support and perform the heavyweight shock (barge) test described above. Pertinent MIL-S-901D paragraph 6.2 data is as follows: a. Shock Tests, H.I. (High Impact) Shipboard Machinery, Equipment, and Systems, Requirements for: MIL-S-901D (Navy); 17 March 1989. b. N.A. c. Shock Grade. Grade A d. Equipment Class. Class II e. Shock Test Type. Type A f. Equipment mounting. Deck mounted g. Equipment mounting plane aboard ship. Back h. Equipment mounting orientation. Unrestricted as to orientation aboard ship i. Method of Mounting. Tactical configuration mounted to deck plate using Navy approved test shock mounts j. Method of simulating shipboard connections. Tactical configuration used for mechanical connections; electrical to be simulated k. Mode of equipment operation during test. Energized, per MILSTD 901D for Grade A shock classification. l. Shock test acceptance criteria and associated post-test functional testing and inspection requirements are to include powering up, placing in initialization (Warm-up and self-diagnostic) and operation modes noting warning and reporting functions (audible and visual) upload and query of data, noting results of BIT test, and confidence checks. m. Acceptance authority/authorities. NSWC Dahlgren (B56), JCAD Test Team. C.1.2 Provide additional engineering and technical support to include: a. Use an isolator shock simulation program to perform an isolator analysis in order to predict the JCAD's shock mount performance under the most severe MIL-S-901D shock test conditions and identify the isolation system's natural frequency. Actual deck simulator input from previous 14 Hertz and 8-Hertz tests should be used in the analysis. If available deck simulator input from previous 10-Hertz test should also be used. b. Review and proved input to existing shock test plan. c. Determine proper test installation, and arrange JCAD system installation to the test barge (mounts and brackets will not be provided by the Government). d. Verification that the JCAD is properly installed for the test. e. Ensure that the JCAD is properly instrumented for displacement and shock loading measurements using a tri-axial accelerometer. The accelerometer measurements should then be integrated to velocity, and position measurements. f. Coordinate and perform the test as a "piggyback' shock test with another test load. g. Selection of a facility to conduct the test and provide shock test fixtures for the JCAD Shock test. Shock test strikes must provide 14 +/- 2 hertz input, 10 +/- 1 hertz input, and 8 +/- 1 hertz input to the JCAD shock mount to verify the isolation system's ability to attenuate transmitted shock to levels within the predicted shock tolerance levels of the JCAD. h. A total of 4 shots should be conducted at the 14 +/- 2 hertz input level, 2 shots at teh 10 +/- 1 hertz input level, and 2 shots at the 8 +/- 1 hertz input level to the JCAD shock mount. i. After test completion, visually inspect and conduct operational tests (as specified in paragraph C.1.1 subparagraph 1) to confirm condition of system. Report any abnormalities. j. Remove system from test barge and return it to B53 in its shipping container. SECURITY REQUIREMENTS --------------------- Security Requirements are set forth in the basic contract's DD254. GOVERNMENT FURNISHED INFORMATION -------------------------------- Technical documentation and data will be supplied to the contractor, as required, to support task performance. These will include, but is not limited to, the following: o Technical Manual o Training Package o Test Plan o Shop Drawings of Shipboard Mount Access will also be granted to on site test facilities as required to assist in executing the Navy part of the JCAD test program. Equipment to be provided is: o JCAD system with Shipping Container o JCAD Shock Mount TRAVEL REQUIREMENTS Destination Persons Days Trips - -------------------------------------------------------------------------------- NSWC - Dahlgren, VA 1 1 3 Rustburg, VA 1 1 3 PERIOD OF PERFORMANCE --------------------- The period of performance shall be from the effective date of the order, through 25 February 2003. 1. CDRL Sequence Number: A007 Title: Contractor's Progress, Status and Management Report Applicability: Task C.1.2 Date Due: Monthly The following information shall be provided to NSWC Dahlgren: a) Funding expended to date of report, and projection of funds required for completion of task. b) Status of completion of tasks under C.1.2. 2. CDRL Sequence Number: A009 Title: Test Plan Applicability: Task C.1.2 Date Due: 21 January 2002 Form: Provide in both hardcopy and electronic file 3. CDRL Sequence Number: A009 Title: Test Report Applicability: Task C.1.2 Date Due: 15 days alter completion of test Form: Provide in both hardcopy and electronic file DISTRIBUTION - ------------ EDA B53/Naley strva@str-inc.com CONTRACT DATA REQUIREMENTS LIST A. CONTRACT LINE ITEM NO. B. EXHIBIT A C. CATEGORY TDP TM OTHER [X] D. SYSTEM/ITEM E. CONTRACT/PR NO. N00164-01-D-0042 F. CONTRACTOR STR - -------------------------------------------------------------------------------- 1. DATA ITEM NO. A002 2. TITLE OF DATA ITEM CONTRACTOR'S CONFIGURATION MANAGEMENT PLAN 3. SUBTITLE 4. AUTHORITY DI-CMAN-80858B 5. CONTRACT REFERENCE 3.2.6 6. REQUIRING OFFICE NSWC, CRANE, CODE 805D 7. DD 250 REQ. LT 8. APP CODE A 9. DIST STATEMENT REQUIRED SEE BLK 16 10. FREQUENCY OTIME 11. AS OF DATE 12. DATE OF FIRST SUBMISSION 30 DAC 13. DATE OF SUBSEQUENT SUBMISSION 15 DARC - -------------------------------------------------------------------------------- 14. DISTRIBUTION a. ADDRESSEE b. COPIES Draft Final Reg Report AL-01-DCMC 1 AL-02-CODE 805D 1 15. TOTAL 2 - -------------------------------------------------------------------------------- 16. REMARKS BLOCK 7 - Submit one info copy only of LT to: COMMANDER, CODE 1165 B-3291 ATT M SIDDONS, NAVAL SURFACE WARFARE CENTER (NSWC) 300 HIGHWAY 361, CRANE IN 47522-5001 or electronically to: siddons_marlene@crane.navy.mil BLOCK 8 - Submit the draft plan 30 days after award. The Government will review the draft for technical adequacy and in accordance with (IAW) the SOW. Written comments to be incorporated into the final plan will be provided within 15 days after receipt of draft. Block 9 - Distribution Statement C DESTRUCTION NOTICE APPLIES. Block 14 - Addressee List (AL) AL-01 is DCMC AL-02 COMMANDER CODE 805 BLDG 3324 ATT S CLARK NAVAL SURFACE WARFARE CENTER, CRANE 300 HIGHWAY 361 CRANE IN, 47522-5001 Or electronically to: clark_s@crane.navy.mil - -------------------------------------------------------------------------------- G. PREPARED BY H. DATE I. APPROVED BY Theresa Andis, Crane Data Manager J. DATE CONTRACT DATA REQUIREMENTS LIST A. CONTRACT LINE ITEM NO. B. EXHIBIT A C. CATEGORY TDP TM OTHER [X] D. SYSTEM/ITEM E. CONTRACT/PR NO. N00164-01-D-0042 F. CONTRACTOR STR - -------------------------------------------------------------------------------- 1. DATA ITEM NO. A004 2. TITLE OF DATA ITEM TEST PROCEDURE 3. SUBTITLE Production 4. AUTHORITY DI-RELI-80603 5. CONTRACT REFERENCE 3.2.4.2 6. REQUIRING OFFICE NSWC, CRANE, CODE 805D 7. DD 250 REQ. DD 8. APP CODE A 9. DIST STATEMENT REQUIRED SEE BLK 16 10. FREQUENCY OTIME 11. AS OF DATE 12. DATE OF FIRST SUBMISSION SEE BLK 16 13. DATE OF SUBSEQUENT SUBMISSION SEE BLK 16 - -------------------------------------------------------------------------------- 14. DISTRIBUTION a. ADDRESSEE b. COPIES Draft Final Reg Report AL-01-DCMC 1 AL-02-CODE 805D 1 15. TOTAL 2 - -------------------------------------------------------------------------------- 16. REMARKS BLOCK 8 - The Government will review the draft for technical adequacy in accordance with (IAW) the requirements of the SOW. Written comments to be incorporated into the final will be provided by the Government within 15 days after receipt of the draft procedure. Block 9 - Distribution Statement C DESTRUCTION NOTICE APPLIES. BLOCKS 12 AND 13 - Submit the draft 30 days after receipt of production authorization. Submit the final within 15 days after receipt of Government comments. Block 14 - Addressee List (AL) AL-01 is DCMC AL-02 COMMANDER CODE 805 BLDG 3324 ATT S CLARK NAVAL SURFACE WARFARE CENTER, CRANE 300 HIGHWAY 361 CRANE IN, 47522-5001 Or electronically to: clark_s@crane.navy.mil - -------------------------------------------------------------------------------- G. PREPARED BY H. DATE I. APPROVED BY Theresa Andis, Crane Data Manager J. DATE AWARD/CONTRACT PAGE OF PAGES 1 | 25 1. THIS CONTRACT IS A RELATED ORDER UNDER DPAS (15 CFR 350) RATING DO-C9E - -------------------------------------------------------------------------------- 2. CONTRACT (PROC. INST. IDENT.) N00178-01-D-3008 - -------------------------------------------------------------------------------- 3. EFFECTIVE DATE 18 Dec 2000 - -------------------------------------------------------------------------------- 4. REQUISITION/PURCHASE REQUEST/PROJECT NO. - -------------------------------------------------------------------------------- 5. ISSUED BY CODE N00178 NAVAL SURFACE WARFARE CENTER, DAHLGREN DIVISION ___ F. PIERSALL (PIERSAKKF@NSWC.NAVY.MIL) 17320 DAHLGREN ROAD DAHLGREN, VA 22448-5100 - -------------------------------------------------------------------------------- 6. ADMINISTERED BY (IF OTHER THAN ITEM 6) CODE S2101A DCM BALTIMORE 217 E REDWOOD STREET, SUITE 1800 BALTIMORE MD 21202-5299 - -------------------------------------------------------------------------------- 7. NAME AND ADDRESS OF CONTRACTOR (NO., STREET, CITY, COUNTY STATE AND ZIP CODE) SCIENCE AND TECHNOLOGY RESEARCH INC ED KESSLER 7210 PINDELL SCHOOL ROAD FULTON MD 20749 - -------------------------------------------------------------------------------- 8. DELIVERY [ ] FOB Origin [X] Other (see below) - -------------------------------------------------------------------------------- 9. DISCOUNT FOR PROMPT PAYMENT - -------------------------------------------------------------------------------- 10. SUBMIT INVOICES (4 COPIES UNLESS OTHERWISE SPECIFIED) TO THE ADDRESS SHOWN IN ITEM Section G - -------------------------------------------------------------------------------- CODE OXNU6 - -------------------------------------------------------------------------------- 11. SHIP TO/MARK FOR CODE N00178 CARLOS LAMA NAVAL SURFACE WARFARE CENTER, DAHLGREN DIVISION 1732 DAHLGREN ROAD DAHLGREN, VA 22448-5100 - -------------------------------------------------------------------------------- 12. PAYMENT WILL BE MADE BY CODE HQ0338 DFAS-CO/SOUTH ENTITLEMENT DIVISION PO BOX 182264 COLUMBUS OH 43218-2264 - -------------------------------------------------------------------------------- 13. AUTHORITY FOR OTHER THAN FULL AND OPEN COMPETITION [X] 10 U.S.C. 2304(c)(5) [ ] 41 U.S.C. 253(c)( ) - -------------------------------------------------------------------------------- 14. ACCOUNTING AND APPROPRIATION DATA See Schedule - -------------------------------------------------------------------------------- 15A. ITEM NO. 15B. SUPPLIES/SERVICES SEE SCHEDULE 15C. QUANTITY 15D. UNIT 15E. UNIT PRICE 15F. AMOUNT - -------------------------------------------------------------------------------- 15G. TOTAL AMOUNT OF CONTRACT: $4,923,784.00 - -------------------------------------------------------------------------------- 16. Table of Contents SEC DESCRIPTION PAGE(S) PART I - THE SCHEDULE X A SOLICITATION/CONTRACT FORM 2 X B SUPPLIES OR SERVICES AND PRICES/COSTS 4 X C DESCRIPTION/SPECS./WORK STATEMENT 5 X D PACKAGING AND MARKING 7 X E INSPECTION AND ACCEPTANCE 8 X F DELIVERIES OR PERFORMANCE 9 X G CONTRACT ADMINISTRATION DATA 10 X H SPECIAL CONTRACT REQUIREMENTS 17 PART II - CONTRACT CLAUSES X I CONTRACT CLAUSES 21 PART III - LIST OF DOCUMENTS, EXHIBITS & ATTACHMENTS X J LIST OF ATTACHMENTS 25 PART IV - REPRESENTATIONS AND INSTRUCTIONS K REPRESENTATIONS, CERTIFICATIONS OTHER STATEMENTS OF OFFERORS L INSTRS. CONDS., AND NOTICES TO M EVALUATION FACTORS FOR AWARD CONTRACTING OFFICER WILL COMPLETE ITEM 17 OR 18 AS APPLICABLE - -------------------------------------------------------------------------------- 17. [X] CONTRACTOR'S NEGOTIATED AGREEMENT (Contractor is required to sign this document and return 1 copies to issuing office). Contractor agrees to furnish and deliver all items or perform all services set forth or otherwise identified above and on any continuation sheets for the consideration stated herein. The rights and obligations of the parties to this contract shall be subject to and governed by the following documents; (a) this award/contract, (b) the solicitation, if any, and (c) such provisions, representations, certifications, and specifications, as are attached or incorporated by reference herein. (Attachments are listed herein.) - -------------------------------------------------------------------------------- 18. [ ] AWARD (Contractor is not required to sign this document). Your offer on solicitation number including the additions or changes made by you which additions or changes set forth in full above, is hereby accepted as to items listed above and on any continuation sheets. This award consummates the contract which consists of the following documents: (a) the Government's solicitation and your offer, and (b) this award/contract. No further contractual document is necessary. - -------------------------------------------------------------------------------- 19A. NAME AND TITLE OF SIGNER (TYPE OR PRINT) Edward L. Kessler/General Manager - -------------------------------------------------------------------------------- 19B. NAME OF CONTRACTOR ASI TECHNOLOGY CORPORATION BY /s/ Edward L. Kessler --------------------------------------- (Signature of person authorized to sign) - -------------------------------------------------------------------------------- 19C. DATE SIGNED 20 DEC 2000 - -------------------------------------------------------------------------------- 20A. NAME OF CONTRACTING OFFICER JAMES E. THOMSON/BRANCH HEAD - -------------------------------------------------------------------------------- 20B. UNITED STATES OF AMERICAN BY /s/ James E. Thomson ---------------------------------- (Signature of Contracting Officer) - -------------------------------------------------------------------------------- 20C. DATE SIGNED 12-Dec-2000 - -------------------------------------------------------------------------------- N00178-01-D-3008 Page 2 of 25 SECTION A Solicitation/Contract Form ACCOUNTING AND APPROPRIATION DATA AA: 97X4930.NH1E 000 77777 0 000178 2F 000000 21B5300ACPRC AMOUNT: $25,000.00 FUNDING JOB ORDER NO QUANTITY B53000/03494170 (Exp. 30 Sep 01 ) AMOUNT: $25,000.00 AB: 97X4930.NH1E 000 77777 0 000178 2F 000000 21B5301LSDAH AMOUNT: $10,000.00 FUNDING JOB ORDER NO QUANTITY B53000/03494172 (Exp. 30 Sep 01 ) AMOUNT: $10,000.00 NOTICE TO CONTRACTORS THE PURPOSE OF THIS NOTICE IS TO BRING MATTERS TO YOUR ATTENTION WHICH CAN AFFECT PAYMENT OF YOUR INVOICES. CCR ANNUAL RENEWAL YOU MUST CONFIRM YOUR REGISTRATION IN THE CENTRAL CONTRACTOR REGISTRATION (CCR) DATABASE OR THE DEFENSE FINANCE AND ACCOUNTING SERVICE (DFAS) MAY NOT PROCESS YOUR INVOICE. YOU MAY OBTAIN MORE INFORMATION ON THIS ANNUAL RENEWAL CONFIRMATION PROCESS BY CALLING 1-888-227-2423 OR VIA THE INTERNET AT http://www.ccr2000.com/ EFTS ELECTRONIC FUNDS TRANSFER (EFT) PAYMENTS ARE BASED ON THE EFT INFORMATION CONTAINED IN THE CCR DATABASE. IT IS CRITICAL THAT YOU ENSURE THAT YOUR EFT INFORMATION IN THE CCR DATABASE REMAINS CURRENT AND CORRECT. INVOICE COPY TO MD24I DFAS RELIES ON NSWCDD CODE MD241 FOR INVOICE PRE-VALIDATION. PLEASE PROVIDE A COPY OF ALL INVOICES TO: N00178-01-D-3008 Page 3 of 25 NAVAL SURFACE WARFARE CENTER, DAHLGREN DIVISION MAIL CODE MD24I 17320 DAHLGREN ROAD, DAHLGREN, VA 22448-5100 REGISTER FOR INVOICE STATUS YOU CAN REGISTER AT THE FOLLOWING WEB SITE TO MONITOR THE STATUS OF YOUR INVOICES. THIS IS THE VENDOR PAY INQUIRY SYSTEM-MOCAS USER REGISTRATION. http://vendorpay.dfas.mil/newuser SECTION C Descriptions and Specifications CLAUSES INCORPORATED BY FULL TEXT STATEMENT OF WORK C.1 INTRODUCTION The Chemical-Biological Defense Branch (B53) of the Naval Surface Warfare Center, Dahlgren Division (NSWCDD) has a requirement to provide engineering development, test and production of chemical and biological agent detectors, integrated detector systems, protection systems, and protection equipment. Engineering development includes design, procurement and fabrication of systems and system components, building of prototypes, operational and environmental testing and evaluation, design modification, and development of Technical Data Packages (TDPs). B53's requirement includes support of both U.S. Nary unique as well as Joint Service Projects. To assist in meeting this requirement, the Contractor shall furnish the necessary supplies, services, facilities, materials, and technical support described in delivery orders issued under this contract in accordance with the following general Statement of Work and the specific Statements of Work attached to individual delivery orders. C.2 GENERAL STATEMENT OF WORK C.2.1 The Contractor shall provide engineering development support for fabrication, assembly, installation, quality control checks, troubleshooting, repair documentation, test plans, engineering reviews, environmental and operational testing, data reduction and analysis, drawings, and appropriate documentation and industrial services as required for the Chemical and Biological Defense programs. C.2.1.1 The Contractor shall provide for the necessary fabricating and/or machining to produce the specified components and the necessary facilities and personnel to assemble or otherwise produce the number of required assemblies. Production of detector and sensor components will require skilled engineers and technicians fully versed with the Chemical or Biological units as specified in specific task orders. C.2.1.2 The Contractor shall provide facilities and personnel necessary to procure, receive, store, and otherwise control materials necessary to produce individual sub-assemblies, components, parts and materials. Specific lists of Government Furnished Material (GFM) will be provided with each delivery order. C.2.1.3 The Contractor shall provide facilities and personnel necessary to inspect and test the individual detector sub-assemblies, components and parts. The Contractor may be required to provide the engineering to prepare or evaluate Engineering Change Proposals for the machining, fabricating or prototyping the mechanical segments of the chemical or biological systems. C.2.2 The Contractor shall participate in NSWCDD meetings, In-Progress Reviews (IPRs), and working groups as required. In support of this effort the Contractor may be required to prepare agendas, review packages, briefing materials and summary reports. Deliverables are to be in accordance with Exhibit A. C.3 CONTRACT MANAGEMENT AND SUPERVISION The Contractor shall identify a Program/Contract Manager as a single point of contact responsible for the contract, responsible for the management and cost/schedule control of the contract consistent with contract requirements and shall provide a monthly status report detailing schedule and funding milestones. C.4 APPLICABLE REFERENCE DOCUMENTS The Contractor shall be required to provide deliverables in accordance with DODINST-5000.1 and DODINST-5000.2. N00178-01-D-3008 Page 6 of 25 MANDATORY MILSPECS/MILSTNDS The contractor is encouraged to submit alternatives to the cited MILSPECs/MILSTNDs. DIGITAL DELIVERY OF DATA (a) Delivery by the Contractor to the Government of certain technical data and other data is now frequently required in digital form rather than as hard copy. Such delivery may cause confusion between data rights and computer software rights. It is agreed that, to the extent that any such data is computer software by virtue of its delivery in digital form, the Government will be licensed to use that digital-form data with exactly the same rights and limitations as if the data had been delivered as hard copy. (b) Any limited rights legends or other allowed legends placed by a Contractor on technical data or other data delivered in digital form shall be digitally included on the same media as the digital-form data and must be associated with the corresponding digital-form technical data to which the legends apply to the extent possible. Such legends shall also be placed in human-readable form on a visible surface of the media carrying the digital-form data as delivered, to the extent possible. N00178-01-D-3008 Page 7 of 25 SECTION D Packaging and Marking CLAUSES INCORPORATED BY FULL TEXT NOTE: This contract contains clauses from the: Federal Acquisition Regulation (FAR) (48 CFR Chapter 1); FAR clauses are numbered "52.XXX-XX". Defense FAR Supplement (DFARS) (48 Chapter 2); DFAR clauses are numbered "252.XXX-XXXX". Navy Acquisition Procedures Supplement (NAPS); numbered "5252.2XX-9XXX". MARKING OF SHIPMENTS (COMMERCIALLY PACKAGED ITEMS) (a) Marking shall be in accordance with ASTM Designation D 3951-90, "Standard Practice for Commercial Packaging." PREPARATION FOR DELIVERY (COMMERCIALLY PACKAGED ITEMS) Preservation, packaging and packing shall be in accordance with ASTM Designation D 3951-95 "Standard Practice for Commercial Packaging." UNPACKING INSTRUCTIONS: COMPLEX OR DELICATE EQUIPMENT (a) Location on Container. When practical, one set of the unpacking instructions will be placed in a heavy water-proof envelope prominently marked "UNPACKING INFORMATION" and firmly affixed to the outside of the shipping container in a protected location, preferably between the cleats on the end of the container adjacent to the identification marking. If the instructions cover a set of equipment packed in multiple containers, the instructions will be affixed to the number one container of the set. When the unpacking instructions are too voluminous to be affixed to the exterior of the container, they will be placed inside and directions for locating them will be provided in the envelope marked "UNPACKING INFORMATION." (b) Marking Containers. When unpacking instructions are provided, shipping containers will be stenciled "CAUTION--THIS EQUIPMENT MAY BE SERIOUSLY DAMAGED UNLESS UNPACKING INSTRUCTIONS ARE CAREFULLY FOLLOWED. UNPACKING INSTRUCTIONS ARE LOCATED (state where located)." When practical, this marking will be applied adjacent to the identification marking on the side of the container. [NO PAGE 8] N00178-01-D-3008 Page 9 of 25 SECTION F Deliveries or Performance DELIVERY INFORMATION
CLINS DELIVERY DATE UNIT OF ISSUE QUANTITY FOB SHIP TO ADDRESS 0001 POP 18-DEC-00 TO Lot Dest. N00178 16-DEC-05 Naval Surface Warfare Center, Dahlgren Division 17320 Dahlgren Road Dahlgren, VA 22448-5100 Carlos Lama (540) 653-3306 0002 POP 18-DEC-00 TO Lot Dest. Same as CLIN 0001 16-DEC-05
CLAUSES INCORPORATED BY REFERENCE: 52.242-15 Alt I Stop-Work Order (Aug 1989) - Alternate I APR 1984 52.247-34 F.O.B. Destination NOV 1991 CLAUSES INCORPORATED BY FULL TEXT CONTRACTOR NOTICE REGARDING LATE DELIVERY In the event the contractor anticipates or encounters difficulty in complying with the contract delivery schedule or date, he/she shall immediately notify the Contracting Officer in writing, via the cognizant Contract Administration Services Office, if assigned. The notice shall give the pertinent details; however such notice shall not be construed as a waiver by the Government of any contract delivery schedule, or of any rights or remedies provided by law or under this contract. DURATION OF CONTRACT PERIOD This contract shall become effective on date of award, and shall continue for 60 months. N00178-01-D-3008 Page 10 of 25 SECTION G Contract Administration Data CLAUSES INCORPORATED BY FULL TEXT PAYMENT, SELECTED ITEMS OF COST REIMBURSEMENT CONTRACTS (a) Travel Costs (Including Foreign Travel) (1) Air: The Contractor shall be reimbursed for the actual cost of transportation via air, provided, such costs are the lowest customary standard, coach or equivalent, airfare offered during normal business hours, unless higher fares are justified in accordance with FAR 31.205-46(d). The contractor shall, to the maximum extent practicable, minimize overall travel costs by taking advantage of discounted airfare rates available through advance purchase. Charges associated with itinerary changes and cancellation under nonrefundable airline tickets are reimbursable as long as the changes are driven by the work requirement (2) Privately Owned Conveyance: Reimbursement for the use of privately owned conveyance by the Contractor's personnel will be at the mileage rate specified in the Joint Travel Regulations plus all necessary tolls when such travel is necessary for performance under this contract and does not constitute non-reimbursable travel as defined below. (3) Auto Rental: Reimbursement for the use of rental cars (most economical class available consistent with the need) by the Contractor's personnel will be at actual cost. (4) Other Public Transportation: The use of other public transportation (Coach/Economy) by the Contractor's personnel will be reimbursed at actual cost. (5) Non-reimbursable Travel: The following travel shall not be reimbursed hereunder: travel performed for personal convenience, daily travel to and from work at the contractor's facility (i.e., designated work site) or to and from NSWCDD when NSWCDD is the designated work site, and travel between the contractor's plant and NSWCDD if the plant is within a 50-mile radius of NSWCDD. (b)(1) Substantiation of Costs: The Contractor shall submit a summary by trip of actual costs incurred for authorized travel in accordance with the clause entitled "Certificate of Performance." In no event will reimbursement exceed the published rates of common carriers unless justified and approved in advance by the Contracting Officer. (2) Personnel in Travel Status: For personnel on official travel status (i.e., travel required for performance of this contract and authorized by the Contracting Officer or the Contracting Officer's representative,) travel shall be considered at time of performance under the contract. However, such reimbursement shall not exceed eight labor hours per individual while in travel status during one calendar day nor shall travel outside regular duty hours be reimbursed except: when travel involves the performance of work while traveling, is carried out under arduous conditions, or results from an event that could not be scheduled or controlled administratively by either the Contractor or Government. (c) Per Diem Expenses for subsistence and lodging shall be reimbursed to the Contractor only to the extent where overnight stay is necessary and authorized by the Contracting Officer for performance under this contract. Incurred costs shall be considered to be reasonable and allowable only to the extent that they do not exceed, on a daily basis, the maximum per diem rates in effect at the time of travel as set forth in the Federal Travel Regulations, Joint Travel Regulations and Standardized Regulations set forth in FAR 31.205-46(2). (d) Cost of Materials N00178-01-D-3008 Page 11 of 25 The cost of materials furnished or used under this contract shall be reimbursed in accordance with paragraph (b) of the clause entitled "Allowable Costs (FAR 52.216-07)" for cost reimbursement contracts or "Payments, Time-and-Material/Labor Hour (FAR 52.232-07)" for time-and-material or labor hour contracts. Expendable material costs for items such as office supplies, report paper, etc., and tools of the trade shall be considered to be included in the contractor's indirect cost pools. The Contractor shall be required to support all material costs claimed in accordance with the clause entitled "Certificate of Performance." (e) Credits The Contractor shall insure that any credits for future travel, free travel, free gifts or rebates on current travel offered by airlines or car rental agencies as part of frequent traveler or similar promotional programs, that are accrued as a result of travel necessary for performance under the contract, shall be conveyed to the Government. (f) Training The Government will not allow costs, nor reimburse costs associated with the contractor training employees in an effort to attain and/or maintain requirements of this contract. Attendance at workshops or symposiums is considered training for purposes of this clause. (g) Direct Charge Relocation Costs In accordance with FAR 31, relocation costs, either direct charged or included in the contractor's indirect cost pools, associated with an individual not completing a term of service equal to one year working under this contract shall be an unallowable cost under this contract. PAYMENT OF FIXED FEE (COST PLUS FIXED FEE) Subject to the withholding provisions of the contract clause entitled "Fixed Fee," and any other adjustments required by other contract clauses, the fixed fee shall be paid in installments. The amount of each fee installment shall be billed at 7.5% of allowable costs. This percentage reflects the ratio of total contract fixed fee to total contract estimated cost. NAVSEA 5252.232-9104 ALLOTMENT OF FUNDS (MAY 1993) (a) This contract is incrementally funded with respect to both cost and fee. The amount(s) presently available and allotted to this contract for payment of fee for incrementally funded contract line item number/contract subline item number (CLIN/SLIN), subject to the clause entitled "FIXED FEE" (FAR 52.216-8) or "INCENTIVE FEE" (FAR 52.216-10), as appropriate, is specified below. The amount(s) presently available and allotted to this contract for payment of cost for incrementally funded CLINs/SLINs is set forth below. As provided in the clause of this contract entitled "LIMITATION OF FUNDS" (FAR 52.232-22), the CLINs/SLINs covered thereby, and the period of performance for which it is estimated the allotted amount(s) will cover are as follows: ESTIMATED ITEM(S) ALLOTTED TO COST ALLOTTED TO FEE PERIOD OF PERFORMANCE - ------- ---------------- --------------- --------------------- [to be specified in individual orders] (b) The parties contemplate that the Government will allot additional amounts to this contract from time to time for the incrementally funded CLINs/SLINs by unilateral contract modification, and any such modification shall state separately N00178-01-D-3008 Page 12 of 25 the amount(s) allotted for cost, the amount(s) allotted for fee, the CLINs/SLINs covered thereby, and the period of performance which the amounts are expected to cover. (c) CLINs/SLINs [to be specified in individual orders] are fully funded and performance under these CLINs/SLINs is subject to the clause of this contract entitled "LIMITATION OF COST" (FAR 52.232-20) or "LIMITATION OF COST (FACILITIES)" (FAR 52.232-21), as applicable. (d) The Contractor shall segregate costs for the performance of incrementally funded CLINs/SLINs from the costs of performance of fully funded CLINs/SLINs. FUNDING PROFILE It is estimated that these incremental funds will provide for [to be specified in individual orders.] The following details funding to date: Total Contract Funds This Previous Funds Balance CPFF Action Funding Available Unfunded [to be specified in individual orders] ADDRESS TO WHICH PAYMENT SHALL BE MADE Offeror shall indicate in the space provided below the address to which payment should be mailed, if such address is different from that shown for the offeror. Science & Technology Research, Inc. ----------------------------------- 10075 Tyler Place, Suite 17 ----------------------------------- Ijamsville, MD 21754 ----------------------------------- AUTHORIZED CHANGES ONLY BY THE CONTRACTING OFFICER (JAN 1992) (a) Except as specified in paragraph (b) below, no order, statement, or conduct of Government personnel who visit the Contractor's facilities or in any other manner communicates with Contractor personnel during the performance of this contract shall constitute a change under the "Changes" clause of this contract. (b) The Contractor shall not comply with any order, direction or request of Government personnel unless it is issued in writing and signed by the Contracting Officer, or is pursuant to specific authority otherwise included as a part of this contract. (c) The Contracting Officer is the only person authorized to approve changes in any of the requirements of this contract and notwithstanding provisions contained elsewhere in this contract, the said authority remains solely the Contracting Officer's. In the event the contractor effects any change at the direction of any person other than the Contracting Officer, the change will be considered to have been made without authority and no adjustment will be made in the contract price to cover any increase in charges incurred as a result thereof. The address and telephone number of the Contracting Officer is: NAME : J. E. Thomson ADDRESS: 17320 Dahlgren Road, Dahlgren, VA 22448 TELEPHONE: (540) 653-7765 N00178-01-D-3008 Page 13 of 25 DELEGATION OF AUTHORITY FOR CONTRACT ADMINISTRATION The Administrative Contracting Officer (ACO) of the cognizant Defense Contract Management Command is designated as the authorized representative of the Contracting Officer for purposes of administering this contract in accordance with FAR 42.3. However, in view of the technical nature of the supplies and services to be furnished, technical cognizance is retained by the Naval Surface Warfare Center, Dahlgren Division. AUTHORITY FOR DEOBLIGATION OF UNEXPENDED AND EXCESS DOLLAR BALANCES Authority is delegated to the Administrative Contracting Officer to execute contract modifications providing for deobligation of excess funds. CONTRACT ADMINISTRATION PLAN In order to expedite administration of this contract, the following delineation of functions is provided. The individual/position designated as having responsibility should be contacted for any questions, clarifications, or information regarding the administration function specified. The names, addresses and phone numbers for these individuals or offices are as follows: Procuring Contracting Officer (PCO): Name: J. E. Thomson Address: Code: SD 13 Dahlgren Division Naval Surface Warfare Center 17320 Dahlgren Road Dahlgren, Virginia 22448-5100 Phone: (540) 653-7765 Administrative Contracting Officer (ACO): Name: DCMA Baltimore Address: 217 East Redwood Street, Suite 1800 Baltimore, MD 21202 Phone: (410) 962-9800 Paying Office: Name: DFAS-CO/South Entitlement Division Address: P.O. Box 182264 Columbus, OH 43218 Phone: (800) 756-4571 Primary Contracting Officer's Representative (COR): Name: Carlos Lama Address: Code B53 Naval Surface Warfare Center, Dahlgren Division 17320 Dahlgren Road Dahlgren, VA 22448 Phone: (540) 653-3306 N00178-01-D-3008 Page 14 of 25 Technical Assistant (TA): To be specified in individual delivery orders. (a) Procuring Contracting Officer (PCO) should be contacted for general information and shall perform the following functions: (1) Designates the COR. NOTE: COR authority is not redelegable. (2) Provide administrative changes to the contract administration plan. (3) Maintains the official contract file, ensuring contract ceiling is not exceeded. (4) Issues technical instructions, ensuring that each technical instruction is within the scope of the contract. (b) Administrative Contracting Officer (ACO) should be contacted for inquiries/information pertaining to matters specified in FAR 42.302 and DFAR 42.302, except in those areas specifically designated below as the responsibility of the COTR. (c) Paying Office should be contacted for inquiries/information with regard to payment of those vouchers approved by the PCO. (d) Contracting Officer's Representative (COR) should be contacted for inquiries/information pertaining to the following functions: (1) The COR will act as the Contracting Officer's Representative for technical matters, providing technical direction and discussion, as necessary, with respect to the specification or statement of work, and monitoring the progress and quality of contractor performance. The COR is not a Contracting Officer and does not have authority to direct the accomplishment of effort which is beyond the scope of the statement of work in the contract (or delivery order). (2) Technical contract administration to ensure each Delivery Order Statement of Work is within the scope of the basic contract, Orders comply with key personnel requirements, and delivery order cost proposals are consistent with the terms and conditions of the basic contract. (3) Technical advice regarding estimated level of effort and labor mix and/or the cost and need for materials, travel, equipment, etc. for each delivery order and any modifications. (4) Reports on the contractor's performance and lessons learned. (5) Review of the Certificate of Performance/invoice. (6) Inspection and/or acceptance of the services/deliverables as the official Government representative. (e) In the event that the COR named above is absent due to leave, illness or official business, all responsibilities and functions assigned to the COR will be the responsibility of the Alternate COR. (f) Technical Assistants (TA) (i.e., Delivery Order COR(s)) should be contacted for general information on the delivery order and shall perform the following functions: (1) Technical assistance/recommendations regarding the individual delivery order(s). (2) Technical advice to the COR regarding estimated level of effort and labor mix and/or the cost and need for materials, travel, equipment, etc. for the instant delivery order. N00178-01-D-3008 Page 15 of 25 (3) A written report to the COR on the contractor's performance and lessons learned for the specific delivery order. (4) Review and note discrepancies concerning the Certificate of Performance/invoice. (5) Recommendations to the COR regarding the acceptability of the services/deliverables. It is emphasized that only the Contracting Officer (either PCO or ACO) has the authority to modify the terms of the contract; therefore, in no event will any understanding, agreement, modification, change order, or other matter deviating from the terms of the basic contract between the contractor and any other person be effective or binding on the Government. When/if, in the opinion of the contractor, any effort outside the existing scope of the contract is requested, the contractor shall promptly notify the PCO in writing. No action must be taken by the contractor unless the PCO or ACO has issued a contractual change. ORDERING (INDEFINITE DELIVERY, TIME AND MATERIAL/LABOR HOUR AND COST REIMBURSEMENT CONTRACTS) (MAY 1993) (NSWCDD) (a) Ordering: All NSWCDD Warranted Contracting Officer are authorized ordering officers. Supplies or services to be furnished under this contract shall be furnished at such times as ordered by the issuance of Delivery Orders on DD Form 1155 by the Contracting Officer. All orders are subject to the terms and conditions of this contract. This contract shall control in the event of conflict with any order. When mailed, a Delivery Order shall be "issued" for purpose of this contract at the time the Government deposits the order in the mail, or, if transmitted by other means, when physically delivered to the contractor. (b) Ordering Procedures: (1) Delivery Orders issued shall include, but not be limited to the following information when applicable: (i) Date of order. (ii) Contract and order number. (iii) Type of Order (iv) Appropriation and accounting data. (v) Description of the work to be performed. (vi) Description of end item(s) to be delivered. (vii) DD Form 1423 (Contract Data Requirements List),if data to be delivered under the order is not listed on the DDForm 1423 included in this contract. (viii) The individual responsible for inspection/acceptance. (ix) Period of performance. (x) The estimated cost plus fixed fee or ceiling price for the order. (xi) List of Government furnished material and its estimated value. (2) Oral orders may be placed only in emergency circumstances. Information described above shall be furnished to the contractor at the time of placing an oral order and shall be confirmed by issuance of a written Delivery Order on DD Form 1155 within two working days. (c) Modifications of Delivery Orders: Delivery Orders may be modified only by the Contracting Officer and may be modified orally by the Contracting Officer in emergency circumstances. Oral modifications shall be confirmed by issuance of a written modification within two working days from the time of the oral communication modifying the order. (d) The Cost Plus Fixed Fee or Ceiling Price for each Delivery Order may not be changed except when authorized by a modification to the Delivery Order. N00178-01-D-3008 Page 16 of 25 (e) Unilateral Orders. Delivery Orders under this contract will ordinarily be issued after both parties agree on all terms. If the parties fail to agree, the Contracting Officer may require the contractor to perform and any disagreement shall be deemed a dispute within the meaning of the "Disputes" clause. MINIMUM AND MAXIMUM QUANTITIES As referred to in paragraph (b) of the "Indefinite Quantities" clause of this contract, the contract minimum quantity is a total of $35,000 worth of orders; the maximum quantity is the total Cost Plus Fixed Fee or Ceiling Price as set forth in the schedule. The maximum quantity is not to be exceeded. 5252.232-9001 SUBMISSION OF INVOICES (COST-REIMBURSEMENT, TIME-AND-MATERIALS, LABOR-HOUR, OR FIXED PRICE INCENTIVE) (JUL 1992) (a) "Invoice" as used in this clause includes contractor requests for interim payments using public vouchers (SF 1034) but does not include contractor requests for progress payments under fixed price incentive contracts. (b) The Contractor shall submit invoices and any necessary supporting documentation, in an original and 4 copies, to the contract auditor at the following address: DCAA, Columbia Branch Office One Mall North, Suite 200 10025 Governor Warfield Parkway Columbia, MD 21044 unless delivery orders are applicable, in which case invoices will be segregated by individual order and submitted to the address specified in the order. In addition, information copies shall be submitted to NSWCDD, codes SD139/Piersall, B53/Lama, and MD24I. Following verification, the contract auditor will forward the invoice to the designated payment office for payment in the amount determined to be owing, in accordance with the applicable payment (and fee) clause(s) of this contract. (c) Invoices requesting interim payments shall be submitted no more than once every two weeks, unless another time period is specified in the Payments clause of this contract. For indefinite delivery type contracts, interim payment invoices shall be submitted no more than once every two weeks for each delivery order. There shall be a lapse of no more than 30 calendar days between performance and submission of an interim payment invoice. (d) In addition to the information identified in the Prompt Payment clause herein, each invoice shall contain the following information, as applicable: (1) Contract line item number (CLIN) (2) Accounting Classification Reference Number (ACRN) (3) Payment terms (4) Procuring activity (5) Date supplies provided or services performed (6) Costs incurred and allowable under the contract (7) Vessel (e.g., ship, submarine or other craft) or system for which supply/service is provided (e) A DD Form 250, "Material Inspection and Receiving Report" is not required. (f) A Certificate of Performance shall be provided with each invoice submittal. (g) The Contractor's final invoice shall be identified as such, and shall list all other invoices (if any) previously tendered under this contract. (h) Costs of performance shall be segregated, accumulated and invoiced to the appropriate ACRN categories to the extent possible. When such segregation of costs by ACRN is not possible for invoices submitted with CLINS with more than one ACRN, an allocation ratio shall be established in the same ratio as the obligations cited in the accounting data so that costs are allocated on a proportional basis. (i) When a vendor invoice for a foreign currency is provided as supporting documentation, the Contractor shall identify the foreign currency and indicate on the vendor invoice the rate of exchange on the date of payment by the Contractor. The Contractor shall also attach a copy of the bank draft or other suitable documents showing the rate of exchange. The contractor shall provide an English translation if the vendor invoice is written in a foreign language. N00178-01-D-3008 Page 17 of 25 SECTION H Special Contract Requirements CLAUSES INCORPORATED BY FULL TEXT EMPLOYMENT OF US GOVERNMENT PERSONNEL RESTRICTED (MAY 1993) (NSWCDD) In performing this contract, the Contractor shall not use as a consultant or employ (on either a full or part time basis) any active duty U.S. Government personnel (civilian or military) without the prior written approval of the Contracting Officer. Such approval may be given only in circumstances where it is clear that no laws and no DoD or U.S. Government instructions, regulations, or policies might possibly be contravened and no appearance of a conflict of interest will result. NONPAYMENT FOR ADDITIONAL WORK Any additional supplies or services or a change to work specified herein which may be performed by the Contractor, either of his own volition or at the request of an individual other than a duly appointed Contracting Officer or his/her designee, except as may be explicitly authorized in this contract, are not authorized and will not be paid for. Only a duly appointed Contracting Officer is authorized to change the specifications, terms and conditions in this contract. PENSION PLAN TERMINATION (MAY 1993) (NSWCDD) If the contractor terminates a defined benefit pension plan via a transaction, which results in any excess assets, NSWCDD shall receive a credit or refund for its equitable share of the proceeds. The credit or refund to NSWCDD shall be the product of the termination proceeds and the weighted average share of NSWCDD's participation in total contractor pension costs. NSWCDD's participation shall be based upon the ratio of pension expense absorbed by NSWCDD contracts to total pension expense for the life of the plan. If the pension expense ratio cannot be readily determined, then a surrogate, as determined by the Contracting Officer, such as total sales or cost input, may be used as long as it achieves an equitable result. The credit due to NSWCDD shall be payable in full immediately upon plan termination, and will include interest at the rate specified by the Secretary of the Treasury pursuant to 50 U.S.C. App. 1215(b)(2) from the date of plan termination until the date of receipt by NSWCDD. PERSONNEL QUALIFICATIONS (MINIMUM) (JAN 1992) (a) Personnel assigned to or utilized by the Contractor in the performance of this contract shall, as a minimum, meet the experience, educational, or other background requirements set forth below and shall be fully capable of performing in an efficient, reliable, and professional manner. If the offeror does not identify the labor categories listed below by the same specific title, then a cross-reference list should be provided in the offeror's proposal identifying the difference. (b) The Government will review resumes of contractor personnel proposed to be assigned, and if personnel not currently in the employ of Contractor, a written agreement from potential employee to work will be part of the technical proposal. (c) If the Ordering Officer questions the qualifications or competence of any person performing under the contract, the burden of proof to sustain that the person is qualified as prescribed herein shall be upon the Contractor. (d) The Contractor must have the personnel, organization, and administrative control necessary to ensure that the work performed meets all requirements specified in delivery orders. The work history of each Contractor employee shall contain experience directly related to the tasks and functions to be assigned. The Ordering Officer reserves the N00178-01-D-3008 Page 18 of 25 right to determine if a given work history contains necessary and sufficiently detailed, related experience to reasonably ensure the ability for effective and efficient performance. (e) Personnel Requirements (1) Program/Contract Manager (Key) - A bachelor's degree in a business management related or scientific discipline and a minimum of 10 years experience managing and administering Government delivery order type contracts. In addition the Program/Contract Manager shall have the ability to: (1) effectively interface with Government contracting, managerial, and technical personnel; (2) apply automated management tools which include database, spreadsheet, and off-the-shelf program management aids; and (3) plan, project and otherwise control the application of resources to enable the successful completion of multiple, concurrent delivery orders. (2) Senior Engineer (Key) - A Bachelor's degree in a scientific discipline and a minimum of seven years of general technical experience with five years of related experience supporting the technical work identified in the SOW; or an associate's degree in a scientific discipline and a minimum of ten years of specialized experience supporting the technical work identified in the SOW. (3) Engineer (Key) - A bachelors degree in an appropriate scientific discipline and a minimum of three years of general technical experience with one year of related experience support the technical work identified in the SOW; or an associate's degree in a scientific discipline and a minimum of seven years of specialized experience supporting the technical work identified in the SOW. (4) Senior Technician (Key) - Five years experience in production planning and equipment fabrication. This experience should include analysis of systems drawings and specifications; assembly of facility setup; supervision of material purchasing and management; direction, coordination and supervision of assembly production operations; and the implementation and supervision of product testing and quality control requirements. NOTICE OF NON-ALLOWABILITY OF COSTS FOR GENERAL PURPOSE OFFICE EQUIPMENT AND GENERAL PURPOSE INFORMATION TECHNOLOGY EQUIPMENT (JUNE 1998)(NSWCDD) (a) General Purpose Office Equipment (GPOE) means equipment normally found in a business office such as desks, chairs, typewriters, calculators, file cabinets, etc., that are obtainable in the open market. Information Technology (IT) means any equipment or interconnected system or subsystem of equipment, that is used in the automatic acquisition, storage, manipulation, movement, control, display, switching, interchange, transmission, or reception of data or information. It includes computers, ancillary equipment, software, firmware and similar procedures, services (including support services), and related resources. (b) Contractors are expected to have the necessary facilities to perform the requirements of this solicitation/contract. This includes any GPOE and IT necessary to perform these requirements. (c) Notwithstanding the "Allowable Cost and Payment" clause of this contract, costs for the acquisition of GPOE and IT shall not be considered as an allowable direct charge to this contract. REQUIRED INSURANCE (MAY 1993) (NSWCDD) (a) The following types of insurance are required in accordance with the clause entitled "INSURANCE LIABILITY TO THIRD PERSONS" (MAR 1996) (FAR 52.228-7) and shall be maintained in the minimum amounts shown: (1) Comprehensive General Liability: $100,000 per person and $500,000 per accident for bodily injury. No property damage general liability insurance is required. (2) Automobile Insurance: $200,000 per person and $500,000 per accident for bodily injury and $20,000 per accident for property damage. Comprehensive form of policy is required. N00178-01-D-3008 Page 19 of 25 (3) Standard Workmen's Compensation and Employer's Liability Insurance (or, where maritime employment is involved, Longshoremen's and Harbor Worker's Compensation Insurance) in the minimum amount of $100,000. (b) The policies for such insurance shall contain an endorsement that cancellation or material change in the policies, adversely affecting the interest of the Government in such insurance, shall not be effective unless the Contracting Officer provides written notice. When the coverage is provided by self-insurance, prior approval of the Administrative Contracting Officer is required for any change or decrease in coverage. (c) The obligation of the Government to reimburse the Contractor for liabilities to third persons, set forth in paragraph (c)(2) of the clause entitled "INSURANCE - LIABILITY TO THIRD PERSONS" (MAR 1996), shall be limited to the amount of appropriations legally available for payment for the loss at the time of the loss. Nothing contained in this clause may be construed to imply that Congress will appropriate funds sufficient to cover the difference between available appropriations and the Contractor's liabilities. NOTICE OF INCORPORATION OF SECTIONS K and L The following sections of the solicitation will not be distributed with the contract; however, they are incorporated in and form a part of the resultant contract as though furnished in full text therewith: SECTION TITLE K Representations, Certifications and Other Statements of Offerors L Instructions, Conditions, and Notices to Offerors NAVSEA 5252.237-9106 CHANGES IN KEY PERSONNEL (JUN 1996) (a) The Contractor agrees that a partial basis for award of this contract is the list of key personnel proposed. Accordingly, the Contractor agrees to assign to this contract those key persons whose resumes were submitted with the proposal necessary to fulfill the requirements of the contract. No substitution shall be made without prior notification to and concurrence of the Contracting Officer in accordance with this requirement. (b) The contractor agrees that during the first 120 days of performance no key personnel substitutions will be permitted unless such substitutions are necessitated by an individual's sudden illness, death, or termination of employment. All proposed substitutions shall have qualifications equal to or higher than the qualifications of the person to be replaced. The Contracting Officer shall be notified in writing of any proposed substitution at least forty-five (45) days, in advance of the proposed substitution. Such notification shall include: (1) an explanation of the circumstances necessitating the substitution; (2) a complete resume of the proposed substitute; (3) the hourly rates of the incumbent and the proposed substitute; and (4) any other information requested by the Contracting Officer to enable him/her to judge whether or not the Contractor is maintaining the same high quality of personnel that provided the partial basis for award. (c) In the event a requirement to increase the specified level of effort for a designated labor category, but not the overall level of effort of the contract, occurs, the Contractor shall submit to the Contracting Officer a written request for approval to add personnel to the designated labor category. The same information as specified in paragraph (b) above is to be submitted with the request. (d) The Contracting Officer shall evaluate requests for changes in personnel and promptly notify the Contractor, in writing, whether the request is approved or disapproved. NAVSEA 5252.245-9108 GOVERNMENT-FURNISHED PROPERTY (PERFORMANCE) (SEP 1990) N00178-01-D-3008 Page 20 of 25 The Government will provide only that property set forth below, notwithstanding any term or condition of this contract to the contrary. Upon Contractor's written request to the cognizant Technical Program Manager, via the cognizant Contract Administration Office, the Government will furnish the following for use in the performance of this contract: (To be specified in Delivery Orders.)
N00178-01-D-3008 Page 21 of 25 SECTION I Contract Clauses CLAUSES INCORPORATED BY REFERENCE: 52.202-1 Definitions OCT 1995 52.203-3 Gratuities APR 1984 52.203-5 Covenant Against Contingent Fees APR 1984 52.203-7 Anti-Kickback Procedures JUL 1995 52.203-6 Restrictions On Subcontractor Sales To The Government JUL 1995 52.203-8 Cancellation, Rescission, and Recovery of Funds for Illegal or JAN 1997 Improper Activity 52.203-10 Price Or Fee Adjustment For Illegal Or Improper Activity JAN 1997 52.203-12 Limitation On Payments To Influence Certain Federal Transactions JUN 1997 52.209-6 Protecting the Government's Interest When Subcontracting With JUL 1995 Contractors Debarred, Suspended, or Proposed for Debarment 52.211-15 Defense Priority And Allocation Requirements SEP 1990 52.215-2 Audit and Records--Negotiation JUN 1999 52.215-8 Order of Precedence--Uniform Contract Format OCT 1997 52.215-10 Price Reduction for Defective Cost or Pricing Data OCT 1997 52.215-12 Subcontractor Cost or Pricing Data OCT 1997 52.215-15 Pension Adjustments and Asset Reversions DEC 1998 52.215-18 Reversion or Adjustment of Plans for Postretirement Benefits OCT 1997 (PRB) Other than Pensions 52.215-19 Notification of Ownership Changes OCT 1997 52.215-21 Requirements for Cost or Pricing Data or Information Other Than OCT 1997 Cost or Pricing Data--Modifications 52.216-7 Allowable Cost And Payment MAR 2000 52.216-8 Fixed Fee MAR 1997 52.219-8 Utilization of Small Business Concerns OCT 1999 52.219-14 Limitations On Subcontracting DEC 1996 52.222-21 Prohibition Of Segregated Facilities FEB 1999 52.222-3 Convict Labor AUG 1996 52.222-26 Equal Opportunity FEB 1999 52.222-35 Affirmative Action For Disabled Veterans And Veterans of the APR 1998 Vietnam Era 52.222-36 Affirmative Action For Workers With Disabilities JUN 1998 52.222-37 Employment Reports On Disabled Veterans And Veterans Of The JAN 1999 Vietnam Era 52.223-2 Clean Air And Water APR 1984 52.223-6 Drug Free Workplace JAN 1997 52.227-1 Authorization and Consent JUL 1995 52.227-2 Notice And Assistance Regarding Patent And Copyright AUG 1996 Infringement 52.228-7 Insurance--Liability To Third Persons MAR 1996 52.230-2 Cost Accounting Standards APR 1998 52.232-17 Interest JUN 1996 52.232-20 Limitation Of Cost APR 1984 52.232-22 Limitation Of Funds APR 1984 52.232-23 Assignment Of Claims JAN 1986 52.232-25 Prompt Payment JUN 1997 52.232-33 Payment by Electronic Funds Transfer--Central Contractor MAY 1999 Registration 52.233-1 Disputes DEC 1998 52.233-3 Alt I Protest After Award (Aug 1996) - Alternate I JUN 1985 N00178-01-D-3008 Page 22 of 25 52.242-1 Notice of Intent to Disallow Costs APR 1984 52.242-3 Penalties for Unallowable Costs OCT 1995 52.242-4 Certification of Final Indirect Costs JAN 1997 52.242-13 Bankruptcy JUL 1995 52.243-2 Changes--Cost-Reimbursement AUG 1987 52.244-2 Alt I Subcontracts (Aug 1998) - Alternate I AUG 1998 52.244-5 Competition In Subcontracting DEC 1996 52.244-6 Subcontracts for Commercial Items and Commercial Components OCT 1998 52.245-5 (Dev) Government Property (Cost-Reimbursement, Time-and-Material, or JAN 1986 Labor-Hour Contracts) (Deviation) 52.249-14 Excusable Delays APR 1984 52.249-6 Termination (Cost Reimbursement) SEP 1996 52.253-1 Computer Generated Forms JAN 1991 252.201-7000 Contracting Officer's Representative DEC 1991 252.203-7001 Prohibition On Persons Convicted of Fraud or Other Defense- MAR 1999 Contract-Related Felonies 252.204-7000 Disclosure Of Information DEC 1991 252.204-7003 Control Of Government Personnel Work Product APR 1992 252.205-7000 Provisions Of Information To Cooperative Agreement Holders DEC 1991 252.209-7000 Acquisition From Subcontractors Subject To On-Site Inspection NOV 1995 Under The Intermediate Range Nuclear Forces (INF) Treaty 252.209-7004 Subcontracting With Firms That Are Owned or Controlled By The MAR 1998 Government of a Terrorist Country 252.215-7000 Pricing Adjustments DEC 1991 252.215-7002 Cost Estimating System Requirements OCT 1998 252.223-7004 Drug Free Work Force SEP 1988 252.225-7012 Preference For Certain Domestic Commodities AUG 2000 252.227-7013 Rights in Technical Data--Noncommercial Items NOV 1995 252.227-7014 Rights in Noncommercial Computer Software and Noncommercial JUN 1995 Computer Software Documentation 252.227-7015 Technical Data--Commercial Items NOV 1995 252.227-7016 Rights in Bid or Proposal Information JUN 1995 252.227-7019 Validation of Asserted Restrictions--Computer Software JUN 1995 252.227-7036 Declaration of Technical Data Conformity JAN 1997 252.231-7000 Supplemental Cost Principles DEC 1991 252.243-7002 Requests for Equitable Adjustment MAR 1998 252.245-7001 Reports Of Government Property MAY 1994
CLAUSES INCORPORATED BY FULL TEXT 52.222-2 PAYMENT FOR OVERTIME PREMIUMS (JUL 1990) (a) The use of overtime is authorized under this contract if the overtime premium cost does not exceed $0 or the overtime premium is paid for work -- (1) Necessary to cope with emergencies such as those resulting from accidents, natural disasters, breakdowns of production equipment, or occasional production bottlenecks of a sporadic nature; (2) By indirect-labor employees such as those performing duties in connection with administration, protection, transportation, maintenance, standby plant protection, operation of utilities, or accounting; (3) To perform tests, industrial processes, laboratory procedures, loading or unloading of transportation conveyances, and operations in flight or afloat that are continuous in nature and cannot reasonably be interrupted or N00178-01-D-3008 Page 23 of 25 completed otherwise; or (4) That will result in lower overall costs to the Government. (b) Any request for estimated overtime premiums that exceeds the amount specified above shall include all estimated overtime for contract completion and shall-- (1) Identify the work unit; e.g.; department or section in which the requested overtime will be used, together with present workload, staffing, and other data of the affected unit sufficient to permit the Contracting Officer to evaluate the necessity for the overtime; (2) Demonstrate the effect that denial of the request will have on the contract delivery or performance schedule; (3) Identify the extent to which approval of overtime would affect the performance or payments in connection with other Government contracts, together with identification of each affected contract; and (4) Provide reasons why the required work cannot be performed by using multishift operations or by employing additional personnel. (End of clause) 52.252-2 CLAUSES INCORPORATED BY REFERENCE (FEB 1998) This contract incorporates one or more clauses by reference, with the same force and effect as if they were given in full text. Upon request, the Contracting Officer will make their full text available. Also, the full text of a clause may be accessed electronically at this address: http://www.abm.rda.hq.navy.mil/ 252.219-7009 SECTION 8(A) DIRECT AWARD (JUN 1998) (a) This contract is issued as a direct award between the contracting office and the 8(a) Contractor pursuant to the Memorandum of Understanding dated May 6, 1998, between the Small Business Administration (SBA) and the Department of Defense. Accordingly, the SBA is not a party to this contract. SBA does retain responsibility for 8(a) certification, for 8(a) eligibility determinations and related issues, and for providing counseling and assistance to the 8(a) Contractor under the 8(a) Program. The cognizant SBA district office is: U. S. Small Business Administration Baltimore District Office City Crescent Bldg., 6th Floor 10 S. Howard Street Baltimore, MD 21201 (b) The contracting office is responsible for administering the contract and for taking any action on behalf of the Government under he terms and conditions of the contract; provided that the contracting office shall give advance notice to the SBA before it issues a final notice terminating performance, either in whole or in part, under the contract. The contracting office also shall coordinate with the SBA prior to processing any novation agreement. The contracting office may assign contract administration functions to a contract administration office. (c) The Contractor agrees that-- (1) It will notify the Contracting Officer, simultaneous with its notification to the SBA (as required by SBA's 8(a) regulations at 13 CFR 124.308), when the owner or owners upon whom 8(a) eligibility is based plan to relinquish N00178-01-D-3008 Page 24 of 25 ownership or control of the concern. Consistent with Section 407 of Pub. L. 100-656, transfer of ownership or control shall result in termination of the contract for convenience, unless the SBA waives the requirement for termination prior to the actual relinquishing of ownership and control; and (2) It will not subcontract the performance of any of the requirements of this contract without the prior written approval of the SBA and the Contracting Officer. (End of Clause) N00178-01-D-3008 Page 25 of 25 SECTION J List of Documents, Exhibits and Other Attachments CLAUSES INCORPORATED BY FULL TEXT Exhibit A DD Form 1423, Contract Data Requirements List Attachment J.1 COR Appointment Letter CONTRACT DATA REQUIREMENTS LIST A. CONTRACT LINE ITEM NO. B. EXHIBIT A C. CATEGORY TDP TM OTHER [X] D. SYSTEM/ITEM E. CONTRACT/PR NO. N00164-01-D-0042 F. CONTRACTOR STR - -------------------------------------------------------------------------------- 1. DATA ITEM NO. A008 2. TITLE OF DATA ITEM RECOMMENDED SPARE PARTS LIST 3. SUBTITLE 4. AUTHORITY DI-ILSS-80134A 5. CONTRACT REFERENCE 3.2.8 6. REQUIRING OFFICE NSWC, CRANE, CODE 805D 7. DD 250 REQ. LT 8. APP CODE 9. DIST STATEMENT REQUIRED SEE BLK 16 10. FREQUENCY ASREQ 11. AS OF DATE SEE BLK 16 12. DATE OF FIRST SUBMISSION 35 DARC 13. DATE OF SUBSEQUENT SUBMISSION 15 DARC - -------------------------------------------------------------------------------- 14. DISTRIBUTION a. ADDRESSEE b. COPIES Draft Final Reg Report AL-01-DCMC 1 AL-02-CODE 805D 1 15. TOTAL 2 - -------------------------------------------------------------------------------- 16. REMARKS BLOCK 7 - Submit one info copy only of LT to: COMMANDER, CODE 1165 B-3291 ATT M SIDDONS, NAVAL SURFACE WARFARE CENTER (NSWC) 300 HIGHWAY 361, CRANE IN 47522-5001 or electronically to: siddons_marlene@crane.navy.mil BLOCK 8 - Government will review the draft list IAW technical adequacy and content. Written comments to be incorporated into the final will be provided by the Government 15 days after receipt of the draft. Block 9 - DISTRIBUTION STATEMENT C and DESTRUCTION NOTICE APPLIES: BLOCKS 10 and 12. - Submit the list No Later Than (NLT) 30 days after ECP requiring a part change is approved. AL-01 is DCMC AL-02 COMMANDER CODE 805 BLDG 3324 ATT S CLARK NAVAL SURFACE WARFARE CENTER, CRANE 300 HIGHWAY 361 CRANE IN, 47522-5001 Or electronically to: clark_sandra@crane.navy.mil Electronic submissions shall be compatible with Windows 98 and in MS Office applications or other format agreed upon at award. - -------------------------------------------------------------------------------- G. PREPARED BY H. DATE I. APPROVED BY Theresa Andis, Crane Data Manager J. DATE CONTRACT DATA REQUIREMENTS LIST A. CONTRACT LINE ITEM NO. B. EXHIBIT A C. CATEGORY TDP TM OTHER [X] D. SYSTEM/ITEM E. CONTRACT/PR NO. N00164-01-D-0042 F. CONTRACTOR STR - -------------------------------------------------------------------------------- 1. DATA ITEM NO. A009 2. TITLE OF DATA ITEM ENGINEERING CHANGE PROPOSAL (ECP) 3. SUBTITLE 4. AUTHORITY DI-CMAN-80639C 5. CONTRACT REFERENCE 3.2.9.2 6. REQUIRING OFFICE NSWC, CRANE, CODE 805D 7. DD 250 REQ. LT 8. APP CODE A 9. DIST STATEMENT REQUIRED SEE BLK 16 10. FREQUENCY ASREQ 11. AS OF DATE 12. DATE OF FIRST SUBMISSION ASREQ 13. DATE OF SUBSEQUENT SUBMISSION ASREQ - -------------------------------------------------------------------------------- 14. DISTRIBUTION a. ADDRESSEE b. COPIES Draft Final Reg Report AL-01-DCMC 1 AL-02-CODE 805D 1 15. TOTAL 2 - -------------------------------------------------------------------------------- 16. REMARKS BLOCK 4 - BLK 10 OF DATA ITEM DESCRIPTION. The ECP may be in contractor format. Content may use Appendix C of MIL-STD-973 and form DD 1692 as guidance. BLOCK 7 - Submit one info copy only of LT to: COMMANDER, CODE 1165 B-3291 ATT M SIDDONS, NAVAL SURFACE WARFARE CENTER (NSWC) 300 HIGHWAY 361, CRANE IN 47522-5001 or electronically to: siddons_marlene@crane.navy.mil BLOCK 8 - Government will review the ECP for technical, impact, merit and classification of the request. Comments will be provided within 30 days after receipt of the ECP. Block 9 - DISTRIBUTION STATEMENT C and DESTRUCTION NOTICE APPLIES: BLOCKS 10, 12 and 13 - Submit both Class I and Class II to the DCMC QAR for forwarding to NSWC CRANE CODE 805D for concurrence of Class II classification and recommended approval/disapproval of Class I ECP. Concurrence of Class II will be provided by the Government within 15 days after receipt of the ECP. Approval of Class I will be within 30 days after receipt of the ECP and will be provided by the PCO. Block 14 - Addressee List (AL) AL-01 is DCMAO AL-02 COMMANDER CODE 805 BLDG 3324 ATT S CLARK NAVAL SURFACE WARFARE CENTER, CRANE 300 HIGHWAY 361 CRANE IN, 47522-5001 Or electronically to: clark_sandra@crane.navy.mil Electronic submissions shall be compatible with Windows 98 and in MS Office applications or other format agreed upon at award. - -------------------------------------------------------------------------------- G. PREPARED BY H. DATE I. APPROVED BY Theresa Andis, Crane Data Manager J. DATE CONTRACT DATA REQUIREMENTS LIST A. CONTRACT LINE ITEM NO. B. EXHIBIT A C. CATEGORY TDP TM OTHER [X] D. SYSTEM/ITEM E. CONTRACT/PR NO. N00164-01-D-0042 F. CONTRACTOR STR - -------------------------------------------------------------------------------- 1. DATA ITEM NO. A010 2. TITLE OF DATA ITEM REQUEST FOR DEVIATION (RFD) 3. SUBTITLE 4. AUTHORITY DI-CMAN-80640C 5. CONTRACT REFERENCE 3.2.9.2 6. REQUIRING OFFICE NSWC, CRANE, CODE 805D 7. DD 250 REQ. LT 8. APP CODE A 9. DIST STATEMENT REQUIRED SEE BLK 16 10. FREQUENCY ASREQ 11. AS OF DATE 12. DATE OF FIRST SUBMISSION ASREQ 13. DATE OF SUBSEQUENT SUBMISSION ASREQ - -------------------------------------------------------------------------------- 14. DISTRIBUTION a. ADDRESSEE b. COPIES Draft Final Reg Report AL-01-DCMC 1 AL-02-CODE 805D 1 15. TOTAL 2 - -------------------------------------------------------------------------------- 16. REMARKS BLOCK 4 - BLK 10 OF DATA ITEM DESCRIPTION. The RFD may be in contractor format. Content shall use MIL-STD-973 as guidance. BLOCK 7 - Submit one info copy only of LT to: COMMANDER, CODE 1165 B-3291 ATT M SIDDONS, NAVAL SURFACE WARFARE CENTER (NSWC) 300 HIGHWAY 361, CRANE IN 47522-5001 or electronically to: siddons_marlene@crane.navy.mil BLOCK 8 - Government will review the RFD for technical, impact on cost and schedule of the request. Comments will be provided within 30 days after receipt of the RFD. Block 9 - DISTRIBUTION STATEMENT C and DESTRUCTION NOTICE APPLIES: BLOCKS 10, 12 and 13 - Submit the RFD within 10 days after need is recognized or justification is available. Block 14 - Addressee List (AL) AL-01 is DCMC AL-02 COMMANDER CODE 805 BLDG 3324 ATT S CLARK NAVAL SURFACE WARFARE CENTER, CRANE 300 HIGHWAY 361 CRANE IN, 47522-5001 Or electronically to: clark_s@crane.navy.mil Electronic submissions shall be compatible with Windows 98 and in MS Office applications or other format agreed upon at award. - -------------------------------------------------------------------------------- G. PREPARED BY H. DATE I. APPROVED BY Theresa Andis, Crane Data Manager J. DATE CONTRACT DATA REQUIREMENTS LIST A. CONTRACT LINE ITEM NO. B. EXHIBIT A C. CATEGORY TDP TM OTHER [X] D. SYSTEM/ITEM E. CONTRACT/PR NO. N00164-01-D-0042 F. CONTRACTOR STR - -------------------------------------------------------------------------------- 1. DATA ITEM NO. A011 2. TITLE OF DATA ITEM REQUEST FOR WAIVER (RFW) 3. SUBTITLE 4. AUTHORITY DI-CMAN-80641B 5. CONTRACT REFERENCE 3.2.9.2 6. REQUIRING OFFICE NSWC, CRANE, CODE 805D 7. DD 250 REQ. LT 8. APP CODE A 9. DIST STATEMENT REQUIRED SEE BLK 16 10. FREQUENCY ASREQ 11. AS OF DATE 12. DATE OF FIRST SUBMISSION ASREQ 13. DATE OF SUBSEQUENT SUBMISSION ASREQ - -------------------------------------------------------------------------------- 14. DISTRIBUTION a. ADDRESSEE b. COPIES Draft Final Reg Report AL-01-DCMC 1 AL-02-CODE 805D 1 15. TOTAL 2 - -------------------------------------------------------------------------------- 16. REMARKS BLOCK 4 - BLK 10 OF DATA ITEM DESCRIPTION. The RFW may be in contractor format. Content shall use MIL-STD-973 as guidance. BLOCK 7 - Submit one info copy only of LT to: COMMANDER, CODE 1165 B-3291 ATT M SIDDONS, NAVAL SURFACE WARFARE CENTER (NSWC) 300 HIGHWAY 361, CRANE IN 47522-5001 or electronically to: siddons_marlene@crane.navy.mil BLOCK 8 - Government will review the RFW for technical, impact on cost and schedule of the request. Comments will be provided within 30 days after receipt of the RFW. Block 9 - DISTRIBUTION STATEMENT C and DESTRUCTION NOTICE APPLIES: BLOCKS 10, 12 and 13 - Submit the RFW within 10 days after need is recognized or justification is available. Block 14 - Addressee List (AL) AL-01 is DCMC AL-02 COMMANDER CODE 805 BLDG 3324 ATT S CLARK NAVAL SURFACE WARFARE CENTER, CRANE 300 HIGHWAY 361 CRANE IN, 47522-5001 Or electronically to: clark_s@crane.navy.mil Electronic submissions shall be compatible with Windows 98 and in MS Office applications or other format agreed upon at award. - -------------------------------------------------------------------------------- G. PREPARED BY H. DATE I. APPROVED BY Theresa Andis, Crane Data Manager J. DATE CONTRACT DATA REQUIREMENTS LIST A. CONTRACT LINE ITEM NO. B. EXHIBIT A C. CATEGORY TDP TM OTHER [X] D. SYSTEM/ITEM E. CONTRACT/PR NO. N00164-01-D-0042 F. CONTRACTOR STR - -------------------------------------------------------------------------------- 1. DATA ITEM NO. A012 2. TITLE OF DATA ITEM NOTICE OF REVISION (NOR) 3. SUBTITLE 4. AUTHORITY DI-CMAN-80642B 5. CONTRACT REFERENCE 3.2.9.2 6. REQUIRING OFFICE NSWC, CRANE, CODE 805D 7. DD 250 REQ. LT 8. APP CODE A 9. DIST STATEMENT REQUIRED SEE BLK 16 10. FREQUENCY ASREQ 11. AS OF DATE 12. DATE OF FIRST SUBMISSION ASREQ 13. DATE OF SUBSEQUENT SUBMISSION ASREQ - -------------------------------------------------------------------------------- 14. DISTRIBUTION a. ADDRESSEE b. COPIES Draft Final Reg Report AL-01-DCMC 1 AL-02-CODE 805D 1 15. TOTAL 2 - -------------------------------------------------------------------------------- 16. REMARKS BLOCK 4 - BLK 10 OF DATA ITEM DESCRIPTION. The RFW may be in contractor format. Content shall use MIL-STD-973 as guidance. BLOCK 7 - Submit one info copy only of LT to: COMMANDER, CODE 1165 B-3291 ATT M SIDDONS, NAVAL SURFACE WARFARE CENTER (NSWC) 300 HIGHWAY 361, CRANE IN 47522-5001 or electronically to: siddons_marlene@crane.navy.mil BLOCK 8 - Government will review the NOR for technical, content, impact on cost and schedules. Comments will be provided within 30 days after receipt of the NOR. Block 9 - DISTRIBUTION STATEMENT C and DESTRUCTION NOTICE APPLIES: BLOCKS 10, 12 and 13 - Submit the NOR concurrently with ECP as supporting documentation. Block 14 - Addressee List (AL) AL-01 is DCMC AL-02 COMMANDER CODE 805 BLDG 3324 ATT S CLARK NAVAL SURFACE WARFARE CENTER, CRANE 300 HIGHWAY 361 CRANE IN, 47522-5001 Or electronically to: clark_s@crane.navy.mil Electronic submissions shall be compatible with Windows 98 and in MS Office applications or other format agreed upon at award. - -------------------------------------------------------------------------------- G. PREPARED BY H. DATE I. APPROVED BY Theresa Andis, Crane Data Manager J. DATE CONTRACT DATA REQUIREMENTS LIST A. CONTRACT LINE ITEM NO. B. EXHIBIT A C. CATEGORY TDP TM OTHER [X] D. SYSTEM/ITEM E. CONTRACT/PR NO. N00164-01-D-0042 F. CONTRACTOR STR - -------------------------------------------------------------------------------- 1. DATA ITEM NO. A013 2. TITLE OF DATA ITEM FAILURE ANALYSIS AND CORRECTIVE ACTION REPORT 3. SUBTITLE 4. AUTHORITY DI-RELI-81315 5. CONTRACT REFERENCE 3.2.4.2 6. REQUIRING OFFICE NSWC, CRANE, CODE 805D 7. DD 250 REQ. LT 8. APP CODE 9. DIST STATEMENT REQUIRED SEE BLK 16 10. FREQUENCY ASREQ 11. AS OF DATE 12. DATE OF FIRST SUBMISSION SEE BLK 16 13. DATE OF SUBSEQUENT SUBMISSION SEE BLK 16 - -------------------------------------------------------------------------------- 14. DISTRIBUTION a. ADDRESSEE b. COPIES Draft Final Reg Report AL-01-DCMC 1 AL-02-CODE 805D 1 15. TOTAL 2 - -------------------------------------------------------------------------------- 16. REMARKS Block 9 - DISTRIBUTION STATEMENT C and DESTRUCTION NOTICE APPLIES: BLOCKS 12 and 13 - Submit the report no later than (NLT) 10 days after each failure is experienced. Block 14 - Addressee List (AL) AL-01 is DCMC AL-02 COMMANDER CODE 805 BLDG 3324 ATT S CLARK NAVAL SURFACE WARFARE CENTER, CRANE 300 HIGHWAY 361 CRANE IN, 47522-5001 Or electronically to: clark_s@crane.navy.mil Electronic submissions shall be compatible with Windows 98 and in MS Office applications or other format agreed upon at award. - -------------------------------------------------------------------------------- G. PREPARED BY H. DATE I. APPROVED BY Theresa Andis, Crane Data Manager J. DATE CONTRACT DATA REQUIREMENTS LIST A. CONTRACT LINE ITEM NO. B. EXHIBIT A C. CATEGORY TDP TM OTHER [X] D. SYSTEM/ITEM E. CONTRACT/PR NO. N00164-01-D-0042 F. CONTRACTOR STR - -------------------------------------------------------------------------------- 1. DATA ITEM NO. A014 2. TITLE OF DATA ITEM CONFERENCE MINUTES 3. SUBTITLE 4. AUTHORITY DI-ADMIN-81250A 5. CONTRACT REFERENCE 3.2.9 6. REQUIRING OFFICE NSWC, CRANE, CODE 805D 7. DD 250 REQ. LT 8. APP CODE 9. DIST STATEMENT REQUIRED SEE BLK 16 10. FREQUENCY ASREQ 11. AS OF DATE 12. DATE OF FIRST SUBMISSION ASREQ 13. DATE OF SUBSEQUENT SUBMISSION ASREQ - -------------------------------------------------------------------------------- 14. DISTRIBUTION a. ADDRESSEE b. COPIES Draft Final Reg Report AL-01-DCMC 1 AL-02-CODE 805D 1 15. TOTAL 2 - -------------------------------------------------------------------------------- 16. REMARKS BLOCK 7 - Submit one info copy only of LT to: COMMANDER, CODE 1165 B-3291 ATT M SIDDONS, NAVAL SURFACE WARFARE CENTER (NSWC) 300 HIGHWAY 361, CRANE IN 47522-5001 or electronically to: siddons_marlene@crane.navy.mil Block 9 - DISTRIBUTION STATEMENT C and DESTRUCTION NOTICE APPLIES: BLOCKS 10, 12 and 13 - Submit the minutes within 2 days after conference/meetings Block 14 - Addressee List (AL) AL-01 is DCMC AL-02 COMMANDER CODE 805 BLDG 3324 ATT S CLARK NAVAL SURFACE WARFARE CENTER, CRANE 300 HIGHWAY 361 CRANE IN, 47522-5001 Or electronically to: clark_s@crane.navy.mil Electronic submissions shall be compatible with Windows 98 and in MS Office applications or other format agreed upon at award. - -------------------------------------------------------------------------------- G. PREPARED BY H. DATE I. APPROVED BY Theresa Andis, Crane Data Manager J. DATE CONTRACT DATA REQUIREMENTS LIST A. CONTRACT LINE ITEM NO. B. EXHIBIT A C. CATEGORY TDP TM OTHER [X] D. SYSTEM/ITEM E. CONTRACT/PR NO. N00164-01-D-0042 F. CONTRACTOR STR - -------------------------------------------------------------------------------- 1. DATA ITEM NO. A015 2. TITLE OF DATA ITEM CONFERENCE AGENDA 3. SUBTITLE 4. AUTHORITY DI-ADMN-81249A 5. CONTRACT REFERENCE 3.2.9 6. REQUIRING OFFICE NSWC, CRANE, CODE 805D 7. DD 250 REQ. LT 8. APP CODE 9. DIST STATEMENT REQUIRED SEE BLK 16 10. FREQUENCY ASREQ 11. AS OF DATE 12. DATE OF FIRST SUBMISSION ASREQ 13. DATE OF SUBSEQUENT SUBMISSION ASREQ - -------------------------------------------------------------------------------- 14. DISTRIBUTION a. ADDRESSEE b. COPIES Draft Final Reg Report AL-01-DCMC 1 AL-02-CODE 805D 1 15. TOTAL 2 - -------------------------------------------------------------------------------- 16. REMARKS BLOCK 7 - Submit one info copy only of LT to: COMMANDER, CODE 1165 B-3291 ATT M SIDDONS, NAVAL SURFACE WARFARE CENTER (NSWC) 300 HIGHWAY 361, CRANE IN 47522-5001 or electronically to: siddons_marlene@crane.navy.mil Block 9 - DISTRIBUTION STATEMENT C and DESTRUCTION NOTICE APPLIES: BLOCKS 10, 12 and 13 - Submit agenda via email no later than 2 days prior to scheduled meetings. Block 14 - Addressee List (AL) AL-01 is DCMC AL-02 COMMANDER CODE 805 BLDG 3324 ATT S CLARK NAVAL SURFACE WARFARE CENTER, CRANE 300 HIGHWAY 361 CRANE IN, 47522-5001 Or electronically to: clark_s@crane.navy.mil Electronic submissions shall be compatible with Windows 98 and in MS Office applications or other format agreed upon at award. - -------------------------------------------------------------------------------- G. PREPARED BY H. DATE I. APPROVED BY Theresa Andis, Crane Data Manager J. DATE CONTRACT DATA REQUIREMENTS LIST A. CONTRACT LINE ITEM NO. B. EXHIBIT A C. CATEGORY TDP TM OTHER [X] D. SYSTEM/ITEM E. CONTRACT/PR NO. N00164-01-D-0042 F. CONTRACTOR STR - -------------------------------------------------------------------------------- 1. DATA ITEM NO. A016 2. TITLE OF DATA ITEM CONTRACTOR'S PROGRESS, STATUS AND MANAGEMENT REPORT 3. SUBTITLE 4. AUTHORITY DI-MGMT-80227 5. CONTRACT REFERENCE 3.2.9.1 6. REQUIRING OFFICE NSWC, CRANE, CODE 805D 7. DD 250 REQ. LT 8. APP CODE 9. DIST STATEMENT REQUIRED SEE BLK 16 10. FREQUENCY MTHLY 11. AS OF DATE 05 12. DATE OF FIRST SUBMISSION 45DAC 13. DATE OF SUBSEQUENT SUBMISSION 05DARP - -------------------------------------------------------------------------------- 14. DISTRIBUTION a. ADDRESSEE b. COPIES Draft Final Reg Report AL-01-DCMC 1 AL-02-CODE 805D 1 15. TOTAL 2 - -------------------------------------------------------------------------------- 16. REMARKS BLOCK 7 - Submit one info copy only of LT to: COMMANDER, CODE 1165 B-3291 ATT M SIDDONS, NAVAL SURFACE WARFARE CENTER (NSWC) 300 HIGHWAY 361, CRANE IN 47522-5001 or electronically to: siddons_marlene@crane.navy.mil Block 9 - DISTRIBUTION STATEMENT C and DESTRUCTION NOTICE APPLIES: BLOCKS 10, 12 and 13 - Submit agenda via email no later than 2 days prior to scheduled meetings. AL-01 is DCMC AL-02 COMMANDER CODE 805 BLDG 3324 ATT S CLARK NAVAL SURFACE WARFARE CENTER, CRANE 300 HIGHWAY 361 CRANE IN, 47522-5001 Or electronically to: clark_s@crane.navy.mil Electronic submissions shall be compatible with Windows 98 and in MS Office applications or other format agreed upon at award. - -------------------------------------------------------------------------------- G. PREPARED BY H. DATE I. APPROVED BY Theresa Andis, Crane Data Manager J. DATE AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT PAGE OF PAGES - -------------------------------------------------------------------------------- 1. CONTRACT ID CODE "J" 1 | 2 - -------------------------------------------------------------------------------- 2. AMENDMENT/MODIFICATION NO. P00002 3. EFFECTIVE DATE 06 FEB 2002 4. REQUISITION/PURCHASE REG. NO. N/A 5. PROJ NO. (if applicable) - -------------------------------------------------------------------------------- 6. ISSUED BY CODE N00164 CONTRACTING OFFICER NAVSURFWARCENDIV 300 HWY 361 CRANE IN 47522-5001 BUYER/SYMBOL: MARLENE SIDDONS/1165ZS PHONE: 812 854-3856 FAX: 812 854-5066 - -------------------------------------------------------------------------------- 7. ADMINISTERED BY (if other than Item 6) CODE DCM BALTIMORE 217 E REDWOOD STREET, SUITE 1800 BALTIMORE MD 21202-5299 ATTN: G ROPISKI 410-962-9257 - -------------------------------------------------------------------------------- 8. NAME AND ADDRESS OF CONTRACTOR (No., street, State and ZIP Code) SCIENCE AND TECHNOLOGY RESEARCH INC 10075 TYLER PLACE, SUITE 17 IJAMSVILLE MD 21754 ATTN: ED KESSLER 540-752-8080 TIN NO. 521604174 - -------------------------------------------------------------------------------- CAGE CODE OXNU6 FACILITY CODE - -------------------------------------------------------------------------------- 9A. AMENDMENT OF SOLICITATION NO. 9B. DATED (SEE ITEM 11) 10A. MODIFICATION OF CONTRACT/ORDER NO. N00164-01-D-0042 10B. DATED (SEE ITEM 13) 27 SEP 2001 - -------------------------------------------------------------------------------- 11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS [ ] The above numbered solicitation is amended at set forth in Item 14. The hour and date specified for receipt of Offers [ ] is extended. [ ] is not extended. Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended by on of the following methods: (a) by completing items 8 and 15, and returning __ copies of the amendment; (b) By acknowledging receipt of this amendment on each copy of the offer submitted; or (c) By separate letter or telegram which includes a reference to the solicitation and amendment numbers. FAILURE OF YOUR ACKNOWLEDGEMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and this amendment, and is received prior to the opening hour and date specified. - -------------------------------------------------------------------------------- 12. ACCOUNTING AND APPROPRIATION DATA (If required) NOT APPLICABLE TO THIS CONTRACTING ACTION - -------------------------------------------------------------------------------- 13. THIS ITEM APPLIES ONLY TO MODIFICATIONS AND CONTRACTS/ORDERS, IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14. - -------------------------------------------------------------------------------- A. THIS CHANGE ORDER IS ISSUED PURSUANT TO (Specify authority) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A. - -------------------------------------------------------------------------------- B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office, appropriation data, etc.) SET FORTH IN ITEM 14, PURSUANT TO THE AUTHORITY OF FAR 43.103(b). - -------------------------------------------------------------------------------- [X] C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OF: MUTUAL AGREEMENT PURSUANT TO THE AUTHORITY OF FAR 43.103(a)(3) - -------------------------------------------------------------------------------- D. OTHER (Specify type of modification and authority.) - -------------------------------------------------------------------------------- E. IMPORTANT: Contractor ( ) is not, (X) is required to sign this document and return 1 copies to the issuing office. - -------------------------------------------------------------------------------- 14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organization by UCF section headings, including solicitation/contract subject matter where feasible.) This contract modification is issued to incorporate Value Engineering Change Proposal (VECP) STRACADA-0011V and the associated Notice of Revision (NOR) 1-1. See page 2 herein for complete modification details. The maximum total amount of the contract is reduced by $80,149.84 from $39,028,526.00 to $38,948,376.16. All other terms and conditions remain unchanged. Except as provided herein, all terms and conditions referenced in Item 9A and 10A, as heretofore changed, remains unchanged and in full force and effect. - -------------------------------------------------------------------------------- 15A. NAME AND TITLE OF SIGNER (Type or print) Edward L. Kessler GEN. MGR. 15B. CONTRACTOR/OFFEROR /s/ Edward L. Kessler ---------------------------------------- (Signature of person authorized to sign) 15C. DATED SIGNED 2/6/2002 - -------------------------------------------------------------------------------- 16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print) MARLENE V SIDDONS/CONTRACTING OFFICER 16B. UNITED STATES OF AMERICA BY /s/ Marlene Siddons ---------------------------------------- (Signature of Contracting Officer) 16C. DATE SIGNED 6 Feb 2002 AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT PAGE OF PAGES - -------------------------------------------------------------------------------- 1. CONTRACT ID CODE "J" 1 | 2 - -------------------------------------------------------------------------------- 2. AMENDMENT/MODIFICATION NO. P00007 3. EFFECTIVE DATE 10 MAY 2002 4. REQUISITION/PURCHASE REG. NO. N/A 5. PROJ NO. (if applicable) - -------------------------------------------------------------------------------- 6. ISSUED BY CODE N00164 CONTRACTING OFFICER NAVSURFWARCENDIV 300 HWY 361 CRANE IN 47522-5001 BUYER/SYMBOL: MARLENE SIDDONS/1165ZS PHONE: 812 854-3856 FAX: 812 854-5066 - -------------------------------------------------------------------------------- 7. ADMINISTERED BY (if other than Item 6) CODE DCM BALTIMORE 217 E REDWOOD STREET, SUITE 1800 BALTIMORE MD 21202-5299 ATTN: G ROPISKI 410-962-9257 - -------------------------------------------------------------------------------- 8. NAME AND ADDRESS OF CONTRACTOR (No., street, State and ZIP Code) SCIENCE AND TECHNOLOGY RESEARCH INC 10075 TYLER PLACE, SUITE 17 IJAMSVILLE MD 21754 ATTN: ED KESSLER 540-752-8080 TIN NO. 521604174 - -------------------------------------------------------------------------------- CAGE CODE OXNU6 FACILITY CODE - -------------------------------------------------------------------------------- 9A. AMENDMENT OF SOLICITATION NO. 9B. DATED (SEE ITEM 11) 10A. MODIFICATION OF CONTRACT/ORDER NO. N00164-01-D-0042 10B. DATED (SEE ITEM 13) 27 SEP 2001 - -------------------------------------------------------------------------------- 11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS [ ] The above numbered solicitation is amended at set forth in Item 14. The hour and date specified for receipt of Offers [ ] is extended. [ ] is not extended. Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended by on of the following methods: (a) by completing items 8 and 15, and returning __ copies of the amendment; (b) By acknowledging receipt of this amendment on each copy of the offer submitted; or (c) By separate letter or telegram which includes a reference to the solicitation and amendment numbers. FAILURE OF YOUR ACKNOWLEDGEMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and this amendment, and is received prior to the opening hour and date specified. - -------------------------------------------------------------------------------- 12. ACCOUNTING AND APPROPRIATION DATA (If required) NOT APPLICABLE TO THIS CONTRACTING ACTION - -------------------------------------------------------------------------------- 13. THIS ITEM APPLIES ONLY TO MODIFICATIONS AND CONTRACTS/ORDERS, IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14. - -------------------------------------------------------------------------------- A. THIS CHANGE ORDER IS ISSUED PURSUANT TO (Specify authority) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A. - -------------------------------------------------------------------------------- B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office, appropriation data, etc.) SET FORTH IN ITEM 14, PURSUANT TO THE AUTHORITY OF FAR 43.103(b). - -------------------------------------------------------------------------------- [X] C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OF: - -------------------------------------------------------------------------------- D. OTHER (Specify type of modification and authority.) - -------------------------------------------------------------------------------- E. IMPORTANT: Contractor ( ) is not, (X) is required to sign this document and return 1 copies to the issuing office. - -------------------------------------------------------------------------------- 14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organization by UCF section headings, including solicitation/contract subject matter where feasible.) This contract modification is issued to Incorporate Value Engineering Change Proposal VECP 0044V. The maximum contract price is decreased by $80,280.30 by the incorporation of VECP 0044V as detailed on page 2 herein. In addition, this modification corrects an error on P00004, page 2: ECP NUMBER STRACADA 0030 was incorporated as no cost impact. This is an error. The incorporation of ECP STRACADA 0030 results in an maximum contract amount increase of $3,642.00, the increase does not impact the unit price matrix found in the basic contract as the price impact is limited to the initial order placed under DO 0001. This modification incorporates the cost impact of incorporating ECP STRACADA 0030 omitted from P00004. The maximum total amount of the contract to implement both changes results in a decrease of $76,638.30 FROM $38,948,376.16 to $___________. Except as provided herein, all terms and conditions referenced in Item 9A and 10A, as heretofore changed, remains unchanged and in full force and effect. - -------------------------------------------------------------------------------- 15A. NAME AND TITLE OF SIGNER (Type or print) Edward L. Kessler GEN. MGR. 15B. CONTRACTOR/OFFEROR /s/ Edward L. Kessler ---------------------------------------- (Signature of person authorized to sign) 15C. DATED SIGNED 5-13-02 - -------------------------------------------------------------------------------- 16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print) MARY E SHEETZ/CONTRACTING OFFICER 16B. UNITED STATES OF AMERICA BY ---------------------------------------- (Signature of Contracting Officer) 16C. DATE SIGNED 8 MAY 2002 AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT PAGE OF PAGES - -------------------------------------------------------------------------------- 1. CONTRACT ID CODE "J" 1 | 2 - -------------------------------------------------------------------------------- 2. AMENDMENT/MODIFICATION NO. P00008 3. EFFECTIVE DATE 13 MAY 2002 4. REQUISITION/PURCHASE REG. NO. N/A 5. PROJ NO. (if applicable) - -------------------------------------------------------------------------------- 6. ISSUED BY CODE N00164 CONTRACTING OFFICER NAVSURFWARCENDIV 300 HWY 361 CRANE IN 47522-5001 BUYER/SYMBOL: MARLENE SIDDONS/1165ZS PHONE: 812 854-3856 FAX: 812 854-5066 - -------------------------------------------------------------------------------- 7. ADMINISTERED BY (if other than Item 6) CODE DCM BALTIMORE 217 E REDWOOD STREET, SUITE 1800 BALTIMORE MD 21202-5299 ATTN: G ROPISKI 410-962-9257 - -------------------------------------------------------------------------------- 8. NAME AND ADDRESS OF CONTRACTOR (No., street, State and ZIP Code) SCIENCE AND TECHNOLOGY RESEARCH INC 10075 TYLER PLACE, SUITE 17 IJAMSVILLE MD 21754 ATTN: ED KESSLER 540-752-8080 TIN NO. 521604174 - -------------------------------------------------------------------------------- CAGE CODE OXNU6 FACILITY CODE - -------------------------------------------------------------------------------- 9A. AMENDMENT OF SOLICITATION NO. 9B. DATED (SEE ITEM 11) 10A. MODIFICATION OF CONTRACT/ORDER NO. N00164-01-D-0042 10B. DATED (SEE ITEM 13) 27 SEP 2001 - -------------------------------------------------------------------------------- 11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS [ ] The above numbered solicitation is amended at set forth in Item 14. The hour and date specified for receipt of Offers [ ] is extended. [ ] is not extended. Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended by on of the following methods: (a) by completing items 8 and 15, and returning __ copies of the amendment; (b) By acknowledging receipt of this amendment on each copy of the offer submitted; or (c) By separate letter or telegram which includes a reference to the solicitation and amendment numbers. FAILURE OF YOUR ACKNOWLEDGEMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and this amendment, and is received prior to the opening hour and date specified. - -------------------------------------------------------------------------------- 12. ACCOUNTING AND APPROPRIATION DATA (If required) NOT APPLICABLE TO THIS CONTRACTING ACTION - -------------------------------------------------------------------------------- 13. THIS ITEM APPLIES ONLY TO MODIFICATIONS AND CONTRACTS/ORDERS, IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14. - -------------------------------------------------------------------------------- A. THIS CHANGE ORDER IS ISSUED PURSUANT TO (Specify authority) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A. - -------------------------------------------------------------------------------- B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office, appropriation data, etc.) SET FORTH IN ITEM 14, PURSUANT TO THE AUTHORITY OF FAR 43.103(b). - -------------------------------------------------------------------------------- [X] C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OF: - -------------------------------------------------------------------------------- D. OTHER (Specify type of modification and authority.) - -------------------------------------------------------------------------------- E. IMPORTANT: Contractor ( ) is not, (X) is required to sign this document and return 1 copies to the issuing office. - -------------------------------------------------------------------------------- 14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organization by UCF section headings, including solicitation/contract subject matter where feasible.) This contract modification is issued to incorporate Value Engineering Change Proposal VECP 0045V. The maximum contract price id decreased by $92,122.04 by the incorporation of VECP 0045V as detailed on page 2 herein. The maximum total amount of the contract is changed FROM: $38,871,737.86 TO: $38,779,615.82. Except as provided herein, all terms and conditions referenced in Item 9A and 10A, as heretofore changed, remains unchanged and in full force and effect. - -------------------------------------------------------------------------------- 15A. NAME AND TITLE OF SIGNER (Type or print) Edward L. Kessler GEN. MGR. 15B. CONTRACTOR/OFFEROR /s/ Edward L. Kessler ---------------------------------------- (Signature of person authorized to sign) 15C. DATED SIGNED 5-13-02 - -------------------------------------------------------------------------------- 16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print) MARY E SHEETZ/CONTRACTING OFFICER 16B. UNITED STATES OF AMERICA BY ---------------------------------------- (Signature of Contracting Officer) 16C. DATE SIGNED 8 MAY 2002 AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT PAGE OF PAGES - -------------------------------------------------------------------------------- 1. CONTRACT ID CODE "J" 1 | 2 - -------------------------------------------------------------------------------- 2. AMENDMENT/MODIFICATION NO. P00009 3. EFFECTIVE DATE 27 JUNE 2002 4. REQUISITION/PURCHASE REG. NO. N/A 5. PROJ NO. (if applicable) - -------------------------------------------------------------------------------- 6. ISSUED BY CODE N00164 CONTRACTING OFFICER NAVSURFWARCENDIV 300 HWY 361 CRANE IN 47522-5001 BUYER/SYMBOL: MARLENE SIDDONS/1165ZS PHONE: 812 854-3856 FAX: 812 854-5066 - -------------------------------------------------------------------------------- 7. ADMINISTERED BY (if other than Item 6) CODE DCM BALTIMORE 217 E REDWOOD STREET, SUITE 1800 BALTIMORE MD 21202-5299 ATTN: G ROPISKI 410-962-9257 - -------------------------------------------------------------------------------- 8. NAME AND ADDRESS OF CONTRACTOR (No., street, State and ZIP Code) SCIENCE AND TECHNOLOGY RESEARCH INC 10075 TYLER PLACE, SUITE 17 IJAMSVILLE MD 21754 ATTN: ED KESSLER 540-752-8080 TIN NO. 521604174 - -------------------------------------------------------------------------------- CAGE CODE OXNU6 FACILITY CODE - -------------------------------------------------------------------------------- 9A. AMENDMENT OF SOLICITATION NO. 9B. DATED (SEE ITEM 11) 10A. MODIFICATION OF CONTRACT/ORDER NO. N00164-01-D-0042 10B. DATED (SEE ITEM 13) 27 SEP 2001 - -------------------------------------------------------------------------------- 11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS [ ] The above numbered solicitation is amended at set forth in Item 14. The hour and date specified for receipt of Offers [ ] is extended. [ ] is not extended. Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended by on of the following methods: (a) by completing items 8 and 15, and returning __ copies of the amendment; (b) By acknowledging receipt of this amendment on each copy of the offer submitted; or (c) By separate letter or telegram which includes a reference to the solicitation and amendment numbers. FAILURE OF YOUR ACKNOWLEDGEMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and this amendment, and is received prior to the opening hour and date specified. - -------------------------------------------------------------------------------- 12. ACCOUNTING AND APPROPRIATION DATA (If required) NOT APPLICABLE TO THIS CONTRACTING ACTION - -------------------------------------------------------------------------------- 13. THIS ITEM APPLIES ONLY TO MODIFICATIONS AND CONTRACTS/ORDERS, IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14. - -------------------------------------------------------------------------------- A. THIS CHANGE ORDER IS ISSUED PURSUANT TO (Specify authority) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A. - -------------------------------------------------------------------------------- B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office, appropriation data, etc.) SET FORTH IN ITEM 14, PURSUANT TO THE AUTHORITY OF FAR 43.103(b). - -------------------------------------------------------------------------------- [X] C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OF: - -------------------------------------------------------------------------------- D. OTHER (Specify type of modification and authority.) - -------------------------------------------------------------------------------- E. IMPORTANT: Contractor ( ) is not, (X) is required to sign this document and return 1 copies to the issuing office. - -------------------------------------------------------------------------------- 14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organization by UCF section headings, including solicitation/contract subject matter where feasible.) This contract modification is issued to extend the required delivery schedule and to incorporate ECP No. NSWCDD-1176. The maximum contract price is increased by $307,985.94 as detailed on page 2 herein. The maximum total amount of the contract is changed FROM: $38,779,615.82 TO: $39,087,601.76. All other terms and conditions remain unchanged. Except as provided herein, all terms and conditions referenced in Item 9A and 10A, as heretofore changed, remains unchanged and in full force and effect. - -------------------------------------------------------------------------------- 15A. NAME AND TITLE OF SIGNER (Type or print) Edward L. Kessler GEN. MGR. 15B. CONTRACTOR/OFFEROR /s/ Edward L. Kessler ---------------------------------------- (Signature of person authorized to sign) 15C. DATED SIGNED 5-13-02 - -------------------------------------------------------------------------------- 16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print) MARY E SHEETZ/CONTRACTING OFFICER 16B. UNITED STATES OF AMERICA BY ---------------------------------------- (Signature of Contracting Officer) 16C. DATE SIGNED AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT PAGE OF PAGES - -------------------------------------------------------------------------------- 1. CONTRACT ID CODE "J" 1 | 2 - -------------------------------------------------------------------------------- 2. AMENDMENT/MODIFICATION NO. P00010 3. EFFECTIVE DATE 2 JULY 2002 4. REQUISITION/PURCHASE REG. NO. N/A 5. PROJ NO. (if applicable) - -------------------------------------------------------------------------------- 6. ISSUED BY CODE N00164 CONTRACTING OFFICER NAVSURFWARCENDIV 300 HWY 361 CRANE IN 47522-5001 BUYER/SYMBOL: MARLENE SIDDONS/1165ZS PHONE: 812 854-3856 FAX: 812 854-5066 - -------------------------------------------------------------------------------- 7. ADMINISTERED BY (if other than Item 6) CODE DCM BALTIMORE 217 E REDWOOD STREET, SUITE 1800 BALTIMORE MD 21202-5299 ATTN: G ROPISKI 410-962-9257 - -------------------------------------------------------------------------------- 8. NAME AND ADDRESS OF CONTRACTOR (No., street, State and ZIP Code) SCIENCE AND TECHNOLOGY RESEARCH INC 10075 TYLER PLACE, SUITE 17 IJAMSVILLE MD 21754 ATTN: ED KESSLER 540-752-8080 TIN NO. 521604174 - -------------------------------------------------------------------------------- CAGE CODE OXNU6 FACILITY CODE - -------------------------------------------------------------------------------- 9A. AMENDMENT OF SOLICITATION NO. 9B. DATED (SEE ITEM 11) 10A. MODIFICATION OF CONTRACT/ORDER NO. N00164-01-D-0042 10B. DATED (SEE ITEM 13) 27 SEP 2001 - -------------------------------------------------------------------------------- 11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS [ ] The above numbered solicitation is amended at set forth in Item 14. The hour and date specified for receipt of Offers [ ] is extended. [ ] is not extended. Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended by on of the following methods: (a) by completing items 8 and 15, and returning __ copies of the amendment; (b) By acknowledging receipt of this amendment on each copy of the offer submitted; or (c) By separate letter or telegram which includes a reference to the solicitation and amendment numbers. FAILURE OF YOUR ACKNOWLEDGEMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and this amendment, and is received prior to the opening hour and date specified. - -------------------------------------------------------------------------------- 12. ACCOUNTING AND APPROPRIATION DATA (If required) NOT APPLICABLE TO THIS CONTRACTING ACTION - -------------------------------------------------------------------------------- 13. THIS ITEM APPLIES ONLY TO MODIFICATIONS AND CONTRACTS/ORDERS, IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14. - -------------------------------------------------------------------------------- A. THIS CHANGE ORDER IS ISSUED PURSUANT TO (Specify authority) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A. - -------------------------------------------------------------------------------- B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office, appropriation data, etc.) SET FORTH IN ITEM 14, PURSUANT TO THE AUTHORITY OF FAR 43.103(b). - -------------------------------------------------------------------------------- [X] C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OF: - -------------------------------------------------------------------------------- D. OTHER (Specify type of modification and authority.) - -------------------------------------------------------------------------------- E. IMPORTANT: Contractor ( ) is not, (X) is required to sign this document and return 1 copies to the issuing office. - -------------------------------------------------------------------------------- 14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organization by UCF section headings, including solicitation/contract subject matter where feasible.) This contract modification is issued to incorporate Engineering Change Proposal (ECP) No. NSWCDD-1177 and STRACADA 0038. The price impact of NSWCDD-1177 is a maximum price increase of $44,065.35 and STRACADA is a maximum price decrease of $31,962.48. The absolute value of the two ECP's is $76,027.83; however, the resultant change to the maximum contract price is increased $12,102.87 TO: $39,099,704.65, with unit price increases as detailed on page 2 herein. All other terms and conditions remain unchanged. Except as provided herein, all terms and conditions referenced in Item 9A and 10A, as heretofore changed, remains unchanged and in full force and effect. - -------------------------------------------------------------------------------- 15A. NAME AND TITLE OF SIGNER (Type or print) Edward L. Kessler GEN. MGR. 15B. CONTRACTOR/OFFEROR /s/ Edward L. Kessler ---------------------------------------- (Signature of person authorized to sign) 15C. DATED SIGNED 7-11-02 - -------------------------------------------------------------------------------- 16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print) MARLENE V SIDDONS/CONTRACTING OFFICER 16B. UNITED STATES OF AMERICA BY ---------------------------------------- (Signature of Contracting Officer) 16C. DATE SIGNED AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT PAGE OF PAGES - -------------------------------------------------------------------------------- 1. CONTRACT ID CODE "J" 1 | 2 - -------------------------------------------------------------------------------- 2. AMENDMENT/MODIFICATION NO. P00013 3. EFFECTIVE DATE 18 JULY 2002 4. REQUISITION/PURCHASE REG. NO. N/A 5. PROJ NO. (if applicable) - -------------------------------------------------------------------------------- 6. ISSUED BY CODE N00164 CONTRACTING OFFICER NAVSURFWARCENDIV 300 HWY 361 CRANE IN 47522-5001 BUYER/SYMBOL: MARLENE SIDDONS/1165ZS PHONE: 812 854-3856 FAX: 812 854-5066 - -------------------------------------------------------------------------------- 7. ADMINISTERED BY (if other than Item 6) CODE DCM BALTIMORE 217 E REDWOOD STREET, SUITE 1800 BALTIMORE MD 21202-5299 ATTN: G ROPISKI 410-962-9257 - -------------------------------------------------------------------------------- 8. NAME AND ADDRESS OF CONTRACTOR (No., street, State and ZIP Code) SCIENCE AND TECHNOLOGY RESEARCH INC 10075 TYLER PLACE, SUITE 17 IJAMSVILLE MD 21754 ATTN: ED KESSLER 540-752-8080 TIN NO. 521604174 - -------------------------------------------------------------------------------- CAGE CODE OXNU6 FACILITY CODE - -------------------------------------------------------------------------------- 9A. AMENDMENT OF SOLICITATION NO. 9B. DATED (SEE ITEM 11) 10A. MODIFICATION OF CONTRACT/ORDER NO. N00164-01-D-0042 10B. DATED (SEE ITEM 13) 27 SEP 2001 - -------------------------------------------------------------------------------- 11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS [ ] The above numbered solicitation is amended at set forth in Item 14. The hour and date specified for receipt of Offers [ ] is extended. [ ] is not extended. Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended by on of the following methods: (a) by completing items 8 and 15, and returning __ copies of the amendment; (b) By acknowledging receipt of this amendment on each copy of the offer submitted; or (c) By separate letter or telegram which includes a reference to the solicitation and amendment numbers. FAILURE OF YOUR ACKNOWLEDGEMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and this amendment, and is received prior to the opening hour and date specified. - -------------------------------------------------------------------------------- 12. ACCOUNTING AND APPROPRIATION DATA (If required) NOT APPLICABLE TO THIS CONTRACTING ACTION - -------------------------------------------------------------------------------- 13. THIS ITEM APPLIES ONLY TO MODIFICATIONS AND CONTRACTS/ORDERS, IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14. - -------------------------------------------------------------------------------- A. THIS CHANGE ORDER IS ISSUED PURSUANT TO (Specify authority) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A. - -------------------------------------------------------------------------------- B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office, appropriation data, etc.) SET FORTH IN ITEM 14, PURSUANT TO THE AUTHORITY OF FAR 43.103(b). - -------------------------------------------------------------------------------- [X] C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OF: FAR 43.103(a) - -------------------------------------------------------------------------------- D. OTHER (Specify type of modification and authority.) - -------------------------------------------------------------------------------- E. IMPORTANT: Contractor ( ) is not, (X) is required to sign this document and return 1 copies to the issuing office. - -------------------------------------------------------------------------------- 14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organization by UCF section headings, including solicitation/contract subject matter where feasible.) This contract modification is issued to incorporate changes to SOW 3.2.2 & 3.2.5.1 as detailed herein. The maximum contract price is increased by $21,119.35 from $39,099,704.65 to $39,120,824.00. All other terms and conditions remain unchanged. Except as provided herein, all terms and conditions referenced in Item 9A and 10A, as heretofore changed, remains unchanged and in full force and effect. - -------------------------------------------------------------------------------- 15A. NAME AND TITLE OF SIGNER (Type or print) Edward L. Kessler GEN. MGR. 15B. CONTRACTOR/OFFEROR /s/ Edward L. Kessler ---------------------------------------- (Signature of person authorized to sign) 15C. DATED SIGNED 18 Jul 02 - -------------------------------------------------------------------------------- 16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print) MARLENE SIDDONS/CONTRACTING OFFICER 16B. UNITED STATES OF AMERICA BY ---------------------------------------- (Signature of Contracting Officer) 16C. DATE SIGNED AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT PAGE OF PAGES - -------------------------------------------------------------------------------- 1. CONTRACT ID CODE "J" 1 | 2 - -------------------------------------------------------------------------------- 2. AMENDMENT/MODIFICATION NO. P00017 3. EFFECTIVE DATE 16 OCT 2002 4. REQUISITION/PURCHASE REG. NO. N/A 5. PROJ NO. (if applicable) - -------------------------------------------------------------------------------- 6. ISSUED BY CODE N00164 CONTRACTING OFFICER NAVSURFWARCENDIV 300 HWY 361 CRANE IN 47522-5001 BUYER/SYMBOL: MARLENE SIDDONS/1165ZS PHONE: 812 854-3856 FAX: 812 854-5066 - -------------------------------------------------------------------------------- 7. ADMINISTERED BY (if other than Item 6) CODE DCM BALTIMORE 217 E REDWOOD STREET, SUITE 1800 BALTIMORE MD 21202-5299 ATTN: G ROPISKI 410-962-9257 - -------------------------------------------------------------------------------- 8. NAME AND ADDRESS OF CONTRACTOR (No., street, State and ZIP Code) SCIENCE AND TECHNOLOGY RESEARCH INC 10075 TYLER PLACE, SUITE 17 IJAMSVILLE MD 21754 ATTN: ED KESSLER 540-752-8080 TIN NO. 521604174 - -------------------------------------------------------------------------------- CAGE CODE OXNU6 FACILITY CODE - -------------------------------------------------------------------------------- 9A. AMENDMENT OF SOLICITATION NO. 9B. DATED (SEE ITEM 11) 10A. MODIFICATION OF CONTRACT/ORDER NO. N00164-01-D-0042 10B. DATED (SEE ITEM 13) 27 SEP 2001 - -------------------------------------------------------------------------------- 11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS [ ] The above numbered solicitation is amended at set forth in Item 14. The hour and date specified for receipt of Offers [ ] is extended. [ ] is not extended. Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended by on of the following methods: (a) by completing items 8 and 15, and returning __ copies of the amendment; (b) By acknowledging receipt of this amendment on each copy of the offer submitted; or (c) By separate letter or telegram which includes a reference to the solicitation and amendment numbers. FAILURE OF YOUR ACKNOWLEDGEMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and this amendment, and is received prior to the opening hour and date specified. - -------------------------------------------------------------------------------- 12. ACCOUNTING AND APPROPRIATION DATA (If required) NOT APPLICABLE TO THIS CONTRACTING ACTION - -------------------------------------------------------------------------------- 13. THIS ITEM APPLIES ONLY TO MODIFICATIONS AND CONTRACTS/ORDERS, IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14. - -------------------------------------------------------------------------------- A. THIS CHANGE ORDER IS ISSUED PURSUANT TO (Specify authority) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A. - -------------------------------------------------------------------------------- B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office, appropriation data, etc.) SET FORTH IN ITEM 14, PURSUANT TO THE AUTHORITY OF FAR 43.103(b). - -------------------------------------------------------------------------------- [X] C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OF: FAR 43.103(a) - -------------------------------------------------------------------------------- D. OTHER (Specify type of modification and authority.) - -------------------------------------------------------------------------------- E. IMPORTANT: Contractor ( ) is not, (X) is required to sign this document and return 1 copies to the issuing office. - -------------------------------------------------------------------------------- 14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organization by UCF section headings, including solicitation/contract subject matter where feasible.) This contract modification is issued to incorporate Engineering Change Proposals STRACADA-0078 and STRACADA-0079 including associated Notice of Revisions as delineated on page 2 herein, and to change the packaging requirement as detailed herein. The price matrix is changed as detailed herein. The total contract maximum is changed to $36,378,678.00. All other terms and conditions remain unchanged. Except as provided herein, all terms and conditions referenced in Item 9A and 10A, as heretofore changed, remains unchanged and in full force and effect. - -------------------------------------------------------------------------------- 15A. NAME AND TITLE OF SIGNER (Type or print) 15B. CONTRACTOR/OFFEROR ---------------------------------------- (Signature of person authorized to sign) 15C. DATED SIGNED - -------------------------------------------------------------------------------- 16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print) MARLENE V SIDDONS/CONTRACTING OFFICER 16B. UNITED STATES OF AMERICA BY ---------------------------------------- (Signature of Contracting Officer) 16C. DATE SIGNED AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT PAGE OF PAGES - -------------------------------------------------------------------------------- 1. CONTRACT ID CODE "J" 1 | 2 - -------------------------------------------------------------------------------- 2. AMENDMENT/MODIFICATION NO. P00021 3. EFFECTIVE DATE 18 MAR 2003 4. REQUISITION/PURCHASE REG. NO. N/A 5. PROJ NO. (if applicable) - -------------------------------------------------------------------------------- 6. ISSUED BY CODE N00164 CONTRACTING OFFICER NAVSURFWARCENDIV 300 HWY 361 CRANE IN 47522-5001 BUYER/SYMBOL: MARLENE SIDDONS/1165ZS PHONE: 812 854-3856 FAX: 812 854-5066 - -------------------------------------------------------------------------------- 7. ADMINISTERED BY (if other than Item 6) CODE S2101A DCM BALTIMORE 217 E REDWOOD STREET, SUITE 1800 BALTIMORE MD 21202-5299 ATTN: G ROPISKI 410-962-9257 - -------------------------------------------------------------------------------- 8. NAME AND ADDRESS OF CONTRACTOR (No., street, State and ZIP Code) SCIENCE AND TECHNOLOGY RESEARCH INC 10075 TYLER PLACE, SUITE 17 IJAMSVILLE MD 21754 ATTN: ED KESSLER 540-752-8080 TIN NO. 521604174 - -------------------------------------------------------------------------------- CAGE CODE OXNU6 FACILITY CODE - -------------------------------------------------------------------------------- 9A. AMENDMENT OF SOLICITATION NO. 9B. DATED (SEE ITEM 11) 10A. MODIFICATION OF CONTRACT/ORDER NO. N00164-01-D-0042 10B. DATED (SEE ITEM 13) 27 SEP 2001 - -------------------------------------------------------------------------------- 11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS [ ] The above numbered solicitation is amended at set forth in Item 14. The hour and date specified for receipt of Offers [ ] is extended. [ ] is not extended. Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended by on of the following methods: (a) by completing items 8 and 15, and returning __ copies of the amendment; (b) By acknowledging receipt of this amendment on each copy of the offer submitted; or (c) By separate letter or telegram which includes a reference to the solicitation and amendment numbers. FAILURE OF YOUR ACKNOWLEDGEMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and this amendment, and is received prior to the opening hour and date specified. - -------------------------------------------------------------------------------- 12. ACCOUNTING AND APPROPRIATION DATA (If required) NOT APPLICABLE TO THIS CONTRACTING ACTION - -------------------------------------------------------------------------------- 13. THIS ITEM APPLIES ONLY TO MODIFICATIONS AND CONTRACTS/ORDERS, IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14. - -------------------------------------------------------------------------------- A. THIS CHANGE ORDER IS ISSUED PURSUANT TO (Specify authority) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A. - -------------------------------------------------------------------------------- B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office, appropriation data, etc.) SET FORTH IN ITEM 14, PURSUANT TO THE AUTHORITY OF FAR 43.103(b). - -------------------------------------------------------------------------------- [X] C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OF: FAR 43.103(a) - -------------------------------------------------------------------------------- D. OTHER (Specify type of modification and authority.) - -------------------------------------------------------------------------------- E. IMPORTANT: Contractor ( ) is not, (X) is required to sign this document and return 1 copies to the issuing office. - -------------------------------------------------------------------------------- 14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organization by UCF section headings, including solicitation/contract subject matter where feasible.) This contract modification is issued to incorporate Engineering Change Proposals STRACADA-0091 including associated Notice of Revision as delineated on page 2 herein. CLIN 0004 is added to SECTION "B", and the required delivery schedule is extended as detailed herein. The total estimated contract amount is increased by $40,698.00 FROM: $36,378,678.00 TO: $35,419,376.00 Except as provided herein, all terms and conditions referenced in Item 9A and 10A, as heretofore changed, remains unchanged and in full force and effect. - -------------------------------------------------------------------------------- 15A. NAME AND TITLE OF SIGNER (Type or print) Edward L. Kessler GEN. MGR. 15B. CONTRACTOR/OFFEROR /s/ Edward L. Kessler ---------------------------------------- (Signature of person authorized to sign) 15C. DATED SIGNED 18 MAR 03 - -------------------------------------------------------------------------------- 16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print) MARLENE V SIDDONS/CONTRACTING OFFICER 16B. UNITED STATES OF AMERICA BY /s/ Marlene V. Siddons ---------------------------------------- (Signature of Contracting Officer) 16C. DATE SIGNED 19 MAR 2003 AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT PAGE OF PAGES - -------------------------------------------------------------------------------- 1. CONTRACT ID CODE "J" 1 | 2 - -------------------------------------------------------------------------------- 2. AMENDMENT/MODIFICATION NO. P00022 3. EFFECTIVE DATE 10 APR 2003 4. REQUISITION/PURCHASE REG. NO. N/A 5. PROJ NO. (if applicable) - -------------------------------------------------------------------------------- 6. ISSUED BY CODE N00164 CONTRACTING OFFICER NAVSURFWARCENDIV 300 HWY 361 CRANE IN 47522-5001 BUYER/SYMBOL: MARLENE SIDDONS/1165ZS PHONE: 812 854-3856 FAX: 812 854-5066 - -------------------------------------------------------------------------------- 7. ADMINISTERED BY (if other than Item 6) CODE S2101A DCM BALTIMORE 217 E REDWOOD STREET, SUITE 1800 BALTIMORE MD 21202-5299 ATTN: G ROPISKI 410-962-9257 - -------------------------------------------------------------------------------- 8. NAME AND ADDRESS OF CONTRACTOR (No., street, State and ZIP Code) SCIENCE AND TECHNOLOGY RESEARCH INC 10075 TYLER PLACE, SUITE 17 IJAMSVILLE MD 21754 ATTN: ED KESSLER 540-752-8080 TIN NO. 521604174 - -------------------------------------------------------------------------------- CAGE CODE OXNU6 FACILITY CODE - -------------------------------------------------------------------------------- 9A. AMENDMENT OF SOLICITATION NO. 9B. DATED (SEE ITEM 11) 10A. MODIFICATION OF CONTRACT/ORDER NO. N00164-01-D-0042 10B. DATED (SEE ITEM 13) 27 SEP 2001 - -------------------------------------------------------------------------------- 11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS [ ] The above numbered solicitation is amended at set forth in Item 14. The hour and date specified for receipt of Offers [ ] is extended. [ ] is not extended. Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended by on of the following methods: (a) by completing items 8 and 15, and returning __ copies of the amendment; (b) By acknowledging receipt of this amendment on each copy of the offer submitted; or (c) By separate letter or telegram which includes a reference to the solicitation and amendment numbers. FAILURE OF YOUR ACKNOWLEDGEMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and this amendment, and is received prior to the opening hour and date specified. - -------------------------------------------------------------------------------- 12. ACCOUNTING AND APPROPRIATION DATA (If required) NOT APPLICABLE TO THIS CONTRACTING ACTION - -------------------------------------------------------------------------------- 13. THIS ITEM APPLIES ONLY TO MODIFICATIONS AND CONTRACTS/ORDERS, IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14. - -------------------------------------------------------------------------------- A. THIS CHANGE ORDER IS ISSUED PURSUANT TO (Specify authority) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A. - -------------------------------------------------------------------------------- B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office, appropriation data, etc.) SET FORTH IN ITEM 14, PURSUANT TO THE AUTHORITY OF FAR 43.103(b). - -------------------------------------------------------------------------------- [X] C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OF: FAR 43.103(a) MUTUAL AGREEMENT - -------------------------------------------------------------------------------- D. OTHER (Specify type of modification and authority.) - -------------------------------------------------------------------------------- E. IMPORTANT: Contractor ( ) is not, (X) is required to sign this document and return 1 copies to the issuing office. - -------------------------------------------------------------------------------- 14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organization by UCF section headings, including solicitation/contract subject matter where feasible.) This contract modification is issued to incorporate Engineering Change Proposals including associated Notice of Revision as delineated on page 2 herein. CLIN 0005 is added to SECTION "B". The total maximum estimated contract amount is increased by $2,910.00 FROM: $36,419,376.00 TO: $36,422,286.00. Except as provided herein, all terms and conditions referenced in Item 9A and 10A, as heretofore changed, remains unchanged and in full force and effect. - -------------------------------------------------------------------------------- 15A. NAME AND TITLE OF SIGNER (Type or print) Edward L. Kessler GEN. MGR. 15B. CONTRACTOR/OFFEROR /s/ Edward L. Kessler ---------------------------------------- (Signature of person authorized to sign) 15C. DATED SIGNED 10 APR 2003 - -------------------------------------------------------------------------------- 16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print) MARLENE V SIDDONS/CONTRACTING OFFICER 16B. UNITED STATES OF AMERICA BY ---------------------------------------- (Signature of Contracting Officer) 16C. DATE SIGNED CONTRACT DATA REQUIREMENTS LIST A. CONTRACT LINE ITEM NO. 0002 B. EXHIBIT A C. CATEGORY TDP TM OTHER [X] D. SYSTEM/ITEM MANUF/ASSY&ENG. CONTRACT E. CONTRACT/PR NO. F. CONTRACTOR - -------------------------------------------------------------------------------- 1. DATA ITEM NO. A001 2. TITLE OF DATA ITEM Technical Report-Study/Services 3. SUBTITLE Resumes 4. AUTHORITY DI-MISC-80508 5. CONTRACT REFERENCE 6. REQUIRING OFFICE NSWCDD/B53 7. DD 250 REQ. LT 8. APP CODE A 9. DIST STATEMENT REQUIRED N/A 10. FREQUENCY OTime 11. AS OF DATE 12. DATE OF FIRST SUBMISSION See 16 13. DATE OF SUBSEQUENT SUBMISSION - -------------------------------------------------------------------------------- 14. DISTRIBUTION a. ADDRESSEE b. COPIES Draft Final Reg Report NSWCDD SD139/PIERSALL 1 0 B53/LAMOY 1 0 15. TOTAL 2 - -------------------------------------------------------------------------------- 16. REMARKS Block 4: A resume shall be submitted for each Key Person in the project organization including subcontractor and associate personnel. The format for each resume shall be as follows: a. Name of employee b. Labor category c. Primary Discipline (No more than one) d. Secondary Discipline (No more than one) e. Whether full-time or part-time f. Security clearance g. Experience in primary and secondary disciplines. Whenever possible this should discuss the employee's performing tasks similar to the task specified in the contract. h. Education. Degrees from accredited colleges and universities shall be described including years in which the degrees were granted. College education short of a degree shall include the number of applicable quarter/semester hours. i. The following certification shall be included: "I, (NAME), certify that, as a current employee of (NAME) the above information is correct and accurate to the best of my knowledge." Each resume must be signed by the individual and by an offeror's official and the signature shall be dated by the individual not earlier than 30 days prior to the date of the resumes submittal. Block 8: Government Review. Comment and approval required. Block 12: Contractor shall furnish resumes for concurrence in position classification prior assignment under this contract. Vouchers for payment will not be accepted for work performed by Key employees for whom resumes have not been submitted. - -------------------------------------------------------------------------------- G. PREPARED BY D. Lamoy, NSWCDD, B53 x3307 H. DATE I. APPROVED BY Data Approval Authorization J. DATE CONTRACT DATA REQUIREMENTS LIST A. CONTRACT LINE ITEM NO. 0002 B. EXHIBIT A C. CATEGORY TDP TM OTHER A D. SYSTEM/ITEM MANUF/ASSY&ENG. CONTRACT E. CONTRACT/PR NO. F. CONTRACTOR - -------------------------------------------------------------------------------- 1. DATA ITEM NO. A002 2. TITLE OF DATA ITEM Program Plan 3. SUBTITLE Program Master Plan 4. AUTHORITY DI-MGT-80909 5. CONTRACT REFERENCE 6. REQUIRING OFFICE NSWCDD/B53 7. DD 250 REQ. LT 8. APP CODE - 9. DIST STATEMENT REQUIRED - 10. FREQUENCY ASREQ 11. AS OF DATE 12. DATE OF FIRST SUBMISSION See 16 13. DATE OF SUBSEQUENT SUBMISSION See 16 - -------------------------------------------------------------------------------- 14. DISTRIBUTION a. ADDRESSEE b. COPIES Draft Final Reg Report NSWCDD See 16 15. TOTAL - -------------------------------------------------------------------------------- 16. REMARKS The contractor shall prepare Program Master Plans. The Master Plans shall describe the work to be done to accomplish the tasks. Deliverables to be produced shall be identified. Interdependencies among tasks shall be identified. Critical paths shall be identified. Blocks 12, 13, and 14: Dates of submission and distribution to be identified in individual delivery orders. - -------------------------------------------------------------------------------- G. PREPARED BY D. LaMoy, NSWCDD, B53 X3307 H. DATE I. APPROVED BY Data Approval Authorization J. DATE CONTRACT DATA REQUIREMENTS LIST A. CONTRACT LINE ITEM NO. 0002 B. EXHIBIT A C. CATEGORY TDP TM OTHER A D. SYSTEM/ITEM MANUF/ASSY&ENG. CONTRACT E. CONTRACT/PR NO. F. CONTRACTOR - -------------------------------------------------------------------------------- 1. DATA ITEM NO. A003 2. TITLE OF DATA ITEM Technical Report-Study/Services 3. SUBTITLE Program Milestones/Milestones Schedules 4. AUTHORITY DI-MISC-80508 5. CONTRACT REFERENCE 6. REQUIRING OFFICE NSWCDD/B53 7. DD 250 REQ. LT 8. APP CODE - 9. DIST STATEMENT REQUIRED N/A 10. FREQUENCY ASREQ 11. AS OF DATE 12. DATE OF FIRST SUBMISSION See 16 13. DATE OF SUBSEQUENT SUBMISSION See 16 - -------------------------------------------------------------------------------- 14. DISTRIBUTION a. ADDRESSEE b. COPIES Draft Final Reg Report NSWCDD See 16 15. TOTAL - -------------------------------------------------------------------------------- 16. REMARKS The contractor shall develop Milestone Schedules. The Milestones shall identify major program events used to generate program progress and status reporting. Blocks 12, 13, and 14: Dates of submission and distribution to be identified in individual delivery orders. - -------------------------------------------------------------------------------- G. PREPARED BY D. Lamoy, NSWCDD, B53 X3307 H. DATE I. APPROVED BY Data Approval Authorization J. DATE CONTRACT DATA REQUIREMENTS LIST A. CONTRACT LINE ITEM NO. 0002 B. EXHIBIT A C. CATEGORY TDP TM OTHER A D. SYSTEM/ITEM MANUF/ASSY&ENG. CONTRACT E. CONTRACT/PR NO. F. CONTRACTOR - -------------------------------------------------------------------------------- 1. DATA ITEM NO. A004 2. TITLE OF DATA ITEM Technical Report-Study/Services 3. SUBTITLE Program Data Collection 4. AUTHORITY DI-MISC-80508 5. CONTRACT REFERENCE 6. REQUIRING OFFICE NSWCDD/B53 7. DD 250 REQ. LT 8. APP CODE - 9. DIST STATEMENT REQUIRED N/A 10. FREQUENCY ASREQ 11. AS OF DATE 12. DATE OF FIRST SUBMISSION See 16 13. DATE OF SUBSEQUENT SUBMISSION See 16 - -------------------------------------------------------------------------------- 14. DISTRIBUTION a. ADDRESSEE b. COPIES Draft Final Reg Report NSWCDD See 16 15. TOTAL - -------------------------------------------------------------------------------- 16. REMARKS The contractor shall collect and distribute program data for the contract period. Specific data collection may include but not be limited to: plans, schedules, reports, studies, analysis, and cost data. Blocks 12, 13, and 14: Dates of submission and distribution to be identified in individual delivery orders. - -------------------------------------------------------------------------------- G. PREPARED BY D. Lamoy, NSWCDD, B53 X3307 H. DATE I. APPROVED BY Data Approval Authorization J. DATE CONTRACT DATA REQUIREMENTS LIST A. CONTRACT LINE ITEM NO. 0002 B. EXHIBIT A C. CATEGORY TDP TM OTHER A D. SYSTEM/ITEM MANUF/ASSY&ENG. CONTRACT E. CONTRACT/PR NO. F. CONTRACTOR - -------------------------------------------------------------------------------- 1. DATA ITEM NO. A005 2. TITLE OF DATA ITEM Technical Report-Study/Services 3. SUBTITLE Report, Program Design Reviews 4. AUTHORITY DI-MISC-80508 5. CONTRACT REFERENCE 6. REQUIRING OFFICE NSWCDD/B53 7. DD 250 REQ. LT 8. APP CODE - 9. DIST STATEMENT REQUIRED N/A 10. FREQUENCY ASREQ 11. AS OF DATE 12. DATE OF FIRST SUBMISSION See 16 13. DATE OF SUBSEQUENT SUBMISSION See 16 - -------------------------------------------------------------------------------- 14. DISTRIBUTION a. ADDRESSEE b. COPIES Draft Final Reg Report NSWCDD See 16 15. TOTAL - -------------------------------------------------------------------------------- 16. REMARKS The contractor shall participate in Program Design Reviews (PDRs) to assess compliance with program schedules and update program data files to reflect actual program status. Blocks 12, 13, and 14: Dates of submission and distribution to be identified in individual delivery orders. - -------------------------------------------------------------------------------- G. PREPARED BY D. Lamoy, NSWCDD, B53 X3307 H. DATE I. APPROVED BY Data Approval Authorization J. DATE CONTRACT DATA REQUIREMENTS LIST A. CONTRACT LINE ITEM NO. 0002 B. EXHIBIT A C. CATEGORY TDP TM OTHER A D. SYSTEM/ITEM MANUF/ASSY&ENG. CONTRACT E. CONTRACT/PR NO. F. CONTRACTOR - -------------------------------------------------------------------------------- 1. DATA ITEM NO. A006 2. TITLE OF DATA ITEM Technical Report-Study/Services 3. SUBTITLE Cost Report 4. AUTHORITY DI-MISC-80508 5. CONTRACT REFERENCE 6. REQUIRING OFFICE NSWCDD/B53 7. DD 250 REQ. LT 8. APP CODE - 9. DIST STATEMENT REQUIRED N/A 10. FREQUENCY QRTLY 11. AS OF DATE 12. DATE OF FIRST SUBMISSION 30 DAC 13. DATE OF SUBSEQUENT SUBMISSION QRTLY - -------------------------------------------------------------------------------- 14. DISTRIBUTION a. ADDRESSEE b. COPIES Draft Final Reg Report NSWCDD S139/Piersall B53/Lamoy 15. TOTAL - -------------------------------------------------------------------------------- 16. REMARKS The report format shall provide for cost reporting of incurred and projected cost. The report shall provide: a. At contract initiation, budget cost based on contract price by month. b. Actual cost incurred to date. c. Estimated costs to complete based on incurred, and status of physical completion by month. - -------------------------------------------------------------------------------- G. PREPARED BY D. Lamoy, NSWCDD, B53, 3307 H. DATE I. APPROVED BY Data Approval Authorization J. DATE CONTRACT DATA REQUIREMENTS LIST A. CONTRACT LINE ITEM NO. 0002 B. EXHIBIT A C. CATEGORY TDP TM OTHER A D. SYSTEM/ITEM MANUF/ASSY&ENG. CONTRACT E. CONTRACT/PR NO. F. CONTRACTOR - -------------------------------------------------------------------------------- 1. DATA ITEM NO. A007 2. TITLE OF DATA ITEM Contractor's Progress, Status and Management Report 3. SUBTITLE Management Report 4. AUTHORITY DI-MGMT-80227 5. CONTRACT REFERENCE 6. REQUIRING OFFICE NSWCDD/B53 7. DD 250 REQ. LT 8. APP CODE - 9. DIST STATEMENT REQUIRED N/A 10. FREQUENCY MTHLY 11. AS OF DATE See 16 12. DATE OF FIRST SUBMISSION 35 DAC 13. DATE OF SUBSEQUENT SUBMISSION MTHLY/see 16 - -------------------------------------------------------------------------------- 14. DISTRIBUTION a. ADDRESSEE b. COPIES Draft Final Reg Report NSWCDD B53/Lamoy S139/Piersall 15. TOTAL - -------------------------------------------------------------------------------- 16. REMARKS Blocks 11 and 13 (CONT) Due on the tenth day of that month immediately following the particular reporting period throughout the life of the contract. - -------------------------------------------------------------------------------- G. PREPARED BY D. Lamoy, NSWCDD, B53 X3307 H. DATE I. APPROVED BY Data Approval Authorization J. DATE CONTRACT DATA REQUIREMENTS LIST A. CONTRACT LINE ITEM NO. 0002 B. EXHIBIT A C. CATEGORY TDP TM OTHER A D. SYSTEM/ITEM MANUF/ASSY&ENG. CONTRACT E. CONTRACT/PR NO. F. CONTRACTOR - -------------------------------------------------------------------------------- 1. DATA ITEM NO. A008 2. TITLE OF DATA ITEM Contract Minutes 3. SUBTITLE (See Blocks 3 and 10.1 of DI-A-5011B) 4. AUTHORITY DI-ADMN-81250A 5. CONTRACT REFERENCE 6. REQUIRING OFFICE NSWCDD/B53 7. DD 250 REQ. LT 8. APP CODE - 9. DIST STATEMENT REQUIRED N/A 10. FREQUENCY See 16 11. AS OF DATE - 12. DATE OF FIRST SUBMISSION See 16 13. DATE OF SUBSEQUENT SUBMISSION See 16 - -------------------------------------------------------------------------------- 14. DISTRIBUTION a. ADDRESSEE b. COPIES Draft Final Reg Report NSWCDD B53/Lamoy 2 0 15. TOTAL 2 - -------------------------------------------------------------------------------- 16. REMARKS Blocks 10, 12, and 13 (CONT): Each report shall be due at a frequency of ASREQ and within 5 days of the corresponding conference. Subsequent submission, if required by the NSWCDD Technical Office, shall be due 5 days after the contractor receives NSWCDD comments against the preceding submission and must incorporate all review comments. - -------------------------------------------------------------------------------- G. PREPARED BY D. Lamoy, NSWCDD, B53 X3307 H. DATE I. APPROVED BY Data Approval Authorization J. DATE CONTRACT DATA REQUIREMENTS LIST A. CONTRACT LINE ITEM NO. 0002 B. EXHIBIT A C. CATEGORY TDP TM OTHER A D. SYSTEM/ITEM MANUF/ASSY&ENG. CONTRACT E. CONTRACT/PR NO. F. CONTRACTOR - -------------------------------------------------------------------------------- 1. DATA ITEM NO. A009 2. TITLE OF DATA ITEM Test/Inspection Reports 3. SUBTITLE 4. AUTHORITY DI-NDTI-80809A 5. CONTRACT REFERENCE 6. REQUIRING OFFICE NSWCDD/B53 7. DD 250 REQ. LT 8. APP CODE - 9. DIST STATEMENT REQUIRED N/A 10. FREQUENCY See 16 11. AS OF DATE - 12. DATE OF FIRST SUBMISSION See 16 13. DATE OF SUBSEQUENT SUBMISSION N/A - -------------------------------------------------------------------------------- 14. DISTRIBUTION a. ADDRESSEE b. COPIES Draft Final Reg Report NSWCDD B53/Lamoy 2 0 15. TOTAL 2 - -------------------------------------------------------------------------------- 16. REMARKS Block 4 (CONT): In accordance with Block 10.2 of DI-NDTI-80809A, the technical content of each report shall be as defined by the NSWCDD Technical Office before the start of the corresponding testing. Blocks 10 and 12 (CONT): Each report shall be due in accordance with the schedule specified by the NSWCDD Technical Office at the start of the corresponding testing or within 10 days of that testing if no schedule is defined. Submit each report at a frequency of O Time. - -------------------------------------------------------------------------------- G. PREPARED BY D. Lamoy, NSWCDD, B53 X3307 H. DATE I. APPROVED BY Data Approval Authorization J. DATE CONTRACT DATA REQUIREMENTS LIST A. CONTRACT LINE ITEM NO. 0002 B. EXHIBIT A C. CATEGORY TDP TM OTHER A D. SYSTEM/ITEM MANUF/ASSY&ENG. CONTRACT E. CONTRACT/PR NO. F. CONTRACTOR - -------------------------------------------------------------------------------- 1. DATA ITEM NO. A010 2. TITLE OF DATA ITEM Technical Report-Study/Services 3. SUBTITLE Miscellaneous Letter Reports (See 16) 4. AUTHORITY DI-MISC-80508 5. CONTRACT REFERENCE 6. REQUIRING OFFICE NSWCDD/B53 7. DD 250 REQ. LT 8. APP CODE A 9. DIST STATEMENT REQUIRED N/A 10. FREQUENCY See 16 11. AS OF DATE See 16 12. DATE OF FIRST SUBMISSION See 16 13. DATE OF SUBSEQUENT SUBMISSION See 16 - -------------------------------------------------------------------------------- 14. DISTRIBUTION a. ADDRESSEE b. COPIES Draft Final Reg Report NSWCDD B53/Lamoy 2 0 *See 16 15. TOTAL 2 - -------------------------------------------------------------------------------- 16. REMARKS Block 3 (CONT): Title to vary with each report. [These reports are NOT formal technical reports.] Block 4 (CONT): The format of each report shall be as defined by the NSWCDD Technical Office and/or as required by the nature of the task. If undefined by the Technical Office for a particular task, format shall be left to the contractor but must be suitable for the report's function/purpose. Block 8 (CONT): Government will review each submission (when applicable) within 15 working days. Blocks 10, 12, and 13 (CONT): Each report shall be due at a frequency of ASREQ. Each report, unless periodic, shall be due 10 days after the receipt by the contractor of comments against the proceeding submission and must incorporate all review comments. For each periodic report, the frequency, dates due, and total number of reporting periods shall be as prescribed by NSWCDD. Block 14 and 15 (CONT): *Repro copy in camera-ready hardcopy form and/or in the form of magnetic medium shall be supplied upon government request; up to 12 additional regular copies shall be supplied upon government request. Note: Technical Manual (Operation, Descriptive, maintenance, and Assembly Information intended for Fleet use) shall not be furnished under this data description. - -------------------------------------------------------------------------------- G. PREPARED BY D. Lamoy, NSWCDD, B53 X3307 H. DATE I. APPROVED BY Data Approval Authorization J. DATE CONTRACT DATA REQUIREMENTS LIST A. CONTRACT LINE ITEM NO. 0002 B. EXHIBIT A C. CATEGORY TDP TM OTHER A D. SYSTEM/ITEM MANUF/ASSY&ENG. CONTRACT E. CONTRACT/PR NO. F. CONTRACTOR - -------------------------------------------------------------------------------- 1. DATA ITEM NO. A011 2. TITLE OF DATA ITEM Scientific and Technical Reports 3. SUBTITLE Preliminary Draft(s) 4. AUTHORITY DI-MISC-80711 5. CONTRACT REFERENCE 6. REQUIRING OFFICE NSWCDD/B53 7. DD 250 REQ. LT 8. APP CODE S16 9. DIST STATEMENT REQUIRED N/A 10. FREQUENCY See 16 11. AS OF DATE See 16 12. DATE OF FIRST SUBMISSION See 16 13. DATE OF SUBSEQUENT SUBMISSION See 16 - -------------------------------------------------------------------------------- 14. DISTRIBUTION a. ADDRESSEE b. COPIES Draft Final Reg Report NSWCDD B53/Lamoy* 2 0 *See 16 15. TOTAL 2 - -------------------------------------------------------------------------------- 16. REMARKS Block 4 (CONT): To be prepared in accordance with MIL-STD-847B as implemented by NSWC MP 87-2 (for format); use TR, TN, or MP standards as directed by the NSWCDD Technical Office. Block 8 (CONT): Government will review each submission within period defined by NSWCDD at start of task, or within 15 working days if no period is defined. Blocks 10, 12, and 13 (CONT): Preliminary draft(s) due in accordance with schedule specified by NSWCDD at the start of task(s) or, if no schedule is defined, within 10 days of completion of the assigned task(s). Submit each report at a frequency or ONE/R; subsequent submission(s) due in accordance with Block 12 of data item directly below (SCIENTIFIC AND TECHNICAL REPORTS, Final (Camera Ready Document(s)). Note: Technical Manual (Operation, Descriptive, maintenance, and Assembly Information intended for Fleet use) shall not be furnished under this data description. *MIL-STD 847-B is stated for guidance. - -------------------------------------------------------------------------------- G. PREPARED BY D. Lamoy, NSWCDD, B53 X3307 H. DATE I. APPROVED BY Data Approval Authorization J. DATE ORDER FOR SUPPLIES OR SERVICES PAGE 1 OF 2 - -------------------------------------------------------------------------------- 1. CONTRACT/PURCH ORDER NO. N00164-01-D-0042 2. DELIVERY ORDER NO. 0002 3. DATE OF ORDER(YYYMMMDD) 20000920 4. REQUISITION/PURCH REQUEST NO. 22622671 5. PRIORITY CO-C9E - -------------------------------------------------------------------------------- 6. ISSUED BY CODE N00164 CONTRACTING OFFICER NSWC CRANE 300 HWY 361 CRANEE IN 47522-5001 ATTN: M SIDDONS 812-854-3856 - -------------------------------------------------------------------------------- 7. ADMINISTERED BY (If other than 6) CODE S2101A DCMA BALTIMORE 217 E REDWOOD STREET SUITE 1800 BALTIMORE MD 21202-5299 ATTN: G. ROPISKI (41)962-9257 - -------------------------------------------------------------------------------- 8. DELIVERY FOB [X] DEST [ ] OTHER (See Schedule if other) - -------------------------------------------------------------------------------- 9. CONTRACTOR CODE OXNU6 FACILITY 79-613-4492 NAME AND ADDRESS SCIENCE AND TECHNOLOGY RESEARCH, INC. 10075 TYLER PLACE, SUITE 17 IJAMSVILLE MD 21754 - -------------------------------------------------------------------------------- 10. DELIVER TO FOB POINTBY See delivery schedule herein - -------------------------------------------------------------------------------- 11. X IF BUSINESS IS [ ] SMALL [X] SMALL DISADVANTAGES [ ] WOMAN-OWNED - -------------------------------------------------------------------------------- 12. DISCOUNT TERMS NONE 13. MAIL INVOICES TO ADDRESS IN BLOCK 15 - -------------------------------------------------------------------------------- 14. SHIP TO CODE N001464 RECEIVING OFFICER BLDG 3324, CODE 805D NSWC CRANE, CRANE IN 47522-5901 ATTN: CLEVE BENTON/SANDY CLARK CODE 805 - -------------------------------------------------------------------------------- 15. PAYMENT WILL BE MADE BY CODE HQ0338 DFAS-COLUMBUS CENTER DFAS-COSOUTH ENTITLEMENT OPERATIONS PO BOX 182264 COLUMBUS OH 43218-2264 - -------------------------------------------------------------------------------- MARK ALL PACKAGES AND PAPERS WITH IDENTIFICATION NUMBERS IN BLOCKS 1 AND 2. - -------------------------------------------------------------------------------- 16. TYPE OF ORDER DELIVERY/CALL [X] This delivery order/call is issued on another Government agency or in accordance with and subject to terms and conditions of above numbered contract. PURCHASE [ ] Reference you __________________ furnish the following on terms specified herein. ACCEPTANCE. THE CONTRACTOR HEREBY ACCEPTS THE OFFER REPRESENTED BY THE NUMBERED PURCHASE ORDER AS IT MAY PREVIOUSLY HAVE BEEN OR IS NOW MODIFIED, SUBJECT TO ALL OF THE TERMS AND CONDITIONS SET FORTH, AND AGREES TO PERFORM THE SAME. SCIENCE AND TECHNOLOGY RESEARCH INC. - --------------------------------- --------------------------------- NAME OF CONTRACTOR SIGNATURE - --------------------------------- --------------------------------- TYPED NAME AND TITLE DATE SIGNED [ ] if this box is marked, supplier must sign Acceptance and return the following number of copies: - -------------------------------------------------------------------------------- 17. ACCOUNTING AND APPROPRIATION DATA/LOCAL USE A1 9720300 2601 26N6N06P3067606090925GY 2DK95A S19130 MDEP: RG04 AMS: 30670060000 PRON: DE2AA979DERM $2,331,924.00.00 - -------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------- 18. ITEM NO. 19. SCHEDULE OF SUPPLIES/SERVICES 20. QUANTITY 21. 22. UNIT 23. AMOUNT ORDERED/ UNIT PRICE ACCEPTED* 0001 SHIPBOARD AUTOMATIC CHEMICAL AGENT DETECTOR 84 Each $27,761.00 $2,331,924.00 AND ALARM (ACADA) systems manufactured in accordance with (LAW) Product Specifications PA/01/8855/002, NAVSEA Drawing 53711-7344570, Technical Manual SW073-AF-MMO Shipboard ACADA Systems Production Units, and as delineated in Statement of Work herein. 0003 DATA IAW DD1423 herein. 1 Lot NSP NSP - -----------------------------------------------------------------------------------------------------------------------
* If quantity accepted by the Government is same as quantity ordered, indicate by X. If different, enter actual quantity accepted below quantity ordered and encircle. - -------------------------------------------------------------------------------- 24. UNITED STATES OF AMERICA BY MARY SHEETZ/CONTRACTING OFFICER /s/ Mary Sheetz CONTRACTING/ORDERING OFFICER - -------------------------------------------------------------------------------- 25. TOTAL $2,331,924.00 - -------------------------------------------------------------------------------- 26. QUANTITY IN COLUMN 20 HAS BEEN [ ] INSPECTED [ ] RECEIVED [ ] ACCEPTED, AND CONFORMS TO THE CONTRACT EXCEPT AS NOTED ------------- ------------------------------------------------- DATE SIGNATURE OF AUTHORIZED GOVERNMENT REPRESENTATIVE - -------------------------------------------------------------------------------- 27. SHIP. NO. 28. D.O. VOUCHER NO. 29. DIFFERENCES 30. INITIALS 31. PAYMENT [ ] COMPLETE [ ] PARTIAL [ ] FINAL 32. PAID BY 33. AMOUNT VERIFIED CORRECT FOR 34. CHECK NUMBER 35. BILL OF LADING NO. - -------------------------------------------------------------------------------- 36. I certify this account is correct and proper for payment ------------- ------------------------------------------------- DATE SIGNATURE AND TITLE OF CERTIFYING OFFICIAL - -------------------------------------------------------------------------------- 37. RECEIVED AT 38. RECEIVED BY 39. DATE RECEIVED 40. TOTAL CONTAINERS 41. S/R ACCOUNT NUMBER 42. S/R VOUCHER NO. ORDER FOR SUPPLIES OR SERVICES PAGE 1 OF 1 - -------------------------------------------------------------------------------- 1. CONTRACT/PURCH ORDER NO. N00164-01-D-0042 2. DELIVERY ORDER NO. 0003 3. DATE OF ORDER(YYYMMMDD) 2003MAR18 4. REQUISITION/PURCH REQUEST NO. 30697769 5. PRIORITY DO-A70 - -------------------------------------------------------------------------------- 6. ISSUED BY CODE N00164 CONTRACTING OFFICER NSWC CRANE CODE BLDG 3291 300 HWY 361 CRANEE IN 47522-5001 ATTN: M SIDDONS (812) 854-3856 - -------------------------------------------------------------------------------- 7. ADMINISTERED BY (If other than 6) CODE S2101A DCMA BALTIMORE 217 E REDWOOD STREET SUITE 1800 BALTIMORE MD 21202-5299 ATTN: G. ROPISKI (410) 962-9257 - -------------------------------------------------------------------------------- 8. DELIVERY FOB [X] DEST [ ] OTHER (See Schedule if other) - -------------------------------------------------------------------------------- 9. CONTRACTOR CODE OXNU6 FACILITY 79-613-4492 NAME AND ADDRESS SCIENCE AND TECHNOLOGY RESEARCH, INC. 112 JULIAD COURT, SUITE 200 FREDERICKSBURG VA 22406 ATTN: ED KESSLER (540) 752-8080 - -------------------------------------------------------------------------------- 10. DELIVER TO FOB POINTBY 18 APRIL 2003 - -------------------------------------------------------------------------------- 11. X IF BUSINESS IS [ ] SMALL [X] SMALL DISADVANTAGES [ ] WOMAN-OWNED - -------------------------------------------------------------------------------- 12. DISCOUNT TERMS NONE 13. MAIL INVOICES TO ADDRESS IN BLOCK 15 - -------------------------------------------------------------------------------- 14. SHIP TO CODE N001464 RECEIVING OFFICER BLDG 3324, CODE 805D NSWC CRANE, CRANE IN 47522-5901 ATTN: SANDY CLARK CODE 805 - -------------------------------------------------------------------------------- 15. PAYMENT WILL BE MADE BY CODE HQ0338 DFAS-COLUMBUS CENTER DFAS-COSOUTH ENTITLEMENT OPERATIONS PO BOX 182264 COLUMBUS OH 43218-2264 - -------------------------------------------------------------------------------- MARK ALL PACKAGES AND PAPERS WITH IDENTIFICATION NUMBERS IN BLOCKS 1 AND 2. - -------------------------------------------------------------------------------- 16. TYPE OF ORDER DELIVERY/CALL [X] This delivery order/call is issued on another Government agency or in accordance with and subject to terms and conditions of above numbered contract. PURCHASE [ ] Reference you __________________ furnish the following on terms specified herein. ACCEPTANCE. THE CONTRACTOR HEREBY ACCEPTS THE OFFER REPRESENTED BY THE NUMBERED PURCHASE ORDER AS IT MAY PREVIOUSLY HAVE BEEN OR IS NOW MODIFIED, SUBJECT TO ALL OF THE TERMS AND CONDITIONS SET FORTH, AND AGREES TO PERFORM THE SAME. SCIENCE AND TECHNOLOGY RESEARCH INC. /s/ Edward L. Kessler - --------------------------------- --------------------------------- NAME OF CONTRACTOR SIGNATURE Edward L. Kessler, Gen. Mgr. 18 Mar 03 - --------------------------------- --------------------------------- TYPED NAME AND TITLE DATE SIGNED [X] if this box is marked, supplier must sign Acceptance and return the following number of copies: 1 - -------------------------------------------------------------------------------- 17. ACCOUNTING AND APPROPRIATION DATA/LOCAL USE A1 97X4930 NH1J000 77777 0 000164 2F 000000 85D00 385D252 ($40,698.00) (LOCAL USE) ACRN A1 CLIN 0003 SHOP/REQN # 85D00/30697769 QTY 1 UNIT PRICE LOT $40,698.00 AMOUNT $40,698.00 CONTRACT TYPE FFP PROGRESS PAYMENTS YES - -------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------- 18. ITEM NO. 19. SCHEDULE OF SUPPLIES/SERVICES 20. QUANTITY 21. 22. UNIT 23. AMOUNT ORDERED/ UNIT PRICE ACCEPTED* 0004 INCORPORATION OF STRACADA 0091 1 LOT $40,698.00 $40,698.00 ACRN: A1 REQUISITION NUMBER: 30697769 - -----------------------------------------------------------------------------------------------------------------------
* If quantity accepted by the Government is same as quantity ordered, indicate by X. If different, enter actual quantity accepted below quantity ordered and encircle. - -------------------------------------------------------------------------------- 24. UNITED STATES OF AMERICA BY MARLENE V. SIDDONS/CONTRACTING OFFICER /s/ Marlene V. Siddons CONTRACTING/ORDERING OFFICER - -------------------------------------------------------------------------------- 25. TOTAL $40,698.00 - -------------------------------------------------------------------------------- 26. QUANTITY IN COLUMN 20 HAS BEEN [ ] INSPECTED [ ] RECEIVED [ ] ACCEPTED, AND CONFORMS TO THE CONTRACT EXCEPT AS NOTED ------------- ------------------------------------------------- DATE SIGNATURE OF AUTHORIZED GOVERNMENT REPRESENTATIVE - -------------------------------------------------------------------------------- 27. SHIP. NO. 28. D.O. VOUCHER NO. 29. DIFFERENCES 30. INITIALS 31. PAYMENT [ ] COMPLETE [ ] PARTIAL [ ] FINAL 32. PAID BY 33. AMOUNT VERIFIED CORRECT FOR 34. CHECK NUMBER 35. BILL OF LADING NO. - -------------------------------------------------------------------------------- 36. I certify this account is correct and proper for payment ------------- ------------------------------------------------- DATE SIGNATURE AND TITLE OF CERTIFYING OFFICIAL - -------------------------------------------------------------------------------- 37. RECEIVED AT 38. RECEIVED BY 39. DATE RECEIVED 40. TOTAL CONTAINERS 41. S/R ACCOUNT NUMBER 42. S/R VOUCHER NO. Subcontract No. N00164-01-D-0042-INT ATTACHMENT III REVISION NO. 01 TO DELIVERY ORDER 0001-INT SUBCONTRACT NO. N00164-01-D-0042 ORDER ----- Item Schedule of Unit No. Supplies/Services Qty. Unit Price Amount - --- ----------------- ---- ---- ----- ------ 0001 Shipboard ACADA Dual Drift 401 EA $3,570.13 $1,431,622.13 Tube Assemblies manufactured IAW subcontract SOW, NAVSEA Drawing 53711-7344570 and Product Specification PS/01/8855/001 0003 Data IAW 1423's in 1 Lot NSP NSP Attachment III, as applicable.
PURPOSE ------- The purpose of this revision is to incorporate STRACADA VECP's 0044 for an improved Voltage Divider Board and to add Intellitec's Acetone Cartridge (VECP STRACADA-0045) as a component of the Dual Drift Tube Assemblies to be delivered under this order. MODIFIED DELIVERY SCHEDULE -------------------------- Under CLIN 0001 of the Contract and this Order, the Subcontractor shall deliver Dual Drift Tube Assemblies to STR (at the address provided below) in accordance with the following schedule. QUANTITY ON OR BEFORE RECEIPT DATE - -------- ------------------------- 2 (Note 1) 14 August 2002 20 (Note 1) 30 September 2002 20 11 October 2002 20 25 October 2002 20 8 November 2002 20 22 November 2002 20 6 December 2002 Subcontract No. N00164-01-D-0042-INT QUANTITY ON OR BEFORE RECEIPT DATE - -------- ------------------------- 20 20 December 2002 20 10 January 2003 20 24 January 2003 20 7 February 2003 20 21 February 2003 20 07 March 2003 20 21 March 2003 20 4 April 2003 20 18 April 2003 20 02 May 2003 20 16 May 2003 20 30 May 2003 20 13 June 2003 19 27 June 2003 NOTE 1: Acetone Cartridges for these two DDTAs to be shipped with the 30 September 2002 Deliverable. PLACE OF DELIVERY ----------------- SCIENCE & TECHNOLOGY RESEARCH, INC. 112 JULIAD COURT, SUITE 200 FREDERICKSBURG, VA 22406 EFFECTIVE DATE: --------------- 3 JUNE 2002 ORDERING OFFICER ACCEPTANCE - ---------------- ---------- /s/ Ed Kessler /s/ Vicky Shanley - --------------------------------- ----------------------------------- Ed Kessler Vicky Shanley Exec. V.P./General Mgr. Date Signed: 6-13-02 Date Signed: 6/27/02 Subcontract No. N00164-01-D-0042-INT ATTACHMENT IV ORDER ----- Item Schedule of Unit No. Supplies/Services Qty. Unit Price Amount - --- ----------------- ---- ---- ----- ------ 0001 Shipboard ACADA Dual Drift 84 Ea. $3,570.13 $229,891 Tube Assembly (DDTA) manufactured IAW Subcontract SOW, NAVSEA Drawing 53711-7344570 and Product Specification PS/01/8855/001. 0002 Acetone Permeation Tube, P/N 520009 84 Ea. $231.69 $ 19,462 0003 Data IAW 1423s in Attachment III, as applicable 1 Lot NSP NSP TOTAL $319,353 DELIVERY SCHEDULE: ------------------ Subcontractor shall deliver Dual Drift Tube Assemblies and Acetone Permeation Tubes to STR at the address stated below in accordance with the following schedule: QUANTITY ON OR BEFORE RECEIPT DATE -------- ------------------------- 20 11 July 2003 20 25 July 2003 20 8 August 2003 20 22 August 2003 4 5 September 2003 PLACE OF DELIVERY: - ------------------ Science & Technology Research, Inc. 112 Juliad Court, Suite 200 Fredericksburg, VA 22406 EFFECTIVE DATE: 26 September 2002 - --------------- ORDERING OFFICER ACCEPTANCE - ---------------- ---------- /s/ Ed Kessler /s/ Vicky Shanley - --------------------------------- ----------------------------------- Ed Kessler Vicky Shanley 9-26-02 10-23-02 - --------------------------------- ----------------------------------- Date Signed Date Signed Subcontract No. N00164-01-D-0042-INT ATTACHMENT V ORDER ----- Item Schedule of Unit No. Supplies/Services Qty. Unit Price Amount - --- ----------------- ---- ---- ----- ------ 0001 Shipboard ACADA Dual Drift 6 Ea. $9,738.23 $58,429.38 Tube Assembly (DDTA) manufactured IAW Subcontract SOW, NAVSEA Drawing 53711-7344570 and Product Specification PS/01/8855 0002 Acetone Permeation Tube, P/N 520009 6 Ea. NSP NSP 0003 Data IAW 1423s in Attachment 1 Lot NSP NSP III, as applicable TOTAL $58,429.38 DELIVERY SCHEDULE: - ------------------ Subcontractor shall deliver Dual Drift Tube Assemblies and Acetone Permeation Tubes to STR at the address stated below in accordance with the following schedule: QUANTITY ON OR BEFORE RECEIPT DATE -------- ------------------------- 6 3 October 2003 PLACE OF DELIVERY - ----------------- Science & Technology Research, Inc. 112 Juliad Court, Suite 200 Fredericksburg, VA 22406 EFFECTIVE DATE: 15 May 2003 - --------------- ORDERING OFFICER ACCEPTANCE - ---------------- ---------- /s/ Ed Kessler /s/ Vicky Shanley - --------------------------------- ----------------------------------- Ed Kessler Vicky Shanley 15 May 2003 6/2/03 - --------------------------------- ----------------------------------- Date Signed Date Signed ORDER FOR SUPPLIES OR SERVICES PAGE 1 OF 1 - -------------------------------------------------------------------------------- 1. CONTRACT/PURCH ORDER NO. N00164-01-D-0042 2. DELIVERY ORDER NO. 0004 3. DATE OF ORDER(YYYMMMDD) 2003APR10 4. REQUISITION/PURCH REQUEST NO. 30971677 5. PRIORITY DO-A70 - -------------------------------------------------------------------------------- 6. ISSUED BY CODE N00164 NSWC CRANE CODE BLDG 3291 300 HWY 361 CRANE IN 47522-5001 ATTN: M SIDDONS (812) 854-3856 - -------------------------------------------------------------------------------- 7. ADMINISTERED BY (If other than 6) CODE S2101A DCMA BALTIMORE 217 E REDWOOD STREET SUITE 1800 BALTIMORE MD 21202-5299 ATTN: G. ROPISKI (410) 962-9257 - -------------------------------------------------------------------------------- 8. DELIVERY FOB [X] DEST [ ] OTHER (See Schedule if other) - -------------------------------------------------------------------------------- 9. CONTRACTOR CODE OXNU6 FACILITY NAME AND ADDRESS SCIENCE AND TECHNOLOGY RESEARCH, INC. 112 JULIAD COURT, SUITE 200 FREDERICKSBURG VA 22406 ATTN: ED KESSLER (540) 752-8080 - -------------------------------------------------------------------------------- 10. DELIVER TO FOB POINTBY 10 MAY 2003 - -------------------------------------------------------------------------------- 11. X IF BUSINESS IS [ ] SMALL [X] SMALL DISADVANTAGES [ ] WOMAN-OWNED - -------------------------------------------------------------------------------- 12. DISCOUNT TERMS NONE 13. MAIL INVOICES TO ADDRESS IN BLOCK 15 - -------------------------------------------------------------------------------- 14. SHIP TO CODE N001464 RECEIVING OFFICER BLDG 3324, CODE 805D NSWC CRANE, CRANE IN 47522-5901 ATTN: SANDY CLARK CODE 805 - -------------------------------------------------------------------------------- 15. PAYMENT WILL BE MADE BY CODE HQ0338 DFAS-COLUMBUS CENTER DFAS-COSOUTH ENTITLEMENT OPERATIONS PO BOX 182264 COLUMBUS OH 43218-2264 - -------------------------------------------------------------------------------- MARK ALL PACKAGES AND PAPERS WITH IDENTIFICATION NUMBERS IN BLOCKS 1 AND 2. - -------------------------------------------------------------------------------- 16. TYPE OF ORDER DELIVERY/CALL [X] This delivery order/call is issued on another Government agency or in accordance with and subject to terms and conditions of above numbered contract. PURCHASE [ ] Reference you __________________ furnish the following on terms specified herein. ACCEPTANCE. THE CONTRACTOR HEREBY ACCEPTS THE OFFER REPRESENTED BY THE NUMBERED PURCHASE ORDER AS IT MAY PREVIOUSLY HAVE BEEN OR IS NOW MODIFIED, SUBJECT TO ALL OF THE TERMS AND CONDITIONS SET FORTH, AND AGREES TO PERFORM THE SAME. SCIENCE AND TECHNOLOGY RESEARCH INC. /s/ Edward L. Kessler - --------------------------------- --------------------------------- NAME OF CONTRACTOR SIGNATURE Edward L. Kessler, Gen. Mgr. 10 APR 2003 - --------------------------------- --------------------------------- TYPED NAME AND TITLE DATE SIGNED [X] if this box is marked, supplier must sign Acceptance and return the following number of copies: 1 - -------------------------------------------------------------------------------- 17. ACCOUNTING AND APPROPRIATION DATA/LOCAL USE A1 97X4930 NH1J000 77777 0 000164 2F 000000 85D00 385D252 ($2,910.00) (LOCAL USE) ACRN A1 CLIN 0005 SHOP/REQN # 85D00/30971677 QTY 1 UNIT PRICE LOT $2,910.00 AMOUNT $2,910.00 CONTRACT TYPE FFP PROGRESS PAYMENTS YES - -------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------- 18. ITEM NO. 19. SCHEDULE OF SUPPLIES/SERVICES 20. QUANTITY 21. 22. UNIT 23. AMOUNT ORDERED/ UNIT PRICE ACCEPTED* - ---------------------------------------------------------------------------------------------------------------------- 0005 INCORPORATION OF STRACADA 0092 1 LOT $2,910.00 $2,910000 ACRN: A1 REQUISITION NUMBER: 30971677 - -----------------------------------------------------------------------------------------------------------------------
* If quantity accepted by the Government is same as quantity ordered, indicate by X. If different, enter actual quantity accepted below quantity ordered and encircle. - -------------------------------------------------------------------------------- 24. UNITED STATES OF AMERICA BY MARLENE V. SIDDONS/CONTRACTING OFFICER CONTRACTING/ORDERING OFFICER - -------------------------------------------------------------------------------- 25. TOTAL $2,910.00 - -------------------------------------------------------------------------------- 26. QUANTITY IN COLUMN 20 HAS BEEN [ ] INSPECTED [ ] RECEIVED [ ] ACCEPTED, AND CONFORMS TO THE CONTRACT EXCEPT AS NOTED ------------- ------------------------------------------------- DATE SIGNATURE OF AUTHORIZED GOVERNMENT REPRESENTATIVE - -------------------------------------------------------------------------------- 27. SHIP. NO. 28. D.O. VOUCHER NO. 29. DIFFERENCES 30. INITIALS 31. PAYMENT [ ] COMPLETE [ ] PARTIAL [ ] FINAL 32. PAID BY 33. AMOUNT VERIFIED CORRECT FOR 34. CHECK NUMBER 35. BILL OF LADING NO. - -------------------------------------------------------------------------------- 36. I certify this account is correct and proper for payment ------------- ------------------------------------------------- DATE SIGNATURE AND TITLE OF CERTIFYING OFFICIAL - -------------------------------------------------------------------------------- 37. RECEIVED AT 38. RECEIVED BY 39. DATE RECEIVED 40. TOTAL CONTAINERS 41. S/R ACCOUNT NUMBER 42. S/R VOUCHER NO. ORDER FOR SUPPLIES OR SERVICES PAGE 1 OF 2 - -------------------------------------------------------------------------------- 1. CONTRACT/PURCH ORDER NO. N00164-01-D-0042 2. DELIVERY ORDER NO. 0005 3. DATE OF ORDER(YYYMMMDD) 2003 05 13 4. REQUISITION/PURCH REQUEST NO. 31342102 5. PRIORITY DO-A70 - -------------------------------------------------------------------------------- 6. ISSUED BY CODE N00164 CONTRACTING OFFICER NSWC CRANE CODE BLDG 3291 300 HWY 361 CRANE IN 47522-5001 ATTN: M SIDDONS (812) 854-3856 - -------------------------------------------------------------------------------- 7. ADMINISTERED BY (If other than 6) CODE S2101A DCMA BALTIMORE 217 E REDWOOD STREET SUITE 1800 BALTIMORE MD 21202-5299 ATTN: G. ROPISKI (410) 962-9257 - -------------------------------------------------------------------------------- 8. DELIVERY FOB [X] DEST [ ] OTHER (See Schedule if other) - -------------------------------------------------------------------------------- 9. CONTRACTOR CODE OXNU6 FACILITY 79-613-4492 NAME AND ADDRESS SCIENCE AND TECHNOLOGY RESEARCH, INC. 112 JULIAD COURT, SUITE 200 FREDERICKSBURG VA 22406 ATTN: ED KESSLER (540) 752-8080 - -------------------------------------------------------------------------------- 10. DELIVER TO FOB POINTBY See delivery schedule herein - -------------------------------------------------------------------------------- 11. X IF BUSINESS IS [ ] SMALL [X] SMALL DISADVANTAGES [ ] WOMAN-OWNED - -------------------------------------------------------------------------------- 12. DISCOUNT TERMS NONE 13. MAIL INVOICES TO ADDRESS IN BLOCK 15 - -------------------------------------------------------------------------------- 14. SHIP TO CODE N001464 RECEIVING OFFICER BLDG 3324, CODE 805D NSWC CRANE, CRANE IN 47522-5901 ATTN: SANDY CLARK CODE 805 - -------------------------------------------------------------------------------- 15. PAYMENT WILL BE MADE BY CODE HQ0338 DFAS-COLUMBUS CENTER DFAS-COSOUTH ENTITLEMENT OPERATIONS PO BOX 182264 COLUMBUS OH 43218-2264 - -------------------------------------------------------------------------------- MARK ALL PACKAGES AND PAPERS WITH IDENTIFICATION NUMBERS IN BLOCKS 1 AND 2. - -------------------------------------------------------------------------------- 16. TYPE OF ORDER DELIVERY/CALL [X] This delivery order/call is issued on another Government agency or in accordance with and subject to terms and conditions of above numbered contract. PURCHASE [ ] Reference you __________________ furnish the following on terms specified herein. ACCEPTANCE. THE CONTRACTOR HEREBY ACCEPTS THE OFFER REPRESENTED BY THE NUMBERED PURCHASE ORDER AS IT MAY PREVIOUSLY HAVE BEEN OR IS NOW MODIFIED, SUBJECT TO ALL OF THE TERMS AND CONDITIONS SET FORTH, AND AGREES TO PERFORM THE SAME. SCIENCE AND TECHNOLOGY RESEARCH INC. /s/ Rodney v. Dodd - --------------------------------- --------------------------------- NAME OF CONTRACTOR SIGNATURE Rodney V. Dodd, Production Manager 15 May 03 - --------------------------------- --------------------------------- TYPED NAME AND TITLE DATE SIGNED [X] if this box is marked, supplier must sign Acceptance and return the following number of copies: 1 - -------------------------------------------------------------------------------- 17. ACCOUNTING AND APPROPRIATION DATA/LOCAL USE A1 97X4930 NH1J000 77777 0 000164 2F 000000 85D00 385D252 $255,918.00 (LOCAL USE) - ---------------------------------------------------------------------------------------------------------------------- 18. ITEM NO. 19. SCHEDULE OF SUPPLIES/SERVICES 20. QUANTITY 21. 22. UNIT 23. AMOUNT ORDERED/ UNIT PRICE ACCEPTED* 0001 SHIPBOARD AUTOMATIC CHEMICAL AGENT DETECTOR 6 Each $42,653.00 $255,918.00 AND ALARM (ACADA) systems manufactured in accordance with (IAW) Product Specification PA/01/8855/002, NAVSEA Drawing 53711-7344570, Technical Manual SW073-AF-MMO Shipboard ACADA Systems Production Units, and as delineated in Statement of Work herein. 0003 DATA IAW DD1423 as set forth in the basic 1 Lot NSP NSP contract - -----------------------------------------------------------------------------------------------------------------------
* If quantity accepted by the Government is same as quantity ordered, indicate by X. If different, enter actual quantity accepted below quantity ordered and encircle. - -------------------------------------------------------------------------------- 24. UNITED STATES OF AMERICA BY MARY SHEETZ/CONTRACTING OFFICER /s/ Mary E. Sheetz CONTRACTING/ORDERING OFFICER - -------------------------------------------------------------------------------- 25. TOTAL $255,918.00 - -------------------------------------------------------------------------------- 26. QUANTITY IN COLUMN 20 HAS BEEN [ ] INSPECTED [ ] RECEIVED [ ] ACCEPTED, AND CONFORMS TO THE CONTRACT EXCEPT AS NOTED ------------- ------------------------------------------------- DATE SIGNATURE OF AUTHORIZED GOVERNMENT REPRESENTATIVE - -------------------------------------------------------------------------------- 27. SHIP. NO. 28. D.O. VOUCHER NO. 29. DIFFERENCES 30. INITIALS 31. PAYMENT [ ] COMPLETE [ ] PARTIAL [ ] FINAL 32. PAID BY 33. AMOUNT VERIFIED CORRECT FOR 34. CHECK NUMBER 35. BILL OF LADING NO. - -------------------------------------------------------------------------------- 36. I certify this account is correct and proper for payment ------------- ------------------------------------------------- DATE SIGNATURE AND TITLE OF CERTIFYING OFFICIAL - -------------------------------------------------------------------------------- 37. RECEIVED AT 38. RECEIVED BY 39. DATE RECEIVED 40. TOTAL CONTAINERS 41. S/R ACCOUNT NUMBER 42. S/R VOUCHER NO. AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT 1. CONTRACT ID CODE PAGE OF PAGES U 1 | 5 - -------------------------------------------------------------------------------- 2. AMENDMENT/MODIFICATION NO. 0005-01 3. EFFECTIVE DATE SEE BLK 16C 4. REQUISITION/PURCHASE REQ. NO. See page 2 5. PROJECT NO. (If applicable) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 6. ISSUED BY CODE N00178 Contracting Officer Attn: Maryann F. Piersall, SD13-9 (540) 653-7765 Naval Surface Warfare Center piersallmf@nswc.navy.mil 17320 Dahlgren Rd., Dahlgren, VA 22448-5100 - -------------------------------------------------------------------------------- 7. ADMINISTERED BY (If other than 6) CODE S2101A DCMA Baltimore 217 E Redwood Street, Suite 1800 Baltimore, MD 21202-5299 - -------------------------------------------------------------------------------- 8. NAME AND ADDRESS OF CONTRACTOR SCIENCE AND TECHNOLOGY RESEARCH, INC. 10075 Tyler Place, Suite 17 Ijamsville, MD 21754 - -------------------------------------------------------------------------------- 9A. AMENDMENT OF SOLICITATION NO. [X] 9B. DATED (SEE ITEM 11) 10A. MODIFICATION OF CONTRACT/ORDER NO. N00178-01-D-3008/0005 10B. DATED (SEE ITEM 13) 18 DEC 02 - -------------------------------------------------------------------------------- CODE OXNU6 FACILITY CODE - -------------------------------------------------------------------------------- 11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS [ ] The above numbered solicitation is amended at set forth in Item 14. The hour and date specified for receipt of Offers [ ] is extended. [ ] is not extended. Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended by on of the following methods: (a) by completing items 8 and 15, and returning __ copies of the amendment; (b) By acknowledging receipt of this amendment on each copy of the offer submitted; or (c) By separate letter or telegram which includes a reference to the solicitation and amendment numbers. FAILURE OF YOUR ACKNOWLEDGEMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and this amendment, and is received prior to the opening hour and date specified. - -------------------------------------------------------------------------------- 12. ACCOUNTING AND APPROPRIATION DATA (If required) See page 2 - -------------------------------------------------------------------------------- 13. THIS ITEM APPLIES ONLY TO MODIFICATIONS AND CONTRACTS/ORDERS, IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14. - -------------------------------------------------------------------------------- [X] A. THIS CHANGE ORDER IS ISSUED PURSUANT TO (Specify authority) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A. - -------------------------------------------------------------------------------- B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office, appropriation data, etc.) SET FORTH IN ITEM 14, PURSUANT TO THE AUTHORITY OF FAR 43.103(b). - -------------------------------------------------------------------------------- [X] C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OF: Mutual Agreement - -------------------------------------------------------------------------------- D. OTHER (Specify type of modification and authority.) - -------------------------------------------------------------------------------- E. IMPORTANT: Contractor ( ) is not, (X) is required to sign this document and return 1 copies to the issuing office. - -------------------------------------------------------------------------------- 14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organization by UCF section headings, including solicitation/contract subject matter where feasible.) See page 2-5 AID# 45492 Except as provided herein, all terms and conditions referenced in Item 9A and 10A, as heretofore changed, remains unchanged and in full force and effect. - -------------------------------------------------------------------------------- 15A. NAME AND TITLE OF SIGNER (Type or print) Edward L. Kessler GEN. MGR. 15B. CONTRACTOR/OFFEROR /s/ Edward L. Kessler ---------------------------------------- (Signature of person authorized to sign) 15C. DATED SIGNED 6-30-03 - -------------------------------------------------------------------------------- 16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print) WILLIAM T. ARMSTRONG 16B. UNITED STATES OF AMERICA ---------------------------------------- (Signature of Contracting Officer) 16C. DATE SIGNED ACCOUNTING AND APPROPRIATION DATA CLIN 0001, Requisition No.: B51000/31413957 ACRN AA 97X4930.NH1E 000 77777 0 000178 2F 000000 21B5603JCDAH $7,796 This modification is issued to increase the estimated cost-plus-fixed-fee or the order. This increase is due to adding testing of an additional JCAD unit. 1. As a result of this modification, the order is increased as follows: CURRENT THIS REVISED AMOUNT ACTION AMOUNT ------ ------ ------ EST. COST $21,423 $7,253 $28,676 FIXED FEE 1,607 543 2,150 TOTAL CPFF $23,030 $7,796 $30,826 2. The following details funding to date: TOTAL FUNDS THIS PREVIOUS FUNDS BALANCE ORDER CPFF ACTION FUNDING AVAILABLE UNFUNDED - ---------- ------ ------- --------- -------- $30,826 $7,796 $23,030 $30,826 $0 3. The revised statement of work in shown below. Changes from the original SOW are highlighted. C.1 JOINT CHEMICAL AGENT DETECTOR (JCAD) SHOCK TEST SUPPORT. Paragraphs C.1 and C.2.1 of the contract require the contractor to provide test plans, test reports, and the necessary facilities and services for the conduct of environmental testing and evaluation in support of Chemical and Biological Defense programs. The Chemical-Biological Defense Brand (B53) has a requirement to conduct the heavyweight shock (barge) test as specified in MIL-S-901D for deck-mounted equipment. C.1.1 Provide engineering and technical support and perform the heavyweight shock (barge) test described above. Pertinent MIL-S-901D paragraph 6.2 data is as follows: a. Shock Tests, H.I. (High Impact) Shipboard Machinery, Equipment, and Systems, Requirements for; MIL-S-901D (Navy); 17 March 1989. b. N.A. c. Shock Grade. Grade A d. Equipment Class. Class II e. Shock Test Type. Type A f. Equipment mounting. Deck mounted g. Equipment mounting plane aboard ship. Back h. Equipment mounting orientation. Unrestricted as to orientation aboard ship i. Method of Mounting. Tactical configuration mounted to deck plate or structural bulkheads using Navy approved test shock mounts j. Method of simulating shipboard connections. Tactical configuration used for mechanical connections; electrical to be simulated k. Mode of equipment operation during test. Energized, per MILSTD 901D for Grade A shock classification. l. Shock test acceptance criteria and associated post-test functional testing and inspection requirements are to include powering up, placing in initialization (Warm-up and self-diagnostic) and operation modes, noting warning and reporting functions (audible and visual), upload and query of data, noting results of BIT test, and confidence checks. m. Acceptance authority/authorities. NSWC Dahlgren (B56), JCAD Test Team. C.1.2 Provide additional engineering and technical support to include: a. Use an isolator shock simulation program to perform an isoloator analysis in order to predict the JCAD's shock mount performance under the most sever MIL-S-901D shock test conditions and identify the isolation system's natural frequency. Actual deck simulator input from previous 14 hertz and 8-hertz tests should be used in the analysis. If available deck simulator input from previous 10-hertz test should also be used. b. Review and provide input to existing shock test plan. c. Determine proper test installation, and arrange installation of 2 JCAD systems to the test barge. Two different models of shock mounts will be provided by NSWC Dahlgren (on efor each JCAD unit). d. Verify that the JCADs are properly installed for the test. e. Ensure that the JCADs are properly instrumented for displacement and shock loading measurements using three accelerometers on each JCAD unit (Vertical, Fore/Aft, and Athwarship). The accelerometer measurements should then be integrated to velocity, and position measurements. f. Coordinate and perform the test as a "piggyback" shock test with another test load. g. Select of a facility to conduct the test and provide shock test fixtures for the JCAD Shock test. Shock test strikes must provide 14 +/- 2 hertz input, 10 +/- 1 hertz input, and 8 +/- 1 hertz input to the JCAD shock mounts to verify the isolation systems' ability to attenuate transmitted shock to levels within the predicted shock tolerance levels of the JCAD. h. A total of 4 shots should be conducted at the 14 +/- 2 hertz input level, 2 shots at the 10 +/- 1 hertz input level, and 2 shots at the 8 +/- hertz input level to the JCAD shock mounts. i. After test completion, visually inspect and conduct operational tests (as specified in paragraph C.1.1 subparagraph l) to confirm condition of systems. Report any abnormalities. j. Remove systems from test barge and return them to B53 in their shipping containers. SECURITY REQUIREMENTS Security Requirements are set forth in the basic contract's DD254. GOVERNMENT FURNISHED MATERIAL Technical documentation and data will be supplied to the contractor, as required, to support task performance. These will include, but is not limited to, the following: o Technical Manual o Operators Manual o Shock test plan o Shop Drawings of Shipboard Mount Access will also be granted to on site test facilities as required to assist in executing the Navy part of the JCAD test program. Equipment to be provided is: o Two JCAD systems with Shipping Containers o Two JCAD Shock Mounts TRAVEL REQUIREMENTS Destination Persons Days Trips - -------------------------------------------------------------------------------- NSWC-Dahlgren, VA 1 1 3 Rustburg, VA 1 1 3 PERIOD OF PERFORMANCE The period of performance shall be from the effective date of the order, through 30 September 2003. Data shall be provided in accordance with the contractor's Contract Data Requirements List (CDRL). 1. CDRL Sequence Number: A007 Title: Contractor's Progress, Status and Management Report Applicability: Task C.1.2 Date Due: Monthly The following information shall be provided to NSWC Dahlgren: a) Funding expended to date of report, and projection of funds required for completion of task. b) Status of completion of tasks under C.1.2. 2. CDRL Sequence Number: A009 Title: Test Plan Applicability: Task C.1.2 Date Due: 10 January 2002 Form: Provide in both hardcopy and electronic file 3. CDRL Sequence Number: A009 Title: Test Report Applicability: Task C.1.2 Date Due: 15 days after completion of test Form: Provide in both hardcopy and electronic file DISTRIBUTION - ------------ EDA Contractor B56/Naley strva@str-inc.com ORDER FOR SUPPLIES OR SERVICES PAGE 1 OF 4 - -------------------------------------------------------------------------------- 1. CONTRACT/PURCH ORDER NO. N00178-01-D-3008 2. DELIVERY ORDER NO. 0006 3. DATE OF ORDER(YYYMMMDD) 20030411 4. REQUISITION/PURCH REQUEST NO. B51000/30994446 5. PRIORITY - -------------------------------------------------------------------------------- 6. ISSUED BY CODE N00178 Naval Surface Warfare Center, Dahlgren Division Attn: M. Piersall, XDS139, piersallmf@nswc.navy.mil 17320 Dahlgren Road Dahlgren, VA 22448-5100 - -------------------------------------------------------------------------------- 7. ADMINISTERED BY (If other than 6) CODE S2101A DCMA Baltimore 217 E Redwood Street, Suite 1800 Baltimore, VA 21202-5299 - -------------------------------------------------------------------------------- 8. DELIVERY FOB [X] DEST [ ] OTHER (See Schedule if other) - -------------------------------------------------------------------------------- 9. CONTRACTOR CODE OXNU6 FACILITY 79-613-4492 NAME AND ADDRESS SCIENCE AND TECHNOLOGY RESEARCH, INC. 10075 Tyler Place, Suite 17 Ijamsville, MD 21754 - -------------------------------------------------------------------------------- 10. DELIVER TO FOB POINTBY 20030711 - -------------------------------------------------------------------------------- 11. X IF BUSINESS IS [ ] SMALL [X] SMALL DISADVANTAGES [ ] WOMAN-OWNED - -------------------------------------------------------------------------------- 12. DISCOUNT TERMS NONE 13. MAIL INVOICES TO ADDRESS IN BLOCK 15 - -------------------------------------------------------------------------------- 14. SHIP TO CODE N00178 Naval Surface Warfare Center, Dahlgren Division Attn: Bruce Naley/B56 Dahlgren, VA 22448-5100 - -------------------------------------------------------------------------------- 15. PAYMENT WILL BE MADE BY CODE HQ0338 DFAS-CO/South Entitlement Division P.O. Box 182264 Columbus, OH 43218-2264 - -------------------------------------------------------------------------------- MARK ALL PACKAGES AND PAPERS WITH IDENTIFICATION NUMBERS IN BLOCKS 1 AND 2. - -------------------------------------------------------------------------------- 16. TYPE OF ORDER DELIVERY/CALL [X] This delivery order/call is issued on another Government agency or in accordance with and subject to terms and conditions of above numbered contract. PURCHASE [ ] Reference you __________________ furnish the following on terms specified herein. ACCEPTANCE. THE CONTRACTOR HEREBY ACCEPTS THE OFFER REPRESENTED BY THE NUMBERED PURCHASE ORDER AS IT MAY PREVIOUSLY HAVE BEEN OR IS NOW MODIFIED, SUBJECT TO ALL OF THE TERMS AND CONDITIONS SET FORTH, AND AGREES TO PERFORM THE SAME. SCIENCE AND TECHNOLOGY RESEARCH INC. /s/ Rodney v. Dodd - --------------------------------- --------------------------------- NAME OF CONTRACTOR SIGNATURE Rodney V. Dodd, Production Manager 15 May 03 - --------------------------------- --------------------------------- TYPED NAME AND TITLE DATE SIGNED [X] if this box is marked, supplier must sign Acceptance and return the following number of copies: 1 - -------------------------------------------------------------------------------- 17. ACCOUNTING AND APPROPRIATION DATA/LOCAL USE ACRN: AA 97X4930.NH1E 000 77777 0 000178 2F 000000 21B5403DECON $7,950.82 - ---------------------------------------------------------------------------------------------------------------------- 18. ITEM NO. 19. SCHEDULE OF SUPPLIES/SERVICES 20. QUANTITY 21. 22. UNIT 23. AMOUNT ORDERED/ UNIT PRICE ACCEPTED* SEE PAGES 2-4 AID# 44942 - -----------------------------------------------------------------------------------------------------------------------
* If quantity accepted by the Government is same as quantity ordered, indicate by X. If different, enter actual quantity accepted below quantity ordered and encircle. - -------------------------------------------------------------------------------- 24. UNITED STATES OF AMERICA BY WILLIAM T. ARMSTRONG /s/ William T. Armstrong CONTRACTING/ORDERING OFFICER - -------------------------------------------------------------------------------- 25. TOTAL $7,950.82 - -------------------------------------------------------------------------------- 26. QUANTITY IN COLUMN 20 HAS BEEN [ ] INSPECTED [ ] RECEIVED [ ] ACCEPTED, AND CONFORMS TO THE CONTRACT EXCEPT AS NOTED ------------- ------------------------------------------------- DATE SIGNATURE OF AUTHORIZED GOVERNMENT REPRESENTATIVE - -------------------------------------------------------------------------------- 27. SHIP. NO. 28. D.O. VOUCHER NO. 29. DIFFERENCES 30. INITIALS 31. PAYMENT [ ] COMPLETE [ ] PARTIAL [ ] FINAL 32. PAID BY 33. AMOUNT VERIFIED CORRECT FOR 34. CHECK NUMBER 35. BILL OF LADING NO. - -------------------------------------------------------------------------------- 36. I certify this account is correct and proper for payment ------------- ------------------------------------------------- DATE SIGNATURE AND TITLE OF CERTIFYING OFFICIAL - -------------------------------------------------------------------------------- 37. RECEIVED AT 38. RECEIVED BY 39. DATE RECEIVED 40. TOTAL CONTAINERS 41. S/R ACCOUNT NUMBER 42. S/R VOUCHER NO. DELIVERY ORDER 0006 N00178-01-D-3008 ITEM DESCRIPTION QUANTITY AMOUNT 0001 The contractor shall provide support for Chemical and Biological defense programs in accordance with the statement of work. 1 Lot Est. Cost $7,396.11 Fixed Fee 554.71 Total ECPFF $7,950.82 0002 Contract Data Requirements List Not Separately Priced (DD Form 1423) in support of CLIN 0001. STATEMENT OF WORK As provided for under the contract Statement of Work paragraphs C.1 and C.2.1, the contractor is to provide a test report, and the necessary facilities and services for the conduct of environmental testing and evaluation in support of Chemical and Biological Defense programs. The Chemical-Biological Defense Branch (B54) has a requirement to conduct live agent chemical testing on four paint samples. C.1 CHEMICAL WEAPONS AGENT DECONTAMINATION SOLUTION. C.1.1 Provide live agent testing at an approved surety laboratory to determine the effectiveness of a decontaminant solution on different paints. The objective of this project is to evaluate four types of test samples (paint coupons) for NBC survivability. The amount of agent remaining on coupons before and after decontamination will be determined. C.1.1.1 Provide technical support to perform testing as described below. The contractor shall provide test planning and coordination with NSWCDD technical personnel. The live agent tests will consist of testing four (4) paint coupons against three (3) agents at a standard NATO concentration of 10g/m(2): Agent Concentration (g/m(2)) ----- ---------------------- HD 10 tGD 10 VX 10 DELIVERY ORDER 0006 N00178-01-D-3008 C.1.1.2 A control shall be created by placing one (1) 5uL drop of agent onto coupon. Leave to stand in a vapor cell for one hour at a flow rate of 1m/sec. Place denta-dam on surface of coupon, and place a 1kg weight on denta-dam. Extract denta-dam and coupon and note the amount of agent present on each material. C.1.1.3 The test shall consist of placing one (1) 5uL drop of agent onto the coupons. Leave to stand in a vapor cell for one (1) hour at a flow rate of 1m/sec, and then wash the coupons with NAVAIR Cleaning Solution. Place denta-dam on surface of coupons, and place 1kg weights on denta-dam. Extract denta-dam and coupon and note the amount of agent present on each material. C.1.1.4 Triplicate testing must be performed. For each type of coupon, each agent must be run on three test coupons and three control coupons. GOVERNMENT FURNISHED MATERIALS The following items will be delivered by NSWCDD to the STR facility in Fredericksburg, VA within 60 days of effective date of the order: 1) Denta-dam 2) Paint coupons 3) NAVAIR Cleaning Solution TRAVEL REQUIREMENTS Travel requirements are as follows: Purpose Destination Person(s) Day(s) Trip(s) - -------------------------------------------------------------------------------- Live Agent Test Gaithersburg, MD 1 1 2 PERIOD OF PERFORMANCE The period of performance shall be 3 months from the effective date of the delivery order. EX-10.34 9 markland_ex10-34.txt EXHIBIT 10.34 SUBCONTRACT AGREEMENT Subcontract Number: S100522 Effective Date: 12/8/2003 BETWEEN BUYER AND SELLER ----- ------ COMPUTER SCIENCES CORPORATION ERGO SYSTEMS ENFORCEMENT, SECURITY & INTELLIGENCE DIVISION 90 GROVE ST 10530 ROSEHAVEN STREET, SUITE 500 SUITE 204 FAIRFAX, VA 22030 RIDGEFIELD, CT 06877 [ ] FFP [X] Time and Materials [ ] Level of Effort [X] Task Assignments [ ] Completion [ ] Letter Subcontract [ ] Basic Ordering Agreement Period of Performance: Date of award to September 24, 2004 Prime Contract Agency: Immigration and Naturalization Service (DOJ) Prime Contract Number: COW-8-C-0051 Priority Rating: Unrated F.O.B. Point: Per STO Funding Not-to-Exceed Amount: $500,000.00 Part I. - THE SCHEDULE ---------------------- Section A. Subcontract Agreement (Face Page and Signature Page) Section B. Supplies/Services and Price/Costs Section C. Description/Specifications/Statement of Work (SOW) Section D. Packaging and Marking Section E. Inspection and Acceptance Section F. Deliveries or Performance Section G. Contract Administration Section H. Special Contract Requirements Part II.- CONTRACT CLAUSES -------------------------- Section I. Contract Clauses Part III - LIST OF ATTACHMENTS ------------------------------ Section J. List of Attachments Part IV - REPRESENTATIONS ------------------------- Section K. Incorporation of Representations and Certifications 1 SUBCONTRACT _S100522_______ SIGNATURE PAGE This Subcontract Agreement may be referred to in this document as "Agreement", "Contract," or "Subcontract." Any reference to CSC's contract with the Government or other customer will be to the "prime contract." IN WITNESS THEREOF, THE PARTIES HERETO HAVE EXECUTED THIS AGREEMENT AS OF THE DATES SET FORTH BELOW. COMPUTER SCIENCES CORPORATION ERGO SYSTEMS, INC. By: __________________________________ By: _____________________________ Signature Date Signature Date Typed Name: Michael Stevenson Typed Name: Kenneth P. Ducey, Jr. --------------------- Title: Senior Subcontracts Administrator Title: President/CFO --------------------------------- -------------- 2 PART 1 - THE SCHEDULE SECTION B SUPPLIES/SERVICES AND PRICES/COST B.1 MINIMUM AND MAXIMUM AMOUNTS, INDEFINITE DELIVERY INDEFINITE QUANTITY (a) This is an Indefinite Delivery Indefinite (a) Quantity (IDIQ) subcontract utilizing Time and Materials (T&M) and Firm Fixed Price (FFP) Subcontract Task Orders in accordance with FAR 16.5. The use of a hybrid IDIQ subcontract will enable CSC to issue task orders using a variety of contract types. CSC may issue Subcontract Task Orders providing for one of the following bases of compensation: Time & Material (T&M) Firm Fixed Price (FFP) B.2 SUPPLIES/SERVICES AND PRICES/COSTS (a) The Seller, acting as an independent contractor and not as an agent of the Buyer, shall furnish all materials, personnel, facilities, support and management necessary to provide the supplies and services as set forth in accordance with the Statement of Work and the Seller's rate proposal dated 12/03/2003, incorporated herein by reference. (b) Statements of Work, specific periods of performance and funding will be obligated via Subcontract Task Orders which will be incorporated herein by modification(s) to this subcontract in accordance with Section G.4, entitled "Ordering". (1) For T&M Subcontract Task Orders, the quantity of hours ordered of each labor category will be specified as deliverable hours billable at the rates specified in this Subcontract Agreement. Profit on travel and ODCs on T&M Subcontract Task Order is not allowable. The cumulative extended total of all labor categories ordered plus ODCs (if allowed) will define the task order ceiling price. Any allowable ODCs will be specified in the Subcontract Task Order. The Buyer will not reimburse the Seller for costs incurred beyond the ceiling price, for hours not delivered, for hours delivered but in excess of the quantities ordered for a particular labor category, or for travel exceeding the estimated travel amount. (2) For FFP Subcontract Task Orders, the quantity of each item, or labor category ordered will be multiplied against the price (rate) listed in the Subcontract Task Order, and the cumulative extended total of all items ordered will define the FFP for those items. Any allowable ODCs will be specified in the Subcontract Task Order. Partial payment of the Subcontract Task Orders FFP may be negotiated based on an attainment of progress milestones. 3 (4) Based upon requirements items identified during Subcontract Task Order preparation, Buyer shall be responsible for purchasing and providing to the Seller any tangible item (i.e., ODCs) required for performance on this contract. The Seller will be reimbursed only for those ODC items specified in the Subcontract Task Order as reimbursable by the Buyer. (c) The Seller's rates will be incorporated to each Task Order. The Seller's rates are as follows: - ----------------------------------------------------------------------------- YEAR 1 Year 2** (DOE*- (9/24/04- LABOR CATEGORY 9/23/04) 12/31/04) - ----------------------------------------------------------------------------- CORPORATE TECHNICAL PLANNING MANAGER $ 88.41 $ 91.06 ---------------------------- ENGINEER TECHNICIAN $ 72.83 $ 75.01 ---------------------------- ENGINEER TECHNICIAN $ 72.83 $ 75.01 ---------------------------- *DOE - Date of Execution ** Year 2 rates include 3% escalation rate - ----------------------------------------------------------------------------- (d) The maintenance agreement terms shall remain in affect for the length of the term. B.3 VALUE This Agreement is issued under Government Prime Contract number COW-8-C-0051, with a DPAS Rating of: Unrated. For Government audit purposes only, the value of this subcontract agreement is $500,000.00. Subcontract Task Order(s) added by Modification(s) hereto will authorize the billable funding (reference Section G.4, Ordering). B.4 EXERCISE OF OPTIONS This subcontract contains two (2) types of options: options to extend the period of performance of the subcontract and options to increase the quantity of labor hours available for each year of subcontract performance. The Buyer may exercise the subcontract options for extensions to the period of performance to the same extent that the options of the prime contract are exercised. In accordance with the provisions of the applicable FAR clauses contained in this subcontract regarding the exercise of options, all options will be exercised in writing through the issuance of modifications to the subcontract signed by the Subcontract Administrator. The increase quantity options (IQOs) are provided to allow CSC to account for unforeseen increases in requirements above the basic requirements of any subcontract year. The specific IQO may be exercised during any particular year to increase the quantity for that period; however, the IQO does not affect the period of performance of the subcontract or the period in which the option was exercised. 4 SECTION C STATEMENT OF WORK C.1 GENERAL STATEMENT OF WORK The following Statement of Work documents are incorporated by reference from the INS STARS RFP Documents. The scope of work noted in the documents is general in nature to the INS STARS Program. The subcontractor will be provided with specific Subcontractor Task Orders by CSC to direct specific work in support of the General Statement of Work. Attachment I of this document includes a detailed Subcontractor Proposal for work that the subcontractor will provide. (a) INS STARS General SOW Umbrella 7-2, dated July 2, 2001 C.2 MANAGEMENT AND ADMINISTRATION The Buyer intends to manage all work assigned under the contract. Therefore, the Seller will not generally submit subcontractor management and administration costs. The Buyer expects there may be certain Subcontract Task Orders that will require management efforts by the Seller. In these cases, specified management and administration requirements will be included in the Subcontract Task Order and priced by the Seller. C.3 ADDITIONAL EFFORTS Subcontract Task Order Specific Statements of Work will be agreed upon and incorporated into the subcontract through issuance of a CSC Subcontracting Officer signed Subcontract Task Order or Subcontract Modification. (Issuing an STO will not require a contract modification unless the Subcontract Task Order causes the total cost of all Subcontract Task Orders to exceed the current contracted value. The Seller shall notify the Buyer when 75 percent (75%) of the subcontract value has been reached.). 5 SECTION D PACKAGING AND MARKING D.1 PACKAGING AND MARKING All materials shipped or mailed under this contract shall be afforded the degree of preservation, packaging, and packing required to prevent deterioration and damage due to the hazards to which they may be subjected during shipment, handling, and storage. All preservation, packaging, and packing for shipment or mailing shall be in accordance with good commercial practice and adequate to ensure acceptance by common carrier and safe transportation at the most economical rate(s). D.2 DELIVERABLES AND MARKING The Seller shall mark all deliverables with the contract number; title of the deliverable; date due; and preparer's name. In addition, when applicable, the Seller shall mark the deliverables with the Subcontract Task Order name/number; CSC Task Manager name; and the document status as a draft, final, or update. Additional deliverables marking information will be provided on the Subcontract Task Order issued when applicable. For example, for the shipment of prototype and pilot systems, the CSC will provide specific packaging and delivery instructions as may be required to ensure the safe shipment of the system. D.3 SUBCONTRACTOR DOCUMENTATION AND OTHER DELIVERABLES Due to the nature of the work to be performed under this subcontract, the documents to be delivered include written reports, specifications, test documentation, and in some instances, drawings or sketches. The Seller shall establish and maintain a contract reporting and documentation preparation process that provides the highest quality products in a timely and cost effective manner. All documents produced under the contract shall comply with Government guidelines, directives, and standards, if applicable, or with industry standard reporting forms and formats, as specified in Subcontract Task Orders. In addition to providing the services specified by Subcontract Task Orders under this subcontract, the Seller may be required to submit prototype hardware and software products, test and evaluation equipment, and other development products. The Seller shall ensure that all products are delivered with all associated components necessary to render the product operational and with complete sets of documentation, instructions, or other literature that may be specified in Subcontract Task Orders. 6 SECTION E INSPECTION AND ACCEPTANCE E.1 CLAUSES INCORPORATED BY REFERENCE The following clauses are incorporated by reference in accordance with the provisions of FAR Clause 52.252-2, Clauses Incorporated by Reference (JUN 1988), contained in Section I of this contract. FAR REFERENCE TITLE DATE - ----------------------------- ------------------------------------------------ ---------------------------- 52.246-4 Inspection of Services - Fixed Price AUG 1996 - ----------------------------- ------------------------------------------------ ---------------------------- 52.246-5 Inspection of Services - Cost APR 1984 Reimbursement - ----------------------------- ------------------------------------------------ ---------------------------- 52.246-6 Inspection - Time-And-Material and JAN 1986 Labor-Hour - ----------------------------- ------------------------------------------------ ----------------------------
E.2 INSPECTION AND ACCEPTANCE CSC's Subcontract Technical Monitor (STM) will inspect and accept the supplies and/or services to be provided under this subcontract. Inspection and acceptance will be performed as stated in the issued Subcontract Task Order(s) and at the time(s) and location(s) identified in the Subcontract Task Order(s). Deliverables are assumed accepted unless rejected, in writing, within thirty (30) calendar days of receipt unless stated differently in a Subcontract Task Order. Those deliverables requiring acceptance testing, as described in the Subcontract Task Order, will have an acceptance/rejection period of ninety (90) calendar days from receipt of the deliverable, unless the period is stated otherwise in the Subcontract Task Order. Rejection of deliverables will be in writing and will be received by the Seller within the acceptance/rejection period, as described above, unless stated otherwise in the Subcontract Task Order. If a deliverable is rejected, the Seller shall make all appropriate corrections within 14 calendar days from receipt of written notification and will resubmit to the Buyer for approval. If corrections are estimated to require more than 14 calendar days, the Seller shall deliver a corrective action plan within seven (7) calendar days from receipt of written notifications of rejection. The plan shall clearly describe the corrective actions to be taken and the proposed schedule for accomplishing the actions. . When the same deliverable is rejected three (3) times, the Buyer may terminate the particular task order for default. E.3 INSPECTION SYSTEM - SUBCONTRACT Per FAR 46.105, The Buyer shall hold the Seller to the same standards of performance as required for Buyer's performance under the prime contract. The Seller shall adhere to the Buyer's work process and work management process as outlined in Sections G and H. 7 E.4 PERFORMANCE MEASURES The Buyer will evaluate contract level performance using 1) aggregate attributes of performance at the Subcontract Task Order Level, and 2) contract management and administration performance. 8 SECTION F DELIVERIES OR PERFORMANCE F.1 CLAUSES INCORPORATED BY REFERENCE The following clauses are incorporated by reference in accordance with the provisions of FAR 52.252-2, Clauses Incorporated by Reference (JUN 1988), contained in Section I of this contract. FAR REFERENCE TITLE DATE - --------------------------------- ------------------------------------------------ ----------------------------- 52.242-15 Stop-Work Order- Alternate I AUG 1989 - --------------------------------- ------------------------------------------------ ----------------------------- 52.247-34 F.O.B. Destination NOV 1991 - --------------------------------- ------------------------------------------------ -----------------------------
F.2 PERIOD OF PERFORMANCE The period of performance shall commence upon date of subcontract award and shall remain in effect as set forth below: Year 1 - Base Period Date of award to 9/23/04 Year 2 - Option 1 9/24/2004 to 12/23/2004 The end of each period shall coincide with the end date of the prime contract. In no case shall the subcontract continue beyond the end date of the prime contract. F.3 TRANSPORTATION - RESERVED F.4 REQUIRED TIME - PLACE OF DELIVERY AND PERFORMANCE The required time and place of delivery of products or provision of services to be provided under these contracts will be specified in each Subcontract Task Order. If a Subcontract Task Order fails to identify the required time and place of delivery, then the Seller shall promptly notify the Buyer and request due dates and/or destinations. All products and services will be ordered through the issuance of written Subcontract Task Orders/modifications to this subcontract. F.5 REQUIREMENTS FOR REPORTS The following table lists the contract-level reports that the Seller must submit. The Seller is required to develop, implement, and update the following reports during performance of the contract. This list is not all inclusive; the task orders may specify the submission of additional reports. 9 REPORT FREQUENCY DUE DATE - ------------------------------------ ---------------------- -------------------- Subcontract Task Monthly 10 Order Monthly DARP Progress Report - ------------------------------------ ---------------------- -------------------- Contract- Level Monthly 10 Monthly Progress DARP Report - ------------------------------------ ---------------------- -------------------- Contract Financial Monthly, 10 Analysis Report Quarterly DARP Annually - ------------------------------------ ---------------------- -------------------- Subcontract Task Monthly, 10 Order Financial Quarterly DARP Analysis Report Annually - ------------------------------------ ---------------------- -------------------- Self-Evaluation Semi- As Report Annually indicated in Task Order - ------------------------------------ ---------------------- -------------------- DARP - Day After Report Period The following sections provide the financial analysis status reporting and SER requirements. All financial reports shall be consistent with the Seller's invoice(s) for the reporting period. F.5.1 SUBCONTRACT TASK ORDER MONTHLY PROGRESS REPORTS The Seller shall provide progress reports only for those Subcontract Task Orders that are managed by the Seller. Such reports shall be prepared in compliance with the CSC on- line Task Management Information System. The earned value for the report will be determined by a review of the Seller's progress in a meeting with the Buyer's Project Control Office. F.5.2 CONTRACT-LEVEL MONTHLY PROGRESS REPORT The Seller shall provide a monthly contract-level progress report for use by the Buyer's senior management to detail the progress of the Seller's efforts of the performance of the contract. The report shall be a high-level overview of technical progress of the contract with specific references to the Seller's Subcontract Task Orders. The report shall contain a discussion of the allowing items: o Technical, management and administration, quality assurance, and contractual problems that affect contract performance including any corrective actions. o Cost savings and quality improvement recommendations. o A summary of the software quality and productivity metrics for software development and maintenance Subcontract Task Orders. F.5.3 CONTRACT FINANCIAL ANALYSIS REPORT The Seller shall develop a monthly, quarterly, and annual financial analysis report for its contract. The report shall describe the financial condition of the contract. At a minimum, the report shall include the following information for the reporting period and inception to date: 10 o A summary of the Subcontract Task Order Financial Analysis report o A matrix that identifies the hours worked by FT for each task order for all orders other than FFP orders o A weighted average labor rate for each labor category for cost reimbursable orders only o An analysis of the cost ceilings and total cost incurred for each Subcontract Task Order as applicable In addition to the items identified above, the Seller shall provide progress status for its contract. The progress status shall summarize the progress status for each Subcontract Task Order. F.5.4 SUBCONTRACT TASK ORDER FINANCIAL ANALYSIS REPORT The Seller shall develop a monthly, quarterly, and annual financial analysis report for each Subcontract Task Order issued under its subcontract. The report shall describe the financial condition of each Subcontract Task Order. At a minimum, the report shall include the following data for the reporting period and inception to date: o Breakdown of FTEs and hours by labor category, CSC Task/cost account number , and Subcontract Task Order for all Subcontract Task Orders other than FFP Subcontract Task Orders. o Total cost incurred by labor category, CSC Task/cost account number Subcontract Task Order orders other than FFP task orders. o Indirect costs by labor category, CSC Task/cost account and Subcontract Task Order for cost reimbursable Subcontract Task Orders only, shall be provided to the Government for its use.. o Breakdown of allowed ODCs by materials, supplies, travel, hardware, and software for each sub-task, CSC Task/cost account number, and Subcontract Task Order for all Subcontract Task Orders other than FFP Subcontract Task Orders. o Total cost ceiling for each Subcontract Task Order for cost reimbursable Subcontract Task Orders only. o Total funding to date for each Subcontract Task Order. o Remaining cost ceiling for each Subcontract Tas Order for cost reimbursable Subcontract Task Orders only. o Remaining funding for Subcontract Task Orders. o Percentage of the work completed including a discussion of the rationale used to develop the percentage and the tasks and deliverables completed in the reporting period, to date, for the next reporting period, and through the end of the task order for FFP task orders only 11 F.6 WAIVER OF DELIVERY SCHEDULE None of the following shall be regarded as an extension, waiver, or abandonment of the delivery schedule or a waiver of CSC and/or the Government's right to terminate for default: o Delay by the Buyer in terminating for default o Acceptance of delinquent deliveries o Acceptance or approval of samples submitted either after default in delivery or in sufficient time for the Contractor to meet the delivery schedule Any assistance rendered to the Seller on this contract or acceptance by CSC and/or the Government of delinquent goods or services hereunder will be solely for the purpose of mitigating damages and is not to be construed as an intention on the part of CSC and/or the Government to condone any delinquency, or as a waiver of any rights CSC and/or the Government may have under this contract. F.7 NOTICE TO CSC OF DELAYS In the event the Subcontractor encounters difficulty in meeting performance requirements, or when the Subcontractor anticipates difficulty in complying with the contract delivery schedule or completion date, or whenever the Subcontractor has knowledge that any actual or potential situation is delaying or threatens to delay the timely performance of this subcontract, the Subcontractor shall immediately notify CSC's Subcontractor Technical Monitor and the Subcontract Administrator, in writing, giving pertinent details. However, this data shall be informational only in character and this provision shall not be construed as a waiver by CSC and/or the Government of any delivery schedule or date, or any rights or remedies provided by law or under this subcontract. SECTION G SUBCONTRACT ADMINISTRATION DATA G.1 GENERAL At a minimum, the following paragraphs shall apply to all Subcontract Task Orders issued under this subcontract. Additional subcontract administration data may be specified in each Subcontract Task Order. G.2 INVOICE INSTRUCTIONS AND PAYMENT ADDRESS The following invoice instructions apply to all Subcontractor Task Orders (STOs) awarded pursuant to this Subcontract: 12 a) Non-Labor Invoices shall be submitted against this Subcontract Agreement on a monthly basis and must be received by Buyer no later than the 8th working day of the month following the month during which the work was performed. When received by the 8th working day of each month, Buyer will pay the Seller no later than forty-five (45) calendar days after receipt of a correct and properly executed invoice. All invoices submitted, except FFP (for T&M and CPAF labor see below), shall be signed and approved by an authorized official of the Seller who shall certify that the invoiced amounts are indeed accurate and that Seller has in its possession records for all direct and indirect costs expended that substantiate all invoices submitted to Buyer for payment. Invoices for services received must be provided no later than 90 days after delivery of services. Invoices received after that date will not be considered for payment. b) Such records shall be made available for audit by cognizant Government agencies upon request at any time from the date of this Subcontract Agreement until three (3) years after final payment hereunder. c) Seller shall comply with all provisions of FAR 52.216-7, "Allowable Cost and Payment", and FAR 52.232-7, "Payments under Time and Materials and Labor-Hour Contracts", as identified in each STO issued hereunder. d) All original invoices must be delivered to: Computer Sciences Corporation U.S. Shared Service Center Accounts Payable, Mail Code 411 P.O. Box 1728 Sterling, VA 20166-9514 OR e-mailed to APWorkflow@csc.com. If you choose to send the invoice to the e-mail address DO NOT forward a hard copy to the P.O. Box referenced above. Each original invoice must have the following information clearly printed on the first page of the invoice: o A valid CSC provided Purchase Order number o An invoice number that is unique (not repeated on an other invoice received from the subcontractor) Invoices should only reference one CSC Purchase Order number per invoice (i.e.,: summary billing is not acceptable) e) In order to comply with the Taxpayer Relief Act of 1997, The Seller shall separately subtotal taxable services and nontaxable materials and supplies on each invoice. If subtotals are not specified on the invoices, CSC will presume that the entire invoice amount is reportable and will be shown on the Form 1099-MISC generated by CSC and provided to the Seller and Internal Revenue Service. f) All other terms and conditions regarding invoicing or payments remain unchanged to the extent they do not conflict with this clause. In the event of a conflict between such other term or condition and this clause, the terms of this clause shall have precedence. 13 INVOICE INSTRUCTIONS FOR FFP TYPE STOS 1. Separate invoices shall be submitted for each STO issued to the Seller upon successful completion of (1) the billing milestones identified in a STO pursuant to FAR 52.232-16, "Progress Payments", or (2) in accordance with an Invoice Payment Schedule specified in each STO issued hereunder, as applicable. 2. For FFP STOs where Progress Payments have been identified, the Subcontractor will submit invoices in equal amounts as specified in each STO, with payments to be made as follows: a) Approval of invoices will be subject to the receipt and acceptance, by CSC of the associated monthly task reports. b) Approval of final invoice(s) shall be subject t the receipt and acceptance of the final task report, final patent report (if applicable) and final new technology report (if applicable). 3. For FFP STOs where an Invoice Payment Schedule has been specified, invoices shall be submitted upon successful completion of the milestones identified in the Payment Schedule identified in the STO. INVOICE INSTRUCTIONS FOR T&M TYPE STOS 1. The Seller is not required to submit invoices for labor under T&M STOs. Instead, the Seller shall be paid through the Buyer's "Subcontractor Information Management System" (SIMS) which uses the data entered into the Buyer's "Time Entry System" (TES) as described in Article G.11, Labor Reporting. 2. For T&M STOs, resumes must have received approval by CSC prior to entering any labor hours into TES, for that Subcontractor employee. By entering the hours worked into TES and approving the hours in TES, for each of the Subcontractor's employees, the Subcontractor certifies that the hours entered are complete and accurate and that the Subcontractor has in its possession, records for substantiating all hours reported to CSC. The Subcontractor also certifies that the individual(s) billed to each STO meet the labor category qualifications cited in Attachment ___ of the Subcontract Agreement. 3. The Seller is required to submit invoices for Materials/ODCs incurred under each STO on a monthly basis in hardcopy, in accordance with the provisions of FAR 52.232-07, "Payments Under Time and Materials and Labor-Hour Contracts", except that withholding of five percent (5%) shall be waived. 14 4. Invoices submitted for reimbursement of Materials/ODCs shall be itemized and may be invoiced at cost plus a material handling rate (or G&A), as approved by the Subcontractor's cognizant auditor and CSC, on both a current and cumulative basis. Profit/fee on Materials/ODCs is not allowable. Actual receipts are not required, but must be maintained by the Subcontractor for audit purposes to substantiate the amounts being invoiced. The Subcontractor shall comply with all government travel regulations in effect at the time of travel, and no costs will be allowable which exceed any such regulations and limits. CSC shall have the right to request an audit or verification of expenses from DCAA of any related and supporting detail for the above items. 5. Subcontractor shall certify by signing the Position designation Determination Form, or other form as required by CSC Management or the INS STARS Customer, each individual billed to an INS STARS Position Category meet the requirements of the Position category, as defined within the Task Order or Subcontract with CSC. At any time during the performance of the subcontract, should an individual later be determined to have not met the Position category qualification requirements, CSC shall be reimbursed for any monies paid to the Subcontractor. e) 6. Sample Invoice (Page Insert) 15 (PAGE INSERT) SAMPLE INVOICE COMPUTER SCIENCES CORPORATION SYSTEMS SCIENCES DIVISION 15245 SHADY GROVE ROAD ROCKVILLE, MARYLAND 20850 INVOICE #XX FOR SERVICES PROVIDED FROM MM/DD/YY THROUGH MM/DD/YY RE:(INSERT COMPANY NAME) SUBCONTRACT NO. ____________ SUBCONTRACT TASK ORDER NO.______ - --------------------------------------------------------------------------------------------------------------------------------- CURRENT CUMULATIVE Labor Labor Total Hours Total Amount Total Total Code Employee Name Labor Description Rate Hours Amount $ - 0.0 $ - 0.0 $ - $ - 0.0 $ - 0.0 $ - $ - 0.0 $ - 0.0 $ - $ - 0.0 $ - 0.0 $ - $ - 0.0 $ - 0.0 $ - $ - 0.0 $ - 0.0 $ - $ - 0.0 $ - 0.0 $ - $ - 0.0 $ - 0.0 $ - $ - 0.0 $ - 0.0 $ - $ - 0.0 $ - 0.0 $ - $ - 0.0 $ - 0.0 $ - $ - 0.0 $ - 0.0 $ - $ - 0.0 $ - 0.0 $ - $ - 0.0 $ - 0.0 $ - - --------------------------------------------------------------------------------------------------------------------------------- Total Labor 0.0 $ - 0.0 $ - TRAVEL DETAIL MEALS/ CURRENT CUMULATIVE TOTAL EMPLOYEE Destination Dates AIRFARE HOTEL INCIDENTALS TOTAL MM/DD-MM/DD $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - SUBTOTAL TRAVEL $ - $ - $ - $ - TOTAL TRAVEL ======================================================================= $ - $ - OTHER DIRECT COST DETAIL DATES CURRENT Cumulative DESCRIPTION MM/DD-MM/DD TOTAL Total $ - $ - $ - $ - $ - SUBTOTAL ODCS $ - ============= ================= TOTAL ODCS $ - $ - TOTAL INVOICE AMOUNT $ - TOTAL CUMULATIVE AMOUNT $ - -------------- --------------- "_______________________________ (insert Company Name) hereby certifies that each individual(s) billed to a labor category cited on this invoice meet the qualifications of said labor category, as defined within its subcontract with CSC. ------------------------------- ------------------------------ Signature Title
16 G.3 SUBCONTRACT MANAGEMENT The administration of the subcontract will require maximum coordination between the Buyer and the Seller. The following individuals will be the Buyer's points of contact during the performance of the subcontract. Designate below is the person(s) who may be contacted for action on matters pertaining to the administration of the Subcontract for both CSC and Seller. COMPANY: ERGO Systems, Inc. (Seller) NAME Michael Curran TITLE: Chief Technical Officer Telephone No. 401-453-3595 x102 E mail curran@marklandtech.com ------------------------- (Hereinafter referred to as Subcontractor, Offeror, or Seller) COMPANY: Computer Sciences Corporation (CSC) (Prime) NAME Michael R. Stevenson TITLE: Senior Subcontracts Administrator Telephone No.: 703-279-3582 Facsimile: 703-279-3505 E mail: mstevenson@csc.com (Hereinafter also referred to as CSC, Prime, Contractor, or Buyer) CSC may, by written notice to the Seller, change such Subcontract Administrator at any time. If the Seller complies with any other direction, interpretation, approval, disapproval, conditional approval, or determination, written or oral, from someone other than CSC's Subcontracts Administrator stated above, except as provided in G.3, it shall be at the Seller's risk and CSC shall not be liable for any increased costs, delay in performance or contract non-performance by the Seller. All written direction received by the Subcontractor from CSC shall be acknowledged by Subcontractor's signature and returned to CSC's Subcontract Administrator within Three (3) working days of receipt by Seller. (a) Subcontract Administrator ------------------------- All subcontract administration will be effected by the Subcontract Administrator (SA), or designee. Communications pertaining to contractual administrative matters will be addressed to the SA with a copy to the Business Management Office (BMO), Business/Contracts Manager. The word "Buyer" as used throughout this contract or its attachment refers specifically to the SA. The SA is the only person authorized to approve changes in any of the requirements of this contract, and notwithstanding any provisions contained elsewhere in this contract, said authority remains solely with 17 the SA. No changes or deviation from the scope of work shall be effected without a written modification to the subcontract executed by the SA authorizing such changes. Should schedule conditions warrant a "rapid reaction", the SA may issue a verbal authorization to initiate work. Should this occur, written confirmation shall be provided to the Seller within five (5) calendar days following the verbal authorization to proceed. (b) Subcontract Administrator Technical Representative (SATR) --------------------------------------------------------- The performance of work required herein shall be subject to the technical direction of the Subcontract Administrator's Technical Representative (SATR) or the designee specified in each Subcontract Task Order with respect to technical matters pertaining hereto. As used herein, "Technical Direction" is direction to the Seller that fills in details, suggests possible lines of inquiry, or otherwise supplements the scope of work. "Technical Direction" must be confined to the general scope of work set forth herein and shall not constitute a new assignment, nor supersede or modify any other clause of this contract. To be valid, technical direction: o Must be issued in writing consistent with the general scope of work set forth in the contract; o Shall not change the expresse terms, conditions, or specifications incorporated into this contract; o Shall not constitute a basis for extension to the contract delivery schedule or contract price The SATR or designee is authorized to: o Act as liaison to coordinate Seller/Buyer activities; o Arrange for and coordinate th use of Buyer resources (personnel, space, documents, etc.); o Provide technical guidance in the performance of the contract; o Receive, review, and approve or accept (but not reject) services and products delivered under the contract; o Certify invoices/vouchers for payment based on the acceptance of products and/or services delivered; o Evaluate and report on Seller performance; and o Perform other technical functions to facilitate the administration of the contract. In accordance with the Inspection and Acceptance clause in Section E, the authority to reject deliverables or deny payments under the contract rests with the Subcontract Administrator. The SATR or designee does not have the authority to alter the Seller's obligations under the contract, direct changes that fall within the purview of the clause entitled "Changes", and/or modify any of the expressed terms, conditions, specifications, or cost of the contract. If as a result of technical discussions, it is desirable to alter/change contractual obligations or the Subcontract Task Order, the SA shall issue such changes in writing. 18 The SATR to be assigned cognizance of the subcontract will be identified at time of the award of the subcontract. (c) The Subcontract Task Monitor (STM). ----------------------------------- The Subcontract Task Monitor will be designated with a task order award to monitor and coordinate all technical aspects and assist in the administration of individual Subcontract Task Orders. Only the STM and SATR are authorized to provide technical direction to the Seller, and such direction must be within the scope described herein (d) Technical Direction ------------------- Performance of work under this Subcontract shal be in compliance with the Statement of Work and any approved Subcontract Task Orders. All technical direction shall be within the scope of the Subcontract and the Subcontract Task Order. No oral statements of any person whosoever will in any manner or degree modify or otherwise affect the terms of this Subcontract. Technical coordination shall not result in any action that: a. constitutes an assignment of additional work outside the SOW or the Subcontract Task Order, b. constitutes a change as defined in the contract clause entitled "Changes" for Firm Fixed Price, Time and Material and Cost Reimbursement contracts, c. causes an increase in the total Subcontract ceiling, task order price, or the time required for contract or Subcontract Task Order performance, d. changes any of the expressed terms, conditions or specifications of the Subcontract or Subcontract Task Order, or e. interferes with the Seller's right to perform the terms and conditions of the contract. G.4 ORDERING The INS will issue Request for Task Order Proposals to the Buyer. The Buyer will be responsible for submitting a competitive Task Order Proposal. The Seller will support the preparation of the proposal to the appropriate extent. The Seller will also support the Task Order Planning Process which forms the basis for Task Order Management. Upon award to the Buyer by the INS, the Buyer will issue a Subcontract Task Order according to the following Process: 19 a) Within the scope of the Statement of Work identified in Section C and Attachment I, the Subcontracts Administrator will issue written Subcontract Task Orders to the Seller. Individual task(s) will be communicated to the Seller by Subcontract Task Order documents wherein the work to be performed is described in terms of scope, deliverables, schedule, milestones, and funding. The procedure for establishing tasks will be as follows: Each task statement will: (i) State the specific requirements and objectives of the task. (ii) List appropriate reference material (iii) State task accomplishment schedule (iv) Identify data requirements (v) Identify a specific Buyer Task Monitor who will be the technical point of contact for the Subcontract Task Order. (vi) Specify the CSC WBS/cost account numbers to be charged for the work (vii) Specify what reports if any, that will be required of the subcontractor (viii) Specify allowable management functions (ix) Specify allowable ODCs b) Upon receipt of the task statement, the Seller shall meet with the Buyer to develop jointly a plan for the budget and execution of the task. Seller shall then submit a cost (or price for a FFP Subcontract Task Order) proposal consisting of the time-phased monthly full-time equivalent staff and cost to complete the work in each CSC cost account. In addition, the proposal shall include, for the overall task, the man-hour requirements (by category of skill), and costs, to complete the task. The proposal shall identify and provide rationale for all non-labor cost elements (allowed by the Subcontract Task Order and required for the task performance. After review, evaluation, negotiation, subsequent acceptance of the proposal, the Seller(s) will be authorized by a Subcontract Task Order/modification, to proceed with the work either as proposed or identified by Buyer. Note that Subcontract Task Order Proposal development costs are not recoverable. c) Buyer will decide the mix of effort by each Seller(s) for every Task Order and issue appropriate Subcontract Task Orders. This mix will depend on the nature of the work, recognition as experts, leaders, or niche area expertise, small business concerns and/or extent of any Organizational Conflict of Interest limitations. In the case of relatively high dollar value requirements, it is likely that more than one team member will be utilized. Team members will be aware of their participation prior to award of any individual member Subcontract Task Order. d) The Seller is not authorized to commence task performance prior to issuance of the Subcontract Task Order by the Subcontract Administrator as outlined in Section G.3 above. Any work performed not at the specific direction of the Buyer's Subcontract Administrator is solely at the Seller's risk and the Buyer is not obligated to reimburse Seller for such work. 20 e) All Subcontract Task Orders are subject to the terms and conditions of this Agreement. In the event of conflict between a Task Order and this Agreement, the Agreement shall control. G.5 MODIFICATION/WAIVER No modification of this Agreement (including any additional or different terms of the Seller) shall be binding on Buyer unless agreed to in writing and signed by Buyer's Subcontracts Administrator. No course of dealing or failure by Buyer to strictly enforce any term right or condition of this Agreement shall be construed as a waiver of such term, right or condition. G.6 SEVERABILITY If any provision of this Agreement is or becomes void or unenforceable by force or operation of law, the other provisions shall remain valid and enforceable. G.7 DEFAULT Seller is in default upon the occurrence of any one or more of the following: (1) Seller fails to make delivery of supplies or fails to perform the services within the time specified in this order; (2) Seller fails to perform in accordance with the provisions of this order; or (3) Seller so fails to make progress as to endanger performance of this order in accordance with its terms. In these cases, Buyer shall, in writing, provide a ten (10) day period (or more if authorized in writing by the Buyer) within which Seller may cure its default prior to Buyer's terminating the order for default. G.8 REMEDIES FOR DEFAULT Buyer, by written notice to Seller, may terminate this order, in whole or in part, if Seller is in default. Upon such termination, Buyer may procure, upon such terms as it shall deem appropriate, supplies similar to those so terminated, in which case Seller shall continue performance of this order to the extent not terminated and shall be liable to Buyer for any excess cost for such similar supplies. As an alternate remedy, and in lieu of termination for default, Buyer, at its sole discretion, may elect (1) to extend the contract delivery schedule, and/or (2) to waive other deficiencies in Seller's performance, in which case an equitable reduction in the Purchase Order price shall be negotiated. If the failure to perform is caused by the default of a Subcontractor at any tier and if such default arises out of causes beyond the control of both Seller and Subcontractor and without the fault or negligence of either of them, Seller shall not be liable for any excess costs for the failure to perform, unless the supplies or services to be furnished by Subcontractor were obtainable from other sources in sufficient time to permit Seller to meet the required delivery schedule. The rights and remedies of the Buyer provided in this clause shall not be exclusive and are in addition to any other rights and remedies provided by this order or by law or equity. Failure of Buyer to insist on strict performance shall not constitute a waiver of any of the provisions of this order or waiver of any other default of Seller. 21 G.9 ORDER OF PRECEDENCE The rights and obligations of the parties hereto shall be subject to and governed by PARTS I through IV of this Subcontract. To the extent of any inconsistency between the Sections in PART I, "The SCHEDULE" they shall be resolved in writing by mutual agreement of the parties. As to any inconsistency between the other PARTS or any specifications or other provisions which are made a part of this Subcontract by reference or otherwise, the inconsistency shall be resolved by giving precedence in the following order: a) Section I-Contract Clauses; b) Subcontract Task Order(s) with it's SOW; c) Section C, SOW; d) Other Section J Attachments in order; e) Section K; f) Subcontractor's RFP responses. If any provision(s) of this Subcontract becomes void or unenforceable by force of operation of law, the remaining provisions shall remain valid and enforceable. G.10 HOLIDAYS AND BILLABLE TIME (a) Authorized holidays for subcontractor personnel performing work at a government site shall correspond with government holidays. Regular government holidays are as follows: New Year's Day Labor Day Martin Luther King Jr.'s Birthday Columbus Day President's Day Veteran's Day Memorial Day Thanksgiving Day Independence Day Christmas Day (b) Authorized holidays for subcontractor personnel performing work at the Buyer's site shall correspond with the Buyer's holidays. Regular Buyer holidays are as follows: New Year's Day Labor Day President's Day Thanksgiving Day Memorial Day Day after Thanksgiving Independence Day Christmas Day Day after Christmas (tentative) (c) BILLABLE TIME. Billable hours consist of the number of normal work hours that services are actually performed. Billable hours do not include: 1) the number of normal work days that contractor personnel are not permitted to work because of lack of security clearance or proper identification required under the terms of the contract, even though such personnel might otherwise be available for work on those days, unless such delays are caused by the Government; 22 2) the number of normal work days that subcontractor personnel are not available for work; 3) the number of normal work days that services were not performed or were NOT AVAILABLE because of security reasons, voluntary resignation, death, incapacity, illness, vacation or removal by the subcontractor of subcontractor personnel. Additionally, the contractor shall not be paid for labor incurred by contractor personnel assigned to OCONUS Government installations when said Government installations are closed for holidays not recognized by the contractor. These subcontractor personnel shall not be required by the Government to work on such holidays. 4) the number of normal work days during which subcontractor personnel are detained after capture by hostile forces or persons as prisoners or hostages or otherwise; but this paragraph shall not prevent payment from being made pursuant to Chapter 12, title 42 of the U.S. Code Section 1701 through 1717 as amended; 5) travel time to and from job assignment for leave or holidays. G.11 LABOR REPORTING-TES TES is an Interactive Voice Response System (IVRS) developed by CSC Corporate MIS to record hours worked. TES will be provided by CSC and is required for all Subcontractors on the INS Stars Program. All time for a given week must be entered into the system no later then 3 PM on each Friday and will include any hours worked beginning from 12:01am the previous Saturday morning. The CSC TM will coordinate appropriate training in the use of TES. The Subcontractor will select an individual to approve the time recorded by Subcontractor Personnel in TES weekly - not later than 5pm each Friday. CSC personnel will verify the time charged by Subcontractor Personnel. Corrections to already approved hours are to be done on a Subcontractor Correction Request form and signed/approved, in ink by the Subcontractor and submitted to the CSC Technical Monitor. If the Subcontractor has any problems/issues with labor hours submitted into TES, CSC must be notified within 30 days or risk being paid for the labor hours in question. Time entry will include a multi character Project Code and a multi character Assignment Code based upon the CSC WBS. TES shall provide electronic files for the Subcontractor. The files shall contain the labor information entered. In addition, an associated hardcopy of the information for each organization shall also be provided. Payment will be made to the Subcontractor based on APPROVED TES data, in accordance with the invoice instructions of this subcontract. 23 SECTION H SPECIAL PROVISIONS H.1 CONFLICT OF INTEREST (FAR 9.5) It is understood and agreed that the Seller, under the terms of this Subcontract, or through the performance of the Statement of Work made a part of this Subcontract, is neither obligated nor expected to deliver or provide material or perform work, which will place the Seller in an Organizational Conflict of Interest, which could serve as a basis for excluding the Seller from supplying products or services to the Immigration and Naturalization Service (INS) or other Government agencies. Further, during the course of this contract, the Buyer will not knowingly unilaterally direct the Seller to perform work, in contravention of the above understanding. It will be the Seller's responsibility to identify any situation in which the potential for an Organizational Conflict of Interest exists. However, prior to the execution of any Subcontract Task Order or amendment thereto, if the Subcontract Administrator discerns the potential for an Organizational Conflict of Interest insofar as the work to be performed there under is understood to involve the preparation of a complete specification of materials leading directly, predictably and without delay to a Statement of Work which will be used in the competitive procurement of a system, the Buyer shall notify the Seller, and the parties shall mutually take action to resolve any potential organizational conflict of interest. H.2 CONFERENCES The Buyer's Subcontract Administrator, or his duly authorized representative, may call a conference from time to time as deemed necessary to discuss any phase of performance under the Subcontract. All discussions, problems encountered, solutions reached, and evaluations made during any conference shall be documented in the next Management Level Monthly Progress Report for current reporting period. In any case, such reporting shall not, in and of itself, constitute formal direction to and/or Subcontract Administrator acceptance of the topics discussed. H.3 TRAVEL (a) Official travel of Seller personnel away from their duty station that was not identified in the negotiated Subcontract Task Order shall not be undertaken unless, advance, prior approval has been obtained from the Buyer TM. If travel causes additional costs to the Subcontract Task Order, written approval by the Buyer is REQUIRED. (b) The Seller's request for travel shall be in writing and contain the dates, locations, and estimated costs of the travel. (c) Cost associated with the Seller's travel shall be in accordance with FAR Part 31.205-46. 24 H.4 WORK AT A GOVERNMENT SITE If the Subcontractor (or any of its subcontractors and their employees) is assigned to work at INS facilities, then the Subcontractor shall comply with the regulations governing access to, operation of, and conduct while in or on the premises. The Subcontractor shall ensure that all work is performed in a manner that does not interrupt or interfere with the conduct of Government business. H. 5 INSURANCE SCHEDULE In accordance with FAR 52.228-7, "Insurance Liability to Third Persons APR 1984," the Subcontractor shall secure, pay the premiums for and keep in force until the expiration of this contract, and any renewal thereof, adequate insurance as provided below, such insurance to specifically include liability assumed by the Seller under this subcontract. a. Property damage liability with a limit of not less than $100,000 for each accident. b. Automotive bodily injury liability insurance with limits of not less than $200,000 for each person and $500,000 for each accident, and property damage liability insurance, with a limit of not less than $40,000 for each accident. Each policy of insurance shall contain an endorsement that any cancellation or material change in the coverage adversely affecting the Buyer's interest shall not be effective unless the insurer or the Seller gives written notice of cancellation or change, as required by the Buyer. When the coverage is provided by self-insurance, the Seller shall not change or decrease the coverage without the Subcontract Administrator's prior approval. A certificate of each policy of insurance shall be furnished to the Subcontract Administrator within ten (10) days after notice of award certifying, among other things, that the policy contains the aforementioned endorsement. The insurance company providing the above insurance shall be satisfactory to the Buyer. Notices of policy changes shall be furnished to the Subcontract Administrator. H.6 NOTIFICATION REQUIREMENTS UNDER TIME AND MATERIAL AND COST REIMBURSEMENT CONTRACTS Seller notification requirements for FAR 52.232-20(b) "Limitation of Cost" for CPFF, CPIF and CPAF Subcontract Task Orders, and FAR 52.2327(c) "Payments under Time and Materials and Labor Hours" for T&M Subcontract Task Orders (clauses are in Section I by reference), shall be accomplished only by separate correspondence directed to the Subcontract Administrator with copies to the Subcontract Task Monitor and Business Management Office. No other form of "notification" (e.g., mention in any type of monthly progress or status report) will effect compliance. Further, notification to any individual other than the Buyer's Subcontract Administrator shall not constitute compliance with this requirement. 25 H.7 PERSONNEL QUALIFICATIONS (a) The labor category descriptions in each Task Order or Position Designation Determination Form depict the types of personnel that shall typically be provided by the Seller in support of task orders and are incorporated into this Subcontract. H.8 KEY PERSONNEL (a) The personnel specified as key personnel are considered essential to the work performed under the STARS Program subcontracts. Before diverting the specified individuals to other programs, the Subcontractor shall notify the Subcontract Administrator no less than 30 calendar days in advance and shall submit justification (including the names and resumes of the proposed substitutions) in sufficient detail to permit evaluation of the impact on the program. The proposed substitutions shall possess qualifications equal or superior to those of the key person(s) being replaced. No diversion or substitution shall be made by the Subcontractor without the written consent of the Subcontract Administrator. The list of key personnel set forth in this clause may be amended from time to time during the contract either to add or delete personnel, as appropriate. Substitution or diversion of key personnel shall be handled as specified in the preceding paragraph, with the exception that during the FIRST 180 DAYS of this contract, no key personnel substitutions will be permitted unless such substitutions are necessitated by an individual's sudden illness, death, or termination of employment. In any of these events, the Subcontractor shall promptly notify the Subcontract Administrator and provide the information required by the Key Personnel clause. The Government and CSC reserve the right to identify or require the designation of key personnel on a Subcontract Task Order Task basis during subcontract performance. H.9 SECURITY This document is unclassified; however, the classification of the work to be performed on specific Task Orders issued under this contract may require security clearances. In that event, the Seller will be advised of the requirements in the SOW. The Seller shall follow conscientiously the security requirements identified in the SOW and other guidance that may be established by the Buyer's Subcontract Administrator. H.9.1 ACCESS TO CLASSIFIED INFORMATION Performance of this contract requires that the Contractor, subcontractor(s), vendor(s), etc., (herein known as Seller) require(s) access to classified National Security Information (herein known as classified information). Classified information is Government information, which requires protection in accordance with Executive Order 12958, Classified National Security Information, and supplementing directives. 26 The Seller shall abide by the requirements set forth in the DD Form 254, Contract Security Classification Specification, provided in Section J of the subcontract, and the National Industrial Security Program Operating Manual (NISPOM) for the protection of classified information at its cleared facility, if applicable, as directed by the Defense Investigative Service. If the Seller has access to classified information at a Buyer or Government facility, it shall abide by the requirements set by that agency. H.10 NONDISCLOSURE OF SENSITIVE AND/OR PROPRIETARY DATA The Seller recognizes that in the performance of this contract it may receive or have access to certain sensitive information, including information provided on a proprietary basis by carriers, equipment manufacturers and other private or public entities. The Seller agrees to use and examine this information exclusively in the performance of this Subcontract and to take the necessary steps in accordance with Buyer regulations to prevent disclosure of such information to any party outside the Buyer or Buyer designated support contractors possessing appropriate proprietary agreements, as listed in paragraph (a) below. (a) Indoctrination of Personnel. The Seller agrees to indoctrinate its personnel who have access as to the sensitive nature of the information and the relationship under which the contractor has possession of or access to the information. Seller personnel shall not engage in any other action, venture or employment wherein sensitive information will be used for the profit of any party other than those furnishing the information. The Seller shall restrict access to sensitive/proprietary information to the minimum number of employees necessary for contract performance. H.11 BUYER FURNISHED EQUIPMENT, INFORMATION OR SERVICES (a) It is anticipated that for some Subcontract Tas Orders, Government Furnished Equipment (GFE) will be specified in the individual order (at the discretion of the Buyer) with specified delivery dates. Such equipment will be returned to the Buyer upon the conclusion of the subcontract, as specified in the individual Subcontract Task Order, or as directed in writing by the Buyer's Subcontract Administrator. (b) Government Furnished Information (GFI) relevant to the tasks to be performed under this subcontract will be provided to the Seller for use during the performance of the Subcontract Task Order as specified in the orders (at the discretion of the Government or Buyer) with specified delivery dates. These documents will be returned to the Buyer upon the conclusion of the subcontract, as specified in the individual task order, or as directed in writing by the Subcontract Administrator. (c) In the case that GFE or GFI are not provided to the Seller by the specified date, the Task Monitor will be immediately notified by the Seller. The Seller will indicate impact and request direction from the Buyer's TM and Subcontract Administrator. 27 (d) Sellers are responsible and liable for GFE property in their possession pursuant to FAR 52.2451, 52.2452 and 52.2455, as applicable. H.12 PUBLICITY The Seller shall not be unduly restricted from disclosing to the public the salient details of the contract arrangement as to meet its SEC requirements to report to the public all material events which involve the Seller. In all cases the Seller shall not disclose any confidential or proprietary information pertaining to the Buyer, nor shall it disclose any confidential or proprietary information that pertains to the Department of Homeland Security. On the occasions that the Seller must disclose salient details to its shareholders of this contract, it shall allow the Buyer and or the Department of Homeland Security a period not to exceed 48 hours to review and edit such disclosure material. Those persons authorized to review and edit such disclosure material are the Contract Officers whom represent the Buyer and the Department of Homeland Security. H.13 EMPLOYMENT OF ILLEGAL ALIENS Subject to existing laws, regulations, and Executive Orders and other provisions of this subcontract, illegal or undocumented aliens shall not be employed by the Subcontractor, or subcontractors if applicable, to work on, under, or with this contract. The Subcontractor shall ensure that this provision is expressly incorporated into any and all subcontracts or subordinate agreements issued in support of this subcontract. H.14 DISPUTES (a) If a decision on any question of fact or law is made by the Government's Contracting Officer and such question of fact or law is also related to this Subcontract, said decision, if binding on Buyer under the Prime Contract, shall in turn be binding on Buyer and Seller insofar as it relates to this Subcontract. If Buyer elects to appeal such a decision pursuant to the "Disputes" clause in the Prime Contract, any decision on such an appeal with respect to such question of fact or law, if binding on Buyer under the Prime Contract, shall in turn be binding on Buyer and Seller insofar as it relates to this Subcontract. If Buyer elects not to appeal such decision pursuant to the "Disputes" clause in the prime contract, Buyer shall promptly notify Seller and Subcontract may exercise it rights under paragraph (e) below. (b) If Seller is otherwise affected by any decision made by any representative of the Government on any question of fact or law arising under the Prime Contract that is also related to this Subcontract, from which an appeal under the "Disputes" clause of the Prime Contract is not available, said decision, if binding on Buyer under the Prime Contract, shall in turn be binding on Buyer and Seller insofar as it relates to this Subcontract. If Buyer elects to bring suit against the Government with respect to such decision, a final judgment in any such suit, if binding on Buyer under the Prime Contract, shall in turn be binding on Buyer and Seller insofar as the question decided relates to this Subcontract. If Buyer elects not bring suit against the Government with respect to such decision, Buyer shall promptly notify Seller, and Seller may exercise its right under paragraph (e) below. 28 (c) If Buyer or Seller brings any such appeal or suit as allowed in paragraphs (a) and (b) above, the other party, at its own expense, shall assist in the prosecution thereof in every reasonable manner and shall be afforded reasonable opportunity to participate in the prosecution thereof to the extent such party's interests may be affected. (d) If as a result of any decision or judgment that is binding on Seller and Buyer, as provided above, Buyer is unable to obtain payment from the Government under the Prime Contract for services, or is required to refund or credit to the Government, any amount Buyer has paid Seller, Seller shall, on demand, promptly repay such amount to Buyer, insofar as it relates to this subcontract. (e) Any dispute arising under this Subcontract that is not covered by paragraph (a) or (b) above and which is not settled by agreement of the parties shall be decided by Buyer. Such decision shall be reduced to writing and a copy thereof furnished to Seller. If Seller disagrees with Buyer's decision, Seller shall notify Buyer within thirty (30) days after receipt of such copy. In the absence of such notice, such decision shall be final. If such notice is given by Seller, Seller may proceed to have the dispute settled through appropriate legal action. If Seller proceeds with litigation and, prior to trial, one or more of the questions of fact or law become the subject of a decision covered by paragraph (a) or (b) above, such questions shall be determined in accordance with this clause and the litigation shall be terminated as to such questions. (f) Pending any decision, appeal, or judgment referred to in paragraph (a) or (b) above, Seller shall proceed diligently with performance of this Subcontract unless Buyer otherwise specifies in writing. (g) The rights and obligations described in this clause shall survive completion and final payment of this Subcontract. (h) Nothing contained in this subcontract shall be construed to obligate the Government contracting officer to deal directly with the Seller, or to make the results, of arbitration, judicial determination, or voluntary settlement between Buyer and the Seller binding on the Government. H.15 NO HIRE CLAUSE Buyer and Seller agree that during the period that this agreement is in force, including extensions or modifications thereto, and for an additional 12 months following this period, neither Buyer nor the Seller will actively recruit, or solicit permanent employees of either company, or the employees of any of the other Subcontractors; who are on active payroll status and are currently participating in this Program, without the prior written approval of the party whose employee is being considered for employment. This does not prohibit any employee from responding to or pursuing employment opportunities through normal media channels, i.e. newspapers, professional journals, etc. so long as it is not an attempt to avoid the intent of the above restriction. 29 H.16 PATENT INDEMNITY, GENERAL INDEMNITY Each party agrees to defend and hold harmless the other party, Buyer's customer and those for whom Buyer may act as an agent from all loss or damage by reason of any and all actions or proceedings charging infringement of any patent, trademark or copyright by reason of sale or use of any services/data furnished hereunder by each party. Each party agrees to indemnify and hold the other party harmless from all loss, costs or damages arising out of the negligent acts and/or omissions of any of the other's employees, agents or representatives. H.17 ASSIGNMENT Seller shall make no assignment of technical responsibilities, monies due or to become due hereunder without the prior written permission of Buyer. However, nothing contained herein will prohibit Seller from assigning monies due or to become due to a bank, trust company, or other accredited financial institution, in which event a copy of each such assignment will be filed with Buyer before the assignment will have any force or effect. H.18 APPROVED SUBCONTRACTING PLAN Not Applicable: No 2nd Tier Subcontracting is authorized under this ------------------------------------------------------------------- Subcontract. ------------ H.19 SUBCONTRACTS REPORTING Not Applicable: No 2nd Tier Subcontracting is authorized under this ------------------------------------------------------------------- Subcontract. ------------ H.20 LIQUIDATED DAMAGES--SUBCONTRACTING PLAN - RESERVED H.21 CHOICE OF LAW This Agreement and performance hereunder shall be interpreted in accordance with, and governed by, the laws of the State of Maryland. 30 H.22 YEAR 2000 WARRANTY--COMMERCIAL SUPPLY ITEMS The Contractor warrants that each hardware, software, and firmware product delivered under this contract shall be able to accurately process date data (including, but not limited to, calculating, comparing, and sequencing) from, into, and between the twentieth and twenty-first centuries, including leap year calculations, when used in accordance with the product documentation provided by the Contractor, provided that all listed or unlisted products (e.g., hardware, software, firmware) used in combination with such listed product properly exchange date data with it. If the contract requires that specific listed products must perform as a system in accordance with the foregoing warranty, then that warranty shall apply to those listed products as a system. The duration of this warranty and the remedies available to the Government for breach of this warranty shall be as defined in, and subject to, the terms and limitations of the Contractor's standard commercial warranty or warranties contained in this contract, provided that notwithstanding any provision to the contrary in such commercial warranty or warranties, the remedies available to the Government under this warranty shall include repair or replacement of any listed product whose non-compliance is discovered and made known to the Contractor in writing within ninety (90) days after acceptance. Nothing in this warranty shall be construed to limit any rights or remedies the Government may otherwise have under this contract with respect to defects other than Year 2000 performance. H.23 YEAR 2000 WARRANTY--NON-COMMERCIAL SUPPLY ITEMS The Contractor warrants that each non-commercial item of hardware, software, and firmware delivered or developed under this contract shall be able to accurately process date data (including, but not limited to, calculating, comparing, and sequencing) from, into, and between the twentieth and twenty-first centuries, including leap year calculations, when used in accordance with the item documentation provided by the Contractor, provided that all listed or unlisted items (e.g., hardware, software, firmware) used in combination with such listed item properly exchange date data with it. If the contract requires that specific listed items must perform as a system in accordance with the foregoing warranty, then that warranty shall apply to those listed items as a system. The duration of this warranty and the remedies available to the Government for breach of this warranty shall be as defined in, and subject to, the terms and limitations of any general warranty provisions of this contract, provided that notwithstanding any provision to the contrary in such warranty provision(s), or in the absence of any such warranty provision(s), the remedies available to the Government under this warranty shall include repair or replacement of any listed item whose non-compliance is discovered and made known to the Contractor in writing within ninety (90) days after acceptance. Nothing in this warranty shall be construed to limit any rights or remedies the Government may otherwise have under this contract with respect to defects other than Year 2000 performance. 31 PART II SECTION I - CONTRACT CLAUSES Unless otherwise noted, all clauses bear the effective date of April 1984. I.1 52.252-2 CLAUSES INCORPORATED BY REFERENCE (JUN 1988) This contract incorporates the following clauses by reference, with the same force and effect as if they were given in full text. Upon request, the Subcontract Administrator will make their full text available. The following Federal Acquisition Regulations (FARs) and agency FAR Supplement clauses are incorporated herein by reference and made a part hereof, except to the extent modified below by a numbered note(s). The FAR and FAR Supplement clauses are the versions in effect as of the date of the prime contract. Except as may be expressly otherwise provided below in each of such clauses, "Contractor" shall mean "Seller"; "Subcontractor" shall mean "Seller's subcontractor"; and "Contract" shall mean "this Agreement." "Contracting Officer" shall mean the Contracting Officer of the Government prime contractor unless otherwise specified. Not withstanding any provisions of the foregoing, all audit rights are reserve for Federal Government. 1.2 FAR REFERENCE TITLE DATE - ----------------------- --------------------------------------------------------------------------- ------------------- 52.202-1 Definitions OCT 1995 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.203-3 Gratuities APR 1984 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.203-5 Covenant Against Contingent Fees APR 1984 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.203-6 Restrictions on Subcontractor Sales to the Government JUL 1995 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.203-7 Anti-Kickback Procedures JUL 1995 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.203-8 Cancellation, Recession, and Recovery of Funds for Illegal or Improper JAN 1997 Activities - ----------------------- --------------------------------------------------------------------------- ------------------- 52.203-10 Price or Fee Adjustment for Illegal or Improper Activity JAN 1997 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.203-12 Limitation on Payments to Influence Certain Federal Transactions JAN 1990 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.204-2 Security Requirements AUG 1996 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.204-4 Printing/Copying Double-Sided on Recycled Paper JUN 1996 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.209-6 Protecting the Government's Interest when Subcontracting with JUL 1995 Contractors Debarred, Suspended or proposed for Debarment - ----------------------- --------------------------------------------------------------------------- ------------------- 52.215-2 Audit-Negotiation AUG 1996 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.215-22 Price Reduction for Defective Cost or Pricing Data OCT 1995 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.215-23 Price Reduction for Defective Cost or Pricing Data-Modifications OCT 1995 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.215-24 Subcontractor Cost or Pricing Data OCT 1995 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.215-25 Subcontractor Cost or Pricing Data -Modifications OCT 1995 - ----------------------- --------------------------------------------------------------------------- ------------------- 32 FAR REFERENCE TITLE DATE - ----------------------- --------------------------------------------------------------------------- ------------------- 52.215-26 Integrity of Unit Prices JAN 1997 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.215-27 Termination of Defined Benefit Pension Plans MAR 1996 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.215-30 Facilities Capital Cost of Money SEP 1987 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.215-33 Order of Precedence JAN 1986 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.215-39 Reversion or Adjustment of Plans for Post-Retirement Benefits Other MAR 1996 than Pensions (PRB) - ----------------------- --------------------------------------------------------------------------- ------------------- 52.215-40 Notification of Ownership Changes FEB 1995 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.216-7 Allowable Cost and Payment MAR 1997 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.216-8*** Fixed Fee MAR 1997 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.219-8 Utilization of Small, Small Disadvantaged and Women-Owned Small OCT 1995 Business Concerns - ----------------------- --------------------------------------------------------------------------- ------------------- 52.219-9 Small, Small Disadvantaged and Women-Owned Small Business AUG 1996 Subcontracting Plan - Alternate II (MAR 1966) - ----------------------- --------------------------------------------------------------------------- ------------------- 52.219-14 Limitations of Subcontracting DEC 1996 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.219.16 Liquidated damages - Subcontracting Plan OCT 1995 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.222-1 Notice to the Government of Labor Disputes FEB 1997 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.222-2 Payment of Overtime Premiums JUL 1990 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.222-3 Convict Labor AUG 1996 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.222-4 Contract Work Hours and Safety Standards Act -- Overtime JUL 1995 Compensation - ----------------------- --------------------------------------------------------------------------- ------------------- 52.222-26 Equal Opportunity APR 1984 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.222-28 Equal Opportunity Preaward Clearance of Subcontracts APR 1984 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.222-35 Affirmative Action for Special Disabled and Vietnam Era Veterans APR 1984 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.222-36 Affirmative Action for Handicapped Workers APR 1984 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.222-37 Employment Reports on Special Disabled Veterans and Veterans of the JAN 1988 Vietnam Era - ----------------------- --------------------------------------------------------------------------- ------------------- 52.223-2 Clean Air and Water APR 1984 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.223-6 Drug-Free Workplace JAN 1997 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.223-14 Toxic Chemical Release Reporting OCT 1996 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.224-1* Privacy Act Notification APR 1984 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.224-2* Privacy Act APR 1984 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.225-3 Buy American Act -- Supplies JAN 1994 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.225-9 Buy American Act -Trade Agreement Act - Balance of JAN 1996 Payment Program - ----------------------- --------------------------------------------------------------------------- ------------------- 52.225-10 Duty-Free Entry APR 1984 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.225-11 Restrictions of Certain Foreign Purchases OCT 1996 - ----------------------- --------------------------------------------------------------------------- ------------------- 33 FAR REFERENCE TITLE DATE - ----------------------- --------------------------------------------------------------------------- ------------------- 52.225-14 Inconsistency between English Version and Translation of Contract AUG 1989 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.225.21 Buy American Act - North American Free Trade Agreement JUN 1996 Implementation Act - Balance of Payments Program - ----------------------- --------------------------------------------------------------------------- ------------------- 52.226-1 Utilization of Indian Organizations Enterprises SEP 1996 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.227-2 Notice and Assistance Regarding Patent and Copyright Infringement AUG 1996 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.227-14** Rights in Data-General JUN 1987 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.227-17** Rights in Data - Special Works JUN 1987 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.227-18 Rights in Data - Existing Works JUN 1987 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.228-5 Insurance - Work on a Government Installation JAN 1997 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.228-7 Insurance - Liability to Third Persons MAR 1996 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.229-3 Federal, State, and Local Taxes JAN 1991 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.229-5 Taxes - Contracts Performed in U.S. Possessions or Puerto APR 1984 Rico - ----------------------- --------------------------------------------------------------------------- ------------------- 52.230-2 Cost Accounting Standards APR 1996 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.230-3 Disclosure and Consistency of Cost Accounting Practices APR 1996 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.230-4 Consistency of Cost Accounting Practices AUG 1992 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.230-6 Administration of Cost Accounting Standards APR 1996 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.232.1 Payments APR 1984 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.232-7 Payments Under Time-and-Materials and Labor Hour FEB 1997 Contracts - ----------------------- --------------------------------------------------------------------------- ------------------- 52.232-9 Limitation on Withholding of Payments APR 1984 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.232.16 Progress Payments JUL 1991 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.232-17 Interest JUN 1996 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.232-18 Availability of Funds APR 1984 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.232-20 Limitation of Cost APR 1984 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.232-22 Limitation of Funds APR 1984 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.232-23 Assignment of Claims JAN 1986 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.232-33 Mandatory Information for Electronic Funds Transfer Payment AUG 1996 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.233-3 Protest After Award - Alternate I (JUN 1995) AUG 1996 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.237-2 Protection of Government Buildings, Equipment, and Vegetation APR 1984 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.237-3 Continuity of Services JAN 1991 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.239-1 Privacy and Security Safeguards AUG 1996 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.242-1 Notice of Intent to Disallow Costs APR 1984 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.242-4 Certification of Final Indirect Costs JAN 1997 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.242-13 Bankruptcy JUL 1995 - ----------------------- --------------------------------------------------------------------------- ------------------- 34 FAR REFERENCE TITLE DATE - ----------------------- --------------------------------------------------------------------------- ------------------- 52.243.1 Changes-Fixed Price - Alternative I (APR 1984) and APR 1987 Alternative II ( APR 1984) - ----------------------- --------------------------------------------------------------------------- ------------------- 52.243-2 Changes--Cost-Reimbursement --Alternative I (APR 1984) and AUG 1987 Alternative II (APR 1984) - ----------------------- --------------------------------------------------------------------------- ------------------- 52.243.3 Changes (Time-Materials or Labor-Hours) APR 1985 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.244.1 Subcontracts (Fixed Price Contracts) FEB 1995 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.244-2 Subcontracts (Cost-Reimbursement and Letter Contracts) FEB 1997 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.244.3 Subcontracts (Time-and-Materials and Labor Hours APR 1985 Contracts - ----------------------- --------------------------------------------------------------------------- ------------------- 52.244-5 Competition in Subcontracting DEC 1996 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.245-1 Property Records APR 1984 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.245.2 Government Property (Fixed Price) DEC 1989s - ----------------------- --------------------------------------------------------------------------- ------------------- 52.245-5 Government Property(Cost Reimbursement, Time and Material, or Labor JAN 1986 Hour Contracts) - ----------------------- --------------------------------------------------------------------------- ------------------- 52.245-19 Government Property Furnished "As Is" APR 1984 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.246-17 Warranty of Supplies of a Non-Complex Nature APR 1984 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.246-20 Warranty of Services APR 1984 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.246-25 Limitation of Liability-Services FEB 1997 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.247-63 Preference for U.S. Flag Air Carriers JAN 1997 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.249-2 Termination for Convenience of the Government (Fixed SEP 1996 Price - ----------------------- --------------------------------------------------------------------------- ------------------- 52.249-6 Termination - (Cost Reimbursement) Alt IV SEP 1996 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.249.8 Default (Fixed Price Supply and Services) (APR 1984 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.249-14 Excusable Delays APR 1984 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.251-1 Government Supply Sources APR 1984 - ----------------------- --------------------------------------------------------------------------- ------------------- 52.253-1 Computer Generated Forms JAN 1991 - ----------------------- --------------------------------------------------------------------------- -------------------
* The specific systems of records subject to the Privacy Act and the required safeguards will be identified on individual Subcontract Task Orders issued hereunder. ** All data right clauses will be specified on each Subcontract Task Order issued. Unless specific data rights are established in a Subcontract Task Order, the Government asserts unlimited use rights in any data, including computer software, developed under any Subcontract Task Order issued under this contract. *** To be used on Cost Plus Fixed Fee (CPFF) Orders Only **** To be used on Cost Plus Incentive Fee Orders (CPIF) Only CLAUSES WITH VARIABLE INFORMATION I.2 FAR 52.216-18 ORDERING (OCT 1995) (a) Any supplies and services to be furnished under this contract shall be ordered by issuance of delivery orders or Subcontract Task Orders by the individuals or activities designated in the Schedule. Such orders may be issued from contract award through contract expiration 35 (b) All delivery orders or Subcontract Task Orders are subject to the terms and conditions of this contract. In the event of conflict between a delivery order or Subcontract Task Order and this contract, the contract shall control. (c) If mailed, a delivery order or Subcontract Task Order is considered "issued" when the Buyer deposits the order in the mail. Orders may be issued orally, by facsimile, or by electronic commerce methods only if authorized in the Schedule. I.3 FAR 52.216-22 INDEFINITE QUANTITY (OCT 1995) (a) This is an indefinite-quantity contract for the supplies or services specified, and effective for the period stated, in the Schedule. The quantities of supplies and services specified in the Schedule are estimates only and are not purchased by this contract. (b) Delivery or performance shall be made only as authorized by orders issued in accordance with the Ordering clause. The Seller shall furnish to the Buyer, when and if ordered, the supplies or services specified in the Schedule up to and including the quantity designated in the Schedule as the maximum. (c) Except for any limitations on quantities in the Delivery-Order Limitations clause or in the Schedule, there is no limit on the number of orders that may be issued. Orders issued may require delivery to multiple destinations or performance at multiple locations. (d) Any order issued during the effective period of this contract and not completed within that period shall be completed by the Seller within the time specified in the order. The subcontract shall govern the Seller's and Buyer's rights and obligations with respect to that order to the same extent as if the order were completed during the contract's effective period; provided, that the Seller shall not be required to make any deliveries under this contract after final delivery. I.4 FAR 52.217-9 OPTION TO EXTEND THE TERM OF THE CONTRACT (MAR 1989) (a) The Buyer may extend the term of this contract by written notice to the Seller within thirty (30) days of expiration of the performance period; provided, that the Buyer shall give the Seller a preliminary written notice of its intent to extend at least 60 days before the contract expires. The preliminary notice does not commit the Buyer to an extension. (b) If the Buyer exercises this option, the extended contrac shall be considered to include this option provision. (c) The total duration of this contract, including the exercise of any options under this clause, shall not exceed five (5) years. 36 I.5 FAR 52.239-1 PRIVACY OR SECURITY SAFEGUARDS (AUG 1996) (a) The Seller shall not publish or disclose in any manner, without the Buyer's written consent, the details of any safeguards either designed or developed by the Seller under this contract or otherwise provided by the Buyer. (b) To the extent required to carry out a program of inspection to safeguard against threats and hazards to the security, integrity, and confidentiality of Buyer data, the Seller shall afford the Buyer access to the Seller's facilities, installations, technical capabilities, operations, documentation, records, and databases. (c) If new or unanticipated threats or hazards are discovered by either the Buyer or the Seller, or if existing safeguards have ceased to function, the discoverer shall immediately bring the situation to the attention of the other party. I.6 FAR 52.248-1 VALUE ENGINEERING (MAR 1989) These data shall not be disclosed outside the Government or duplicated, used, or disclosed, in whole or in part, for any purpose other than to evaluate a value engineering change proposal submitted under the clause. This restriction does not limit the Government's right to use information contained in these data if it has been obtained or is otherwise available from the Contractor or from another source without limitations. FULL TEXT CLAUSES I.7 JAR 2852.223-1 USE OF RECOVERED MATERIALS IN PAPER AND PAPER PRODUCTS (MAR 1992) (a) the Contractor is required under this contract to deliver any of the paper and paper products listed below, all such items delivered shall meet the minimum content standards for recovered materials, post consumer recovered materials, or waste paper. (1) Recovered materials are defined as waste material and by-products that have been recovered or diverted from solid waste, not including those materials and by-products generated from, and commonly reused within, an original manufacturing process. (2) Post consumer recovered materials are defined as waste materials recovered from retail stores, office building, homes and so forth after they passed through their end usage as a consumer item. (3) Waste paper is defined as all items from the first two categories above in addition to forest residues, and manufacturing and other wastes. Unless otherwise directed by the Contracting Officer, the Contractor shall use "High Grade Bleached Printing and Writing Papers" as defined in this clause to produce all progress reports, final reports, and any other products required to be delivered to the Government under this contract. MINIMUM CONTENT STANDARDS FOR SELECTED PAPER AND PAPER PRODUCTS 37 Minimum % Minimum % Post Minimum % Waste Recovered consumer Recovered Paper Materials Materials NEWSPRINT 50 HIGH GRADE BLEACHED PRINTING AND WRITING PAPERS Offset printing 50 Mimeo and duplicator paper 50 Writing (stationery) 50 Office paper (e.g., note pads) 50 Paper for high speed copiers 50 Envelopes 50 Form bond including computer paper and 50 carbonless Book papers 50 Bond paper 50 Ledger 50 Cover stock 50 Cotton Fiber papers 25 TISSUE PRODUCTS: Toilet tissue 20 Paper towels 40 Paper napkins 30 Facial tissue 5 Doilies 40 Industrial wipes 0 UNBLEACHED PACKAGING: Corrugated boxes 35 Fiber boxes 35 Brown papers (e.g. bags) 5 RECYCLED PAPERBOARD: Recycled paperboard products 80 Pad backing 90
38 Alternate I (APR 1984). As prescribed in 16.406(b), add the following paragraph (q) to the basic clause: (q) Provisioning and options. Parts, other supplies, or services that are to be furnished under this contract on the basis of a provisioning document or Government option shall be subject to price revision in accordance with this clause. Any prices established for these parts, other supplies, or services under a provisioning document or Government option shall be treated as initial target prices, or target prices as agreed upon and stipulated in the pricing document supporting the provisioning or added items. Initial or firm target costs and profits and final prices covering these parts, other supplies, or services may be established separately, in the aggregate, or in any combination, as the parties may agree. 39 PART III - LIST OF DOCUMENTS AND OTHER ATTACHMENTS -------------------------------------------------- SECTION J - LIST OF ATTACHMENTS ------------------------------- J.1 LIST OF ATTACHMENTS Attachment 1 Subcontractor Proposal 40 PART IV - REPRESENTATIONS ------------------------- SECTION K - INCORPORATION OF CERTIFICATIONS ------------------------------------------- K.1 INCORPORATION OF CERTIFICATIONS Section K, "Representations, Certifications and Other Statements of Offerors" of the RFP, returned filled in, signed and dated February 20, 2002, are hereby incorporated by reference in this Agreement. 41 ATTACHMENT I. SUBCONTRACTOR PROPOSAL FOR DCL SYSTEM & GES MAINTENANCE 1.0 SCOPE This Statement of Work (SOW) defines the Maintenance Services and performance parameters to be provided by the contractor in support of the Department of Homeland Security (DHS) Dedicated Commuter Lanes (DCL) system and the associated Global Enrollment System (GES). Currently, there are two types of DCL systems deployed: NEXUS and SENTRI. The NEXUS system is installed at 10 Northern US border locations and the SENTRI system is installed at the three Southern US border locations. The scope of this SOW addresses the San Diego Port of Entry (POE) only. 2.0 BACKGROUND The DCL system was designed to decrease the inspection time for enrolled, low-risk travelers who frequently enter the United States by vehicle. Port of Entry travel times in conventional lanes have been decreased by removing low-risk travelers from those lanes. As a result, inspectors in conventional lanes have been able to spend more time focusing on potentially higher risk travelers. DCL has two versions currently deployed. These versions, NEXUS and SENTRI, allow faster processing of low-risk travelers who travel through U.S. Ports of Entry (POEs) between Canada and the United States or between Mexico and the United States. Users must be enrolled in the Global Enrollment System (GES) at each POE region where they might enter before they can use the DCL system. The DCL system allows for faster processing at POEs by using radio frequency identification (RFID) technology that identifies DCL enrollees. A U.S. inspector verifies the identity and status of the traveler after the DCL system retrieves the traveler's information and displays it on the monitor in the inspector's booth. 3.0 DEFINITIONS AND NOMENCLATURE o DCL - Dedicated Commuter Lane. A single vehicl passage lane dedicated for passage of the enrolled trusted travelers. o GES - Global Enrollment System. The GES captures and stores all pertinent information regarding the enrollees in the DCL system. For NEXUS enrollees only personal information is stored. For SENTRI enrollees both personal and vehicle information is stored. o VALIDATION SUBSYSTEM - The validation subsystem provides an operator interface to the inspector. It can interface with the data server or the lane controller depending on the configuration. The validation subsystem connects to the ges database where information and images of all enrollees and vehicles are retrieved. These images, along with information about the vehicle, are displayed for the inspector to verify the identity of the vehicle and its occupants. 42 o PRIMARY INSPECTION BOOTH - First Inspection are for vehicles entering the U.S Port of Entry. o PRE-PRIMARY - Open space prior to the primary inspection booth o SECONDARY INSPECTION AREA - Intensive examination for suspect vehicles o EGRESS LANES - Exit area for cleared vehicles into the United States. o SYSTEM AVAILABILITY - Expressed as a percentage the actual number of operational hours divided by the total scheduled hours. For example, if the system were down four (4) hours out of a scheduled 80 hours, the achieved actual availability is 76/80 or 95%. o RESPONSE TIME - The response time is defined as the time from the receipt of a trouble call by the contractor, until the physical arrival of the contractor's technical representative on the site of the trouble call. o SYSTEM CONFIGURATION - The SYSTEM CONFIGURATION refers to the entire set of equipment acquired by the government and placed in service at a port of entry. It includes, but is not limited to, all Enrollment Center equipment, all Lane Control equipment, and any hardware or software module that is part of the DCL system at the port of entry. o CRITICAL FAILURES - Failures in the DCL system are critical when the malfunction results in the system being in a non-operational state. o NON-CRITICAL FAILURES - Failures in the DCL system are considered non-critical when the malfunction results in the system being in an operational but impaired state. 4.0 OPERATIONAL CONCEPT Travelers are required to fill out an application for admittance to the DCL program through the DHS enrollment centers located at the respective border crossing sites. The DHS enrollment centers facilitate travelers entry into the Global Enrollment System (GES) database. The enrollment centers process the application along with a set of the applicants' fingerprints. The results of this background investigation determine whether or not applicants will be accepted into the DCL program. Once accepted, the applicant is photographed and issued either a proximity card (NEXUS) or a transponder (SENTRI). The proximity card associated with the NEXUS system includes the traveler's photo, printed identifying data, and encoded data that can be read remotely by radio-frequency equipment installed in the DCL. The transponder associated with the SENTRI system provides similar personal information to the inspectors and also provides vehicle information as well. The registered travelers and their vehicles (vehicles checked for SENTRI only) are periodically checked for any change in background status that may affect their eligibility. Figure 1 is representative of all NEXUS lanes. A dedicated access lane is provided for NEXUS users allowing vehicles to by-pass the general traffic lanes and provides fast access into the United States. As the vehicle enters the Automated Identification zone, each traveler in the NEXUS program presents his/her proximity card to the reader. The information on the card is then checked against the GES database for verification and any pertinent updated information regarding the traveler. All of the information is provided to the lane operator for verification at the Validation Subsystem. 43 [GRAPHIC OMITTED] FIGURE 1 - GENERAL NEXUS DCL SYSTEM CONFIGURATION ------------------------------------------------- At the Inspector Clearance Area, any missed NEXUS cards are read for verification. The inspector then performs the appropriate checks and verifications on the driver and all passengers in the vehicle based on the information presented via the Validation Subsystem. Authorized vehicles are cleared to enter the United States and unauthorized or suspected vehicles, drivers, or passengers are directed to the Secondary inspection area. Traffic control signals are deployed at the DCL exit to direct vehicles through the inspection process. Figures 2 and 3 demonstrate the SENTRI lane configurations for San Diego POE. A dedicated access lane is provided for SENTRI users allowing vehicles to by-pass the general traffic lanes and provides fast access into the United States. As the vehicle enters the Automated Identification zone, the vehicle's transponder is activated and read by the Ergo/Transcore system. The ID data from the transponder is then sent to the Validation Subsystem to retrieve the appropriate information from the GES database. The retrieved information is provided to the lane operator for verification. 44 [GRAPHIC OMITTED] FIGURE 2 - OTAY MESA SENTRI DCL SYSTEM CONFIGURATION ---------------------------------------------------- [GRAPHIC OMITTED] FIGURE 3 - SAN YSIDRO SENTRI DCL CONFIGURATION ---------------------------------------------- 45 At the Inspector Clearance Area, any missed transponders ID's are read for verification. The inspector then performs the appropriate checks and verifications on the driver and all passengers in the vehicle based on the information presented via the Validation Subsystem. Authorized vehicles are cleared to enter the United States and unauthorized or suspected vehicles, drivers, or passengers are directed to the Secondary inspection area. Traffic control devices (gates, signal lights, and bollards) are deployed at the DCL exit to prevent vehicles from bypassing the inspection process. At some locations, pipe bollards and/or concrete barriers delineate the vehicle path to the U.S. and secondary inspection areas. GES collects biographic and biometric data about applicants for automated inspection systems and stores this information. GES enrolls low-risk travelers who are then able to enter the United States by verifying their ID and enrollment status with an automated system, to accelerate individual examination by a Customs and Border Protection (CBP) Inspector. The system provides the enroll travelers with either a proximity card (NEXUS) or a transponder for a specific vehicle (SENTRI). There are two versions of the GES to support: Version 1.8.x and Version 1.10.x. Version 1.8.x is used to enroll travelers using the NEXUS system at a POE. Figure 5 exhibits the GES Version 1.8.x configuration. Version 1.10.x is used to enroll travelers and vehicles using the SENTRI system at a POE. Figure 6 exhibits the GES Version 1.10.x configuration. 5.0 SUPPORT ENVIRONMENT This section presents the hardware and software configuration for the DCL systems and GES to be maintained under this SOW. Both the NEXUS and SENTRI system configurations are detailed. 5.1 NEXUS DCL SYSTEM 5.1.1 NEXUS DCL HARDWARE COMPONENTS The following is a high-level summary of the NEXUS DCL hardware components: o Cserver 1220 (or 2025) Pentium 4 rackmount computer o SBC, Pentium 133 MHz with 32MB of random access memory (RAM) o Seiko thermal receipt printer o Laser sensor (vehicle detection and separation) o Proximity card reader and antennae o Inspector's display o Inspector's control panel o Lane open/closed lights o Booth entry lights o Booth exit lights o Blackbox Matrix ServSwitch o Monitor, keyboard, and trackball mouse o Video graphics array (VGA) National Television Standards Committee (NTSC) video converter/switch o Ethernet switch/hub o APC uninterruptible power supply (UPS) o Serial A/B switch ; Keyboard video mouse (KVM) extender (local and remote) o Panasonic time-lapse VCR o Panasonic video multiplexer o Netopia router o External booth enclosure o External prequeue enclosure o Internal booth enclosure o Video power supply enclosure o Camera enclosure and video camera o HP Jetdirect print server o Ethernet/local area network (LAN) repeater/signal booste (Detroit Tunnel only) [GRAPHIC OMITTED] FIGURE 5 - GES VERSION 1.8.X CONFIGURATION 46 [GRAPHIC OMITTED] FIGURE 6 - GES VERSION 1.10.X CONFIGURATION 5.1.2 NEXUS DCL SOFTWARE COMPONENTS The following is a high-level summary of the NEXUS DCL software components: o Windows 95B and/or Windows 2000 (sp3) o Oracle8.0.5 client o DCL Validation 4.1.2 o DCL Winnode Dataserver 2.0 o DCL SBC 1.2 o DCL Sim32 1.0 o Symantec PCAnywhere 10 (Detroit and Buffalo only) o Efkon Laser Softguide 1.1 o Receipt printer drivers 47 5.2 SENTRI DCL SYSTEM 5.2.1 SENTRI DCL HARDWARE COMPONENTS The following is a list of all the main hardware components in a single-lane SENTRI system: o Cserver 1220 1.8Ghz Pentium 4 1U rackmount computer o Blackbox ServSelect o Monitor, keyboard, & trackball mouse o VGA splitter o Ethernet switch/hub o APC UPS ; Serial A/B switch (Otay Mesa only) o Blackbox gang switch (San Ysidro only) Refer to Figures 1, 2, and 3 for detailed information regarding the SENTRI DCL system configurations currently deployed. 5.2.2 SENTRI DCL SOFTWARE COMPONENTS The following is a high-level summary of the SENTRI DCL software components: o Windows 2000 (sp3) o Oracle 8.0.5 client o DCL Validation 4.1.2 o Symantec PCAnywhere 10 5.3. GES VERSION 1.8.X 5.3.1 GES VERSION 1.8.X HARDWARE COMPONENTS The following lists the hardware components for GES Version 1.8.x: o One Intel Pentium II or 100-percent compatible workstation as primary domain controller (PDC) o One Intel Pentium II or 100-percent compatible workstation as backup domain controller (BDC) o One Intel Pentium-based, server-grade computer as database server (DBS) o Intel Pentium II or 100-percent compatible workstations as enrollment workstations o Data card printer o Hand geometry unity (HGU) o Black Box signal converter o Digital camera o Proximity card reader/writer o Network laser printer with Transmission Control Protocol (TCP)/Internet Protocol (IP) support and JetDirect ; Four-port hub ; Uninterruptible power supply (UPS) 48 5.3.2 GES VERSION 1.8.X SOFTWARE COMPONENTS The following software is required for GES Version 1.8.x: o Oracle 8.05 o Microsoft Windows NT 4.0 Server o Microsoft Windows NT 4.0 Workstation o Oracle for Windows NT o ArcServeIT 2000 Backup Software o Oracle Backup Agent for ArcServeIT 2000 o PCAnywhere 10 o Hewlett-Packard JetAdmin ;IQ Engineering Super Fonts o DynaComm Elite 3.6.2 o Microsoft Windows NT 4.0 Resource Kit and Supplement o UPS Powerchute Communication Software o GES Version 1.8.x 5.4 GES VERSION 1.10.X 5.4.1 GES VERSION 1.10.X HARDWARE COMPONENTS The following lists the hardware components for GES Version 1.10.x: o One Intel Pentium II or 100-percent compatible workstation as the PDC o One Intel Pentium II or 100-percent compatible workstation as the BDC o One Intel Pentium-based, server-grade computer as DBS o Intel Pentium II or 100-percent compatible workstations as enrollment workstations o Data Card printer o HGU o Black Box signal converter o Digital camera o Network laser printer with TCP/IP support and JetDirect support o UPS 5.4.2 GES VERSION 1.10.X SOFTWARE COMPONENTS The following software is required for GES Version 1.10.x: o Oracle 8.05 o Microsoft Windows NT 4.0 Server o Microsoft Windows NT 4.0 Workstation 49 o Oracle for Windows NT o ArcServeIT 2000 Backup Software o Oracle Backup Agent for ArcServeIT 2000 o PCAnywhere 10 o Hewlett-Packard JetAdmin o IQ Engineering Super Fonts o DynaComm Elite 3.6.2 o Microsoft Windows NT 4.0 Resource Kit and Supplement o UPS Powerchute Communication Software o GES Version 1.10.x 6.0 PERFORMANCE CRITERIA This SOW requires all DCL lanes and locations along with their respective GES centers to be functionally operational 95% of the time during normal operating hours. The chart below shows the current operational times for each location. The system availability is calculated at the performance requirement of 95% availability per week/month during normal hours of operation. The weekly downtimes can be carried over throughout a given month. However, the total downtime per month cannot exceed the 95% availability. - -------------------------------------- ------------------ --------------- ---------- -------------------- ----------------------- Hours Days Avg. Total Allowable DCL Locations of of Total Allowable Downtime per Operation Operation Hours Downtime per Month Week - -------------------------------------- ------------------ --------------- ---------- -------------------- ----------------------- Otay Mesa, CA 6am - 8pm Mon - Fri 70 3.5 hrs 16 hrs - -------------------------------------- ------------------ --------------- ---------- -------------------- ----------------------- San Ysidro, CA 6am -10pm Mon - Fri 8am - 8pm Sat & Sun 104 5.2 hrs 23 hrs - -------------------------------------- ------------------ --------------- ---------- -------------------- -----------------------
7.0 PERFORMANCE REQUIREMENTS The contractor shall provide DCL system maintenance in two major areas: Preventative Maintenance (PM) and Corrective Maintenance (CM). The contractor shall also manage a spare parts inventory deemed necessary to meet the 95% system availability rate. The requirements in each of these areas are detailed below. 7.1 PREVENTATIVE MAINTENANCE (PM) All Preventative Maintenance activities shall be performed on a periodic basis to ensure that the DCL systems and GES centers are always in a state where the likelihood of a critical failure is minimized. PM activities shall be performed on a schedule that ensures the system availability performance criteria stated in Section 6 of this SOW are met. PM shall be conducted in accordance with the periodic schedule listed in the following sections. 50 7.1.1 WEEKLY ACTIVITIES o Meet with the DCL and GES supervisors at the port to address any issues or concerns that may have come up during the week. Scheduling of maintenance activities for the upcoming week(s) shall be agreed upon during the weekly meeting as well. o Perform a visual inspection of all hardware used in the DCL system and GES center. Ensure that all of the hardware/software functions have been running as expected by checking error logs. o Thoroughly clean the Hand Geometry Unit (HGU) in the GES center using the procedure in the GES Maintenance Manual. o Thoroughly clean the Data Card Printer in the GES Center using the procedure in the GES Maintenance Manual. 7.1.2 MONTHLY ACTIVITIES o Check all cable connections in the rack and tighten all loose connections. o Log into each computer and conduct a scandisk and defrag of the hard drives. o Check to make sure there is at least 500 MB of free spac on the hard drives. o If space is at a minimum, back up all old border crossin event record (BCER) log files and delete all logs from the drive. o Relabel any equipment that has lost its original label. o Do a diagnostics on the APC UPS. o Do a network diagnostics by pinging and tracing all know devices on the network. o Test the system hardware by running applications and simulators on all primary and backup lane equipment. o Clean the backup tape drive in the GES Center using a cleaning tape along with the procedure in the GES Maintenance Manual. 7.1.3 QUARTERLY ACTIVITIES o Using compressed air, thoroughly clean all hardware to make them free of dust. o Check for and Install any software or hardware updates t the DCL system after approval of the appropriate Contractor and Government personnel. 7.2 CORRECTIVE MAINTENANCE For Corrective Maintenance activities the contractor shall diagnose, repair and/or replace and bring back to full service, all DCL systems covered under this contract. The contractor will provide all equipment and resources, including supplies, transportation of parts and skilled labor to fulfill these requirements. 7.2.1 TROUBLE CALL NOTIFICATION All trouble calls should be routed through the DHS CBP help desk to ensure that the proper notification protocol is followed in the reporting of the problem. All of the following information should be available to help facilitate a swift corrective action. 51 o Name and title of personnel reporting the problem o Site location, address, and telephone number o Name of the system (i.e., DCL Lane number, Validation System) o A detailed description of the problem and the events tha led to the problem. (For example, enrollee information is not appearing on the inspector's display; system does not seem to be responding.) o A description of when the problem first occurred (what task was being performed, e.g., problem first occurred after several cars passed through the lane. The lane seemed to be running slow, and then it seemed to freeze.) A trouble ticket is generated from the information and the appropriate person is notified to resolve the problem. The notification path to the maintenance contractor shall be setup to ensure that the performance criteria shall be met. The local area maintenance contractors shall have company cell phones to allow direct access from the DHS Help Desk personnel. A central answering service will also be made available to cover instances when the local contractors are not accessible. The DCL Inspectors and Supervisors shall also have direct access to the maintenance contractors; however, the standard protocol requires that the calls be routed through the DHS Help Desk. Once the DHS Help Desk has been informed of the problem and a trouble ticket has been generated, direct contact with the maintenance contractors is permitted. This method has proved effective in the past and present for maintenance work on the southern US border ports. 7.2.2 TROUBLE CALL RESPONSE TIME The Response Time for trouble calls are defined for both critical and non-critical failures. For all critical failures the contractor shall respond within two (2) operational hours of notification by a DHS official. All Non-critical failures require the contractor to respond within eight (8) operational hours of notification by a DHS official. Where feasible non-critical failures shall be repaired during non peak, or off hours so the impact on the operation of the port of entry is minimized. 7.3 SPARE PARTS INVENTORY MANAGEMENT The Contractor shall be responsible for managing the spare parts inventory to provide system availability rate of 95% as stated in Section 6 of this Statement of Work. Spare parts shall be billed to the prime contractor at purchased cost. Invoices and/or receipts shall be provided for all purchases when invoices are submitted to the prime contractor. The contractor's estimate of spare parts inventory is based on component/sub-system availability and component/subsystem impact on the system. A recommended spare parts list shall be agreed upon at the start of the maintenance period and may be modified based on in field experience over time. All additions, deletions, or quantity changes to the spares list shall be agreed 52 upon by both parties. There is no provision for local storage space included in the proposal thus if a requirement for one becomes necessary, the associated cost shall be added to the maintenance agreement. The contractor will exchange and replace defective or worn parts when such replacements are required to maintain proper operation. The spare parts inventory shall be replenished as it is used. 8.0 ADDITIONAL TASKS During the period of this Maintenance Agreement, there may be additional added scope work efforts proposed based on the Contractor's recommendations to improve the system. In this case, both parties must agree to the cost and level of effort required before such tasks are implemented. These additional tasks include, but are not limited to: o Technical Support o Special Installations o Software Support o Engineering/Development 9.0 DOCUMENTATION AND TRAINING At the time of award, the prime contractor shall provide all of the necessary maintenance documentation, manufacturer's drawings, and a complete set of "as-built" drawings for each DCL and GES location (as available). All user interface specifications and software flow diagrams shall be supplied as well. An intensive training session shall be provided by the prime contractor at the time of award. The contractor shall ensure that all of the DCL and GES maintenance technical team leaders attend this training session. The contractor shall be responsible for training all of the local maintenance team members. 10.0 DELIVERABLES The contractor will manage the maintenance effort and provide a log and summary report of maintenance activities on a monthly basis. The log and summary report of maintenance activities shall be provided by the third Monday of the month in a format acceptable to CSC and the Contractor. The log report will detail the time the trouble call was received, the time contractor responded, nature of the problem, corrective measures taken, mean time to repair, and length of time the system was down. The contractor will update and maintain the DCL and GES Maintenance Manuals as required to ensure that all of the documentation reflects the present system configuration and proper maintenance procedures. Sections detailing the debug procedures for commonly found problems will be incorporated as well. 53 11.0 PERSONNEL 11.1 PERSONNEL QUALIFICATIONS & BACKGROUND CHECK The Contractor shall provide qualified personnel to support the Statement of Work. Technically qualified personnel will be required to undergo a background investigation by the DHS to ensure their suitability for access to sensitive information. 11.2 PERSONNEL ALLOCATION REQUIREMENTS The current DCL/GES breakdown requires that two field engineers (San Ysidro and Otay Mesa DCL Sites) support the San Diego POE. The efforts of the field engineers shall be supported by a Technical Representative and a Program Manager at the contractor's home office. All reporting, documentation, accounting, management and administrative activities shall be executed by these individuals. These individuals shall be responsible for all POE expansion activities and all interfacing to the prime contractor. 12.0 PERIOD OF PERFORMANCE The period of performance for this SOW, which applies to the San Diego POE only, is from 8 December 2003 through 23 September 2004. This statement of work may be updated to reflect associated period of performances for the other POEs as the maintenance efforts at those ports are required. The intention is to use the San Diego Port of Entry as a performance verification site. 13.0 MAINTENANCE COST BASIS The cost basis for the maintenance effort has been modeled after the Ergo Systems maintenance and support the San Diego POE. This effort has been executed through a GSA contract with the government and the associated GSA rates (plus 2%) shall apply to this proposal as well. The billing rates are divided into 2 categories: Program Manager and Field Engineer as shown below: PERSONNEL LABOR CATEGORY LABOR RATE PER HOUR - ------------------------------------ ----------------------------- Program Manager $88.41/hr - ------------------------------------ ----------------------------- Field Service Engineer $72.83/hr - ------------------------------------ ----------------------------- Applying the labor rates to the required staffing the following table provides the weekly cost for the effort at the San Diego POE. Total costs for the POE shall be determined by applying the period of performance (in weeks) identified in Section 13 to the weekly cost total above. 54 SAN DIEGO PORT OF ENTRY ----------------------- Personnel Labor Category Labor Rate (Hr) Qty Required Total Cost - ---------------------------------- ---------------------- ------------------ --------------- Program Manager $88.41 0.25 $884.10 - ---------------------------------- ---------------------- ------------------ --------------- Home Office Tech. Rep. $72.83 0.25 $728.30 - ---------------------------------- ---------------------- ------------------ --------------- Field Service Engineers $72.83 2 $5,826.40 - ---------------------------------- ---------------------- ------------------ ---------------
14.0 POE ACTIVATION PROCEDURES Upon the agreement and acceptance of this SOW and the applicable contract documents the maintenance effort at the San Diego Port of Entry shall commence. All other POEs shall begin when the appropriate POE activation contract documents are signed and the period of performance has been agreed upon by both parties. Once a POE has been activated, there shall be a 60 day mobilization and training period before the maintenance effort is fully operational. Section 15 details the startup and mobilization efforts. After the activation contract has been signed by both parties, the activation shall remain in force for the entire period of performance. The following exceptions are the only valid causes for early termination of the contract: o Negligent performance by sub-contractor (as defined in performance rating document). o End or cancellation of government contract to prime contractor. 15.0 STARTUP SCHEDULE AND LOGISTICS The startup effort shall commence upon the contract award and a number of efforts will need to be accomplished in short order to ensure that the full maintenance team is in place and fully trained within 60 days of award. o TRAINING AND DEPLOYMENT PLAN - A plan shall be agreed upon for the prime contractor to train the maintenance team leaders. This plan and training time logistics (1 to 2 weeks at CSC mock up or on site) will be completed within 1 week of the contract award. The priorities and area coverage issues will be discussed and formalized as well. All of the documentation associated with the equipment to be maintained will be put together for training purposes. o MAINTENANCE TEAM LEADER TRAINING - An intensive training effort for the maintenance team leaders shall be executed in weeks 3 and 4 of the startup plan. This allows the team leaders to start training the local maintenance staff in week 5 when they start working. o LOCAL MAINTENANCE TEAM TRAINING - All local maintenance team training shall be executed at the respective sites. The site team leader and the local maintenance team shall investigate, review and understand all of the required maintenance activities over a 2-4 week period. The prime contractor shall have personnel available for remote issue resolution during this period. During this period the maintenance effort shall be in effect, however, the performance criteria and requirements shall NOT be in effect until the training period is completed. 55 EX-10.35 10 markland_ex10-35.txt EXHIBIT 10.35 LEASE AGREEMENT LANDLORD: 112 JULIAD COURT LLC TENANT: SCIENCE & TECHNOLOGY RESEARCH, INC. ii TABLE OF CONTENTS ARTICLE I Definitions of Certain Terms ARTICLE II Premises ARTICLE III Term ARTICLE IV Base Rent ARTICLE V Increases in Operating Charges ARTICLE VI Use of Premises ARTICLE VII Assignment, Subletting or Transfer ARTICLE VIII Maintenance and Repairs ARTICLE IX Alterations ARTICLE X Signs ARTICLE XI Security Deposit ARTICLE XII Holding Over ARTICLE XIII Insurance ARTICLE XIV Services and Utilities ARTICLE XV Liability of Landlord ARTICLE XVI Rules ARTICLE XVII Damage to Building ARTICLE XVIII Condemnation ARTICLE XIX Default ARTICLE XX Bankruptcy ARTICLE XXI Subordination ARTICLE XXII Quiet Enjoyment ARTICLE XXIII General Provisions LIST OF ATTACHMENTS: EXHIBIT A -- Diagram of Premises EXHIBIT B --Work Agreement EXHIBIT C -- Form of Certificate Affirming Lease Commencement Date EXHIBIT D -- Rules ii LEASE AGREEMENT THIS LEASE AGREEMENT (the "Lease") is dated as of the 11th day of October, 2000, by and between 112 JULIAD COURT LLC ("Landlord"), and SCIENCE & TECHNOLOGY, INC., a VIRGINIA CORPORATION ("Tenant"). ARTICLE I DEFINITIONS OF CERTAIN TERMS This Article defines certain terms used in this Lease. Certain other terms are defined in other places in this Lease. When used in this Lease, each term shall have the meaning indicated. 1.1 Anticipated Occupancy Date: NOVEMBER 1, 2000. 1.2 Base Rent: $45,975.00 for the first Lease Year (which amount is based on $10.00 S.F. OFFICE SPACE AND $4.50 S.F. WAREHOUSE SPACE per square foot of rentable area in the Premises) and adjusted for each succeeding Lease Year as provided herein. 1.3 Base Rent Escalator: FOUR percent (4%). 1.4 Broker(s): For Landlord: SULLIVAN PROPERTIES, INC. For Tenant: N/A. 1.5 Building: A building containing approximately 55,000 square feet of rentable office and warehouse area, known as 112 JULIAD CT. and located at 112 JULIAD COURT, STAFFORD COUNTY, VIRGINIA. 1.6 Building Architect: N/A. 1.7 "INTENTIONALLY LEFT BLANK" 1.8 Landlord's Address: C/O SULLIVAN PROPERTIES, INC. 608 WILLIAM STREET FREDERICSKSBURG, VIRGINIA 22401. 1.9 Parking Rent: $N/A per month per Permitted Parking Space for the first Lease Year adjusted for each succeeding Lease Year as provided herein. 1.10 Lease Term Length: 24 months. 1.11 "INTENTIONALLY LEFT BLANK" 1.12 Permitted Parking Spaces: 3 per 1,000 square feet of office space and 1 per 1,000 square feet of warehouse space, for a total of 14 parking spaces. The Permitted Parking Spaces shall be reasonably allocated among standard, compact, and subcompact spaces in the Building's parking facility. 1 1.13 Premises: APPROXIMATELY 2,910 S.F. OFFICE AND 3,750 S.F. WAREHOUSE of rentable area located on the 2ND floor of the Building, substantially as shown on Exhibit A. 1.14 Operating charges: Tenant shall pay proratta share of operating charges associated with the building. The definition of the charges can be found in section 5.2. The current charge, due monthly, is $1.40 per s.f. or $770.00 per month 1.15 Utility charges: Tenant shall pay utility charges associated with the Premises, which is further defined in section 5.4. The current charge, due monthly, is $1.50 per s.f. or $825. per month. 1.16 Security Deposit: An amount equal to ONE months initial Base Rent. 1.16 Space Plan Due Date: 10/11/00. 1.17 Tenant's Address: 112 JULIAD COURT, FREDERICKSBURG, VA 22406. 1.18 Tenant's Representative: EDWARD L. KESSLER, EXEC. V.P./GENERAL MANAGER. 1.19 Use: General office and light manufacturing use. ARTICLE II PREMISES 2.1 Tenant leases the Premises in the project identified in Paragraph 1.5, consisting of the building or buildings, roadways, sidewalks, utilities and other infrastructure improvements (the "Project") from Landlord for the term and upon the conditions and covenants stated in this Lease. Tenant shall have the non-exclusive right to use the common and public areas of the Building solely for purposes of ingress to and egress from the Building. 2.2 Tenant, its employees and visitors, shall have the right to park automobiles in the Building's parking spaces. The number of parking spaces available for Tenant, its employees and visitors shall be equal to the number of Permitted Parking Spaces set forth in Article I. Tenant shall not use, or permit its invitees to use, any number of spaces in excess of the number of Permitted Parking Spaces. Subject to availability, Tenant shall have the right to lease additional parking spaces on a month-to-month basis. ARTICLE III TERM 3.1 This Lease is effective between the parties when fully executed by them. The period referred to in this Lease as the "Lease Term" shall commence on the Lease Commencement Date determined as provided in Section 3.2. The Lease Term shall continue for the Lease Term Length shown in Article I; provided that, if the Lease Commencement Date is not the first day of a month, then the Lease Term shall continue for the Lease Term Length plus that number of days necessary to make the Lease Term expire on the last day of the month in which the Lease Term Length expires. The Lease Term shall also include any renewal or extension of the term of this Lease. 2 3.2 The "Lease Commencement Date" shall be the earlier of (a) the date Tenant Work is deemed Substantially Completed as determined pursuant to Exhibit B, or (b) the date Tenant commences beneficial use of the Premises. Tenant shall be deemed to have commenced beneficial use of the Premises when Tenant begins to move Furnishings into the Premises. "Furnishings" shall mean furniture, furnishings, inventory, equipment or trade fixtures. Promptly after the Lease Commencement Date is ascertained, Landlord and Tenant shall execute a certificate (substantially in the form of Exhibit C) confirming the Lease Commencement Date and any other matters reasonably requested by Landlord. 3.3 It is presently anticipated that the Premises will be delivered to Tenant on or about the Anticipated Occupancy Date. If Landlord does not complete construction and deliver possession of the Premises by such date, the rights and obligations of Landlord and Tenant shall be as set forth in the Work Agreement (as attached hereto as Exhibit B), and this Lease shall not be rendered voidable on account thereof. 3.4 "Lease Year" shall mean a period of twelve (12) consecutive months commencing on the Lease Commencement Date and each successive twelve (12) month period thereafter; provided, however, that if the Lease Commencement Date is not the first day of a month, then the second Lease Year shall commence on the first day of the month in which the first anniversary of the Lease Commencement Date occurs, and each successive Lease Year shall commence on the anniversary of the second Lease Year. The period in which the Lease Term expires or terminates shall be a Lease Year even if it is shorter than twelve (12) months. ARTICLE IV BASE RENT 4.1 Tenant shall pay the Base Rent in equal monthly installments in advance on the first day of each month during a Lease Year. On the first day of the second and each subsequent Lease Year, the Base Rent in effect shall be increased by an amount equal to the Base Rent Escalator multiplied by the Base Rent in effect immediately before the increase. If the day Tenant's rent obligation commences is not the first day of a month, then the Base Rent from such rent commencement date until the first day of the following month shall be prorated on a per diem basis at the rate of one-thirtieth (1/30) of the month installment of the Base Rent payable during the Lease Year in which the rent commencement date occurs. Concurrently with Tenant's execution of this Lease, Tenant shall pay an amount equal to one (1) monthly installment of the Base Rent in effect during the first Lease Year, which amount shall be credited toward the first monthly installment(s) of the Base Rent payable under this Lease after any rent abatement period has ended. 4.2 All Base Rent, additional rent and other sums payable by Tenant shall be paid to Landlord in legal tender of the United States, at Landlord's Address, or to such other party or such other address as Landlord may designate in writing. Landlord's acceptance of rent after it shall have become due and payable shall not excuse a delay upon subsequent occasions or constitute a waiver of rights. 3 ARTICLE V INCREASES IN OPERATING CHARGES 5.1 Tenant shall pay as additional rent Tenant's proportionate share of the Operating Charges during each calendar year falling entirely or partly within the Lease. For purposes of this Section, Tenant's proportionate share shall be that percentage (12%) which is equal to a fraction, the numerator of which is the number of square feet of rentable area in the Premises (6,600 S.F.), and the denominator of which is the number of square feet of rentable office and warehouse area in the Building (55,000 S.F.). 5.2 "Operating Charges" shall mean all expenses incurred in owning, operating, managing, maintaining and repairing the Building and/or the land on which it is located (the "Land"), including but not limited to: (a) Common area electricity, water, sewer and other utility charges; (b) insurance premiums; (c) management fees including, without limitation, salaries for on-site employees not above the level of building manager; (d) costs of service and maintenance contracts; (e) maintenance and repair expenses; (f) amortization of amounts under 5.2(i)(2), with interest at the published Wall Street Journal Prime Rate plus one percent (1%); (g) Real Estate Taxes; (h) charges or costs for janitorial services; (i) charges or costs to operate, maintain, or repair common or public areas or facilities of the Project, including charges or costs (1) to pay for landscaping in such common areas or facilities, (2) to pay for capital improvements (related to repairs and maintenance of the Project or to reduce Operating Charges, in which case such capital improvements will be depreciated over their usable life) in such common areas or facilities, (3) to pay for any transportation or means of transportation contemplated by any covenants or governmental requirements now or hereafter affecting the Building, and (4) to pay for any architectural review board or other administrative expenses; (j) any business, professional or occupational license tax payable by Landlord with respect to the Building; (k) reasonable reserves for replacements, repairs and contingencies with respect to common or public areas or facilities of the Project (not to include capital improvements except for those related to repairs and maintenance of the Project or to reduce Operating Charges, in which case such capital improvements will be depreciated over their usable life); (l) costs of decorating and landscaping the grounds and the common areas of the Building; and (m) any sales tax paid by Landlord with respect to goods and services in connection with the foregoing. Operating Charges shall not include: principal or interest payments on any mortgage, deed of trust or ground lease; leasing commissions; depreciation of the Building except as specified above; and the costs of special services or utilities separately charged directly to particular tenants of the Building. Current charge is $1.40 s.f. to be paid monthly along with the rent. 5.3 "Real Estate Taxes" shall mean: (a) all real estate taxes, including general and special assessments, if any, which are imposed upon Landlord or levied or assessed against the Building and/or the Land; (b) any other present or future taxes or governmental charges that are imposed upon Landlord or assessed against the Building or the Land which are in the nature of or in substitution for real estate taxes, including any tax levied on or measured by the rents payable by tenants of the Building; and (c) expenses (including reasonable attorneys' fees) incurred in reviewing or seeking a reduction of real estate taxes. 4 5.4 "UTILILTIES" shall mean all expenses incurred in supplying utilities, including but not limited to: electricity, water, sewer and natural gas. Current charge is $1.50 s.f. to be paid monthly along with the rent. Landlord reserves the right to separately meter any or all utilities. 5.5 Any assessments, charges, costs or taxes payable with respect to the Land or the Building because of their location within the Project, including real estate taxes assessed with respect to the common areas or facilities of the Project which (pursuant to the common covenants affecting the Project or otherwise) are properly allocated to the Land or the Building shall, where appropriate, be included in Operating Charges or Real Estate Taxes. 5.6 INTENTIONALLY LEFT BLANK 5.7 Within approximately one hundred twenty (120) days after the end of each calendar year, beginning 2001, Landlord shall submit a full and accurate accounting, including, but not limited to, an itemized statement showing (a) Tenant's proportionate share of the Operating Charges incurred during the preceding calendar year exceeded the Operating Charges (b) the aggregate amount of Tenant's payments during such year. If such statement indicates that the aggregate amount of such estimated payments exceeds Tenant's actual liability, then Landlord will credit the net overpayment to Tenant. If such statement indicates that Tenant's actual liability exceeds the aggregate amount of such estimated payments, then Tenant shall pay the amount of such excess within thirty (30) days of written notice from the Landlord. 5.8 Landlord's failure or delay in rendering any particular statement or statements contemplated by this Article shall not constitute a waiver of Landlord's right thereafter to render such statement or statements. 5.9 If the Lease Term commences or expires on a day other than the first day or the last day of a calendar year, respectively, then Tenant's liability for Operating Charges incurred during such year shall be proportionately reduced. ARTICLE VI USE OF PREMISES 6.1 Tenant shall use the Premises solely for the Use set forth in Article I and for no other use or purpose. Tenant shall not cause or allow the use or occupancy of the Premises in any manner which will or is likely to (a) violate any present or future laws, ordinances, regulations or orders (collectively, "Laws") or any covenants, conditions or restrictions now of record concerning the use and occupancy of the Premises and all Furnishings therein (b) constitute waste, nuisance or unreasonable annoyance to Landlord or any tenant of the Building, (c) impair or interfere with any base building systems or facilities, (d) adversely affect the character, appearance or reputation of the Building, or (e) increase the number of parking spaces required for the Building or materially increase the number of parking spaces used by Tenant. Tenant shall obtain and keep current any temporary or permanent occupancy or use permits required by any Law at Tenant's expense and promptly deliver a copy thereof to Landlord. 5 6.2 Tenant shall pay before delinquency any business, rent or other tax or fee that is now or hereafter assessed or imposed upon Tenant's use or occupancy of the Premises, the conduct of Tenant's business in the Premises or Tenant's Furnishings or personal property. If any such tax or fee is enacted or altered so that such tax or fee is imposed upon Landlord or so that Landlord is responsible for collection or payment thereof, then Tenant shall deliver a receipt or proof of payment for any such tax or fee as levied or charged from time to time or, if requested by Landlord, Tenant shall pay the amount of such tax or fee and the costs of any collection thereof promptly to Landlord upon demand. 6.3 Tenant shall not generate, use, store or dispose of any Hazardous Materials in or about the Building or the Land. "Hazardous Materials" shall mean: (a) "hazardous wastes," as defined by the Resource Conservation and Recovery Act of 1976, as amended from time to time; (b) "hazardous substances," as defined by the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended from time to time; (c) "toxic substances," as defined by the Toxic Substances Control Act, as amended from time to time; (d) "hazardous materials," as defined by the Hazardous Materials Transportation Act, as amended from time to time; (e) oil or other petroleum products; and (f) any substance whose presence could be detrimental to the Building or hazardous to health or the environment. This restriction shall not be deemed to prevent Tenant's reasonable use of materials, which are typical in the day to day use of space for general office purposes. ARTICLE VII ASSIGNMENT, SUBLETTING OR TRANSFER 7.1 (a) A "Transfer" is any assignment, subletting, use, occupancy or transfer of the Premises or any part thereof by or to anyone other than Tenant. A "Transferee" is any individual, group or entity to whom a Transfer is made. Tenant shall not Transfer this Lease or any of Tenant's rights or obligations hereunder, without Landlord's prior written consent, which consent may be granted or withheld in Landlord's discretion provided that such consent shall not be withheld or delayed if the following conditions all have been satisfied: (i) In the reasonable judgment of the Landlord, the proposed Transferee is of a character and financial worth such as is in keeping with the standards of Landlord in those respects for the Building, and the nature of the proposed Transferee's business and its reputation are in keeping with the character of the Building and its tenancies. (ii) The purposes for which the proposed Transferee intends to use the Premises or the applicable portion thereof are uses expressly permitted by and not prohibited by this Lease including, without limitation, the provisions of Article VI hereof, and by any other lease in the Building. (iii) The proposed occupancy shall not increase the office cleaning requirements, exceed the capacity of any base building system including, without limitation, the electrical, heating, ventilation and air-conditions system, or impose a material extra burden upon the Building's parking, equipment or services. (iv) In the event any such Transfer will result in there being more than two (2) tenants in addition to Tenant in the Premises, any additional Transfer shall be subject to Landlord's reasonable determination that the number of additional tenants shall not adversely affect other tenants' use of the Building, the operation and maintenance of the Building, or otherwise detract from the character of the Building as a comparable office and warehouse space. 6 (v) "INTENTIONALLY LEFT BLANK" (vi) No Event of Default, and no uncured default, shall have occurred under this Lease, either at the time Landlord's consent to such Transfer is requested, or at the commencement of the term of any proposed Transfer, or upon the effective date of any such Transfer, and Tenant shall have complied with all of the terms of this Article VII in connection with such Transfer. (vii) The proposed Transferee shall not be entitled, directly or indirectly, to diplomatic or sovereign immunity and shall not be a government or quasi government agency and shall be subject to the service of process in, and under the jurisdiction of the courts of, the state in which the Building is situated. (viii) The term of any proposed Transfer shall not be less than six (6) months in length, except to the extent that the balance of the Lease Term at the time of such proposed Transfer shall be less than six (6) months. (ix) In the event there have been more than two (2) previous Transferees during the term of this Lease of any single portion of the space proposed to be Transferred, any additional Transferee shall be subject to Landlord's reasonable determination that the fluctuation in tenants shall not adversely affect other tenants' use of the Building, the operation and maintenance of the Building, or otherwise detract from the character of the Building as comparable office and warehouse space. (x) Any Mortgagee whose consent is required shall have consented to such Transfer. (xi) The proposed Transferee shall not have been specifically identified in writing by Landlord's broker as a prospective tenant who remains in active negotiations with Landlord within the ninety (90) days immediately preceeding the initial request for the transfer. (b) No Transfer of this Lease may be effected by operation of law or otherwise without Landlord's prior written consent as provided above. Any Transfer, Landlord's consent thereto or Landlord's collection or acceptance of rent from any Transferee shall not be construed as (i) an acceptance of such Transferee as a tenant, (ii) a waiver or release of Tenant from liability hereunder, or (iii) a waiver of Tenant's and any Transferee's obligation to obtain Landlord's prior written consent to any subsequent Transfer. With respect to any permitted assignment of this Lease, Tenant assigns to Landlord any sum due from any Transferee as security for Tenant's performance of its obligations pursuant to this Lease. Tenant authorizes each such Transferee to pay such sum directly to Landlord if such Transferee receives written notice from Landlord specifying that such rent shall be paid directly to Landlord. All restrictions and obligations imposed pursuant to this Lease on Tenant shall be deemed to extend to any Transferee, and Tenant shall cause any Transferee to comply with all such restrictions and obligations. If the Lease Term or Tenant's right of possession shall terminate prior to the stated expiration of the Lease Term, then, at Landlord's option in its sole and absolute discretion, Landlord may (but shall not be required to) succeed to the rights of Tenant under any or all Transfers. Tenant shall not mortgage, pledge or encumber this Lease without Landlord's prior written consent, which consent may be granted or withheld in Landlord's sole and absolute discretion. Tenant shall pay the reasonable expenses (including attorneys' fees) incurred by Landlord in connection with Tenant's request for Landlord to give its consent to any Transfer or Mortgage. 7 7.2 If Tenant is a partnership, then any dissolution of Tenant or a withdrawal or change, whether voluntary, involuntary or by operation of law, of partners owning a controlling interest in Tenant shall be deemed a Transfer of this Lease subject to this Article. If Tenant is a corporation, then any dissolution, merger, consolidation or other reorganization of Tenant, or any sale or transfer of a controlling interest of its capital stock, shall be deemed a Transfer of this Lease subject to this Article. If any Transfer is deemed to have occurred pursuant to this Section, the Transferee shall be deemed to be paying the greater of fair market rent or the actual rent to be paid by such Transferee after any abatement or free rent period for purposes of determining the excess rent referred to in Section 7.5 below. 7.3 In order to request the consent of Landlord to a Transfer pursuant to this Article, Tenant shall give Landlord written notice ("Tenant's Request Notice") of the identity of the proposed Transferee and its business, all terms of the proposed Transfer, the commencement date of the proposed Transfer, (the "Proposed Transfer Commencement Date") and the area proposed to be assigned or sublet (the "Proposed Transfer Space"). Tenant shall also transmit therewith the most recent financial statement or other evidence of financial responsibility of such Transferee, a certification executed by Tenant and such proposed Transferee stating whether (and to what extent) any premium or other consideration is being paid for the proposed Transfer, and all other information reasonably requested by Landlord concerning such proposed Transferee. Tenant agrees to pay Landlord's reasonable attorney's fees and costs incurred in connection with any proposed assignment or subletting. 7.4 Landlord shall have the right in its sole and absolute discretion to terminate this Lease with respect to the Proposed Transfer Space by sending Tenant written notice within thirty (30) days after Landlord's receipt of Tenant's Request Notice. If the Proposed Transfer Space does not constitute the entire Premises and Landlord elects to terminate this Lease with respect to the Proposed Transfer Space, then: (a) Tenant shall tender the Proposed Transfer Space to Landlord on the Proposed Transfer Commencement Date as if the Proposed Transfer Commencement Date had been originally set forth in this Lease as the expiration date of the Lease Term with respect to the Proposed Transfer Space; and (b) as to all portions of the Premises other than the Proposed Transfer Space, this Lease shall remain in full force and effect except that the Permitted Parking Spaces, the additional rent payable pursuant to Article V, the Parking Rent, and the Base Rent shall be reduced proportionately based on square footage. Tenant shall pay all expenses of demising walls and other construction required to permit the operation of the Proposed Transfer Space separate from the balance of the Premises. If the Proposed Transfer Space constitutes the entire Premises and Landlord elects to terminate this Lease, then: (1) Tenant shall tender the Premises to Landlord on the Proposed Transfer Commencement Date; and (2) the Lease Term shall terminate on the Proposed Transfer Commencement Date. 8 7.5 If the Transferee is to pay any amount in excess of the rent and other charges due under this Lease, then, whether such excess be in the form of an increased rental, lump sum payment, payment for the sale or lease of fixtures or other leasehold improvements which were provided pursuant to the Work Agreement or any other form (and if the applicable space does not constitute the entire Premises, the existence of such excess shall be determined on a pro rata basis), Tenant shall pay to Landlord any such excess (net of reasonable and customary specific costs associated with the assignment or sublease, such as improvements to the Premises and brokerage fees) upon such terms as shall be specified by Landlord and in no event later than ten (10) days after Tenant receives (or is deemed to have received) such excess. Landlord shall have the right to inspect Tenant's books and records relating to any Transfer. Any Transfer shall be effected on forms supplied or approved by Landlord. ARTICLE VIII MAINTENANCE AND REPAIRS 8.1 Tenant shall at its sole expense keep and maintain the Premises and all Furnishings including, without limitation, any supplemental heating, ventilating or air conditioning equipment and any other equipment located in the Premises in clean, safe and sanitary condition and in good order and repair, shall suffer no waste or injury thereto, and at the expiration or earlier termination of the Lease Term, shall surrender the Premises in the same order and condition in which they were on the Lease Commencement Date, ordinary wear and tear excepted. Except as otherwise provided in Article XVII, all injury, breakage and damage to the Premises and to any other part of the Building or the Land caused by any act or omission of any invitee, agent, employee, subtenant, assignee, contractor, client, family member, or licensee (collectively "Invitees") or Tenant, shall be repaired by and at Tenant's expense, except that Landlord shall have the right at Landlord's option to make any such repair and to charge Tenant for all reasonable costs and expenses incurred in connection therewith. Tenant responsible for janitorial and cleaning services for the premises. 8.2 Subject to the provisions of Article V, Landlord shall provide janitorial and cleaning services for the Building common areas consistent with a comparable office and warehouse space in Stafford County, Virginia; maintenance in good order, condition and repair of the parking facilities and all driveways leading thereto, as well as all walkways, keeping the same free from any unreasonable accumulation of snow; maintenance in a neat, safe and orderly condition of all landscaped areas; maintenance in good order and repair consistent with a comparable office and warehouse space in Stafford County, Virginia of the Premises and the remainder of the Building and the Project including but not limited to the exterior structure and systems, the walls, load bearing elements, foundations, pipes and conduits, roof and common areas that form a part of the Premises, parking areas, elevators, and the building standard mechanical, electrical, HVAC and plumbing systems, provided, however, that Tenant shall be responsible for those obligations set forth in Article 8.1 hereof. ARTICLE IX ALTERATIONS 9.1 The original improvement of the Premises shall be accomplished by Landlord in accordance with Exhibit B. Landlord is under no obligation to make any alterations, decorations, additions, improvements or other changes in or to the Premises or to the Building (collectively "Alterations") except as set forth in Exhibit B or otherwise expressly provided in this Lease. As used in this Lease, Alterations shall not include the hanging of pictures or other minor improvements to the Premises such as repainting or recarpeting, provided that such improvements are consistent with a comparable office and warehouse space. 9 9.2 Tenant shall not make or permit anyone to make any Alteration without Landlord's prior written consent, which consent shall not unreasonably be withheld. Any Alteration made by Tenant shall be subject to the preceding sentence and shall be made: (a) in a good, workmanlike, first-class and prompt manner; (b) using new materials only; (c) by a contractor and in accordance with plans and specifications and procedures approved in writing by Landlord; (d) in accordance with all Laws and the requirements of any insurance company insuring the Building and any Mortgagee; (e) after obtaining Landlord's written approval of a workmen's compensation insurance and any other insurance policy required by Landlord; and (f) after delivering to Landlord (i) an architect's certificate that such Alteration will conform to all applicable Laws, (ii) a copy of all necessary permits obtained from governmental authorities having jurisdiction, and (iii) written, unconditional waivers of mechanics' and materialmen's liens against the Premises and the Building from all proposed contractors, subcontractors, laborers and material suppliers for all work and materials in connection with such Alteration. If any lien (or a petition to establish a lien) is filed in connection with any Alteration, then such lien (or petition) shall be discharged (or proceedings shall have been filed for the purpose of discharging any such lien) by Tenant at Tenant's expense within ten (10) days thereafter by the payment thereof or filing of a bond acceptable to Landlord. Landlord's consent to the making of any Alteration shall be deemed not to constitute Landlord's consent to subject its interest in the Premises or the Building to liens which may be filed in connection therewith. Tenant shall hire Landlord (or its designee) to perform any Alteration, provided that the charge to Tenant therefor is reasonable. Tenant shall furnish Landlord with an updated set of "as-built" drawings reflecting any Alterations made by Tenant. 9.3 If any Alteration is made without Landlord's prior written consent, then Landlord shall have the right at Tenant's expense to remove and correct such Alteration and restore the Premises and the Building to their condition immediately prior thereto or to require Tenant to do the same. All Alterations made by either party shall immediately become Landlord's property and shall remain upon and be surrendered with the Premises at the expiration or earlier termination of the Lease Term except that Tenant shall be required to remove all Alterations (including any initial improvements to the Premises designated to be removed on the initial plans) which Landlord designates in writing (at the time such Alterations are approved) for removal. Notwithstanding the foregoing sentence, if Tenant is not in default under this Lease, then Tenant shall have the right to remove, prior to the expiration or earlier termination of the Lease Term, all Movable Furnishings installed in the Premises solely at Tenant's expense. "Movable Furnishings" shall be deemed to exclude any item which would normally be removed from the Premises with the assistance of any tool or machinery other than a dolly. If any such Furnishings are not removed by Tenant prior to the expiration or earlier termination of the Lease Term, then the same shall become Landlord's property and shall be surrendered with the Premises as a part thereof; provided, however, that Landlord shall have the right to remove from the Premises at Tenant's expense such Furnishings and any Alteration, designated for removal by Landlord in writing, which Tenant fails to remove. Landlord shall have the right to repair at Tenant's expense all damage to the Premises or the Building caused by Tenant's removal of Furnishings or Alterations designated by Landlord in writing for removal or to require Tenant to do the same. 10 ARTICLE X SIGNS 10.1 Landlord, at its expense, will list Tenant's name in the Building directory, if any, and provide building standard signage on or near the primary suite entry door. Tenant shall not paint, affix or otherwise display on any part of the exterior or interior of the Building any other sign, advertisement or notice. If any such item that has not been approved by Landlord is so displayed, then Landlord shall have the right to remove such item at Tenant's expense or to require Tenant to do the same. ARTICLE XI SECURITY DEPOSIT 11.1 Concurrently with Tenant's execution of this Lease, Tenant shall deposit with Landlord the Security Deposit as security for the performance of all of Tenant's obligations, covenants, conditions and agreements under this Lease. Landlord shall not be required to pay interest on the Security Deposit or to maintain the Security Deposit in a separate account. Upon any default by Tenant, Landlord may use or apply all or part of the Security Deposit to reimburse Landlord for any loss or expense incurred by reason of such default or to pay any sum that Tenant fails to pay. Within three (3) business days after written notice of Landlord's use of the Security Deposit, Tenant shall deposit with Landlord cash in an amount sufficient to restore the Security Deposit to its prior amount. Within approximately sixty (60) days after the later of (a) the expiration or earlier termination of the Lease Term, or (b) Tenant's vacating the Premises, Landlord shall return the Security Deposit less such portion thereof as Landlord may have used to satisfy Tenant's obligations. If Landlord transfers the Security Deposit to a transferee of the Building or Landlord's interest therein, then such transferee (and not Landlord) shall be liable for its return. Any Mortgagee shall not be liable for the return of the Security Deposit unless such Mortgagee actually receives the Security Deposit. ARTICLE XII HOLDING OVER 12.1 Tenant acknowledges that it is extremely important that Landlord have substantial advance notice of the date on which Tenant will vacate the Premises, because Landlord will (a) require an extensive period to locate a replacement tenant, and (b) plan its entire leasing and renovation program for the Building in reliance on its lease expiration dates. Tenant also acknowledges that if Tenant fails to surrender the Premises at the expiration or earlier termination of the Lease Term, then it will be conclusively presumed that the value to Tenant of remaining in possession, and the loss that will be suffered by Landlord as a result thereof, far exceed the Base Rent and additional rent that would have been payable had the Lease Term continued during such holdover period. Therefore, if Tenant does not immediately surrender the Premises upon the expiration or earlier termination of the Lease Term, then the rent shall be increased to equal the greater of (1) fair market rent for the Premises, or (2) one and one-half (1.5) times the Base Rent, additional rent and other sums that would have been payable pursuant to the provisions of this Lease if the Lease Term had continued during such holdover period. Such rent shall be computed on a monthly basis and shall be payable on the first day of such holdover period and the first day of each calendar month thereafter during such holdover period until the Premises have been vacated. Landlord's acceptance of such rent shall not in any manner adversely affect Landlord's other rights and remedies, including Landlord's right to evict Tenant and to recover damages. 11 Notwithstanding the foregoing, if Landlord consents in writing to Tenant holding over at the expiration or earlier termination of the Lease Term (which consent may be withdrawn by Landlord upon the giving of thirty (30) days prior notice to Tenant), then the rent during such holdover period shall be the greater of (1) fair market rent for the Premises, or (2) the Base Rent, additional rent and other sums that would have been payable pursuant to the provisions of this Lease if the Lease Term had continued during such holdover period. ARTICLE XIII INSURANCE 13.1 Tenant shall not conduct or allow any activity or place or allow the placement of any item in or about the Building which may (i) subject Landlord to any increased risk of liability for injury to any person or property, (ii) cause any increase in the insurance rates on any policies of insurance carried by Landlord covering the Building, or cause insurance companies of good standing to refuse to insure the Building in amounts reasonably satisfactory to Landlord, (iii) result in the cancellation of any policy of insurance or the assertion of any defense by the insurer to any claim under any policy of insurance maintained by or for the benefit of Landlord, or (iv) violate any insurance requirement. If any increase in the cost of such insurance is due to any such activity or item, then (whether or not Landlord has consented to such activity or item) Tenant shall pay the amount of such increase as additional rent within five (5) days after Landlord's demand. The statement of any insurance company or insurance rating organization (or other organization exercising similar functions in connection with the prevention of fires or the correction of hazardous conditions) that such an increase is due to any such activity or item shall be conclusive evidence thereof. 13.2 Tenant shall maintain throughout the Lease Term, with a company licensed to do business in the jurisdiction in which the Building is located, approved by Landlord and having a rating equal to or exceeding A:XI in Best's Insurance Guide: (a) broad form comprehensive general liability insurance (written on an occurrence basis and including contractual liability coverage insuring the obligations assumed by Tenant pursuant to Section 15.2 and an endorsement for personal injury); (b) all-risk property insurance; (c) comprehensive automobile liability insurance (covering automobiles owned by Tenant); (d) Broad Form Boiler and Machinery Insurance on all air conditioning equipment, miscellaneous electrical apparatus, boilers and other pressure vessels or systems, whether fired or unfired, installed by Tenant (or by Landlord, at Tenant's expense) in or serving the Premises, either as part of the extended coverage insurance mentioned in clause (b) of this Section or in amounts set by Landlord, but in no event less than One Million Dollars ($1,000,000); (e) during the course of construction of any Alterations by Tenant in the Premises and until completion thereof, Builder's Risk insurance on an "all risk" basis (including collapse) on a completed value (non-reporting) form for full replacement value, covering interests of Landlord and Tenant (and their respective contractors and subcontractors) and any Mortgagee, in all work incorporated in the Building and all materials and equipment in or about the Premises; (f) Workers' Compensation Insurance, as required by law; and (g) such other insurance in such amounts as Landlord may reasonably require from time to time. All such insurance shall contain only reasonable "deductibles." The minimum amounts of insurance required under this Section shall not be construed to limit the extent of Tenant's liability under this Lease. Such liability 12 insurance shall be in minimum amounts typically carried by prudent tenants engaged in similar operations, but in no event shall be in an amount less than two million dollars ($2,000,000) combined single limit per occurrence for bodily injury or death to any one person or any number of persons, and two million dollars ($2,000,000) general aggregate for property damage. Such property insurance shall be in an amount not less than that required to replace all work done to the Premises in excess of that covered by the Work Agreement. Such automobile liability insurance shall be in an amount not less than one million dollars ($1,000,000) combined single limit per occurrence for bodily injury and property damage and two million dollars ($2,000,000) in the aggregate. All liability insurance shall name Landlord and any Mortgagee of Landlord as additional insureds. All property insurance shall contain an endorsement that such insurance shall remain in full force and effect notwithstanding that the insured may have waived its claims against any person prior to the occurrence of a loss, and provide that the insurer waives all right of recovery by way of subrogation against Landlord, its officers, agents and employees. All of Tenant's insurance shall contain an endorsement prohibiting modification, expiration or cancellation (1) as to the interests of Landlord and any Mortgagee of Landlord by reason of any act or omission of Tenant, and (2) without the insurer's giving Landlord thirty (30) days' prior written notice of such action. Landlord reserves the right from time to time to reasonably require Tenant to obtain higher minimum amounts of insurance. Tenant shall deliver a certificate of insurance and receipts evidencing payment of the premium for all required insurance policies (and, upon request, copies of all required insurance policies, including endorsements and declarations) to Landlord on or before the Lease Commencement Date and at least annually thereafter, no less than thirty (30) days prior to the earliest expiration date on such certificate. 13.3 Landlord shall keep the Building insured against loss or damage by fire and such other risks as are now or may be customarily covered with respect to buildings and improvements similar in construction, general location, use, occupancy and design. Landlord shall also maintain for its benefit and for the benefit of Tenant and other tenants of the Building general public liability insurance against claims for personal injury, death or property damage occurring upon, in or about the Project, such insurance to afford protection to Landlord and its managing agent, if applicable, of a combined single limit of Two Million and No/100 Dollars ($2,000,000) in respect to the injury, death or property damage arising out of any accident or occurrence. Landlord agrees to include in its general public liability insurance policy the contractual liability coverage insuring Landlord indemnification obligations provided for herein. Any such coverage shall be deemed primary to any liability coverage secured by Tenant. 13.4 These insurance provisions shall in no way limit or modify any of the obligations of Landlord or Tenant under any provisions of this Lease. The parties agree that such policies of insurance shall permit releases of liability as provided herein and/or waiver of subrogation clauses in favor of each party and each waives, releases and discharges the other from all claims or demands whatsoever which the other may have or acquire under this Lease to the extent of insurance coverage for such event or occurrence. Insurance premiums paid for insurance coverage required under this Article XIII by Landlord shall be a portion of the Operating Expenses described in Article V hereof. ARTICLE XIV SERVICES AND UTILITIES 13 14.1 Landlord shall furnish to the Premises air-conditioning and heating during the seasons they are required consistent with a comparable office and warehouse space in Stafford County, Virginia. Landlord shall provide maintenance services as provided in Article VIII; electricity (24 hours a day/7 days a week); water (24 hours a day/7 days a week); elevator service (24 hours a day/7 days a week. The normal hours of operation of the Building will be 8:00 a.m. to 6:00 p.m. on Monday through Friday (except Holidays) and 9:00 a.m. to 1:00 p.m. on Saturday (except Holidays) and such other hours, if any, as Landlord determines. Landlord agrees to provide Tenant with advance notice of any scheduled utility outages if Landlord has advance notice of such outages. If Tenant requires air-conditioning or heat beyond the normal operating hours, then Landlord will furnish the same at Tenant's expense in accordance with Landlord's then-current schedule, provided Tenant gives Landlord sufficient advance notice (not less than 24 hours) of such requirement. Subject to the provisions of this Lease, Tenant shall have access by electronic card-key system or key to the Building twenty-four (24) hours a day, seven (7) days a week, three hundred sixty-five (365) days a year. 14.2 INTENTIONALLY LEFT BLANK ARTICLE XV LIABILITY OF LANDLORD 15.1 Landlord, its members, employees, agents and mortgagees, except for gross negligence or willful misconduct, shall not be liable to Tenant, any invitee or any other person or entity for any damage (including indirect and consequential damage), injury, loss or claim (including claims for the interruption of or loss to business) based on or arising out of any cause whatsoever (except as otherwise provided in this Section), including without limitation the following: repair to any portion of the Premises or the Building; interruption in the use of the Premises or any equipment therein; any accident or damage resulting from any use or operation (by Landlord, Tenant or any other person or entity) of elevators or heating, cooling, electrical, sewerage or plumbing equipment or apparatus; termination of this Lease by reason of damage to the Premises or the Building; fire, robbery, theft, vandalism, mysterious disappearance or any other casualty; actions of any other tenant of the Building or of any other person or entity; failure or inability to furnish any service or utility specified in this lease; and leakage in any part of the Premises or the Building from water, rain, ice or snow that may leak into, or flow from, any part of the Premises or the Building, or from drains, pipes or plumbing fixtures in the Premises or the Building. If any condition exists that may be the basis of a claim of constructive eviction, then Tenant shall give Landlord written notice thereof and a reasonable opportunity to correct such condition, and in the interim Tenant shall not claim that it has been constructively evicted or is entitled to a rent abatement. Any property placed by Tenant or Invitees in or about the Premises or the Building shall be at the sole risk of Tenant, and Landlord shall not in any manner be responsible therefor. If any employee of Landlord receives any package or article delivered for Tenant, then such employee shall be acting as Tenant's agent for such purpose and not as Landlord's agent. For purposes of this Article, the term "Building" shall be deemed to include the Land. Notwithstanding the foregoing provisions of this Section, Landlord shall not be released from liability to Tenant for any physical injury to any natural person or other damage or loss caused by, or resulting from, Landlord's gross negligence or intentional acts. 15.2 Unless arising or resulting from Landlord's gross negligence or willful misconduct, Tenant shall reimburse Landlord for, and shall indemnify, defend upon request and hold Landlord, its employees and agents harmless from and against, all costs, damages, claims, liabilities, expenses (including attorneys' fees), losses and court costs suffered by or claimed against 14 Landlord, directly or indirectly, based on or arising out of, in whole or in part: (a) use and occupancy of the Premises or the business conducted therein; (b) any act or omission of Tenant or any Invitee; (c) any breach of Tenant's obligations under this Lease, including failure to surrender the Premises upon the expiration or earlier termination of the Lease Term, (d) any entry by Tenant or any Invitee in or upon the Building prior to the Lease Commencement Date; or (e) the breach of any representation or warranty made by Tenant in this Lease. 15.3 If any landlord hereunder transfers the Building or such landlord's interest therein, then such landlord shall not be liable for any obligation or liability based on or arising out of any event or condition occurring after such transfer. Within five (5) days after request, Tenant shall attorn to such transferee and execute, acknowledge and deliver any document submitted to Tenant confirming such attornment (at no cost to Tenant). 15.4 Tenant shall not have the right to offset or deduct the amount allegedly owed to Tenant pursuant to any claim against Landlord from any rent or other sum payable to Landlord. Tenant's sole remedy for recovering upon such claim shall be to institute an independent action against Landlord. 15.5 If Tenant or any Invitee is awarded a money judgment against Landlord, then recourse for satisfaction of such judgment shall be limited to execution against Landlord's estate and interest in the Building. No other asset of Landlord, any member, manager, partner, director or officer of Landlord (collectively "Officer") or any other person or entity shall be available to satisfy or be subject to such judgment, nor shall any Officer or other person or entity have personal liability for satisfaction of any claim or judgment against Landlord or any Officer. ARTICLE XVI RULES 16.1 Tenant and Invitees shall observe the rules specified in Exhibit D and any other rule not inconsistent with this Lease, of which notice is given, that Landlord may promulgate for the operation or maintenance of the Building. Landlord shall have no duty to enforce such rules or any provision of any other lease against any other tenant; provided that Landlord shall not enforce the rules against Tenant in a way that discriminates unfairly against Tenant. ARTICLE XVII DAMAGE TO BUILDING 17.1 If the Premises or the Building are totally or partially damaged by fire or other casualty, and (a) Landlord's insurance is insufficient (through no fault of Landlord and provided that Landlord has maintained insurance on the Building in accordance with Article 13.3 hereof) to pay the full cost of the repair and restoration to be performed by Landlord, (b) any Mortgagee fails or refuses to make such insurance proceeds available for such repair and restoration, (c) zoning or other applicable Laws do not permit such repair and restoration, (d) the cost of repair and restoration exceeds twenty-five percent (25%) of the replacement value of the Building, or (e) in Landlord's judgment the period needed for effecting a satisfactory settlement with any insurance company involved, removing debris, preparing plans, obtaining all required governmental permits and other approvals and completing such repair and restoration will exceed two hundred seventy (270) days after the occurrence of such damage, then Landlord shall have the right, at its sole option, to 15 terminate this Lease by giving written notice of termination within forty-five (45) days after the occurrence of such damage, or, if later, within ten (10) days after Landlord last receives notice of the existence of any of the circumstances in clauses (a) through (e) above. Landlord shall have no liability to Tenant in the event Landlord's estimate of the time frame for the circumstances in clause (e) above proves inaccurate. If the Premises are totally or partially damaged by fire or other casualty that renders the Premises totally or partially inaccessible or unusable, and the conditions in clause (e) above exist with respect to the Premises, then Tenant shall have the right, at Tenant's option, to terminate this Lease by giving written notice of termination within forty-five (45) days after the occurrence of such damage, or, if earlier, within ten (10) days after Landlord notifies Tenant that Landlord intends to proceed with repair and restoration as required by this Article. If this Lease is terminated pursuant to this Article, then rent shall be apportioned (and rebated to Tenant if applicable) (based on the portion of the Premises which is usable after such damage) and paid to the date of termination. 17.2 If this Lease is not terminated as a result of such damage, then, after collecting the insurance proceeds attributable to such damage (including the proceeds of any insurance maintained by Tenant with respect to work in excess of the work performed pursuant to the Work Agreement, which proceeds shall be paid to Landlord), Landlord shall diligently repair and restore the Premises to substantially the same condition they were in prior to such damage; provided, however, that Landlord shall not be required to repair or restore any of Tenant's Furnishings or personal property. Landlord shall bear the expenses of such repair and restoration of the Premises and the Building; provided, however, that: (a) if such damage or destruction was caused by the act or omission of Tenant or any Invitee, then Tenant shall pay the amount by which such expenses exceed the insurance proceeds, if any, actually received by Landlord on account of such damage and the amount of any deductible; and (b) Tenant shall pay the amount by which the cost of restoring any work in excess of the work performed pursuant to the Work Agreement exceeds the insurance proceeds, if any, received with respect thereto. If this Lease is not terminated as a result of such damage, then commencing on the date of the occurrence of such casualty until such repair and restoration of the Premises are substantially complete, Tenant shall be required to pay the Base Rent and additional rent only for the portion of the Premises that is usable for Tenant to reasonably conduct its business while such repair and restoration are being made; provided, however, that: (1) if such damage was caused by the act or omission of Tenant or any Invitee, then Tenant shall not be entitled to any such rent reduction; and (2) if a delay in the substantial completion of such repair and restoration shall occur as a result of any cause of the kind described in the Work Agreement as a Tenant Delay, including any failure by Tenant to provide Landlord with plans and specifications for such repair or restoration within fifteen (15) days of Landlord's request or any delay by Tenant in giving authorizations, approvals or substitutions necessary for completion of the repair or restoration, then Tenant shall not be entitled to any rent reduction for any period in excess of the period which would be necessary regardless of the aforementioned delays to restore the Premises to the Tenant Cost Allowance condition. ARTICLE XVIII CONDEMNATION 18.1 If one-third or more of the area of the Premises or occupancy thereof shall be taken or condemned by any governmental or quasi-governmental authority for any public or quasi-public use or purpose or sold under threat of such a taking or condemnation (collectively, "Condemned" or "Condemnation"), then this Lease shall terminate on the date title vests in such authority and rent shall be apportioned as of such date. If less than one-third of the Premises or 16 occupancy thereof is Condemned and Tenant is thereafter able to reasonably conduct its business, then this Lease shall continue in full force and effect as to the part of the Premises not Condemned, except that as of the date title vests in such authority Tenant shall not be required to pay the Base Rent and additional rent with respect to the part of the Premises Condemned. If any Condemnation reduces the number of parking spaces available to the Building, then the number of Permitted Parking Spaces shall be reduced proportionately. If there is a Condemnation of the Land or the Building for which the award, damages and other compensation can reasonably be expected to exceed twenty-five percent (25%) of the replacement value of the Land or Building, then regardless of whether the Premises are affected, Landlord shall have the right to terminate this Lease as of the date title vests in such authority by written notice to Tenant within forty-five (45) days of the date title vests in such authority. 18.2 All awards, damages and other compensation paid by such authority on account of such Condemnation shall belong to Landlord, and Tenant assigns to Landlord all rights to such awards, damages and compensation. Tenant shall not make any claim against Landlord or the authority for any portion of such award, damages or compensation attributable to damage to the Premises, value of the unexpired portion of the Lease Term, loss of profits or goodwill, leasehold improvements or severance damages. Nothing contained herein, however, shall prevent Tenant from pursuing a separate claim against the authority for the value of Furnishings installed in the Premises at Tenant's expense and for relocation expenses; provided that such claim shall in no way diminish the amounts payable to Landlord in connection with such Condemnation. ARTICLE XIX DEFAULT 19.1 An "Event of Default" is: (a) Tenant's failure to pay any Base Rent, additional rent or other sum within five (5) days of the date on which such sum is due; (b) Tenant's failure to perform or observe any other covenant or condition, which failure continues for thirty (30) days after written notice of such failure is sent by Landlord to Tenant; (c) Tenant's failure to occupy continuously the Premises (except as provided for in Article VII); (d) an Event of Bankruptcy as specified in Article XX; (e) Tenant's dissolution or liquidation; or (f) any material breach of representation or warranty by Tenant. 19.2 This Lease is entered into on the express condition that if there shall be an Event of Default, including an Event of Default prior to the Lease Commencement Date, then the provisions of this Section shall apply. Landlord shall have the right, at its sole option, to terminate this Lease. In addition, with or without terminating this Lease, Landlord may re-enter, terminate Tenant's right of possession and take possession of the Premises pursuant to this Article XIX or under applicable laws, or by such other proceedings, including re-entry and possession, as may be applicable. The provisions of this Article shall operate as a notice to quit, any other notice to quit or of Landlord's intention to re-enter the Premises being expressly waived. If Landlord elects to terminate this Lease and/or elects to terminate Tenant's right of possession, then all of Landlord's obligations as set forth in this Lease shall cease. Landlord may relet the Premises or any part thereof, alone or together with other premises, for such term(s) (which may extend beyond the date on which the Lease Term would have expired but for Tenant's default) and on such terms and conditions (which may include reasonable concessions and alterations of the Premises) as Landlord, in its sole discretion, may determine, but 17 Landlord shall not be liable for, nor shall Tenant's obligations be diminished by reason of, Landlord's failure to relet the Premises or collect any rent due upon such reletting. Whether or not this Lease is terminated, Tenant nevertheless shall remain liable for the Base Rent, additional rent and any other sums or damages which may be due or sustained prior to the later of termination of this Lease or Landlord's recovery of possession of the Premises, and all costs, fees and expenses (including without limitation reasonable attorney's fees, brokerage fees and expenses incurred in placing the Premises in first-class rentable condition) incurred by Landlord in pursuit of its remedies and in renting the Premises to others from time to time. Tenant shall also be liable for additional damages which at Landlord's election shall be either Monthly Damages or Present Value Damages. "Monthly Damages" shall be an amount equal to the Base Rent and additional rent which would have become due during the remainder of the Lease Term, less the amount of rental, if any, which Landlord receives during such period from others to whom the Premises may be rented (other than any additional rent payable as a result of any failure of such other person to perform any of it obligations), which damages shall be computed and payable in monthly installments, in advance, on the first day of each calendar month following Tenant's default and continuing until the date on which the Lease Term would have expired but for Tenant's default. Separate suits may be brought to collect any such Monthly Damages for any month(s), and such suits shall not in any manner prejudice Landlord's right to collect any such damages for any subsequent month(s), or Landlord may defer any such suit until after the expiration of the Lease Term, in which event such suit shall be deemed not to have accrued until the expiration of the Lease Term. "Present Value Damages" shall be an amount equal to the present value (as of the date of Tenant's default) of the Base Rent and additional rent which would have become due through the date on which the Lease Term would have expired but for Tenant's default, which damages shall be payable to Landlord in a lump sum on demand. For purpose of this Section, present value shall be computed by discounting at a rate equal to one (1) whole percentage point above the discount rate then in effect at the Federal Reserve Bank with jurisdiction over banks in the area in which the Building is located. Tenant waives any right of redemption, re-entry or restoration of the operation of this Lease under any present of future law, including any such right which Tenant would otherwise have if Tenant shall be dispossessed for any cause. Landlord agrees to make reasonable efforts to mitigate its damages hereunder. 19.3 Landlord shall have the right to terminate any renewal or expansion right contained in this Lease, and to grant or withhold any consent or approval pursuant to this Lease in its sole and absolute discretion, if an Event of Default has occurred. If this Lease requires Landlord to be reasonable in giving any prior written consent or approval of an action by Tenant, Landlord nevertheless shall not be required to be reasonable in approving the action of Tenant if Tenant took the action without first seeking Landlord's prior written consent pursuant to this Lease. Landlord shall have no obligation to refund to Tenant or to credit to Tenant against any other amounts or installments coming due to Landlord hereunder any amount otherwise owed or creditable by Landlord to Tenant pursuant to the terms of this Lease if an Event of Default has occurred (except that as a result thereof Landlord shall not be entitled to receive more than 100% of what it is entitled to receive from Tenant under this Lease). The provisions of this Section shall apply notwithstanding anything to the contrary in this Lease, and whether or not this Lease and/or Tenant's right of possession is terminated as a result of Tenant's default. 18 19.4 After the occurrence of an Event of Default, any abatement of Base Rent and additional rent payable for Operating Charges for periods subsequent to the Event of Default shall be null and void. Landlord's right to receive the Base Rent and additional rent for such future abatement period shall be in addition to any other remedies available to Landlord as a result of such Event of Default, termination or re-entry. 19.5 Landlord's rights and remedies set forth in this Lease are cumulative and in addition to Landlord's other rights and remedies at law or in equity. Landlord's exercise of any such right or remedy shall not prevent the concurrent or subsequent exercise of any other right or remedy. Landlord's delay or failure to exercise or enforce any of Landlord's rights or remedies or Tenant's obligations shall not constitute a waiver of any such rights, remedies or obligations. Landlord shall not be deemed to have waived any default unless such waiver expressly is set forth in an instrument signed by Landlord. Any such waiver shall not be construed as a waiver of any covenant or condition except as to the specific circumstances described in such waiver. Neither Tenant's payment of an amount less than a sum due nor Tenant's endorsement or statement on any check or letter accompanying such payment shall be deemed an accord and satisfaction. Notwithstanding any request or designation by Tenant, Landlord may apply any payment received from Tenant to any payment then due. Landlord may accept the same without prejudice to Landlord's right to recover the balance of such sum or to pursue other remedies. Re-entry and acceptance of keys shall not be considered an acceptance of a surrender of this Lease. 19.6 If more than one natural person and/or entity shall constitute Tenant or if Tenant is a general partnership or other entity, the partners or members of which are subject to personal liability, then the liability of each such person, entity, partner or member shall be joint and several. If Tenant is a partnership, without limiting any other proper means for service of process upon Tenant or its partners, Tenant represents and warrants to Landlord that each General Partner has irrevocably appointed the person to whom notices to Tenant under this Lease are to be addressed as its agent for service of process in all matters relating to this Lease. Tenant represents and warrants to Landlord that neither Tenant, nor any Guarantor, nor any General Partner, is entitled, directly or indirectly, to diplomatic or sovereign immunity. 19.7 If Tenant fails to make any payment to any third party or to do any act herein required to be made or done by Tenant in relation to this Lease, the Landlord may, but shall not be required to, make such payment or do such act. Landlord's taking such action shall not be considered a cure of such failure by Tenant or prevent Landlord from pursuing any remedy it is otherwise entitled to in connection with such failure. If Landlord elects to make such payment or do such act, then all expenses incurred, plus interest thereon at the Default Rate from the date incurred to the date of payment thereof by Tenant, shall constitute additional rent. The "Default Rate" shall equal the rate per annum which is the greater of eighteen percent (18%) or three (3) whole percentage points above the Wall Street Journal Prime Rate or such replacement rate as Landlord may designate if said prime rate is not available. 19.8 If Tenant fails to make any payment of the Base Rent, additional rent or any other sum payable to Landlord on or before five (5) days after the date such payment is due and payable, then Tenant shall pay a late charge of five percent (5%) of the amount of such payment. In addition, such payment shall bear interest at the Default Rate from the date such payment was due to the date of payment. 19 ARTICLE XX BANKRUPTCY 20.1 An "Event of Bankruptcy" is: the occurrence, with respect to Tenant, any guarantor or surety of this Lease ("Guarantor"), or any general partner in Tenant (a "General Partner") of any of the following: (a) any such person's becoming insolvent, as that term is defined in Title 11 of the United States Code (the "Bankruptcy Code"), or under the insolvency laws of any state (the "Insolvency Laws"); (b) appointment of a receiver or custodian for any property of any such person, or the institution of a foreclosure or attachment action upon any property of any such person; (c) filing of a voluntary petition by any such person under the provisions of the Bankruptcy Code or Insolvency Laws; (d) filing of an involuntary petition against any such person as the subject debtor under the Bankruptcy Code or Insolvency Laws, which either (1) is not dismissed within sixty (60) days after filing, or (2) results in the issuance of an order for relief against the debtor; or (e) any such person's making or consenting to an assignment for the benefit of creditors or a composition of creditors. 20.2 Upon occurrence of an Event of Bankruptcy, Landlord shall have all rights and remedies available pursuant to Article XIX; provided, however, that while a case (the "Case") in which Tenant is the subject debtor under the Bankruptcy Code is pending, Landlord's right to terminate this Lease shall be subject, to the extent required by the Bankruptcy Code, to any rights of Tenant or its trustee in bankruptcy (collectively, "Trustee") to assume or assign this Lease pursuant to the Bankruptcy Code. Trustee shall not have the right to assume or assign this Lease unless Trustee promptly: (a) cures all defaults under this Lease; (b) compensates Landlord for damages incurred as a result of such defaults; (c) provides adequate assurance of future performance on the part of Tenant or Tenant's assignee; (d) complies with the other requirements of this Article; and (e) complies with all other requirements of the Bankruptcy Code. If Trustee fails to assume or assign this Lease in accordance with the requirements of the Bankruptcy Code within sixty (60) days after the initiation of the Case, then Trustee shall be deemed to have rejected this Lease. Adequate assurance of future performance shall require that the following minimum criteria be met: (1) Tenant's gross receipts in the ordinary course of business during the thirty (30) days preceding the Case must be greater than ten (10) times the next monthly installment of the Base Rent and additional rent; (2) both the average and median of Tenant's monthly gross receipts in the ordinary course of business during the seven (7) months preceding the Case must be greater than ten (10) times the next monthly installment of the Base Rent and additional rent; (3) Trustee must pay its estimated pro-rata share of the cost of all services performed or provided by Landlord (whether directly or through agents or contractors and whether or not previously included as part of the Base Rent) in advance of the performance or provision of such services; (4) Trustee must agree that Tenant's business shall be conducted in a first-class manner, and that no liquidating sale, auction or other non-first-class business operation shall be conducted in the Premises; (5) Trustee must agree that the Use of the Premises as stated in this Lease shall remain unchanged and that no prohibited use shall be permitted; (6) Trustee must agree that the assumption or assignment of this Lease shall not violate or affect the rights of other tenants in the Building and the Project; (7) Trustee must pay at the time the next monthly installment of the Base Rent is due, in addition to such installment, an amount equal to the monthly installments of the Base Rent and additional rent due for the next six (6) months thereafter, such amount to be held as a security deposit; (8) Trustee must agree to pay, at any time Landlord draws on such security deposit, the amount necessary to restore such security deposit to its original amount; and (9) all assurances of future performance specified in the Bankruptcy Code must be provided. If Trustee shall propose to assume and assign this Lease to any 20 person who shall have made a bona fide offer to accept an assignment of this Lease on terms acceptable to Trustee, then notice of such proposed assignment shall be given to Landlord by Trustee no later than twenty (20) days after receipt by Trustee of such offer, but in any event no later than ten (10) days prior to the date that Trustee shall make application to the court of competent jurisdiction for approval to assume this Lease and enter into such assignment, and Landlord shall thereupon have the option, to be exercised by notice to Trustee given at any time prior to the date of such application, to accept an assignment of this Lease upon the same terms and conditions and for the same consideration, if any, as the offer made by such person, less any brokerage commissions which may be payable out of the consideration to be paid by such person for the assignment of this Lease. ARTICLE XXI SUBORDINATION 21.1 A "Mortgage" is any of the following now or hereafter in effect: any mortgage, deed of trust, financing statement or similar security or financing instrument securing any existing or future debt or obligation and encumbering or affecting the Building; any master lease, ground lease or other underlying lease or sublease under which Landlord is lessee or sublessee of the Building; and all renewals, extensions, modifications, recastings or refinancings of any such agreement or instrument. A "Mortgagee" is the holder or other party secured by, or lessor under, any Mortgage and shall include trustees and successors and assigns of such party whether immediate or remote, the purchaser of any Mortgage whether at foreclosure or otherwise, and the successors, assigns and Mortgagees of such purchaser whether immediate or remote. A "Foreclosure" is any foreclosure, trustee's sale, deed-in-lieu of foreclosure, termination or other enforcement. The provisions of this Article shall be effective without any further document signed by Tenant; however, in confirmation of the provisions of this Article, Tenant shall at Landlord's request promptly execute any requisite or appropriate documents. Tenant appoints Landlord as Tenant's attorney-in-fact to execute any such documents for Tenant. 21.2 This Lease is subject and subordinate to the lien, operation and effect of all Mortgages and any and all advances made or hereafter made under each such Mortgage, except that if and to the extent specifically elected by any Mortgagee in writing, at its sole option, this Lease shall be deemed superior to such Mortgagee's Mortgage and any Mortgage which is subordinate to such Mortgage, to the extent necessary to prevent any Foreclosure of such Mortgage and/or Mortgages from terminating or affecting this Lease and Tenant's rights hereunder, but such superiority shall not limit the ability of any Mortgagee to exercise the other rights granted in its Mortgage, including but not limited to the right to direct the application of insurance or condemnation proceeds. Such election by a Mortgagee may be made in its Mortgage, in an advertisement of a Foreclosure sale, or in a separate document executed before, or within a reasonable time after, a Foreclosure. Tenant waives the provisions of any statute or rule of law now or hereafter in effect which may give or purport to give Tenant any right to terminate or otherwise adversely affect this Lease or Tenant's obligations in the event any Foreclosure is prosecuted or completed or in the event the Land, the Building or Landlord's interest therein is sold at a Foreclosure. If this Lease is not terminated or extinguished upon such Foreclosure or by the purchaser or successor ("Successor") following such Foreclosure, then Tenant shall attorn to such Successor and shall recognize such Successor as the landlord under this Lease. Upon such attornment such Successor shall not be: (a) bound by any payment of the Base Rent or additional rent more than one (1) month in advance; (b) bound by any amendment of this Lease made 21 without the written consent of the Mortgagee under each Mortgage existing as of the date of such amendment; (c) liable for any breach, act or omission of any prior landlord; (d) subject to any offsets, defenses or counterclaims which Tenant might have against any prior landlord; (e) obligated to perform any work for Tenant or the Premises; or (f) liable for the return of any security deposit not actually received by such Successor. Any liability of the Mortgagee or Successor hereunder shall exist only during the time such Mortgagee or Successor is the owner of the Land, Building or the Project and shall be subject to any other limitations of liability under this Lease. 21.3 If any lender or prospective lender providing financing secured by the Building requires as a condition of such financing that modifications to this Lease be obtained, and provided that such modifications (a) are reasonable, (b) do not affect in a material manner Tenant's use of the Premises as herein permitted, and (c) do not increase the rent and other sums to be paid by Tenant, then Tenant shall execute, acknowledge and deliver to Landlord (at no cost to Tenant) an amendment to this Lease incorporating such modifications within five (5) days after receipt of such amendment from landlord. 21.4 Tenant shall be entitled to rely on any notice which Tenant receives from any Mortgagee stating that such Mortgagee is exercising its rights under its Mortgage and is thereafter entitled to receive all amounts thereafter due under this Lease; provided that Tenant has first received from such Mortgagee written notice of the existence of such Mortgage, together with a copy of the relevant provision of the applicable instrument and a copy of any and all notices to Landlord pursuant to which said Mortgagee is exercising said right to receive the amounts thereafter due hereunder. ARTICLE XXII QUIET ENJOYMENT 22.1 Landlord covenants that if Tenant shall perform timely all of its obligations, then, subject to the provisions of this Lease, Tenant shall during the Lease Term peaceably and quietly occupy and enjoy possession of the Premises without hindrance by Landlord or anyone rightfully claiming through Landlord. 22.2 Landlord reserves the right to: (a) change the street address and name of the Building or the Project; (b) change the arrangement and location of entrances, passageways, doors, doorways, corridors, elevators, stairs, toilets or other public parts of the Building; (c) erect, use and maintain pipes and conduits in and through the Premises; (d) grant to anyone the exclusive right to conduct any particular business in the Building not inconsistent with the permitted Use of the Premises; (e) use or lease exclusively the roof areas, the sidewalks and other exterior areas; (f) resubdivide the Land or to combine the Land with other lands; (g) construct improvements (including kiosks) on the Land and in the public and common areas of the Building; (h) relocate any parking area designated for Tenant's use; and (i) install and display signs, advertisements and notices on any part of the exterior or interior of the Building. Exercise of any such right shall not be considered a constructive eviction or a disturbance of Tenant's business or occupancy. 22 22.3 Without limiting the generality of the preceding Section, Tenant's rights under this Lease shall extend only to the surfaces facing the interior of the space identified in Article I as the Premises, and not to any other areas, including but not limited to: (a) exterior walls; (b) the space above the hung ceiling; (c) the space below the underside of the Premises; (d) the Land; (e) the roof of the Building; and (f) the common or public areas of the Building (except for ingress and egress purposes expressly permitted by this Lease). No easement for light or air is incorporated in the Premises. 22.4 Landlord shall have the right to change the location and configuration of the Premises subject to the following terms and conditions: (a) if Tenant has commenced beneficial use of the Premises, then Landlord shall provide Tenant not less than thirty (30) days' advance written notice of the date Tenant must vacate the Premises; (b) Landlord shall provide Tenant with substitute space of similar nature and size elsewhere in the Building (the "Substitute Premises"); and (c) Landlord shall, at Landlord's expense, (1) remove Tenant's Furnishings from the Premises and reinstall them in the Substitute Premises, and (2) redecorate the Substitute Premises in a manner substantially similar to the manner in which the Premises were decorated. Within ten (10) days after Landlord submits an amendment of this Lease indicating the location and configuration of the Substitute Premises and reasonable revisions (if necessary) to the schedule specified in Exhibit B, Tenant shall execute such amendment. 22.5 Tenant shall permit Landlord and Landlord's designees to enter the Premises, without charge or diminution of rent therefore, to inspect, maintain and exhibit (with prior reasonable notice) the Premises and to install, maintain, repair, replace or relocate for service building service fixtures, equipment and facilities wherever located in the Building provided that substitutions thereof are substantially equivalent or better. ARTICLE XXIII GENERAL PROVISIONS 23.1 Tenant acknowledges that neither Landlord nor any broker, agent or employee of Landlord has made any representation or promise with respect to the Premises or the Building except as expressly set forth herein, and no right is being acquired by Tenant except as expressly set forth herein. This Lease contains the entire agreement of the parties and supersedes all prior agreements, negotiations, letters of intent, proposals, representations, warranties and discussions between the parties. This Lease may be changed in any manner only by an instrument signed by both parties. 23.2 Nothing contained in this Lease shall be construed as creating any relationship between Landlord and Tenant other than that of landlord and tenant. 23.3 Landlord and Tenant each warrants that in connection with this Lease it has not employed or dealt with any broker, agent or finder other than the Broker(s). Landlord and Tenant shall indemnify and hold each other harmless from and against any claim for brokerage or other commissions asserted by any other broker, agent or finder. 23.4 From time to time as reasonably requested by Landlord and upon ten (10) days' prior written notice, Tenant and each Transferee shall execute, acknowledge and deliver to Landlord and any designee of Landlord a written statement certifying: (a) that this Lease is unmodified and in full force and effect (or that this Lease is in full force and effect as modified and stating the modifications); (b) the amount of Base Rent and additional rent and the 23 dates to which rent and any other charges have been paid; (c) that Landlord is not in default in the performance of any obligation (or specifying the nature of any default); (d) the address to which notices are to be send; (e) the Lease Commencement Date and date of expiration of the Lease Term; (f) that Tenant has accepted the Premises and all work thereto has been completed (or specifying the incomplete work); and (g) such other matters as Landlord may reasonably request. From time to time upon five (5) days' prior written notice (but not more than once every calendar year), Tenant shall deliver to Landlord the most current financial statements of Tenant, each Guarantor (if any) and each General Partner (if any), together with such additional information regarding the financial or other condition of such persons as Landlord may request. The financial statements for each such person shall be audited or reviewed to the most rigorous level or review of any financial statements previously delivered to Landlord for such person. Tenant represents and warrants to Landlord that all financial statements and information previously or in the future delivered to Landlord regarding Tenant, any Guarantor and any General Partner shall be true, correct and complete. Tenant represents and warrants to Landlord that there has been no material adverse change in Tenant's financial condition from that depicted in the financial statements previously delivered to landlord by Tenant. Any material breach of the representations and warranties contained in the two (2) immediately preceding sentences shall constitute an Event of Default under this Lease. Any statements delivered pursuant to this Section may be relied upon by any owner of the Building or the Land, any prospective purchaser of the Building or the Land, any lender or prospective lender, or any other person or entity. Tenant acknowledges that time is of the essence to the delivery of such statements and Tenant's failure to deliver timely such statements may cause substantial damages resulting from, for example, delays in obtaining financing secured by the Building. 23.5 Landlord, Tenant, Guarantors and General Partners waive trial by jury in any action, claim or counterclaim brought in connection with any matter arising out of or in any way connected with this Lease, the landlord-tenant relationship, Tenant's use or occupancy of the Premises or any claim of injury or damage. Tenant consents to service of process and any pleading relating to any such action at the Premises; provided, however, that nothing herein shall be construed as requiring such service at the Premises. Landlord, Tenant, all Guarantors and all General Partners waive any objection to the venue of any action filed in any court situated in the jurisdiction in which the Building is located and waive any right to transfer any such action filed in any such court to any other court. 23.6 All notices or other required communications shall be in writing and shall be deemed duly given when delivered in person (with receipt therefor), or when sent by Federal Express or other overnight courier or when sent by certified or registered mail, return receipt requested, postage prepaid, to the Addresses set forth in Article I. Any party may change its Address for the giving of notices by notice given in accordance with this Section. 23.7 Each provision of this Lease shall be valid and enforceable to the fullest extent permitted by law. If any provision or its application to any person or circumstance shall to any extent be invalid or unenforceable, then such provision shall be deemed to be replaced by the valid and enforceable provision most substantively similar thereto, and the remainder of this Lease and the application of such provision to other persons or circumstances shall not be affected. 24 23.8 This Section sets forth certain rules of construction, which shall apply to this Lease and all agreements and Exhibits supplemental to this Lease, unless the context otherwise requires. Feminine, masculine or neuter pronouns shall be substituted for those of another form, and the plural or singular shall be substituted for the other number, in any place in which the context may require. The term "person" includes natural persons as well as corporations, partnerships and other entities. The terms "include," "such as" and the like shall be construed as if followed by the phrase "without being limited to." The terms "herein," "hereunder" and the like shall refer to this Lease as a whole, not to any particular Section or other part, unless expressly so stated. The term "tenant" shall include any and all occupants of the Building. The terms "consent," "approval" and the like shall mean prior written consent and approval. References to days, months or years shall refer to calendar days (i.e. Sunday, Monday, etc.), calendar months (i.e. January, February, March, etc.), or calendar years (i.e. 1990, 1991, etc.) unless expressly so stated. The terms "business day," "work day" and the like shall mean any day other than Saturday, Sunday or a Holiday. 23.9 The provisions of this Lease shall be binding upon and inure to the benefit of the parties and their respective representatives, successors and assigns, subject to the provisions herein restricting Transfers. No other person shall have any rights hereunder or be deemed a third-party beneficiary of this Lease. 23.10 This Lease shall be governed by the laws of the Commonwealth of Virginia. 23.11 Headings and any table of contents or index are used for convenience and shall not be considered when construing this Lease. 23.12 The submission to Tenant of an unsigned copy of this document, including drafts and correspondence submitted to Tenant by any person on Landlord's behalf, shall not constitute an offer or option to lease. This Lease shall become effective and binding only upon execution and delivery by both Landlord and Tenant. 23.13 Time is of the essence with respect to each provision of this Lease. 23.14 This Lease may be executed in multiple counterparts, each of which is deemed an original and all of which constitute one and the same document. Neither this Lease nor a memorandum thereof shall be recorded. 23.15 Tenant hereby waives any right to damages based upon Landlord's actually or allegedly wrongfully withholding or delaying any consent under or in connection with this Lease. Tenant's sole remedy for any wrongfully withheld or delayed consent shall be a proceeding for specific performance, or injunction or declaratory judgment. In no event shall Tenant be entitled to any other rights or remedies arising from any such withholding or delaying of consent. 23.16 Landlord reserves the right to make reasonable changes to the plans and specifications for the Building without Tenant's consent, provided such changes do not alter the character of the Building as a comparable office and warehouse space and that such changes be done in a commercially reasonable manner. 25 23.17 Except as otherwise provided in this Lease, any additional rent or other sum owed by Tenant to Landlord, and any cost, expense, damage or liability incurred by Landlord for which Tenant is liable, shall be considered additional rent payable pursuant to this Lease and paid by Tenant no later than ten (10) days after the date Landlord notifies Tenant in writing of the amount thereof. If Tenant wishes to object to any statement rendered by Landlord setting forth the amount of any additional rent, Tenant shall give Landlord written notice, specifying in reasonable detail the grounds for Tenant's objection, within ten (10) days after the statement is rendered to Tenant; provided that such objection shall not entitle Tenant to reduce or delay paying any additional rent. Tenant shall be deemed to have waived any such objection if Tenant does not give Landlord the written notice of objection as and when described above. 23.18 The rentable area of the Building and the Premises shall be determined by the Landlord in accordance with the BOMA Standard Method of Measurement. In the event the Landlord determines that any square footage shown in Article I varies from the correct square footage, the Base Rent and any other amount based on such square footage shall be appropriately adjusted in an amendment to this Lease prepared by Landlord and executed by Landlord and Tenant. 23.19 Tenant's and Landlord's liabilities existing as of the expiration or earlier termination of the Lease Term shall survive such expiration or earlier termination. 23.20 Except for Tenant's payment obligations or as otherwise provided herein, if Landlord or Tenant are in any way delayed or prevented from performing any obligation due to fire, act of God, governmental act or failure to act, labor dispute, inability to procure materials or any cause beyond their reasonable control (whether similar or dissimilar to the foregoing events), then the time for performance of such obligation (except for Tenant's financial obligations hereunder) shall be excused for the period of such delay or prevention and extended for a period equal to the period of such delay or prevention. 23.21 The deletion of any printed, typed or other portion of this Lease, or any earlier draft of this Lease, shall not evidence an intention to contradict such deleted portion. Such deleted portion shall be deemed never to have been inserted in this Lease. 23.22 Tenant and Landlord agree to keep confidential all terms of this Lease, as well as any and all discussions and/or negotiations related to this Lease, except for disclosures required by either party on a "need to know" basis to employees, agents and representatives, including counsel and accountants. 23.23 The persons executing this Lease on Tenant's and Landlord's behalf warrant that such they are duly authorized to so act. 26 IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the date first above written. WITNESS: LANDLORD: [INSERT NAME] ______________________________ By: ____________________________________ Name: __________________________________ Title: _________________________________ WITNESS: TENANT: [NAME] ______________________________ By:_____________________________________ Name:___________________________________ Title: _________________________________ EXHIBIT A DIAGRAM OF PREMISES A-1 EXHIBIT B WORK AGREEMENT 1. LANDLORD'S WORK Landlord shall deliver space to Tenant with the following improvements: o Office walls painted and holes repaired. o Add HVAC to warehouse area. o Install separation wall in office hallway and modify reception area wall. o Install separation wall and two 3 ft. doors in warehouse. o Install 8 outlets in warehouse area. o Install utility sink in warehouse area. o Install 3 ft. door connecting office and warehouse area. o Install kitchen cabinet, counter, sink in lunch area o Enclose water closets in both rest rooms and add urinal in men's room. 2. TENANT'S REPRESENTATIVE Tenant has appointed the Tenant's Representative as its authorized representative with full power and authority to bind Tenant for all actions taken with regard to the Tenant Work. Tenant hereby ratifies all actions and decisions with regard to the Tenant Work that Tenant's Representative may have taken or made prior to the execution of the Lease. Landlord shall not be obligated to respond to or act upon any plan, drawing, change order or approval or other matter relating to the Tenant Work until it has been executed by Tenant's Representative. Neither Tenant nor Tenant's Representative shall be authorized to direct Landlord's contractors with respect to the Tenant Work. In the event that Landlord's contractors perform any such work under the direction of Tenant or Tenant's Representative, then Landlord shall have no liability for the cost of such work, the cost of corrective work required as a result of such work, any delay that may result from such work, or any other problem in connection with such work. B-1 SCHEDULE I: BUILDING STANDARD TENANT ALLOWANCE B-2 EXHIBIT C FORM OF CERTIFICATE AFFIRMING LEASE COMMENCEMENT DATE The Certificate to be executed by Landlord and Tenant pursuant to Section 3.2 of the Lease shall provide as follows: "This Certificate is being provided pursuant to the terms and provisions of that certain lease agreement dated as of ____________, 2000 (the "Lease"), by and between _____________________________ and _____________________. The parties confirm the following: 1. The Lease Commencement Date is _________________ ____, 2000. 2. The initial term of the Lease shall expire on __________________ ____, 2000. 3. The agreed rentable square footage of the Premises is: _________________. 4. The agreed number of Permitted Parking Spaces allocated to Tenant is ______________." WITNESS: LANDLORD: [NAME] ______________________________ By: _________________________________ Name: _______________________________ Title: ______________________________ WITNESS: TENANT: [NAME] ______________________________ By: _________________________________ Name: _______________________________ Title: ______________________________ C-1 EXHIBIT D RULES 1. Tenant and Invitees shall not obstruct or encumber or use for any purpose other than ingress and egress to and from the Premises any sidewalk, entrance, passage, court, elevator, vestibule, stairway, corridor, hall or other part of the Building or Land not exclusively occupied by Tenant. Landlord shall have the right to control and operate the public portions of the Building and Land and the facilities furnished for common use of the tenants, in such manner as Landlord deems best for the benefit of the tenants generally. Tenant shall not permit the visit to the Premises of persons in such numbers or under such conditions as to interfere with the use and enjoyment of the entrances, corridors, elevators and other public portions or facilities of the Building or Land by other tenants. Tenant shall coordinate in advance with Landlord's property management department all move-ins, move-outs and deliveries to the Building, including all use of any freight elevator, so that Landlord shall have advance knowledge thereof and so that arrangements can be made to minimize such interference. Tenant and Invitees shall not use any of the parking spaces designated for use by visitors or by handicapped persons only or the roof of the Building. 2. Tenant and Invitees shall not place any showcase, mat or other article in any common or public area of the Building. Tenant and Invitees shall not place objects against glass partitions or doors or windows or adjacent to any open common space which would be unsightly from the Building corridors or from the exterior of the Building, and will promptly remove the same upon notice from Landlord. Tenant and Invitees shall not at any time place, leave or discard any rubbish, paper, articles, or objects of any kind whatsoever outside the doors of the Premises or in the corridors or passageways of the Building, or on the Land. Tenant shall not store vehicles or trailers upon the Property. 3. Tenant and Invitees shall not use the water and wash closets and other plumbing fixtures for any purpose other than those for which they were constructed and shall not place any debris, rubbish, rag or other substance therein. 4. Tenant and Invitees shall not construct, maintain, use or operate within the Premises any electrical device, wiring or apparatus in connection with a loudspeaker system or other sound system without Landlord's prior written consent. Tenant and Invitees shall not construct, maintain, use or operate any such loudspeaker or sound system outside of the Premises. This does not pertain to Tenant's quiet communication system which is approved. 5. Tenant and Invitees shall not bring any bicycle, vehicle, animal, bird or pet of any kind into the Building, except for assisted living animals. 6. Tenant shall not, and Tenant shall not permit or suffer anyone to: (i) cook in the Premises, except for the use of microwave ovens or coffee machines by Tenant's employees and visitors for their own consumption; (ii) install any vending or dispensing machine of any kind in or about the Premises, except as specifically contemplated by the Tenant Work described in Exhibit B to the Lease, without Landlord's prior written approval of such equipment and its location within the Premises; (iii) cause or permit any unusual or objectionable odor to be produced upon or permeate from the Premises; or (iv) use any space in the Building or on the Land for the sale of goods to the public at large or for the sale at auction of goods or property of any kind. E-1 7. Tenant shall not place or allow on any floor a load exceeding the floor load per square foot which such floor was designed to carry (i.e., one hundred (100) pounds per square foot calculated as follows: seventy-five (75) pounds per square foot live load and twenty-five (25) pounds per square foot dead load). Landlord shall have the right to prescribe the weight, position and manner of installation of safes and other heavy items. Landlord shall have the right to repair at Tenant's expense any damage caused by Tenant's moving property into or out of the Premises or due to the same being in or upon the Premises or to require Tenant to do the same. Tenant and Invitees shall not receive into the Building or carry in the elevators any furniture, equipment or bulky item except as approved by Landlord, and any such furniture, equipment and bulky item shall be delivered only through the designated delivery entrance of the Building and the designated freight elevator. Tenant shall remove promptly from sidewalks adjacent to the Building items delivered for Tenant. 8. Door keys for doors in the Premises will be furnished at the commencement of the Lease by Landlord. Tenant shall not place or allow additional locks or bolts of any kind on any door or window or make any change in any lock or locking mechanism without Landlord's prior written approval and shall provide duplicate keys to Landlord for any such additional locks or bolts. Tenant shall keep doors leading to a corridor or main hall closed at all times except as such doors may be used for ingress or egress. Upon the termination of its tenancy, Tenant shall deliver to Landlord all keys furnished to or procured by Tenant, and if any key so furnished is not delivered, then Tenant shall pay the replacement cost thereof. Landlord will provide an electronic card-key system for Building access to enable Tenant to access the Premises twenty-four (24) hours a day, seven (7) days a week, and fifty-two (52) weeks per year. 9. Tenant and Invitees shall not place or install any projections, antennas, aerials or similar devices inside or outside of the Premises without the prior written consent of Landlord. Tenant and Invitees shall not install or operate in the Premises any equipment that operates on greater than 110 volt power without obtaining Landlord's prior consent. Landlord may condition such consent upon Tenant's payment of additional rent in compensation for the excess consumption of electricity or other utilities and for the cost of any additional wiring or apparatus that may be occasioned by the operation of such equipment. Tenant and Invitees shall not install any equipment of any type or nature that will or may necessitate any changes, replacements or additions to, or changes in the use of, the water system, heating system, plumbing system, air-conditioning system or electrical system of the Premises or the Building. If any equipment of Tenant or Invitees causes noise or vibration that may be transmitted to such a degree as to be objectionable to Landlord or any tenant in the Building, then Landlord shall have the right to install at Tenant's expense vibration eliminators or other devices sufficient to reduce such noise and vibration to a level satisfactory to Landlord or to require Tenant to do the same. Tenant and Invitees shall not waste electricity or water. Tenant agrees to cooperate fully with Landlord to assure the most effective operation of the Building's heating and air conditioning. 10. Landlord may exclude from the Building any person who does not properly identify himself to the Building management or guard on duty. Landlord may require any person admitted to or leaving the Building to register. E-2 11. Tenant and Invitees shall not use the Premises for: (i) lodging, manufacturing, or for any immoral or illegal purposes; (ii) engaging in the manufacturing or sale of any spirituous, fermented, intoxicating or alcoholic beverages on the Premises; or (iii) engaging in the manufacturing or sale of any illegal drugs on the Premises. 12. Before closing and leaving the Premises at any time, Tenant shall close all windows and turn off all lights. Tenant assumes full responsibility for protecting the Premises from theft, robbery and pilferage. 13. Tenant shall not employ or request Landlord's employees to do anything outside of such employees' regular duties whatsoever without Landlord's prior written consent. Tenant's special requirements will be attended to only upon application to Landlord's property management firm, and any such special requirements shall be billed to Tenant in accordance with the schedule of charges maintained by Landlord's property management firm from time to time or as is agreed upon in writing in advance by Landlord's property management firm and Tenant. 14. Canvassing, soliciting and peddling in the Building or on the Land are prohibited. Tenant shall cooperate to prevent the same. In such regard, Tenant shall report peddlers, solicitors and beggars to the office of the Landlord's property management firm. 15. Only hand trucks equipped with rubber tires and side guards may be used in the Building. Tenant shall be responsible for loss or damage resulting from any delivery made by or for Tenant or the Premises. 16. Tenant shall comply with standards prescribed by Landlord for curtains, drapes, blinds, shades, screens, lights and ceilings, including standards designed to give the Building a uniform, attractive appearance. No person or contractor not employed by Landlord or Landlord's property management firm shall be used to perform exterior window washing in the Premises. 17. Drapes (whether installed by Landlord or Tenant) which are visible from the exterior of the Building shall be cleaned by Tenant at least once a year at Tenant's expense. Landlord's property management firm shall clean Venetian blinds. 18. Any sign, lettering, picture, notice or advertisement installed within the Premises (including but not limited to Tenant identification signs on doors to the Premises) which is visible outside of the Premises shall be installed in such manner, character and style as Landlord may approve in writing. No sign, lettering, picture, notice or advertisement shall be placed on any outside window or in any position so as to be visible from outside the Building or from any atrium or lobbies of the Building. 19. Tenant shall not use the name of the Building or use pictures or illustrations of the Building in advertising or other publicity, without the prior written consent of Landlord, which consent shall not be unreasonably withheld. E-3 20. Tenant and Invitees shall not bring into the Building inflammables such as gasoline, kerosene, naphtha and benzene, or explosives or firearms or any other article of intrinsically dangerous nature except for customary amounts of customary office supplies, which shall be stored and used in accordance with applicable laws and regulations and good business office practice. 21. Tenant shall comply with all applicable federal, state and municipal Laws and shall not directly or indirectly make any use of the Premises which may be prohibited thereby or which shall be dangerous to person or property or shall increase the cost of insurance or require additional insurance coverage. 22. If, in addition to the standard building systems, Tenant desires a fire alarm signal, communication, alarm or a utility service connection installed or changed, the same shall be made at the expense of Tenant, with approval and under direction of Landlord. 23. Tenant shall cooperate and participate in all security programs affecting the Building. 24. In the event Landlord allows one or more tenants in the Building to do any act prohibited herein, Landlord shall not be precluded from denying any other tenant the right to do any such act, provided that Landlord shall not prohibit Tenant to do any act which is permitted to other similarly situated tenants. 25. Landlord shall have the right to prohibit any advertising by Tenant which, in Landlord's reasonable opinion, tends to impair the reputation of the Building or its desirability for offices, and upon written notice from landlord, Tenant will refrain from or discontinue such advertising. 26. Except for the installation of customary office decorations and except as otherwise set forth in the Lease (i) Tenant shall not drill into, or in any way deface any part of the Building or the Premises and (ii) no boring, cutting or stringing of wires shall be permitted, except with the prior consent of Landlord. Tenant shall not install any resilient tile or similar floor covering in the Premises except pursuant to Exhibit B as part of its original Tenant Work and thereafter with the prior approval of Landlord if required in accordance with provisions in the Lease regarding additions and alterations to the Premises. 27. Landlord shall have the right to limit or control the number and format of listings on any Building directory. 28. Tenant shall not, and Tenant shall not permit or suffer anyone, within Tenant's control, to light or smoke any cigarette, cigar, pipe or other tobacco product within the Premises and/or within any confines of the Building, including but not limited to the hallways, corridors, lobbies, elevators, restrooms, basement, stairwells, closets or any other such area. 29. Landlord may, upon request of Tenant, waive Tenant's compliance with any of the rules, provided that no waiver (a) shall be effective unless signed by Landlord, (b) shall relieve Tenant from the obligations to comply with such rule in the future unless otherwise agreed in writing by Landlord, (c) granted to any Tenant shall relieve any other Tenant from the obligation of complying with these rules and regulations, and (d) shall relieve Tenant from any liability for any loss or damage resulting from Tenant's failure to comply with any rule. 30. If there is any conflict between the terms of the Lease and the terms of this Exhibit, the terms of the Lease shall control. E-5 EX-10.36 11 markland_ex10-36.txt EXHIBIT 10.36 USAF CRADA NUMBER 02-263-AMWC-02 COOPERATIVE RESEARCH AND DEVELOPMENT AGREEMENT BETWEEN USAF AIR MOBILITY BATTLELAB AND EUROTECH LTD. ARTICLE 1. PREAMBLE 1.1 This Cooperative Research and Development Agreement (Agreement) for performing the work described in the Work Plan attached hereto as Appendix A is entered into pursuant to 15 U.S.C. ss. 3710a (as amended) and Air Force Policy Directive 61-3 and Air Force Instruction 61-302 by and between Eurotech Ltd. (Hereinafter referred to as "Collaborator"), located at 10306 Eaton Place Suite 220 Fairfax, VA 22030 USA and the United States of America as represented by the Department of the Air Force, USAF Air Mobility Battlelab, (hereinafter referred to as the "Air Force Activity"), located at Fort Dix, New Jersey. The terms and conditions of this Agreement are set forth as follows. ARTICLE 2. DEFINITIONS 2.1 As used in this Agreement, the following terms shall have the following meanings and such meanings shall be applicable to both the singular and plural forms of the terms. All other terms of this Agreement shall be ascribed their plain, commonly accepted definitions. 2.2 "CREATED" in relation to any copyrightable work means when the work is fixed in any tangible medium of expression for the first time, as provided for at 17 U.S.C.ss.101. 2.3 "EFFECTIVE DATE" means the earlier of: (a) the date of the last signature of the duly authorized representatives of the parties and the REVIEWING OFFICIAL; or (b) thirty (30) days after the receipt of a signed copy of this Agreement by the REVIEWING OFFICIAL without that official taking any action thereon. 2.4 "GOVERNMENT" means the Government of the United States of America. 2.5 "SPECIAL PURPOSE LICENSE" means a license to the GOVERNMENT conveying a nonexclusive, nontransferable, irrevocable, worldwide, royalty-free license to practice and have practiced an INVENTION for or on behalf of the GOVERNMENT for research or other government purposes and conveying a nonexclusive, nontransferable, irrevocable, worldwide, royalty-free license to use, duplicate, prepare derivative works, distribute or disclose copyrighted works or Proprietary Information in whole or in part and in any manner, and to have or permit others to do so, for research or other government purposes. Research or other government purposes include competitive procurement, but do not include the right to have or permit others to practice an INVENTION or use, duplicate, prepare derivative works, distribute or disclose copyrighted works or Proprietary Information for commercial purposes. 2.6 "INVENTION" means any invention or discovery that is or may be patentable or otherwise protectable under Title 35 of the United States Code or any novel variety of plant which is or may be protectable under the Plant Variety Protection Act (7 U.S.C. ss. 2321 ET SEQ). 2.7 "MADE" in relation to any INVENTION means the conception or first actual reduction to practice of such INVENTION. 2.8 "Proprietary Information" means information which embodies trade secrets or which is confidential technical, business or financial information provided that such information: i) is not generally known, or is not available from other sources without obligations concerning its confidentiality; ii) has not been made available by the owners to others without obligation concerning its confidentiality; iii) is not described in an issued patent or a published copyrighted work or is not otherwise available to the public without obligation concerning its confidentiality; or iv) can be withheld from disclosure under 15 U.S.C.ss.3710a(c)(7)(A) & (B) and the Freedom of Information Act, 5 U.S.C.ss.552 ET SEQ; and v) is identified as such by labels or markings designating the information as proprietary. 2.9 "REVIEWING OFFICIAL" means the authorized representative of the Department of the Air Force who is identified on the signature page of this Agreement. 2.10 "UNDER" as used in the phrase "Under this Agreement" means within the scope of work to be performed as described in the Work Plan. ARTICLE 3. WORK PLAN 3.1 Appendix A sets forth the nature and scope of the work to be performed UNDER THIS AGREEMENT, including any equipment, maintenance and other support, and any associated reporting requirements. 2 3.2 The COLLABORATOR may inspect GOVERNMENT property identified in Appendix A prior to use. Such property may be repaired or modified at the COLLABORATOR'S expense only after obtaining the written approval of the AIR FORCE ACTIVITY. Any repair or modification of the property shall not affect the title of the GOVERNMENT. Unless AIR FORCE ACTIVITY hereafter otherwise agrees, the COLLABORATOR shall, at no expense to the AIR FORCE ACTIVITY, return all GOVERNMENT property after termination or expiration of this AGREEMENT in the condition in which it was received, normal wear and tear excepted. Unless the COLLABORATOR hereafter otherwise agrees, the AIR FORCE ACTIVITY shall return all of COLLABORATOR's property after termination or expiration of this AGREEMENT in the condition in which it was received, normal wear and tear excepted. 3.3 The parties agree to confer and consult with each other prior to publication or other public disclosure of the results of work UNDER THIS AGREEMENT to ensure that no PROPRIETARY INFORMATION or military critical technology or other controlled information is released. Prior to submitting a manuscript for publication or before any other public disclosure, each party will offer the other party ample opportunity to review such proposed publication or disclosure, to submit objections, and to file applications for patents in a timely manner. ARTICLE 4. FINANCIAL OBLIGATIONS 4.1 Except as otherwise stated in the Work Plan described in Appendix A, each party shall bear it own expenses in the performance of work UNDER THIS AGREEMENT. 4.2 The COLLABORATOR is responsible for the shipment of all COLLABORATOR owned property. 4.3 This Agreement does not create any contractual obligation, express or implied, on Air Force Activity and/or Government to purchase goods or services from COLLABORATOR. ARTICLE 5. PATENTS 5.1 DISCLOSURE OF INVENTIONS. Each party shall report to the other party, in writing, each INVENTION MADE Under this Agreement, promptly after the existence of each such INVENTION, in the exercise of reasonable diligence, becomes known. 5.2 RIGHTS IN INVENTIONS. Each party shall separately own any INVENTION MADE solely by its respective employees Under this Agreement. INVENTIONS MADE jointly by the Air Force Activity and the Collaborator employees shall be jointly owned by both parties. The Collaborator shall have an option to choose an exclusive license for a pre-negotiated field of use at a reasonable royalty rate, subject to the conditions set forth in 15 U.S.C.ss. 3710a(b)(1)(A), (B) & (C), in any INVENTION MADE in whole or in part by Air Force Activity employees Under this Agreement. The Collaborator shall exercise the option to obtain a license by giving 3 written notice thereof to the Air Force Activity within three (3) months after disclosure of the INVENTION under paragraph 5.1. The royalty rate, field of use and other terms and conditions of the license shall be set forth in a separate license agreement and shall be negotiated promptly after notice is given. The Collaborator hereby grants to the GOVERNMENT, in advance, a SPECIAL PURPOSE LICENSE in any INVENTION MADE by the Collaborator employees Under this Agreement. 5.3 FILING PATENT APPLICATIONS. The Collaborator shall have the first option to file a patent application on any INVENTION MADE Under this Agreement, which option shall be exercised by giving notice in writing to the Air Force Activity within three (3) months after disclosure of the INVENTION under paragraph 5.1, and by filing a patent application in the U.S. Patent and Trademark Office within six (6) months after written notice is given. If the Collaborator elects not to file or not to continue prosecution of a patent application on any such INVENTION in any country or countries, the Collaborator shall notify the Air Force Activity thereof at least three (3) months prior to the expiration of any applicable filing or response deadline, priority period or statutory bar date. In any country in which the Collaborator does not file, or does not continue prosecution of, or make any required payment on, an application or patent on any such INVENTION, the Air Force Activity may file, or continue prosecution of, or make any required payment on, an application or patent, and the Collaborator agrees, upon request by the Air Force Activity, to assign to the GOVERNMENT all right, title and interest of the Collaborator in any such application or patent and to cooperate with the Air Force Activity in executing all necessary documents and obtaining cooperation of its employees in executing such documents related to such application or patent. The party filing an application shall provide a copy thereof to the other party. NOTE: Any patent application filed on any INVENTION MADE Under this Agreement shall include in the patent specification thereof the statement: "This invention was made in the performance of a Cooperative Research and Development Agreement with the Department of the Air Force. The Government of the United States has certain rights to use the invention." 5.4 PATENT EXPENSES. Unless otherwise agreed, the party filing an application shall pay all patent application preparation and filing expenses and issuance, post issuance and patent maintenance fees associated with that application. ARTICLE 6. COPYRIGHTS 6.1 The Collaborator shall own the copyright in all works CREATED in whole or in part by the Collaborator Under this Agreement, which are copyrightable under Title 17, United States Code. The Collaborator shall mark any such works with a copyright notice showing the Collaborator as an owner and shall have the option to register the copyright at the Collaborator'S expense. 4 6.2 The Collaborator hereby grants in advance to the GOVERNMENT a SPECIAL PURPOSE LICENSE in all copyrighted works CREATED Under this Agreement. The Collaborator will prominently mark each such copyrighted work subject to the SPECIAL PURPOSE LICENSE with the words: "This work was created in the performance of a Cooperative Research and Development Agreement with the Department of the Air Force. The Government of the United States has certain rights to use this work." 6.3 The Collaborator shall furnish to the Air Force Activity, at no cost to the Air Force Activity, three (3) copies of each work CREATED in whole or in part by the Collaborator Under this Agreement. ARTICLE 7. PROPRIETARY INFORMATION 7.1 Neither party to this AGREEMENT shall deliver to the other party any PROPRIETARY INFORMATION not developed UNDER THIS AGREEMENT, except with the written consent of the receiving party. Unless otherwise expressly provided in a separate document, such PROPRIETARY INFORMATION shall not be disclosed by the receiving party except under a written AGREEMENT of confidentiality to employees and contractors of the receiving party who have a need for the information in connection with their duties UNDER THIS AGREEMENT. Neither party shall be liable for release of unmarked information. 7.2.1 PROPRIETARY INFORMATION developed UNDER THIS AGREEMENT shall be owned by the developing party, and any jointly developed PROPRIETARY INFORMATION shall be jointly owned. GOVERNMENT shall have a SPECIAL PURPOSE LICENSE to use, duplicate and disclose, in confidence, and to authorize others to use, duplicate and disclose, in confidence, for government purposes, any such PROPRIETARY INFORMATION developed UNDER THIS AGREEMENT solely by the COLLABORATOR. The COLLABORATOR may use, duplicate and disclose, in confidence, and authorize others on its behalf to use, duplicate and disclose, in confidence, any such PROPRIETARY INFORMATION developed UNDER THIS AGREEMENT solely by the Air Force Activity. PROPRIETARY INFORMATION developed UNDER THIS AGREEMENT shall be exempt from the Freedom of Information Act, 5 U.S.C.ss.552 et seq., as provided at 15 U.S.C.ss. 3710a(c)(7)(A) & (B). The exemption for PROPRIETARY INFORMATION developed jointly by the parties or solely by the Air Force Activity shall expire not later than five years from the date of development of such PROPRIETARY INFORMATION. 7.2.2 It is expressly agreed herein that the Acoustic Core Technology equipment developed by COLLABORATOR'S proprietary transfer function optimization software shall be treated as PROPRIETARY INFORMATION. In respect to this PROPRIETARY INFORMATION, the Government's rights under a Special Purpose License shall not include the right of disclosure to non-Government 3rd parties, nor the right of use for competitive procurement. This does not preclude the AIR FORCE ACTIVITY comparing the results of the COLLABORATOR's system with the results of similar systems. 5 ARTICLE 8. TERM, MODIFICATION, EXTENSION TERMINATION AND DISPUTES 8.1 TERM AND EXTENSION. The term of this AGREEMENT is for a period of 18 months, commencing on the EFFECTIVE DATE of this AGREEMENT. This AGREEMENT shall expire at the end of this term unless both parties hereto agree in writing to extend it further. Expiration of this AGREEMENT shall not affect the rights and obligations of the parties accrued prior to expiration. 8.2 MODIFICATION. Any modifications of this AGREEMENT shall be by mutual written AGREEMENT signed by the parties' representatives authorized to execute this AGREEMENT and attached hereto. A copy of any modifications will be forwarded to the REVIEWING OFFICIAL for information purposes. 8.3 TERMINATION. Either party may terminate this AGREEMENT for any reason upon delivery of written notice to the other party at least one (1) month prior to such termination. Termination of this AGREEMENT shall not affect the rights and obligations of the parties accrued prior to the date of termination of this AGREEMENT. In the event of termination by either party, each party shall be responsible for its own costs incurred through the date of termination, as well as its own costs incurred after the date of termination and which are related to the termination. If the AIR FORCE ACTIVITY terminates this AGREEMENT, it shall not be liable to the COLLABORATOR or its contractors or subcontractors for any costs resulting from or related to the termination, including, but not limited to, consequential damages or any other costs. In the event that the AIR FORCE ACTIVITY terminates this AGREEMENT prior to the completion of the work outlined in Appendix A, the Air Force shall return all of COLLABORATOR's equipment in the condition in which it was received, normal wear and tear excepted. 8.4 DISPUTES. All disputes arising out of, or related to, this AGREEMENT shall be resolved in accordance with this Article. 8.4.1 The parties shall attempt to resolve disputes between themselves. Resolution attempts must be documented and kept on file by the local technology transfer focal point for the AIR FORCE ACTIVITY. Either party may refer in writing any dispute which is not disposed of by AGREEMENT of the parties to the REVIEWING OFFICIAL for decision. 8.4.2 REVIEWING OFFICIAL. The REVIEWING OFFICIAL shall within sixty (60) days of the receipt of the dispute, notify the parties of the decision. This decision shall be final and conclusive unless, within thirty (30) days from the date of receipt of such copy, either party submits to the REVIEWING OFFICIAL, a written appeal addressed to the Office of the Assistant Secretary of the Air Force (Acquisition), Deputy Assistant Secretary (Science, Technology, and Engineering). 6 8.4.3 Office of the Assistant Secretary of the Air Force (Acquisition), Deputy Assistant Secretary (Science, Technology, and Engineering). The decision of the Assistant Secretary of the Air Force (Acquisition), Deputy Assistant Secretary (Science, Technology, and Engineering), or his duly authorized representative, on the appeal shall be final and conclusive. 8.5 Continuation of Work. Pending the resolution of any such dispute, work UNDER THIS AGREEMENT will continue as elsewhere provided herein. ARTICLE 9. REPRESENTATIONS AND WARRANTIES 9.1 The Air Force Activity hereby represents and warrants to the Collaborator as follows: 9.1.1 MISSION. The performance of the activities specified by this Agreement are consistent with the mission of the Air Force Activity. 9.1.2 AUTHORITY. All prior reviews and approvals required by regulations or law have been obtained by the Air Force Activity prior to the execution of the Agreement. The Air Force Activity official executing this Agreement has the requisite authority to do so. 9.1.3 STATUTORY COMPLIANCE. The Air Force Activity, prior to entering into this Agreement, has (1) given special consideration to entering into cooperative research and development agreements with small business firms and consortia involving small business firms; (2) given preference to business units located in the United States which agree that products embodying an INVENTION MADE Under this Agreement or produced through the use of such INVENTION will be manufactured substantially in the United States; and (3) taken into consideration, in the event this Agreement is made with an industrial organization or other person subject to the control of a foreign company or government, whether or not such foreign government permits United States agencies, organizations, or other persons to enter into cooperative research and development agreements and licensing agreements with such foreign country. 9.2 The Collaborator hereby represents and warrants to the Air Force Activity as follows: 7 9.2.1 CORPORATE ORGANIZATION. The Collaborator, as of the date hereof, is a corporation duly organized, validly existing and in good standing under the laws of the United States of America, and is a wholly owned subsidiary of Eurotech Ltd, USA corporation. 9.2.2 STATEMENT OF OWNERSHIP. The Collaborator is a US owned or a subsidiary of a US-owned entity. The Collaborator has the right to assignment of all INVENTIONS MADE and copyrightable works CREATED by its employees Under this Agreement. 9.2.3 AUTHORITY. The Collaborator official executing this Agreement has the requisite authority to enter into this Agreement and the Collaborator is authorized to perform according to the terms thereof. ARTICLE 10. LIABILITY 10.1 PROPERTY. All property is to be furnished "as is." Except as otherwise provided in this Agreement or the attached Work Plan, no party to this Agreement shall be liable to any other party for any property of that other party consumed, damaged or destroyed in the performance of this Agreement, unless it is due to the gross negligence or willful misconduct of the party or an employee or agent of the party. 10.2 COLLABORATOR EMPLOYEES. The Collaborator agrees to indemnify and hold harmless and defend the GOVERNMENT, its employees and agents, against any liability or loss for any claim made by an employee or agent of the Collaborator, or persons claiming through them, for death, injury, loss or damage to their person or property arising in connection with this Agreement, except to the extent that such death, injury, loss or damage arises solely from the negligence of the Air Force Activity or its employees. 10.3 NO WARRANTY. EXCEPT AS SPECIFICALLY STATED IN ARTICLE 9, OR IN A LATER AGREEMENT, THE PARTIES MAKE NO EXPRESS OR IMPLIED WARRANTY AS TO ANY MATTER WHATSOEVER, INCLUDING THE CONDITIONS OF THE RESEARCH OR ANY INVENTION OR OTHER INTELLECTUAL PROPERTY, OR PRODUCT, WHETHER TANGIBLE OR INTANGIBLE, MADE, OR DEVELOPED UNDER THIS AGREEMENT, OR THE MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE OF THE RESEARCH OR ANY INVENTION OR OTHER INTELLECTUAL PROPERTY, OR PRODUCT. THE PARTIES FURTHER MAKE NO WARRANTY THAT THE USE OF ANY INVENTION OR OTHER INTELLECTUAL PROPERTY OR PRODUCT CONTRIBUTED, MADE OR DEVELOPED UNDER THIS AGREEMENT WILL NOT INFRINGE ANY OTHER UNITED STATES OR FOREIGN PATENT OR OTHER INTELLECTUAL PROPERTY RIGHT. IN NO EVENT WILL ANY PARTY BE LIABLE TO ANY OTHER PARTY FOR PUNITIVE, EXEMPLARY, OR CONSEQUENTIAL DAMAGES. 8 10.4 OTHER LIABILITY. The GOVERNMENT shall not be liable to any party to this Agreement, whether directly or by way of contribution or indemnity, for any claim made by any person or other entity for personal injury or death or for property damage or loss, arising in any way from this Agreement, including, but not limited to, the later use, sale or other disposition of research and technical developments, whether by resulting products or otherwise, whether made or developed Under this Agreement or contributed by either party pursuant to this Agreement, except as provided under the Federal Tort Claims Act (28 U.S.C. ss. 2671 ET SEQ) or other Federal law where sovereign immunity has been waived. ARTICLE 11. GENERAL TERMS AND PROVISIONS 11.1 DISPOSAL OF TOXIC OR OTHER WASTE. The Collaborator shall be responsible for removal and disposal from Air Force Activity premises of toxic or other material provided or generated by Collaborator in the course of performing this Agreement, except that, for purposes of this Agreement, removal and disposal of hazardous materials and wastes in amounts and of types typically produced during operation of the Air Force Activity facilities described in the Work Plan will be the responsibility of the Air Force Activity. Removal and disposal of hazardous materials and wastes over and above amounts and different from types typically produced during operation of the Air Force Activity facilities described in the Work Plan will be the responsibility of Collaborator. Collaborator shall obtain at its own expense all necessary permits and licenses as required by local, state, and Federal law and regulation and shall conduct such removal and disposal in a lawful and environmentally responsible manner. 11.2 FORCE MAJEURE. Neither party shall be in breach of this Agreement for any failure of performance caused by any event beyond its reasonable control and not caused by the fault or negligence of that party. In the event such a force majeure event occurs, the party unable to perform shall promptly notify the other party and shall in good faith maintain such part performance as is reasonably possible and shall resume full performance as soon as is reasonably possible. 11.3 RELATIONSHIP OF THE PARTIES. The parties to this Agreement and their employees are independent contractors and are not agents of each other, joint venturers, partners or joint parties to a formal business organization of any kind. Neither party is authorized or empowered to act on behalf of the other with regard to any contract, warranty or representation as to any matter, and neither party will be bound by the acts or conduct of the other. Each party will maintain sole and exclusive control over its own personnel and operations. 11.4 PUBLICITY/USE OF NAME ENDORSEMENT. Any public announcement of this Agreement shall be coordinated between the Collaborator, the Air Force Activity and the public affairs office supporting the Air Force Activity. By entering into this Agreement, the Air Force Activity or the GOVERNMENT does not directly or indirectly endorse any product or service provided, or to be provided, by Collaborator, its successors, assignees, or licensees. The Collaborator shall not in any way imply that this Agreement is an endorsement of any such product or service. 9 11.5 NO BENEFITS. No member of, or delegate to the United States Congress, or resident commissioner, shall be admitted to any share or part of this Agreement, nor to any benefit that may arise there from; but this provision shall not be construed to extend to this Agreement if made with a corporation for its general benefit. 11.6 GOVERNING LAW. The construction, validity, performance and effect of this Agreement for all purposes shall be governed by the laws applicable to the GOVERNMENT. 11.7 WAIVER OF RIGHTS. Any waiver shall be in writing and provided to all other parties. Failure to insist upon strict performance of any of the terms and conditions hereof, or failure or delay to exercise any rights provided herein or by law, shall not be deemed a waiver of any rights of any party hereto. 11.8 SEVERABILITY. The illegality or invalidity of any provision of this Agreement shall not impair, affect or invalidate the other provisions of this Agreement. 11.9 ASSIGNMENT. Neither this Agreement nor any rights or obligations of any party hereunder shall be assigned or otherwise transferred by any party without the prior written consent of all other parties. 11.10 CONTROLLED INFORMATION. The parties understand that information and materials provided pursuant to or resulting from this Agreement may be export controlled, classified, or unclassified sensitive and protected by law, executive order or regulation. Nothing in this Agreement shall be construed to permit any disclosure in violation of those restrictions. 10 ARTICLE 12. NOTICES 12.1. Notices specified in this Agreement shall be deemed made if given and addressed as set forth below. A. Send formal notices under this Agreement by prepaid certified U.S. Mail to: Air Force Activity: Attn: (ORTA) - staff Address SMSgt John Acosta AMWC/WCB 5656 Texas Ave Fort Dix NJ 08640-5403 Collaborator: Attn: Address Mr Don Hahnfeldt,CEO Eurotech Ltd. 10306 Eaton Place Suite 220 Fairfax, VA 22030 USA B. Send correspondence on technical matters by prepaid ordinary U.S. Mail to: Air Force Activity: Attn: (ORTA) - staff Address SMSgt John Acosta AMWC/WCB 5656 Texas Ave Fort Dix NJ 08640-5403 Collaborator: Attn: Robert Tarini Address: 88 Royal Little Drive Providence, RI 02904 USA 11 IN WITNESS WHEREOF, the Parties have executed this Agreement in duplicate through their duly authorized representatives as follows: COLLABORATOR AIR FORCE ACTIVITY ------------ ------------------ AIR MOBILITY BATTLELAB (Name of Collaborator) (Name of Air Force Activity) _________________________________ MARK J. SURINA, LT COL, USAF (NAME OF OFFICIAL--PRINTED OR TYPED) (NAME OF OFFICIAL--PRINTED OR TYPED) --------------------------------- --------------------------------- (SIGNATURE OF OFFICIAL) (SIGNATURE OF OFFICIAL) _________________________________ COMMANDER, AIR MOBILITY BATTLELAB (TITLE OF OFFICIAL) (TITLE OF OFFICIAL) _________________________________ 5656 TEXAS AVE, FORT DIX NJ 08640-5403 (ADDRESS OF OFFICIAL) (ADDRESS OF OFFICIAL) --------------------------------- --------------------------------- (DATE SIGNED) (DATE SIGNED) REVIEWED AND APPROVED BY AIR FORCE REVIEWING OFFICIAL: ------------------------------------------------------ ------------------------------------------------ (NAME OF AIR FORCE REVIEWING OFFICIAL--PRINTED OR TYPED) ------------------------------------------------ (TITLE--PRINTED OR TYPED) ---------------------------------- --------------------------------- (SIGNATURE) (DATE)
12 APPENDIX A ---------- WORK PLAN --------- 1.0 Title. Acoustic Technology Explosive Detection Demonstration 2.0 Objective. This program will develop a system that will demonstrate the effectiveness of Acoustic Core(TM) technology to non-intrusively detect explosive materials in cargo and/or vehicles. 3.0 Background. The Collaborator will design/develop a device to non-intrusively detect explosive materials in cargo and/or vehicles using its Acoustic Core(TM) technology. This will be accomplished by the Collaborator undertaking a trial activity to create a database of acoustic algorithms to be integrated with their Acoustic Core(TM) spectral analysis tools. The Collaborator will develop a device that will screen and detect explosives using the aforementioned technology. For these demonstrations, the Collaborator will provide the data collection hardware, analysis software/hardware system, and technical guidance to use it. The Air Force Activity will provide the necessary technical support for the trial activity phase and cargo pallets and/or vehicles for the demonstration phase. The Air Force Activity will also provide the facilities, explosives and resources necessary to conduct this demonstration as well as other miscellaneous materials and equipment, that are agreed upon, that might be required. The demonstration team will consist of personnel from the Collaborator, Air Force Activity, and other USAF/DOD personnel from the operating location, and technical experts as required. In general, USAF personnel will be responsible for demonstration of the system with assistance from the Collaborator and the Collaborator will be responsible for setup and operation of the system with oversight and assistance from USAF personnel. 4.0 Technical Tasks. 4.1 Air Force Activity will be responsible for the following tasks: - Provide suitable demonstration items for the length of the demonstration - Provide technical data/support for the purpose of developing the necessary database for the demonstration. - Review and acceptance of the design of the system for the length of the demonstration - Procure/make available necessary explosives for the demonstration - Provide personnel and support activities necessary for the length of the demonstration - Agree to and coordinate demonstration execution criteria - Execute the agreed demonstration plans - Prepare an after initiative report 13 4.2 The Collaborator will be responsible for the following tasks: - The design, develop and manufacture the software/hardware system(s) required for the demonstration - Supplying the system(s) for the length of the demonstrations. Specific time period to be agreed upon by both parties - Assisting with the set up of equipment for the demonstrations - Supporting the demonstrations as required - Providing the system replacement parts as required - Assisting the USAF in preparing required reports, plans and other submissions as requested - Provide information/guidance for best data collection of the system 5.0 Deliverables or Desired Benefit. From this demonstration, the Air Force Activity expects to gain enough data/knowledge about Acoustic Core(TM) technology's explosive detection capability to determine whether it has the potential to enhance the USAF mission accomplishment. The results will be provided to USAF personnel to determine the value of Acoustic Core(TM) technology and whether it warrants further analysis for an acquisition decision. From this demonstration, the Collaborator will use the results of this demonstration to improve their probability of a USAF wide implementation of this system. 6.0 Milestones. The following table shows major milestones for this demonstration. All dates may slip due to unforeseen circumstances (manufacturing delays, facility and measuring equipment unavailable due to mission requirements, personnel deployments, etc.). - ------------------------------------- ---------------------------------- ---------------------------------- EVENT START FINISH - ------------------------------------- ---------------------------------- ---------------------------------- CRADA approval Jul 02 Aug 02 - ------------------------------------- ---------------------------------- ---------------------------------- Air Force Activity and Jun 02 Aug 02 Collaborator agree on specific requirements document - ------------------------------------- ---------------------------------- ---------------------------------- Air Force Activity (or agents) and Aug 02 Oct 02 Collaborator will work trial activities on database - ------------------------------------- ---------------------------------- ---------------------------------- Air Force Activity and Collaborator Jun 02 Aug 02 will agree on specific design of detection portal - ------------------------------------- ---------------------------------- ---------------------------------- Collaborator will develop detection Aug 02 Dec 02 portal and interface with detection portal system - ------------------------------------- ---------------------------------- ---------------------------------- 14 - ------------------------------------- ---------------------------------- ---------------------------------- Phase I Execution o Air Force Activity (or agents) Jan 02 Feb 02 and Collaborator - Full system setup - Data collection - Evaluate Data - ------------------------------------- ---------------------------------- ---------------------------------- Phase II Execution o Air Force Activity (or agent) and TBD TBD Collaborator system installation o Collaborator final data collection o Air Force Activity data collection - ------------------------------------- ---------------------------------- ---------------------------------- Collaborator Report TBD TBD - ------------------------------------- ---------------------------------- ---------------------------------- Air Force Activity After Initiative TBD TBD Report - ------------------------------------- ---------------------------------- ----------------------------------
5.0 Reports. The Collaborator will provide a report of the data/results collected from their optimization software as well as any other finding by the collaborator throughout this demonstration. The Air Force Activity will provide an after initiative report of all data/results collected throughout this demonstration. Proprietary information in any report will be marked appropriately. 15 APPENDIX B RELEASE OF LIABILITY AGREEMENT In consideration of being allowed to use the facilities of the United States Air Force, I hereby accept full responsibility for any risks related to my own use of such facilities and for my own safety. I hereby release forever the Government of the United States (U.S. Government), its agencies and personnel, from every liability whatsoever to me arising out of the use of such facilities, including liabilities for personal injury or death and property damage or loss, except to the extent that the death, injury, loss or damage results from the gross negligence or willful misconduct of U.S. Government personnel. For the purposes of this Agreement, "U.S. Government personnel" includes military personnel and civilian employees of the United States, including non-appropriated fund employees acting within the scope of their employment, and the heirs, successors, executors, administrators and assigns of such personnel and employees. I make this release for myself and on behalf of my heirs, successors, executors, administrators and assigns. -------------- ---------------------- Date Signature of Collaborator Employee 16 EX-10.41 12 markland_ex10-41.txt EXHIBIT 10.41 AMENDMENT TO EMPLOYEE AGREEMENT Reference is made to the Employment Agreement, dated on or about May 7th, 2004 ("Original Agreement"), between Markland Technologies Inc. (the "Company") and Robert Tarini. The Original Agreement is hereby amended as follows: In consideration of the deletion of section 4(d), with regard to the anti-dilution provision, of the Original Agreement, the Company has agreed to make the first grant of shares based on the Company Equity as of May 12th, 2004, the date of the present Agreement between parties. The Original Agreement otherwise remains in full force and effect THE PARTIES ACKNOWLEDGE THAT EACH HAS READ THIS AMENDMENT TO THE ORIGINAL AGREEMENT, UNDERSTANDS IT, AND AGREES TO BE BOUND BY ITS TERMS AND CONDITIONS. FURTHER, THE PARTIES AGREE THAT THE ORIGINAL AGREEMENT AND THIS AMENDMENT TO THE ORIGINAL AGREEMENT AND ANY EXHIBITS THERETO OR HERETO ARE THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN THE PARTIES, WHICH SUPERSEDES ALL PROPOSALS OR ALL PRIOR AGREEMENTS, ORAL OR WRITTEN, AND ALL OTHER COMMUNICATIONS BETWEEN THE PARTIES RELATING TO THE SUBJECT MATTER HEREOF. ACCEPTED AND AGREED: MARKLAND TECHNOLOGY, INC. ROBERT TARINI By: Ken Ducey CFO /s/ Kenneth Ducey Jr. /s/ Robert Tarini Date: 6/14/2004 Date: 6/14/2004 EX-10.42 13 markland_ex10-42.txt EXHIBIT 10.42 AMENDMENT TO EMPLOYMENT AGREEMENT Reference is made to the Employment Agreement, dated on or about May 7th, 2004 ("Original Agreement"), between Markland Technologies Inc. (the "Company") and Kenneth Ducey, Jr. (the "Employee") The Original Agreement is hereby amended as follows: In consideration of the deletion of section 4(d), with regard to the anti-dilution provision, of the Original Agreement, the Company has agreed to make the first grant of shares based on the Company Equity as of May 12th, 2004, the date of the present Agreement between parties. The Original Agreement otherwise remains in full force and effect THE PARTIES ACKNOWLEDGE THAT EACH HAS READ THIS AMENDMENT TO THE ORIGINAL AGREEMENT, UNDERSTANDS IT, AND AGREES TO BE BOUND BY ITS TERMS AND CONDITIONS. FURTHER, THE PARTIES AGREE THAT THE ORIGINAL AGREEMENT AND THIS AMENDMENT TO THE ORIGINAL AGREEMENT AND ANY EXHIBITS THERETO OR HERETO ARE THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN THE PARTIES, WHICH SUPERSEDES ALL PROPOSALS OR ALL PRIOR AGREEMENTS, ORAL OR WRITTEN, AND ALL OTHER COMMUNICATIONS BETWEEN THE PARTIES RELATING TO THE SUBJECT MATTER HEREOF. ACCEPTED AND AGREED: MARKLAND TECHNOLOGY, INC. KEN DUCEY By: Robert Tarini By: Ken Ducey CEO /s/ Robert Tarini /s/ Kenneth Ducey Jr. Date: 6/14/2004 Date: 6/14/2004 EX-10.43 14 markland_ex10-43.txt EXHIBIT 10.43 AMENDMENT TO CONSULTANT AGREEMENT Reference is made to the Consultant Agreement, dated on or about May 7th, 2004 ("Original Agreement"), between Markland Technologies Inc. (the "Company") and Verdi Consulting. The Original Agreement is hereby amended as follows: In consideration of the deletion of section 4(d), with regard to the anti-dilution provision, of the Original Agreement, the Company has agreed to make the first grant of shares based on the Company Equity as of May 12th, 2004, the date of the present Agreement between parties. The Original Agreement otherwise remains in full force and effect THE PARTIES ACKNOWLEDGE THAT EACH HAS READ THIS AMENDMENT TO THE ORIGINAL AGREEMENT, UNDERSTANDS IT, AND AGREES TO BE BOUND BY ITS TERMS AND CONDITIONS. FURTHER, THE PARTIES AGREE THAT THE ORIGINAL AGREEMENT AND THIS AMENDMENT TO THE ORIGINAL AGREEMENT AND ANY EXHIBITS THERETO OR HERETO ARE THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN THE PARTIES, WHICH SUPERSEDES ALL PROPOSALS OR ALL PRIOR AGREEMENTS, ORAL OR WRITTEN, AND ALL OTHER COMMUNICATIONS BETWEEN THE PARTIES RELATING TO THE SUBJECT MATTER HEREOF. ACCEPTED AND AGREED: MARKLAND TECHNOLOGY, INC. VERDI CONSULTING By: Ken Ducey By: Chad Verdi CFO /s/ Kenneth Ducey Jr. /s/ Chad Verdi Date: 6/14/2004 Date: 6/14/2004 EX-23.2 15 markland_ex23-2.txt EXHIBIT 23.2 INDEPENDENT AUDITORS' CONSENT June 17, 2004 We consent to the incorporation by reference in Amendment No. 1 to the registration statement on Form SB-2 of Markland Technologies, Inc., filed on June 8, 2004 (File No. 333-115395), of our report dated October 4, 2002, with respect to the consolidated balance sheets of Markland Technologies, Inc. as of June 30, 2002, and the related consolidated statements of operations, stockholders' deficiency, and cash flows for the year ended June 30, 2002, and to the use of our name as it appears under the caption "Experts". /s/Sherb & Co., LLP Sherb & Co., LLP New York, New York EX-23.3 16 markland_ex23-3.txt EXHIBIT 23.3 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM'S CONSENT We consent to the use in the Registration Statement of Markland Technologies, Inc., and Subsidiaries on Form SB-2 of our report dated September 15, 2003 relating to the consolidated financial statements of Markland Technologies, Inc. and Subsidiaries, which report includes (among other things) an explanatory paragraph to an uncertainty to the Company's ability to continue as a going concern, appearing in the Prospectus, which is a part of such Registration Statement, and to the use of our name as it appears under the caption "Experts". June 17, 2004 /s/ Marcum & Kleigman, LLP Marcum & Kleigman, LLP INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM'S CONSENT We consent to the use in the Registration Statement of Markland Technologies, Inc., ("the Company") on Form SB-2 filed on May 11, 2004 (the "Registration Statement") of our report dated February 25, 2004 relating to the financial statements of Science and Technology Research, Inc., appearing in the current report on Form 8-K with the Securities and Exchange Commission on March 23, 2004 File #000-28863, which is a part of such Registration Statement, and to the use of our name as it appears under the caption "Experts". June 17, 2004 /s/ Marcum & Kleigman, LLP Marcum & Kleigman, LLP -----END PRIVACY-ENHANCED MESSAGE-----