Professional Services Agreement
                                                            (Time and Materials)
                                                             Contract No. OP-001


This   Agreement,   effective   01,September   2001,   is  between  Ocean  Power
("Customer"), a Delaware corporation, having an office at 5000 Robert J. Mathews
Parkway, Eldorado Hills, California 95762 and Science Applications International
Corporation ("SAIC"), a Delaware  corporation,  having an office at 10260 Campus
Point Drive, San Diego, California 92121.


I.       DESCRIPTION OF PROFESSIONAL SERVICES


SAIC shall provide to Customer the Professional Services ("Services")  described
Exhibit A. The Services shall be provided  subject to the Terms and  Conditions,
which follow.


II.      CUSTOMER AND SAIC ADMINISTRATIVE CONTACTS
<TABLE>
<CAPTION>

<S>                                      <C>
J. Michael Hopper                        Corrie Garrow
Chief Operating Officer                  Sr. Contracts Representative
Ocean Power                              Science Applications International Corporation
5000 Robert J. Mathews Parkway           9455 Towne Centre Drive, M/S W-2
El Dorado Hills, California 95762        San Diego, CA 92121

Tel. No.        (916) 933-8100           Tel. No.    (858) 826-7125
Fax No.         (916) 933-8177           Fax No.     (858) 826-6360
</TABLE>

In consideration of the mutual  obligations  assumed under this Agreement,  SAIC
and Customer agree to the Terms and Conditions  attached hereto and incorporated
by reference and represent  that this  Agreement is executed by duly  authorized
representatives as of the dates below.

AGREED BY:
INSERT CUSTOMER'S FULL LEGAL                  SCIENCE APPLICATIONS
NAME in all caps and bold                     INTERNATIONAL CORPORATION
By:                                           By:
      -------------------------------               ----------------------------

Name: Joseph P. Maceda                        Name: Corrie Garrow
      -------------------------------               ----------------------------

Title:President                               Title:Sr. Contracts Representative
      -------------------------------               ----------------------------

Date:                                         Date:
      -------------------------------               ----------------------------
Rev.2001-05-12

<PAGE>

TERMS AND CONDITIONS



<PAGE>


1.  Services.  SAIC will  perform  the  services  ("Services")  and  deliver the
deliverables  ("Deliverables")  described in the Statement of Work, set forth in
Exhibit A.

2.  Place of Performance. Unless otherwise provided in this Agreement,  SAIC may
perform the Services in whole or in part at SAIC's place of business, Customer's
place of business, and/or such other locations as SAIC may select.

3.  Effective Date; Term. This Agreement shall be effective as of the date first
above  written  (the  "Effective  Date"),  and shall  continue in full force and
effect until the Services have been  completed,  the Estimated Price (as defined
in  section  4) has  been  reached,  or the  Agreement  has been  terminated  in
accordance with Section 9 hereof.

4.  Payment Terms.

    (a) Customer will pay SAIC monthly on a "time and materials" basis for labor
expended and costs and expenses incurred,  as hereinafter  described.  SAIC will
use good faith  efforts to complete the  Services  and deliver the  Deliverables
within the estimated price ("Estimated  Price") set forth in Exhibit B, but does
not  guarantee  that the Services can be  completed or the  Deliverables  can be
delivered within the Estimated Price.

    (b) Customer shall pay to SAIC for labor expended in performing the Services
an amount computed by multiplying  the applicable  hourly billing rate set forth
in Exhibit B by the number of hours worked. Fractional parts of an hour shall be
payable on a prorated basis.

    (c) In addition to paying for labor expended,  Customer shall reimburse SAIC
for  the  cost of all  goods  and  materials  purchased  exclusively  for use in
performing the Services or which are incorporated into any Deliverable,  as well
as for all reasonable travel expenses and miscellaneous  out-of-pocket  expenses
incurred in performing the Services. Such costs and expenses shall be subject to
the administrative and overhead charge provided in Exhibit B.

    (d) Customer  shall have no  obligation  to pay SAIC more than the Estimated
Price. SAIC shall have no obligation to provide labor or incur costs or expenses
having a combined value more than the Estimated Price, even if the Services have
not been  completed or the  Deliverables  delivered,  or the results  desired by
Customer have not been achieved.  The parties may, by mutual written  agreement,
increase the Estimated Price.

                                       1
<PAGE>

    (e) Customer  shall  make an initial  payment of working  capital to SAIC of
$200,000  within 30 days of contract  award and shall there after  replenish the
level of working  capital  by making  payments  according  to the  schedule  and
provisions of Exhibit B.  Customer  shall provide this amount until such time as
SAIC has been paid the amount of $6,800,000. Thereafter, SAIC shall draw down on
the working  capital  until the Not To Exceed  Amount of $7,7000,00 is expended.
SAIC shall have a lien upon and may retain or repossess any and all Deliverables
if Customer does not make payment in full to SAIC.

    (f) Invoiced  amounts are immediately  due and payable by either  electronic
funds transfer (EFT) or by mail to the following location(s):

        If Customer has EFT capabilities, use the following address:

                         Science Applications International Corporation
                         Bank of America San Francisco
                         Account No. 14520-00006
                         ABA No. 121000358
                         Telegraphic Abbreviation: BNKAMER
                         Reference: Project Number(s) and Invoice Numbers(s)

        If Customer does not have EFT capabilities, use the following address:

                         Science Applications International Corporation
                         File No. 2570
                         Los Angeles, CA 90074-2570
                         Reference: Project Number(s) and Invoice Numbers(s)

    (g) If Customer  fails to pay the total amount of an invoice  within  thirty
(30) days of such invoice,  interest  compounded at the rate of one percent (1%)
per month shall be charged on all amounts  unpaid and  outstanding.  If Customer
fails to make any  payment to SAIC as  required  hereunder,  SAIC shall have the
right,  exercisable in SAIC's sole  discretion,  in addition to its other rights
and remedies, to cease further performance of the Services hereunder.

    (h) Bill To Address. The invoice will be mailed to:

              Ocean Power
              5000 Robert J. Matthews Parkway
              El Dorado Hills, CA  95672

                                       2
<PAGE>

5.  Resources to be Provided by Customer.

    (a) Customer  shall  provide,   maintain  and make  available  to  SAIC,  at
Customer's  expense and in a timely  manner,  the  resources  described  in this
Section 5 and such  other  additional  resources,  as SAIC may from time to time
reasonably request in connection with SAIC's performance of the Services. Delays
in the provision of these resources may result in delays and/or  additional cost
in performing the Services or Delivering the Deliverables.

    (b) Customer will designate and make  available to SAIC  qualified  Customer
personnel or  representatives  who will consult with SAIC on a regular  basis in
connection with the Services.  Customer will furnish such documentation or other
information as is reasonably necessary to perform the Services.

    (c) Customer shall furnish access to Customer's  premises,  and  appropriate
workspace for any SAIC personnel  working at Customer's  premises,  as necessary
for  performance of those portions of the Services to be performed at Customer's
premises.


6.  Confidentiality.  In the event either party  determines that it is necessary
to provide confidential,  proprietary,  or trade secret information to the other
party in connection  with this Agreement,  such  disclosure will be made,  after
advance  written  notice to the other  party,  and only in  accordance  with the
confidentiality  provisions of the Technology  Licensing  Agreement.  Nothing in
this Agreement or in the licensing  Agreement  referred to in this section shall
be deemed to restrict or prohibit  SAIC from  providing  to others  services and
deliverables  the  same as or  similar  to the  Services  and  Deliverables.  In
providing any such similar  services or  deliverables  to any third party,  SAIC
shall keep confidential any Customer  confidential,  proprietary or trade secret
information  which is subject to the Licensing  Agreement in accordance with the
requirements of such agreement.

7.  Intellectual Property.

    (a) All  improvements  which are made,  conceived  or reduced to practice by
SAIC Energy  Products  Division (or its employees,  agents,  representatives  or
collaborators), either alone or together with others, shall be the sole property
of SAIC; provided,  however, that any such Improvements shall be included within
the meaning of the SAIC Technology License dated 23 April 2001. SAIC grants back
to OP the same rights to  enhancements  or improvements as are enumerated in the
Agreement without additional costs.

                                       3
<PAGE>

    (b) This  agreement is not intended and shall not be construed to in any way
restrict  SAIC's right to engage in  research,  development,  marketing,  sales,
licensing or other activities  relating to SAIC Technology  (whether or not such
activities  are within the Field of Use) or in any other  activity  which is not
inconsistent with the Agreement.  No rights are transferred to OP outside of the
Field of Use and SAIC reserves the rights not expressly granted to OP.

8.  Taxes.  Customer  shall pay any and all sales,  use,  value  added,  excise,
import,  privilege,  or other similar taxes, levies or payments in lieu thereof,
including interest and penalties  thereon,  arising out of or in connection with
the  performance  of the  Services by SAIC  (other  than those  levied on SAIC's
income), imposed by any authority,  government or governmental agency, and shall
comply with all  applicable  treaties,  laws,  rules,  or  regulations  relating
thereto.

9.  Termination.  Either party may  terminate  this  Agreement  for cause,  i.e.
default,  nonpayment,  etc.  upon 30 days  written  notice to the  other  party.
Termination  will not affect payment  obligations  incurred under this Agreement
for Services performed and reimbursable costs and expenses incurred prior to the
effective  date of  termination,  including  without  limitation  commitments to
purchase products or services from third parties which were entered into by SAIC
in  the  course  of  performance  hereunder  prior  to  the  effective  date  of
termination.  Such  reimbursable  costs may  include,  but are not  limited  to,
cancellation  fees,  minimum  consulting or material  fees,  and  non-refundable
charges or fees for third party products or services.


10. Limited Warranty.

    (a) SAIC warrants that the Services  provided under this Agreement  shall be
performed  with  that  degree  of  skill  and  judgment  normally  exercised  by
recognized  professional firms performing  services of the same or substantially
similar nature. In the event of any breach of the foregoing  warranty,  provided
Customer  has  delivered  to SAIC timely  notice of such  breach as  hereinafter
required,  SAIC  shall,  at its  own  expense,  in its  discretion  either:  (1)
re-perform   the   non-conforming   Services  and  correct  the   non-conforming
Deliverables to conform to this standard; or (2) refund to Customer that portion
of the amounts  received by SAIC  attributable  to the  non-conforming  Services
and/or  Deliverables.  No warranty claim shall be effective  unless Customer has
delivered  to SAIC  written  notice  specifying  in detail the  non-conformities
within 90 days after performance of the non-conforming Services or tender of the
non-conforming  Deliverables.  The remedy set forth in this Section 10(a) is the
sole and exclusive remedy for breach of the foregoing warranty.

    (b) SAIC  SPECIFICALLY  DISCLAIMS  ANY OTHER  EXPRESS OR IMPLIED  STANDARDS,
GUARANTEES,  OR  WARRANTIES,  INCLUDING  ANY  WARRANTIES OF  MERCHANTABILITY  OR
FITNESS FOR A PARTICULAR PURPOSE, ANY WARRANTIES THAT MAY BE ALLEGED TO ARISE AS
A RESULT OF CUSTOM OR USAGE,  ANY  WARRANTY OF  ERROR-FREE  PERFORMANCE,  OR ANY
WARRANTY OF THIRD PARTY PRODUCTS,  OR  FUNCTIONALITY  OF THE CLIENT'S  HARDWARE,
SOFTWARE, FIRMWARE, OR COMPUTER SYSTEMS.

                                       4
<PAGE>

    (c) Customer  represents and warrants to SAIC that Customer has the right to
use and furnish to SAIC for SAIC's use in connection  with this  Agreement,  any
information,  specifications,  data or  Intellectual  Property that Customer has
provided or will  provide to SAIC in order for SAIC to perform the  Services and
to create the Deliverables identified in Exhibit A.

11. Limitation of Liability.

    (a) SAIC's total liability to Customer for any and all  liabilities,  claims
or damages  arising out of or relating to this Agreement,  howsoever  caused and
regardless  of the  legal  theory  asserted,  including  breach of  contract  or
warranty, tort, strict liability,  statutory liability or otherwise,  shall not,
in the aggregate,  exceed the amount actually paid to SAIC under this Agreement,
or under the specific task order at issue, whichever is less.

    (b) In no event shall either SAIC or Customer be liable to the other for any
punitive,  exemplary,  special,  indirect,  incidental or consequential  damages
(including, but not limited to, lost profits, lost business opportunities,  loss
of use or equipment down time, and loss of or corruption to data) arising out of
or relating to this  Agreement,  regardless of the legal theory under which such
damages are sought, and even if the parties have been advised of the possibility
of such damages or loss.

12. Non-Waiver of Rights. The failure of either party to insist upon performance
of any provision of this Agreement,  or to exercise any right,  remedy or option
provided  herein,  shall not be construed as a waiver of the right to assert any
of the same at any time thereafter.

13. Rights and Remedies Not  Exclusive.   Unless  otherwise  expressly  provided
herein,  no  right  or  remedy  of a party  expressed  herein  shall  be  deemed
exclusive,  but shall be cumulative with, and not in substitution for, any other
right or remedy of that party.

14. Severability.  If any covenant,  condition,  term, or provision contained in
this  Agreement  is  held or  finally  determined  to be  invalid,  illegal,  or
unenforceable  in any respect,  in whole or in part,  such covenant,  condition,
term,  or provision  shall be severed  from this  Agreement,  and the  remaining
covenants,  conditions,  terms and provisions contained herein shall continue in
force and  effect,  and shall in no way be  affected,  prejudiced  or  disturbed
thereby.

15. Conflicting Provisions.  This Agreement and all of the exhibits,  schedules,
and documents  attached  hereto are intended to be read and construed in harmony
with each other, but in the event any provision in any attachment conflicts with
any provision of this Agreement, then this Agreement shall be deemed to control,
and such  conflicting  provision  to the  extent  it  conflicts  shall be deemed
removed and replaced with the governing provision herein.

16. Assignment.  Neither party may sell, assign,  transfer,  or otherwise convey
any of its rights or delegate any of its duties under this Agreement without the
prior written consent of the other party.  Notwithstanding  the foregoing,  SAIC
may without  violation  of this  paragraph  engage the  services of  independent
contractors to assist in the performance of its duties hereunder.

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<PAGE>

17. Applicable Law.  This Agreement shall be governed by and construed under the
laws of the State of California, without regard to its laws relating to conflict
or choice of laws.

18. Interpretation.  The captions and headings used in this Agreement are solely
for the convenience of the parties,  and shall not be used in the interpretation
of the text of this  Agreement.  Each party has read and agreed to the  specific
language  of this  Agreement;  therefore  no  conflict,  ambiguity,  or doubtful
interpretation shall be construed against the drafter.

19. Disputes.  Any controversy,  claim or dispute  ("Dispute") arising out of or
relating  to  this  Agreement  shall  be  resolved  by  binding  arbitration  in
accordance  with the Commercial  Arbitration  Rules of the American  Arbitration
Association then in effect. Before commencing any such arbitration,  the parties
agree to enter into  negotiations  to resolve  the  Dispute.  If the parties are
unable to resolve the Dispute by good faith negotiation,  either party may refer
the matter to arbitration. The arbitration shall take place in the County of San
Diego,  State of  California.  The  arbitrator(s)  shall be bound to follow  the
provisions  of this  Agreement in resolving  the dispute,  and may not award any
damages which are excluded by this Agreement.  The decision of the arbitrator(s)
shall be final and binding on the  parties,  and any award of the  arbitrator(s)
may be entered or enforced in any court of competent  jurisdiction.  Any request
for  arbitration  of a claim by either party against the other  relating to this
Agreement  must be filed no later  than one year  after  the date on which  SAIC
concludes performance under this Agreement.

20. Force Majeure.  Neither party shall be liable for any failure of or delay in
performance of its  obligations  under this Agreement to the extent such failure
or delay is due to  circumstances  beyond  its  reasonable  control,  including,
without limitation,  acts of God, acts of a public enemy, fires,  floods,  wars,
civil disturbances,  sabotage, accidents,  insurrections,  blockades, embargoes,
storms,  explosions,  labor disputes (whether or not the employees'  demands are
reasonable and/or within the party's power to satisfy), acts of any governmental
body, failure or delay of third parties or governmental bodies from whom a party
is obtaining or must obtain approvals,  authorizations,  licenses, franchises or
permits,  or  inability  to  obtain  labor,  materials,   power,  equipment,  or
transportation  (collectively referred to herein as "Force Majeure"). Each party
shall use its reasonable  efforts to minimize the duration and  consequences  of
any failure of or delay in performance resulting from a Force Majeure event.

21. Multiple Copies or Counterparts of Agreement. This Agreement may be executed
in one or more counterparts,  each of which shall be deemed an original, but all
of which together shall constitute one and the same  instrument.  This Agreement
shall not be effective  until the  execution  and  delivery  between each of the
parties of at least one set of the counterparts.

22. Notices. All notices or other written communication required or permitted to
be given  under any  provision  of this  Agreement  shall be deemed to have been
given by the  notifying  party if  mailed  by  certified  mail,  return  receipt
requested,  to the receiving party addressed to the mailing address set forth in

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<PAGE>

the first paragraph of this Agreement,  or such other address as the parties may
designate  in writing to the other  parties.  Additionally,  notices sent by any
other  means  (i.e.,  facsimile,  overnight  delivery,  courier,  etc.)  may  be
acceptable subject to written  confirmation of both the transmission and receipt
of the notice.

23. Relationship of Parties.  SAIC is an independent  contractor in all respects
with regard to this  Agreement.  Nothing  contained in this  Agreement  shall be
deemed or construed to create a  partnership,  joint venture,  agency,  or other
relationship other than that of contractor and customer.

24. Third Party Beneficiaries.  This Agreement does not create, and shall not be
construed as creating,  any rights or interests  enforceable by any person not a
party to this Agreement.

25. Waiver or  Modification.  This  Agreement may be modified,  or part or parts
hereof waived,  only by an instrument in writing  specifically  referencing this
Agreement and signed by an authorized  representative  of the party against whom
enforcement of the purported modification or waiver is sought.

26. Entire  Agreement.  This Agreement,  including any and all Exhibits attached
hereto,  which are hereby  incorporated  by  reference,  constitutes  the entire
agreement and understanding  between the parties and supersedes and replaces any
and  all  prior  or  contemporaneous  proposals,   agreements,   understandings,
commitments or representations of any kind, whether written or oral, relating to
the  subject  matter  hereof or the  Services  or  Deliverables  to be  provided
hereunder.

27. Survival.   The  provisions  of  sections  4, 6, 7, 9, 10,  11, and 19 shall
survive the termination or expiration of this Agreement.

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<PAGE>


                                    Exhibit A
                                    ---------


                                Statement of Work


Period of Performance:     1 September 2001 to 31 August 2003
----------------------

Overview:
---------

The  goal  of  this  program  is to use  the  lessons  learned  from  the  USDOE
dish/Stirling  and related  development  programs  to create a viable  near-term
solar dish  concentrator  power  system for  electrical  power  production.  The
program  consists of four tasks.  Task 1 is the  refinement  of the present SAIC
dish  concentrator  design and  development of components  needed for commercial
sales.  Components to be developed  include a  fixed-focus,  low-cost  reflector
facet and a high-moment drive system for the dish concentrator.  Task 2 consists
of marketing and business  development  activities,  to create a market pull for
the systems.  Task 3 is the development of an alternative  receiver for the dish
system, to give an option to the present Stirling engine, which has demonstrated
poor reliability. Task 4 is product demonstration and testing, in which two full
systems  will be  fielded as  demonstration  units and for  testing of  improved
components.  At the end of this  two-year  effort,  SAIC will have  designed and
demonstrated a system suitable for commercial  application for power  production
in the U.S. and other markets.

The  following  paragraphs  give more  detail on the  activities  in each of the
tasks. Dollar amounts shown are planning estimates only


    TASK 1.  ADVANCED DISH DEVELOPMENT
        SAIC TASK WORK   ($2,500)
The dish structure will be improved and  simplified.  Most likely,  this will be
done in  conjunction  with  changing  from steel to aluminum for the  structural
components.  Structural  analysis  will be done to  ensure  that  the  structure
provides  adequate  stiffness in all  orientations  and  conditions  of wind and
gravity. Joints will be re-designed to simplify assembly and minimize fit-up and
alignment issues.

A  fixed-focal-length  facet  will be  developed.  The  facet  will be a drop-in
replacement  for the  present  facets,  using the same  mounting  and  alignment
approach.  Different  designs and materials of construction  will be traded off,
and testing of prototypes will be conducted to determine the most cost-effective
approach.

A  large-moment  drive  system  suitable  for the dish  will be  developed  from
preliminary  designs already in place at SAIC. Analysis and testing of prototype
sub-systems will be conducted to validate the design.

The control system of the dish will be upgraded to incorporate  lessons  learned
from the  dish/Stirling  system.  The  control  wiring  will be  simplified  and
modifications  to  accommodate  the  new  receiver  and  drive  system  will  be
implemented.

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<PAGE>

All parts of the dish design will be coordinated  with the receiver  development
task and with each other in a comprehensive  systems  integration  task.  Design
reviews will be conducted at specific points in the design  development  process
to ensure that all subsystems fit together and work together correctly. The main
driver  in the  design  process  will be  reliability,  followed  by the cost of
electricity  from  the  systems.  All  improvements  and  modifications  will be
analyzed in view of their impacts on these factors.

        SUBCONTRACTOR WORK DIRECTED BY SAIC  ($1,500K)

Two major  subcontractors  are contemplated for this phase,  they are Tomcat for
the  structure  and drive,  and Rotating  Precision  Motion for the backup drive
vendor.  Large scale  production  contractor will be developed during this phase
using Vince Gorgas's holding company.


    TASK 2.  MARKETING AND BUSINESS DEVELOPMENT
        SAIC TASK WORK ($500K)
Existing leads for commercial  sales of the system will be followed up, with the
goal of obtaining  firm orders for systems.  New leads will be developed as they
are identified. For immediate implementations, SAIC may use other flat-plate PV,
concentrating  PV, or solar thermal systems and components,  and act as a system
integrator for end-user  customers.  As production of the SAIC dish concentrator
system  ramps up, the SAIC system  will be blended  into the product mix for the
customers.

        SUBCONTRACTOR WORK DIRECTED BY SAIC ($100K)

DOE has recommended  that we help fund a RDI multi-client  market  assessment of
Concentration  solar power technologies,  including dish stirling.  This will be
use as an independent  assessment of the true market  potential for Ocean Powers
product line..


    TASK 3.  RECEIVER DEVELOPMENT
        SAIC TASK WORK    ($600K)
Alternative  receivers for the dish  concentrator  will be evaluated and tested.
The best  receiver for the system will be selected  based on  considerations  of
availability,  cost,  reliability,  and  performance.  Receivers  that are being
considered  include  the  Amonix/C-Tech  PV  receiver,  Solar  Systems,  Ltd. PV
receiver, and the integrating  sphere/multi-spectrum  PV receiver design of Ugor
Ortabasi.  The  approach to  receiver  development  will be to obtain  prototype
receivers and implement  them on the NREL or other  test-bed dish  concentrators
for  evaluation.  Advanced  systems with potential for increased  performance or
lower cost will be  identified  and traded off  against  the  baseline  receiver
selected from  available  technologies.  Two of these  systems  include the NREL
multiple-series-cell  PV cells and the  multi-junction PV cells from Spectralab.
SAIC will  pursue  limited,  directed  R&D on  advanced  technologies  with high
potential  in order to  prepare  them for  implementation  on the  system in the
future.

In order to  maximize  performance  of a PV or other  receiver,  flux  smoothing
devices  will be  analyzed  and  tested,  and the best  approach  found  will be
implemented on the prototype systems.

                                       9
<PAGE>

    SUBCONTRACTOR WORK DIRECTED BY SAIC   ($1,400K)

The C-tech/Amonix photovoltaic power conversion system will result in a complete
16 kW PV receiver, with plans to built 100's more. ($50K C-tech, $145K Amonix)



The United  Innovations  Receiver  using  Emcor cell is more  risky,  but UI has
agreed to a fixed price  contract for $750K to provide a 20kW receiver ready for
testing and mass production. ($750 United Innovations)

Solar System Ltd. Of Australia  will consider a joint  receiver sales and system
sales  agreement,  which would net them both system sales and receiver sales. We
would install and operate and maintain their systems in the USA. They would also
help SAIC integrate the SSL receiver onto the SAIC dish. ($450K SSL)


    TASK 4.  PRODUCT TESTING AND SPECIFICATION
        SAIC TASK WORK    ($400K)
Development  items will be tested in  subsystem  tests to  validate  designs and
production  techniques.  Two full dish  systems  will be built and  operated for
demonstration  and testing  purposes.  These systems will be operated to measure
the  performance  and  demonstrate  the  reliability  of the dish  and  receiver
subsystems improved during this program. Upgrade the users manual,  installation
manual, checkout manual and acceptance testing procedures.

    SUBCONTRACTOR WORK DIRECTED BY SAIC  ($300K)
This would be work at Tomcat, APS STAR or at NREL to help to qualify our systems
as soon as possible. ($300K Misc. Contractors)

                                       10
<PAGE>

                                    Exhibit B
                                    ---------


Hourly Rates (by labor category):
---------------------------------


Labor Category                                          Hourly Billing Rate
--------------                                          -------------------

Sr. Program Manager                                            $255

Sr. Project Manager                                            $175

Sr. Engineer                                                   $142

Manufacturing Supervisor                                       $110

Fabrication/Installation Spvr.                                  $80

Project Engineer                                                $88

Project Technician                                              $82

Sr. Structural Engineer                                        $118

Administrative Assistant                                        $79



The above rates are  effective 01 September  2001 through 31 August 2002.  There
after the rates will be increased by 5% annually

Administrative Charges to be applied to Material, Travel and Other Expenses: 18%
--------------------------------------------------------------------------------

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<PAGE>


Estimated Price: $7,700,000
---------------



The estimated  number of hours by labor category,  estimated costs and expenses,
and  the  Estimated  Price  are  estimates  only  and  may  vary.  SAIC,  in its
discretion,  may use a greater or lesser number of hours in any labor  category,
and may incur a  greater  or lesser  amount of costs and  expenses,  but may not
charge more than the total  Estimated Price for all labor unless Customer agrees
in writing.

                                       12