**Exhibit 10.19**

 

**[CONFIDENTIAL TREATMENT REQUESTED. CERTAIN PORTIONS OF THIS AGREEMENT HAVE BEEN REDACTED AND FILEDSEPARATELY WITH THE COMMISSION]**

 
| **Purchase Order** | ** ** | PO Create Date: 09/05/2004             |   | **Raytheon** |   | **Space and Airborne Systems** |
|--------------------|------------|----------------------------------------|--------|--------------|--------|--------------------------------|
|               |       | Current Date/Time: 06/03/2005 17:04:46 |   |         |   | GOLETA EW                      |
|               |       |                                   |   |         |   | 6380 HOLLISTER AVE             |
|               |       |                                   |   |         |   | GOLETA CA 93117                |

 
| **Ordering Address: OA**#**:  0000110122**Salesperson/Attention: Ed McAvoy  AML COMMUNICATIONS INC  1000 AVENIDA ACASO  CAMARILLO CA 93012                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | Originator: SHARON JENEWEIN  Phone: 805-879-3120  FAX: 805-879.3112 Goleta-EW  Approved By: ***                                Date: 7/7/05  Signature {11 Required}.

 

Illegible |   | The number below must appear on all Packing

Lists, Shipping Labels and Invoices.

**Purchase Order No.**

**4400071815**

PO Type: Firm Fixed Price

Source of Inspection Items Exist: No

***

       |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Manufacturing Plant: MN #: N/A**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | **Purchase Order Total: 414,913.00  Currency: USD**  Taxable: See Line Items for Tax  Liquidation Rate: 0%  Payment Terms: Net 30 days from Invoice                                                                                                                                                                                            |   | **Foreign Offset: N**

 

Country 1: N/A     PO % Offset  Value: 0%

Country 2: N/A     PO % Offset  Value: 0%

Options: N

Option Expiration Date: N/A

  |
| **We require an Acknowledgement.**

Sign below and return promptly to Originator of this document.  This order, including the terms and  conditions of purchase referenced herein, are Fully accepted and agreed  to.   Any deviations must be noted.

Signature:                                            Date:                                             |   | **Delivery Address (If Blank See Line**  **Items):**  ***  ***  ***  ***  INCOTERMS: FOB ORIGIN  Ship Instructions: See Line Item[5]                                                                                                                                                                                                      |   | **Bill-To Address:**  RAYTHEON ELECTRONIC SYSTEMS  ACCOUNTS PAYABLE  6380 HOLLISTER AVE  GOLETA CA 93117-3114  For Payment Questions Call:                                                                   |

 

EFFECTIVE 1/1/04: THE RAYTHEON COMPANY GENERAL TERMS AND CONDITIONS OFPURCHASE TC001 (10/03) AND EXPORT/IMPORT CONTROLS TC109 (10/03) AND OTHER REFERENCEDDOCUMENTS ARE EITHER ATTACHED OR HAVE BEEN  PREVIOUSLY PROVIDED TO YOU.  ALL ARE INCORPORATED HEREIN AS IF FULLY SETFORTH IN THIS DOCUMENT.  ANY EXCEPTIONSARE NOTED IN THE PAGES BELOW.  TO OBTAINFULL TEXT COPIES, EITHER CONTACT THE ORIGINATOR ABOVE OR ACCESS: *** FOR CREATEDATES PRIOR TO 1/1/04.  ORIGINAL TERMSAND CONDITIONS AT ISSUANCE APPLY, UNLESS OTHERWISE NOTED.

 

Delivery to-NA

 

Header text

Change Order No. 03 increases funds to $326,133 from $88,780 to $414,913.

 

Attachment “A” dated 3 June 2005 supersedes and replaces in itsentirety all other Attachment “A” s to this Purchase Order.

 

All other terms and conditions remain unchanged.

 

2/3/2005 Change Order 02

Adds funds for the Thermal Study. All other terms and conditions remain unchanged.

 

8/19/2004 Change Order 01

Drawings *** and *** released to Revision.

All other Terms and Conditions remain unchanged.

Attachemtn A to this Purchase Order is incorporated herein by thisreference and made an integral part of this Purchase Order.

 

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*** Confidential TreatmentRequested

 

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| **PO  number /date**                     | ** ** | **Ordering  Address: OA**#**: 0000110122** | ** ** | **Raytheon** | ** ** | **Space  and Airborne Systems** |
|------------------------------------------|------------|--------------------------------------------|------------|--------------|------------|---------------------------------|
| **440007  1815 / 08/05/2004**            | ** ** | **AML  COMMUNICATIONS INC**                | ** ** | ** **   | ** ** | **GOLETA  EW**                  |
| **Current  Date/Time 7/7/2005 18:04:39** | ** ** | **1000  AVENIDA ACASO**                    | ** ** | ** **   | ** ** | **6380  HOLLISTER AVE**         |
| ** **                               | ** ** | **CAMARILLO  CA 93012**                    | ** ** | ** **   | ** ** | **GOLETA  CA 93117**            |

 

This Purchase Order is issuedto Fund one each brass boards pursuant to Drawings *** and *** Brass boardsmust meet all electrical requirements of the drawings.

 

Seller shall provide Buyer anexecuted Data Rights List which will then be formally incorporated into thePurchase Order via a change order.

 

Seller agrees to deposit thetechnical data into an escrow account and shall enter into an escrow agreementwith DSL Escrow Services with Buyer as the third party beneficiary.  Seller and Buyer shall agree to mutuallyacceptable release conditions.

 
| **Material No: Cage Code** | ** ** | **Material  Short Description** | ** ** | **Dwg.  Rev.** | ** ** | **Parts  List  Rev.** | ** ** | **SIS/  Index Rev.** | ** ** | **Order  Quantity** | ** ** | **Order  Price** | ** ** | **Ord  Price  Per Unit** | ** ** | **Est  Extended Price** | ** ** |
|----------------------------|------------|---------------------------------|------------|----------------|------------|-----------------------|------------|----------------------|------------|---------------------|------------|------------------|------------|--------------------------|------------|-------------------------|------------|
|                       |       | NRE CHARGE                      |       |           |       |                  |       |                 |       | 1,000               |       | 414,913.00       |       | 1                        |       | NO 414,913.00           |       |

 
| **Line  Item** | ** ** | **Vendor  Material Number**   | ** ** | **Prime Contract  Number** | ** ** | **DPAS  Rating** | ** ** | **Source  Insp.** | ** ** | **DD254  Req’d**             | ** ** | **Agreement  No.** |   | **Agree.  Item No.** | ** ** | **Delivery  Date** | ** ** | **Tax  States-Tax ID**  | ** ** |
|----------------|------------|-------------------------------|------------|----------------------------|------------|------------------|------------|-------------------|------------|-----------------------------------|------------|--------------------|--------|----------------------|------------|--------------------|------------|-------------------------|------------|
| 00010          |       |                          |       | ***                        |       | ***              |       | None              |       | Yes                               |       |               |   |                 |       | 08/31/2006         |       | Exempt Resale 98-034129 |       |
|           |       |                          |       |                       |       |             |       |              |       |                              |       |               |   |                 |       |               |       |                    |       |
|           |       | **Terms of Delivery:**        |       |                       |       |             |       |              |       |                              |       |               |   |                 |       |               |       |                    |       |
|           |       | *** Services changed ***      |       |                       |       |             |       |              |       |                              |       |               |   |                 |       |               |       |                    |       |
|           |       | *** Net Price changed ***     |       |                       |       |             |       |              |       |                              |       |               |   |                 |       |               |       |                    |       |
|           |       | *** Delivery data changed *** |       |                       |       |             |       |              |       | **Total Net Value Excl. Tax USD** |       |               |   | **414,913.00**       |       |

 

**Any Information Below Pertains to All Items on this Purchase Order**

 

UNIVERSAL PROCUREMENT NOTES: INADDITION TO TC001 (10/03) AND TC019 (10/03) THE FOLLOWING DOCUMENTS, UNLESSOTHERWISE NOTED, ARE INCORPORATED HEREIN BY REFERENCE. FOR A COPY OF THE FULLTEXT CONTACT THE BUYER OR ACCESS ***

 

 

N015 UNIVERSAL PROCUREMENT NOTEApplies for Purchase Order Issue Dates:

2/23/04 and before: Rev 2

2/24/04 - 3/29/05: Rev 4 (5/16/01)

3/30/05 and after: Rev 5 (12/18/04)

 

PN120 UNIVERSAL PROCUREMENT NOTEApplies for Purchase Order Issue Dates:

6/ 26/02 - 4/25/04: Rev 10(3/18/02)

4/ 26/04 - 6/21/04: Rev 14 (8/18/03)

6/ 22/04 - 3/29/05: Rev 15 (6/15/04)

3/ 30/05 and after: Rev 16(11/23/04)

 

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*** Confidential TreatmentRequested

 

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| **PO number/date**                    | Ordering Address: OA: 0000110122 |        | **Space and Airborne Systems** |
|---------------------------------------|----------------------------------|--------|--------------------------------|
| 4400071815/08/05/2004                 | AML COMMUICATIONS INC            |   | GOLETA EW                      |
| Current Date/Time 07/07/2005 10:04:39 | 1000 AVENIDA ACASO               |   | 6380 HOLLISTER AVE             |
|                                  | CAMARILLO CA 93012               |   | GOLETA CA 93117                |

 

REV AT DATE OF ORIGINAL PURCHASE ORDER ISSUANCE APPLIES, UNLESSOTHERWISE NOTED.

 

PACKAGING: FOR PURCHASE ORDERS REQUIRING DELIVERY OF PRODUCT, THESUPPLIER SHALL BE RESPONSIBLE FOR INSURING THAT ITEMS SHALL BE ADEQUATELYPROTECTED TO PREVENT DAMAGE DURING HANDLING AND SHIPMENT. UNLESS OTHERWISESPECIFIED BY A PACKAGING NOTE, ITEMS THAT MAY BE DAMAGED BY ITEM-TO-ITEM CONTACTSHALL BE INDIVIDUALLY WRAPPED, BAGGED, OR PROTECTED WHEN PACKAGED WITHIN ALARGER PACKAGE.

 

NATIONAL DEFENSE RELATED ORDER - TC002 (10/03) AND TC003 (10/03) AREINCORPORATED HEREIN BY THIS REFERENCE. THIS IS A RATED PURCHASE ORDER (PO),CERTIFIED FOR NATIONAL DEFENSE USE AND YOU ARE REQUIRED TO FOLLOW ALLPROVISIONS OF THE DEFENSE PRIORITIES AND ALLOCATION SYSTEM REGULATION (15 CFR700). ALL SUCH RATED POs MUST BE ACKNOWLEDGED AS FOLLOWS:

(A) DO RATED POs MUST BE ACKNOWLEDGED (OR REJECTED) WITHIN 15 WORKINGDAYS AFTER ORDER RECEIPT.

(B) DX-RATED POs MUST BE ACKNOWLEDGED (OR REJECTED) WITHIN 10 WORKINGDAYS AFTER ORDER RECEIPT.

(C) REJECTION OF DO OR DX ORDERS MUST BE IN WRITING, GIVING THESPECIFIC REASON FOR THE REJECTION.

(D) COMMENCEMENT OF PERFORMANCE OF THE WORK CALLED FOR BY THIS PO INTHE ABSENCE OF SELLERS WRITTEN ACKNOWLEDGEMENT THEREOF SHALL BE DEEMEDACCEPTANCE OF THIS PO AS WRITTEN. IF BOTH RATED AND UNRATED QUANTITIES AREREFLECTED IN THIS ORDER, YOU ARE ONLY REQUIRED TO FOLLOW THE DPAS REGULATION ASIT PERTAINS TO THE RATED QUANTITIES. FOR CREATE DATES PRIOR TO 1/1/04, ORIGINALTERMS AND CONDITIONS AT ISSUANCE APPLY, UNLESS OTHERWISE NOTED.

 

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| Applicable to Purchase Order 4400071815 |   | Change Order No. 3 |
|-----------------------------------------|--------|--------------------|

 

**ATTACHMENT“A”**

 

**AML Communications Inc.**

**1000 Avenida Acaso**

**Camarillo CA 93012**

 

**Reference: Purchase Order 4400071815, ChangeOrder No. 3**

 

**This Attachment “A”, Change Order No. 3supercedes and replaces any previous Attachment “A” to this Purchase Order No. 4400071815.**

 

This Firm Fixed Priced Purchase Order is hereby entered into by andbetween AML Communications Inc. hereinafter called “Supplier” and RaytheonSpace & Airborne Systems, acting by and through its, ElectronicWarfare Systems Business Unit, Goleta, hereinafter called “Buyer” for thepurpose of delivering the services and supplies called for herein, inaccordance with the following exhibits and attachments which are incorporatedby reference and an integral part of the referenced Purchase Order, and arelisted in descending order of precedence subordinate to the implementaryPurchase Order.

 

This Change Order No. 3 increases funds from $88,780 to $414,913,an increase of $326,133, and updates delivery schedule and paymentschedule. This Change Order also adds FN-001 and FN-003 for Allotted Funds andMilestone Payments.

 

**Exhibit A, Terms and Conditions ofPurchase**

 

1.               F08635-03-C-0002Prime Contract Flowdown Provisions, Supplement to TC-001

2.               General Terms andConditions of Purchase, TC-001 (10/03).

3.               General Terms andConditions of Purchase, Supplement 1 - Government Contract Provision from theFederal Acquisition Regulation (FAR), TC-002 (10/03).

4.               General Terms andConditions of Purchase, Supplement 2 - Government Contract Provisions from theDepartment of Defense FAR Supplement (DFARS), TC-003 (10/03).

5.               Purchase OrderAttachment PT-001, Property in Possession of Supplier, (03/00)

6.               Purchase OrderAttachment IP-001, Representation Concerning Rights in Technical Data andComputer Software (03/00)

7.               DD254 to beprovided under separate cover letter

8.               Purchase OrderAttachment FN-004 (10/03), Performance Based Payments.

9.               InsuranceProtection, Indemnification, and Security Requirements, SA-004, (03/00).

10.         Allotted Funds UnderFixed Price Procurement, FN-001 (l0/03 2 pp.)

11.         Milestone Payments, FN-003(10/03).

 

**Exhibit B, Scope of Work**

 

Supplier shall design, fabricate, test and deliver two Breadboards one forthe *** and one for the *** After the Breadboards are tested the Supplier shalldeliver the prototype units as outlined below.

 

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*** Confidential TreatmentRequested

 

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•      *** Rev.- , ***

•      *** Rev - , ***

•     SOWG720024, Rev - , Statementof Work

•     *** Rev - , ***

 

**Exhibit C, Purchase Order Correspondenceand Invoices**

 

All Purchase Order related correspondence and inquiries shall betransmitted directly to the Cognizant Buyer at the following address:

 
|   | Correspondence:                          |
|--------|------------------------------------------|
|   | Raytheon Electronic Warfare Systems      |
|   | 6380 Hollister Avenue, Bldg. H7 M/S 9294 |
|   | Goleta, California 93117-3114            |
|   |                                     |
|   | Remittance Address for Invoices          |
|   | Raytheon Electronic Warfare Systems      |
|   | 6380 Hollister Avenue, Accounts Payable  |
|   | Goleta, CA 93117-3114                    |

 

**Exhibit D, Schedule**

 
| **Description**  | ** ** | **Date** | ** ** | **QTY** | ** ** | **Comments**     | ** ** |
|------------------|------------|----------|------------|---------|------------|------------------|------------|
| ***              |       | 2/05     |       | 1       |       |             |       |
| ***              |       | 2/05     |       | 1       |       |             |       |
| First Article HB |       | 7/05     |       | 2       |       |             |       |
| Shipsets         |       | 7/05     |       | 2       |       | ***              |       |
| Shipsets         |       | 9/05     |       | 2       |       | ”           |       |
| Shipsets         |       | 10/05    |       | 2       |       | ”           |       |
| Shipsets         |       | 11/05    |       | 2       |       | ”           |       |
| Shipsets         |       | 12/05    |       | 2       |       | ”           |       |
| Shipsets         |       | 1/06     |       | 2       |       | ”           |       |
| Shipsets         |       | 2/06     |       | 2       |       | ”           |       |
| Shipsets         |       | 3/06     |       | 2       |       | ”           |       |
| Shipsets         |       | 4/06     |       | 2       |       | ”           |       |
| Shipsets         |       | 5/06     |       | 2.      |       | ”           |       |
| Shipsets         |       | 6/06     |       | 2       |       | ”           |       |
| Shipsets         |       | 7/06     |       | 2       |       | ”           |       |
| SDRLs            |       | See SOW  |       | Lot     |       | Per SOW  G720024 |       |

 

**Exhibit E, Payment Schedule**

 

This purchase order is phase funded in the amount of $414,913.00. In noevent shall Buyer be obligated for any costs incurred in excess of this amount,Seller shall assume all risks for any amount incurred in excess of $414,913. Inaccordance with FN-001, paragraph III, supplier is to notify Buyer of the datethat additional funds are needed.  Thetotal Firm Fixed Price is $461,383 for the effort described herein.

 

The current funding is expected to cover the period of performancethrough March 2006.

 

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*** Confidential TreatmentRequested

 

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**Milestone Payments**

 
| **MILESTONES**   | ** ** | **Description**                | ** ** | ** ** | ** ** | **$ ’s** | ** ** | **Total** | ** ** |
|------------------|------------|--------------------------------|------------|------------|------------|--------------------|------------|-----------|------------|
| *** NRE          |       | B/B                            |       |       |       | $                  | 32,600     |      | $          | 32,600 |   |
| *** NRE          |       | B/B                            |       |       |       |               | $          | 32,370    |       | $ | 64,970 |   |
| SDRLS 50%        |       | SDRLS                          |       |       |       | $                  | 3,250      |      | $          | 68,220 |   |
| Thermal          |       | Study                          |       |       |       | $                  | 23,780     |      | $          | 92,000 |   |
| Repair           |       | ***                            |       |       |       | $                  | 15,200     |      | $          | 107,200 |   |
| Change           |       | Packaging                      |       |       |       | $                  | 10,070     |      | $          | 117,270 |   |
| Change           |       | Wedge Locks                    |       |       |       | $                  | 10,070     |      | $          | 127,340 |   |
| Change           |       | Connector & Flexboard |       |       |       | $                  | 10,000     |      | $          | 137,340 |   |
| Order Mat’l |       | ***                            |       |       |       | $                  | 77,856     |      | $          | 215,196 |   |
| Order Mat’l |       | ***                            |       |       |       | $                  | 79,560     |      | $          | 294,756 |   |
| 1st Article      |       | ***                            |       |       |       | $                  | 8,721      |      | $          | 303,477 |   |
| 1st Article      |       | ***                            |       |       |       | $                  | 9,490      |      | $          | 312,967 |   |
| Deliver  Units*  |       | 24 ***                         |       | $          | 2,940      |               | $          | 70,560    |       | $ | 383,527 |   |
| Deliver  Units*  |       | 24 ***                         |       | $          | 3,244      |               | $          | 77,856    |       | $ | 461,383 |   |

 

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*The 50% balance due on each unit will be paid upon receipt. *** Pre-ProductionUnits are priced at $5,880.00 each. *** Pre-Production Units are priced at$6,488.00 each.

 

Screening will be paid when completed. The MB SSM and HB SSM FirstArticles will be screened for a price of $l,200.00 each, which is included inabove. Additional screenings will be on the lots as directed by Raytheon.

 

**Exhibit F, Option**

 

1.                                       TheBuyer reserves the right to exercise any production options envisioned by thisPurchase Order by issuance of new and separate Purchase Orders containing allof the necessary provisions of this Purchase Order. This is an administrativeconvenience to both parties and allows for the earlier closeout of thisPurchase Order. The issuance of new Purchase Orders can be accomplishedunilaterally by the Buyer and will have the same force and effect as thisPurchase Order.

 

2.                                       Followingare the quantities and dates of Options:

 

| **Model** | ** ** | **Phase** | ** ** | **Qty.** | ** ** | **Year** | ** ** |
|-----------|------------|-----------|------------|----------|------------|----------|------------|
| ***       |       | LRIP      |       | 150      |       | 2008     |       |
| ***       |       | FRP Lot 1 |       | 450      |       | 2009     |       |
| ***       |       | FRP Lot 2 |       | 450      |       | 2010     |       |
| ***       |       | FRP Lot 3 |       | 450      |       | 2011     |       |
| ***       |       | LRIP      |       | 150      |       | 2009     |       |
| ***       |       | FRP Lot 1 |       | 450      |       | 2010     |       |
| ***       |       | FRP Lot 2 |       | 450      |       | 2011     |       |
| ***       |       | RFP Lot 3 |       | 450      |       | 2012     |       |

 

3.                                       Inconsideration of this Purchase Order Supplier grants to Buyer the option statedherein (“Option(S)”). The Option shall be adjusted to the Consumer Price Index(CPI) of U.S. Department of Labor, Bureau of Labor Statistics, Consumer PriceIndex - All Urban Consumers. Series ID: CUURA421SA0, DUUSA421SA0, Notseasonally Adjusted, Area: Los Angeles-Riverside-Orange County, CA, Item: All Items,Base Period: 1982-84+100. The Options described herein may be exercised at thesole discretion of Buyer. Buyer shall not be obligated and assumes no liabilityfor failure to exercise any or all of the Options and no representations aremade herein by Buyer committing Buyer to exercising any or all of the Options.Buyer’s Prime

 

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*** Confidential TreatmentRequested

 

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Contract allows for a plus or minus 10% quantitiy. Supplier agrees tothe same fluctuation in the Options granted here.

 

In the event that the publication of theindex described above is discontinued, the parties shall agree upon anappropriate substitute index. If the parties fail to agree within ninety (90)days after an aforementioned index is discontinued, Supplier agrees to acceptthe substitute inces established by Buyer subject to the Disputes clause ofthis Purchase Order.

 

OPTION PRICING

 

*** SSM is agreed as follows:

 

LRIP                      $4,960.00each in 2004 dollars

FRP                          $4,580.00each in 2004 dollars

 

*** SSM is agreed as follows:

 

LRIP                      $5,560.00each in 2004 dollars

RFP                          $5,050.00each in 2004 dollars

 

The CPI and the formulae for applying it will be applied to the aboveprices for items ordered after CY 2004.

 

**Exhibit G, Miscellaneous**

 

Payment terms are Net 30 days after receipt of an acceptable invoice.

 

Only the undersigned, or his designated representative as a member of Buyer’sProcurement Department, is authorized to make changes or give directionrelative to this Purchase Order. All such changes and direction must be inwriting and signed by Buyer’s Procurment Department in order to be valid.

 

No news release, public announcement, denial or confirmation of anypart or subject matter of this Subcontract, or any phase of any program hereunder,shall be made without the prior written approval of Buyer.

 

In accordance with DPAS regulations, your acceptance or rejection ofthis subcontract is required within fifteen (15) working days of receipt.Reasons for rejection must be provided in writing.

 

Supplier’s acceptance of the referenced Purchase Orders shall besignified by affixing its signature to the copy in the provided and returningsaid copy to the assigned Buyer. Such acceptance together with Buyer’ssignature, will constitute a fully executed contract.

 

 
| RAYTHEON COMPANY,          | AML Communications Inc.        |
|----------------------------|--------------------------------|
| Space and Airborne Systems |                           |
| Electronic Warfare Systems |                           |
|                       |                           |
| By:                        | /s/ Steven M. Kantor           |   | By: |   /s/ JACOB INBAR |   |
| Typed Name:                | Steven M.  Kantor              |   | Typed |   |   |
| Title:                     |   Manager,  Materiel |   | Name: | JACOB INBAR |   |
| Date:                      | 7/7/05                         |   | Title: | PRES. |   |
|                       |                           |   | Date: | 6/22/05 |   |
|                            |                                |  |  |  |  |  |  |  |  |  |

 

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*** Confidential TreatmentRequested

 

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**PURCHASEORDER ATTACHMENT FN-001**

** **

**ALLOTTEDFUNDS UNDER FIXED PRICE PROCUREMENT**

 

I.                      INITIALALLOTMENT AND PERFORMANCE PERIOD. The sum that is presently available forpayment and allotted to this Purchase Order and the period of performance whichsuch allotted sum will cover are identified in the body of this Purchase Orderas “Phase Funding” and “Performance Period”, respectively. It is anticipated,but not agreed, that from time to time additional sums will be made availablepursuant to this Purchase Order’s provisions entitled “Phase Funding”, andchange notices shall be issued until the total price and period of performancehave been assigned.

 

II.                  LIMITATIONS ONOBLIGATIONS. Seller agrees to perform or have performed work hereunder up tothe point at which, in the event that additional sums are not provided underthe terms of the Purchase Order or this attachment, the total amount paid andpayable by Buyer for work done (including but not limited to costs and fairprofit) by Seller would in the exercise of reasonable judgment approximate, butin no event exceed, the then allotted sum. Seller shall not be obligated tocontinue performance of the work beyond such point, and Buyer shall not beobligated to pay any amount in excess of then total allotted sum. Anything tothe contrary in other provisions, whether relating to changes, termination,overhead rates, or other matters shall not be considered as giving rise to anincrease in Buyer’s obligations over the allotted sum from time to time. Anyrequest from Buyer’s personnel to continue performance shall not affect theaforesaid limitations on Seller’s obligation to perform or on Buyer’sobligation to make payment.

 

Ill.                ADDITIONALALLOTMENTS. In the event Seller considers the allotted funds to be inadequateto cover the work to be performed during any performance period, Seller shallnotify Buyer in writing at least 45 days prior to the date when the work willreach a point at which, in the event of termination of this order for Buyer’sconvenience, the total amount paid and payable to Buyer, covering all costsincurred (including subcontractors’ charges and termination settlement costs)and a fair profit earned on work done will approximate 85% of the totalallotted funds. The notice shall state the estimated date when such point willbe reached and the estimated amount of additional allotted funds required to continueperformance during the balance of the performance period.

 

IV.              SUSPENSION ORTERMINATION FOR LACK OF FUNDS. If additional allotted funds are not madeavailable by (a) the 45th day after delivery of the notification requiredby Clause III, or (b) the date additional allotted funds are declared inthe notice to be needed, or (c) the date such funds are actually needed,whichever date is the latest, Seller may request that Buyer, at Buyer’s option,either order work suspension in accordance with the Changes provision elsewhereprovided or terminate this order for Buyer’s convenience, Buyer shall do sowithin 15 days after such request unless additional allotted funds are madeavailable. Nothing herein shall be construed to require Seller to performbeyond the point described in Clause II. above, whether or not work suspensionhas been ordered. In the event of termination pursuant to this clause, Sellershall not be entitled to an amount as final termination settlement which,together with previous payments, would exceed the allotted funds plus stand-bycosts authorized as a result of any work suspension ordered pursuant to thisclause. Buyer may, at any time prior to termination, provide additionalallotted funds for this Purchase Order. With the consent of Seller, afternotice of termination, Buyer may rescind such termination in whole or in partand provide additional allotted funds for this purchase order.

 

V.                  ADDITIONALPERFORMANCE PERIOD. If and when additional allotted sums are made available forcontinued performance under the purchase order, then, unless already specifiedin this Purchase Order, the parties shall agree as to the performance periodcovered by such allotted sums, and the provisions of this attachment shallapply in like manner to such additional allotted sums and performance period,and the order amended accordingly.

 

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VI.              REDUCTION INALLOTMENTS. Buyer shall be entitled to reduce the allotted funds from time totime except that if the allotted funds as reduced are less than any amount towhich Seller would be entitled. If Buyer, on the reduction date, terminatesthis order for Buyer’s convenience, then Seller shall notify Buyer within 30days thereafter and Buyer shall then increase the allotted funds to suchamount, provided that the increase shall in no event be in excess of the amountof allotted funds immediately prior to the reduction.

 

VII.          CHANGES TO PURCHASEORDER. No change to this Purchase Order, whether made pursuant to the Changesprovision elsewhere set forth or otherwise, shall require Buyer to make anyadjustment in the allotted funds.

 

***The text of this document shallnot be changed except by written agreement between Buyer and Seller.***

**FN-001 (10/03)**

 

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**PURCHASEORDER ATTACHMENT FN-003**

** **

**MILESTONEPAYMENTS**

 

A.                The intent of thisprovision is to permit interim payment prior to completion of the total effortrequired by this purchase order. It is mutually understood and agreed that,with respect to the dates set forth below; time shall be the essence.

 

B.                  Provision 19,entitled, “COMPLIANCE WITH LAW”, of the General Terms and Conditions ofPurchase remains in full force and effect including the addition hereto of thefollowing:

 

Seller shall submit to the Buyer duplicatecopies of the invoices submitted by Seller to Buyer’s accounts payabledepartment for payment.

 

Billings for complete milestones shall besubmitted by Seller to Buyer upon completion thereof.

 

C.                  The Buyer shallhave the right to reduce or suspend milestone payments to the Seller in theevent Seller fails to complete on schedule the milestone events identifiedbelow. Notwithstanding any payment made by Buyer to Seller under this clause,it is understood and agreed that if this purchase order is terminated fordefault, Seller shall, upon demand, repay to Buyer all such sums theretoforepaid by Buyer to Seller hereunder.

 

D.                 Upon completionof the milestone work, Seller’s written verification of milestone completion,delivery to and acceptance of milestone work by Buyer, title to such milestonework shall vest in the Buyer and/or the Government. Notwithstanding that titleto such milestone work is in the Buyer or the Government through operation ofthis clause, the handling and disposition of such milestone work shall bedetermined by the applicable provisions of this purchase order.

 

E.                   The rights andremedies of the Buyer or the Government, with respect to this clause, shall notbe exclusive and are in addition to any other rights and remedies provided bylaw or under this contract. Payment or vesting of title pursuant to this clauseshall neither excuse the Seller from performance of his obligations under thispurchase order, nor constitute a waiver of any of the rights and remedies ofthe parties under this purchase order. Delay or failure of the Buyer or the Governmentin exercising any right, power or privilege, under this clause shall neitheraffect any such right, power or privilege, nor shall any single or partialexercise thereof preclude or impair any further exercise of any other right,power, or privilege of the Buyer.

 

**END OF DOCUMENT**

 

***The text of this document shallnot be changed except by written agreement between Buyer and Seller.***

**10/03 Edition**

 

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