Kellogg Brown & Root Services, Inc.

                             Agreement No. CA-00062

This  Agreement  is entered  into as of the 20  December  2004,  by and  between
Kellogg Brown & Root Services,  Inc.  (hereinafter  "KBR" or  "Company"),  whose
offices are located at 1550 Wilson  Boulevard,  Suite 400,  Arlington,  Virginia
22209 and MachineTalker, Inc. (TIN: 01-0592299 ) whose address is 513 De La Vina
Street, Santa Barbara, CA 93101 (hereinafter "MACHINETALKER" or "Consultant").

1. TERM AND SCOPE OF AGREEMENT:

1.1 Term
1.1.1 Effective Dates
The  Agreement  shall be valid and  effective  from the date of its execution by
both parties but in no event prior to 20 December 2004 or after 31July 2005.

1.1.2 Termination
The  Agreement  may be  terminated  at any time by  either  party  upon  written
notification. Such notification shall not relieve either party of its respective
liabilities that may have accrued prior to termination.

1.1.3 Renewal
This  Agreement  may  be  renewed  for  additional  terms  after  the  scheduled
completion  date upon  mutual  written  agreement  between the  parties.  If not
renewed,  the Agreement shall automatically expire at twelve midnight on 31 July
2005.

1.1.4 Licensed Product and Technology
"LICENSED  PRODUCT"  means  those  certain  devices  that  employ the use of the
Licensed Technology and that are manufactured and sold by MACHINETALKER that are
intended to enable users of those  devices to track  inventory,  containers  and
other similar  packages.  "LICENSED  TECHNOLOGY" means the Documentation and the
Software that enables the Licensed Products to transmit and receive  information
via self-coordinated machine network by employing MACHINETALKER's Simple Machine
Management   Protocol  (SMMP(R))   technology,   as  described  in  U.S.  Patent
Application  2004/0114557.  The scope of the  technology  disclosed  within U.S.
Patent  Application  2004/0114557,  and  licensed  herein,  shall be  considered
limited to such aspects of the technology as reasonably relates to applications,
systems,  or  solutions  that  track  inventory,  containers  and other  similar
packages.

1.1.5 Changes
All changes,  of any type, to this  agreement  affecting  either the term or the
value shall require the prior written agreement of both parties in the form of a
modification to this  agreement.  Should  MACHINETALKER  elect to proceed with a
change prior to finalization of written modification to this agreement, it shall
be at the sole risk and liability of MACHINETALKER.

Agreement No. CA-00062        12/29/2004 6:18 PM                   Page 1 of 14
-- MachineTalker, Inc.
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1.2 Scope

1.2.1 Introduction
MACHINETALKER will adapt their MachineTalker(R)  product family of wireless mesh
networking   processors  for  placement  on-board  of  shipping  containers  and
materials,  inventory, packages or other similar items in transit and storage to
provide for  tracking of those items.  Specifically,  the  MiniTalker(R)  and/or
TagTalker(R)  products will be tested in conjunction  with KBR  requirements  to
determine choice of radio,  battery and methods for mounting within the Shipping
containers and materials.

1.2.2 Background
The tracking or finding of items will bring  significant  economic savings while
minimizing the problem of loss of valuable contents due to theft or spoilage.

1.2.3 KBR Project
The Project will involve the coordinated  effort of systems  personnel from both
MACHINETALKER  and  KBR.  The   MACHINETALKER   staffing  will  include  systems
engineering  personnel  to  formulate  how  MachineTalker's(R)  will be  adapted
physically  and what new  Applications  Software  is to be  created  to meet KBR
requirements.  KBR  staffing  will  include  those who will  specify  aspects of
shipping processes,  what is to be detected, what actions will be taken, what is
to be reported, and how it is to be reported.

Subsequently,   the  MACHINETALKER  team  will  test  variations  of  the  basic
MachineTalker(R)  product to optimize performance in KBR specified  environment.
MACHINETALKER will implement  Applications  Software to service sensors,  accept
cargo  information and to report in the manner specified for use by KBR tracking
system software.

The end result is to equip the items with the means for  tracking  and  security
and  to do so in  concert  with  KBR  tracking  system.  The  Project  tasks  to
accomplish  this goal are tied to  "milestones"  as  expressed  below and in the
Project Schedule and Payment  Deliverable  Chart.  Each  deliverable  shall also
include  submission of a written report  addressing the goal of the deliverable,
the status of each goal and an assessment of the progress of the project.

1.2.4 Project Specifics
Task #1 - All hands  meeting(s)  among  Project  team  members  to  discuss  and
determine all operational issues to be resolved by the use of on-board means for
security  and  tracking.  The  result  of these  meetings  will be to  publish a
task-oriented schedule and guidelines for testing,  evaluation and specification
for the  requisite  Applications  Software  to fulfill  the stated  goals of the
Project.  MACHINETALKER  shall  prepare and submit a written  report which shall
summarize the findings of the all hands meeting,  including but not  necessarily
limited to, the specification for the end product and its interfaces.

Task #2 - Test and  evaluation  of the  insertion of wireless  products into the
shipping   container   environment.   These  tests  will  be   conducted   using
off-the-shelf   MiniTalkers(R)   to  evaluate   operation  at  different   radio
frequencies and in different container locations and configurations.  The result
of these tests will be to find the  optimum  radio  frequencies  and the optimum
mounting  locations  within  the  Shipping   containers  and  materials.   Radio
frequencies  which are  prohibited  for use by the U.S.  Government  will not be
considered. MACHINETALKER shall prepare a written report upon completion of this
Task  #2  and,  in  conjunction   with  the  report,   submit  a   manufacturing
specification for the production  hardware  configuration  for  KBRMiniTalker(R)
unit.

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-- MachineTalker, Inc.
<PAGE>

Task #3 -  Codification  of KBR freight  tracking  and  inventory  software  I/O
language   (protocol)   desired  by  KBR  Project  team.  This  codification  is
anticipated  to  be  the  foundation  of  the  data  content  being  sent  by  a
MACHINETALKER network or by individual shipping containers and materials, to KBR
tracking  and  controlcenter.  MACHINETALKER  shall  prepare  a  written  report
summarizing  this  progress  and  accomplishments  made under  this  deliverable
including the specification of the required format.

Task #4 - Selection of sensors and  detectors  that will be used on-board of the
shipping  containers and materials and that will be serviced by KBR - MiniTalker
version.  MACHINETALKER  engineers  will  experiment  with and test the proposed
sensing  devices to ensure that their output  parameters  can be serviced by the
wireless  node.  Consideration  shall be given  to the  type of  sensor,  sensor
output, power requirements and packaging. MACHINETALKER shall prepare and submit
a report which will include a specification  on implementing the sensor hardware
and the  Applications  Software to support  each sensor type and provide for the
range of sensor types and their relative  physical  attributes  along with draft
information about their use.

Task #5 - Finalization of the design of the end-product  including  hardware and
software documentation to build units to meet KBR requirement,  field testing of
the first production units with the Applications Software and,  incorporation of
changes  that will  improve the end  product.  MACHINETALKER  shall  prepare and
submit an initial report that, at minimum,  includes a Bill of Materials for the
manufacture of units in quantity, a summary of Applications  Software changes to
improve  operation in the field and incorporates  detailed results of testing in
the field. MACHINETALKER shall prepare a final report that summarizes the issues
of operating  wireless  sensors  on-board  Shipping  containers  and  materials,
descriptions of the  form-fit-and  function,  details on  installation,  use and
maintenance, methodology for determining placement of sensors and wireless nodes
on or within  containers and guidelines for use of different types of sensors of
interest to shipping and maintenance personnel.

1.2.5 Go-No-Go Decision

As  expressed  in Section  1.2.6  below,  KBR,  on or about Week 14, at its sole
discretion,  shall  determine if the project will proceed.  Election to continue
the  project  must be made by the  affirmative  action  of KBR to  purchase  the
Software  License as set forth in Exhibit 6 of this Agreement.  In the event KBR
elects to end the project,  or fails to purchase the  Software  License,  1) KBR
shall waive any and all rights to the licenses  technology and products,  2) KBR
and MACHINETALKER shall cease to have any right and/or obligation to each other,
3)  MACHINETALKER  shall  be free of all  encumbrances  and  limitations  on the
intellectual  property  rights as it  applies  to the  licensed  technology  and
products,  and 4) KBR shall pay  MACHINETALKER  the remainder of any amounts not
yet paid toward the Firm Fixed Price of this Consulting Agreement.

Agreement No. CA-00062        12/29/2004 6:18 PM                   Page 3 of 14
-- MachineTalker, Inc.
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 1.2.6  [Redacted pursuant to Rule 406 of Regulation C of the Securities Act]





























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-- MachineTalker, Inc.
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 2. KBR Contact
 Performance  of the  work  under  this  Agreement  is  subject  to the  written
 technical  direction of the  Technical  Representative.  "Technical  direction"
 means a directive to MACHINETALKER that approves approaches, solutions, designs
 or  refinements;   fills  in  details  or  other  wise  completes  the  general
 description of work or documentation items; shifts emphasis among work areas or
 tasks; or furnishes similar  instruction to MACHINETALKER.  Technical direction
 includes  requiring  studies and pursuit of certain lines of inquiry  regarding
 matters within the general tasks and requirements of this Agreement.

 The  Technical  Representative  does not have the  authority to, and shall not,
 issue any instruction purporting to be technical direction that:

(1)  constitutes an additional assignment outside of the statement of work;
(2)  constitutes a change to the Agreement or work required under the Agreement;
(3)  constitutes  a basis for an  increase  in the total  price or the period of
     performance under the Agreement;
(4)  changes any of the expressed  terms,  conditions or  specifications  of the
     Agreement;
(5)  interferes with  MACHINETALKER's  right to perform the terms and conditions
     of the Agreement.


The Technical  Manager for KBR is Andrew Bush or his assigns and is the point of
contact  for  all  technical   matters  under  this  Agreement  subject  to  the
limitations above.

Technical direction shall be issued in writing by the Technical  Representative.
If, in  MACHINETALKER's  opinion,  any instruction or direction by the Technical
Representative  falls  within items (1) through (5) above,  MACHINETALKER  shall
provide  written  notification to the  Subcontract  Administrator  and shall not
proceed  with the  work  required  prior  to  negotiation  and  issuance  of the
appropriate    modification   to   the   Agreement,   or   withdrawal   of   the
instruction/direction.


                                           Name: Andy Bush
The Technical Representative :             Telephone: 703-526-2358
 for this Agreement shall be               e-mail: andy.bush@halliburton.com


The Subcontract Administrator              Primary Contact
 for the Agreement shall be:               Name: Kevin B. Shriner
                                           Telephone #: 703-526-7966
                                           e-mail: kevin.shriner@halliburton.com

Agreement No. CA-00062        12/29/2004 6:18 PM                   Page 5 of 14
-- MachineTalker, Inc.
<PAGE>


3 Compensation
For performing the Services, MACHINETALKER will be compensated as follows:

[Redacted pursuant to Rule 406 of Regulation C of the Securities Act]

3.1 Reimbursement for Certain Approved Expenses

[Redacted pursuant to Rule 406 of Regulation C of the Securities Act]

3.2 Agreement Value and Change Requirement

[Redacted pursuant to Rule 406 of Regulation C of the Securities Act]




















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-- MachineTalker, Inc.

<PAGE>

4. Payments and Invoicing.

[Redacted pursuant to Rule 406 of Regulation C of the Securities Act]

Invoices shall be submitted to:
         Kellogg Brown & Root Services, Inc.
             P.O. Box 12366Arlington, Virginia 22219-2366
                Attention: Procurement - Mr. Kevin B. Shriner

MACHINETALKER  shall  execute  and  submit  one (1) copy of the  "Affidavit  for
Subcontractor" incorporated as Exhibit 2 with the final invoice.






















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-- MachineTalker, Inc.
<PAGE>

5. MACHINETALKER as Independent Contractor.
As an independent contractor under this Agreement,  and not an employee or agent
of KBR,  MACHINETALKER  is not  authorized  to and  will not  commit  KBR to any
obligation,  and MACHINETALKER  will receive no vacation  accrual,  holiday pay,
paid sick leave, insurance, or any other benefits afforded employees of KBR. All
taxes,  Social Security  payments,  and other such related  charges  relative to
MACHI NETALKER's Services shall be solely MACH IN ETALKER's responsibility.

6.       Performance of the Services.

6.1  MACHINETALKER's  Services  will  be  performed  at  MACHINETALKER's  office
location,  KBR  Arlington,  Virginia  and/or  other  locations  to  be  mutually
agreed-upon in writing between KBR and  MACHINETALKER.  KBR is interested in the
results obtained through the use of  MACHINETALKER's  Services,  rather than the
manner in which MACHINETALKER's  Services are performed.  While MACHINETALKER is
expected to devote the amount of effort  reasonably  required  to  complete  the
assignments  given to  MACHINETALKER  within the financial and time  constraints
attendant to each  assignment,  the number of hours worked  during any given day
and  the   particular   days  that   MACHINETALKER   works  will  be  solely  at
MACHINETALKER's   discretion   except  where   interface   with  KBR  or  client
representatives is required.  MACHINETALKER understands and agrees that, for any
Services  performed on KBR's  premises or that of a customer or supplier of KBR,
that it will comply with any and all rules and regulations pertaining to health,
safety,  environmental,  or security,  specifically,  KBR's  policies  regarding
substance  testing for any persons  performing work under contract to KBR on KBR
premises.

6.2  EXCEPT  FOR  EXISTING   BUSINESS   RELATIONSHIPS  AS  NOTED  IN  EXHIBIT  4
MACHINETALKER agrees not to accept any other representation appointment,  not to
enter into a relationship  with any person,  firm or corporation with respect to
projects  which may be  competitive  with or conflict with the interests of KBR.
KBR,  however,   acknowledges  that  MACHINETALKER   provides   MachineTalker(R)
products, consulting, and development services to other clients, and agrees that
nothing  hereunder  shall be deemed or construed to prevent  MACHINETALKER  from
carrying on such business or developing for itself or others  materials that are
not  competitive  with  those  produced  as a result  of the  Services  provided
hereunder,  irrespective  of  their  similarity  to  the  deliverables  provided
hereunder.

6.3 License to Use.
In  addition  to  the  SMMP(R)  license   agreement   executed  by  the  parties
incorporated  as  Exhibit  6 to  this  Agreement  and to  the  extent  that  any
MACHINETALKER   Information,   as  defined  below,  is  incorporated   into  the
Applications  Software,  MACHINETALKER  will  grant  an  exclusive,  non-royalty
bearing,  worldwide and perpetual license to use such MACHINETALKER  Information
under  this  Agreement  in the area of  container  and  inventory  security  and
tracking. Nothing in this Section 6.3 shall be deemed to permit KBR to disclose,
provide access to, sublicense, disassemble, decompile, reverse engineer, modify,
create  derivative  works of, or transfer any  MACHINETALKER  Information to any
third party,  except to a subsidiary or  affiliate,  with a need to know without
the prior, written consent of MACHINETALKER.

7. No Subcontracting.
It is  understood  that  this  Agreement  is  for  Services  to be  rendered  by
MACHINETALKER  personally. In no event shall Services requested of MACHINETALKER
hereunder be rendered by any other person without KBR's prior written approval.


Agreement No. CA-00062        12/29/2004 6:18 PM                   Page 8 of 14
-- MachineTalker, Inc.
<PAGE>

8. Confidentiality and Proprietary Information.

8.1 Confidentiality
MACHINETALKER  agrees to keep  confidential  and not disclose to any third party
nor  use  except  in  connection  with  MACHINETALKER's  Services  for  KBR  all
information  concerning  KBR,  including  but not limited to the  existence  and
content of this  Agreement,  KBR's Services,  the business  affairs or technical
data or processes of KBR, or its customers,  made available to  MACHINETALKER by
KBR in the course of  MACHINETALKER's  Services to KBR, except to the extent KBR
authorizes  disclosures  in writing.  All memoranda,  notes,  and documents made
available to  MACHINETALKER  by KBR will remain the property of KBR and shall be
returned to KBR upon completion of the Services or termination of the Agreement.

KBR agrees that in conjunction  with the Project  described in the Agreement KBR
may receive or be privy to information  that is confidential  and proprietary to
Consultant.  Such Confidential  Information can include,  but is not limited to,
the business plans,  business  associations or proprietary technical information
of the  Consultant.  Except  as  developed  for  KBR  during  the  Project,  all
memoranda,  notes,  and documents made  available to KBR by the Consultant  will
remain the  property of the  Consultant  and shall be returned to  theConsultant
upon completion of the Services or termination of the Agreement.

If either MACHINETALKER or KBR receives from the other party written information
which is marked "Confidential" or "Proprietary",  the receiving party agrees not
to use such  information  except in the  performance of this  Agreement,  and to
treat such  information  in the same  manner as it treats  its own  confidential
information for a period of Five (5) years from the date of disclosure.  Without
limiting  the  foregoing,   it  is  agreed  that  all   communications   between
MACHINETALKER and KBR relating to bidding,  testing,  or sales activities are to
be confidential.  However, MACHINETALKER's and KBR's obligations above shall not
apply with respect to any Confidential Information which:

     A.) (i) is already  rightfully in the  possession of the Party;  (ii) is or
becomes  publicly  available  through no wrongful act of either Party;  (iii) is
rightfully  received by the Party from a third party  without an  obligation  of
confidentiality to the other Party; (iv) is disclosed to a third party by either
Party  without   restriction;   or  (v)  is  approved  for  release  by  written
authorization of the disclosing Party.
     B.) Is or becomes generally available to the public other than by reason of
a breach by either of the PARTIES of its obligations under this Agreement; or
     C.) Is compelled by court order to disclose, provided that disclosing Party
(i) provides to the other Party a reasonable period prior to disclosure  written
notice of all  circumstances  pertaining  to the proposed  disclosure,  and (ii)
cooperates  reasonably  with any  attempt  by  other  Party  to  obtain  or file
pleadings with respect to any protective  judicial order limiting or prohibiting
the disclosure of such Confidential  Information  except to the extent necessary
for the purposes of the proceeding in which the disclosure order arose; or Other
Party agrees that the confidential information can be disclosed to a third party
under a  non-disclosure  agreement  with that  party,  for the sole  purpose  of
preparing proposals,  marketing,  sales, and other activities reasonably related
to disclosing  Party's overall  business  strategy in the area of  applications,
systems,  or  solutions  that  track  inventory,  containers  and other  similar
packages,  where such final purpose is the sale of, and  implementation  of, the
Licensed Products.


Agreement No. CA-00062        12/29/2004 6:18 PM                   Page 9 of 14
-- MachineTalker, Inc.
<PAGE>

8.2 Ownership of Proprietary Information and Work Product

MACHINETALKER's   original  works  in  developing  the  Applications   Software,
including but not limited to MACHINETALKER's work products submitted to KBR, are
agreed to be works made for hire,  and all  right,  title and  interest  will be
owned by KBR.  MACHINETALKER  will  promptly  disclose to KBR any  invention  or
original  work  conceived  or  prepared  by   MACHINETALKER  in  the  course  of
MACHINETALKER's  Services hereunder in developing such Applications Software, or
based on  information  made available to  MACHINETALKER  by KBR in the course of
MACHINETALKER's  Services.  Hereunder,  all right,  title,  and interest in such
inventions and original works,  including any derivative works, or improvements,
modifications, or enhancements thereof ("Works") are owned by KBR. MACHINETALKER
will  assist KBR with all  reasonably  necessary  efforts to execute  all papers
necessary to enable KBR or its nominee to apply for Letters Patent based on such
inventions  and  copyrights  on such Works in the United  States and any foreign
countries  which KBR may select,  and to assign to KBR or its nominee the entire
right,  title,  and  interest  in  and to  any  such  Works.  Such  services  by
MACHINETALKER  are  recognized to be outside of the scope of this  agreement and
MACHINETALKER will be compensated for such efforts at MACHINETALKER's  published
hourly fee contained in Attachment B.

MACHINETALKER's  and  KBR's  obligations  in this  Article 8 shall  survive  any
termination  or  expiration  of this  Agreement for a period of 5 years from the
termination of the Agreement.

9. MACHINETALKER's Reports.
MACHINETALKER  will furnish  monthly  reports  reflecting the times worked and a
summary of the efforts and the results of MACHINETALKER's Services corresponding
to those times. Such reports shall be submitted to the Technical  Representative
upon request.

10. Compliance with Laws.
MACHINETALKER  agrees to conduct its  activities  and  perform  all  Services in
accordance with all applicable laws, regulations, codes or ordinances, including
but not limited to  possessing  all valid and current  professional  licenses or
certifications   required   to   perform   the   Services   in  the   applicable
jurisdiction(s).  In the  provision  of  Services  pursuant  to this  Agreement,
MACHINETALKER  shall  comply  with  KBR/Halliburton  Code  of  Business  Conduct
incorporated into this Agreement as Exhibit 1. In addition,  MACHINETALKER shall
comply with all requirements and standards of conduct applicable to it under the
Personnel Employment Services Act, Tex. Civ. Stat. Ann. art. 5221a-7.

11. Future Purchases of Licensed Product.
Exhibit 7, Purchase Order Terms and Conditions will be made a part of any future
purchases of Licensed Products.

12. Dispute Resolution.
This  Agreement  and any disputes  between the parties  shall be governed by the
laws of the Commonwealth of Virginia,  excluding any provisions  thereof dealing
with  conflict  of  laws  which  might  make  the  laws of  other  jurisdictions
applicable.  The  parties  agree that all  disputes  and claims will be amicably
resolved  through  good  faith  direct  negotiation  between  the  parties as an
exclusive substitute for litigation. Should any dispute or claim not be resolved
within a reasonable  period,  the parties agree, as a sole and exclusive remedy,
to submit  the  dispute or claim to  mediation  or  binding  arbitration,  to be
administered by the American Arbitration Association in Arlington,  Virginia, in
accordance with its then-current rules and procedures.


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-- MachineTalker, Inc.
<PAGE>

13. Indemnification for Services

(A)  MACHINETALKER  AGREES TO  INDEMNIFY  AND HOLD KBR  HARMLESS  FROM ANY LOSS,
ACTION, OR CLAIM ARISING OUT OF ANY SERVICES  RENDERED,  PROVIDED THAT KBR GIVES
MACHINETALKER  NOTICE OF ANY SUCH LOSS OR CLAIM  WITHIN 30 DAYS OF THE DATE THAT
KBR IS MADE  AWARE OF THE  CLAIM.  KBR  AGREES  TO USE BEST  EFFORTS  TO  ASSIST
MACHINETALKER IN ANY SUCH DEFENSE TO THE EXTENT REASONABLE AND PRACTICABLE.

(B) KBR AGREES TO INDEMNIFY  AND HOLD  MACHINETALKER  HARMLESS  FROM ANY LOSS OR
CLAIM  RELATED TO THE  NEGLIGENCE  OF KBR,  ITS AGENTS OR  EMPLOYEES  DURING THE
TESTING PERIOD DESCRIBE IN ATTACHMENT A, OR ARISING OUT OF ANY REPRESENTATION OR
WARRANTY MADE BY KBR, ITS AGENTS, OR EMPLOYEES WHERE SUCH REPRESENTATION EXCEEDS
MACHINETALKER'S  LIMITED  WARRANTY  IF  SUCH  LOSS  OR  CLAIM  IS  EXCLUSIVE  OF
MACHINETALKER  NEGLIGENCE,  PROVIDED THAT MACHINETALKER  GIVES KBR NOTICE OF ANY
SUCH LOSS OR CLAIM WITHIN 30 DAYS OF THE DATE THAT  MACHINETALKER  IS MADE AWARE
OF THE CLAIM. MACHINETALKER AGREES TO USE BEST EFFORTS TO ASSIST KBR IN ANY SUCH
DEFENSE TO THE EXTENT REASONABLE AND PRACTICABLE.

In the event that either Party is entitled to claim damages from the other Party
subsequent to an action arising under article 17, above, such liability shall be
limited to:

     1)   Damages  for  bodily  injury  (including  death)  and  damage  to real
          property and tangible personal property; and
     2)   The amount of any other actual direct  damages,  up to the charges (if
          recurring,  12  month's  charges  apply) for the  Product  that is the
          subject of the claim.

In no event shall either party be liable to the other for:

     A)   loss of, or damage to, records or data; or
     B)   special, incidental, or indirect damages or any consequential economic
          damages; or
     C)   lost profits, business, revenue, or anticipated savings.

All indemnities are subject to the limitations and exclusions  elsewhere in this
Agreement.

NOTWITHSTANDING  ANYTHING  IN THE  AGREEMENT  TO  THE  CONTRARY,  KBR'S  MAXIMUM
LIABILITY  TO  MACHINETALKER  SHALL NOT EXCEED THE AMOUNT OF $600,000  UNDER ANY
CIRCUMSTANCES,  INCLUSIVE OF ATTORNEYS' FEES, COSTS, AND EXPENSES, FOR ANY CLAIM
ARISING  FROM OR  RELATED  TO THE  AGREEMENT  OR TO THE  SUBJECT  MATTER  OF THE
AGREEMENT. SUCH CLAIMS MIGHT INCLUDE BUT ARE NOT LIMITED TO CLAIMS FOR BREACH OF
CONTRACT.

13.3 In the event, travel outside of the continental United States is authorized
under this Agreement,  MACHINETALKER acknowledges,  understands and accepts that
conditions  in the world  including  locations  throughout  Middle East,  Kuwait
and/or Iraq can be considered dangerous. Although reasonable efforts are made to
ensure the safety of all personnel,  KBR makes no  representations or warranties
regarding the safety of individuals  and accepts no liability or  responsibility
for the  safety of  independent  contractors,  subcontractors,  MACHINETALKER's,
vendors or suppliers  including,  but not limited to,  health and welfare  costs
that may be incurred in the event of injury.


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-- MachineTalker, Inc.

<PAGE>

14. CREATION OF SECURITY INTEREST.
MACHINETALKER  hereby grants to KBR a security interest in any products or items
purchased for the purpose of creating,  repairing, or modifying Licensed Product
to  secure  the  performance  of  MACHINETALKER's  obligations  as stated in the
Agreement.  MACHINETALKER  agrees to maintain a Job Cost System that at all time
will uniquely  identify the said products or items to which KBR holds a security
interest.  MACHINETALKER  agrees to segregate  the said products or items at all
times so that they are readily  identifiable and separate from any other similar
materials  not  belonging  to KBR and not  subject to KBR's  security  interest.
MACHINETALKER  agrees to provide  free and open  access to its  facility  during
normal  business  hours for inspection by KBR, and to  MACHINETALKER's  Job Cost
System for the purpose of allowing  KBR to audit the  accuracy of the system and
compliance  with this Article.  MACHINETALKER  further agrees to execute any and
all UCC-1  forms and such other  forms that KBR may  request in order to perfect
KBR's security interest or to accomplish the purposes of this Article.

15. AUDIT RIGHTS.
For the purpose of  evaluating  MACHINETALKER's  incurred  costs with respect to
MACHINETALKER's   invoices   for   cost   reimbursement,    progress   payments,
MACHINETALKER's  claim(s) arising out of a termination or partial termination of
this contract,  and  MACHINETALKER's  proposals for incentive price revisions or
elements of MACHINETALKER's  change proposals which involve unique claims (e.g.,
obsolescence costs) which must be verified by audit,  MACHINETALKER  agrees that
KBR or any of its duly authorized  representatives  shall have access to and the
right to audit any directly  pertinent  books,  documents,  papers,  and records
which support direct and indirect costs.

16. EXAMINATION OF PROPOSED COSTS.
For the purpose of  evaluating  MACHINETALKER's  proposed  costs with respect to
proposals,   change   proposals,   and  proposals  for  follow-on   procurement,
MACHINETALKER agrees that KBR or any of its duly authorized  representatives may
subject such  proposals or reports and related  financial  data to analysis type
examination at MACHINETALKER's facility. For such purposes,  MACHINETALKER shall
make available all data supporting direct and indirect costs.

17. PERFORMANCE OF WORK ON GOVERNMENT PREMISES
Any work under this contract which is performed by  MACHINETALKER  or any of its
subcon-tractors   on  premises  under  Government  control  is  subject  to  all
provisions of this contract  governing such work and to the  following:  A.) All
MACHINETALKER  personnel shall at all times conspicuously  display a distinctive
badge  provided by  MACHINETALKER,  identifying  such  personnel as employees of
MACHINETALKER  and shall  observe  and  otherwise  be subject  to such  security
regulations as are in effect for the particular premises involved. B.) Except as
may be otherwise  specified in this  contract,  MACHINETALKER  shall furnish all
supplies,  material and  equipment  required for the work to be  performed.  C.)
MACHINETALKER  shall provide  direct  supervision of its own employees but shall
not  supervise  or  accept  supervision  from  any  Government  personnel.   D.)
MACHINETALKER   shall   designate   to  KBR  in   writing   an   on-the-premises
representative  to  serve  as  point  of  contact  for  MACHINETALKER  with  the
Contracting  Officer or his duly authorized  representative.  E.) Performance of
work on Government  premises  shall be confined to the area(s)  specified by the
Contracting Officer or his duly authorized representative.


Agreement No. CA-00062        12/29/2004 6:18 PM                   Page 12 of 14
-- MachineTalker, Inc.

<PAGE>

18. PROCUREMENT INTEGRITY
As an  express  condition  of the  award of this  subcontract,  (or  subcontract
modification)  MACHINETALKER  represents and warrants to KBR that in relation to
the award of the prime  contract (or prime  contract  modification)  under which
this  subcontract is issued,  MACHINETALKER  has complied,  and will continue to
comply, in all respects with the Procurement  Integrity provisions of the Office
of Federal  Procurement  Policy Act Amendments of 1988 (the Act), 41 U.S.C. 423,
and its  implementing  Federal  Acquisition  Regulations  (see  FAR  3.104),  as
amended.  MACHINETALKER  further  agrees  that it shall  comply with the Act and
implementing  regulations,  as amended, in relation to any and all modifications
or extensions of the prime contract under which this subcontract is issued.  For
violations of the Act by the MACH INETALKER or  MACHINETALKER's  subcontractors,
as determined by notice from the U.S. Government.

19. NOTICE
Any  correspondence of notice given by either Party to the other hereunder shall
be served, if delivered in person to the office of the authorized representative
and  designated in writing to act for the respective  party,  or if deposited in
the mail, properly stamped with the required postage and addressed to the office
of the  authorized  representative.  Either Party hereto shall have the right to
change any  representative  or  address it may have given to the other  Party by
giving such other party due notice in writing of such change.  Notices  shall be
delivered as addressed as follows:

FOR KBR:                            Kevin Shriner Telephone: 703-526-7966
                                    Kellogg Brown & Root Services, Inc.
                                    1550 Wilson Blvd, Suite 200
                                    Arlington VA 22209

FOR MACHINETALKER                   Roland F. Bryan Telephone: 805-957-1680
                                    MachineTalker, Inc.
                                    513 De La Vina Street
                                    Santa  Barbara,  CA  93101  Notices  of  all
                                    changes   to  the   Agreement,   except   as
                                    otherwise stated herein,  shall be delivered
                                    thirty (30) days prior to the effective date
                                    of the change.


20. Purchase of the Software License.
MACHINETALKER  offers the purchase of the Software  License  under the condition
that  acceptance  by KBR must be in the form of a Lump Sum payment in the amount
of $200,000 and received by MACHINETALKER  prior to 11:59pm on 01 April 2005. In
the event KBR elects to purchase the Software  License,  said License  terms and
conditions  shall be as set forth in Exhibit 6 of this  Agreement.  In the event
KBR elects to end the project,  or fails to purchase the Software License,  such
action or inaction on behalf of KBR shall result in the following:  1) KBR shall
waive any and all rights to the licenses  technology  and  products,  2) KBR and
MACHINETALKER  shall cease to have any right and/or obligation to each other and
3)  MACHINETALKER  shall  be free of all  encumbrances  and  limitations  on the
intellectual  property  rights as it  applies  to the  licensed  technology  and
products.


Agreement No. CA-00062        12/29/2004 6:18 PM                   Page 13 of 14
-- MachineTalker, Inc.
<PAGE>

21. Agreement Documents

     Attachment A -Relative Activity Periods vs. Task
     Attachment B -MACHINETALKER Hourly Rates
     Exhibit 1 - Halliburton Code of Business Conduct
     Exhibit 2 - Affidavit for MACHINETALKER (Final Release)
     Exhibit 3 - Small Business Program Representations
     Exhibit 4 - Organizational Conflict of Interest
     Exhibit 5 - Secrecy Agreement (Mutual Non-Disclosure Agreement)
     Exhibit 6 - Software License (9 Pages)
     Exhibit 7 - Purchase Order Terms and Conditions (11 Pages)
     Exhibit 8 - Notice of KBR Invoice Procedures


22. Entire Agreement.

The foregoing constitutes the entire Agreement between KBR and MACHINETALKER and
supercedes any representations or Agreements heretofore made with respect to the
same subject matter. This Agreement may be renewed, modified, or amended only by
a document in writing signed by both parties hereto.

Please  signify  Agreement to the foregoing by dating and signing both originals
of this Agreement and returning one original to KBR's attention.















Agreement No. CA-00062        12/29/2004 6:18 PM                   Page 14 of 14
-- MachineTalker, Inc.
<PAGE>

                                 "MACHINETALKER"
                  MACHINETALKER, INC., a Delaware corporation


Name & title: Date:
Roland F. Bryan, President

Address and Facsimile Number for Notice:

MachineTalker, Inc.
513 De La Vina Street
Santa Barbara, California 93101

Facsimile No.: (805) 957-1740

                                      "KBR"
                      KELLOGG, BROWN & ROOT SERVICES, INC.




 Name & title: Date:


 Address and Facsimile Number for Notice:

 Kellogg, Brown & Root Services, Inc.
 Attn: Procurement
 1550 Wilson Boulevard, Suite 400
 Arlington, Virginia 22209

 Facsimile No.: (____)


<PAGE>

Consulting Agreement
MachineTalker, Inc.
<PAGE>
                                  ATTACHMENT A

[Redacted pursuant to Rule 406 of Regulation C of the Securities Act]

<PAGE>
                                  ATTACHMENT B


[Redacted pursuant to Rule 406 of Regulation C of the Securities Act]

<PAGE>








Consulting Agreement
 MachineTalker, Inc.







<PAGE>








                                    EXHIBIT 1


                            Code of Business Conduct


<PAGE>







  Halliburton Company

Code of
      Business
          Conduct


<PAGE>
                                TABLE OF CONTENTS


Letter To All Employees ......................................1

General Policy Regarding Laws and Business Conduct ...........2

Ethical Business Practices ...................................3
    Sensitive Transactions ...................................3
    Commercial Bribery .......................................4
    Accounting Controls, Procedures and Records ..............5
    Use and Disclosure of Inside Information .................6
    Confidential or Proprietary information ..................6
    Conflicts of Interest ....................................7
    Fraud and Similar Irregularities .........................8
 Export Matters and International
 Business Relationships ......................................9
 Export Administration and International
    Economic Sanctions .......................................9
    Boycotts .................................................9
    International Business Relationships .....................10

 Antitrust and Competition ...................................11

 Employment and the Workplace ................................12
    Equal Employment Opportunity .............................12
    Harassment ...............................................12

 Health, Safety and Environment ..............................13

  Political Activities .......................................14

  United States Federal Government Contracting ...............15

  Confidential Reporting of Alleged Code Violations ..........1E

  Useful Telephone Numbers ...................................1E

  Training ...................................................1E
  Distribution ...............................................1E


<PAGE>

General Policy Regarding Laws and Business Conduct

         The Code of Business  Conduct of  Halliburton  Company (the  "Company")
consists of the policies  relating to the ethical and legal standards of conduct
to be followed by Directors,  employees and agents of the Company in the conduct
of its business.  The Code of Business Conduct applies to all Company Directors,
employees and agents and all Company  activities  throughout  the world,  except
where specifically indicated.

         It is the policy of the Company to comply  with  applicable  law.  Some
Company  policies are based on the requirements of applicable law and others are
just good ethics and  business  sense.  The Company is  organized  under  United
States law and its securities are publicly  traded.  This means that the Company
is primarily  governed by United  States law, and that United States law applies
to some of the Company's business outside the United States.

         The Company does business in many countries  around the world and, as a
good business  citizen,  we must observe the applicable laws of the countries in
which the  Company  does  business.  Sometimes  there is a conflict  between the
United States law and the law of one of the other countries in which the Company
operates.  In these  situations  the Company will resolve the conflict  with the
advice and counsel of the Law Department.

         It is the personal  responsibility of each Company  Director,  employee
and agent to observe the standards of conduct and other requirements of the Code
of Business  Conduct  whether or not these standards and  requirements  are also
imposed by law. Any  Director,  employee or agent who does not comply with these
standards and requirements is acting outside the scope of his or her employment,
responsibilities or agency.

         The  underlying  formal  policies  themselves  have more detail than is
contained in this booklet.  It is the responsibility of each Director,  employee
or agent to  familiarize  himself or herself with the details of the policies of
the Company that apply to his or her assigned  duties.  If an employee wishes to
refer to the complete policies summarized in this booklet, they are available in
electronic and written form. If a Director,  employee or agent has any questions
about the policies  summarized in this booklet, he or she should contact the Law
Department.

Reference: Corporate Policy 3-0001
                                       2

<PAGE>
                           Ethical Business Practices

         Company policy requires Directors, employees and agents to observe high
standards  of business  and  personal  ethics in the conduct of their duties and
responsibilities.  Directors and employees  must practice fair dealing,  honesty
and  integrity  in every  aspect of dealing with other  Company  employees,  the
public, the business community, shareholders,  customers, suppliers, competitors
and government authorities.  When acting on behalf of the Company, Directors and
employees shall not take unfair  advantage  through  manipulation,  concealment,
abuse of privileged  information,  misrepresentation of material facts, or other
unfair-dealing practices.

         Company policy prohibits  unlawful  discrimination  against  employees,
shareholders,  Directors,  officers,  customers or suppliers on account of race,
color, age, sex, religion or national origin.  All persons shall be treated with
dignity and respect and they shall not be  unreasonably  interfered  with in the
conduct of their duties and responsibilities.

         No Director or employee  should be misguided by any sense of loyalty to
the Company or a desire for profitability that might cause him or her to disobey
any  applicable  law  or  Company  policy.  Violation  of  Company  policy  will
constitute  grounds  for  disciplinary  action,   including,  when  appropriate,
termination of employment.


Reference: Corporate Policy 3-0001

Sensitive Transactions

         Company  policy  prohibits  its  Directors,  employees  and agents from
entering into sensitive transactions.  If such a transaction occurs, the Company
and its officers,  Directors and employees  directly  involved may be subject to
fines, imprisonment and civil litigation.

         The term "sensitive  transactions" is commonly used to describe a broad
range of business dealings generally considered to be either illegal, unethical,
immoral  or to  reflect  adversely  on  the  integrity  of  the  Company.  These
transactions are usually in the nature of kickbacks, gifts of significant value,
bribes  or  payoffs  made to  favorably  influence  some  decision  affecting  a
company's business or for the personal gain of an individual. These transactions
may result in violation of various laws,  including  the United  States  Foreign
Corrupt Practices Act (the "FCPA") and similar laws of other countries.

     Company  policy  and the  FCPA  prohibits  the  Company  and its  officers,
Directors,  employees and agents from corruptly  offering or giving  anything of
value to:

         o        An  official,  including  any  person  acting  in an  official
                  capacity  for a  government  outside  the United  States or an
                  official of a public international organization;
         o        A political  party  official or  political  party  outside the
                  United States; or
         o        A candidate for political office outside the United States;

                                       3
<PAGE>

directly or indirectly,  for the purpose of  influencing  any act or decision of
these  officials  in their  official  capacity or in  violation  of their lawful
duties or to secure any improper  advantage in order to help the Company  obtain
or retain business or direct business to any person.

         Employees of government  owned companies such as national oil companies
are considered to be government officials.

         Company  policy  prohibits any Director,  employee or agent from making
any payment or engaging in any transaction that is prohibited by the FCPA.

         This policy does not prohibit  properly made and recorded  facilitating
payments.  Sometimes  the  Company  may be  required  to  make  facilitating  or
expediting  payments  to a low level  government  official  or  employee in some
countries  other than the United States to expedite or secure the performance of
routine  governmental  action  by the  government  official  or  employee.  Such
facilitating  payments  may not be illegal  under the FCPA and  similar  laws of
other  countries.  Nevertheless,  it may be  difficult  to  distinguish  a legal
facilitating  payment from an illegal  bribe,  kickback or payoff.  Accordingly,
facilitating  payments must be strictly controlled and every effort must be made
to eliminate or minimize such payments. Facilitating payments, if required, will
be made only in accordance with the advance guidance of the Law Department.  All
facilitating  payments must be recorded  accurately as facilitating  payments in
the accounting records of the Company.

Reference: Corporate Policy 3-0005

Commercial Bribery

         Company policy prohibits commercial bribes, kickbacks and other similar
payoffs and benefits paid to any suppliers or customers.



                                       4
<PAGE>

         Directors,  employees and agents are also  prohibited  from  receiving,
directly or  indirectly,  anything of a  significant  value  (other than salary,
wages or other  ordinary  compensation  from the Company) in  connection  with a
transaction entered into by the Company.

         Bribery of suppliers or customers  includes any payment for the benefit
of any representative of the supplier or customer. It includes:

         o        Gifts of other than nominal value;
         o        Cash payments by Directors,  employees or third per-sons, such
                  as agents or consultants, who are reimbursed by the Company;
         o        The  uncompensated  use of  Company  services,  facilities  or
                  property, except as may be authorized by the Company; and
         o        Loans, loan guarantees or other extensions of credit.

         This policy does not prohibit  expenditures  of reasonable  amounts for
meals and  entertainment  of suppliers and  customers  which are an ordinary and
customary business expense,  if they are otherwise lawful.  Expenditures of this
type should be included on expense  reports and approved under standard  Company
procedures.

Reference: Corporate Policy 3-0006

Accounting Controls, Procedures and Records

         Applicable  laws and Company  policy  require the Company to keep books
and  records  that  accurately  and  fairly  reflect  its  transactions  and the
dispositions of its assets.  In addition,  the Company must maintain a system of
internal  accounting  controls that will ensure the  reliability and adequacy of
its books and  records.  Failure  to meet such  requirements  may  constitute  a
violation of law.

         To satisfy  these  requirements,  the Company  has adopted  policies to
ensure that only proper transactions are entered into by the Company,  that such
transactions  have  proper  management  approval,  that  such  transactions  are
properly  accounted  for in the books and  records of the  Company  and that the
reports  and  financial   statements   of  the  Company  are  timely   prepared,
understandable and fully,  fairly and accurately reflect such transactions.  All
Directors and employees  having any  responsibility  for such  functions must be
familiar  with the  Company's  policies,  accounting  controls,  procedures  and
records and must comply with their requirements.

Reference: Corporate Policy 3-0004

                                       5
<PAGE>

Use and Disclosure of Inside information

         The laws of the United States and many other countries regulate the use
and  disclosure of inside  information  concerning  the Company.  Information is
"inside  information"  if it has not been  publicly  disclosed.  The Company has
policies  (based in part on such  laws)  concerning  the use and  disclosure  of
inside information.

         Company policy prohibits  disclosure of material inside  information to
anyone other than persons  within the Company  whose  positions  require them to
know such information.

         Company policy also prohibits  trading in the securities of the Company
by any employee while in the possession of material  inside  information.  If an
employee  or agent has inside  information  he or she must wait until the end of
business on the second  business  day after the  information  has been  properly
disclosed to the public before trading in the securities of the Company. Company
policy  also  prohibits   providing  inside  information  to  other  persons  or
recommending  that  they buy or sell the  Company's  securities  on the basis of
inside  information.  More  restrictive  rules apply to certain  key  employees,
officers and Directors.

         A  Director,  employee or agent  shall not trade in the  securities  of
another  company if, in the course of his or her employment or position with the
Company, he or she learns confidential information about such other company that
is likely to affect the price of such securities.

         Company Directors, employees and agents are discouraged from short term
speculation in the securities of the Company.

         It is  Company  policy  that no  preferential  treatment  be given with
respect to disclosure of inside information.  The Company has adopted procedures
to avoid improper preferential disclosures.

Reference: Corporate Policy 3-0008

Confidential or Proprietary Information

         Company  Directors,  employees and agents often learn  confidential  or
proprietary  information  about the  Company or its  customers.  Company  policy
prohibits Directors,  employees and agents from disclosing or using confidential
or  proprietary  information  outside the Company or for personal  gain,  either
during or after employment,  without proper written Company  authorization to do
so. An unauthorized  disclosure could be harmful to the Company or a customer or
helpful to a competitor.

                                       6
<PAGE>

         The Company also works with  proprietary  data of customers,  suppliers
and joint venture  partners.  This is an important  trust and must be discharged
with the greatest care for the Company to merit the continued  confidence of its
customers,  suppliers and joint venture partners. No Director, employee or agent
shall  disclose  or use  confidential  or  proprietary  information  outside the
Company without Company authorization, nor shall any Director, employee or agent
disclose such information to other employees except on a need-to-know basis.

Reference: Corporate Policy 3-0009

Conflicts of Interest

         Company  policy  prohibits  conflicts  between  the  interests  of  its
Directors  or  employees  and  the  Company.  A  complete   definition  of  what
constitutes  a conflict  of interest is  difficult.  There are some  situations,
however, that will always be considered a prohibited conflict of interest. These
situations  occur  when a Director  or  employee  or any  person  having a close
personal relationship with the Director or employee:

o     Obtains a significant financial or other beneficial interest in one of the
      Company's suppliers,  customers or competitors without first notifying the
      Company and obtaining  written approval from the Chief.  Executive Officer
      or his or her designee;
o     Engages in a  significant  personal  business  transaction  involving  the
      Company  for  profit or gain,  unless  such  transaction  has  first  been
      approved in writing by the Chief Executive Officer or his or her designee;
o     Accepts money, gifts of other than nominal value,  excessive  hospitality,
      loans,  guarantees  of  obligations  or other special  treatment  from any
      supplier,  customer  or  competitor  of the Company  (loans  from  lending
      institutions at prevailing interest rates are excluded);
o     Participates  in any  sale,  loan  or  gift of  Company  property  without
      obtaining  written approval from the Chief Executive Officer or his or her
      designee;
o     Learns of a business  opportunity through association with the Company and
      discloses  it to a third  party or  invests  in or takes  the  opportunity
      personally without first offering it to the Company;
o     Uses  corporate  property,  information, or position for personal gain; or
o     Competes with the Company.

         A conflict  of  interest  may arise  because of outside  directorships,
personal  use of Company  property or  obtaining  Company  services for personal
benefit.

                                       7
<PAGE>

         "Person  having a close  personal  relationship  with the  Director  or
employee"  refers to the  Director's or employee's  spouse,  parents,  children,
siblings,  mothers and fathers-in-law,  sons and daughters-in-law,  brothers and
sisters-in-law,  any  person  living  in the same  house  with the  Director  or
employee or any business associate of the Director or employee.

         Periodically the Company  requires certain  employees to certify to the
Company that they have  complied with all  requirements  of the Code of Business
Conduct. Disclosure of a particular situation that may be a conflict of interest
does not mean that the Company will consider it to be  substantial  enough to be
prohibited. Each situation will be considered on an individual basis.

Reference: Corporate Policy 3-0003

Fraud and Similar Irregularities

         Company  policy  prohibits  fraud  and  establishes  procedures  to  be
followed  concerning the recognition,  reporting and  investigation of suspected
fraud. Fraud includes, but is not limited to:

         o        Dishonest or fraudulent act;
         o        Embezzlement;
         o        Forgery  or  alteration  of  negotiable  instruments  such  as
                  Company checks and drafts;
         o        Misappropriation of Company,  employee,  customer,  partner or
                  supplier assets;
         o        Conversion  to personal use of cash,  securities,  supplies or
                  any other Company asset;
         o        Unauthorized  handling or reporting  of Company  transactions;
                  and
         o        Falsification  of Company records or financial  statements for
                  personal or other reasons.

         Directors and  employees are obligated to protect the Company's  assets
and ensure their efficient use. Theft,  carelessness and waste of Company assets
by Directors and employees are prohibited  since such actions and conduct have a
direct and negative  impact on the Company's  profitability.  All Company assets
shall only be used for the legitimate business purposes of the Company.

         Any  Director,  employee  or agent  who  suspects  that any  fraudulent
activity  may have  occurred  is  required  to report  such  concern  to the Law
Department,   Audit  Services,  Security  Department,  or  the  Company's  Chief
Financial  Officer.  All  fraud  investigations  will  be  conducted  under  the
direction of the Law Department.

Reference: Corporate Policy 3-0015

                                       8
<PAGE>

                        Export Matters and International
                             Business Relationships

 Export Administration and International Economic Sanctions

         Although the Company  operates in many countries  throughout the world,
as a United  States  company it must comply with the export  administration  and
international  economic  sanctions  laws of the United  States.  Company  policy
requires  that the Company  conduct all of its business and export its services,
products and technology in compliance with such laws. There are no exceptions to
this policy.

         The Company has established a comprehensive internal monitoring program
to ensure  compliance with such laws. The requirements of these laws are complex
and sometimes difficult to understand. Any questions concerning the requirements
of this policy or the  applicable  law should be addressed to the export control
manager or the Law Department. All Company Directors,  employees and agents must
observe all requirements of the internal  controls program and act in compliance
with these laws.

Reference: Corporate Policy 3-0010

Boycotts

         Applicable laws and Company policy  prohibits  cooperation with certain
boycotts imposed by the laws of other countries.  Applicable  United States laws
also require that the Company not provide  certain  information  concerning  the
identity   and   nationality   of  its   employees,   Directors,   shareholders,
subcontractors  and  suppliers  or  information  about  where the  Company  does
business when such information is requested to support a prohibited  boycott.The
Company is also required to report requests it receives to support such boycotts
even though it does not comply with such requests.

         Sometimes  requests to support a prohibited boycott are hard to detect.
All  employees  and agents who are likely to come in contact with such  requests
must be fully aware of the details of this policy.

Reference: Corporate Policy 3-0011

                                       9
<PAGE>

International Business Relationships

         The Company often enters into business relationships with other persons
and  companies  outside  the  United  States.  These   "International   Business
Relationships"  take the form of agency  agreements,  joint  ventures  and other
forms of business  combinations.  Company  policy governs the manner in which it
will enter into and manage these business relationships.

      The term "International Business Relationships" includes the following:
o     Employment of an agent,  consultant,  sponsor or any other party to assist
      the  Company  in  obtaining  work or  projects,  personnel  visas,  import
      licenses,  facilities  or other matters  necessary for operation  within a
      country or region;
o     Entering into a joint venture, consortium or shareholder agreement, or any
      other  arrangement  where another party obtains an equity  interest in the
      business  of an entity in which the  Company  also owns an  interest  or a
      share of the profits from any work performed by the Company;
o     Entering into a distribution, marketing, sales representation or licensing
      agreement  where another  party  distributes,  markets,  sells or licenses
      others  or  obtains  a  license  relating  to the  services,  products  or
      technology of the Company; or
o     Entering into a contract or  subcontract  where another party will perform
      the majority of the work to be performed under the Company's contract.

         "International  Business  Relationships" do not include subcontracts or
purchase orders for goods or routine services in the regular course of business.

         While International Business Relationships are useful in the conduct of
the Company's business, they must be adequately subject to the Company's systems
of control to protect the Company's assets against  unauthorized  use. Also, the
Company may be held  accountable  for actions  taken by agents and others on its
behalf.  Thus, Company policy requires that selection of other parties with whom
the Company will join in International Business Relationships must be subject to
appropriate management control and investigation.

         All proposed  agreements  establishing  or amending such  relationships
must be carefully reviewed by legal, financial and management personnel prior to
signing the agreement.

                                       10
<PAGE>

         Further,  these agreements must require that the other parties agree to
comply with the Company's Code of Business  Conduct for  International  Business
Relationships.  This separate code of conduct applies to International  Business
Relationships.  It includes many of the same  requirements as the Company's Code
of Business  Conduct.  Any  employee  who has  responsibilities  with respect to
International  Business  Relationships  must be familiar  with the more detailed
applicable Company policies.

Reference: Corporate Policy 3-0007

Antitrust and Competition

         The antitrust  laws of the United States and other  countries  prohibit
agreements  or actions that might  eliminate or  discourage  competition,  bring
about a monopoly, abuse a dominant market position, artificially maintain prices
or otherwise illegally hamper or distort commerce.

         In addition to criminal fines and jail terms,  United States  antitrust
violations  often  allow a private  party to recover  three times  actual  money
damages.  Antitrust  lawsuits  have  frequently  resulted in  judgments  against
companies amounting to tens of millions and on occasions hundreds of millions of
dollars.

         The Company  does not  tolerate any  business  activity  that  violates
antitrust laws that apply to the Company's  business.  Company  policy  requires
that no  Director,  employee  or  agent  of the  Company  shall  enter  into any
understanding,  agreement,  plan  or  scheme,  express  or  implied,  formal  or
informal,  with any competitor in regard to prices,  terms or conditions of sale
or service, production, distribution,  territories or customers; nor exchange or
discuss with a competitor prices, terms or conditions of sale or service, or any
other  competitive  information;  nor engage in any other conduct which violates
any of  the  antitrust  laws.  However,  subcontracting  arrangements  or  joint
proposals with  competitors  which are not in violation of applicable  antitrust
laws and which have been approved by the Law Department are not prohibited.  Any
discussion with competitors in connection with a project in which the competitor
is an alliance partner,  joint venturer, or subcontractor must be precleared and
coordinated with the Law Department.

         Antitrust laws are complex and sometimes  difficult to understand.  Any
Director,  employee or agent of the Company who has  responsibility for business
conduct that might be subject to antitrust  laws must be guided by the advice of
the Law Department. Any questions concerning

                                       11
<PAGE>

antitrust  implications must be referred to the Law Department before taking any
action.  There are no  exceptions  to this  policy and no one is  authorized  to
approve any action in violation of this policy.

Reference: Corporate Policy 3-0013

                          Employment and the Workplace

 Equal Employment Opportunity

         Company  policy  prohibits  all  unlawful  discrimination  against  any
employee or  applicant  for  employment.  The Company is  committed to providing
equal  opportunity  to all  qualified  individuals  in its hiring and  promotion
policies.  The Company will endeavor to create a workforce  that is a reflection
of the diverse population of the communities in which it operates.

         With respect to  operations  governed by United States law, this policy
relates to all phases of employment,  including recruitment,  hiring, placement,
promotion, transfer,  compensation,  benefits, training, educational, social and
recreational  programs  and the use of Company  facilities.  It covers all other
personnel actions in all job categories and at all levels,  including employment
of qualified disabled individuals, disabled veterans and veterans of the Vietnam
era. It is  intended to provide  employees  with a working  environment  free of
discrimination,  harassment,  intimidation  or  coercion  relating  directly  or
indirectly to race, color, religion, sex, age, disability or national origin.

         All Directors, members of management and other employees shall actively
support this policy.

Reference: Corporate Policy 3-0002

 Harassment

         The Company  believes that all employees should be treated with dignity
and respect. It is the policy of the Company to provide a work environment which
is free from harassment.

         As used in this policy, harassment includes sexual, racial, ethnic, and
other forms of harassment,  including  harassment  based upon  disability.  Some
examples, depending on the facts and circumstances, include:


                                       12
<PAGE>

o        Verbal  or  Written  Harassment  -  unwelcome  or  derogatory  comments
         regarding a person's  race,  color,  sex,  religion,  ancestry,  ethnic
         heritage, mental or physical disability, age or appearance;  threats of
         physical  harm; or the  distribution  of material  having such effects,
         including by electronic mail or display in any Company work area.
o        Physical  Harassment - hitting,  pushing or other  aggressive  physical
         contact or threats to take such action, or inappropriate gestures.
o        Sexual  Harassment  -  unwelcome  sexual  conduct,  whether  verbal  or
         physical,  including  sexual  advances,  demands for sexual favors,  or
         other verbal or physical conduct of a sexual nature,  whether or not it
         was designed or intended to promote an intimate relationship.

         It is not considered  harassment for  supervisors  and other members of
management  to enforce job  performance  and  standards of conduct in a fair and
consistent manner.

         Any employee who believes she or he is being harassed  should  consider
telling the offending  party that she or he objects to that conduct.  This often
solves the problem.  However, if an employee is not comfortable  confronting the
offending party (or if the offending party's unwelcome conduct  continues),  the
employee should advise his or her immediate supervisor of the offending conduct.
If the employee is more comfortable discussing the issue with someone other than
his or her immediate  supervisor,  or if the immediate  supervisor has not taken
what the  employee  regards  as  appropriate  action to solve the  problem,  the
employee should contact a Human Resources or Law Department representative.

         Reports of harassment will be investigated promptly and discreetly.

         Any employee who reports any act of harassment in good faith, including
sexual harassment, will not be retaliated against because of such report.

Reference: Corporate Policy 3-0016

Health, Safety and Environment

         Protection  of health,  safety and the  prevention  of pollution to the
environment are primary goals of the Company. The Company will strive to develop
and provide  products and services that have no undue  environmental  impact and
are safe in their  intended use,  efficient in their  consumption  of energy and
natural resources and can be recycled, reused or disposed of safely.

                                       13
<PAGE>

         All  employees  must  conduct  their  duties  and  responsibilities  in
compliance  with  applicable law and industry  standards  relating to health and
safety in the workplace and prevention of pollution to the environment.

         The Chief Health,  Safety and Environment  Officer of the Company shall
oversee the  administration of this policy.  Implementation  shall be subject to
the oversight of the Health,  Safety and Environment  Committee of the Company's
Board of Directors.

Reference: Corporate Policy 3-0014

Political Activities

         The Company believes strongly in the democratic process.  Its Directors
and  employees  should take an active  interest in fostering  principles of good
government in the countries and  communities  in which they live.  Directors and
employees may spend their own time and funds supporting political candidates and
issues, but they will not be reimbursed by the Company.  Directors and employees
should ensure that their personal political  contributions and activities are in
compliance with applicable law.

         Further,  some political  conduct which is permitted and encouraged for
individuals is unlawful for corporations.

         Company policy requires  Directors,  employees and agents who represent
the  Company in  political  and  governmental  matters  to comply  with all laws
regulating  corporate  participation  in public  affairs.  To assure  that these
requirements  are met and as guidance to them, the following  policies have been
adopted:

         No  Director,  employee or agent shall apply any  pressure on any other
         employee that infringes that individual's  right to decide whether,  to
         whom and in what  amount a  personal  political  contribution  is to be
         made;

         No contributions  of Company funds,  property or services shall be made
         in support of  political  candidates  for federal  office in the United
         States or in certain states or other countries where such contributions
         are prohibited. Indirect expenditures on behalf of a candidate, such as
         travel on a Company  aircraft,  may be considered as  contributions  in
         this regard;

         No political contribution of Company funds, property or services can be
         made by the Company,  except in accordance  with a plan approved by the
         Chief Executive Officer;

                                       14
<PAGE>
o    When  permitted  by law and  authorized  by the  Chief  Executive  Officer,
     Company funds and facilities may be used to provide  administrative support
     for the operation of political action committees or programs,  the purposes
     of which  include  the  disbursement  of  financial  contributions  made by
     certain  employees,  shareholders  and/or  others to  political  parties or
     candidates. No Company funds, facilities or other property will be used for
     other than administrative support of such a committee;

o    When  permitted  by law and  authorized  by the  Chief  Executive  Officer,
     expenditures of Company funds may be made to inform or influence the voting
     public on an issue of  importance  to the  business  of the Company and its
     shareholders.

     If an employee or Director is requested to make a political contribution or
to provide  assistance on behalf of the Company,  whether personal or corporate,
and such employee or Director has any questions regarding this Company policy or
applicable  law,  the employee or Director  should  contact the  Company's  Vice
President - Government Relations or the Law Department.

Reference: Corporate Policy 3-0012

United States(degree)federal Government Contracting

         To ensure that the Company complies with federal  regulations on United
States governmental contracts, all employees involved in the performance of work
under  governmental  contracts  are to be adequately  informed and  sufficiently
trained in the policies and practices  contained in the Code of Business Conduct
and other Company policies specifically relating to government contracting. Each
business  unit manager  with  contracts  with the United  States  government  is
responsible  for ensuring that training  sessions  regarding  these policies are
conducted and that the training sessions are properly documented.

         The Company takes  appropriate,  timely action to correct violations of
United  States  governmental  standards.  If any  employee has a question on the
propriety of a  transaction,  the employee  must report the  transaction  to the
immediate  supervisor.  If the supervisor  finds the question to have substance,
the supervisor  must report the transaction to the General Counsel or his or her
designee.  The supervisor  must advise the employee of the action the supervisor
has taken.  If the employee  disagrees with the supervisor or if the employee is
not comfortable  reporting the  transaction to the supervisor,  the employee may
contact the General Counsel or his or her designee directly.

                                       15
<PAGE>

         When cost and  pricing  data are  required  to respond to a  government
solicitation,  the cost and pricing data must be current, accurate, and complete
at the time of submission.  All costs are to be properly  recorded,  documented,
and retained in compliance with United States federal  procurement  regulations.
Each business unit doing business with the United States government must invoice
the  government  in strict  compliance  with  United  States  governmental  cost
principles and other United States federal regulations.

         Many  United  States   governmental   projects  in  which  the  Company
participates may involve classified or proprietary materials or information.  In
these cases,  the Company  complies with all United States  government  security
regulations  to  prevent  unauthorized  access,  distribution,  or  use  of  any
classified information.

         The Company complies with applicable United States federal statutes and
regulations   governing  the  employment  of  former  United  States   military,
Department of Defense, or other federal employees. When the Company contemplates
hiring a former United States governmental  employee or engaging the employee as
a consultant,  the responsible  business unit manager shall consult with the Law
Department for guidance.

Reference: Corporate Policy 3-0017

Confidential Reporting of Alleged Code Violations

         If you need advice or  assistance or know of a violation of the Code of
Business Conduct,  you should contact management or the Law Department in person
or by  telephone.  You may also send an e-mail  to  FHOUCODE  or a letter to the
special Mailbox noted below, or you may call the Company's Ethics Helpline.

If you use the Ethics Helpline, Mailbox or Code e-mail address:

1.       You may refrain from identifying yourself (although,  in the absence of
         such identification,  the Company may have insufficient  information to
         investigate the allegations).
2.       No  retribution  shall be  imposed on you for making the report in good
         faith unless you are one of the violators.
3.       Your confidentiality shall be maintained unless disclosure is:

                                       16
<PAGE>

o        Required or advisable in connection with any governmental investigation
         or report;
o        In the interests of the Company, consistent with the goals of the Code;
         or
o        Required or advisable in the Company's legal defense of the matter.

         The Ethics  Helpline,  Mailbox and Code e-mail address are not intended
to be used for personal grievances. All matters that do not appear to constitute
violations of the Code of Business  Conduct will be referred to the  appropriate
department; for example, reports concerning personnel grievances will be sent to
the Human Resources Department.

         The Ethics  Helpline  is  answered  by an  independent  company  and is
available every day, 24 hours a day.  Translators  are available on request.  If
you are  calling  from the United  States or  Canada,  you may access the Ethics
Helpline toll free by dialing:

                                 1-888-414-8112

If you are in the United Kingdom,  you may dial toll free:  0800-169-3116 If you
are in Indonesia, you may dial toll free:

                               001-803-1-009-1244

If you are calling from any other country, you may call collect at:

                                  770-613-6714

The address of the Mailbox for making Code reports is:

                           Director of Business Conduct Halliburton Company
                           P.O. Box 2625
                           Houston, Texas 77252-2625 U.S.A.


                                       17
<PAGE>

                            Useful Telephone Numbers

Executive Vice President                    713.759.2620
and General Counsel
Law Department - Houston, TX                281.575.4434
        (Energy Services Group)
Law Department - Houston, TX                713.753.2241
        (Kellogg Brown & Root)
Law Department - Houston, TX                713.753.2344
        (KBR Government Operations)
General Counsel and Secretary -
Landmark                                    713.839.2422
Law Department - Leatherhead
44.1372.86.6583
Law Department - Aberdeen                   44.1224.776071
Law Department - Cairo                      20.2.522.8737
Law Department - Dubai                      971.4.3036629
Law Department - Moscow                     7.095.755.8300
Law Department - Perth                      61.8.9278.4280
Law Department - Singapore                  65.6329.7779
Chief Financial Officer                     713.759.2636
Vice President - Human Resources            281.575.3734
Director of Audit Services                  713.839.4747
Security Department                         713.839.4704
Director of Business Conduct                713.759.2673


                                    Training

         Code  of  Business  Conduct  training  is  available  on the  Company's
intranet.  Additionally,  various  departments  offer a  significant  number  of
training  courses in a wide number of Code of  Business  Conduct  subjects  that
include, among many others,  environmental  compliance,  safety, compliance with
laws and equal opportunity.  To arrange training on the Code of Business Conduct
or other subjects, contact the Director of Business Conduct.


                                  Distribution

         The Company's Code of Business  Conduct is a very important part of the
governance  of the  Company.  A summary of the Code is  published in a number of
languages  and is  distributed  to employees  in hard copy and on the  Company's
intranet.  The Code of  Business  Conduct  is also  published  on the  Company's
internet home page at  http://www.halliburton.com.  To obtain a full copy of the
Company's Code of Business Conduct, contact the Director of Business Conduct.


                                       18
<PAGE>

Consulting Agreement
MachineTalker, Inc.



<PAGE>








                                    EXHIBIT 2


                    Affidavit for Consultant - Final Release
                           (submit with final invoice)


<PAGE>

CONSULTANT                                  Prime Contractor
                                            Kellogg Brown & Root Services, Inc.
                                            1550 Wilson Boulevard, Suite 200
                                            Arlington, Virginia 22209


"AFFIDAVIT FOR CONSULTANT"



<PAGE>

                         RE: AGREEMENT/WORK RELEASE NO.

_NAME OF CONSULTANT:                                   DATE OF AGREEMENT:
_NAME OF OWNER UNDER AGREEMENT: Kellogg Brown & Root Services, Inc.
                                -----------------------------------

         WHEREAS,  the above-named  Consultant entered into the above-referenced
Agreement with Kellogg Brown & Root Services, Inc. for performance by Consultant
of the Services described in the Agreement; and

         WHEREAS,  under the  Agreement  certain  monies are not due and payable
unto Consultant until all bills for labor,  material,  and other changes arising
in the performance of the Services have been fully paid by the Consultant;

         NOW,  THEREFORE,  for the  purpose  of  inducing  Kellogg  Brown & Root
Services, Inc. to pay over such monies unto the Consultant,  the Consultant does
hereby:

                 Warrant and  represent to Kellogg Brown & Root  Services,  Inc.
         that all bills for labor,  material,  re-sublet work, equipment rental,
         taxes,  insurance and all other charges  arising in connection with the
         performance  of the  Services  have  been  fully  paid  by or  for  the
         Consultant, except as listed below;
                  Agree to  indemnify  and hold  harmless  Kellogg  Brown & Root
         Services,  Inc. from all liens,  claims,  demands,  penalties,  losses,
         costs,  damages,  and  liability  in any  manner  arising  out of or in
         connection  with any claim by any person,  entity or agency for payment
         for work or labor  performed  or material  furnished  pursuant to or in
         connection with the Agreement;
                  Release,  relieve and discharge Kellogg Brown & Root Services,
         Inc. from all claims for payment (other than unpaid retainage,  if any)
         for work  performed  under or in  connection  with the Agreement or any
         change order or other modification thereto, except as listed below.


EXCEPTIONS:

Signed:_____________________________________________

Printed Name and Title_____________________________________________



                  FOR CONSULTANT
           SUBSCRIBED AND SWORN TO before me this the_______day of__________2003

                                  NOTARY PUBLIC
                          County of___________________

                       State of__________________________


<PAGE>






Consulting Agreement
 MachineTalker, Inc.











<PAGE>








                                    EXHIBIT 3


                     Small Business Program Representations


<PAGE>

52.21 9-1 SMALL BUSINESS PROGRAM  REPRESENTATIONS  (APR 2002) - ALTERNATE I (APR
2002)

(a)(1) The North American Industry  Classification  System (NAICS) code for this
acquisition is 561210.

(2) The small  business size standard is  $6,000,000.00.

(3) The small business size standard for a concern which submits an offer in its
own name, other than on a construction or service  contract,  but which proposes
to furnish a product which it did not itself manufacture, is 500 employees.

(b) Representations. (1) The offeror represents as part of its offer that it [ ]
is, [ ] is not a small business concern.

(2) (Complete only if the offeror represented itself as a small business concern
in paragraph  (b)(1) of this  provision.)  The offeror  represents,  for general
statistical purposes,  that it [ ] is, [ ] is not a small disadvantaged business
concern as defined in 13 CFR 124.1002.

(3) (Complete only if the offeror represented itself as a small business concern
in paragraph  (b)(1) of this  provision.) The offeror  represents as part of its
offer that it [ ] is, [ ] is not a women-owned small business concern.

(4) (Complete only if the offeror represented itself as a small business concern
in paragraph  (b)(1) of this  provision.) The offeror  represents as part of its
offer that it [ ] is, [ ] is not a veteran-owned small business concern.

(5) (Complete only if the offeror  represented  itself as a veteran-owned  small
business concern in paragraph (b)(4) of this provision.) The offeror  represents
as part of its offer that it [ ] is, [ ] is not a service-disabled veteran-owned
small business concern.

(6) [Complete only if the offeror represented itself as a small business concern
in paragraph (b)(1) of this provision.] The offeror  represents,  as part of its
offer, that--

(i) It [ ] is, [ ] is not a HUBZone small business  concern listed,  on the date
of this representation, on the List of Qualified HUBZone Small Business Concerns
maintained  by the Small  Business  Administration,  and no  material  change in
ownership and control,  principal  office,  or HUBZone  employee  percentage has
occurred  since  it  was  certified  by the  Small  Business  Administration  in
accordance with 13 CFR part 126; and

(ii) It [ ] is, [ ] is not a joint venture that  complies with the  requirements
of 13 CFR part  126,  and the  representation  in  paragraph  (b)(6)(i)  of this
provision is accurate for the HUBZone  small  business  concern or concerns that
are  participating  in the joint  venture.  (The offeror shall enter the name or
names of the HUBZone small business  concern or concerns that are  participating
in the joint venture:

) Each HUBZone small business  concern  participating in the joint venture shall
submit a separate signed copy of the HUBZone representation.

(7) (Complete if offeror represented itself as disadvantaged in paragraph (b)(2)
of this  provision.) The offeror shall check the category in which its ownership
falls:

____ Black American.


<PAGE>

____ Hispanic American.

____ Native American (American Indians, Eskimos, Aleuts, or Native Hawaiians).

____  Asian-Pacific   American  (persons  with  origins  from  Burma,  Thailand,
Malaysia,  Indonesia,  Singapore,  Brunei,  Japan, China, Taiwan, Laos, Cambodia
(Kampuchea),  Vietnam,  Korea,  The  Philippines,  U.S.  Trust  Territory of the
Pacific Islands (Republic of Palau), Republic of the Marshall Islands, Federated
States of Micronesia,  the Commonwealth of the Northern  Mariana Islands,  Guam,
Samoa, Macao, Hong Kong, Fiji, Tonga, Kiribati, Tuvalu, or Nauru).

       Subcontinent  Asian  (Asian-Indian)  American  (persons with origins from
India, Pakistan, Bangladesh, Sri Lanka, Bhutan, the Maldives Islands, or Nepal).

       Individual/concern, other than one of the preceding.

(c) Definitions. As used in this provision--

Service-disabled veteran-owned small business concern--

(1) Means a small business concern--

(i) Not less than 51 percent  of which is owned by one or more  service-disabled
veterans  or,  in the case of any  publicly  owned  business,  not less  than 51
percent of the stock of which is owned by one or more service-disabled veterans;
and

(ii) The management and daily business operations of which are controlled by one
or more  service-disabled  veterans or, in the case of a veteran with  permanent
and severe disability, the spouse or permanent caregiver of such veteran.

(2)  Service-disabled  veteran means a veteran, as defined in 38 U.S.C.  101(2),
with a disability that is service-connected, as defined in 38 U.S.C. 101(16).

"Small  business  concern," means a concern,  including its affiliates,  that is
independently  owned and  operated,  not  dominant in the field of  operation in
which it is bidding on Government  contracts,  and qualified as a small business
under the criteria in 13 CFR Part 121 and the size  standard in paragraph (a) of
this provision.

Veteran-owned small business concern means a small business concern--

(1) Not less  than 51  percent  of which  is owned by one or more  veterans  (as
defined at 38 U.S.C. 101(2)) or, in the case of any publicly owned business, not
less than 51 percent of the stock of which is owned by one or more veterans; and

(2) The management and daily business  operations of which are controlled by one
or more veterans.

<PAGE>

"Women-owned small business concern," means a small business concern --

(1) That is at least 51  percent  owned by one or more  women or, in the case of
any publicly owned business,  at least 51 percent of the stock of which is owned
by one or more women; or

(2) Whose management and daily business operations are controlled by one or more
women.

(d)      Notice.

(1) If this  solicitation is for supplies and has been set aside, in whole or in
part,  for  small  business  concerns,  then  the  clause  in this  solicitation
providing notice of the set-aside contains restrictions on the source of the end
items to be furnished.

(2) Under 15 U.S.C.  645(d),  any person who  misrepresents a firm's status as a
small, HUBZone small, small disadvantaged, or women-owned small business concern
in order to  obtain a  contract  to be  awarded  under the  preference  programs
established  pursuant to section 8(a),  8(d), 9, or 15 of the Small Business Act
or any other provision of Federal law that specifically  references section 8(d)
for a definition of program eligibility, shall--

(i) Be punished by imposition of fine, imprisonment, or both;

(ii) Be subject to administrative remedies,  including suspension and debarment;
and

(iii) Be ineligible for participation in programs  conducted under the authority
of the Act.

                               (End of provision)

52.21  9-19  SMALL  BUSINESS  CONCERN  REPRESENTATION  FOR  THE  SMALL  BUSINESS
COMPETITIVENESS DEMONSTRATION PROGRAM (OCT 2000)

(a) Definition.

"Emerging small business" as used in this  solicitation,  means a small business
concern whose size is no greater than 50 percent of the numerical  size standard
applicable to the North  American  Industry  Classification  System (NAICS) code
assigned to a contracting opportunity.

(b) [Complete only if the Offeror has represented  itself under the provision at
52.219-1  as  a  small  business  concern  under  the  size  standards  of  this
solicitation.]  The Offeror [ ] is, [ ] is not an emerging small  business.

(c)  (Complete  only if the Offeror is a small  business  or an  emerging  small
business, indicating its size range.)

Offeror's  number of employees for the past 12 months (check this column if size
standard stated in solicitation is expressed in terms of number of employees) or
Offeror's  average  annual gross revenue for the last 3 fiscal years (check this
column if size standard  stated in  solicitation is expressed in terms of annual
receipts).  (Check one of the  following.)  No. of Employees  Avg.  Annual Gross
Revenues

<PAGE>
       50 or fewer          $1 million or less
--------             -------
       101 - 250            $2,000,001 - $3.5 million
--------             -------
       251 - 500           $3,500,001 - $5 million
--------             -------
       501 - 750           $5,000,001 - $10 million
--------             -------
       751 - 1,000         $10,000,001 - $17 million
--------             -------
       Over 1,000          Over $17 million
--------             -------
                               (End of provision)


52.21 9-21 SMALL BUSINESS SIZE  REPRESENTATION FOR TARGETED INDUSTRY  CATEGORIES
UNDER THE SMALL BUSINESS COMPETITIVENESS DEMONSTRATION PROGRAM (MAY 1999)

(Complete  only if the Offeror has  represented  itself  under the  provision at
52.219-1  as  a  small  business  concern  under  the  size  standards  of  this
solicitation.)

Offeror's  number of employees for the past 12 months (check this column if size
standard stated in solicitation is expressed in terms of number of employees) or
Offeror's  average  annual gross revenue for the last 3 fiscal years (check this
column if size standard  stated in  solicitation is expressed in terms of annual
receipts). (Check one of the following.)

No. of Employees Avg. Annual Gross Revenues

       50 or fewer          $1 million or less
--------             -------
       101 - 250            $2,000,001 - $3.5 million
--------             -------
       251 - 500           $3,500,001 - $5 million
--------             -------
       501 - 750           $5,000,001 - $10 million
--------             -------
       751 - 1,000         $10,000,001 - $17 million
--------             -------
       Over 1,000          Over $17 million
--------             -------

                               (End of provision)

52.222-22  PREVIOUS  CONTRACTS  AND  COMPLIANCE  REPORTS  (FEB 1999) The offeror
represents that --

(a) [ ] It has, [ ] has not  participated in a previous  contract or subcontract
subject to the Equal Opportunity clause of this solicitation;

(b) [ ] It has, [ ] has not, filed all required compliance reports; and

(c) Representations indicating submission of required compliance reports, signed
by proposed subcontractors, will be obtained before subcontract awards.

                               (End of provision)


<PAGE>


52.222-25 AFFIRMATIVE ACTION COMPLIANCE (APR 1984)

The offeror  represents  that (a) [ ] it has  developed and has on file, [ ] has
not  developed  and does not have on file,  at each  establishment,  affirmative
action programs  required by the rules and regulations of the Secretary of Labor
(41 CFR 60-1 and 60-2), or

(b) [ ] has not  previously  had  contracts  subject to the written  affirmative
action  programs  requirement  of the rules and  regulations of the Secretary of
Labor.

                               (End of provision)


52.222-38 COMPLIANCE WITH VETERANS' EMPLOYMENT REPORTING REQUIREMENTS (DEC 2001)

By submission of its offer, the offeror represents that, if it is subject to the
reporting  requirements  of 38  U.S.C.  4212(d)  (i.e.,  if it has any  contract
containing Federal Acquisition  Regulation clause 52.222-37,  Employment Reports
on Special  Disabled  Veterans,  Veterans of the Vietnam Era, and Other Eligible
Veterans),  it has submitted the most recent  VETS-100  Report  required by that
clause.

                               (End of provision)


52.223-13 CERTIFICATION OF TOXIC CHEMICAL RELEASE REPORTING (OCT 2000)

(a) Submission of this  certification  is a prerequisite  for making or entering
into this  contract  imposed by Executive  Order 12969,  August 8, 1995.

(b) By signing this offer, the offeror certifies that--

(1) As the owner or operator of facilities  that will be used in the performance
of this  contract  that are  subject to the filing  and  reporting  requirements
described in section 313 of the Emergency  Planning and Community  Right-to-Know
Act of 1986  (EPCRA)  (42  U.S.C.  11023)  and  section  6607  of the  Pollution
Prevention  Act of 1990  (PPA) (42  U.S.C.  13106),  the  offeror  will file and
continue  to file for such  facilities  for the life of the  contract  the Toxic
Chemical Release Inventory Form (Form R) as described in sections 313(a) and (g)
of EPCRA and section 6607 of PPA; or

(2) None of its owned or operated  facilities to be used in the  performance  of
this contract is subject to the Form R filing and reporting requirements because
each such facility is exempt for at least one of the following  reasons:  (Check
each block that is applicable.)

[ ] (i) The facility  does not  manufacture,  process or otherwise use any toxic
chemicals listed under section 313(c) of EPCRA, 42 U.S.C. 11023(c);

[ ] (ii) The facility does not have 10 or more full-time  employees as specified
in section 313.(b)(1)(A) of EPCRA 42 U.S.C. 11023(b)(1)(A);


<PAGE>

[ ] (iii) The facility does not meet the reporting thresholds of toxic chemicals
established  under section 313(f) of EPCRA,  42 U.S.C.  11023(f)  (including the
alternate  thresholds at 40 CFR 372.27,  provided an  appropriate  certification
form has been filed with EPA);

[ ] (iv) The facility does not fall within  Standard  Industrial  Classification
Code (SIC)  major  groups 20 through 39 or their  corresponding  North  American
Industry Classification System (NAICS) sectors 31 through 33; or

[ ] (v) The facility is not located within any State of the United  States,  the
District of Columbia, the Commonwealth of Puerto Rico, Guam, American Samoa, the
United  States  Virgin  Islands,  the  Northern  Mariana  Islands,  or any other
territory or possession over which the United States has jurisdiction.

                               (End of provision)


52.230-1 COST ACCOUNTING STANDARDS NOTICES AND CERTIFICATION (JUN 2000)

Note:  This notice does not apply to small  businesses  or foreign  governments.
This notice is in three parts, identified by Roman numerals I through III.

Offerors shall examine each part and provide the requested  information in order
to determine Cost  Accounting  Standards  (CAS)  requirements  applicable to any
resultant contract.

If the offeror is an educational institution,  Part II does not apply unless the
contemplated  contract will be subject to full or modified CAS coverage pursuant
to 48 CFR 9903.201-2(c)(5) or 9903.201-2(c)(6), respectively.

I. DISCLOSURE STATEMENT--COST ACCOUNTING PRACTICES AND CERTIFICATION

(a) Any contract in excess of $500,000  resulting from this solicitation will be
subject  to the  requirements  of the Cost  Accounting  Standards  Board (48 CFR
Chapter 99),  except for those contracts which are exempt as specified in 48 CFR
9903.201-1.

(b) Any offeror  submitting  a proposal  which,  if  accepted,  will result in a
contract  subject to the  requirements of 48 CFR Chapter 99 must, as a condition
of  contracting,  submit a Disclosure  Statement as required by 48 CFR 9903.202.
When  required,  the  Disclosure  Statement  must be  submitted as a part of the
offeror's  proposal  under this  solicitation  unless the  offeror  has  already
submitted a Disclosure  Statement  disclosing  the practices  used in connection
with the pricing of this  proposal.  If an applicable  Disclosure  Statement has
already been  submitted,  the offeror may satisfy the requirement for submission
by  providing  the  information  requested  in  paragraph  (c) of Part I of this
provision.

CAUTION:  In the  absence  of  specific  regulations  or  agreement,  a practice
disclosed in a Disclosure Statement shall not, by virtue of such disclosure,  be
deemed to be a proper,  approved, or agreed-to practice for pricing proposals or
accumulating and reporting contract performance cost data.

(c) Check the appropriate box below:

(1) Certificate of Concurrent Submission of Disclosure Statement.


<PAGE>


The  offeror  hereby  certifies  that,  as a part of the  offer,  copies  of the
Disclosure  Statement have been submitted as follows:  (i) original and one copy
to the cognizant  Administrative  Contracting Officer (ACO) or cognizant Federal
agency  official  authorized  to act in that  capacity  (Federal  official),  as
applicable, and (ii) one copy to the cognizant Federal auditor.

(Disclosure must be on Form No. CASB DS-1 or CASB DS-2, as applicable. Forms may
be  obtained  from  the  cognizant  ACO or  Federal  official  and/or  from  the
loose-leaf version of the Federal Acquisition Regulation.)

Date of Disclosure  Statement:_________________Name and Address of Cognizant ACO
or Federal Official Where Filed:____________________

The offeror  further  certifies that the practices  used in estimating  costs in
pricing  this  proposal  are  consistent  with  the  cost  accounting  practices
disclosed  in  the  Disclosure  Statement.

(2)Certificate of Previously Submitted Disclosure Statement.  The offeror hereby
certifies that the required Disclosure Statement was filed as follows:

Date of  Disclosure  Statement:___________Name  and Address of Cognizant  ACO or
Federal Official Where Filed:__________________________________

The offeror  further  certifies that the practices  used in estimating  costs in
pricing  this  proposal  are  consistent  with  the  cost  accounting  practices
disclosed  in  the  applicable  Disclosure  Statement.

(3)Certificate of Monetary Exemption.

The offeror  hereby  certifies  that the offeror,  together with all  divisions,
subsidiaries, and affiliates under common control, did not receive net awards of
negotiated  prime contracts and  subcontracts  subject to CAS totaling more than
$50  million  (of which at least  one award  exceeded  $1  million)  in the cost
accounting  period  immediately  preceding the period in which this proposal was
submitted.  The offeror further  certifies that if such status changes before an
award  resulting  from this  proposal,  the offeror will advise the  Contracting
Officer immediately.

(4)      Certificate of Interim Exemption.

The offeror  hereby  certifies  that (i) the offeror first exceeded the monetary
exemption  for  disclosure,  as defined in (3) of this  subsection,  in the cost
accounting  period  immediately  preceding  the  period in which  this offer was
submitted and (ii) in accordance with 48 CFR 9903.202-1,  the offeror is not yet
required to submit a Disclosure Statement. The offeror further certifies that if
an award resulting from this proposal has not been made within 90 days after the
end of that period, the offeror will immediately submit a revised certificate to
the  Contracting  Officer,  in the form specified under  subparagraph  (c)(1) or
(c)(2) of Part I of this provision,  as appropriate,  to verify  submission of a
completed Disclosure Statement.

CAUTION:  Offerors  currently  required to disclose  because they were awarded a
CAS-covered  prime contract or subcontract of $50 million or more in the current
cost accounting period may not claim this exemption (4). Further,  the exemption
applies only in connection  with proposals  submitted  before  expiration of the
90-day  period  following  the cost  accounting  period  in which  the  monetary
exemption was exceeded.

II. COST ACCOUNTING STANDARDS--ELIGIBILITY FOR MODIFIED CONTRACT COVERAGE

<PAGE>

If  the  offeror  is  eligible  to  use  the  modified   provisions  of  48  CFR
9903.201-2(b)  and elects to do so, the offeror  shall  indicate by checking the
box below.  Checking  the box below  shall mean that the  resultant  contract is
subject to the Disclosure and Consistency of Cost Accounting Practices clause in
lieu of the Cost Accounting Standards clause.

[ ] The offeror  hereby claims an exemption from the Cost  Accounting  Standards
clause under the  provisions  of 48 CFR  9903.201-2(b)  and  certifies  that the
offeror is eligible for use of the Disclosure and Consistency of Cost Accounting
Practices clause because during the cost accounting period immediately preceding
the period in which this proposal was submitted,  the offeror received less than
$50 million in awards of  CAS-covered  prime  contracts  and  subcontracts.  The
offeror further  certifies that if such status changes before an award resulting
from this proposal, the offeror will advise the Contracting Officer immediately.

CAUTION:  An offeror may not claim the above  eligibility for modified  contract
coverage if this  proposal  is expected to result in the award of a  CAS-covered
contract  of $50  million or more or if,  during  its  current  cost  accounting
period,  the offeror has been  awarded a single  CAS-covered  prime  contract or
subcontract of $25 million or more.

III. ADDITIONAL COST ACCOUNTING STANDARDS APPLICABLE TO EXISTING CONTRACTS

The offeror shall  indicate  below whether  award of the  contemplated  contract
would, in accordance with subparagraph  (a)(3) of the Cost Accounting  Standards
clause,  require a change in established  cost  accounting  practices  affecting
existing contracts and subcontracts.

[ ] YES [ ] NO
                               (End of provision)

252.209-7001 DISCLOSURE OF OWNERSHIP OR CONTROL BY THE GOVERNMENT OF A TERRORIST
COUNTRY (MAR 1998)

(a) "Definitions."

As used in this provision --

(a) "Government of a terrorist country" includes the state and the government of
a  terrorist  country,  as  well  as  any  political  subdivision,   agency,  or
instrumentality thereof.

(2) "Terrorist  country"  means a country  determined by the Secretary of State,
under  section  6(j)(1)(A) of the Export  Administration  Act of 1979 (50 U.S.C.
App.  2405(j)(i)(A)),  to be a country the  government  of which has  repeatedly
provided  support for such acts of  international  terrorism.  As of the date of
this provision,  terrorist  countries  include:  Cuba, Iran, Iraq, Libya,  North
Korea, Sudan, and Syria.

(3) "Significant interest" means --

(i)  Ownership of or  beneficial  interest in 5 percent or more of the firm's or
subsidiary's securities.  Beneficial interest includes holding 5 percent or more
of any class of the firm's  securities in "nominee  shares,"  "street names," or
some other method of holding  securities  that does not disclose the  beneficial
owner;


<PAGE>

(ii) Holding a management position in the firm, such as a director or officer;

(iii) Ability to control or influence the  election,  appointment,  or tenure of
directors or officers in the firm;

(iv)  Ownership of 10 percent or more of the assets of a firm such as equipment,
buildings, real estate, or other tangible assets of the firm; or

(v) Holding 50 percent or more of the indebtness of a firm.

(b) "Prohibition on award."

In  accordance  with 10 U.S.C.  2327,  no contract may be awarded to a firm or a
subsidiary of a firm if the government of a terrorist  country has a significant
interest in the firm or  subsidiary  or, in the case of a  subsidiary,  the firm
that  owns the  subsidiary,  unless a waiver  is  granted  by the  Secretary  of
Defense.

(c) "Disclosure."

If the  government  of a  terrorist  country has a  significant  interest in the
Offeror or a  subsidiary  of the  Offeror,  the Offeror  shall  disclosure  such
interest in an attachment to its offer. If the Offeror is a subsidiary, it shall
also disclose any significant interest the government of a terrorist country has
in any firm that owns or controls the subsidiary.  The disclosure  shall include
--

(1) Identification of each government holding a significant interest; and

(2) A description of the significant interest held by each government.

(End of provision)

252.225-7020 TRADE AGREEMENTS CERTIFICATE (APR 2003)

(a)  Definitions.  Caribbean Basin country end product,  designated  country end
product,  NAFTA  country  end  product,   non-designated  country  end  product,
qualifying  country end  product,  and U.S.  -made end product have the meanings
given in the Trade Agreements clause of this solicitation.

(b) Evaluation.  The Government--

(1) Will evaluate  offers in accordance with the policies and procedures of Part
225 of the Defense Federal Acquisition Regulation Supplement; and

(2) Will  consider only offers of end products  that are  U.S.-made,  qualifying
country,  designated  country,  Caribbean  Basin  country,  or NAFTA country end
products, unless the Government determines that--

(i) There are no offers of such end products;

(ii)  The  offers  of  such  end  products  are   insufficient  to  fulfill  the
Government's requirements; or

(iii) A national interest exception to the Trade Agreements Act applies.

(c) Certification and identification of country of origin.


<PAGE>

(1)  For  all  line  items  subject  to the  Trade  Agreements  clause  of  this
solicitation,  the offeror certifies that each end product to be delivered under
this contract,  except those listed in paragraph (c)(2) of this provision,  is a
U.S.-made,  qualifying country,  designated country, Caribbean Basin country, or
NAFTA country end product.

(2) The following supplies are other non-designated country end products:

(Line Item Number)

(Country of Origin)

                               (End of provision)


252.247-7022 REPRESENTATION OF EXTENT OF TRANSPORTATION BY SEA (AUG 1992)

(a) The Offeror shall  indicate by checking the  appropriate  blank in paragraph
(b) of this provision  whether  transportation of supplies by sea is anticipated
under the resultant contract. The term supplies is defined in the Transportation
of Supplies by Sea clause of this solicitation.

(b) Representation. The Offeror represents that it:

         (1) Does  anticipate  that supplies will be  transported  by sea in the
performance of any contract or subcontract resulting from this solicitation.

         (2) Does not anticipate that supplies will be transported by sea in the
performance of any contract or subcontract resulting from this solicitation.

(c)  Any   contract   resulting   from  this   solicitation   will  include  the
Transportation of Supplies by Sea clause. If the Offeror represents that it will
not use ocean  transportation,  the  resulting  contract  will also  include the
Defense FAR Supplement clause at 252.247-7024, Notification of Transportation of
Supplies by Sea.

                               (End of provision)


52.000-4117 CONTRACTOR'S CERTIFICATION

Bidders are cautioned to note the "Contractor's Certification," included in this
solicitation,   and  to  furnish  the  information  required  by  paragraph  b.,
Partnerships, and paragraph c., Corporations, as appropriate.

Name of Company:

Signed by:

Typed/Printed Name:

Date Signed:


<PAGE>








Consulting Agreement MachineTalker, Inc.



<PAGE>



                                    EXHIBIT 4

                       Organizational Conflict of Interest


<PAGE>

                       ORGANIZATIONAL CONFLICT OF INTEREST
                                  CERTIFICATION

                               MachineTalker, Inc.
                                   Consultant

Consultant  certifies  that,  to the  best  of its  knowledge  and  belief,  and
excepting those organizations  listed below, no facts exist concerning any past,
present, or currently planned activities (financial, contractual, organizational
or  otherwise)  which  relate to the work  contemplated  to be  provided  to the
Kellogg  Brown  & Root  Services,  Inc.  and  which  are  relevant  to  possible
organizational conflicts of interest.

KBRSI acknowledges that Consultant provides its MachineTalker(R)  products,  its
consulting and its  development  services to other clients;  and that Consultant
has  developed  the means  and  promoted  the use of its  products  in  shipping
container tracking and security to many  organizations  including KBRSI. In this
regard  Consultant  has  published  original  material,  given  seminars and has
entered into prior negotiations with those clients listed below:

         Continental   Airlines,   Universal  Guardian   Holdings,   Mitsubishi,
         Sovereign   Tracking  Systems,   Nera  Satellite   Systems   (Norwegian
         shipping).

Consultant  certifies  that these  referenced  clients  may  specify  the use of
MachineTalker(R)  products in the tracking of shipping  containers or inventory.
Consultant  acknowledges  that the goal of the KBRSI Agreement is to develop the
means to track  shipping  containers  and  inventory  on a global  basis  and to
provide that service for the shipping industry.  Therefore,  in keeping with the
Agreement,  should  any of these  existing  clients  wish to  develop  a similar
service using MachineTalker(R) products, Consultant will introduce them to KBRSI
to offer its capability to them.


Signature:

Name:

Title:

Date:

Company:

Address:

Phone No.:


<PAGE>








Consulting Agreement MachineTalker, Inc.







<PAGE>








                                    EXHIBIT 5

                                Secrecy Agreement


<PAGE>

                                SECRECY AGREEMENT

MachineTalker,  Inc.  hereinafter called  Consultant,  agrees to cooperate fully
with Kellogg  Brown & Root  Services,  Inc,  hereinafter  called  Company in its
patents,  proprietary information,  and nondisclosure policies,  copies of which
have been provided to Consultant. Consultant further agrees as follows:

1.       Consultant  will not use or disclose  to anyone,  at any time or in any
         manner, any trade secrets or confidential  information which Consultant
         learns  as a  result  of/or  during  the  performance  of  Consultant's
         services.

2.       Such "trade secrets confidential  information" shall include everything
         told to  Consultant  in  confidence  as a trade  secret  and  also  all
         photographs, maps, drawings, reports,  specifications,  operating data,
         procurement or marketing  information,  cost data and other information
         related to the details of the work.  Consultant  is involved in and the
         operations and  installations  affected.  No such information  shall be
         released to anyone other,  than authorized  representatives  of Company
         for whom the work is being performed,  who have a need to know,  either
         before or after completion of the work, except with the written consent
         by Company's representative.

3.       These  obligations  shall continue during the term of the Agreement and
         for three (3) years thereafter.

4.       Consultant  understands  and  agrees  that  these  obligations  may  be
         enforced by legal action for damages, injunction or otherwise,  brought
         by Company for whom the work is performed, or their assigns.

I have read this Agreement and agree to its provisions. MachineTalker, Inc.

SIGNED:

NAME:

DATE:


<PAGE>






                                    EXHIBIT 6
                                Software License


<PAGE>

                                    EXHIBIT 6
                           SOFTWARE LICENSE AGREEMENT

THIS SOFTWARE  LICENSE  AGREEMENT  (the  "Agreement")  is made and entered into,
effective  as of  December  __,  2004 (the  "Effective  Date"),  by and  between
MACHINETALKER,  INC.,  (MACHINETALKER) a Delaware corporation ("Licensor"),  and
KELLOGG, BROWN & ROOT SERVICES, INC., (KBR) a Delaware corporation ("LICENSEE"),
with reference to the following facts:

RECITALS:

MACHINETALKER  owns the  "Software"  and  manufactures  and sells the  "Licensed
Product"  described below, and the parties have agreed to execute this Agreement
in order to memorialize  the terms and conditions on which  MACHINETALKER  shall
grant to KBR certain license rights to use the "Software" in connection with its
use of the Licensed Product.

AGREEMENTS:

NOW,  THEREFORE,  the parties  hereto,  intending to be legally bound, do hereby
agree as follows:

1. DEFINITIONS. For purposes of this Agreement:

         1.1  "CONFIDENTIAL  INFORMATION"  means  and  includes  (a)  all  Trade
Secrets,  knowledge, data and other information of a confidential or proprietary
nature  which is owned,  held,  or known by  MACHINETALKER  and  relating to the
Licensed  Technology,  including  but not  limited  to the  Source  Code for the
Software,   and  all  customer  lists,  business  plans,   marketing  plans  and
strategies,  pricing  strategies  and other  subject  matter  pertaining  to the
Licensed  Technology,  and  (b)  all  other  information  which  either  (i)  is
conspicuously  identified as  "confidential" at the time it is disclosed to KBR,
or (ii) is verbally  disclosed,  and/or identified as "confidential" at the time
of such  disclosure,  within Five (5) days after the latter of the  execution of
this Agreement or the disclosure of such information.

         1.2 "DOCUMENTATION" means those User Guides that MACHINETALKER provides
to KBR upon KBR's purchase of the Licensed Product.

         1.3  "EFFECTIVE  DATE" has the  meaning  ascribed  thereto in the first
paragraph of this Agreement.

         1.4  "LICENSE"  means  the  license  granted  by  MACHINETALKER  to KBR
pursuant to Section 2, below.

         1.5 "LICENSE  FEES" means the sum of [Redacted  pursuant to Rule 406 of
Regulation  C of the  Securities  Act],  which KBR  shall  pay to  MACHINETALKER
concurrently herewith pursuant to Section 3, below.

         1.6 "LICENSED  PRODUCT" means those certain devices that employ the use
of the Licensed  Technology and that are  manufactured and sold by MACHINETALKER
that  are  intended  to  enable  users  of those  devices  to  track  inventory,
containers and other similar packages.


Agreement No. CA-00062            12/29/2004 6:20 PM    Page 1 of 10 EXHIBIT 6 -
Software License Agreement


<PAGE>

         1.7 "LICENSED TECHNOLOGY" means the Documentation and the Software that
enables  the  Licensed   Products  to  transmit  and  receive   information  via
self-coordinated  machine  network by employing  MACHINETALKER's  Simple Machine
Management  Protocol (SMMP) technology,  as described in U.S. Patent Application
2004/0114557.   The  scope  of  the  technology  disclosed  within  U.S.  Patent
Application  2004/0114557,  and licensed herein,  shall be considered limited to
such aspects of the technology as reasonably  relates to applications,  systems,
or solutions that track inventory, containers and other similar packages.

         1.8 "MATERIAL ERRORS" means reproducible or otherwise verifiable errors
in the Licensed  Product and Technology that causes abnormal  termination of the
Software  program,  loss of user  data,  or  otherwise  prevents  the use of the
Licensed Product and Technology for its intended purpose.

         1.9 "OBJECT  CODE" means the version of a computer  program that is not
in a programming language and is in a specific, machine-readable format only.

         1.10  "SOFTWARE"  means the  Licensed  Technology  in Object Code form,
including the Documentation,  that enables the Licensed Products to transmit and
receive  information in a  self-coordinated  machine network manner by employing
MACHINETALKER's  Simple  Machine  Management  Protocol  (SMMP)  technology,   as
described in U.S. Patent Application 2004/0114557.

         1.11  "SOFTWARE  UPDATES  or  UPGRADES"  means  such  improvements  and
enhancements to the Licensed Product and Technology as  MACHINETALKER  from time
to time shall produce,  market, and give freely to KBR after the Effective Date,
or that KBR shall from time to time request and have provided by MACHINETALKER.

         1.12 "SOURCE CODE" means the version of a computer program that is in a
programming  language  that is  understandable  by humans and shall  include any
programmers' notes and similar documentation available prior to the date of this
agreement.

         1.13 "TRADE SECRETS" means  information  that has independent  economic
value, is not generally known in the industry,  and is the subject of reasonable
efforts by either party to maintain secret.


2. GRANT OF LICENSE & RIGHT OF FIRST REFUSAL

         2.1 EXCLUSIVE LICENSE. Subject to the limitations on "Use" set forth in
Section 2.3, below,  MACHINETALKER  hereby grants to KBR an exclusive license to
use the Software in connection  with the use and operation of Licensed  Products
to track inventory, containers and other similar packages. KBR acknowledges that
the foregoing License is a nonexclusive  license as regards applications outside
the reasonable  scope of the Licensed  Products.  Both Parties  acknowledge that
this exclusive license is intended as an absolute limit on MACHINETALKER's right
and power to grant to any other person, juridical or otherwise, a license to use
the Licensed  Technology and Licensed Products as described herein including the
right to use the same in connection  with the sale of goods or services that may
be  competitive  with any goods or services sold now or within Five years of the
effective date of this License date by MACHINETALKER.

         2.2 RESTRICTIONS ON USE. The exclusive license granted by MACHINETALKER
to KBR to use


Agreement No. CA-00062          12/29/2004 6:20 PM     Page 2 of 10 EXHIBIT 6 -
  Software License Agreement


<PAGE>


the Licensed  Product and Technology is subject to the restriction  that the use
of the Licensed  Products and Technology is limited to a KBR solution to provide
a method of tracking inventory,  containers and other similar packages, and such
use as the end users or intended clients might reasonably be required to utilize
said KBR solution.

         This  License is also  limited by the  following  understanding  of the
PARTIES that KBR will market and sell the Licensed  Products and  Technology and
shall in all cases have a Right of First Refusal on business  opportunities that
may arise that involve the licensed area of tracking of  inventory,  containers,
and  similar  packages,  but that  opportunities  that arise that KBR,  within a
reasonable period of time, elects not to pursue may be taken up by MACHINETALKER
under  the same  terms and  conditions  as  offered  to KBR at the time of KBR's
written  rejection,  such rejection of the  opportunity by KBR and acceptance of
the opportunity by MACHINETALKER  shall waive the exclusivity of this License as
it applies to said singularly defined instance or opportunity at the KBR offered
terms and conditions.

         2.3 LIMITATIONS ON USE. Notwithstanding any provision of this Agreement
to the contrary,  KBR shall use the Licensed  Technology only in connection with
KBR's use of Licensed Products to track inventory,  containers and other similar
packages,  and only with those  Licensed  Products  that are  supplied to KBR by
MACHINETALKER  for  re-sale  as part of a KBR  solution  to  provide a method of
tracking inventory, containers and other similar packages.

         2.4 RESALE OF, or SUBLICENSING OF THIS LICENSE. MACHINETALKER grants to
KBR the right to resell this  license in entirety to a 3rd party  subject to the
rights and responsibilities  established and conveyed herein, and subject to the
condition  that such 3rd party  be,  or be wholly  owned by, a company  which is
registered, or incorporated in the United States. Any resale to a U.S. 3rd party
must  transfer  all  rights  and  obligations  of KBR to said U.S.  3rd party in
entirety.  MACHINETALKER  grants to KBR the right to sublicense  this License in
whole  or in part to any  U.S.  3rd  party,  however,  this  grant  of  right to
sublicense  is  restricted  to  commercial  sales  reasonably  relating to a KBR
solution for tracking inventory, containers and other similar packages.

         2.5 DELIVERIES BY MACHINETALKER.  Concurrent with the sale and delivery
of Licensed  Products to KBR,  MACHINETALKER  shall deliver to KBR a copy of all
Documentation  necessary for proper use of the Licensed  Product in the field of
tracking inventory, containers and other similar packages.

3.  KBR  FEES.  Concurrent  with  the  execution  of  this  Agreement,   and  in
consideration  of all  rights  and  licenses  granted  herein,  KBR shall pay to
MACHINETALKER  [Redacted  pursuant to Rule 406 of Regulation C of the Securities
Act] as a full and final  License  Fee.  Upon  payment of said  License Fee, all
License rights granted herein are mutually  acknowledged  by the parties to have
been paid for in full and to be royalty-free for the duration of this License.

4. REPRESENTATIONS AND WARRANTIES OF MACHINETALKER

         4.1  REPRESENTATIONS  AND  WARRANTIES.   MACHINETALKER  represents  and
warrants to KBR:

                  4.1.1 SOFTWARE AND  DOCUMENTATION.  That the Licensed  Product
         and Technology

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<PAGE>

         shall perform in accordance with the specifications as set forth in the
         Consulting  Agreement,  of which this License is an  inseparable  part.
         MACHINETALKER  agrees to apply  best  efforts  over the  period of this
         License  to modify  the  specifications  such that they are fit for the
         intended  use of the  Licensed  Products  and  Technology  as described
         herein.

                  4.1.2 INTELLECTUAL  PROPERTY RIGHTS.  That to the knowledge of
         MACHINETALKER, as of the Effective Date of this Agreement, the Licensed
         Technology  does not  infringe any patent,  copyright,  trade secret or
         other intellectual property right of any third party and that they have
         the  right  to sell  the  information,  rights,  patents  and  products
         conveyed by this licensing  agreement.  MACHINETALKER  agrees that they
         will fully  indemnify and defend KBR against any legal action  alleging
         breach or infringement  of intellectual  property rights related to use
         of the Licensed Technology. Furthermore, MACHINETALKER agrees that they
         will pay all costs and damages  associated  with and/or finally awarded
         in any such action, provided that MACHINETALKER is notified promptly in
         writing of the action  and,  upon their  request and  agreement  to pay
         associated expenses, that they are given control of such action and all
         reasonably requested  information and assistance necessary to settle or
         defend the same. Should use of the Licensed Technology be enjoined as a
         result of such action,  then  MACHINETALKER  shall in a reasonable time
         either:  (a) At their own cost  obtain for KBR the right to continue to
         use the  Licensed  Technology;  or (b) modify or replace  the  Licensed
         Technology with non-infringing Technology.

                  4.1.3  INDEMNIFICATION.  (A) MACHINETALKER AGREES TO INDEMNIFY
         AND HOLD KBR HARMLESS  FROM ANY LOSS,  ACTION,  OR CLAIM ARISING OUT OF
         ANY  DEFECTS  OF THE  LICENSED  TECHNOLOGY,  PROVIDED  THAT  KBR  GIVES
         MACHINETALKER  NOTICE OF ANY SUCH  LOSS OR CLAIM  WITHIN 30 DAYS OF THE
         DATE  THAT  KBR IS MADE  AWARE OF THE  CLAIM.  KBR  AGREES  TO USE BEST
         EFFORTS  TO ASSIST  MACHINETALKER  IN ANY SUCH  DEFENSE  TO THE  EXTENT
         REASONABLE AND PRACTICABLE.

         (B) KBR AGREES TO INDEMNIFY  AND HOLD  MACHINETALKER  HARMLESS FROM ANY
         LOSS OR CLAIM RELATED TO THE NEGLIGENCE OF KBR, ITS AGENTS OR EMPLOYEES
         REGARDING  THE  INSTALLATION,   USE,  SALE  OR  SERVICING  OF  LICENSED
         TECHNOLOGY  OR ARISING OUT OF ANY  REPRESENTATION  OR WARRANTY  MADE BY
         KBR,  ITS  AGENTS,  OR  EMPLOYEES  WHERE  SUCH  REPRESENTATION  EXCEEDS
         MACHINETALKER'S  LIMITED WARRANTY IF SUCH LOSS OR CLAIM IS EXCLUSIVE OF
         MACHINETALKER NEGLIGENCE,  PROVIDED THAT MACHINETALKER GIVES KBR NOTICE
         OF ANY SUCH LOSS OR CLAIM WITHIN 30 DAYS OF THE DATE THAT MACHINETALKER
         IS MADE AWARE OF THE CLAIM. MACHINETALKER AGREES TO USE BEST EFFORTS TO
         ASSIST  KBR  IN  ANY  SUCH  DEFENSE  TO  THE  EXTENT   REASONABLE   AND
         PRACTICABLE.

In the event that either Party is entitled to claim damages from the other Party
subsequent to an action arising under article 17, above, such liability shall be
limited to:

         1)  Damages  for  bodily  injury  (including  death) and damage to real
         property and tangible personal property; and

         2) The amount of any other actual direct damages, up to the charges (if
         recurring,  12  month's  charges  apply)  for the  Product  that is the
         subject of the claim.

In no event shall either party be liable to the other for:

         A) loss of, or damage to, records or data; or

         B)  special,  incidental,  or  indirect  damages  or any  consequential
         economic damages; or


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<PAGE>


         C) lost profits, business, revenue, or anticipated savings.

All indemnities are subject to the limitations and exclusions  elsewhere in this
Agreement.

NOTWITHSTANDING  ANYTHING  IN THE  AGREEMENT  TO  THE  CONTRARY,  KBR'S  MAXIMUM
LIABILITY  TO  MACHINETALKER  SHALL NOT EXCEED THE AMOUNT OF $600,000  UNDER ANY
CIRCUMSTANCES,  INCLUSIVE OF ATTORNEYS' FEES, COSTS, AND EXPENSES, FOR ANY CLAIM
ARISING  FROM OR  RELATED  TO THE  AGREEMENT  OR TO THE  SUBJECT  MATTER  OF THE
AGREEMENT. SUCH CLAIMS MIGHT INCLUDE BUT ARE NOT LIMITED TO CLAIMS FOR BREACH OF
CONTRACT.

5. ADDITIONAL AGREEMENTS OF THE PARTIES

         5.1 COVENANTS OF KBR. KBR covenants and agrees:

                  5.1.1 APPOINT CONTACT.  To appoint as MACHINETALKER's  primary
         contact in  connection  with the delivery and operation of the Licensed
         Technology  a limited  number of  personnel  who  possesses  reasonable
         skills  sufficient  to allow that person to assist  competently  in the
         installation  and operation of the Licensed  Technology.  MACHINETALKER
         agrees  to  provide  all  necessary  training  and  instruction  to KBR
         designated personnel at KBR's Premises pursuant to this Agreement.

                  5.1.2 ACCEPTANCE AND USE OF SOFTWARE. KBR agrees to accept and
         use the Licensed  Technology solely as part of an application,  system,
         or solution  that enables end users of the  Licensed  Products to track
         inventory, containers and other similar packages.

                  5.1.3 CONFIDENTIALITY.  PARTIES agree to keep confidential the
         terms and conditions of this Agreement,  except for any disclosures (a)
         made in connection with any dispute  arising under this  Agreement,  to
         the extent  appropriate  to enforce or defend  KBR's  rights under this
         Agreement,  (b) to the extent required by law, (c) made after the terms
         of this  Agreement  that become  available  to the public other than by
         reason of KBR's breach of its obligations under this Agreement,  or (d)
         made in  response  to a legal and proper  request  of any  governmental
         authority.

                  5.1.4 NO  MODIFICATIONS.  KBR agrees  not to  modify,  reverse
         engineer,  decompile,  or change or copy the Licensed Technology in any
         manner for other than the  purposes of  integration  with a  monitoring
         system  without the express  written  consent of  MACHINETALKER,  which
         shall not be unreasonable withheld.


         5.2 COVENANTS OF MACHINETALKER. MACHINETALKER covenants and agrees:

                  5.2.1  DELIVERY OF SOFTWARE.  To deliver the Licensed  Product
         and the  Documentation  concurrently  with  the sale  and  delivery  of
         Licensed Products.

                  5.2.2  CORRECTION OF MATERIAL  ERRORS IN LICENSED  PRODUCT AND
         TECHNOLOGY.  If a Material  Error  occurs in the  Licensed  Product and
         Technology,  then MACHINETALKER shall exercise commercially  reasonable
         best  efforts  to  correct   such  error  as  promptly  as   reasonably
         practicable.


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<PAGE>


                  5.2.3 UPDATES AND UPGRADES.  To deliver to KBR all Updates and
         Upgrades to the Licensed Technology that are developed and published by
         MACHINETALKER during the term of this Agreement that improve or correct
         the performance of the Licensed Products.


         5.3 OWNERSHIP.  KBR acknowledges and agrees that except for the License
expressly granted herein, KBR shall not acquire any right,  title,  license,  or
other  interest  in or claim to all or any  portion of the  Licensed  Technology
(including any portion thereof constituting  Confidential Information) by reason
of (a) the execution and delivery of this  Agreement,  or (b) the  disclosure of
any information with respect to the Licensed  Technology by MACHINETALKER to KBR
either  pursuant to this  Agreement or prior to execution  hereof in  connection
with discussions pertaining to the Licensed Product and Technology, or (c) KBR's
discovery  of the  Confidential  Information  in the  course  of the  commercial
relationship contemplated by this Agreement.


6. CONFIDENTIAL INFORMATION

         6.1 NONDISCLOSURE OF CONFIDENTIAL  INFORMATION.  If either PARTY hereto
receives from the other party written information which is marked "Confidential"
or "Proprietary",  the receiving party agrees not to use such information except
in the performance of this Agreement,  and to treat such information in the same
manner as it treats its own  confidential  information  for a period of Five (5)
years from the date of disclosure.  Without limiting the foregoing, it is agreed
that all  communications  between  MACHINETALKER  and KBR  relating  to bidding,
testing, or sales activities are to be confidential.

         6.2 PERMITTED DISCLOSURE. PARTY's obligations under Section 6.1, above,
shall not apply with respect to any Confidential Information which:

         A.) (i) is already  rightfully  in the  possession  of KBR;  (ii) is or
becomes publicly  available  through no wrongful act of KBR; (iii) is rightfully
received by KBR from a third party without an obligation of  confidentiality  to
MACHINETALKER;  (iv) is  disclosed  to a third  party by  MACHINETALKER  without
restriction;  or (v)  is  approved  for  release  by  written  authorization  of
MACHINETALKER.

         B.) Is or  becomes  generally  available  to the  public  other than by
reason of a breach  by  either of the  PARTIES  of its  obligations  under  this
Agreement; or

         C.) Is  compelled  by court order to  disclose,  provided  that KBR (i)
provides to MACHINETALKER a reasonable period prior to disclosure written notice
of all circumstances pertaining to the proposed disclosure,  and (ii) cooperates
reasonably  with any attempt by  MACHINETALKER  to obtain or file pleadings with
respect to any protective  judicial order limiting or prohibiting the disclosure
of such Confidential Information except to the extent necessary for the purposes
of the proceeding in which the disclosure order arose; or

         D.)  MACHINETALKER  agrees  that the  confidential  information  can be
disclosed to a third party under a non-disclosure agreement with that party, for
the sole purpose of preparing proposals,  marketing, sales, and other activities
reasonably   related  to  KBR's  overall  business   strategy  in  the  area  of
applications,  systems, or solutions that track inventory,  containers and other
similar  packages,  where such final purpose is the sale of, and  implementation
of, the Licensed Products.


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<PAGE>

                  6.2.2  ACTION  BETWEEN  PARTIES.  Disclosure  of  Confidential
         Information  in  any  action  between  the  parties  pursuant  to or in
         connection  with  this  Agreement  is  permitted,   provided  that  the
         disclosing party first (a) provides the  non-disclosing  party at least
         twenty-one  (21) days advance  written notice of such  disclosure,  (b)
         takes all reasonable actions, at its sole cost and expense, to obtain a
         protective   order  protecting  such   Confidential   Information  from
         disclosure  except to the  extent  directly  required  to  construe  or
         enforce  this  Agreement  or the  rights  and  duties  of  the  parties
         hereunder,  and (c) cooperates  reasonably in efforts by non-disclosing
         party to obtain or file pleadings  with respect to any such  protective
         order.

         6.3 EQUITABLE RELIEF. PARTIES (a) acknowledge that any violation of the
provisions  of this Section 6 may cause  immediate  and  irreparable  damage for
which non-disclosing party cannot be adequately compensated by monetary damages,
(b) agree that in the event of any such  breach  that the  non-disclosing  party
shall be entitled to such preliminary or other injunctive  relief,  an order for
specific performance,  and any other equitable relief that a court may determine
to be appropriate,  (c) hereby waive any requirement that  non-disclosing  party
post,  as a condition  or other  requirement  of  obtaining  any such  equitable
relief,  a bond or other  collateral,  and (d) further agree that such equitable
relief shall be in addition to any damages or other remedies provided by law and
otherwise  available to non-disclosing  party as a result of disclosing  party's
breach of  confidentiality.  Notwithstanding the above, the parties shall not be
liable to each other regarding  obligations and remedies  relating to the use of
and  disclosure of  Proprietary  Information  provided that the Receiving  Party
affords  the  Proprietary  Information  the same  degree of  protection  that it
affords to its own Proprietary  Information of similar importance,  but not less
than a reasonable degree of care.


7. TERM AND TERMINATION

         7.1 TERM.  Subject to the  restrictions of Section 7.2, below, the term
of the License  shall  commence on the Effective  Date and shall  continue for a
period of Five (5) years.

         7.2 TERMINATION. This Agreement may be terminated:

                  7.2.1 BY  MACHINETALKER.  By MACHINETALKER if KBR breaches any
         material  obligation  imposed  upon KBR  under  this  Agreement  or the
         Purchase  Order  (including  but not limited to the  obligation  to pay
         License Fees when due) and fails to cure such breach within thirty (30)
         days following the date on which MACHINETALKER  delivers to KBR written
         notice of default.

                  7.2.2  BY KBR.  By KBR at any  time  upon  thirty  (30)  days'
         advance written notice to MACHINETALKER.

                  7.2.3 BY  EITHER  PARTY.  Should  the other  party (a)  become
         insolvent;  (b) make an assignment  for the benefit of  creditors;  (c)
         have  a  receiver   appointed;   (d)  institute  any   proceedings  for
         liquidation or winding up.

         7.3 EFFECT OF  TERMINATION.  Upon any termination of this Agreement for
any reason legally justified under the terms and conditions of this agreement:






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<PAGE>
                  7.3.1 USE AND RETURN OF  SOFTWARE.  KBR shall  cease using the
         Licensed  Technology and, at the election of MACHINETALKER,  either (a)
         shall return to  MACHINETALKER  all copies of the  Licensed  Technology
         provided pursuant to this Agreement, or (b) shall destroy all copies of
         the Licensed Technology provided pursuant to this Agreement.

                  7.3.2  SURVIVAL OF CLAIMS.  Each party shall retain all claims
         for breach of this  Agreement  with  respect  to  periods  prior to the
         effective date of termination of this Agreement.

                  7.3.3 SURVIVAL OF  OBLIGATIONS.  The rights and obligations of
         each party  under  Sections  5.1.4,  6, and 8 of this  Agreement  shall
         survive the expiration or termination of this  Agreement.  In the event
         of termination by KBR, MACHINE TALKER's  obligation to continue to sell
         Licensed  Products to KBR shall be limited to those  Licensed  Products
         and  Technology  that KBR is  contractually  obligated  to furnish to a
         customer.

8. MISCELLANEOUS

         8.1 TRADEMARKS.  The name of either PARTY,  and any  trademarks,  trade
names and logos  associated  with the  PARTY may only be used as  authorized  in
writing by the owning PARTY.

         8.2 NO IMPLIED LICENSE.  No license is granted herein,  either directly
or by implication,  estoppel or otherwise,  except as expressly  provided for in
this Agreement.

         8.3  SEVERABILITY.  If any  provision of this License is for any reason
found  to  be  ineffective,  unenforceable,  or  illegal  by  any  court  having
jurisdiction over both parties,  such condition shall not affect the validity or
enforceability of any of the remaining  portions hereof,  unless it deprives any
party  hereto of any  material  right or license  held by such party  under this
Agreement.  The  parties  shall  negotiate  in good  faith to  replace  any such
ineffective,  unenforceable,  or illegal provisions as soon as practicable,  and
the substituted provision shall, as closely as possible,  have the same economic
and legal effect as the eliminated provision.

         8.4  INDEPENDENT  CONTRACTORS.  Performance  by the parties  under this
Agreement  shall be as independent  contractors.  This Agreement is not intended
and shall not be construed  as creating a joint  venture or  partnership,  or as
causing  either  party to be  treated  as the agent of the  other  party for any
purpose  or in any sense  whatsoever,  or to create any  fiduciary  or any other
obligations other than those expressly imposed by this Agreement.

         8.5  ASSIGNMENT.  Subject to the  express  limitations  imposed by this
Agreement on KBR's right to assign its rights hereunder or to grant sublicenses,
this  Agreement  shall be binding  upon and inure to the benefit of the parties,
their successors and permitted assignees.

         8.6  GOVERNING  LAW,  JURISDICTION  AND VENUE.  This  License  shall be
governed  by  and  subject  to  and  construed  according  to  the  laws  of the
Commonwealth of Virginia.  Each party hereby consents to the jurisdiction of the
courts of the  Commonwealth  of Virginia for any action  construing or enforcing
the rights and duties  created  hereunder.  The parties agree that the exclusive
venue for all disputes arising under or in connection with this License shall be
a court of proper venue and jurisdiction in Virginia, and hereby waive any right
to object that such venue is inconvenient or otherwise inappropriate.


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<PAGE>
         8.7  ATTORNEYS'  FEES.  If any action or  proceeding  is  commenced  to
construe this License or the rights and remedies created herein,  then the party
prevailing  in that  action  shall be  entitled to recover its costs and fees in
such  action  or  proceeding,  as well as all costs  and fees of  enforcing  any
judgment entered therein.

         8.8 FORCE  MAJEUR.  Neither  party  shall be liable for any  default or
delay in  performance  of any of its  obligations  under this  Agreement if such
default or delay is caused,  directly or indirectly,  by fire, flood, earthquake
or other acts of God; labor  disputes,  strikes or lockouts;  acts of terrorism,
wars,  rebellions  or  revolutions;   riots  or  civil  disorder;  accidents  or
unavoidable  casualties;   interruptions  in  transportation  or  communications
facilities or delays in transit or  communication;  supply  shortages that could
not reasonably be avoided, or remedied;  or the failure of any Person to perform
any  commitment  to such party  related to this  Agreement;  or any other  cause
beyond such party's reasonable control and remedy.

         8.9 ENTIRE AGREEMENT;  AMENDMENTS.  This License may not be modified or
amended  except  by a  written  instrument  mutually  executed  by  the  parties
subsequent to the effective date of this Agreement.

         8.10 INTERPRETATION.  Each party to this Agreement has been represented
by (or had adequate  time to obtain the advice and input of)  independent  legal
counsel with respect to this Agreement.  All pronouns and any variation  thereof
shall be  deemed  to refer to the  masculine,  feminine,  or  neuter  and to the
singular  or plural as the  identity  of the person or persons  may  require for
proper interpretation of this Agreement.





























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<PAGE>

    IN WITNESS  WHEREOF,  the  parties  hereto  have  executed  this  Agreement,
effective as of the date set forth above.


                                                  [GRAPHIC OMITTED]



























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<PAGE>






                                    EXHIBIT 7
                       Purchase Order Terms and Conditions


<PAGE>

Agreement No. CA-0006             12/29/2004 6:21 PM      Page 1 of 11 EXHIBIT 7
- Purchase Order Terms & Conditions

                                    EXHIBIT 7
                    KELLOGG BROWN & ROOT, SERVICES INC. (KBR)
                       PURCHASE ORDER TERMS AND CONDITIONS
         (To be made a part of any future purchase of Licensed Products)

1. DEFINITIONS. These Terms and Conditions,  together with the Agreement and any
special  terms and  conditions,  and all  attachments,  exhibits  and  documents
expressly  referenced in the Purchase Order, shall  collectively  constitute the
"Purchase  Order".  "Buyer",  "Seller",  and "Owner" (if any) are identified and
defined as set forth within this Purchase Order.  This Purchase Order is entered
into between Buyer and Seller,  who may be referred to individually  herein as a
"party" or  collectively  as the  "parties".  Seller  agrees to sell,  and Buyer
agrees to buy, the goods, work and/or services  described in and furnished under
this Purchase  Order (the  "Goods"),  under the terms and  conditions  set forth
herein.  The "Buyer  Indemnitees"  as referred to herein  shall mean Buyer,  any
Owner,  any  assignee,  their  parents,  subsidiaries,   affiliates,   partners,
co-participants, investors, and lenders, and the respective officers, directors,
employees,   consultants,   contractors,   invitees,  agents,   representatives,
successors,  heirs,  and  insurers of each such  entity at all tiers.  Seller is
acting in all respects as an independent  contractor  under this Purchase Order.

2. EFFECTIVE  DATE.  This Purchase Order becomes  effective when (a) executed by
both the Buyer and Seller; or (b) when Seller commences performance; or (c) when
Seller  tenders  the  Goods  to  Buyer,  whichever  event  occurs  earliest.

3. INTEGRATION AND CONTROLLING TERMS. This Purchase Order constitutes the entire
agreement  between Buyer and Seller with respect to the Goods,  superseding  all
quotations, proposals, communications,  negotiations and counter-proposals. This
Purchase  Order  expressly  excludes any quotations or proposal of Seller unless
such proposal is specifically  referenced and incorporated herein. Any different
or additional  terms and  conditions by Seller in Seller's  acceptance or during
Seller's performance of this Purchase Order,  including any terms and conditions
contained on any of Seller's quotations,  proposals, or forms, shall be null and
void and of no effect on the parties.  Electronic commerce  transactions between
Buyer and Seller  pertaining to this Purchase  Order will be solely  governed by
these terms and conditions.  Any terms and conditions on Seller's  internet site
to which agreement by Buyer in any manner,  whether through a online  electronic
agreement,  deemed implied by site use, or otherwise,  is required in any manner
during performance of this Purchase Order, will be null and void and of no legal
effect on Buyer.  If this Purchase Order has been issued by Buyer in response to
a proposal or offer by Seller,  it is Buyer's intention that its counteroffer to
Seller will be governed  solely by these terms and  conditions and not by any of
Seller's terms or conditions which may be contained in its proposal or offer. If
Seller includes or attaches any different and/or  additional terms or conditions
in Seller's executed acceptance of a Purchase Order issued by Buyer and proceeds
to commence  performance or tender all or any part of the Goods without  Buyer's
express  acceptance of such different or additional terms or conditions,  Seller
agrees that a binding  contract  will be formed  solely upon  Buyer's  terms and
conditions,  which  contract will not include any of Seller's  different  and/or
additional terms or conditions.  Seller's  proposal or quotation is not included
as part of the Purchase Order unless expressly  referenced herein as part of the
agreement.

4.  ERRONEOUS OR  CONFLICTING  REQUIREMENTS.  Upon Seller's  discovery  that any
provision  of this  Purchase  Order may contain any error,  omission or conflict
with any other provision contained herein, it is Seller's responsibility to give
Buyer immediate written notice of such for resolution by Buyer. If

<PAGE>

Agreement No. CA-0006              12/29/2004 6:21 PM    Page 2 of 11 EXHIBIT 7
 - Purchase Order Terms & Conditions


Seller proceeds with  performance  after discovery  without  notification to and
resolution by Buyer,  then Seller  assumes the risk of all  resulting  expenses,
costs and consequences incurred.

5. INSPECTION,  EXPEDITING,  AND DOCUMENTATION.  Seller is fully responsible for
the timely,  proper and accurate performance of this Purchase Order,  including,
to the extent applicable, for the design, fabrication,  manufacture, production,
construction,  and  shipment of the Goods,  and for  compliance  with all terms,
conditions,  specifications,  drawings, and other written requirements of Buyer.
Buyer has the right to inspect  and  expedite  the Goods at any stage of design,
fabrication,   manufacture,  storage,  transit,  and  upon  delivery  to  assure
compliance  herewith.  Seller  will  provide  Buyer  with  all  data,  drawings,
specifications,  test  results,  quality  documentation,   schedules  and  other
documents  and   information   relating  to  the  Goods.   Notwithstanding   any
specifications, data, requirements or other information provided by Buyer, it is
Seller's  responsibility to request any additional  documentation or information
from Buyer which Seller  determines it may need for performance of this Purchase
Order, and Buyer will respond to the extent possible in a timely manner.  Seller
will  comply  with  Buyer's  inspection  and  testing  requirements,   plans  or
procedures set forth in this Purchase  Order,  and with other such  instructions
and directions as may be provided by the  authorized  Buyer  representative.  No
inspection,  waiving of inspection, review, approval, acceptance or provision of
any instructions,  direction, information, drawings or data hereunder by or from
Buyer,  or lack of such from Buyer,  will  constitute a waiver of, or relieve or
discharge   Seller  from,   either   expressly  or  by   implication,   Seller's
responsibilities and obligations under this Purchase Order.

6.  TIME  OF  PERFORMANCE.  SELLER  ACKNOWLEDGES  THAT  THE  TIME  REQUIRED  FOR
PERFORMANCE AND THE DELIVERY  SCHEDULE  SPECIFIED HEREIN ARE CRITICAL,  MATERIAL
AND OF THE ESSENCE TO  PERFORMANCE  OF THIS PURCHASE  ORDER FOR THE AVOIDANCE OF
SUBSTANTIAL  LOSS  TO  BUYER,  VARIOUS  CONTRACTORS  AND ANY  OWNER  .  SELLER'S
UNEXCUSED  FAILURE TO MEET THE DELIVERY SCHEDULE WITHOUT BUYER'S WRITTEN CONSENT
MAY  CONSTITUTE A BREACH OF CONTRACT OR DEFAULT  HEREUNDER.  Any such consent by
Buyer,  however,  will not constitute a waiver of any provision  herein but will
serve only to delay the delivery schedule. In the event of delay, or anticipated
delay, from any cause,  including force majeure,  Seller will immediately notify
Buyer  in  writing  of the  delay  or  anticipated  delay,  and its  approximate
duration, and Seller will undertake to mitigate, shorten or make up the delay by
all reasonable and  expeditious  means.  An event of "Force  Majeure" under this
paragraph shall be an excused delay, provided Seller has provided timely written
notice of the occurrence of such event to Buyer.  If possible,  Seller agrees to
take all reasonable commercial efforts to reduce or mitigate the effects of such
delay.  "Force  Majeure" is defined as any act of God,  flooding,  fire,  severe
storm, lightning,  act of war, act of terrorism,  or unforeseeable  governmental
action, beyond the control of and not caused in any part by any fault of Seller,
but shall not  include  any power,  supply,  transportation  or labor  problems.
Buyer, at its option, may require or approve in writing a change in the delivery
schedule or progress  requirements  as  established  in this  Purchase  Order in
response to Seller's notice. If Seller fails to obtain the approval of Buyer for
any such change,  and Seller fails for any reason to meet the delivery schedule,
progress  requirements,  or it becomes  apparent  that  Seller  will not for any
reason meet the schedule or progress milestones, Buyer may in such case, without
penalty,  cancellation  fee,  restocking  or other fee or  charges,  and without
prejudice to any other  rights which it may have,  cancel all or any part of the
Purchase  Order and take any other  action as Buyer may  consider  necessary  or
desirable  under  the  circumstances  to avoid or  minimize  losses.  Buyer  may
backcharge Seller for all direct costs and expenses of any nature resulting from
Seller's  unexcused  nonperformance,  delays  or  failure  to meet the  required
delivery schedule.

7. TITLE,  SHIPMENT,  AND RISK OF LOSS. Unless otherwise specified herein, title
to the Goods (and in the event  that the Goods are made to order,  then title to
all material, inventory and work in progress,

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- Purchase Order Terms & Conditions


design data, other documentation,  and all contractual rights thereto) will vest
in Buyer  (or  Owner if Buyer is  acting  as  Owner's  agent)  immediately  upon
acceptance of the Goods by Buyer,  payment by Buyer, or  identification  to this
Purchase  Order,  whichever  first  occurs.  If  Goods  are made to order or the
Purchase  Order  otherwise  specifies  that  title  will vest in the Goods  upon
identification to this Purchase Order,  Seller will take action to segregate the
Goods and clearly label them as property of Buyer.  In the event of cancellation
or termination of this Purchase Order, Buyer has the right to enter Seller's (or
Seller's agent's,  contractor's or supplier's)  premises during regular business
hours and take possession of any Goods, including any related drawings, records,
materials to be incorporated into the Goods, and equipment,  for which Buyer has
paid Seller,  provided to Seller by Buyer, or which have been identified to this
Purchase Order or created by Seller  hereunder,  and Buyer shall be obligated to
pay Seller for any unpaid portion of the Goods or equipment of which Buyer takes
possession.  Seller  warrants free and clear title to the Goods,  free and clear
from any and all liens, claims, restrictions,  reservations,  security interests
and  encumbrances.  If  applicable,  Seller  is  responsible  for  properly  and
carefully  preparing,  labeling,  packing and shipping the Goods, at its expense
unless  otherwise   specified  herein,   and  providing  all  required  shipping
documentation.  In the  shipping  process,  Seller will comply with all laws and
regulations  applicable  to  the  Goods  in  addition  to  any  requirements  or
instructions of Buyer as may be specified in this Purchase Order or otherwise in
writing  pertaining  thereto.  Irrespective  of  vesting  of title and any other
provision herein to the contrary,  Seller will bear the risk of loss and damage,
and will insure or self-insure for the benefit of Seller,  Buyer, and any Owner,
the Goods in its care,  custody  and  control,  including  free  issue  material
supplied to Seller for  incorporation  into, or work in  conjunction  with,  the
Goods accordance with the provisions of this Purchase Order.  Should any loss or
damage occur to the Goods prior to acceptance by Buyer,  Buyer at its option may
cancel this Purchase Order without any  cancellation  fee, charge,  penalty,  or
liability,  and any  amounts  paid by Buyer for such Goods  shall be refunded in
full to Buyer.  Should  any loss or  damage  occur to any  free-issue  materials
provided to Seller,  in addition to Buyer's right to cancel this Purchase Order,
Seller shall either, at Buyer's option,  immediately replace such materials with
identical materials in order to meet its performance  obligations hereunder,  or
reimburse Buyer for the loss,  including any necessary  additional  expenses and
costs which may be incurred resulting from such loss. Upon request, Seller shall
provide adequate insurance coverage,  naming Buyer (and if applicable at Buyer's
request,  any Owner or other person) as additional insured,  for its obligations
under this Paragraph.

8. CONFORMING  GOODS AND ACCEPTANCE.  The Goods will conform to the description,
data,  drawings,  plans,  specifications,  performance or operation criteria (if
applicable), any sample, and other requirements of Buyer provided to Seller. The
Goods will meet the  standards  set forth in Paragraph 9 below.  Seller will not
make any modification, change, or substitution, in whole or in part, without the
prior  written  approval  of Buyer.  If  required  by Buyer,  Seller will supply
satisfactory evidence of the origin, composition,  manufacture, kind and quality
of  the  Goods.  Prior  to  shipment,  Seller  will  carefully  inspect,  and if
applicable  test, the Goods for conformance to the requirements of this Purchase
Order. If the words "or equal" are used in this Purchase Order,  proposed equals
must be  approved  in writing in advance by Buyer.  Seller will not ship more or
less than the quantity  specified  without the prior written  approval of Buyer.
Upon delivery of the Goods or in any other  location or time as may be specified
herein,  Buyer may conduct a visual  inspection of the Goods in accordance  with
its standard procedures and may accept or reject the Goods, in whole or in part,
provided that Buyer reserves all rights provided for herein to reject any Goods,
in whole or in part,  at a later  time  upon  discovery  of a latent  defect  or
non-compliance not apparent by such normal visual inspection.  If Goods received
do not conform to those ordered,  or if a different  quantity is shipped,  Buyer
may reject such shipment in whole or in part by giving notice thereof to Seller,
and may cancel this  Purchase  Order.  Seller will remove any rejected  Goods at
Seller's  expense  within ten (10) working days after  notice.  If any Goods are
rejected by Buyer,  Seller will not ship any replacement Goods without the prior
written approval of and in accordance with the  instructions  provided by Buyer.
For any incorrect quantity, damaged, defective, non-conforming, or rejected

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 - Purchase Order Terms & Conditions


Goods,  Buyer may cancel  this  Purchase  Order in whole or in part  without any
obligation to pay a cancellation fee or other fee, charge or penalty, and return
the Goods at Seller's expense for full refund or credit to Buyer's  account,  at
Buyer's option.

9.  WARRANTY.  Seller  warrants  to Buyer  that the Goods  furnished  under this
Purchase  Order,  whether  manufactured,  fabricated,  or otherwise  produced or
provided by Seller or others, will be (a) new, (b) of the latest design or model
conforming  to  Buyer  requirements,  (c)  conform  to the  descriptions,  data,
drawings,  plans,  specifications,  any performance criteria, sample if any, and
other  requirements  specified herein or provided by Buyer to Seller;  (d) be of
merchantable  quality,  (e) if specified  in this  Purchase  Order,  fit for the
purpose(s) intended; (f) conform with all applicable laws, ordinances, codes and
regulations,  (g) be of the  highest  quality;  and (h)  free  from  defects  in
materials, performance,  operation, and workmanship. The Goods will be warranted
hereunder, as may be applicable,  for a period of one (1) year after the date of
acceptance of the facility or the project by Owner,  or twenty-four  (24) months
from date of delivery  to and  acceptance  by Buyer,  whichever  period  expires
earlier.  All work on the Goods or otherwise in the performance of this Purchase
Order  will  be  done  in a  skilled  manner  and  of  the  highest  quality  of
workmanship.  Seller further  warrants that the Goods will be of sufficient size
and capacity,  and of correct  materials,  to properly  perform any functions or
purpose specified in this Purchase Order.

10. WARRANTY  REMEDIES.  If, within the warranty period specified in Paragraph 9
above, Buyer discovers any defect, error, noncompliance,  omission,  operational
or performance deficiency,  or breach of warranty set forth in Paragraph 9 above
as to the Goods, upon notice from Buyer, Seller will promptly repair, reperform,
or replace, without cost, the Goods in question (including bearing any necessary
removal,  reinstallation,   access,  shipping,  labor  and  other  direct  costs
resulting  therefrom) in accordance with Buyer instructions.  If Seller fails to
proceed promptly with and complete the repair, reperformance,  or replacement of
the  defective  Goods,  Buyer may  repair,  reperform,  or replace the Goods and
charge all related  direct costs  (including  labor and access  costs) to Seller
without  voiding the  warranties  herein,  and without  Buyer  waiving any other
rights  or  remedies  it may  have  under  this  Purchase  Order.  Such  repair,
reperformance,  or replacement  will be rewarranted  for a period of twelve (12)
months from the date of its acceptance by Buyer or Owner.  If Buyer  determines,
for any  reason,  that the  remedies  provided  for herein are not  adequate  or
feasible, Buyer may elect to have such Goods removed at Seller's expense and any
portion of the purchase  price paid  refunded in full.  Any Owner or assignee of
this  Purchase  Order as well as Buyer will have the  benefit  of the  foregoing
warranty and warranty  remedies in  Paragraphs 9 and 10 herein,  and such rights
and remedies  are in addition to any other  rights or remedies  provided in law,
equity, or under this Purchase Order.

11.  GOVERNING LAW AND COMPLIANCE WITH LAW. Unless  otherwise  specified in this
Purchase  Order,  this  contract  will be  governed  by the laws of the State of
Texas, U.S.A.,  exclusive of conflict of laws principles,  in effect on the date
the Purchase Order becomes  effective.  In its  performance  under this Purchase
Order, Seller agrees to comply with all applicable laws,  treaties,  ordinances,
directives,  orders,  codes and  regulations,  and  specifically  with,  but not
limited to, any import, export, health, safety, security and environmental laws,
treaties,  ordinances,  codes  and  regulations  of  any  jurisdiction  (whether
international,  country,  region,  state,  province,  city, or local) where this
Purchase  Order may be  performed.  NOTHING  CONTAINED  IN THIS  PARAGRAPH  WILL
OBLIGATE BUYER,  OWNER,  SELLER, OR ANY PERSON ACTING ON THEIR BEHALF, TO ENGAGE
IN ANY ACTION OR OMISSION TO ACT WHICH WOULD BE PROHIBITED BY OR PENALIZED UNDER
THE LAWS OR REGULATIONS OF THE UNITED STATES OF AMERICA OR ANY OF ITS STATES. If
applicable to this Purchase Order, Seller will specifically comply with the U.S.
Occupational  Safety  and  Health  Act  (OSHA),  and  any  State  Plan  approved
thereunder,  and any regulation thereunder,  including without limitation,  OSHA
Hazard Communication Standard 29 CFR 1910.1200

<PAGE>

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- Purchase Order Terms & Conditions


and 1926.59 regarding container labeling,  warning notices,  and Material Safety
Data Sheets.  Upon Buyer written request,  Seller will provide any certification
of compliance required by any federal, state, or local law, ordinance,  code, or
regulation.  SELLER AGREES TO RELEASE,  DEFEND,  INDEMNIFY AND HOLD HARMLESS THE
BUYER  INDEMNITEES FROM AND AGAINST ANY LOSS, COST (INCLUDING  ATTORNEY FEES AND
COURT COSTS), CIVIL OR OTHER FINES AND PENALTIES,  DAMAGE OR LIABILITY,  ARISING
FROM OR ALLEGED TO ARISE FROM ANY VIOLATION,  ALLEGED  VIOLATION,  OR FAILURE TO
COMPLY WITH, THE TERMS OF THIS PARAGRAPH BY SELLER OR ANY PERSON FOR WHOM SELLER
MAY BE  RESPONSIBLE.

12. HAZARDOUS AND DANGEROUS GOODS.  Seller is solely  responsible for examining,
inspecting,  identifying,  and  determining  whether  or not any Goods  provided
hereunder (in whole or in part) constitute  hazardous or dangerous goods, and to
notify Buyer of such prior to shipment of the Goods.  Unless expressly  exempted
by Buyer in writing in the Purchase Order, Seller is responsible to determine if
a Material  Safety Data Sheet  (MSDS) is required  for the Goods,  and if so, to
supply with the Goods all such required MSDS  documentation and information.  In
the event any Goods or any portion  thereof are so identified by Seller,  Seller
shall  ensure  that  such  Goods  are  properly  handled,  labeled,  documented,
packaged,  transported, and shipped in full compliance with any applicable legal
requirements,  to the point of delivery to Buyer. It is the sole  responsibility
of the Seller to ensure the  compliance  by all  suppliers,  manufacturers,  and
subcontractors of all tiers with the provisions of this paragraph, including but
not limited to timely,  complete and proper submittal of all required  documents
and  information.  Seller shall inform Buyer in writing prior to shipment of any
precautionary  measures  that need to be taken with the Goods.  SELLER AGREES TO
RELEASE,  DEFEND,  INDEMNIFY  AND HOLD HARMLESS THE BUYER  INDEMNITEES  FROM AND
AGAINST ANY LOSS, COST (INCLUDING ATTORNEY FEES AND COURT COSTS), CIVIL OR OTHER
FINES AND PENALTIES, DAMAGE OR LIABILITY,  ARISING FROM OR ALLEGED TO ARISE FROM
ANY VIOLATION,  ALLEGED VIOLATION,  OR FAILURE TO COMPLY WITH, THE TERMS OF THIS
PARAGRAPH BY SELLER, ANY OF ITS LOWER TIER SUPPLIERS OR  SUBCONTRACTORS,  OR ANY
OTHER PERSON FOR WHOM SELLER MAY BE RESPONSIBLE HEREUNDER.

13. IMPORT AND EXPORT COMPLIANCE. SELLER AGREES THAT IT IS SOLELY RESPONSIBLE IN
ITS  PERFORMANCE  UNDER THIS  PURCHASE  ORDER FOR REQUIRED  COMPLIANCE  WITH THE
IMPORT AND EXPORT LAWS AND  REGULATIONS OF THE UNITED STATES OF AMERICA,  AND TO
THE EXTENT  APPLICABLE  TO THE  PURCHASE  ORDER,  THE IMPORT AND EXPORT LAWS AND
REGULATIONS  OF ANY  OTHER  JURISDICTION  OR  COUNTRY.  If any  import or export
control or compliance form is attached to this Purchase Order, including Buyer's
Request for Export Control  Information,  Seller will  thoroughly and accurately
complete  such  form and  return  it  within  ten  (10)  days to  Buyer.  Seller
understands  and  acknowledges  that (a) Buyer  and  Owner  (if any),  and their
contractors  and  agents,  will  rely on the  information  provided  by  Seller,
including  making a  determination  whether any U.S. or foreign export or import
license is required for the export of the  supplied  materials to the country of
destination;  (b) Seller is  responsible  for  compliance  with local import and
export control laws of any jurisdiction,  and is responsible for compliance with
applicable U.S. re-export laws; and (c) Seller will be fully responsible for the
accuracy  and  completeness  of import  and  export  documentation  prepared  or
executed  by Seller as part of  Seller's  performance  of this  Purchase  Order,
including  that required for the import of any materials  used in the production
or manufacture of the Goods and of any documents prepared by Seller's employees,
contractors, agents and brokers. SELLER AGREES TO RELEASE, DEFEND, INDEMNIFY AND
HOLD HARMLESS THE BUYER  INDEMNITEES  FROM AND AGAINST ANY LOSS, COST (INCLUDING
ATTORNEY FEES AND COURT COSTS),  CIVIL OR OTHER FINES AND  PENALTIES,  DAMAGE OR
LIABILITY,  ARISING  FROM OR  ALLEGED  TO  ARISE  FROM  ANY  VIOLATION,  ALLEGED
VIOLATION, OR FAILURE TO COMPLY WITH,

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- Purchase Order Terms & Conditions


THE TERMS OF THIS  PARAGRAPH  BY SELLER OR ANY  PERSON  FOR WHOM  SELLER  MAY BE
RESPONSIBLE.

14.  ASSIGNMENT AND NOTICE OF SELLER CHANGES.  Seller will not sell,  assign, or
transfer this Purchase  Order,  or any part hereof,  or any performance or money
due  hereunder,  without  the prior  written  consent  of Buyer.  If  consent is
granted,  any such  assignment  by Seller will not (a) increase or alter Buyer's
obligations,  (b) diminish the rights of Buyer,  or (c) relieve Seller of any of
its obligations  under this Purchase  Order.  Buyer reserves the right to assign
this Purchase  Order,  in whole or in part.  Seller will give Buyer or any Owner
prompt written notice of any adverse  material change in its financial  standing
(including any prospective bankruptcy, reorganization,  insolvency, liquidation,
dissolution  or  assignment  for the  benefit  of any  creditor),  ownership  or
organization  or any other  operational  change which may affect its performance
under the Purchase  Order,  including in the  manufacture  or  production of the
Goods. In the event of any adverse material change,  Buyer reserves the right to
cancel or terminate  this Purchase Order without  penalty or further  obligation
other than to pay Seller for any completed and  satisfactory  performance to the
date of such cancellation or termination.

15. CANCELLATION. Buyer has the right at any time to cancel all or any separable
part of this Purchase Order by written notice.  No cancellation,  fee, charge or
payment  will be owed by Buyer to Seller,  and Seller  will be owed only for the
direct  costs  of any  completed  and  satisfactory  performance  to the date of
cancellation,  and,  if any  portion  of the Goods will be  delivered  to Buyer,
Seller  shall also be  reimbursed  any direct and  necessary  costs  incurred to
preserve, protect, store, and ship such Goods to the point of delivery to Buyer.
At the time of any cancellation by Buyer,  Seller will  immediately  discontinue
all work  pertaining to the Purchase  Order,  including  not placing  additional
purchase  orders or making any other  commitment,  and  canceling  forthwith any
existing purchase orders and commitments on the best possible terms. Seller will
preserve and protect the Goods on hand,  work in progress,  supplier  data,  and
completed work, both in its own and in its suppliers' facilities,  in accordance
with Buyer's  instructions.  Buyer has the right to enter  Seller's (or Seller's
agent's,  contractor's or supplier's) premises during regular business hours and
take possession of any Goods, including any related drawings, records, materials
to be  incorporated  into the Goods,  and  equipment,  for which  Buyer has paid
Seller, provided to Seller, or which have been identified to this Purchase Order
or created by Seller hereunder,  and Buyer shall be only obligated to pay Seller
for any unpaid portion of the Goods of which Buyer takes possession.

16.  CHANGES  IN  THE  GOODS.   Seller  will  make  no   modification,   change,
substitution, or revision without Buyer's prior written consent.

         (a) Buyer has the right to make changes in the character or quantity of
the Goods,  in the manner or time of  performance  of this  Purchase  Order,  or
otherwise, by written notice to Seller. Changes will be in writing and signed by
a duly  authorized  representative  of Buyer.  Seller  will  respond to Buyer in
writing  within five (5) business days of receipt  either  accepting the change,
with any proposed  adjustment  in price or schedule,  or rejecting the change if
Seller is unable to comply. If Seller fails to respond within such period,  such
change will be deemed accepted and an equitable adjustment in the price and time
of  performance  will be made by Buyer if any  change  results  in a  reasonably
documented  decrease or increase in  Seller's  cost or time of  performance.  If
Seller rejects the change,  Buyer may cancel this Purchase Order as set forth in
Paragraph 15 above.

         (b) Should  Seller  request any change from Buyer,  Seller  shall place
such  request in writing,  with all  reasonable  supporting  documentation,  and
submit to Buyer. If Seller's request is complete, Buyer will respond



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- Purchase Order Terms & Conditions


in  writing as soon as  possible  concerning  acceptance  or  rejection  of such
change. Seller will not discontinue performance pending Buyer's decision without
the prior  written  consent of Buyer.  No claim by Seller for any change will be
considered  unless  submitted to Buyer in writing within ten (10) days after the
occurrence  of the event upon which such change is based.

17. INDEMNIFICATION; CONSEQUENTIAL DAMAGES.

(A)  MACHINETALKER  AGREES TO  INDEMNIFY  AND HOLD KBR  HARMLESS  FROM ANY LOSS,
ACTION,  OR CLAIM  ARISING OUT OF ANY PRODUCT  DEFECTS,  PROVIDED THAT KBR GIVES
MACHINETALKER  NOTICE OF ANY SUCH LOSS OR CLAIM  WITHIN 30 DAYS OF THE DATE THAT
KBR IS MADE  AWARE OF THE  CLAIM.  KBR  AGREES  TO USE BEST  EFFORTS  TO  ASSIST
MACHINETALKER IN ANY SUCH DEFENSE TO THE EXTENT REASONABLE AND PRACTICABLE.

(B) KBR AGREES TO INDEMNIFY  AND HOLD  MACHINETALKER  HARMLESS  FROM ANY LOSS OR
CLAIM RELATED TO THE  NEGLIGENCE  OF KBR, ITS AGENTS OR EMPLOYEES  REGARDING THE
INSTALLATION,  USE,  SALE  OR  SERVICING  OF  PRODUCTS  OR  ARISING  OUT  OF ANY
REPRESENTATION  OR WARRANTY  MADE BY KBR, ITS AGENTS,  OR  EMPLOYEES  WHERE SUCH
REPRESENTATION EXCEEDS MACHINETALKER'S LIMITED WARRANTY IF SUCH LOSS OR CLAIM IS
EXCLUSIVE OF MACHINETALKER  NEGLIGENCE,  PROVIDED THAT  MACHINETALKER  GIVES KBR
NOTICE OF ANY SUCH LOSS OR CLAIM  WITHIN 30 DAYS OF THE DATE THAT  MACHINETALKER
IS MADE AWARE OF THE CLAIM.  MACHINETALKER  AGREES TO USE BEST EFFORTS TO ASSIST
KBR IN ANY SUCH DEFENSE TO THE EXTENT REASONABLE AND PRACTICABLE.

In the event that either Party is entitled to claim damages from the other Party
subsequent to an action arising under article 17, above, such liability shall be
limited to:

         1)  Damages  for  bodily  injury  (including  death) and damage to real
property and tangible personal property; and

         2) The amount of any other actual direct damages, up to the charges (if
recurring,  12 month's charges apply) for the Product that is the subject of the
claim.

In no event shall either party be liable to the other for:

         A) loss of, or damage to, records or data; or
         B)  special,  incidental,  or  indirect  damages  or any  consequential
economic damages; or
         C) lost profits, business, revenue, or anticipated savings.

All indemnities are subject to the limitations and exclusions  elsewhere in this
Agreement.

NOTWITHSTANDING  ANYTHING  IN THE  AGREEMENT  TO  THE  CONTRARY,  KBR'S  MAXIMUM
LIABILITY  TO  MACHINETALKER  SHALL NOT EXCEED THE AMOUNT OF $600,000  UNDER ANY
CIRCUMSTANCES,  INCLUSIVE OF ATTORNEYS' FEES, COSTS, AND EXPENSES, FOR ANY CLAIM
ARISING  FROM OR  RELATED  TO THE  AGREEMENT  OR TO THE  SUBJECT  MATTER  OF THE
AGREEMENT. SUCH CLAIMS MIGHT INCLUDE BUT ARE NOT LIMITED TO CLAIMS FOR BREACH OF
CONTRACT.

18.  TAXES.  Unless  otherwise  provided for in this Purchase  Order,  Seller is
responsible for payment of, and the compensation set forth herein includes,  all
sales,  use, excise,  value-added,  goods and services,  business  (franchise or
privilege), and other such taxes, any taxes imposed on Seller which are based on
revenue,  income,  net income,  net assets,  net worth, or capital and any taxes
imposed  in lieu  thereof,  and all  duties,  fees,  levies,  charges  or  other
assessments of whatever nature imposed by governing authorities or any


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- Purchase Order Terms & Conditions


duties, fees, levies, charges or other assessments of whatever nature imposed by
governing  authorities  or  any  jurisdiction   applicable  in  connection  with
performance under this Purchase Order.  Seller accepts sole  responsibility  and
liability for the payment of any and all contributions or taxes for unemployment
insurance,  social  security  payments,  or other  assessments for those persons
performing  work for Seller  hereunder.  If it is ever  determined  that any tax
included in the price paid by Buyer was not required to be paid,  Seller  agrees
to refund promptly such amount to Buyer. Seller will release, defend, indemnify,
and hold the Buyer Indemnitees  harmless from and against any fines,  penalties,
interest,  costs  (including  attorneys  fees and court costs),  charges,  fees,
losses,  damages or liabilities,  arising from, alleged to arise from, or in any
way associated with Seller's failure to comply with the terms of this Paragraph.

19. CONFIDENTIALITY.  All data, designs,  documents,  drawings,  specifications,
communications  and other  information,  revealed  or  disclosed  in any form or
manner to Seller by Buyer (whether written, oral, electronic,  visual,  graphic,
photographic,  observational,  or  otherwise),  including any documents or other
tangible items supplied,  or produced or created by Seller for Buyer  hereunder,
or any information or item provided by any Owner (collectively defined as "Buyer
Information")  are proprietary and confidential to Buyer and will be used solely
by Seller for purposes of performing this Purchase Order.  All such  Information
will be  treated  and  protected  by  Seller  as  confidential,  and will not be
disclosed to any third party without the prior written  consent of Buyer and may
be disclosed within Seller's  organization only on a need-to-know  basis.  Buyer
may  require  Seller's  employees,  contractors,   suppliers  and  other  Seller
personnel  involved  in the  performance  of this  Purchase  Order to execute an
individual  confidentiality  agreement prior to any  disclosure.  The provisions
protecting  Buyer  Information  in any  separate  confidentiality,  secrecy,  or
nondisclosure agreement heretofore executed by Seller in connection with Buyer's
or Owner's  business,  this Purchase Order, or any other contract  pertaining to
the Goods,  are hereby  expressly  incorporated  within this Purchase Order, and
these  provisions  are in addition  to such  agreement.  Upon  request of Buyer,
Seller will immediately return to Buyer any Buyer Information  provided,  either
upon demand, or upon completion of the warranty period hereunder,  including all
copies made by Seller.

20. PUBLICITY.  Seller will not publicize,  disclose,  or discuss the existence,
content, or scope (whether generalities or details) of this Purchase Order, make
any reference to Buyer or Owner (if any), the business of either, or the project
for which this Purchase Order is intended,  to any third party by any means, and
through  any  medium   (including  but  not  limited  to  marketing   materials,
advertising,  internet  or web site  references,  photographs,  articles,  press
releases  or  interviews,  speeches or  programs)  without  obtaining  the prior
written  consent of Buyer.  Seller  shall not use Buyer's,  any Owner's,  or the
project name as a reference in any manner without Buyer's express prior consent.

21. PAYMENTS, LIENS, RIGHT TO SET OFF AND BACKCHARGES. Seller agrees to keep the
project,  premises and other property of Buyer, any Owner, and any other person,
free and  clear  from any and all  claims,  liens,  restrictions,  reservations,
security interests and encumbrances  arising from this Purchase Order,  Seller's
performance or  non-performance,  or related to the Goods. To the maximum extent
allowed by law, Seller agrees to release,  defend,  indemnify, and hold harmless
the Buyer  Indemnitees  from and against any and all  laborers',  materialmen's,
mechanic's,   subcontractors,   or  any  other  liens,   claims,   restrictions,
reservations, security interests and encumbrances arising from, alleged to arise
from, or in any way arising from this Purchase  Order,  Seller's  performance or
nonperformance,  or related to the Goods. Seller agrees that any payment made by
Buyer  constitutes  trust funds  intended  for the  benefit of any  contractors,
suppliers and laborers.  At any time, if Seller fails to make any payment to any
of its  contractors,  suppliers  and  laborers,  Buyer  may  elect  to pay  such
beneficiaries  directly or by issuance of joint checks, or take any other action
required to prevent  imposition  of a lien.  Regardless  of the payment terms in
this Purchase Order, Buyer's

<PAGE>
Agreement No. CA-0006             12/29/2004 6:21 PM      Page 9 of 11 EXHIBIT 7
- Purchase Order Terms & Conditions


obligation  to pay the  purchase  price  is  conditioned  upon  (a)  receipt  of
completed,  non-defective  conforming Goods; (b) receipt and acceptance by Buyer
of Seller's accurate and properly completed invoice  accompanied by satisfactory
supporting  documentation;  and (c)  compliance  by  Seller  with all  terms and
conditions  of this Purchase  Order.  Seller agrees to pay promptly when due all
bills for labor,  material,  equipment or services in connection with the Goods.
If such bills are not promptly  paid by Seller when due,  Buyer may pay them and
Seller will immediately  reimburse Buyer therefore.  Buyer may at its discretion
set off any funds owed by Seller  against any other  amounts due to Seller under
any other contract with Buyer, Owner, or any affiliate of either.  Seller waives
all  rights  of lien  against  the  premises,  facilities,  equipment  and other
property of Buyer and any Owner. Any sums due Seller hereunder may be applied by
Buyer  as a set off  against  any  sums  owed by  Seller  to Buyer or any of its
affiliates  or against any claims of third  parties  against  Buyer arising from
Seller's performance,  breach or default,  hereunder,  whether under this or any
other  purchase  order or other  contract.  At its sole  discretion,  Buyer  may
withhold  from  payments  to be made to Seller  amounts  legally  required to be
withheld  from  such  payments  and  remitted  to the  taxing  authority  of any
jurisdiction  relevant  to the  transaction.  Upon  prior  notice to Seller  and
Seller's  failure to cure  within the period of time  contained  therein,  Buyer
reserves the right to backcharge Seller for any losses,  damages,  claims, costs
and expenses  incurred  resulting from Seller's  breach of any provision of this
Purchase Order.  Buyer may withhold or set-off any payment due under this or any
other  contract  with Seller or any of its  affiliates  in order to recover such
backcharged amounts.

22.  SUBCONTRACTORS,  SUBVENDORS AND  SUBSUPPLIERS.  Buyer reserves the right to
approve or disapprove any subcontractors,  subvendors,  or subsuppliers proposed
by Seller to be involved in Seller's implementation of or performance under this
Purchase Order. Prior to entering into this Purchase Order, Seller will submit a
listing of all such proposed  subcontractors,  subsuppliers,  or subvendors  for
review and approval by Buyer.  Seller agrees that Buyer has the right to contact
or visit any of Seller's subcontractors, subvendors, or subsuppliers directly to
confirm  delivery  commitments or the origin,  composition,  manufacture,  kind,
quantity,  or quality of any Goods  provided  thereunder.  Any approval by Buyer
will not constitute a waiver of any term or condition  hereunder,  at law, or in
equity,  nor relieve  Seller of any obligation  herein.  Seller will ensure that
terms and conditions  substantially  similar to those in this Purchase Order are
contained in any contract issued to any subcontractor,  subsupplier or subvendor
for any  goods,  materials,  equipment,  services,  work or  other  items  to be
provided  under this Purchase  Order.  Upon request,  Seller agrees to submit to
Buyer copies of any contract with any subcontractor,  subvendor,  or subsupplier
(with pricing deleted) for any item procured pertaining to this Purchase Order.

23. INTELLECTUAL  PROPERTY. If applicable to this Purchase Order, any customized
or made-to-order Goods which are first conceived,  designed, created, developed,
fabricated,  or  manufactured  by Seller  under  this  Purchase  Order  (whether
detailed or  conceptual),  and in whatever  form,  including  but not limited to
designs, manufactured items, or developed software and any and all related data,
drawings,  documents and specifications  ("Custom Goods"), are the sole property
of Buyer, or any Owner or other assignee (if so designated in the Purchase Order
or upon request of the Buyer), with title to such vesting upon identification to
this Purchase Order.  Such Custom Goods and any and all related data,  drawings,
documents,  and  specifications  will be  considered  and protected by Seller as
"Buyer  Information"  as set forth in Paragraph 19  hereunder.  Seller will turn
over all such  Custom  Goods  and any  related  data,  drawings,  documents  and
specifications to Buyer or any Owner, including copies thereof, at no additional
charge,  at the  expiration  date of the warranty  period,  or earlier as may be
requested in writing by Buyer . Any  proprietary  designs,  know-how,  software,
development  tools,  processes,  source  code,  programs,  or  systems  owned or
controlled  by  Seller  prior  to the  date of this  Purchase  Order  which  are
incorporated or embedded into the Custom Goods ("Seller Intellectual  Property")
shall remain the intellectual property of Seller, and Seller agrees to grant and
does herein  grant to Buyer and any Owner or their  assignees  a  non-exclusive,
worldwide, transferable, fully-paid and

<PAGE>
Agreement No. CA-0006               12/29/2004 6:21 PM   Page 10 of 11 EXHIBIT 7
- Purchase Order Terms & Conditions


perpetual license to use the Seller Intellectual Property in connection with use
of the Custom Goods. Except for any Seller Intellectual  Property,  Seller shall
not retain any rights to the Custom Goods, in whole or in part. Seller warrants,
represents and covenants that the design, fabrication,  manufacture, production,
sale,  distribution  and  intended  use of the Custom  Work and the Goods do not
infringe  directly or indirectly,  in whole or in part,  any patent,  copyright,
trade secret, trademark, trade name, or other intellectual property right of any
third party. Seller agrees to release,  defend, protect,  indemnify and hold the
Buyer  Indemnitees  harmless  from  and  against  any and all  costs  (including
attorney fees and court costs), expenses, fines, penalties, losses, damages, and
liabilities  arising  out of any  alleged  or actual  patent,  copyright,  trade
secret, trademark, trade name, or other intellectual property right infringement
or other claim, demand or action made by any third party arising from or related
to the design, fabrication,  manufacture,  production, sale, distribution or use
of the Goods or any Custom Goods , however Seller will not be responsible to the
extent of any negligence or fault on the part of any Buyer  Indemnitee as may be
finally determined by a court or arbitrator.  At Buyer's request,  Seller agrees
to execute such additional  documents as may be required by Buyer to confirm the
provisions of this Paragraph  including  legal title in and to the Custom Goods.
The provisions of this Paragraph 23 shall survive the  expiration,  cancellation
or termination of this Purchase Order.

24.   DOCUMENTATION  AND  RIGHT  OF  AUDIT.   Where  Seller's  invoice  includes
compensation  for work  performed at a lump sum, unit rate or for changes in the
work,  Seller will submit  Seller's  determination  of units of work  performed,
substantiated  by  documents  satisfactory  in form and  content to Buyer.  Upon
verification by Buyer of such documents,  Buyer will advise Seller in writing of
either Buyer's acceptance of Seller's  determination,  or of Buyer's alternative
determination of such units.  Where Seller's  invoices include  compensation for
work performed for a reimbursable  price, all costs,  expenses and other amounts
so invoiced will be substantiated and supported by documents satisfactory to and
verified by Buyer.  Seller will maintain for a minimum  period of five (5) years
after  final  payment  has been made to Seller  under  this  Purchase  Order all
records and accounts pertaining to work performed hereunder.  Seller agrees that
Buyer will have the right to audit, copy and inspect,  or cause to have audited,
copied and inspected,  Seller's  records and accounts  pertaining to performance
under  this  Purchase  Order  at all  reasonable  times  during  the  course  of
performance  hereunder  and for a minimum  period of five (5) years  after final
payment has been made to Seller, however,  Buyer's rights will not extend to any
components of any lump sum amounts or unit rates.

25. DEFAULT AND  TERMINATION  FOR CAUSE.  In the event of Seller's (a) actual or
anticipated  breach of or default under any  provision of this  Purchase  Order,
which has not been cured within a reasonable  time after written  notice of such
has been provided to Seller by Buyer; or (b) any  organizational  or operational
change as stated in  Paragraph 14 adversely  affecting,  or which may  adversely
affect, in Buyer's sole judgment and opinion, Seller's performance hereunder; or
(c)  any  actual  or  threatened   bankruptcy,   reorganization,   receivership,
insolvency,  making an  assignment  for the benefit of  creditors,  liquidation,
dissolution,  or other financial or  organizational  instability,  Buyer has the
right,  in addition to any rights or remedies it may have in law, in equity,  or
under this Purchase Order, to require that Seller provide acceptable documentary
or other  appropriate  assurances of performance,  including a performance bond,
letter  of  credit,  or other  type of  guarantee.  Should  Seller  be unable or
unwilling to do so, Buyer has the right to  immediately  terminate this Purchase
Order for cause by written  notice to Seller and Seller  will not be entitled to
any cancellation or termination  charge or other fee or penalty  hereunder,  nor
will Buyer be liable to pay any costs of cancellation.  In such event, Buyer may
immediately take possession of all or any portion of the Goods,  subject only to
an  obligation  to  equitably  compensate  Seller  for same,  including  for any
payments  made by Seller  for  materials  or other work  incorporated  into such
Goods.  Upon  termination  by Buyer as a result of Seller's  default  hereunder,
Seller will be liable to and will  immediately  pay or  reimburse  Buyer for all
reasonable  costs of any  nature  which  may be  incurred  by Buyer to cover any
losses or expenses related to such default and to effect completion of



<PAGE>
Agreement No. CA-0006              12/29/2004 6:21 PM    Page 11 of 11 EXHIBIT 7
- Purchase Order Terms & Conditions


performance  of this  Purchase  Order,  and if  Buyer  does  not  elect  to take
possession  of any portion of the Goods,  Seller  shall also refund to Buyer any
payments  made  to  Seller  for  design  or  other  work  and  materials  to  be
incorporated  into the  Goods.  26.  SITEWORK.  If Seller  performs  any work or
services on site related to this Purchase Order or the Goods provided hereunder,
Buyer's  On-Site  Services  Terms and  Conditions  will apply in addition to the
provisions of this Purchase  Order,  and are attached to and fully  incorporated
herein.

27.  CLAIMS AND  DISPUTE  RESOLUTION.  Seller will submit any claims or disputes
arising  under this  Purchase  Order to Buyer in writing  prior to Buyer  making
final  payment.  Buyer's  obligation to make final payment is  conditioned  upon
Seller's  settlement  and release of all claims or disputes.  Seller agrees that
its  failure  to submit  any  claims or  disputes  in  writing by such time will
constitute  an express  waiver by Seller of any legal or  equitable  rights with
respect  to the  subject  matter  of the  claim or  dispute.  For any  claims or
disputes  arising  under this Purchase  Order,  the parties agree to exert their
best  efforts  in good  faith  to try to  resolve  such  issues  through  direct
negotiation between  management.  Seller agrees that any such issues that cannot
be  resolved  through  direct  negotiation  within  a  reasonable  time  will be
submitted to binding arbitration.  Arbitration  proceedings will be conducted by
the American Arbitration  Association ("AAA") in Houston, Texas, before a single
arbitrator,  in accordance with the AAA Commercial  Rules and  Procedures.  Each
party  will  bear  its  own  expenses  in  any  dispute  resolution  process  or
proceeding.  Notwithstanding the existence,  filing, or pendency of any claim or
dispute  under  this  Purchase  Order or with Buyer or any  Owner,  Seller  will
continue to fully perform its obligations  hereunder and will not cease or delay
performance,  fabrication or fail to make any shipment pending resolution of any
claim  or  dispute.  Any  award  of  the  arbitrator  may  be  enforced  in  any
jurisdiction.
































<PAGE>






                                    EXHIBIT 8
                        Notice of KBR Invoice Procedures


<PAGE>

Agreement No. CA-00062                12/29/2004 6:49 PM            Page 1 of 1
EXHIBIT 8 - Notice of KBR Invoice Procedures

                                    EXHIBIT 8
                        NOTICE OF KBR INVOICE PROCEDURES



--------------------------------------------------------------------------------
 IMPORTANT! FAILURE TO FOLLOW THESE PROCEDURES MAY RESULT IN A DELAY OF PAYMENT
                   OR RETURN OF THE INVOICE TO THE SUBMITTER
--------------------------------------------------------------------------------


                 ALL INVOICES MUST BE ADDRESSED & DELIVERED TO:

                -------------------------------------------------
                    Kellogg Brown & Root Services, Inc. Attn:
                           Procurement - Kevin Shriner
                                 P.O. Box 12366
                            Arlington, VA 22219-2366
                -------------------------------------------------

 TO RECEIVE YOUR INVOICE MONIES YOU MUST INCLUDE THE FOLLOWING ON ALL INVOICES:

__       COMPANY NAME: MachineTalker, Inc.

__       VENDOR No.: (Applied for, Contact your SCA prior to first invoice)

__       FULL CONTRACT No. :CA-00062

         *Invoices  shall  also  reference  as   appropriate:   Invoice  number,
         percentage of work complete,  identify invoice as a "progress payment",
         quantities shipped, descriptions, tag numbers, and pricing.

 IMPORTANT NOTES:

You must send invoices to the above  address in the above  format.  All invoices
sent to the  Project  Manager or work site,  or to the  address  below,  will be
returned!  Invoices  that do not include the above  listed  information  will be
returned!

KBR will not consider an invoice as properly  delivered  for payment  processing
unless submitted to the above address. Invoices shall not delivered to any other
address  or  location,  or  given  to  another  KBR  representative,  except  as
understood by the subcontractor/vendor that they do so at their own risk of loss
to the invoice.

KBR will not consider an invoice as properly  delivered  for payment  processing
unless it includes on its face: The Company Name, The Company's Vendor No.:, The
Work  Release  No.:,  and as  applicable,  Invoice  number,  percentage  of work
complete,  identify  invoice  as  a  "progress  payment",   quantities  shipped,
descriptions, tag numbers, and pricing.

KBR will  consider  the date the  invoice is  physically  received  at the above
address as the official date of receipt to compute the payment due date.

Please contact the below  immediately if your current  invoicing system will not
support the above  requirements.  Questions  concerning these invoice processing
procedures may be directed to:

                     [DO NOT SEND IN VOICES TO THIS ADDRESS]
                    Kellogg Brown & Root Services, Inc. ATTN:
                     Procurement - Kevin Shriner 1550 Wilson
                 Boulevard, Suite 400 Arlington, Virginia 22209
                      E-mail: Kevin.Shriner@Halliburton.com