Document:

<PAGE>

                                                                    Exhibit 10.6
<TABLE>
====================================================================================================================================
                                                                                       CONTRACT ID CODE        PAGE OF PAGES
       AMENDMENT  OF  SOLICITATION MODIFICATION OF CONTRACT                                                       1     2
------------------------------------------------------------------------------------------------------------------------------------

2.  AMENDMENT/MODIFICATION NO.           3.   EFFECTIVE DATE        4.  REQUISITION/PURCHASE REQ. NO. 5. PROJECT NO. (If applicable]
               P00009                            See Blk 16c                   0008-01
<S>                                      <C>                        <C>                               <C>
------------------------------------------------------------------------------------------------------------------------------------
6. ISSUED BY                     CODE                               7. ADMINISTERED BY (If other than Item 6)   CODE
                                          -------------------                                                          -------------
Office of Special Technology                                        DCMC
10530 Riverview Road                                                West Region
Fort Washington, MD 20744
                                                                    Approved for form and legality  DBH
                                                                                                    ---
------------------------------------------------------------------------------------------------------------------------------------
8. NAME AND ADDRESS OF CONTRACTOR (No., street, country, State and ZIP Code)             9A. AMENDMENT OF SOLICITATION NO.
                                                                                    (X)
                                                                                    ---
                                                                                         -------------------------------------------

Irvine Sensors Corporation
3001 Redhill Avenue, Building 3                                                          9B. DATED (SEE ITEM 11)
Costa Mesa,                                                                              -------------------------------------------
                                                                                         10A. MODIFICATION OF CONTRACT/ORDER
                                                                                              NO.

                                                                                    X               N39998-97-C-5201

-----------------------------------------------------------------------------------      10B. DATED (SEE ITEM 13)
CODE                                           FACILITY CODE                                        31  December 1996
------------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------------
                                     11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS
------------------------------------------------------------------------------------------------------------------------------------

[_]   The above numbered solicitation is amended as set forth in Item 14. The hour and date specified for receipt of Offers [_] is
      extended, [_] is not extended.

Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended, by one of
the following methods:

(a) By completing Items 8 and 15, and returning _______________ copies of the amendment; (b) By acknowledging receipt of this
amendment on each copy of the offer submitted; or (c) By separate letter or telegram which includes a reference to the solicitation
and amendment numbers. FAILURE OF YOUR ACKNOWLEDGMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE
HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already
submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and
this amendment, and is received prior to the opening hour and date specified.

------------------------------------------------------------------------------------------------------------------------------------
12. ACCOUNTING AND APPROPRIATION DATA (If required) N/A
------------------------------------------------------------------------------------------------------------------------------------
              13. THIS ITEM APPLIES ONLY TO MODIFICATIONS OF CONTRACTS/ORDERS, IT MODIFIES THE CONTRACT/ORDER NO. AS
                  DESCRIBED IN ITEM 14 .

------------------------------------------------------------------------------------------------------------------------------------
 (X)   A. THIS CHANGE ORDER IS ISSUED PURSUANT TO: (Specify authority) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE
          CONTRACT ORDER NO. IN ITEM 10A.
------------------------------------------------------------------------------------------------------------------------------------
       B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office,
          appropriation date, etc.) SET FORTH IN ITEM 14, PURSUANT TO THE AUTHORITY OF FAR 43.103 (b).
------------------------------------------------------------------------------------------------------------------------------------
       C. THIS SUPPLEMENTAK AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OF:

------------------------------------------------------------------------------------------------------------------------------------
  X    D. OTHER (Specify type of modification and authority) Per contractor's letter dated 10 October 2000
------------------------------------------------------------------------------------------------------------------------------------
E.   IMPORTANT: Contractor [X] is not, [_] is required to sign this document and return _____________ copies to the issuing office.
------------------------------------------------------------------------------------------------------------------------------------
14.  DESCRIPTION OF AMENDMENT/MODIFICATION (Organized by UCF section headings, including solicitation/contract subject matter where
     feasible.)

See Page 2

Except as provided herein, all terms and conditions of the document referenced in Item 9A or 10A, as heretofore changed, remains
unchanged and in full force and effect.

------------------------------------------------------------------------------------------------------------------------------------
15A. NAME AND TITLE OF SIGNER (Type of print)                         16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print)

                                                                      Darlene Abel
------------------------------------------------------------------------------------------------------------------------------------
15B. CONTRACTOR/OFFEROR                           15C. DATE SIGNED    16B. UNITED STATES OF AMERICA           16C.  DATE SIGNED

                                                                      BY      /s/ Darlene M. Abel                  10/23/00
     ____________________________________________                        -----------------------------------
        (Signature of person authorized to sign                            (Signature of Contracting Officer)
====================================================================================================================================

NSN 7540-01-152-8070            30-105             STANDARD FORM 30 (REV. 10-83)
PREVIOUS EDITION UNUSABLE                          Prescribed by GSA
                                                   FAR (48 CFR) 53.243
</TABLE>
<PAGE>

                                                             N39998-97-C-5201
                                                                       P00009
                                                                  Page 2 of 2

The purpose of this modification is to add a DD 254 and to extend the period of
performance to contract N39998-97-C-5201 at no additional cost to the
government. Accordingly, the following applies:

1.   Under Section F, DELIVERIES/PERFORMANCE, the following is modified:

     The period of performance for CLINs 0007 and 0008 are hereby extended from
     01 December 2000 to 01 March 2001.

2.   Under Section J, LIST OF ATTACHMENTS, the following now applies:

     the DD 254, attachment I, hereto, now applies to this contract.

ALL OTHER TERMS AND CONDITIONS OF CONTRACT N39998-97-C-5201 REMAIN UNCHANGED.
<PAGE>

<TABLE>
<S>                                                                           <C>
------------------------------------------------------------------------------------------------------------------------------------
                           DEPARTMENT OF DEFENSE                              1.      CLEARANCE AND SAFEGUARDING
                                                                              ------------------------------------------------------
                                                                              a.      FACILITY CLEARANCE REQUIRED
              CONTRACT SECURITY CLASSIFICATION SPECIFICATION                  TOP SECRET
                                                                              ------------------------------------------------------
        (The requirements of DoD Industrial Security Manual apply             b.      LEVEL OF SAFEGUARDING REQUIRED
                to all security aspects of this effort.)                      SECRET
------------------------------------------------------------------------------------------------------------------------------------
2.   THIS SPECIFICATION IS FOR: (X and complete as applicable)        3.  THIS SPECIFICATION IS: (X and complete as applicable)
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                     Date (YYYYMMDD)
X     a. PRIME CONTRACT NUMBER                                            a.   ORIGINAL (Complete date in all cases) 1997-03-10
      N39998-97-C-5201         EXPIRES 010301
------------------------------------------------------------------------------------------------------------------------------------
      b. SUBCONTRACT NUMBER                                           X   b.   REVISED (Supersedes    Revision No.   Date (YYYYMMDD)
                                                                               all previous specs)    04             2000-10-27
------------------------------------------------------------------------------------------------------------------------------------
      c. SOLICITATION OR OTHER NUMBER            Due Date (YYYYMMDD)      c.   FINAL (Complete Item 5 in all cases)  Date (YYYYMMDD)

------------------------------------------------------------------------------------------------------------------------------------

4.   IS THIS A FOLLOW-ON CONTRACT?      [_] YES          [X] NO. If YES, complete the following:

     Classified material received or generated under___________________________      (Preceding Contract Number) is transferred to
                                                                                       this follow-on contract.
------------------------------------------------------------------------------------------------------------------------------------

5.  IS THIS A FINAL DD FORM 254?        [_] YES          [X] NO. If YES, complete the following:

   In response to the contractor's request dated____________, retention of the identified classified material is authorized for the
   period of_________________________
------------------------------------------------------------------------------------------------------------------------------------
6.   CONTRACTOR  (Include Commercial and Government Entity (CAGE) Code)
------------------------------------------------------------------------------------------------------------------------------------
a.   NAME, ADDRESS, AND ZIP CODE                             b.   CAGE CODE    c.   COGNIZANT SECURITY OFFICE (Name, Address,
                                                                                                               and Zip  Code)
IRVINE SENSORS CORPORATION                                                     SOUTHERN CALIFORNIA OPERATING LOCATION
3001 RED HILL AVENUE                                                           DEFENSE SECURITY SERVICE
BLDG 3                                                            54266        ONE WORLD TRADE CENTER, SUITE 622
COSTA MESA, CA 92626                                                           LONG BEACH, CA 90831-0622
-----------------------------------------------------------------------------------------------------------------------------------
7. SUBCONTRACTOR
-----------------------------------------------------------------------------------------------------------------------------------
a. NAME, ADDRESS, AND ZIP CODE                               b.   CAGE CODE    c.   COGNIZANT SECURITY OFFICE (Name, Address,
                                                                                                                and zip Code)

------------------------------------------------------------------------------------------------------------------------------------
8. ACTUAL PERFORMANCE
------------------------------------------------------------------------------------------------------------------------------------
a.  LOCATION                                                 b.   CAGE CODES    c.  COGNIZANT SECURITY OFFICE (Name, Address,
                                                                                                                and Zip Code)
Same as block 6a                                                  54266           Same as block 6c

------------------------------------------------------------------------------------------------------------------------------------
9.   GENERAL IDENTIFICATION OF THIS PROCUREMENT
ULTRA COMPACT CAMERA SYSTEM

------------------------------------------------------------------------------------------------------------------------------------

10.  THIS CONTRACT WILL REQUIRE ACCESS TO:                  YES   NO    11. IN PERFORMING THIS CONTRACT, THE CONTRACTOR WILL: YES NO
------------------------------------------------------------------------------------------------------------------------------------
a.   COMMUNICATIONS SECURITY (COMSEC) INFORMATION                 X     a.  HAVE ACCESS TO CLASSIFIED INFORMATION ONLY AT
                                                                            ANOTHER CONTRACTOR'S FACILITY OR A GOVERNMENT
                                                                            ACTIVITY                                              X
------------------------------------------------------------------------------------------------------------------------------------
b. RESTRICTED DATA                                                X     b.  RECEIVE CLASSIFIED DOCUMENTS ONLY                     X
------------------------------------------------------------------------------------------------------------------------------------
c. CRITICAL NUCLEAR WEAPON DESIGN INFORMATION                     X     c.  RECEIVE AND GENERATE CLASSIFIED MATERIAL          X
------------------------------------------------------------------------------------------------------------------------------------
d. FORMERLY RESTRICTED DATA                                       X     d.  FABRICATE, MODIFY, OR STORE CLASSIFIED HARDWARE       X
------------------------------------------------------------------------------------------------------------------------------------
e. INTELLIGENCE INFORMATION:                                            e.  PERFORM SERVICES ONLY                                 X
------------------------------------------------------------------------------------------------------------------------------------
   (1) Sensitive Compartmented Information (SCI)                  X     f.  HAVE ACCESS TO U.S. CLASSIFIED INFORMATION
                                                                            OUTSIDE THE U.S., PUERTO RICO, U.S.
                                                                            POSSESSIONS AND TRUST TERRITORIES                     X
------------------------------------------------------------------------------------------------------------------------------------
   (2) Non-SCI                                                    X     g.  BE AUTHORIZED TO USE THE SERVICES OF DEFENSE
                                                                            TECHNICAL INFORMATION CENTER (DTIC) OR OTHER
                                                                            SECONDARY DISTRIBUTION CENTER                         X
------------------------------------------------------------------------------------------------------------------------------------
f. SPECIAL ACCESS INFORMATION                                     X     h.  REQUIRE A COMSEC ACCOUNT                              X
------------------------------------------------------------------------------------------------------------------------------------
g. NATO INFORMATION                                               X     i.  HAVE TEMPEST REQUIREMENTS                         X
------------------------------------------------------------------------------------------------------------------------------------
h. FOREIGN GOVERNMENT INFORMATION                                 X     j.  HAVE OPERATIONS SECURITY (OPSEC) REQUIREMENTS         X
------------------------------------------------------------------------------------------------------------------------------------
i. LIMITED DISSEMINATION INFORMATION                              X     k.  BE AUTHORIZED TO USE THE DEFENSE COURIER SERVICE      X
------------------------------------------------------------------------------------------------------------------------------------
j. FOR OFFICIAL USE ONLY INFORMATION                         X          l.  OTHER (Specify)                                       X
------------------------------------------------------------------------------------------------------------------------------------
k. OTHER (specify)                                                X
------------------------------------------------------------------------------------------------------------------------------------
DD Form 254, DEC 90                    Previous editions are obsolete                    S/N 0102-LF-011-5800                805/340
</TABLE>

                                                               Page 1 of 2 Pages

<PAGE>

================================================================================
12. PUBLIC RELEASE. Any information (classified or unclassified) pertaining to
    this contract shall not be released for public dissemination except as
    provided by the Industrial Security Manual or unless it has been approved
    for public release by appropriate U.S. Government authority. Proposed public
    releases shall be submitted for approval prior to release

    [_] Direct   [X] Through (Specify)

NO PUBLIC DISCLOSURE IS AUTHORIZED UNLESS APPROVED BY THE GOVERNMENT PROGRAM
MANAGER AND SPONSOR.

    to the Directorate for Freedom of information and Security Review, Office of
    the Assistant Secretary of Defense (Public Affairs)* for review.
================================================================================
13. SECURITY GUIDANCE. The security classification guidance needed for this
    classified effort is identified below. If any difficulty is encountered in
    applying this guidance or if any other contributing factor indicates a need
    for changes in this guidance, the contractor is authorized and encouraged to
    provide recommended changes; to challenge the guidance or the classification
    assigned to any information or material furnished or generated under this
    contract; and to submit any questions for interpretation of this guidance to
    the official identified below. Pending final decision, the information
    involved shall be handled and protected at the highest level of
    classification assigned or recommended. (Fill in as appropriate for the
    classified effort. Attach, or forward under separate correspondence, any
    documentation/guides/extracts referenced herein. Add additional pages as
    needed to provide complete guidance.)
Item 10j, 11c and 11j: Security guidance for this contract is provided in the
National Industrial Security Program Operating Manual (NISPOM). All classified
material received or generated under this contract must be either destroyed or
forwarded to the sponsor or government program manager (at their discretion).

A SECRET security clearance is required for personnel performing the classified
portion of this contract. Visit Authorization Letters (VALs) will be certified
by the Contracting Officers Representative/Program Manager when there is no
classified contractural relationship between the parties.

Security classification guidance will be provided by the Program Manager and/or
Sponsor.

Contact Doug Gemi at Office of Special Technology (OST) (301) 203-2672 if you
have any contract security questions.

================================================================================
14. ADDITIONAL SECURITY REQUIREMENTS. Requirements, in addition to ISM
    requirements, are established for this contract. (If yes, identify the
    pertinent contractual clauses in the contract document itself, or provide an
    appropriate statement which identifies the additional requirements. Provide
    a copy of the requirements to the cognizant security office. Use Item 13 if
    additional space is needed.)
                                                 [_] Yes   [X] No

================================================================================
15. INSPECTIONS. Elements of this contract are outside the inspection
    responsibility of the cognizant security office. (If Yes, explain and
    identify specific areas elements carved out and the activity responsible for
    inspections. Use Item 13 if additional space is needed.)
                                                 [_] Yes   [X] No

================================================================================
16. CERTIFICATION AND SIGNATURE. Security requirements stated herein are
    complete and adequate for safeguarding the classified information to be
    released or generated under this classified effort. All questions shall be
    referred to the official name below.
--------------------------------------------------------------------------------
<TABLE>
<S>                                     <C>                      <C>
a.  TYPED NAME OF CERTIFYING OFFICIAL   b. TITLE                 c.  TELEPHONE (Include Area Code)

GORDON D. PAULY                         DIRECTOR OF SECURITY     (301) 203-2607
</TABLE>
--------------------------------------------------------------------------------
d.  ADDRESS (Include Zip Code)          17. REQUIRED DISTRIBUTION
Office of Special Technology            [X] a. CONTRACTOR
10530 Riverview Road                    [_] b. SUBCONTRACTOR
Ft. Washington, MD 20744                [X] C. COGNIZANT SECURITY OFFICE FOR
                                               PRIME AND SUBCONTRACTOR
                                        [_] d. U.S. ACTIVITY RESPONSIBLE FOR
                                               OVERSEAS SECURITY ADMINISTRATION
e. SIGNATURE                            [X] e. ADMINISTRATIVE CONTRACTING
                                               OFFICER
/s/ [ILLEGIBLE]                         [X] f. OTHERS AS NECESSARY
================================================================================

                                                               Page 2 of 2 Pages
<PAGE>

<TABLE>
====================================================================================================================================
                                                                                       CONTRACT ID CODE        PAGE OF PAGES
          AMENDMENT  OF  SOLICITATION    /MODIFICATION OF CONTRACT                                               1      2
------------------------------------------------------------------------------------------------------------------------------------
<S>                                       <C>                       <C>                                  <C>
2.  AMENDMENT/MODIFICATION NO.            3.   EFFECTIVE DATE       4.  REQUISITION/PURCHASE REQ. NO. 5. PROJECT NO. (If applicable)
               P00008                           See Blk 16c
------------------------------------------------------------------------------------------------------------------------------------
6. ISSUED BY                     CODE                               7. ADMINISTERED BY (If other than Item 6)   CODE
                                          -------------------                                                          -------------
Office of Special Technology                                        DCMC
10530 Riverview Road                                                West Region
Fort Washington, MD 20744
                                                                    Approved for form and legality  /s/ DBH.
                                                                                                    --------
------------------------------------------------------------------------------------------------------------------------------------
8. NAME AND ADDRESS OF CONTRACTOR (No., street, country, State and ZIP Code)        (X)  9A. AMENDMENT OF SOLICITATION NO.
                                                                                    ---
                                                                                        --------------------------------------------
Irvine Sensors Corporation                                                              9B. DATED (SEE ITEM 11)
3001 Redhill Avenue, Building 3
Costa Mesa, California 92626                                                            --------------------------------------------
                                                                                         10A. MODIFICATION OF CONTRACT/ORDER
                                                                                              NO.

                                                                                    X               N39998-97-C-5201
                                                                                        --------------------------------------------
-----------------------------------------------------------------------------------      10B. DATED (SEE ITEM 13)
CODE                                           FACILITY CODE                                        31  December 1996
------------------------------------------------------------------------------------------------------------------------------------
                                    11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS
------------------------------------------------------------------------------------------------------------------------------------
[_]   The above numbered solicitation is amended as set forth in Item 14. The hour and date specified for receipt of Offers [_] is
extended, [_] is not extended.

Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended, by one of
the following methods:

(a) By completing Items 8 and 15, and returning _______________ copies of the amendment; (b) By acknowledging receipt of this
amendment on each copy of the offer submitted; or (c) By separate letter or telegram which includes a reference to the solicitation
and amendment numbers. FAILURE OF YOUR ACKNOWLEDGMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE
HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already
submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and
this amendment, and is received prior to the opening hour and date specified.
------------------------------------------------------------------------------------------------------------------------------------
12. ACCOUNTING AND APPROPRIATION DATA (If required)
N/A
------------------------------------------------------------------------------------------------------------------------------------
                 13.  THIS ITEM APPLIES ONLY TO MODIFICATIONS OF CONTRACTS/ORDERS, IT
                      MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14.
------------------------------------------------------------------------------------------------------------------------------------
 (X)     A. THIS CHANGE ORDER IS ISSUED PURSUANT TO: (Specify authority) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT
-----       ORDER NO. IN ITEM 10A.
------------------------------------------------------------------------------------------------------------------------------------
  X      B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office,
            appropriation date, etc.) SET FORTH IN ITEM 14, PURSUANT TO THE AUTHORITY OF FAR 43.103 (b).
------------------------------------------------------------------------------------------------------------------------------------
         C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORTY OF:
------------------------------------------------------------------------------------------------------------------------------------
         D. OTHER (Specify type of modification and authority)
------------------------------------------------------------------------------------------------------------------------------------
E.   IMPORTANT: Contractor [X] is not, [_] is required to sign this document and return _____________ copies to the issuing office.
------------------------------------------------------------------------------------------------------------------------------------
14.  DESCRIPTION OF AMENDMENT/MODIFICATION (Organized by UCF section headings, including solicitation/contract subject matter where
     feasible.)

See Page 2

Except as provided herein, all terms and conditions of the document referenced in Item 9A or 10A, as heretofore changed, remains
unchanged and in full force and effect.

------------------------------------------------------------------------------------------------------------------------------------
15A. NAME AND TITLE OF SIGNER (Type or print)                         16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print)

                                                                      Kathleen C. Maggio
------------------------------------------------------------------------------------------------------------------------------------
15B. CONTRACTOR/OFFEROR                           15C. DATE SIGNED    16B. UNITED STATES OF AMERICA           16C.  DATE SIGNED

                                                                      BY     /s/ Kathleen C. Maggio                16 March 00
     ____________________________________________                        -----------------------------------
        (Signature of person authorized to sign                            (Signature of Contracting Officer)
====================================================================================================================================
</TABLE>

NSN 7540-01-152-8070            30-105             STANDARD FORM 30 (REV. 10-83)
PREVIOUS EDITION UNUSABLE                          Prescribed by GSA
                                                   FAR (48 CFR) 53.243

<PAGE>

                                                                N39998-97-C-5201
                                                                          P00008
                                                                     Page 2 of 2

The purpose of this modification is to add a current DD 254 to contract
N39998-97-C-5201. Accordingly, the following applies:

1         Under Section J, LIST OF ATTACHMENTS, the following now applies:

          DD254, Attachment I, hereto, now applies to this contract.

ALL OTHER TERMS AND CONDITIONS OF CONTRACT N39998-97-C-5201 REMAIN UNCHANGED.
<PAGE>

<TABLE>
------------------------------------------------------------------------------------------------------------------------------------
AMENDMENT OF SOLICITATION MODIFICATION OF CONTRACT     1. CONTRACT ID CODE           PAGE OF PAGES
                                                                                       1       2
------------------------------------------------------------------------------------------------------------------------------------
<S>                            <C>                 <C>                                     <C>
2. AMENDMENT/MODIFICATION NO.  3. EFFECTIVE DATE   4. REQUISITION/PURCHASE REQ. NO.        5. PROJECT NO. (If applicable)
               P00007               See Blk 16c                  0070-00
------------------------------------------------------------------------------------------------------------------------------------
6. ISSUED BY               CODE                    7. ADMINISTERED BY (If other than Item 6)        CODE
                               ------------------                                                        ---------------------------
Office of Special Technology                       DCMC
10530 Riverview Road                               West Region
Fort Washington, MD 20744
                                                   Approved for form and legality DBH
                                                                                  ---
------------------------------------------------------------------------------------------------------------------------------------
8. NAME AND ADDRESS OF CONTRACTOR (No., street, country, State and ZIP Code)    [X]  9A. AMENDMENT OF SOLICITATION NO.
                                                                                ---
                                                                                     -----------------------------------------------
Irvine Sensors Corporation
Costa Mesa, CA 92626                                                                  9B. DATED (SEE ITEM 11)

                                                                                     -----------------------------------------------
                                                                                      10A. MODIFICATION OF CONTRACT/ORDER
                                                                                           NO.

                                                                                 X                 N39998-97-C-5201

                                                                                     -----------------------------------------------
                                                                                      10B. DATED (SEE ITEM 13)
------------------------------------------------------------------------------                    31 December 1996
CODE                          FACILITY CODE
------------------------------------------------------------------------------------------------------------------------------------
                                     11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS
------------------------------------------------------------------------------------------------------------------------------------
[_] The above numbered solicitation is amended as set forth in item 14. The hour and date specified for receipt of Offers
[_] is extended,  [_] is not extended.
Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended, by one of
the following methods:
(2) By completing items 8 and 15, and returning _______________ copies of the amendment; (b) By acknowledging receipt of this
amendment on each copy of the offer submitted; or (c) By separate letter or telegram which includes a reference to the solicitation
and amendment numbers. FAILURE OF YOUR ACKNOWLEDGEMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE
HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already
submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and
this amendment, and is received prior to the opening hour and date specified.
------------------------------------------------------------------------------------------------------------------------------------
12. ACCOUNTING AND APPROPRIATION DATA (If required)
See Attached Financial Accounting Data Sheet
------------------------------------------------------------------------------------------------------------------------------------
                                 13. THIS ITEM APPLIES ONLY TO MODIFICATIONS OF CONTRACTS/ORDERS,
                                     IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14.
------------------------------------------------------------------------------------------------------------------------------------
[X]  A. THIS CHANGE ORDER IS ISSUED PURSUANT TO: (Specify authority) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER
        NO. IN ITEM 10A.
------------------------------------------------------------------------------------------------------------------------------------
     B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office,
        appropriation date, etc.) SET FORTH IN ITEM 14, PURSUANT TO THE AUTHORITY OF FAR 43,103(b)
------------------------------------------------------------------------------------------------------------------------------------
     C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OF:
------------------------------------------------------------------------------------------------------------------------------------
 X   D. OTHER (Specify type of modification and authority)
         Mutual Agreement
------------------------------------------------------------------------------------------------------------------------------------
E.  IMPORTANT: Contractor [_] is not, [X] is required to sign this document and return     2       copies to the issuing office.
                                                                                      ------------
------------------------------------------------------------------------------------------------------------------------------------
14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organized by UCF section headings, including solicitation contract subject matter where
feasible.)

See Page 2

Except as provided herein, all terms and conditions of the document referenced in Item 9A or 10A, as heretofore changed, remains
unchanged and in full force and effect.
------------------------------------------------------------------------------------------------------------------------------------
15A. NAME AND TITLE OF SIGNER (Type or print)                           16A. NAME AND TITLE OF CONTRACTING OFFICER  (Type or print)
     JOHN J. STUART, JR.
     CHIEF FINANCIAL OFFICER                                                 Kathleen C. Maggio
------------------------------------------------------------------------------------------------------------------------------------
15B. CONTRACTOR/OFFEROR                      15C. DATE SIGNED           16B. UNITED STATES OF AMERICA            16C. DATE SIGNED
     IRVINE SENSORS CORPORATION
     /s/ John J. Stuart, Jr.                                                 BY: /s/ Kathleen C. Maggio
  ----------------------------------------                                   ----------------------------------
  (Signature of person authorized to sign)     8 MAR 00                      (Signature of Contracting officer)    09 March 2000
------------------------------------------------------------------------------------------------------------------------------------
NSN 7540-152-8070                                              30-105                          STANDARD FORM 30 (REV. 10-83)
PREVIOUS EDITION UNUSABLE                                                                      Prescribed by GSA
                                                                                               FAR (48 CFR) 53.243
</TABLE>
<PAGE>

The purpose of this modification to contract N39998-97-C-5201 is to provide for
an increase in scope. Accordingly, the following applies:

 1.  Under Section B, SUPPLIES/SERVICES AND PRICES/COSTS. CLINs 0007 and 0008
     are added to the contract:

     Item           Description                        Amount
     ----           -----------                        ------
     0007           Compact LWIR Camera                $757.288

                         Total Estimated Cost:                $679.211
                         Total Estimated FCCM:                $ 27.662
                         Total Estimated Fixed Fee:           $ 50.415
                         Total CPFF:                          $757.288

     0008           Data Support of CLIN 0007        NSP

PAYMENT OF FIXED FEE: The Government shall make payments on account of the
fixed fee equal to 7.42% of the amount of each invoice (less FCCM) submitted by
the contractor under the Clauses entitled "Allowable Cost and Payment." FAR
52.126-7 and "Fixed Fee." 52.216-8 of the General Clauses hereto, subject to the
withholding provisions of paragraph (b) of FAR 52.216-8 provided that the total
of all such payments shall not exceed 85 percent of the fixed fee. Any balance
of fixed fee shall be paid to the contractor or any overpayment of fixed fee
shall be refunded by the contractor or credited to the Government at the time of
final payment.

2.   Under Section C, DESCRIPTION/WORK STATEMENT, the following applies:

     CLIN 0007 shall be performed in accordance with the Statement of Work,
     attachment II, hereto. CLIN 0008 shall be performed in accordance with
     the Contract Data Requirements List, (CDRL), DD Form 1423, exhibit A,
     hereto.

3.   Under Section F, DELIVERIES/PERFORMANCE, following applies:

     The period of performance and all deliveries for CLINs 0007 and 0008 shall
     be completed by 01 December 2000.

4.   Under Section G, CONTRACT ADMINISTRATION, clause G-7. Accounting and
     Appropriation Data, the following statement is added:

     The Financial Accounting Data Sheet, attachment I, hereto, now applies to
     CLINs 0007 and 0008.

5.   Under Section I, CLAUSES, the following clauses pertain only to this
     increase in scope:
<PAGE>

                                                                   Page __ of __

<TABLE>
<CAPTION>
CONTRACT NO.: N39998-97-C-5201              CONTRACT MOD. NO.: P00007
              ------------------------                         -----------------
CONTRACTOR: IRVINE SENSORS                  TASK ORDER NO.:_____________________          TASK MOD. NO.:_______________________
            --------------------------
-------------------------------------------------------------------------------------------------------------------------------
TO     CLIN     ACRN     APPN      SUB     O/C     BCN     SA      AAA     TT      PAA      COST CODE      CSS        AMOUNT
-------------------------------------------------------------------------------------------------------------------------------
<S>   <C>       <C>    <C>        <C>      <C>    <C>      <C>   <C>       <C>   <C>       <C>             <C>   <C>
      07-08      AB    1701319    F4KW     000    39998    0     068941    2D    000000    A900YH204230          $   757,288.00
-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------------

Obligation of funds is authorized in the amounts shown in the amount column above              GRAND TOTAL       $   752,298.00
                                                                                                                 ==============
</TABLE>

SIGNATURE: /s/ [ILLEGIBLE]                       DATE: 7 March 2000
           ------------------------------              ------------
<PAGE>

===============================================================================
CONTRACT DATA REQUIREMENTS LIST                           Form Approved
                                                     OMB No ? 704-0188
--------------------------------------------------------------------------------
Public reporting burden for this collection of information estimated to average
110 hours per response, including the ? reviewing instructions, searching
existing data sources, gathering and maintaining data needed, and completing and
reviewing the collection of information. Send comments regarding this burden
estimate or any other aspect of this collection of information, including
suggestions for reducing this burden, to Washington Headquarters Services,
Directorate for Information Operations and Reports, 1215 Jefferson Davis
Highway, Suite 1204, Arlington, VA 22202-4302, and to the Office of Management
and Budget. Paperwork Reduction Project (0704-0188), Washington, DC 20503.

<TABLE>
------------------------------------------------------------------------------------------------------------------
A. CONTRACT LINE ITEM          B. EXHIBIT                         C. CATEGORY:
NO.                                                               TDP_____ TM_____ OTHER__________
------------------------------------------------------------------------------------------------------------------
<S>                            <C>                                <C>
D. SYSTEM/ITEM                                 E. CONTRACT/PR NO.          F. CONTRACTOR
LWIR Camera                                    N39998-97-C-5201            Irvine Sensors Corp
------------------------------------------------------------------------------------------------------------------  ===============
1. DATA ITEM NO.    2. TITLE OF DATA ITEM                                  3. SUBTITLE                               17. PRICE
A001                Monthly Status Reports                                 Monthly Status Report                     GROUP
------------------------------------------------------------------------------------------------------------------  ---------------
4. AUTHORITY (Data Acquisition Document No.)   5. CONTRACT REFERENCE                      6. REQUIRING OFFICE        18.
DI-MGMT-80227                                  SOW para 7                                   OST                      ESTIMATED
------------------------------------------------------------------------------------------------------------------        TOTAL
7. .DD 250 REQ        9. DIST STATEMENT   10. FREQUENCY      12. DATE OF FIRST SUBMISSION   14. DISTRIBUTION
LT                       REQUIRED         MTHLY             See Block 16                  -------------------------  ===============
---------------                        --------------------------------------------------     a.       b. COPIES
8. APP CODE                       B      11. AS OF DATE     13. DATE OF SUBSEQUENT         ADDRESSEE --------------
                                         See Block 16       SUBMISSION SEE BLOCK                     DRAFT FINAL
                                                           16                                             REG  REP
------------------------------------------------------------------------------------------------------------------
16. REMARKS                                                                               OST              1
                                                                                         -------------------------
15 days after beginning of first full month of task, monthly
thereafter, prefer in electronic format.                                                 -------------------------
                                                                                         -------------------------
                                                                                          15. TOTAL---     1
------------------------------------------------------------------------------------------------------------------  ===============
1. DATA ITEM NO.    2. TITLE OF DATA ITEM                                  3. SUBTITLE                               17. PRICE
A002                Technical Reports-Final Report                                                                   GROUP
------------------------------------------------------------------------------------------------------------------  ---------------
4. AUTHORITY (Data Acquisition Document No.)   5. CONTRACT REFERENCE                     6. REQUIRING OFFICE         18.
DI-MISC-80508                                  SOW para 7                                OST                         ESTIMATED
------------------------------------------------------------------------------------------------------------------        TOTAL
7. DD 250 REQ        9. DIST STATEMENT   10. FREQUENCY      12. DATE OF FIRST SUBMISSION   14. DISTRIBUTION
LT                      REQUIRED         OTIME              EOC                           -------------------------  ==============
---------------                        -------------------------------------------------      a.       b. COPIES
8. APP CODE                       B      11. AS OF DATE     13. DATE OF SUBSEQUENT         ADDRESSEE --------------
                                                           SUBMISSION                                DRAFT FINAL
                                                                                                           REG  REP
-------------------------------------------------------------------------------------------------------------------
16. REMARKS                                                                               OST              3
                                                                                         -------------------------
Contractor format, one electronic copy.
                                                                                         -------------------------
                                                                                         -------------------------
                                                                                          15. TOTAL---     3
------------------------------------------------------------------------------------------------------------------  ===============
1. DATA ITEM NO.    2. TITLE OF DATA ITEM                                  3. SUBTITLE                               17. PRICE
A003                Prototype Uncooled Thermal Camera                                                                GROUP
------------------------------------------------------------------------------------------------------------------  ---------------
4. AUTHORITY (Data Acquisition Document No.)   5. CONTRACT REFERENCE                     6. REQUIRING OFFICE         18.
                                               SOW para 5                                USSOCOM                     ESTIMATED
------------------------------------------------------------------------------------------------------------------        TOTAL
7. DD 250 REQ        9. DIST STATEMENT   10. FREQUENCY      12. DATE OF FIRST SUBMISSION   14. DISTRIBUTION            PRICE
Yes                     REQUIRED         OTIME                                            -------------------------  ==============
---------------                        -------------------------------------------------      a.       b. COPIES
8. APP CODE                              11. AS OF DATE     13. DATE OF SUBSEQUENT         ADDRESSEE --------------
                                                            SUBMISSION                                DRAFT FINAL
                                                                                                           REG  REP
-------------------------------------------------------------------------------------------------------------------
16. REMARKS                                                                               USSOCOM          1
                                                                                         --------------------------

                                                                                         --------------------------
                                                                                         --------------------------
                                                                                          15. TOTAL---     1
------------------------------------------------------------------------------------------------------------------- ===============
1. DATA ITEM NO.    2. TITLE OF DATA ITEM                                  3. SUBTITLE                               17. PRICE
                                                                                                                     GROUP
------------------------------------------------------------------------------------------------------------------- ---------------
4. AUTHORITY (Data Acquisition Document No.)   5. CONTRACT REFERENCE                     6. REQUIRING OFFICE         18.
                                                                                                                      ESTIMATED
-------------------------------------------------------------------------------------------------------------------       TOTAL
7. DD 250 REQ        9. DIST STATEMENT   10. FREQUENCY      12. DATE OF FIRST SUBMISSION   14. DISTRIBUTION
                        REQUIRED                                                         -------------------------- ===============
---------------                        -------------------------------------------------      a.       b. COPIES
8. APP CODE                              11. AS OF DATE     13. DATE OF SUBSEQUENT         ADDRESSEE ---------------
                                                            SUBMISSION                                DRAFT FINAL
                                                                                                           REG  REP
-------------------------------------------------------------------------------------------------------------------
16. REMARKS
                                                                                          -------------------------

                                                                                          -------------------------
                                                                                          -------------------------
                                                                                          15. TOTAL---
-------------------------------------------------------------------------------------------------------------------

G. PREPARED BY                                  H. DATE                    I. APPROVED BY             J. DATE
Sylvia Morales /s/ Sylvia Morales               18-Jan-00
===================================================================================================================
</TABLE>

          Previous editions are obsolete            Page 1 of 1 Pages
                                                         -    -
161183  S/N 0102-LF-010-5400<PAGE>

                                                                    EXHIBIT 10.7

<TABLE>
------------------------------------------------------------------------------------------------------------------------------------
                                                                                       1. CONTRACT ID CODE           PAGE OF PAGES
AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT
                                                                                                                        1     2
------------------------------------------------------------------------------------------------------------------------------------
<S>                               <C>                     <C>                                  <C>
2. AMENDMENT/MODIFICATION NO.     3. EFFECTIVE DATE       4. REQUISITION/PURCHASE REQ. NO.     5. PROJECT  NO.  (If applicable)
P00001                               See Block 16C           IDT500-0208-0100
------------------------------------------------------------------------------------------------------------------------------------
6. ISSUED BY                     CODE    USZA22                7. ADMINISTERED BY (if other than item 6)     CODE     HQ0339
                                        ----------------------                                                    -----------------
U.S. SPECIAL OPERATIONS COMMAND
ATTN: SOAL-KB (J.S. THOMPSON)                                  DCMC SANTA ANA
2418 FLORIDA KEYS AVENUE                                       34 CIVIC CENTER PLAZA
MACDILL, AFB, FL. 33621-5316                                   PO BOX 12700
                                                               SANTA ANA, CA  92712-2700
------------------------------------------------------------------------------------------------------------------------------------
8. NAME AND ADDRESS OF CONTRACTOR (No., street, county, State and ZIP Code)       X         9A. AMENDMENT OF SOLICITATION NO.
                                                                                ------
IRVINE SENSORS CORPORATION
3001 REDHILL AVENUE
COSTA MESA, CA 92626-4629

                                                                                           -----------------------------------------
                                                                                            9B. DATED (SEE ITEM 11)

                                                                                           -----------------------------------------
                                                                                  X         10A. MODIFICATION OF CONTRACT/ORDER NO.
                                                                                            USZA22-00-C-0013
----------------------------------------------------------------------------               -----------------------------------------
CODE                          FACILITY                                                      1OB. DATED (SEE ITEM 13
                                                                                            14 AUGUST 2000
------------------------------------------------------------------------------------------------------------------------------------
                              11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS
------------------------------------------------------------------------------------------------------------------------------------
[_]  The above numbered solicitation is amended as set forth in Item 14.   The hour and date specified for receipt of Offers
                                                                                          [_]  is extended      is not extended.

Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended, by one of
the following methods:

(a)  By completing Items 8 and 15, and returning _______ copies of the amendment, (b) By acknowledging receipt of this amendment on
     each copy of the offer submitted; or (c) By separate letter or telegram which includes a reference to the solicitation and
     amendment numbers. FAILURE OF YOUR ACKNOWLEDGMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO
     THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an
     offer already submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the
     solicitation and this amendment, and is received prior to the opening hour and date specified.
------------------------------------------------------------------------------------------------------------------------------------
12. ACCOUNTING AND APPROPRIATION DATA (If required)
NO CHANGE

------------------------------------------------------------------------------------------------------------------------------------
                                  13. THIS ITEM APPLIES ONLY TO MODIFICATIONS OF CONTRACTS/ORDERS,
                                      IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14.
------------------------------------------------------------------------------------------------------------------------------------
  (x)     A.   THIS CHANGE ORDER IS ISSUED PURSUANT TO: (Specify authority) THE CHANGES SET FORTH IN ITEM 14 ARE IN THE CONTRACT
------
               ORDER NO. IN ITEM 10A.
------------------------------------------------------------------------------------------------------------------------------------
   X      B.   THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying
               office, Appropriation data, etc.) SET FORTH IN ITEM 14, PURSUANT TO THE AUTHORITY OF FAR 43.103(b).
------------------------------------------------------------------------------------------------------------------------------------
          C.   THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OF: Public Law 102-564

------------------------------------------------------------------------------------------------------------------------------------
          D.   OTHER (Specify type of modification and authority)

------------------------------------------------------------------------------------------------------------------------------------

   E.     IMPORTANT:     Contractor       X is not       [_]       is required to sign this document and return  ______ copies to
                                                                                                                 the issuing office.

------------------------------------------------------------------------------------------------------------------------------------
14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organized by UCF section headings, including solicitation/contract subject matter where
    feasible.)
THE FOLLOWING ADMINISTRATIVE CHANGES ARE MADE TO THE CONTRACT:
ALL REFERENCES TO MR. STEVE OSMON'S DESIGNATION AS THE REQUIRING ACTIVITY
OFFICIAL (RAO) OR CONTRACTING OFFICER'S REPRESENTATIVE (COR) AS SHOWN ON PAGES 6, 7, 8, 9, AND 11 OF THE CONTRACT AND THE CDRL
ADDRESS LISTING ARE DELETED AND THE FOLLOWING IS SUBSTITUTED:

------------------------------------------------------------------------------------------------------------------------------------
15A. NAME AND TITLE OF SIGNER (Type or print)                         16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print)
                                                                     JOHN S. THOMPSON

------------------------------------------------------------------------------------------------------------------------------------
15B. CONTRACTOR/OFFEROR                      15C. DATE SIGNED        16B. UNITED STATES OF AMERICA            16C. DATE SIGNED
                                                                                                               1 NOVEMBER 2000
                                                                      /s/ John S. Thompson
----------------------------------------                             --------------------------------------
(Signature of person authorized to sign)                             (Signature of Contracting Officer)
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>

                                                       CONTRACT NO USZA22-C-0013
                                                                     Page 2 of 2

NAVAL SURFACE WARFARE CENTER-CRANE
ATTN: CODE 805E (MR. BRIAN K. TUSSEY)
BUILDING 3291
CRANE, IN 47522
EMAIL ADDRESS: tussey_b@crane.navy.mil
TELEPHONE: (812) 854-5870
<PAGE>

<TABLE>
         -------------------------------   --------------------------------------------     ---------------------------------------
<S>                                          <C>                                <C>         <C>                      <C>
                                             1. THIS CONTRACT IS A RATED ORDER              NG                       PAGE OF PAGES
           AWARD/CONTRACT                       UNDER DPAS (15 CFR 350)                            DO                  1     16
-----------------------------------------------------------------------------------------------------------------------------------
 2. CONTRACT (Proc. Inst. Ident.) NO.        3. EFFECTIVE DATE                  4. REQUISITION/PURCHASE REQUEST/PROJECT NO.
 USZA22-00-C-0013                                   SEE BLOCK 20C               SEE SCHEDULE
-----------------------------------------------------------------------------------------------------------------------------------
 5. ISSUED BY              CODE  USZA22                          6. ADMINISTERED BY (If other than item 5)     CODE  SO513A
                                --------------------------                                                          ---------------
U.S. SPECIAL OPERATIONS COMMAND                                  DCMC SANTA ANA
ATTN: SOAL-KB (MR. THOMPSON)                                     34 CIVIC CENTER PLAZA
7701 TAMPA POINT BLVD                                            P.O. BOX 12700
MACDILL AFB, FL 33621-531                                        SANTA ANA, CA 92712-2700

-----------------------------------------------------------------------------------------------------------------------------------
 7. NAME AND ADDRESS OF CONTRACTOR (No., street, city, county, State and ZIP Code)   8. DELIVERY

          IRVINE SENSORS CORPORATION'                                                  [_]  FOB ORIGIN    [X]  OTHER (See below)
          3001 REDHILL AVENUE
          BUILDING #3                                                              -----------------------------------------------
          COSTA MESA, CA 92626-4629                                                  9. DISCOUNT FOR PROMPT PAYMENT
                                                                                                         NET/30

                                                                                    -----------------------------------------------
                                                                                     10. SUBMIT INVOICES             ITEM
                                                                                     (4 copies unless otherwise      SEE BLOCK 12
------------------------------------------------------------------------------------ specified) TO THE ADDRESS
CODE DUNS: 038058038             FACILITY CODE                                       SHOWN IN:
-----------------------------------------------------------------------------------------------------------------------------------
 11. SHIP TO/MARK FOR      CODE                                  12. PAYMENT WILL BE MADE BY                   CODE  HQ0339
                                 --------------------------                                                         ---------------
SEE SCHEDULE                                                     DFAS COLUMBUS CENTER
                                                                 WEST ENTITLEMENTS OPERATIONS
                                                                 P.O. BOX 182381
                                                                 COLUMBUS, OH 43218-2381
-----------------------------------------------------------------------------------------------------------------------------------
13. AUTHORITY FOR USING OTHER THAN FULL AND OPEN COMPETITION:    14. ACCOUNTING AND APPROPRIATION DATA
                                                                 SEE SCHEDULE
[_]  10 USC 2304(c) (        )     [_] 41 USC 253(c) (         )
-----------------------------------------------------------------------------------------------------------------------------------
   15A. ITEM NO.              15B. SUPPLIES/SERVICES                   15C.  QUANTITY    15D. UNIT   15E. UNIT PRICE   15F. AMOUNT
-----------------------------------------------------------------------------------------------------------------------------------
 SEE SECT B   SMALL BUSINESS INOVATIVE RESEARCH
              PROGRAM (SBIR), TOPIC SOCOM 99-003

              COST PLUS FIXED FEE
-----------------------------------------------------------------------------------------------------------------------------------
                                                                              15G. TOTAL AMOUNT OF CONTRACT           $ 748,708
-----------------------------------------------------------------------------------------------------------------------------------
                                                      16. TABLE OF CONTENTS
-----------------------------------------------------------------------------------------------------------------------------------
 (X)  SEC.           DESCRIPTION                     PAGE(S)  (X)  SEC.              DESCRIPTION                    PAGE(S)
-----------------------------------------------------------------------------------------------------------------------------------
              PART I - THE SCHEDULE                                               PART II - CONTRACT CLAUSES
-----------------------------------------------------------------------------------------------------------------------------------
       A  SOLICITATION/CONTRACT FORM                           X    I    CONTRACT CLAUSES                                13
-----------------------------------------------------------------------------------------------------------------------------------
  X    B  SUPPLIES OR SERVICES AND PRICES/COST           2-4        PART III - LIST OF DOCUMENTS, EXHIBITS AND OTHER ATTACH.
-----------------------------------------------------------------------------------------------------------------------------------
  X    C  DESCRIPTION/SPECS/WORK STATEMENT                 4   X    J  LIST OF ATTACHMENTS                               16
-----------------------------------------------------------------------------------------------------------------------------------
  X    D  PACKAGING AND MARKING                            5              PART IV - REPRESENTATIONS AND INSTRUCTIONS
-----------------------------------------------------------------------------------------------------------------------------------
  X    E  INSPECTION AND ACCEPTANCE                      6-7            REPRESENTATIONS, CERTIFICATIONS AND
------------------------------------------------------------        K   OTHER STATEMENTS OF OFFERORS
  X    F  DELIVERIES OR PERFORMANCE                        7
-----------------------------------------------------------------------------------------------------------------------------------
  X    G  CONTRACT ADMINISTRATION DATA                  8-10        L   INSTRS., CONDS., AND NOTICES TO OFFERORS
------------------------------------------------------------------------------------------------------------------------------------
  X    H  SPECIAL CONTRACT REQUIREMENTS                   11        M   EVALUATION FACTORS FOR AWARD
-----------------------------------------------------------------------------------------------------------------------------------
                                  CONTRACTING OFFICER WILL COMPLETE ITEM 17 OR 18 AS APPLICABLE
-----------------------------------------------------------------------------------------------------------------------------------

  17. [X]      CONTRACTOR'S NEGOTIATED AGREEMENT (Contractor is required to sign
this document and return 1 copies to issuing office.) Contractor agrees to
furnish and deliver all items or perform all the services set forth or otherwise
identified above and on any continuation sheets for the consideration stated
herein. The rights and obligations of the parties to this contract shall be
subject to and governed by the following documents: (a) this award/contract, (b)
the solicitation, if any, and (c) such provisions, representations,
certifications, and specifications, as are attached or incorporated by reference
herein. (Attachments are listed herein.)

  18. [_]      AWARD (Contractor is not required to sign this document.) Your
offer on Solicitation Number ________________________________, including the
additions or changes made by you which additions or changes are set forth in
full above, is hereby accepted as to the items listed above and on any
continuation sheets. This award consummates the contract which consists of the
following documents: (a) the Government's solicitation and your offer, and (b)
this award/contract. No further contractual document is necessary.

-----------------------------------------------------------------------------------------------------------------------------------
19A. NAME AND TITLE OF SIGNER (Type or print)                                20A. NAME OF CONTRACTING OFFICER
     John J. Stuart, Jr.                                                    JOHN S. THOMPSON
     Chief Financial Officer
-----------------------------------------------------------------------------------------------------------------------------------
19B. NAME OF CONTRACTOR                     19C. DATE SIGNED               20B. UNITED STATES OF AMERICA           20C. DATE SIGNED
 IRVINE SENSORS CORPORATION                      08 AUG 00
BY /s/ John J. Stuart, Jr.                                                 BY /s/ John Thompson
-------------------------------------------                                ------------------------------------           14 AUG 00
   (Signature of person authorized to sign)                                 (Signature of Contracting Officer)
====================================================================================================================================
</TABLE>

NSN  7540-01-152-8069                     26-107
PREVIOUS EDITION UNUSABLE   Form designed using PerForm Pro  STANDARD FORM 26
                                    software.                  (REV.4-85)
                                                              Prescribed by GSA
                                                              FAR (48 CFR)
                                                              53.214(a)
<PAGE>

                                                                USZA22-00-C-0013
Name Of Offeror or Contractor                                    Page 2 of 16
Irvine Sensors Corporation

SECTION B: Supplies or Services and Prices

ITEM NO    Description supplies/services     QTY     U/M              AMOUNT
0001       SBIR Phase II SOCOM Topic 99-003 (Remote Sighting System for Weapons)
           The contractor shall provide all facilities, material, labor, and
           travel to conduct the research and development, testing, system
           demonstration/training, and prototyping in accordance with Irvine
           Sensors Corporation's, proposal entitled Day/Night Miniature
           Sighting System" dated 14 June 2000.

0001AA     Technical Data                      1      Lot   Estimated $31,819.00
                                                                      ----------
                                                                  Fee $ 2,212.00
           The contractor shall provide monthly progress status and management
           reports IAW CDRL A001.

0001AB     Technical Data                      1      Lot   Estimated $31,819.00
                                                                      ----------
                                                                      $ 2,212.00
           The contractor shall provide monthly progress status and management
           reports IAW CDRL A001.

0001AC     Technical Data                      1      Lot   Estimated $31,819.00
                                                                      ----------
                                                                  Fee $ 2,212.00
           The contractor shall provide monthly progress status and management
           reports IAW CDRL A001.

0001AD     Technical Data                      1      Lot   Estimated $31,819.00
                                                                      ----------
                                                                  Fee $ 2,212.00
           The contractor shall provide monthly progress status and management
           reports IAW CDRL A001.

0001AE     Technical Data                      1      Lot   Estimated $31,819.00
                                                                      ----------
                                                                  Fee $ 2,212.00
           The contractor shall provide monthly progress status and management
           reports IAW CDRL A001.

0001AF     Technical Data                      1      Lot   Estimated $31,819.00
                                                                      ----------
                                                                  Fee $ 2,212.00
           The contractor shall provide monthly progress status and management
           reports IAW CDRL A001.

0001AG     Technical Data                      1      Lot   Estimated $31,819.00
                                                                      ----------
                                                                  Fee $ 2,212.00
           The contractor shall provide monthly progress status and management
           reports IAW CDRL A001.

0001AH     Technical Data                      1      Lot   Estimated $31,819.00
                                                                      ----------
                                                                  Fee $ 2,212.00
           The contractor shall provide monthly progress status and management
           reports IAW CDRL A001.

0001AJ     Technical Data                      1      Lot   Estimated $31,819.00
                                                                      ----------
                                                                  Fee $ 2,212.00
           The contractor shall provide monthly progress status and management
           reports IAW CDRL A001.
<PAGE>

--------------------------------------------------------------------------------
CONTINUATION SHEET   REFERENCE NO. OF DOCUMENT BEING CONTINUED   PAGE
                      USZA22-00-C-0013                           3 Of 16
--------------------------------------------------------------------------------
NAME OF OFFEROR OR CONTRACTOR

Irvine Sensors Corpcontractororation
--------------------------------------------------------------------------------

0001AK     Technical Data                      1      Lot   Estimated $31,819.00
                                                                      ----------
                                                                  Fee $ 2,212.00
           The contractor shall provide monthly progress status and management
           reports IAW CDRL A001.

0001AL     Technical Data                      1      Lot   Estimated $31,819.00
                                                                      ----------
                                                                  Fee $ 2,212.00
           The contractor shall provide monthly progress status and management
           reports IAW CDRL A001.

0001AM     Technical Data                      1      Lot   Estimated $31,819.00
                                                                      ----------
                                                                  Fee $ 2,212.00
           The contractor shall provide monthly progress status and management
           reports IAW CDRL A001.

0001AN     Technical Data                      1      Lot   Estimated $31,819.00
                                                                      ----------
                                                                  Fee $ 2,212.00
           The contractor shall provide monthly progress status and management
           reports IAW CDRL A001.

0001AP     Technical Data                      1      Lot   Estimated $31,819.00
                                                                      ----------
                                                                  Fee $ 2,212.00
           The contractor shall provide monthly progress status and management
           reports IAW CDRL A001.

0001AQ     Technical Data                      1      Lot   Estimated $31,819.00
                                                                      ----------
                                                                  Fee $ 2,212.00
           The contractor shall provide monthly progress status and management
           reports IAW CDRL A001.

0001AR     Technical Data                      1      Lot   Estimated $31,819.00
                                                                      ----------
                                                                  Fee $ 2,212.00
           The contractor shall provide monthly progress status and management
           reports IAW CDRL A001.

0001AS     Technical Data                      1      Lot   Estimated $31,819.00
                                                                      ----------
                                                                  Fee $ 2,212.00
           The contractor shall provide monthly progress status and management
           reports IAW CDRL A001.

0001AT     Technical Data                      1      Lot   Estimated $31,819.00
                                                                      ----------
                                                                  Fee $ 2,212.00
           The contractor shall provide monthly progress status and management
           reports IAW CDRL A001.

0001AU     Technical Data                      1      Lot   Estimated $31,819.00
                                                                      ----------
                                                                  Fee $ 2,212.00
           The contractor shall provide monthly progress status and management
           reports IAW CDRL A001.

0001AV     Technical Data                      1      Lot   Estimated $31,819.00
                                                                      ----------
                                                                  Fee $ 2,212.00
           The contractor shall provide monthly progress status and management
           reports IAW CDRL A001.

--------------------------------------------------------------------------------

NSN 7540-01-152-8057            50336-101              OPTIONAL FORM 336A (4-86)
                                                       Sponsored by GSA
                                                       FAR (48 CFR) 53.110
<PAGE>

--------------------------------------------------------------------------------
CONTINUATION SHEET   REFERENCE NO. OF DOCUMENT BEING CONTINUED   PAGE
                      USZA22-00-C-0013                           4 Of 16
--------------------------------------------------------------------------------
NAME OF OFFEROR OR CONTRACTOR

Irvine Sensors Corpcontractororation
--------------------------------------------------------------------------------

0001AW     Technical Data                      1      Lot   Estimated $31,831.00
                                                                      ----------
                                                                  Fee $ 2,212.00
           The contractor shall provide monthly progress status and management
           reports IAW CDRL A001.

0001AX     Technical Data                      1      Lot   Estimated $31,831.00
                                                                      ----------
                                                                  Fee $ 2,226.00
           The contractor shall provide monthly progress status and final report
           IAW CDRL A005.

0001AY     Technical Data                      1      Lot              NSP
           The contractor shall provide meeting agendas as required IAW CDRL
           A002.

0001AZ     Technical Data                      1      Lot              NSP
           The contractor shall provide meeting minutes/reports as required IAW
           CDRL A003.

0001BA     Technical Data                      1      Lot              NSP
           The contractor shall provide commercialization metrics reports IAW
           CDRL A004.

0002       Remote Weapons Sighting System
           Prototype 1                         1      Lot              NSP

SECTION C Descriptions and Specifications

C.1 Irvine Sensors Corp. shall conduct research for the development, testing,
demonstration/training and prototyping of a Remote Weapons Sighting System in
response to the Department of Defense Small Business Innovation Research (SBIR)
Program entitled: Small Business Innovation Research Solicitation 99.1, released
on 1 October 1998.

Topic Number and Title: SOCOM 99-003, Remote Weapons Sighting System which is
hereby incorporated into the contract by reference.

C.2 The contractor shall submit the technical data requirements as outlined in
Exhibits A001 thru A005 in Section J for the basic contract period. The final
and all other reports resulting from this research effort will contain the
following disclaimer on the cover of the reports: "The views, opinions, and
findings contained in this report are those of the author(s) and should not be
construed as an official Agency position, policy, or decision, unless so
designated by other official documentation".

                               END OF SECTION C

--------------------------------------------------------------------------------

NSN 7540-01-152-8057            50336-101              OPTIONAL FORM 336A (4-86)
                                                       Sponsored by GSA
                                                       FAR (48 CFR) 53.110
<PAGE>

--------------------------------------------------------------------------------
CONTINUATION SHEET   REFERENCE NO. OF DOCUMENT BEING CONTINUED   PAGE
                      USZA22-00-C-0013                           5 Of 16
--------------------------------------------------------------------------------
NAME OF OFFEROR OR CONTRACTOR

Irvine Sensors Corpcontractororation
--------------------------------------------------------------------------------

SECTION D Packaging and Marking

CLAUSES INCORPORATED BY FULL TEXT

52.204-4005    General Packaging and Marking Instructions F.O.B. Destination
               (1995)

All data and material to be shipped under this contract shall be packaged and
packed to conform with carrier requirements per FAR Clause 52.247-34, F.O.B.
Destination, incorporated by reference in the contract. The information on the
outside of the package shall clearly state the shipping address, contract
number, device number, and any other "MARK FOR" information required for easy
identification without opening the package.

--------------------------------------------------------------------------------

NSN 7540-01-152-8057            50336-101              OPTIONAL FORM 336A (4-86)
                                                       Sponsored by GSA
                                                       FAR (48 CFR) 53.110
<PAGE>

================================================================================
CONTINUATION SHEET  REFERENCE NO. OF DOCUMENT BEING CONTINUED    PAGE
                    USZA22-00-C-0013                             6 of 16
================================================================================
NAME OF OFFEROR OR CONTRACTOR

Irvine Sensors Corpcontractororation
================================================================================

SECTION E Inspection and Acceptance

CLAUSES INCORPORATED BY REFERENCE:

52.246-7  Inspection of Research and Development Fixed Price     AUG 1996
52.246-16 Responsibility For Supplies                            APR 1984

CLAUSES INCORPORATED BY FULL TEXT

52.205-4001    Government Inspection and Acceptance (1995)

Government inspection and acceptance shall be performed at destination by a
Government Representative.

CLIN/SLIN           0001 and 0002

     WHEN:          CLIN0001 (Per individual CDRL item)
                    CLIN0002 (Upon Acceptance of data item A005).

    PLACE:          At Destination

       BY:          Contracting Officer Representative (COR)

52.205-4002         Material Inspection and Receiving Reports (1995)

RAO/COR Address:              Mr. Steven R. Osmon
                              Naval Warfare Surface Center
                              Code 805F
                              Bldg. 3291
                              Crane, IN 46522
                              Telephone: (812) 854-5349
                              E-mail: Osmon_S@crane.navy.mil.

Procurement Office Address:   USSOCOM
                              ATTN: SOAL-KB (Mr. John S. Thompson)
                              7701 Tampa Point Blvd
                              MacDill AFB, FL 33621-5323
                              Telephone: (813) 828-7077
                              E-mail: thompsj@socom.mil

Defense Finance Office:       DFAS-Columbus Center
                              West Entitlements Division
                              P.O. Box 182381
                              Columbus, OH 43218-2381

--------------------------------------------------------------------------------

NSN 7540-01-152-8057          50336-101                OPTIONAL FORM 336A (4-86)
                                                       Sponsored by GSA
                                                       FAR (48 CFR) 53.110
<PAGE>

================================================================================
CONTINUATION SHEET  REFERENCE NO. OF DOCUMENT BEING CONTINUED    PAGE
                    USZA22-00-C-0013                             7 of 16
================================================================================
NAME OF OFFEROR OR CONTRACTOR

Irvine Sensors Corpcontractororation
================================================================================

DCMC Address:       DCMC Santa Ana
                    34 Civic Center Plaza
                    P.O. Box 12700
                    Santa Ana, CA. 92712-2700

Other:    USSOCOM
          ATTN: SOSB (Karen Pera)
          7701 Tampa Point Blvd
          MacDill AFB, FL 33621-5323

252.246-7000   MATERIAL INSPECTION AND RECEIVING REPORT (DEC 1991)

At the time of each delivery of supplies or services under this contract, the
Contractor shall prepare and furnish to the Government a Material Inspection and
Receiving Report in the manner and to the extent required by Appendix F,
Material Inspection and Receiving Report, of the Defense FAR Supplement.

SECTION F Deliveries or Performance

CLAUSES INCORPORATED BY REFERENCE:

52.242-15 Alt I Stop-Work Order Alternate I            AUG 1989
52.242-17       Government Delay of Work               APR 1984
52.247-34       F.O.B. Destination                     NOV 1991

 CLAUSES INCORPORATED BY FULL TEXT

52.206-4002         Point of Delivery Without Options (1991)

The following conditions apply to requirement:

a.   Place of Delivery:  CLIN 0001 - Per Individual CDRL item

                         CLIN 0002 - Commander
                                     Naval Warfare Surface Center
                                     ATTN: Code 805F (Mr. Steven R. Osmon)
                                     Bldg. 3291
                                     Crane, IN 46522

b.   Period of Performance: The total duration of this contract shall not exceed
22 months.

--------------------------------------------------------------------------------

NSN 7540-01-152-8057          50336-101                OPTIONAL FORM 336A (4-86)
                                                       Sponsored by GSA
                                                       FAR (48 CFR) 53.110
<PAGE>

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                    USZA22-00-C-0013                             8 Of 16
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NAME OF OFFEROR OR CONTRACTOR

Irvine Sensors Corpcontractororation
================================================================================

SECTION G Contract Administration Data

CLAUSES INCORPORATED BY FULL TEXT

52.207-4001  Instructions to Paying Office/Contract Administration (1991)

a.   The Contracting Office representative is:

     Name: Mr. John S. Thompson
     Organization Code:  USSOCOM/SOAL-KB (USZA22)
     Telephone No.: (813) 828-7077
     E-mail: thompsj@socom.mil

b.   Requiring Activity Official (RAO) or Contracting Officer Representative
     (COR):

     Name: Mr. Steven R. Osmon
     Organization Code 805F
     Telephone No.: (812) 854-5349
     E-mail: Osmon_S@crane.navy.mil

c. Payment will be made by the office designated in Block 12 of Standard Form
26, Block 25 of Standard Form 33, or Block 15 of DD Form 1155. For other type
contracts the invoice should be forwarded directly to the designed paying
office.

d. Payment to the contractor shall be mailed to the following address (if other
than the address shown on SF-26, SF-33 or DD Form 1155):

     Name:

     Address:

     City, State, Zip Code:

--------------------------------------------------------------------------------

NSN 7540-01-152-8057          50336-101                OPTIONAL FORM 336A (4-86)
                                                       Sponsored by GSA
                                                       FAR (48 CFR) 53.110
<PAGE>

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                    USZA22-00-C-0013                           9 Of 16

================================================================================
NAME OF OFFEROR OF CONTRACTOR

Irvine Sensors Corpcontractororation
================================================================================

52.207-400     Accounting and Appropriation (1992)

Accounting and Appropriation Data:
        CLIN/SLIN:     0001 and 0002

     (1) ACRN: AA
     (2) Appropriation Number:  979/00400.5600 X69 52AC 66S275 DT0275 592
         662400
     (3) PR Number: IDT275-0208-0100
     (4) Amount: $21,000.00

     (1) ACRN: AB
     (2) Appropriation Number: 979/00400.1156 H09 52AC 605020 DT0500 592 662400
     (3) PR Number: IDT050-0208-0100
     (4) Amount: $231,971.00

     (1) ACRN: AC
     (2) Appropriation Number: 970/10400.5600 X60 52AC 610000 DT5000 592 662400
     (3) PR Number: IDT500-0208-0100
     (4) Amount: $495,737.00

52.207-4004      Distribution of Vouchers/Invoices (1994)

a.   The contractor shall forward vouchers/invoices to the address below in a
     simultaneous mailing.

     (1) The original and six (6) copies to Defense Contract Audit Agency (DCAA)
          Office if a cost type contract, or to the Defense Finance Accounting
          Service (DFAS) office if other than cost contract. The cognizant
          address is:         Defense Contract Audit Agency
                              ATTN: Mr. Todd Pedersen
                              3 Hutton Center Drive
                              Suite 750
                              Santa Ana, CA. 92707

     (2)  One copy to the Requiring Activity Official (RAO) or Contracting
          Officer Representative (COR):
                              Naval Surface Warfare Center - Crane
                              ATTN: Code 805F (Mr. Steven R. Osmon)
                              Building 3291
                              Crane, IN 47522

     (3)  One copy to the Contracting Officer:
                              U.S. Special Operations Command
                              Attn: SOAL-KB (Mr. John S. Thompson)
                              7701 Tampa Point Blvd
                              MacDill AFB, FL 33621-5323

--------------------------------------------------------------------------------

NSN 7540-01 152-8057            50336-101            OPTIONAL FORM 336A-(4-86)
                                                     Sponsored by GSA
                                                     FAR (48 CFR) 53.110
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NAME OF OFFEROR OR CONTRACTOR

Irvine Sensors Corpcontractororation
--------------------------------------------------------------------------------

     (4)  One copy to the payment office:

                    DFAS Columbus center
                    West Entitlements Operations
                    P.O. Box 182381
                    Columbus, OH 43218-2381

     (5)  One copy to the contract administration office:
                    DCMC - Santa Ana
                    34 Civic Center Plaza
                    P.O. Box 12700
                    Santa Ana, CA. 92712-2700

b.   Contract completion voucher will be forwarded by the DCAA Contract Auditor
     to the Defense Contract Management Command (DCMC) Administrative
     Contracting Officer (ACO), or to the PCO who signed this contract if no
     DCMC ACO has been designed, for approval and transmittal to the cognizant
     disbursing office.

c.   52.207-4002 Delay in Delivery (1991)

The cognizant Contracting Administration Office shall submit DLA Form 165,
"Delay in Delivery," when required in accordance with FAR 42.1106(c) and DFARS
242.1106(b) and (c), to:
                    U.S. Special Operations Command
                    Attn: SOAL-KB
                    7701 Tampa Point Blvd
                    MacDill AFB, FL 33621-5323
                    PCO: Mr. John S. Thompson     Telephone: (813) 828-7077

--------------------------------------------------------------------------------
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NAME OF OFFEROR OR CONTRACTOR

Irvine Sensors Corpcontractororation
--------------------------------------------------------------------------------

SECTION H Special Contract Requirements

CLAUSES INCORPORATED BY REFERENCE

CLAUSES INCORPORATED BY FULL TEXT

52.208-4025    New Releases

New releases pertaining to this requirement shall not be made without prior
written approval of the PCO.

52.208-4002    Contracting Officer's Representative (COR) (1991)

a. The Contracting Officer may appoint one or more Government employees as
Contracting Officer's Representatives (COR) for technical purposes applicable to
this contract.

b. The appointment(s) shall be in writing, signed by the Contracting Officer,
and shall set forth the authority granted to and limitations of the COR. The
Contractor shall acknowledge receipt of appointment letters in writing and
forward one signed copy back to the Contracting Officer. Such signing shall
represent the Contractor's acknowledgment of the limited authority of the COR.

c. The Contracting Officer shall notify the Contractor in writing of any such
changes or revocations of the COR appointed in paragraph b.

d The Contracting Officer's Representative is Mr. Steven R. Osmon, Telephone
(812) 854-5349.

52.208-4019    Telephone Communications Security Monitoring (1991)

All communications with DOD organizations are subject to communications security
(COMSEC) review. Contractor personnel will be aware that telecommunications
networks are continually subject to intercept by unfriendly intelligence
organizations. The DOD has authorized the military departments to conduct
COMSEC monitoring and recording of telephone calls originating from, or
terminating at, DOD organizations. Therefore, civilian contractor personnel are
advised that any time they place a call to, or receive a call from, a military
organization, they are subject to COMSEC procedures. The contractor will assume
the responsibility for ensuring wide and frequent dissemiation of the above
information to all employees dealing with DOD information.

52.208-4004    Constructive Change Orders (1991)

No verbal order, statement or conduct of the Contracting Officer, the authorized
representative of the Contracting Officer, whether or not acting within the
limits of his authority, or any other representative of the Government, shall
constitute a change under the "Changes" clause of this contract or entitle the
Contractor to an equitable adjustment of the contract price or delivery schedule
under that or any other clause, unless such change is issued in writing and
signed by the Contracting Office. No representative of the Contracting Officer
shall be authorized to issue a written change order under the "Changes" clause
of this contract. The Contractor shall be under no obligation to comply with any
orders or directions not issued in writing and signed by the Contracting
Officer.

--------------------------------------------------------------------------------
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--------------------------------------------------------------------------------
NAME OF OFFEROR OR CONTRACTOR

Irvine Sensors Corpcontractororation
--------------------------------------------------------------------------------

52.208-4030    Notice of Incorporation of Section K (1995)
Section K, Certification and Representation, of the solicitation will not be
distributed with the contract, however, Section K is hereby incorporated by
reference.

52.208-4032    Marketing of Technical Reports Potentially Disclosing Inventions
(1992)

Any report of either an interim nature or any final report not intended for
public distribution which contains potentially patentable subject matter, shall
have the following legend prominently displayed on its cover.

Notwithstanding any other legends marked hereon, this document contains
information which the Government has a right, title or interest. Further
distribution of this document to any non-governmental agency is prohibited
without the written approval of the Director of Procurement, USSOCOM/SOAL-KB,
7701 Tampa Point Blvd. MacDill AFB, FL 33621-5323.

Key Personnel Requirements

a.   Certain skilled experienced professional and/or technical personnel are
     essential for successful contractor accomplishment of the work to be
     performed under this contract. These are defined as "key personnel" and are
     those persons whose resumes were submitted for evaluation of the proposal.
     The contractor agrees that such personnel shall not be removed from the
     contract work or replaced without compliance with the following:

b.   If one or more of the key personnel, for whatever reason becomes; or is
     expected to become, unavailable for work under this contract for a
     continuous period exceeding 30 work days, or is expected to devote
     substantially less effort to the work than indicated in the proposal or
     initially anticipated: the contractor shall, subject to the concurrence of
     the contracting officer or his authorized representative, promptly replace
     such personnel with personnel of at least substantially equal ability and
     qualifications.

c.   All requests for approval of substitutions hereunder must be in writing and
     provide a detailed explanation of the circumstances necessitating the
     proposed substitutions. They must contain a complete resume of the proposed
     substitute, and any other information requested by the contracting officer
     or needed by him to approve or disapprove the proposed substitution. The
     contracting officer or his authorized representative, promptly notify the
     contractor of his approval in writing.

d.   If the contracting officer determines that suitable and timely replacement
     of key personnel who have been reassigned, terminated or have otherwise
     become unavailable for the contract work is not reasonably forthcoming or
     that the resultant reduction of productive effort would be so substantial
     as to impair the successful completion of the Government, as appropriate,
     or the discretion of the contracting officer if he finds the contractor at
     fault for the condition, the contract price or fixed fee may be equitably
     adjusted downward to compensate the Government for any resultant delay,
     loss, or damage.

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NAME OF OFFEROR OR CONTRACTOR

Irvine Sensors Corpcontractororation
--------------------------------------------------------------------------------

SECTION 1 Contract Clauses

CLAUSES INCORPORATED BY REFERENCE:

<TABLE>
<S>       <C>                                                                                       <C>
52.202-1  Definitions                                                                               OCT 1995
52.203-3  Gratuities                                                                                APR 1984
52.203-5  Covenant Against Contingent Fees                                                          APR 1984
52.203-6  Restrictions On Subcontractor Sales To The Government                                     JUL 1995
52.203-7  Anti-Kickback Procedures                                                                  JUL 1995
52.203-8  Cancellation, Rescission, and Recovery of Funds for Illegal or Improper Activity          JAN 1997
52.203-10 Price Or Fee Adjustment For Illegal Or Improper Activity                                  JAN 1997
52.203-12 Limitation On Payments To Influence Certain Federal Transactions                          JUN 1997
52.204-2  Security Requirements                                                                     AUG 1996
52.204-4  Printing/Copying Double-Sided an Recycled Paper                                           JUN 1996
52.209-6  Protecting the Government's Interest When Subcontracting With Contractors Debarred,
          Suspended, or Proposed for Debarment                                                      JUN 1995
52.215-2  Audit and Records--Negotiation                                                            JUN 1999
52.215-10 Price Reduction for Defective Cost or Pricing Data -- Modifications                       OCT 1997
52.215-8  Order of precedence--Uniform Contract Format                                              OCT 1997
52.215-11 Price Reduction for Defective Cost or Pricing Data--Modifications                         OCT 1997
52.215-12 Subcontractor Cost or Pricing Data                                                        OCT 1997
52.215-13 Subcontractor Cost or Pricing Data--Modifications                                         OCT 1997
52.215-14 Integrity of Unit Prices                                                                  OCT 1997
52.215-15 Pension Adjustment and asset Revision                                                     DEC 1998
52.215-16 Facilities Capital cost of Money                                                          OCT 1997
52.215-18 Reversion of Adjustment of Plans for Post-Retirement Benefits Other Than Pension          OCT 1997
52.215-19 Notification of Ownership Changes                                                         OCT 1997
52.216-7  Allowable Cost and payment                                                                APR 1998
52.216-8  Fixed Fee                                                                                 MAR 1997
52.219-8  Utilization of Small Business Concerns                                                    OCT 1999
52.222-2  Payment For Overtime Premiums                                                             JUL 1990
52.222-1  Notice To The Government Of Labor Disputes                                                FEB 1997
52.222-4  Contract Work Hours and Saftey Standards Act -- Overtime Compensation                     JUL 1995
52.222-26 Equal Opportunity                                                                         FEB 1999
52.222-35 Affirmative Action For Disabled Veterans And Veterans of the Vietnam Era                  APR 1998
52.222-36 Affirmative Action For Workers with Disabilities                                          JUN 1998
52.222-37 Employment Reports On Disabled Veterans And Veterans Of The Vietnam Era                   JAN 1999
52.223-14 Toxic Chemical Release Reporting                                                          OCT 1996
52.227-1  Authorization and Consent                                                                 JUL 1985
52.227-2  Notice and Assistance Regarding Patent and Copyright Infringement                         AUG 1996
52.227-10 Filing of Patent Applications-Classified Subject Matter                                   APR 1984
52.227-11 Patent Rights--Retention By The Contractor (Short Form)                                   JUN 1997
52.227-14 Rights in data-General                                                                    JUN 1987
</TABLE>

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<PAGE>

<TABLE>
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=============================================================================================================
<S>            <C>                                                                              <C>
52.227-20      Rights in Data - SBIR Program                                                    MAR 1994
52.228-7       Insurance-Liability to Third Persons                                             MAR 1996
52.229-3       Federal, State And Local Taxes                                                   JAN 1991
52.229-5       Taxes--Contracts Performed in US Possessions or Puerto Rico                      APR 1984
52.232-1       Payments                                                                         APR 1984
52.232-2       Clean Air and Water                                                              APR 1984
52.232-6       Drug-Free Workplace                                                              JAN 1997
52.232-9       Limitation On Withholding Of Payment                                             APR 1984
52.232-17      Interest                                                                         JUN 1996
52.232-11      Extras                                                                           APR 1984
52.232-20      Limitation of Cost                                                               APR 1984
52.232-23      Assignment Of Claims                                                             JAN 1986
52.232-33      [Payment by] Electronic Funds Transfer [Central Contractor Registration]         MAY 1999
52.232-25      Prompt Payment                                                                   JUN 1997
52.232-34      [Payment by] Electronic Funds Transfer Payment--Other than Central               MAY 1999
               Contractor Registration
52.233-1       Disputes                                                                         DEC 1998
52.233-3       Protest After Award                                                              AUG 1996
52.242-1       Notice of Intent to Disallow Costs                                               APR 1984
52.242-3       Penalties for Unallowable Costs                                                  OCT 1995
52.242-12      Report of Shipment (RESHIP)                                                      JUL 1995
52.242-13      Bankruptcy                                                                       JUL 1995
52.242-4       Certification of Final Indirect Costs                                            JAN 1997
52.243-2       Changes--Cost-Reimbursement                                                      AUG 1987
52.243-2 Alt V - Alternate V                                                                    APR 1984
52.244-2       Subcontracts                                                                     AUG 1998
52.244-2       Subcontracts Alternate I                                                         AUG 1998
52.244-5       Competition in Subcontracting                                                    DEC 1996
52.245-5       Government Property (Cost-Reimbursement Contracts)                               JAN 1986
52.249-6       Termination (Cost-Reimbursement)                                                 SEP 1996
52.249-14      Excusable Delays                                                                 APR 1984

252.203-7001   Prohibition on Persons Convicted of Fraud or Other Defense Contract-             MAR 1999
               Related Felonies
52.253-1       Computer Generated Forms                                                         JAN 1991
252.204-7000   Disclosure Of Information                                                        DEC 1991
252.204-7002   Payment For Subline Items Not Separately  Priced                                 DEC 1991
252.204-7003   Control Of Government Personnel Work Product                                     APR 1992
252.209-7000   Acquisition From Subcontractors Subject To On-Site Inspection Under              NOV 1995
               The Intermediate Range Nuclear Forces (INF) Treaty
252.205-7000   Provisions Of Information To Cooperative Agreement Holders                       DEC 1991
252.215-7000   Pricing Adjustments                                                              DEC 1991
252.227-7016   Rights in Bid or Proposal Information                                            JUN 1995
252.227-7017   Identification and Assertion of Use, Release, or Disclosure Restrictions         JUN 1995
252.227-7018   Rights in Noncommercial Technical Data and Computer Software--Small              JUN 1995
               Business Innovation Research (SBIR) Program
252.227-7019   Validation of asserted restrictions--Computer software                           JUN 1995

=============================================================================================================
</TABLE>
<PAGE>

<TABLE>
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                           USZA22-00-C-0013                          15 Of 16
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====================================================================================================
<S>             <C>                                                                   <C>
252.227-7028    Technical data or computer software previously delivered to the       JUN 1995
                government
252.227-7030    Technical Data--Withholding Of Payment                                 OCT 1988
252.227-7037    Validation of Restrictive Markings on Technical Data                   SEP 1999
252.227.7036    Declaration of Technical Data Conformity                               JAN 1997
252.227-7039    Patents-Reporting of Subject Inventions                                APR 1990
252.242-7000    Postaward Conference                                                   DEC 1991
252.231-7000    Supplemental Cost Principles                                           DEC 1991
252.243-7001    Pricing Of Contract Modifications                                      DEC 1991
252.243-7000    Engineering Change Proposals                                           SEP 1999
252.247-7024    Notification Of Transportation Of Supplies By Sea                      NOV 1995
252.247-7023    Transportation of Supplies by Sea                                      NOV 1995

  CLAUSES INCORPORATED BY FULL TEXT

  52.244-6  SUBCONTRACTS FOR COMMERCIAL ITEMS AND COMMERCIAL COMPONENTS (OCT
            1998)

  (a) Definitions

  "Commercial item", as used in this clause, has the meaning contained in the
  clause at 52.202-1. Definitions.

  "Subcontract", as used in this clause, includes a transfer of commercial items
  between divisions, subsidiaries, or affiliates of the Contractor or
  subcontractor at any tier.

  (b) To the maximum extent practicable, the Contractor shall incorporate, and
  require its subcontractors at all tiers to incorporate, commercial items or
  nondevelopmental items as components of items to be supplied under this
  contract.

  (c) Notwithstanding any other clause of this contract, the Contractor is not
  required to include any FAR provision or clause, other than those listed below
  to the extent they are applicable and as may be required to establish the
  reasonableness of prices under Part 15, in a subcontract at any tier for
  commercial items or commercial components:

  (1) 52.222-26, Equal Opportunity (FEB 1999);

  (2) 52.222-35, Affirmative Action for Disabled Veterans and Veterans of the
  Vietnam Era APR 1998;

  (3) 52.227-36, Affirmative Action for Workers with Disabilities (29 U.S.C.
  793); and

  (4) 52.247-64, Preference for Privately-Owned U.S.-Flagged Commercial Vessels
  (JUN 1997) (flow down not required for subcontracts awarded beginning May 1,
  1996).

  52.252-2  CLAUSES INCORPORATED BY REFERENCE (FEB 1998)

  This contract incorporates one or more clauses by reference, with the same
  force and effect as if they were given in full text. Upon request, the
  Contracting Officer will make their full text available. Also, the full text
  of a clause may be accessed electronically at this/these address(es):
  http://farsite.hill.af.mil
  --------------------------

====================================================================================================
</TABLE>
<PAGE>

<TABLE>
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                           USZA22-00-C-0013                          16 Of 16
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NAME OF OFFEROR OR CONTRACTOR

Irvine Sensors Corpcontractororation
==============================================================================================================

SECTION J  List of Documents, Exhibits and Other Attachments.

EXHIBITS       DOCUMENTS                                  DATE          PAGES
<S>            <C>                                        <C>           <C>
   A           Contract Data Requirements List            31 July 00        1
               (DD Form 1423) for Contractors Progress
               Status, And Management Reports, Data
               Item A001

   A           Contract Data Requirements List            31 July 00        1
               (DD Form 1423) for Meeting Agendas
               Data item A002

   A           Contract Data Requirements List            31 July 00        1
               (DD Form 1423) for Meeting Minutes
               Data item A003

   A           Contract Data Requirements List            31 July 00        1
               (DD Form 1423 for Commercialization
               Metrics
               Data item A004

   A           Contract Data Requirements List            31 July 00        1
               (DD Form 1423) for Final Report
               Data item A005

==============================================================================================================
</TABLE>

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