Document:

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                                                                   EXHIBIT 10.19

            TECHNOLOGY TESTING AND CONTINGENT PURCHASE AGREEMENT FOR
                                    BIOSENTRY

      This Agreement is entered into by and between the Olivenhain Municipal
Water District, a Municipal Water District organized and operating pursuant to
Water Code Sections 71000 et seq. (hereinafter the District) and JMAR
Technologies, Inc., a Delaware corporation operating in the State of California
(hereinafter "JMAR").

                                 R-E-C-I-T-A-L-S

      1. The District is a public agency organized and operating pursuant to
Water Code Sections 71000 et seq., which provides water and sewer service within
certain areas of Northern San Diego County.

      2. JMAR is a leading innovator in the development of laser-based equipment
for imaging, analysis and fabrication and, in conjunction with The LXT Group,
has developed the BioSentry(TM) system, a laser-based, early-warning system for
detecting and classifying potentially harmful microorganisms in water supplies;

      3. JMAR has successfully completed a proof of concept and alpha versions
of its BioSentry(TM) units, and has offered to install three beta BioSentry
units in the District's water treatment facilities for the purposes of testing
the operation of these beta units in a water facility environment;

      4. The District's goal with regard to testing and ultimate purchase of the
BioSentry(TM) units is to receive a waiver from the California Department of
Health Services ("CDHS") of the requirement for a 0.5 log reduction in Giardia
now required for the District's treatment system.

      5. JMAR and the District desire to engage in a joint effort to test the
operation and effectiveness of the BioSentry units in order to allow the
District to obtain the approval and waiver from the CDHS. If successful, the
District has agreed to purchase 3 BioSentry(TM) units on the terms set forth
herein.

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                                C-O-V-E-N-A-N-T-S

      1. Services to Be Performed. JMAR agrees to install BioSentry beta units
at the District's facility and to operate and perform testing of such units in
accordance with the BioSentry Test Program Proposal and Test Plan attached
hereto as Exhibit A and Exhibit A-1 and incorporated herein by reference. All
work performed by JMAR shall be subject to review and approval by the District.
The District shall have no obligation to approve any work found defective by the
District, in its sole discretion.

      2. Installation and Testing of Beta Units. JMAR agrees to a) supply and
install three BioSentry(TM) Beta units at the District's treatment facility and
b) operate and test the Beta units in accordance with Exhibit A at no cost to
the District. JMAR agrees to bear the cost of the three Beta units and its own
costs for installing, operating and testing the units. The District agrees to
make available its facility to JMAR at no additional cost to JMAR for the
purpose of the installation and testing of the three BioSentry(TM) Beta units.
The District also agrees to make its personnel available to JMAR at the
District's cost to support the installation and testing of the Beta units in
accordance with Exhibit A.

      3. Contingent Purchase Order. The parties must obtain approval by the CDHS
for installation and operation of the BioSentry(TM) units at the District's
treatment plant. The parties also intend to seek a waiver by the CDHS of the
requirement for a 0.5 log reduction in Giardia currently required by the CDHS
for the District's water treatment plant. The obligation of the District to
purchase any BioSentry(TM) units is expressly conditional upon CDHS approval of
both installation of the BioSentry(TM) units at the Districts's treatment plant
and CDHS approval of a waiver of the requirement for 0.5 log reduction in
Giardia at the District's water treatment plant. Upon receipt by the District of
written approval from the CDHS for the installation and operation of the
BioSentry(TM) units and CDHS approval of a waiver of the 0.5 log reduction in
Giardia, the District will issue a binding Purchase Order obligating the
District to purchase at least three production units of the BioSentry(TM)
system. The Purchase Order will contain the terms and conditions set forth in
the Quotation attached hereto as Exhibit B and incorporated herein by reference.
Following the purchase of the production units by the District, the parties
agree to

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continue to work together to obtain the desired CDHS waiver. If CDHS does not
approve installation of the BioSentry(TM) system in the District's treatment
plant or the DDHS does not approve a waiver of 0.5 log reduction in Giardia at
the District's water treatment plant, the District shall have the unilateral
right to terminate this agreement by written notice to JMAR. JMAR shall remove
all BioSentry(TM) units in the plant at is sole cost and expense without causing
any damage to the District's water treatment plant and JMAR will not receive any
compensation from the District.

      4. Work Performance Standards. JMAR agrees to perform all work and
services required by this Agreement in a manner which complies with all federal
and state health and safety standards, in a manner that complies with all permit
requirements for the District's water treatment plant, in a manner that complies
with all CDHS requirements, and in a manner which avoids damage or injury to any
real or personal property of any person or entity, including any real or
personal property of the District. JMAR agrees to perform the work at all times
in a manner which avoids the creation of any trespass or private or public
nuisance during conduct of the work.

      5. Liability for Work of Agents, Independent Contractors, and
Subcontractors. JMAR shall be solely liable and responsible for all labor and
materials provided by any director, officer, agent, employee, subcontractor,
supplier, or independent contractor hired or retained by JMAR to perform any
work or to provide any materials or supplies. The District shall have no
liability whatsoever for any work or services performed or any materials or
supplies provided by JMAR or its directors, officers, agents, employees,
subcontractors, suppliers, or independent contractors.

      6. Time for Completion of Services. As a material term of this Agreement,
JMAR agrees to complete all work and services required by this Agreement by no
later than December 31, 2005.

      7. Termination Right. Either party shall have the express right to
terminate this Agreement at any time by giving thirty (30) consecutive days
advance written notice to the other party upon the occurrence of any of the
following events: a) the failure of the BioSentry Beta units to perform in
accordance with the Test Plan set forth in Exhibit A-1 for a period of 120

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days after installation; or b) the receipt of an unconditional refusal by CDHS
to grant the requested approval or waiver. Upon receipt of such a termination
notice, JMAR shall promptly cease its testing and operation of the BioSentry
units, shall remove the BioSentry units from the District's treatment plant
within 30 days at its sole cost and expense and shall avoid any injury or damage
to any part of the District's treatment plant in removing the units. The
District shall be responsible for restoring the premises to its previous
condition.

      8. Hazardous and Toxic Waste. For purposes of this section, the term
"hazardous or toxic waste" means any solid, liquid, or gaseous product
classified as a hazardous or toxic waste under any federal, state, or local
laws, rules, regulations, or ordinances, and all gas and oil products and
by-products of every kind or nature. JMAR shall be solely liable and responsible
for the proper clean-up and removal of all hazardous or toxic waste used,
handled, stored, or spilled by JMAR or any director, officer, agent, employee,
subcontractor, independent contractor or representative of JMAR. JMAR shall pay
all fees, costs, expenses and fines necessary to clean-up or remediate any
hazardous or toxic waste for which JMAR is liable under this paragraph in strict
accordance with all federal, state and local laws, rules and regulations at
JMAR's sole cost and expense. JMAR shall not be liable for any hazardous or
toxic waste used, handled, stored or spilled by the District or its directors,
officers, employees or contractors.

      In the event any third party, including any regulatory agency, brings any
claim or cause of action against the District to clean-up or remediate any
hazardous or toxic waste for which JMAR is liable under this section, JMAR shall
also indemnify and hold harmless the District and its directors, officers,
agents, and employees from all claims, actions, losses, costs, fees, expenses,
fines, and penalties, of whatever type or nature, including all costs of defense
and attorneys fees, upon written demand for indemnity from the District.

            In the event any third party, including any regulatory agency,
brings any claim or cause of action against JMAR to clean-up or remediate any
hazardous or toxic waste for which District is liable under this section,
District shall also indemnify and hold harmless JMAR and its directors,
officers, agents, and employees from all claims, actions, losses, costs, fees,
expenses, fines, and penalties, of whatever type or nature, including all costs
of defense and attorneys fees, upon written demand for indemnity from JMAR.

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      9. Independent Contractor. As a material term of this Agreement, it is
expressly agreed between the parties that JMAR is performing all work and
services for the District pursuant to this Agreement as an independent
contractor and not as an agent or employee of the District. The parties further
agree and acknowledge that the District expects JMAR to make its own independent
determination of the means and methods to perform all work required by this
Agreement, and will not be directed as to any of these means or methods by the
District.

      10. Conflicts of Interest Prohibited. As a material term of this
Agreement, JMAR shall not in any way attempt to use its position to influence
any decision of the District in which it knows, or has reason to know, it has a
financial interest other than the compensation provided in this agreement. As a
material term of this Agreement, JMAR warrants and represents that it does not,
to the best of its knowledge, have any economic interests which would conflict
with any of its duties under this Agreement. JMAR agrees not to secure any
economic interest during the performance of this Agreement which conflicts with
its duties to the District under this Agreement.

      11. Insurance. At all times during the term of this Agreement, JMAR shall
maintain workers compensation insurance and a commercial general liability
insurance policy in strict accordance with all terms of this paragraph. The
insurance required by this paragraph shall be provided as follows:

            11.1 Workers Compensation Insurance. Immediately following execution
of this Agreement and prior to commencement of any work by JMAR, JMAR shall
provide the District with certificates of insurance showing that JMAR has
obtained, for the full period of this Agreement, workers compensation insurance
coverage for no less than the statutory limits covering all persons whom JMAR
employs or may employ in carrying out any work under this Agreement. This
workers compensation insurance shall remain in full force and effect at all
times during performance of any work required by this Agreement; and

            11.2 Liability Insurance. Promptly following execution of this
Agreement, and prior to commencement of any work, JMAR shall provide the
District with certificates of insurance and such endorsements as may be required
by the District, demonstrating that JMAR has in full force and effect a broad
form commercial general liability insurance policy or policies

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covering bodily injury, property damage, products-completed operations, and
personal injury in an amount of not less than $2,000,000.00 per occurrence with
a deductible not to exceed $50,000. This liability insurance policy or policies
shall be with an insurance company licensed to do business in the State of
California and acceptable to the District. All liability insurance shall include
an occurrence coverage (except for products liability insurance which shall be
"claims made" coverage) and shall include a "cross-liability" or "severability
of interest" clause. The insurance certificate and any endorsements shall be
non-cancelable without thirty (30) days prior written notice to the District.

      The District shall be named as additional named insureds on all policies
required by this paragraph. The insurance afforded to the District shall be
primary insurance. If the District has other insurance which might be applicable
to any loss, the amount of the insurance provided under this section shall not
be reduced or prorated by the existence of such other insurance.

      12. Job Site Safety. JMAR shall be solely liable and responsible for the
job site safety and complying with all federal, state and local laws, rules and
regulations pertaining to job safety for all agents, employees, subcontractors,
suppliers, and independent contractors retained by JMAR to perform any work or
services or to provide any materials required by this Agreement. However, JMAR
shall not be liable or responsible for job site safety for any workers or agents
employed by the District in connection with the installation and operation of
the BioSentry units.

      13. Indemnity. As a material term of this Agreement, JMAR agrees to hold
harmless, indemnify, and defend the District and its directors, officers,
employees, agents, and representatives from and against any and all liability,
claims, causes of action, suits, actions, damages, losses, costs, fees,
expenses, fines, and penalties, of whatever type or nature, including all costs
of defense and attorney fees, caused in whole or in part, or claimed to be
caused in whole or in part by the action, inaction, passive or active
negligence, or intentional misconduct of JMAR or its directors, officers,
employees, agents, subcontractors, sub-consultants, suppliers, or independent
contractors, except claims and causes of action caused by the sole active
negligence or intentional misconduct of the District or its directors, officers,
employees or agents. The District agrees to hold harmless, indemnify, and defend
JMAR and its directors, officers, employees, agents, and representatives from
and against any and all claims, causes of action, suits, actions, damages,
losses, costs, fees, expenses, fines, and penalties, of whatever type or

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nature, including all costs of defense and attorney fees, caused by the sole
active negligence or intentional misconduct of the District or its directors,
officers, employees, agents, subcontractors, sub-consultants, suppliers, or
independent contractors. In the event that any administrative proceeding,
litigation or arbitration is instituted naming an indemnified party as a
defendant, the indemnified party shall be entitled to appoint its own
independent counsel to represent it, and the indemnifying party agrees to pay
all reasonable attorneys fees, expert fees and costs, and litigation costs
associated with this defense within thirty (30) days of any billing.

      14. Miscellaneous Provisions.

            14.1 California Law Governs. This Agreement shall by governed by
California law.

            14.2 Jurisdiction and Venue. In the event of any legal or equitable
proceeding to enforce or interpret the terms and conditions of this Agreement,
the parties agree that jurisdiction and venue shall lie only in the state courts
located in the North County Judicial District, County of San Diego, State of
California.

            14.3 Modification. This Agreement may not be altered in whole or in
part except by a written modification approved by the Board of Directors of the
District and executed by all the parties to this Agreement.

            14.4 Attorneys' Fees. In the event any arbitration, action or
proceeding is initiated to challenge, invalidate, enforce or interpret any of
the terms of this Agreement, the prevailing party shall be entitled to all
attorneys' fees, all expert fees and costs, and all litigation fees, costs, and
expenses in addition to any other relief granted by law. This provision shall
apply to the entire Agreement.

            14.5 Entire Agreement. This Agreement, together with all exhibits
attached hereto, contains all representations and the entire understanding
between the parties with respect to the subject matter of this Agreement. Any
prior correspondence, memoranda, or agreements, whether or not such
correspondence, memoranda or agreements are in conflict with this Agreement, are
intended to be replaced in total by this Agreement and its exhibits. JMAR
warrants and represents that no District representative has made any oral
representations or oral

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agreements not contained in this Agreement. JMAR further warrants and represents
that JMAR has not relied upon any oral statements or promises made by any
District representative or agent in executing this Agreement. The parties
mutually declare that this Agreement and its exhibits constitute a final,
complete and integrated agreement between the parties.

            14.6 Prohibition on Assignment. JMAR shall not be entitled to assign
or transfer all or any portion of its rights or obligations in this Agreement
without obtaining the express prior written consent of the District. The
District shall have no obligation to give its consent to any assignment and may
deny any requested assignment, in its sole discretion.

            14.7 Binding Effect. This Agreement shall inure to the benefit of
and be binding upon the parties and on their respective purchasers, successors,
heirs and assigns.

            14.8 Unenforceable Provisions. The terms, conditions, and covenants
of this Agreement shall be construed whenever possible as consistent with all
applicable laws and regulations. To the extent that any provision of this
Agreement, as so interpreted, is held to violate any applicable law or
regulation, the remaining provisions shall nevertheless be carried into full
force and effect and remain enforceable.

            14.9 Representation of Capacity to Contract. Each party to this
Agreement represents and warrants that he or she has the authority to execute
this Agreement on behalf of the entity represented by that individual. This
representation is a material term of this Agreement.

            14.10 Opportunity to be Represented by Independent Counsel. Each of
the parties to this Agreement warrants and represents that it has been advised
to consult independent counsel of its own choosing and has had a reasonable
opportunity to do so prior to executing this Agreement.

            14.11 No Waiver. The failure of either party to enforce any term,
covenant or condition of this Agreement on the date it is to be performed shall
not be construed as a waiver of that party's right to enforce this, or any
other, term, covenant, or condition of this Agreement at any later date or as a
waiver of any term, covenant, or condition of this Agreement. No waiver shall
occur unless the waiver is expressly stated in writing and signed by the person
for the party

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having the authority to expressly waive the benefit or provision, in writing. No
oral waivers shall be effective against either party.

            14.12 No Joint Venture and No Third Party Beneficiaries. Nothing in
this Agreement is intended to create a joint venture, partnership or common
enterprise relationship of any kind between the District and JMAR. No third
parties shall be construed as beneficiaries of any term, covenant or provision
of this Agreement.

            14.13 Time of Essence. The parties agree that time is of the essence
as to all matters specified in this Agreement. The parties mutually declare that
this is a material term of this Agreement.

            14.14 Notices. All letters, statements, or notices required pursuant
to this Agreement shall be deemed effective upon receipt when personally served,
transmitted by facsimile machine, or sent certified mail, return receipt
requested, to the following addresses or facsimile numbers:

To:  "JMAR"

JMAR Technologies, Inc.
Attention: General Counsel
5800 Armada Drive
Carlsbad, California  92008
Facsimile No.  (760) 602-3299

To: "District"

Olivenhain Municipal Water District
Attn: David C. McCollom, General Manager
1966 Olivenhain Road
Encinitas, California 92024
Facsimile No. (760) 753-5640

            14.15 Effective Date. The effective date of this Agreement executed
in counterparts in Olivenhain, California, within the North County Judicial
District, County of San Diego, State of California, is March 4, 2005.

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Dated:  March 4, 2005                OLIVENHAIN MUNICIPAL WATER DISTRICT,
                                     a public agency

                                     By: /s/ DAVID C. McCOLLOM
                                         David C. McCollom
                                         General Manager

Dated:  March 4, 2005                JMAR TECHNOLOGIES, INC.

                                     By: /s/ JOHN RICARDI
                                     Title: Vice President of Sensor Products

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                                                                   Exhibit 10.20
March 18, 2003

Dr. Jack L. Herz
Dr. Ara Chutjian
Dr. Murray Darrach
FemtoTrace, Inc.

Gentlemen:

      This letter sets forth the agreement ("Agreement") of JMAR Technologies,
Inc. ("JMAR") and FemtoTrace, Inc. ("FemtoTrace") regarding the design,
manufacture and delivery by JMAR of certain prototype versions of the READ
Analytical Instrument for the Trace Analysis and Detection of Organic
Pollutants, Explosives, Nerve and Blister Agents, Illicit Drugs and Other
Contraband ("READ Analytical Instrument").

This Agreement shall be performed in phases as provided below.

1.    Alpha and Beta Units

            a) In order to expedite commencement of the work provided for under
      this Agreement, upon execution of this Agreement JMAR shall commence work
      on the initial design tasks for the two Alpha units, up to the point of
      incurring a total of $50,000 in burdened labor. Unless and until
      FemtoTrace shall have delivered written authorization to JMAR to proceed
      with the balance of the work specified under the Agreement, JMAR shall not
      incur costs in excess of $50,000 and FemtoTrace shall not be obligated to
      pay any costs in excess of $50,000.

            b) The first phase of this Agreement shall involve the design,
      manufacture and delivery of two (2) Alpha versions of the READ Analytical
      Instrument. The specifications of the Alpha units are attached hereto as
      Exhibit A.

            c) The second phase of this Agreement shall involve the design,
      manufacture and delivery of two (2) Beta versions of the READ Analytical
      Instrument. Following completion of acceptance testing for the Alpha units
      as provided in Section 5 below, there shall be a period of 60 days during
      which the parties will discuss and agree upon the final specifications of
      the Beta units, the timeline and tasks related to the assembly and
      delivery of the Beta units and the designs and other modifications
      required to be made to the Beta units. Unless FemtoTrace has exercised its
      right under Section 9(b) to terminate this Agreement, after the parties
      have reached agreement on the final specifications, timeline, tasks,
      designs and other modifications for the Beta units and related matters,
      JMAR shall be obligated to design, manufacture and deliver the two (2)
      Beta units in accordance with those final specifications and other agreed
      upon terms and FemtoTrace shall be obligated to
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      purchase those units on the terms set forth herein. If the parties are
      unable to reach agreement on the final specifications, timeline, tasks,
      designs and other modifications required for the Beta units, then JMAR
      shall have no obligation to design, manufacture or deliver the Beta units.
      Each of the parties shall bear its own costs in negotiating and preparing
      this Agreement, as well as in discussing and agreeing upon the final
      specifications of the Beta units, the timeline and tasks related to the
      assembly and delivery of the Beta units.

            d) Prior to the delivery of the two Alpha units, JMAR shall also
      provide FemtoTrace with a recommended schedule of spare parts and options
      to purchase such spare parts and an optional service contract.

2.    Price

            a)    This Agreement will be a fixed price, best efforts level of
                  performance contract. The total contract price will be
                  $1,016,780 subject to adjustment for good cause as provided in
                  this Agreement.

            b)    The contract price for the delivery of two (2) Alpha units of
                  the READ Analytical Instrument shall be $598,047 subject to
                  change only under Section 8(b) below. The methodology for
                  calculating the contract price for the Alpha units is set
                  forth on Exhibit B-1 hereto.

            c)    The contract price for the delivery of two (2) Beta units of
                  the READ Analytical Instrument shall be $418,733 subject to
                  adjustment during the 60 day period after acceptance of the
                  Alpha units by taking into account all agreed upon changes to
                  the design, scope of work and changes in materials. The
                  contract price for the two Beta units shall include the time
                  budgeted by JMAR for evaluation of the performance of the
                  Alpha units after delivery and the final design of the Beta
                  units. The methodology for calculating the contract price for
                  the Beta units is set forth on Exhibit B-1 hereto.

            d)    JMAR will permit representatives designated by FemtoTrace,
                  upon reasonable notice and during normal business hours, at
                  FemtoTrace's expense to (a) visit JMAR's Systems Division and
                  inspect the activities being performed in connection with the
                  design and manufacture of the Alpha and Beta units, and (b)
                  examine the financial and other business records of JMAR's
                  Systems Division to confirm the costs and prices for the Alpha
                  and Beta units, as well any adjustments to the pricing
                  required by the Agreement (unless such examination is not
                  permitted by federal, state or local law or by contract) and
                  make copies thereof or extracts therefrom.

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3.    Payment Schedule

            FemtoTrace shall pay the contract price for the Alpha and Beta units
      in accordance with the schedule set forth on Exhibit C hereto.

4.    Schedule of Work

            a)    The tasks to be performed by JMAR related to the design,
                  manufacturing and assembly of the Alpha units, are listed on
                  Exhibit D-1 hereto.

            b)    A recommended timeline with specific tasks related to the
                  design and assembly of the Alpha units is attached hereto as
                  Exhibit D-2. The JMAR Program Manager may modify this timeline
                  and list of tasks from time to time as necessary after
                  consultation with FemtoTrace, provided, however, that such
                  modifications must be reasonable and necessary and cannot
                  change the agreed delivery dates.

            c)    The parties shall agree upon the tasks and timelines for the
                  two Beta units within the 60 day period after acceptance of
                  the Alpha units.

            d)    A series of program reviews will be scheduled, including an
                  Initial Program Review (IPR), Preliminary Design Review (PDR),
                  Critical Design Review (CDR) and a Manufacturing Release
                  Review (MRR) for the Alpha units and a CDR and a MRR for the
                  Beta units. Written weekly reports will be provided by JMAR to
                  FemoTrace describing the progress versus schedule, problems
                  and actions to resolve problems. The parties will hold weekly
                  meetings on the status of the program by telephone conference
                  at a regular time and to be agreed by the parties upon
                  execution of this Agreement. The parties will meet in person
                  as reasonably necessary to effectively complete the work.

5.    Acceptance Testing

            Final acceptance of the Alpha and Beta units by FemtoTrace will
      consist of the satisfactory completion of a mutually agreed upon final
      test procedure and the delivery by JMAR of a report that describes the
      variance of the unit's performance from the product performance
      specification set forth on Exhibit A hereto.

            FemtoTrace shall, within 45 days of execution of this Agreement,
      provide to JMAR its acceptance test requirements for Alpha Units. JMAR
      shall, at least 45 days prior to the scheduled delivery of the initial
      Alpha Units, provide FemtoTrace with its proposed written acceptance test
      procedures, subject to FemtoTrace's review and modification prior to
      delivery. With respect to Beta Units, FemtoTrace will provide test
      requirements within 30 days after the parties have reached agreement
      (under Section 6b, below) on Beta specifications, with JMAR to provide its
      proposed test procedure at least 30 days before delivery of the initial
      Beta Units.

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6.    Delivery Schedule

            a)    The two Alpha units will be delivered to FemtoTrace by JMAR
                  not later than seven (7) months following the date of
                  execution of this Agreement by the parties.

            b)    Provided the parties have reached agreement on the final
                  specifications, timeline, tasks, designs and other
                  modifications required for the Beta units by the end of the 60
                  day period described in Section 1(b) above and provided
                  FemtoTrace shall not have terminated this Agreement pursuant
                  to Section 9(b), the design and manufacture of the two Beta
                  units will commence not later than 30 days after the parties
                  have reached agreement on said matters, with delivery of the
                  Beta units four months after design and manufacture has
                  commenced.

            c)    Upon delivery of the Alpha units, JMAR shall also deliver to
                  FemtoTrace all software, including source code, together with
                  all blueprints, specifications, drawings and instructions,
                  sufficient to replicate a fully functioning Alpha unit in all
                  aspects. Upon delivery of the Beta Units, JMAR shall also
                  deliver to FemtoTrace all software, including source code,
                  together with all blueprints, specifications, drawings and
                  instructions, sufficient to replicate a fully functioning Beta
                  unit in all aspects.

7.    Delivery of Additional Alpha or Beta Units

            a) Within the 60-day period after acceptance of the initial Alpha
      units, the parties will agree on the configuration of any additional Alpha
      units that FemtoTrace may order in the future. At any time after
      acceptance of the Alpha Units and up to twenty-four (24) months after
      execution of this Agreement, upon 45 days advance written notice by
      FemtoTrace, and after delivery of the first Alpha units, FemtoTrace may
      order additional Alpha units in the agreed upon configuration at a price
      based upon the pricing methodology set forth on Exhibit B-2 hereto applied
      to that configuration. Any changes to that configuration will result in
      changes in the pricing based on re-application of the pricing methodology.
      The delivery of such additional Alpha units shall be no longer than 120
      days following the order.

            b) Within the 60-day period after acceptance of the initial Beta
      units, the parties will agree on the configuration of any additional Beta
      units that FemtoTrace may order in the future. At any time up to
      twenty-four (24) months after execution of this Agreement, upon 45 days
      advance written notice by FemtoTrace, and after the delivery of the first
      Beta units, FemtoTrace may order additional Beta units in the agreed upon
      configuration at a price based upon the pricing methodology set forth on
      Exhibit B-2 hereto applied to that configuration. Any changes to that
      configuration will result in changes in the pricing based on
      re-application of the pricing methodology. The delivery of such additional
      Beta units shall be no longer than 120 days following the order.

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      c) From time to time, FemtoTrace may request that JMAR perform other
   services, such as non-recurring engineering services, or provide other goods
   not covered by this Agreement. In such event, the price of such goods or
   services shall be based upon the pricing methodology set forth on Exhibit B-2
   hereto.

8.    List of Components; Cost

            a)    The pricing of this contract is based upon the specification
                  by FemtoTrace of various commercially available components and
                  subsystems. The components to be used in the READ Analytical
                  Instrument, together with the cost thereof, are listed in
                  Exhibit E hereto. Also listed on Exhibit E are those
                  components that will be supplied to JMAR by FemtoTrace.

            b)    In the event that components other than those listed on
                  Exhibit E are used in the Alpha or Beta units, or in the event
                  that the cost of those components have changed, resulting in a
                  change in the cost of the units, the contract price for the
                  Alpha or Beta units shall be increased or decreased, as the
                  case may be, to reflect the change in the cost of the
                  components. JMAR shall provide written confirmation of any
                  increased or decreased component costs to FemtoTrace prior to
                  incurring such changed costs. Labor costs associated with any
                  component changes will not be charged unless the aggregate of
                  all component changes under this Agreement results in
                  substantial and material increased labor. It is agreed that
                  the contract prices for the Alpha and Beta units already
                  include sufficient labor allocations to cover customary minor
                  adjustments to design and components

9.    Termination Provisions

            (a) FemtoTrace shall have the right to terminate this Agreement upon
      the material breach by JMAR in the performance of its obligations under
      this Agreement. In order to terminate this Agreement on account of such a
      breach by JMAR, FemtoTrace shall deliver written notice of termination of
      this Agreement to JMAR and JMAR shall have failed to cure said breach
      within 30 days after delivery of said notice.

            (b) FemtoTrace shall have the right to terminate this Agreement
      within 60 days after its acceptance of the Alpha units if it has not
      secured sufficient financing to enable it to fund the second phase of this
      Agreement, by delivering a written notice of termination to JMAR
      certifying its failure to obtain said financing. If FemtoTrace terminates
      this Agreement pursuant to this Section 9(b), then it shall be responsible
      to pay JMAR for its reasonable costs in evaluating the performance of the
      Alpha units after delivery and in designing the final Beta units. However,
      JMAR will not incur such costs prior to funding without prior written
      approval of FemtoTrace and no components or materials for the Beta units
      will be ordered until FemtoTrace confirms to JMAR that the funding
      contingency has been met.

                                       5
<PAGE>
            (c) In the event that the parties have not reached an agreement on
      the matters set forth in Section 1(b) before the expiration of 60 days
      after acceptance by FemtoTrace of the two Alpha units, either party may
      terminate this Agreement by delivery of a notice of termination to the
      other party with the termination being effective 10 days after delivery of
      said notice.

10.   Right to Exclusive Negotiation

            Conditioned upon timely and complete performance by JMAR of this
      Agreement, FemtoTrace agrees to negotiate exclusively with JMAR, for a
      period of up to 60 days beginning not later than the delivery by JMAR of
      the Beta units under this Agreement, for the purpose of entering into a
      further agreement for the development and manufacture of the production
      version of the READ Analytical Instrument. If the parties have reached an
      agreement in principle within this period, the period shall be extended an
      additional 30 days for the purpose of drafting and negotiating definitive
      agreements. The parties understand that these negotiations will be guided,
      in part, by the need for FemtoTrace to be able to achieve certain price
      points and margins for this business. In arriving at the terms and
      conditions of a production supply agreement, JMAR shall be treated as a
      contract manufacturer and, as such, the pricing of its manufacturing
      services under the production supply agreement shall be based upon the
      pricing methodology set forth on Exhibit B-3 hereto. During this exclusive
      negotiating period, FemtoTrace will not negotiate for such an agreement
      with any other supplier.

11.   Intellectual Property Rights

            The intellectual property owned by JMAR and FemtoTrace,
      respectively, prior to the execution of this Agreement shall not be
      affected by this Agreement. All intellectual property of any kind, whether
      patents, trademarks, copyrights, trade secrets or other proprietary
      materials or information, that is developed in connection with the design
      and manufacturing activities performed by JMAR under this Agreement will
      be owned by FemtoTrace. All of the work performed by JMAR under this
      Agreement will be performed as "work for hire" for FemtoTrace. JMAR will
      execute such documents (including assignments, licenses, patent
      applications, registrations, etc.) and take any actions required to fully
      effectuate FemtoTrace's intellectual property rights under this Agreement;
      provided, however, that the costs of preparing and prosecuting patent
      applications and other similar actions to protect FemtoTrace's
      intellectual property rights shall be borne by FemtoTrace.

            JMAR shall retain rights in any intellectual property developed by
      JMAR under this Agreement that may be used in the field of semiconductor
      equipment applications that are not competitive with FemtoTrace's
      products. FemtoTrace will execute an appropriate form of "grant-back"
      license to JMAR to enable JMAR to retain such rights.

                                       6
<PAGE>
            Upon delivery of the first Alpha unit under this Agreement and again
      upon delivery of the first Beta unit, JMAR and FemtoTrace will conduct
      intellectual property reviews to identify all intellectual property of any
      kind that has been developed in connection with JMAR's performance of the
      Agreement, so that FemtoTrace may take appropriate action to secure its
      intellectual property rights.

12.   Confidentiality

            JMAR agrees to maintain in confidence and not to disclose to any
      third party any information or other documentation created in connection
      with its performance under this Agreement, including without limitation
      any specifications, plans, drawings, trade secrets, software, source code,
      manufacturing processes, or inventions. JMAR may disclose confidential
      information only to employees or agents who have a need to know the
      confidential information for the purpose of performing JMAR's obligations
      under this Agreement, and who are bound by an obligation of secrecy,
      whether written or oral with respect to such information. JMAR will
      instruct its employees, in written form, of their obligations under this
      Agreement.

            FemtoTrace may, in its sole discretion, seek positive publicity on
      certain aspects of the project and JMAR agrees to cooperate reasonably in
      these efforts upon the request of FemtoTrace.

            JMAR may make such public disclosures regarding the execution of
      this Agreement as it deems necessary or appropriate to satisfy its
      obligations as an SEC reporting company, provided that no proprietary
      information shall be disclosed and, unless a shorter timeframe is required
      by law, FemtoTrace shall have been given at least five (5) business days
      to review and comment on such proposed disclosures.

13.   Other Terms and Conditions

      a) Taxes. FemtoTrace shall pay for all sales, use, excise, custom duties,
      export fees and/or similar taxes caused by or associated with the sale of
      the products contemplated by this Agreement.

      b) Shipment. Shipments shall be F.O.B. South Burlington, Vermont.
      FemtoTrace shall be responsible for the payment of all shipping and
      related expenses unless otherwise agreed to in writing. JMAR shall not be
      liable for delay or default in performance when such delay or default
      directly or indirectly results from or is contributed to by circumstances
      beyond JMAR's control, including, but not limited to, acts of God; war or
      national emergency; fire; flood; riot; explosion; any labor dispute,
      difficulty or practice, however caused; or the unavailability of necessary
      materials despite diligent and timely efforts. The period of any such
      delays will extend the time of shipment accordingly.

      c) Limited Warranty. JMAR MAKES NO WARRANTIES, EXPRESS OR IMPLIED, OF
      MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR

                                       7
<PAGE>
      PURPOSE OR OTHERWISE, AND JMAR HAS NOT AUTHORIZED ANY OTHER PERSON TO MAKE
      ANY OTHER REPRESENTATIONS OR WARRANTIES OR OTHERWISE SUBJECT JMAR TO ANY
      OTHER LIABILITY IN CONNECTION WITH THE SALE OF THE READ ANALYTICAL
      INSTRUMENTS. JMAR'S SOLE AND LIMITED WARRANTY TO FEMTOTRACE IS THAT THE
      READ UNITS PROVIDED UNDER THIS CONTRACT WILL BE FREE OF MANUFACTURING OR
      WORKMANSHIP DEFECTS ARISING DIRECTLY FROM THE WORK PERFORMED BY JMAR. THE
      SOLE REMEDY FOR ANY SUCH DEFECT, FOR A PERIOD OF 180 DAYS FOLLOWING
      DELIVERY TO FEMTOTRACE ONLY, WILL BE FOR JMAR, IN ITS DISCRETION, TO
      EITHER REPAIR OR REPLACE ANY DEFECTIVE PART OR COMPONENT OF THE READ UNIT.

      Components not of JMAR's manufacture are subject to component
      manufacturer's standard new product warranties that will be made available
      to FemtoTrace to the full extent available to JMAR.

      d) Limitation of Liability. JMAR and FemtoTrace shall have no liability to
      each other for payment of incidental or consequential damages, including,
      but not limited to, damages due to loss of use, loss of production, or
      loss of profit or other economic loss as a result of the performance of
      this Agreement or use and operation of the product, including, but not
      limited to, defective workmanship or materials or any delay, act, error or
      omission of JMAR.

      e) Insurance and Indemnity. JMAR and FemtoTrace will each maintain
      insurance sufficient to cover their own acts and omissions in the
      performance of this Agreement. JMAR and FemtoTrace shall each hold
      harmless and indemnify the other against any loss, damage, claim,
      settlement or judgment arising solely from their own negligence or
      misconduct.

      Miscellaneous Provisions

      a)    This Agreement shall be governed by and construed in accordance with
            the laws of the State of California.

      b)    This Agreement constitutes the entire agreement between the parties
            hereto relating to the subject matter hereof and supersedes all
            prior or contemporaneous negotiations, representations, agreements
            and understandings of the parties relating thereto. This Agreement
            may be amended or supplemented at any time, but only by written
            agreement of the parties.

      c)    This Agreement may be signed in counterparts and signatures may be
            exchanged by facsimile. When both parties have signed and exchanged
            facsimile signatures, the Agreement shall be deemed fully executed.

                                       8
<PAGE>
JMAR TECHNOLOGIES, INC.

By:   /s/ RONALD A. WALROD
      Ronald A. Walrod, Chief Executive Officer

FEMTOTRACE, INC.

By:   /S/ JACK L. HERZ
      Dr. Jack L. Herz, Chief Executive Officer

                                       9

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