Document:

<PAGE>

                                                                   EXHIBIT 10.3

<TABLE>
-----------------------------------------------------------------------------------------------------------------------------------
           <S>                                <C>                                       <C>           <C>
           AWARD/CONTRACT                     1. THIS CONTRACT IS A RATED ORDER         RATING        PAGE OF PAGES
                                                 UNDER DPAS (15 CFR 350)                                1       14
-----------------------------------------------------------------------------------------------------------------------------------
2. CONTRACT (Proc. Inst. Ident.) No.          3. EFFECTIVE DATE         4. REQUISITION/PURCHASE REQUEST/PROJECT NO.
                       N3998-02-C-4510               See blk #20c                                046-02.
-----------------------------------------------------------------------------------------------------------------------------------
5. ISSUED BY                      CODE           N39998           6.  ADMINISTERED BY (If other than Item 5)       CODE       vab
                                      -------------------------                                                            --------
DoD, Office of Special Technology                                 Same as blk 5
10530 Riverview Road, Bldg. #3
Ft. Washington, MD 20744                                          Approved for form and legality: /s/
-----------------------------------------------------------------------------------------------------------------------------------
7. NAME AND ADDRESS OF CONTRACTOR (No., street, city, country, State and ZIP Code)  8. DELIVERY

IRVINE SENSORS CORPORATION                                                          [_] FOB ORIGIN     [_] OTHER (See below)
3001 REDHILL AVE., BLDG. 4                                                        -------------------------------------------------
COSTA MESA, CA 92626                                                                9. DISCOUNT FOR PROMPT PAYMENT

                                                                                  -------------------------------------------------
                                                                                   10. SUBMIT INVOICES           ITEM
                                                                                   (4 copies unless other-
--------------------------------------------------------------------------------   wise specified) TO THE
CODE                                      FACILITY CODE                            ADDRESS SHOWN IN:             See Section G
-----------------------------------------------------------------------------------------------------------------------------------
11. SHIP TO/MARK FOR              CODE                           12. PAYMENT WILL BE MADE BY               CODE
                                      -------------------------                                                --------------------
See Section D

-----------------------------------------------------------------------------------------------------------------------------------
13. AUTHORITY FOR USING OTHER THAN FULL AND OPEN COMPETI-        14. ACCOUNTING AND APPROPRIATION DATA
    TION:                                                        See Attachment II

 [x]  10 U.S.C. 2304(c)(   6    )  [_] 41 U.S.C. 253(C)(        )
-----------------------------------------------------------------------------------------------------------------------------------
  15A. ITEM NO.                 15B. SUPPLIES/SERVICES               15C. QUANTITY    15D. UNIT    15E. UNIT PRICE    15F. AMOUNT
-----------------------------------------------------------------------------------------------------------------------------------
                  SEE ATTACHED PAGES                                                                                  $495,219.00

-----------------------------------------------------------------------------------------------------------------------------------
                                                                             15G. TOTAL AMOUNT OF CONTRACT           $   495,219.00
-----------------------------------------------------------------------------------------------------------------------------------
                                                16. TABLE OF CONTENTS
-----------------------------------------------------------------------------------------------------------------------------------
[X]  SEC.              DESCRIPTION                   PAGE(S) [X]  SEC.              DESCRIPTION                             PAGE(S)
-----------------------------------------------------------------------------------------------------------------------------------
                  PART I - THE SCHEDULE                                       PART II - CONTRACT CLAUSES
-----------------------------------------------------------------------------------------------------------------------------------
 X    A    SOLICITATION/CONTRACT FORM                  1      X    I    CONTRACT CLAUSES                                       5
-----------------------------------------------------------------------------------------------------------------------------------
 X    B    SUPPLIES OR SERVICES AND PRICES/COSTS       2           PART III - LIST OF DOCUMENTS, EXHIBITS AND OTHER ATTACH.
-----------------------------------------------------------------------------------------------------------------------------------
 X    C    DESCRIPTION/SPECS/WORK STATEMENT            2      X    J    LIST OF ATTACHMENTS                                   14
-----------------------------------------------------------------------------------------------------------------------------------
 X    D    PACKAGING AND MARKING                       2                 PART IV - REPRESENTATIONS AND INSTRUCTIONS
-----------------------------------------------------------------------------------------------------------------------------------
 X    E    INSPECTION AND ACCEPTANCE                   2           K    REPRESENTATIONS, CERTIFICATIONS AND
------------------------------------------------------------            OTHER STATEMENTS OF OFFERORS
 X    F    DELIVERIES OR PERFORMANCE                   3
-----------------------------------------------------------------------------------------------------------------------------------
 X    G    CONTRACT ADMINISTRATION DATA                3           L    INSTRS., CONDS., AND NOTICES TO OFFERORS
-----------------------------------------------------------------------------------------------------------------------------------
 X    H    SPECIAL CONTRACT REQUIREMENTS               4           M    EVALUATION FACTORS FOR AWARD
-----------------------------------------------------------------------------------------------------------------------------------
                                   CONTRACTING OFFICER WILL COMPLETE ITEM 17 OR 18 AS APPLICABLE
-----------------------------------------------------------------------------------------------------------------------------------

17. [x]  CONTRACTOR'S NEGOTIATED AGREEMENT (Contractor is    18. [_] AWARD (Contractor is not required to sign this document.) Your
  requited to sign this document and return _____2_____       offer on Solicitation Number________________________________________,
  copies to issuing office.) Contractor agrees to furnish     including the additions or changes made by you which additions or
  and deliver at [XXXX] or perform all the services set       changes are set forth in full above, is hereby accepted as to items
  forth or otherwise identified above and on any continu-     listed above and on any continuation sheets. This award consummates
  ation sheets for the consideration stated herein. The       the contract which consists of the following documents: (a) the
  rights and obligations of the parties to this contract      Government's solicitation and your offer, and (b) this award/contract,
  shall be subject to and governed by the following docu-     No further contractual document is necessary.
  ments: (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.)
-----------------------------------------------------------------------------------------------------------------------------------
19A. NAME AND TITLE OF SIGNER (Type or print)                20A. NAME OF CONTRACTING OFFICER
     John C. Carson                                               Christopher S. Massetti
     Chief Operating Officer                                      Contracting Officer
-----------------------------------------------------------------------------------------------------------------------------------
19B. NAME OF CONTRACTOR                19C. DATE SIGNED      20B. UNITED STATES OF AMERICA                 20C. DATE SIGNED
                                            3-19-02                                                             19 Mar 02
BY   /s/ John C. Carson                                      BY   /s/ Christopher S. Massetti
     ----------------------------------------                     ----------------------------------
     (Signature of person authorized to sign)                     (Signature of Contracting Officer)
-----------------------------------------------------------------------------------------------------------------------------------
NSN 7540-01-152-8069                                                                                   STANDARD FORM 26 (Rev. 4-85)
PREVIOUS EDITIONS UNUSABLE                                                                                        Prescribed by GSA
                                                                                                            FAR (48 CFR) 53.214 (a)
</TABLE>

<PAGE>

                                                 N39998-02-C-4510
                                                 Page 2 of 14 Pages

SECTION B -- SUPPLIES/SERVICES AND PRICES/COSTS

---------------------------------------------------------------------------
    Item                 Description                        Amount
---------------------------------------------------------------------------

---------------------------------------------------------------------------
 0001         FLAST Camera Characterization          $495,219
---------------------------------------------------------------------------

---------------------------------------------------------------------------
              Total Estimated Cost:                  $453,791
---------------------------------------------------------------------------
              FCCM:                                  $  8,165
---------------------------------------------------------------------------
              Fixed Fee:                             $ 33,263
---------------------------------------------------------------------------
              Total CPFF:                            $495,219
---------------------------------------------------------------------------

---------------------------------------------------------------------------
 0002         Data in Support of CLIN 0001 --                   NSP
              Contract Data Requirements List        (included in CLIN
              (CDRL) DD Form 1423                    0001)
---------------------------------------------------------------------------

PAYMENT OF FIXED FEE: The Government shall make payments on account of the fixed
fee equal to 7.33% of the amount of each invoice (less FCCM) submitted by the
             -----
Contractor under the Clauses entitled "Allowable Cost and Payment," FAR 52.216-7
and "Fixed Fee," FAR 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.

SECTION C -- DESCRIPTION/WORK STATEMENT

Item 0001 -- Shall be performed in accordance with the Statement of Work,
Attachment I, hereto.

Item 0002 -- Shall be performed in accordance with CDRLs (DD Form 1423), Exhibit
A, hereto.

SECTION D -- PACKAGING AND MARKING

All deliverables shall be sent to the Office of Special Technology at the
following address unless otherwise noted:

          Office of Special Technology
          10530 Riverview Road, Bldg. #3
          ATTN: Bill Vienna
          Ft. Washington, MD 20744

All packaging and marking of all deliverables shall be in accordance with best
commercial practices to ensure safe delivery at destination.

SECTION E -- INSPECTION AND ACCEPTANCE

Inspection and acceptance for all deliverables under this contract shall be
performed by the Contracting Officer Representative (COR) or his duly appointed
Government representative at the address stated in Section D.

<PAGE>

                                                 N39998-02-C-4510
                                                 Page 3 of 14 Pages

SECTION F - DELIVERIES OR PERFORMANCE

Items 0001/0002 - The period of performance for these items shall be ten (10)
                                                                     --------
months from the date of contract award. All deliverables shall be inspected and
------
accepted by that date.

SECTION G - CONTRACT ADMINISTRATION

G-1: Contract Administration
     -----------------------

Procuring Contracting Officer:            Christopher S. Massetti
                                          (301) 292-8533

Contract Specialist:                      Vanessa Boger
                                          (301) 203-2644

Contracting Officer Representative:       Bill Vienna
                                          (301) 203-2729

Contractor Representative:                Diane Kutner
                                          (714) 444-8712

G-2: Accounting and Appropriation Data
     ---------------------------------

The accounting and appropriation data sheet provided as "Attachment II", hereto,
applies to this contract.

G-3: Administrative Instructions for Billing
     ---------------------------------------

a.  Attention should be directed to FAR 52.232-25 entitled "Prompt Payment",
    which is incorporated into this contract by the applicable general provision
    in Section I herein. Furthermore, this provision shall be read and applied
    with the instructions herein.

b.  The contractor shall submit a proper invoice/voucher on Standard Form (SF)
    1034 Public Voucher; original and two (2) copies to the COR. All vouchers
    shall be submitted to the COR as set forth below:

                                  DOD, Office of Special Technology
                                  10530 Riverview Road, Bldg. #3
                                  Ft. Washington, MD 20744
                                  ATTN: Bill Vienna

Invoices/vouchers that do not conform to the aforementioned specifications will
be returned to the contractor for corrections. Payment will only be made on
properly submitted invoices/vouchers. After invoices/vouchers have been
approved, they shall be sent to the following payment address:

                                  Navy Systems Management Activity
                                  1931 Jefferson Davis Highway
                                  CM#3, Room 802 (Irene Wrtaza)
                                  Arlington, VA 22202-3528

<PAGE>

                                                 N39998-02-C-4510
                                                 Page 4 of 14 Pages

G-4: Contracting Officer's Representative DFARS (252.201-7000) DEC 91
     ----------------------------------------------------------------

(a) Definition. Contracting officer's representative means an individual
designated in accordance with subsection 201.602-2 of the Defense Federal
Acquisition Regulation Supplement and authorized in writing by the contracting
officer to perform specific technical or administrative functions.

(b) If the Contracting Officer designates a contracting officer representative
(COR), the Contractor will receive a copy of the written designation. It will
specify the extent of the COR's authority to act on behalf of the contracting
officer. The COR is not authorized to make any commitments or changes that will
affect price, quality, quantity, delivery, or any other term or condition of the
contract.

SECTION H - SPECIAL CONTRACT REQUIREMENTS
            -----------------------------

H-1 Functions/Limitations of the COR
H-2  Incorporated by Reference
H-3  Contract Dates

H-1 FUNCTIONS/LIMITATIONS OF THE COR
    --------------------------------

Bill Vienna is hereby designated the COR who will represent the Contracting
Officer in the administration of technical details within the scope of this
contract. Guidance and possibly surveillance will be furnished by the COR where
it is deemed to be necessary and proper. The Contractor shall not accept any
guidance outside the scope of this contract from any third party, including
business concerns being supported by this contract effort. All questions or
problems respecting administration of technical details shall be directed to the
COR for resolution.

The COR, Bill Vienna, is not otherwise authorized to make any representations or
commitments of any kind on behalf of the Contracting Officer or the Government.
Furthermore, neither the COR nor third parties have the authority to alter the
Contractor's obligations or change the specifications in the contract. if, as a
result of technical discussions with the COR, it is desirable to alter/change
contractual obligations or the "Statement of Work", changes must be issued (in
writing) and signed by the Contracting Officer herself.

H-2 INCORPORATED BY REFERENCE
    -------------------------

All specifications, exhibits, drawings or other documents which are referenced
in this contract, but are not attached hereto, are hereby incorporated by
reference.

H-3 CONTRACT DATES
    --------------

a. All periods of time referenced herein (unless otherwise stated) shall be
measured by calendar days, weeks, months as opposed to "work" days, weeks,
months.

b. With regard to due dates for submission of reports, data, hardware, etc.,
called for in Section F hereof, the Contractor will submit same in sufficient
time to allow for their arrival at the specified destination on or before the
due date indicated.

<PAGE>

                                                 N39998-02-C-4510
                                                 Page 5 of 14 Pages

SECTION 1
CONTRACT CLAUSES INCORPORATED BY REFERENCE
COST REIMBURSEMENT CONTRACTS (NOVEMBER 2001)

a. The following contract clauses of the Federal Acquisition Regulation (FAR)
(2001 Edition), the full text of which will be made available upon request, are
hereby incorporated in this contract by reference with the same force and effect
as if set forth in full:

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
 Clause No.   Title and Date                                                          FAR
---------------------------------------------------------------------------------------------------
    <S>       <C>                                                                     <C>
     1        Definitions (MAY 2001)                                                  52.202-1
              ( ) Alternate I (APR 1984)
---------------------------------------------------------------------------------------------------
     2        Gratuities (APR 1984)                                                   52.203-3
---------------------------------------------------------------------------------------------------
     3        Covenant Against Contingent Fees (APR 1984)                             52.203-5
---------------------------------------------------------------------------------------------------
     4        Restrictions on Subcontractor Sales to the Government (JUL              52.203-6
              1995)
---------------------------------------------------------------------------------------------------
     5        Anti-Kickback Procedures (JUL 1995)                                     52.203-7
---------------------------------------------------------------------------------------------------
     6        Cancellation, Recission and Recovery of Funds for Illegal or            52.203-8
              Improper Activity (JAN 1997)
---------------------------------------------------------------------------------------------------
     7        Price or Fee Adjustment for Illegal or Improper Activity (JAN           52.203-10
              1997)
---------------------------------------------------------------------------------------------------
     8        Certification and Disclosure Regarding Payments to Influence            52.203-11
              Certain Federal Transactions (APR 1991)
---------------------------------------------------------------------------------------------------
     9        Limitation on Payments to Influence Certain Federal                     52.203-12
              Transactions (JUN 1997)
---------------------------------------------------------------------------------------------------
    10        Printing/Copying Double-Sided on Recycled Paper (JUN 1996)              52.204-4
---------------------------------------------------------------------------------------------------
    11        Protecting the Government's Interest When Subcontracting with           52.209-6
              Contractors Debarred, Suspended or Proposed for Debarment
              (JUL 1995)
---------------------------------------------------------------------------------------------------
    12        Material Requirements (AUG 2000)                                        52.211-5
---------------------------------------------------------------------------------------------------
    13        Defense Priority and Allocation Requirements (SEP 1990)                 52.211-15
---------------------------------------------------------------------------------------------------
    14        Audit and Records - Negotiation(JUN 1999)                               52.215-2
              ( ) Alternate I (JAN 1997)
              ( ) Alternate II (APR 1998)
              ( ) Alternate III (JUN 1999)
---------------------------------------------------------------------------------------------------
    15        Order of Precedence--Uniform Contract Format (OCT 1997)                 52.215-8
---------------------------------------------------------------------------------------------------
    17        Allowable Cost and Payment (MAR 2000)                                   52.216-7
              Educational Institutions - change "31.2" to "31.3"
              State and Local Governments - change "31.2" to "31.4"
              For All Other Nonprofits - change "31.2" to "31.7"
---------------------------------------------------------------------------------------------------
    18        Utilization of Small Business Concerns (OCT 2000)                       52.219-8
---------------------------------------------------------------------------------------------------
    19        Notice to the Government of Labor Disputes (FEB 1997)                   52.222-1
---------------------------------------------------------------------------------------------------
    20        Contract Work Hours and Safety Standards Act--Overtime                  52.222-4
              Compensation (SEP 2000)
---------------------------------------------------------------------------------------------------
    21        Walsh-Healey Public Contracts Act (DEC 1996)                            52.222-20
---------------------------------------------------------------------------------------------------
    22        Prohibition of Segregated Facilities (FEB 1999)                         52.222-21
---------------------------------------------------------------------------------------------------
    23        Equal Opportunity (FEB 1999)                                            52.222-26
---------------------------------------------------------------------------------------------------
    24        Affirmative Action for Disabled Veterans and Veterans of the            52.222-35
              Vietnam Era (APR 1998)
</TABLE>

<PAGE>

                                                 N39998-02-C-4510
                                                 Page 6 of 14 Pages

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
 Clause No.   Title and Date                                                          FAR
---------------------------------------------------------------------------------------------------
    <S>       <C>                                                                     <C>
    25        Affirmative Action for Workers with Disabilities (JUN 1998)             52.222-36
---------------------------------------------------------------------------------------------------
    26        Employment Reports on Disabled Veterans and Veterans of the             52.222-37
              Vietnam Era (JAN 1999)
---------------------------------------------------------------------------------------------------
    27        Drug-Free Workplace (MAY 2001)                                          52.223-6
---------------------------------------------------------------------------------------------------
    28        Toxic Chemical Release Reporting (OCT 2000)                             52.223-14
---------------------------------------------------------------------------------------------------
    29        Restrictions on Certain Foreign Purchases (JUL 2000)                    52.225-13
---------------------------------------------------------------------------------------------------
    30        Notice and Assistance Regarding Patent Copyright Infringement           52.227-2
              (AUG 1996)
---------------------------------------------------------------------------------------------------
    31        Filing of Patent Applications--Classified Subject Matter (APR           52.227-10
              1984)
---------------------------------------------------------------------------------------------------
    32        Insurance--Liability to Third Persons (MAR 1996)                        52.228-7
---------------------------------------------------------------------------------------------------
    33        Limitation on Withholding of Payments (APR 1984)                        52.232-9
---------------------------------------------------------------------------------------------------
    34        Interest (JUN 1996)                                                     52.232-17
---------------------------------------------------------------------------------------------------
    35        Assignment of Claims (JAN 1986)                                         52.232-23
              (  ) Alternate I (APR 1984)
---------------------------------------------------------------------------------------------------
    36        Prompt Payment (MAY 2001)                                               52.232-25
---------------------------------------------------------------------------------------------------
    37        Disputes (DEC 1998)                                                     52.233-1
              (X) Alternate I (DEC 1991)
---------------------------------------------------------------------------------------------------
    38        Protest After Award (AUG 1996)                                          52.233-3
              (X) Alternate I (JUN 1985)
---------------------------------------------------------------------------------------------------
    39        Notice of Intent to Disallow Costs (APR 1984)                           52.242-1
---------------------------------------------------------------------------------------------------
    40        Bankruptcy (JUL 1995)                                                   52.242-13
---------------------------------------------------------------------------------------------------
    41        Stop-Work Order (AUG 1989)                                              52.242-15
              ( ) Alternate I (APR 1984)
---------------------------------------------------------------------------------------------------
    42        Subcontracts (AUG 1989)                                                 52.244-2
              ( ) Alternate I (AUG 1998)
              ( ) Alternate I1 (AUG 1998)
---------------------------------------------------------------------------------------------------
    43        Competition in Subcontracting (DEC 1996)                                52.244-5
---------------------------------------------------------------------------------------------------
    44        Government Property (Cost-Reimbursement, Time and Material,             52.245-5
              or Labor Hour Contracts) (DEVIATION) JAN 1986)
              ( ) Alternate I (JUL 1985)
---------------------------------------------------------------------------------------------------
    45        Use and Charges (DEVIATION) (APR 1984)                                  52.245-9
---------------------------------------------------------------------------------------------------
    46        Commercial Bill of Lading Notations (APR 1984)                          52.247-1
---------------------------------------------------------------------------------------------------
    47        Preference for U.S.-Flag Air Carriers (JAN 1997)                        52.247-63
---------------------------------------------------------------------------------------------------
    48        Termination (Cost Reimbursement) (SEP 1996)                             52.249-6
              ( ) Alternate I (SEP 1996)
              ( ) Alternate II (SEP 1996)
              ( ) Alternate III (SEP 1996)
              ( ) Alternate IV (SEP 1996)
              ( ) Alternate V (SEP 1996)
---------------------------------------------------------------------------------------------------
    49        Excusable Delays (APR 1984)                                             52.249-14
---------------------------------------------------------------------------------------------------
    50        Clauses Incorporated by Reference (FEB 1998)                            52.252-2
---------------------------------------------------------------------------------------------------
    51        Computer Generated Forms (JAN 1991)                                     52.253-1
---------------------------------------------------------------------------------------------------
</TABLE>

b. The following contract clauses of the Department of Defense FAR Supplement
(1998 Edition), the full text of which will be made available upon request, are
hereby incorporated in this contract by reference with the same force and effect
as if set forth in full:

<PAGE>

                                                 N39998-02-C-4510
                                                 Page 7 of 14 Pages

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
 Clause No.   Title and Date                                                          DFARS
-----------------------------------------------------------------------------------------------------
    <S>       <C>                                                                     <C>
     1        Prohibition on Persons Convicted of Fraud or Other Defense              252.203-7001
              Contract Related Felonies (MAR 1999)
-----------------------------------------------------------------------------------------------------
     2        Disclosure of Information (DEC 1991)                                    252.204-7000
-----------------------------------------------------------------------------------------------------
     3        Control of Government Personnel Work Product (APR 1992)                 252.204-7003
-----------------------------------------------------------------------------------------------------
     4        Required Central Contractor Registration (MAR 2000)
-----------------------------------------------------------------------------------------------------
     5        Oral Attestation of Security Responsibilities (AUG 1999)                252.204-7005
-----------------------------------------------------------------------------------------------------
     6        Acquisition From Subcontractors Subject to On-Site Inspection           252.209-7000
              Under the Intermediate-Range Nuclear Forces (INF) Treaty
              (NOV 1995)
-----------------------------------------------------------------------------------------------------
     7        Subcontracting With Firms That Are Owned or Controlled by the           252.209-7004
              Government of a Terrorist Country (MAR 1998)
-----------------------------------------------------------------------------------------------------
     8        Preference for Certain Domestic Commodities (AUG 2000)                  252.225-7012
-----------------------------------------------------------------------------------------------------
     9        Secondary Arab Boycott of Israel (JUN 1992)                             252.225-7031
-----------------------------------------------------------------------------------------------------
    10        Utilization of Indian Organizations and Indian-Owned Economic           252.226-7001
              Enterprises--DoD Contracts
-----------------------------------------------------------------------------------------------------
    11        Rights in Technical Data--Noncommercial Items (NOV 1995)                252.227-7013
-----------------------------------------------------------------------------------------------------
    12        Rights in Noncommercial Computer Software and                           252.227-7014
              Noncommercial Computer Software Documentation (JUN 1995)
              ( ) Alternate I (JUN 1995)
-----------------------------------------------------------------------------------------------------
    13        Rights in Bid or Proposal Information (JUN 1995)                        252.227-7016
-----------------------------------------------------------------------------------------------------
    14        Identification and Assertion of Use, Release, or Disclosure             252.227-7017
              Restrictions (JUN 1995)
-----------------------------------------------------------------------------------------------------
    15        Validation of Asserted Restrictions--Computer Software (JUN             252.227-7019
              1995)
-----------------------------------------------------------------------------------------------------
    16        Limitations on the Use or Disclosure of Government-Furnished            252.227-7025
              Information (JUN 1995)
-----------------------------------------------------------------------------------------------------
    17        Deferred Delivery of Technical Data or Computer Software                252.227-7026
              (APR 1988)
-----------------------------------------------------------------------------------------------------
    18        Deferred Ordering of Technical Data or Computer Software                252.227-7027
              (APR 1988)
-----------------------------------------------------------------------------------------------------
    19        Technical Data or Computer Software Previously Delivered to             252.227-7028
              the Government (JUN 1995)
-----------------------------------------------------------------------------------------------------
    20        Technical Data - Withholding of Payment (MAR 2000)                      252.227-7030
-----------------------------------------------------------------------------------------------------
    21        Declaration of Technical Data Conformity (JAN 1997)                     252.227-7036
-----------------------------------------------------------------------------------------------------
    22        Validation of Restrictive Markings on Technical Data (SEP               252.227-7037
              1999)
-----------------------------------------------------------------------------------------------------
    23        Supplemental Cost Principles (DEC 1991)                                 252.231-7000
-----------------------------------------------------------------------------------------------------
    24        Post Award Conference (Dec 1991)                                        252.242-7000
-----------------------------------------------------------------------------------------------------
    25        Requests for Equitable Adjustment (MAR 1998)                            252.243-7002
-----------------------------------------------------------------------------------------------------
    26        Reports of Government Property (MAY 1994)                               252.245-7001
-----------------------------------------------------------------------------------------------------
    27        Material Inspection and Receiving Report (DEC 1991)                     252.246-7000
-----------------------------------------------------------------------------------------------------
</TABLE>

c. The following contract clauses of the Federal Acquisition Regulation (FAR)
(2001 Edition), the full text of which will be made available upon request, are
hereby incorporated in this contract by reference with the same force and effect
as if set forth in full when the clause is preceded by an "X" in the "Effect"
column (clauses preceded by "N/A" are inapplicable to this acquisition):

<PAGE>

                                                 N39998-02-C-4510
                                                 Page 8 of 14 Pages

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
 Clause No.  Effect   Title and Date                                                  FAR
---------------------------------------------------------------------------------------------------
    <S>       <C>     <C>                                                             <C>
    1          X      Security Requirements (AUG 1996)                                52.204-2
                      ( ) Alternate I (APR 1984)
                      (X) Alternate II (APR 1984)
---------------------------------------------------------------------------------------------------
    2         N/A     Changes or Additions to Make-or-Buy Program (OCT                52.215-9
                      1997)
                      ( ) Alternate I (OCT 1997)
                      ( ) Alternate II (OCT 1997)
---------------------------------------------------------------------------------------------------
    3         N/A     Price Reduction for Defective Cost or Pricing Data              52.215-10
                      (OCT 1997)
---------------------------------------------------------------------------------------------------
    4         N/A     Price Reduction for Defective Cost or Pricing Data--            52.215-11
                      Modifications (OCT 1997)
---------------------------------------------------------------------------------------------------
    5         N/A     Subcontractor Cost or Pricing Data (OCT 1997)                   52.215-12
---------------------------------------------------------------------------------------------------
    6         N/A     Subcontractor Cost or Pricing Data--Modifications               52.215-13
                      (OCT 1997)
---------------------------------------------------------------------------------------------------
    7         N/A     Integrity of Unit Prices (OCT 1997)                             52.215-14
                      ( ) Alternate I (OCT 1997)
---------------------------------------------------------------------------------------------------
    7         N/A     Pension Adjustments and Asset Reversions (DEC 1998)             52.215-15
---------------------------------------------------------------------------------------------------
    8          X      Facilities Capital Cost of Money (OCT 1997)                     52.215-16
---------------------------------------------------------------------------------------------------
    9         N/A     Waiver of Facilities Capital Cost of Money (OCT 1997)           52.215-17
---------------------------------------------------------------------------------------------------
    10         X      Reversion or Adjustment of Plans for Postretirement             52.215-18
                      Benefits (PRB) Other than Pensions (OCT 1997)
---------------------------------------------------------------------------------------------------
    11         X      Notification of Ownership Changes (OCT 1997)                    52.215-19
---------------------------------------------------------------------------------------------------
    12        N/A     Requirements for Cost or Pricing Data or Information            52.215-20
                      Other than Cost or Pricing Data (OCT 1997)
                      ( ) Alternate I (OCT 1997) (see proposal instructions
                      for format)
                      ( ) Alternate II (OCT 1997) (see instructions for
                      ACO/Auditor addresses)
                      ( ) Alternate III (OCT 1997) (applies if submission by
                      electronic media is required)
                      ( ) Alternate IV (OCT 1997) (SF1411 not required;
                      information other than cost or pricing data is required)
---------------------------------------------------------------------------------------------------
    13        N/A     Requirements for Cost or Pricing Data or Information            52.215-21
                      Other than Cost or Pricing Data--Modifications (OCT
                      1997)
                      ( ) Alternate I (OCT 1997) (see proposal instructions
                      for format)
                      ( ) Alternate II (OCT 1997) (see instructions for
                      ACO/Auditor addresses)
                      ( ) Alternate III (OCT 1997) (applies if submission by
                      electronic media is required)
                      ( ) Alternate IV (OCT 1997) (SF1411 not required;
                      information other than cost or pricing data is required)
---------------------------------------------------------------------------------------------------
    14         X      Fixed Fee (MAR 1997)                                            52.216-8
---------------------------------------------------------------------------------------------------
    15        N/A     Incentive Fee (MAR 1997)                                        52.216-10
---------------------------------------------------------------------------------------------------
    16        N/A     Cost Contract--No Fee (APR 1984)                                52.216-11
</TABLE>

<PAGE>

                                                 N39998-02-C-4510
                                                 Page 9 of 14 Pages

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
 Clause No.  Effect   Title and Date                                                  FAR
---------------------------------------------------------------------------------------------------
    <S>       <C>     <C>                                                             <C>
    17        N/A     Cost Sharing Contract--No Fee (APR 1984)                        52.216-12
---------------------------------------------------------------------------------------------------
    18        N/A     Small Business Subcontracting Plan (OCT 2000)                   52.219-9
                      ( ) Alternate I (OCT 2000)
                      ( ) Alternate II (OCT 2000)
---------------------------------------------------------------------------------------------------
    19        N/A     Liquidated Damages--Subcontracting Plan (JAN 1999)              52.219-16
---------------------------------------------------------------------------------------------------
    20        N/A     Small Disadvantaged Business Participation Program--            52.219-25
                      Disadvantaged Status and Reporting (OCT 1999)
---------------------------------------------------------------------------------------------------
    21         X      Payment for Overtime Premiums (JUL 1990)                        52.222-2
                      The overtime premium is ZERO.
---------------------------------------------------------------------------------------------------
    22        N/A     Convict Labor (AUG 1996)                                        52.222-3
---------------------------------------------------------------------------------------------------
    23        N/A     Notification of Visa Denial (FEB 1999)                          52.222-29
---------------------------------------------------------------------------------------------------
    24        N/A     Pollution Prevention and Right-to-Know Information              52-223-5
                      (APR 1998)
---------------------------------------------------------------------------------------------------
    25        N/A     Utilization of Indian Organizations and Indian-Owned            52.226-1
                      Economic Enterprises (JUN 2000)
---------------------------------------------------------------------------------------------------
    26         X      Patent Indemnity (APR 1984)                                     52.227-3
---------------------------------------------------------------------------------------------------
    27         X      Patent Rights-Retention by the Contractor (Short Form)          52.227-11
                      (JUN 1997)
---------------------------------------------------------------------------------------------------
    28        N/A     Patent Rights-Retention by the Contractor (Long Form)           52.227-12
                      (JAN 1997)
---------------------------------------------------------------------------------------------------
    29        N/A     Patent Rights--Acquisition by the Government (JAN               52.227-13
                      1997)
---------------------------------------------------------------------------------------------------
    30        N/A     Additional Bond Security (OCT 1997)                             52.228-2
---------------------------------------------------------------------------------------------------
    31        N/A     Workers' Compensation Insurance (Defense Base Act)              52.228-3
                      (APR 1984)
---------------------------------------------------------------------------------------------------
    32        N/A     Taxes--Foreign Cost-Reimbursement Contracts (MAR                52.229-8
                      1990)
---------------------------------------------------------------------------------------------------
    33        N/A     Cost Accounting Standards (APR 1998)                            52.230-2
---------------------------------------------------------------------------------------------------
    34        N/A     Disclosure and Consistency of Cost Accounting                   52.230-3
                      Practices (APR 1998)
---------------------------------------------------------------------------------------------------
    35        N/A     Consistency in Cost Accounting Practices (AUG 1992)             52.230-4
---------------------------------------------------------------------------------------------------
    36        N/A     Cost Accounting Standards--Educational Institutions             52.230-5
                      (APR 1998)
---------------------------------------------------------------------------------------------------
    37        N/A     Administration of Cost Accounting Standards (NOV                52.230-6
                      1999)
---------------------------------------------------------------------------------------------------
    38         X      Limitation of Cost (APR 1984)                                   52.232-20
---------------------------------------------------------------------------------------------------
    39        N/A     Limitation of Funds (APR 1984)                                  52.232-22
---------------------------------------------------------------------------------------------------
    40         X      Payment by Electronic Funds Transfer--Central                   52.232-33
                      Contractor Registration (MAY 1999)
---------------------------------------------------------------------------------------------------
    41        N/A     Payment by Electronic Funds Transfer--Other Than                52.232-34
                      Central Contractor Registration (MAY 1999)
---------------------------------------------------------------------------------------------------
    42        N/A     Protection of Government Buildings, Equipment and               52.237-2
                      Vegetation (APR 1984)
---------------------------------------------------------------------------------------------------
    43         X      Privacy or Security Safeguards (AUG 1996)                       52.239-1
---------------------------------------------------------------------------------------------------
    44        N/A     Penalties for Unallowable Costs (MAY 2001)                      52.242-3
---------------------------------------------------------------------------------------------------
    45        N/A     Certification of Final indirect Costs (JAN 1997)                52.242-4
</TABLE>

<PAGE>

                                                 N39998-02-C-4510
                                                 Page 10 of 14 Pages

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
 Clause No.  Effect   Title and Date                                                  FAR
---------------------------------------------------------------------------------------------------
    <S>       <C>     <C>                                                             <C>
    46        N/A     F.O.B. Origin--Government Bills of Lading or Prepaid            52.242-10
                      Postage (APR 1984)
---------------------------------------------------------------------------------------------------
    47        N/A     F.O.B. Origin--Government Bills of Lading or Indicia            52.242-11
                      Mail (FEB 1993)
---------------------------------------------------------------------------------------------------
    48        N/A     Report of Shipment (REPSHIP) (JUL 1995)                         52.242-12
---------------------------------------------------------------------------------------------------
    49        N/A     Subcontracts for Commercial Items (MAY 2001)                    52.244-6
---------------------------------------------------------------------------------------------------
    50        N/A     Special Test Equipment (FEB 1993)                               52.245-18
---------------------------------------------------------------------------------------------------
    51        N/A     Higher Level Contract Quality Requirement (FEB 1999)            52.246-11
---------------------------------------------------------------------------------------------------
    52        N/A     Preference for Privately Owned U.S. Flag Commercial             52.247-64
                      Vessels (JUN 2000)
---------------------------------------------------------------------------------------------------
    53        N/A     Value Engineering (FEB 2000)                                    52.248-1
                      ( ) Alternate I (APR 1984)
                      ( ) Alternate II (FEB 2000)
                      ( ) Alternate III (APR 1984)
---------------------------------------------------------------------------------------------------
    54        N/A     Termination for Convenience of the Government                   52.249-5
                      (Educational and Other Nonprofit Institutions) (SEP
                      1996)
---------------------------------------------------------------------------------------------------
    55        N/A     Government Supply Sources (APR 1984)                            52.251-1
---------------------------------------------------------------------------------------------------
    56        N/A     Interagency Fleet Management System Vehicles and                52.251-2
                      Related Services (JAN 1991)
---------------------------------------------------------------------------------------------------
    57         X      Solicitation Provisions Incorporated by Reference (FEB 1998)    52.252-1
---------------------------------------------------------------------------------------------------
</TABLE>

d. The following contract clauses of the Department of Defense FAR Supplement
(1998 Edition), the full text of which will be made available upon request, are
hereby incorporated in this contract by reference with the same force and effect
as if set forth in full when the clause is preceded by an "X" in the "Effect"
column (clauses preceded by "N/A" are inapplicable to this acquisition):

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
 Clause No.  Effect   Title and Date                                                  DFARS
---------------------------------------------------------------------------------------------------
    <S>       <C>     <C>                                                             <C>
    1         N/A     Display of DOD Hotline Poster (DEC 1991)                        252.203-7002
---------------------------------------------------------------------------------------------------
    2         N/A     Payment for Subline Items Not Separately Priced (DEC            252.204-7002
                      1991)
--------------------------------------------------------------------------------------------------
    3         N/A     Intent to Furnish Precious Metals as Government-                252.208-7000
                      Furnished Material (DEC 1991)
---------------------------------------------------------------------------------------------------
    4         N/A     Military Recruiting on Campus (JAN 2000)                        252.209-7005
---------------------------------------------------------------------------------------------------
    5          X      Pricing Adjustments (DEC 1991)                                  252.215-7000
---------------------------------------------------------------------------------------------------
    6          X      Cost Estimating System Requirements (OCT 1998)                  252.215-7002
---------------------------------------------------------------------------------------------------
    7         N/A     Small, Small Disadvantaged and Women-Owned Small                252.219-7003
                      Business Subcontracting Plan (DOD Contracts) (APR 1996)
---------------------------------------------------------------------------------------------------
    8         N/A     Hazard Warning Labels (DEC 1991)                                252.223-7001
---------------------------------------------------------------------------------------------------
    9         N/A     Safety Precautions for Ammunition and Explosives                252.223-7002
                      (MAY 1994)
---------------------------------------------------------------------------------------------------
   10         N/A     Change in Place of Performance--Ammunition and                  252.223-7003
                      Explosives (DEC 1991)
---------------------------------------------------------------------------------------------------
   11         N/A     Drug-Free Work Force (SEP 1988)                                 252.223-7004
---------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                                                 N39998-02-C-4510
                                                 Page 11 of 14 Pages

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
 Clause No.  Effect   Title and Date                                                  DFARS
---------------------------------------------------------------------------------------------------
    <S>       <C>     <C>                                                             <C>
    12        N/A     Prohibition on Storage and Disposal of Toxic and                252.223-7006
                      Hazardous Materials (APR 1993)
---------------------------------------------------------------------------------------------------
    13        N/A     Safeguarding Sensitive Conventional Arms,                       252.223-7007
                      Ammunition, and Explosives (SEP 1999)
---------------------------------------------------------------------------------------------------
    14         X      Buy American Act--Balance of Payments Program                   252.225-7000
                      Certificate (SEP 1999)
---------------------------------------------------------------------------------------------------
    15         X      Buy American Act--Balance of Payments Program                   252.225-7001
                      (MAR 1998)
---------------------------------------------------------------------------------------------------
    16         X      Qualifying Country Sources as Subcontractors (DEC               252.225-7002
                      1991)
---------------------------------------------------------------------------------------------------
    17         X      Buy American Act--Trade Agreements--Balance of                  252.225-7006
                      Payments Program Certificate(MAR 1998)
---------------------------------------------------------------------------------------------------
    18         X      Buy American Act--Trade Agreements--Balance of                  252.225-7007
                      Payments Program (SEP 2001)
---------------------------------------------------------------------------------------------------
    19        N/A     Supplies to be Accorded Duty-Free Entry (MAR 1998)              252.225-7008
---------------------------------------------------------------------------------------------------
    20        N/A     Duty-Free Entry--Qualifying Country Supplies (End               252.225-7009
                      Products and Components) (AUG 2000)
---------------------------------------------------------------------------------------------------
    21        N/A     Duty-Free Entry--Additional Provisions (AUG 2000)               252.225-7010

---------------------------------------------------------------------------------------------------
    22        N/A     Preference for Domestic Specialty Metals (MAR 1998)             252.225-7014
                      ( ) Alternate I (MAR 1998)
---------------------------------------------------------------------------------------------------
    23         X      Restriction on Acquisition of Ball and Roller Bearings          252.225-7016
                      (DEC 2000)
---------------------------------------------------------------------------------------------------
    24        N/A     Trade Agreements (SEP 2001)                                     252.225-7021
---------------------------------------------------------------------------------------------------
    25        N/A     Restriction on Acquisition of Polyacrylonitrile (PAN)           252.225-7022
                      Carbon Fiber (JUN 1997)
---------------------------------------------------------------------------------------------------
    26         X      Restrictions on Acquisition of Forgings (JUN 1997)              252.225-7025
---------------------------------------------------------------------------------------------------
    27         X      Reporting of Contract Performance Outside the United            252.225-7026
                      States (JUN 2000)
---------------------------------------------------------------------------------------------------
    28        N/A     Preference for United States or Canadian Air Circuit            252.225-7029
                      Breakers (AUG 1998)
---------------------------------------------------------------------------------------------------
    29        N/A     Restriction on Acquisition of Carbon, Alloy, and Armor          252.225-7030
                      Steel Plate (OCT 1992)
---------------------------------------------------------------------------------------------------
    30        N/A     Waiver of United Kingdom Levies (OCT 1992)                      252.225-7032
---------------------------------------------------------------------------------------------------
    31         X      Buy American Act--North American Free Trade                     252.225-7035
                      Agreement Implementation Act--Balance of Payments
                      Program Certificate (MAR 1998)
---------------------------------------------------------------------------------------------------
    32         X      Buy American Act--North American Free Trade                     252.225-7036
                      Agreement Implementation Act--Balance of Payments
                      Program (MAR 1998)
---------------------------------------------------------------------------------------------------
    33        N/A     Duty-Free Entry--Eligible End Products (AUG 2000)               252.225-7037
---------------------------------------------------------------------------------------------------
    34        N/A     Antiterrorism/Force Protection for Defense Contractors          252.225-7043
                      Outside the United States (JUN 1998)
---------------------------------------------------------------------------------------------------
    35        N/A     Rights in Special Works (JUN 1995)                              252.227-7020
---------------------------------------------------------------------------------------------------
    36        N/A     Rights in Data - Existing Works (MAR 1979)                      252.227-7021
---------------------------------------------------------------------------------------------------
    37         X      Patents--Subcontracts (APR 1984)                                252.227-7034
---------------------------------------------------------------------------------------------------
    38         X      Patents--Reporting of Subject Inventions (APR 1990)             252.227-7039
---------------------------------------------------------------------------------------------------
    39        N/A     Aircraft Flight Risk (SEP 1996)                                 252.228-7002
</TABLE>

<PAGE>

                                                 N39998-02-C-4510
                                                 Page 12 of 14 Pages

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
 Clause No.  Effect   Title and Date                                                  DFARS
---------------------------------------------------------------------------------------------------
    <S>       <C>     <C>                                                             <C>
    40        N/A     Accident Reporting and Investigation Involving                  252.228-7005
                      Aircraft, Missiles and Space Launch Vehicles (DEC
                      1991)
---------------------------------------------------------------------------------------------------
    41        N/A     Notice of Earned Value Management System (MAR                   252.234-7000
                      1998)
---------------------------------------------------------------------------------------------------
    42        N/A     Earned Value Management System (MAR 1998)                       252.234-7001
---------------------------------------------------------------------------------------------------
    43         X      Indemnification Under 10 U.S.C. 2354--Cost                      252.235-7001
                      Reimbursement (DEC 1991)
---------------------------------------------------------------------------------------------------
    44        N/A     Frequency Authorization(DEC 1991)                               252.235-7003
---------------------------------------------------------------------------------------------------
    45        N/A     Protection Against Compromising Emanations (DEC                 252.239-7000
                      1991)
---------------------------------------------------------------------------------------------------
    46        N/A     Telecommunications Security Equipment, Devices,                 252.239-7016
                      Techniques and Services (DEC 1991)
---------------------------------------------------------------------------------------------------
    47        N/A     Material Management and Accounting System (DEC                  252.242-7004
                      2000)
---------------------------------------------------------------------------------------------------
    48        N/A     Cost/Schedule Status Report (MAR 1998)                          252.242-7005
---------------------------------------------------------------------------------------------------
    49        N/A     Cost/Schedule Status Report Plans (MAR 1997)                    252.242.7006
---------------------------------------------------------------------------------------------------
    50        N/A     Engineering Change Proposals (SEP 1999)                         252.243-7000
                      ( ) Alternate I (MAY 1994)
---------------------------------------------------------------------------------------------------
    51        N/A     Subcontracts for Commercial Items and Commercial                252.244-7000
                      Components (DoD Contracts) (MAR 2000)
---------------------------------------------------------------------------------------------------
    52        N/A     Government-Furnished Mapping, Charting and Geodesy              252.245-7000
                      Property (DEC 1991)
---------------------------------------------------------------------------------------------------
    53        N/A     Warranty of Data (DEC 1991)                                     252.246-7001
---------------------------------------------------------------------------------------------------
    54        N/A     Transportation of Supplies by Sea (MAR 2000)                    252.247-7023
---------------------------------------------------------------------------------------------------
    55        N/A     Notification of Transportation of Supplies by Sea (MAR          252.247-7024
                      2000)
---------------------------------------------------------------------------------------------------
    56         X      Ordering From Government Supply Sources (MAY                    252.251.7000
                      1995)
---------------------------------------------------------------------------------------------------
</TABLE>

g. The following contract clauses of the Federal Acquisition Regulation (FAR)
(2001 Edition), applicable to Cost Reimbursement Research & Development
contracts, the full text of which will be made available upon request, are
hereby incorporated in this contract by reference with the same force and effect
as if set forth in full:

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
 Clause No.  Title and Date                                                           FAR
---------------------------------------------------------------------------------------------------
    <S>      <C>                                                                      <C>
    1        Authorization and Consent (JUL 1995)                                     52.227-1
             ( ) Alternate I (APR 1984)
             ( ) Alternate II (APR 1984)
---------------------------------------------------------------------------------------------------
    2        Changes--Cost Reimbursement (AUG 1987)                                   52.243-2
             ( ) Alternate I (APR 1984)
             ( ) Alternate II (APR 1984)
             ( ) Alternate III (APR 1984)
             ( ) Alternate IV (APR 1984)
             ( ) Alternate V (APR 1984)
---------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                                                 N39998-02-C-4510
                                                 Page 13 of 14 Pages

h. The following contract clauses of the Federal Acquisition Regulation (FAR)
(2001 Edition), applicable to Cost Reimbursement Research & Development
contracts, the full text of which will be made available upon request, are
hereby incorporated in this contract by reference with the same force and effect
as if set forth in full when the clause is preceded by an "X" in the "Effect"
column (clauses preceded by "N/A" are inapplicable to this acquisition):

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
 Clause No.  Effect   Title and Date                                                  FAR
---------------------------------------------------------------------------------------------------
    <S>       <C>     <C>                                                             <C>
    1         X       Change Order Accounting (APR 1984)                              52.243-6
---------------------------------------------------------------------------------------------------
    2         X       Notification of Changes (APR 1984)                              52.243-7
---------------------------------------------------------------------------------------------------
    3         X       Inspection of Research and Development--Cost                    52.246-8
                      Reimbursement (MAY 2001)
---------------------------------------------------------------------------------------------------
    4        N/A      Inspection of Research and Development (Short                   52.246-9
                      Form) (APR 1984)
---------------------------------------------------------------------------------------------------
    5         X       Limitation of Liability (FEB 1997)                              52.246-23
---------------------------------------------------------------------------------------------------
    6        N/A      Limitation of Liability--High Value Items (FEB                  52.246-24
                      1997)
                      ( ) Alternate I (APR 1984)
                      (This clause applies to Item(s)________________)
---------------------------------------------------------------------------------------------------
</TABLE>

i. The following contract clauses of the Federal Acquisition Regulation (FAR)
(2001 Edition), applicable to Cost Reimbursement Supply contracts, the full
text of which will be made available upon request, are hereby incorporated in
this contract by reference with the same force and effect as if set forth in
full:

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
 Clause No.   Title and Date                                                          FAR
---------------------------------------------------------------------------------------------------
    <S>       <C>                                                                     <C>
    1         Child Labor--Cooperation with Authorities and Remedies                  52.222-19
              (FEB 2001)
---------------------------------------------------------------------------------------------------
    2         Authorization and Consent (JUL 1995)                                    52.227-1
              ( ) Alternate I (APR  1984)
              ( ) Alternate II (APR  1984)
---------------------------------------------------------------------------------------------------
    3         Changes--Cost Reimbursement (AUG 1987)                                  52.243-2
---------------------------------------------------------------------------------------------------
    4         Inspection of Supplies--Cost Reimbursement (MAY 2001)                   52.246-3
---------------------------------------------------------------------------------------------------
</TABLE>

j . The following contract clauses of the Federal Acquisition Regulation (FAR)
(2001 Edition), applicable to Cost Reimbursement Supply contracts, the full text
of which will be made available upon request, are hereby incorporated in this
contract by reference with the same force and effect as if set forth in full
when the clause is preceded by an "X" in the "Effect" column (clauses preceded
by "N/A" are inapplicable to this acquisition):

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
 Clause No.  Effect   Title and Date                                                  FAR
---------------------------------------------------------------------------------------------------
    <S>       <C>     <C>                                                             <C>
    1         N/A     Qualification Requirements (FEB 1995)                           52.209-1
---------------------------------------------------------------------------------------------------
    2         N/A     Production Progress Reports (APR 1991)                          52.242-2
---------------------------------------------------------------------------------------------------
    3          X      Change Order Accounting (APR 1984)                              52.243-6
---------------------------------------------------------------------------------------------------
    4          X      Notification of Changes (APR 1984)                              52.243-7
---------------------------------------------------------------------------------------------------
    5         N/A     Contractor Inspection Requirements (APR 1984)                   52.246-1
---------------------------------------------------------------------------------------------------
    6         N/A     Certificate of Conformance (APR 1984)                           52.246-15
---------------------------------------------------------------------------------------------------
    7          X      Limitation of Liability (FEB 1997)                              52.246-23
---------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                                                 N39998-02-C-4510
                                                 Page 14 of 14 Pages

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
 Clause No.  Effect   Title and Date                                                  FAR
---------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------
    <S>      <C>      <C>                                                             <C>
    8        N/A      Limitation of Liability--High Value Items (FEB                  52.246-24
                      1997)
                     ( ) Alternate (APR 1984)
                     (This clause applies to Item(s)_____________)
---------------------------------------------------------------------------------------------------
</TABLE>

SECTION J - LIST OF ATTACHMENTS
            -------------------

ATTACHMENT I - Statement of Work

ATTACHMENT II - Accounting and Appropriation Data Sheet

EXHIBIT A - Contract Data Requirements List (CDRL)

THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.

<PAGE>

<TABLE>
<CAPTION>
               <S>                                                                         <C>
-------------------------------------------------------------------------------------------------------------------
              CONTRACT DATA REQUIREMENTS LIST                                                Form Approved
                     (2 Data Items)                                                        OMB No. 0704-0188
-------------------------------------------------------------------------------------------------------------------
Public reporting burden for this collection of information is estimated to average 440 hours per response,
including the time for reviewing instructions, searching existing data sources, gathering and maintaining the 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
Department of Defense, 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, Please DO NOT RETURN your form to either of these
addresses. Send completed form to the Government Issuing Contracting Officer for the Contract/PR No. listed in
Block E.
-------------------------------------------------------------------------------------------------------------------
A. CONTRACT LINE ITEM NO.         B. EXHIBIT            C. CATEGORY:
                                                           TDP____________  TM___________ OTHER_______________
-------------------------------------------------------------------------------------------------------------------
D. SYSTEM/ITEM                         E. CONTRACT/PR NO.                      F. CONTRACTOR
     FLAST Camera Characterization                      TBD                             Irvine Sensors Corporation
------------------------------------------------------------------------------------------------------------------- ---------------
1. DATA ITEM NO.   2. TITLE OF DATA ITEM                                       3. SUBTITLE                          17. PRICE GROUP

       A001                   Contractor's Monthly Status Report                    FLAST Camera Characterization
------------------------------------------------------------------------------------------------------------------- ---------------
4. AUTHORITY (Data Acquisition         5. CONTRACT REFERENCE                       6. REQUIRING OFFICE              18. ESTIMATED
   Document No.)                                                                                                        TOTAL PRICE
                 DI-MGMT-80227                     SOW Paragraph 3.2                  Office of Special Technology
--------------------------------------------------------------------------------------------------------------------
7. DD 250 REQ      9. DIST STATEMENT    10. FREQUENCY     12. DATE OF FIRST SUB.   14.        DISTRIBUTION
          LT          REQUIRED                  MTHLY            See Block 16      ---------------------------------
-------------------                     -------------------------------------------                     b. COPIES
8. APP CODE                             11. AS OF DATE    13. DATE OF SUBS. SUB.                  ------------------ --------------
                             B              See Block 16                             a. ADDRESSEE           Final
                                                                                                   Draft -----------
                                                                                                         Reg   Repro
--------------------------------------------------------------------------------------------------------------------
16. REMARKS                                                                         OST                     1
Contractor's Format Acceptable                                                     ---------------------------------
15 Days after the beginning of first full month of task, monthly thereafter.       ---------------------------------
                                                                                   ---------------------------------
                                                                                   ---------------------------------
                                                                                   ---------------------------------
                                                                                   ---------------------------------
                                                                                   ---------------------------------
                                                                                   ---------------------------------
                                                                                   ---------------------------------
                                                                                   ---------------------------------
                                                                                   ---------------------------------
                                                                                   ---------------------------------
                                                                                   ---------------------------------
                                                                                   ---------------------------------
                                                                                   15. TOTAL -------- >     1
-------------------------------------------------------------------------------------------------------------------- ---------------
1. DATA ITEM NO     2. TITLE OF DATA ITEM                                       3. SUBTITLE                          17. PRICE GROUP

       A002                   Contractor's Final Report                             FLAST Camer Characterization
-------------------------------------------------------------------------------------------------------------------- --------------
4. AUTHORITY (Data Acquisition         5. CONTRACT REFERENCE                       6. REQUIRING OFFICE               18. ESTIMATED
   Document No.)                                                                                                         TOTAL PRICE
                 DI-MISC-80447                        SOW Paragraph 3.2
--------------------------------------------------------------------------------------------------------------------
7. DD 250 REQ      9. DIST STATEMENT    10. FREQUENCY     12. DATE OF FIRST SUB.   14.        DISTRIBUTION
          LT          REQUIRED                  OTIME                    EOC       ---------------------------------
-------------------                     -------------------------------------------                     b. COPIES
8. APP CODE                             11. AS OF DATE    13. DATE OF SUBS. SUB.                  ------------------ --------------
                             F                                                      a. ADDRESSEE           Final
                                                                                                   Draft -----------
                                                                                                         Reg   Repro
--------------------------------------------------------------------------------------------------------------------
16. REMARKS                                                                         OST                     2
                                                                                   ---------------------------------
                                                                                   ---------------------------------
                                                                                   ---------------------------------
                                                                                   ---------------------------------
                                                                                   ---------------------------------
                                                                                   ---------------------------------
                                                                                   ---------------------------------
                                                                                   ---------------------------------
                                                                                   ---------------------------------
                                                                                   ---------------------------------
                                                                                   ---------------------------------
                                                                                   ---------------------------------
                                                                                   ---------------------------------
                                                                                   ---------------------------------
                                                                                   15. TOTAL -------- >     2
--------------------------------------------------------------------------------------------------------------------
G. PREPARED BY                     H. DATE            I. APPROVED BY                               J. DATE
     /s/                                  7/02/02
--------------------------------------------------------------------------------------------------------------------
DD FORM 1423-2, JUN 90 (EF)         PREVIOUS EDITIONS ARE OBSOLETE.                           Page_____of_____Pages
</TABLE>

<PAGE>

                                                 Page ____ of ____

<TABLE>
    <S>                                            <C>
    CONTRACT NO. :  N39998-02-C-4510               CONTRACT MOD. NO. :  BASIC
                    ----------------------                              --------------

    CONTRACTOR:  IRVINE SENSORS                    TASK ORDER NO. :                      TASK MOD. NO. :
                ------------------------                           -------------------                  ------------------
</TABLE>

<TABLE>
<CAPTION>
  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>
       0001        AA    1721319   F4KW     000    39998    0    068941    2D   000000   A920YW002152         $    495,219.00
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
Obligation of funds is authorized in the amounts shown in the amount column above             GRAND TOTAL     $    495,219.00
                                                                                                              ------------------
</TABLE>

SIGNATURE:  /s/                                               DATE: 13 MAR 02
            -----------------------------------                     ------------<PAGE>

                                                                    EXHIBIT 10.4

                               PROMISSORY NOTE AND
                               SECURITY AGREEMENT

1.   Note. For value received, Irvine Sensors Corp. unconditionally promises to
pay to the order of _______________, ("holder") the principal sum of Fifty
Thousand dollars and no/00 ($50,000.00) on or before May 30, 2002. This Note is
a non-interest bearing note.

2.   Security Interest. To secure payment of this Note, and of any other
liability of Irvine Sensors Corp. to the holder hereof, due or to become due, or
that may be hereafter contracted or existing regardless of how acquired by the
holder, Irvine Sensors Corp. agrees to grant a security interest in the
collateral set forth in Paragraph 4 herein.

3.   Attachment and Obligation Secured. The security interest hereby created
shall attach immediately on execution of and shall secure the payment, according
to the terms of this Note.

4.   Description of Collateral. The Collateral covered by this Agreement and in
which a security interest is hereby granted and transferred to the holder is as
follows:

                  Receipts due Irvine Sensors Corp. pursuant to
                   U.S. Army CECOM Contract #DAAB07-02-C-P608.

5.   Release of Security Interest. Upon full payment of principal due on this
     Note, the holder releases any security interest it may have in the
     Collateral.

6.   Governing Law. This Note shall be construed under the Laws of the State of
     California, including the Uniform Commercial Code as in force in the State
     of California.

Date:    March 16, 2002

IRVINE SENSORS CORPORATION

____________________________
John J. Stuart
Chief Financial Officer

<PAGE>

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED
OR EXERCISED UNLESS AND UNTIL SUCH WARRANT AND/OR SHARES OF COMMON STOCK IS
REGISTERED UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
IS OBTAINED TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED. THIS WARRANT
AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT ARE
SUBJECT TO THE RESTRICTIONS ON TRANSFER SET FORTH IN SECTIONS 4 AND 10 OF THIS
WARRANT.

Warrant No. PN0202                               Number of Shares: 25,000

Date of Issuance:  March 16, 2002

                           IRVINE SENSORS CORPORATION
                          Common Stock Purchase Warrant
                          (Void after Eighteen Months)

         Irvine Sensors Corporation, a Delaware corporation (the "Company"), for
value received, hereby certifies that _______________ or his registered assigns
(the "Registered Holder"), is entitled, subject to the terms and conditions set
forth below, to purchase from the Company, at any time or from time to time
commencing on or after nine months from the date of issuance (the "Original
Issuance Date") and on or before 5:00 p.m. (Pacific time) on September 16, 2003
(the "Termination Date") shares of Common Stock of the Company, at a purchase
price of $1.20 per share. The shares purchasable upon exercise of this Warrant,
and the purchase price per share, each as adjusted from time to time pursuant to
the provisions of this Warrant, are hereinafter referred to as the "Warrant
Shares" and the "Purchase Price," respectively.

1.  Exercise.

         (a) This Warrant may be exercised by the Registered Holder, in whole or
in part, by surrendering this Warrant, with the purchase form appended hereto as
Exhibit I duly executed by the Registered Holder or by the Registered Holder's
duly authorized attorney, at the principal office of the Company, or at such
other office or agency as the Company may designate, accompanied by payment in
full, in lawful money of the United States, of the Purchase Price payable in
respect of the number of Warrant Shares purchased upon such exercise.

         (b) Each exercise of this Warrant shall be deemed to have been effected
immediately prior to the close of business on the day on which this Warrant
shall have been surrendered to the Company as provided in subsection 1(a) above
accompanied by payment in full of the Purchase Price (the "Exercise Date"). At
such time, the person or persons in whose name or names any certificates for
Warrant Shares shall be issuable upon such exercise as provided in subsection
1(c) below shall be deemed to have become the holder or holders of record of the
Warrant Shares represented by such certificates.

<PAGE>

         (c) As soon as practicable after the exercise of this Warrant in full
or in part, and in any event within 5 business days thereafter, the Company, at
its expense, will cause to be issued in the name of, and delivered to, the
Registered Holder, or as such Holder (upon payment by such Holder of any
applicable transfer taxes) may direct:

                  (i)  a certificate or certificates for the number of full
         Warrant Shares to which the Registered Holder shall be entitled upon
         such exercise plus, in lieu of any fractional share to which the
         Registered Holder would otherwise be entitled, cash in an amount
         determined pursuant to Section 3 hereof; and

                  (ii) in case such exercise is in part only, a new warrant or
         warrants (dated the date hereof) of like tenor, calling in the
         aggregate on the face or faces thereof for the number of remaining
         Warrant Shares.

         (d) In the event that the Company's common stock has traded on the
Nasdaq SmallCap Market, or comparable exchange, at a price of $2.00 per share or
greater, as adjusted for any events described in Section 2 hereof, for ten
consecutive trading days, the Company, at its sole discretion, may elect to
demand call the exercise of this Warrant; provided however, that such call may
not be made unless and until the Warrant Shares have previously been registered
for resale pursuant to a registration statement declared effective by the
Securities and Exchange Commission.

2.  Adjustments.

         (a) Adjustment for Stock Splits and Combinations. If the Company shall
at any time or from time to time after the date on which this Warrant was first
issued (the "Original Issue Date") effect a subdivision of the outstanding
Common Stock, the Purchase Price then in effect immediately before that
subdivision shall be proportionately decreased. If the Company shall at any time
or from time to time after the Original Issue Date combine the outstanding
shares of Common Stock, the Purchase Price then in effect immediately before the
combination shall be proportionately increased. Any adjustment under this
paragraph shall become effective at the close of business on the date the
subdivision or combination becomes effective.

         (b) Adjustment for Certain Dividends and Distributions. In the event
the Company at any time, or from time to time after the Original Issue Date
shall make or issue, or fix a record date for the determination of holders of
Common Stock entitled to receive, a dividend or other distribution payable in
additional shares of Common Stock, then and in each such event the Purchase
Price then in effect immediately before such event shall be decreased as of the
time of such issuance or, in the event such a record date shall have been fixed,
as of the close of business on such record date, by multiplying the Purchase
Price then in effect by a fraction:

                  (1)  the numerator of which shall be the total number of
         shares of Common Stock issued and outstanding immediately prior to the
         time of such issuance or the close of business on such record date, and

                                       2

<PAGE>

                  (2)  the denominator of which shall be the total number of
         shares of Common Stock issued and outstanding immediately prior to the
         time of such issuance or the close of business on such record date plus
         the number of shares of Common Stock issuable in payment of such
         dividend or distribution;

provided, however, if such record date shall have been fixed and such dividend
is not fully paid or if such distribution is not fully made on the date fixed
therefor, the Purchase Price shall be recomputed accordingly as of the close of
business on such record date and thereafter the Purchase Price shall be adjusted
pursuant to this paragraph as of the time of actual payment of such dividends or
distributions.

         (c) Adjustment in Number of Warrant Shares. When any adjustment is
required to be made in the Purchase Price pursuant to subsections 2(a) or 2(b),
the number of Warrant Shares purchasable upon the exercise of this Warrant shall
be changed to the number determined by dividing (i) an amount equal to the
number of shares issuable upon the exercise of this Warrant immediately prior to
such adjustment, multiplied by the Purchase Price in effect immediately prior to
such adjustment, by (ii) the Purchase Price in effect immediately after such
adjustment.

         (d) Adjustments for Other Dividends and Distributions. In the event the
Company at any time or from time to time after the Original Issue Date shall
make or issue, or fix a record date for the determination of holders of Common
Stock entitled to receive, a dividend or other distribution payable in
securities of the Company (other than shares of Common Stock) or in cash or
other property (other than cash out of earnings or earned surplus, determined in
accordance with generally accepted accounting principles), then and in each such
event provision shall be made so that the Registered Holder shall receive upon
exercise hereof, in addition to the number of shares of Common Stock issuable
hereunder, the kind and amount of securities of the Company and/or cash and
other property which the Registered Holder would have been entitled to receive
had this Warrant been exercised into Common Stock on the date of such event and
had the Registered Holder thereafter, during the period from the date of such
event to and including the Exercise Date, retained any such securities
receivable, giving application to all adjustments called for during such period
under this Section 2 with respect to the rights of the Registered Holder.

         (e) Adjustment for Mergers or Reorganizations, etc. If there shall
occur any reorganization, recapitalization, consolidation or merger involving
the Company in which the Common Stock is converted into or exchanged for
securities, cash or other property (other than a transaction covered by
subsections 2(a), 2(b) or 2(d)), then, following any such reorganization,
recapitalization, consolidation or merger, the Registered Holder shall receive
upon exercise hereof the kind and amount of securities, cash or other property
which the Registered Holder would have been entitled to receive if, immediately
prior to such reorganization, recapitalization, consolidation or merger, the
Registered Holder had held the number of shares of Common Stock subject to this
Warrant. Notwithstanding the foregoing sentence, if (x) there shall occur any
reorganization, recapitalization, consolidation or merger involving the Company
in which the Common Stock is converted into or exchanged for anything other than
solely equity securities, and (y) the common stock of the acquiring or surviving
company is publicly traded, then, as part of any such reorganization,
recapitalization, consolidation or merger, (i) the Registered Holder

                                       3

<PAGE>

shall have the right thereafter to receive upon the exercise hereof such number
of shares of common stock of the acquiring or surviving company as is determined
by multiplying (A) the number of shares of Common Stock then subject to this
Warrant by (B) a fraction, the numerator of which is the Fair Market Value per
share of Common Stock as of the effective date of such transaction, and the
denominator of which is the fair market value per share of common stock of the
acquiring or surviving company as of the effective date of such transaction, as
determined in good faith by the Board of Directors of the Company, and (ii) the
exercise price per share of common stock of the acquiring or surviving company
shall be the Purchase Price divided by the fraction referred to in clause (B)
above. In any such case, appropriate adjustment (as determined in good faith by
the Board of Directors of the Company) shall be made in the application of the
provisions set forth herein with respect to the rights and interests thereafter
of the Registered Holder, to the end that the provisions set forth in this
Section 2 (including provisions with respect to changes in and other adjustments
of the Purchase Price) shall thereafter be applicable, as nearly as reasonably
may be, in relation to any securities, cash or other property thereafter
deliverable upon the exercise of this Warrant.

         The Fair Market Value per share of Common Stock shall be determined as
follows:

             (i)  If the Common Stock is listed on a national securities
exchange, the Nasdaq Stock Market or another nationally recognized trading
system (including, without limitation, the OTC Bulletin Board and, if the
average daily trading volume for the preceding 10 days has been at least 100,000
shares, the Pink Sheets) as of the Exercise Date, the Fair Market Value per
share of Common Stock shall be deemed to be the average of the high and low
reported sale prices per share of Common Stock thereon on the trading day
immediately preceding the effective date of the transaction (provided that if no
such price is reported on such day, the Fair Market Value per share of Common
Stock shall be determined pursuant to clause (ii)).

             (ii) If the Common Stock is not listed on a national securities
exchange, the Nasdaq Stock Market or another nationally recognized trading
system, the Fair Market Value per share of Common Stock shall be deemed to be
the amount most recently determined by the Board of Directors to represent the
fair market value per share of the Common Stock.

         (f) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Purchase Price pursuant to this Section 2, the
Company at its expense shall promptly compute such adjustment or readjustment in
accordance with the terms hereof and furnish to the Registered Holder a
certificate setting forth such adjustment or readjustment (including the kind
and amount of securities, cash or other property for which this Warrant shall be
exercisable and the Purchase Price) and showing in detail the facts upon which
such adjustment or readjustment is based. The Company shall, upon the written
request at any time of the Registered Holder, furnish or cause to be furnished
to the Registered Holder a certificate setting forth (i) the Purchase Price then
in effect and (ii) the number of shares of Common Stock and the amount, if any,
of other securities, cash or property which then would be received upon the
exercise of this Warrant.

3.  Fractional Shares.

                                       4

<PAGE>

         The Company shall not be required upon the exercise of this Warrant to
issue any fractional shares, but shall make an adjustment therefor in cash on
the basis of the Fair Market Value per share of Common Stock, as determined
pursuant to the following.

         (a) If the Common Stock is listed on a national securities exchange,
the Nasdaq Stock Market or another nationally recognized trading system
(including, without limitation, the OTC Bulletin Board and, if the average daily
trading volume for the preceding 10 days has been at least 100,000 shares, the
Pink Sheets) as of the Exercise Date, the Fair Market Value per share of Common
Stock shall be deemed to be the average of the high and low reported sale prices
per share of Common Stock thereon on the trading day immediately preceding the
Exercise Date (provided that if no such price is reported on such day, the Fair
Market Value per share of Common Stock shall be determined pursuant to clause
(b)).

         (b) If the Common Stock is not listed on a national securities
exchange, the Nasdaq Stock Market or another nationally recognized trading
system as of the Exercise Date, the Fair Market Value per share of Common Stock
shall be deemed to be the amount most recently determined by the Board of
Directors to represent the fair market value per share of the Common Stock
(including without limitation a determination for purposes of granting Common
Stock options or issuing Common Stock under an employee benefit plan of the
Company).

4.  Requirements for Transfer.

         (a) This Warrant and the Warrant Shares shall not be sold or
transferred unless either (i) they first shall have been registered under the
Securities Act of 1933, as amended (the "Act"), or (ii) the Company first shall
have been furnished with an opinion of legal counsel, reasonably satisfactory to
the Company, to the effect that such sale or transfer is exempt from the
registration requirements of the Act.

         (b) Notwithstanding the foregoing, no registration or opinion of
counsel shall be required for (i) a transfer by a Registered Holder which is a
corporation to a wholly owned subsidiary of such corporation, a transfer by a
Registered Holder which is a partnership to a partner of such partnership or a
retired partner of such partnership or to the estate of any such partner or
retired partner, a transfer by a Registered Holder which is a limited liability
company to a member of such limited liability company or a retired member or to
the estate of any such member or retired member, or a transfer by a Registered
Holder which is a member of the National Association of Securities Dealers (the
"NASD") to an officer or employee of the Registered Holder as permitted by NASD
rules, provided that the transferee in each case agrees in writing to be subject
to the terms of this Section 4, or (ii) a transfer made in accordance with Rule
144 under the Act.

         (c) Each certificate representing Warrant Shares shall bear a legend
substantially in the following form:

         "The securities represented by this certificate have not been
         registered under the Securities Act of 1933, as amended, and may not be
         offered, sold or otherwise transferred, pledged or hypothecated unless
         and until such securities are registered

                                       5

<PAGE>

         under such Act or an opinion of counsel satisfactory to the Company is
         obtained to the effect that such registration is not required."

The foregoing legend shall be removed from the certificates representing any
Warrant Shares, at the request of the holder thereof, at such time as they
become eligible for resale pursuant to Rule 144(k) under the Act or if an
effective registration statement is then in effect permitting the resale of the
Warrant Shares.

         (d) The Company will use its reasonable efforts to register the Warrant
Shares for resale. However, the Company can make no guarantees as to when, or
if, the Securities and Exchange Commission will declare a registration statement
covering the Warrant Shares to be effective.

5.  No Impairment.

         The Company will not, by amendment of its charter or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the holder of this Warrant against impairment.

6.  Notices of Record Date, etc.

         In the event:

         (a) the Company shall take a record of the holders of its Common Stock
(or other stock or securities at the time deliverable upon the exercise of this
Warrant) for the purpose of entitling or enabling them to receive any dividend
or other distribution, or to receive any right to subscribe for or purchase any
shares of stock of any class or any other securities, or to receive any other
right; or of any capital reorganization of the Company, any reclassification of
the Common Stock of the Company, any consolidation or merger of the Company with
or into another corporation (other than a consolidation or merger in which the
Company is the surviving entity and its Common Stock is not converted into or
exchanged for any other securities or property), or any transfer of all or
substantially all of the assets of the Company; or

         (b) of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company,

then, and in each such case, the Company will mail or cause to be mailed to the
Registered Holder a notice specifying, as the case may be, (i) the record date
for such dividend, distribution or right, and the amount and character of such
dividend, distribution or right, or (ii) the effective date on which such
reorganization, reclassification, consolidation, merger, transfer, dissolution,
liquidation or winding-up is to take place, and the time, if any is to be fixed,
as of which the holders of record of Common Stock (or such other stock or
securities at the time deliverable upon the exercise of this Warrant) shall be
entitled to exchange their shares of Common Stock

                                       6

<PAGE>

(or such other stock or securities) for securities or other property deliverable
upon such reorganization, reclassification, consolidation, merger, transfer,
dissolution, liquidation or winding-up. Such notice shall be mailed at least ten
days prior to the record date or effective date for the event specified in such
notice.

7.  Reservation of Stock.

         The Company will at all times reserve and keep available, solely for
issuance and delivery upon the exercise of this Warrant, such number of Warrant
Shares and other securities, cash and/or property, as from time to time shall be
issuable upon the exercise of this Warrant.

8.  Exchange of Warrants.

         Upon the surrender by the Registered Holder, properly endorsed, to the
Company at the principal office of the Company, the Company will, subject to the
provisions of Section 4 hereof, issue and deliver to or upon the order of such
Holder, at the Company's expense, a new Warrant or Warrants of like tenor, in
the name of the Registered Holder or as the Registered Holder (upon payment by
the Registered Holder of any applicable transfer taxes) may direct, calling in
the aggregate on the face or faces thereof for the number of shares of Common
Stock (or other securities, cash and/or property) then issuable upon exercise of
this Warrant.

9.  Replacement of Warrants.

         Upon receipt of evidence reasonably satisfactory to the Company of the
loss, theft, destruction or mutilation of this Warrant and (in the case of loss,
theft or destruction) upon delivery of an indemnity agreement (with surety if
reasonably required) in an amount reasonably satisfactory to the Company, or (in
the case of mutilation) upon surrender and cancellation of this Warrant, the
Company will issue, in lieu thereof, a new Warrant of like tenor.

10. Transfers, etc.

         (a) The Company will maintain a register containing the name and
address of the Registered Holder of this Warrant. The Registered Holder may
change its or his address as shown on the warrant register by written notice to
the Company requesting such change.

         (b) Subject to the provisions of Section 4 hereof, this Warrant and all
rights hereunder are transferable, in whole or in part, upon surrender of this
Warrant with a properly executed assignment (in the form of Exhibit II hereto)
at the principal office of the Company.

         (c) Until any transfer of this Warrant is made in the warrant register,
the Company may treat the Registered Holder as the absolute owner hereof for all
purposes; provided, however, that if and when this Warrant is properly assigned
in blank, the Company may (but shall not be

                                       7

<PAGE>

obligated to) treat the bearer hereof as the absolute owner hereof for all
purposes, notwithstanding any notice to the contrary.

11. Representations of the Registered Holder.

         The Registered Holder of this Warrant represents and warrants to the
Company as follows:

         (a) Investment. The Registered Holder is acquiring this Warrant and the
Warrant Shares issuable upon the exercise of this Warrant, for its own account
for investment and not with a view to, or for sale in connection with, any
distribution thereof, nor with any present intention of distributing or selling
the same, except as otherwise may be permitted under applicable securities laws.

         (b) Authority. The Registered Holder has full power and authority to
enter into and to perform this Warrant in accordance with its terms. The
Registered Holder has not been organized specifically for the purpose of
investing in the Company.

         (c) Accredited Investor. The Registered Holder is an Accredited
Investor within the definition set forth in Rule 501(a) promulgated under the
Securities Act.

12. Mailing of Notices, etc.

         All notices and other communications from the Company to the Registered
Holder shall be mailed by first-class certified or registered mail, postage
prepaid, to the address last furnished to the Company in writing by the
Registered Holder. All notices and other communications from the Registered
Holder or in connection herewith to the Company shall be mailed by first-class
certified or registered mail, postage prepaid, to the Company at its principal
office set forth below. If the Company should at any time change the location of
its principal office to a place other than as set forth below, it shall give
prompt written notice to the Registered Holder and thereafter all references in
this Warrant to the location of its principal office at the particular time
shall be as so specified in such notice.

13. No Rights as Stockholder.

         Until the exercise of this Warrant, the Registered Holder shall not
have or exercise any rights by virtue hereof as a stockholder of the Company.
Notwithstanding the foregoing, in the event (i) the Company effects a split of
the Common Stock by means of a stock dividend and the Purchase Price of and the
number of Warrant Shares are adjusted as of the date of the distribution of the
dividend (rather than as of the record date for such dividend), and (ii) the
Registered Holder exercises this Warrant between the record date and the
distribution date for such stock dividend, the Registered Holder shall be
entitled to receive, on the distribution date, the stock dividend with respect
to the shares of Common Stock acquired upon such exercise,

                                       8

<PAGE>

notwithstanding the fact that such shares were not outstanding as of the close
of business on the record date for such stock dividend.

14. Change or Waiver.

         Any term of this Warrant may be changed or waived only by an instrument
in writing signed by the party against which enforcement of the change or waiver
is sought.

15. Section Headings.

         The section headings in this Warrant are for the convenience of the
parties and in no way alter, modify, amend, limit or restrict the contractual
obligations of the parties.

16. Governing Law.

         This Warrant will be governed by and construed in accordance with the
internal laws of the State of California (without reference to the conflicts of
law provisions thereof).

         EXECUTED effective the Date of Issuance indicated above.

                                     IRVINE SENSORS CORPORATION

                                     By: John J. Stuart, Jr.
                                         --------------------------------

                                     Title: Senior VP & Chief Financial Officer
                                            ------------------------------------

                                       9

<PAGE>

                                    EXHIBIT I
                                  PURCHASE FORM

To: IRVINE SENSORS CORPORATION                            Dated:________________

The undersigned, pursuant to the provisions set forth in the attached Warrant
___________ hereby irrevocably elects to purchase:

         ____________ shares of the Common Stock covered by such Warrant

The undersigned herewith makes payment of the full purchase price for such
shares at the price per share provided for in such Warrant, which is $1.20 in
lawful money of the United States.

                                          Signature: ___________________________

                                          Address:

                                          ______________________________________

                                          ______________________________________

                                          ______________________________________

                                       10

<PAGE>

                                   EXHIBIT II
                                 ASSIGNMENT FORM

FOR VALUE RECEIVED, ________________________________________ hereby sells,
assigns and transfers all of the rights of the undersigned under the attached
Warrant ___________ with respect to the number of shares of Common Stock covered
thereby set forth below, unto:

Name of Assignee                  Address                    No. of Shares

Dated:_____________________

Signature:________________________________

Signature Guaranteed:

By: _______________________

The signature should be guaranteed by an eligible guarantor institution (banks,
stockbrokers, savings and loan associations and credit unions with membership in
an approved signature guarantee medallion program) pursuant to Rule 17Ad-15
under the Securities Exchange Act of 1934.

                                       11

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