1. ACCEPTANCE - Buyer and Seller shall be bound by this order when Seller: (i) executes and returns the acknowledgment; (ii) commences work pursuant to this order; (iii) delivers to Buyer any one of the items ordered; or (iv) renders for Buyer any of the services ordered herein.

2. COMPLETE AGREEMENT - The terms and conditions of this Order set forth the entire agreement between the Buyer and Seller and supersede all prior representations or agreements, whether oral or written, between the parties regarding the subject matter hereof, and no agreement or understanding altering such terms and conditions shall be binding on Buyer, unless agreed to in writing by Buyer's duly authorized representative. This Order shall be governed by, subject and construed according to the laws of the State of Delaware. In the performance of the Order, the Seller shall comply with all applicable Federal, State, and local laws.

3. CHANGES - Buyer may at any time by written notice make changes within the general scope of this Order in (i) shipping, and packaging instructions, and (ii) the place of delivery and Seller shall promptly proceed with the Order as changed. If any such change increases or decreases the cost of, or the time required for, the performance of this Order, an equitable adjustment in the price or delivery schedule, or both, will be made. Claim for such an adjustment must be made in writing within 30 days from the date the change is ordered, together with a cost breakdown or other facts to support such claim. Where the cost of property made obsolete or excess as a result of a change order is included in Seller's claim for adjustment, Buyer shall have the right to prescribe the manner of disposition of such property. If there is a Federal Prime Contract number on the face of this Purchase Order, this clause shall be replaced by FAR 52.243-1.

4. STANDARDS OF WORK - The Seller agrees that the performance of work and services pursuant to the requirements of this Order shall conform to high professional standards.

5. DELIVERY - Time is of the essence of this Order. Deliveries shall be strictly in accordance with schedules established in this Order and exact quantities ordered. If Seller fails to proceed with the performance of this Order or to make deliveries within the periods specified therein, Buyer may terminate this Order or such part that has been delayed. Except with respect to defaults of its subcontractors or suppliers, Seller will not be liable for damage occasioned by a delay in performance or delivery due to causes beyond its control and without its fault or negligence, provided Seller exercises due diligence in promptly notifying Buyer of conditions which will result in a delay. If the delay is caused by a subcontractor or supplier of Seller and if such delay arises out of causes beyond the control of both Seller and the subcontractor or supplier and without the fault of either. Seller shall not be liable to Buyer for damages unless the material or services to be furnished by the supplier or subcontractor were obtainable from other sources in sufficient time to permit the Seller to meet the delivery schedule.

6. SHIPPING - All shipments must be so packaged as to permit efficient handling and provide protection in shipment in accordance with carrier regulations. Buyer's Purchase order and Government contract numbers and Seller's packing list number must be shown on all invoices and packing lists. The Purchase Order number and Seller's packing list numbers must appear on all bills of lading. Buyer's count or weight will be conclusive on shipments not accompanied by the packing list. Seller shall issue an individual invoice for each shipment.

7. INSPECTION - (a) All items shall be subject to inspection and test at all practicable time and places, including the period of manufacture, by Buyer and, if there is a Federal Prime Contract number on the face of this Purchase Order, the Government, but such inspections and tests shall be so performed as not to unduly delay the work. If such inspection or test are made on Seller's premises, Seller shall provide without charge reasonable facilities and assistance for the inspectors. All items are also subject to final inspection and acceptance at Buyer's plant within a reasonable time after delivery notwithstanding any prior payments or other inspections. (b) If any item is defective in material or workmanship, or otherwise not in conformity with Order requirements, Buyer may reject it and require its prompt correction or replacement or accept it with an equitable adjustment in price. Promptly after notification of rejection, rejected items shall be removed at Seller's expense, including transportation both ways. Seller shall bear all risk for rejected items after such notification.

8. WARRANTY - (a) The goods or services shall comply with any and all specifications, drawings, samples, or other descriptions furnished by buyer; (b) The goods shall be merchantable, of good material and workmanship, free from defect, and suitable for their intended purpose; and Buyer's approval of Seller's design or material shall not relieve the Seller of the foregoing warranties. Such warranties, together with Seller's service warranties and guarantees, shall survive inspection, acceptance, and payment for the items and shall run to Buyer and its customers. (c) Except for latent defects, fraud or such gross mistakes as amount to fraud, notice of any defect or nonconformity must be given by Buyer to Seller within 90 days after delivery. Buyer may, at its option either return for credit or require prompt correction or replacement of the defective or nonconforming items thereof at no charge to Buyer, provided such items are returned to Seller within thirty days after such defect or nonconformity is discovered. Items required to be corrected or replaced shall be subject to the provisions of this clause and of the clause hereof entitled "inspection" to the same extent as items originally delivered under this Order, except for latent defects, fraud or such gross mistakes as amount to fraud. All warranties of Seller, whether created expressly by law or in fact, are incorporated herein by reference and shall include, and are supplemented by, the following express warranties.

9. PATENT INDEMNITY - Except where items are made entirely to Buyer's design Seller shall, at its expense, hold harmless and defend Buyer, its customers and all parties claiming under buyer against any loss, damage or liability which may be incurred on account of any claim or judgment involving infringement of any U.S. patent, copyright or trademark in the manufacture, use or disposition of any item supplied hereunder. Buyer shall notify Seller promptly of any suit instituted against Buyer and, to the full extent of its ability to do so, permit Seller to defend or settle same.

10. TOOLING AND TEST EQUIPMENT - (a) If the Order price is stated to include jigs, dies, fixtures, patterns, or special test equipment and manufacturing aids used in manufacture of the items and drawings thereof (all hereinafter called tooling), such tooling becomes the property of Buyer or its customer immediately upon payment thereof. Tooling shall be used only for the benefit of Buyer or any of its customers, which have acquired the right to use such tooling. Tooling shall be kept in good condition, including necessary replacement, without expense to Buyer. Buyer shall pay for changes of design. Seller shall maintain proper property control records for such tooling and shall promptly furnish Buyer a list thereof on request. (b) Unless otherwise directed by Buyer, upon completion or termination of this order, Seller shall hold all tooling free of charge for six months subsequent to furnishing an inventory to Buyer with a request for disposition; any such tooling Buyer orders returned shall be delivered f.o.b. Seller's facility, properly crated for domestic shipment. No crating charge is to be included in Seller's quotations unless expressly requested by Buyer.

11. TERMINATION - (a) By written notice to Seller of default, Buyer may terminate this Order in whole or in part if Seller becomes the subject of a proceeding under state or federal law for relief of creditors or makes an assignment for benefit of creditors, or if Seller fails to comply with any of its obligations under this Order. In such event, Buyer may purchase similar items elsewhere, and Seller shall be liable for any reasonable excess costs occasioned Buyer thereby. A waiver of a breach of any provision of this Order shall not constitute a waiver of any other breach. If, after notice of default issued hereunder, it is determined that Seller's failure to perform this Order was due to unforeseeable causes beyond the control and without the fault of the Seller, the rights and obligations of the parties shall be governed by paragraph (b) of this clause. The rights and remedies of Buyer under this paragraph are not exclusive and are in addition to any other rights and remedies afforded Buyer by law or under this Order. If there is a Federal Prime Contract number on the face of this Purchase Order, this clause shall be replaced by FAR 52.249-8. (b) The Buyer may terminate performance or work under this order in whole or in part by written notice of termination, whereupon the Seller will stop work on the date and to the extent specified in the notice and terminate all orders and subcontracts to the extent they relate to the terminated work. Within sixty (60) days after receipt of such notice of termination, the Seller will submit all its claims resulting from such termination. Buyer will have the right to check such claims at any reasonable time or times by inspecting and auditing the records, facilities, and work on materials of the Seller relating to this order. Payment made under this clause constitutes the Buyer's only liability in the event this order is terminated hereunder. If there is a Federal Prime Contract number on the face of this Purchase Order, this clause shall be replaced by FAR 52.249-2.

12. REPRODUCTION RIGHTS - Seller, grants Buyer the right to reproduce, use and disclose the reports, drawings, software and other data to be delivered by Seller to Buyer under this Order, but Buyer may not use same to produce items for sale in competition with Seller.

13. DEFINITIONS - The following definitions shall apply to this Order except as otherwise herein provided. FAR/DFARS clauses shall be those in effect on the date of issuance of this Order unless otherwise stated in the body of the Order. "Buyer" - the legal entity issuing this Order. "Contractor" - Seller. "Contracting Officer" - the government contracting officer(s) for the prime contract, or authorized representative. "DFARS" - Department of Defense, Federal Acquisition Regulation Supplement. "FAR" - Federal Acquisition Regulation. "Government" - the Government of the United States. "Prime Contract" - the Government contract under which this Order is issued. "Purchasing Representative" - Buyer's authorized representative. "Seller" - the legal entity which contracts with the Buyer. "Subcontractor" - Seller's subcontractors. "This Order" - this contractual instrument, including changes.

14. COMPLIANCE WITH LAW - In performance of the work and shipment of goods covered by this order, Seller agrees to comply (and to bear all expense required for compliance) with the Fair Labor Standards Act of 1938, as amended, and regulations thereunder, all applicable provisions of the Walsh-Healy Act, the Buy American Act, the Occupational Safety and Health Act, the Equal Employment Act of 1972 and regulations thereunder, and all other applicable federal, state and local laws, rules, regulations and orders, and agrees to indemnify Buyer against any loss, cost, liability or damage whatsoever, including attorney's fees, which may result from Seller's violation of this paragraph.

15. DISPUTES - Any dispute arising under this order which is not settled by agreement of the parties may be settled under the American Arbitration Association Commercial Rules; proceedings will be held in Delaware. Pending any decision, appeal or judgment in such proceedings, or the settlement of any dispute arising under this order, Seller shall proceed diligently with the performance of this order in accordance with the decision and instruction of Buyer. If this is a Federal subcontract, the clause entitled "Disputes," appended to this Purchase Order replaces this Clause 15.


(a) The General Accounting Office has the right to audit Seller's records under FAR 52.214-26 or 52.215-2, as applicable.

(b) This Order shall be subject to any act heretofore or hereafter enacted and to the extent indicated therein, providing for renegotiation of subcontracts.

(c) The following Federal Acquisition Clauses are incorporated by Reference, subject to the following modifications and definitions:

"Contractor" means "Seller," "Subcontractor" means "Seller's subcontractor(s)," "Contract" means "Order," "Government" means "Buyer," and "Contracting Officer" means "DZYNE Technology designated contractual representative." (See also Paragraph 13.)

FAR 52.222-26 Equal Opportunity (E.O. 11246)

FAR 52.222-35 Affirmative Action for Disabled Veterans and Veterans of the Vietnam Era (38 U.S.C. 4212(a))

FAR 52.222-36 Affirmative Action for Workers with Disabilities (29 U.S.C. 793)

FAR 52.244-6 Subcontracts for Commercial Items and Commercial Components

(d) Travel shall be conducted and reimbursed in accordance with FAR Part 31.205-46.

17. COUNTERFEIT PARTS - Seller represents and warrants that only new and authentic materials are used in products to be delivered and that work delivered contains no counterfeit parts. No other material or part, other than a new and authentic part is to be used unless approved in advance in writing.

18. SPECIALTY METALS - Seller represents and warrants that this order is in compliance with DFARS 252.225-7014, Alternate1, "Preference for Domestic Specialty Metals."

19. INDEPENDENT CONTRACTOR: INDEMNITY (a) It is understood and agreed between the parties that the Subcontractor is and shall be in all events, an independent contractor, and nothing contained herein shall constitute the Subcontractor as an agent, partner, employee, or legal representative of the Contractor for any purpose whatsoever. (b) The Subcontractor shall indemnify the Contractor and hold the Contractor harmless from all claims, demands, liabilities, actions, suits, or proceedings asserted or claimed by third parties and arising out of the performance of this Subcontract, including all costs associated therewith, and Subcontractor agrees to undertake the cost of defending the same.

20. USE OF THE WORK PRODUCT: The Subcontractor shall not make any use of the work effort produced under this agreement unless and until it has received the written permission of the Contractor to do so. The withholding of such permission by the Contractor is final and conclusive, and not an arbitral question of fact under the Disputes clause of this Subcontract or subject to court review. The title to all such work efforts is in the Contractor.

21. ORDER OF PRECEDENCE- In the event of any ambiguity or inconsistency in this Order, unless otherwise provided herein, the inconsistency or ambiguity shall be resolved by giving precedence in the following order to the various documents making up this Order:

1. The provisions of the awarded Prime Contract and/or Subcontract

2. DZYNE Technologies Inc. General Terms and Conditions contained in this Purchase Order

3. Federal Acquisition Regulations when applicable

4. Any other applicable Terms and Conditions agreed to between Buyer and Seller