Modification No. 1 to Base Agreement, dated as of January 26, 2022, by and between the Registrant and Advanced Technology International

In accordance with the terms and conditions of the referenced MCDC Base Agreement, Modification No. 01 hereby amends the Base Agreement as follows:

Prior to the submission of invoices, the PAH shall have and maintain an established accounting system which complies with Generally Accepted Accounting Principles (GAAP) and the requirements of this MCDC Base Agreement. The PAH shall ensure that appropriate arrangements have been made for receiving, distributing and accounting for Federal funds under this MCDC Base Agreement. Consistent with this stipulation, an acceptable accounting system will be one in which all cash receipts and disbursements are controlled and documented properly.

In accordance with provisions of 10 USC 2371b, the DoD has authority to enter into transactions other than contracts, grants, or cooperative agreements. The DoD has the authority to make awards that are directly relevant to enhancing the mission effectiveness of military personnel and the supporting platforms, systems, components, or materials proposed to be acquired or developed by the DoD, or the improvement of platforms, systems, components, or materials in use by the armed forces.

Per 10 U.S.C. § 2371b, each prototype project awarded under this Base Agreement must meet one of the following conditions:

•There is at least one nontraditional defense contractor or nonprofit research institution participating to a significant extent in the prototype project.

•All significant participants in the transaction, other than the Federal Government, are small businesses (including small businesses participating in a program described under section 9 of the Small Business Act (15 U.S.C. 638)) or nontraditional defense contractors.

•At least one third of the total cost of the prototype project is to be paid out of funds provided by sources other than the Federal Government.

•The senior procurement executive for the agency determines in writing that exceptional circumstances justify the use of a transaction that provides for innovative business arrangements or structures that would not be feasible or appropriate under a contract, or would provide an opportunity to expand the defense supply base in a manner that would not be practical or feasible under a contract.

Throughout the period of performance of any PA, the AO and AOR will actively monitor projects to ensure compliance with this statutory requirement. The Government will take into account any implementation guidance from the Department of the Army and the Office of the Under Secretary of Defense for Acquisition and Sustainment, which includes but is not limited to, the most recent Other Transactions Guide. The MCDC Member awarded a PA will be given the opportunity to become compliant with this statutory requirement should they be found non-compliant by the AO and AOR and as communicated to the PAH by the CMF. Failure to comply may result in termination.

If significant nontraditional / nonprofit participation cannot be fulfilled, the PAH must provide at least one third cost share of the value of the PA awarded to the PAH. Proposals that fail to comply with this requirement, will not be awarded under the OTA.

Cost Sharing is not required under the OTA for projects that contain significant nontraditional / nonprofit participation. Where both Partiesthe Government and MCDCPAH agree, cost sharing may be considered on a per project basis under terms and conditions to be agreed to by the Partiesthem, and in accordance with the most recent Other Transactions Guide.

(ii)    “Free Trade Agreement country end product” other than a “Bahrainian end product,” a “Moroccan end product,” a “Panamanian end product,” or a “Peruvian end product,” as defined in the Buy American Act – Free Trade Agreements – Balance of Payments Program clause; or

(iii)    “Canadian end product,” as defined in Alternate I of the Buy American Act – Free Trade Agreements – Balance of Payments Program clause

(2)    Components (including, without limitation, raw materials and intermediate assemblies) produced or made in qualifying countries, that are to be incorporated into U.S – made end products to be delivered under an PA; or

(3)    Other supplies for which the PAH estimates that duty will exceed $200 per shipment into the customs territory of the Unites States.

(1)    Claim duty-free entry only for supplies that the PAH intends to deliver to the Government under a PA, either as end items or components of end items; and

(2)    Pay duty on supplies, or any portion thereof, that are diverted to nongovernmental use, other than –

(i)    Scrap or salvage; or

(ii)    Competitive sale made, directed, or authorized by the AO.

(iv)    (A) For direct shipments to a U.S. military installation, the notation: “UNITED STATES GOVERNMENT DEPARTMENT OF DEFENSE Duty-Free Entry to be claimed pursuant to Section XXII, Chapter 98, Subchapter VIII, Item 9808.00.30 of the Harmonized Tariff Schedule of the United States. Upon arrival of shipment at the appropriate port of entry, District Director of Customs, please release shipment under 19 CFR Part 142 and notify Commander, Defense Contract management Agency (DCMA) New York, ATTN: Customs Team, DCMAE-GNTF, 201 Varick Street, Room 905C, New York, New York, 10014, for execution of Customs Form 7501, 7501A, or 7506 and any required duty-free entry certificates.”

(B) If the shipment will be consigned to other than a military installation, e.g., a domestic contractor’s plant, the shipping document notation shall be altered to include the name and address of the contractor, agent, or broker who will notify Commander, DCMA New York, for execution of the duty-free certificate. (If the shipment will be consigned to a contractor’s plant and no duty-free entry certificate is required due to a trade agreement, the PAH shall claim duty-free entry under the applicable trade agreement and shall comply with the U.S. Customs Service requirements. No notification to Commander, DCMA New York, is required.)

(vii) Activity address number of the contract administration office administering the prime agreement, e.g., for DCMA Dayton, S3605A.

(2) For shipments containing both supplies that are to be accorded duty-free entry and supplies that are not, the PAH shall identify on the customs forms those items that are eligible for duty-free entry.

(1)    Prepare (if the PAH is a foreign supplier), or shall instruct the foreign supplier to prepare, a sufficient number of copies of the bill of lading (or other shipping document) so that at least two (2) of the copies accompanying the shipment will be available for use by the District Director of Customs at the port of entry;

(2)    Consign the shipment as specified in Paragraph (e) of this clause; and

(3)    Mark on the exterior of all packages –

(i)    “UNITED STATES GOVERNMENT, DEPARTMENT OF DEFENSE”; and

(ii)    The activity address number of the contract administration office administering the prime agreement.

(10)    An agreement that the PAH will pay duty on supplies, or any portion thereof, that are diverted to nongovernmental use other than –

(1)    The supplies are identical in nature to supplies purchased by the PAH or any subcontractor in connection with its commercial business; and

(2)    It is not economical or feasible to account for such supplies, so as to ensure that the amount of the supplies for which duty-free entry is claimed does not exceed the amount purchased in connection with this agreement.

Except as provided herein, all Terms and Conditions of the referenced MCDC Base Agreement, Project Agreement, and preceding modifications remain unchanged and in full force and effect.

The Project Agreement Holder is required to sign this document and return to Advanced Technology International to finalize this action.