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                                TEAMING AGREEMENT
                                     BETWEEN
                        SIEMENS MAINTENANCE SERVICES, LLC
                                       AND
                          HI-ENERGY TECHNOLOGIES, INC.


THIS  AGREEMENT,  made this 4th day of  August,  2004,  by and  between  Siemens
Maintenance Services, LLC (SMS), a Delaware corporation (hereafter "MEMBER") and
Hi-energy  (hereinafter  "PRIME"),  and  collectively   hereinafter  called  the
parties.

                               W I T N E S S E T H

WHEREAS, teaming together and submitting proposals utilizing the combined skills
of the  parties  will  offer the  Client the most  advantageous  combination  of
capabilities to achieve Project objectives;

NOW,  THEREFORE,  in  consideration  of the  premises,  promises,  covenants and
agreements contained herein, the parties agree as follows:

ARTICLE 1.        PURPOSE OF TEAMING AGREEMENT

1.1   The purpose of this Agreement is to facilitate  the joint effort  required
      to submit proposals to Clients in the interest of obtaining contracts.

1.2   Both parties will jointly respond to Clients Requests for Proposals. PRIME
      shall act as prime contractor with MEMBER acting as subcontractor.

1.3   The parties will work closely together and exchange business and technical
      information.  For this reason,  the parties agree to cooperate  fully with
      each other towards  fulfillment of the purpose set forth in Section 1.1 of
      this Agreement.

1.4   The parties will jointly devise a marketing  strategy and cooperate  fully
      in all proposal efforts.

1.5   Nothing  contained  herein is  intended  to  preclude  either  party  from
      independently  submitting proposals or from performing work not related to
      Teaming Projects.

1.6   In the event PRIME is successful in obtaining a contract for any Projects,
      PRIME acting as the prime contractor, will then award to MEMBER and MEMBER
      shall accept a mutually agreeable subcontract covering the work specified
      in Statement of Work.

1.7   Each party will assist the other,  as  necessary,  and will exert its best
      efforts in preparing any proposal.

ARTICLE 2.        PRIME PROPOSAL RESPONSIBILITIES

2.1   PRIME  shall  take the lead and  shall  have  overall  responsibility  for
      preparing any proposal,  integrating  MEMBER'S data,  including submitting
      any  proposal  to a Client in a timely  manner,  and  negotiating  a prime
      contract. Provided, however, PRIME shall provide MEMBER with a copy of all
      bid,  proposal and prime  contract  documents  sufficiently  in advance of
      submission or  discussion  with Client to allow MEMBER and PRIME to review
      and coordinate the preparation of a mutually  acceptable  response to such
      documents.

2.2   PRIME  shall bid on  Projects in good  faith,  in a manner  responsive  to
      Client's  technical  requirements  and  on the  basis  of  reasonable  and
      competitive pricing, provided Projects can be bid profitably.


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2.3   PRIME will coordinate Client contracts and conferences.

2.4   PRIME will identify  MEMBER in the proposal as the proposed member for the
      Services/Supplies  specified.. All other services/supplies in any proposal
      to any Client shall be provided by and the responsibility of PRIME.

2.5   PRIME will  consult with MEMBER  regarding  MEMBER'S  technical  input and
      pricing; however, in the event of a disagreement,  MEMBER shall have final
      responsibility for a proposal's content with respect to products, services
      and pricing provided by MEMBER. All other services/supplies  necessary for
      Projects shall be the responsibility of PRIME.

2.6   PRIME shall  provide to MEMBER a complete and  accurate  copy of all final
      proposal and contract documents within a reasonable time after preparation
      or receipt by PRIME,  but in any event,  prior to  submission of the final
      documents to a Client.

2.7   PRIME shall bear its own proposal costs and expenses.

ARTICLE 3.        MEMBER PROPOSAL RESPONSIBILITIES

3.1   MEMBER shall support the proposal preparation by submitting its technical,
      cost, and management portions of the proposal to PRIME.

3.2   MEMBER shall bid on any Project in good faith,  in a manner  responsive to
      the Client's  technical  requirements  and on the basis of reasonable  and
      competitive pricing, provided a Project can be bid profitably.

3.3   If requested by PRIME, MEMBER shall furnish qualified personnel at PRIME'S
      facility to assist in preparing final proposal documents.

3.4   If necessary,  MEMBER shall provide  technical,  financial and  management
      data/personnel  to assist PRIME in  discussions or  negotiations  with any
      Client concerning MEMBER'S proposed work.

3.5   MEMBER  shall use  reasonable  efforts  to assist  PRIME by such  means as
      necessary  and proper to support any proposal  effort  including,  but not
      limited to, all activities prior to contract award.

3.6   MEMBER shall bear its own proposal costs and expenses.

ARTICLE 4.        PERFORMANCE

4.1   If PRIME is awarded a contract  for a Project and that  contract  includes
      the Services/Supplies  peculiar to the MEMBER, PRIME will award to MEMBER,
      and  MEMBER  shall  accept  from and enter  into with  PRIME,  a  mutually
      agreeable subcontract for such Services/Supplies required for a Project at
      the  pricing  timely  provided  by  MEMBER  for  inclusion  in a  proposal
      submitted by PRIME to a Client.  The  subcontract  award is subject to the
      Client's  approval,  if such  approval  is  required.  PRIME shall use all
      reasonable efforts and means to obtain any such approvals.

4.2   The  subcontract  shall be subject to applicable  laws,  regulations,  and
      mutual  agreement on pricing and other  subcontract  terms and conditions,
      including  those  provisions  of PRIME'S  contract  with Client  which are
      necessarily or  appropriately  passed down in the  subcontract.  PRIME and
      MEMBER  shall be, as between  each  other,  solely  responsible  for their
      respective  work under the prime contract.  The subcontract  shall contain
      mutually  acceptable  cross  indemnities  and releases  solely between the
      parties with respect to their work under the subcontract.


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4.3   In the event of a disagreement  between the parties,  concerning  MEMBER'S
      scope of work, price(s), delivery, or provisions of the subcontract, which
      cannot be resolved  through  good faith  negotiations  within a reasonable
      time,  but not to  exceed  thirty  (30) days from the date of award of the
      prime contract,  either party shall have the right, without prejudice,  or
      further  obligation to the other, to enter into agreements with others for
      the subcontract work.

ARTICLE 5.        PROPRIETARY/CONFIDENTIAL INFORMATION

5.1   During the term of this Agreement, it may be necessary for either party to
      disclose  proprietary or confidential  information to the other. Such data
      must  be  in  writing  and  identified  as  proprietary  or   confidential
      information or marked with a notice stating restrictions as to its use. If
      information  or data is not  identified  with a  restrictive  notice,  the
      receiving party may assume that all information and data is furnished with
      unlimited   rights  of  disclosure.   With  respect  to  such   restricted
      information, the following provisions shall apply:

      a.    Each  party  agrees  not to  disclose  the  other's  proprietary  or
            confidential  information to unauthorized  parties. Each party shall
            take  precautions  at least as strict as those normally taken by the
            party to safeguard its own proprietary or confidential information.

      b.    Neither   party  shall  use  the  other   party's   proprietary   or
            confidential  information  for any purpose other than as is required
            for the  performance of this Agreement.  If any such  information is
            marked  proprietary or confidential  or bears a restrictive  notice,
            such marking or restrictive notice will be retained on any disclosed
            information.

      c.    Proprietary  or  confidential  information  or  data  marked  with a
            restrictive  notice shall be delivered,  with a cover letter listing
            the  enclosures,  only to the  following  individuals  authorized to
            receive such data:

            For MEMBER:      Dave Patterson,  Vice President and GM
            For PRIME:       Dr. Bogdan C. Maglich, Chairman & Chief Scientist

5.2   All  maintenance  programs,  design,  engineering  details  and other data
      pertaining  to  any  discoveries,  inventions,  patent  rights,  software,
      improvement  reports,  notes,  calculations,  data,  drawings,  estimates,
      specifications,  manuals, other documents and all computer programs, codes
      and  computerized  materials  prepared by or for PRIME are  instruments of
      PRIME's work  ("Instruments")  and shall remain PRIME's  property.  To the
      extent  specified  in  the  Scope,   MEMBER,   its  employees  and  agents
      ("Permitted  Users")  shall  have a right to make  and  retain  copies  of
      Instruments  except uncompiled code, and to use all Instruments,  provided
      however,  the Instruments  shall not be used or relied upon by any parties
      other  than  Permitted  Users,  and  such  use  shall  be  limited  to the
      particular  project and location for which the Instruments  were provided.
      All  Instruments  are  provided  for  MEMBER's  use only for the  purposes
      disclosed to PRIME,  and MEMBER  shall not transfer  them to others or use
      them or permit them to be used for any  extension of the Work or any other
      project or purpose, without PRIME's express written consent.


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5.3   A party's obligation  regarding the use of proprietary  information is not
      applicable if such information:

      a.    was in the public  domain at the time of  disclosure  or later comes
            into the public domain, through no breach of this Agreement; or

      b.    was  known to the  receiving  party at the  time of  disclosure,  as
            demonstrated by written records; or

      c.    is  authorized  for  disclosure  by  the  written  approval  of  the
            disclosing party; or

      d.    is not lawfully  derived by the receiving  party from a source other
            than  the  disclosing  party  without  restriction  as to the use or
            disclosure of the data; or

      e.    is independently  developed by the receiving party without reference
            to the confidential information.

5.4   If a subcontract is awarded to MEMBER as a result of a proposal hereunder,
      these terms regarding "Proprietary/Confidential  Information" shall remain
      in full force and effect unless the parties  specifically agree in writing
      to modify the obligations of the parties with respect to subsequent use of
      disclosure of each party's proprietary or confidential information.

5.5   Upon  termination  of  this  Agreement,  except  by  the  execution  of  a
      subcontract,  all material furnished hereunder disclosing such proprietary
      or  confidential  information,  data,  designs,  and  inventions  shall be
      promptly  returned to the owner  thereof upon request of the owner of said
      material.  All  material  furnished  hereunder  may  be  destroyed  by the
      custodian of such  information  thirty (30) days following  termination of
      this Agreement,  if the return of such information was not requested prior
      to such  destruction.  The recipient of any data under this  Agreement may
      retain,  in its law,  contract or patent department files, one (1) copy of
      data  transmitted  pursuant  to this  Agreement  solely  for  purposes  of
      determining  compliance  with this  Article 5.  Nothing in this  Agreement
      conveys any right of license under any patent or copy right.

5.6   Nothing  herein  shall  prohibit  disclosure  to  attorneys,  accountants,
      bankers, insurers, sureties,  consultants or other advisors to the parties
      in connection with the transactions  contemplated herein. Further, nothing
      herein shall prohibit any disclosure required by any law or legal process;
      provided that the  disclosing  party shall  advise,  consult and cooperate
      with the other party,  to the extent  permitted by law,  prior to any such
      required disclosure.

5.7   The  obligations of the parties under this Article 5 shall terminate three
      (3)  years  from the date of this  Agreement,  or  completion  date of any
      resultant contract and related subcontract.

ARTICLE 6.        LEGAL EFFECT OF TEAMING AGREEMENT

6.1   Nothing  in this  Agreement  shall be deemed to  constitute,  create  give
      effect to, or otherwise recognize a joint venture,  partnership, or formal
      business  entity of any kind,  and rights and  obligations  of the parties
      shall be limited to those expressly set forth herein. Nothing herein shall
      be construed as providing for the sharing of profits or losses arising out
      of the  efforts of any or all of the  parties  except as  provided  in any
      subcontract between the parties as a result of this Agreement.

6.2   The  parties  agree  that no legal  relationship  of any kind  exists as a
      result of this  Agreement  other than the  covenants  expressly  contained
      herein.  Neither party shall have authority to create any  obligations for
      the other except to the extent stated herein.  The parties agree that this
      Agreement may be made known to the Client.


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ARTICLE 7.        TERMINATION OF AGREEMENT

7.1   This Agreement, except for Article 5, shall expire 36 months from the date
      hereof unless terminated earlier by one of the following events:

      a.    Client  cancels  the   procurement  or  withdraws  the  Request  for
            Proposal.

      b.    Client awards the prime contract to other than PRIME.

      c.    The parties execute a subcontract in accordance with the Agreement.

      d.    Client  directs PRIME to have the  subcontracted  work  performed by
            other than the Member  specified herein or the Client indicates that
            the Member is not acceptable to the Client.

      e.    Client  eliminates  or  substantially   reduces  the  Member's  work
            contemplated hereby.

      f.    A party  notifies  the other of a decision  not to submit a proposal
            for a Project.

      g.    Failure of the parties to reach timely mutual agreement on the terms
            of a contemplated proposal or subcontract for a Project.

      h.    The parties dissolve this Agreement by mutual consent.

      i.    One of the parties petitions for bankruptcy or reorganization  under
            the  bankruptcy  laws,  or makes an  assignment  for the  benefit of
            creditors.

j.    Material  breach  of the  provisions  of this  Agreement  or other  valid,
      compelling  reason  exists for  either of the  parties  to  terminate  the
      Agreement;  e.g., debarment,  suspension, or criminal investigation of the
      other party; grossly  unsatisfactory  performance of the other party, etc.
      Continuation  of this  agreement  after a change  in legal  status  due to
      merger or sale of the other party requires  written  approval of the other
      party, which shall not be unreasonably withheld.

k.    Failure of PRIME to achieve  protection under the Safety Act or Public Law
      85-804 or a failure to  subsequently  pass through rights of protection to
      MEMBER  under the Safety Act; or MEMBER  inability  to acquire an approved
      application under the Safety Act on its own.

l.    Upon  award of a Project  by DHS,  MEMBER or PRIME  shall  enter into good
      faith  negotiations  In  order  to  reach a  Final  Agreement  based  upon
      determination of mutually  acceptable terms and conditions for the parties
      to  undertake  the  Project and PRIME to provide  it's Scope.  The parties
      shall use good faith efforts to agree upon the terms of a Final Agreement,
      provided,  however,  that the failure of the parties to enter into a Final
      Agreement  shall not create any  liabilities or obligations on the part of
      either party.

ARTICLE 8.        PUBLICITY

8.1   No publicity or advertising  relating to this Agreement  shall be released
      by the PRIME or MEMBER without the other party's prior written approval by
      the parties legal and corporate communications departments. Nothing herein
      shall prohibit any  disclosure by press release,  filing or otherwise that
      is required by federal or state  securities  or other laws;  provided that
      the  disclosing  party shall advise,  consult and cooperate with the other
      party,  to the  extent  permitted  by  law,  prior  to any  such  required
      disclosure.


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ARTICLE 9. ASSIGNMENT

9.1   Neither party shall assign,  nor in any manner transfer,  its interests or
      any part thereof,  in this  Agreement to others,  except that either party
      may  assign  its  interests  to  its   subsidiaries  or  other  affiliated
      companies.

ARTICLE 10. NOTICES

10.1  Any notice or communication  hereunder or in any agreement entered into in
      connection with the  transactions  contemplated  hereby must be in writing
      and given by depositing  the same in the United States mail,  addressed to
      the party to be notified, postage prepaid and registered or certified with
      return  receipt  requested,  or by  delivering  the same in  person  or by
      express carrier. Such notice shall be deemed received on the date on which
      it is delivered in person or by express  carrier or on the third  business
      day following  the date on which it is so mailed.  For purposes of notice,
      the addresses of the parties shall be:

      a.    Siemens Maintenance Services, LLC.
            250 E. Arapaho, Road
            Suite 175
            Richardson, Texas 75801
            Attn:  Dave Patterson

            with a copy to:

            Siemens (Legal)
            1000 Deerfield Parkway
            Buffalo Grove, IL  60089
            Attn:  Legal Department -SMS Support

      b.    Hi-Energy Technologies, Inc..
            1601-B Alton Parkway
            Irvine, California  92606
            Attn.  Dr.  Bogdan C. Maglich
            Phone: (949) 757-0855
            Fax: (949) 757-1477
            E-Mail hienergy@hienergyinc.com

      Either party may change its address or the individual addressee by written
      notice to the other  party in  accordance  herewith,  and any such  change
      shall take effect immediately upon receipt of such notice.

ARTICLE 11. WAIVER

11.1  The failure of either  party to enforce at any time of the  provisions  of
      this Agreement,  or to require at any time  performance by the other party
      of any of the  provisions  hereof,  shall in no way be  construed  to be a
      waiver of such  provision,  nor in any way  affect  the  validity  of this
      Agreement  or any  part  thereof,  or  the  right  of  any of the  parties
      thereafter to enforce each and every provision hereof.

ARTICLE 12. SCOPE OF AGREEMENT

12.1  The scope of this  Agreement is confined  solely to  activities  described
      above  and the  provisions  hereof  shall  have no  application  or effect
      whatsoever  to any work  being  performed  by PRIME  under  any  unrelated
      subcontract with MEMBER. In this connection, it is understood specifically
      that, with no respect to any such work, the terms of each such subcontract
      shall govern and shall solely apply.


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ARTICLE 13. ENTIRE AGREEMENT

14.1  This  Agreement,  including  attachments  hereto,  constitute  the  entire
      understanding  and agreement  between the parties and supersedes any prior
      oral or written agreements with respect to the subject matter hereof. This
      Agreement  shall  not be  modified  unless  agreed to in  writing  by both
      parties.

ARTICLE 14. APPLICABLE LAW

15.1  The validity and  performance of this  Agreement  shall be governed by the
      laws of the State of Texas.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as
of the date first written above.


PRIME: HI-ENERGY TECHNOLOGIES, LLC     MEMBER: SIEMENS MAINTENANCE SERVICES, LLC

________/s/_______________________     ________________/s/______________________
Name:  Dr. Bogdan C. Maglich           Name:  David B. Patterson
Title:  Chairman and Chief Scientist   Title: Vice President and General Manager