<PAGE>   1
                                                                 EXHIBIT 10.2(a)

                     MODIFICATION AND SETTLEMENT AGREEMENT

          MODIFICATION AND SETTLEMENT AGREEMENT, dated as of June 12, 2000,
among Advanced Optics Electronics, Inc., a Nevada corporation (the "Company"),
and the Purchasers listed on Schedule I attached hereto (each a "Purchaser" and
collectively, the "Purchasers").

                                   RECITALS:

         WHEREAS, the Company sold and issued issued to the Purchasers, and the
Purchasers purchased from the Company, $500,000 aggregate principal amount of
the Company's 8% Convertible Notes due June 3, 2001 ("Convertible Notes"),
pursuant to a Securities Subscription Agreement dated as of June 3, 1999
("Agreement"); and

         WHEREAS, pursuant to the terms of the Agreement and the Convertible
Notes, the Convertible Notes are convertible into shares of the Company's
common stock, par value $.001 per share ("Common Stock"); and

         WHEREAS, pursuant to the terms of the Agreement, the Company issued to
the Purchasers warrants to purchase an aggregate of 12,500,000 shares of Common
Stock ("Warrants"); and

         WHEREAS, pursuant to the Agreement, and a certain Registration Rights
Agreement, dated as of June 3, 1999 ("Registration Rights Agreement"), the
Purchasers were granted certain registration rights with respect to shares of
Common Stock issuable (i) as interest under, and upon conversion of, the
Convertible Notes, and (ii) upon exercise of the Warrants; and

         WHEREAS, the Company wishes to modify the Agreement, the Convertible
Notes and Registration Rights Agreement in order to fully and finally settle
its obligations to the Purchasers, and the Purchasers are willing to effectuate
a settlement with the Company upon the terms and conditions set forth in the
Modification and Settlement Agreement ("Modification Agreement").

         NOW, THEREFORE, in consideration of the foregoing premises and the
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:

         1.  Conversion of Convertible Notes and Settlement of Warrants.

         (a) Simultaneously with the execution of this Modification Agreement,
the Purchasers shall issue Notices of Conversion of the Convertible Notes and
the Company shall issue to the Purchasers, in denominations set forth on
Schedule I, 2,000,000 shares of the Company's common stock in accordance with
the Notices of Conversion ("Conversion Shares"). The Conversion Shares shall be
issued pursuant to Rule 144 with a holding period commencing on June 3, 1999
("Holding Period"). The Purchasers shall be entitled to sell the Conversion
Shares in accordance with Rule 144 based on the Holding Period. An opinion of
counsel with regard to the saleability of the Conversion Shares shall be
provided by the Purchasers. Sale of the Conversion Shares shall return to the




<PAGE>   2

Purchasers an aggregate of USD$ 1,000,000 net of all sales commissions and any
other costs of sale and administration ("Return"). In the event that the sale
of (i) less than all Conversion Shares aggregates the full Return, the balance
of the Conversion Shares shall be returned to the Company; or (ii) all of the
Conversion Shares aggregates less than the full Return, then the Company, upon
demand made by the Purchasers in writing ("Demand Notice"), shall deliver to
the Escrow Agent, as defined below, on as many occasions as necessary to
effectuate the purposes of this Section 1(a), tranches of 500,000 Conversion
Shares ("Share Tranche or Share Tranches") until sales of the Conversion Shares
aggregate the full Return. A Demand may be made on as many occasions as
necessary to effectuate the purposes of this Section 1(a). In the event that
the sale of less than the full number of shares in any Share Tranche results in
the Purchasers achieving the full Return, then the balance of the Share Tranche
shall be returned to the Company.

         (b) Simultaneously with the execution of this Modification Agreement,
the Purchasers shall issue Notices of Conversion of the Convertible Notes and
the Company shall issue to the Purchasers, in denominations set forth on
Schedule I, 7,200,000 shares of the Company's common stock in accordance with
the Notices of Conversion ("Other Conversion Shares"). The Other Conversion
Shares shall be issued pursuant to Rule 144 with a holding period commencing on
June 3, 1999 ("Holding Period"). The Purchasers shall be entitled to sell the
Other Conversion Shares in accordance with Rule 144 based on the Holding
Period. An opinion of counsel with regard to the saleability of the Other
Conversion Shares shall be provided by the Purchasers.

         (c) The Conversion Shares and any shares from Share Tranches, shall be
deposited in an account ("Share Escrow Account") maintained by Edward H.
Burnbaum, Esq. ("Escrow Agent") and shall be sold out of such Share Escrow
Account for the benefit of the Purchaser. The Company shall receive duplicate
confirmations of all sales made from the Share Escrow Account. Proceeds from
the sale of Conversion Shares or Share Tranches shall be payable from the
Escrow Account to the Purchaser as realized. The Conversion Shares or Share
Tranches may be sold each trading day on an amount which does not exceed the
greater of (i) an aggregate value of $20,000 based upon the bid price on the
trading day the stock is sold of the Company's common stock as reported on the
OTC Electronic Bulletin Board, or any exchange on which the Company's shares
are then trading, for each individual Purchaser, or (ii) 20% of the daily
trading volume on the trading day on which the stock is sold for all
Purchasers. The Company, in its sole discretion, may permit the Purchasers to
sell Conversion Shares at greater amounts than as set forth in this Section
1(c)(i) and (ii) on any trading day or days.

         (d) Upon performance by the Company of its obligations under this
Modification Agreement, the Purchasers shall deliver to the Company, along with
any Conversion Shares or shares from a Share Tranche, as the case may be, that
remain after the full Return has been achieved, the Convertible Notes and the
Warrant. In the event, for any reason, the Company fails to perform its
obligations under this Agreement, the Purchasers shall retain the Convertible
Notes and the Warrants, and may enforce same in accordance with their terms,
however, the Company shall be entitled to a credit against the shares
exercisable under the Warrants in the number of Conversion Shares and Share
Tranches actually delivered to the Purchasers.



                                      -2-
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         (e) For a period of 12 months from the date of this Modification
Agreement, the Company shall not take any action to forward or reverse split
its shares of common stock into a greater or smaller number of shares of common
stock, as the case may be.

         2. Resolution. Simultaneously with the execution of this Agreement,
the Company shall deliver (i) to the Purchasers a Resolution, substantially in
the form annexed hereto as Exhibit A, authorizing the transaction contemplated
in this Modification Agreement, and (ii) to the Escrow Agent, a Resolution,
substantially in the form annexed hereto as Exhibit B ("Transfer Agent
Resolution"), instructing the Company's transfer agent, Oxford Transfer and
Registrar, 317 SW Alder, Suite 1120, Portland, Oregon 97204 ("Transfer Agent")
to issue to Purchasers shares of the Company's common stock registered in the
name of the Purchasers, in an amount equal up to $1,000,000, or at some lesser
amount as the Escrow Agent, in his sole discretion may direct the transfer
agent, and providing that the Company shall not change its transfer agent from
the Transfer Agent, without the express written consent and directive of the
Escrow Agent. The Transfer Agent Resolution may be delivered by the Escrow
Agent to the Transfer Agent in the event that, for any reason whatsoever, the
Company fails to perform its obligations under this Modification to deliver
Conversion Shares or Share Tranches, or in the event that the Company changes
or attempts to change its transfer agent from the Transfer Agent without the
express written consent of the Purchasers. Upon written demand from the
Purchasers, Escrow Agent shall deliver the Transfer Agent Resolution to the
Transfer Agent as provided in this Section 2. Escrow Agent shall be entitled to
honor any such written demand from the Purchasers and shall ignore any demand
or instructions to the contrary from the Company.

         3. Concerning the Escrow Agent. To induce the Escrow Agent to act
hereunder, it is further agreed by the undersigned that:

                  (a) This Escrow Agreement expressly sets forth all the duties
of the Escrow Agent with respect to any and all matters pertinent hereto. No
implied duties or obligations shall on the part of the Escrow Agent shall be
read into this Escrow Agreement. The Escrow Agent shall not be bound by the
provisions of any agreement among the other parties hereto except this Escrow
Agreement.

                  (b) The Escrow Agent shall not be liable for any action or
failure to act in its capacity as Escrow Agent hereunder unless such action or
failure to act shall constitute willful misconduct on the part of the Escrow
Agent, in which case there shall be no indemnification obligations.

                  (c) The Escrow Agent shall be entitled to rely upon any
order, judgment, certification, demand, notice, instrument or other writing
delivered to it hereunder without being required to determine the authenticity
or the correctness of any fact stated therein or the propriety or validity of
the service thereof. The Escrow Agent may act in reliance upon any instrument
or signature believed by it to be genuine and may assume, unless he has actual
knowledge to the contrary, that any person purporting to give notice or receipt
or advice or make any statement or



                                      -3-
<PAGE>   4


execute any document in connection with the provisions hereof has been duly
authorized to do so.

                  (d) The Escrow Agent may act pursuant to the advice of
counsel with respect to any matter relating to this Escrow Agreement and shall
not be liable for any action taken or omitted in accordance with such advice.

                  (e) The Escrow Agent does not have any interest in the
Conversion Shares, Share Tranches, Transfer Agent Resolution or any other
property deposited hereunder but is serving as escrow holder only and having
only possession thereof, and is not charged with any duty or responsibility to
determine the validity or enforceability of any such documents.

                  (f) The Escrow Agent (and any successor Escrow Agent) may at
any time resign as such by delivering the Transfer Agent Resolution and any
Conversion Shares or Tranche Shares in the Escrow Agent's account to any
successor Escrow Agent, jointly designated by the other parties hereto in
writing, or to any court of competent jurisdiction, whereupon the Escrow Agent
shall be discharged of and from any and all further obligations arising in
connection with this Escrow Agreement thereafter. The resignation of the Escrow
Agent will take effect on the earlier of (a) the appointment of a successor
(including a court of competent jurisdiction) or (b) the day which is 30 days
after the date of delivery of its written notice of resignation to the other
parties hereto. If at that time the Escrow Agent has not received a designation
of a successor Escrow Agent, the Escrow Agent's sole responsibility after that
time shall be to safekeep the Transfer Agent Resolution, the Conversion Shares
and the Tranche Shares and not make delivery or disposition thereof until
receipt of a designation of successor Escrow Agent or a joint written
disposition instruction by the other parties hereto or a final order of a court
of competent jurisdiction.

                  (g) In the event of any disagreement among the parties hereto
resulting in adverse claims or demands being made in connection with the
Transfer Agent Resolution, the Conversion Shares or the Tranche Shares, or in
the event that the Escrow Agent otherwise determines that the Transfer Agent
Resolution, the Conversion Shares or the Tranche Shares should be retained,
then the Escrow Agent may retain same until the Escrow Agent shall have
received (i) a final nonappealable order of a court of competent jurisdiction
directing delivery of the Transfer Agent Resolution, the Conversion Shares or
the Tranche Shares, or (ii) a written agreement executed by the other parties
hereto directing delivery of the same, in which case the Escrow Agent shall
promptly deliver the same in accordance with such order or agreement. Any court
order referred to in (i) above shall be accompanied by a legal opinion by
counsel for the presenting party reasonably satisfactory to the Escrow Agent to
the effect that said court order is final and nonappealable. The Escrow Agent
shall act on such court order and legal opinion without further question.

                  (h) This Escrow Agreement shall be binding upon and inure
solely to the benefit of the parties hereto an their respective successors
(including successors by way of merger) and assigns, heirs, administrators and
representatives and shall not be enforceable by or inure to the benefit of any
third party except as provided in paragraph (g) with respect to a resignation
by the Escrow Agent.



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                  (i) Purchasers and the Company agree, jointly and severally
to indemnify, defend and hold harmless the Escrow Agent from and against any
and all costs (including, without limitation, legal fees and expenses),
liabilities, claims and losses arising out of or in connection with this
Modification Agreement or any action or failure to act by the Escrow Agent
under this Modification Agreement. This Modification Agreement may not be
modified except in a writing signed by all the parties hereto, and no waiver
hereunder shall be effective unless in a writing signed by the party to be
charged.

         4. Governing Law. This Escrow Agreement shall be governed in all
respects by the internal laws of the State of New York. The parties agree to
submit to any dispute or controversy arising hereunder to binding arbitration
before the American Arbitration Association in New York City in accordance with
its rules.

         5. Notices. All notices, requests, consents and other communications
hereunder shall be in writing, shall be delivered by hand or sent by U.S.
Express Mail, Fedex or some other reliable overnight courier service for next
day delivery. Each such notice or other communication shall for all purposes of
this Escrow Agreement be treated as effective or having been given when
delivered if delivered personally, or, if sent by overnight express mail
service, 1 day after the same has been deposited with the U.S. Postal Service,
Fedex or the overnight courier. All such notices must also be sent by facsimile
on the same day to the parties as follows:

                  If to the Company:

                  Advanced Optics Electronics, Inc.
                  8301 Washington Street, Unit 4
                  Albuquerque, New Mexico 87113
                  Att'n: Leslie S. Robins
                  Fax: 505-858-1871

                  If to Purchaser:

                  Sholem Liebenthal
                  2 Hachoma Hashlishit
                  E. Jerusalem, Israel
                  Fax No.: 914-774-7275

                  Y.L Hirsch
                  259 Batai Ugarin
                  Jerusalem, Israel
                  Fax No.: 914-774-7275



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<PAGE>   6





                  Avram Rothman
                  Rechov Ovadya 14
                  Jerusalem E., Israel
                  Fax No.: 914-774-7275

                  Joshua Heimlich
                  3 Rechov Meah Sha'arim
                  Jerusalem, Israel
                  Fax No.: 914-774-7275

                  Zvi Y. Zelikovitz
                  P.O. Box 50468
                  Jerusalem, Israel
                  Fax No.: 914-774-7275

                  If to Escrow Agent:

                  Edward H. Bumbaum, Esq.
                  Novack Burnbaum Crystal LLP
                  300 East 42nd Street
                  New York, New York 10017
                  Fax: 212-986-2907

         6. Counterparts. This Escrow Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.

         7. Releases. Upon full performance by the Company and the Purchasers
under the terms and conditions of this Modification Agreement, the parties
shall be full and generally released from all of their respective obligations,
responsibilities and liabilities of the parties under the Agreement, the
Convertible Notes and the Warrants.


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<PAGE>   7


         This Modification Agreement has been executed as of the date first
above written.


                                    ADVANCED OPTICS ELECTRONICS, INC.



                                    By: /s/ LESLIE ROBINS
                                        ---------------------------------------


                                    By: /s/ SHOLEM LIEBENTHAL
                                        ---------------------------------------
                                            SHOLEM LIEBENTHAL


                                    By: /s/ Y.L. HIRSCH
                                        ---------------------------------------
                                            Y.L. HIRSCH


                                    By: /s/ AMRAM ROTHMAN
                                        ---------------------------------------
                                            AMRAM ROTHMAN


                                    By: /s/ JOSHUA HEIMLICH
                                        ---------------------------------------
                                            JOSHUA HEIMLICH


                                    By: /s/ ZVI Y. ZELIKOVITZ
                                        ---------------------------------------
                                            ZVI Y. ZELIKOVITZ




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<PAGE>   8




                                   SCHEDULE I

<TABLE>
<CAPTION>
                                Net Proceeds                      Other
                              Conversion Shares             Conversion Shares
                              -----------------             -----------------

     Purchaser
     ---------
<S>                           <C>                           <C>
     Sholem Liebenthal              $200,000                    1,440,000
     Y.L. Hirsch                     200,000                    1,440,000
     Amram Rothman                   200,000                    1,440,000
     Joshua Heimlich                 200,000                    1,440,000
     Zvi. Y. Zelikovitz              200,000                    1,440,000

     Total                        $1,000,000                    7,200,000

</TABLE>


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<PAGE>   9








                                   EXHIBIT A


                   UNANIMOUS WRITTEN CONSENT OF THE DIRECTORS

                                       OF

                       ADVANCED OPTICS ELECTRONICS, INC.

         The undersigned, constituting all of the Directors of Advanced Optics
Electronics, Inc., a Nevada corporation (the "Corporation"), hereby consent to
the taking of the following actions and hereby adopt, by this written consent,
the following resolutions with the same force and effect as if they had been
adopted at a duly convened meeting of the Board of Directors of the
Corporation:

                  RESOLVED, that the Corporation be, and it hereby is,
                  authorized to enter into a Modification and Settlement
                  Agreement which, inter alia, modifies a certain Securities
                  Purchase Agreement with the investors who are signatories
                  thereto (the "Investors"), modifying and settling the
                  Corporation's obligations to issue and sell to the Investors
                  an aggregate of up to $500,000 principal amount of 8%
                  Convertible Notes due June 3, 2001 (the "Notes") and warrants
                  (the "Warrants") to purchase up to an aggregate of up to
                  12,500,000 shares of the Corporation's common stock, $.001
                  par value ("Common Stock"), all as set forth in the
                  Modification and Settlement Agreement; and be it further

                  RESOLVED that the Chief Executive Officer and President of
                  the Corporation and the Chief Financial Officer of the
                  Corporation (together, the "Authorized Officers") be, and
                  each of them with full authority to act without the other
                  hereby is, authorized and directed to execute and deliver, in
                  the name and on behalf of the Corporation, the Modification
                  and Settlement Agreement substantially in the form annexed
                  hereto and the Transfer Agent Resolution as defined therein.
                  And to issue shares of common stock to the Investors as
                  provided therein, with such changes and modifications as the
                  Authorized Officer executing the same deems necessary or
                  advisable, the execution thereof by such Authorized Officer
                  being conclusive evidence of the necessity or advisability
                  thereof; and be it further


                  RESOLVED, that the Corporation reserve for issuance the
                  number of shares of Common Stock contemplated by the
                  Modification and Settlement Agreement for issuance upon
                  conversion of the



<PAGE>   10



                  Convertible Notes, as defined in the Modification and
                  Settlement Agreement, and such shares, when issued upon
                  conversion of the Notes, shall be deemed to be duly and
                  validly issued, fully paid and non-assessable; and be it
                  further

                  RESOLVED, that the Authorized Officers hereby are, and each
                  of them with full authority to act without the other hereby
                  is, authorized to take all such further action and to execute
                  and deliver all such further instruments and documents, in
                  the name and on behalf of the Corporation and under its
                  corporate seal or otherwise, and to pay such fees and
                  expenses as in his judgment shall be necessary or advisable
                  in order fully to carry out the intent and to accomplish the
                  purposes of the foregoing resolutions, and the execution by
                  either of the Authorized Officers of any such instruments or
                  documents, or the doing by either of them of any act in
                  connection with the foregoing matters, shall conclusively
                  establish his authority therefor from the Company of the
                  approval and ratification by the Company of the instruments
                  and documents so executed and the actions so taken.

         This Unanimous Consent may be executed in two or more counterparts,
which together shall constitute an originally executed Unanimous Written
Consent.

         IN WITNESS WHEREOF, the undersigned has executed this Unanimous
Written Consent as of June 11, 2000.

                                            -----------------------------------
                                            LESLIE ROBINS


                                            -----------------------------------
                                            HAROLD HERMAN


                                            -----------------------------------
                                            MICHAEL PETE


<PAGE>   11







                                   EXHIBIT B


                               RESOLUTION OF THE
                             BOARD OF DIRECTORS OF

                       ADVANCED OPTICS ELECTRONICS, INC.


                  A meeting of the Board of Directors of Advanced Optics
Electronics, Inc., a Nevada corporation, was held on June 11, 2000 at the
corporate offices, at which the following Resolutions were passed upon and
adopted:


                  RESOLVED, that the Corporation shall deliver to Edward H.
                  Bumbaum, Esq., as Escrow Agent ("Escrow Agent"), this
                  original Resolution, a true copy of which may in turn be
                  delivered to Oxford Transfer and Registrar, 317 SW Alder,
                  Suite 1120, Portland, Oregon 97204, the transfer agent
                  ("Transfer Agent") for the Corporation's publicly traded
                  shares, symbol "ADOT", and the Transfer Agent is hereby
                  instructed to release and deliver to the Escrow Agent shares
                  of the Corporation's common stock in an amount equal up to
                  $1,000,000, or at some lesser sum as the Escrow Agent, in his
                  sole discretion, may direct the Transfer Agent, at a price
                  per share which is the closing bid price of the Corporation's
                  common stock for the trading day prior to the date or dates
                  on which this Resolution is delivered to the Transfer Agent
                  ("Market Price"). The Escrow Agent shall provide the Transfer
                  Agent with Market Price and the calculation of shares to be
                  delivered and the Transfer Agent shall have the right to rely
                  on the Escrow Agent's calculation and direction. The Escrow
                  Agent may present this Resolution to the Transfer Agent on as
                  many occasions as necessary in order to effectuate the
                  purposes of a certain Modification and Settlement Agreement,
                  dated May 24, 2000, among the Corporation and various
                  purchasers


                  RESOLVED, that this Resolution and the directions and
                  instructions contained herein shall be effective through May
                  24, 2002, and shall be irrevocable and shall not be
                  superseded, amended, suspended or revoked by any other
                  Resolution, direction, instruction or action of the
                  Corporation or its shareholders, under the Modification and
                  Settlement Securities Agreement.


<PAGE>   12






                  RESOLVED, that the Corporation shall not change the Transfer
                  Agent without the express written consent of the Escrow Agent
                  through and including May 24, 2002, and that the Transfer
                  Agent shall not honor any request of the Corporation to
                  cooperate in a change of Transfer Agent unless approved in
                  writing by the Escrow Agent.

                  UPON MOTION DULY MADE AND SECONDED, the meeting was adjourned.



                                    ---------------------------------------
                                                      Chairman