Document:

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                                  EXHIBIT 10.34

                             STOCK OPTION AGREEMENT
                           (NONQUALIFIED STOCK OPTION)

<TABLE>
<CAPTION>
<S>                         <C>
OPTIONEE:              Derek W. Woolston

NUMBER OF SHARES:      13,636

OPTION EXERCISE PRICE: $2.24 per Share

DATE OF GRANT:        December 19, 2002

EXERCISE TERM:        Ten Years from the Date of Grant

VESTING SCHEDULE:     25% on the date 3 months following the Date of Grant;
                      25%  on  the  date  6  months  following  the Date of Grant;
                      25%  on  the  date  9  months  following  the Date of Grant;
                      25%  on  the  date  1  year  following  the  Date  of Grant.

     THIS OPTION AGREEMENT (the "AGREEMENT") is entered into effective as of the
19th  day  of  December,  2002  by  and  between  HIENERGY TECHNOLOGIES, INC., a
Delaware  corporation  (the "Company"), and the individual designated above (the
"Optionee").
</TABLE>
                                    RECITALS
                                    --------

     WHEREAS,  QED  Law  Group, P.L.L.C., a Washington limited liability company
("QED"),  has  provided  legal  services  to  the  Company;  and

     WHEREAS,  the  Optionee,  as  a  member of QED, has agreed to accept, as an
accommodation  to  adjust  amounts owing to QED, stock options from the Company;

NOW,  THEREFORE,  the  parties  agree  to  the  terms and conditions as follows:

1.     GRANT OF OPTION.

1.1     Option.  An option to purchase shares of the Company's Common Stock, par
        ------
     value  $0.001  per  share, (the "Shares") is hereby granted to the Optionee
(the  "Option").

1.2     Number  of  Shares.  The number of Shares that the Optionee can purchase
        ------------------
upon  exercise  of  the  Option  is  set  forth  above.

1.3     Option  Exercise Price.  The price the Optionee must pay to exercise the
        ----------------------
Option  (the  "Option  Exercise  Price")  is  set  forth  above.

Stock Option Agreement, Derek W. Woolston - Page 1

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1.4     Date  of Grant.  The date the Option is granted (the "Date of Grant") is
        --------------
set  forth  above.

1.5     Type  of  Option.  The  Option  is  intended  to be a Nonqualified Stock
        ----------------
Option.  It  is  not intended to qualify as an Incentive Stock Option within the
meaning  of  Section  422  of the Internal Revenue Code of 1986, as amended from
time  to  time,  or  any  successor  provision  thereto.

1.6     Condition.  The  Option  is  conditioned  on the Optionee's execution of
        ---------
this  Agreement.  If  this  Agreement is not executed by the Optionee, it may be
canceled  by  the  Company's  Board  of Directors or a duly authorized committee
thereof  (the  "Board").

2.     DURATION.

     The  Option  shall  be exercisable to the extent and in the manner provided
herein  during  the  Exercise Term, which is set forth above; provided, however,
that  the  Option  may  be earlier terminated as provided in Section 1.6 hereof.

3.     VESTING.

     The Option shall vest, and may be exercised, with respect to the Shares, on
or after the dates set forth above, subject to earlier termination of the Option
as  provided  in  Section  1.6 hereof.  The right to purchase the Shares as they
become  vested  shall  be cumulative and shall continue during the Exercise Term
unless  sooner  terminated  as  provided  herein.

4.     MANNER OF EXERCISE AND PAYMENT.

4.1     To  exercise  the  Option, the Optionee must deliver a completed copy of
the Option Exercise Form, attached hereto as Exhibit A, to the address indicated
on  such  Form or such other address designated by the Company from time to
time.  Contemporaneously  with  the  delivery  of  the Option Exercise Form, the
Optionee  shall  tender  the  Option Exercise Price to the Company, (i) by cash,
check,  wire  transfer  or  such  other  method  of  payment  (e.g., delivery or
attestation  of  Shares already owned) as may be acceptable to the Company, (ii)
by  "cashless  exercise"  in  accordance with the provisions of Section 4.3, but
only  when  a  registration  statement  under Securities Act qualifying a public
offering  of  the  underlying  Shares  is  not  then  in  effect,  or (iii) by a
combination  of  the  foregoing methods of payment selected by the Optionee. The
Option  may  be exercised in whole or in part with respect to the vested Shares.
Within  ten  (10) days of delivery of the Option Exercise Form and tender of the
Option  Exercise  Price,  the  Company shall deliver certificates evidencing the
Shares  to  the  Optionee,  duly endorsed for transfer to the Optionee, free and
clear  of  all  liens,  security  interests, pledges or other claims or charges.

4.2     The  Optionee shall not be deemed to be the holder of, or to have any of
the  rights  of  a holder with respect to any Shares subject to the Option until

Stock Option Agreement, Derek W. Woolston - Page 2

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(i) the Option shall have been exercised pursuant to the terms of this Agreement
and  the Optionee shall have paid the full purchase price for the number of
Shares in respect of which the Option was exercised, (ii) the Company shall have
issued  and  delivered the Shares to the Optionee, and (iii) the Optionee's name
shall  have been entered as a stockholder of record on the books of the Company,
whereupon  the  Optionee  shall have full voting and other ownership rights with
respect  to  such  Shares.

4.3     Notwithstanding  any provisions herein to the contrary, if the Per Share
Market  Value  of  one share of Common Stock is greater than the Option Exercise
Price  (at  the  date  of calculation as set forth below), in lieu of exercising
this  Option  by  payment  of  cash,  the Optionee may exercise this Option by a
cashless  exercise  and shall receive the number of shares of Common Stock equal
to  an amount (as determined below) by surrendering this Option at the principal
office  of  the Company together with the properly endorsed Option Exercise Form
in  which  event  the  Company shall issue to the Optionee a number of shares of
Common  Stock  computed  using  the  following  formula:
<TABLE>
<CAPTION>
<S>     <C>
           X = Y - (A)(Y)
                  ------
           B

Where     X =     the number of shares of Common Stock to be issued to the Optionee.

          Y =     the number of shares of Common Stock purchasable upon exercise of all of
                  the Option or, if only a portion of the Option is being exercised, the portion
                  of the Option being exercised.

          A =     the Option Exercise Price.

          B  =    the  Per  Share  Market  Value  of one share of Common Stock.

</TABLE>

"Per  Share Market Value" means on any particular date (a) the closing bid price
for  a  share of Common Stock in the over-the-counter market, as reported by the
OTC  Bulletin Board (or in the National Quotation Bureau Incorporated or similar
organization  or agency succeeding to its functions of reporting prices), or any
United  States  market  or  exchange  senior to the OTC Bulletin Board where the
Company's Common Stock may become traded, at the close of business on such date,
or (b) if the Common Stock is not then reported by the OTC Bulletin Board or the
National  Quotation  Bureau  Incorporated  (or  similar  organization  or agency
succeeding  to  its  functions  of  reporting  prices  or  any  senior market or
exchange),  then  the  average  of  the  "Pink  Sheet"  quotes  for the relevant
conversion  period,  as  determined  in  good  faith by the Board, or (c) if the
Common  Stock  is  not  then publicly traded the fair market value of a share of
Common  Stock  as determined by the Board in good faith; provided, however, that
                                                         --------  -------
the  Optionee,  after  receipt of the determination by the Board, shall have the
right  to  select,  jointly with the Company, an Independent Appraiser, in which

Stock Option Agreement, Derek W. Woolston - Page 3

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case,  the  fair  market  value  shall  be the determination by such Independent
Appraiser; and provided, further that all determinations of the Per Share Market
               --------  -------
Value  shall  be appropriately adjusted for any stock dividends, stock splits or
other similar transactions during such period.  The determination of fair market
value  shall  be based upon the fair market value of the Company determined on a
going  concern  basis as between a willing buyer and a willing seller and taking
into account all relevant factors determinative of value, and shall be final and
binding  on  all parties.  In determining the fair market value of any shares of
Common Stock, no consideration shall be given to any restrictions on transfer of
the Common Stock imposed by agreement or by federal or state securities laws, or
to  the  existence  or  absence  of,  or  any  limitations  on,  voting  rights.

"Independent  Appraiser"  means  a  nationally  recognized  or  major  regional
investment  banking  firm or firm of independent certified public accountants of
recognized standing (which may be the firm that regularly examines the financial
statements  of  the  Company)  that  is  regularly  engaged  in  the business of
appraising  the  capital  stock  or  assets of corporations or other entities as
going  concerns,  and  which  is  not  affiliated with either the Company or the
Optionee.

5.     DEATH  OF  OPTIONEE.

     In  the  event  of  the  death  of  the  Optionee  during  the Term of this
Agreement,  the options shall continue to vest as provided by Section 3, and the
options  shall  terminate  on  the  expiration  date  otherwise provided in this
Agreement. Under these circumstances, the Option will be exercisable at any time
prior to such termination by the Optionee's estate, or by such person or persons
who  have acquired the right to exercise the Option by bequest or by inheritance
or  by  reason  of  the  death  of  the  Optionee.

6.     TRANSFERABILITY.

     Except  as  permitted  by  the  Board, the Option shall not be transferable
other  than  by will or by the laws of descent and distribution, and, during the
lifetime  of the Optionee, the Option shall be exercisable only by the Optionee.

7.     RESTRICTIONS  ON  THE  OPTIONS;  RESTRICTIONS  ON  THE  SHARES.

     The  Option  may  not  be  exercised  at any time unless, in the opinion of
counsel  for  the  Company, the issuance and sale of the Shares issued upon such
exercise  is  exempt  from  registration  under  the  Securities Act of 1933, as
amended,  or  any  other  applicable  federal  or  state securities law, rule or
regulation,  or  the  Shares  have  been  duly  registered under such laws.  The
Company  shall not be required to register the Shares issuable upon the exercise
of the Option under any such laws.  Unless the Shares have been registered under
all  applicable  laws,  the  Optionee  shall  represent, warrant and agree, as a
condition to the exercise of the Option, that the Shares are being purchased for
investment  only  and  without a view to any sale or distribution of such Shares
and  that  such  Shares  shall  not  be transferred or disposed of in any manner
without  registration  under  such laws, unless it is the opinion of counsel for
the  Company  that  such  a  disposition  is exempt from such registration.  The
Optionee  acknowledges  that  an appropriate legend, in such form as the Company
shall  determine,  giving  notice  of  the  foregoing  restrictions shall appear
conspicuously on all certificates evidencing the Shares issued upon the exercise
of  the  Option.  The  Company  may,  in its sole discretion, place a "Blue Sky"
legend  on  the certificates in accordance with U.S. state securities laws or as
required  by  applicable  securities  laws.

Stock Option Agreement, Derek W. Woolston - Page 4

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     The  Optionee  also  acknowledges  and  agrees that, in connection with any
public  offering  of  the  Company's  stock,  upon request of the Company or the
underwriters  managing  any  underwritten public offering of the Company's stock
and  making  such  request with the approval of the Board, not to sell, make any
short  sale of, loan, grant any option for the purchase of, or otherwise dispose
of  any  of  his Shares without the prior written consent of the Company or such
underwriters,  as  the case may be, from the effective date of such registration
for so long as the Company or the underwriters may specify, but in any event not
to  exceed  180  days.

8.     NO  RIGHT  TO  CONTINUED  STATUS  AS  LEGAL  COUNSEL.

     Nothing  in this Agreement shall be interpreted or construed to confer upon
the  Optionee  any  right  with  respect to continuance as legal counsel for the
Company or any successor, nor shall this Agreement interfere in any way with the
right  of  the  Company  or  any successor to terminate the Optionee's status as
legal  counsel  at  any  time.

9.     ADJUSTMENTS  UPON  CERTAIN  EVENTS.

9.1.     Adjustments  Upon  Changes  in Capitalization.  Subject to any required
         ---------------------------------------------
action  by  the  shareholders  of  the  Company,  in  the  event  of a change in
capitalization,  such  as a stock split or other subdivision or consolidation of
Shares  or  the  payment of any stock dividend consisting of Shares or any other
increase  or  decrease  in  the  number  of  Shares  effected without receipt of
consideration  by  the  Company,  the  Company  shall  make  appropriate  and
proportionate  adjustments  to  the  number  and  class of Shares subject to the
Option  and  the  purchase  price  for such Shares or other stock or securities;
provided, however, that conversion of the Option will not be deemed to have been
"effected without receipt of consideration". Any adjustments as a result of
a  change  in  the  Company's  capitalization  will  be made by the Board, whose
determination  in  that  respect  is  final,  binding and conclusive.  Except as
otherwise  expressly  provided  in this Section 9.1, any issue by the Company of
shares  of stock of any class, or securities convertible into shares of stock of
any  class,  shall  not affect the number of Shares or the exercise price of the
Shares  subject to the Option, and no adjustments in the Option shall be made by
reason  thereof.  The  grant of this Option does not in any way affect the right
or  power of the Company to make adjustments, reclassifications, reorganizations
or  changes  of  its  capital  or  business  structure.

9.2.     Liquidation  or  Dissolution.  In  the  event  of  a  liquidation  or
         ----------------------------
dissolution,  any unexercised options will terminate. The Optionee will have the
right to exercise the Optionee's Option as to all of the optioned stock prior to
the  consummation  of  the  liquidation  or  dissolution.

Stock Option Agreement, Derek W. Woolston - Page 5

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9.3.     Change  of  Control,  Merger, Sale of Assets, Etc.  In the event of the
         -------------------------------------------------
sale  or other transfer of the outstanding shares of stock of the Company in one
transaction or a series of related transactions or a merger or reorganization of
the Company with or into any other corporation, where immediately following
the  transaction, those persons who were shareholders of the Company immediately
before  the  transaction  control  less  than  50%  of  the  voting power of the
surviving  organization  (a  "change  of  control  event")  or in the event of a
proposed  sale  of substantially all of the assets of the Company (collectively,
"sale  transaction"),  the Option shall become fully vested immediately prior to
such  transaction  (and  the  Company  shall afford Optionee with notice of such
transaction  and  a reasonable opportunity to exercise the Option), or, with the
consent  of  the  Optionee,  be assumed or replaced with a substitute equivalent
option.

10.     WITHHOLDINGS  OF  TAXES.

     The Company shall have the right to deduct from any distribution of cash to
the  Optionee  an  amount equal to the federal, state and local income taxes and
other  amounts  as  may  be  required  by  law to be withheld (the "Withholdings
Taxes")  with  respect  to  the  Option.  If the Optionee is entitled to receive
Shares  upon  exercise  of  the  Option, the Optionee shall pay the Withholdings
Taxes  (if  any) to the Company in cash prior to the issuance of such Shares. In
satisfaction of the Withholdings Taxes, the Optionee may make a written election
(the "Tax Election"), which may be accepted or rejected in the discretion of the
Company,  to  have  withheld a portion of the Shares issuable to him or her upon
exercise  of  the  Option,  having  an  aggregate Fair Market Value equal to the
Withholdings  Taxes,  provided that, if the Optionee may be subject to liability
under  Section  16(b)  of  the  Exchange  Act, the election must comply with the
requirements  applicable  to  Share  transactions  by  such  Optionees.

11.     MODIFICATION  OF  AGREEMENT.

     This  Agreement  may be modified, amended, suspended or terminated, and any
terms  or conditions may be waived, only by a written instrument executed by the
parties  hereto.

12.     SEVERABILITY.

     Should  any  provision  of  this  Agreement be held by a court of competent
jurisdiction  to  be  unenforceable  or  invalid  for  any reason, the remaining
provisions  of  this  Agreement shall not be affected by such holdings and shall
continue  in  full  force  in  accordance  with  their  terms.

13.     GOVERNING  LAW.

     The  validity,  interpretation,  construction  and  performance  of  this
Agreement  shall  be  governed  by  the  laws of the State of Washington without
giving  effect  to  the  conflicts  of  laws  principles  thereof.

Stock Option Agreement, Derek W. Woolston - Page 6

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14.     SUCCESSORS  IN  INTEREST.

     This  Agreement  shall  be  binding  upon, and inure to the benefit of, the
Company  and  its successors and assigns, and upon any person acquiring, whether
by  merger,  consolidation,  reorganization,  purchase  of  stock  or assets, or
otherwise,  all or substantially all of the Company's assets and business.  This
Agreement  shall  inure  to  the  benefit  of  the  Optionee's  heirs  and legal
representatives.  All  obligations  imposed  upon  the  Optionee  and all rights
granted  to  the  Company  under  this  Agreement  shall  be  final, binding and
conclusive  upon the Optionee's heirs, executors, administrators and successors.

15.     RESOLUTION  OF  DISPUTES.

     Any dispute or disagreement which may arise under, or as a result of, or in
any  way  relate  to,  the  interpretation,  construction or application of this
Agreement  shall  be  determined by the Board.  Any determination made hereunder
shall  be  final, binding and conclusive on the Optionee and the Company for all
purposes.

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

HIENERGY TECHNOLOGIES, INC.

By:     /s/ Tom Pascoe
        -------------------

Name:   Tom Pascoe
        -------------------

Title:  President and CEO
        -------------------

     By signing below, Optionee hereby accepts the Option subject to all its
terms and provisions.

OPTIONEE

Signature:     /s/ Derek W. Woolston
               ---------------------

Print Name:     Derek W. Woolston
                --------------------

                                [EXHIBIT  FOLLOWS]

Stock Option Agreement, Derek W. Woolston - Page 7

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                                    EXHIBIT A

                              OPTION EXERCISE FORM
                              --------------------

To:  HiEnergy Technologies, Inc.

(1)     a)     The undersigned hereby elects to purchase the number of shares of
the common stock of HiEnergy Technologies, Inc. (the "Company") set forth below,
pursuant  to  the  terms of the Stock Option Agreement dated __________________,
2002, tendering simultaneous full payment of the Total Option Exercise Price for
such  shares.

  Number of Shares:                         ________________ Shares

  Option Exercise Price Per Share:          x  $____________ per Share

  Total Option Exercise Price:              =  $____________

b)   The undersigned hereby elects to exercise the Option with respect to the
     number of underlying Shares set forth below according to the "cashless
     exercise" provisions of the Option.

    Number of underlying Shares:            ________________ Shares

The undersigned understands that he will be issued a certificate for a lesser
number of net Shares based on the provisions of the Option.

(2)     In exercising this Option, the undersigned hereby confirms and
acknowledges that:

     a)   the shares of Common Stock to be issued upon exercise are being
          acquired solely for the account of the undersigned and not as a
          nominee for any other party; and

     b)   the shares of Common Stock to be issued upon exercise are not acquired
          with a view toward distribution; and

     c)   the undersigned will not offer, sell or otherwise dispose of any such
          shares of Common Stock except pursuant to an effective registration,
          or an exemption therefrom, under the Securities Act of 1933, as
          amended, together with a similar exemption under the securities laws
          of all applicable jurisdictions; and

Option Exercise Form - Page 1

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     d)   the undersigned otherwise reaffirms all representations, warranties,
          and indemnifications contained in the Stock Option Agreement,
          including, but not limited to, those contained in Section 7 of the
          Stock Option Agreement; and

     e)   the undersigned has reviewed all of Company's public filings with the
          Securities and Exchange Commission; and

     f)   the undersigned consents to delay the exercise of the Option until, in
          the Company's judgment, the Company has disclosed any additional
          matters that need to be disclosed to the undersigned, beyond those
          contained in the public filings with the Securities and Exchange
          Commission.

(3)     Subject  to  Section  (2),  please  issue  a certificate or certificates
representing  said  shares  of  Common  Stock  in the name of the undersigned as
instructed.

(4)     Please  issue  a  new Option for the unexercised portion of the attached
Option  in  the  name  of  the  undersigned.

This _____ day of __________________, _____:

___________________________________________
Signature

___________________________________________
Print Name of Signatory

___________________________________________
Name of Entity (if applicable)

Send  or  deliver  this  Form  with  an  original  signature  to:

HiEnergy Technologies, Inc.
Attn:  President
1601 Alton Parkway
Unit B
Irvine, CA  92606

Option Exercise Form - Page 2

<PAGE><PAGE>

                                  EXHIBIT 10.35

                              SETTLEMENT AGREEMENT
                              --------------------

     This settlement agreement ("Agreement") is made and entered into by and
between Keith Cowan ("Cowan") on the one hand, and HiEnergy MicroDevices, Inc,
HiEnergy Technologies, Inc.,  and Bogdan Castle Maglich (collectively referred
to as the "HiEnergy Defendants") on the other hand, as of January 15, 2003, in
Irvine, California.

                                    RECITALS
                                    --------

     WHEREAS an action is now pending in the Superior Court of the State of
California, County of Orange, Central Justice Center, styled Cowan v. HiEnergy
                                                             -----------------
MicroDevices, et al., Case No. 02CC05356 (the "Action"); and
-------------------

     WHEREAS all parties wish to resolve the disputes and differences existing
between them by settling the Action and thereafter having their peace;

                                    AGREEMENT
                                    ---------

     NOW, THEREFORE, for and in consideration of the following terms and
conditions, each of the parties hereby agree as follows:

     1.     CONSIDERATION
            -------------

     Within fifteen (15) days of execution of this agreement by all parties,
however no earlier than the eighth day following Cowan's execution, HiEnergy
Defendants shall provide Cowan with the following consideration:

          (a)     PAYMENT OF SETTLEMENT FUNDS: HiEnergy Defendants shall pay to
                  ---------------------------
Cowan the sum of Fifty Thousand Dollars ($50,000), payable as follows:

               (1)     Twenty Five Thousand Dollars ($25,000) shall be wages
subject to all payroll tax withholdings and shall be paid directly to Cowan,
with the check delivered to the Law Offices of David J. Harter, 5232 Bolsa Ave.,
Suite 2, Huntington Beach, CA 92649, prior to 5:00 p.m. on the due date.  Cowan
shall have the right to provide a new W-4 prior to payment.

               (2)     Twenty Five Thousand Dollars ($25,000) shall be for the
reimbursement of moving expenses and legal fees in connection with the Action.
Such payment shall be made by issuing payment to the Law Offices of David J.
Harter Client Trust Account, and must be received by delivery to 5232 Bolsa
Ave., Suite 2, Huntington Beach, CA 92649, prior to 5:00 p.m. on the due date.
Cowan agrees that payment in this manner is fully satisfactory to him.  The
parties agree that payroll taxes shall not be deductible from this payment as
the payment is not for wages, but rather reimbursement for attorney's fees and
moving expenses.  Nevertheless, in the event any interest or penalties are
assessed by the Internal Revenue Service against HiEnergy as a result of this
payment without withholding, Cowan will indemnify HiEnergy for any such interest
and/or penalties imposed.

<PAGE>

Settlement Agreement and Release
Page 2 of 7
______________________________________________________________________________

          (b)     REGISTRATION OF STOCK:  Eighty Thousand (80,000) shares of
                  ---------------------
restricted stock in HiEnergy Technologies, Inc. ("STOCK") will be provided to
Cowan as further consideration.  Within five (5) days of execution of this
agreement, the certificate representing the STOCK shall be issued and delivered
to Cowan.  The STOCK is to be included in the next SEC registration statement
filed by HiEnergy and will be reissued with all restrictions removed within
three days after the registration statement becomes effective.  Cowan agrees to
execute HiEnergy's standard Certificate of Representations, Warranties and
Covenants.  If in the opinion of HiEnergy's counsel, restrictive legends on the
certificates cannot removed pursuant to state securities laws, and the holder
refuses to make such accommodations as would satisfy HiEnergy's counsel, then
HiEnergy shall not be required to remove the restrictive legend. If the
restriction is not removed from the stock on or before April 1, 2003, then
COWAN, at his option, can tender the shares to HiEnergy and make a claim for the
full amount of the funds being held pursuant to the provisions of section 1
subdivision (c) of this agreement.

          (c)     ISSUANCE OF LETTER OF CREDIT OR ESTABLISHMENT OF ESCROW
                  -------------------------------------------------------
ACCOUNT:  HiEnergy Defendants shall do one of the following:

          (i)  Issue an irrevocable letter of credit from a major U.S. bank in
               favor of Cowan for the sum of One Hundred Twenty Five Thousand
               Dollars ($125,000). Payment terms of the letter of credit shall
               say that the funds shall be payable to Cowan, upon certification
               by Cowan, that one of the following conditions has been met: (1)
               the restrictions from Cowan's share certificate were not removed
               on or before April 1, 2003 and the share certificate representing
               the 80,000 shares has been returned to HiEnergy, or (2) after
               expiration of the 30-day period immediately following the date
               the SEC registration statement becomes effective, and provided
               that (A) Cowan possesses none of the 80,000 shares of HiEnergy
               Technologies, Inc. stock described in Paragraph 1(b) and (B)
               Cowan received less than $125,000 for sale of all 80,000 shares,
               upon presentation of supporting documentation evidencing the
               proceeds realized from the sale of the shares, in which case
               Cowan may draw on said letter of credit up to a maximum amount
               equaling the difference between the amount Cowan receives for
               sale of all shares and $125,000, or;

          (ii) Deposit the sum of One Hundred Twenty Five Thousand Dollars
               ($125,000) in an escrow account acceptable to Cowan. The escrow
               instructions shall state that the funds shall be payable to
               Cowan, upon certification by Cowan, that one of the following
               conditions has been met: (1) if the restrictions from Cowan's

                                        2

<PAGE>

Settlement Agreement and Release
Page 3 of 7
______________________________________________________________________________

               share certificate are not removed on or before April 1, 2003 and
               the share certificate representing the 80,000 shares has been
               returned to HiEnergy, or (2) after expiration of the 30-day
               period immediately following the date the SEC registration
               statement becomes effective, provided that (A) Cowan possesses
               none of the 80,000 shares of HiEnergy Technologies, Inc. stock
               described in Paragraph 1(b), and (B) Cowan received less than
               $125,000 for sale of all 80,000 shares, upon presentation of
               supporting documentation evidencing the proceeds realized from
               the sale of the shares, in which case Cowan may withdraw funds
               from the escrow account up to a maximum amount equaling the
               difference between the amount Cowan receives for sale of all
               shares and $125,000.

     Cowan hereby agrees that any sale of the shares shall be a good faith arms
length sale through a registered securities broker/dealer.

     Cowan acknowledges that the HiEnergy Defendants vigorously deny any
wrongdoing whatsoever in connection with its dealing with Cowan, and that the
consideration provided pursuant to this Agreement is made solely for the purpose
of compromising disputed claims and avoiding the time and expense of litigation.
It is expressly understood and agreed that nothing contained in this Agreement
shall constitute or be treated as an admission of any wrongdoing or liability on
the part of the Company.

     2     NOTICE OF SETTLEMENT / DISMISSAL OF ACTION
           ------------------------------------------

     Upon receipt of the settlement funds described in Paragraph 1(a) herein,
and the deposit of the additional settlement funds into escrow with the required
instructions or opening of the letter of credit described in Paragraph 1(c)
herein, Cowan shall cause a notice of settlement to be filed with the Orange
County Superior Court, Case No. 02CC05356 (the "Action"), and forward a
conformed copy to the attention of Jerry D. Underwood at Stradling Yocca Carlson
& Rauth, attorneys of record for the HiEnergy Defendants.  The court shall
retain jurisdiction to enforce the terms of this settlement until such time as
Cowan has sold the STOCK or received any money due to him under the escrow or
letter of credit. Once the STOCK has been sold for an amount of not less than
$125,000, or an money held in escrow or under the letter of credit has been paid
consistent with Paragraph 1(c) herein, Cowan shall cause a Request for Dismissal
of the entire action against all defendants, heirs, and estates, as the case may
be, with prejudice, to be filed in the Action, and forward a conformed copy to
the attention of Jerry D. Underwood at Stradling Yocca Carlson & Rauth. No
defendant shall file a memorandum of costs in connection with this dismissal.

                                        3

<PAGE>

Settlement Agreement and Release
Page 4 of 7
______________________________________________________________________________

     3.     RELEASE OF ALL CLAIMS
            ---------------------

     Upon the performance of all obligations required under this agreement, the
parties hereby fully, finally, and forever release and discharge each other, as
well as their parent companies, subsidiaries, affiliates, predecessors in
interest, successors in interest, officers, directors, employees, agents,
attorneys, principals, joint and co-venturers, assigns, and representatives of
every nature from any and all claims for relief, causes of action, claims,
rights, obligations, liabilities, damages, costs, demands, complaints to the
board of registration, and actions at law, in equity or otherwise, related to
the Action, including, without limitation, those that are known and unknown,
those that are suspected and unsuspected, and those that exist as well as those
that may come into existence in the future, and including all causes of action
that could have been asserted in those actions.

     The release in this Agreement includes, but is not limited to, claims
arising under federal, state or local law for race, color, sex, age, or other
forms of employment discrimination and retaliation.  In accordance with the
Older Workers Benefit Protection Act, Cowan hereby knowingly and voluntarily
waives and releases all rights and claims, known or unknown, arising under the
Age Discrimination in Employment Act of 1967, as amended, which he might
otherwise have had against the HiEnergy Defendants.  Cowan is advised to and
acknowledges that he has consulted with his attorney David J. Harter before
signing this Agreement and that he has 21 days in which to consider and accept
this Agreement.  In addition, Cowan understands and acknowledges that he has a
period of seven (7) days following his execution of this Agreement in which he
may revoke this Agreement.  If Cowan does not advise the HiEnergy Defendants by
a writing addressed and sent the attention of Jerry D. Underwood at Stradling
Yocca Carlson & Rauth, attorneys of record for the HiEnergy Defendants within
such seven day period of the his intent to revoke this Agreement, the Agreement
will become effective and enforceable upon the expiration of the seven days.

     4.     WAIVER OF ALL RIGHTS
            --------------------

     The parties hereby expressly, knowingly, and intentionally WAIVES ALL
RIGHTS AND PROTECTIONS afforded in connection with the Action by the terms and
provisions of California Civil Code section 1542 and by any and all similar laws
of and for any other state of the United States and all foreign governments.
California Civil Code section 1542 states that:

          A general release does not extend to claims which the creditor does
          not know or suspect to exist in his favor at the time of executing the
          release, which if known by him must have materially affected his
          settlement with the debtor.

     In connection with such waiver, the parties hereby acknowledges that they
hereafter may discover claims, obligations, rights, causes of action, claims for
relief, liabilities, and facts, or any of them, in addition to or different from
those that he now knows or believes to be in existence, accrued, or true with
respect to the matters hereby released.  Nevertheless, it is the intention of

                                        4

<PAGE>

Settlement Agreement and Release
Page 5 of 7
______________________________________________________________________________

the parties, through this Release and with the independent advice of counsel or
the opportunity to receive such advice, fully, finally, and forever to settle
and release all such claims, obligations, rights, causes of action, claims for
relief, liabilities, and damages that heretofore have existed, now exist, or
hereafter may exist against the other party in connection with the Action.

     5.     CONFIDENTIALITY
            ---------------

     Each party agrees to keep the terms of this Agreement completely
confidential and not hereafter disclose the substance or contents hereof,
including specifically the amount of such payment(s), to any person or entity,
including but not limited to any past or present employee of the Company;
provided, however, that this provision shall not:

          (a)     preclude either party from making such disclosures (1) as are
necessary to comply with a valid subpoena or court order (provided, however,
that upon receipt of any such subpoena or court order the party receiving it
will immediately and prior to any disclosure notify the other party), or (2) to
their attorneys, accountants, or tax preparers as are necessary for either party
to comply with the law or generally accepted accounting principles, provided
such individuals are informed of this confidentiality provision and agree to be
bound thereby; and

          (b)     preclude HiEnergy from making such disclosures as necessary,
in the opinion of HiEnergy, for any filing with the Securities and Exchange
Commission.

If asked about the claim, each party shall state only that the matter has been
resolved.

     6.     ENTIRE AGREEMENT
            ----------------

     This Agreement contains the entire understanding between the parties
concerning the subject matter it contains.  There are no representations,
agreements, arrangements, or understandings, oral or written, among the parties
relating to the subject matter of this Agreement, which are not fully expressed
herein.

     7.     JOINT PREPARATION
            -----------------

     This Agreement is the product of the parties' mutual discussions and
negotiations.  This document is drafted, prepared and created by all the parties
collectively and shall not be construed in favor of, or against, any party.

     8.     OPPORTUNITY TO REVIEW AGREEMENT
            -------------------------------

     Each party has been given an opportunity to fully review and analyze this
Agreement and further have had the opportunity to seek legal counsel and to have
legal counsel review and analyze this Agreement.  Each party has fully read and
understands each provision of this contract and all parties understand their
respective duties under this Agreement.

                                        5
<PAGE>

Settlement Agreement and Release
Page 6 of 7
______________________________________________________________________________

     9.     WAIVERS, MODIFICATION AND AMENDMENT
            -----------------------------------

     No supplement, modification, or amendment of this Agreement shall be
binding unless executed in writing and signed by all the parties. No waiver of
any of the provisions of this Agreement shall be deemed, or shall constitute, a
waiver of any other provision, whether or not similar, nor shall any waiver
constitute a continuing waiver. No waiver shall be binding unless executed in
writing by the party making the waiver.

     10.     SEVERABILITY CLAUSE
             -------------------

     If any provision of this Agreement is held by a court of competent
jurisdiction to be invalid, void or unenforceable for any reason, the remaining
provisions not so declared shall nevertheless continue in full force and effect,
but shall be construed in a manner so as to effectuate the intent of this
Agreement as a whole, notwithstanding such stricken provision or provisions.

     11.     PROPERLY EXECUTED.
             -----------------

     HiEnergy Defendants represent and warrant that this Agreement has been duly
authorized, executed and delivered and that all corporate action necessary to
approve and authorize the terms of this agreement have been performed.

     12.     INTEGRATION
             -----------

     This agreement constitutes the entire agreement between the parties.  This
agreement supersedes all prior negotiations, representations or agreements,
either written or oral.  This agreement may be amended only by the written
agreement of all parties to this agreement.

     13.     COUNTERPARTS
             ------------

     This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original but all of which together shall constitute one and
the same instrument.  In addition a faxed signature shall be binding as though
it were an original.

                                        6

<PAGE>

Settlement Agreement and Release
Page 7 of 7
______________________________________________________________________________

     IN WITNESS WHEREOF, the parties to this agreement have duly executed it on
the date stated below.

Dated: January 15, 2003               By:       /s/ K. Cowan
               --                         ------------------------
                                               Keith Cowan

                                      HiEnergy Microdevices, Inc.

Dated: January 15, 2003               By:       /s/ BC Maglich
               --                         ------------------------

                                      HiEnergy Technologies, Inc.

                                           /s/ Tom Pascoe
Dated: January 15, 2003               By: _______________________
               --
                                           /s/ BC Maglich
Dated: January 15, 2003               By: _______________________
               --                          Bodgan Castle Maglich

                                        7

<PAGE>

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