Document:

EXHIBIT 10.22

                  SERIES A CONVERTIBLE PREFERRED STOCK PURCHASE

                                    AGREEMENT

                           DATED AS OF OCTOBER 7, 2002

                                      AMONG

                           HIENERGY TECHNOLOGIES, INC.

                                       AND

                       THE PURCHASERS LISTED ON EXHIBIT A

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                                TABLE OF CONTENTS
                                -----------------

                                                                            PAGE
                                                                            ----
ARTICLE  I  Purchase  and  Sale  of  Preferred  Stock                        1

  Section  1.1     Purchase  and  Sale  of  Stock                            1
  Section  1.2     The  Conversion  Shares.                                  1
  Section  1.3     Purchase  Price  and  Closing.                            2
  Section  1.4     Warrants                                                  2

ARTICLE  II  Representations  and  Warranties                                2

  Section  2.1     Representations  and  Warranties  of  the  Company        2
  Section  2.2     Representations  and  Warranties  of  the  Purchasers    13

ARTICLE  III  Covenants                                                     16

  Section  3.1     Securities  Compliance.                                  16
  Section  3.2     Registration  and  Listing                               17
  Section  3.3     Inspection  Rights                                       17
  Section  3.4     Compliance  with  Laws                                   17
  Section  3.5     Keeping  of  Records  and  Books  of  Account            18
  Section  3.6     Reporting  Requirements                                  18
  Section  3.7     Amendments                                               18
  Section  3.8     Other  Agreements                                        18
  Section  3.9     Distributions                                            18
  Section  3.10     Status  of  Dividends                                   19
  Section  3.11     Reservation  of  Shares                                 20
  Section  3.12     Transfer  Agent  Instructions                           20

ARTICLE  IV  Conditions                                                     21

  Section  4.1     Conditions  Precedent  to  the  Obligation of the
                   Company to Sell  the  Shares.                            21
  Section  4.2     Conditions  Precedent  to the Obligation of the
                   Purchasers to Purchase  the  Shares                      21

ARTICLE  V  Stock  Certificate  Legend                                      24

  Section  5.1     Legend                                                   24

ARTICLE  VI  Indemnification                                                25
  Section  6.1     General  Indemnity                                       25
  Section  6.2     Indemnification  Procedure                               25

ARTICLE  VII  Miscellaneous                                                 26

  Section  7.1     Fees  and  Expenses                                      26
  Section  7.2     Specific  Enforcement,  Consent  to  Jurisdiction        26
  Section  7.3     Entire  Agreement;  Amendment                            27
  Section  7.4     Notices                                                  27
  Section  7.5     Waivers                                                  28
  Section  7.6     Headings                                                 28
  Section  7.7     Successors  and  Assigns                                 28
  Section  7.8     No  Third  Party  Beneficiaries                          28
  Section  7.9     Governing  Law                                           28
  Section  7.10    Survival                                                 28
  Section  7.11    Counterparts                                             29
  Section  7.12    Publicity                                                29
  Section  7.13    Severability                                             29
  Section  7.14    Further  Assurances                                      29
  Section  7.15    Most  Favored  Nations.                                  29

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             SERIES A CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT

     This  SERIES  A  CONVERTIBLE   PREFERRED  STOCK  PURCHASE   AGREEMENT  (the
"Agreement") is dated as of October 7, 2002 by and among HiEnergy  Technologies,
Inc., a Washington  corporation (the  "Company"),  and each of the Purchasers of
shares of Series A  Convertible  Preferred  Stock of the Company whose names are
set forth on Exhibit A hereto (individually, a "Purchaser" and collectively, the
"Purchasers").

The parties hereto agree as follows:

                                    ARTICLE I

                      PURCHASE AND SALE OF PREFERRED STOCK

     Section  1.1  Purchase  and Sale of  Stock.  Upon the  following  terms and
conditions,  the Company shall issue and sell to the  Purchasers and each of the
Purchasers  shall  purchase  from the  Company,  the  number  of  shares  of the
Company's Series A Convertible Preferred Stock, par value $0.0001 per share (the
"Preferred  Shares"),  at a purchase price of $10,000 per share,  set forth with
respect to such  Purchaser  on Exhibit A hereto (as such  exhibit may be updated
pursuant to the terms hereof for the successive closings contemplated by Section
1.3). Upon the following terms and  conditions,  the Purchasers  shall be issued
Warrants,   in  substantially  the  form  attached  hereto  as  Exhibit  B  (the
"Warrants"), to purchase the Company's Common Stock, par value $0.0001 per share
(the "Common  Stock").  The maximum  aggregate  purchase price for the Preferred
Shares and the  Warrants  shall be  $3,450,000.  There is no  minimum  aggregate
purchase  price.  The  designation,  rights,  preferences  and  other  terms and
provisions  of the  Series A  Convertible  Preferred  Stock are set forth in the
Certificate of Designation of the Relative  Rights and Preferences of the Series
A Convertible  Preferred Stock attached hereto as Exhibit C (the "Certificate of
Designation"). The Company reserves the right to close this offering at any time
and accept no  further  subscriptions,  even if  subscriptions  for the  maximum
aggregate purchase price of $3,450,000 have been subscribed for but not accepted
by the Company. The Company and the Purchasers are executing and delivering this
Agreement in accordance  with and in reliance upon the exemption from securities
registration   afforded  by  Rule  506  of  Regulation  D  ("Regulation  D")  as
promulgated  by the  United  States  Securities  and  Exchange  Commission  (the
"Commission")  under the  Securities  Act of 1933,  as amended (the  "Securities
Act") or Section 4(2) of the Securities Act.

Section 1.2 The Conversion  Shares.  The Company has authorized and has reserved
and  covenants  to  continue  to reserve,  free of  preemptive  rights and other
similar  contractual  rights of  stockholders,  such  number of shares of Common
Stock as shall from time to time be sufficient  to effect the  conversion of all
of the Preferred Shares and exercise of the Warrants then outstanding;  provided
that the number of shares of Common  Stock so reserved  shall at no time be less
than 200% of the  number of its  authorized  but  unissued  shares of its Common
Stock required to effect the conversion of the Preferred  Shares and exercise of
the  Warrants.  Any  shares of Common  Stock  issuable  upon  conversion  of the
Preferred  Shares and exercise of the Warrants (and such shares when issued) are
herein  referred  to as  the  "Conversion  Shares"  and  the  "Warrant  Shares",
respectively. The Preferred Shares, the Conversion Shares and the Warrant Shares
are sometimes collectively referred to as the "Shares".

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     Section 1.3 Purchase Price and Closing.  In consideration of and in express
reliance upon the representations,  warranties,  covenants, terms and conditions
of this  Agreement,  the Company  agrees to issue and sell to the Purchasers and
the Purchasers,  severally but not jointly, agree to purchase that number of the
Preferred  Shares and  Warrants set forth  opposite  their  respective  names on
Exhibit A. The aggregate  purchase  price of the  Preferred  Shares and Warrants
being acquired by each Purchaser is set forth opposite such  Purchaser's name on
Exhibit  A (for each such  purchaser,  the  "Purchase  Price"  and  collectively
referred to as the "Purchase Prices"). The closing of the execution and delivery
of this Agreement  shall occur upon delivery by facsimile of executed  signature
pages of this  Agreement  and all  other  documents,  instruments  and  writings
required to be delivered pursuant to this Agreement to QED Law Group,  P.L.L.C.,
3200 N.W. 68th Street,  Seattle,  Washington  98117.  The  Preferred  Shares and
Warrants  shall be sold and funded in one or more  separate  closings  (each,  a
"Closing").  The initial  closing under this Agreement  (the "Initial  Closing")
shall take place no later than October 7, 2002 (the "Initial  Closing Date") and
the second closing under this Agreement (the "Second  Closing") shall take place
no later than October 22, 2002 (the "Second Closing Date"). Funding with respect
to each Closing shall take place by wire transfer of immediately available funds
on or prior to the applicable  Closing Date, so long as the conditions set forth
in Article IV hereof shall be fulfilled or waived in accordance  herewith.  Each
Closing under this  Agreement  shall take place at the offices of QED Law Group,
P.L.L.C.  at 1:00  p.m.  (eastern  time)  (10:00  a.m.  pacific  time)  upon the
satisfaction  of each of the  conditions set forth in Article IV hereof (each, a
"Closing Date").

     Section 1.4 Warrants. The Company agrees to issue to each of the Purchasers
Warrants to  purchase  the number of shares of Common  Stock set forth  opposite
such Purchaser's  name on Exhibit A hereto.  The Warrants shall have an exercise
price equal to the Warrant  Price (as defined in the  Warrants) and shall expire
on the second (2nd) anniversary of the date of issuance.

                                   ARTICLE II

                         REPRESENTATIONS AND WARRANTIES

     Section 2.1  Representations  and  Warranties  of the Company.  The Company
hereby makes the following  representations  and  warranties to the  Purchasers,
subject to modification  for information  disclosed in the Company's  disclosure
letter delivered with this Agreement (the  "Disclosure  Letter") or disclosed in
its filings with the Securities and Exchange  Commission  (sometimes referred to
redundantly in part hereinafter as "Form 10-KSB" or "Form 10-QSB"), as follows:

     (a)  Organization,  Good  Standing and Power.  The Company is a corporation
duly  incorporated,  validly existing and in good standing under the laws of the
State of Washington  and has the  requisite  corporate  power to own,  lease and
operate its properties and assets and to conduct its business as it is now being
conducted. The Company does not have any subsidiaries except as set forth in the
Company's  Form 10-KSB for the fiscal year ended April 30, 2002,  including  the
accompanying  financial statements (the "Form 10-KSB"), or in the Company's Form
10-QSB for the fiscal quarters ended July 31, 2002, October 31, 2002, or January
31, 2002 (collectively, the "Form 10-QSB"). The Company and each such subsidiary
is  duly  qualified  as a  foreign  corporation  to do  business  and is in good
standing in every  jurisdiction in which the nature of the business conducted or
property  owned  by  it  makes  such  qualification  necessary  except  for  any
jurisdiction(s)  (alone  or in the  aggregate)  in which  the  failure  to be so
qualified will not have a Material  Adverse Effect (as defined in Section 2.1(c)
hereof) on the Company's financial condition.

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     (b)  Authorization;  Enforcement.  The Company has the requisite  corporate
power and authority to enter into and perform this Agreement,  the  Registration
Rights  Agreement  attached  hereto  as  Exhibit  D  (the  "Registration  Rights
Agreement"),  the Transfer Agent  Instructions (as defined in Section 3.12), the
Certificate of Designation,  and the Warrants  (collectively,  the  "Transaction
Documents") and to issue and sell the Shares and the Warrants in accordance with
the terms hereof.  The execution,  delivery and  performance of the  Transaction
Documents and the Certificate of Designation by the Company and the consummation
by it of the  transactions  contemplated  hereby and thereby  have been duly and
validly authorized by all necessary  corporate action, and no further consent or
authorization  of the  Company  or its Board of  Directors  or  stockholders  is
required.  This  Agreement  has been duly executed and delivered by the Company.
The other  Transaction  Documents  will have been duly executed and delivered by
the  Company  at  the  Initial  Closing.   Each  of  the  Transaction  Documents
constitutes,  or shall  constitute  when  executed  and  delivered,  a valid and
binding obligation of the Company  enforceable against the Company in accordance
with its terms,  except as such  enforceability  may be  limited  by  applicable
bankruptcy,     insolvency,     reorganization,     moratorium,     liquidation,
conservatorship,   receivership  or  similar  laws  relating  to,  or  affecting
generally  the  enforcement  of,  creditor's  rights  and  remedies  or by other
equitable principles of general application.

     (c)  Capitalization.  The  authorized  capital stock of the Company and the
shares thereof currently issued and outstanding as of September 30, 2002 are set
forth in the Disclosure  Letter.  All of the outstanding shares of the Company's
Common Stock and Series A Convertible Preferred Stock have been duly and validly
authorized.  Except as set forth in this Agreement and the  Registration  Rights
Agreement  and as set  forth in the Form  10-KSB  or Form  10-QSB,  no shares of
Common Stock are entitled to preemptive rights or registration  rights and there
are no outstanding  options,  warrants,  scrip,  rights to subscribe to, call or
commitments  of any  character  whatsoever  relating to, or securities or rights
convertible  into,  any shares of  capital  stock of the  Company.  Furthermore,
except as set forth in this Agreement and the Registration  Rights Agreement and
as set  forth  in the  Form  10-KSB  or Form  10-QSB,  there  are no  contracts,
commitments,  understandings,  or  arrangements  by which the  Company is or may
become bound to issue  additional  shares of the capital stock of the Company or
options,  securities or rights  convertible  into shares of capital stock of the
Company.  Except for  customary  transfer  restrictions  contained in agreements
entered  into by the  Company  in  order  to sell  restricted  securities  or as
provided  in the Form 10-KSB or Form  10-QSB,  the Company is not a party to any
agreement  granting  registration  or  anti-dilution  rights to any person  with
respect to any of its equity or debt securities.  The Company is not a party to,
and it has no knowledge of, any agreement  restricting the voting or transfer of
any shares of the capital stock of the Company.  Except as set forth in the Form
10-KSB or Form  10-QSB,  the offer and sale of all  capital  stock,  convertible
securities,  rights,  warrants,  or options of the Company  issued  prior to the
Closing  complied with all applicable  Federal and state securities laws, and no
stockholder  has a right of rescission or claim for damages with respect thereto
which would have a Material  Adverse  Effect (as defined below) on the Company's
financial  condition or  operating  results.  The Company has  furnished or made
available to the Purchasers true and correct copies of the Company's Articles of
Incorporation  as in  effect  on the  date  hereof  (the  "Articles"),  and  the
Company's  Bylaws  as in  effect  on the date  hereof  (the  "Bylaws").  For the
purposes of this Agreement,  "Material  Adverse Effect" means any adverse effect
on the business,  operations,  properties,  prospects, or financial condition of
the  Company or its  subsidiaries  and which is material to such entity or other
entities controlling or controlled by such entity.

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     (d) Issuance of Shares.  The Preferred Shares and the Warrants to be issued
at each Closing have been duly authorized by all necessary  corporate action and
the  Preferred  Shares,  when paid for or issued  in  accordance  with the terms
hereof,  shall be validly issued and outstanding,  fully paid and  nonassessable
and  entitled  to the rights and  preferences  set forth in the  Certificate  of
Designation.  When the  Conversion  Shares and the Warrant  Shares are issued in
accordance  with  the  terms  of  the  Preferred  Shares  as  set  forth  in the
Certificate of Designation and the Warrants,  respectively,  such shares will be
duly  authorized  by all  necessary  corporate  action  and  validly  issued and
outstanding, fully paid and nonassessable,  and the holders shall be entitled to
all rights accorded to a holder of Common Stock.

     (e)  No  Conflicts.   The  execution,   delivery  and  performance  of  the
Transaction  Documents by the  Company,  the  performance  by the Company of its
obligations  under the  Certificate of Designation  and the  consummation by the
Company of the transactions  contemplated herein and therein do not and will not
(i) violate any  provision of the  Company's  Articles or Bylaws,  (ii) conflict
with, or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment,  acceleration or cancellation  of, any agreement,  mortgage,  deed of
trust, indenture, note, bond, license, lease agreement, instrument or obligation
to which the Company is a party or by which it or its  properties  or assets are
bound, (iii) create or impose a lien,  mortgage,  security  interest,  charge or
encumbrance  of any nature on any property of the Company under any agreement or
any  commitment to which the Company is a party or by which the Company is bound
or by which any of its respective properties or assets are bound, or (iv) result
in  a  violation  of  any  federal,  state,  local  or  foreign  statute,  rule,
regulation,  order,  judgment or decree (including  Federal and state securities
laws and regulations) applicable to the Company or any of its subsidiaries or by
which any property or asset of the Company or any of its  subsidiaries are bound
or affected,  except, in all cases other than violations pursuant to clauses (i)
and  (iv)  above,  for  such  conflicts,  defaults,  terminations,   amendments,
accelerations, cancellations and violations as would not, individually or in the
aggregate,  have a Material Adverse Effect.  The business of the Company and its
subsidiaries  is not being  conducted in violation  of any laws,  ordinances  or
regulations of any  governmental  entity,  except for possible  violations which
singularly  or in the  aggregate  do not and will not  have a  Material  Adverse
Effect.  The Company is not required under Federal,  state or local law, rule or
regulation to obtain any consent,  authorization or order of, or make any filing
or  registration  with,  any  court or  governmental  agency  in order for it to
execute,  deliver  or  perform  any of its  obligations  under  the  Transaction
Documents or the  Certificate  of  Designation,  or issue and sell the Preferred
Shares, the Warrants, the Conversion Shares and the Warrant Shares in accordance
with the terms hereof or thereof  (other than any filings  which may be required
to be made by the Company with the Commission or state securities administrators
subsequent  to the  Closing,  any  registration  statement  which  may be  filed
pursuant  hereto,  and the  Certificate  of  Designation);  provided  that,  for
purposes of the  representation  made in this sentence,  the Company is assuming
and relying upon the accuracy of the relevant  representations and agreements of
the Purchasers herein.

<PAGE>

     (f) Commission  Documents,  Financial  Statements.  The Common Stock of the
Company  is  registered  pursuant  to Section  12(b) or 12(g) of the  Securities
Exchange Act of 1934, as amended (the "Exchange Act"),  and, except as disclosed
in the Form 10-KSB or Form 10-QSB,  since April 30, 2002, the Company has timely
filed all reports,  schedules, forms, statements and other documents required to
be filed by it with the Commission pursuant to the reporting requirements of the
Exchange Act, including material filed pursuant to Section 13(a) or 15(d) of the
Exchange Act (all of the foregoing  including filings  incorporated by reference
therein being referred to herein as the "Commission Documents"). The Company has
delivered or made available  (including by filing its Commission  Documents with
the  Commission)  to each of the  Purchasers  true and  complete  copies  of the
Commission Documents filed with the Commission since April 30, 2002. The Company
has not provided to the Purchasers any material non-public  information or other
information which, according to applicable law, rule or regulation, was required
to have  been  disclosed  publicly  by the  Company  but  which  has not been so
disclosed,  other than with  respect to the  transactions  contemplated  by this
Agreement.  As of their  respective  dates,  the Form 10-KSB and the Form 10-QSB
complied in all material  respects with the requirements of the Exchange Act and
the rules and  regulations  of the Commission  promulgated  thereunder and other
federal,  state  and  local  laws,  rules  and  regulations  applicable  to such
documents,  and, as of their respective  dates,  none of the Form 10-KSB and the
Form 10-QSB  contained  any untrue  statement  of a material  fact or omitted to
state a material  fact  required to be stated  therein or  necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.  The financial  statements of the Company  included in the
Commission  Documents comply as to form in all material respects with applicable
accounting   requirements  and  the  published  rules  and  regulations  of  the
Commission or other applicable rules and regulations with respect thereto.  Such
financial  statements have been prepared in accordance  with generally  accepted
accounting  principles ("GAAP") applied on a consistent basis during the periods
involved (except (i) as may be otherwise indicated in such financial  statements
or the notes thereto or (ii) in the case of unaudited interim statements, to the
extent  they  may  not  include   footnotes  or  may  be  condensed  or  summary
statements),  and fairly present in all material respects the financial position
of the Company and its  subsidiaries  as of the dates thereof and the results of
operations  and cash flows for the periods then ended  (subject,  in the case of
unaudited statements, to normal year-end audit adjustments).

     (g)  Subsidiaries.  The Form 10-KSB,  Form 10-QSB or the Disclosure  Letter
sets forth each  subsidiary  of the  Company,  showing the  jurisdiction  of its
incorporation  or  organization  and showing  the  percentage  of each  person's
ownership of the outstanding  stock or other interests of such  subsidiary.  For
the purposes of this Agreement, "subsidiary" shall mean any corporation or other
entity  of  which at  least a  majority  of the  securities  or other  ownership
interest  having  ordinary  voting power  (absolutely or  contingently)  for the
election of directors or other persons  performing  similar functions are at the
time  owned  directly  or  indirectly  by the  Company  and/or  any of its other
subsidiaries.  All of the outstanding shares of capital stock of each subsidiary
have  been  duly  authorized  and  validly  issued,   and  are  fully  paid  and
nonassessable.  There are no outstanding preemptive, conversion or other rights,
options,  warrants  or  agreements  granted  or  issued by or  binding  upon any
subsidiary for the purchase or acquisition of any shares of capital stock of any
subsidiary  or  any  other  securities  convertible  into,  exchangeable  for or
evidencing the rights to subscribe for any shares of such capital stock. Neither
the Company  nor any  subsidiary  is subject to any  obligation  (contingent  or
otherwise)  to  repurchase  or  otherwise  acquire  or retire  any shares of the
capital stock of any subsidiary or any convertible securities,  rights, warrants
or options of the type described in the preceding sentence.  Neither the Company
nor any  subsidiary  is  party  to,  nor has any  knowledge  of,  any  agreement
restricting  the voting or transfer  of any shares of the  capital  stock of any
subsidiary.

<PAGE>

     (h) No Material  Adverse  Change.  Since April 30,  2002,  the date through
which the most  recent  annual  report of the  Company  on Form  10-KSB has been
prepared  and filed  with the  Commission,  a copy of which is  included  in the
Commission  Documents,  the Company has not experienced or suffered any Material
Adverse Effect.

     (i) No Undisclosed  Liabilities.  Except as disclosed in the Form 10-KSB or
Form  10-QSB,   neither  the  Company  nor  any  of  its  subsidiaries  has  any
liabilities,  obligations, claims or losses (whether liquidated or unliquidated,
secured or unsecured,  absolute,  accrued,  contingent or otherwise)  other than
those  incurred in the  ordinary  course of the  Company's  or its  subsidiaries
respective  businesses  since April 30, 2002 and which,  individually  or in the
aggregate,  do not or would not have a Material Adverse Effect on the Company or
its subsidiaries.

     (j) No Undisclosed  Events or  Circumstances.  No event or circumstance has
occurred or exists  with  respect to the  Company or its  subsidiaries  or their
respective businesses, properties, prospects, operations or financial condition,
which,  under applicable law, rule or regulation,  requires public disclosure or
announcement  by the  Company but which has not been so  publicly  announced  or
disclosed.

     (k) Indebtedness.  The Form 10-KSB or Form 10-QSB sets forth as of the date
hereof all outstanding secured and unsecured  Indebtedness of the Company or any
subsidiary, or for which the Company or any subsidiary has commitments.  For the
purposes of this  Agreement,  "Indebtedness"  shall mean (a) any liabilities for
borrowed money or amounts owed in excess of $100,000  (other than trade accounts
payable  incurred  in the  ordinary  course of  business),  (b) all  guaranties,
endorsements  and other  contingent  obligations in respect of  Indebtedness  of
others,  whether  or not the same are or should be  reflected  in the  Company's
balance  sheet (or the notes  thereto),  except  guaranties  by  endorsement  of
negotiable  instruments for deposit or collection or similar transactions in the
ordinary course of business;  and (c) the present value of any lease payments in
excess of $25,000 due under leases required to be capitalized in accordance with
GAAP.  Neither the Company nor any  subsidiary is in default with respect to any
Indebtedness.

     (l) Title to Assets.  Each of the Company and the subsidiaries has good and
marketable  title to all of its  real and  personal  property  reflected  in the
Commission Documents, free and clear of any mortgages,  pledges, charges, liens,
security interests or other encumbrances, except for those indicated in the Form
10-KSB or Form 10-QSB or such that,  individually  or in the  aggregate,  do not
cause  a  Material  Adverse  Effect  on the  Company's  financial  condition  or
operating  results.  All said leases of the Company and each of its subsidiaries
are valid and subsisting and in full force and effect.

     (m)  Actions  Pending.  There is no  action,  suit,  claim,  investigation,
arbitration,  alternate  dispute  resolution  proceeding or any other proceeding
pending or, to the knowledge of the Company,  threatened  against the Company or
any  subsidiary  which  questions  the validity of this  Agreement or any of the
other Transaction  Documents or the transactions  contemplated hereby or thereby
or any action  taken or to be taken  pursuant  hereto or thereto.  Except as set
forth in the Form  10-KSB  or Form  10-QSB,  there is no  action,  suit,  claim,
investigation, arbitration, alternate dispute resolution proceeding or any other
proceeding pending or, to the knowledge of the Company,  threatened,  against or
involving the Company,  any subsidiary or any of their respective  properties or
assets.  Except as set forth in the Form  10-KSB  or Form  10-QSB,  there are no
outstanding  orders,  judgments,  injunctions,  awards or  decrees of any court,
arbitrator  or  governmental  or  regulatory  body  against  the  Company or any
subsidiary  or any officers or directors of the Company or  subsidiary  in their
capacities as such.

     (n) Compliance  with Law. The business of the Company and the  subsidiaries
has been and is presently  being  conducted in  accordance  with all  applicable
federal,  state and local governmental laws, rules,  regulations and ordinances,
except as set forth in the Form 10-KSB or Form 10-QSB or such that, individually
or in the aggregate,  do not cause a Material  Adverse  Effect.  The Company and
each of its subsidiaries have all franchises,  permits,  licenses,  consents and
other governmental or regulatory  authorizations and approvals necessary for the
conduct of its  business  as now being  conducted  by it unless  the  failure to
possess such franchises,  permits, licenses,  consents and other governmental or
regulatory authorizations and approvals, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect.

<PAGE>

     (o)  Taxes.  Except as set forth in the Form  10-KSB  or Form  10-QSB,  the
Company  and each of the  subsidiaries  has  accurately  prepared  and filed all
federal, state and other tax returns required by law to be filed by it, has paid
or  made  provisions  for  the  payment  of all  taxes  shown  to be due and all
additional  assessments,  and adequate provisions have been and are reflected in
the  financial  statements of the Company and the  subsidiaries  for all current
taxes and other  charges to which the Company or any  subsidiary  is subject and
which are not currently due and payable.  None of the federal income tax returns
of the  Company or any  subsidiary  have been  audited by the  Internal  Revenue
Service. The Company has no knowledge of any additional assessments, adjustments
or contingent tax liability (whether federal or state) of any nature whatsoever,
whether  pending or  threatened  against the Company or any  subsidiary  for any
period, nor of any basis for any such assessment, adjustment or contingency.

     (p)  Certain  Fees.  Except as set  forth in this  Agreement,  no  brokers,
finders or financial advisory fees or commissions will be payable by the Company
or any subsidiary or any Purchaser with respect to the transactions contemplated
by this Agreement.

     (q)  Disclosure.  To the  best of the  Company's  knowledge,  neither  this
Agreement or the  Disclosure  Letter nor any other  documents,  certificates  or
instruments  furnished to the  Purchasers  by the Company or any  subsidiary  in
connection  with the  transactions  contemplated  by this Agreement  contain any
untrue  statement of a material fact or omit to state a material fact  necessary
in order to make the  statements  made  herein or  therein,  in the light of the
circumstances under which they were made herein or therein, not misleading.

     (r) Operation of Business. The Company and each of the subsidiaries owns or
possesses all patents, trademarks,  domain names (whether or not registered) and
any patentable improvements or copyrightable derivative works thereof,  websites
and intellectual  property rights relating thereto,  service marks, trade names,
copyrights,  licenses and authorizations as set forth in the Form 10-KSB or Form
10-QSB,  and all rights with respect to the  foregoing,  which are necessary for
the conduct of its  business as now  conducted  without  any  conflict  with the
rights of others.

     (s) Environmental Compliance. The Company and each of its subsidiaries have
obtained  all  material  approvals,   authorization,   certificates,   consents,
licenses, orders and permits or other similar authorizations of all governmental
authorities, or from any other person, that are required under any Environmental
Laws. The Form 10-KSB or Form 10-QSB sets forth all material  permits,  licenses
and other  authorizations  issued under any Environmental Laws to the Company or
its subsidiaries.  "Environmental  Laws" shall mean all applicable laws relating
to  the  protection  of  the  environment  including,  without  limitation,  all
requirements  pertaining  to  reporting,  licensing,  permitting,   controlling,
investigating  or  remediating  emissions,  discharges,  releases or  threatened
releases of hazardous substances, chemical substances, pollutants,  contaminants
or toxic substances,  materials or wastes,  whether solid,  liquid or gaseous in
nature,  into the air,  surface  water,  groundwater or land, or relating to the
manufacture,   processing,  distribution,  use,  treatment,  storage,  disposal,
transport or handling of hazardous substances, chemical substances,  pollutants,
contaminants or toxic substances,  material or wastes,  whether solid, liquid or
gaseous in nature. The Company has all necessary governmental approvals required
under all Environmental  Laws and used in its business or in the business of any
of its  subsidiaries.  The  Company  and  each of its  subsidiaries  are also in
compliance  with all other  limitations,  restrictions,  conditions,  standards,
requirements,   schedules   and   timetables   required  or  imposed  under  all
Environmental  Laws.  Except for such instances as would not  individually or in
the  aggregate  have a  Material  Adverse  Effect,  there are no past or present
events, conditions,  circumstances,  incidents, actions or omissions relating to
or in any way  affecting  the Company or its  subsidiaries  that  violate or may
violate any  Environmental  Law after the Closing  Date or that may give rise to
any environmental  liability,  or otherwise form the basis of any claim, action,
demand,  suit,  proceeding,  hearing,  study  or  investigation  (i)  under  any
Environmental  Law, or (ii) based on or related to the manufacture,  processing,
distribution,  use, treatment, storage (including without limitation underground
storage tanks),  disposal,  transport or handling,  or the emission,  discharge,
release  or  threatened  release  of  any  hazardous  substance.  "Environmental
Liabilities"  means all  liabilities of a person  (whether such  liabilities are
owed by such person to  governmental  authorities,  third  parties or otherwise)
whether  currently in existence or arising hereafter which arise under or relate
to any Environmental Law.

<PAGE>

     (t)  Books  and  Record  Internal  Accounting  Controls.  The  records  and
documents of the Company and its subsidiaries accurately reflect in all material
respects  the  information  relating  to the  business  of the  Company  and the
subsidiaries, the location and collection of their assets, and the nature of all
transactions  giving  rise to the  obligations  or  accounts  receivable  of the
Company or any subsidiary.  The Company and each of its subsidiaries  maintain a
system of  internal  accounting  controls  sufficient,  in the  judgment  of the
Company's  board  of  directors,   to  provide  reasonable  assurance  that  (i)
transactions  are executed in accordance with  management's  general or specific
authorizations,   (ii)   transactions   are  recorded  as  necessary  to  permit
preparation  of financial  statements  in  conformity  with  generally  accepted
accounting  principles  and to maintain  asset  accountability,  (iii) access to
assets is permitted  only in accordance  with  management's  general or specific
authorization and (iv) the recorded  accountability  for assets is compared with
the existing  assets at reasonable  intervals and  appropriate  actions is taken
with respect to any differences.

     (u)  Material  Agreements.  Except as set forth in the Form  10-KSB or Form
10-QSB, neither the Company nor any subsidiary is a party to any written or oral
contract, instrument, agreement, commitment,  obligation, plan or arrangement, a
copy of which would be required to be filed with the Commission as an exhibit to
a  registration  statement  on  Form  SB-2  or  applicable  form  (collectively,
"Material  Agreements")  if the  Company  or  any  subsidiary  were  registering
securities  under the Securities  Act. The Company and each of its  subsidiaries
has in all  material  respects  performed  all the  obligations  required  to be
performed  by them to date under the  foregoing  agreements,  have  received  no
notice of default and, to the best of the Company's knowledge are not in default
under any Material  Agreement  now in effect,  the result of which could cause a
Material  Adverse Effect.  No written or oral contract,  instrument,  agreement,
commitment,  obligation, plan or arrangement of the Company or of any subsidiary
limits or shall  limit the  payment  of  dividends  on the  Company's  Preferred
Shares, other Preferred Stock, if any, or its Common Stock.

     (v) Transactions with Affiliates. Except as set forth in the Form 10-KSB or
Form  10-QSB,  there  are  no  loans,  leases,  agreements,  contracts,  royalty
agreements,   management   contracts  or   arrangements   or  other   continuing
transactions  between (a) the Company, any subsidiary or any of their respective
customers or suppliers on the one hand,  and (b) on the other hand, any officer,
employee,  consultant or director of the Company, or any of its subsidiaries, or
any person  owning any  capital  stock of the Company or any  subsidiary  or any
member of the immediate family of such officer, employee,  consultant,  director
or  stockholder or any  corporation or other entity  controlled by such officer,
employee,  consultant,  director or  stockholder,  or a member of the  immediate
family of such officer, employee, consultant, director or stockholder.

     (w) Securities Act of 1933. Based in material part upon the representations
herein of the  Purchasers,  the  Company has  complied  and will comply with all
applicable  federal  and state  securities  laws in  connection  with the offer,
issuance and sale of the Shares and the Warrants hereunder.  Neither the Company
nor anyone acting on its behalf, directly or indirectly, has or will sell, offer
to sell or solicit  offers to buy any of the  Shares,  the  Warrants  or similar
securities  to, or solicit  offers with respect  thereto from, or enter into any
preliminary  conversations or negotiations relating thereto with, any person, or
has taken or will take any action so as to bring the issuance and sale of any of
the Shares and the Warrants under the registration  provisions of the Securities
Act and applicable state securities laws, and neither the Company nor any of its
affiliates,  nor any person  acting on its or their  behalf,  has engaged in any
form of general  solicitation  or general  advertising  (within  the  meaning of
Regulation D under the Securities  Act) in connection  with the offer or sale of
any of the Shares and the Warrants.

     (x) Governmental Approvals.  Except as set forth in the Form 10-KSB or Form
10-QSB,  and  except for the filing of any  notice  prior or  subsequent  to the
Closing  Date  that  may be  required  under  applicable  state  and/or  Federal
securities laws (which if required, shall be filed on a timely basis), including
the  filing  of  a  registration   statement  or  statements   pursuant  to  the
Registration Rights Agreement,  and the filing of the Certificate of Designation
with the  Secretary  of State of the  State  of  Washington,  no  authorization,
consent, approval,  license, exemption of, filing or registration with any court
or   governmental   department,    commission,    board,   bureau,   agency   or
instrumentality,  domestic  or  foreign,  is or will  be  necessary  for,  or in
connection  with,  the  execution  or delivery of the  Preferred  Shares and the
Warrants,  or for the  performance by the Company of its  obligations  under the
Transaction Documents or the Certificate of Designation.

<PAGE>

     (y)  Employees.  Neither the Company nor any  subsidiary has any collective
bargaining  arrangements or agreements covering any of its employees,  except as
set  forth in the Form  10-KSB or Form  10-QSB.  Except as set forth in the Form
10-KSB or Form 10-QSB, neither the Company nor any subsidiary has any employment
contract,   agreement   regarding   proprietary   information,   non-competition
agreement,  non-solicitation agreement,  confidentiality agreement, or any other
similar contract or restrictive covenant,  relating to the right of any officer,
employee  or  consultant  to be  employed  or  engaged  by the  Company  or such
subsidiary.  Since April 30, 2002, no officer, consultant or key employee of the
Company or any  subsidiary  whose  termination,  either  individually  or in the
aggregate,  could have a Material  Adverse  Effect,  has  terminated  or, to the
knowledge of the Company,  has any present  intention of terminating  his or her
employment or engagement with the Company or any subsidiary.

     (z) Absence of Certain  Developments.  Except as provided in Form 10-KSB or
Form 10-QSB, since April 30, 2002, neither the Company nor any subsidiary has:

     (i) issued any stock,  bonds or other  corporate  securities or any rights,
options or warrants with respect thereto;

     (ii) borrowed any amount or incurred or become  subject to any  liabilities
(absolute or  contingent)  except current  liabilities  incurred in the ordinary
course of  business  which are  comparable  in nature and amount to the  current
liabilities  incurred in the ordinary  course of business  during the comparable
portion of its prior fiscal year, as adjusted to reflect the current  nature and
volume of the Company's or such subsidiary's business;

     (iii)  discharged  or  satisfied  any  lien  or  encumbrance  or  paid  any
obligation or liability (absolute or contingent), other than current liabilities
paid in the ordinary course of business;
     (iv) declared or made any payment or distribution of cash or other property
to stockholders with respect to its stock, or purchased or redeemed, or made any
agreements so to purchase or redeem, any shares of its capital stock;

     (v) sold,  assigned or transferred any other tangible  assets,  or canceled
any debts or claims, except in the ordinary course of business;

     (vi) sold,  assigned or transferred  any patent rights,  trademarks,  trade
names,  copyrights,  trade secrets or other  intangible  assets or  intellectual
property rights,  or disclosed any proprietary  confidential  information to any
person  except  to  customers  in the  ordinary  course  of  business  or to the
Purchasers or their representatives;

     (vii)  suffered  any  substantial  losses or waived any rights of  material
value,  whether or not in the ordinary course of business,  or suffered the loss
of any material amount of prospective business;

     (viii)  made any changes in employee  compensation  except in the  ordinary
course of business and consistent with past practices;

     (ix) made capital  expenditures  or commitments  therefor that aggregate in
excess of $100,000;

<PAGE>

     (x) entered into any other transaction other than in the ordinary course of
business, or entered into any other material transaction,  whether or not in the
ordinary course of business;

     (xi) made charitable contributions or pledges in excess of $25,000;

     (xii) suffered any material damage,  destruction or casualty loss,  whether
or not covered by insurance;

     (xiii)  experienced  any  material  problems  with labor or  management  in
connection with the terms and conditions of their employment;

     (xiv)  effected any two or more events of the  foregoing  kind which in the
aggregate would be material to the Company or its subsidiaries; or

     (xv) entered into an agreement,  written or  otherwise,  to take any of the
foregoing actions.

     (aa) Use of Proceeds.  The proceeds from the sale of the  Preferred  Shares
will be used by the Company for working capital and general corporate purposes.

     (bb) Public Utility Holding Company Act and Investment  Company Act Status.
The  Company is not a "holding  company" or a "public  utility  company" as such
terms are defined in the Public Utility Holding Company Act of 1935, as amended.
The Company is not, and as a result of and immediately upon the Closing will not
be,  an  "investment  company"  or a  company  "controlled"  by  an  "investment
company," within the meaning of the Investment Company Act of 1940, as amended.

     (cc) ERISA.  No liability to the Pension Benefit  Guaranty  Corporation has
been incurred with respect to any Plan by the Company or any of its subsidiaries
which is or would be materially adverse to the Company and its subsidiaries. The
execution and delivery of this Agreement and the issue and sale of the Preferred
Shares will not involve any transaction  which is subject to the prohibitions of
Section 406 of ERISA or in connection with which a tax could be imposed pursuant
to Section 4975 of the Internal Revenue Code of 1986, as amended, provided that,
if any of the  Purchasers,  or any  person  or  entity  that  owns a  beneficial
interest in any of the Purchasers, is an "employee pension benefit plan" (within
the  meaning of Section  3(2) of ERISA)  with  respect to which the Company is a
"party in  interest"  (within  the  meaning  of  Section  3(14) of  ERISA),  the
requirements of Sections 407(d)(5) and 408(e) of ERISA, if applicable,  are met.
As used in this Section 2.1(cc), the term "Plan" shall mean an "employee pension
benefit  plan"  (as  defined  in  Section  3 of  ERISA)  which  is or  has  been
established or maintained,  or to which  contributions are or have been made, by
the  Company  or any  subsidiary  or by any trade or  business,  whether  or not
incorporated,  which,  together  with the  Company or any  subsidiary,  is under
common control, as described in Section 414(b) or (c) of the Code.

     (dd) Dilutive Effect.  The Company  understands and  acknowledges  that the
number of Conversion Shares issuable upon conversion of the Preferred Shares and
the Warrant  Shares  issuable  upon  exercise of the Warrants  will  increase in
certain  circumstances.  The Company further acknowledges that its obligation to
issue  Conversion  Shares upon conversion of the Preferred  Shares in accordance
with this Agreement and the  Certificate of Designation  and its  obligations to
issue the Warrant  Shares upon the exercise of the Warrants in  accordance  with
this Agreement and the Warrants,  is, in each case,  absolute and  unconditional
regardless  of the dilutive  effect that such issuance may have on the ownership
interest of other stockholders of the Company.

<PAGE>

     (ee)  Reincorporation.  The  Company's  Board of  Directors on May 29, 2002
approved  the  Company's  reincorporation  to  Delaware  and on  July  16,  2002
recommended  adoption and approval by its stockholders of the Agreement and Plan
of Merger to effect  the  reincorporation  at the  Company's  annual  meeting of
stockholders  scheduled for October 10, 2002. At its July 16, 2002 meeting,  the
Company's  Board of  Directors  established  the record  date for the  Company's
annual  meeting of  stockholders  as Monday,  August 12, 2002, so the Purchasers
will not be entitled to vote at the annual  meeting.  The Board of  Directors on
August 11, 2002,  approved  revision of the Certificate of  Incorporation of the
Delaware  corporation to include the Series A Designation of Relative Rights and
Preferences subject to revision only for technical compliance with Delaware law.

     Section 2.2 Representations  and Warranties of the Purchasers.  Each of the
Purchasers  hereby makes the  following  representations  and  warranties to the
Company  with  respect  solely  to  itself  and not with  respect  to any  other
Purchaser:

     (a)  Organization  and Standing of the  Purchasers.  If the Purchaser is an
entity,  such  Purchaser is a corporation or partnership  duly  incorporated  or
organized,  validly  existing  and  in  good  standing  under  the  laws  of the
jurisdiction of its incorporation or organization.

     (b)  Authorization  and Power.  The Purchaser  has the requisite  power and
authority to enter into and perform this Agreement and to purchase the Preferred
Shares being sold to it hereunder.  The execution,  delivery and  performance of
this Agreement and the  Registration  Rights Agreement by such Purchaser and the
consummation by it of the transactions contemplated hereby and thereby have been
duly  authorized  by all  necessary  corporate  or  partnership  action  (if the
Purchaser  is an  entity),  and no  further  consent  or  authorization  of such
Purchaser or its Board of Directors,  stockholders, or partners, as the case may
be, is required.  Each of this Agreement and the  Registration  Rights Agreement
has been duly authorized,  executed and delivered by such Purchaser. Each of the
Transaction  Documents  constitutes,  or  shall  constitute  when  executed  and
delivered,  a valid and binding obligation of the Purchaser  enforceable against
the Purchaser in accordance with its terms, except as such enforceability may be
limited  by  applicable  bankruptcy,  insolvency,  reorganization,   moratorium,
liquidation,  conservatorship,  receivership  or similar  laws  relating  to, or
affecting  generally the  enforcement of,  creditor's  rights and remedies or by
other equitable principles of general application.

     (c) No Conflicts. The execution, delivery and performance of this Agreement
and the Registration  Rights Agreement and the consummation by such Purchaser of
the transactions  contemplated  hereby and thereby or relating hereto do not and
will not (i) result in a violation  of such  Purchaser's  charter  documents  or
bylaws or (ii)  conflict  with,  or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any  rights of  termination,  amendment,  acceleration  or  cancellation  of any
agreement, indenture or instrument to which such Purchaser is a party, or result
in a violation of any law, rule, or regulation, or any order, judgment or decree
of any  court  or  governmental  agency  applicable  to  such  Purchaser  or its
properties  (except for such  conflicts,  defaults and  violations as would not,
individually  or in the  aggregate,  have a  material  adverse  effect  on  such
Purchaser). Such Purchaser is not required to obtain any consent,  authorization
or order of, or make any filing or registration  with, any court or governmental
agency in order for it to  execute,  deliver or perform  any of its  obligations
under this  Agreement or the  Registration  Rights  Agreement or to purchase the
Preferred  Shares or acquire the Warrants in  accordance  with the terms hereof,
provided that for purposes of the  representation  made in this  sentence,  such
Purchaser   is  assuming   and  relying   upon  the  accuracy  of  the  relevant
representations and agreements of the Company herein.

<PAGE>

     (d) Acquisition  for Investment.  Such Purchaser is acquiring the Preferred
Shares and the Warrants solely for its own account for the purpose of investment
and  not  with a view to or for  sale  in  connection  with  distribution.  Such
Purchaser does not have a present  intention to sell the Preferred Shares or the
Warrants,  nor a  present  arrangement  (whether  or  not  legally  binding)  or
intention to effect any  distribution of the Preferred Shares or the Warrants to
or  through  any  person  or  entity;  provided,  however,  that by  making  the
representations  herein and subject to Section 2.2(f) below, such Purchaser does
not agree to hold the Shares or the Warrants  for any minimum or other  specific
term and reserves the right to dispose of the Shares or the Warrants at any time
in  accordance  with  Federal  and  state  securities  laws  applicable  to such
disposition.  Such Purchaser  acknowledges that it is able to bear the financial
risks associated with an investment in the Preferred Shares and the Warrants and
that it has been  given  full  access to such  records  of the  Company  and the
subsidiaries  and to the  officers  of the  Company  and  the  subsidiaries  and
received such  information as it has deemed  necessary or appropriate to conduct
its due diligence investigation.

     (e) Accredited  Purchasers.  Such Purchaser is an "accredited  investor" as
defined in Regulation D promulgated under the Securities Act.

     (f) Rule 144.  Such  Purchaser  understands  that the  Shares  must be held
indefinitely  unless such Shares are  registered  under the Securities Act or an
exemption from registration is available.  Such Purchaser acknowledges that such
Purchaser  is  familiar  with  Rule  144 of the  rules  and  regulations  of the
Commission, as amended, promulgated pursuant to the Securities Act ("Rule 144"),
and that such person has been advised  that Rule 144 permits  resales only under
certain  circumstances.  Such Purchaser understands that to the extent that Rule
144 is not  available,  such Purchaser will be unable to sell any Shares without
either  registration  under  the  Securities  Act or the  existence  of  another
exemption from such registration requirement.

     (g) Investment Experience. Each Purchaser has such knowledge and experience
in financial and business  matters that it is capable of  evaluating  the merits
and risks of the  prospective  investment in the Preferred  Shares and Warrants,
which are  substantial and has in fact evaluated such merits and risks in making
its  investment  decision to purchase the Preferred  Shares and  Warrants.  Each
Purchaser,  by virtue of its business and financial expertise,  has the capacity
to  protect  its own  interest  in  connection  with  this  transaction,  or has
consulted  with  tax,   financial,   legal  or  business   advisors  as  to  the
appropriateness  of an  investment in the  Preferred  Shares and Warrants.  Each
Purchaser  has not been  organized for the purpose of investing in the Preferred
Shares and Warrants, although such investment is consistent with its purposes.

     (h) Access to Information.  Each Purchaser or its professional  advisor has
been  granted  the  opportunity  to conduct a full and fair  examination  of the
records,  documents  and files of the Company,  to ask  questions of and receive
answers from representatives of the Company, its officers, directors,  employees
and agents concerning the terms and conditions of the offering,  the Company and
its business and prospects,  and to obtain any additional  information which the
Purchaser or its professional  advisor deems necessary to verify the accuracy of
the information  received.  Each Purchaser further represents that it has had an
opportunity to ask questions and receive answers from the Company  regarding the
terms and conditions of the offering,  and any information so requested has been
made available to the full and complete  satisfaction  of such  Purchaser.  Each
Purchaser  hereby  confirms  that it has  received  and  examined  all  material
information it considers necessary to make an informed decision to invest in the
Preferred Shares and Warrants.  Each Purchaser hereby confirms that, in addition
to  examining  other  information  it  requested  during  the  course of its due
diligence,  it has examined all of the Company's filings under the Exchange Act,
including  its  financial  statements.  Each  Purchaser  acknowledges  that  its
decision to invest in the Company is solely based upon  information  provided to
the Purchaser by the Company in writing.

<PAGE>

     (i)  No  Distributor,  Dealer  or  Underwriter.  Each  Purchaser  is  not a
distributor or dealer of the Preferred Shares and Warrants. The Purchaser is not
taking  the  Preferred   Shares  and  Warrants  with  the  intent  of  making  a
distribution of the Preferred Shares and Warrants,  as such terms are defined in
the  Securities  Act and the  Exchange  Act. In any event,  if the  Purchaser is
deemed to be the  distributor  of the  Preferred  Shares  and  Warrants  offered
hereby, the Purchaser will act in accordance with applicable law.

     (j) No Immediate Need for Liquidity.  Each Purchaser  understands that each
of the Preferred  Shares,  Warrants,  Conversion  Shares and Warrant Shares is a
"restricted security" within the meaning of the Securities Act, and certificates
representing  the  Preferred  Shares,  Warrants,  Conversion  Shares and Warrant
Shares are legended  with certain  restrictions  on resale and may not be resold
without a valid exemption from registration under the Securities Act, or until a
registration  statement is filed with respect  thereto under the Securities Act.
There can be no assurance that upon  registration  of the Conversion  Shares and
Warrant Shares  pursuant to the Securities Act, that a market for the Conversion
Shares and  Warrant  Shares  will exist on an  exchange  or market or  quotation
system. Accordingly,  each Purchaser is aware that there are legal and practical
limits on such Purchaser's  ability to sell or dispose of the Conversion  Shares
and Warrant  Shares,  and,  therefore  that the Purchaser must bear the economic
risk of the  investment  for an indefinite  period of time.  Each  Purchaser has
adequate  means of  providing  for the  Purchaser's  current  needs and possible
personal  contingencies  and  has  need  for  only  limited  liquidity  of  this
investment.  The Purchaser's commitment to illiquid investments is reasonable in
relation to the Purchaser's  net worth.  The Purchaser is capable of bearing the
high degree of economic risks and burdens of this investment,  including but not
limited to the  possibility of complete loss of all its  investment  capital and
the lack of a liquid market,  such that it may not be able to liquidate  readily
the investment whenever desired or at the then current asking price.

     (k)  Private  Transaction.  At no time was a  Purchaser  presented  with or
solicited by any leaflet,  public promotional  meeting,  circular,  newspaper or
magazine article, radio or television advertisement or any other form of general
advertising.

     (l) Reliance on Own Advisors.  Each Purchaser has relied  completely on the
advice of, or has consulted  with,  its own personal tax,  investment,  legal or
other  advisors  and has not  relied on the  Company  or any of its  affiliates,
officers, directors, attorneys, accountants or any affiliates of any thereof and
each other  person,  if any, who  controls  any  thereof,  within the meaning of
Section 15 of the  Securities  Act,  except to the extent such advisors shall be
deemed to be as such.

<PAGE>

     (m) Limitations on Short Sales.  Each Purchaser  represents that it has not
entered  into  any  Short  Sales  (as  hereinafter   defined)   following  their
introduction  by H.C.  Wainwright  Co. Inc. to the Company from the date of such
introduction  through the Initial  Closing Date in  connection  with the sale of
Common Stock  contemplated  herein.  Furthermore,  each Purchaser agrees that it
will not enter into any Short  Sales for the period  commencing  on the  Initial
Closing Date and ending on the date which all of the Preferred  Shares have been
converted and all of the Warrants have been exercised and such Conversion Shares
and Warrant Shares are covered by the Registration  Statement (as defined in the
Registration  Rights  Agreement).  For purposes of this Section 2.2(m), a "Short
Sale" by a Purchaser  shall mean a sale of Common  Stock by a Purchaser  that is
marked as a short  sale and that is made at a time when  there is no  equivalent
offsetting long position in Common Stock held by such Purchaser. For purposes of
determining  whether there is an equivalent  offsetting  long position in Common
Stock held by a Purchaser,  Conversion  Shares that have not yet been  converted
upon  conversion  of the Preferred  Shares and Warrant  Shares that have not yet
been issued upon  exercise  of the  Warrants  shall be deemed to be held long by
such Purchaser, and the amount of shares of Common Stock held in a long position
shall be the  number  of  Conversion  Shares  issuable  upon  conversion  of the
Preferred  Shares assuming such holder  converted all the outstanding  principal
amount of the Preferred  Shares on such date and with respect to Warrant Shares,
the number of Warrant  Shares  issuable upon  exercise of the Warrants  assuming
such holder exercised all of the Warrants on such date.

     (n) General.  Such Purchaser  understands that the Shares are being offered
and  sold  in  reliance  on a  transactional  exemption  from  the  registration
requirement of Federal and state securities laws and the Company is relying upon
the  truth  and  accuracy  of  the  representations,   warranties,   agreements,
acknowledgments  and  understandings of such Purchaser set forth herein in order
to determine the  applicability  of such  exemptions and the suitability of such
Purchaser to acquire the Shares.

                                   ARTICLE III

                                    COVENANTS

     The  Company  covenants  with  each of the  Purchasers  as  follows,  which
covenants are for the benefit of the  Purchasers and their  permitted  assignees
(as defined herein).

     Section  3.1  Securities  Compliance.

     (a) The Company shall notify the Commission in accordance  with their rules
and  regulations,  of the  transactions  contemplated  by any of the Transaction
Documents,  including  filing a Form D with  respect  to the  Preferred  Shares,
Warrants,  Conversion  Shares and Warrant Shares as required under Regulation D,
and shall take all other necessary action and proceedings as may be required and
permitted  by  applicable  law,  rule and  regulation,  for the  legal and valid
issuance of the Preferred  Shares,  the Warrants,  the Conversion Shares and the
Warrant Shares to the Purchasers or subsequent holders.

     (b)  The   Company  is  relying   upon  the  truth  and   accuracy  of  the
representations,  warranties, agreements,  acknowledgments and understandings of
such  Purchasers  set forth herein in order to determine  the  applicability  of
Federal  and  state  securities  laws  exemptions  and the  suitability  of such
Purchasers to acquire the Preferred Shares.

     (c) The Company  covenants  and agrees that it will not issue any shares of
the Common Stock to a Purchaser  which would  result in the issuance  under this
Agreement of more than 19.9% of the issued and outstanding  shares of the Common
Stock as of the date hereof,  unless such issuance has been duly approved by the
shareholders of the Company.

<PAGE>

     (d) Unless  waived by a  Purchaser  by means of  providing  sixty (60) days
notice to the  Company,  the  Company  covenants  and agrees  that the number of
Conversion  Shares  issuable upon  conversion  of the  Preferred  Shares and the
number of  Warrant  Shares  issuable  upon any  exercise  of such  Warrant  by a
Purchaser  shall not exceed the number of such shares that, when aggregated with
all other  shares of Common  Stock  disclosed  to the  Company  in  writing by a
Purchaser  as being owned by a  Purchaser  beneficially  or deemed  beneficially
owned by a Purchaser,  would result in a Purchaser owning more than 4.99% of all
of such Common Stock as would be  outstanding on such date of conversion or such
date of exercise of the Warrant,  as determined in accordance with Section 16 of
the Exchange Act and the regulations promulgated thereunder.

     Section 3.2  Registration  and  Listing.  The Company will cause its Common
Stock to continue to be registered under Sections 12(b) or 12(g) of the Exchange
Act, will comply in all respects with its reporting and filing obligations under
the Exchange Act, will comply with all requirements  related to any registration
statement filed pursuant to this Agreement or the Registration Rights Agreement,
and will not take any action or file any document  (whether or not  permitted by
the Securities Act or the rules promulgated  thereunder) to terminate or suspend
such   registration  or  to  terminate  or  suspend  its  reporting  and  filing
obligations  under the  Exchange  Act or  Securities  Act,  except as  permitted
herein.  The Company  will take all action  necessary to continue the listing or
trading of its Common Stock on the over-the-counter electronic bulletin board or
such other senior United States trading facility as it may elect.

     Section 3.3  Inspection  Rights.  The Company shall  permit,  during normal
business hours and upon reasonable request and reasonable notice, each Purchaser
or any employees,  agents or representatives  thereof, so long as such Purchaser
shall  be  obligated  hereunder  to  purchase  the  Preferred  Shares  or  shall
beneficially own any Preferred  Shares, or shall own Conversion Shares which, in
the aggregate,  represent more than 2% of the total combined voting power of all
voting  securities then  outstanding,  for purposes  reasonably  related to such
Purchaser's  interests as a stockholder to examine and make reasonable copies of
and extracts from the records and books of account of, and visit and inspect the
properties,  assets,  operations and business of the Company and any subsidiary,
and to discuss  the  affairs,  finances  and  accounts  of the  Company  and any
subsidiary with any of its officers, consultants, directors, and key employees.

     Section 3.4 Compliance with Laws. The Company shall comply,  and cause each
subsidiary to comply,  with all applicable laws, rules,  regulations and orders,
noncompliance with which could have a Material Adverse Effect.

     Section 3.5 Keeping of Records and Books of Account. The Company shall keep
and cause each  subsidiary  to keep  adequate  records and books of account,  in
which  complete  entries  will be  made in  accordance  with  GAAP  consistently
applied,   reflecting  all  financial   transactions  of  the  Company  and  its
subsidiaries,  and in which,  for each  fiscal  year,  all proper  reserves  for
depreciation, depletion, obsolescence,  amortization, taxes, bad debts and other
purposes in connection with its business shall be made.

     Section  3.6  Reporting  Requirements.  If the  Company  ceases to file its
periodic reports with the Commission,  or if the Commission  ceases making these
periodic  reports  available via the Internet  without charge,  then the Company
shall furnish the following to each Purchaser so long as such Purchaser shall be
obligated  hereunder to purchase the Preferred Shares or shall  beneficially own
any Preferred  Shares,  or shall own Conversion  Shares which, in the aggregate,
represent  more  than  2% of the  total  combined  voting  power  of all  voting
securities then outstanding:

<PAGE>

     (a) Quarterly  Reports filed with the  Commission on Form 10-QSB as soon as
available, and in any event within forty-five (45) days after the end of each of
the first three fiscal quarters of the Company;

     (b) Annual  Reports  filed with the  Commission  on Form  10-KSB as soon as
available, and in any event within ninety (90) days after the end of each fiscal
year of the Company; and

     (c) Copies of all notices and  information,  including  without  limitation
notices and proxy statements in connection with any meetings,  that are provided
to holders of shares of Common  Stock,  contemporaneously  with the  delivery of
such notices or information to such holders of Common Stock.

     Section 3.7 Amendments.  The Company shall not amend or waive any provision
of the Articles or Bylaws of the Company,  or Registration  Rights  Agreement in
any way that would  adversely  affect  the  liquidation  preferences,  dividends
rights,  conversion rights, voting rights or redemption rights of the holders of
the Preferred Shares.

     Section  3.8  Other  Agreements.  The  Company  shall  not  enter  into any
agreement  in which the terms of such  agreement  would  restrict  or impair the
right  or  ability  to  perform  of the  Company  or any  subsidiary  under  any
Transaction Document or the Certificate of Designation.

     Section  3.9  Distributions.  So long as any  Preferred  Shares or Warrants
remain outstanding,  the Company agrees that it shall not (i) declare or pay any
dividends  or make  any  distributions  to any  holder(s)  of  Common  Stock  in
violation  of the  Certificate  of  Designation  or (ii)  purchase or  otherwise
acquire for value,  directly or  indirectly,  any Common  Stock or other  equity
security of the Company in violation of the Certificate of Designation.

     Section 3.10 Status of Dividends.  If available to the Purchasers as of the
Initial Closing, the Company covenants and agrees that (i) no Federal income tax
return or claim for refund of  Federal  income  tax or other  submission  to the
Internal Revenue Service will adversely affect the Preferred  Shares,  any other
series of its Preferred  Stock, or the Common Stock, and any deduction shall not
operate to jeopardize the  availability to Purchasers of the dividends  received
deduction provided by Section 243(a)(1) of the Code or any successor  provision,
(ii)  in  no  report  to  shareholders  or  to  any  governmental   body  having
jurisdiction  over the Company or otherwise  will it treat the Preferred  Shares
other  than as equity  capital  or the  dividends  paid  thereon  other  than as
dividends paid on equity capital unless required to do so by a governmental body
having jurisdiction over the accounts of the Company or by a change in generally
accepted   accounting   principles   required  as  a  result  of  action  by  an
authoritative  accounting  standards setting body, and (iii) other than pursuant
to this  Agreement or the  Certificate  of  Designation,  it will take no action
which would result in the dividends paid by the Company on the Preferred  Shares
out  of  the  Company's  current  or  accumulated  earnings  and  profits  being
ineligible for the dividends received deduction provided by Section 243(a)(1) of
the Code. The preceding sentence shall not be deemed to prevent the Company from
designating the Preferred Stock as "Convertible  Preferred  Stock" in its annual
and  quarterly  financial  statements  in  accordance  with its  prior  practice
concerning other series of preferred stock of the Company.  Notwithstanding  the
foregoing,  the  Company  shall not be  required  to  restate  or modify its tax
returns for periods prior to the Closing Date. In the event that the  Purchasers
have  reasonable  cause to believe  that  dividends  paid by the  Company on the
Preferred  Shares out of the  Company's  current  or  accumulated  earnings  and
profits will not be treated as eligible  for the  dividends  received  deduction
provided by Section  243(a)(1)  of the Code,  or any  successor  provision,  the
Company  will,  at  the  reasonable  request  of  the  Purchasers  of 51% of the
outstanding  Preferred Shares, join with the Purchasers in the submission to the
Service of a request for a ruling that  dividends  paid on the Shares will be so
eligible  for  Federal  income  tax  purposes,  at the  Purchasers  expense.  In
addition,  the  Company  will  reasonably  cooperate  with  the  Purchasers  (at
Purchasers' expense) in any litigation,  appeal or other proceeding  challenging
or  contesting  any ruling,  technical  advice,  finding or  determination  that
earnings  and profits are not  eligible  for the  dividends  received  deduction
provided by Section  243(a)(1) of the Code,  or any  successor  provision to the
extent that the position to be taken in any such  litigation,  appeal,  or other
proceeding  is not  contrary  to  any  provision  of the  Code  or  incurred  in
connection with any such  submission,  litigation,  appeal or other  proceeding.
Notwithstanding  the  foregoing,  nothing  herein  contained  shall be deemed to
preclude the Company from claiming a deduction with respect to such dividends if
(i)  the  Code  shall  hereafter  be  amended,  or  final  Treasury  regulations
thereunder  are issued or modified,  to provide that  dividends on the Preferred
Shares or  Conversion  Shares  should not be treated as  dividends  for  Federal
income tax purposes or that a deduction  with respect to all or a portion of the
dividends on the Shares is allowable for Federal income tax purposes, or (ii) in
the  absence  of  such  an  amendment,  issuance  or  modification  and  after a
submission of a request for ruling or technical  advice,  the service shall rule
or advise that  dividends on the shares  should not be treated as dividends  for
Federal income tax purposes. If the Service determines that the Preferred Shares
or Conversion Shares constitute debt, the Company may file protective claims for
refund.

<PAGE>

     Section 3.11 Reservation of Shares.  So long as any of the Preferred Shares
or Warrants remain  outstanding,  the Company shall take all action necessary to
at all times have authorized,  and reserved for the purpose of issuance, no less
than 200% of the  aggregate  number of shares of Common  Stock needed to provide
for the issuance of the Conversion Shares and the Warrant Shares.

     Section  3.12  Transfer  Agent   Instructions.   The  Company  shall  issue
irrevocable  instructions  to its transfer  agent,  and any subsequent  transfer
agent,  to issue  certificates,  registered in the name of each Purchaser or its
respective nominee(s),  for the Conversion Shares and the Warrant Shares in such
amounts as  specified  from time to time by each  Purchaser  to the Company upon
conversion  of the  Preferred  Shares or exercise of the Warrants in the form of
Exhibit E attached hereto (the "Irrevocable Transfer Agent Instructions"). Prior
to  registration  of the  Conversion  Shares and the  Warrant  Shares  under the
Securities  Act,  all  such  certificates  shall  bear  the  restrictive  legend
specified  in  Section  5.1 of this  Agreement.  The  Company  warrants  that no
instruction other than the Irrevocable  Transfer Agent Instructions  referred to
in this Section 3.12 will be given by the Company to its transfer agent and that
the Shares shall  otherwise be freely  transferable  on the books and records of
the Company as and to the extent provided in this Agreement and the Registration
Rights  Agreement.  Nothing in this  Section  3.12 shall  affect in any way each
Purchaser's  obligations  and agreements set forth in Section 5.1 to comply with
all  applicable  prospectus  delivery  requirements,  if any, upon resale of the
Shares.  If a Purchaser  provides the Company  with an opinion of counsel,  in a
generally  acceptable  form,  to the effect that a public  sale,  assignment  or
transfer of the Shares may be made without registration under the Securities Act
or the Purchaser provides the Company with reasonable assurances that the Shares
can be sold  pursuant to Rule 144 without  any  restriction  as to the number of
securities  acquired as of a particular date that can then be immediately  sold,
the Company shall permit the transfer, and, in the case of the Conversion Shares
and the Warrant  Shares,  promptly  instruct its transfer  agent to issue one or
more  certificates in such name and in such  denominations  as specified by such
Purchaser and without any restrictive  legend.  Each Purchaser  hereby covenants
that upon the  provision of any such opinion  that a sale may be  undertaken  in
accordance with all applicable  securities  laws, the Purchaser shall undertake,
and shall cause its broker  with whom the Shares are to be placed to  undertake,
to sell such Shares  strictly in accordance with such opinion and, absent such a
sale in accordance  with such opinion,  to return such Shares to the Company for
reissuance with an appropriate restrictive legend. The Company acknowledges that
a breach by it of its obligations under this Section 3.12 will cause irreparable
harm to the  Purchasers by vitiating  the intent and purpose of the  transaction
contemplated  hereby.  Accordingly,  the Company acknowledges that the remedy at
law for a breach of its  obligations  under this Section 3.12 will be inadequate
and agrees,  in the event of a breach or threatened breach by the Company of the
provisions  of this Section  3.12,  that the  Purchasers  shall be entitled,  in
addition  to  all  other  available  remedies,  to an  order  and/or  injunction
restraining any breach and requiring  immediate  issuance and transfer,  without
the necessity of showing  economic  loss and without any bond or other  security
being required.

<PAGE>

                                   ARTICLE IV

                                   CONDITIONS

     Section 4.1  Conditions  Precedent to the Obligation of the Company to Sell
the  Shares.  The  obligation  hereunder  of the  Company  to issue and sell the
Preferred  Shares  and  the  Warrants  to  the  Purchasers  is  subject  to  the
satisfaction or waiver, at or before each Closing, of each of the conditions set
forth below.  These  conditions  are for the  Company's  sole benefit and may be
waived by the Company at any time in its sole discretion.

     (a)  Accuracy  of Each  Purchaser's  Representations  and  Warranties.  The
representations  and warranties of each  Purchaser  shall be true and correct in
all  material  respects as of the date when made and as of each  Closing Date as
though made at that time,  except for  representations  and warranties  that are
expressly made as of a particular  date,  which shall be true and correct in all
material respects as of such date.

     (b)  Performance by the  Purchasers.  Each Purchaser  shall have performed,
satisfied and complied in all material  respects with all covenants,  agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by such Purchaser at or prior to each Closing.

     (c) No Injunction.  No statute, rule, regulation,  executive order, decree,
ruling or injunction shall have been enacted,  entered,  promulgated or endorsed
by any court or governmental authority of competent jurisdiction which prohibits
the consummation of any of the transactions contemplated by this Agreement.

     Section 4.2  Conditions  Precedent to the  Obligation of the  Purchasers to
Purchase the Shares.  The obligation  hereunder of each Purchaser to acquire and
pay for the Preferred  Shares and the Warrants is subject to the satisfaction or
waiver,  at or before each Closing,  of each of the  conditions set forth below.
These conditions are for each Purchaser's sole benefit and may be waived by such
Purchaser at any time in its sole discretion.

     (a) Accuracy of the Company's  Representations and Warranties.  Each of the
representations  and  warranties of the Company shall be true and correct in all
material respects as of the date when made and as of each Closing Date as though
made at that time (except for  representations and warranties that speak as of a
particular date), which shall be true and correct in all material respects as of
such date.

     (b) Performance by the Company. The Company shall have performed, satisfied
and complied in all  respects  with all  covenants,  agreements  and  conditions
required by this  Agreement to be  performed,  satisfied or complied with by the
Company at or prior to each Closing.

     (c) No Suspension,  Etc. From the date hereof to the Closing Date,  trading
in the Company's  Common Stock shall not have been  suspended by the  Commission
(except  for any  suspension  of trading of  limited  duration  agreed to by the
Company, which suspension shall be terminated prior to the Closing), and, at any
time prior to the  Closing,  trading in  securities  generally  as  reported  by
Bloomberg  Financial  Markets  ("Bloomberg")  shall not have been  suspended  or
limited,  or minimum prices shall not have been  established on securities whose
trades are reported by Bloomberg, or on the New York Stock Exchange, nor shall a
banking  moratorium  have been declared  either by the United States or New York
State  authorities,  nor shall  there have  occurred  any  material  outbreak or
escalation of hostilities or other national or international  calamity or crisis
of such  magnitude  in its  effect  on, or any  material  adverse  change in any
financial  market which, in each case, in the judgment of such Purchaser,  makes
it impracticable or inadvisable to purchase the Preferred Shares.

     (d) No Injunction.  No statute, rule, regulation,  executive order, decree,
ruling or injunction shall have been enacted,  entered,  promulgated or endorsed
by any court or governmental authority of competent jurisdiction which prohibits
the consummation of any of the transactions contemplated by this Agreement.

     (e) No Proceedings or Litigation.  No action, suit or proceeding before any
arbitrator  or any  governmental  authority  shall have been  commenced,  and no
investigation by any governmental authority shall have been threatened,  against
the Company or any subsidiary,  or any of the officers,  directors or affiliates
of the  Company or any  subsidiary  seeking to  restrain,  prevent or change the
transactions  contemplated by this  Agreement,  or seeking damages in connection
with such transactions.

<PAGE>

     (f)  Certificate  of Designation  of Rights and  Preferences.  Prior to the
Initial  Closing,  the  Certificate  of  Designation  in the form of  Exhibit  C
attached hereto shall have been filed with the Secretary of State of Washington.

     (g) Opinion of Counsel,  Etc. At each Closing,  the  Purchasers  shall have
received an opinion of counsel to the Company,  dated the date of such  Closing,
in the form of Exhibit F hereto,  and such other  certificates  and documents as
the Purchasers or its counsel shall reasonably require incident to such Closing.

     (h) Registration  Rights  Agreement.  At the Initial  Closing,  the Company
shall have  executed and  delivered the  Registration  Rights  Agreement to each
Purchaser.

     (i)  Certificates.  The Company  shall have  executed and  delivered to the
Purchasers the  certificates  (in such  denominations  as such  Purchaser  shall
request) for the Preferred  Shares and Warrants being acquired by such Purchaser
at each Closing.

     (j)  Resolutions.  The Board of Directors of the Company shall have adopted
resolutions consistent with Section 2.1(b) above in a form reasonably acceptable
to such Purchaser (the "Resolutions").

     (k) Reservation of Shares.  As of each Closing Date, the Company shall have
reserved out of its authorized and unissued Common Stock, solely for the purpose
of effecting  the  conversion  of the  Preferred  Shares and the exercise of the
Warrants,  a number  of shares of  Common  Stock  equal to at least  200% of the
aggregate number of Conversion  Shares issuable upon conversion of the Preferred
Shares outstanding on the Closing Date and the number of Warrant Shares issuable
upon  exercise of the number of Warrants  assuming such Warrants were granted on
the Initial  Closing Date (after giving  effect to the Preferred  Shares and the
Warrants  to be  issued  on the  Initial  Closing  Date  and  assuming  all such
Preferred Shares and Warrants were fully convertible or exercisable on such date
regardless  of any  limitation  on the timing or amount of such  conversions  or
exercises).

     (l)  Transfer   Agent   Instructions.   The   Irrevocable   Transfer  Agent
Instructions,  in the  form of  Exhibit  E  attached  hereto,  shall  have  been
delivered to and acknowledged in writing by the Company's transfer agent.

     (m)  Secretary's  Certificate.  The Company  shall have  delivered  to such
Purchaser a  secretary's  certificate,  dated as of each Closing Date, as to (i)
the Resolutions,  (ii) the Articles,  (iii) the Bylaws,  (iv) the Certificate of
Designation,  each as in  effect  at the  Closing,  and (v)  the  authority  and
incumbency of the officers of the Company  executing the  Transaction  Documents
and any other  documents  required  to be executed or  delivered  in  connection
therewith.

     (n)  Officer's  Certificate.  The  Company  shall  have  delivered  to  the
Purchasers a  certificate  of an executive  officer of the Company,  dated as of
each Closing Date,  confirming  the accuracy of the  Company's  representations,
warranties  and covenants as of such Closing Date and  confirming the compliance
by the Company with the conditions precedent set forth in this Section 4.2 as of
such Closing Date.

     (o) Material Adverse Effect. No Material Adverse Effect shall have occurred
at or before each Closing Date.

<PAGE>

                                    ARTICLE V

                            STOCK CERTIFICATE LEGEND

     Section 5.1 Legend. Each certificate  representing the Preferred Shares and
the Warrants,  and, if appropriate,  securities issued upon conversion  thereof,
shall be stamped  or  otherwise  imprinted  with a legend  substantially  in the
following  form  (in  addition  to  any  legend  required  by  applicable  state
securities or "blue sky" laws):

          THESE SECURITIES  REPRESENTED BY THIS  CERTIFICATE (THE  "SECURITIES")
          HAVE NOT BEEN REGISTERED  UNDER THE SECURITIES ACT OF 1933, AS AMENDED
          (THE  "SECURITIES  ACT") OR ANY STATE  SECURITIES  LAWS AND MAY NOT BE
          SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE
          SECURITIES ACT AND UNDER  APPLICABLE STATE SECURITIES LAWS OR HIENERGY
          TECHNOLOGIES,  INC. SHALL HAVE RECEIVED AN OPINION OF ITS COUNSEL THAT
          REGISTRATION  OF SUCH  SECURITIES  UNDER THE  SECURITIES AND UNDER THE
          PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.

     The Company agrees to reissue certificates  representing the Shares without
the legend set forth above if at such time,  prior to making any transfer of any
Shares or Shares,  such holder  thereof shall give written notice to the Company
describing  the manner and terms of such transfer and removal as the Company may
reasonably  request.  Such proposed transfer will not be effected until: (a) the
Company  has  notified  such  holder  that  either (i) in the opinion of Company
counsel,  the  registration  of such  Shares  under  the  Securities  Act is not
required in  connection  with such  proposed  transfer;  or (ii) a  registration
statement  under the Securities Act covering such proposed  disposition has been
filed by the Company  with the  Commission  and has become  effective  under the
Securities Act; and (b) the Company has notified such holder that either: (i) in
the opinion of Company  counsel,  the  registration or  qualification  under the
securities  or "blue sky" laws of any state is not required in  connection  with
such proposed  disposition,  or (ii) compliance with applicable state securities
or "blue sky" laws has been  effected.  The Company will use its best efforts to
respond to any such  notice from a holder  within ten (10) days.  In the case of
any proposed  transfer  under this  Section 5, the Company  will use  reasonable
efforts to comply with any such applicable  state securities or "blue sky" laws,
but shall in no event be required,  in  connection  therewith,  to qualify to do
business in any state where it is not then  qualified or to take any action that
would subject it to tax or to the general  service of process in any state where
it is not then subject.  The  restrictions on transfer  contained in Section 5.1
shall be in addition to, and not by way of limitation of, any other restrictions
on transfer contained in any other section of this Agreement.

                                   ARTICLE VI

                                 INDEMNIFICATION

     Section 6.1 General  Indemnity.  The Company  agrees to indemnify  and hold
harmless  the  Purchasers  and  any  finder  (and  their  respective  directors,
officers,  affiliates,  agents, successors and assigns) from and against any and
all losses, liabilities,  deficiencies,  costs, damages and expenses (including,
without  limitation,  reasonable  attorneys'  fees,  charges and  disbursements)
incurred by the  Purchasers  as a result of any  inaccuracy  in or breach of the
representations,  warranties  or  covenants  made by the  Company  herein.  Each
Purchaser  severally  but not jointly  agrees to indemnify and hold harmless the
Company and its directors,  officers, affiliates, agents, successors and assigns
from and against any and all losses, liabilities,  deficiencies,  costs, damages
and expenses (including, without limitation, reasonable attorneys' fees, charges
and  disbursements)  incurred by the Company as result of any  inaccuracy  in or
breach of the  representations,  warranties or covenants  made by such Purchaser
herein.

<PAGE>

     Section   6.2   Indemnification    Procedure.   Any   party   entitled   to
indemnification under this Article VI (an "indemnified party") will give written
notice  to the  indemnifying  party of any  matters  giving  rise to a claim for
indemnification;   provided,   that  the  failure  of  any  party   entitled  to
indemnification  hereunder  to give notice as provided  herein shall not relieve
the  indemnifying  party of its obligations  under this Article VI except to the
extent that the  indemnifying  party is actually  prejudiced  by such failure to
give  notice.  In case any  action,  proceeding  or claim is brought  against an
indemnified party in respect of which  indemnification is sought hereunder,  the
indemnifying  party  shall be  entitled  to  participate  in and,  unless in the
reasonable  judgment of the indemnified  party a conflict of interest between it
and the indemnifying party may exist with respect of such action,  proceeding or
claim, to assume the defense thereof with counsel reasonably satisfactory to the
indemnified  party.  In  the  event  that  the  indemnifying  party  advises  an
indemnified  party  that  it  will  contest  such a  claim  for  indemnification
hereunder,  or fails,  within thirty (30) days of receipt of any indemnification
notice to notify, in writing,  such person of its election to defend,  settle or
compromise,  at its sole cost and expense,  any action,  proceeding or claim (or
discontinues its defense at any time after it commences such defense),  then the
indemnified party may, at its option,  defend, settle or otherwise compromise or
pay such action or claim. In any event,  unless and until the indemnifying party
elects in writing to assume  and does so assume the  defense of any such  claim,
proceeding or action, the indemnified  party's costs and expenses arising out of
the defense,  settlement or  compromise of any such action,  claim or proceeding
shall be losses subject to  indemnification  hereunder.  The  indemnified  party
shall  cooperate  fully  with  the  indemnifying  party in  connection  with any
negotiation or defense of any such action or claim by the indemnifying party and
shall furnish to the indemnifying party all information  reasonably available to
the indemnified  party which relates to such action or claim.  The  indemnifying
party shall keep the  indemnified  party  fully  apprised at all times as to the
status of the defense or any settlement  negotiations  with respect thereto.  If
the  indemnifying  party  elects to defend  any such  action or claim,  then the
indemnified  party shall be entitled to participate in such defense with counsel
of its choice at its sole cost and expense.  The indemnifying party shall not be
liable for any settlement of any action,  claim or proceeding  effected  without
its prior written  consent.  Notwithstanding  anything in this Article VI to the
contrary,  the  indemnifying  party shall not,  without the indemnified  party's
prior written consent, settle or compromise any claim or consent to entry of any
judgment  in  respect  thereof  which  imposes  any  future  obligation  on  the
indemnified party or which does not include,  as an unconditional  term thereof,
the  giving by the  claimant  or the  plaintiff  to the  indemnified  party of a
release  from all  liability  in  respect  of such  claim.  The  indemnification
required  by this  Article VI shall be made by  periodic  payments of the amount
thereof  during the course of  investigation  or defense,  as and when bills are
received or expense,  loss,  damage or  liability  is  incurred,  so long as the
indemnified party  irrevocably  agrees to refund such moneys if it is ultimately
determined by a court of competent jurisdiction that such party was not entitled
to  indemnification.  The  indemnity  agreements  contained  herein  shall be in
addition to (a) any cause of action or similar rights of the  indemnified  party
against  the  indemnifying   party  or  others,  and  (b)  any  liabilities  the
indemnifying party may be subject to pursuant to the law.

<PAGE>

                                   ARTICLE VII

                                  MISCELLANEOUS

     Section 7.1 Fees and  Expenses.  Each party shall pay the fees and expenses
of its advisors,  counsel,  accountants and other experts, if any, and all other
expenses,  incurred  by such party  incident  to the  negotiation,  preparation,
execution, delivery and performance of this Agreement, provided that the Company
shall pay to H.C.  Wainwright & Co., Inc. for appropriate  disbursement,  at the
Closing, the lesser of (i) the actual attorneys' fees and expenses (exclusive of
disbursements  and  out-of-pocket  expenses)  incurred by the Purchasers  (which
shall include the fees and expenses of Jenkens & Gilchrist Parker Chapin LLP) in
connection  with the  preparation,  negotiation,  execution and delivery of this
Agreement,  the Registration Rights Agreement and the transactions  contemplated
thereunder or (ii) $10,000.

     Section  7.2  Specific  Enforcement,  Consent  to  Jurisdiction.

     (a) The Company and the Purchasers  acknowledge and agree that  irreparable
damage would occur in the event that any of the  provisions  of this  Agreement,
the  Certificate of Designation or the  Registration  Rights  Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is  accordingly  agreed that the parties  shall be entitled to an  injunction or
injunctions  to prevent or cure breaches of the  provisions of this Agreement or
the  Registration  Rights  Agreement and to enforce  specifically  the terms and
provisions  hereof or thereof,  this being in  addition  to any other  remedy to
which any of them may be entitled by law or equity.

     (b) Each of the Company and the Purchasers (i) hereby  irrevocably  submits
to the  jurisdiction of the United States District Court sitting in the Southern
District of New York and the courts of the State of New York located in New York
county for the  purposes  of any suit,  action or  proceeding  arising out of or
relating to this  Agreement  or any of the other  Transaction  Documents  or the
transactions  contemplated  hereby or thereby and (ii) hereby waives, and agrees
not to assert in any such suit,  action or proceeding,  any claim that it is not
personally  subject to the jurisdiction of such court,  that the suit, action or
proceeding  is brought in an  inconvenient  forum or that the venue of the suit,
action  or  proceeding  is  improper.  Each of the  Company  and the  Purchasers
consents  to process  being  served in any such suit,  action or  proceeding  by
mailing a copy  thereof to such party at the address in effect for notices to it
under this  Agreement  and agrees that such service  shall  constitute  good and
sufficient  service of process and notice  thereof.  Nothing in this Section 7.2
shall affect or limit any right to serve  process in any other manner  permitted
by law.

     Section 7.3 Entire Agreement; Amendment. This Agreement contains the entire
understanding  of the parties  with respect to the matters  covered  hereby and,
except as specifically  set forth herein or in the Transaction  Documents or the
Certificate of Designation,  neither the Company nor any of the Purchasers makes
any  representations,  warranty,  covenant or  undertaking  with respect to such
matters and they supersede all prior  understandings and agreements with respect
to said subject  matter,  all of which are merged  herein.  No provision of this
Agreement may be waived or amended other than by a written  instrument signed by
the Company and the holders of at least two-thirds (2/3) of the Preferred Shares
then  outstanding,  and no  provision  hereof  may be waived  other than by an a
written  instrument  signed by the party  against whom  enforcement  of any such
amendment  or waiver is sought.  No such  amendment  shall be  effective  to the
extent that it applies to less than all of the holders of the  Preferred  Shares
then  outstanding.  No  consideration  shall be offered or paid to any person to
amend or  consent to a waiver or  modification  of any  provision  of any of the
Transaction  Documents  or  the  Certificate  of  Designation  unless  the  same
consideration is also offered to all of the parties to the Transaction Documents
or holders of Preferred Shares, as the case may be.

<PAGE>

     Section  7.4  Notices.  Any  notice,  demand,   request,  waiver  or  other
communication  required or permitted to be given  hereunder  shall be in writing
and shall be effective (a) upon hand delivery by telex (with correct answer back
received),  telecopy or facsimile at the address or number  designated below (if
delivered on a business day during normal business hours where such notice is to
be received),  or the first  business day following  such delivery (if delivered
other than on a business day during normal  business  hours where such notice is
to be received) or (b) on the second  business day following the date of mailing
by express courier service,  fully prepaid,  addressed to such address,  or upon
actual receipt of such mailing,  whichever shall first occur.  The addresses for
such communications shall be:

            If  to  the  Company:  HiEnergy  Technologies,  Inc.
                                   1601  Alton  Parkway,  Unit  B
                                   Irvine,  California  92606
                                   Attention:  President
                                   Tel.  No.:  (949)  757-0855
                                   Fax  No.:  (949)  757-1477

            with  copies  to:      QED  Law  Group,  P.L.L.C.
                                   3200  NW  68th  Street
                                   Seattle,  Washington  98117
                                   Attention:  Shea  Wilson,  Esq.
                                   Tel  No.:  (206)  781-7887
                                   Fax  No.:  (206)  781-8002

            If to any  Purchaser: At the  address  of  such  Purchaser set forth
                                  on  Exhibit  A to this Agreement, with  copies
                                  to Purchaser's counsel as set forth on Exhibit
                                  A or as specified in writing by such Purchaser
                                  with copies to:

                                  Jenkens  &  Gilchrist  Parker  Chapin  LLP
                                  The  Chrysler  Building
                                  405  Lexington  Avenue
                                  New  York,  New  York  10174
                                  Attention:  Christopher  S.  Auguste,  Esq.
                                  Tel  No.:  (212)  704-6000
                                  Fax  No.:  (212)  704-6288

Any party  hereto may from time to time change its address for notices by giving
at least ten (10) days written notice of such changed address to the other party
hereto.

     Section 7.5 Waivers.  No waiver by either party of any default with respect
to any provision,  condition or requirement of this Agreement shall be deemed to
be a  continuing  waiver in the  future  or a waiver  of any  other  provisions,
condition or requirement hereof, nor shall any delay or omission of any party to
exercise any right hereunder in any manner impair the exercise of any such right
accruing to it thereafter.

     Section 7.6 Headings. The article,  section and subsection headings in this
Agreement  are for  convenience  only and  shall not  constitute  a part of this
Agreement  for any other  purpose and shall not be deemed to limit or affect any
of the provisions hereof.

<PAGE>

     Section 7.7  Successors and Assigns.  This Agreement  shall be binding upon
and inure to the benefit of the parties and their successors and assigns.  After
the Closing, the assignment by a party to this Agreement of any rights hereunder
shall not affect the obligations of such party under this Agreement.

     Section 7.8 No Third Party  Beneficiaries.  This  Agreement is intended for
the benefit of the parties hereto and their respective  permitted successors and
assigns and is not for the benefit of, nor may any provision  hereof be enforced
by, any other person.

     Section  7.9  Governing  Law.  This  Agreement  shall  be  governed  by and
construed in accordance with the internal laws of the State of New York, without
giving  effect  to the  choice  of law  provisions.  This  Agreement  shall  not
interpreted  or construed  with any  presumption  against the party causing this
Agreement to be drafted.

     Section 7.10 Survival.  The  representations  and warranties of the Company
and  the  Purchasers  contained  in  Sections  2.1(o)  and  (s)  should  survive
indefinitely  and those  contained in Article II, with the exception of Sections
2.1(o) and (s), shall survive the execution and delivery  hereof and the Closing
until the date three (3) years from the Closing  Date,  and the  agreements  and
covenants set forth in Articles I, III and V of this Agreement shall survive the
execution and delivery hereof and the Closing hereunder until no Purchaser shall
in the aggregate beneficially own securities (determined in accordance with Rule
13d-3 under the Exchange Act) not eligible for resale under Section 4(1) or Rule
144  promulgated  thereunder  constituting  more than 1% of the  total  combined
voting power of all voting securities then outstanding,  provided, that Sections
3.1,  3.2,  3.4,  3.5,  3.7,  3.8, 3.9, 3.10 and 3.12 shall not expire until the
Registration  Statement  required  by  Section  2  of  the  Registration  Rights
Agreement is no longer  required to be effective  under the terms and conditions
of Registration Rights Agreement.

     Section 7.11 Counterparts.  This Agreement may be executed in any number of
counterparts,  all of which taken  together  shall  constitute  one and the same
instrument and shall become effective when counterparts have been signed by each
party and delivered to the other parties  hereto,  it being  understood that all
parties  need not sign the same  counterpart.  In the  event  any  signature  is
delivered  by  facsimile  transmission,  the party  using such means of delivery
shall cause four additional executed signature pages to be physically  delivered
to the other parties within five days of the execution and delivery hereof.

     Section 7.12 Publicity.  The Company agrees that it will not disclose,  and
will not include in any public announcement,  the name of the Purchasers without
the consent of the  Purchasers  unless and until such  disclosure is required by
law or applicable regulation, and then only to the extent of such requirement.

     Section  7.13   Severability.   The  provisions  of  this  Agreement,   the
Certificate of Designation and the  Registration  Rights Agreement are severable
and, in the event that any court of competent  jurisdiction shall determine that
any one or more of the  provisions or part of the  provisions  contained in this
Agreement,  the Certificate of Designation or the Registration  Rights Agreement
shall,  for any reason,  be held to be invalid,  illegal or unenforceable in any
respect,  such invalidity,  illegality or unenforceability  shall not affect any
other  provision or part of a provision of this  Agreement,  the  Certificate of
Designation or the Registration Rights Agreement shall be reformed and construed
as if such  invalid  or  illegal  or  unenforceable  provision,  or part of such
provision,  had never been contained  herein,  so that such provisions  would be
valid, legal and enforceable to the maximum extent possible.

<PAGE>

     Section 7.14 Further Assurances. From and after the date of this Agreement,
upon the request of any  Purchaser or the  Company,  each of the Company and the
Purchasers  shall  execute  and deliver  such  instrument,  documents  and other
writings as may be  reasonably  necessary  or desirable to confirm and carry out
and to effectuate fully the intent and purposes of this Agreement, the Preferred
Shares, the Conversion Shares, the Warrants, the Warrant Shares, the Certificate
of Designation, and the Registration Rights Agreement.

     Section 7.15 Most Favored Nations. Notwithstanding anything to the contrary
contained in this Agreement or any of the other  Transaction  Documents,  if, at
any time  during  the period  commencing  after the date of this  Agreement  and
ending on the two (2) year anniversary of the Closing Date, the Company conducts
and closes a private equity or  equity-linked  financing on terms and conditions
more  favorable  than the terms  governing the Preferred  Shares with gross cash
proceeds in excess of $250,000  (each such  financing  a "New  Financing"),  the
Purchaser  shall have the right to  exchange  (any such  exchange  being an "MFN
Change") its Preferred  Shares,  valued at an amount equal to the product of the
number of Preferred  Shares being  exchanged  times $10,000,  for the securities
offered in the New Financing.  The Company covenants and agrees to promptly give
written  notice ("MFN  Notice") to the Purchaser of the terms and  conditions of
any such New  Financing.  On or prior to the expiration of the five (5) Business
Day period (the "MFN Review  Period")  after the  Purchaser has received the MFN
Notice,  the Purchaser  shall notify the Company in writing (the "MFN Response")
specifying whether it elects to conduct an MFN Change. If the Purchaser fails to
send an MFN  Response  prior to the  expiration  of the MFN Review  Period,  the
Purchaser  shall be deemed to have  waived its rights  under this  Section  7.15
solely with respect to the MFN Change  specified  in the MFN Notice  relating to
such MFN Review Period.  Each potential MFN Change shall be  communicated to the
Purchaser in accordance  with this Section 7.15 until such time as the Purchaser
elects to conduct an MFN  Change.  Once the  Purchaser  elects to conduct an MFN
Change,  the Purchaser  shall have no further  right to receive  notice of or to
conduct  any future MFN Change  under this  Section  7.15.  The  Company and the
Purchaser  shall  cooperate  to  promptly  cancel  the  Preferred  Shares  being
exchanged and to promptly enter into such agreements, certificates,  instruments
and other  documents  that are  necessary  to  reflect  an MFN  Change  that the
Purchaser elects to conduct.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
duly executed by their respective  authorized officer as of the date first above
written.

                                  HIENERGY  TECHNOLOGIES,  INC.

                                  By:
                                      ----------------------------------------
                                      Name: Tom Pascoe
                                      Title: President and CEO

                                    PURCHASER

                                  By:
                                      ----------------------------------------
                                      Name:
                                      Title:
<PAGE>

<TABLE>
<CAPTION>
                      HIET Series A Preferred Investor List
                                                                                         5%
             Investor                                     Principal   Days    Interest Buying   Total
               Name                                        Invested  Interest  Earned   Power Investment

<S>                                                       <C>           <C> <C>      <C>       <C>
Nathan Freund & Lila Freund. . . . . . . . . . . . . . .  $100,000      14  $   467  $  5,024  $105,491
--------------------------------------------------------------------------------------------------------
Robert A. Melnick. . . . . . . . . . . . . . . . . . . .  $ 60,000      14  $   280  $  3,014  $ 63,294
--------------------------------------------------------------------------------------------------------
Jacob Bar Lev & Zvia Bar Lev . . . . . . . . . . . . . .  $ 50,000      14  $   234  $  2,512  $ 52,746
--------------------------------------------------------------------------------------------------------
Robert J. Neborsky, M.C., Inc. Combined Retirement Trust  $ 50,000      14  $   234  $  2,512  $ 52,746
--------------------------------------------------------------------------------------------------------
David Wiener Revocable Trust - 96. . . . . . . . . . . .  $ 30,000      14  $   140  $  1,507  $ 31,647
--------------------------------------------------------------------------------------------------------
James Enright. . . . . . . . . . . . . . . . . . . . . .  $ 25,000      10  $    84  $  1,255  $ 26,339
--------------------------------------------------------------------------------------------------------
Ioannis Korologos. . . . . . . . . . . . . . . . . . . .  $ 30,000      14  $   140  $  1,507  $ 31,647
--------------------------------------------------------------------------------------------------------
Ruth Arbel-Magid & Eliezer Magid . . . . . . . . . . . .  $ 25,000      10  $    84  $  1,255  $ 26,339
--------------------------------------------------------------------------------------------------------
Richard Melnick. . . . . . . . . . . . . . . . . . . . .  $150,000      10  $   500  $  7,525  $158,025
--------------------------------------------------------------------------------------------------------
Kris S. Pogoloff . . . . . . . . . . . . . . . . . . . .  $ 10,000      10  $    34  $    502  $ 10,536
--------------------------------------------------------------------------------------------------------
Mark W. Collins. . . . . . . . . . . . . . . . . . . . .  $ 25,875      14  $   121  $  1,300  $ 27,296
--------------------------------------------------------------------------------------------------------
William I Shoenfeld & Rosalie G. Schoenfeld. . . . . . .  $ 10,000      14  $    47  $    503  $ 10,550
--------------------------------------------------------------------------------------------------------
Morrie Lieb. . . . . . . . . . . . . . . . . . . . . . .  $ 10,000      10  $    34  $    502  $ 10,536
--------------------------------------------------------------------------------------------------------
Mark Capital LLC . . . . . . . . . . . . . . . . . . . .  $ 28,750      10  $    96  $  1,443  $ 30,289
--------------------------------------------------------------------------------------------------------
Andrew J. Maffey . . . . . . . . . . . . . . . . . . . .  $ 50,000      10  $   167  $  2,509  $ 52,676
--------------------------------------------------------------------------------------------------------
Karma Kapital LLC. . . . . . . . . . . . . . . . . . . .  $115,000       4  $   154  $  5,758  $120,912
--------------------------------------------------------------------------------------------------------
Global Medicine, Inc, MPPP . . . . . . . . . . . . . . .  $100,000      10  $   334  $  5,017  $105,351
--------------------------------------------------------------------------------------------------------
Angeliki Frangou . . . . . . . . . . . . . . . . . . . .  $ 50,000       4  $    67  $  2,504  $ 52,571
--------------------------------------------------------------------------------------------------------
Jan H. Stahl & Cynthia M. Ruggero. . . . . . . . . . . .  $ 10,000       4  $    14  $    501  $ 10,515
========================================================================================================
TOTAL INVESTED . . . . . . . . . . . . . . . . . . . . .  $929,625          $ 3,231  $ 46,650  $979,506
========================================================================================================
</TABLE>

<PAGE>

                                EXHIBIT B TO THE
           SERIES A CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR
                           HIENERGY TECHNOLOGIES, INC.

                                 FORM OF WARRANT

          [SEE EXHIBIT 4.8 TO THE REGISTRATION STATEMENT ON FORM SB-2]

<PAGE>

                                EXHIBIT C TO THE
           SERIES A CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR
                           HIENERGY TECHNOLOGIES, INC.

                       FORM OF CERTIFICATE OF DESIGNATION

  [SEE SECTION 2.2.1 TO EXHIBIT 3.1 TO THE REGISTRATION STATEMENT ON FORM SB-2]

<PAGE>

                                EXHIBIT D TO THE
           SERIES A CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR
                           HIENERGY TECHNOLOGIES, INC.

                      FORM OF REGISTRATION RIGHTS AGREEMENT

          [SEE EXHIBIT 4.7 TO THE REGISTRATION STATEMENT ON FORM SB-2]

<PAGE>

                                EXHIBIT E TO THE
           SERIES A CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR
                           HIENERGY TECHNOLOGIES, INC.

                 FORM OF IRREVOCABLE TRANSFER AGENT INSTRUCTIONS

                           HIENERGY TECHNOLOGIES, INC.

                                                   as of _________________, 2002
[Name  and  address  of  Transfer  Agent]
Attn:  _____________

LADIES  AND  GENTLEMEN:

     Reference  is made to that certain  Series A  Convertible  Preferred  Stock
Purchase  Agreement,  dated  as of  ____________________,  2002,  by  and  among
HiEnergy Technologies,  Inc., a Washington corporation (the "COMPANY"),  and the
purchasers named therein (collectively,  the "PURCHASERS") pursuant to which the
Company  is  issuing  to the  Purchasers  shares  of its  Series  A  Convertible
Preferred  Stock,  par value  $0.0001 per share,  (the  "PREFERRED  SHARES") and
warrants (the  "WARRANTS") to purchase shares of the Company's common stock, par
value $0.0001 per share (the "COMMON  STOCK")  Warrants in  connection  with the
sale and  issuance of  Preferred  Shares and  Warrants to the  Purchasers.  This
letter  shall  serve  as our  irrevocable  authorization  and  direction  to you
(provided  that you are the transfer agent of the Company at such time) to issue
shares of Common Stock upon conversion of the Preferred  Shares (the "CONVERSION
SHARES")  and  exercise of the Warrants  (the  "WARRANT  SHARES") to or upon the
order  of a  Purchaser  from  time to time  upon (a) (i)  surrender  to you of a
properly  completed and duly executed  Conversion  Notice or Exercise Notice, as
the case may be, in the form  attached  hereto  as  Exhibit  I and  Exhibit  II,
respectively,  (ii) in the case of the conversion of Preferred Shares, a copy of
the  certificates  (with the  original  certificates  delivered  to the Company)
representing  Preferred Shares being converted or, in the case of Warrants being
exercised,  a copy of the Warrants (with the original Warrants  delivered to the
Company) being exercised (or, in each case, an indemnification  undertaking with
respect to such share  certificates  or the  warrants in the case of their loss,
theft  or  destruction),  and  (iii)  delivery  of a  treasury  order  or  other
appropriate order duly executed by a duly authorized  officer of the Company and
(b) the  Company's  failure to notify you that such  Holder,  in the  opinion of
Company  counsel,  has not registered or qualified under the securities or "blue
sky"  laws of any  state  in  connection  with  such  proposed  disposition,  or
qualified for an exemption  therefrom.  So long as you have previously  received
(x) (i) written  confirmation  from counsel to the Company  that a  registration
statement  covering  resales  of the  Conversion  Shares or Warrant  Shares,  as
applicable,   has  been  declared  effective  by  the  Securities  and  Exchange
Commission  (the "SEC") under the  Securities Act of 1933, as amended (the "1933
ACT"), and no subsequent  notice by the Company or its counsel of the suspension
or termination of its  effectiveness  and (ii) no notification  from the Company
that such  Holder,  in the opinion of Company  counsel,  has not  registered  or
qualified  under the  securities  or "blue sky" laws of any state in  connection
with such proposed disposition, or qualified for an exemption therefrom, and (y)
a copy  of such  registration  statement,  and if the  Purchaser  represents  in
writing that the Conversion  Shares or the Warrant  Shares,  as the case may be,
were sold pursuant to the Registration Statement, then certificates representing
the Conversion Shares and the Warrant Shares, as the case may be, shall not bear
any legend restricting transfer of the Conversion Shares and the Warrant Shares,
as the case may be,  thereby  and should  not be  subject  to any  stop-transfer
restriction.  Provided,  however,  that if you have not previously  received (i)
written  confirmation from counsel to the Company that a registration  statement
covering resales of the Conversion Shares or Warrant Shares, as applicable,  has
been  declared  effective by the SEC under the 1933 Act, and (ii) a copy of such
registration statement,  then the certificates for the Conversion Shares and the
Warrant Shares shall bear the following legend:

<PAGE>

               "THE  SECURITIES  REPRESENTED BY THIS  CERTIFICATE  HAVE NOT BEEN
          REGISTERED   UNDER  THE  SECURITIES  ACT  OF  1933,  AS  AMENDED  (THE
          SECURITIES  ACT"),  OR ANY STATE  SECURITIES LAWS AND MAY NOT BE SOLD,
          TRANSFERRED  OR  OTHERWISE  DISPOSED  OF UNLESS  REGISTERED  UNDER THE
          SECURITIES  ACT OR  APPLICABLE  STATE  SECURITIES  LAWS,  OR  HIENERGY
          TECHNOLOGIES,  INC. SHALL HAVE RECEIVED AN OPINION OF ITS COUNSEL THAT
          REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE
          PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED."

and,  provided  further,  that the  Company  may from time to time notify you to
place  stop-transfer  restrictions on the certificates for the Conversion Shares
and the  Warrant  Shares  in the event a  registration  statement  covering  the
Conversion Shares and the Warrant Shares is subject to amendment for events then
current.

     A  form  of  written  confirmation  from  counsel  to  the  Company  that a
registration statement covering resales of the Conversion Shares and the Warrant
Shares has been  declared  effective  by the SEC under the 1933 Act is  attached
hereto as Exhibit III.

     Please be advised  that the  Purchasers  are relying upon this letter as an
inducement to enter into the Securities  Purchase  Agreement  and,  accordingly,
each Purchaser is a third party beneficiary to these instructions.

     Please  execute  this letter in the space  indicated  to  acknowledge  your
agreement  to act in  accordance  with these  instructions.  Should you have any
questions concerning this matter, please contact me at ___________.

                                Very truly yours,
                           HIENERGY TECHNOLOGIES, INC.

                             By: _____________________________________
                                 Name:  ______________________________
                                 Title: ______________________________
ACKNOWLEDGED  AND  AGREED:
[TRANSFER  AGENT]
By:     _______________________________
Name:   _______________________________
Title:  _______________________________
Date:   ______________

<PAGE>

                                    EXHIBIT I

                           HIENERGY TECHNOLOGIES, INC.
                                CONVERSION NOTICE

Reference is made to the  Certificate of Designation of the Relative  Rights and
Preferences of the Series A Preferred Stock of HiEnergy Technologies,  Inc. (the
"Certificate  of   Designation").   In  accordance  with  and  pursuant  to  the
Certificate of Designation,  the undersigned hereby elects to convert the number
of  shares  of Series A  Preferred  Stock,  par  value  $0.0001  per share  (the
"Preferred Shares"), of HiEnergy  Technologies,  Inc., a Washington  corporation
(the "Company"),  indicated below into shares of Common Stock, par value $0.0001
per  share  (the  "Common  Stock"),  of the  Company,  by  tendering  the  stock
certificate(s)  representing the share(s) of Preferred Shares specified below as
of the date specified below.

     Date  of  Conversion:                  ____________________________________

     Number  of  Preferred  Shares  to  be  converted:  ______

     Stock  certificate  no(s).  of  Preferred  Shares
     to  be  converted:       _________

     The  Common Stock have been sold pursuant to the Registration Statement (as
defined  in  the  Registration  Rights  Agreement):  YES  ____     NO____

Please confirm the following information:

     Conversion  Price:                     ____________________________________

     Number  of  shares  of  Common  Stock
     to  be  issued:                        ____________________________________

Please  issue the  Common  Stock  into  which  the  Preferred  Shares  are being
converted  and, if  applicable,  any check drawn on an account of the Company in
the following name and to the following address:

     Issue  to:                             ____________________________________

     Facsimile  Number:                     ____________________________________

     Authorization:                         ____________________________________
                                   By:      ____________________________________
                                   Title:   ____________________________________

     Dated:

                                 PRICES ATTACHED

<PAGE>

                                   EXHIBIT II

                             FORM OF EXERCISE NOTICE

                                  EXERCISE FORM

                           HIENERGY TECHNOLOGIES, INC.

The  undersigned  _______________,  pursuant  to the  provisions  of the  within
Warrant,  hereby  elects to purchase  _____  shares of Common  Stock of HiEnergy
Technologies, Inc. covered by the within Warrant.

Dated:  _________________          Signature     ___________________________

                                   Address       ___________________________

                                                 ___________________________

                                   ASSIGNMENT

FOR VALUE RECEIVED,  _________________  hereby sells, assigns and transfers unto
__________________  the within Warrant and all rights evidenced thereby and does
irrevocably constitute and appoint _____________, attorney, to transfer the said
Warrant on the books of the within named corporation.

Dated:  _________________          Signature     ___________________________

                                   Address       ___________________________

                                                 ___________________________

                               PARTIAL ASSIGNMENT

FOR VALUE RECEIVED,  _________________  hereby sells, assigns and transfers unto
__________________  the right to  purchase  _________  shares of  Warrant  Stock
evidenced  by the within  Warrant  together  with all rights  therein,  and does
irrevocably  constitute and appoint  ___________________,  attorney, to transfer
that part of the said Warrant on the books of the within named corporation.

Dated:  _________________          Signature     ___________________________

                                   Address       ___________________________

                                                 ___________________________

                           FOR USE BY THE ISSUER ONLY:

This  Warrant  No. W-_____ canceled (or transferred or exchanged) this _____ day
of  ___________,  _____,  shares  of Common Stock issued therefor in the name of
_______________,  Warrant  No. W-_____ issued for ____ shares of Common Stock in
the  name  of  _______________.

<PAGE>

                                   EXHIBIT III

                         FORM OF NOTICE OF EFFECTIVENESS
                            OF REGISTRATION STATEMENT

[Name  and  address  of  Transfer  Agent]
Attn:  _____________

     Re:     HIENERGY  TECHNOLOGIES,  INC.

Ladies  and  Gentlemen:

     We are counsel to HiEnergy  Technologies,  Inc., a  Washington  corporation
(the  "COMPANY"),  and have  represented  the  Company in  connection  with that
certain Series A Convertible  Preferred Stock Purchase  Agreement (the "PURCHASE
AGREEMENT"),  dated as of  ____________________,  2002, by and among the Company
and the purchasers named therein  (collectively,  the "PURCHASERS")  pursuant to
which the Company  issued to the  Purchasers  shares of its Series A Convertible
Preferred  Stock,  par value  $0.0001 per share,  (the  "PREFERRED  SHARES") and
warrants (the  "WARRANTS") to purchase shares of the Company's common stock, par
value  $0.0001  per  share  (the  "COMMON  STOCK").  Pursuant  to  the  Purchase
Agreement,  the Company has also entered into a  Registration  Rights  Agreement
with  the  Purchasers  (the  "REGISTRATION  RIGHTS  AGREEMENT"),   dated  as  of
_____________________,  2002, pursuant to which the Company agreed,  among other
things,  to register the Registrable  Securities (as defined in the Registration
Rights Agreement), including the shares of Common Stock issuable upon conversion
of the Preferred  Shares and exercise of the Warrants,  under the Securities Act
of 1933,  as  amended  (the  "1933  ACT").  In  connection  with  the  Company's
obligations under the Registration Rights Agreement, on ________________,  2002,
the Company filed a Registration  Statement on Form SB-2 (File No. 333-________)
(the "REGISTRATION  STATEMENT") with the Securities and Exchange Commission (the
"SEC") relating to the resale of the Registrable  Securities which names each of
the present Purchasers as a selling stockholder thereunder.

     In connection with the foregoing,  we advise you that a member of the SEC's
staff has advised us by  telephone  that the SEC has entered an order  declaring
the  Registration  Statement  effective  under  the 1933 Act at  [ENTER  TIME OF
EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge,  after
telephonic  inquiry  of a  member  of the  SEC's  staff,  that  any  stop  order
suspending its  effectiveness  has been issued or that any  proceedings for that
purpose are pending  before,  or  threatened  by, the SEC and  accordingly,  the
Registrable  Securities  are available for resale under the 1933 Act pursuant to
the Registration Statement.

                                Very truly yours,
                                [COMPANY COUNSEL]

                             By:

cc:     [LIST  NAMES  OF  PURCHASERS]

<PAGE>

                                EXHIBIT F TO THE
           SERIES A CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR
                           HIENERGY TECHNOLOGIES, INC.

                FORM OF OPINION OF THE COMPANY'S SPECIAL COUNSEL

                                     [DATE]
[PURCHASER]

Re:     Series A Convertible Preferred Stock Purchase Agreement Between HiEnergy
Technologies,  Inc.  and  the  Purchasers  Listed  on  Exhibit  A

Ladies  and  Gentlemen:

          We have acted as special securities counsel to HiEnergy  Technologies,
Inc., a Washington corporation ("the Company"),  in connection with the Series A
Convertible  Preferred Stock Purchase Agreement (the "Purchase Agreement") dated
as of  _________________,  between  the  Company  and the  Purchasers  listed on
Exhibit  A  (the   "Purchasers")  and  the  transactions  (the   "Transactions")
contemplated  by the Transaction  Documents (as defined below).  This opinion is
furnished  to you  pursuant to Section  4.2(g) of the  Purchase  Agreement.  All
capitalized terms used herein have the meanings defined for them in the Purchase
Agreement or the Accord (as defined below) unless otherwise defined herein.

               This Opinion  Letter is governed by, and shall be  interpreted in
accordance  with, the Legal Opinion Accord and the  accompanying  commentary and
technical  notes (which are an integral part  thereof),  all as published in The
Business  Lawyer,  Volume 47, No. 1,  November  1991 (the  "Accord"),  which are
incorporated herein by this reference. As a consequence,  this Opinion Letter is
subject to a number of  assumptions,  qualifications,  exceptions,  definitions,
limitations  on  coverage  and  other  limitations,  all  as  more  particularly
described in the Accord,  and this Opinion  Letter should be read in conjunction
therewith.  The law covered by the opinions  expressed  herein is limited to the
law of the State of Washington and United States federal securities laws. To the
extent that the  Documents  (as defined  below) are  governed by the laws of any
state other than Washington, we have assumed that the law of such other state is
identical to the law of Washington.

               We have  examined  originals  or copies  certified  or  otherwise
identified  as being true copies of the  following  agreements  and  instruments
(collectively the "Transaction Documents"):

     1. The Purchase Agreement;

     2.  Warrants to Purchase  Shares of Common Stock of HiEnergy  Technologies,
Inc. that expire ________________, in favor of the Purchasers;

     3. Registration Rights Agreement dated as of _________________, between the
Company and the Purchasers;

     4.  Note  Purchase  Agreements  between  the  Company  and the  Purchasers,
variously dated September 23, 2002, September 27, 2002, and October 3, 2002; and

     5.  Promissory  Notes  made by the  Company  in  favor  of the  Purchasers,
variously dated September 23, 2002, September 27, 2002, and October 3, 2002.

<PAGE>

     We have also examined originals or copies certified or otherwise identified
as being true copies of the following  documents and  instruments  (collectively
the "Related Documents"):

          a.   Articles of Incorporation of the Company, as amended;

          b.   Articles  of  Amendment  establishing  the  Series A  Convertible
               Preferred Stock;

          c.   Bylaws of the Company, as amended;

          d.   Specimen Series A Preferred Stock Certificate;

          e.   Irrevocable  Transfer  Agent  Instructions  dated
               __________________to  Signature  Stock  Transfer  Company;

          f.   Certificate of Michal Levy, Secretary of the Company, dated
               __________________;

          g.   Certificate  of  Thomas  R. Pascoe, President and Chief Executive
               Officer  of  the  Company,  dated  _____________________;

          h.   The Company's Disclosure Letter to the Purchasers dated
               __________________;

          i.   Resolutions  of the Company's  Board of Directors  from a meeting
               held August 11, 2002;

          j.   Resolutions of the Executive  Committee of the Company's Board of
               Directors  adopted  August 13,  2002,  September  20,  2002,  and
               October 7, 2002, by unanimous  written consent,  and Designations
               of Authority executed by the Company's President on September 24,
               2002, and September 30, 2002;

          k.   Convertible Preferred Stock Term Sheet of HiEnergy  Technologies,
               Inc., a copy of which is attached hereto;

          l.   The  Company's  Form  10-KSB for the year ended  April 30,  2002,
               filed with the  Securities  and Exchange  Commission  on July 29,
               2002, and Form 10-QSB for the quarter ended July 31, 2002,  filed
               with the  Securities  and Exchange  Commission  on September  20,
               2002;

          m.   The electronic  web page of the Washington  Secretary of State on
               October 9, 2002,  confirming the valid  existence of the Company;
               and

          n.   The electronic  web page of the California  Secretary of State on
               October 9, 2002,  confirming  that the Company is qualified to do
               business in California.

<PAGE>

          The Transaction  Documents and the Related  Documents are collectively
referred to herein as the  "Documents".  We have examined such  questions of law
that we  consider  necessary  or  advisable  for the purpose of  rendering  this
opinion.  In such examinations we have assumed the genuineness of all signatures
on original  documents,  the  authenticity  and  completeness  of all  documents
submitted to us as originals, the conformity to original documents of all copies
submitted to us as copies thereof,  the legal capacity of natural  persons,  and
the due authorization, execution and delivery of all documents (except as to due
authorization,  execution and delivery by the Company) where due  authorization,
execution and delivery are a prerequisite to the effectiveness thereof. We have,
with your  permission,  necessarily  assumed the correctness and completeness of
the statements and representations  made to us or included in the Documents.  In
connection with the delivery of our opinions  hereunder,  you have  acknowledged
that our knowledge of the Company's affairs extends only to the Documents.

          We have not examined  certificates  representing  the Preferred Shares
other than specimens of the certificates. In rendering our opinion we have, with
your  permission,  relied on the  Company's  Transfer  Agent as to the issuance,
execution,  countersignature,  and  delivery  of  the  Shares  according  to the
instructions delivered by the Purchaser, whether in certificated form or via DTC
through its DWAC system.

     Based upon and subject to the foregoing, we are of the opinion that:

     1. The Company is a  corporation  duly  incorporated  and validly  existing
under the laws of the state of Washington and has the requisite  corporate power
to own,  lease  and  operate  its  properties  and  assets,  and to carry on its
business as  presently  conducted.  The Company is duly  qualified  as a foreign
corporation  to do business  and is in good  standing in every  jurisdiction  in
which the nature of the business  conducted  or property  owned by it makes such
qualification  necessary  and in which the  failure to so  qualify  would have a
material adverse effect upon the business, condition (financial or otherwise) or
properties of the Company taken as a whole.

     2. The Company has the  requisite  corporate  power and  authority to enter
into and perform its obligations  under the  Transaction  Documents and to issue
the Preferred  Stock, the Warrants and the Common Stock issuable upon conversion
of the  Preferred  Stock and exercise of the Warrants in  accordance  with their
respective  terms.  Each of the Transaction  Documents has been duly authorized,
executed and delivered by the Company,  and no further consent or  authorization
of the Company or its Board of Directors or  stockholders  is required.  Each of
the Transaction  Documents  constitutes a legal, valid and binding obligation of
the Company  enforceable  against the Company in accordance  with its respective
terms.  The Common Stock  issuable upon  conversion  of the Preferred  Stock and
exercise  of the  Warrants  in  accordance  with their  respective  terms is not
subject to any  preemptive  rights  under the Articles of  Incorporation  or the
Bylaws.

     3. The  Preferred  Stock  and the  Warrants  to be  issued  and sold by the
Company in accordance with the Purchase  Agreement have been duly authorized and
executed  by the  Company  and,  when  delivered  against  payment  in  full  in
accordance with the Purchase Agreement,  will be validly issued,  fully paid and
nonassessable.  The  shares of Common  Stock  issuable  upon  conversion  of the
Preferred Stock and exercise of the Warrants in accordance with their respective
terms, have been duly authorized and reserved for issuance,  and, when delivered
upon  conversion or against  payment in full in accordance  with such respective
terms, will be validly issued, fully paid and nonassessable.

     4. To the Actual  Knowledge of the Primary  Lawyer  Group,  the  execution,
delivery and  performance of the Transaction  Documents and the  consummation by
the Company of the  transactions  contemplated  thereby and the  issuance of the
Preferred Stock and the Warrants in accordance  with the Purchase  Agreement and
the Common Stock issuable upon conversion of the Preferred Stock and exercise of
the Warrants in accordance  with their  respective  terms do not (i) violate any
provision of the Articles of  Incorporation  or Bylaws,  (ii) conflict  with, or
constitute  a default  (or an event  which with  notice or lapse of time or both
would  become a default)  under,  or give to others  any rights of  termination,
amendment,  acceleration or cancellation of, any material  agreement,  mortgage,
deed of trust,  indenture,  note, bond, license, lease agreement,  instrument or
obligation  to which  the  Company  is a party,  (iii)  create or impose a lien,
charge or  encumbrance on any property of the Company under any agreement or any
commitment  to which the  Company is a party or by which the Company is bound or
by which any of its respective properties or assets are bound, or (iv) result in
a violation of any statute,  rule, regulation,  order,  judgment,  injunction or
decree  applicable  to the  Company  or to which  any  property  or asset of the
Company is  subject;  except,  in all cases  other than  violations  pursuant to
clause  (i)  above,  for  such  conflicts,  default,  terminations,  amendments,
acceleration,  cancellations and violations as would not, individually or in the
aggregate,  have  a  material  adverse  effect  upon  the  business,   condition
(financial or otherwise) or properties of the Company taken as a whole.

<PAGE>

     5. No consent, approval or authorization of or designation,  declaration or
filing with any governmental authority on the part of the Company is required in
connection with the valid  execution and delivery of the Transaction  Documents,
or the offer,  sale or  issuance of the  Preferred  Stock,  the  Warrants or the
Common Stock issuable upon conversion of the Preferred Stock and exercise of the
Warrants  in  accordance  with their  respective  terms other than the filing of
Articles of  Amendment  and the  Registration  Statement,  except such as may be
required under the Securities Act of 1933 or state securities laws.

     6. The offer,  issuance and sale of the Preferred Stock and the Warrants in
accordance with the Purchase Agreement and the conversion of the Preferred Stock
and exercise of the Warrants in  accordance  with their  respective  terms,  are
exempt from the registration requirements of the Securities Act.

     7. The Company is not, and as a result of and immediately upon Closing will
not be, an  "investment  company" or a company  "controlled"  by an  "investment
company", within the meaning of the Investment Company Act of 1940, as amended.

     In addition to the General Qualifications (which include the Bankruptcy and
Insolvency Exception,  the Equitable Principles Exception,  and the Other Common
Qualifications),  all of which apply to the  foregoing  opinions,  the foregoing
opinions  are  qualified  by  and  subject  to  the  following  assumptions  and
exceptions,  which  assumptions  and exceptions  modify the Accord to the extent
necessary:

     A. We express no opinion on any fact made in any representation or warranty
or the accuracy of any  calculations,  descriptions  or facts in the Transaction
Documents  or in any  exhibit or schedule  to a  Transaction  Document or in any
document referenced in or related to any of the foregoing.

     B. Rights to indemnification  and contribution may be limited by provisions
of  securities   law  and  by  principles   governing   the   construction   and
interpretation of indemnity provisions, in addition to the limitations stated in
the Accord.

     C. We express no opinion as to the enforceability of cumulative remedies to
the  extent  such  cumulative  remedies  purport  to or would have the effect of
compensating  the party entitled to the benefits thereof in amounts in excess of
the  actual  loss  suffered  by such  party or  would  violate  applicable  laws
concerning election of remedies.

<PAGE>

     D.  We  express  no  opinion  as  to  the   enforceability  of  irrevocable
instructions whose enforcement would result in a violation of law.

     E. The opinion at item (1) with respect to the Company's existence is given
in sole reliance on the electronic web page of the Washington Secretary of State
on  October 9, 2002,  confirming  the valid  existence  of the  Company  and the
statements  contained  thereon.  The  opinion  at item (1) with  respect  to the
Company's  qualification as a foreign corporation to do business and to its good
standing in every  jurisdiction in which the nature of the business conducted or
property  owned  by it  makes  such  qualification  necessary  is  given in sole
reliance on the  electronic  web page of the  California  Secretary  of State on
October 9, 2002,  confirming  the  Company's  qualification  to do  business  in
California.

     F. The  opinions  set forth at item (3) are subject to (i)  reliance on the
Company's Transfer Agent as to the issuance,  execution,  countersignature,  and
delivery of the Shares according to the instructions  delivered by the Purchaser
and (ii) the Company  maintaining  authorized  but unissued  shares in an amount
sufficient to satisfy its obligations under the Documents.

     G. The opinions  set forth at item  (4)(iii) are subject to the interest of
H.C. Wainwright & Co., Inc., as a broker in the Transactions.

     H. The opinions set forth at item (6) are subject to our  assumption,  made
with your permission,  that the Purchasers have based their investment decisions
only on written  materials and that the only written  materials  received by the
Purchasers in connection with their investment decisions are the Documents.

     I. We are  expressing  no opinion  with respect to the Blue Sky laws of any
state in which the Shares may be or may have been offered or sold.

     J.  Our  opinions  are  subject  to  Purchasers  returning  their  original
Promissory  Notes (or Affidavits of Lost Promissory Note containing  appropriate
indemnities) to the Company for cancellation.

     The term "Primary  Lawyer Group" as used in the Accord,  is hereby modified
and for purposes of applying the Accord to this Opinion Letter shall mean Chapin
E. ("Shea") Wilson and Derek W. Woolston.

     This Opinion  Letter  speaks as to the matters as of the date hereof and we
assume no responsibility for changes in law, regulations, facts or circumstances
after the date hereof.  We have no duty,  and  undertake no duty, to update this
Opinion Letter or to deliver future opinions.

     This Opinion  Letter may be relied upon by you only in connection  with the
Transactions  and may not be used or relied  upon by you or by any other  person
for any  purpose  whatsoever,  except to the extent  authorized  in the  Accord,
without in each instance our prior written consent.

                                   Very truly yours, QED Law Group, P.L.L.C.

                                              By

                                       Chapin E. Wilson

<PAGE>

                    [HIENERGY TECHNOLOGIES, INC. LETTERHEAD]

             1601 Alton Parkway, Suite B* Irvine * California 92606*
           Office: 949-757-0855 Fax: 949-757-1477 www.hienergyinc.com

October 7, 2002

Re:      Disclosure Letter

Dear Purchaser(s):

         In connection  with that certain Series A Convertible  Preferred  Stock
Purchase  Agreement (the  "Agreement")  dated as of October 7, 2002 by and among
HiEnergy Technologies,  Inc. (the "Company") and the persons and entities listed
on the Schedule of Purchasers  (Exhibit A to the Agreement),  the Company hereby
delivers this  Disclosure  Letter,  which  contains  exceptions to the Company's
representations  and warranties  given in the Agreement.  The section numbers in
this  Disclosure  Letter  correspond  to the section  numbers in the  Agreement;
provided,  however,  that any  information  disclosed  herein  under any section
number shall be deemed to be disclosed and  incorporated in any other section of
the Agreement  where such  disclosure  would be  appropriate.  Disclosure of any
information  or  document  herein is not a  statement  or  admission  that it is
material or required to be disclosed  herein.  References to any document do not
purport to be complete  and are  qualified  in their  entirety  by the  document
itself.  Capitalized  terms  used but not  defined  herein  shall  have the same
meanings given them in the Agreement

         With respect to the following sections of the Agreement, and subject to
the  provisions  of the  Agreement  governing  the  contents of this  Disclosure
Letter, we hereby inform you as follows:

      Section 2.1(a)        Organization,  Good Standing and Power.  The Company
                            contemplates   forming   a   wholly-owned   Delaware
                            corporation  for the purpose of  reincorporating  in
                            Delaware,  which will be the  surviving  corporation
                            upon merging with the Company.  The  reincorporation
                            has been  approved by the Board of Directors  but is
                            subject to approval by a majority of the outstanding
                            shares  of  the  Company  at  the  Company's  annual
                            stockholders'  meeting  to be  held on  October  10,
                            2002.  The  record  date for the  annual  meeting to
                            determine the shares  entitled to vote is August 12,
                            2002.

      Section               2.1(c) Capitalization.  The authorized capital stock
                            of the  Company  is  100,000,000  shares  of  common
                            stock,  par value $0.0001 per share,  and 20,000,000
                            shares of  preferred  stock,  par value  $0.0001 per
                            share.  As of September  30,  2002,  the Company had
                            22,624,276   shares  of  common   stock  issued  and
                            outstanding  and no shares of preferred stock issued
                            and outstanding.
                            The Company has the  following  options and warrants
                            issued and outstanding as of September 30, 2002:

                            o       On April  24,  2002,  the  Company  issued a
                                    stock  option  to Dr.  Maglich  to  purchase
                                    2,482,011  shares of common  stock at $0.134
                                    per   share   subject   to  the   terms  and
                                    conditions  set  forth in the  Stock  Option
                                    Agreement,  a copy of which was  filed  with
                                    the   Commission   as  an   exhibit  to  the
                                    Company's  annual  report on Form 10-KSB for
                                    the fiscal year ended April 30, 2002.

<PAGE>

                            o       The employment agreement between Dr. Maglich
                                    and the Company contemplates the issuance of
                                    the following  stock options to Dr.  Maglich
                                    annually  through the term of the employment
                                    agreement,   or  until  December  31,  2006:
                                    options to purchase  one percent per year of
                                    the   Company's   common  stock  issued  and
                                    outstanding  at the end of each year with an
                                    exercise price equal to the average  trading
                                    price for the preceding thirty days and with
                                    terms  of five  years.  In no  case  may the
                                    number of options granted in a given year be
                                    less than ten percent of the total number of
                                    options  granted by the Company for services
                                    in that year. The  employment  agreement was
                                    filed with the  Commission  as an exhibit to
                                    the  Company's  annual report on Form 10-KSB
                                    for the fiscal year ended April 30, 2002.

                            o       HiEnergy   Microdevices,   Inc.  has  20,540
                                    minority shares issued and outstanding.  The
                                    Company  has agreed that in the event of any
                                    merger or other  consolidation  of  HiEnergy
                                    Microdevices   into   the   Company,    each
                                    remaining HiEnergy Microdevices  stockholder
                                    will receive the greater of the market value
                                    of their  HiEnergy  Microdevices  shares  or
                                    shares in the  Company  on the same terms as
                                    the  voluntary  share  exchange  transaction
                                    that  closed on April 25,  2002.  If all the
                                    minority  shareholders  convert, the Company
                                    will  be  required  to  issue  approximately
                                    459,118 additional shares of common stock to
                                    the minority shareholders.

                            o       HiEnergy  Microdevices granted stock options
                                    and  warrants to purchase  16,365 and 32,247
                                    shares, respectively,  of common stock prior
                                    to the voluntary share exchange  transaction
                                    with the  Company.  These stock  options and
                                    warrants have been exercised by the HiEnergy
                                    Microdevices Board of Directors at $3.50 per
                                    share.  Promissory notes have been issued to
                                    the  holders  for  an  amount  equal  to the
                                    number of shares times $3.50. The notes must
                                    be paid  within  five (5) years in order for
                                    the   holders   to  acquire   the   HiEnergy
                                    Microdevices  stock. If the note holders pay
                                    off the  promissory  notes,  the Company has
                                    agreed to allow the  holders to  voluntarily
                                    exchange    their    shares   in    HiEnergy
                                    Microdevices  for  shares in the  Company on
                                    the  same  terms  as  the  voluntary   share
                                    exchange. If all of the note holders pay for
                                    and  convert  their  HiEnergy   Microdevices
                                    shares,  the  Company  will be  required  to
                                    issue 1,086,595  additional shares of common
                                    stock to the them.  On  September  17, 2002,
                                    the Company approved the issuance of a stock
                                    option to Ms. Michal Levy to purchase 89,410
                                    shares  of the  Company's  common  stock  in
                                    exchange  for  the   cancellation  of  4,000
                                    shares of HiEnergy Microdevices common stock
                                    underlying  a stock  option  that  had  been
                                    granted  by  HiEnergy  Microdevices  to  Ms.
                                    Levy.  The  conversion  was at the voluntary
                                    share  exchange  rate  of  22.3524   Company
                                    shares   for   each   share   of    HiEnergy
                                    Microdevices.   The   stock   option   vests
                                    immediately.  The  exchange  with  Ms.  Levy
                                    reduces the number of HiEnergy  Microdevices
                                    shares of common stock outstanding by 4,000.

<PAGE>

                            o       On September 17, 2002, the Company  approved
                                    the issuance of 22,356  shares of its common
                                    stock  to Ms.  Levy in  connection  with the
                                    assignment of her employment  agreement from
                                    HiEnergy     Microdevices     to    HiEnergy
                                    Technologies. The shares are to be issued to
                                    Ms.  Levy  at the end of  each  three  month
                                    period beginning on the commencement date of
                                    her   employment   agreement  with  HiEnergy
                                    Microdevices, or February 2002. She has been
                                    issued 11,178 shares of the Company's common
                                    stock to date.

                            o       On  May  14,  2002,  the  Company  issued  a
                                    warrant  to Rheal Cote to  purchase  150,000
                                    shares of common stock at an exercise  price
                                    of $1.00 and with a term of three (3) years.
                                    A copy of the  Warrant  was  filed  with the
                                    Commission  as an exhibit  to the  Company's
                                    annual  report on Form 10-KSB for the fiscal
                                    year ended April 30, 2002.

                            o       On July 11, 2002,  the Company  approved the
                                    issuance of a stock  option to Isaac  Yeffet
                                    to purchase 1,000,000 shares of common stock
                                    at $1.00 per share  subject to the terms and
                                    conditions  set  forth  in  a  Stock  Option
                                    Agreement,  a copy of which was  filed  with
                                    the   Commission   as  an   exhibit  to  the
                                    Company's  annual  report on Form 10-KSB for
                                    the fiscal year ended April 30, 2002.

                            o       On August 11, 2002, the Company approved the
                                    issuance  of  warrants  to  purchase  up  to
                                    100,000  shares  of  common  stock  to  H.C.
                                    Wainwright  &  Co.  in  connection   with  a
                                    placement agent letter agreement.

                            o        On September 17, 2002, the Company approved
                                     the grant and issuance of a stock option to
                                     purchase 400,000 shares of common stock (or
                                     some lesser number in the discretion of the
                                     Company)  to  Primoris  Group,  an investor
                                     relations firm.

                            o       As an  accommodation to adjust amounts owing
                                    to  QED  Law  Group,   P.L.L.C.,   effective
                                    September 25, 2002, the Company approved the
                                    grant and issuance of stock  options to Shea
                                    Wilson and Derek Woolston to purchase shares
                                    of the  Company's  common  stock.  The stock
                                    options  have a term of ten  years,  and the
                                    number of underlying  shares will not exceed
                                    100,000.

<PAGE>

                            o       Mr. Tom Pascoe has  received  stock  options
                                    pursuant to his  employment  agreement.  His
                                    options   entitle  him  to  purchase  common
                                    shares  in an  amount  equal to ten  percent
                                    (10%) of the  Company's  outstanding  common
                                    stock on a fully diluted basis, based on the
                                    Company's  equity structure on September 30,
                                    2002,    which   is    anticipated   to   be
                                    approximately 3,000,000 shares. With respect
                                    to 75% of the underlying  shares, the option
                                    shall vest  one-twelfth  (1/12) with respect
                                    to such  shares on each of the dates that is
                                    the   following   number  of  months   after
                                    September 25, 2002: 3, 6, 9, 12, 15, 18, 21,
                                    24, 27, 30, 33, 36.  With  respect to 25% of
                                    the underlying shares, the option shall vest
                                    with respect to such shares,  on the earlier
                                    of (a) the date when the closing  sale price
                                    of the Company's common stock has equaled or
                                    exceeded  $1.75  on every  trading  day in a
                                    period of 90 consecutive  calendar days, (b)
                                    the date immediately preceding a sale of the
                                    Company  (whether by merger,  share exchange
                                    or sale of  assets)  for  $1.75 per share of
                                    common   stock  or  more,   or  (c)  if  the
                                    Company's common stock ceases to be publicly
                                    traded, on the date following the closing of
                                    an offering  at a deemed  price per share of
                                    common stock of $1.75 or more.  The exercise
                                    price to purchase an underlying  share shall
                                    be  fixed  on  the  date  six  months  after
                                    September  25,  2002,  as the  lesser of (a)
                                    $1.00  per  share;  or (b) for any  offering
                                    that closes  within six months of  September
                                    25, 2002 (other than the Company's  offering
                                    of  its  Series  A  Preferred  Stock),   the
                                    following  percentage  of the price per unit
                                    of the Company's  equity  securities (or the
                                    price  per  share at  which a series  of the
                                    Company's  preferred  stock  is  convertible
                                    into the Company's  common  stock):  (i) for
                                    preferred  with  warrants,   70%,  (ii)  for
                                    preferred without  warrants,  80%, (iii) for
                                    common  with  warrants,  90%,  and  (iv) for
                                    common, without warrants, 100%.

                            The  following   shares  of  Common  Stock  will  be
                            included in the Registration  Statement on Form SB-2
                            to be filed by the Company  following the closing of
                            the Series A Convertible Preferred Stock offering:

                            o       1,725,000 shares from the Company's  private
                                    placement  with a final  closing on June 24,
                                    2002.

                            o       1,500,000  shares (or some lesser  number in
                                    the  discretion  of the Company) from former
                                    shareholders  of  the  Company's  subsidiary
                                    HiEnergy Microdevices, Inc.

                            o       1,000,000 shares for Isaac Yeffet.

                            o       400,000  shares  underlying  a stock  option
                                    issued  to  Primoris   Group,   an  investor
                                    relations firm.

                            o       500,000 shares (or some lesser number in the
                                    discretion of the Company) for miscellaneous
                                    registration commitments,  including 100,000
                                    shares  underlying a warrant  issued to H.C.
                                    Wainwright & Co.

                            o       2,500,000  shares (or some lesser  number in
                                    the  discretion  of the  Company) for common
                                    stock sold in an offering  closing  prior to
                                    the   effectiveness   of  the   Registration
                                    Statement.

                            To the actual  knowledge of the  Company,  the offer
                            and   sale  of  all   capital   stock,   convertible
                            securities,  rights,  warrants  and  options  of the
                            Company  issued prior to the Closing  complied  with
                            all applicable  federal and state  securities  laws,
                            and no  stockholder  has a right  of  rescission  or
                            claim for damages with respect  thereto  which would
                            have a  Material  Adverse  Effect  on the  Company's
                            financial condition or operating results.

<PAGE>

      Section 2.1(e)        No Conflicts.

                            H.C.  Wainwright & Co.,  Inc. has an interest in the
                            private  placement  offering  as  a  broker  in  the
                            transactions.

                            The Company's  Board of Directors has approved,  and
                            has  recommended to the Company's  stockholders  for
                            approval at the next annual meeting of  shareholders
                            to be held on October 10, 2002, a change of domicile
                            by the Company from the State of  Washington  to the
                            State of Delaware.  If approved by the stockholders,
                            the reincorporation  will require the formation of a
                            wholly-owned Delaware subsidiary corporation and the
                            merger of the Company into the  Delaware  subsidiary
                            corporation.  The  merger  will be  effected  by the
                            Delaware  corporation filing a Certificate of Merger
                            with the Secretary of State of Delaware and Articles
                            of Merger with the Secretary of State of Washington.
                            The Certificate of Incorporation  that is filed with
                            the  Secretary of State of Delaware will contain the
                            Certificate of Designation establishing the Series A
                            Preferred   Stock,   subject  to  modification   for
                            technical compliance with Delaware law.

      Section 2.1(f)        Commission Documents, Financial Statements.

                            To  the  Company's  actual  knowledge,   as  of  the
                            respective  dates,  the Form  10-KSB  for the fiscal
                            year ended  April 30,  2002 and the Form  10-QSB for
                            the  quarter  ended July 31,  2002  complied  in all
                            material  respects  with  the  requirements  of  the
                            Exchange  Act and the rules and  regulations  of the
                            Commission promulgated thereunder and other federal,
                            state  and  local   laws,   rules  and   regulations
                            applicable to such documents,  and, to the Company's
                            actual knowledge, as of their respective dates, none
                            of the Form 10-KSB and the Form 10-QSB contained any
                            untrue  statement  of a material  fact or omitted to
                            state a material fact required to be stated  therein
                            or  necessary  in  order  to  make  the   statements
                            therein,  in light of the circumstances  under which
                            they were made, not misleading.

<PAGE>

      Section 2.1(g)        Subsidiaries.

                            HiEnergy    Microdevices,    Inc.,    a   California
                            corporation,  has a total of 663,879 shares of Class
                            A common stock issued and  outstanding and no shares
                            of Class B common stock issued and outstanding.  The
                            Company  owns  643,339  shares  of  the  issued  and
                            outstanding shares of Class A common stock.

                            HiEnergy  Microdevices  granted  stock  options  and
                            warrants  to  purchase  16,365  and  32,247  shares,
                            respectively,  of  shares  of Class A  common  stock
                            prior to the voluntary  share  exchange  transaction
                            with the Company.  These stock  options and warrants
                            have been  exercised  by the Board of  Directors  at
                            $3.50 per share.  Promissory  notes have been issued
                            to the holders for an amount  equal to the number of
                            shares  times  $3.50.  The notes must be paid within
                            five (5) years in order for the  holders  to acquire
                            the HiEnergy Microdevices stock.

                            The  Company  owns  100%  of the  1,000  issued  and
                            outstanding  shares of common stock of VWO II, Inc.,
                            a Washington corporation.

      Section               2.1(h) No Material Adverse Change.  The cash balance
                            of  the   Company  at   September   9,   2002,   was
                            approximately   $125,000,  and  its  burn  rate  was
                            approximately  175,000  per month.  The  Company has
                            received net proceeds of $847,888 pursuant to bridge
                            notes in connection with the Series A financing.

      Section 2.1(k)        Indebtedness.

                            HiEnergy  Microdevices owes $40,000 to Stone Capital
                            Management for services rendered to the Company.

                            HiEnergy  Microdevices has a contingent liability in
                            the amount of $27,608,  with interest  payable at 6%
                            per annum,  for salary payable in February and March
                            of 2002 to Keith Cowan,  a former CEO and  President
                            of HiEnergy Microdevices, Inc. HiEnergy Microdevices
                            also has a  contingent  liability  in the  amount of
                            $150,000, non-interest-bearing, as severance payable
                            to Mr. Cowan. The Company is currently in litigation
                            regarding these amounts.

                            HiEnergy  Microdevices  owes  Mr.  Edward  Finch,  a
                            former director of the Company, notes payable in the
                            amount of $10,400,  with interest  payable at 8% per
                            annum,  and secured by the patent  applications  for
                            Europe,  Canada and  Japan.  The holder of the notes
                            has the option to convert the principal and interest
                            into shares of common stock.

                            HiEnergy Microdevices has unsecured notes payable to
                            an unrelated  party,  non-interesting  bearing,  and
                            payable on demand in the amount of $45,000.

                            On September  30, 2002,  the Company  relocated  its
                            offices  to 1601  Alton  Parkway,  Unit  B,  Irvine,
                            California   92606.   The  new  offices  consist  of
                            approximately  6,999 square feet.  The lease term is
                            thee years,  with  payments  due at a monthly  lease
                            rate of  $8,000.  The  facilities  are  close to all
                            necessary  services,  including  laboratories at the
                            University   of   California,   Irvine,   which  are
                            currently used for certain developmental work.

<PAGE>

      Section 2.1(n)        Compliance with Law.

                            Because   the   Company's    technology    and   its
                            applications  are so new, the Company is not certain
                            of all of the potential  government  regulation that
                            may affect it. The  Company  believes  that  certain
                            applications   of  its   technology   will   require
                            approvals  from  various  government  organizations.
                            Examples of  government  agencies  that may regulate
                            applications of the Company's technology include the
                            Federal    Aviation    Administration    (now    the
                            Transportation   Security    Administration),    the
                            Department of Defense, the U.S. Customs Service, and
                            the  Food  and  Drug  Administration  in the case of
                            potential  quality  assurance  applications for food
                            and drugs.  The Company  expects that its technology
                            will require  various  potential  environmental  use
                            approvals,  particularly as it relates to using fast
                            neutrons in public settings.  The Nuclear Regulatory
                            Commission  may also  regulate the  Company's use of
                            fast  neutrons.   Where  regulation  is  coordinated
                            between federal,  state and local  authorities,  the
                            Company  expects the state and local  equivalents of
                            these federal  agencies to regulate it as well.  The
                            approvals  from  government  organizations  may take
                            longer  and  be  more   difficult   to  obtain  than
                            expected.   There   is   no   assurance   that   any
                            governmental  approval  that might be required  will
                            ever be obtained,  which could affect the  Company's
                            ability to commercialize and sell its technology.

                            The  Company  plans to have  government  agencies as
                            customers  for  the  products  we  develop.  At  the
                            federal  level,  this  will  subject  the  Company's
                            contracting to the Federal Acquisition  Regulations,
                            a  comprehensive  set of  regulations  governing how
                            vendors do business with the federal government. The
                            Company also  applies for grants,  which are subject
                            to regulation by the granting agencies.  Here again,
                            where the Company's  customers or grantors are state
                            or local governments, the Company will be subject to
                            similar  state  and  local   contracting  and  grant
                            regulations.

<PAGE>

      Section 2.1(p)        Certain Fees.  The Company  has agreed to  pay  H.C.
                            Wainwright & Co., Inc.  compensation for its role as
                            placement agent as follows:

                            o       A  stock   retainer   of  100,000   warrants
                                    exercisable   at  $0.01  per  share  payable
                                    promptly  upon  execution  of the  placement
                                    agent letter agreement;

                            o       A cash  placement  fee of eight percent (8%)
                                    on  any  gross  proceeds   received  by  the
                                    Company   in   connection    the   sale   of
                                    securities; and

                            o       On each closing  date on which  proceeds are
                                    paid to the Company,  a warrants to purchase
                                    ten   percent   (10%)  of  the   amount   of
                                    securities  issued to the  purchasers  (with
                                    anti-dilution    protection,    a   cashless
                                    exercise  provision and demand and piggyback
                                    registration rights).

      Section 2.1(s)        Environmental  Compliance.  The disclosure  provided
                            in  Section  2.1(n)  of this  Disclosure  Letter  is
                            incorporated herein by reference.

      Section               2.1(t)   Books  and   Record   Internal   Accounting
                            Controls. The Company is a development stage company
                            and does not have a system of internal controls. The
                            Company  does,  however,   have  one  administrative
                            employee who maintains  the Company's  books and has
                            recently hired someone who formerly  worked with the
                            Company's outside auditors to assist with accounting
                            and review of the books.  As the Company  grows,  it
                            intends to implement further internal controls.

      Section 2.1(u)        Material Agreements.

                            o       The  Company   executed  a  placement  agent
                                    letter agreement with H.C. Wainwright & Co.,
                                    Inc. on July 25, 2002. The  compensation  to
                                    be paid to H.C. Wainwright & Co. is outlined
                                    under  Section  2.1(p)  of  this  Disclosure
                                    Letter and incorporated herein by reference.

                            o       Mr.  Thomas R.  Pascoe  replaced  Mr.  Barry
                                    Alter as the  Company's  President,  CEO and
                                    Treasurer   on  September   25,   2002.   In
                                    connection  with  his  hiring,   Mr.  Pascoe
                                    entered into an  employment  agreement  with
                                    the  Company.  He will  receive  a salary of
                                    $135,000   initially.   Based  on  achieving
                                    milestones  involving  bringing  revenues or
                                    financing  to  the  Company,   Mr.  Pascoe's
                                    salary will increase to $175,000 and then to
                                    $250,000.  Mr.  Pascoe will also be entitled
                                    to a $250,000  bonus when HiEnergy  achieves
                                    two  consecutive  quarters of positive  cash
                                    flow.  The bonus is payable  according  to a
                                    formula out of excess cash. Mr. Pascoe and a
                                    Committee  of the Board will  propose a more
                                    comprehensive  bonus  plan to the  Board  by
                                    December 24, 2002.

<PAGE>

                           Mr. Pascoe  received  stock  options  pursuant to his
                           employment  agreement.  His  options  entitle  him to
                           purchase  common  shares  in an  amount  equal to ten
                           percent  (10%) of the  Company's  outstanding  common
                           stock  on  a  fully  diluted  basis,   based  on  the
                           Company's  equity  structure on  September  30, 2002.
                           With  respect to 75% of the  underlying  shares,  the
                           option shall vest one-twelfth  (1/12) with respect to
                           such  shares  on  each  of  the  dates  that  is  the
                           following  number of months after September 25, 2002:
                           3, 6, 9, 12, 15,  18,  21,  24, 27, 30, 33, 36.  With
                           respect to 25% of the underlying  shares,  the option
                           shall  vest  with  respect  to  such  shares,  on the
                           earlier of (a) the date when the  closing  sale price
                           of the Company's common stock has equaled or exceeded
                           $1.75  on  every  trading  day  in  a  period  of  90
                           consecutive  calendar days, (b) the date  immediately
                           preceding a sale of the  Company  (whether by merger,
                           share exchange or sale of assets) for $1.75 per share
                           of  common  stock  or more,  or (c) if the  Company's
                           common  stock  ceases to be publicly  traded,  on the
                           date following the closing of an offering at a deemed
                           price per share of common stock of $1.75 or more. The
                           exercise price to purchase an underlying  share shall
                           be fixed on the date six months after  September  25,
                           2002,  as the lesser of (a) $1.00 per  share;  or (b)
                           for any  offering  that  closes  within six months of
                           September 25, 2002 (other than the Company's offering
                           of its  Series  A  Preferred  Stock),  the  following
                           percentage  of the  price  per  unit of the  issuer's
                           equity  securities (or the price per share at which a
                           series of the issuer's preferred stock is convertible
                           into the issuer's  common  stock):  (i) for preferred
                           with  warrants,   70%,  (ii)  for  preferred  without
                           warrants,  80%, (iii) for common with warrants,  90%,
                           and (iv) for common, without warrants, 100%.

                           Mr. Alter remains a Director, and has agreed to serve
                           as a consultant  to the Company.  The Company and Mr.
                           Alter  expect  to  execute  a  consulting   agreement
                           shortly.

                           o        On September 30, 2002, the Company relocated
                                    its offices to 1601 Alton  Parkway,  Unit B,
                                    Irvine,  California  92606.  The new offices
                                    consist of approximately  6,999 square feet.
                                    The lease term is thee years,  with payments
                                    due at a monthly  lease rate of $8,000.  The
                                    facilities   are  close  to  all   necessary
                                    services,   including  laboratories  at  the
                                    University of California,  Irvine, which are
                                    currently  used  for  certain  developmental
                                    work.

      Section 2.1(v)       Transactions with Affiliates.

                           The  Company  has   approved  the   negotiation   and
                           execution of a consulting  agreement with Barry Alter
                           by an  Executive  Committee of the Board of Directors
                           established  for  that  purpose.  The  terms  of  the
                           consulting agreement have not been finalized.

      Section 2.1(x)       Government Approvals.

                           If approved by the shareholders at the annual meeting
                           on  October  10,  2002,   the  Company  will  file  a
                           Certificate  of  Incorporation   with  the  State  of
                           Delaware to form a wholly-owned  Delaware corporation
                           into which the Company  will merge to effect a change
                           in domicile from the State of Washington to the State
                           of Delaware.  The Certificate of  Incorporation  will
                           contain the same  Certificate  of  Designation as was
                           filed with the State of Washington.

<PAGE>

      Section 2.1(y)       Employees.

                           Dr. Bogdan  Maglich,  the  Company's  Chairman of the
                           Board and Chief Scientific Officer, has an employment
                           agreement  and a  stock  option  agreement  with  the
                           Company.  Both  agreements  were filed as exhibits to
                           the  Company's  annual  report on Form 10-KSB for the
                           fiscal year ended April 30, 2002.

                           Mr.  Isaac  Yeffet  has  a  consulting  agreement,  a
                           confidentiality agreement and is finalizing the terms
                           of a amended stock option agreement with the Company.
                           The  consulting  agreement was filed as an exhibit to
                           the  Company's  annual  report on Form 10-KSB for the
                           fiscal year ended April 30, 2002.

                           Ms. Michal Levy,  the Company's  Secretary and a Vice
                           President,  has an  employment  agreement and a stock
                           option agreement with the Company.

                           Mr. Tom Pascoe, the Company's President and CEO and a
                           Director of the Company,  has an employment agreement
                           and a stock option  agreement  with the  Company.  He
                           will receive a salary of $135,000 initially. Based on
                           achieving  milestones  involving bringing revenues or
                           financing to the Company,  Mr.  Pascoe's  salary will
                           increase to $175,000 and then to $250,000. Mr. Pascoe
                           will also be  entitled  to a $250,000  bonus when the
                           Company achieves two consecutive quarters of positive
                           cash  flow.  The  bonus  is  payable  according  to a
                           formula  out  of  excess  cash.   Mr.  Pascoe  and  a
                           Committee   of  the   Board   will   propose  a  more
                           comprehensive bonus plan to the Board by December 24,
                           2002. Mr. Pascoe has received stock options  pursuant
                           to his employment agreement.  His options entitle him
                           to purchase  common  shares in an amount equal to ten
                           percent  (10%) of the  Company's  outstanding  common
                           stock  on  a  fully  diluted  basis,   based  on  the
                           Company's  equity  structure on  September  30, 2002,
                           which is  anticipated to be  approximately  3,000,000
                           shares.

<PAGE>

    Section 2.1(z)(i)      Absence of Certain Developments.

                           The  Company  has  issued or  committed  to issue the
                           following securities since April 30, 2002:

                           o        On  May  14,  2002,  the  Company  issued  a
                                    warrant  to Rheal Cote to  purchase  150,000
                                    shares of common stock at an exercise  price
                                    of $1.00 and with a term of three (3) years.
                                    A copy of the  Warrant  was  filed  with the
                                    Commission  as an exhibit  to the  Company's
                                    annual  report on Form 10-KSB for the fiscal
                                    year ended April 30, 2002.

                           o        On July 11, 2002,  the Company  approved the
                                    issuance of a stock  option to Isaac  Yeffet
                                    to purchase 1,000,000 shares of common stock
                                    at $1.00 per share  subject to the terms and
                                    conditions  set  forth  in  a  Stock  Option
                                    Agreement,  a copy of which was  filed  with
                                    the   Commission   as  an   exhibit  to  the
                                    Company's  annual  report on Form 10-KSB for
                                    the fiscal year ended April 30, 2002.

                           o        In July,  2002,  the Company  issued  11,218
                                    shares  of  common  stock  to  Mr.  Harb  Al
                                    Zuhair, a director of HiEnergy Technologies,
                                    valued  at $1.00  per  share to  retire  the
                                    principal  and  interest  owing  to  Mr.  Al
                                    Zuhair on two notes  payable in the  amounts
                                    of  $5,780  and  $5,438,  respectively.  The
                                    notes are considered paid in full.

                           o        In July,  2002,  the Company  issued  11,678
                                    shares of common stock to Mr.  Richard Alden
                                    valued  at $1.00  per  share to  retire  the
                                    principal and interest owing to Mr. Alden on
                                    a note payable totaling $11,678. The note is
                                    considered paid in full. In July,  2002, the
                                    Company issued 15,000 shares of common stock
                                    to Rimar  Investments,  Inc.,  a  California
                                    corporation,  valued  at $1.00  per share to
                                    retire the principal  and interest  owing to
                                    Rimar  Investments,  Inc. on a note  payable
                                    totaling  $15,000.  The  note is  considered
                                    paid in  full.  Mr.  Alden  is one of  three
                                    shareholders    and   directors   of   Rimar
                                    Investments, Inc.

                           o        On August 11, 2002, the Company approved the
                                    issuance  of  warrants  to  purchase  up  to
                                    100,000  shares  of  common  stock  to  H.C.
                                    Wainwright  &  Co.  in  connection   with  a
                                    placement agent letter agreement.

                           o        On September 17, 2002, the Company  approved
                                    the  issuance  of  23,356  shares  of common
                                    stock to Michal  Levy,  Vice  President  and
                                    Corporate   Secretary,   pursuant   to   her
                                    employment  agreement  with the Company.  In
                                    addition, the Company approved the grant and
                                    issuance  of a stock  option to Ms.  Levy to
                                    purchase  89,410  shares of common  stock at
                                    $0.157  per share  with a term of five years
                                    also  pursuant to her  employment  agreement
                                    with the Company.  o On September  17, 2002,
                                    the Company  approved the grant and issuance
                                    of a stock option to purchase 400,000 shares
                                    of common  stock (or some  lesser  number in
                                    the  discretion  of the Company) to Primoris
                                    Group, an investor relations firm.

<PAGE>

                           o        As an  accommodation to adjust amounts owing
                                    to  QED  Law  Group,   P.L.L.C.,   effective
                                    September 25, 2002, the Company approved the
                                    grant and issuance of stock  options to Shea
                                    Wilson and Derek Woolston to purchase shares
                                    of the  Company's  common  stock.  The stock
                                    options  have a term of ten  years,  and the
                                    number of underlying  shares will not exceed
                                    100,000.

                           o        In September 2002, Mr. Pascoe received stock
                                    options    pursuant   to   his    employment
                                    agreement.   His  options   entitle  him  to
                                    purchase common shares in an amount equal to
                                    ten   percent   (10%)   of   the   Company's
                                    outstanding  common stock on a fully diluted
                                    basis,   based  on  the   Company's   equity
                                    structure  on September  30, 2002,  which is
                                    anticipated  to be  approximately  3,000,000
                                    shares.

                           o        The Company has  commenced a "best  efforts"
                                    "no minimum"  private offer (the "Offering")
                                    and sale of up to  1,500,000  shares  of its
                                    common  stock at a price of $1.35 per share.
                                    The Company will be assisted in the Offering
                                    by its financial advisor,  H.C. Wainwright &
                                    Co. H.C.  Wainwright  & Co.  will  receive a
                                    cash commission  equal to eight percent (8%)
                                    of the gross  Offering  proceeds and warrant
                                    coverage  equal to ten percent  (10%) of the
                                    gross Offering proceeds.

    Section 2.1(z)(ix)     Absence  of  Certain   Developments.  The Company has
                           purchased  equipment  in the amount of  approximately
                           $300,000 since April 30, 2002.

This letter  advises you of matters as of the Closing  Date, or as of dates more
specifically set forth herein.

Very truly yours,

HIENERGY TECHNOLOGIES, INC.

/s/ Tom Pascoe

Tom Pascoe
President and CEO

EnclosuresEXHIBIT 10.23

                              CONSULTING AGREEMENT

     This Consulting Agreement  ("Agreement") is entered into and effective this
25th day of September,  2002, by and between  HiEnergy  Technologies,  Inc. (the
"Company"),  a corporation organized and existing under the laws of the State of
Washington and located at 1601 Alton Parkway, Unit B, Irvine,  California 92606,
And Barry Alter (the "Consultant"), an individual located at 488 Melrose Avenue,
Toronto, ON M5M 2A2, CANADA.

     WHEREAS,  the Consultant has served as the President,  CEO and Treasurer of
the Company since February 2002; and

     WHEREAS,  the Company  desires to continue to benefit from the expertise of
the Consultant; and

     WHEREAS,  the Consultant  has the skills and resources  necessary to assist
the Company with raising additional funding;

NOW THEREFORE,  in  consideration of the promises and mutual covenants set forth
in this Agreement, the parties hereby agree as follows:

1. PERFORMANCE BY CONSULTANT

     The  Consultant  agrees to provide  consulting  services  (the  "Services")
specified in the Statement of Work attached hereto as Exhibit A.

2.   PAYMENT FOR SERVICES

a.   Fees.  The Company agrees to pay the Consultant for the Services based on a
     commission of $5,000 per month.

b.   Out-of-Pocket   Expenses.  The  Consultant  shall  be  reimbursed  for  all
     reasonable  out-of-pocket  expenses  directly related to performance of the
     Services.

3.   PERFORMANCE OF SERVICES

     The  Consultant  shall  perform the  Services in a  professional  manner in
accordance with accepted industry standards.  The Consultant shall determine the
manner in which the Services are to be  performed  and the specific  hours to be
worked by the Consultant. The Company will rely on the Consultant to work as
many  hours  as  may  be  reasonably   necessary  to  fulfill  the  Consultant's
obligations under this Agreement.

4. TERMINATION

a. Commencement. This Agreement shall commence on the date first set forth above
and shall  remain in effect for a period of twelve  (12)  months  (the  "Term").
Thereafter,  this Agreement shall be renewed  automatically without interruption
for another one (1) year period at the same terms,  conditions and  compensation
as set forth herein.  After the initial Term,  either party may notify the other
party,  in writing,  of its election not to renew, in which event this Agreement
will terminate ten (10) days after receipt of such notice. This Agreement may be
renewed  with  revised  terms,  conditions  and  compensation  only upon written
agreement of both parties.

<PAGE>

b. Termination. During the Term, this Agreement may be terminated as follows:

          i. By either  party,  at any time  during the term of this  Agreement,
     upon thirty (30) days written notice to the other party; or

          ii. by either party,  in the event the Company  terminates or suspends
     its business,  becomes  subject to any bankruptcy or insolvency  proceeding
     under  Federal or state  law,  or  becomes  subject to direct  control by a
     trustee or similar authority; or

          iii.  by the  Company,  if at any time after the  commencement  of the
     Services  by the  Consultant,  the  Company,  in its  reasonable  judgment,
     determines   that  such  Services  are   inadequate,   unsatisfactory,   or
     substantially   nonconforming  to  the   specifications   and  descriptions
     contained  herein  and the  problem  is not  remedied  within  twenty  (20)
     business days of the Consultant's  receipt of written notice describing the
     problem; or

          iv.  by the  Company,  if at any time  after the  commencement  of the
     Services  by the  Consultant,  the  Company,  in its  reasonable  judgment,
     determines  that the Consultant has committed a "for Cause"  violation.  In
     such an  instance,  the  Company  shall  have the right to  terminate  this
     Agreement  immediately  and have no further duty to fulfill its obligations
     under this  Agreement.  "For  Cause" is defined  as the  commission  of any
     grossly negligent or reckless act in connection with the performance of the
     Services or the commission of any crime by the Consultant.

In the event that any of the above  events  occurs to a party,  that party shall
immediately  notify the other party in writing of its occurrence,  which written
notice shall be effective upon mailing by first class mail,  FedEx or other such
delivery  services at the respective  addresses  provided by the parties in this
Agreement.

5. SUPPORT SERVICES

     The Company  will  provide  support  services,  including  office space and
secretarial services, for the benefit of the Consultant.

6. CONFIDENTIAL INFORMATION

a.  Non-Disclosure.  Each party  agrees  not to use,  disclose,  sell,  license,
publish,  reproduce or otherwise make available the Confidential  Information of
the other party except and only to the extent  necessary  to perform  under this
Agreement.   Each  party  agrees  to  secure  and  protect  the  other   party's
Confidential  Information  in a manner  consistent  with the  maintenance of the
other party's confidential and proprietary rights in the information and to take
appropriate action by instruction or agreement with its employees,
consultants  or other  agents  who are  permitted  access to the  other  party's
Confidential Information to satisfy its obligations under this Section.

b.  Definition.  "Confidential  Information"  means a party's  information,  not
generally  known  by  non-party  personnel,  used  by the  party  and  which  is
proprietary  to the party or the disclosure of which would be detrimental to the
party.  Confidential  Information includes, but is not limited to, the following
types of  information  (whether  or not  reduced  to writing  or  designated  as
confidential):

<PAGE>

          i. work product resulting from or related to Services  performed under
     this Agreement;

          ii. a party's computer software, including documentation;

          iii. a party's  internal  personnel,  financial,  marketing  and other
     business information and manner and method of conducting business;

          iv. a  party's  strategic,  operations  and other  business  plans and
     forecasts;

          v.  confidential  information  provided  by  or  regarding  a  party's
     employees, customers, vendors and other contractors; and

          vi. the existence of a contractual relationship between the parties.

7. INDEMNIFICATION

     The  Consultant  agrees to  indemnify  and shall hold  harmless  (including
payment of reasonable  attorneys' fees) the Company,  its corporate  affiliates,
and any  employee or agent  thereof  (each of the  foregoing  being  hereinafter
referred to individually as "Indemnified  Party") against all liability to third
parties (other than liability solely the fault of the Indemnified Party) arising
from or in connection with the Consultant's breach of his obligations under this
Agreement.  The Consultant's  obligation to indemnify any Indemnified Party will
survive the  expiration or termination of this Agreement by either party for any
reason.  The Company  shall  conduct the defense of any such third party  action
arising as described herein unless the Consultant and the Company shall mutually
agree that the Consultant will conduct the defense.

8. LIMITATION OF LIABILITY

     In no event shall  either of the parties  hereto be liable to the other for
the payment of any consequential,  indirect, or special damages,  including lost
profits. The provisions of this Section,  however, shall not apply in any way to
the Consultant's obligations to indemnify any Indemnified Party.

9. INJUNCTIVE RELIEF

     It is hereby  understood  and agreed that  damages  shall be an  inadequate
remedy in the event of a breach by the Consultant of this Agreement and that any
such breach by Consultant  will cause the Company great and  irreparable  injury
and  damage.  Accordingly,  the  Consultant  agrees  that the  Company  shall be
entitled,  without waiving any additional rights or remedies otherwise available
to the  Company  at law or in  equity or by  statute,  to  injunctive  and other
equitable  relief in the event of a breach or intended or  threatened  breach by
the Consultant.

10. OTHER PROVISIONS

a. Status as  Independent  Contractor.  The  Consultant  and the Company  hereby
acknowledge that the Consultant is an independent contractor. In his capacity as
a  consultant,  the  Consultant  agrees not to hold himself out as, nor take any
action from which third parties might reasonably infer that the Consultant is an
employee,  partner  or  agent  of,  or a joint  venturer  with the  Company.  In
addition,  the  Consultant  shall take no action which,  to the knowledge of the
Consultant,  binds,  or  purports  to  bind,  the  Company  to any  contract  or
agreement.

<PAGE>

b.  Applicable  Law and Forum.  This  Agreement  shall be construed and enforced
according  to the laws of the State of  California.  All legal  actions  arising
under this  Agreement  shall be instituted  in, and both the  Consultant and the
Company consent to jurisdiction in the County of Orange, State of California.

c. Assignment.  Neither party hereto may assign any of its rights or obligations
hereunder  without the prior written consent of the other party.  The Consultant
consents to the Company's assignment of its rights and obligations  hereunder in
connection with a business combination transaction.

d. Notices.  Any notice or other communication  required or permitted under this
Agreement  shall be given in writing and  delivered by hand or by  registered or
certified mail, postage prepaid and return receipt  requested,  to the following
persons (or their successors pursuant to due notice):

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

     If for the Consultant:     Barry Alter
                                488 Melrose Avenue
                                Toronto, ON M5M 2A2
                                CANADA

Such  address  may be  changed  from time to time by either  party by  providing
written notice to the other in the manner set forth above.

e.  Waiver.  The  failure  of either  party to  enforce  any  provision  of this
Agreement shall not be construed as a waiver or limitation of that party's right
to  subsequently  enforce and compel strict  compliance  with every provision of
this Agreement.

f. Entire Agreement. This Agreement, including Exhibit A, constitutes the entire
agreement between the Consultant and the Company.

g. Headings.  The section headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or  interpretation  of
this Agreement.

h.  Amendments.  This  Agreement  may be modified or amended if the amendment is
made in writing and is signed by both parties.

i.  Severability.  If one or more  provisions  of this  Agreement are held to be
invalid or  unenforceable  under  applicable  law,  such  provision(s)  shall be
excluded  from  this  Agreement  and  the  balance  of the  Agreement  shall  be
interpreted  as if such  provision(s)  were excluded and shall be enforceable in
accordance with its terms.

<PAGE>

j.  Counterparts  and  Facsimile  Signature.  This  Agreement  may be  signed in
counterparts,  all of  which  when  taken  together  shall  constitute  a single
executed  document.  Signatures  transmitted by facsimile  shall be deemed valid
execution of this Agreement binding on the parties.

k. Agreement,  Read,  Understood and Fair. The Consultant has carefully read and
considered  all  provisions  of  this  Agreement  and  agrees  that  all  of the
transactions  set forth are fair and reasonable and are reasonably  required for
the protection of the interests of the Company.

<PAGE>

     IN WITNESS WHEREOF, and in acknowledgment that the parties hereto have read
and understood each and every provision  hereof,  the parties have executed this
Agreement on the date first set forth above.

COMPANY:

HIENERGY  TECHNOLOGIES,  INC.

By:    /s/  Tom  Pascoe
    ----------------------------
       Tom  Pascoe
       Its:  President  and  CEO

CONSULTANT:

   /s/  Barry  Alter
--------------------------------
   Barry  Alter

<PAGE>

                                   APPENDIX A

                                Statement of Work

The Consultant shall perform the following services for the Company:

1.

2.

3.

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