Document:

[HALFMOON BAY LOGO OMITTED]
                                                   HALFMOON BAY ENTERPRISES INC.
                                             Suite 10.3 West Wing, Rohas Perkasa
                                                                   9 Jalan Perak
                                                              Kuala Lumpur 50450
                                                       Telephone: +603 2161 1552
                                                             Fax: +603 2163 3552

                                Letter of Intent

19th February 2008

Board of Directors
Electronic Sensor Technology
1077 Business Center Circle
Newbury Park, CA 91320

Dear Sirs:

This letter of intent reflects our understanding of the basic terms related to
the investment by Halfmoon Bay Enterprises Ltd(the "Investor") of Trident
Chambers, PO Box 146, Road Town Tortola, BVI into Electronic Sensor Technology,
Inc. (the "Company").

Investor agrees to invest the total sum of $5.5 million. Of that amount $3.5
million will be in the form of common equity. The price shall be 90% of the
closing price of the stock on the day preceding the closing or $0.08, whichever
is the lesser. The balance of $2.0 million shall be in the form of a convertible
debenture with the following terms: The debenture will be repayable five (5)
years from the closing date. Interest shall be at the rate of 9% per annum
payable half-yearly. The conversion rate of the debentures into common shares
shall be at a 20% premium of the price per share of the equity portion of the
investment by the investor.

The Company will use it best efforts to file a registration statement covering
the underlying shares one year from the closing date.

The company has an understanding with its current $7 million 8% convertible
debenture holders that they will accept $3.5 million in payment for $3.5 million
principal and will convert the balance at $0.35 per share. The debenture holders
also agree to the cancellation of 50% of their approximately 12.2 million
warrants exercisable at $0.40. This will result in a complete extinguishment of
the debenture; The Company agrees to use the proceeds to extinguish the
debenture.

The parties agree that the investment is contingent upon the extinguishment of
the debenture and that the closing of the investment and extinguishment of the
debenture are to occur simultaneously.

Upon closing of the transaction, investor will own more than one-third (1/3) of
the outstanding common shares of the company. The company will use it best
efforts to nominate and elect directors as recommended by the investor
proportional to its ownership.
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This letter reflects the current understanding of the parties and is subject to
the normal closing conditions including the execution of definitive agreements
covering the transactions contemplated under this letter of intent and the
absence of any material adverse changes at the company.

The parties agree to use best efforts to close the transaction within 1 month of
the date of this agreement.

Please indicate your acceptance of this letter of intent by signing below.

Very truly yours,

/s/ Tan Sri Wan Azmi Wan Hamzah

Authorised Signatory

Halfmoon Bay Enterprises Ltd

Agreed and accepted:

/s/ Barry S. Howe 2/26/08

-------------------------
Barry S. Howe
President and CEOTHIS CONVERSION AND TERMINATION AGREEMENT (this "Agreement"), dated as of
February 26, 2008 among Electronic Sensor Technology, Inc., a Nevada corporation
(the "Company"), Midsummer Investment, Ltd. ("Midsummer") and Islandia L.P.
("Islandia") (each of Midsummer and Islandia, including its successors and
assigns, also referred to as a "Holder" and collectively the "Holders"). The
Holders are the holders of the Company's 8% Convertible Debentures due December
7, 2009 (the "Existing Debentures") issued pursuant to that certain Securities
Purchase Agreement, dated December 7, 2005, by and among the Company and the
Holders (the "Purchase Agreement"), and those certain common stock purchase
warrants issued pursuant to the Purchase Agreement (the "Existing Warrants").
Capitalized terms used herein and not otherwise defined herein that are defined
in the Securities Purchase Agreement shall have the same meaning herein as
therein defined.

                             Preliminary Statement:

     A.   The Company is seeking additional liquidity to continue its
operations.

     B.   The Company has identified an investor ("Investor") that the Company
believes is willing to invest a minimum of $5,000,000 in the Company (the "New
Financing"), (i) $3,500,000 of which would be in the form of a purchase of
common stock of the Company (the "New Shares") at a price per share (the
"Closing Share Price") equal to the lesser of (a) $0.08 per share or (b) 90% of
the closing price of the Company's common stock on the day preceding the
closing; and (b) at least $1,500,000 of which would be in the form of a
five-year convertible debenture (the "New Debenture"), principal payable at
maturity, bearing interest at the rate of 9% per annum with interest payable
semiannually, and convertible at the option of the holder thereof at a
conversion price equal to 120% of the Closing Share Price (collectively, the
"New Debenture Terms").

     C.   In order to induce Investor to purchase the New Shares at the Closing
Share Price and to purchase the New Debenture with the New Debenture Terms, the
Company has requested that the Holders convert their respective Existing
Debentures in part, cancel the non-converted balance of their respective
Existing Debentures against a cash payment and cancel a portion of their
respective Existing Warrants.

     NOW, THEREFORE, the parties to this Agreement, for adequate and sufficient
consideration, the receipt of which is hereby acknowledged, do hereby agree as
follows:

     1.   Partial Conversion and Payoff of Existing Debentures by Holders.

          (a)  Subject to the terms and conditions herein, notwithstanding
     anything to the contrary contained in the Purchase Agreement or its
     Existing Debenture, upon receipt by Midsummer of $2,250,000 in immediately
     available funds (the "Midsummer Payment"), Midsummer agrees to convert
     $2,250,000 principal amount of its Existing Debenture, together with all
     accrued and unpaid interest on its Existing Debenture, into common stock at
     a conversion price of $0.35 per share ("Midsummer Conversion Shares"), such
     shares to be delivered electronically within three Trading Days from the
     date of conversion by crediting the account of Midsummer's prime broker
     with the Depository Trust Company System pursuant to instructions provided
     by Midsummer.
<PAGE>
          (b)  Subject to the terms and conditions herein, notwithstanding
     anything to the contrary contained in the Purchase Agreement or its
     Existing Debenture, upon receipt by Islandia of $1,250,000 in immediately
     available funds (the "Islandia Payment"), Islandia agrees to convert
     $1,250,000 principal amount of its Existing Debenture, together with all
     accrued and unpaid interest on its Existing Debenture, into common stock at
     a conversion price of $0.35 per share ("Islandia Conversion Shares"), such
     shares to be delivered electronically within three Trading Days from the
     date of conversion by crediting the account of Islandia's prime broker with
     the Depository Trust Company System pursuant to instructions provided by
     Islandia.

          (c)  The Company hereby agrees to use the proceeds from the New
     Financing to make the Midsummer Payment and Islandia Payment prior to using
     the proceeds for any other purpose. Such payments shall be made within one
     business day of the closing of the New Financing.

     2.   Cancellation of Existing Debentures and a Portion of the Existing
Warrants.

          (a)  Subject to the terms and conditions herein, notwithstanding
     anything to the contrary contained in the Purchase Agreement or its
     Existing Debenture, upon receipt by Midsummer of the Midsummer Payment and
     the Midsummer Conversion Shares: (i) interest shall cease accruing on its
     Existing Debenture and Midsummer shall immediately tender to the Company
     for cancellation its Existing Debenture and (ii) 50% of Warrant Shares
     underlying the Existing Warrants shall be cancelled. Following such
     cancellation, the number of Warrant Shares underlying Midsummer's Existing
     Warrant shall be 3,899,030 shares. Such non-cancelled Existing Warrant
     shall continue in full force and effect in accordance with the terms
     thereof.

          (b)  Subject to the terms and conditions herein, notwithstanding
     anything to the contrary contained in the Purchase Agreement or its
     Existing Debenture, upon receipt by Islandia of the Islandia Payment and
     the Islandia Conversion Shares: (i) interest shall cease accruing on its
     Existing Debenture and Islandia shall immediately tender to the Company for
     cancellation its Existing Debenture and (ii) 50% of Warrant Shares
     underlying the Existing Warrants shall be cancelled. Following such
     cancellation, the number of Warrant Shares underlying Islandia's Existing
     Warrant shall be 2,166,128 shares. Such non-cancelled Existing Warrant
     shall continue in full force and effect in accordance with the terms
     thereof.

     3.   Waiver and Termination of Certain Provisions of the Purchase
Agreement. Notwithstanding anything to the contrary contained in the Purchase
Agreement, until March 31, 2008 (the "Drop Dead Date"), each of Midsummer and
Islandia hereby waives any and all rights it may have to participate in,
prohibit, restrict or consent to the sale and purchase of the New Shares at the
Closing Share Price and the issuance of the New Debenture with the New Debenture
Terms. Without further action on the part of the Company, Midsummer and/or
Islandia, upon receipt on or before the Drop Dead Date by (i) Midsummer of the
Midsummer Payment and the Midsummer Conversion Shares and (ii) Islandia of the
Islandia Payment and the Islandia Conversion Shares, Sections 4.4, 4.9, 4.13,
4.14, 4.16 and 4.17 of the Purchase Agreement shall terminate and shall have no
further force or effect.

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<PAGE>
     4.   Waiver of Section 5(b) of the Debentures. In connection with the
proposed equity transaction described in paragraph B of the Preliminary
Statement, Investor may make a non-refundable good faith deposit. Investor shall
not be entitled to receive common stock of the Company by virtue of such
deposit. The parties hereto agree that such deposit shall not be deemed to be a
"Subsequent Equity Sale" or a "Dilutive Issuance" under Section 5 of the
Debenture Agreement.

     5.   Registration Rights Agreement. The Company hereby agrees that the
Midsummer Conversion Shares and the Islandia Conversion Shares shall remain
subject to the Registration Rights Agreement. Midsummer agrees that, effective
upon its receipt of the Midsummer Payment and the Midsummer Conversion Shares,
any provision of the Registration Rights Agreement that prohibits, restricts or
limits (or that might be deemed to prohibit, restrict or limit) the Company from
granting registration rights to Investor on a pari passu basis shall be deemed
amended without further action, it being the intent and understanding of the
Company and Midsummer that registration rights, if any, granted to Investor
shall be granted on a pari passu basis with those granted to Midsummer and
Islandia. Islandia agrees that, effective upon its receipt of the Islandia
Payment and the Islandia Conversion Shares, any provision of the Registration
Rights Agreement that prohibits, restricts or limits (or that might be deemed to
prohibit, restrict or limit) the Company from granting registration rights to
Investor on a pari passu basis shall be deemed amended without further action,
it being the intent and understanding of the Company and Islandia that
registration rights, if any, granted to Investor shall be granted on a pari
passu basis with those granted to Islandia and Midsummer.

     6.   Representations and Warranties of the Company. The Company hereby
makes to each Holder the following representations and warranties:

          i.   Authorization; Enforcement. The Company has the requisite
     corporate power and authority to enter into and to consummate the
     transactions contemplated by this Agreement and otherwise to carry out its
     obligations hereunder. The execution and delivery of this Agreement by the
     Company and the consummation by it of the transactions contemplated hereby
     have been duly authorized by all necessary action on the part of the
     Company and no further action is required by the Company, its board of
     directors or its stockholders in connection therewith. This Agreement has
     been duly executed by the Company and, when delivered in accordance with
     the terms hereof will constitute the valid and binding obligation of the
     Company enforceable against the Company in accordance with its terms except
     (i) as limited by general equitable principles and applicable bankruptcy,
     insolvency, reorganization, moratorium and other laws of general
     application affecting enforcement of creditors' rights generally, (ii) as
     limited by laws relating to the availability of specific performance,
     injunctive relief or other equitable remedies and (iii) insofar as
     indemnification and contribution provisions may be limited by applicable
     law.

          ii.  No Conflicts. The execution, delivery and performance of this
     Agreement by the Company and the consummation by the Company of the
     transactions contemplated hereby do not and will not: (i) conflict with or
     violate any provision of the Company's Subsidiary's certificate or articles
     of incorporation, bylaws or other organizational or charter documents, or
     (ii) conflict with, or constitute a default (or an event that with

                                        3
<PAGE>
     notice or lapse of time or both would become a default) under, result in
     the creation of any Lien upon any of the properties or assets of the
     Company or any Subsidiary, or give to others any rights of termination,
     amendment, acceleration or cancellation (with or without notice, lapse of
     time or both) of, any material agreement, credit facility, debt or other
     material instrument (evidencing a Company or Subsidiary debt or otherwise)
     or other material understanding to which the Company or any Subsidiary is a
     party or by which any property or asset of the Company or any Subsidiary is
     bound or affected, or (iii) conflict with or result in a violation of any
     law, rule, regulation, order, judgment, injunction, decree or other
     restriction of any court or governmental authority to which the Company or
     a Subsidiary is subject (including federal and state securities laws and
     regulations), or by which any property or asset of the Company or a
     Subsidiary is bound or affected; except in the case of each of clauses (ii)
     and (iii), such as could not have or reasonably be expected to result in a
     Material Adverse Effect.

     7.   Representations and Warranties of the Holders. Each Holder hereby, for
itself and for no other Holder, represents and warrants as of the date hereof to
the Company that the execution, delivery and performance by such Holder of the
transactions contemplated by this Agreement have been duly authorized by all
necessary corporate or similar action on the part of such Holder. This Agreement
has been duly executed by such Holder, and when delivered by such Holder in
accordance with the terms hereof, will constitute the valid and legally binding
obligation of such Holder, enforceable against it in accordance with its terms,
except (i) as limited by general equitable principles and applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other
equitable remedies and (iii) insofar as indemnification and contribution
provisions may be limited by applicable law.

     8.   Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, unless the same shall be in writing and signed by the Company and each
Holder.

     9.   Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be delivered as set forth
in the Purchase Agreement.

     10.  Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and permitted assigns of each of the parties
and shall inure to the benefit of each Holder. The Company may not assign
(except by merger) its rights or obligations hereunder without the prior written
consent of all of the Holders of the then-outstanding Securities. Each Holder
may assign their respective rights hereunder in the manner and to the Persons as
permitted under the applicable Purchase Agreement.

     11.  Execution and Counterparts. This Agreement may be executed in two or
more counterparts, all of which when taken together shall be considered one and
the same agreement and shall become effective when counterparts have been signed
by each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission or by e-mail delivery of a ".pdf"

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<PAGE>
format data file, such signature shall create a valid and binding  obligation of
the party  executing  (or on whose behalf such  signature is executed)  with the
same  force and effect as if such  facsimile  or ".pdf"  signature  page were an
original thereof.

     12.  Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be determined in
accordance with the provisions of the Purchase Agreements.

     13.  Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their commercially reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.

     14.  Headings. The headings in this Agreement are for convenience only, do
not constitute a part of the Agreement and shall not be deemed to limit or
affect any of the provisions hereof.

     15.  Independent Nature of Holders' Obligations and Rights. The obligations
of each Holder hereunder are several and not joint with the obligations of any
other Holders hereunder, and no Holder shall be responsible in any way for the
performance of the obligations of any other Holder hereunder. Nothing contained
herein or in any other agreement or document delivered at any closing, and no
action taken by any Holder pursuant hereto, shall be deemed to constitute the
Holders as a partnership, an association, a joint venture or any other kind of
entity, or create a presumption that the Holders are in any way acting in
concert with respect to such obligations or the transactions contemplated by
this Agreement. Each Holder shall be entitled to protect and enforce its rights,
including without limitation the rights arising out of this Agreement, and it
shall not be necessary for any other Holder to be joined as an additional party
in any proceeding for such purpose.

     16.  Termination of this Agreement. This Agreement, and all of the
agreements, consents, waivers and amendments of the parties herein shall be null
and void in the event the New Financing is not consummated, and the Midsummer
Payment and Islandia Payment are not made, on or before March 31, 2008.

     17.  Filing of 8-K. Within 1 Trading Day of the date hereof, the Company
shall issue a Current Report on Form 8-K, reasonably acceptable to each Holder
disclosing the material terms of the transactions contemplated hereby, which
shall include this Agreement as an attachment thereto.

                            [SIGNATURE PAGE FOLLOWS]

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<PAGE>
     IN WITNESS WHEREOF, the parties hereto have caused this Conversion and
Termination Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.

                                              ELECTRONIC SENSOR TECHNOLOGY, INC.

                                              By: /s/ Barry S. Howe
                                                  ------------------------------
                                              Name:  Barry S. Howe
                                              Title: President and CEO  2/26/08

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                       SIGNATURE PAGE FOR HOLDER FOLLOWS]

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<PAGE>
        [HOLDER SIGNATURE PAGES TO CONVERSION AND TERMINATION AGREEMENT]

     IN WITNESS WHEREOF, the undersigned have caused this Conversion and
Termination Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.

Name of Holder:  MIDSUMMER INVESTMENT LTD.

Signature of Authorized Signatory of Holder: /s/ Michel A. Amsalem

Name of Authorized Signatory: Michel A. Amsalem

Title of Authorized Signatory: Director

                                        7
<PAGE>
        [HOLDER SIGNATURE PAGES TO CONVERSION AND TERMINATION AGREEMENT]

     IN WITNESS WHEREOF, the undersigned have caused this Conversion and
Termination Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.

Name of Holder:  ISLANDIA, LP

Signature of Authorized Signatory of Holder: /s/ Edgar R. Berner

Name of Authorized Signatory: Edgar R. Berner

Title of Authorized Signatory: VP of John Lang, Inc., G.P.

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