Document:

EXHIBIT 10.120

                            Equipment Sales Agreement

Contract No. 19107-1 This Sales Agreement ("Agreement") is entered into by and
between HiEnergy Technologies, Inc. ("Company") and Southeastern Pennsylvania
Transportation Authority ("Customer").

1. Sale of  Equipment.  Customer  hereby  agrees to  purchase  from  Company the
equipment (the "Equipment") as set forth on Schedule A. Reference hereinafter to
"Equipment"   shall  be  deemed  to  include  Software  except  where  otherwise
indicated,  and reference  hereinafter  to  "Equipment"  or "Software"  shall be
deemed to include any Services to be performed.

2. Price. The price and time of payment for the Equipment (the "Contract Price")
is as follows:

               Price               Due Date

            $603,104.96    Payment due net 30 days
                           upon receipt of shipment

The Contract Price includes all the items referred to in Schedule A. Any amounts
payable by Customer  hereunder  which remain unpaid after the delivery  shall be
subject  to a late  charge  equal to 1% per month  from the due date  until such
amount is paid.

Prices for  Equipment  specified  herein are  exclusive  of all city,  state and
federal taxes,  including,  without  limitation,  taxes on  manufacture,  sales,
receipts,  gross income,  occupation,  use and similar taxes. Customer agrees to
pay such taxes  directly or to  reimburse  Company  for all such taxes,  whether
imposed on Customer required to be collected by Company, or imposed on Equipment
or on Customer in connection with this sale.  Wherever  applicable,  such tax or
taxes shall be invoiced separately. Customer agrees to pay all personal property
taxes that may be levied against Equipment after the date of delivery.

3. Delivery.  Company shall use its reasonable  efforts to deliver the Equipment
to Customer between ninety (90) and one hundered and twenty (120) days following
order.  Delivery shall be made to a domestic location designated by Customer and
all  transportation,  shipping  and handling  charges  shall be paid by Company.
Times quoted for delivery  and/or  readiness for operation  represent  Company's
best  estimates  and  Company  shall in good faith  endeavor to meet such stated
times,  but  reserves  the right to vary the times of shipment  and delivery and
shall not be liable for any loss, injury, damage or other expense which Customer
or any other  party may  suffer by  reason of such  variation.  Delivery  may be
subject to issuance of required  licensing  and  approvals  by local,  state and
federal regulatory bodies.

4.  Payment  Terms.  Unless  other  terms of payment  are agreed to in  writing,
payment  of the  Contract  Price,  including  without  limitation,  payment  for
Services performed under the Agreement,  shall be made to HiEnergy Technologies,
Inc.  Any down  payment  shall be  non-refundable  except  in the case  that the
Company  does not  accept  the Order,  in which  case the down  payment  will be
refunded promptly. In the event Customer refuses or otherwise declines to accept
delivery of Equipment  hereunder,  Company may, as Customer's  agent and without
liability to Company, store or arrange for storage of such declined Equipment at
Customer's  expense,  and such Equipment  shall be deemed to be delivered at the
time it is either put into  storage or turned over to the carrier for  shipment,
whichever  occurs first.  Any amounts  which become due from Customer  under the
Agreement  may not be set off  against any other  amounts  which may be due from
Company to Customer under the Agreement or otherwise.  Unless otherwise  stated,
all prices are in U.S. dollars.

5.  Acceptance.  The  criterion for  acceptance  of Equipment is the  successful
operation  of  the  Equipment  using  Company's  standard  test  procedures  and
diagnostic test programs  applicable to the Equipment  involved.  All acceptance
tests will be conducted prior to delivery and will be run by Company  personnel.
If Customer or its  representative  fails to witness such tests,  performance of
the tests will not be delayed.  Acceptance will be deemed to have been made upon
successful completion of the acceptance tests as evidenced by issuance by a Test
Certificate.

6.  Title and  License.  Title and risk of loss to the  Equipment  shall pass to
Customer at the time the  Equipment is  delivered  to Customer.  All Software is
made  available in accordance  with these Terms and Conditions and the terms and
conditions of the Company's  Individual  End User  Software  License  Agreement,
which is  attached  hereto,  incorporated  herein and made a part hereof by this
reference.

7. Variations and Extras.  The Equipment and Services  provided by Company shall
be those  specified in the  Agreement as accepted in writing by Company.  Should
Company agree to any variations  from or extras beyond the  requirements  of the
accepted order,  which involve extra cost to Company,  or from or should Company
incur extra cost owing to delays  caused by Customer's  instructions,  incorrect
instructions,  lack of instructions,  or other matters within the responsibility
of Customer,  or Customer's  agents or  subcontractors,  such extra costs may be
charged by Company and shall be paid for by Customer and the scheduled  delivery
and/or completion dates shall be appropriately extended.

8. Specifications and Performance.  The Equipment supplied will be substantially
in  accordance  with  the  specifications  provided  to  Customer,   subject  to
reasonable  variations plus or minus.  Such reasonable  variations  shall not be
made the basis of any claim against Company or its suppliers.  Company shall not
be  responsible  for  performance  figures  given in any  source  other than the
specifications. Company reserves the right to supply Equipment in fulfillment of
its obligations  hereunder,  the design and/or  constructions  of which has been
modified,  provided  that  the  general  performance  of  the  Equipment  is not
adversely  affected.  Unless otherwise stated, the Equipment will be packaged in
accordance with normal air freight packing standards.

9.  Operation of the Equipment.  Customer shall be responsible  for operation of
the Equipment.  Customer  shall operate the Equipment in a reasonably  competent
manner and in compliance with the operations manual for the Equipment.  Customer
shall comply with all applicable rules, laws, and regulations in connection with
operation of the Equipment.

10. Infringement Indemnity. Company will defend and indemnify Customer against a
claim that the Equipment infringes a United States copyright or patent, provided
that:  (a) Customer  notifies  Company in writing within thrity (30) days of the
claim;  (b) Company has sole  control of the defense and all related  settlement
negotiations; and (c) Customer provides Company with the assistance, information
and authority necessary to perform Company's  obligations under this Section 10.
Reasonable  out-of-pocket  expenses  incurred  by  Customer  in  providing  such
assistance  will be reimbursed  by Company.  Company shall have no liability for
any claim of infringement based on use of Equipment altered by Customer.  In the
event the Equipment is held or is believed by Company to infringe, Company shall
have  the  option,   at  its  expense,   to  (a)  modify  the  Equipment  to  be
noninfringing;  (b)  obtain  for  Customer  a  license  to  continue  using  the
Equipment; or (c) refund the fees paid for the Equipment. This Section 10 states
Company's  entire liability and Customer's  exclusive  remedy for  infringement,
misappropriation or related claims.

<PAGE>

11. Warranty and Disclaimer

      (a) The warranty holds that the Equipment sold by the Company will be free
from  defects in  workmanship  and  materials  and will  conform  to  applicable
specifications  for a period of twelve  (12) months from the date of shipment or
1,200 hours of Neutron Generator operation, whichever comes first (the "Warranty
period"),  provided the Customer  gives written  notice to Company of any defect
within said Warranty period or within fifteen (15) days thereafter. The Warranty
on the  Neutron  Generator  is  pro-rated  (that is, for  example,  if a Neutron
Generator became defective after four months,  the Customer would pay to Company
four-twelfths  of the price of a replacement of the Neutron  Generator).  Credit
toward  refurbishment  or  replacement  will be given to Customer,  at Company's
option,  and will be  prorated  from the date of  original  shipment  or for the
Warranty  period,  as specified.  This Warranty is valid only if the accelerator
head is operated with non-defective electronic and control equipment supplied by
and in accordance with, written instructions by Company.

      (b) As a first resort,  Field Service  Engineering  (FSE) personnel and/or
subcontractors  will provide on-site  warranty  service and  maintenance  and/or
parts replacment as to the defective  Equipment at Customer's  location.  In the
event  FSE or the  subcontractors  cannot  perform  the  necessary  diagnostics,
maintenance and/or repair at Customer's facilities, Customer will be required to
return for repair  such  defective  Equipment  to  Company's  designated  repair
facility at no cost within  thirty (30) days after said notice.  Company will be
responsible for any transportation,  insurance and all other charges to and from
Company's  designated repair facility and will promptly  reimburse  Customer any
shipping and handling  charges  incurred by Company or its  representatives.  So
long as Company is so notified of any such defect in  workmanship  or  materials
within  the  Warranty  period,  Company  will  correct  the defect by making any
necessary  repairs  or,  at its  option,  by  providing  replacements  for  such
defective Equipment,  parts, or components thereof ("Parts").  It is recommended
for  efficiency  and  timeliness   that   replacement  be  made  by  FSE  and/or
subcontractors from a stock of Parts separately purchased by Company.  Defective
Parts,  if  replaced,  will become the property of Company.  All other  charges,
including  without   limitation,   FSE  travel,   on-site  labor,   removal  and
reinstallation fees, shall be assumed by Company during the Warranty period.

      (c) Customer will pay Company the cost of all charges,  to include but not
limited to a  reasonable  charge for  examination  and rework,  if the  returned
Equipment  proves  not  to be  defective  or if at  Customer's  request  Company
performs work upon returned Equipment exceeding Company's obligations under this
Warranty.  (d)  This  Warranty  extends  only to the  original  Customer  of the
Equipment from Company.  This Warranty does not apply to, and Company assumes no
responsibility  for,  damage  or  defects  due to any  cause  other  than  those
specified above,  including without  limitation,  damage or defects arising as a
result of misuse,  improper installation by non-authorized  Company personnel or
non-authorized  subcontractors,   accident,  neglect,  modification,  repair  by
Customer, subjection to adverse conditions, demands exceeding performance levels
required  by   applicable   specifications   or  Company   furnished   operating
instructions,  failure to carry out  recommended  servicing,  or from the use of
components or replacement parts other than those supplied or approved in writing
by Company.

      (e) It shall be  incumbent  upon the  Customer to show  evidence of faulty
parts or workmanship when operated or tested in any other manner.  The liability
of Company  arising from the supply or use of the  Equipment,  whether it arises
under Warranty or otherwise,  shall be limited  solely to correcting  defects or
providing  replacement  parts to the  Customer as set forth  herein above and is
limited to the period of the Warranty.

IN NO EVENT SHALL TOTAL  LIABILITY  EXCEED THE TOTAL CONTRACT PRICE. IN NO EVENT
SHALL COMPANY BE LIABLE FOR SPECIAL,  INCIDENTAL OR CONSEQUENTIAL  DAMAGES,  NOR
SHALL IT BE LIABLE FOR ANY OTHER DAMAGES,  EXCEPT AS HEREINABOVE PROVIDED.  THIS
WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING THE
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

ANY INSTALLATION,  MAINTENANCE,  REPAIR, SERVICE, RELOCATION OR ALTERATION TO OR
OF, OR OTHER  TAMPERING  WITH,  THE  PRODUCTS  PERFORMED BY ANY PERSON OR ENTITY
OTHER THAN COMPANY  WITHOUT  COMPANY'S  PRIOR  WRITTEN  APPROVAL,  OR ANY USE OF
REPLACEMENT PARTS NOT SUPPLIED BY COMPANY, SHALL IMMEDIATELY VOID AND CANCEL ALL
WARRANTIES WITH RESPECT TO THE AFFECTED PRODUCTS. THIS WARRANTY IS EXCLUSIVE AND
IS MADE IN LIEU OF ALL OTHER WARRANTIES.  THE GOODS  SPECIFICALLY  COVERED UNDER
THIS WARRANTY ARE OF AN EXPERIMENTAL NATURE. NO WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR  PARTICULAR  PURPOSE ARE EXPRESSED OR IMPLIED.  NO  MODIFICATION  OR
ALTERATION OF THE FOREGOING WARRANTY AND LIMITATION OR REMEDIES PROVISIONS SHALL
BE VALID OR  ENFORCEABLE  UNLESS  SET  FORTH IN A  WRITTEN  AGREEMENT  SIGNED BY
COMPANY AND THE CUSTOMER.

THE  INDEMNITIES  IN SECTION 10 AND  SECTION 16 AND THE  WARRANTY  IN SECTION 11
ABOVE IS EXCLUSIVE AND IN LIEU OF ALL OTHER  INDEMNITIES OR WARRANTIES,  WHETHER
EXPRESSED OR IMPLIED,  INCLUDING THE IMPLIED WARRANTIES OF  MERCHANTABILITY  AND
FITNESS FOR A PARTICULAR PURPOSE.

12.  Nondisclosure.  By virtue of this  Agreement,  Customer  may have access to
information  that  is  confidential  to  Company  ("Confidential  Information").
Confidential  Information  shall  include,  but not be limited to, the terms and
pricing under this  Agreement,  the technical and other  specifications  for the
Equipment and all information clearly identified as confidential or proprietary,
including,  without limitation,  drawings, designs,  specifications,  manuals or
information  relating in any way to the Equipment,  howsoever issued,  including
all oral  communications  subsequently  identified  in  writing  by  Company  as
proprietary,  without the prior  written  permission  of  Company.  Confidential
Information shall not include  information that: (i) is or becomes a part of the
public  domain  through no act or omission of Customer;  (ii) was in  Customer's
lawful  possession prior to the disclosure and had not been obtained by Customer
either  directly or  indirectly  from the  disclosing  party;  (iii) is lawfully
disclosed to Customer by a third party without  restriction  on  disclosure;  or
(iv)  is   independently   developed  by  Customer.   Customer  agrees  to  hold
Confidential Information in confidence during the term of this Agreement and for
a period  of three (3)  years  after  termination  of this  Agreement.  Customer
agrees, that unless required by law, it shall not make Confidential  Information
available in any form to any third party or to use Confidential  Information for
any purpose other than the implementation of this Agreement.  Customer agrees to
take all  reasonable  steps  to  ensure  that  Confidential  Information  is not
disclosed  or  distributed  by  its  employees,  representatives  or  agents  in
violation  of the  terms of this  Agreement.  Copyright  in all  materials  made
available by Company shall remain with Company at all times.  The  provisions of
this Section 12 shall survive any termination of this Agreement.

                                       2
<PAGE>

13. Rights in Data.  Company retains full ownership of all inventions,  designs,
copyrights,  processes  and data  already  made or  evolved  by  Company  in the
preparation of or during the course of any work under the Agreement or resulting
therefrom.

14.  Limitation  of  Liability.  IN NO EVENT  SHALL  COMPANY  BE LIABLE  FOR ANY
INDIRECT, INCIDENTAL, PUNITIVE, SPECIAL OR CONSEQUENTIAL DAMAGES, OR DAMAGES FOR
LOSS OF PROFITS,  REVENUE,  OR USE  INCURRED  BY  CUSTOMER  OR ANY THIRD  PARTY,
WHETHER IN AN ACTION IN CONTRACT,  OR TORT, OR OTHERWISE  EVEN IF ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.  COMPANY'S  LIABILITY FOR DAMAGES ARISING OUT OF OR
IN CONNECTION WITH THIS AGREEMENT SHALL IN NO EVENT EXCEED THE PURCHASE PRICE OF
THE DEFECTIVE  EQUIPMENT.  THE PROVISIONS OF THIS  AGREEMENT  ALLOCATE THE RISKS
BETWEEN COMPANY AND CUSTOMER. COMPANY'S PRICING REFLECTS THIS ALLOCATION OF RISK
AND BUT FOR THIS ALLOCATION AND LIMITATION OF LIABILITY,  COMPANY WOULD NOT HAVE
ENTERED INTO THIS AGREEMENT.

15.  Indemnity.  Customer  shall  indemnify and hold  harmless  Company from and
against any and all liability,  damages,  costs, losses and expenses arising out
of or in connection with any personal injury,  including death, or any damage to
property or business  which may be  suffered  by use,  operation,  or failure to
operate of the Equipment  furnished  hereunder  except for the negligent acts of
Company.

16. Force Majeure.  If Company's  ability to perform its  obligations  under the
Agreement  is limited,  delayed or  prevented  in whole or in part by any reason
whatsoever  not  reasonably  within the  control of Company,  or its  suppliers,
including without limitation,  act of God, war, invasion,  act of foreign enemy,
hostilities,  civil war,  rebellion,  civil strife,  strikes  and/or  industrial
dispute or by any law,  rule,  regulation,  order or other  action by any public
authority,  transportation  delays  or the  refusal  of any  necessary  license,
Company shall be excused,  discharged, and released of performance to the extent
such performance is so limited,  delayed or prevented  without  liability of any
kind.

17. Miscellaneous.

      (a) The section headings  contained herein are for reference purposes only
and shall not affect in any way the meaning and interpretation of the Agreement.

      (b) Any  provision  or  provisions  of the  Agreement  prohibited  by,  or
unlawful  under,  any  applicable  law of any  jurisdiction  shall,  as to  such
jurisdiction,  be  made  invalid  or  unenforceable,  without  invalidating  the
remaining  provisions  of the  Agreement,  provided,  however,  that  where  the
provisions of any such  applicable law may be waived,  they are hereby waived by
Customer to the full  extent  permitted  by law,  to the end that the  Agreement
shall be deemed to be valid,  binding,  and  enforceable in accordance  with its
terms.

      (c) This  Agreement,  and all  matters  arising out of or relating to this
Agreement,  shall be governed by the laws of the State of California  (exclusive
of conflict of laws  principles),  and shall be deemed to be executed in Irvine,
California.

      (d) Any legal action or  proceeding  relating to this  Agreement  shall be
instituted solely in a state or federal court in Irvine, California. Company and
Customer agree to submit to the  jurisdiction of, and agree that venue is proper
in, these courts in any such legal action or proceeding.

      (e) All notices, including notices of address change, requests, demands or
other  communications  which are required or may be given hereunder  pursuant to
the terms of the Agreement  shall be in writing and shall be deemed to have been
duly given if  delivered by hand or first class  registered  mail to the address
specified  by the  parties in the  Agreement,  or by fax to the  address  listed
below.

      (f) If the  Agreement  is  terminated  or  cancelled,  then,  at Company's
option,  and in addition to all other remedies available at law or in equity: i.
Customer  shall accept  delivery of and make payment for all Equipment  which is
either finished or ready for shipping;  ii. Customer shall reimburse Company for
all costs of all  material,  all other  costs,  including  but not  limited  to,
general,  selling and  administrative  expenses,  and a reasonable profit on the
terminated  portion  of the  Agreement.  Filing  of a  petition  in  bankruptcy,
commencement of any insolvency proceeding, or execution of an assignment for the
benefit of Creditors,  shall, at the option of Company, be deemed a cancellation
by Customer.

      (g) To  secure  payment  and  performance  of all  Customer's  obligations
hereunder,  Company  hereby  retains title to Equipment and a security  interest
therein  until  payment  in  full  and  performance  by  Customer  of  all  said
obligations.  When requested by Company,  Customer shall duly  acknowledge  this
Agreement, and execute,  acknowledge and deliver to Customer, in Company's usual
form, a supplement hereto,  security  agreement,  financing  statement and other
appropriate instruments to constitute Equipment as the unencumbered security for
the obligations of Customer  hereunder,  or to enable Company to comply with all
applicable filing or recording laws.

      (h) The waiver by either party of any default or breach of this  Agreement
shall not  constitute  a waiver of any other or  subsequent  default  or breach.
Except for actions for non-payment or breach of Company's proprietary rights, no
action,  regardless of form, arising out of or in connection with this Agreement
may be brought by either  party more than one year after the cause of action has
accrued.

      (i)  Customer  agrees to comply  fully with all  relevant  export laws and
regulations of the United States ("Export Laws") to assure that the Equipment is
not (1) exported,  directly or  indirectly,  in violation of Export Laws; or (2)
intended to be used for any purposes  prohibited  by the Export  Laws.  Customer
agrees that the Equipment will only be used or operated in the United States and
other territories approved in writing by Company.

      (j) Company is an independent contractor;  nothing in this Agreement shall
be  construed  to create a  partnership,  joint  venture or agency  relationship
between the parties.

      (k)  These  Terms  and  Conditions,  together  with  the  other  documents
constituting the Agreement as accepted in writing by HiEnergy,  shall constitute
the entire  agreement  and supersede  all prior or  contemporaneous  agreements,
understandings,  representations,  discussions,  proposals,  literature, and the
like, written or oral. No other terms or conditions, nor any addition to, waiver
or modification of the provisions of these Terms and Conditions shall be binding
unless  made in a writing  signed by an  officer of  Company.  In the event of a
conflict  between these Terms and Conditions and any other terms and conditions,
these  Terms  and  Conditions  shall  supercede  and take  precedence  over such
conflicting terms and conditions.  This Agreement may not be modified or amended
except in a writing signed by a duly authorized representative of each party; no
other act,  doc ument,  usage or custom  shall be deemed to amend or modify this
Agreement.

      (l) In any  proceeding  brought to enforce or interpret  the terms of this
Agreement, the prevailing party shall be entitled to recover its attorneys' fees
and costs incurred.

      (m) This  Agreement  shall be  construed  as to its fair  meaning  and not
strictly for or against either party.

      (n) No action,  regardless of form,  arising out of this  Agreement may be
brought by either party more than one year after the cause of action  arose,  or
in the case of non-payment, more than two years from the date of last payment.

                                       3
<PAGE>

         (o) This Agreement shall not be assigned by Customer or by operation of
law without the prior written consent of Company. The Agreement shall be binding
upon and inure to the  benefit  of the  parties,  their  legal  representatives,
successors and assigns.

         (p) This Agreement may be executed in counterparts and by fax.

Company:                                       Customer:

HIENERGY TECHNOLOGIES, INC.                    SOUTHEASTERN PENNSYLVANIA
                                               TRANSPORTATION
                                               AUTHORITY

By: /s/ Dr. Bogdan C. Maglich                  By: /s/
    ------------------------                       ------------------------
Name: Dr. Bogdan C. Maglich                    Name:
Title:  Chairman & CEO                         Title:
Address: 1601 Alton Parkway                    Address: 1234 Market St.
Unit B                                         4th floor
Irvine, CA 92606                               Philadelphia, PA 19107
Phone: 949-757-0855                            Phone:
Fax: 949-7571477                               Fax:

                                       4EXHIBIT 10.121

CONFORMED COPY

                  INTEGRATED CONCEPTS AND RESEARCH CORPORATION
                          TIME and MATERIAL SUBCONTRACT
                             AGREEMENT AVT. 05.00.0K

This Subcontract is made by and between Integrated Concepts and Research
Corporation ("ICRC"), a District of Columbia Corporation, having offices located
at 1033 North Fairfax Street, Alexandria, Virginia 22314 and HiEnergy
Technologies, Inc. ("Subcontractor), a State of Delaware Corporation, with
executive offices located at 1601-B Alton Parkway, Irvine, California 92606.
Either ICRC or subcontractor may either singularly or collectively be referred
to hereafter respectively as "Party" or "Parties".

This Subcontract is for the service(s) and/or deliverable(s) provided by
Subcontractor in support of ICRC's Prime Contract Number DAAE07-02-C-L062 (the
"Prime Contract") with the United States Army Tank - Automotive and Armaments
Command, Warren Michigan ("ICRC Customer" or "TACOM"). The services and/or
deliverables specified in Section C are being procured by ICRC on a Time and
Materials (T&M) basis as specified herein.

SECTION A - SCOPE OF AGREEMENT

A.1   CONTENTS OF SUBCONTRACT

This Subcontract consists of the following Sections:

      Section A - Scope of Agreement
      Section B - Subcontract Term, Ceiling Price, Hourly Rates and Payment
      Section C - Statement of Work
      Section D - General Terms and Conditions
      Section E - Supplemental Terms and Conditions Applicable to Services
      Section F - Prime Contract Flow Down Provisions

A.2      ORDER OF PRECEDENCE

In the event of an inconsistency between any of the provisions of this
Subcontract, the inconsistency shall be resolved by giving precedence to the
provisions of the Subcontract in the following order:

(1) Section A, Scope of Agreement and Section B, Subcontract Term, Ceiling
Price, Hourly Rates and Payment

(2) Section D, General Terms and Conditions, and
Section E, Supplemental Terms and Conditions Applicable to Services

     (3) Section C, Statement of Work

     (4) Section F, Prime Contract Flow Down Provisions

                                  Page 1 of 25
<PAGE>

A.3   ENTIRE AGREEMENT

This Subcontract in its entirety, including those documents and/or provisions
incorporated by reference, constitutes the entire contractual agreement between
the Parties hereto and supersedes all prior written or oral communications
agreements or understandings of the Parties with respect to the subject matter
of this Subcontract. All provisions on Subcontractor's forms shall be deemed
deleted. A waiver or amendment of any provision may only be made in writing,
signed by the authorized representatives of both Parties. The failure of either
Party to insist upon strict performance of any of the terms and conditions in
this Subcontract, or to exercise any rights or remedies, shall not be construed
as a waiver of its rights to assert any of the same or to rely on any such terms
or conditions at any time thereafter. The headings within this Subcontract are
for convenience only and will not affect the interpretation of this Subcontract.
Any provision or provisions of this Subcontract prohibited by, or unlawful
under, any applicable law of any jurisdiction shall, as to such jurisdiction, be
made invalid or unenforceable, without invalidating the remaining provisions of
this Subcontract.

AGREED TO BY:

Integrated Concepts & Research                     HiEnergy Technologies, Inc.
Corporation

By: /s/ James W. Lexo                              By: /s/ Dr. Bogdan C. Maglich
      --------------------------                       -------------------------
Name:    James W. Lexo                             Name:  Dr. Bogdan C. Maglich
Title:      President & CEO                        Title: Chairman & CEO

Date: 7-18-05                                     Date: 7-15-05
      --------------------------                        ------------------------

                                  Page 2 of 25
<PAGE>

SECTION B - SUBCONTRACT TERM, CEILING PRICE, HOURLY RATES AND PAYMENT

ICRC shall reimburse Subcontractor as specified in this Section for the delivery
of the services and/or deliverable(s) as detailed in Section C, Statement of
Work, subject to the terms and conditions set forth in this Subcontract.

B.1   SUBCONTRACT TERM

The term of this Subcontract shall be for the period from the June 28, 2005
through February 28, 2006 or (1) termination in accordance with the terms of
this Subcontract or (2) expiration, cancellation or termination of ICRC's Prime
Contract. Time is of the essence in performance of this Subcontract.

B.2   CEILING PRICE AND FUNDING BY COST ELEMENT.

            B.2.1 Ceiling Price. The ceiling price for this Subcontract is
$333,688.10

            B.2.2 Labor. The Subcontractor shall not expend more than 1,110
hours of direct labor effort or exceed $66,284.90 in total direct labor dollar
expenditures. Of the before mentioned direct labor hours, Subcontract shall not
perform more than -0- hours on-site at TACOM (reference Subcontract Section.E.6
entitled On-Site Services).

            B.2.3 Travel. The Subcontractor shall not expend more than $2,800
for travel related expenses. This not to exceed amount includes per diem,
airfare, lodging, other associated costs, and any applicable indirect burden
rate. No profit or fee is allowed on travel expenses. All travel shall be in
accordance with the U.S. Government Joint Travel Regulations (JTR) and / or
Federal Travel Regulations (FTR).

            B.2.4 Material. The Subcontractor shall not expend more than
$264,603.20 for direct material or equipment charges and related expenses and
applicable indirect burden rate. The $264,603.20 direct material charges amount
consists of the below listed HiEnergy Technologies Commercial Items subtotaling
$240,399.34 and a not to exceed amount of $24,203.96 for Subcontractor
non-commercial items. Such non-commercial items consist of the vertex assembly,
test kit (cables, coolant lines / PC), radiation shielding materials, and
miscellaneous equipment and accessories. Any Profit applied to materials shall
be in accordance with FAR 52.232-7 Payment under Time and Materials and Labor -
Hour Contracts (Alternate I) (MAR 2000).

<TABLE>
<CAPTION>
-------------------------------------------------------------- ------------- ---------------- ---------------------
      HiEnergy Technologies Commercial Items                     Quantity        Unit Price                 Total
-------------------------------------------------------------- ------------- ---------------- ---------------------
-------------------------------------------------------------- ------------- ---------------- ---------------------
<S>                     <C>                                         <C>             <C>                   <C>
Neutron Generator Subsystem
-------------------------------------------------------------- ------------- ---------------- ---------------------
  Neutron Generator (NEM16D)                                        1               $122,400              $122,400
-------------------------------------------------------------- ------------- ---------------- ---------------------
Data Acquisition Subsystem
-------------------------------------------------------------- ------------- ---------------- ---------------------
  Gamma Detector (GMX20P4)                                          2             $11,294.62            $22,589.24
-------------------------------------------------------------- ------------- ---------------- ---------------------
  X-Cooler (CFGXCOOLII)                                             2                 $6,360               $12,720
-------------------------------------------------------------- ------------- ---------------- ---------------------
  Data Interface Module (DIM-NEGGE)                                 2                   $900                $1,800
-------------------------------------------------------------- ------------- ---------------- ---------------------
  Spectroscopy Module (DSPEC)                                       2                 $9,600               $19,200
-------------------------------------------------------------- ------------- ---------------- ---------------------
  Host P.C. (EPIA-MII)                                              1                 $1,540                $1,540
-------------------------------------------------------------- ------------- ---------------- ---------------------
HiEnergy Firmware & Analytical Engine Subsystem
-------------------------------------------------------------- ------------- ---------------- ---------------------
  FPGA Board (ADM-XRC-II)                                           2                $18,000               $36,000
-------------------------------------------------------------- ------------- ---------------- ---------------------
  InterrogatorTM Software License (Single End-User)                 1                $16,000               $16,000
-------------------------------------------------------------- ------------- ---------------- ---------------------
Radiation Safety Subsystem
-------------------------------------------------------------- ------------- ---------------- ---------------------
  Meridian 5085 Neutron Survey Meter (M5085)                        1                  $5000                $5,000
-------------------------------------------------------------- ------------- ---------------- ---------------------
  Micro-1000 Gamma Dosimeter (MREM02)                               1                   $750                  $750
-------------------------------------------------------------- ------------- ---------------- ---------------------
Training Materials                                                  20                  $120                $2,400
-------------------------------------------------------------- ------------- ---------------- ---------------------
                          Subtotal                                                                     $240,399.24
-------------------------------------------------------------- ------------- ---------------- ---------------------
</TABLE>

                                  Page 3 of 25
<PAGE>

B.3   LABOR CATEGORIES AND HOURLY RATES

The labor category descriptions in Attachment A are incorporated and made a part
of this Subcontract. The following hourly rates applicable to said labor
categories shall remain firm and fixed for the Subcontract Term:

      ------------------------------------------------- ------------------
                            Labor Labor Rate
      Categories
      ------------------------------------------------- ------------------
      Program Manager I                                 $65
      ------------------------------------------------- ------------------
      Program Manager II                                $75
      ------------------------------------------------- ------------------
      Physicist (Design Engr V)                         $60.10
      ------------------------------------------------- ------------------
      Engineer III                                      $62.50
      ------------------------------------------------- ------------------
      Program Analyst III                               $43.27
      ------------------------------------------------- ------------------
      Trainer (Engr. Tech)                              $75
      ------------------------------------------------- ------------------
      Engineering Technician I                          $20
      ------------------------------------------------- ------------------
      Engineering Technician III                        $36.06
      ------------------------------------------------- ------------------

Hourly Rates include all indirect burdens and profit.

B.4   FUNDING

Subcontractor shall notify ICRC in accordance with the FAR clause entitled
Limitation of Cost whenever the Subcontractor has reason to believe that the
funds allotted to this Subcontract are either insufficient or excessive for the
performance required.

B.5   NOT TO EXCEED AMOUNTS

If, at any time, the Subcontractor has reason to believe that any amount of
expense (in one or more categories of labor, material, and/or travel) which it
expects to incur shall exceed the amount authorized, the Subcontractor shall
provide such written notification to the ICRC project manager and contract
representative for appropriate action. As a part of such notice, the Subcontract
shall provide a revised statement of total hours and/or material or travel
expense necessary to complete this Subcontract. The Subcontractor shall not
exceed any amount authorized for an expense category without the express written
permission of ICRC.

B.6   RESERVED

                                  Page 4 of 25
<PAGE>

B.7   SUBMISSION OF INVOICES AND PAYMENT

      B.7.1 Invoices shall be submitted in duplicate as specified below and
shall be addressed as follows:

                Integrated Concepts & Research Corporation
                1115 East Whitcomb Avenue
                Madison Heights, Michigan 48071
                Attention:  Sandy Ardoin
                Reference:  Subcontract No. AVT.05.00.0K

Invoices in duplicate are to be submitted no more frequently than every two
weeks for labor delivered and properly allocated costs. Invoices for labor costs
must detail the number of hours by labor category delivered and applicable
hourly rates. All other costs shall be clearly annotated as either "Material" or
"Travel". All invoices with claims for costs other than labor shall include
sufficient detail to allow verification of proper allocation of charges.
Subcontractor's invoices shall contain the following information: (1) date of
invoice, (2) ICRC Subcontract number (3) description of deliverables and/or
services, (4) delivery date of deliverable(s) / period of performance for
services, (5) quantity shipped, hours expended, as applicable (6) unit price (7)
extended total reimbursable amounts, and (8) the Subcontract payment terms.
Reimbursement of authorized and accepted services and expenses will be in
accordance with FAR 52.232-7, Payments under Time and Materials and Labor - Hour
Contracts (Alternate I) (March 2000).

      B.7.2 ICRC shall pay Subcontractor for services and/or deliverables upon
receipt of invoice and within five days of receipt of payment from ICRC
Customer.

      B.7.3 Subcontractor shall be responsible for the payment of all taxes
pertaining to the services and or deliverables provided under this Subcontract,
and shall be solely responsible for payment to all 3rd parties with whom it
deals in providing such services and/or deliverables to ICRC. Upon request, ICRC
will provide its Tax Exempt Certification Number.

      B.7.4 ICRC reserves the right to demand an offset against amounts payable
to Subcontractor under this Subcontract for any claim or charge ICRC may have
against Subcontractor with regard to billing activity for services and/or
deliverables. ICRC shall provide written notice to Subcontractor in the event
there is a billing dispute which requires an offset for a claim or charge by
ICRC against amounts payable to Subcontractor. Subcontractor has the right to
dispute the nature and/or amount of any offset under this clause, which dispute
shall be resolved pursuant to Clause D.3.

                                  Page 5 of 25
<PAGE>

SECTION C - STATEMENT OF WORK

C.1   SCOPE

      C.1.1 The Subcontractor shall perform the following work in accordance
with ICRC RFQ #ST-CBF-009 dated January 25, 2005.

      C.1.2 The Subcontractor shall procure, configure and calibrate the Neutron
Generator Sub-System, HPGe Detectors w/DAQ Sub-System, Monitoring Sub-System
hardware, and FPGA hardware in accordance with the proprietary engineering and
design of its CarBomb FinderTM. The hardware will be acquired from trusted,
best-of-class vendors with whom the Subcontractor has a proven relationship.
Additionally, these vendors will have provided the software libraries necessary
to allow the Subcontractor to build where necessary any customized control
software and application interfaces.

      C.1.3 The Subcontractor will install and configure its proprietary Control
Host Sub-System software which controls (with a minimum of input from the
operator) the Neutron Generator, HPGe Detectors w/DAQ, Monitoring, and Data
Analysis Module Sub-Systems. This hardware interfaces with drivers provided by
the Subcontractor's vendors, and the software includes data management and
integration as per the data collected from the sub-systems.

      C.1.4 The Subcontractor's in-house engineering and technical teams will
install, calibrate and maintain its proprietary firmware and any translation of
its InterrogatorTM software and proprietary algorithms for the Data Analysis
Module Sub-System, and provide modifications where necessary for the required
application.

      C.1.5 The Subcontractor will install and configure its proprietary User
Interface Sub-System, and provide assistance in the communication of
Subcontractor's proprietary server to the CBF-EV platform's client and any user
interface and data systems produced by ICRC..

      C.1.6 The Subcontractor will design and manufacture a finished housing
assembly for the CarBomb FinderTM head unit.

      C.1.7 The Subcontractor will assemble the CarBomb FinderTM head unit and
configure all components previously mentioned and will perform all complete
system testing at its facilities in Irvine, California, prior to its final
installation on the CBF-EV.

      C.1.8 The Subcontractor will perform final testing on the completed
vehicle at its facility in Irvine, California. After completion of testing the
Subcontractor shall perform an onsite engineering review for final inspection
and acceptance before shipment of the vehicle to the end user in Washington,
D.C. or an alternative location determined by ICRC. ICRC shall assume
responsibility for all vehicle shipment and handling costs to the Subcontractor
facility and from the Subcontractor facility to the end user.

C.2   DELIVERABLES

      C.2.1 The Subcontractor shall provide a design of the CarBomb FinderTM
head unit and housing assembly to ICRC no later than 30 days of subcontract
execution. In addition, the Subcontractor shall provide a product specification
with deployment scenarios to ICRC no later than 30 days of Subcontract
execution, which will be used in support of the design and development of the
deployment platform by ICRC.

                                  Page 6 of 25
<PAGE>

      C.2.2 The Subcontractor will deliver a test kit to allow for testing of
the sensor outputs without actually using the sensor to produce data. This test
kit will simulate the hardware functions and related data communications. The
test kit shall also include a computer hardware specification including any
connections or ports that are necessary to interface with their system. This
test kit shall be delivered to the ICRC Program Manager no later than thirty
(30) days of Subcontract execution.

      C.2.3 The Subcontractor shall deliver a replica CarBomb FinderTM head unit
with all components, including cooling lines and electrical connections, to
Extreme CAD/CAM of Clinton Township, Michigan within ninety (90) days of
Subcontract execution, which is required to allow for the testing of the final
arm design including movement / positioning of the sensor, the collision
avoidance system, and the motion detection system. The replica will have mass
substitutes for the Neutron Generator and HPGe Detectors. At the option of the
Subcontractor, the replica CarBomb FinderTM head unit will be returned to
Subcontractor following either of the completion of the testing by Extreme
CAD/CAM, or no later than the scheduled delivery of the final CarBomb FinderTM
head unit. The Subcontractor shall also provide onsite support during the
installation and testing of the replica CarBomb FinderTM head unit with the
CBF-EV.

      C.2.4 The Subcontractor will deliver one (1) fully functional CarBomb
FinderTM head unit, with all associated components, electronics, firmware and
software license, to ICRC no later than February 10, 2006. Additionally, the
Subcontractor shall provide training for the operation of the CarBomb FinderTM
to ICRC personnel and end user personnel during the commissioning of the CBF-EV
and deliver to ICRC the requisite training material and operating manuals prior
to the start of training classes/activities.

C.3   NOTICE OF LATE DELIVERY

The Subcontractor shall immediately notify the ICRC project manager by telephone
if dates by which work must be performed or deliverables must be delivered will
not be met, followed promptly by written notice pursuant to Clause D.9.

C.4   PACKAGING

All data and/or items deliverable under this Subcontract shall be packaged and
packed in accordance with good commercial practice. Packaging and packing shall
be adequate to ensure arrival at destination without damage or loss. Any costs
associated with the packaging and packing of the deliverables is considered
shipping and handling costs and the responsibility of ICRC.

C.5   MAINTENANCE AND SUPPORT

Both Parties acknowledge that the Subcontractor has no obligation to provide
maintenance and support for the CarBomb FinderTM other than that required for
performance by Subcontractor under the warranties provided herein. ICRC and/or
the ICRC Customer reserve an option to procure from Subcontractor an extended
maintenance program at an additional cost to provide for timely service and
repairs for all hardware and software products provided by Subcontractor. The
maintenance program would provide 24-hrs-a-day, 7-days-a-week support and
on-site response to a service call within the U.S. within 12 hours.

SECTION D - GENERAL TERMS AND CONDITIONS

      D.1   DEFINITIONS

For purposes of this Subcontract, the following terms shall have the meanings
described below:

                                  Page 7 of 25
<PAGE>

Unless otherwise specified in this Subcontract, references to "days" shall refer
to calendar days.

"Work Product" means the deliverables and documentation, including working
papers, developed under this Subcontract.

      D.2   INSPECTION AND ACCEPTANCE

      D.2.1 All Work Product furnished under this Subcontract, and as described
in Clause C.2, shall be subject to inspection and testing by ICRC and/or the
ICRC Customer during the period of performance under this Subcontract.
Inspection by ICRC of the Work Product shall be performed by ICRC and/or the
ICRC Customer at the Subcontractor's facility in Irvine, CA prior to shipment.
Subcontractor shall provide all reasonable facilities and assistance for the
safety and convenience of ICRC's inspectors for any test made on Subcontractor's
premises at no additional charge to ICRC or the ICRC Customer.

      D.2.2 The criterion for acceptance of the CarBomb FinderTM head unit (and
all associated components, electronics and firmware/software) is the successful
operation of the CarBomb FinderTM head unit (and all associated components,
electronics and firmware/software) using the Subcontractor's standard test
procedures and diagnostic test programs applicable to the items involved. All
acceptance tests will be conducted by Subcontractor personnel prior to delivery,
on a date agreeable to ICRC and/or the ICRC Customer. If neither ICRC or the
ICRC Customer, or their respective representatives, attend, or request in
writing a postponement of the performance of the scheduled tests, acceptance
will be deemed to have been made upon successful completion of the acceptance
tests which will be evidenced by the issuance and delivery of a Test Certificate
to ICRC.

      D.2.3 Work Product supplied will be substantially in accordance with the
specifications provided by the Subcontractor to ICRC, subject to reasonable
variations. Subcontractor shall not be responsible for performance figures given
in any source other than the specifications provided to ICRC. Subcontractor
reserves the right to supply Work Product in fulfillment of its obligations
hereunder, the design and/or constructions of which has been modified, provided
that the general performance of the Work Product is not adversely affected.

      D.2.4 If Work Product does not conform to the specifications, drawings,
and/or other data provided to ICRC, and the general performance of the Work
Product has been adversely affected due to said non-conformance, or there is a
failure by Subcontractor to comply with any warranty provided, ICRC reserves the
right to reject the affected Work Product, whereupon ICRC will promptly deliver
to Subcontractor a notice of rejection in accordance with Clause D.9. Said
notice shall include the reason for the rejection and detail any variances in
performance recognized by ICRC and/or ICRC Customer. If the Subcontractor fails
to respond to the notice within eight (8) days or does not provide an acceptable
plan to ICRC to remedy the claim within eight (8) days, ICRC may terminate this
Subcontract for default.

      D.2.5 Payment for any Work Product shall not be deemed acceptance thereof.

      D.3   DISPUTES

      D.3.1 Disputes with the Government. If a decision is issued by the
Contracting Officer under the Prime Contract "Disputes" Clause which relates to
this Subcontract, ICRC shall notify Subcontractor of said decision. Such a
decision shall be binding unless Subcontractor requests ICRC to appeal such
decision on its behalf. If requested, ICRC will provide reasonable cooperation
and assistance, and deliver to Subcontractor all information related to the
Dispute with Government available to ICRC. ICRC is not obligated to pursue an
appeal on the behalf of Subcontractor. Any final judgment in such an appeal
shall be binding upon Subcontractor. If any such appeal is taken or brought by
ICRC, Subcontractor shall be afforded a complete right of participation in the
appeal to the extent Subcontractor's interests may be affected. If as a result
of any decision or judgment which is binding upon Subcontractor and directly
related to the performance of Subcontractor under this Subcontract, ICRC is
unable to obtain reimbursement from the Government under the Prime Contract for,
or is required to refund a credit to the Government of any amount with respect
to any item of cost or fee for which ICRC has reimbursed Subcontractor,

                                  Page 8 of 25
<PAGE>

Subcontractor shall upon demand, promptly repay such amount to ICRC. To the
extent requested by ICRC, Subcontractor shall prosecute for ICRC any appeal or
suit taken or brought at Subcontractor's request and, in such event, ICRC shall
assist Subcontractor in every reasonable manner. All costs and expenses incurred
by Subcontractor and ICRC in prosecuting any appeal or suit taken or brought at
Subcontractor's request shall be paid by Subcontractor. In the event ICRC
refuses to pursue and appeal on Subcontractor's behalf then Subcontractor may
bring suit against ICRC in accordance with the Disputes Between The Parties
provision of this Subcontract in order to seek resolution and the findings of
the Government on the matter shall not be binding.

      D.3.2 For any claims to be submitted under this Disputes with the
Government provision in excess of $50,000, the Subcontractor shall certify to
ICRC, as to Subcontractor's portion of the claim, that: (a) the claim is made in
good faith, (b) the supporting data are accurate to the best of Subcontractor's
knowledge and belief, and (c) the amount requested accurately reflects the
Subcontract adjustment for which Subcontractor believes the Government liable.

      D.3.3 Disputes between the Parties. The Parties will attempt in good faith
to resolve, by negotiation or mediation, any controversy or claim, not covered
by the Disputes with the Government provision above regarding the rights and
obligations under this Subcontract or its breach. Any dispute not disposed of
within ninety (90) days from the date of notification, regardless of the causes
of action alleged, the claim will be resolved by arbitration in the Commonwealth
of Virginia, before a single arbitrator who is knowledgeable in diagnostic
equipment and technologies. Such arbitration will be conducted pursuant to the
then current Commercial Arbitration Rules of the American Arbitration
Association. The Arbitrator shall be bound to follow the applicable subcontract
provisions and the laws of the Commonwealth of Virginia and the federal
substantive and procedural law of arbitration. The arbitrator's award will be
final and binding, The arbitrator shall not have the power to award punitive or
exemplary damages. Any claim or action must be brought within two years after
the cause of action

      D.3.4 Continuation of Performance Pending Dispute. Pending any decision,
appeal or judgment referred to in this section or the settlement of any dispute
arising under this Subcontract, Subcontractor and ICRC shall proceed diligently
with their performance of this Subcontract.

      D.3.5 The rights and obligations herein this Clause D.3 and the contained
provisions shall survive expiration, termination, or final payment under this
Subcontract.

D.4   TERMINATION

      D.4.1 Termination for Convenience. In the event the ICRC Customer
terminates the Subcontractor's portion of work under this Subcontract, ICRC may
terminate this Subcontract in whole or in part at any time for its convenience,
upon the delivery by ICRC to Subcontractor a written notification of the date of
termination and a copy of an official notice of termination from the ICRC
Customer to ICRC respective to the Subcontractor's portion of work. On the date
of termination, Subcontractor shall discontinue performance of the services and
shall wholly comply with ICRCs instructions regarding such termination related
to the requirements within this Subcontract. ICRC shall pay Subcontractor for
deliverables delivered and services rendered through the effective date of
termination.

      D.4.2 Termination for Default.

                  (a) Either Party may terminate this Subcontract for default
upon written notice in the event a Party: (a) materially breaches any term,
condition or provision of this Subcontract and does not cure or provide an
acceptable plan to cure such failure within a period of eight (8) days after
receipt of notice from the offended Party specifying such material breach; or
(b) becomes the subject of any proceedings under state or federal law for the
relief of debtors or otherwise becomes insolvent, or bankrupt, or makes
assignments for the benefit of creditors. A default shall not be deemed to have
occurred until the end of any applicable cure period.

                                  Page 9 of 25
<PAGE>

      D.4.3 Additional Termination Provisions. The rights set forth above shall
be in addition to any other rights of termination provided elsewhere in this
Subcontract.

      D.4.4 Obligations Upon Termination. Any property including documentation
the Subcontractor received from ICRC without obligation of payment will be
immediately returned to ICRC by no later than the effective date of termination
or expiration in the same condition that such property was received, less normal
wear and tear and in the same or similar packing materials as received by
Subcontractor.

D.5   NONDISCLOSURE

In entering this Subcontract, it may be necessary for either Party to provide
proprietary information to the other. It is agreed that any disclosure of
information shall be made only in accordance with the following provisions:

      D.5.1. "Proprietary Information" is defined as documented information
originated by or peculiarly within the knowledge of a disclosing Party or its
suppliers which is not generally available to the others without restriction by
said disclosing Party or its suppliers. However, information shall not be
considered to be Proprietary Information:

      (a) unless it is received from the other Party in writing and is clearly
identified as proprietary information or marked with a notice stating
restrictions as to its use or disclosure, and made to authorized
representative(s) of the receiving Party; or, if orally disclosed, reduced to
writing within thirty (30) days after such disclosure, and identified as
specified above; or

      (b) if it becomes lawfully known to the receiving Party from a source
other than the disclosing Party at the time of disclosure, without breach of
this Subcontract; or

      (c) if it becomes publicly known through no wrongful act of the receiving
Party, or is independently developed by the receiving Party without breach of
this Subcontract; or

      (d) if it was is disclosed pursuant to the requirement of a governmental
agency or court; or

      (e) if it relates to an item, component or process developed exclusively
with government funds to which the United States Government has claimed, and
both Parties have agreed to provide, "unlimited rights".

      D.5.2. With regard to Proprietary Information disclosed by either Party,
the receiving Party agrees to take all steps necessary to:

      (a) to protect such information to the extent normally used in
safeguarding its own proprietary information but in no event less than a
standard of reasonable care; and

      (b) to protect and prevent disclosure to and/or use by third parties of
any proprietary information of the other party; and

      (c) to hold all said proprietary information in confidence and not to,
directly or indirectly, copy, publish, summarize or disclose to any person or
entity such information without the other party's prior written consent; and

                                 Page 10 of 25
<PAGE>

      (d) until seven (7) years after the expiration or termination of this
Subcontract, unless otherwise mutually agreed to in writing by the Contract
Representatives or their appointed replacements, whichever is earlier, (i) not
to use such information for purposes other than evaluation or in connection with
the Subcontract; and (ii) not to disclose such information to persons other than
its directors, officers or employees (or agents or consultants who have signed
confidentiality agreements containing terms and conditions materially the same
as those contained in this nondisclosure agreement) who have a demonstrated
"need to know".

      D.5.3. A receiving Party shall not be liable for disclosure of such
information pursuant to Judicial action or Governmental regulations or
requirements, provided that the receiving Party notifies the disclosing Party of
the need for such disclosure promptly after such need becomes known, and prior
to any disclosure of such information, which shall in all cases be only to the
extent the disclosing Party is legally compelled.

      D.5.4. Exchange of information between the Parties is contemplated from
the Effective Date of the Subcontract through its expiration or termination; all
other provisions herein relating to holding in confidence all proprietary and/or
confidential information received from the other Party shall remain in force and
effect for the period as specified under subparagraph D.5.2.(d) above.

      D.5.5. No license to the other Party, under any patents, is granted by
conveying proprietary information to that Party and none of such information
which may be transmitted or exchanged by the respective Parties shall constitute
any representation, warranty, assurance, guarantee of inducement by either Party
to the other with respect to the infringement of patents or other rights of
others.

D.6   CONTRACT COMMUNICATIONS

      D.6.1 The authorized contractual and technical representatives with regard
to communications between the Parties on any issue related to the terms and
conditions of the Subcontract, including the Statement of Work, are designated
as follows:

         ICRC Representatives are:
              Contract Representative           Sandy Ardoin
              Technical Representative          Hans Steiniger

         Subcontractor Representatives are:
              Contract Representative           Roger Spillmann
              Technical Representative          Dr. Kevin McKinny

      D.6.2 At any time during this Subcontract, the Parties may designate a
program manager, project coordinator, or other technical representatives with
responsibility for day-to-day clarifications and guidance. However, the effort
set forth in the Statement of Work shall be performed under the technical
direction of ICRC Technical Representative. When, in Subcontractor's opinion,
such technical direction constitutes a change to the Subcontract, the ICRC
Contract Representative shall be notified immediately for authorization of such
change. Until such authorization is granted by the ICRC Contract Representative,
and accepted by Subcontractor Contract Representative, Subcontractor shall
perform in accordance with the Subcontract as specified.

      D.6.3 No verbal or written request, notice, authorization, direction or
order sent by one Party and received by the other, and no action taken by the
Parties which by their nature effect a change in the Subcontract's terms and
conditions, including the Statement of Work, shall be binding, or serve as the
basis for a change in price or any other provision of this Subcontract, unless
issued (or confirmed) in writing between the Contract Representatives in the
manners indicated in the "Notices" section of this Subcontract.

                                 Page 11 of 25
<PAGE>

      D.6.4 Each Party shall immediately notify the Contract Representatives
whenever a verbal or written communication which will affect the price,
schedule, or other terms or conditions of this Subcontract has been issued or
received from a representative of ICRC or Subcontractor other than the Contract
Representatives.

      D.6.5 ICRC shall be responsible for all liaisons and communications with
ICRC's ICRC Customer as well as ICRC's other subcontractors for the term of this
Subcontract. The Subcontractor shall not communicate with ICRC's ICRC Customer
or ICRC's other subcontractors regarding this Subcontract except with the prior
consent of ICRC.

D.7   ICRC FURNISHED PROPERTY

Any property furnished by ICRC to Subcontractor for its use under this
Subcontract shall remain the property of ICRC or its ICRC Customer, and shall be
used by Subcontractor solely for the purposes of performing under the terms of
this Subcontract. Such property shall be held at the Subcontractor's risk, and
shall be kept insured by the Subcontractor at the Subcontractor's expense while
in Subcontractor's custody and control in an amount equal to the replacement
cost thereof, with loss payable to ICRC. When so instructed by ICRC, the
Subcontractor shall deliver any property owned or subject to use by ICRC to ICRC
(or to any other person ICRC may designate) in good condition, ordinary wear and
tear excepted, in the same or similar packing materials as received by
Subcontractor, and such property shall be subject to repossession or removal by
ICRC upon ICRC's instructions.

D.8   RESERVED

D.9   NOTICES

All notices (including requests, consents or waivers) made under this
Subcontract will be in writing and delivered by facsimile, electronic mail or
other electronic means, or by prepaid means providing proof of delivery. Notices
are deemed duly given or sent when delivered with verified receipt, and will be
sent to the following:

To Subcontractor:    HiEnergy Technologies, Inc.
                     1601-B Alton Parkway
                     Irvine, California 92606
                     Attention:  Roger Spillmann
                     Phone:           949.757.0855
                     Facsimile:       949.757.1477
                     E-mail:          rspillmann@hienergyinc.com

To ICRC:             Integrated Concepts & Research Corporation
                     1115 East Whitcomb Avenue
                     Madison Heights, Michigan 48071
                     Attention:       Sandy Ardoin
                     Phone No:        248.823.4273
                     Facsimile:       248.585.7533
                     E-mail:          sardoin@icrc-detroit.net

                                 Page 12 of 25
<PAGE>

With a copy to:      Integrated Concepts and Research Corporation
                     1033 North Fairfax St., Suite 400
                     Alexandria, VA 22314
                     Attention:       Bill Clark, ICRC - Contracts Manager
                     Phone No:        (703) 519- 9901
                     Facsimile:       (703) 519- 9930
                     E-mail:          bclark@icrcsolutions.com

Either Party may change its respective information listed above upon notice as
required by this provision.

D.10  FORCE MAJEURE

Neither Party is liable for failing to fulfill its obligations, in whole or in
part, due to causes beyond its control, without fault or negligence. Examples of
such causes include: (1) an act of God, (2) hostilities, war, rebellion, civil
strife, or an invasion or an act of foreign enemy, (3) an act or omission of the
U.S. Government, (4) any law, rule, regulation, order or other action by any
public authority, (5) fires, (6) floods, (7) epidemics, (8) quarantine
restrictions, (9) strikes, (10) freight embargoes (11) failure by the operator
to obtain license to operate the equipment, and (12) inclement weather. A Party
must use best efforts to notify the other of conditions that will result in a
delay in or failure of performance ("Force Majeure Conditions") within three (3)
working days of the occurrence. If a Force Majeure Condition, which limits,
delays or prevents the Subcontractor from performing its obligations under this
subcontract, continues for a period in excess of forty-five (45) days, ICRC may
elect to: (1) terminate this Subcontract as to any product(s) not yet provided
or to any services which have not been commenced or (2) suspend the Subcontract
for the duration of the Force Majeure Condition, and as the case may be: (i)
obtain product(s) and/or services elsewhere to perform the functions under this
Subcontract; or (ii) resume performance once the Force Majeure Condition ceases
with the option to extend such term up to the length of time the Force Majeure
Condition endured.

D.11  INDEMNIFICATION

Each Party shall indemnify and save the other harmless from and against any and
all liability for injury to persons or property occasioned wholly or in part by
an act or omission of the other party, its sub-contractors or suppliers, or
employees, including any and all expense, legal or otherwise, incurred by the
injured party in the claim or suit, actual or threatened, arising out of the
work done under this Subcontract; provided, however, that each party shall not
be liable for injury to persons or property caused by the sole negligence of the
other party, its agents or employees. Each Party shall notify the other within
thirty (30) days of any claim or suit filed against the injured party which is
covered by this indemnification provision and shall authorize representatives of
the other party to settle or defend any such claim or suit and to represent the
injured party in, or to take charge of, any litigation in connection therewith.
Except as otherwise specifically provided in this Subcontract, each Party shall
provide reasonable cooperation and assistance and keep the other party informed
of the progress of the defense of any claim or suit and will confer with each
other on strategies for the defense and settlement of the claim. Each Party's
obligation to indemnify the other shall be reduced to the extent each Party's
negligence contributed to the liability.

D.12  INFRINGEMENT

Subcontractor will defend at its expense any claim or suit, actual or
threatened, brought against ICRC, its ICRC Customers, and distributors alleging
any product infringes a patent, copyright, trade secret or other intellectual
property right and will pay all costs and damages finally awarded, if ICRC

                                 Page 13 of 25
<PAGE>

provides Subcontractor (1) written notice within thirty (30) days of the claim;
(2) all information requested that ICRC possesses about the claim; (3)
reasonable cooperation and assistance; and (4) sole authority to defend or
settle the claim; provided, however, if the Prime Contract permits ICRC's ICRC
Customer to elect to defend or settle the claim, Subcontractor shall furnish to
ICRC's ICRC Customer or ICRC all evidence and information in possession of the
Subcontractor pertaining to such claim, at Subcontractor's expense. In the event
the product is held or is believed by Subcontractor to infringe, Subcontractor
shall have the option, at its expense, to (a) modify the product to be
non-infringing; (b) obtain for ICRC Customer a license to continue using the
product; or (c) refund the material costs paid by ICRC Customer for the product.
Subcontractor is not obligated to indemnify ICRC under this provision if the
claim results only from: (i) Subcontractor's compliance with ICRC's designs;
(ii) the use of the product with other products not furnished or specified by
Subcontractor provided there is a substantial non-infringing use for the
product; or (iii) modifications to the product are not made by Subcontractor or
are not made in accordance with Subcontractor's instructions.
When this Subcontract is performed under the authorization and consent of the
United States Government to infringe United States patents (see FAR 52.227-1),
Subcontractor's liability for infringement of such patents pursuant to such
performance shall be limited to the extent of the obligation of ICRC to
indemnify or hold harmless the United States Government.

D.13  INSURANCE

Both Parties will maintain during the term of this Subcontract, and at each of
the Party's expense, all insurance required by law or if specified in the
Statement of Work, including, without limitation, workers' compensation, general
liability, product liability and automobile insurance, and such other insurance
which is necessary or prudent in order to adequately protect Subcontractor and
ICRC, and their officers, agents, and employees from harm, injury (including
death) or damage relating to or resulting from the provision by Subcontractor
and ICRC of products and/or services to ICRC Customer under this Subcontract.
Each Party will furnish certificates of insurance showing compliance with these
requirements to the other Party upon request. Each Party will ensure to the
other that it will provide a minimum of : (a) $100,000 per accident for
workman's compensation and employee liability insurance; $500,000 per occurrence
for comprehensive general liability; and, $100,000 per person, $300,000 per
occurrence for bodily injury liability and $20,000 for property damage liability
for automobile insurance; (b) carry an endorsement that the insurance will be
primary and the insurance, if any, maintained by the other Party will be excess.
Each Party will furnish certificates of insurance showing compliance with these
requirements upon request. Each Party will ensure the other Party receives at
least one month's prior written notice of any changes to, or cancellation of,
any of the required insurance policies.

D.14  LIMITATIONS OF LIABILITY

IN NO EVENT WILL EITHER PARTY BE LIABLE FOR ANY INDIRECT, INCIDENTAL, PUNITIVE,
SPECIAL OR CONSEQUENTIAL DAMAGES OR DAMAGES FOR LOSS OF PROFITS, REVENUE, OR USE
INCURRED BY THE OTHER OR ANY THIRD PARTY, WHETHER IN AN ACTION IN CONTRACT, OR
TORT, OR OTHERWISE EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. EXCEPT
FOR CLAIMS FOR BODILY INJURY (INCLUDING DEATH) OR DAMAGE TO REAL OR TANGIBLE
PERSONAL PROPERTY OR INTELLECTUAL PROPERTY INFRINGEMENT FOR WHICH A PARTY IS
LEGALLY LIABLE, IN NO EVENT SHALL A PARTY'S CUMULATIVE LIABILITY TO THE OTHER,
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, EXCEED THE CEILING PRICE OF
THIS SUBCONTRACT.

                                 Page 14 of 25
<PAGE>

D.15  ASSIGNMENT

Subcontractor  may not assign this Subcontract or its duties  hereunder  without
the express  written  consent of ICRC,  which  consent will not be  unreasonably
withheld;  however,  such approved  assignment shall not operate as a release of
Subcontractor from any obligation  hereunder arising prior to the effective date
of the assignment.

D.16  PUBLICITY

No advertising, publicity release or similar public information concerning this
Subcontract shall be published by either Party without the prior written consent
of the other party.

D.17  RELATIONSHIP OF THE PARTIES

The only relationship between Subcontractor and ICRC which is intended to be
created by this Subcontract is that of independent contractors, and neither
Party shall be nor represent itself to be an agent, employee, partner or joint
venture of the other, nor shall either Party transact any business in the name
of the other, or on the other's behalf, or in any manner or form make promises,
representations, or warranties or incur any liability, direct or indirect,
contingent or fixed, for or on behalf of the other Party. Personnel supplied by
Subcontractor will not for any purpose be considered employees, agents or
lower-tier subcontractors of ICRC, nor will such personnel or Subcontractor be
granted any rights under ICRC's employee benefit plans. Subcontractor assumes
full responsibility for the action of such personnel and is solely responsible
for their supervision, daily direction and control, payment of wages (including
withholding of income taxes and social security), workers' compensation,
disability benefits and the like.

D.18  CHOICE OF LAW

This Subcontract shall be governed by and construed in accordance with the laws
of the Commonwealth of Virginia, as applied to contracts entered into and/or
performed entirely in that jurisdiction, excluding its rules on conflicts of law
and the United Nations Convention on Contracts for the International Sale of
Goods (1980). Notwithstanding the foregoing, any provision in this Order that is
(i) incorporated in full text or by reference form, or substantially based on,
the Federal Acquisition Regulation ("FAR") or similar governmental authority
shall be construed and interpreted according to the federal common law of
government contracts as applied by federal judicial bodies, Boards of Contract
Appeals, and quasi-judicial agencies of the federal Government.

D.19  COMPLIANCE WITH LAWS

Subcontractor and all persons furnished by Subcontractor shall comply, at their
own expense, with all applicable federal, state, and local laws, statues,
ordinances, administrative or executive orders, regulations, and rules.
Subcontractor agrees to submit all reports, certifications, and other documents
as required. Subcontractor shall provide all product information related to the
handling of the products purchased under this Subcontract as may be required by
law.

ICRC and ICRC Customer agree to comply fully with all relevant export laws and
regulations of the United States ("Export Laws") to assure that the product is
not (1) exported, directly or indirectly, in violation of Export Laws; or (2)
intended to be used for any purposes prohibited by the Export Laws. The SOFTWARE
LICENSE AGREEMENT, WARRANTY, LIMITATIONS OF LIABILITY, INDEMNIFICATION,
INFRINGEMENT, RIGHTS IN WORK, NON-DISCLOSURE, CONFIDENTIALITY, DISPUTES,
TERMINATION, CHOICE OF LAW provisions of this Subcontract will survive the
termination or expiration of this Subcontract.

                                 Page 15 of 25
<PAGE>

SECTION E - SUPPLEMENTAL TERMS AND CONDITIONS APPLICABLE TO SERVICES

The following additional terms apply to all services to be performed under this
Subcontract:

E.1   FACILITIES

If any of the services are to be performed at ICRC Customer facilities,
Subcontractor's employees, agents and lower-tier subcontractors will follow all
of ICRC Customer policies and procedures concerning security, as well as all
work rules and regulations, including the signing of a confidentiality
agreement, when applicable, in a form acceptable to ICRC. ICRC is not
responsible for the safekeeping of Subcontractor's property at ICRC Customer
facilities.

t 0 6 E.2 REPLACEMENT OF PERSONNEL

For purposes of this Section, "Key Personnel" as identified below is defined as
those individuals of the Subcontractor who are mutually recognized by ICRC and
Subcontractor as essential to the successful completion and execution of this
Subcontract.

      E.2.1 ICRC reserves the right to request the removal of any individual
assigned to this subcontract, including Key Personnel, with reasonable cause.
Reasonable cause for requesting removal of an individual will be based on the
following: technical incompetence, inability to meet the position
qualifications, failure to perform an assignment, poor attendance, ethics
violation, unsafe work habits, damage to U. S. Government and/or ICRC property,
or ICRC Customer dissatisfaction. Subcontractor will agree to immediately remove
any individual of the Subcontractor so specified by ICRC with reasonable cause
and ensure that such individual will not be reassigned to provide services or
Work Product under this Subcontract. Subcontractor shall replace any removed
individual with personnel substantially equal in ability and qualifications.

      E.2.2. Subcontractor may substitute Key Personnel assigned to provide
services or Work Product under this Subcontract, subject to prior approval of
ICRC in writing, which shall not be unreasonably withheld. Subcontractor shall
replace any substituted Key Personnel with personnel substantially equal in
ability and qualifications.

      E.2.3. In the event of any replacement of personnel and/or staffing
change, ICRC shall not be charged by Subcontractor for the time required to
train the replacement.

E.3   LOWER-TIER AGREEMENTS

Subcontractor will have written Subcontracts with each of its agents and
lower-tier subcontractors sufficient to enable Subcontractor to comply with all
of the terms and conditions of this Subcontract.

E.4   NON-SOLICITATION

Each party agrees that it will not, without prior written consent of the other
party, solicit any employee of the other party who was directly involved in the
provision of services hereunder, or induce such employee to leave the other
party's employment, directly or indirectly, for a period of two (2) years after
the most recent time such employee has performed or received services hereunder.
The foregoing restriction shall not apply with respect to advertisements in
newspapers, job fairs or unsolicited resumes or applications for employment.

                                 Page 16 of 25
<PAGE>

E.5   PROGRESS REPORTS

Subcontractor will provide the designated ICRC Project Manager with monthly
progress reports and will participate in monthly status review meetings with
ICRC, at such times specified by ICRC. Such monthly review meetings will be for
the purpose of:

(a) reviewing the progress of work by Subcontractor;

(b) modifying delivery or other dates provided in this Subcontract, if mutually
agreed upon; (c) discussing and resolving any problems;

(d) formulating, if necessary, details of activity in the following month; and

(e) coordinating acceptance testing, installation and training schedules.

Additional meetings may be held, if requested by either party, at a time and
place mutually agreed to by both parties.

E.6   ON-SITE SERVICES

The Parties recognize and agree that some of the services required under this
Subcontract may be performed on-site at TACOM by one or more of Subcontractor
employees. Any TACOM on-site Subcontractor services must be specifically
authorized with a ceiling established for the maximum number of hours to be
performed on-site. Said services shall be provided only in strict accordance wit
the statement of work of this Subcontract. This is to ensure that TACOM / ICRC /
Subcontractor adhere to the policies in the Office of Federal Procurement Policy
Letter 92-1 and the Department of Defense Directive 4205-2. Subcontractor
personnel rendering services under this Subcontract are not subject, by contract
terms or in the manner of its administration, to the supervision and control
usually prevailing in relationships between the Government and its employees.
The Subcontractor agrees to refrain from any activity that will make their
personnel appear, in effect, to be Government employees. The Subcontractor will
not be reimbursed for any work that is outside this Subcontract's statement of
work.

E.7   RIGHTS IN WORK

      E.7.1 Subcontractor rights to the Work Product developed hereunder shall
be in accordance with the Federal Acquisition Regulation (FAR) intellectual
property clauses incorporated herein. To read these clauses in proper context,
the wording "Contracting Officer" or the "Government" shall not mean ICRC.

      E.7.2 Subcontractor represents to ICRC that it has developed exclusively
at private expense all items described in the Section C herein, with exception
to the work and deliverables referred to in Clauses C.1.6 and C.2.2.

      E.7.3 ICRC agrees that it shall have no rights to any computer software,
computer database, technical data, detailed manufacturing or process data,
documentation, intellectual property, or other technology, processes and
materials developed, owned, disclosed or licensed by Subcontractor, other than
to use the same to provide the service(s) and/or deliverable(s) in accordance
with the Prime Contract.

E.8   SOFTWARE LICENSE AGREEMENT

Subcontractor grants to ICRC a non-exclusive end-user license for the
InterrogatorTM software which shall be installed on the system by Subcontractor
and used as necessary in performance of its contractual obligations as they
relate to the Prime Contract The software shall be and remain the sole and

                                 Page 17 of 25
<PAGE>

exclusive products of Subcontractor. ICRC shall have no other rights whatsoever
in or to the Software. ICRC agrees not to remove from any copies of the Software
any statements appearing thereon regarding copyrights or proprietary rights of
Subcontractor. ICRC shall not copy (in any form), distribute, sell, lease,
assign, encumber, license or sub-license this Software or programs written using
this Software to anyone other than the ICRC Customer without prior written
consent from Subcontractor. ICRC hereby acknowledges and agrees that the
Software may be licensed by Subcontractor to other users without limitation of
any kind. ICRC acknowledges that the license granted hereby shall automatically
transfer to ICRC Customer upon delivery of the system to ICRC Customer and
extends solely to ICRC Customer and that Software shall not be used by any other
division, subsidiary or affiliated entity. ICRC acknowledges that the computer
program, manuals and related data which comprise or are related to the Software
are proprietary products of Subcontractor who retains all rights, title and
interest, including copyright to these products. ICRC agrees that the Software
source code of Interrogator(TM) constitutes protected information, which is
equivalent to trade secret information of Subcontractor, whether or not any
portion thereof is or may be the subject of a valid copyright or patent. ICRC
agrees not to reverse assemble, reverse compile, reverse engineer or otherwise
attempt to discover the source code of any of the Software, except to the extent
Licensee may be expressly permitted by HiEnergy. Any distribution, sale, or
other disposition by the ICRC of the Software, including derivative
modifications or extensions of them, and including any proprietary products, is
expressly prohibited. ICRC recognizes and agrees that any unauthorized use or
distribution of the Software or proprietary products would immediately and
irreparably damage Subcontractor in a way not capable of being fully compensated
by monetary damages in accordance with the "Indemnification" Section contained
in this document, and accordingly, Subcontractor shall be entitled without
waiving any other rights which Subcontractor may have, to injunctive relief in
the event of any such unauthorized use, distribution or violation of this
agreement.

The Software is subject to the U.S. Governments Restricted Rights Legend and
use, duplication, or disclosure by the Government is subject to restrictions set
forth in Subparagraph (c)(1)(ii) of the Rights in Technical Data and Computer
Software clause at 52.227-7013 of the Department of Defense Federal Acquisition
Regulations (FAR).

E.9   WARRANTY OF SOFTWARE

For purposes of this Subcontract, "Licensee" shall mean the licensed end-user of
the software which shall be limited to ICRC and/or ICRC Customer.

      E.9.1 During the warranty period, Subcontractor shall: (i) provide
maintenance or support for the Software; and (ii) notify Licensee of bug fixes,
patches, or upgrades to the Software (if any). If, in its sole discretion,
Subcontractor makes a Software bug fix, patch or upgrade available to Licensee
and does not separately enter into a written license agreement with Licensee
relating to such bug fix, patch or upgrade, then it shall be deemed incorporated
into the Software and subject to this Agreement.

      E.9.2 The Software has been thoroughly tested by Subcontractor and will
perform the functions as described. However, should Licensee have a demonstrable
problem with the product Licensee will immediately provide Subcontractor written
or verbal notice describing said problem. Subcontractor agrees to respond within
two (2) working days of receipt of notice in order to verify the problem. At its
discretion, Subcontractor will: (a) immediately issue Licensee a new release of
the product (at no charge); (b) resolve the problem within no later than thirty
(30) calendar days; and (c) issue Licensee a revised version (at no charge).

THE WARRANTIES DESCRIBED HEREIN ARE THE EXCLUSIVE WARRANTIES FOR THE
SUBCONTRACTOR'S SOFTWARE AND ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR
IMPLIED. SUBCONTRACTOR NEITHER ASSUMES NOR AUTHORIZES ANY OTHER PERSON TO ASSUME

                                 Page 18 of 25
<PAGE>

FOR IT ANY OTHER LIABILITY IN CONNECTION WITH THE SALE OR USE OF ITS SOFTWARE.
NO WARRANTY OF ANY KIND IS MADE OR SHALL BE IMPOSED WITH RESPECT TO ANY SOFTWARE
THAT IN SUBCONTRACTOR'S SOLE AND ABSOLUTE JUDGMENT HAS NOT BEEN PROPERLY
INSTALLED OR HAS BEEN MODIFIED IN A WAY THAT AFFECTS PERFORMANCE OR RELIABILITY.
CODE ALTERATION WHICH WAS NOT SPECIFIED BY SUBCONTRACTOR VOIDS THIS LIMITED
WARRANTY. THE PARTIES AGREE THAT THE LICENSEE'S SOLE AND EXCLUSIVE REMEDY
AGAINST SUBCONTRACTOR SHALL BE FOR THE REPAIR OR REPLACEMENT OF DEFECTIVE CODE.
LICENSEE AGREES THAT NO OTHER REMEDY OR DAMAGES, INCLUDING BUT NOT LIMITED TO
INCIDENTAL OR CONSEQUENTIAL DAMAGES FOR LOST PROFITS, LOST SALES, LOSS OF USE,
INJURY TO PERSON OR PROPERTY, OR ANY OTHER INCIDENTAL OR CONSEQUENTIAL LOSS,
SHALL BE AVAILABLE TO IT. THE TERM OF THIS WARRANTY IS THE EARLIER OF ONE (1)
YEAR FROM DATE OF ACCEPTANCE. IT IS EXPECTED THAT CODE UPGRADES WILL BE REQUIRED
WITH FUTURE VERSIONS OF THIS SOFTWARE AND SUBCONTRACTOR FOR A PERIOD OF ONE (1)
YEAR SHALL NOT CHARGE FEES FOR ANY SOFTWARE UPGRADES, SHOULD AN UPGRADE BE
NECESSARY. THEREAFTER, THE LICENSEE WILL BE REQUIRED BY SUBCONTRACTOR TO PAY A
MODEST FEE FOR ANY UPGRADES.

EXCLUDING CLAIMS FOR INTELLECTUAL PROPERTY INFRINGEMENT, IN NO EVENT SHALL
SUBCONTRACTOR'S LIABILITY FOR DAMAGES ARISING FROM OR IN CONNECTION WITH THIS
SOFTWARE LICENSE AGREEMENT EXCEED THE AMOUNT PAID BY LICENSEE FOR THE SOFTWARE.
THE PROVISIONS OF THIS AGREEMENT ALLOCATE THE RISKS BETWEEN SUBCONTRACTOR AND
LICENSEE. SUBCONTRACTOR'S PRICING REFLECTS THIS ALLOCATION OF RISK AND BUT FOR
THIS ALLOCATION AND LIMITATION OF LIABILITY, LICENSEE WOULD NOT HAVE ACCEPTED
THIS LICENSE. LICENSEE SHALL INDEMNIFY AND HOLD HARMLESS HIENRGY FROM AND
AGAINST ANY AND ALL LIABILITY, DAMAGES, COSTS, LOSSES AND EXPENSES ARISING OUT
OF OR IN CONNECTION WITH ANY PERSONAL INJURY, INCLUDING DEATH, OR ANY DAMAGE TO
PROPERTY OR BUSINESS WHICH MAY BE SUFFERED BY USE, OPERATION, OR FAILURE TO
OPERATE OF THE SOFTWARE FURNISHED HEREUNDER EXCEPT FOR THE NEGLIGENT ACTS OF
SUBCONTRACTOR.

E.10  WARRANTY OF HARDWARE

      E.10.1 This Subcontractor will provide ICRC and/or the ICRC Customer with
a limited parts warranty which provides that the CarBomb FinderTM head unit,
with all associated components, electronics and firmware, excluding the Neutron
Generator and Gamma Ray Detectors, will be free from defects in workmanship and
materials and will conform to applicable specifications for a period of ninety
(90) days from the date of acceptance (the "Warranty period"), provided ICRC or
the ICRC Customer gives written notice to Subcontractor of any defect within
said Warranty period or within five (5) days thereafter.

      E.10.2 The Subcontractor will provide ICRC and/or the ICRC Customer with a
limited warranty that the Neutron Generator and Gamma Ray Detectors will be free
from defects in workmanship and materials and will conform to applicable
specifications for a period of no less than ninety (90) days and up to the full
warranty period offered by the manufacturer warranty. This warranty is pro-rated
(that is, for example, if a Neutron Generator or Gamma Ray Detector became
defective after four months of a one year warranty, ICRC and/or the ICRC

                                 Page 19 of 25
<PAGE>

Customer would pay to Subcontractor four-twelfths of the price of a replacement
of the Neutron Generator or Gamma Ray Detector). Credit toward refurbishment or
replacement will be given to ICRC and/or ICRC Customer, at the manufacturer's
option, and will be prorated from the date of original acceptance or for the
Warranty period, as specified. This Warranty shall only be valid if the hardware
is operated with the electronic and control equipment supplied by and in
accordance with, written instructions by the Subcontractor.

ANY INSTALLATION, MAINTENANCE, REPAIR, SERVICE, RELOCATION OR ALTERATION TO OR
OF, OR OTHER TAMPERING WITH, THE HARDWARE PERFORMED BY ANY PERSON OR ENTITY
OTHER THAN SUBCONTRACTOR WITHOUT SUBCONTRACTOR'S PRIOR WRITTEN APPROVAL, OR ANY
USE OF REPLACEMENT PARTS NOT SUPPLIED BY SUBCONTRACTOR, SHALL IMMEDIATELY VOID
AND CANCEL ALL WARRANTIES WITH RESPECT TO THE AFFECTED HARDWARE. THIS WARRANTY
IS EXCLUSIVE AND IS MADE IN LIEU OF ALL OTHER WARRANTIES. NO MODIFICATION OR
ALTERATION OF THE FOREGOING WARRANTY AND LIMITATION OR REMEDIES PROVISIONS SHALL
BE VALID OR ENFORCEABLE UNLESS SET FORTH IN A WRITTEN AGREEMENT SIGNED BY
SUBCONTRACTOR AND ICRC AND/OR ICRC CUSTOMER.

IN NO EVENT SHALL TOTAL LIABILITY RELATED TO HARDWARE EXCEED THE TOTAL MATERIALS
COST. IN NO EVENT SHALL SUBCONTRACTOR BE LIABLE FOR SPECIAL, INCIDENTAL OR
CONSEQUENTIAL DAMAGES, NOR SHALL IT BE LIABLE FOR ANY OTHER DAMAGES, EXCEPT AS
HEREINABOVE PROVIDED. THIS WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES,
EXPRESSED OR IMPLIED.

E.11  WARRANTY OF SERVICES

      E.11.1 Subcontractor warrants and represents the following to ICRC, in
carrying out the services to be performed for the delivery of a Work Product as
described in the Statement of Work: The best technical practices, skills,
procedures, care and judgment will be employed; the services required to
delivery the Work Product will be performed in the most expeditious and
economical manner consistent with ICRC meeting its ICRC Customer's requirements.

      E.11.2 Subcontractor will provide the services and Work Product in
accordance with the requirements in the section of this Subcontract entitled
Statement of Work.

      E.11.3 Other than for material supplied by ICRC: (i) the Work Product will
be the original work of Subcontractor; (ii) Subcontractor possesses all
necessary right, title and interest in the Work Product necessary for
Subcontractor to grant to ICRC the rights and licenses stated in this
Subcontract; (iii) the Work Product does not infringe on any third party's
patent, copyright, trademark, trade secret or other intellectual property right;
and (iv) any information that Subcontractor discloses to ICRC is not
confidential to Subcontractor or to any third party.

      E.11.4 Subcontractor is under no obligation or restriction, nor will
Subcontractor assume any, that will interfere or present a conflict of interest
with the services performed hereunder.

      E.11.5 If the services performed in the delivery of the Work Product fail
to conform to one or more of the warranties described in this Subcontract,
Subcontractor shall be required to re-perform the services at no cost to ICRC.
The remedies provided in this provision shall be in addition to such other
rights as ICRC may have under this Subcontract or in law or equity.

                                 Page 20 of 25
<PAGE>

ALL WARRANTIES UNDER THIS SUBCONTRACT SHALL SURVIVE INSPECTION, TESTING,
ACCEPTANCE, AND PAYMENT AND SHALL RUN TO ICRC, ITS AFFILIATES, SUCCESSORS,
ASSIGNS, AND ICRC CUSTOMER.

SECTION F - PRIME CONTRACT FLOW DOWN CLAUSES

F.1 The following clauses from the Prime Contract whether set forth in full
text, amended text, or incorporated by reference are incorporated and made a
part of this Subcontract. In all such clauses, unless the clause requires
otherwise, the term "Contractor" shall mean "Subcontractor" and the term
"Contract" shall mean this "Subcontract", the term "Work Directive" shall mean
this "Subcontract", and the terms "Government", "Contracting Office" and
equivalent phrases shall mean "ICRC" or an "ICRC representative" respectively
unless the function to be performed can only be performed by the Government. It
is intended that these incorporated clauses shall apply to Subcontractor in such
manner as is necessary to reflect the position of Subcontractor as a
subcontractor to ICRC, to insure Subcontractor obligations to ICRC and to the
United States Government, and to enable ICRC to meet its obligations under its
Prime Contract.

F.2   CLAUSES INCORPORATED IN FULL OR AMENDED TEXT

      F.2.1 Organizational Conflict of Interest

            (a) In accordance with FAR 9.505-1 - The Contractor understands and
agrees that the Department of Defense will not consider it, its successors
(hereinafter referred to as the Contractor) as a source of supply for any system
or major component thereof, or training related thereto, for which the
Contractor provides system engineering and technical direction under this
contract. The Contractor further understands and agrees that it will not be
allowed to be a subcontractor or consultant to a supplier of a system or any
major component thereof, or training related thereto for which the Contractor
provides system engineering and technical direction under this contract. This
prohibition shall be in effect from contract award through one (1) year after
the end of this contract.

            (b) The term "Contractor" herein means (i) the organization
(hereinafter referred to as "it" or "its") entering into this contract with the
U.S. Government, (ii) all business organizations with which it may merge, join
or affiliate, now or in the future, and in any number whatever, or which hold or
may obtain, by purchase or otherwise, direct or indirect control of it, (iii)
its parent organization (if any) or its present or future subsidiaries,
associates, affiliates, or holding companies, and (iv) any organization or
enterprise over which it has direct or indirect control (now or in the future).
The prior written approval of the Contracting Officer is required before any
work to be performed under any work directive issued under this contract may be
subcontracted to any of the organizations described in (ii), (iii), or (iv)
immediately preceding.

            (c) The Contractor agrees to enter into written agreements with all
companies to whose propriety data it shall have access to and shall protect such
data from unauthorized use or disclosure as long as it remain proprietary. The
Contractor shall furnish the Contracting Officer with copies of such written
agreements in accordance with FAR 9.505-4.

            (d) The Contractor agrees to protect the proprietary data and rights
of other organizations made available from any source, which were disclosed to
it, directly or indirectly during the performance of this contract with the same
caution that a reasonable, prudent contractor would use to safeguard their own
proprietary data and rights. In addition, the Contractor agrees not to utilize
the data in supplying hardware or in performing services or studies on contracts
which may be awarded by the Department of Defense on a competitive basis. The
Contractor agrees not to use proprietary data for any purpose other than that
for which it was furnished.

                                 Page 21 of 25
<PAGE>

            (e) Notwithstanding paragraph F2.1.1 above and any other provision
herein, protection of and exclusion of use of proprietary date shall be extended
for so long as the data remains proprietary. However, such protection and
exclusion shall not be in effect when data are lawfully obtained by the
Contractor from some other sources without restriction.

            (f) The Contractor shall not distribute reports, data or information
of any nature arising from its performance under this contract, except as
provided by this contract or as may be directed by the Contracting Officer. All
Government-furnished proprietary data and any derivatives shall be returned to
the Government at the end of the contract.

            (g) Subcontracts: The Contractor shall include the subject conflict
of interest provision, including this paragraph, in subcontracts of any tier
which involve access to information covered in F.2.1.1 above. The use of this
clause in such subcontracts shall be read by substituting the word
"subcontractor" for the word "contractor" whenever the latter appears.

            (h) The Contractor agrees to thoroughly educate its employees
through formal training, company policy information directives and procedures,
and by providing an awareness of the legal provisions of FAR Part 9, subpart
9.5, so that each employee will understand the absolute necessity of
safeguarding proprietary information (i) developed under this contract, and (ii)
provided to the contractor during performance of this contract from any one
other than the Contractor's employees who have a need to know, and the U.S.
Government.

            (i) The contracting officer or his designated representatives shall
have full access for inspection of the contractor's premises, policies, and
records for the purpose of reviewing actions and programs undertaken by the
contractor to safeguard all information derived from this contract so that full
compliance with FAR 9.5 policy requirements is achieved.

            (j) Upon receipt of a Work Directive for effort issued under the
provisions of this contract, the Contractor shall conduct a review of actual or
potential Organizational Conflict of Interest (OCOI) as defined in and within
the meaning of FAR subpart 9.5. If in the opinion of the Contractor the
performance of a Work Directive directed under this contract will involve an
actual or potential Organizational Conflict of Interest, the Contractor shall
notify the Contracting Officer and provide justification in support of its
opinion. The Contracting Officer will thereupon determine whether in fact the
Work Directive involved is an Organizational Conflict of Interest. If the
Contracting Officer determines that an OCOI is involved, the Contractor shall
not perform said Work Directive unless the parties agree to the restrictions
imposed by FAR subpart 9.5.

F.3   CLAUSES INCORPORATED BY REFERENCE

The following Federal Acquisition Regulation (FAR) and Defense Federal
Acquisition Regulation Supplement (DFARS) and TACOM FAR clauses are incorporated
by reference (Reference number formats are FAR = 52.xxx; DFARS = 252.xxx; TACOM
FAR = 52.xxx- 4xxx).

<TABLE>
<CAPTION>
----------- ------------------ ------------------------------------------------------------------------- --------------
Prime       Reference Number   Clause Title                                                              Date
Ref #
----------- ------------------ ------------------------------------------------------------------------- --------------
<S>         <C>                <C>                                                                       <C>
I-1         52.202-1           Definitions                                                               MAY/2001
----------- ------------------ ------------------------------------------------------------------------- --------------
I-2         52.203-3           Gratuities                                                                APR/1984
----------- ------------------ ------------------------------------------------------------------------- --------------
I-3         52.203-5           Covenant Against Contingent Fees                                          APR/1984
----------- ------------------ ------------------------------------------------------------------------- --------------
</TABLE>

                                 Page 22 of 25
<PAGE>

<TABLE>
<CAPTION>
----------- ------------------ ------------------------------------------------------------------------- --------------
<S>         <C>                <C>                                                                       <C>
I-4         52.203-6           Restrictions on Subcontractor Sales to the Government                     JUL/1995
----------- ------------------ ------------------------------------------------------------------------- --------------
I-5         52.203-7           Anti-Kickback Procedures                                                  JUL/1995
----------- ------------------ ------------------------------------------------------------------------- --------------
I-6         52.203-8           Cancellation, Rescission and Recovery of Funds for Illegal or Improper    JAN/1997
                               Activity
----------- ------------------ ------------------------------------------------------------------------- --------------
I-7         52.203-10          Price or Fee Adjustment for Illegal or Improper Activity                  JAN/1997
----------- ------------------ ------------------------------------------------------------------------- --------------
I-8         52.203-12          Limitation on Payments to Influence Certain Federal Transactions          JUN/1997
----------- ------------------ ------------------------------------------------------------------------- --------------
I-9         52.204-4           Printing/Copying Double-Sided on Recycled Paper                           AUG/2000
----------- ------------------ ------------------------------------------------------------------------- --------------
I-10        52.209-6           Protecting the Government's Interest when Subcontracting with             JUL/1995
                               Contractors Debarred, Suspended, or Proposed for Debarment
----------- ------------------ ------------------------------------------------------------------------- --------------
I-11        52.211-15          Defense Priority and Allocation Requirements                              SEP/1990
----------- ------------------ ------------------------------------------------------------------------- --------------
D-1         52.211-4113        Bar Code Marking                                                          SEP/2000
----------- ------------------ ------------------------------------------------------------------------- --------------
I-12        52.215-2           Audit and Records - Negotiations                                          JUN/1999
----------- ------------------ ------------------------------------------------------------------------- --------------
I-13        52.215-10          Price Reduction for Defective Cost or Pricing Data                        OCT/1997
----------- ------------------ ------------------------------------------------------------------------- --------------
I-14        52.215-12          Subcontractor Cost or Pricing Data                                        OCT/1997
----------- ------------------ ------------------------------------------------------------------------- --------------
I-15        52.215-15          Pension Adjustments and Asset Reversions                                  DEC/1998
----------- ------------------ ------------------------------------------------------------------------- --------------
I-16        52.215-17          Waiver of Facilities Capital Cost of Money                                OCT/1997
----------- ------------------ ------------------------------------------------------------------------- --------------
I-17        52.215-18          Reversion or Adjustment of Plans for Postretirement Benefits (PRB)        OCT/1997
                               Other than Pensions
----------- ------------------ ------------------------------------------------------------------------- --------------
I-18        52.215-19          Notification of Ownership Changes                                         OCT/1997
----------- ------------------ ------------------------------------------------------------------------- --------------
I-84                           52.215-21 Requirements for Cost or Pricing Data
                               or Information other than Cost or OCT/1997
                               Pricing Data - Modifications - (Alternate III
                               (OCT 1997))
----------- ------------------ ------------------------------------------------------------------------- --------------
            52.232-7           Payments under Time and Materials and Labor - Hour Contracts (Alternate   MAR/2000
                               I )(MAR 2000)
----------- ------------------ ------------------------------------------------------------------------- --------------
H-19        52.216-4008        Status of Funds on Cost Reimbursement Contracts / CINS                    JUN/1989
----------- ------------------ ------------------------------------------------------------------------- --------------
I-21        52.219-8           Utilization of Small Business Concerns                                    OCT/2000
----------- ------------------ ------------------------------------------------------------------------- --------------
I-22        52.222-1           Notice to the Government of Labor Disputes                                FEB/1997
----------- ------------------ ------------------------------------------------------------------------- --------------
            52.222-2           Payment for Overtime Premiums (Zero inserted in the first sentence of     JUL/1990
                               subparagraph (a))
----------- ------------------ ------------------------------------------------------------------------- --------------
I-23        52.222-4           Contract Work Hours and Safety Standards Act - Overtime Compensation      SEP/2000
----------- ------------------ ------------------------------------------------------------------------- --------------
I-24        52.222-20          Walsh-Healey Public Contracts Act                                         DEC/1996
----------- ------------------ ------------------------------------------------------------------------- --------------
I-25        52.222-21          Prohibition of Segregated Facilities                                      FEB1999
----------- ------------------ ------------------------------------------------------------------------- --------------
I-26        52.222-26          Equal Opportunity                                                         APR/2002
----------- ------------------ ------------------------------------------------------------------------- --------------
I-27        52.222-35          Affirmative Action for Disabled Veterans and Veterans of the Vietnam Era  DEC/2001
----------- ------------------ ------------------------------------------------------------------------- --------------
I-28        52.222-36          Affirmative Action for Workers with Disabilities                          JUN/1998
----------- ------------------ ------------------------------------------------------------------------- --------------
I-29        52.222-37          Employment Reports on Special Disabled Veterans, Veterans of the          DEC/2001
                               Vietnam Era, and Other Eligible Veterans
----------- ------------------ ------------------------------------------------------------------------- --------------
I-30        52.223-6           Drug Free Workplace                                                       MAY/2001
----------- ------------------ ------------------------------------------------------------------------- --------------
I-86        52.223-11          Ozone - Depleting Substances                                              MAY/2001
----------- ------------------ ------------------------------------------------------------------------- --------------
I-31        52.225-8           Duty-Free Entry                                                           FEB/2000
----------- ------------------ ------------------------------------------------------------------------- --------------
I-32        52.225-13          Restrictions on Certain Foreign Purchases                                 JUL/2000
----------- ------------------ ------------------------------------------------------------------------- --------------
I-33        52.227-1           Authorization and Consent                                                 JUL/1995
----------- ------------------ ------------------------------------------------------------------------- --------------
I-34        52.227-2           Notice and Assistance Regarding Patent and Copyright Infringement         AUG/1996
----------- ------------------ ------------------------------------------------------------------------- --------------
I-35        52.227-3           Patent Indemnity                                                          APR/1984
----------- ------------------ ------------------------------------------------------------------------- --------------
I-36        52.227-11          Patent Rights - Retention By the Contractor (Short Form)                  JUN/1997
----------- ------------------ ------------------------------------------------------------------------- --------------
</TABLE>

                                 Page 23 of 25
<PAGE>

<TABLE>
<CAPTION>
----------- ------------------ ------------------------------------------------------------------------- --------------
<S>         <C>                <C>                                                                       <C>
I-37        52.228-7           Insurance - Liability to Third Persons                                    MAR/1996
----------- ------------------ ------------------------------------------------------------------------- --------------
I-38        52.232-9           Limitation on Withholding of Payments                                     APR/1984
----------- ------------------ ------------------------------------------------------------------------- --------------
I-40        52.232-20          Limitation of Cost                                                        APR/1984
----------- ------------------ ------------------------------------------------------------------------- --------------
I-41        52.232-23          Assignment of Claims                                                      JAN/1986
----------- ------------------ ------------------------------------------------------------------------- --------------
G-3         52.232-4005        Invoice Information Requirement                                           JAN/1988
----------- ------------------ ------------------------------------------------------------------------- --------------
I-44        52.233-1           Disputes                                                                  DEC/1998
----------- ------------------ ------------------------------------------------------------------------- --------------
I-45        52.233-3           Protest After Award - (Alternate I, dated JUN 1985)                       AUG/1996
----------- ------------------ ------------------------------------------------------------------------- --------------
I-46        52.242-1           Notice of Intent to Disallow Costs                                        APR/1984
----------- ------------------ ------------------------------------------------------------------------- --------------
I-47        52.242-3           Penalties for Unallowable Costs                                           MAY/2001
----------- ------------------ ------------------------------------------------------------------------- --------------
I-48        52.242-4           Certification of Indirect Costs                                           JAN/1997
----------- ------------------ ------------------------------------------------------------------------- --------------
I-49        52.242-13          Bankruptcy                                                                JUL/1995
----------- ------------------ ------------------------------------------------------------------------- --------------
F-1         52.242-15          Stop Work Order - (Alternate 1, dated APR 1984)                           AUG/1989
----------- ------------------ ------------------------------------------------------------------------- --------------
G-4         52.242-4011        Work Directives                                                           FEB/1998
----------- ------------------ ------------------------------------------------------------------------- --------------
            52.243-3           Changes - Time and Materials or Labor-Hours                               SEP/2000
----------- ------------------ ------------------------------------------------------------------------- --------------
I-52        52.243-7           Notification of Changes                                                   APR/1984
----------- ------------------ ------------------------------------------------------------------------- --------------
I-53        52.244-2           Subcontracts (Alt I - AUG 1998)                                           AUG/1998
----------- ------------------ ------------------------------------------------------------------------- --------------
I-54        52.245-5           Government Property (Cost-Reimbursement, Time-and-Material, or            JAN/1986
                               Labor-Hour Contracts)  (Deviation, per DAR Tracking Number 99-00008, 13
                               July 99)
----------- ------------------ ------------------------------------------------------------------------- --------------
I-55        52.245-18          Special Test Equipment                                                    FEB/1993
----------- ------------------ ------------------------------------------------------------------------- --------------
            52.246-6           Inspection - Time and Material and Labor-Hours                            MAY/2001
----------- ------------------ ------------------------------------------------------------------------- --------------
I-56        52.246-23          Limitation of Liability                                                   FEB/1997
----------- ------------------ ------------------------------------------------------------------------- --------------
I-57        52.247-1           Commercial Bill of Lading Notations. The notation set forth in            APR/1984
                               paragraph (a) of the clause applies in this contract.  The agency name
                               in line one of the notation shall read: US Army Tank-Automotive &
                               Armaments Command
----------- ------------------ ------------------------------------------------------------------------- --------------
F-2         52.247-34          F.O.B. Destination                                                        NOV/1991
----------- ------------------ ------------------------------------------------------------------------- --------------
I-58        52.247-63          Preference for U.S. - Flag Air Carriers                                   JAN/1997
----------- ------------------ ------------------------------------------------------------------------- --------------
D-2         52.247-4016        Heat Treatment and Marking of Wood Packaging Materials                    SEP/2001
----------- ------------------ ------------------------------------------------------------------------- --------------
I-59        52.249-6           Termination (Cost-Reimbursement)                                          SEP/1996
----------- ------------------ ------------------------------------------------------------------------- --------------
I-60        52.249-14          Excusable Delays                                                          APR/1984
----------- ------------------ ------------------------------------------------------------------------- --------------
I-61        52.253-1           Computer Generated Forms                                                  JAN/1991
----------- ------------------ ------------------------------------------------------------------------- --------------
H-1         252.203-7002       Display of DOD Hotline Poster                                             DEC/1991
----------- ------------------ ------------------------------------------------------------------------- --------------
H-2         252.204-7002       Payment for Subline Items Not Separately Priced                           DEC/1991
----------- ------------------ ------------------------------------------------------------------------- --------------
I-62        252.204-7003       Control of Government Personnel Work Product                              APR/1992
----------- ------------------ ------------------------------------------------------------------------- --------------
H-3         252.205-7000       Provision of Information to Cooperative Agreement Holders                 DEC/1991
----------- ------------------ ------------------------------------------------------------------------- --------------
I-63        252.209-7000       Acquisition from Subcontractors Subject to On-Site Inspection Under the   NOV/1995
                               Intermediate-Range Nuclear Forces (INF) Treaty
----------- ------------------ ------------------------------------------------------------------------- --------------
I-64        252.209-7004       Subcontracting with Firms that are Owned or Controlled by the             MAR/1998
                               Government of a Terrorist Country per DoD interim rule, Federal
                               Register 27 Mar 98
----------- ------------------ ------------------------------------------------------------------------- --------------
I-65        252.211-7005       Substitutions for Military or Federal Specifications and Standards        AUG/2000
----------- ------------------ ------------------------------------------------------------------------- --------------
I-66        252.215-7000       Pricing Adjustments                                                       DEC/1991
----------- ------------------ ------------------------------------------------------------------------- --------------
I-67        252.215-7002       Cost Estimating System Requirements                                       OCT/1998
----------- ------------------ ------------------------------------------------------------------------- --------------
H-4         252.225-7001       Buy American Act and Balance of Payments Program                          MAR/1998
----------- ------------------ ------------------------------------------------------------------------- --------------
H-5         252.225-7002       Qualifying Country Sources as Subcontractors                              DEC/1991
----------- ------------------ ------------------------------------------------------------------------- --------------
H-6         252.225-7009       Duty-Free-Entry - Qualifying Country Supplies (End Products and           AUG/2000
                               Components)
----------- ------------------ ------------------------------------------------------------------------- --------------
H-7         252.225-7010       Duty-Free-Entry - Additional Provisions                                   AUG/2000
----------- ------------------ ------------------------------------------------------------------------- --------------
</TABLE>

                                 Page 24 of 25
<PAGE>

<TABLE>
<CAPTION>
----------- ------------------ ------------------------------------------------------------------------- --------------
<S>         <C>                <C>                                                                       <C>
I-68        252.225-7012       Preference for Certain Domestic Commodities                               AUG/2000
----------- ------------------ ------------------------------------------------------------------------- --------------
I-69        252.225-7014       Preference for Domestic Specialty Metals (Alt 1)                          MAR/1998
----------- ------------------ ------------------------------------------------------------------------- --------------
I-89        252.225-7015       Preference for Domestic Hand or Measuring Tools                           DEC/1991
----------- ------------------ ------------------------------------------------------------------------- --------------
I-70        252.225-7016       Restriction on Acquisition of Ball and Roller Bearings                    DEC/2000
----------- ------------------ ------------------------------------------------------------------------- --------------
I-71        252.225-7025       Restriction on Acquisition of Forgings                                    JUN/1997
----------- ------------------ ------------------------------------------------------------------------- --------------
I-72        252.225-7026       Reporting of Contract Performance Outside the United States               JUN/2000
----------- ------------------ ------------------------------------------------------------------------- --------------
I-73        252.225-7031       Secondary Arab Boycott of Israel                                          JUN/1992
----------- ------------------ ------------------------------------------------------------------------- --------------
H-14        252.226-7043       Antiterrorism/Force Protection for Defense Contractors Outside the        JUN/1998
                               United States
----------- ------------------ ------------------------------------------------------------------------- --------------
I-74        252.227-7013       Rights in Technical Data - Noncommercial Items                            NOV/1995
----------- ------------------ ------------------------------------------------------------------------- --------------
I-75        252.227-7015       Technical Data - Commercial Items                                         NOV/1995
----------- ------------------ ------------------------------------------------------------------------- --------------
I-76        252.227-7016       Rights in Bid or Proposal Information                                     JUN/1995
----------- ------------------ ------------------------------------------------------------------------- --------------
I-77        252.227-7017       Identification and Assertion of Use, Release, or Disclosure Restrictions  JUN/1995
----------- ------------------ ------------------------------------------------------------------------- --------------
I-78        252.227-7020       Rights in Special Works                                                   JUN/1995
----------- ------------------ ------------------------------------------------------------------------- --------------
I-79        252.227-7025       Limitations on the Use or Disclosure of Government-Furnished              JUN/1995
                               Information Marked with Restrictive Legends
----------- ------------------ ------------------------------------------------------------------------- --------------
I-80        252.227-7030       Technical Data - Withholding of Payment                                   OCT/1988
----------- ------------------ ------------------------------------------------------------------------- --------------
I-81        252.227-7034       Patents - Subcontracts                                                    APR/1984
----------- ------------------ ------------------------------------------------------------------------- --------------
H-8         252.227-7036       Declaration of Technical Data Conformity                                  JAN/1997
----------- ------------------ ------------------------------------------------------------------------- --------------
H-9         252.227-7037       Validation of Restrictive Markings on Technical Data                      SEP/1999
----------- ------------------ ------------------------------------------------------------------------- --------------
H-17        252.227-7039       Patents - Reporting of Subject Inventions                                 APR/1990
----------- ------------------ ------------------------------------------------------------------------- --------------
H-10        252.231-7000       Supplemental Cost Principles                                              DEC/1991
----------- ------------------ ------------------------------------------------------------------------- --------------
H-11        252.235-7011       Final Scientific or Technical Report                                      SEP/1999
----------- ------------------ ------------------------------------------------------------------------- --------------
I-82        252.242-7000       Postaward Conference                                                      DEC/1991
----------- ------------------ ------------------------------------------------------------------------- --------------
I-83        252.244-7000       Subcontracts for Commercial Items and Commercial Components (DoD          MAR/2000
                               Contracts)
----------- ------------------ ------------------------------------------------------------------------- --------------
H-12        252.246-7000       Material Inspection and Receiving Report                                  DEC/1991
----------- ------------------ ------------------------------------------------------------------------- --------------
H-13        252.246-7001       Warranty of Data                                                          DEC/1991
----------- ------------------ ------------------------------------------------------------------------- --------------
I-90        252.247-7023       Transportation of Supplies by Sea                                         NOV/1995
----------- ------------------ ------------------------------------------------------------------------- --------------
I-91        252.247-7024       Notification of Transportation of Supplies by Sea                         MAR/2000
----------- ------------------ ------------------------------------------------------------------------- --------------
</TABLE>

                                 Page 25 of 25

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