SETTLEMENT AND RELEASE

                  WHEREAS the Helionetics Official Committee of Unsecured
Creditors (the "Committee") has initiated an adversary action against KSW, Inc.
("KSW"), as well as against Mr. Floyd Warkol, Mr. Burton Reyer, and Mr. Robert
Brussel (collectively, with KSW, the "KSW Defendants"); and

                  WHEREAS pursuant to the approved Plan of Liquidation and the
Order Confirming Helionetics, Inc.'s Third Amended Chapter 11 Plan as Modified
(which was entered on December 23, 1998), Helionetics, Inc. ("Debtor") has
assigned to the Committee all claims and actions held by the Debtor, the
Debtor-in-Possession and the Debtor's estate, against the KSW Defendants to the
Committee, which claims are a part of the adversary action; and

                  WHEREAS KSW has sued its former counsel (and co-defendant)
Stroock and Stroock and Lavan ("Stroock") in a separate action pending in the
Superior Court of the State of California in and for the County of Los Angeles,
Case No. BC 244442; and

                  WHEREAS the Committee, on behalf of itself and as assignee of
all claims and actions held by the Debtor, the Debtor-in-Possession, and the
Debtor's estate, and the KSW Defendants (collectively, the "Parties") desire to
settle all claims and disputes between the Committee and Debtor on the one hand
and the KSW Defendants on the other hand; and

                  WHEREAS on March 20, 2002 and March 21, 2002, the Committee
and the KSW Defendants reached a binding settlement, which the Parties
anticipated would be replaced and superceded by a more complete, integrated
agreement; and

                  WHEREAS Messrs. Warkol and Reyer have contributed financially
to this settlement pursuant to an agreement between them and KSW; and

                  WHEREAS, KSW has disclosed to the Committee its covenants with
existing lenders and sureties;

                  NOW, THEREFORE, the Parties hereby stipulate and agree as

1.       Payments by KSW

         1.1 KSW shall pay to the Committee the sum of $250,000 within two
business days of final approval of the Settlement Agreement ("Agreement") by the
Bankruptcy Court. Payment shall be delivered to Debtor's Counsel, Drummy King
White Parret & Joerger (Attn: John D. Ott, Esq.), at 611 Anton Blvd., Suite 800,
Costa Mesa, California 92626.

         1.2 In addition to the sum set forth in Section 1.1, and subject to the
limitations set forth herein, KSW shall pay the Committee the additional sum of
$250,000 within one week of the time KSW's Form 10-Q or Form 10-K (whichever the

case may be) is filed with the Securities and Exchange Commission ("SEC") for
the quarter in which this Agreement is approved by the Bankruptcy Court. This
payment shall come only from, and only to the extent of, aggregate operating
profits by KSW commencing with the first quarter of 2002 and continuing
thereafter, but only to the extent that such payments will not place KSW in
violation of any of its existing covenants with any of its lenders or sureties
or within $50,000 of any such covenant. (For purposes of this Paragraph 1.2,
"existing covenants" includes any existing covenant with lenders or sureties, as
well as any similar covenant in any extension or replacement of existing lender
or surety agreements.) If the $250,000 is not paid in full following the quarter
that this Agreement is approved by the Bankruptcy Court, then the unpaid balance
shall be paid within one week of the time that KSW's form 10-Q or form 10-K is
filed with the SEC for the following quarter, but subject to the same
limitations as set forth above. This obligation shall continue from quarter to
quarter until the entire $250,000 is paid.

         1.3 No interest shall accrue on any of the sums set forth in Sections
1.1 and 1.2.

         1.4 For any quarter in which any part of the foregoing sums is not
paid, the Committee shall have the right to designate one person to audit KSW's
books, and may (at the Committee's option) report its findings to a member of
KSW's Audit Committee. Any such audit will be subject to the terms of the
confidentiality agreement executed concurrently herewith.

         1.5 Until such time as the sums set forth in Sections 1.1 and 1.2 have
been paid in full, no unusual and extraordinary compensation shall be paid by
KSW to Mr. Warkol or Mr. Reyer.

         1.6 The Committee's counsel shall hold the payments set forth in
Sections 1.1 and 1.2 secure in an interest bearing account until such time as
the Bankruptcy Court's approval of this settlement is no longer subject to
appellate review. Thereafter, the payments -- and the interest thereon -- may be
distributed to the Committee. Should the Bankruptcy Court's approval be
reversed, however, the payments set forth above and the interest thereon shall
revert to KSW.

2.       Recoupment to KSW

         2.1 The payments set forth in Section 1 are to be refunded to KSW,
without interest, as follows.

         2.2 Schedule of Recoupment

                  2.2.1 If the Committee settles with Stroock or collects a
judgment from Stroock and KSW does not, as a part thereof, dismiss or relinquish
any of its claims against Stroock, then KSW shall receive 50 percent of any


monies collected from or on behalf of Stroock (without deduction or offset)
above $1 million up to $1.5 million, for a maximum recoupment of $250,000.

                  2.2.2 If the Committee resolves its case against Stroock,
whether before of after judgment, and KSW is required, as a part of such
resolution, to dismiss or relinquish any of its claims against Stroock, then KSW
shall receive 50 percent of any monies collected by the Committee from or on
behalf of Stroock (without deduction or offset) from the first dollar collected
up to $1 million (for a maximum recoupment of $500,000), plus 15 percent of any
such monies collected (without deduction or offset) above $1 million up to $4
million (for a maximum additional payment of $450,000), plus 5 percent of any
such monies collected (without deduction or offset) above $4 million. The
Parties recognize that should there be a payment made pursuant to this Section
2.2.2 based on a resolution with Stroock by which over $1 million is collected,
KSW will recover more than the sum it paid pursuant to Section 1 above. The
Parties further recognize that, subject to the provisions in Section 2.3 below,
KSW may be required to dismiss its action against Stroock, in whole or in part,
as a part of the Committee's settlement of its claim against Stroock. In any
settlement with Stroock pursuant to this Section 2.2.2, the Committee guarantees
that (a) it will not settle for less than $700,000 unless KSW is paid $350,000
irrespective of the foregoing percentages; and (b) Stroock will release the KSW
Releasees (defined below). The provisions in the foregoing sentence are referred
to below as the "Committee Guarantee."

         2.3 Settlement Approval Rights

                  2.3.1 KSW's Approval Rights.

               The Committee may not settle its claim against
Stroock without both obtaining KSW's prior consent and (in the case of a
settlement pursuant to Section 2.2.2 above) complying with the Committee
Guarantee. KSW shall have two business days from the time notice is received (as
described in Paragraph 5.14 below) of the essential terms of a settlement
between the Committee and Stroock to refuse to give its consent thereto. If KSW
does not clearly give notice of refusal within that time, KSW will be deemed to
have consented.

               KSW's consent shall not be unreasonably withheld
to any settlement governed by Paragraph 2.2.1.

               If a settlement governed by Section 2.2.2 is
reached prior to both the Material Change Date and the Option Termination Date
(defined below), KSW's consent shall not be unreasonably withheld.
Notwithstanding the foregoing, if the entirety of Stroock's consideration to the
Committee is a lump sum payment and a release, and the Committee fulfills the
Committee Guarantee, then the settlement shall be conclusively presumed to be

               Once the Material Change Date has occurred, the
conclusive presumption of a reasonable settlement set forth in Section


shall no longer apply, although the Committee Guarantee set forth in Section
2.2.2 shall remain in force. The Material Change Date occurs when (if ever)
there has been a material and substantial change in KSW's malpractice claim
against Stroock benefiting KSW. An example of a material and substantial change
would be if KSW obtained summary adjudication of an important issue, or a major
legal or factual issue were favorably resolved by way of a motion or other
procedural device. KSW represents that it has no present intent to seek summary
judgment or summary adjudication of issues prior to January 1, 2003 (unless
otherwise required by the court in the malpractice action). Notwithstanding the
foregoing, and so long as the Committee Guarantee has been fulfilled, KSW's
consent to a settlement by the Committee with Stroock shall not be unreasonably

               Once the Option Termination Date has occurred,
KSW may withhold its consent to any settlement under Section 2.2.2 in its sole
and absolute discretion notwithstanding Section, although the Committee
Guarantee set forth in Section 2.2.2 shall remain in force. The Option
Termination Date occurs when the court in the malpractice action has formally
indicated its view of the merits of KSW's claim against Stroock as to both
liability and compensatory damages even if that view is tentative, has not been
reduced to a judgment, or is subject to appeal or post-trial attack. The Parties
contemplate that "formally" in this context connotes an indication of the
court's view at an appropriate time, such as at a hearing on a dispositive
motion or after trial. A comment by the court in an informal setting, such as at
a settlement conference or other similar type of proceeding, will not be
considered a "formal" indication.

               Any settlement made pursuant to Section 2.2.2 in
which the Committee Guarantee is not fulfilled is conclusively presumed

                  2.3.2 Until the Option Termination Date (defined above), KSW
may not settle its claim against Stroock without the Committee's consent, which
consent may not be unreasonably withheld. On or after the Option Termination
Date, KSW may settle its claim against Stroock without the Committee's consent
so long as KSW has paid the Committee all sums set forth in Paragraphs 1.1 and
1.2, or does so immediately upon receipt of any settlement proceeds from

                  2.3.3 In the event that KSW refuses to consent to a settlement
between the Committee and Stroock under Paragraph 2.2.1 or 2.2.2 prior to the
Option Termination Date, or the Committee refuses to consent to a settlement
between KSW and Stroock and such consent is required, or there exists a dispute
over whether consent is required or whether the Option Termination Date or
Material Change Date has occurred, the Parties hereto shall submit the issue to
Richard Chernick for binding resolution of the dispute. The Parties shall use
their best efforts to obtain a binding resolution within ten (10) business days
of written notification of any proposed settlement. The resolution shall be by
way of expedited binding arbitration by which each Party may submit papers to
Mr. Chernick, and Mr. Chernick may decide whether or not to hear argument so as
to render a timely award. No discovery shall be permitted, except that all
settlement drafts and communications between the purportedly settling parties
relating to the purported settlement shall be immediately exchanged. If Mr.


Chernick is not available, the Parties shall agree on another arbitrator, or, if
they cannot agree, each Party shall simultaneously nominate three candidates
affiliated with J.A.M.S. in Los Angeles or Orange County within one (1) business
day of a request by any Party to so nominate. If any person is nominated by both
Parties, that person shall be the arbitrator (or, if more than one person is so
nominated, then the arbitrator shall be randomly selected from such nominees).
Otherwise, the arbitrator shall be chosen by lot from the Parties' nominees.

         2.4 KSW shall have a lien on any monies paid to the Committee or Debtor
by Stroock to the extent of the recoupment provisions in this Section 2. The
Committee shall have a lien on any monies paid in settlement by Stroock to KSW
to the extent that KSW has not paid to the Committee the sums set forth in
Paragraphs 1.1 and 1.2.

         2.5 Any recoupment to be paid to KSW pursuant to this Section 2 shall
be applied first to any sum not yet paid by KSW to the Committee pursuant to
Paragraphs 1.1 and 1.2.

3.       Releases

         3.1 Definitions.

                  3.1.1 "KSW Releases" shall mean KSW, Inc. and all of its
subsidiaries, officers, directors, employees (including, without limitation,
Messrs. Warkol, Reyer, and Brussel, but excluding persons (other than those just
named) who were officers, directors, or employees of Debtor or any of its
non-KSW, Inc. subsidiaries on or before January 1, 1996 and further excluding
Don Davis, Susan Barnes, KB Equities, and Peter Aiello), insurers and sureties
(but only to the extent of obligations or potential obligations under insurance
policies or surety agreements insuring or benefitting KSW, Inc. or any of its
subsidiaries, officers, directors, or employees in said capacities), and Munger,
Tolles & Olson LLP and Browne and Woods, LLP. "KSW Releasees" does not include
KSW's former attorneys including, but not limited to, Stroock or any of
Stroock's current or former partners or associates.

                  3.1.2 "Committee Releasees" includes the Committee, its
members, the Debtor, Debtor-in-Possession, the Debtor's estate, and Drummy King
White Parret & Joerger. The "Committee Releasees" does not include Stroock or
any of Stroock's present or former partners or associates, or Don Davis.

                  3.1.3 "KSW Releasors" means KSW, Inc., its subsidiaries, and
Messrs. Warkol, Reyer, and Brussel.

                  3.1.4 "Committee Releasors" means the Committee and each
member thereof, the Debtor, Debtor-in-Possession, and the Debtor's estate.

                  3.1.5 Except for claims arising directly from this Agreement,
"Released Claims" means all claims of any kind that were or could have been
raised in this action, from the beginning of time to the present, known or


unknown, suspected or unsuspected. It also includes any other claim, debt, cause
of action, or allegation, in law or in equity, of any kind or type whatsoever,
known or unknown, suspected or unsuspected, arising out of or related to
Helionetics or its subsidiaries, employees, directors, or major shareholders.
The scope of "Released Claims" is intended by the Parties to be broadly
construed and to release as many claims as it is legal to release. To that end,
the Parties expressly waive the provisions of California Civil Code Section
1542, which states:

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

                  3.1.6 "Effective Date" means the date this Agreement is
approved by the Bankruptcy Court.

         3.2 As of the Effective Date, the Committee Releasors release the KSW
Releasees from the Released Claims. In addition, the Committee Releasors agree
that they will bring no fraudulent conveyance or similar action against any
transferee of KSW stock to the extent that the transferee's stock was sold by
KSW to that transferee, directly or indirectly, on or after January 1, 1996,
provided that this forebearance will not apply in favor of Stroock or any of its
present or former partners or associates.

         3.3 As of the Effective Date, the KSW Releasors release the Committee
Releasees from the Released Claims.

         3.4 Within two business days following receipt by the Committee of the
sums set forth in Section 1, the Committee shall file a stipulation for
dismissal with prejudice in the Bankruptcy Action as to KSW, and Messrs. Warkol
and Reyer. The Committee will further stipulate to a judgment to be entered in
favor of Mr. Brussel, but no costs shall be awarded therein. The Committee
further agrees not to appeal said judgment. Pending said dismissal, the
Committee and Debtor shall take no action in this litigation as against any KSW
Releasee except to enforce the terms of this Agreement.

4.       Court Approval

         4.1 The Parties shall mutually use their best efforts promptly to
obtain Bankruptcy Court approval of this Agreement, which approval shall include
a finding of "good faith" pursuant to California Code of Civil Procedure Section
877.6. Court approval may be conditioned upon timely payment of the amount set
forth in Paragraph 1.1.

         4.2 If the Bankruptcy Court does not approve this Agreement, or an
appellate decision is rendered, not subject to further review, disapproving this
Agreement, then this Agreement shall be null and void and any sums paid
hereunder shall be returned to the payor together with interest, any releases
given shall be revoked, and any judgments rendered based on this Agreement shall


be vacated. The Parties further agree that should such an event occur, they will
jointly use their best efforts to place themselves and each other as nearly as
practicable in the position they were in as of January 22, 2002.

5.       Miscellaneous

         5.1 The KSW Defendants will de-designate their experts and will use
their best efforts, consistent with all legal and ethical requirements, to
assure that those experts will not be designated by any other party to this

         5.2 Upon the Committee's request, KSW will waive the attorney-client
and attorney work product protections as to Stroock as permitted by law.

         5.3 The KSW Defendants will not voluntarily testify in this action
except at the Committee's request.

         5.4 KSW's experts (to the extent they agree), counsel, and personnel
will be available to assist the Committee as reasonably requested by the
Committee, provided that the Committee pays any fees and costs charged by KSW's
experts and counsel, and pays any out-of-pocket costs incurred by KSW personnel
to the same extent as those costs would be reimbursed by KSW.

         5.5 This Agreement is a compromise of disputed claims. It is not, and
shall not be used as, an admission of liability by any Party, or as an admission
of any lack of merit of any Party's position.

         5.6 Except as set forth in Section 4.2, this Agreement reflects a full
and complete compromise, accord and satisfaction, and novation of the Parties'
rights as to one another.

         5.7 Each Party shall bear its own costs in the prosecution or defense
of this action. However, should litigation be necessary to enforce the terms of
this Agreement, the prevailing Party (as defined in California Civil Code
Section 1717) shall recover its actual attorneys' fees, costs, and

         5.8 This Agreement supersedes the letter agreements of March 20, 2002
and March 21, 2002 in their entirety.

         5.9 This Agreement is intended to be fully integrated, and all of the
relevant promises and terms are set forth herein. No other promises have been
made, and any such promises are hereby null and void.

         5.10 This Agreement shall be governed by California law.

         5.11 This Agreement is the subject of negotiations by the Parties, and
shall not be construed against the drafting Party. Instead, this Agreement will
be fairly and neutrally construed so to give effect to the Parties' intent set
forth herein.


         5.12 This Agreement shall inure to the benefit of the Parties and their
successors-in-interest as well as the specified releasees. No one else is an
intended third party beneficiary.

         5.13 Each Party and signator hereby represents and warrants to every
other Party that it has full authority to enter into this Agreement and perform
the promises set forth herein. Each Party further represents and warrants to
every other Party that it has not assigned to any other entity any claims it is
purporting to release herein.

         5.14 Notices

                  5.14.1 Notice to the Committee shall be addressed as follows:

                                    Hevka Sramek
                                    325 Lookout Dr.
                                    Sedona, Arizona  86351


                                    John D. Ott, Esq.
                                    Drummy King White Parret & Joerger
                                    611 Anton Blvd., Suite 800
                                    Costa Mesa, California  92626

                  5.14.2 Notice to KSW, Mr. Warkol, Mr. Reyer, or Mr. Brussel
shall be addressed as follows:

                                    James Oliviero
                                    General Counsel
                                    KSW, Inc.
                                    37-16 23rd Street
                                    Long Island City, NY  11101


                                    Mark H. Epstein
                                    Munger, Tolles & Olson LLP
                                    355 S. Grand Ave., 35th Floor
                                    Los Angeles, CA  90071

                  5.14.3 Notices shall be hand delivered or sent by overnight
mail, and shall be effective and deemed made upon receipt, but if receipt occurs
after 5:00 p.m. or on a Saturday, Sunday, or legal holiday, then receipt shall
be deemed to occur on the next business day.

         5.15 This Agreement may be amended only through a written amendment
signed by all affected Parties.


         5.16 This Agreement may be signed in counterparts, but each such
counterpart shall be considered one and the same original.

Dated:  June 11, 2002                   Dated:  June 11, 2002

/s/ Floyd Warkol                        /s/ Hevka Sramek
- -----------------------------------     ---------------------------------------
For KSW, Inc.                           For the Official Committee of
                                        Unsecured Creditors

Dated:  June 11, 2002

/s/ Floyd Warkol
- -----------------------------------
Floyd Warkol

Dated:  June 11, 2002

/s/ Burton Reyer
- -----------------------------------
Burton Reyer

Dated:  June 11, 2002

/s/ Robert Brussel
- -----------------------------------
Robert Brussel