Stock Purchase Agreement between HiEnergy Technologies, Inc. and Purchaser (February 9, 2004)
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This agreement is between HiEnergy Technologies, Inc. and a purchaser for the sale of company common stock and warrants. The purchaser agrees to buy 333,333 shares and several warrants for $150,000, with an option to buy additional shares and warrants for up to $650,000 if certain market conditions are met. The agreement outlines the purchase terms, pricing, and conditions for exercising warrants, and specifies that the securities are for investment only and subject to transfer restrictions under securities laws.
EX-10.64 8 stockpurch.txt EXHIBIT 10.64 THE SECURITIES REFERRED TO HEREIN HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR QUALIFIED UNDER ANY STATE SECURITIES LAW IN RELIANCE UPON EXEMPTIONS THEREFROM. THE SECURITIES MAY BE ACQUIRED FOR INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR OFFERED TO BE SO TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH TRANSACTION SHALL NOT VIOLATE ANY FEDERAL OR STATE SECURITIES LAWS. STOCK PURCHASE AGREEMENT This STOCK PURCHASE AGREEMENT ("Agreement") is dated February 9, 2004 between the purchaser identified on the signature page hereto and any assignee of such person ("Purchaser"), and HiEnergy Technologies, Inc., a Delaware corporation ("Company"). 1. Purchases and Sale. (1). Purchase and Sale. Purchaser agrees to buy and the Company agrees to sell and issue to Purchaser, at the First Closing, for an aggregate purchase price of One Hundred and Fifty Thousand Dollars ($150,000) in cash (the "Minimum Purchase Price"): (a) 333,333 shares of the Company's authorized and previously unissued common stock, par value $0.001 per share ("Common Stock"); (b) a 3 1/2 year warrant to purchase Common Stock in substantially the form attached hereto as Attachment B, with an initial exercise price of $0.83 per share, subject to adjustment, for the purchase initially of up to 180,722 shares of Common Stock; (c) a 3 1/2 year warrant to purchase Common Stock in substantially the form attached hereto as Attachment B, with an exercise price of $1.38 per share, subject to adjustment, for the purchase initially of up to 108,697shares of Common Stock; (d) a 3 1/2 year warrant to purchase Common Stock in substantially the form attached hereto as Attachment B, with an exercise price of $1.65 per share, subject to adjustment, for the purchase initially of up to 90,909 shares of Common Stock; and (e) a 3 1/2 year warrant to purchase Common Stock in substantially the form attached hereto as Attachment B, with an initial exercise price of $0.49 per share, subject to adjustment, for the purchase initially of up to 306,122 shares of Common Stock. (2) If the Closing Market Price equals or exceeds $0.92, then Purchaser shall have the right to purchase the following shares and warrants, and if the Purchaser exercises such right as provided hereinafter, the Company agrees to sell and issue to Purchaser upon the Second Closing, for an aggregate purchase price of up to Six Hundred and Fifty Thousand Dollars ($650,000) in cash (the "Additional Purchase Price"): (a) one whole share of the Common Stock for each $0.45 of the Additional Purchase Price; (b) a 3 1/2 year warrant to purchase Common Stock in substantially the form attached hereto as Attachment B, with an initial exercise 1 price of $0.83 per share, subject to adjustment, covering the number of shares of Common Stock that could be purchased at the exercise price with an amount in cash equal to the Additional Purchase Price; (c) a 3 1/2 year warrant to purchase Common Stock in substantially the form attached hereto as Attachment B, with an exercise price of $1.38 per share, subject to adjustment, covering the number of shares of Common Stock that could be purchased at that exercise price with an amount in cash equal to the Additional Purchase Price; and (d) a 3 1/2 year warrant to purchase Common Stock in substantially the form attached hereto as Attachment B, with an exercise price of $1.65 per share covering the number of shares of Common Stock that could be purchased at that exercise price with an amount in cash equal to the Additional Purchase Price. "Closing Market Price" shall mean the average Per Share Market Value of the five Trading Days immediately prior to the Effectiveness Date, the Effectiveness Date itself, and the five Trading Days immediately after the Effectiveness Date. "Effectiveness Date" shall mean the date as of which the Registration Statement, as defined in Section 5 of this Agreement, is declared effective by the Securities and Exchange Commission. "Per Share Market Value" shall means on any particular date (a) the closing sale price for a share of Common Stock in the over-the-counter market, as reported by the OTC Bulletin Board or in the National Quotation Bureau Incorporated (or similar organization or agency succeeding to its functions of reporting prices), or as reported by such other senior United States trading facility as the Issuer may elect, at the close of business on such date, or (b) if the Common Stock is not then publicly traded the fair market value of a share of Common Stock as determined by the Board in good faith; provided, however, that the Majority Holders, after receipt of the determination by the Board, shall have the right to select, jointly with the Issuer, an Independent Appraiser, in which case, the fair market value shall be the determination by such Independent Appraiser; and provided, further that all determinations of the Per Share Market Value shall be appropriately adjusted for any stock dividends, stock splits or other similar transactions during such period. The determination of fair market value shall be based upon the fair market value of the Issuer determined on a going concern basis as between a willing buyer and a willing seller and taking into account all relevant factors determinative of value, and shall be final and binding on all parties. In determining the fair market value of any shares of Common Stock, no consideration shall be given to any restrictions on transfer of the Common Stock imposed by agreement or by federal or state securities laws, or to the existence or absence of, or any limitations on, voting rights. "Term" The right to subscribe for and purchase shares of the aforementioned warrant stock shall commence on February 6, 2004 and shall expire at 5:00 p.m., eastern time, on the date that is three and one-half years after the Effectiveness Date. 2 "Trading Day" means (a) a day on which the Common Stock is traded on the OTC Bulletin Board, or (b) if the Common Stock is not traded on the OTC Bulletin Board, a day on which the Common Stock is quoted in the over-the-counter market as reported by the National Quotation Bureau Incorporated (or any similar organization or agency succeeding its functions of reporting prices) or such other senior United States trading facility as in the issuer may elect; provided, however, that in the event that the Common Stock is not listed or quoted as set forth in (a) or (b) hereof, then Trading Day shall mean any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in the State of New York are authorized or required by law or other government action to close. The Common Stock issuable under this Agreement, the Warrants issuable under this Agreement (each a "Warrant" and collectively the "Warrants"), and Common Stock issuable upon exercise of each Warrant, are herein collectively called the "Securities." (b) Closings. The First Closing shall occur concurrently with the execution of this Agreement. The Second Closing shall be held as soon as practicable on or after the third business day after the Effectiveness Date if Purchaser makes the election under Section 1(2) by delivering written notice to the Company on or before the third business day after the Effectiveness Date. The First Closing and the Second Closing (each the "Closing" and collectively the "Closings") shall be conducted via telephone and facsimile transmission. At the First Closing, the Purchaser shall pay the Minimum Purchase Price by wire transfer against delivery to the Purchaser by facsimile of executed issuance instructions to issue the Common Stock and the executed Warrants as set forth in Section 1(1). At the Second Closing, in the event that Purchaser exercises its rights under Section 1(2), the Purchaser shall pay the Additional Purchase Price by wire transfer against delivery to the Purchaser by facsimile of executed issuance instructions to issue the Common Stock and executed Warrants as set forth in Section 1(2). 2. Representations and Warranties of the Company. The Company hereby makes the following representations and warranties to the Purchaser: (a) Organization and Qualification. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware with the requisite corporate power and authority to own and use its properties and assets and to carry on its business as currently conducted. The Company is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary. (b) Authorization. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The execution and delivery of this Agreement by the Company and the consummation of the transaction contemplated hereby have been duly authorized by all necessary action on the part of the Company, the undersigned is duly authorized to execute this Agreement on behalf of the Company, and no further action is required by the Company or its shareholders for the Company to execute and consummate this Agreement and the transactions contemplated hereby. This Agreement has been duly executed by the Company and, when delivered in accordance with the terms hereof, and assuming the valid execution hereof by the Purchaser, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (a) as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally, (b) as enforceability of any indemnification and contribution provisions may be limited under the federal and state securities laws and public policy, and (c) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefore may be brought. 3 (c) No Conflicts. The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby does not and will not: (i) conflict with or violate any provision of the Company's certificate of incorporation or bylaws (each as amended through the date hereof), or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment or acceleration (with or without notice, lapse of time or both) of, any material agreement or indebtedness to which the Company is a party or by which any material property or asset of the Company is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, decree or other restriction of any court, governmental authority or stock market to which the Company or the Common Stock is subject. (d) Issuance of the Securities. The Shares and the Warrants are duly authorized and, when issued and paid for in accordance with the terms hereof, will be legally issued, fully paid and nonassessable, free and clear of all liens and encumbrances (other than any that are the result of any action or inaction of the Purchaser). The shares issuable upon exercise of the Warrants, when paid for in accordance with the terms of the Warrant, will be legally issued, fully paid and nonassessable, free and clear of all liens and encumbrances (other than any that are the result of any action or inaction of the Purchaser). (f) Disclosure. Neither the Company nor any other Person acting on its behalf has provided the Purchaser or their agents or counsel with any information that constitutes or may, in the Company's opinion, constitute material non-public information. (g) Capitalization. The authorized capital stock of the Company is comprised of 100,000,000 shares of Common Stock, par value $.001 per share, and 1,000,000 shares of Preferred Stock, par value $1.00 per share. As of January 30, 2004 there were 31,454,419 shares of Common Stock and no shares of Preferred Stock outstanding. The Company has a sufficient amount of authorized and unissued shares of Common Stock to reserve for issuance, under the Notes and the Warrants, the maximum number of shares issuable thereunder initially. 4 (h) SEC Reports and Financial Statements. The Company has filed with the SEC all forms, reports, schedules, statements and other documents required to be filed by it under the Securities Exchange Act of 1934, as amended, or the Securities Act of 1933, as amended (collectively, the "Securities Acts") (as such documents will be filed after the date hereof or have been amended since the time of their filing, collectively the "Company SEC Documents"). Except as to such matters as may be described in the comment and response letters between the SEC and the Company, as of their respective dates, or if amended, as of the date of the last such amendment, the Company SEC Documents, including any financial statements or schedules included therein (a) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading and (b) complied in all material respects with the applicable requirements of the Securities Acts and the applicable rules and regulations of the SEC thereunder. Except as to such matters as may be described in the comment and response letters between the SEC and the Company, each of the consolidated financial statements included in the Company SEC Documents (the "Financial Statements") complies in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto, (ii) has been prepared in accordance with United States generally accepted accounting principles ("GAAP") applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto and subject, in the case of unaudited statements, to normal year-end audit adjustments) and (iii) fairly presents the consolidated financial position and the consolidated results of operations and cash flows (and changes in financial position, if any) of the Company and its consolidated Subsidiaries as of the times and for the periods referred to therein. 3. Representations and Warranties of the Purchaser. The Purchaser hereby represents and warrants to the Company as follows: (a) Validity. Upon the execution and delivery of this Agreement, and assuming the valid execution thereof by the Company, this Agreement shall constitute the valid and binding obligation of the Purchaser, enforceable against the Purchaser in accordance with its terms, except (a) as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally, (b) as enforceability of any indemnification and contribution provisions may be limited under the federal and state securities laws and public policy, and (c) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefore may be brought. (b) No Conflicts. The execution, delivery and performance of this Agreement by the Purchaser and the consummation by the Purchaser of the transactions contemplated hereby does not and will not (i) conflict with or violate any provision of the Purchaser's certificate of incorporation or bylaws (each as amended through the date hereof), or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment or acceleration (with or without notice, lapse of time or both) of, any material agreement or indebtedness to which the Purchaser is a party or by which any material property or asset of the Purchaser is bound or affected, or (iii) result in a violation of any order, judgment or decree of any court to which the Purchaser is subject. 5 (c) Investment Representations. (i) The Purchaser is capable of bearing the economic risks of this investment, including the possible loss of the entire investment; (ii) The Securities are being acquired for investment only and for the Purchaser's own account and not with a view to, or for sale in connection with, the distribution thereof, nor with any present intention of distributing or selling any of the Securities; (iii) The Purchaser understands that the Securities have not been qualified under the Delaware Securities Act, as amended, (the "Law") or any other applicable state securities laws and that the Securities have not been registered under the Securities Act of 1933, as amended, (the "Act"), and are being offered and sold pursuant to exemptions thereunder, and that in this connection the Company is relying on the Purchaser's representations set forth in this Stock Purchase Agreement; (iv) The Purchaser understands and agrees that the Securities may not be offered or transferred in any manner unless (i) the Securities are subsequently registered under the Act and any applicable state securities laws, or (ii) an opinion of counsel satisfactory to the Company has been rendered stating that such offer or transfer will not violate any applicable federal or state securities laws; (v) The Purchaser understands and agrees that in addition to any other restrictive legend which may be imposed on the certificates, the certificates evidencing said Securities will bear substantially the following legend or a similar legend: THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS PURSUANT TO SEC RULE 144 (IF AVAILABLE) OR THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT COVERING SUCH SECURITIES OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE 1933 ACT. 6 (vi) The Purchaser is an Accredited Investor as defined in Regulation D under the Act; (vii) By executing this Stock Purchase Agreement, the Purchaser hereby acknowledges receipt of all such information as the Purchaser deems necessary and appropriate to enable the Purchaser to evaluate the merits and risks in acquiring the Securities. The Purchaser acknowledges receipt of satisfactory and complete information covering the business and financial condition of the Company, including the opportunity to obtain information regarding the Company's financial status, in response to all inquiries in respect thereof. The Purchaser has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of acquiring the Securities and the capacity of protecting its own interests in the transaction; (viii) The Purchaser has been furnished with the materials relating to the Company and the offering of the Securities which he has requested, and has been afforded the opportunity to make inquiries concerning the Company and such matters as the Purchaser has deemed necessary, and has further been afforded the opportunity to obtain any additional information required by the Purchaser to the extent the Company possesses such information or could acquire it without unreasonable effort or expense; (ix) The Purchaser has substantial means of providing for its current needs and contingencies and has no need for liquidity in this investment; (x) The Purchaser has determined that the Securities are a suitable investment for it and that it could bear a complete loss of its entire investment; (xi) The Purchaser has relied on its own tax and legal advisor and its own investment counselor with respect to the income tax and investment considerations of a purchase of the Securities; (xii) The Purchaser did not learn of the offering described herein through any general advertising or other literature, and it has relied only on the information furnished or made available to them by the Company described above; (xiii) No representations or warranties have been made to the Purchaser by the Company, its officers, directors or shareholders or any persons acting on behalf of the Company, or any affiliates of any of them, other than the representations set forth herein; and (xiv) The foregoing representations, warranties and agreements of the Purchaser shall survive the sale and issuance of the Securities to the Purchaser. 4. Intentionally Omitted. 7 5. Registration Rights. The Company shall cause within a reasonable time, and in any case not later than February 29, 2004, the preparation and filing of a Registration Statement on Form SB-2 (as amended herein called the "Registration Statement") that includes the Shares and the shares of Common Stock issuable upon exercise of each Warrant. If the Holder continues to hold the Shares, the Company will pay Holder in arrears in like kind a number of Securities equal to two percent of the Securities purchased if the Company has not caused the shares to become registered by April 30, 2004. Thereafter the Company shall continue to pay such amount to the Holder on the last day of each calendar month if the Company has not caused the shares to become registered by that date, together with a pro rata monthly portion of such amount if the Effectiveness Date is on any date other than the last day of any calendar month after April 30, 2004. In addition, no such payment is due to the extent such payment causes the total amount payable for failure to obtain an effective registration statement to exceed the amount permitted by law. The Issuer shall use its reasonable best efforts to cause a Registration Statement on Form SB-2 that includes the shares of Common Stock issuable hereunder to remain effective to December 31, 2005 or any earlier date when all the shares issuable under this Agreement and the Warrants are or may be sold under Rule 144(k). It is the express intention of the parties that at all times they shall comply with all applicable laws, including usury laws. This Agreement shall automatically be modified to the extent necessary to achieve that purpose. 6. Covenants of the Company. (a) Full-Ratchet Adjustment. If prior to January 15, 2005, the Company enters into a binding written agreement to sell, or sells, Common Stock or equivalents (except pursuant to the Company's stock incentive plans) at a price that is less than $0.45 per share, then the purchase price of the Shares issued pursuant to this Agreement shall be deemed adjusted to equal the lower price and additional shares shall be issued. Successive adjustments shall be made in the event of multiple sales at lower selling prices. (b) First Right of Refusal. From the First Closing until January 15, 2005, the Company shall promptly give notice to the Purchaser if the Company enters into a binding agreement to sell shares of the Company's Common Stock to a third-party for cash at a price below $0.45 per share. The notice will contain the price, terms, identity of third party buyer, and other customary detailed information. Within five (5) Trading Days after such notice is given, Purchaser shall have the right to elect to purchase shares in an amount determined by Purchaser, but not more than 20% of the amount offered, at the same price and on the same terms at which the shares are sold to such third party. Purchaser shall transfer funds for such purchase to the Company concurrently with the third party, and the closing of such purchase shall be either concurrently with or within three (3) Trading Days after the third party purchase and sale is consummated, as the Company may determine. 7. Counterparts. This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. This Agreement, once executed by a party, may be delivered to the other party hereto by facsimile transmission of a copy of this Agreement bearing the signature of the party so delivering this Agreement, which shall be deemed fully valid and binding. The parties also agree to forward promptly their original signature on a copy of this Agreement to the other party. 8 8. Entire Agreement. This Agreement contains the entire understanding of the parties with respect to the matters covered herein and, except as specifically set forth herein, neither the Company nor the Purchaser make any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be amended other than by an instrument in writing signed by the Company and Purchaser. 9. Severability. In the event that any provision of this Agreement shall be determined to be invalid or unenforceable by any court of competent jurisdiction, the remainder of this agreement shall not be affected thereby, and any invalid or unenforceable provision shall be reformed so as to be valid and enforceable to the full extent permitted by law. 10. Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earlier of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified for notice prior to 5:00 p.m., eastern time, on a Trading Day, (ii) the Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified for notice later than 5:00 p.m., eastern time, on any date and earlier than 11:59 p.m., eastern time, on such date, (iii) the Trading Day following the date of mailing, if sent by nationally recognized overnight courier service or (iv) actual receipt by the party to whom such notice is required to be given. The addresses for such communications shall be with respect to the Purchaser, addressed to such Purchaser at his last known address or facsimile number appearing on the books of the Issuer maintained for such purposes, with a copy to the Purchaser's legal counsel, if designated by Purchaser, or with respect to the Issuer, addressed to: HiEnergy Technologies, Inc. 1601B Alton Parkway Irvine, California 92606 Attention: President Tel. No.: (949) 757-0855 Fax No.: (949) 757-1477 Any party hereto may from time to time change its and its counsel's address for notices by giving at least ten (10) days written notice of such changed address to the other party hereto. [SIGNATURE PAGE FOLLOWS] 9 IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above. COMPANY: HIENERGY TECHNOLOGIES, INC. By: /S/ Bogdan C. Maglich ----------------------------------------- Name: Bogdan C. Maglich Title: Chairman, Chief Executive Officer and Treasurer PURCHASER: Print or Type Name in which Title is to be Held: Bullbear Capital Partners LLC By: /s/ Brian D. Corday ----------------------------------------- Name: Brian D. Corday Title: President ASSIGNMENT The Purchaser may in the future assign the foregoing Agreement to an assignee of the Purchaser's choice. The Purchaser may use the following assignment form. FOR VALUE RECEIVED, the above-signed Purchaser, pursuant to the provisions of the within Stock Purchase Agreement hereby assigns and transfers unto ____________________________ the rights, titles and interests of Purchaser under the within Stock Purchase Agreement and all rights evidenced thereby and does irrevocably constitute and appoint _____________, attorney, to transfer the Shares and Warrant W-__ on the books of the within-named Company. ASSIGNOR Dated: _________________ Signature:_______________ Name:_______________ Title:________________ Assignee:____________________________ Address:_____________________________ Tax ID. No.:_________________________ 10 Exhibit 10.64 ATTACHMENT A Not Used Exhibit 10.64 ATTACHMENT B TO HIENERGY/BULLBEAR STOCK PURCHASE AGREEMENT THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR HIENERGY TECHNOLOGIES, INC. SHALL HAVE RECEIVED AN OPINION OF ITS COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED. WARRANT TO PURCHASE SHARES OF COMMON STOCK OF HIENERGY TECHNOLOGIES, INC. Expires: 3 1/2years after effectiveness of registration statement Holder: ________________ Warrant No.: W-_____ Number of Warrant Shares: ______ Exercise Price: $___ per Warrant Share Original Issue Date: February 9, 2004 FOR VALUE RECEIVED, subject to the provisions hereinafter set forth, the undersigned, HiEnergy Technologies, Inc., a Delaware corporation (together with its successors and assigns, the "Issuer"), hereby certifies that the Holder or its registered assign or assigns (individually or collectively referred to as the "Holder") is entitled to subscribe for and purchase, during the period defined below in this Warrant as the Term, the number of Warrant Shares indicated above shares (subject to adjustment as hereinafter provided) of the duly authorized, validly issued, fully paid and non-assessable shares of the Issuer's Common Stock, as defined below in this Warrant, at an exercise price per share equal to the Warrant Price then in effect, subject, however, to the provisions and upon the terms and conditions hereinafter set forth. 1. Definitions. For the purposes of this Warrant, the following terms have the following meanings: "Board" means the Board of Directors of the Issuer. "Business Day" means any day except a Saturday, Sunday or any day on which commercial banks in Irvine, California or New York, New York are authorized or required by law or other government action to close. "Capital Stock" means and includes (i) any and all shares, interests, participations or other equivalents of or interests in (however designated) corporate stock, including, without limitation, shares of preferred or preference stock, (ii) all partnership interests (whether general or limited) in any Person which is a partnership, (iii) all membership interests or limited liability company interests in any limited liability company, and (iv) all equity or ownership interests in any Person of any other type. "Certificate of Incorporation" means the Certificate of Incorporation of the Issuer as in effect on the Original Issue Date, and as hereafter from time to time amended, modified, supplemented or restated in accordance with the terms hereof and thereof and pursuant to applicable law. "Common Stock" means the Common Stock, par value $0.001 per share, of the Issuer and any other Capital Stock into which such stock may hereafter be changed. "Effectiveness Date" means the date that the Registration Statement as described in Section 5 of the Purchase Agreement becomes effective with respect to the Warrant Shares to be issued upon the exercise of this Warrant by the Holder. "Exercise Date" means the date that the amount payable under Section 3(b) is received in full by the Issuer in immediately available U.S. dollar denominated funds in the account of the Issuer at a financial institution designated from time to time by the Issuer pursuant to the Purchase Agreement. "Governmental Authority" means any governmental, regulatory or self-regulatory entity, department, body, official, authority, commission, board, agency or instrumentality, whether federal, state or local, and whether domestic or foreign. "Holders" mean the Persons who shall from time to time own any Warrant. The term "Holder" means one of the Holders. "Independent Appraiser" means a nationally recognized or major regional investment banking firm or firm of independent certified public accountants of recognized standing (which may be the firm that regularly examines the financial statements of the Issuer) that is regularly engaged in the business of appraising the Capital Stock or assets of corporations or other entities as going concerns, and which is not affiliated with either the Issuer or the Holder of any Warrant. "Issuer" means HiEnergy Technologies, Inc., a Delaware corporation, and its successors. "Majority Holders" means at any time the Holders of Warrants exercisable for a majority of the Warrant Shares issuable under the Warrants at the time outstanding. "Original Issue Date" means the date of the Closing as defined in the Purchase Agreement. "OTC Bulletin Board" means the over-the-counter electronic bulletin board. "Other Common" means any other Capital Stock of the Issuer of any class which shall be authorized at any time after the date of this Warrant (other than Common Stock) and which shall have the right to participate in the distribution of earnings and assets of the Issuer without limitation as to amount. "Person" means an individual, corporation, limited liability company, partnership, joint stock company, trust, unincorporated organization, joint venture, Governmental Authority or other entity of whatever nature. "Per Share Market Value" means on any particular date (a) the closing sale price for a share of Common Stock in the over-the-counter market, as reported by the OTC Bulletin Board or in the National Quotation Bureau Incorporated (or similar organization or agency succeeding to its functions of reporting prices), or as reported by such other senior United States trading facility as the Issuer may elect, at the close of business on such date, or (b) if the Common Stock is not then reported by the OTC Bulletin Board or the National Quotation Bureau Incorporated (or similar organization or agency succeeding to its functions of reporting prices) or by such other senior United States trading facility as the Issuer may elect, then the average of the "Pink Sheet" quotes for the relevant conversion period, as determined in good faith by the Board, or (c) if the Common Stock is not then publicly traded the fair market value of a share of Common Stock as determined by the Board in good faith; provided, however, that the Majority Holders, after receipt of the determination by the Board, shall have the right to select, jointly with the Issuer, an Independent Appraiser, in which case, the fair market value shall be the determination by such Independent Appraiser; and provided, further that all determinations of the Per Share Market Value shall be appropriately adjusted for any stock dividends, stock splits or other similar transactions during such period. The determination of fair market value shall be based upon the fair market value of the Issuer determined on a going concern basis as between a willing buyer and a willing seller and taking into account all relevant factors determinative of value, and shall be final and binding on all parties. In determining the fair market value of any shares of Common Stock, no consideration shall be given to any restrictions on transfer of the Common Stock imposed by agreement or by federal or state securities laws, or to the existence or absence of, or any limitations on, voting rights. "Purchase Agreement" means the Stock Purchase Agreement dated as of February 9, 2004 between the Issuer and the investors party thereto. "Registration Statement" means the registration statement on Form SB-2 or another available form registering the Warrant Shares as described in Section 5 of the Purchase Agreement. "Securities" means any debt or equity securities of the Issuer, whether now or hereafter authorized, any instrument convertible into or exchangeable for Securities or a Security, and any option, warrant or other right to purchase or acquire any Security. "Security" means one of the Securities. "Securities Act" means the Securities Act of 1933, as amended, or any similar federal statute then in effect. "Subsidiary" means any corporation at least 50% of whose outstanding Voting Stock shall at the time be owned directly or indirectly by the Issuer or by one or more of its Subsidiaries, or by the Issuer and one or more of its Subsidiaries. "Term" has the meaning specified in Section 2 hereof. "Trading Day" means (a) a day on which the Common Stock is traded on the OTC Bulletin Board, or (b) if the Common Stock is not traded on the OTC Bulletin Board, a day on which the Common Stock is quoted in the over-the-counter market as reported by the National Quotation Bureau Incorporated (or any similar organization or agency succeeding its functions of reporting prices) or such other senior United States trading facility as in the issuer may elect; provided, however, that in the event that the Common Stock is not listed or quoted as set forth in (a) or (b) hereof, then Trading Day shall mean any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in the State of New York are authorized or required by law or other government action to close. "Voting Stock" means, as applied to the Capital Stock of any corporation, Capital Stock of any class or classes (however designated) having ordinary voting power for the election of a majority of the members of the Board of Directors (or other governing body) of such corporation, other than Capital Stock having such power only by reason of the happening of a contingency. "Warrants" means the Warrants issued and sold pursuant to the Purchase Agreement, including, without limitation, this Warrant, and any other warrants of like tenor issued in substitution or exchange for any thereof pursuant to the provisions of Section 3(c), 3(d) or 3(e) hereof or of any of such other Warrants. "Warrant Price" initially means U.S. $___, as such price may be adjusted from time to time as shall result from the adjustments specified in this Warrant, including Section 5 hereto. "Warrant Share Number" means at any time the aggregate number of Warrant Shares which may at such time be purchased upon exercise of this Warrant, after giving effect to all prior adjustments to such number made or required to be made under the terms hereof. "Warrant Shares" means shares of Common Stock issuable upon exercise of any Warrant or Warrants or otherwise issuable pursuant to any Warrant or Warrants. 2. Term. The right to subscribe for and purchase Warrant Shares represented hereby shall commence on February 9, 2004 and shall expire at 5:00 pm, Eastern Time, on the date that is three and one-half years after the Effectiveness Date (such period sometimes herein called the "Term"). 3. Method of Exercise and Payment; Issuance of New Warrant Certificates; Transfer and Exchange. (a) Time of Exercise. The purchase rights represented by this Warrant may be exercised in whole or in part at any time and from time to time during the Term, and this Warrant shall be considered exercised on the date (the "Exercise Date") that the amount payable under Section 3(b) is received in full by the Issuer in immediately available U.S. dollar denominated funds in the account of the Issuer at a financial institution designated from time to time by the Issuer pursuant to the Purchase Agreement. (b) Method of Exercise. The Holder hereof may exercise this Warrant, in whole or in part, by the surrender of this Warrant (with the exercise form attached hereto duly executed) at the principal office of the Issuer, and by the payment in full to the Issuer of an amount of consideration therefore equal to the Warrant Price in effect on the Exercise Date multiplied by the number of Warrant Shares with respect to which this Warrant is then being exercised, payable in immediately available U.S. dollar denominated funds to the account of the Issuer at a financial institution designated from time to time by the Issuer pursuant to the Purchase Agreement (c) Issuance of Stock Certificates. In the event of any exercise of the rights represented by this Warrant in accordance with and subject to the terms and conditions hereof, (i) certificates for the Warrant Shares so purchased shall be dated as of the Exercise Date and delivered to the Holder hereof within a reasonable time, not exceeding three (3) Trading Days after the Exercise Date, and the Holder hereof shall be deemed for all purposes to be the Holder of the Warrant Shares so purchased as of the Exercise Date and (ii) unless this Warrant has expired, a new Warrant representing the number of Warrant Shares, if any, with respect to which this Warrant shall not then have been exercised (less any amount thereof which shall have been canceled in payment or partial payment of the Warrant Price as hereinabove provided) shall also be issued to the Holder hereof at the Issuer's expense within such time. (d) Transferability of Warrant. Subject to Section 3(f), this Warrant may be transferred by a Holder without the consent of the Issuer. If transferred pursuant to this paragraph and subject to the provisions of subsection (f) of this Section 3, this Warrant may be transferred on the books of the Issuer by the Holder hereof in person or by duly authorized attorney, upon surrender of this Warrant at the principal office of the Issuer, properly endorsed (by the Holder executing an assignment in the form attached hereto) and upon payment of any necessary transfer tax or other governmental charge imposed upon such transfer. This Warrant is exchangeable at the principal office of the Issuer for Warrants for the purchase of the same aggregate number of Warrant Shares, each new Warrant to represent the right to purchase such number of Warrant Shares as the Holder hereof shall designate at the time of such exchange. All Warrants issued on transfers or exchanges shall be dated the Original Issue Date and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant hereto. (e) Continuing Rights of Holder. The Issuer will, at the time of or at any time after each exercise of this Warrant, upon the request of the Holder hereof, acknowledge in writing the extent, if any, of its continuing obligation to afford to such Holder all rights to which such Holder shall continue to be entitled after such exercise in accordance with the terms of this Warrant, provided that if any such Holder shall fail to make any such request, the failure shall not affect the continuing obligation of the Issuer to afford such rights to such Holder. (f) Compliance with Securities Laws. (i) The Holder of this Warrant, by acceptance hereof, acknowledges that this Warrant or the Warrant Shares to be issued upon exercise hereof are being acquired solely for the Holder's own account and not as a nominee for any other party, and for investment, and that the Holder will not offer, sell or otherwise dispose of this Warrant or any Warrant Shares to be issued upon exercise hereof except pursuant to an effective registration statement, or an exemption from registration, under the Securities Act and any applicable state securities laws. (ii) Except as provided in paragraph (iii) below, this Warrant and all certificates representing Warrant Shares issued upon exercise hereof shall be stamped or imprinted with a legend in substantially the following form: THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR HIENERGY TECHNOLOGIES, INC. SHALL HAVE RECEIVED AN OPINION OF ITS COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED. (iii) The restrictions imposed by this subsection (f) upon the transfer of this Warrant or the Warrant Shares to be purchased upon exercise hereof shall terminate (A) when such securities shall have been resold pursuant to an effective registration statement under the Securities Act, (B) upon the Issuer's receipt of an opinion of counsel, in form and substance reasonably satisfactory to the Issuer, addressed to the Issuer to the effect that such restrictions are no longer required to ensure compliance with the Securities Act and state securities laws or (C) upon the Issuer's receipt of other evidence reasonably satisfactory to the Issuer that such registration and qualification under the Securities Act and state securities laws are not required. Whenever such restrictions shall cease and terminate as to any such securities, the Holder thereof shall be entitled to receive from the Issuer (or its transfer agent and registrar), without expense (other than applicable transfer taxes, if any), new Warrants (or, in the case of Warrant Shares, new stock certificates) of like tenor not bearing the applicable legend required by paragraph (ii) above relating to the Securities Act and state securities laws. 4. Stock Fully Paid; Reservation and Listing of Shares; Covenants. (a) Stock Fully Paid. The Issuer represents, warrants, covenants and agrees that all Warrant Shares which may be issued upon the exercise of this Warrant or any shares of capital stock otherwise issuable hereunder will, upon issuance, be duly authorized, validly issued, fully paid and non-assessable and free from all taxes, liens and charges created by, through or under Issuer, other than resale restrictions under the federal or state securities laws. (b) Reservation. The Issuer covenants and agrees that during the period within which this Warrant may be exercised, the Issuer will at all times have authorized and reserved for the purpose of the issue upon exercise of this Warrant a sufficient number of shares of Common Stock to provide for the exercise of this Warrant. If any shares of Common Stock required to be reserved for issuance upon exercise of this Warrant or as otherwise provided hereunder require registration or qualification with any governmental authority under any federal or state law before such shares may be so issued, the Issuer will, upon notice from the Holder of such requirement, in good faith use its best efforts as expeditiously as possible at its expense to cause such shares to be duly registered or qualified. If the Issuer shall list any shares of Common Stock on any securities exchange or market it will, at its expense, list thereon, maintain and increase when necessary such listing, of, all Warrant Shares from time to time issued upon exercise of this Warrant or as otherwise provided hereunder, and, to the extent permissible under the applicable securities exchange rules, all unissued Warrant Shares which are at any time issuable hereunder, so long as any shares of Common Stock shall be so listed. The Issuer will also so list on each securities exchange or market, and will maintain such listing of, any other securities which the Holder of this Warrant shall be entitled to receive upon the exercise of this Warrant if at the time any securities of the same class shall be listed on such securities exchange or market by the Issuer. (c) Covenants. The Issuer shall not by any action, including, without limitation, amending the Certificate of Incorporation or the by-laws of the Issuer, or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of the Holder hereof against dilution (to the extent specifically provided herein) or impairment. Without limiting the generality of the foregoing, the Issuer will (i) not permit the par value, if any, of its Common Stock to exceed the then effective Warrant Price, (ii) not amend or modify any provision of the Certificate of Incorporation or by-laws of the Issuer in any manner that would adversely affect the rights of the Holders of the Warrants, (iii) take all such action as may be reasonably necessary in order that the Issuer may validly and legally issue fully paid and nonassessable shares of Common Stock, free and clear of any liens, claims, encumbrances and restrictions (other than as provided herein) upon the exercise of this Warrant, and (iv) use its best efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be reasonably necessary to enable the Issuer to perform its obligations under this Warrant. (d) Loss, Theft, Destruction of Warrants. Upon receipt of evidence satisfactory to the Issuer of the ownership of and the loss, theft, destruction or mutilation of any Warrant and, in the case of any such loss, theft or destruction, upon receipt of indemnity or security satisfactory to the Issuer or, in the case of any such mutilation, upon surrender and cancellation of such Warrant, the Issuer will make and deliver, in lieu of such lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and representing the right to purchase the same number of shares of Common Stock. 5. Adjustment of Warrant Price and Warrant Share Number. The number of shares of Common Stock for which this Warrant is exercisable, and the price at which such shares may be purchased upon exercise of this Warrant, shall be subject to adjustment from time to time as set forth in this Section 5. The Issuer shall give the Holder notice of any event described below which requires an adjustment pursuant to this Section 5 in accordance with Section 6. (a) Recapitalization, Reorganization, Reclassification, Consolidation, Merger or Sale. (i) In case the Issuer after the Original Issue Date shall do any of the following (each, a "Triggering Event"): (a) consolidate with or merge into any other Person and the Issuer shall not be the continuing or surviving corporation of such consolidation or merger, or (b) permit any other Person to consolidate with or merge into the Issuer and the Issuer shall be the continuing or surviving Person but, in connection with such consolidation or merger, any Capital Stock of the Issuer shall be changed into or exchanged for Securities of any other Person or cash or any other property, or (c) transfer all or substantially all of its properties or assets to any other Person, or (d) effect a capital reorganization or reclassification of its Capital Stock, then, and in the case of each such Triggering Event, proper provision shall be made so that, upon the basis and the terms and in the manner provided in this Warrant, the Holder of this Warrant shall be entitled upon the exercise hereof at any time after the consummation of such Triggering Event, to the extent this Warrant is not exercised prior to such Triggering Event, to receive at the Warrant Price in effect at the time immediately prior to the consummation of such Triggering Event in lieu of the Common Stock issuable upon such exercise of this Warrant prior to such Triggering Event, the Securities, cash and property to which such Holder would have been entitled upon the consummation of such Triggering Event if such Holder had exercised the rights represented by this Warrant immediately prior thereto, subject to adjustments (subsequent to such corporate action) as nearly equivalent as possible to the adjustments provided for elsewhere in this Section 5. (ii) Notwithstanding anything contained in this Warrant to the contrary, the Issuer will not effect any Triggering Event if, prior to the consummation thereof, each Person (other than the Issuer) which may be required to deliver any Securities, cash or property upon the exercise of this Warrant as provided herein shall assume, by written instrument delivered to, and reasonably satisfactory to, the Holder of this Warrant, (A) the obligations of the Issuer under this Warrant (and if the Issuer shall survive the consummation of such Triggering Event, such assumption shall be in addition to, and shall not release the Issuer from, any continuing obligations of the Issuer under this Warrant) and (B) the obligation to deliver to such Holder such shares of Securities, cash or property as, in accordance with the foregoing provisions of this subsection (a), such Holder shall be entitled to receive, and such Person shall have similarly delivered to such Holder an opinion of counsel for such Person, which counsel shall be reasonably satisfactory to such Holder, stating that this Warrant shall thereafter continue in full force and effect and the terms hereof (including, without limitation, all of the provisions of this subsection (a)) shall be applicable to the Securities, cash or property which such Person may be required to deliver upon any exercise of this Warrant or the exercise of any rights pursuant hereto. (b) Stock Dividends, Subdivisions and Combinations. If at any time the Issuer shall: (i) take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend payable in, or other distribution of, shares of Common Stock, (ii) subdivide its outstanding shares of Common Stock into a larger number of shares of Common Stock, or (iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock, then (1) the number of shares of Common Stock for which this Warrant is exercisable immediately after the occurrence of any such event shall be adjusted to equal the number of shares of Common Stock which a record holder of the same number of shares of Common Stock for which this Warrant is exercisable immediately prior to the occurrence of such event would own or be entitled to receive after the happening of such event, and (2) the Warrant Price then in effect shall be adjusted to equal (A) the Warrant Price then in effect multiplied by the number of shares of Common Stock for which this Warrant is exercisable immediately prior to the adjustment divided by (B) the number of shares of Common Stock for which this Warrant is exercisable immediately after such adjustment. (c) Form of Warrant after Adjustments. The form of this Warrant need not be changed because of any adjustments in the Warrant Price or the number and kind of Securities purchasable upon the exercise of this Warrant. (d) Escrow of Warrant Shares. If after any property becomes distributable pursuant to this Section 5 by reason of the taking of any record of the holders of Common Stock, but prior to the occurrence of the event for which such record is taken, and the Holder exercises this Warrant, any shares of Common Stock issuable upon exercise by reason of such adjustment shall be deemed the last shares of Common Stock for which this Warrant is exercised (notwithstanding any other provision to the contrary herein) and such shares or other property shall be held in escrow for the Holder by the Issuer to be issued to the Holder upon and to the extent that the event actually takes place, upon payment of the current Warrant Price. Notwithstanding any other provision to the contrary herein, if the event for which such record was taken fails to occur or is rescinded, then such escrowed shares shall be cancelled by the Issuer and escrowed property returned. 6. Notice of Adjustments. Whenever the Warrant Price or Warrant Share Number shall be adjusted pursuant to Section 5 hereof (for purposes of this Section 6, each an "adjustment"), the Issuer shall cause its Chief Financial Officer to prepare and execute a certificate setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated (including a description of the basis on which the Board made any determination hereunder), and the Warrant Price and Warrant Share Number after giving effect to such adjustment, and shall cause copies of such certificate to be delivered to the Holder of this Warrant promptly after each adjustment. Any dispute between the Issuer and the Holder of this Warrant with respect to the matters set forth in such certificate may at the option of the Holder of this Warrant be submitted to one of the national accounting firms currently known as the "big five" selected by the Holder, provided that the Issuer shall have ten (10) days after receipt of notice from such Holder of its selection of such firm to object thereto, in which case such Holder shall select another such firm and the Issuer shall have no such right of objection. The firm selected by the Holder of this Warrant as provided in the preceding sentence shall be instructed to deliver a written opinion as to such matters to the Issuer and such Holder within thirty (30) days after submission to it of such dispute. Such opinion shall be final and binding on the parties hereto. 7. Fractional Shares. No fractional Warrant Shares will be issued in connection with and exercise hereof, but in lieu of such fractional shares, the Issuer shall make a cash payment therefore equal in amount to the product of the applicable fraction multiplied by the Per Share Market Value then in effect. 8. Call. Notwithstanding anything herein to the contrary, commencing any time during the effectiveness of the registration statement registering the Warrant Shares, the Issuer, at its option, may call up to one hundred percent (100%) of this Warrant if the Per Share Market Value of the Common Stock has been equal to or greater than $2.50 per share for a period of five (5) consecutive Trading Days immediately prior to the date of delivery of the Call Notice (a "Call Notice Period") by providing the Holder of this Warrant written notice pursuant to Section 12 (the "Call Notice"). The rights and privileges granted pursuant to this Warrant with respect to the Warrant Shares subject to the Call Notice (the "Called Warrant Shares") shall expire on the twentieth (20th) day after the Holder receives the Call Notice (the "Early Termination Date") if this Warrant is not exercised with respect to such Called Warrant Shares prior to such Early Termination Date. In the event this Warrant is not exercised with respect to the Called Warrant Shares, the Issuer shall remit to the Holder of this Warrant (i) $.01 per Called Warrant Share and (ii) a new Warrant representing the number of Warrant Shares, if any, which shall not have been subject to the Call Notice upon the Holder tendering to the Issuer the applicable Warrant certificate. 9. Other Notices. In case at any time: (a) the Issuer shall make any distributions to the holders of Common Stock; or (b) the Issuer shall authorize the granting to all holders of its Common Stock of rights to subscribe for or purchase any shares of Capital Stock of any class or other rights; or (c) there shall be any reclassification of the Capital Stock of the Issuer; or (d) there shall be any capital reorganization by the Issuer; or (e) there shall be any (i) consolidation or merger involving the Issuer or (ii) sale, transfer or other disposition of all or substantially all of the Issuer's property, assets or business (except a merger or other reorganization in which the Issuer shall be the surviving corporation and its shares of Capital Stock shall continue to be outstanding and unchanged and except a consolidation, merger, sale, transfer or other disposition involving a wholly-owned Subsidiary); or (f) there shall be a voluntary or involuntary dissolution, liquidation or winding-up of the Issuer or any partial liquidation of the Issuer or distribution to holders of Common Stock; then, in each of such cases, the Issuer shall give written notice to the Holder of the date on which (i) the books of the Issuer shall close or a record shall be taken for such dividend, distribution or subscription rights or (ii) such reorganization, reclassification, consolidation, merger, disposition, dissolution, liquidation or winding-up, as the case may be, shall take place. Such notice also shall specify the date as of which the holders of Common Stock of record shall participate in such dividend, distribution or subscription rights, or shall be entitled to exchange their certificates for Common Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, disposition, dissolution, liquidation or winding-up, as the case may be. Such notice shall be given at least twenty (20) days prior to the action in question and not less than twenty (20) days prior to the record date or the date on which the Issuer's transfer books are closed in respect thereto. The Holder shall have the right to send two (2) representatives selected by it to each meeting, who shall be permitted to attend, but not vote at, such meeting and any adjournments thereof. This Warrant entitles the Holder to receive copies of all financial and other information distributed or required to be distributed to the holders of the Common Stock. 10. Amendment and Waiver. Any term, covenant, agreement or condition in this Warrant may be amended, or compliance therewith may be waived (either generally or in a particular instance and either retroactively or prospectively), by a written instrument or written instruments executed by the Issuer and the Majority Holders; provided, however, that no such amendment or waiver shall reduce the Warrant Share Number, increase the Warrant Price, shorten the period during which this Warrant may be exercised or modify any provision of this Section 10 except with the consent of the Holder of this Warrant or pursuant to this Warrant Agreement. 11. Governing Law. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW. 12. Notices. All notices, requests, consents or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earlier of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified for notice prior to 5:00 p.m., eastern time, on a Business Day, or if not, then on the next Business Day, (ii) the Business Day following the date of mailing, if sent by nationally recognized overnight courier service specifying next-day delivery with verification of delivery or (iii) actual receipt by the party to whom such notice is required to be given. The addresses for such communications shall be at the relevant Holder's last known address or facsimile number appearing on the books of the Issuer maintained for such purposes, or with respect to the Issuer, addressed to: HiEnergy Technologies, Inc. 1601B Alton Parkway Irvine, California 92606 Attention: Chief Executive Officer Tel. No.: (949) 757-0855 Fax No.: (949) 757-1477 with a copy to: Yocca Patch & Yocca, LLP 19900 MacArthur Blvd, Suite 650 Irvine, CA 92618 Attention: Nicholas Yocca, Esq. Tel No.: (949) 253-0800 Fax No.: (949) 253-0870 Copies of notices to the Holder shall be sent to the attorney indicated in the signature pages to this Warrant. Any party hereto may from time to time change its or its attorney's address for notices by giving at least ten (10) days written notice of such changed address to the other party hereto. 13. Warrant Transfer Agent. The Issuer may, by written notice to each Holder of this Warrant, appoint an agent or more than one agent having an office in New York, New York for the purpose of being directly involved with Holder in respect to issuing Warrant Shares upon the exercise of this Warrant pursuant to subsection (b) of Section 3 hereof, transferring or exchanging this Warrant or any Warrant Certificate pursuant to subsection (d) of Section 3 hereof or replacing this Warrant or any Warrant Certificate pursuant to subsection (d) of Section 4 hereof, or any of the foregoing, and thereafter any such issuance, exchange or replacement, as the case may be, shall be made at such office by such agent or agents, as designated from time to time by the Issuer. 14. Remedies. The Issuer stipulates that the remedies at law of the Holder of this Warrant in the event of any default or threatened default by the Issuer in the performance of or compliance with any of the terms of this Warrant, and the Holder likewise stipulates that the remedies at law of the Issuer, are not and will not be adequate and that, to the fullest extent permitted by law, such terms may be specifically enforced by a decree for the specific performance of any agreement contained herein, interim relief, or by an injunction for performance or against a violation of any of the terms hereof. This Warrant is acquired by the Holder pursuant to and subject to the terms of the Purchase Agreement. 15. Successors and Assigns. All respective rights, powers and privileges and respective obligations evidenced by this Warrant shall inure to the benefit of and be binding upon the Issuer and only the registered successors and registered assigns of the Holder hereof and (to the extent provided herein) the Holders of Warrant Shares issued pursuant hereto, and shall be enforceable by any such Holder or Holder of Warrant Shares. 16. Modification and Severability. If, in any action before any court or agency legally empowered to enforce any provision contained herein, any provision hereof is found to be unenforceable, then such provision shall be deemed modified to the extent necessary to make it enforceable by such court or agency. If any such provision is not enforceable as set forth in the preceding sentence, the unenforceability of such provision shall not affect the other provisions of this Warrant, but this Warrant shall be construed as if such unenforceable provision had never been contained herein. 17. Headings. The headings of the Sections of this Warrant are for convenience of reference only and shall not, for any purpose, be deemed to modify any other term or provision of this Agreement. [SIGNATURE PAGE FOLLOWS] IN WITNESS WHEREOF, the Issuer has executed this Warrant to Purchase Shares of Common Stock of HiEnergy Technologies, Inc., Warrant No. W-___, as of the date first above written. HIENERGY TECHNOLOGIES, INC. By: ---------------------------------------- Name: Dr. Bogdan C. Maglich Title: Chief Executive Officer SCHEDULE A (ACCURATE ONLY AS OF THE DATE OF THE DATE FIRST SET FORTH ABOVE, AND SUBJECT TO FUTURE CHANGES IN THE REGISTERED HOLDER AS LISTED ABOVE AND SUCCESSORS AND ASSIGNS REGISTERED PURSUANT TO THE WARRANT.) REGISTERED HOLDER COPY TO HIENERGY TECHNOLOGIES, INC. EXERCISE FORM The undersigned _______________, pursuant to the provisions of the within Warrant, hereby elects to purchase ________ shares of Common Stock of HiEnergy Technologies, Inc. covered by the within Warrant. Dated: _________________ Signature: ___________________________ Address: ---------------------- ---------------------- ASSIGNMENT FORM FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto __________________ the within Warrant and all rights evidenced thereby and does irrevocably constitute and appoint _____________, attorney, to transfer the said Warrant on the books of the within named corporation. Dated: _________________ Signature: ___________________________ Address: ---------------------- ---------------------- PARTIAL ASSIGNMENT FORM FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto __________________ the right to purchase _________ Warrant Shares evidenced by the within Warrant together with all rights therein, and does irrevocably constitute and appoint ___________________, attorney, to transfer that part of the said Warrant on the books of the within named corporation. Dated: _________________ Signature: ___________________________ Address: ---------------------- ---------------------- EXHIBIT 10.64 SUPPLEMENT Brian D. Corday or Bullbear Capital Partners, LLC shall receive, as finder for HiEnergy Technologies, Inc., under the written agreement between them, in connection with an investment by Bullbear Capital Partners, LLC on February 9, 2004, of $150,000 in HiEnergy, only the following compensations, in lieu of any other compensations due under the agreement on account of this investment of $150,000: 1. $5,250 in cash 2. 3,333 shares of restricted common stock 3. 15,000 warrants at $0.45/share IN WITNESS WHEREOF, the parties hereto have caused this Supplement to be duly executed by their respective authorized signatories as of the date first indicated above. COMPANY: HIENERGY TECHNOLOGIES, INC. By: /s/ Bogdan C. Maglich ----------------------------------- Name: Bogdan C. Maglich Title: Chairman, Chief Executive Officer and Treasurer FINDER: By: /s/ Brian D. Corday ----------------------------------- Name: Brian D. Corday Title: An Individual
