Contract
Exhibit
4.2
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 COUNSEL REASONABLY SATISFACTORY TO HIENERGY
TECHNOLOGIES, INC. THAT
REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE
PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED.
SERIES
B-1 WARRANT TO PURCHASE
SHARES
OF
COMMON STOCK
OF
HIENERGY
TECHNOLOGIES, INC.
Expires
June __, 2011
|
No.: W-B-1-06-__
Date
of Issuance: June __, 2006
|
Number
of Shares: ___________
|
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 _______________________________ or its registered assigns
is entitled to subscribe for and purchase, during the Term (as hereinafter
defined), up to ____________________________________ (_____________) shares
(subject to adjustment as hereinafter provided) of the duly authorized, validly
issued, fully paid and non-assessable Common Stock of the Issuer, 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.
Capitalized terms used in this Warrant and not otherwise defined herein shall
have the respective meanings specified in Section 9 hereof.
1. Term.
The
term of this Warrant shall commence on June ____, 2006 and shall expire at
5:00
p.m., eastern time, on June __, 2011 (such period being the "Term").
2. Method
of Exercise Payment; Issuance of New Warrant; Transfer and
Exchange.
(a) Time
of Exercise.
The
purchase rights represented by this Warrant may be exercised in whole or in
part
during the Term commencing on the date the Issuer files the Charter Amendment
(as defined in the Purchase Agreement) to effect the Share Increase (as defined
in 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 to the Issuer of an amount
of
consideration therefor equal to the Warrant Price in effect on the date of
such
exercise multiplied by the number of shares of Warrant Stock with respect to
which this Warrant is then being exercised, payable at such Holder's election
(i) by certified or official bank check or by
wire
transfer to an account designated by the Issuer,
(ii) by
"cashless exercise" in accordance with the provisions of subsection (c) of
this
Section 2, but only when a registration statement under the Securities Act
providing for the resale of the Warrant Stock is not then in effect, or (iii)
by
a combination of the foregoing methods of payment selected by the Holder of
this
Warrant.
(c) Cashless
Exercise.
Notwithstanding any provisions herein to the contrary and commencing one (1)
year following the Original Issue Date, if (i) the Per Share Market Value of
one
share of Common Stock is greater than the Warrant Price (at the date of
calculation as set forth below) and (ii) a registration statement under the
Securities Act providing for the resale of the Warrant Stock is not then in
effect, in lieu of exercising this Warrant by payment of cash, the Holder may
exercise this Warrant by a cashless exercise and shall receive the number of
shares of Common Stock equal to an amount (as determined below) by surrender
of
this Warrant at the principal office of the Issuer together with the properly
endorsed Notice of Exercise in which event the Issuer shall issue to the Holder
a number of shares of Common Stock computed using the following
formula:
X
= Y -
(A)(Y)
B
|
Where
|
X
=
|
the
number of shares of Common Stock to be issued to the
Holder.
|
|
Y
=
|
the
number of shares of Common Stock purchasable upon exercise of all
of the
Warrant or, if only a portion of the Warrant is being exercised,
the
portion of the Warrant being exercised.
|
|
A
=
|
the
Warrant Price.
|
|
B
=
|
the
Per Share Market Value of one share of Common Stock.
|
(d) 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
shares of Warrant Stock so purchased shall be dated the date of such exercise
and delivered to the Holder hereof within a reasonable time, not exceeding
three
(3) Trading Days after such exercise (the “Delivery
Date”)
or, at
the request of the Holder (provided that a registration statement under the
Securities Act providing for the resale of the Warrant Stock is then in effect
and the Holder complies with all applicable securities laws in connection with
the sale, including, without limitation, the prospectus delivery requirements),
issued and delivered to the Depository Trust Company (“DTC”)
account on the Holder’s behalf via the Deposit Withdrawal Agent Commission
System (“DWAC”)
within
a reasonable time, not exceeding three (3) Trading Days after such exercise,
and
the Holder hereof shall be deemed for all purposes to be the holder of the
shares of Warrant Stock so purchased as of the date of such exercise and (ii)
unless this Warrant has expired, a new Warrant representing the number of shares
of Warrant Stock, 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 a reasonable
time, not exceeding seven (7) Trading Days after such exercise.
2
(e) Compensation
for Buy-In on Failure to Timely Deliver Certificates Upon
Exercise.
In
addition to any other rights available to the Holder, if the Issuer fails to
cause its transfer agent to transmit to the Holder a certificate or certificates
representing the Warrant Stock pursuant to an exercise on or before the Delivery
Date, and if after such date the Holder is required by its broker to purchase
(in an open market transaction or otherwise) shares of Common Stock to deliver
in satisfaction of a sale by the Holder of the Warrant Stock which the Holder
anticipated receiving upon such exercise (a “Buy-In”),
then
the Issuer shall (1) pay in cash to the Holder the amount by which (x) the
Holder’s total purchase price (including brokerage commissions, if any) for the
shares of Common Stock so purchased exceeds (y) the amount obtained by
multiplying (A) the number of shares of Warrant Stock that the Issuer was
required to deliver to the Holder in connection with the exercise at issue
times
(B) the price at which the sell order giving rise to such purchase obligation
was executed, and (2) at the option of the Holder, either reinstate the portion
of the Warrant and equivalent number of shares of Warrant Stock for which such
exercise was not honored or deliver to the Holder the number of shares of Common
Stock that would have been issued had the Issuer timely complied with its
exercise and delivery obligations hereunder. For example, if the Holder
purchases Common Stock having a total purchase price of $11,000 to cover a
Buy-In with respect to an attempted exercise of shares of Common Stock with
an
aggregate sale price giving rise to such purchase obligation of $10,000, under
clause (1) of the immediately preceding sentence the Issuer shall be required
to
pay the Holder $1,000. The Holder shall provide the Issuer written notice
indicating the amounts payable to the Holder in respect of the Buy-In, together
with applicable confirmations and other evidence reasonably requested by the
Issuer. Nothing herein shall limit a Holder’s right to pursue any other remedies
available to it hereunder, at law or in equity including, without limitation,
a
decree of specific performance and/or injunctive relief with respect to the
Issuer’s failure to timely deliver certificates representing shares of Common
Stock upon exercise of this Warrant as required pursuant to the terms
hereof.
(f) Transferability
of Warrant.
Subject
to Section 2(h), 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 (h) of this Section 2, 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 shares of Warrant Stock, each new Warrant to represent the right to purchase
such number of shares of Warrant Stock 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 shares of Warrant Stock issuable pursuant
thereto.
3
(g) 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.
(h) Compliance
with Securities Laws.
(i) The
Holder of this Warrant, by acceptance hereof, acknowledges that this Warrant
or
the shares of Warrant Stock 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 shares of Warrant Stock 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 shares of Warrant Stock 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 COUNSEL REASONABLY SATISFACTORY TO HIENERGY
TECHNOLOGIES, INC. THAT
REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE
PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.
(iii) The
Issuer agrees to reissue this Warrant or certificates representing any of the
Warrant Stock, without the legend set forth above if at such time, prior to
making any transfer of any such securities, the Holder shall give written notice
to the Issuer describing the manner and terms of such transfer and removal
as
the Issuer may reasonably request. Such proposed transfer and removal will
not
be effected until: (a) either (i) the Issuer has received an opinion of counsel
reasonably satisfactory to the Issuer, to the effect that the registration
of
such securities under the Securities Act is not required in connection with
such
proposed transfer, (ii) a registration statement under the Securities Act
covering such proposed disposition has been filed by the Issuer with the
Securities and Exchange Commission and has become effective under the Securities
Act and the holder has complied with any prospectus delivery requirements,
(iii)
the Issuer has received other evidence reasonably satisfactory to the Issuer
that such registration and qualification under the Securities Act and state
securities laws are not required, or (iv) the Holder provides the Issuer with
reasonable assurances that such security can be sold pursuant to Rule 144 under
the Securities Act; and (b) either (i) the Issuer has received an opinion of
counsel reasonably satisfactory to the Issuer, to the effect that registration
or qualification under the securities or "blue sky" laws of any state is not
required in connection with such proposed disposition, or (ii) compliance with
applicable state securities or "blue sky" laws has been effected or a valid
exemption exists with respect thereto. The Issuer will respond to any such
notice from a holder within five (5) business days. In the case of any proposed
transfer under this Section 2(h), the Issuer will use reasonable efforts to
comply with any such applicable state securities or "blue sky" laws, but shall
in no event be required, (x) to qualify to do business in any state where it
is
not then qualified, or (y) to take any action that would subject it to tax
or to
the general service of process in any state where it is not then subject. The
restrictions on transfer contained in this Section 2(h) shall be in addition
to,
and not by way of limitation of, any other restrictions on transfer contained
in
any other section of this Warrant. Whenever
a
certificate representing the Warrant Stock is required to be issued to the
Holder without a legend, in lieu of delivering physical certificates
representing the Warrant Stock (provided
that a registration statement under the Securities Act providing for the resale
of the Warrant Stock is then in effect and the Holder complies with all
applicable securities laws in connection with the sale, including, without
limitation, the prospectus delivery requirements),
the
Issuer shall cause its transfer agent to electronically transmit the Warrant
Stock to the Holder by crediting the account of the Holder's Prime Broker with
DTC through its DWAC system (to the extent not inconsistent with any provisions
of this Warrant or the Purchase Agreement).
4
(i) Accredited
Investor Status.
In no
event may the Holder exercise this Warrant in whole or in part unless the Holder
is an “accredited investor” as defined in Regulation D under the Securities
Act.
3. Stock
Fully Paid; Reservation and Listing of Shares; Covenants.
(a) Stock
Fully Paid.
The
Issuer represents, warrants, covenants and agrees that all shares of Warrant
Stock which may be issued upon the exercise of this Warrant or otherwise
hereunder will, when issued in accordance with the terms of this Warrant, be
duly authorized, validly issued, fully paid and non-assessable and free from
all
taxes, liens and charges created by or through the Issuer. The Issuer further
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.
(b) Reservation.
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 in good faith use its
reasonable 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 shares of Warrant Stock from time to time issued upon exercise of this
Warrant or as otherwise provided hereunder (provided that such Warrant Stock
has
been registered pursuant to a registration statement under the Securities Act
then in effect), and, to the extent permissible under the applicable securities
exchange rules, all unissued shares of Warrant Stock 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.
5
(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 in their capacity
as
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 reasonable 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.
4. Adjustment
of Warrant Price.
The
price at which shares of Warrant Stock may be purchased upon exercise of this
Warrant shall be subject to adjustment from time to time as set forth in this
Section 4. The Issuer shall give the Holder notice of any event described below
which requires an adjustment pursuant to this Section 4 in accordance with
Section 5.
(a) Recapitalization,
Reorganization, Reclassification, Consolidation, Merger or Sale.
6
(i)
In
case the Issuer after the Original Issue Date shall do any of the following
(each, a "Triggering
Event"):
(a)
consolidate or merge with or into another corporation where the holders of
outstanding Voting Stock prior to such merger or consolidation do not own over
50% of the outstanding Voting Stock of the merged or consolidated entity
immediately after such merger or consolidation, or (b) sell all or substantially
all of its properties or assets to any other Person, or (c) change the Common
Stock to the same or different number of shares of any class or classes of
stock, whether by reclassification, exchange, substitution or otherwise (other
than by way of a stock split or combination of shares or stock dividends or
distributions provided for in Section 4(b) or Section 4(c)), or (d) effect
a
capital reorganization (other than by way of a stock split or combination of
shares or stock dividends or distributions provided for in Section 4(b) or
Section 4(c)), 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 4.
(ii) Notwithstanding
anything contained in this Warrant to the contrary, a Triggering Event shall
not
be deemed to have occurred 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 a written acknowledgement executed by the President or Chief Financial
Officer of the Company, 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) make
or
issue or set a record date for 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,
7
(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.
Notwithstanding
the foregoing, if such record date shall have been fixed and such dividend
is
not fully paid or if such distribution is not fully made on the date fixed
therefor, the Warrant Price shall be adjusted pursuant to this paragraph as
of
the time of actual payment of such dividends or distributions.
(c) Certain
Other Distributions.
If at
any time the Issuer shall make or issue or set a record date for the
determination of the holders of its Common Stock for the purpose of entitling
them to receive any divi-dend or other distribution of:
(i) cash
(other than a cash dividend payable out of earnings or earned surplus legally
available for the payment of dividends under the laws of the jurisdiction of
incorporation of the Issuer),
(ii) any
evidences of its indebtedness, any shares of stock of any class or any other
securities or property of any nature whatsoever (other than cash, Common Stock
Equivalents or Additional Shares of Common Stock), or
(iii) any
warrants or other rights to subscribe for or purchase any evidences of its
indebtedness, any shares of stock of any class or any other securities or
property of any nature whatsoever (other than cash, Common Stock Equivalents
or
Additional Shares of Common Stock),
then
(1)
the number of shares of Common Stock for which this Warrant is exercisable
shall
be adjusted to equal the product of the number of shares of Common Stock for
which this Warrant is exercisable immediately prior to such adjustment
multiplied by a fraction (A) the numerator of which shall be the Per Share
Market Value of Common Stock at the date of taking such record and (B) the
denominator of which shall be such Per Share Market Value minus the amount
allocable to one share of Common Stock of any such cash so distributable and
of
the fair value (as determined in good faith by the Board of Directors of the
Issuer and supported by an opinion from an investment banking firm of recognized
national standing acceptable to (but not affiliated with) the Holder) of any
and
all such evidences of indebtedness, shares of stock, other securities or
property or warrants or other subscription or purchase rights so distributable,
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. A reclassification of the Common
Stock (other than a change in par value, or from par value to no par value
or
from no par value to par value) into shares of Common Stock and shares of any
other class of stock shall be deemed a distribution by the Issuer to the holders
of its Common Stock of such shares of such other class of stock within the
meaning of this Section 4(c) and, if the outstanding shares of Common Stock
shall be changed into a larger or smaller number of shares of Common Stock
as a
part of such reclassification, such change shall be deemed a subdivision or
combination, as the case may be, of the outstanding shares of Common Stock
within the meaning of Section 4(b).
8
Notwithstanding
the foregoing, if such record date shall have been fixed and such dividend
is
not fully paid or if such distribution is not fully made on the date fixed
therefor, the Warrant Price shall be adjusted pursuant to this Section 4(c)
as
of the time of actual payment of such dividends or distributions.
(d) Issuance
of Additional Shares of Common Stock.
In the
event the Issuer shall at any time following the Original Issue Date issue
any
Additional Shares of Common Stock (otherwise than as provided in the foregoing
subsections (a) through (c) of this Section 4), at a price per share less than
the Warrant Price then in effect or without consideration, then the Warrant
Price upon each such issuance shall be adjusted to the price equal to the
consideration per share paid for such Additional Shares of Common
Stock.
(e) Issuance
of Common Stock Equivalents.
If at
any time the Issuer shall issue or sell any Common Stock Equivalents, whether
or
not the rights to exchange or convert thereunder are immediately exercisable,
and the aggregate price per share for which Common Stock is issuable upon such
conversion or exchange plus the consideration received by the Issuer for
issuance of such Common Stock Equivalent divided by the number of shares of
Common Stock issuable pursuant to such Common Stock Equivalent (the
“Aggregate
Per Common Share Price”)
shall
be less than the Warrant Price then in effect, or if, after any such issuance
of
Common Stock Equivalents, the price per share for which Additional Shares of
Common Stock may be issuable thereafter is amended or adjusted, and such price
as so amended shall make the Aggregate Per Common Share Price be less than
the
Warrant Price in effect at the time of such amendment or adjustment, then the
Warrant Price upon each such issuance or amendment shall be adjusted as provided
in Section 4(d). No further adjustment of the Warrant Price then in effect
shall
be made under this Section 4(e) upon the issuance of any Common Stock
Equivalents which are issued pursuant to the exercise of any warrants or other
subscription or purchase rights therefor, if any such adjustment shall
previously have been made upon the issuance of such warrants or other rights
pursuant to this Section 4(e). No further adjustments of the Warrant Price
then
in effect shall be made upon the actual issue of such Common Stock upon
conversion or exchange of such Common Stock Equivalents.
(f) Superseding
Adjustment.
If, at
any time after any adjustment of the number of shares of Common Stock for which
this Warrant is exercisable and the Warrant Price then in effect shall have
been
made pursuant to Section 4(e) as the result of any issuance of Common Stock
Equivalents, and (i) such Common Stock Equivalents, or the right of conversion
or exchange in such Common Stock Equivalents, shall expire, and all or a portion
of such or the right of conversion or exchange with respect to all or a portion
of such Common Stock Equivalents, as the case may be, shall not have been
exercised, or (ii) the consideration per share for which shares of Common Stock
are issuable pursuant to such Common Stock Equivalents shall be increased,
then
such previous adjustment shall be rescinded and annulled and the Additional
Shares of Common Stock which were deemed to have been issued by virtue of the
computation made in connection with the adjustment so rescinded and annulled
shall no longer be deemed to have been issued by virtue of such computation.
Upon the occurrence of an event set forth in this Section 4(g) above, there
shall be a recomputation made of the effect of such Common Stock Equivalents
on
the basis of: (i) treating the number of Additional Shares of Common Stock
theretofore actually issued or issuable pursuant to the previous exercise of
Common Stock Equivalents or any such right of conversion or exchange, as having
been issued on the date or dates of any such exercise and for the consideration
actually received and receivable therefor, and (ii) treating any such Common
Stock Equivalents which then remain outstanding as having been granted or issued
immediately after the time of such increase of the consideration per share
for
which Additional Shares of Common Stock are issuable under such Common Stock
Equivalents; whereupon a new ad-justment of the number of shares of Common
Stock
for which this Warrant is exercisable and the Warrant Price then in effect
shall
be made, which new adjustment shall supersede the previous adjustment so
rescinded and annulled.
9
(g) Other
Provisions applicable to Adjustments under this Section.
The
following provisions shall be ap-plicable to the making of adjustments of the
number of shares of Common Stock for which this Warrant is exercisable and
the
Warrant Price then in effect provided for in this Section 4:
(i) Computation
of Consideration.
To the
extent that any Additional Shares of Common Stock or any Common Stock
Equivalents (or any warrants or other rights therefor) shall be issued for
cash
consideration, the consideration received by the Issuer therefor shall be the
amount of the cash received by the Issuer therefor, or, if such Additional
Shares of Common Stock or Common Stock Equivalents are offered by the Issuer
for
subscription, the subscription price, or, if such Additional Shares of Common
Stock or Common Stock Equivalents are sold to underwriters or dealers for public
offering without a subscription offering, the initial public offering price
(in
any such case subtracting any amounts paid or receivable for accrued interest
or
accrued dividends and without taking into account any compensation, discounts
or
expenses paid or incurred by the Issuer for and in the underwriting of, or
otherwise in connection with, the issuance thereof). In connection with any
merger or consolidation in which the Issuer is the surviving corporation (other
than any consolidation or merger in which the previously outstanding shares
of
Common Stock of the Issuer shall be changed to or exchanged for the stock or
other securities of another corporation), the amount of consideration therefore
shall be, deemed to be the fair value, as determined reasonably and in good
faith by the Board, of such portion of the assets and business of the
nonsurviving corporation as the Board may determine to be attributable to such
shares of Common Stock or Common Stock Equivalents, as the case may be. The
consideration for any Additional Shares of Common Stock issuable pursuant to
any
warrants or other rights to subscribe for or purchase the same shall be the
consideration received by the Issuer for issuing such warrants or other rights
plus the additional con-sideration payable to the Issuer upon exercise of such
warrants or other rights. The consideration for any Additional Shares of Common
Stock issuable pursuant to the terms of any Common Stock Equivalents shall
be
the consideration received by the Issuer for issuing war-rants or other rights
to subscribe for or purchase such Common Stock Equivalents, plus the
consideration paid or payable to the Issuer in respect of the subscription
for
or purchase of such Common Stock Equivalents, plus the additional consideration,
if any, payable to the Issuer upon the exercise of the right of conversion
or
exchange in such Common Stock Equivalents. In the event of any consolidation
or
merger of the Issuer in which the Issuer is not the surviving corporation or
in
which the previously outstanding shares of Common Stock of the Issuer shall
be
changed into or exchanged for the stock or other securities of another
corporation, or in the event of any sale of all or substantially all of the
assets of the Issuer for stock or other securities of any corporation, the
Issuer shall be deemed to have issued a number of shares of its Common Stock
for
stock or securities or other property of the other corporation computed on
the
basis of the actual exchange ratio on which the transaction was predicated,
and
for a consideration equal to the fair market value on the date of such
transaction of all such stock or securities or other property of the other
corporation. In the event any consideration received by the Issuer for any
securities consists of property other than cash, the fair market value thereof
at the time of issuance or as otherwise applicable shall be as determined in
good faith by the Board. In the event Common Stock is issued with other shares
or securities or other assets of the Issuer for consideration which covers
both,
the consideration computed as provided in this Section 4(h)(i) shall be
allocated among such securities and assets as determined in good faith by the
Board.
10
(ii) When
Adjustments to Be Made.
The
adjustments required by this Section 4 shall be made whenever and as often
as
any specified event requiring an adjustment shall occur, except that any
adjustment of the number of shares of Common Stock for which this Warrant is
exercisable that would otherwise be required may be postponed (except in the
case of a subdivision or combination of shares of the Common Stock, as provided
for in Section 4(b)) up to, but not beyond the date of exercise if such
adjustment either by itself or with other adjustments not previously made adds
or subtracts less than one percent (1%) of the shares of Common Stock for which
this Warrant is exercisable immediately prior to the making of such adjustment.
Any adjustment representing a change of less than such minimum amount (except
as
aforesaid) which is postponed shall be carried forward and made as soon as
such
adjustment, together with other adjustments required by this Section 4 and
not
previously made, would result in a minimum adjustment or on the date of
exercise. For the purpose of any adjustment, any specified event shall be deemed
to have occurred at the close of business on the date of its
occurrence.
(iii) Fractional
Interests.
In
computing ad-justments under this Section 4, fractional interests in Common
Stock shall be taken into account to the near-est one one-hundredth
(1/100th)
of a
share.
(iv) When
Adjustment Not Required.
If the
Issuer shall take a record of the holders of its Common Stock for the purpose
of
entitling them to receive a dividend or distribution or subscription or purchase
rights and shall, thereafter and before the distribution to stockholders
thereof, legally abandon its plan to pay or deliver such dividend, distribution,
subscription or purchase rights, then thereafter no adjustment shall be required
by reason of the taking of such record and any such adjustment previously made
in respect thereof shall be rescinded and annulled.
11
(h) 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.
(i) Escrow
of Warrant Stock.
If
after any property becomes distributable pursuant to this Section 4 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
exer-cises 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.
5. Notice
of Adjustments.
Whenever the Warrant Price or Warrant Share Number shall be adjusted pursuant
to
Section 4 hereof (for purposes of this Section 5, 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 the Issuer’s independent, outside accountant. The Issuer
shall use its best efforts to cause the accountant to perform the calculations
and notify the Issuer and the Holder of the results no later than five (5)
business days from the time it receives the disputed calculation. Such
accountant's calculation shall be binding upon all parties absent manifest
error. The reasonable expenses of such accountant in making such determination
shall be paid by the Issuer, in the event the Holder's calculation was correct,
or by the Holder, in the event the Issuer’s calculation was correct, or equally
by the Issuer and the Holder in the event that neither the Issuer's or the
Holder's calculation was correct.
6. Fractional
Shares.
No
fractional shares of Warrant Stock will be issued in connection with any
exercise hereof, but in lieu of such fractional shares, the Issuer shall make
a
cash payment therefor equal in amount to the product of the applicable fraction
multiplied by the Per Share Market Value then in effect.
7. Ownership
Cap and Certain Exercise Restrictions.
(a)
Notwithstanding anything to the contrary set forth in this Warrant, at no time
may a Holder of this Warrant exercise this Warrant if the number of shares
of
Common Stock to be issued pursuant to such exercise would cause the number
of
shares of Common Stock owned by the Holder at such time to exceed, when
aggregated with all other shares of Common Stock owned by such Holder at such
time, the number of shares of Common Stock which would result in such Holder
beneficially owning (as determined in accordance with Section 13(d) of the
Exchange Act and the rules thereunder) in excess of 4.9% of all of the Common
Stock outstanding at such time; provided,
however,
that
upon the Holder of this Warrant providing the Issuer with sixty-one (61) days
notice (pursuant to Section 13 hereof) (the "Waiver
Notice")
that
such Holder would like to waive this Section 7(a) with regard to any or all
shares of Common Stock issuable upon exercise of this Warrant, this Section
7(a)
will be of no force or effect with regard to all or a portion of the Warrant
referenced in the Waiver Notice; provided,
further,
that
this provision shall be of no further force or effect during the sixty-one
(61)
days immediately preceding the expiration of the term of this
Warrant.
12
(b) Notwithstanding
anything to the contrary set forth in this Warrant, at no time may a Holder
of
this Warrant exercise this Warrant if the number of shares of Common Stock
to be
issued pursuant to such exercise would cause the number of shares of Common
Stock owned by the Holder at such time to exceed, when aggregated with all
other
shares of Common Stock owned by such Holder at such time, the number of shares
of Common Stock which would result in such Holder beneficially owning (as
determined in accordance with Section 13(d) of the Exchange Act and the rules
thereunder) in excess of 9.9% of all of the Common Stock outstanding at such
time; provided,
however,
that
upon a holder of this Warrant providing the Issuer with a Waiver Notice that
such holder would like to waive this Section 7(b) with regard to any or all
shares of Common Stock issuable upon exercise of this Warrant, this Section
7(b)
shall be of no force or effect with regard to those shares of Warrant Stock
referenced in the Waiver Notice; provided,
further,
that
this provision shall be of no further force or effect during the sixty-one
(61)
days immediately preceding the expiration of the term of this
Warrant.
8. Call.
Notwithstanding anything herein to the contrary, following the effective date
of
the registration statement under the Securities Act providing for the resale of
the Warrant Stock and the shares of Common Stock issuable upon conversion of
the
Issuer’s Series B Preferred Stock issued pursuant to the Purchase Agreement (the
“Registration
Statement”),
the
Issuer, at its option, may call (a “Call”)
up to
one hundred percent (100%) of this Warrant if the Per Share Market Value of
the
Common Stock has been greater than two hundred percent (200%) of the Warrant
Price as of the Original Issue Date (as may be adjusted for any stock splits
or
combinations of the Common Stock) for a period of ten (10) 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 13
(the
"Call
Notice");
provided,
that
(i) the
Registration Statement is then in effect and has been effective, without lapse
or suspension of any kind, for a period of sixty (60) consecutive calendar
days,
(ii) trading
in the Common Stock shall not have been suspended by the Securities and Exchange
Commission or the OTC Bulletin Board (or other exchange or market on which
the
Common Stock is trading), (iii) the Issuer is in material compliance with the
terms and conditions of this Warrant and the other Transaction Documents (as
defined in the Purchase Agreement) and (iv) the Issuer is not in possession
of
material non-public information;
provided,
further,
that
the Registration Statement is in effect from the date of delivery of the Call
Notice until the date which is the later of (1) the date the Holder exercises
the Warrant pursuant to the Call Notice and (2) the 20th
day
after the Holder receives the Call Notice (the "Early
Termination Date").
The
rights and privileges granted pursuant to this Warrant with respect to the
shares of Warrant Stock subject to the Call Notice (the "Called
Warrant Shares")
shall
expire on 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 (A) $.001 per
Called Warrant Share and (B) a new Warrant representing the number of shares
of
Warrant Stock, if any, which shall not have been subject to the Call Notice
upon
the Holder tendering to the Issuer the applicable Warrant certificate.
Notwithstanding anything in the foregoing to the contrary, if the Holder may
not
exercise this Warrant as a result of the restrictions contained in Section
7
hereof, the Call Notice shall be deemed null and void and shall not be deemed
effective until the date that the Holder may exercise this Warrant in accordance
with Section 7 hereof.
13
9. Definitions.
For the
purposes of this Warrant, the following terms have the following
meanings:
"Additional
Shares of Common Stock"
means
all shares of Common Stock issued by the Issuer after the Original Issue Date,
and all shares of Other Common, if any, issued by the Issuer after the Original
Issue Date, except: (i) securities issued pursuant to a bona fide firm
underwritten public offering of the Issuer’s securities, (ii) securities issued
pursuant to the conversion or exercise of convertible or exercisable securities
issued or outstanding on or prior to the date hereof or issued pursuant to
the
Purchase Agreement, (iii) the Warrant Stock, (iv) the payment of any dividends
on the Series B Preferred Stock of the Issuer issued pursuant to the Purchase
Agreement, (v) securities issued (other than for cash) in connection with a
merger, acquisition or consolidation of the Issuer, (vi) any warrants issued
to
the placement agent for the transactions contemplated by the Purchase Agreement
or in connection with other financial services rendered to the Issuer, (vii)
securities issued in connection with license agreements, joint ventures and
other strategic partnering arrangements so long as such issuances are not for
the primary purpose of raising capital, and (viii) the issuance of Common Stock
or the issuance or grants of options to purchase Common Stock pursuant to the
Issuer’s stock option plans and employee stock purchase plans outstanding on the
date hereof.
"Board"
shall
mean the Board of Directors of the Issuer.
"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 $.001 per share, of the Issuer and any other Capital
Stock into which such stock may hereafter be changed.
"Common
Stock Equivalent"
means
any Convertible Security or warrant, option or other right to subscribe for
or
purchase any Additional Shares of Common Stock or any Convertible
Security.
"Convertible
Securities"
means
evidences of Indebtedness, shares of Capital Stock or other Securities which
are
or may be at any time convertible into or exchangeable for Additional Shares
of
Common Stock. The term "Convertible Security" means one of the Convertible
Securities.
14
"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 shares
of
Warrant Stock issuable under the Warrants at the time outstanding.
"Original
Issue Date"
means
June __, 2006.
"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.
“Outstanding
Common Stock”
means,
at any given time, the aggregate amount of outstanding shares of Common Stock,
assuming full exercise, conversion or exchange (as applicable) of all options,
warrants and other Securities which are convertible into or exercisable or
exchangeable for, and any right to subscribe for, shares of Common Stock that
are outstanding at such time.
"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 last trading price per share of the Common Stock
on such date on the OTC
Bulletin Board or
another registered national stock exchange on which the Common Stock is then
listed, or if there is no such price on such date, then the closing bid price
on
such exchange or quotation system on the date nearest preceding such date,
or
(b) if the Common Stock is not listed then on the OTC Bulletin Board or any
registered national stock exchange, the last trading 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) at the close of business on
such date, or (c) 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), then the average of
the
"Pink Sheet" quotes for the five (5) Trading Days preceding such date of
determination, or (d) if the Common Stock is not then publicly traded the fair
market value of a share of Common Stock as determined by an Independent
Appraiser selected in good faith by the Majority Holders; provided,
however,
that
the Issuer, after receipt of the determination by such Independent Appraiser,
shall have the right to select an additional Independent Appraiser, in which
case, the fair market value shall be equal to the average of the determinations
by each 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 by an Independent Appraiser
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.
15
"Purchase
Agreement"
means
the Series B Convertible Preferred Stock Purchase Agreement dated as of June
__,
2006, among the Issuer and the investors a party thereto.
"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 1 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); 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.
16
"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
2(c), 2(d) or 2(e) hereof or of any of such other Warrants.
"Warrant
Price"
initially means U.S. $0.45, as such Warrant Price may be adjusted from time
to
time as shall result from the adjustments specified in this Warrant, including
Section 4 hereto.
"Warrant
Share Number"
means
at any time the aggregate number of shares of Warrant Stock which may at such
time be purchased upon exercise of this Warrant, after giving effect to all
prior adjustments and increases to such number made or required to be made
under
the terms hereof.
"Warrant
Stock"
means
Common Stock issuable upon exercise of any Warrant or Warrants or otherwise
issuable pursuant to any Warrant or Warrants.
10. 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
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17
|
(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 record date or effective date for the event specified
in
such notice.
11. 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 11 without the consent of the Holder of
this Warrant.
12. Governing
Law; Jurisdiction.
This
Warrant shall be governed by and construed in accordance with the internal
laws
of the State of New York, without giving effect to any of the conflicts of
law
principles which would result in the application of the substantive law of
another jurisdiction. This Warrant shall not be interpreted or construed with
any presumption against the party causing this Warrant to be drafted.
Each
of
the Company and the Purchasers (i) hereby irrevocably submits to the
jurisdiction of the United States District Court sitting in the Southern
District of New York and the courts of the State of New York located in New
York
county for the purposes of any suit, action or proceeding arising out of or
relating to this Warrant or any of the other Transaction Documents or the
transactions contemplated hereby or thereby and (ii) hereby waives, and agrees
not to assert in any such suit, action or proceeding, any claim that it is
not
personally subject to the jurisdiction of such court, that the suit, action
or
proceeding is brought in an inconvenient forum or that the venue of the suit,
action or proceeding is improper. Each of the Company and the Purchasers
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address in effect for notices to
it
under this Warrant and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing in this Section 12
shall affect or limit any right to serve process in any other manner permitted
by law.
13. Notices.
Any
notice, demand, request, waiver or other communication required or permitted
to
be given hereunder shall be in writing and shall be effective (a) upon hand
delivery, telecopy or facsimile at the address or number designated below (if
delivered on a business day during normal business hours where such notice
is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice
is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses
for
such communications shall be:
18
|
If
to the Company:
|
HiEnergy
Technologies, Inc.
0000-X
Xxxxx Xxxxxxx, Xxxx X
Xxxxxx,
Xxxxxxxxxx 00000
Attention:
Senior Vice President
and
Corporate Secretary
Tel.
No.: (000) 000-0000
Fax
No.: (000) 000-0000
|
|
|
with
copies (which shall not constitute notice) to:
|
August
Law Group, P.C.
The
Atrium Building
00000
Xxx Xxxxxx Xxx., Xxxxx 000
Xxxxxx,
Xxxxxxxxxx 00000
Attention:
Xxxxxxx X. August
Tel
No.: (000) 000-0000
Fax
No.: (000) 000-0000
|
|
|
If
to any Purchaser:
|
At
the address of such Purchaser set forth on Exhibit
A
to
this Agreement, with copies to Purchaser’s counsel as set forth on
Exhibit
A
or
as specified in writing by such:
|
|
|
with
copies (which shall not constitute notice) to:
|
Xxxxxx
Xxxxx Xxxxxxxx & Xxxxxxx LLP
0000
Xxxxxx xx xxx Xxxxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention:
Xxxxxxxxxxx X. Xxxxxxx
Tel
No.: (000) 000-0000
Fax
No.: (000) 000-0000
|
Any
party
hereto may from time to time change its address for notices by giving at least
ten (10) days written notice of such changed address to the other party
hereto.
14. Warrant
Agent.
The
Issuer may, by written notice to each Holder of this Warrant, appoint an agent
having an office in New York, New York for the purpose of issuing shares of
Warrant Stock on the exercise of this Warrant pursuant to subsection (b) of
Section 2 hereof, exchanging this Warrant pursuant to subsection (d) of Section
2 hereof or replacing this Warrant pursuant to subsection (d) of Section 3
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.
15. 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 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 or by an injunction against a violation of any of the terms
hereof or otherwise.
19
16. Successors
and Assigns.
This
Warrant and the rights evidenced hereby shall inure to the benefit of and be
binding upon the successors and assigns of the Issuer, the Holder hereof and
(to
the extent provided herein) the Holders of Warrant Stock issued pursuant hereto,
and shall be enforceable by any such Holder or Holder of Warrant
Stock.
17. 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.
18. Headings.
The
headings of the Sections of this Warrant are for convenience of reference only
and shall not, for any purpose, be deemed a part of this Warrant.
IN
WITNESS WHEREOF, the Issuer has executed this Series B-1 Warrant as of the
day
and year first above written.
|
HIENERGY
TECHNOLOGIES, INC.
|
||
| |
|
|
| By: | ||
|
Name:
|
||
| Title | ||
20
EXERCISE
FORM
SERIES
B-1 WARRANT
HIENERGY
TECHNOLOGIES, INC.
The
undersigned _______________, pursuant to the provisions of the within Warrant,
hereby elects to purchase _____ shares of Common Stock of HiEnergy Technologies,
Inc. covered by the within Warrant.
| Dated: _________________ | Signature | _____________________ | |
| Address | _____________________ | ||
| _____________________ | |||
Number
of
shares of Common Stock beneficially owned or deemed beneficially owned by the
Holder on the date of Exercise: _________________________
ASSIGNMENT
FOR
VALUE
RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the within Warrant and all rights evidenced thereby and
does
irrevocably constitute and appoint _____________, attorney, to transfer the
said
Warrant on the books of the within named corporation.
| Dated: _________________ | Signature | _____________________ | |
| Address | _____________________ | ||
| _____________________ | |||
PARTIAL
ASSIGNMENT
FOR
VALUE
RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the right to purchase _________ shares of Warrant Stock
evidenced by the within Warrant together with all rights therein, and does
irrevocably constitute and appoint ___________________, attorney, to transfer
that part of the said Warrant on the books of the within named
corporation.
| Dated: _________________ | Signature | _____________________ | |
| Address | _____________________ | ||
| _____________________ | |||
-21-
FOR
USE
BY THE ISSUER ONLY:
This
Warrant No. W-___ canceled (or transferred or exchanged) this _____ day of
___________, _____, shares of Common Stock issued therefor in the name of
_______________, Warrant No. W-_____ issued for ____ shares of Common Stock
in
the name of _______________.
-22-
