EXHIBIT 10.81
AMENDMENT TO SHARE PURCHASE AGREEMENT
THIS AMENDMENT TO SHARE PURCHASE AGREEMENT (the "Amendment") is made and
entered into as of January 24, 2005 by and among HiEnergy Technologies, Inc., a
Delaware corporation (the "Company") and Bullbear Capital Partners LLC (the
"Purchaser"). Capitalized terms used herein but not defined herein shall have
the meanings assigned thereto in the Share Purchase Agreement (as defined
below).
RECITALS
A. The parties listed above are parties to a Share Purchase Agreement,
dated as of February 9, 2004 (the "Purchase Agreement").
B. The First Closing occurred on February 9, 2004. At the First
Closing, the Purchaser paid the Minimum Purchase Price, and the
Company issued to Purchaser 333,333 shares of common stock of the
Company (the "Shares") and accompanying Warrants pursuant to Section
1 of the Purchase Agreement.
C. The parties desire to reduce the prices of the Warrants issued in
the First Closing, as well as provide for cashless exercise of the
$0.45 Warrants; reduce the prices of the Warrants in connection with
the Second Closing (as defined below), as well as provide for
cashless exercise of the $0.45 Warrants.
NOW, THEREFORE, in consideration of the mutual agreements, covenants and
other premises set forth herein, the mutual benefits to be gained by the
performance thereof, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged and accepted, the parties
hereby agree as follows:
The Purchase Agreement is hereby amended as follows:
1. SECTION 1. PURCHASES AND SALE of the Purchase Agreement is hereby
amended and restated in its entirety to read as follows:
(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 warrant to purchase
Common Stock in substantially the form attached hereto as
Attachment B, with an initial exercise price of $0.45 per
share, subject to adjustment, for the purchase initially of up
to 333,333 shares of Common Stock, with a cashless exercise
provision; (c) a warrant to purchase Common Stock in
substantially the form attached hereto as Attachment B, with
an exercise price of $0.75 per share, subject to adjustment,
for the purchase initially of up to 200,000 shares of Common
Stock; (d) a warrant to purchase Common Stock in substantially
the form attached hereto as Attachment B, with an exercise
price of $1.25 per share, subject to adjustment, for the
purchase initially of up to 120,000 shares of Common Stock;
and (e) a warrant to purchase Common Stock in substantially
the form attached hereto as Attachment B, with an initial
exercise price of $0.45 per share, subject to adjustment, for
the purchase initially of up to 333,333 shares of Common
Stock, with a cashless exercise provision. All of such revised
Warrants shall be dated February 9, 2004 and their term shall
expire 3 1/2 years from the effective date of the Company's
Registration Statement.
(2) Purchaser shall have the right to purchase the
following shares of common stock 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 Eight
Hundred and Fifty Thousand Dollars ($850,000) in cash (the
"Additional Purchase Price"): (a) one whole share of the
Common Stock for each $0.45 of the Additional Purchase Price
(the "Additional Shares"); (b) a warrant to purchase Common
Stock in substantially the form attached hereto as Attachment
B, with an initial exercise price of $0.45 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, with a
cashless exercise provision; (c) a warrant to purchase Common
Stock in substantially the form attached hereto as Attachment
B, with an exercise price of $0.75 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; (d) a warrant to
purchase Common Stock in substantially the form attached
hereto as Attachment B, with an exercise price of $1.25 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; and (e) a warrant to
purchase Common Stock in substantially the form attached
hereto as Attachment B, with an initial exercise price of
$0.45 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, with a cashless exercise provision. All of such
Warrants shall be dated the date of the Second Closing and
their term shall expire 3 1/2 years from the effective date of
the Company's Registration Statement.
"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 First Closing occurred on February 9, 2004. In the event that all
conditions set forth herein have been satisfied, the Second Closing shall occur
concurrently with the execution of this Amendment. The Second Closing (the
"Closing") shall be conducted via telephone and facsimile transmission. At the
Second Closing, the Purchaser shall pay the Additional Purchase Price by wire
transfer against delivery to the Purchaser by facsimile of the Additional Shares
and the Warrants. The Company agrees to remit to the Purchaser from proceeds
$7,800.00 in reimbursement of Purchaser's legal fees and expenses
2. Notwithstanding anything in Section 5 of the Purchase Agreement, the
Additional Shares and Warrants issued to the Purchaser in connection with this
Second Closing (the "Second Closing Securities") shall not be subject to the two
percent payments on a monthly basis; provided however, that if the Purchaser
continues to hold the Second Closing Securities and if the Company has not
caused the shares underlying the Second Closing Securities to become registered
by April 9, 2005, the Company shall pay to Purchaser in like kind a number of
securities equal to two percent of the Second Closing Securities in the same
manner as prescribed in Section 5 of the Purchase Agreement. In all cases, the
Company shall not be obligated to pay penalties on the additional Warrants
issued to the Purchaser as a result of the repricing of the First Closing.
3. Except as specifically set forth herein, the remaining sections of the
Purchase Agreement shall not be amended, modified or otherwise altered.
4. The Company will not file any registration statement of Form S-8
without the review and approval of Bullbear Capital Partners LLC. Bullbear
Capital Partners LLC agrees to not unreasonably prevent the Company from filing
a registration statement on Form S-8 relating to the registration of not more
than 500,000 shares of common stock of the Company issued to specified employees
and/or consultants for qualified services, so long as the Company makes
full-disclosure of the services rendered by each employee and/or consultant, and
obtains an opinion of counsel that such shares may be registered on Form S-8
under the Securities Act of 1933, as amended.
5. The Company agrees to include all of the shares of Common Stock owned
by the Purchaser and its representatives, including all of the shares of Common
Stock underlying warrants owned by the Purchaser, and its representatives, in
its next Registration Statement.
6. Notwithstanding anything in the Purchase Agreement (and excluding
Section 4 of this Amendment), the Purchaser shall have the right to assign,
without the approval or consent of the Company, its rights in the Purchase
Agreement and this Amendment to any third party or parties (the "Assigned
Party"), subject to the Purchaser's participation and that of each Assigned
Party in the Closing described herein. The Purchaser shall provide to the
Company in anticipation of the Closing a written notice specifying the name of
each Assigned Party on or before the date of the Closing.
7. The Company hereby represents and warrants that Xxxxxx X. Xxxxxxx,
Chairman, Chief Executive Officer and Treasurer of the Company, has the express
authority to execute and deliver this Amendment pursuant to written
authorization of the Board of Directors of the Company dated January 12, 2005.
IN WITNESS WHEREOF, the parties have caused this Amendment to be signed as
of the date first written above.
COMPANY:
HIENERGY TECHNOLOGIES, INC.
By: __________________________
Name: Xxxxxx X. Xxxxxxx
Title: Chairman, Chief Executive Officer and Treasurer
PURCHASER:
BULLBEAR CAPITAL PARTNERS LLC
By:__________________________
Name: Xxxxx X. Xxxxxx
Title: President
ATTACHMENT B
TO HIENERGY/BULLBEAR AMENDED AND RESTATED
-----------------------------------------
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 1/2 years after effectiveness of registration statement
Holder:
Warrant No.: W-___
Number of Warrant Shares: __________
Exercise Price: $____ per Warrant Share
Original Issue Date: ________________
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;
or the date the Holder executes the cashless exercise provision provided for
herein and pursuant to the conditions set forth Section 3 (c).
"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 Amended and Restated Stock Purchase
Agreement dated as of _______________ 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(d), 3(e) or 3(f) 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; or Warrant shall be considered exercised on
the date the Holder executes the cashless exercise provision provided for herein
and pursuant to the conditions set forth Section 3(c).
(b) Method of Exercise. The Holder hereof may exercise this Warrant, in
whole or in part, by (1) a facsimile transmission executed and sent to the
attention of the Secretary of the Company, and (2) the physical surrender on the
next Trading Day of this Warrant (with the exercise form attached hereto duly
executed) at the principal office of the Issuer, and (2) by the payment in full
to the order of the Issuer on the next trading day of an amount of consideration
therefor 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 by
check or by wire to the account of the Issuer at a financial institution
designated from time to time by the Issuer pursuant to the Purchase Agreement.
(c) Cashless Exercise. Notwithstanding any provisions herein to the
contrary, if the underlying securities are not registered by February 9, 2005,
and if the closing bid price for one share of Common Stock at the close of
business on the date of exercise in the over-the-counter market as reported by
the OTC Bulletin Board, or as reported 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 (the "Per Share Market Price"), is greater than
the Exercise Price on the date of exercise, then the Holder may exercise this
Warrant by a cashless exercise, in lieu of exercising this Warrant by payment of
cash, and shall receive the number of shares of Common Stock equal to the amount
determined below by surrender of this Warrant at the principal office of the
Issuer together with 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 a partial exercise, the number of shares underlying the portion
being exercised;
A = the Exercise 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 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.
(e) Transferability of Warrant. Subject to Section 3(g), 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 Section 3 (g), 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.
(f) 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.
(g) 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 (g) 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.
Attn: Corporate Secretary
0000X Xxxxx Xxxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Chief Executive Officer
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
with a copy to:
August Law Group, P.C.
The Atrium
00000 Xxx Xxxxxx Xxx., Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxxxxx X. August, Esq.
Tel No.: (000) 000-0000
Fax No.: (000) 000-0000
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
subsections (b) and (c) of Section 3 hereof, transferring or exchanging this
Warrant or any Warrant Certificate pursuant to subsection (e) 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.
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: Xx. Xxxxxx X. Xxxxxxx
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 :_____________________
_____________________
HIENERGY TECHNOLOGIES, INC.
CASHLESS EXERCISE FORM
(To be executed upon exercise of Warrant pursuant to Section 3(c) )
The undersigned ______________hereby irrevocably elects a cashless exercise of
the right of purchase represented by the within the Warrant for, and to purchase
thereunder, ______________ shares of Common Stock, as provided for in Section 3
(c) therein.
If said number of shares shall not be all the shares purchasable under the
within the Warrant, a new Warrant is to be issued in the name of said
undersigned for the balance remaining of the shares purchasable thereunder
rounded up to the next higher number of shares.
Please issue a certificate or certificates for such Common Stock in the
name of, and pay any cash for any fractional shares to:
NAME: ___________________________________________
(Please Print Name)
ADDRESS: ___________________________________________
___________________________________________
SOCIAL SECURITY NUMBER: ________________________________
SIGNATURE: ________________________________
NOTE: The above signature should correspond exactly with the name on the first
page of this Warrant or with the name the assignee appearing in the assignment
form on the preceding page.
