AMENDMENT NO. 1 TO THE CONFIDENTIAL SETTLEMENT
AND MUTUAL RELEASE
This Amendment No. 1 to the Confidential Settlement Agreement and Mutual
Release, dated as of June 9, 2006 (the "Amendment") between Xxxxx Xxxxxx and
Yeffet Security Consultants, Inc. ("Claimants") and HiEnergy Technologies, Inc.
(the "Company") is entered into on January 30, 2007.
WHEREAS, the Parties entered into a Confidential Settlement Agreement and
Mutual Release, dated as of June 9, 2006 (the "Original Agreement");
WHEREAS, the Company is currently in breach of Section 3 of the Original
Agreement;
WHEREAS, the Company and the Claimants desire to amend the terms of the
Original Agreement as follows.
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto agree as follows:
1. Defined Terms. Unless otherwise defined herein, capitalized terms used herein
shall have the meanings ascribed to them in the Original Agreement.
2. Amendment of Original Agreement. The Original Agreement is hereby amended as
follows:
(a) Cash Payments. The Parties agree that the sum currently owed to
Claimants under Section 3 of the Original Agreement is $189,540.91 plus the
accrued interest as provided for in the Original Agreement, which shall be paid
as follows:
(i) Payment of $100,000. The Company shall pay the Claimants
$100,000 in five equal monthly installments of $20,000 each (the "Installment
Payments"), with the first installment sent to Claimants immediately on the
mutual execution of this Amendment and the next four installments paid on or
before the last business day of January, February, March, and April 2007
respectively. Payment of the Installment Payments shall by guaranteed by Xxxxxxx
X. Xxxxx though the execution of a Personal Guaranty in the form attached in
Exhibit A and provided to Claimants immediately on the mutual execution of this
Amendment.
(ii) Payment of Additional $89,540.91 plus Interest. In addition to
the Installment Payments described in paragraph 2(a)(i) above, the Company shall
pay the Claimants $89,540.91 plus all accrued interest (including any interest
earned on the amount subject to the Installment Payments) as provided for in the
Original Agreement on or before June 30, 2007.
(b) Repurchase Obligations. The repurchase obligations of the Company
pursuant to Section 4(d) of the Original Agreement shall not commence on
November 1, 2006 as provided by the Original Agreement, but instead shall
commence on July 1, 2007. The repurchase obligations of the Company pursuant to
Section 4(d) of the Original Agreement shall not terminate until Xx. Xxxxxx
shall have had the opportunity to exercise the repurchase rights with respect to
the same number of days as he would have been entitled to exercise the
repurchase rights if such rights commenced on November 1, 2006. As an example,
for the avoidance of doubt, if the repurchase rights under Section 4(d) of the
Original Agreement would have terminated on April 30, 2007 under the Original
Agreement, then, pursuant to this Amendment, Xx. Xxxxxx'x repurchase rights
shall commence on July 1, 2007 and terminate on December 31, 2007.
(c) Additional Warrants. As consideration for entering into this
Amendment, in addition to the Settlement Shares issued to the Claimants pursuant
to the Original Agreement, the Claimants are hereby granted an option to
purchase 775,000 shares of Company common stock at an exercise price of $0.20
per share (subject to equitable adjustment in the case of a stock split,
combination, stock dividend, recapitalization, or similar event) for a term of
five years from the date of this Amendment (the "Option"). The Option shall be
exercisable by the Claimants either through cash payment of the exercise price
or as a "cashless exercise" through surrender to the Company of the appropriate
number of shares of common stock, in the discretion of the Claimants. The
Claimants shall have the rights provided under Section 4 of the Original
Agreement with respect to the stock to be issued upon exercise of the Option,
other than the rights contained in Sections 4(c), (d) and (e).
3. Notices. Section 19 of the Original Agreement is hereby amended to delete the
address for notices to Claimants set forth therein in its entirety and replace
it as follows:
"If to Claimants:
Xxxxxxxxx Xxxxxxx Xxxx & Xxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Fax: 000 000 0000
Attention: Xxxxxxxxx Xxxxxxx"
4. Terms of Original Agreement. Unless specifically modified hereby, all terms
of the Original Agreement shall remain unchanged and in full force and effect.
5. Representations and Warranties of the Company. The Company represents and
warrants to the Claimants that (i) the Company has the corporate power to enter
into and perform its obligations under this Amendment, (ii) the execution,
delivery and performance of this Amendment have been authorized by all required
corporate action on the part of the Company and do not conflict with or result
in a breach of or constitute a default under any documents or agreements to
which the Company is party or by which it is bound, and (iii) this Amendment
constitutes a valid and binding obligation, enforceable against the Company in
accordance with its terms.
Applicable Law. This Amendment shall be governed exclusively by the applicable
laws of the State of New Jersey without regard to its conflict of laws
principles, and the rights and remedies available to the Claimants pursuant to
the Original Agreement shall apply with equal force to this Amendment.
6. Execution of Counterparts. This Amendment may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
IN WITNESS WHEREOF, the Parties have executed this Amendment No. 1 to
Confidential Settlement Agreement and Mutual Release as of the day and year
first above written.
Xxxxx Xxxxxx:
/S/ XXXXX XXXXXX
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By: Xxxxx Xxxxxx
Yeffet Security Consultants, Inc.
/S/ XXXXX XXXXXX
------------------------------------
By: Xxxxx Xxxxxx
Its: President
HiEnergy Technologies, Inc.
/S/ XXXXX W.A. SPILLMANN
------------------------------------
By: Xxxxx W.A. Xxxxxxxxx
Its: President
EXHIBIT A
FORM OF UNCONDITIONAL GUARANTY
UNCONDITIONAL GUARANTY
For and in consideration of Xxxxx Xxxxxx and Yeffet Security Consultants,
Inc. ("Claimants") entry into Amendment No. 1 to the Confidential Settlement
Agreement and Mutual Release, dated as of January 30, 2007 (the "Amendment")
with HiEnergy Technologies, Inc. (the "Company"), the undersigned, Xxxxxxx X.
Xxxxx, an adult individual residing in the District of Columbia at the address
set forth on the signature page hereof (the "Guarantor"), hereby unconditionally
and irrevocably guarantees the prompt and complete payment of the Installment
Payments (as defined in the Amendment) owed by the Company to Claimants pursuant
to the Amendment (the "Obligations"). For sake of clarification, the Claimants
agree and understand that the Obligations guaranteed by this Guarantee encompass
only the payment of the five Installment Payments of $20,000 each as set forth
in the Amendment and do not extend to any other requirements or obligations of
the Company. The Guarantor hereby expressly agrees with and covenants to the
Claimants as follows:
1. If Company does not perform the Obligations, or any of them, the Guarantor
shall, within five (5) business days following written notice of such
failure from Claimants to the address or fax number set forth on the
signature page hereof, pay and otherwise perform all of the Obligations.
2. The obligations of the Guarantor hereunder are independent of and distinct
from the Obligations of the Company, and a separate action or actions may
be brought and prosecuted against the Guarantor whether action is
previously or simultaneously brought against the Company, and/or whether
the Company may thereafter be joined in any such action or actions. The
Guarantor waives the benefit of any statute of limitations affecting its
liability hereunder or the enforcement thereof, to the extent permitted by
law.
3. Guarantor waives any right to require the Claimants to (a) proceed against
Company or any other person; (b) proceed against or exhaust any security
held from Company; or (c) pursue any other remedy in the Claimants' power
whatsoever. Claimants may, at their election, exercise or decline or fail
to exercise any right or remedy they may have against Company or any
security held by the Claimants including without limitation the right to
foreclose upon any such security by judicial or nonjudicial sale, without
affecting or impairing in any way the liability of Guarantor hereunder.
Guarantor waives any defense arising by reason of any disability or other
defense of Company or by reason of the cessation from any cause whatsoever
of the liability of the Company, and waives any and all other defenses of
any kind or nature now or hereafter available to a surety. Guarantor
waives any setoff, defense or counterclaim that Company may have against
Claimants. Guarantor waives any defense arising out of the absence,
impairment or loss of any right of reimbursement or subrogation or any
other rights against the Company. Guarantor waives all rights to
participate in any security now or hereafter held by the Claimants.
Guarantor waives all presentments, demands for performance, notices of
nonperformance, protests, notices of protest, notices of dishonor, and
notices of acceptance of this Guaranty and of the existence, creation, or
incurring of new or additional indebtedness. Guarantor assumes the
responsibility for being and keeping itself informed of the financial
condition of Company and of all other circumstances bearing upon the risk
of nonpayment of any indebtedness or nonperformance of the Obligations,
and agrees that Claimants shall have no duty to advise Guarantor of
information known to Claimants regarding such condition or any such
circumstances
4. If Company becomes insolvent or is adjudicated bankrupt or files a
petition for reorganization, arrangement, composition or similar relief
under any present or future provision of the United States Bankruptcy
Code, or if such a petition is filed against Company, and in any such
proceeding some or all of the Obligations are terminated, rejected,
modified or abrogated, or if the Obligations are otherwise avoided for any
reason, Guarantor agrees that Guarantor's liability hereunder shall not
thereby be affected or modified and such liability shall continue in full
force and effect as if no such action or proceeding had occurred. This
Guaranty shall continue to be effective or be reinstated, as the case may
be, if any payment must be returned by Claimants upon the insolvency,
bankruptcy or reorganization of Company, Guarantor, any other guarantor or
surety, or otherwise, as though such payment had not been made.
5. No terms or provisions of this Guaranty may be changed, waived, revoked or
amended without the prior written consent of the parties. Should any
provision of this Guaranty be determined by a court of competent
jurisdiction to be unenforceable, all of the other provisions shall remain
effective. This Guaranty, together with any agreements (including without
limitation any security agreements or any pledge agreements) executed in
connection with this Guaranty, embodies the entire agreement among the
parties hereto with respect to the matters set forth herein, and
supersedes all prior agreements among the parties with respect to the
matters set forth herein. No course of prior dealing among the parties, no
usage of trade, and no parole or extrinsic evidence of any nature shall be
used to supplement, modify or vary any of the terms hereof. There are no
conditions to the full effectiveness of this Guaranty.
6. Guarantor represents and warrants to the Claimants that (i) Guarantor is
an adult individual, with full power and capacity to enter into, execute
and perform this Guaranty, (ii) execution, delivery and performance of
this Guaranty do not conflict with or result in a breach of or constitute
a default under any documents or agreements to which he is party or by
which he is bound, and (iii) this Guaranty constitutes a valid and binding
obligation, enforceable against Guarantor in accordance with its terms.
7. GUARANTOR WAIVES ANY RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS GUARANTY OR ANY OF THE TRANSACTIONS
CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF
DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. This Guaranty
shall be governed by and construed in accordance with the internal laws of
the State of New Jersey applicable to the performance and enforcement of
contracts made within such state, without giving effect to the law of
conflicts of laws applied thereby. In the event that the Claimants shall
be forced to bring any legal action to enforce, protect or defend
Claimants' rights under this Guarantee, then the Claimants shall be
entitled to reimbursement from the Guarantor of all reasonable fees, costs
and other expenses (including, without limitation, the reasonable expenses
of counsel ) in such action.
IN WITNESS WHEREOF, the undersigned Guarantor has executed this Guaranty
as of this 30th day of January 2007.
XXXXXXX X. XXXXX
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Address for Notice:
[Address]
[Fax]
Agreed:
---------------------------
Xxxxx Xxxxxx
Yeffet Security Consultants, Inc.
By:
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Xxxxx Xxxxxx
President
