HiEnergy Technologies, Inc. Senior Convertible Promissory Bridge Note

 

Exhibit 10.127

 

THIS NOTE HAS NOT BEEN   REGISTERED   UNDER THE SECURITIES ACT OF 1933, AS AMENDED

(THE   "SECURITIES   ACT"),   OR ANY   STATE   SECURITIES   LAW AND   MAY NOT BE   SOLD,

TRANSFERRED OR OTHERWISE   DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT

AND UNDER APPLICABLE STATE SECURITIES LAWS OR HIENERGY   TECHNOLGIES,   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.

 

                           HiEnergy Technologies, Inc.

                    Senior Convertible Promissory Bridge Note

 

U.S. $_________________                               Issuance Date: ____________

No.: 10-2005-HIET-__                                   Maturity Date: ____________

 

      FOR   VALUE   RECEIVED,   the   undersigned,   HiEnergy   Technologies   Inc.,   a

Delaware   corporation   (the   "Company"),   hereby promises to pay to the order of

_________________,   or any future permitted   holder of this secured   convertible

bridge   note   (the   "Payee"),   at the   principal   office   of the Payee set forth

herein,   or at such other   place as the holder may   designate   in writing to the

Company, the principal sum of _________________ Dollars ($_______) or such other

amount as may be   outstanding   hereunder,   together   with all accrued but unpaid

interest,   in such coin or   currency   of the United   States of America as at the

time shall be legal   tender for the payment of public and   private   debts and in

immediately available funds, as provided in this secured convertible bridge note

(the "Note").

 

      1. Automatic Exchange of Principal and Interest into Qualified   Financing.

The   outstanding   principal   amount of this Note   together   with all accrued but

unpaid interest hereunder (the "Outstanding   Balance"),   shall   automatically be

exchanged   into   shares   issued   in an equity or   equity   based   financing   or a

combination of equity financings following the Issuance Date with gross proceeds

totaling at least   $2,500,000 (the "Qualified   Financing");   provided,   however,

that for   purposes of   determining   the number of equity   securities,   including

warrants   issued in such Qualified   Financing,   to be received by the Payee upon

such   exchange,   the   Payee   shall   be   deemed   to   have   tendered   110%   of the

Outstanding   Balance   of the   Note   as   payment   of the   purchase   price   in the

Qualified Financing.   Upon such exchange pursuant to a Qualified Financing,   the

Payee shall be deemed to be a purchaser in such Qualified Financing and shall be

granted all rights afforded a purchaser in the Qualified Financing.

 

      2. In   consideration   for the loan evidenced by this Note, the Payee shall

be issued Bridge   Warrants in the form attached as Exhibit A for the issuance of

80,000   shares of common   stock of the Company at an exercise   price of $.80 per

$100,000 of Note principal amount.

 

 

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      3.   Voluntary   Conversion of Principal and Interest.   At the option of the

Payee, the Outstanding   Balance of this Note may be converted into common shares

of the   Company   at a price   per   share of   $0.60   at any time the Note   remains

outstanding.

 

      4.   Seniority   and   Ranking.   This Note shall rank   senior to the   Maker's

currently issued and outstanding indebtedness and equity securities,   other than

any current or future accounts receivable   financing which amount may not exceed

$1,000,000.   The Company shall not issue any securities or financial instruments

that rank   senior to or   pari-passu   to this Note [(part of a series of separate

notes of the same form   aggregating a total principal amount of up $500,000 (the

"Note or Notes")] without the prior written consent of the Payee.

 

      5. Principal and Interest Payments.

 

            (a) In the   event   the   Company   does   not   complete   the   Qualified

Financing, the Company shall repay the entire principal balance then outstanding

in cash on ______________, 2006 (the "Maturity Date").

 

            (b) Interest on the outstanding principal balance of this Note shall

accrue at a rate of ten percent   (10%) per annum.   Interest   on the   outstanding

principal   balance   of the Note   shall be   computed   on the basis of the   actual

number of days elapsed and a year of three hundred and sixty-five (365) days and

shall be payable on the Maturity Date by the Company in cash or in shares of the

Company's   equity   securities.   Furthermore,   upon the occurrence of an Event of

Default,   then to the extent   permitted by law, the Company will pay interest to

the Payee,   payable on demand, on the outstanding   principal balance of the Note

from   the date of the   Event of   Default   until   payment   in full at the rate of

twelve percent (12%) per annum.

 

            (c) At the   Company's   sole   option,   the   Company   may   prepay   the

outstanding   principal   amount of this Note plus all accrued and unpaid interest

in cash at any time   without   penalty   prior to maturity.   All payments   made on

account of the   indebtedness   evidenced   by this Note shall be applied   first to

accrued   but unpaid   interest,   if any,   and the   remainder   shall be applied to

principal.

 

      6.   Non-Business   Days.   Whenever any payment to be made shall be due on a

Saturday,   Sunday or a public   holiday   under the laws of the State of New York,

such   payment   may be due on the next   succeeding   business   day and   such   next

succeeding   day shall be   included in the   calculation   of the amount of accrued

interest payable on such date.

 

      7.   Representations and Warranties of the Company.   The Company represents

and warrants to the Payee as follows:

 

            (a) The Company has been duly   incorporated   and is validly existing

and in good   standing   under   the   laws of the   state   of   Delaware,   with   full

corporate   power and authority to own,   lease and operate its   properties and to

conduct its business as currently conducted.

 

            (b)   This   Note has   been   duly   authorized,   validly   executed   and

delivered on behalf of the Company and is a valid and binding   obligation of the

Company enforceable against the Company in accordance with its terms, subject to

limitations on enforcement by general   principles of equity and by bankruptcy or

other laws affecting the   enforcement of creditors'   rights   generally,   and the

Company has full power and   authority   to execute   and deliver   this Note and to

perform its obligations hereunder.

 

 

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            (c) The   execution,   delivery and   performance of this Note will not

(i) conflict   with or result in a breach of or a default   under any of the terms

or provisions of, (A) the Company's   certificate of incorporation or by-laws, or

(B) any material   provision of any indenture,   mortgage,   deed of trust or other

material   agreement or instrument to which the Company is a party or by which it

or any of its material properties or assets is bound, (ii) result in a violation

of any material provision of any law, statute, rule, regulation, or any existing

applicable decree,   judgment or order by any court,   Federal or state regulatory

body, administrative agency, or other governmental body having jurisdiction over

the Company,   or any of its material properties or assets or (iii) result in the

creation or   imposition of any material   lien,   charge or   encumbrance   upon any

material   property or assets of the Company or any of its subsidiaries   pursuant

to the terms of any   agreement or   instrument to which any of them is a party or

by which   any of them may be bound or to which any of their   property   or any of

them is subject.

 

            (d)   No   consent,   approval   or   authorization   of   or   designation,

declaration or filing with any governmental authority on the part of the Company

is required in connection with the valid execution and delivery of this Note.

 

      8. Events of Default.   The occurrence of any of the following events shall

be an "Event of Default" under this Note:

 

            (a) the Company   shall fail to make the payment of any amount of any

principal   outstanding   for a period of three (3)   business   days after the date

such payment shall become due and payable hereunder; or

 

            (b) the Company   shall fail to make any   payment of   interest   for a

period of three (3) business days after the date such interest   shall become due

and payable hereunder; or

 

            (c)   any   representation,   warranty   or   certification   made   by the

Company herein or in any certificate or financial   statement shall prove to have

been false or   incorrect   or   breached   in a material   respect on the date as of

which made; or

 

            (d) the   holder of any   indebtedness   of the   Company   or any of its

subsidiaries   shall accelerate any payment of any amount or amounts of principal

or   interest   on   any   indebtedness    (the    "Indebtedness")    (other   than   the

Indebtedness   hereunder)   prior   to its   stated   maturity   or   payment   date the

aggregate   principal   amount of which   Indebtedness   of all such   persons   is in

excess of $1,000,000,   whether such Indebtedness now exists or shall hereinafter

be   created,   and such   accelerated   payment   entitles   the   holder   thereof   to

immediate   payment   of   such   Indebtedness   which   is due   and   owing   and   such

indebtedness   has not been discharged in full or such   acceleration has not been

stayed,    rescinded   or   annulled    within   ten   (10)    business   days   of   such

acceleration; or

 

            (e) A judgment   or order for the   payment of money shall be rendered

against the Company or any of its   subsidiaries   in excess of   $1,000,000 in the

aggregate (net of any applicable   insurance   coverage) for all such judgments or

orders   against all such persons   (treating any   deductibles,   self insurance or

retention   as not so   covered)   that   shall   not be   discharged,   and   all   such

judgments and orders remain outstanding,   and there shall be any period of sixty

(60)   consecutive   days   following   entry of the   judgment or order in excess of

$1,000,000 or the judgment or order which causes the aggregate   amount described

above to exceed   $1,000,000   during which a stay of enforcement of such judgment

or order, by reason of a pending appeal or otherwise, shall not be in effect; or

 

 

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            (f) the   Company   shall (i) apply for or consent to the   appointment

of, or the taking of possession by, a receiver, custodian, trustee or liquidator

of itself or of all or a substantial part of its property or assets, (ii) make a

general assignment for the benefit of its creditors,   (iii) commence a voluntary

case under the Bankruptcy Code or under the comparable laws of any   jurisdiction

(foreign or   domestic),   (iv) file a petition   seeking to take   advantage of any

bankruptcy,   insolvency,    moratorium,    reorganization   or   other   similar   law

affecting the   enforcement   of   creditors'   rights   generally,   (v) acquiesce in

writing   to any   petition   filed   against   it in an   involuntary   case under the

Bankruptcy   Code or under the comparable   laws of any   jurisdiction   (foreign or

domestic),   or (vi) take any action under the laws of any jurisdiction   (foreign

or domestic) analogous to any of the foregoing; or

 

            (g) a   proceeding   or case   shall be   commenced   in   respect   of the

Company or any of its   subsidiaries   without its application or consent,   in any

court of competent   jurisdiction,   seeking (i) the liquidation,   reorganization,

moratorium,   dissolution,   winding up, or   composition   or   readjustment   of its

debts, (ii) the appointment of a trustee, receiver, custodian, liquidator or the

like of it or of all or any   substantial   part of its   assets   or (iii)   similar

relief in respect of it under any law providing   for the relief of debtors,   and

such   proceeding or case   described in clause (i), (ii) or (iii) shall   continue

undismissed,   or unstayed and in effect, for a period of thirty (30) consecutive

days or any order for relief shall be entered in an   involuntary   case under the

Bankruptcy   Code or under the comparable   laws of any   jurisdiction   (foreign or

domestic)   against the Company or any of its   subsidiaries   or action   under the

laws of any jurisdiction (foreign or domestic) analogous to any of the foregoing

shall be taken with respect to the Company or any of its   subsidiaries and shall

continue   undismissed,   or   unstayed   and in effect for a period of thirty   (30)

consecutive days; or

 

            (h) the   suspension   from listing or the failure of the Common Stock

to be listed   on the OTC   Bulletin   Board   for a period of five (5)   consecutive

trading days.

 

      9.   Remedies   Upon An Event of Default.   If an Event of Default shall have

occurred and shall be continuing,   the Payee of this Note may at any time at its

option,   (a) declare the entire unpaid principal balance of this Note,   together

with all interest accrued hereon, due and payable, and thereupon, the same shall

be   accelerated   and so due   and   payable;   provided,   however,   that   upon   the

occurrence   of an Event   of   Default   described   in (i)   Sections   8(f) and (g),

without   presentment,   demand,   protest,   or   notice,   all of which   are   hereby

expressly unconditionally and irrevocably waived by the Company, the outstanding

principal balance and accrued interest   hereunder shall be automatically due and

payable,   and (ii)   Sections   8(a) through (e) and Section   8(h),   the Payee may

exercise or   otherwise   enforce any one or more of the Payee's   rights,   powers,

privileges,   remedies and interests under this Note or applicable law. No course

of delay on the part of the Payee shall operate as a waiver thereof or otherwise

prejudice the right of the Payee. No remedy   conferred hereby shall be exclusive

of any other remedy referred to herein or now or hereafter   available at law, in

equity, by statute or otherwise.

 

      10. Replacement.   Upon receipt of a duly executed, notarized and unsecured

written   statement from the Payee with respect to the loss, theft or destruction

of this Note (or any   replacement   hereof),   and without   requiring an indemnity

bond or other   security,   or, in the case of a   mutilation   of this   Note,   upon

surrender and   cancellation of such Note, the Company shall issue a new Note, of

like tenor and amount,   in lieu of such lost,   stolen,   destroyed   or   mutilated

Note.

 

 

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      11. Parties in Interest, Transferability.   This Note shall be binding upon

the Company and its   successors   and assigns and the terms hereof shall inure to

the benefit of the Payee and its successors and permitted assigns. This Note may

not be   transferred   or sold,   subject to the   provisions   of Section 17 of this

Note,   or pledged,   hypothecated   or otherwise   granted as security by the Payee

without the prior written consent of the Company.

 

      12.   Amendments.   This Note may not be   modified   or amended in any manner

except in writing executed by the Company and the Payee.

 

      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 by 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 Company   will give written   notice to the Payee at least

thirty   (30) days   prior to the date on which the   Company   closes   its books or

takes a record (x) with respect to any dividend or distribution   upon the common

stock of the   Company,   (y) with respect to any pro rata   subscription   offer to

holders of common   stock of the   Company or (z) for   determining   rights to vote

with respect to a Major Transaction,   dissolution, liquidation or winding-up and

in no   event   shall   such   notice   be   provided   to such   holder   prior   to such

information   being made known to the public.   The Company will also give written

notice   to the   Payee   at   least   twenty   (20)   days   prior to the date on which

dissolution,   liquidation   or   winding-up   will take place and in no event shall

such notice be provided to the Payee prior to such information   being made known

to the public.

 

Address of the Payee:

 

Address of the Company:        HiEnergy Technologies, Inc.

                              1601-b Alton Parkway

                              Irvine, CA 92606

                              Phone: (949) 757-0855

                              Fax:    (949) 757-1477

                               Attention: Roger Spillmann

                                         Corporate Secretary

 

      14.   Governing   Law.   This Note   shall be   governed   by and   construed   in

accordance   with the   internal   laws of the   State of New York,   without   giving

effect to the choice of law   provisions.   This Note shall not be   interpreted or

construed   with any   presumption   against   the   party   causing   this   Note to be

drafted.

 

      15.   Headings.   Article   and section   headings   in this Note are   included

herein for purposes of   convenience of reference only and shall not constitute a

part of this Note for any other purpose.

 

 

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      16.   Remedies,    Characterizations,    Other    Obligations,    Breaches   and

Injunctive Relief. The remedies provided in this Note shall be cumulative and in

addition to all other   remedies   available   under this Note, at law or in equity

(including,   without limitation,   a decree of specific   performance and/or other

injunctive   relief),   no   remedy   contained   herein   shall be deemed a waiver of

compliance   with the   provisions   giving rise to such remedy and nothing   herein

shall   limit a Payee's   right to pursue   actual   damages   for any failure by the

Company to comply with the terms of this Note. Amounts set forth or provided for

herein with respect to payments and the like (and the computation thereof) shall

be the amounts to be received   by the Payee and shall not,   except as   expressly

provided   herein,   be subject to any other   obligation   of the   Company   (or the

performance thereof).

 

      17. Failure or Indulgence   Not Waiver.   No failure or delay on the part of

the Payee in the   exercise   of any power,   right or   privilege   hereunder   shall

operate as a waiver   thereof,   nor shall any single or partial   exercise   of any

such power,   right or privilege preclude other or further exercise thereof or of

any other right, power or privilege.

 

      18. Enforcement Expenses. The Company agrees to pay all costs and expenses

of   enforcement   of   this   Note,   including,    without   limitation,    reasonable

attorneys' fees and expenses.

 

      19. Binding Effect. The obligations of the Company and the Payee set forth

herein   shall be binding   upon the   successors   and   assigns of each such party,

whether or not such successors or assigns are permitted by the terms hereof.

 

      20.   Compliance with Securities Laws. The Payee of this Note   acknowledges

that this Note is being acquired solely for the Payee's own account and not as a

nominee for any other party,   and for   investment,   and that the Payee shall not

offer,   sell or otherwise dispose of this Note other than in compliance with the

laws   of the   United   States   of   America   and as   guided   by the   rules   of the

Securities   and   Exchange    Commission.    This   Note   and   any   Note   issued   in

substitution   or   replacement   therefore   shall be stamped or   imprinted   with a

legend in substantially the following form:

 

      "THIS NOTE HAS NOT BEEN   REGISTERED   UNDER THE SECURITIES ACT OF

      1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES

      LAW AND MAY NOT BE SOLD,   TRANSFERRED   OR OTHERWISE   DISPOSED OF

      UNLESS   REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE

      STATE   SECURITIES LAWS OR WAVE WIRELESS   CORPORATION   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."

 

      21.   Severability.   The provisions of this Note are severable,   and if any

provision   shall be held   invalid   or   unenforceable   in whole or in part in any

jurisdiction,   then such invalidity or unenforceability   shall not in any manner

affect such provision in any other   jurisdiction   or any other provision of this

Note in any jurisdiction.

 

 

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      22. Consent to Jurisdiction.   Each of the Company and the Payee (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 Note 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 Payee

consents   to process   being   served in any such suit,   action or   proceeding   by

mailing a copy   thereof   to such   party at the   address   set forth in Section 10

hereof and agrees that such service shall constitute good and sufficient service

of process and notice thereof.   Nothing in this Section 19 shall affect or limit

any right to serve process in any other manner permitted by law.

 

      23. Company Waivers. Except as otherwise specifically provided herein, the

Company   and all   others   that   may   become   liable   for all or any   part of the

obligations evidenced by this Note, hereby waive presentment,   demand, notice of

nonpayment,   protest and all other   demands and notices in   connection   with the

delivery,   acceptance,   performance   and enforcement of this Note, and do hereby

consent to any number of renewals of   extensions   of the time or payment   hereof

and agree that any such renewals or extensions may be made without notice to any

such persons and without affecting their liability herein and do further consent

to the release of any person liable hereon,   all without affecting the liability

of the other persons,   firms or Company liable for the payment of this Note, AND

DO HEREBY WAIVE TRIAL BY JURY.

 

            (a) No delay or omission on the part of the Payee in exercising   its

rights under this Note, or course of conduct relating hereto, shall operate as a

waiver of such rights or any other   right of the Payee,   nor shall any waiver by

the Payee of any such right or rights on any one   occasion be deemed a waiver of

the same right or rights on any future occasion.

 

            (b) THE COMPANY ACKNOWLEDGES THAT THE TRANSACTION OF WHICH THIS NOTE

IS A PART IS A COMMERCIAL   TRANSACTION,   AND TO THE EXTENT ALLOWED BY APPLICABLE

LAW,   HEREBY   WAIVES   ITS   RIGHT TO   NOTICE   AND   HEARING   WITH   RESPECT   TO ANY

PREJUDGMENT   REMEDY WHICH THE PAYEE OR ITS   SUCCESSORS   OR ASSIGNS MAY DESIRE TO

USE.

 

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

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            IN WITNESS WHEREOF, the Company has executed and delivered this Note

as of the date first written above.

 

                                  HiEnergy Technologies, Inc.

 

                                  By:

                                     -------------------------------------------

                                     Name: Bogdan C. Maglich

                                     Title: Chairman and Chief Executive Officer

 

 

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                                    EXHIBIT A

 

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.

 

Holder:

Warrant No.: W-

Number of Warrant Shares:

Exercise Price: $0.80 per Warrant Share

Original Issue Date:

Expiration 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.

 

 

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      "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.

 

      "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 Note; 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.

 

      "Note"   means the Senior   Convertible   Promissory   Bridge Note dated as of

__________, 2005 between the Issuer and the investor, or Payee, thereto.

 

      "Original   Issue   Date"   means the date of the   Closing   as defined in the

Note.

 

      "OTC Bulletin Board" means the over-the-counter electronic bulletin board.

 

      "Other   Common"   means any other   Capital Stock of the Issuer of any c