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
Isaac Yeffet 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 William
A. Nitze 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.
<PAGE>
(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 Mr. Yeffet
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, Mr.
Yeffet's 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:
Patterson Belknap Webb & Tyler LLP
1133 Avenue of the Americas
New York, NY 10036
Fax: 212 336 2222
Attention: Alexander Shapiro"
<PAGE>
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 la
