JOINT MARKETING AGREEMENT
This Agreement, made and entered into as of this 15th day of January, 2006, by and between Laseroptronix AB,
a foreign corporation ("Laseroptronix"), whose principal address is Enhagsslingan 23, 187 34 Taby, Sweden;
and HiEnergy Technologies, Inc., a Delaware corporation ("HiEnergy"), whose principal address is 1601B Alton
Parkway, Irvine, California 92606.
WHEREAS, Laseroptronix designs, manufactures and markets the products listed in Exhibit A, and related
software, documentation, and key services;
WHEREAS, HiEnergy has developed, manufactures and markets the products listed in Exhibit A, and related
software, documentation and key services; and
WHEREAS, Laseroptronix and HiEnergy desire to jointly market a proposed product offering consisting of a
combination of Laseroptronix and HiEnergy products for sales to prospective customers in the United States and
in Sweden and have decided that it is in their mutual and respective best interests to enter into a program intended
to promote sales under this Agreement.
NOW THEREFORE, in consideration of the mutual covenants contained herein Laseroptronix and HiEnergy
enter into this Agreement in order to provide for the initial phase of joint marketing activities for the proposed
joint product offering.
1. Definitions. As used herein, the following words or phrases have the following meanings:
1.1 "Laseroptronix Products" shall mean those specified in Exhibit A and related software, documentation, and
1.2 "Laseroptronix Property" means any and all Intellectual Property owned by Laseroptronix as of the Effective
Date or developed thereafter solely by or on behalf of Laseroptronix, and expressly excludes any HiEnergy
1.3 "Effective Date" means January 14, 2006.
1.4 "Hereof," "herein, and "hereunder" when used in this Agreement shall refer to the Agreement as a whole,
unless the context otherwise requires.
1.5 "HiEnergy Products" shall mean those specified in Exhibit A and related software, documentation, and key
1.6 "HiEnergy Property" means any and all Intellectual Property owned by HiEnergy as of the Effective Date or
developed thereafter solely by or on behalf of HiEnergy, and expressly excludes any Laseroptronix Property.
1.7 "Intellectual Property" means any and all inventions, improvements, enhancements, methods, designs, know-
how, trade secrets, software, hardware, circuits, products, documentation, mask works, layouts, ornamental
designs, trademarks, service marks, trade dress, company names, brand names, logos, and fictitious names,
together with any and all worldwide vested and/or inchoate rights in and to any or all of the foregoing under any
issued, pending and/or later filed applications for patent or copyright registration, trademark and/or service mark
registration, utility models and/or any other form of protection of various forms of intellectual and/or industrial
property recognized anywhere in the world including any and all rights of domestic and/or foreign priority, the
right to sue and recover damages for infringements including, without limitation, any past infringements.
1.8 "Product" or "Products" shall mean any combination of the Laseroptronix and HiEnergy Products, developed
in accordance with this Agreement.
1.9 "Project" means a mutual effort by the parties to promote, sell, deliver, and support a combination of the
Laseroptronix Product and the HiEnergy Product, and/or improvement to any Product and/or components
thereof, whether hardware, software, electronic, mechanical or otherwise.
1.10 "Proprietary Information" means proprietary rights in, and to, all computer programs, source code,
algorithms, software routines, microcode and other similar data pertaining to Laseroptronix Products, the
HiEnergy Products, or the Product, as the case may be.
1.11 "Specifications" means the criteria for and description of the Product set forth on Exhibit A hereto.
1.12 "Term" means the period from the Effective Date through the Termination Date.
1.13 "Termination Date" means any date upon which this Agreement shall terminate in accordance with the terms
hereof, or one (1) year from the Effective Date, whichever is earlier.
2. Scope of Agreement
2.1 Laseroptronix shall:
2.1.1 Provide exclusive license for resale of Laseroptronix Product in the United States to HiEnergy under
mutually acceptable terms;
2.1.2 Give reasonable cooperation to the Project and HiEnergy in terms of advertising, media and press relations,
trade expositions and shows, and dealer and distributor support;
2.1.3 Make management, marketing and technical personnel available to assist the Project and HiEnergy to
resolve issues and achieve joint and respective sales goals;
2.1.4 Provide training, technical data and product documentation to the Project and HiEnergy, where training,
technical data and product documentation is reasonably required to achieve joint and respective sales goals, but
such provision shall be under mutually acceptable terms;
2.1.5 Make available after-sale support to the Project and HiEnergy including maintenance, software support and
spare parts, technical data and product documentation, under mutually acceptable terms; and
2.1.6 Perform design enhancements, modifications, or improvements of Laseroptronix Product when required by
the Project in the joint determination of the parties, under mutually acceptable terms.
2.2 HiEnergy shall:
2.2.1 Provide exclusive license for resale of HiEnergy Product in Sweden to Laseroptronix under mutually
2.2.2 Give reasonable cooperation to the Project and Laseroptronix in terms of advertising, media and press
relations, trade expositions and shows, and dealer and distributor support;
2.2.3 Make management, marketing and technical personnel available to assist the Project and Laseroptronix to
resolve issues and achieve joint and respective sales goals;
2.2.4 Provide training, technical data and product documentation to the Project and Laseroptronix, where
training, technical data and product documentation is reasonably required to achieve joint and respective sales
goals, but such provision shall be under mutually acceptable terms;
2.2.5 Make available after-sale support to the Project and Laseroptronix including maintenance, software
support and spare parts, technical data and product documentation, under mutually acceptable terms;
2.2.6 Perform design enhancements, modifications, or improvements of HiEnergy Product when required by the
Project in the joint determination of the parties, under mutually acceptable terms.
3. Pricing and Terms of Sales. The parties agree to negotiate in good faith and to reach agreement on the
following matters within 15 days after the Effective Date: the initial List Prices for the Product, the discounts that
will be available to the various sales channels, the other terms and conditions of the sales of the Product to third
parties, and the terms, conditions and pricing under which Laseroptronix will act as reseller of the HiEnergy
Product and HiEnergy will act as a reseller of the Laseroptronix. HiEnergy and Laseroptronix agree to cooperate
in the future to establish different List Prices and discounts as needed to address cost changes or market
4 Restrictions on Product Use, Trademarks, Trade Names and Publicity. All use by a party of the other's
product is restricted as follows:
4.1 Either party is strictly prohibited from reverse engineering, reverse compilation, or reverse assembly of the
4.2 Either party is strictly prohibited from making a copy or copies of the other's product;
4.3 Either party is strictly prohibited from sublicensing or otherwise transferring the other's product;
4.4. Either party shall not use the trademarks or trade names of the other; and
4.5 Either party shall not publicize this Agreement without the consent of the other party.
5 Compliance With Laws and Business Practices.
5.1 It is expressly understood and agreed that this Agreement, and any exports, sales, transfers, or any other
disposition of Laseroptronix Products or HiEnergy Products, to the extent incorporated in the Product, are
subject to the laws and regulations of Sweden and the United States, respectively. Specifically, contracts and
orders placed for the Product may require advance Government Export approval or licensing, and, therefore all
such contracts and orders are subject to the receipt of any necessary approvals and licenses. The parties hereto
agree to solicit orders from each, and the manufacturer agrees to process and ship orders, in accordance with all
applicable laws and regulations. During the term of this Agreement, and thereafter, any Products purchased by or
provided by the parties to the other hereunder, including any technical data or documentation pertaining thereto,
shall not be sold, leased, released, assigned, transferred, conveyed or in any manner disposed of, either directly
or indirectly, in any manner that violates applicable laws.
5.2 Laseroptronix and HiEnergy agree to comply in all respects with the U.S. Foreign Corrupt Practices Act of
1977 (FCPA), as amended, which provides generally that: under no circumstances will foreign officials,
representatives, political parties or holders of public offices be offered, promised or paid any money,
remuneration, things of value, or provided any other benefit, direct or indirect, in connection with obtaining or
maintaining contracts or orders hereunder. When representatives or other individuals or organizations associated
with the parties are required to perform any obligations related to or in connection with this Agreement the
substance of this provision shall be flowed-down and included in any agreement between with any such
representatives. The failure of the parties to comply in all respects with the provisions of the FCPA shall
constitute a material breach by the offending party of its obligations hereunder; and, shall entitle the other to
terminate the Agreement immediately.
5.3 Each party agrees to use its best efforts to obtain all necessary Government approvals or licenses for export
of the Products hereunder.
6. Customer Support
6.1 Initial Contact. HiEnergy shall be the initial point of contact for customer support of the Product and shall
establish and maintain support facilities sufficient to provide primary support for the Product. Primary support
requires that HiEnergy provide all necessary resources to provide initial diagnosis of both hardware and software
problems and providing reasonable assistance to purchasers to resolve problems with the Product.
6.2 Maintenance. Following receipt of support requests from a customer and an assessment by HiEnergy of the
customer's additional support requirements, if it is determined that the customer requires maintenance services,
Laseroptronix shall provide such maintenance for Laseroptronix Products and HiEnergy shall provide such
maintenance in all other instances. Each party hereto agrees to maintain support services sufficient to discharge
the duty set forth in the preceding sentence, and shall provide such services in its usual and customary manner,
and at customary rates, as provided to other customers (which, in all cases, shall be a commercially reasonable
manner and rate). Each party agrees to maintain the availability of support services for a period of at least one
year after the termination of this Agreement. The term "support," for purposes of this section, means verifying,
diagnosing and resolving hardware and software problems and delivery of software patches and applicable
7. Intellectual Property Rights
7.1 Ownership of Intellectual Property
7.1.1 Laseroptronix Property. Subject to the provisions of this Section 7.2 the parties acknowledge and agree
that all Laseroptronix Property is and shall remain at all times the exclusive property of Laseroptronix, its
successors and assigns.
7.1.2 Property. Subject to the provisions of Section 7.2, the parties acknowledge and agree that all HiEnergy
Property is and shall remain at all times the exclusive property of HiEnergy, its successors and assigns.
7.2 Cross License. Subject to the terms and conditions contained herein, Laseroptronix hereby grants to
HiEnergy a nontransferable, non-exclusive license to use the Laseroptronix Property solely to the extent as is
required to manufacture and market the Product. Subject to the terms and conditions contained herein, HiEnergy
hereby grants to Laseroptronix a nontransferable, non-exclusive license to use the HiEnergy Property solely to
the extent as is required to manufacture and market the Product. Each party hereto acknowledges and agrees
that the other has expended considerable time, effort and funds in developing and generating the Intellectual
Property owned by it, and has and will continue to have a substantial proprietary interest and valuable trade
secret therein. The license granted by each party to the other herein is granted as part of the consideration of
entering into this Agreement.
7.3 Limitation. Laseroptronix shall have no interest in any of the trademarks, service marks, trade dress,
company names, or logos of HiEnergy or the Product; without limiting the generality of the foregoing clause of this
sentence, Laseroptronix shall have no rights with respect to the trademarks belonging to HiEnergy including
AtometyTM, SIEGMATM, CarBomb FinderTM or STARRAYTM or any other related tradenames, except to
the limited extent necessary to act as a seller of the Product. HiEnergy shall have no interest in any of the
trademarks, service marks, trade dress, company names, or logos of Laseroptronix; without limiting the generality
of the foregoing clause of this sentence, HiEnergy shall have no rights with respect to the trademarks belonging to
Laseroptronix, including LadarTM, LaserSnapTM and LaserGrabTM(,) or any other tradenames, except to the
limited extent necessary to act as a seller of the Product.
7.4 With respect to any Product which is believed by either party to be copyrightable, patentable or of
commercial value, the parties agree to decide whether and where to apply for copyright, patent or other
appropriate forms of protection. To the extent the parties agree to protect a Product, the parties shall do so at
their own expense using counsel as mutually agreed
7.5 In the event Laseroptronix elects to pursue protection of any Laseroptronix Product in the United States,
HiEnergy will assist Laseroptronix by seeking such protection using counsel of its choice and will pay for all costs
related to the patent, trademark or copyright as determined necessary by counsel. Laseroptronix will reimburse
HiEnergy for any and all costs related to the protection of its Intellectual Property on its behalf, which amounts
shall be accrued and deducted from any amounts due Laseroptronix for the sale of its Products in the licensed
7.6 All expenses of renewing and or maintaining intellectual property protection of any Product shall be borne by
the party seeking protection, or, in the case of protection sought jointly by the parties hereto, by both parties
sharing equally in such expenses.
8. Warranties of the Parties to the Other
8.1 Ownership of Laseroptronix Products. Laseroptronix warrants to HiEnergy that it owns or otherwise holds
all rights necessary to make, use, sell, offer for sale, advertise and distribute the Laseroptronix Products free and
clear from all claims, liens and encumbrances of third parties, except for the obligations under those agreements
and licenses listed on Exhibit D hereto.
8.2 Ownership of HiEnergy Products. HiEnergy warrants to Laseroptronix that it owns or otherwise holds all
rights necessary to make, use, sell, offer for sale, advertise and distribute the HiEnergy Products free and clear
from all claims, liens and encumbrances of third parties.
8.3 Warranty. Laseroptronix hereby warrants to HiEnergy that under normal use and service, Laseroptronix
Products are free from defects in design and workmanship. HiEnergy hereby warrants to Laseroptronix that
under normal use and service, HiEnergy Products are free from defects in design and workmanship. Each party
warrants to the other that the products delivered by such party for use in connection with the Product will be
complete and in conformity with the products regularly supplied by each to purchasers and lessees of its
8.4 Product Warranty. The Product shall be sold with a warranty to be agreed upon between the parties hereto,
essentially to the effect that the Product will be free from defects in design, workmanship and material, with a time
period (not to exceed one year) and on such other terms and conditions as are to be agreed upon between the
parties. Subject to the limitations on warranty contained in this Agreement, Laseroptronix agrees to assume all
liability for breach of such warranty to the extent that a breach of warranty relates solely to Laseroptronix
Products incorporated into the Product. Subject to the limitations on warranty contained in this Agreement,
HiEnergy agrees to assume all liability for breach of such warranty to the extent that such breach relates to the
assembly or configuration of the Product or solely to HiEnergy Products. Laseroptronix and HiEnergy agree to
jointly assume all liability for breach of such warranty to the extent that a breach of warranty relates to the design
of the Product or other matters that are not covered by either of the two preceding sentences.
8.5 Limitation on Warranty. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH HEREIN AND
EXCEPT FOR WARRANTY OF TITLE, NEITHER PARTY MAKES ANY OTHER WARRANTIES,
EXPRESS OR IMPLIED TO THE OTHER WITH RESPECT TO ITS PRODUCTS. EXCEPT AS
OTHERWISE EXPRESSLY SET FORTH HEREIN, THERE ARE NO WARRANTIES OR ANY
AFFIRMATIONS OF FACT OR PROMISES BY EITHER PARTY HERETO AS TO
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, INFRINGEMENT OR
OTHERWISE. USE OF SUCH PRODUCTS CONSTITUTES THE CONSENT OF THE OTHER PARTY
HERETO TO ASSUME ALL RISKS OF SUCH USE AND TO HOLD THE OTHER HARMLESS FOR
ANY DAMAGES OR CLAIM OF DAMAGES ARISING IN ANY MANNER FROM SUCH USE. THE
EMPLOYEES OR AGENTS OF NEITHER PARTY HAVE ANY AUTHORITY TO MAKE ANY
WARRANTY OR REPRESENTATION REGARDING THE MANNER OR BENEFITS OF USE OF ANY
PRODUCT OTHER THAN THOSE EXPRESSLY SET FORTH IN THE SPECIFICATION FOR SUCH
8.1 This Agreement shall terminate upon the occurrence of a material breach of this Agreement by either party
8.1.1 The breaching party is given notice by the other party hereto containing a claim of breach and setting forth
the nature of the breach and circumstances giving rise to such a claim;
8.1.2 The party to whom notice is given fails to remedy such circumstances within sixty days after receipt of the
8.1.3 This Agreement shall terminate upon the written notice of either party to the other that such party is unable
to perform as provided hereunder due to labor disputes, fire, casualties and accidents, acts of the elements, acts
of a public enemy, sovereign acts or regulations and any other causes beyond the control of such party, its agents,
employees or officers; and
8.1.4 This Agreement shall terminate if any of the following events occur as to one party hereto and the other
party does not provide written notice within thirty days after it becomes aware of such event that it intends to
waive termination of this Agreement: a party makes an assignment for the benefit of its creditors, requests or
permits a proposal, arrangement or reorganization under or, as an insolvent debtor, takes the benefit of any
legislation now or hereafter in force for bankrupt or insolvent debtors; a receiver or other officer with like powers
is appointed for a party for a substantial part of its assets; a lien holder takes possession of a substantial part of a
party's property; or an order is made for the winding up, liquidation, revocation, or cancellation of incorporation
of a party; or a party ceases carrying on its business as a going concern.
8.1.5 This Agreement shall terminate at the expiration of one (1) year from its Effective Date.
8.2 Effects of Termination.
8.2.2 Except as set forth herein, neither party shall be liable to the other for any claims, damages, costs, expenses
or charges incurred in connection with the entering into, performance, breach, or termination of this Agreement
unless specifically provided for herein.
8.2.3 Notwithstanding the Termination Date of this Agreement, the provisions of Sections 4, 6, 7 and 8 shall
survive the Termination Date. Without limiting the generality of the foregoing sentence, for two years after the
Termination Date, Laseroptronix shall continue to use commercially reasonable efforts to supply to HiEnergy such
number of Laseroptronix Products as may be required for HiEnergy to fulfill its orders for the Product and
HiEnergy shall continue to use commercially reasonable efforts to assemble and configure the number of Products
as may be required for Laseroptronix to fulfill its orders for the Product. The prices to be charged by HiEnergy
and Laseroptronix to the other in fulfillment of the obligations stated in the foregoing sentence are described in
9. Miscellaneous Provisions
9.1 Assignment. Neither party shall assign this Agreement or any interest therein without the prior written consent
of the other party.
9.2 Confidentiality. Neither party hereto shall, without the express written consent of the other, provide, disclose,
transfer or otherwise make available any Proprietary Information, or parts or copies thereof, to any third party.
Each party shall ensure that it, its employees and third party agents having access to any Proprietary Information,
or to the Laseroptronix Products or HiEnergy Products of the other, will restrict and control the use, copying,
modification, disclosure, transfer, protection and security of such items, in accordance with these provisions. Each
party hereto agrees to protect all Proprietary Information with the same standard of care that it uses to protect its
own like information.
9.3 Non-solicitation. The parties hereto agree that they will not, at any time during the term this Agreement and
for a period of one year thereafter, directly or indirectly, for itself or for any other person, firm, corporation,
partnership, association or other entity, attempt to employ, employ or enter into any contractual arrangement with
any employee or former employee of the other party, its subsidiaries or predecessors in interest, unless such
employee or former employee has not been employed by the other party, its subsidiaries or its predecessors in
interest, for a period in excess of six months.
9.4 Publicity. The parties hereto agree to cooperate in the drafting of any press releases or other public disclosure
that relates to the Project. Neither shall make any public disclosure relating to the Project or the other party
without the consent of such other party. Notwithstanding the foregoing, in the event that a party hereto (the
"Disclosing Party") is advised by counsel that public disclosure relating to the Project or the other party is
required, the Disclosing Party shall provide to the other party a copy of the proposed disclosure in advance of its
public release and shall use all reasonable efforts to seek the comments of the other party prior to its publication.
9.5 Notices. All notices permitted or required hereunder shall be effective upon receipt if delivered personally; on
the third business after sending if sent via registered or certified U.S. mail, return receipt requested; on the second
business day after sending, charges prepaid for next day delivery, via overnight courier; and upon
acknowledgment of receipt by the party to be charged with notice if sent via any other means. Notice shall be
given to the principal address or to such other address as to which a party shall give notice.
If to Laseroptronix:
187 34 Taby, Sweden;
Attention: Allan Jansson
If to HiEnergy:
HiEnergy Technologies, Inc.
1601B Alton Parkway
Irvine, CA 92606
Attention: Corporate Secretary
9.6 Governing Law. This Agreement shall be governed by California law, without regard to its conflict of law
provisions, and the United Nations Convention On Contracts for the International Sale of Goods (1980) [CISG].
9.7 Relationship of the Parties. The parties hereto agree that no agency, employment, partnership, joint venture or
franchise relationship is created or shall be deemed to be created hereunder. Neither party shall have, and neither
shall represent to have, any power, right or authority to bind the other or to assume or create any obligation or
responsibility, express or implied, on behalf of the other party or in the other party's name, except as herein
9.8 Entire Agreement. This Agreement constitutes the entire agreement and supersedes any prior agreements or
understandings between the parties hereto regarding the subject matter hereof, and no amendment, alteration or
waiver of this Agreement shall be valid or binding unless made in writing and signed by both parties.
9.9 Further Agreements. The parties hereto agree to enter into good faith negotiations for the purposes of
executing and delivering an appropriate agreement or agreements providing for Laseroptronix's ability to resell the
HiEnergy Products and for HiEnergy's ability to resell the Laseroptronix Products, now or hereafter developed
during the term of this Agreement.
9.10 Liability. Neither of the parties hereto shall be liable to the other, or to any third party claiming through the
parties for the failure of performance of any obligation under this Agreement except as specifically set forth
herein, or otherwise agreed to in writing. Additionally, neither of the parties hereto shall, under any circumstances,
be liable hereunder for indirect, special, incidental or consequential damages resulting from its failure of
performance. Any failure to perform any obligation under this Agreement except payment of monies due, shall be
excused if such failure is caused by Force Majeure, or acts of God, acts of public authorities, wars and war
measures, fires, casualties, labor difficulties and strikes, shortages of material or fuel, failure or delays of suppliers
or carriers, shortage of transportation, or other causes beyond the failing party's control.
9.11 Severability. Any provision in this Agreement found to be void, voidable or unenforceable shall not affect
the validity or enforceability of any other provision in this Agreement. In the event that any provision of this
Agreement shall be declared void, voidable or unenforceable by a court of competent jurisdiction, said provision
shall be deemed to be amended to provide the party seeking to enforce this Agreement the greatest protection
available under law.
IN WITNESS WHEREOF the undersigned have executed and delivered this Agreement as of the date and year
first above written.
HIENERGY TECHNOOGIES, INC LASEROPTRONIX AB
By:/s/ Bogdan C. Maglich By:/s/ Allan Jonsson
Dr. Bogdan C. Maglich Mr. Allan Jonsson
Chief Executive Officer President
TO BE AGREED UPON
JOINT MARKETING PLAN
TO BE PROVIDED
TO BE AGREED UPON
THIRD PARTY AGREEMENTS/LICENSES
TO BE PROVIDED
DR Vladivoj Valkovic
February 16, 2006
Dr. Bogdan C. Maglich
Chairman and Chief Executive Officer
HiEnergy Technologies, Inc.
1601B Alton Parkway
Irvine, CA 92606
RE: HiEnergy Technologies, Inc. - Engagement Letter
This letter will confirm our mutual understanding concerning advisory and consulting services that I, Dr. Vladivoj
Valkoviae ("Valkoviae"), will render to HiEnergy Technologies, Inc. and/or its subsidiaries ("HiEnergy"), as
1. Valkovic will provide HiEnergy with advisory services to assist HiEnergy in product and technology sales,
promotion, research, product development and integration, and technology licensing and funding opportunities.
The services provided by Valkovia will include (but not be limited to):
o Sales of all HiEnergy's products and re-sale technologies in Europe and Africa;
o Significant participation in the projects funded by NATO, IAEA, EU and local governments;
o Organizing conferences, seminars, shows, exhibits, meetings and other events in Europe including TV and radio
shows in which HiEnergy and its products will receive prominent role; and
o Producing publications, CD's, films, books in which HiEnergy and its products will receive prominent role.
2. HiEnergy will pay Valkoviae a retainer of $40,000 for aforementioned services to be rendered to HiEnergy.
Said retainer will be pre-paid in the form of restricted stock, which is to be filed under a Registration Statement
on Form S-8 and would be cancelable, or refundable to the Company, if Valkoviae voluntary resigns and/or
cancels the engagement prior to performing any of the Services under the Engagement. In the event that the value
of the stock falls between the date of receipt and the date you are able to liquidate such shares lawfully in the
public market, the Company agrees to issue to you for no further consideration such additional number of shares
as is equal to the dollar balance of retainer compensation earned for which payment has not then been received
directly or through the sale of stock. Valkoviae is not obligated to sell the shares and, in the event the value of
shares appreciates above the value of the above stated retainer, Valkoviae shall not be obligated to pay any
surplus to HiEnergy. The payment of the retainer shall be conditional upon the delivery to management of monthly
written reports of your activities and performance of the Services.
Dr. Bogdan C. Maglich
Page 2 of 3
3. HiEnergy agrees to reimburse Valkoviae for all reasonable out-of-pocket expenses directly related to
performance of the Services, provided that such expenses are agreed in writing in advance.
4. In addition to the compensation provided above, Valkoviae shall receive from HiEnergy success fees for non-
investment related activities, as follows:
o With respect to the occurrence of other objectives or transactions (e.g., introductions to strategic partners and
the formation of joint-ventures, alliances, etc.), HiEnergy will pay Valkoviae a percentage of the net value of the
transaction consummated between HiEnergy and any party introduced by Valkoviae, which remuneration will be
determined and mutually agreed upon by Valkoviae and HiEnergy, on a case by case basis, during the course of
In the event there is a dispute as to the valuation of any transaction, business opportunity, joint-venture and/or
alliance resulting from the activities of Valkoviae and accepted by HiEnergy, both parties agree to will rely
mutually agreeable independent valuation agent and will honor the non-circumvention rights of the other as
established under separate agreement during the period of said dispute.
5. If at any time within one (1) year following the termination of this engagement, or any extension hereof, a
transaction occurs between HiEnergy and a party to whom HiEnergy was introduced by Valkoviae, Valkoviae
shall be entitled to the remuneration previously stipulated in paragraph 4 above; provided that a written list of all
introduced parties is provided to HiEnergy within fifteen (15) business days after the expiration or termination of
6. This engagement may be terminated by either party upon sixty (60) days written notice to the other.
7. Valkoviae will treat as confidential all information concerning HiEnergy that comes into its possession by
reason of this engagement under the terms of a Proprietary Information Agreement dated February 13, 2006.
8. Valkovic will indemnify HiEnergy (including any affiliated companies and any of its affiliates, officers, directors,
employees or controlling persons) from and against all claims, liabilities, losses, damages and expenses incurred
that relate to or arise out of this engagement. Valkoviae will not, however, be responsible for any claims,
liabilities, losses, damages or expenses to the extent that they result primarily from actions taken by HiEnergy
through bad faith or negligence.
Dr. Bogdan C. Maglich
Page 3 of 3
9. This engagement may not be assigned by either party without the express written consent of the other party. If
any provision of this engagement is found to be illegal or invalid, the remaining provisions shall remain in full force
and effect in accordance with their terms. No delay or omission by either party in exercising any right under this
engagement shall operate as a waiver of that or any other right.
10. This engagement constitutes the entire agreement between the parties relating to the subject matter herein and
supersedes all prior agreements and understandings between the parties, whether written or oral. This
engagement may be amended or modified only by a written instrument executed by both parties. This engagement
shall be governed by California law, without regard to its conflict of law provisions.
11. The benefits, obligations and liabilities assumed in this engagement by the parties hereto shall be binding upon
their respective successors and assigns.
12. This engagement is renewable upon completion by mutual agreement.
Should HiEnergy Technologies, Inc. agree to proceed on this basis, please date, sign and return the duplicate of
this letter to me by facsimile.
/s/ V. Valkovic February 16, 2006
Dr. Vladivoj Valkovic Dated
/s/ Bogdan C. Maglich February 16, 2006
Dr. BogdanMaglich CEO/Chairman Dated
INDEPENDENT CONTRACTOR AGREEMENT
HiEnergy Technologies, Inc. ("HiEnergy"), a Delaware Corporation and Radiation Safety Academy ("RSA"), a
Maryland Corporation, hereby enter into this independent contractor agreement related to manual and training
program development and services to be provided on the basis of Work Made For Hire as of the last date
following the signatures below (the "Agreement").
"Agreement" means this Independent Contractor Agreement and any relevant Statements of Work ("SOW"),
Work Authorizations ("WA"), and other attachments or appendices specifically referenced in, and incorporated
as part of, this Agreement.
"Deliverables" means items that RSA prepares for or provides to HiEnergy as described in a SOW. Deliverables
include Developed Work, Licensed Work, Preexisting Materials, and Tools.
"Developed Work" means all work product (including Externals), developed in the performance of this
Agreement as described in a SOW. Developed Work does not include Licensed Work, Preexisting Materials,
Tools, or items specifically excluded in a SOW.
"Enhancements" means changes or additions, other than Error Corrections, to the Developed Work or Licensed
"Error Corrections" means revisions that correct errors and deficiencies (collectively referred to as "errors") in the
Developed Work or Licensed Work.
"Externals" means any pictorial, graphic, audiovisual works, reports or data generated by execution of software
code and any programming interfaces, languages or protocols.
"Licensed Work" is any material described in or that conforms to the Description of Licensed Work in the
relevant SOW, associated documentation, Externals, Error Corrections, and Enhancements.
"Party" or "Parties" means either of HiEnergy or RSA and used singularly or collectively hereinafter.
"Preexisting Materials" means items contained within a Deliverable, in which the copyrights are owned by a third
party or that RSA prepared or had prepared outside the scope of this Agreement. Preexisting Materials exclude
Tools, but may include material that is created by the use of Tools.
"Prices" means the agreed upon payments and currency for Deliverables and Services, including all applicable
fees, royalty payments and taxes, as specified in the relevant SOW.
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"Products" means an offering by HiEnergy to its customers or other users, whether or not branded by HiEnergy
or its Affiliates, that includes the Developed Work, Licensed Work or a derivative work of a Licensed Work.
"Propietary and/or Confidential Information" means any information identified as being Propietary and/or
Confidential Information by either party, either orally or in writing, at the time it is disclosed, or designated as
confidential in writing (either electronically or by other means) within 30 days of the disclosure, provided that the
information (a) was not publicly known or generally in the public domain prior to the disclosure, (b) does not
become generally known or part of the public domain through any improper action or disclosure by the receiving
party, or (c) can be shown to have been in the rightful possession of the receiving party prior to having been
identified as Propietary and/or Confidential Information by the disclosing party.
"Services" means work that RSA performs for HiEnergy as described in a SOW.
"Statement of Work" or "SOW" means any document that:
1. identifies itself as a statement of work;
2. is signed by both parties;
3. incorporates by reference the terms and conditions of this Base Agreement; and
4. describes the Deliverables and Services, including any requirements, specifications or schedules.
"Tools" means software that is not commercially available, and its Externals, required for the development,
maintenance or implementation of a Deliverable.
"Work Authorization" or "WA" means HiEnergy's authorization in either electronic or tangible form for RSA to
conduct transactions under this Agreement in accordance with the applicable SOW (i.e., a purchase order, bill of
lading, or other HiEnergy designated document). A SOW is a WA only if designated as such in writing by
2. WORK MADE FOR HIRE / RIGHTS TO WORK.
a) RSA understands and agrees that it is to perform and/or provide Services and Deliverables as detailed in the
SOW(s) as Work Made for Hire.
b) RSA understands and agrees that the (i) Developed Work and any work product shall be the sole and
exclusive property of HiEnergy (ii) RSA shall have no other rights whatsoever in or to the Developed Work, and
any work product, including Error Corrections and Enhancements to Developed Work, delivered under the
(iii) RSA shall not distribute, sell, or incorporate the Developed Work, and any derivative modifications or
extensions of them.
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c) RSA agrees not to attach to the Developed Work any statements appearing thereon regarding copyright or
proprietary rights of RSA. RSA shall not copy (in any form), distribute, sell, lease, assign, encumber, license or
sub-license the Developed Work, and any work product to anyone other than HiEnergy. RSA hereby
acknowledges and agrees that the Developed Work is to be incorporated into Products and sold and/or
distributed to other users for commercial purposes by HiEnergy.
3. TITLE AND COPYRIGHT ASSIGNMENT
a) The Developed Work, and any work product, including Error Corrections and Enhancements to Developed
Work, delivered under the Agreement, and the results of the Services to be rendered by RSA hereunder, are
Work Made for Hire. RSA acknowledges and agrees that the Developed Work (and all rights therein, including,
without limitation, copyright) belongs to and shall be the sole and exclusive property of HiEnergy, subject to
HiEnergy meeting its obligations herewith.
b) If for any reason the Developed Work would not be considered a work made for hire under applicable law,
RSA does hereby sell, assign, and transfer to HiEnergy, its successors and assigns, the entire right, title and
interest in and to the copyright in the Developed Work and any registrations and copyright applications relating
thereto and any renewals and extensions thereof, and in and to all works based upon, derived from, or
incorporating the Developed Work, and the entire right to all income, royalties, damages, claims and payments
now or hereafter due or payable with respect thereto, and in and to all causes of action, either in law or in equity
for past, present, or future infringement based on the copyrights, and in and to all rights corresponding to the
c) If the Developed Work is one to which the provisions of 17 U.S.C. 106A apply, the RSA hereby waives and
appoints HiEnergy to assert on RSA's behalf the author's moral rights or any equivalent rights regarding the form
or extent of any alteration to the Developed Work (including, without limitation, removal or destruction) or the
making of any derivative works based on the Developed Work, including, without limitation, any reproductions of
the Developed Work in any medium.
d) RSA agrees to execute all papers and to perform such other proper acts as HiEnergy may deem necessary to
secure for HiEnergy or its designee the rights herein assigned.
4. INDEPENDENT CONTRACTOR.
a) Nothing in this Agreement shall be construed to make the Parties partners, joint venturers, representatives, or
agents of each other, nor shall either Party so hold itself out.
b) RSA shall be an independent contractor with respect to HiEnergy. HiEnergy shall not be responsible for
withholding taxes with respect to RSA's compensation hereunder. RSA shall have no claim against HiEnergy for
vacation pay, sick leave, retirement benefits, social security, worker's compensation, health or disability benefits,
unemployment insurance benefits, or employee benefits of any kind.
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5. PAYMENT AND CONSIDERATION TERMS.
a) Prices for Deliverables and Services are presented in the SOW.
b) Deliverables and Services HiEnergy may be paid or prepaid in the form of restricted stock, which is to be filed
under a Registration Statement on Form S-8, with value equivalent to six (6) months of the above stated retainer,
the pro-rata portion of time not served would be cancellable, or refundable to the Company, if RSA voluntary
resigns and/or cancels the engagement, or RSA fails to perform the Services under the Engagement. In the event
that the value of the stock falls between the date of receipt and the date you are able to liquidate such shares
lawfully in the public market, the Company agrees to issue to you for no further consideration such additional
number of shares as is equal to the dollar balance of compensation earned for which payment has not then been
received directly or through the sale of stock. RSA is not obligated to sell the shares and, in the event the value of
shares appreciates above the value equivalent to three (3) months of the above stated retainer, RSA shall not be
obligated to pay any surplus to HiEnergy.
c) All invoices with claims for reimbursable expenses shall include sufficient detail and documentation to allow for
verification of proper allocation of charges.
d) Both Parties may modify at any time the amounts to be paid by HiEnergy to RSA, so long as any and all such
modifications shall be in writing and executed in acceptance by the Parties in order to be effective.
This Agreement is a non-exclusive agreement, and both parties remain free to enter into similar agreements with
third parties. In the event that RSA enters into an agreement with a third party in which RSA performs work to an
entity involved in explosive bomb detection, RSA shall give notice to HiEnergy of that agreement at or before the
time RSA enters into such agreement. Nothing in this
Section 6 limits or supercedes any other provision herein.
a) Both HiEnergy and RSA agree that during the term of this Agreement, each Party, may disclose to the other
certain Propietary and/or Confidential Information. Either Party may designate any information it provides to the
other as Propietary and/or Confidential Information, and the receiving party shall not disclose that information to
third parties without the express permission of the disclosing party. Information designated as Propietary and/or
Confidential Information shall remain confidential until the disclosing party designates it as non-confidential or until
the information becomes public through no fault of the receiving party or illegal action.
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b) With regard to Propietary and/or Confidential Information disclosed by either Party, the receiving Party agrees
to take all steps necessary to:
i. to protect such information to the extent normally used in safeguarding its own proprietary information but in no
event less than a standard of reasonable care; and
ii. to protect and prevent disclosure to and/or use by third parties of any proprietary information of the other
iii.to hold all said proprietary information in confidence and not to, directly or indirectly, copy, publish, summarize
or disclose to any person or entity such information without the other party's prior written consent; and
iv. to notify the Disclosing Party in writing within two (2) working days of discovery of any inadvertent or
accidental disclosure of Propietary and/or Confidential Information, without in any way limiting the other rights or
remedies of the Disclosing Party hereunder, and the Receiving Party shall take all necessary precautions to avoid
further dissemination of the information disclosed, as well as corrective precautions to prevent disclosure of any
additional Propietary and/or Confidential Information.
c) The Parties understand and agree that in the event either party breaches or threatens to breach the provisions
of this section, such breach or threatened breach would cause irreparable harm to the non-breaching party, and
that monetary damages would not be a sufficient remedy and that each Party shall be entitled to specific
performance, including, without limitation, injunctive relief, as a remedy for any such breach by the other Party.
Such remedy shall not be deemed to be the exclusive remedy for any breach but shall be in addition to all other
remedies available at law or equity.
8. QUALITY AND ACCEPTANCE.
a) RSA will provide the Deliverables and Services to HiEnergy in accordance with the specifications and timeline
established in the SOW.
b) HiEnergy will review all Deliverables using its own quality assurance procedures, and may reject any
Developed Work it reasonably believes does not meet its specifications.
c) In the event that errors or deficiencies are discovered in the Deliverables, RSA will use its best efforts to
provide Error Corrections in an expeditious manner.
d) Payment by HiEnergy for Deliverables and Services by RSA shall not be deemed to be acceptance by
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9. LIMITED WARRANTY.
a) RSA warrants that the best technical practices, skills, procedures, care and judgment will be employed and
that the Developed Work will be completed in the most expeditious and economical manner in satisfaction of the
b) RSA warrants that it has the right and authority to enter into this Agreement, and that, to the best of RSA's
knowledge, (i) the Developed Work will not infringe upon any copyright or other intellectual property interest of
any third party and (ii) RSA will take all due and reasonable care to avoid infringing any copyright or other
intellectual property interest of any third party.
ALL WARRANTIES UNDER THIS AGREEMENT SHALL SURVIVE INSPECTION AND
ACCEPTANCE, AND PAYMENT AND SHALL RUN TO HIENERGY, ITS AFFILIATES,
SUCCESSORS AND ASSIGNS.
10. ADDITIONAL OBLIGATIONS.
HiEnergy shall supply RSA with all technical and other documents deemed necessary to enable RSA to fulfill its
obligations; the failure of which shall not prejudice RSA, nor be the cause of any forfeiture of any consideration
due RSA, insofar as (i) said failure was the cause of non-performance of RSA and
(ii) RSA satisfactorily performed its obligations upon reconcile.
11. TERM AND TERMINATION.
This Agreement shall begin upon execution of both Parties ("Effective Date") through termination in accordance
with the terms of this Agreement. Time is of the essence in performance of this Agreement. HiEnergy may
terminate this Agreement by thirty (30) days' written (electronic or other means) notice of termination. HiEnergy
shall pay RSA for any outstanding consideration owed RSA for all services performed pursuant to the Agreement
through the effective date of termination.
12. DISPUTES BETWEEN THE PARTIES.
a) The Parties will attempt in good faith to resolve, by negotiation or mediation, any controversy or claim
regarding the rights and obligations under this Agreement or its breach. If the Parties are unable to do so, and
regardless of the causes of action alleged, the claim will be resolved by arbitration in before a single arbitrator
who is knowledgeable in independent contractor software development. Such arbitration will be conducted
pursuant to the then current Commercial Rules of the American Arbitration Association and the federal
substantive and procedural law of arbitration. The arbitrator's award will be final and binding, and may be entered
in any court having jurisdiction thereof. The arbitrator shall not have the power to award punitive or exemplary
damages. Each Party will bear its own attorneys' fees and costs related to the arbitration. Any claim or action
must be brought within two years after the cause of action
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b) The rights and obligations of this Disputes section herein shall survive expiration, termination, or final payment
under this Agreement.
a) HiEnergy shall defend, indemnify, and hold harmless RSA from and against any liability, suits, claims, losses,
damages and judgments filed against RSA made in the United States related to this Agreement, provided that
RSA promptly notifies HiEnergy of any and all such claims and provided that HiEnergy is given control over the
defense of any and all such claims. The provisions of this Section shall survive the termination of this Agreement.
b) HiEnergy shall not be responsible for any claims brought against RSA related to actions taken by RSA outside
14. LIMITATION ON LIABILITY.
To the extent allowed by applicable law,
EXCEPT FOR THE EXPRESS LIABILITIES HEREIN, IN NO EVENT WILL EITHER PARTY BE
LIABLE FOR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS OR SAVINGS) OR
INCIDENTAL DAMAGES, EVEN IF INFORMED OF THEIR POSSIBILITY; AND IN NO EVENT
SHALL EITHER PARTY, ITS AGENTS, SUPPLIERS, DISTRIBUTORS, OR RESELLERS, BE LIABLE
FOR ANY REPRESENTATION OR WARRANTY MADE TO ANY THIRD PARTY BY THE OTHER
PARTY OR ITS AGENTS.
a) Any notice under this Agreement shall be in English, in writing, and shall be deemed to be given upon receipt.
Notices to HiEnergy shall be delivered to Contracts Manager, HiEnergy Technologies, Inc., 1601-B Alton
Parkway, Irvine, CA 92606, USA. Notices to RSA shall be delivered to Greg Johnson, Radiation Safety
Academy, 481 N. Frederick Avenue, Ste. 302, Gaithersburg, MD 20877.
b) This Agreement, including all SOW(s) and WA(s), constitutes the entire understanding of the Parties. This
Agreement supersedes and terminates all prior representations, warranties and agreements, written or oral,
regarding the subject matter of this Agreement. Any modification to this Agreement must be in a writing and
executed by both Parties.
c) The headings within this Agreement are for convenience only and will not affect the interpretation of this
Agreement. If one or more of the provisions contained in this Agreement is held invalid, illegal or unenforceable in
any respect by any court of competent jurisdiction, such holding will not impair the validity, legality, or
enforceability of the remaining provisions.
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d) Failure or delay on the part of any party to exercise any right, remedy, power or privilege hereunder will not
operate as a waiver. Any waiver must be in writing and signed by the party granting such waiver in order to be
e) Neither Party shall subcontract or assign this Agreement to any third party without the express written consent
f) This agreement shall be construed and interpreted according to the laws of the State of California and shall be
binding upon the parties hereto, their heirs, successors, assigns, and personal representatives; and references to
RSA and to HiEnergy shall include their heirs, successors, assigns, and personal representatives.
IN WITNESS WHEREOF, the parties have duly executed this agreement.
RADIATION SAFETY ACADEMY HIENERGY TECHNOLOGIES, INC.
By: /s/ Ray Johnson By: /s/ Bogdan C. Maglich
Name: Ray Johnson Name: Bogdan C. Maglich
Title: Director Title: Chairman & CEO
Date: February 7, 2006 Date: Feb. 8, 2006
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CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Roger W.A. Spillmann, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of HiEnergy Technologies, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the small business
issuer as of, and for, the periods presented in this report;
4. The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small
business issuer and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the small business issuer, including
its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;
b. Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
c. Disclosed in this report any change in the small business issuer's internal control over financial reporting that
occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal
quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
small business issuer's internal control over financial reporting; and
5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation
of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the
small business issuer's board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process,
summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in
the small business issuer's internal control over financial reporting.
Date: March 22, 2006 /s/ Roger W.A. Spillmann
Roger W.A. Spillmann,
Chief Executive Officer, President,
(Principal Executive Officer and
Principal Financial Officer)
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-QSB of HiEnergy Technologies, Inc. (the "Company") for
the period ended January 31, 2006 as filed with the Securities and Exchange Commission on the date hereof (the
"Report"), I, Roger W.A. Spillmann, Chief Executive Officer and Treasurer of the Company, hereby certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that, to the best of my knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of
1934, as amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and
results of operations of the Company.
Date: March 22, 2006 /s/ Roger W.A. Spillmann
Roger W.A. Spillmann,
Chief Executive Officer, President,
(Principal Executive Officer and
Principal Financial Officer)
This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall
not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for
Section 18 of the Securities Exchange Act of 1934, as amended.