Exhibit 2.7
AGREEMENT REGARDING ADDITIONAL SECURITY DEPOSIT
THIS AGREEMENT (the "Agreement") is made and entered into effective as of
the ____ day of January, 2003, by and between EASTSIDE PROPERTIES, LLC, a
Colorado limited liability company ("Eastside"), and HEI, INC., a Minnesota
corporation ("HEI).
RECITALS
A. Eastside is the landlord, and HEI, as assignee of Colorado MedTech,
Inc., is the current tenant, under a Lease dated January 7,2002, as amended (the
"Lease"), regarding certain real property and improvements located at 0000 X.
00xx Xxxxxx, Xxxxxxx, Xxxxxxxx (the "Property").
B. In order to induce Eastside and its mortgage lender to consent to the
assignment of the Lease from Colorado MedTech, Inc. to HEI and to release
Colorado MedTech, Inc. from liability under the Lease, HEI agreed to deposit
with Eastside an additional Security Deposit of $1,500,000 to be used by
Eastside to reduce the outstanding mortgage indebtedness secured by the
Property.
C. Contemporaneous with the execution of this Agreement, Eastside and HEI
have entered into a Second Addendum to the Lease providing, among other things,
for HEI to pay the additional $1,500,000 Security Deposit, which when added to
the Security Deposit previously being held by Eastside under the Lease, results
in a total Security Deposit of $1,580,000.
D. The Second Addendum provides for Eastside to return $1,430,000 of the
Security Deposit (the "Refund Amount") to HEI as set forth in this Agreement.
E. The parties desire to enter into this Agreement giving HEI the right to
receive payment of the Refund Amount from Eastside upon the occurrence of
certain events.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
promises and covenants contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
TERMS AND CONDITIONS
1. Return of Refund Amount. Provided that HEI is not then in default under
the Lease, HEI shall be entitled prior to termination/expiration of the Lease to
a return of the Refund Amount from Eastside within thirty (30) days after: (i)
HEI has raised at least an additional $3,000,000 in equity from a secondary
stock offering; or (ii) the later of the following: (a) the date that is two (2)
years after the effective date of this Agreement; or (b) the date upon which HEI
gives Eastside written notice together with financial statements indicating that
HEI has achieved a net operating profit for six (6) consecutive quarters.
2. Six Consecutive Quarters defined: Six consecutive quarters of net
operating profit shall include not only profitable quarters as shown by
financial statements, but shall include such quarters that show an operating
loss if the loss is due solely to: (i) unusual charges, such as a onetime
write-off, or write-offs, as the case may be, (such write-off(s) being defined
as including write-
offs of uncollectable receivable(s) outside the ordinary course of business or
other bad debts); (ii) losses arising from discontinued or unprofitable
operations or divisions; or (iii) extraordinary items (including gains or
losses) as such concept is used under Generally Accepted Accounting Principles.
3. Repayment Upon Refinance: Notwithstanding any provision hereof to the
contrary, upon Eastside refinancing existing development/construction and or
mini-permanent financing through a Long-term Loan, as defined below, Eastside
shall upon closing of such refinance, pay the Refund Amount to HEI.
4. Long-term Loan defined: Long-term loan is defined as a loan for a term
of not less than 18 years, with a fixed interest rate, amortized over the fixed
term of the loan. The fixed interest rate must not be greater than that
customarily charged by life insurance companies under similar circumstances.
Similar circumstances are defined as a single-tenant office-industrial building,
a lease of similar duration to that of HEI's lease or longer, in Boulder,
Colorado, with a tenant similar to HEI.
5. Security and Guaranty for Repayment of Security Deposit: In addition to
any other remedy available at law or equity, in the event the Refund Amount is
due to be paid to HEI and is not so paid by Eastside, then all rent due under
the Lease shall be abated during any period such Refund Amount is due but
unpaid. No credit for abated rent shall be made against the Refund Amount,
regardless of the duration of such abatement. Further, the repayment of such
Refund Amount shall be personally guaranteed hereunder by Xxxxx X. Xxxxxxxx,
Xxxxxx X. Xxxxxxxx and Xxxxx Xxxxxxxx (hereinafter jointly referred to as the
"Guarantors"). The Guarantors shall be jointly and severally liable under this
Guaranty and waive any requirement that any claims be first exhausted against
any primarily liable party or any other Guarantor of the Refund Amount. The
Guarantors acknowledge that they are owners/members of Eastside and therefore
consideration exists for the issuance of this Guaranty. The Guarantors
acknowledge that this is continuing guaranty and shall not be affected by any
modification in the Lease or any other agreement between HEI and Eastside,
regardless of whether notice thereof has been given to any or all of the
Guarantors.
6. Miscellaneous. This Agreement, together with the Lease, as amended, and
the Operating Agreement, constitutes the entire agreement of the parties
regarding the subject matter herein contained. In the event of any disputes
arising out of this Agreement, its modification or termination, or the
performance or breach of either party hereto, such dispute shall be resolved in
the manner specified in the Operating Agreement. This Agreement shall be
construed in accordance with laws of the State of Colorado. This Agreement shall
be binding upon and shall inure to the benefit of the parties and their
respective successors and permitted assigns.
[signature page to follow]
IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the day and year first written above.
EASTSIDE PROPERTIES, LLC HEI, INC.
a Colorado limited liability company a Minnesota corporation
By:_________________________________ By:_________________________________
Name:_______________________________ Name:_______________________________
Title:______________________________ Title:______________________________
GUARANTORS
____________________________________
Xxxxx X. Xxxxxxxx
____________________________________
Xxxxxx X. Xxxxxxxx
