March 26, 2003
PERSONAL AND CONFIDENTIAL
Xxxx Xxxxx
Chief Financial Officer
Colorado MEDtech, Inc.
000 X. Xxxxxxx Xx., Xxxx X
P.O. Box 819
Longmont, Colorado 80502-0819
Dear Xxxx:
This letter will confirm the understanding and agreement (the
"Agreement") between ThinkEquity Partners, LLC ("TEP"), and Colorado MEDtech,
Inc. (the "Company") as follows:
1. Engagement. The Company hereby engages TEP during the Engagement
Period (as defined in Section 3) as its sole placement agent for the private
placement of (i) up to 955,000 shares of HEI, Inc's ("HEI's") common stock, par
value $.05 per share (the "HEI Stock") and, (ii) up to $2,600,000 aggregate
principal amount of HEI's notes due September 30, 2004 (the "HEI Notes") and,
(together with the HEI Stock, the "Securities"), owned by it, in one or more
related transactions (collectively, the "Private Placement") that are intended
to be exempt from registration under the Securities Act of 1933, as amended (the
"Securities Act"), and the Investment Company Act of 1940, as amended (the
"Investment Company Act"), and otherwise to comply with the applicable laws and
regulations of any other jurisdictions in which the Securities are offered.
2. TEP's Role. As contemplated by this Agreement, XXX accepts the
engagement described herein and will provide the Company with financial advice
and assistance relating to the Private Placement of the Securities. In
particular, TEP will assist the Company in:
(a) structuring the Private Placement;
(b) identifying potential purchasers;
(c) marketing the Private Placement; and
(d) evaluating proposals and negotiating the sale of the Securities
to the purchasers.
3. Engagement Period. The term of this Agreement shall commence on the
date hereof and continue through the earlier of (i) 45 days from such date or
(ii) the date of the final closing of the sale of Securities as part of the
Private Placement of the Securities (the "Engagement Period"), unless terminated
at an earlier date pursuant to Section 8 of this Agreement. Each closing of a
sale of securities as part of the Private Placement is referred to herein as a
"Closing."
Colorado MEDtech, Inc. Page 2 March 26, 2003
4. Certain Securities Laws Matters. No offers or sales of any
securities of the same or similar classes as the Securities will be made by the
Company or any affiliate during the six-month period after the completion of a
Private Placement except in compliance with the registration requirements of the
Securities Act or an exemption there from. The Company and TEP shall not make
any general solicitation in connection with the offer and sale of the
Securities. Assuming that the Company complies with its obligations under
Section 7(b), TEP will otherwise comply with Federal and applicable State
securities laws, provided that TEP is not responsible for any misstatements or
omissions regarding disclosures made by HEI.
5. Best Efforts; No Fiduciary Duty. It is understood that in acting as
placement agent for the Private Placement, TEP will seek to complete the Private
Placement strictly on a best efforts basis, acting as the Company's agent and
not as a principal in the sale and placement of the Securities, and that the
consummation of the Private Placement will be subject to, among other things,
market conditions as well as the written consent of the Company to the terms of
the Private Placement, including the sales price. In such capacity, TEP shall
act as an independent contractor, and any duties of TEP arising out of its
engagement pursuant to this Agreement shall be owed solely to the Company; and
this Agreement is not intended to create rights or obligations of either party
for the benefit of third parties, including without limitation the creditors of
the Company. It is understood that TEP's responsibility to the Company is solely
contractual in nature and that TEP does not owe the Company, or any other party,
any fiduciary duty as a result of its engagement.
There may be other services which are required to be provided to the
Company in connection with any transaction contemplated by this Agreement and
which will be provided by others (e.g., independent auditors, attorneys or
appraisers). Furthermore, the parties hereto understand that TEP is not required
to purchase any Securities.
6. Information. The Company shall furnish, or cause to be furnished, to
TEP all information reasonably requested by TEP for the purpose of rendering
services hereunder (all such information being the "Information"). The Company
recognizes and confirms that TEP (a) will use and rely on the Information and on
information available from generally recognized public sources in performing the
services contemplated by this Agreement without having independently verified
the same; (b) does not assume responsibility for the accuracy or completeness of
the Information and such other information; and (c) will not make an appraisal
of the HEI Stock or the HEI Notes. The Company agrees that all Information
furnished to TEP in connection with this Agreement will be accurate in all
material respects at the time provided and that if such Information, in whole or
in part, becomes materially inaccurate, misleading or incomplete during the term
of TEP's engagement hereunder, the Company will promptly so advise TEP in
writing and correct any such inaccuracy or omission.
TEP agrees that all Information it receives pursuant to this Agreement
that is related to the Company ("Company Information") shall be used only for
the purposes set forth in this Agreement. TEP further agrees that, except as
otherwise required by law, judicial or administrative process or regulatory
request or demand or other body having jurisdiction over TEP, or as contemplated
by its engagement hereunder, all non-public Company Information furnished to TEP
by or on behalf of the Company in connection with its engagement hereunder will
be held by TEP as confidential, except to the extent (i) such Company
Information is disclosed by TEP to its counsel or its employees or agents on a
need-to-know basis, (ii) such Company Information is otherwise publicly
available or becomes publicly available through no fault of TEP or (iii) such
disclosure is deemed necessary to TEP in litigation or any other proceeding in
which it or any of its current or former directors, officers, employees, agents,
representatives are parties; provided however that if disclosure of any such
non-public Company Information is requested pursuant to, or required by,
applicable law or regulation or by legal process, TEP will (x) provide the
Company with notice as promptly as reasonably practicable of such request or
requirement in order to enable the Company
Colorado MEDtech, Inc. Page 3 March 26, 2003
to seek an appropriate protective order or other remedy, to consult with TEP
with respect to taking steps to resist or narrow the scope of such request or
legal process or, in the sole discretion of the Company, to waive compliance, in
whole or in part, with the terms hereof, or (y) cooperate with the Company in
seeking any such protective order or other remedy. In the event that no such
protective order or other remedy is obtained, or compliance with the terms
hereof is waived by the Company, TEP will furnish only that portion of the
requested Company Information that is advised by its counsel is legally required
and will use reasonable efforts, at the Company's sole expense, to obtain
reliable assurances that all Company Information that is so disclosed will be
accorded confidential treatment.
7. Responsibilities, Representations and Warranties of the Company:
(a) The sale of Securities to the Investors will be evidenced by
(i) a stock purchase agreement ("Purchase Agreement") between
the Company and the Investors.
(b) The Company agrees that the Company shall have sole
responsibility for (i) ensuring that the sale of Securities
contemplated by this Agreement shall be exempt from the
registration requirements of the Securities Act, subject to
the terms of this Agreement and the accuracy of the
representations and warranties of the Investors contained in
the Purchase Agreement and will otherwise comply with the
securities laws of any applicable country or other
jurisdiction, and (ii) qualifying the Securities for offering
and sale under the applicable securities, or Blue Sky, laws of
such states and other jurisdictions (domestic or foreign) as
are necessary for the consummation of the Private Placement.
Neither TEP nor the Company shall take any action or permit to
be taken any action on its behalf that would cause such sale
of Securities to fail to (i) qualify for such an exemption, or
(ii) otherwise comply with such securities laws.
(c) The Company will reasonably believe at the time of any sale of
Securities as part of the Private Placement that each
purchaser is an "accredited investor" as that term is defined
in Rule 501 of Regulation D of the SEC or an otherwise
sophisticated investor satisfactory to the Company and TEP.
Neither the Company nor any person acting on its behalf will
offer or sell the Securities by any form of general
solicitation or general advertising, including the methods
described in Rule 502(c) of Regulation D.
(d) The Company represents that no offers or sales of securities
of the same or a similar class as the Securities have been
made by it or for it during the six-month period ended on the
date of this Agreement that would require the Securities to be
registered under the Securities Act. The Company agrees that
no offers or sales of any securities of the same or a similar
class as the Securities will be made by it or on its behalf
during the six-month period after the completion of an
offering of the Securities pursuant to a Private Placement
that would result in any obligation to register such
Securities sold under such Private Placement under the
Securities Act.
8. Termination. This Agreement and all of TEP's obligations hereunder
may be terminated by TEP for any reason upon giving ten days prior notice
thereof to the other; provided, however, that in the event the Company or TEP
does not perform any obligation under this Agreement or any of the Company's or
TEP's representations and warranties hereunder are incomplete or inaccurate in
any respect, this Agreement and all of TEP's or the Company's obligations
hereunder, respectively, may be immediately terminated by TEP or the Company,
respectively, by notice to the other. Upon termination, the Company
Colorado MEDtech, Inc. Page 4 March 26, 2003
shall pay to TEP all fees earned and reimburse TEP for all reasonable expenses
incurred, in accordance with Paragraphs 9 and 10 hereof, respectively.
Notwithstanding any termination of or under this Agreement as provided herein,
the following Sections of this Agreement will survive any such termination:
Section 4; the second paragraph of Section 6; Sections 9 through 19; and Annex
A.
9. Fees. As compensation for the services to be rendered by TEP
hereunder, the Company agrees to pay or cause to be paid at the Closing of a
sale of the Securities a transaction fee to TEP equal to seven percent (7%) of
the aggregate gross proceeds from such Closing; provided that, except as
specified in the following sentence, if no Closing has occurred within 45 days
of the date of this letter and none is scheduled at that time, TEP shall not be
entitled to any fee with respect to any subsequent Closing. Notwithstanding
anything in the previous sentence or in Section 14 of this Agreement to the
contrary, if TEP has identified and contacted any potential purchaser of the
Securities and TEP has disclosed the name of such potential purchaser to the
Company in writing prior to, or in connection with, the termination of this
Agreement, then the Company shall pay TEP the transaction fee specified in the
first sentence of this paragraph 9 upon any subsequent sale of the Securities to
such purchaser, provided, however, that the Company shall not be required to
make the payment specified in this sentence if the purchaser is HEI, any
affiliate of HEI, Xxxxxx Xxxxxx, Aquisitor plc, Acquisitor Holdings (Bermuda)
Ltd., American Opportunity Trust plc, XX Xxxxxx Capital Management Limited, XX
Xxxxxx Capital Management (Holdings) Limited or Xxxxxxxxxxx Xxxxxxx Xxxxxxx
Xxxxx unless negotiations concerning such sale were initiated prior to the end
of the Engagement Period.
The Company agrees to pay to TEP a refundable retainer fee of $10,000
in cash immediately upon execution of this Agreement. The retainer fee shall be
credited against the transaction fee payable under this Agreement. In the event
that TEP is not entitled any transaction fee pursuant to this Section, upon
termination of this agreement, TEP will refund the retainer to the Company, less
any expenses incurred by TEP that have not already been reimbursed.
10. Expense Reimbursement. Regardless of whether or not the
transactions contemplated by this Agreement are consummated, the Company agrees
to reimburse TEP for all of its reasonable and documented out-of-pocket expenses
in connection with the performance of its activities under the terms of this
Agreement without prior approval, provided that expenses in excess of $10,000
individually or in the aggregate shall require the advance consent of the
Company. Reasonable out-of-pocket expenses include, but are not limited to,
costs such as printing, telephone, telex, courier service, direct computer
expenses, accommodations, coach airfare, travel (to be pre-approved by the
Company) and the fees and expenses of legal counsel employed by and for TEP that
is reasonably satisfactory to the Company, provided that the Company
acknowledges Debevoise & Xxxxxxxx is satisfactory. All such fees, expenses and
costs will be billed monthly or in such other intervals or at such other times
as are reasonably practicable for TEP and are payable when invoiced; provided
that all such expenses billed prior to the Closing shall be paid at the Closing.
The Company or any purchaser of Securities will bear all of their
legal, accounting, printing and other expenses in connection with the offering
and sale of the Securities. It is also understood that TEP will not be
responsible for any fees or commissions payable to financial or other advisors
utilized or retained by the Company or by any purchaser or offeree of the
Securities.
Expenses related to indemnification subject to Section 11 and Annex A
are not subject to this paragraph.
11. Indemnity. In addition to the fees and reimbursement of expenses
provided for above, the Company and TEP agree to the indemnification provisions
set forth as Annex A hereto, which are incorporated herein by reference as if
fully set forth herein.
Colorado MEDtech, Inc. Page 5 March 26, 2003
12. Amendments; Governing Laws. This Agreement may not be amended or
modified except in writing signed by each of the parties and shall be governed
by and construed and enforced in accordance with the laws of the State of New
York without regard to the conflict of law principles thereof.
13. Confidentiality. Except as required by law, this Agreement and the
services and advice to be provided by TEP hereunder, shall not be disclosed to
third parties by either party hereto without the other parties' prior written
permission. Notwithstanding the foregoing, when the Private Placement is
completed, TEP may advertise the services it provided to the Company in
connection with this Agreement.
14. No Brokers. The Company represents and warrants to TEP that it has
not incurred, and shall not incur, directly or indirectly any liability for any
brokerage or finders' fees or agents' commissions or any similar charges in
connection with this Agreement or the Private Placement, except for the
liability of the Company to TEP hereunder and that there are no other financial
advisors or similar persons entitled to receive compensation from the Company in
connection with any transaction contemplated herein, provided that this Section
14 shall not prohibit the Company from incurring any such liability to any party
for brokerage or finders' fees or agents' commissions or similar charges upon
the termination of this Agreement so long as the Company complies with the terms
of Section 9.
15. Authorization. The Company and TEP each represents and warrants
that it has all requisite power and authority to enter into and carry out the
terms and provisions of this Agreement and the execution, delivery and
performance of this Agreement does not breach or conflict with any agreement
(whether written or oral), document or instrument to which it or any of its
subsidiaries is a party or is bound.
16. Notices. All communications hereunder shall be in writing and shall
be mailed or delivered (a) to the Company, at its offices at 000 X. Xxxxxxx Xx,
Xxxx X, X.X. Box 819, Longmont, Colorado 80502-0819, Attention: Xxxx Xxxxx, and
(b) to TEP, at its offices at 00 Xxxx 00xx Xxxxxx, Xxxxx 0000, Xxx Xxxx, XX
00000, Attention: Xxxxx Xxxxxx.
17. Waiver of Trial by Jury. Each of TEP and the Company (on its own
behalf and, to the extent permitted by applicable law, on behalf of its
affiliates and stockholders) waives all right to trial by jury in any action,
claim, suit, proceeding or counterclaim (whether based upon contract, tort or
otherwise) relating to or arising out of the engagement of TEP pursuant to, or
the performance by TEP of the services contemplated by, this Agreement.
18. Full Service Securities Firm. The Company acknowledges that TEP is
a full service securities firm and in the ordinary course of its business, for
its own account or the accounts of its customers, holds long or short positions
in securities or derivative securities (including options), which may include
securities or derivative securities relating to HEI, the Company or other
entities which may be involved in the engagement contemplated by this Agreement.
Nothing in this Agreement shall be deemed to prohibit TEP from providing any
services permitted by applicable law to any third party or from engaging in any
lawfully permitted activity on its own behalf.
19. Miscellaneous. This Agreement, including Annex A, constitutes the
entire understanding and agreement between the Company and TEP with respect to
the subject matter hereof and supersedes all prior understandings or agreements
among the parties with respect thereto, whether oral or written, express or
implied. This Agreement and all rights, liabilities and obligations hereunder
shall be binding upon and inure to the benefit of each party's successors but
may not be assigned without the prior written approval of the other parties.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument. The descriptive headings of the Paragraphs of
this Agreement are inserted for convenience only, do not
Colorado MEDtech, Inc. Page 6 March 26, 2003
constitute a part of this Agreement and shall not affect in anyway the meaning
or interpretation of this Agreement.
TEP is delighted to accept this engagement and looks forward to working
with you. Please confirm that the foregoing correctly sets forth our agreement
by signing the enclosed duplicate of this letter in the space provided and
returning it, whereupon this letter shall constitute a binding agreement as of
the date first above written.
Very truly yours,
THINKEQUITY PARTNERS, LLC
BY: /s/ Xxxxx X. Xxxxxx, Xx.
----------------------------
Xxxxx X. Xxxxxx, Xx.
Head of Health Care Investment Banking
ACCEPTED AND AGREED TO
AS OF THE ABOVE DATE:
Colorado MEDtech, Inc.
BY: /s/ Xxxxxxx X. Xxxxx
------------------------
Xxxxxxx X. Xxxxx
Chief Financial Officer
ANNEX A: INDEMNIFICATION
The Company agrees to indemnify and hold harmless TEP, its affiliates
and its and their respective directors, officers, employees, agents and
controlling persons (TEP and each such person or entity being an "Indemnified
Party") from and against any losses, claims, damages and liabilities, joint or
several, as incurred, (collectively, the "Damages"), to which such Indemnified
Party may become subject under any United States federal or state law, or
otherwise, and in connection with or otherwise relating to or arising from (i)
any transaction contemplated by this Agreement or the engagement of TEP pursuant
to and the performance of services by an Indemnified Party hereunder or (ii) any
untrue statement or an alleged untrue statement of a material fact contained in
any information (whether written or oral) or documents including without
limitation the Information and any public information, furnished or made
available by the Company, HEI, directly, through TEP or otherwise, to any
purchaser or offeree of the Securities or any of their representatives or the
omission or the alleged omission to state therein a material fact necessary in
order to make the statements therein not misleading, in the light of the
circumstances under which they were made; provided, however, that the Company
will not be liable to an Indemnified Party under clause (i) hereof to the extent
that any loss, claim, damage or liability is found in a final non-appealable
judgment by a court to have resulted from such Indemnified Party's bad faith,
gross negligence or willful misconduct in performing the services described
above. The Company also agrees to reimburse each Indemnified Party for all
reasonable and documented fees and expenses (including the reasonable fees and
expenses of one counsel (in addition to any local counsel) that is reasonably
satisfactory to the Company) (collectively, "Expenses") as they are incurred in
connection with investigating, preparing, pursuing or defending any threatened
or pending claim, action, proceeding or investigation (collectively, the
"Proceedings") arising therefrom, whether or not such Indemnified Party is a
formal party to such Proceeding and whether or not such claim, action or
proceeding is initiated or brought by or on behalf of the Company. The Company
also agrees that no Indemnified Party will have any liability (whether direct or
indirect, in contract, tort or otherwise) to the Company or any person asserting
claims on behalf of the Company arising out of or in connection with any
transactions contemplated by this letter agreement or the engagement of or
performance of services by any Indemnified Party thereunder except to the extent
that any Damages are found in a final non-appealable judgment by a court of
competent jurisdiction to have resulted from the bad faith, gross negligence or
willful misconduct of the Indemnified Party.
If for any reason, the indemnification provided for in this Agreement
is available under the terms of this Agreement, but is for any reason held
unenforceable or otherwise unavailable to an Indemnified Party or insufficient
to hold an Indemnified Party harmless, then the Company will contribute to the
amount paid or payable by an Indemnified Party as a result of such Damages
(including all Expenses incurred) in such proportion as is appropriate to
reflect the relative benefits to the Company on the one hand and TEP on the
other hand, in connection with the matters covered by this Agreement or, if the
foregoing allocation is not permitted by applicable law, not only such relative
benefits but also the relative faults of such parties as well as any relevant
equitable considerations. The Company agrees that for purposes of this paragraph
the relative benefits to the Company, and TEP in connection with the matters
covered by this Agreement will be deemed to be in the same proportion that the
total value paid or received or to be paid or received by the Company in
connection with the transactions contemplated by this Agreement, whether or not
consummated, bears to the fees paid or received by TEP under this Agreement;
provided, that, to the extent permitted by applicable law in no event will the
total contribution of all Indemnified Parties to all such Damages exceed the
amount of fees actually received and retained by TEP hereunder (excluding any
amounts received by TEP as reimbursement of expenses).
Promptly after receipt by an Indemnified Party of notice of any claim
or the commencement of any action (including any governmental action), such
Indemnified Party will, if a claim in respect thereof is to be made against any
indemnifying party under the terms herein, deliver to the indemnifying party a
written notice of the commencement thereof, and the indemnifying party shall
have the right to participate
in, and, to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with counsel
mutually satisfactory to the Indemnified Parties. Notwithstanding the preceding
sentence, any Indemnified Party shall have the right to retain its own counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such Indemnified Party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such Indemnified Party and any other party represented by such
counsel in such proceeding. In such event, the fees and disbursement of such
separate counsel will be paid by the Company, provided that the Company shall
not be responsible for the fees and expenses of more than one separate counsel
(in addition to any local counsel) for all similarly situated Indemnified
Parties.
The Company agrees not to enter into any waiver, release or settlement
of any Proceeding (whether or not TEP or any other Indemnified Party is a formal
party to such Proceeding) in respect of which indemnification may be sought
hereunder (whether or not TEP or any other Indemnified Party is an actual or
potential party to such claim, action or proceeding) without the prior written
consent of TEP, unless such waiver, release or settlement includes an
unconditional release of TEP and each Indemnified Party from all liability
arising out of such Proceeding.
In the event TEP or any Indemnified Party is requested or required to
appear as a witness in any action brought by or on behalf of or against the
Company or any affiliate or any participant in a transaction covered hereby in
which TEP or such Indemnified Party is not named as a defendant, the Company
agrees to reimburse TEP for all reasonable and documented out-of-pocket expenses
incurred by it in connection with such Indemnified Party's appearing and
preparing to appear as a witness, including, without limitation the fees and
disbursements of its legal counsel, and to compensate TEP in an amount to be
mutually agreed upon.
The indemnity, reimbursement and contribution obligations of the
Company hereunder will be in addition to any liability which the Company may
otherwise have to any Indemnified Party and will be binding upon and inure to
the benefit of any successors, assigns, heirs and personal representatives of
the Company or an Indemnified Party.
