EXHIBIT 1
HEI, INC.
0000 Xxxxxxx Xxxx Xxxx
Xxxxxxxx, XX 00000
September 10, 2000
Xx. Xxxxxxx X. Xxxx
0000 Xxxxxxx Xxxx Xxxx
Xxxxxxxx, XX 00000
Re: Acquisition of Shares of Colorado MEDtech, Inc.
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Dear Xx. Xxxx:
This letter agreement sets forth the terms pursuant to which HEI,
Inc., a Minnesota corporation ("HEI"), will purchase from you (the "Seller"),
1,214,300 shares (the "CM Shares") of common stock, no par value, of Colorado
MEDtech, Inc., a Colorado corporation ("Colorado MEDtech").
1. Sale of CM Shares; Purchase Price. The Seller agrees to sell to
HEI, and HEI agrees to purchase from the Seller, the CM Shares, for an aggregate
purchase price of $8,330,775.26 (the "Purchase Price"), which represents the
weighted average price paid by the Seller for the CM Shares as set forth on
Schedule A of the Seller's Schedule 13D filed with the Securities and Exchange
Commission on August 31, 2000. The Purchase Price shall be payable (a) by the
delivery to Seller of 235,000 shares of common stock, $.05 par value per share,
of HEI (the "HEI Shares"), which shares have a market value of $5,258,125, based
upon the average of the high and low per share sales price of HEI common stock
on the Nasdaq Stock Market on September 8, 2000, of $22.375 and (b) by the
assumption by HEI of $3,072,650.26 of indebtedness of Seller, which indebtedness
was incurred by Seller in connection with the acquisition of the CM Shares (the
"Margin Debt").
2. Transfer of Shares. Seller agrees to transfer to HEI, or cause to
be transferred to HEI, as promptly as practicable after the date hereof, the CM
Shares. HEI agrees to transfer to Seller, or cause to be transferred to Seller,
as promptly as practicable after the date hereof, the HEI Shares, and to assume,
as promptly as practicable after the date hereof, the Margin Debt.
3. Expenses of Seller. Upon receipt of appropriate documentation from
the Seller, HEI will promptly reimburse Seller, in cash, for all of Seller's
costs and expenses reasonably related to Seller's acquisition and holding of the
CM Shares prior to the date hereof, including but not limited to commissions
paid by Seller to brokers in connection with the acquisition of the CM Shares
and interest paid by Seller on the Margin Debt, as well as reasonable attorneys'
fees incurred by the Seller in connection with this letter agreement and the
preparation of the Seller's Schedule 13D filing made in connection with the
acquisition of the CM Shares (collectively, "Expenses").
4. Representations of Seller. Seller is the sole beneficial owner of
the CM Shares, and owns such shares free and clear of all liens, claims,
limitations on voting rights, options, security interests, pledges and other
encumbrances (collectively, "Liens"), except for the Margin Debt, and except for
restrictions, if any, which may exist as a result of provisions of Colorado
MEDtech's charter, bylaws or Rights Agreement dated as of January 14, 1999, as
amended and restated June 22, 2000, or of provisions of the Colorado Business
Corporation Act. Other than the CM Shares, Seller does not own or have the right
to acquire any shares of capital stock of Colorado MEDtech. Upon delivery of the
CM Shares by Seller as provided herein, HEI will acquire title to the CM Shares
free and clear of any Liens, except for the Margin Debt, and will be entitled to
all the rights of a holder of such CM Shares. Seller has no actual knowledge of,
nor any reason to believe that, the CM Shares, together with the 100 shares of
common stock of Colorado MEDtech purchased by HEI on September 8, 2000,
represent 10% or more of Colorado MEDtech's outstanding shares of common stock
on the date hereof.
5. Representations and Covenants of HEI. (a) Except for 100 shares of
common stock of Colorado MEDtech purchased by HEI on September 8, 2000, HEI does
not own, beneficially or of record, any shares of capital stock of Colorado
MEDtech. Upon delivery of the HEI Shares by HEI as provided herein, the Seller
will acquire title to the HEI Shares free and clear of any Liens, and will be
entitled to all the rights of a holder of such HEI Shares. HEI has no actual
knowledge of, nor any reason to believe that, the CM Shares, together with the
100 shares of common stock of Colorado MEDtech purchased by HEI on September 8,
2000, represent 10% or more of Colorado MEDtech's outstanding shares of common
stock on the date hereof.
(b) The HEI Shares, when issued, sold, and delivered in accordance
with the terms of this letter agreement, will be duly authorized and validly
issued, fully paid and non-assessable and free of restrictions on transfer,
other than restrictions on transfer under applicable state and federal
securities laws.
(c) HEI will use its reasonable best efforts to promptly list the HEI
Shares on the Nasdaq Stock Market.
(d) HEI will use its reasonable best efforts to promptly have the
Seller removed as an obligor or guarantor on the Margin Debt.
6. Subsequent Transfer of CM Shares. If, at any time after the date
hereof and prior to the earlier of (a) the consummation of a transaction whereby
HEI directly or indirectly gains control of Colorado MEDtech, or (b) the date
that is 18 months from the date hereof, HEI transfers (by way of sale, merger or
otherwise) any or all of the CM Shares to any person, other than an affiliate of
HEI, at a price per share (including the fair market value of any non-cash
consideration) in excess of the Purchase Price plus the amount of any Expenses
divided by the number of CM Shares transferred hereby (as adjusted to reflect
fully the effect of any stock split, reverse split, stock dividend,
reorganization, recapitalization or other like exchange with respect to shares
of Colorado MEDtech common stock after the date hereof) (the "Per Share Xxxxxxxx
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Xxxxx"), XXX shall promptly pay to Seller an amount, not to exceed $2,446,137,
equal to 50% of the aggregate proceeds received by HEI in such transfer in
excess of the Per Share Purchase Price multiplied by the number of CM Shares
transferred by HEI (as adjusted to reflect fully the effect of any stock split,
reverse split, stock dividend, reorganization, recapitalization or other like
exchange with respect to shares of Colorado MEDtech common stock after the date
hereof), less the amount of any Expenses.
7. Demand Registration Rights. At any time while the Seller holds the
HEI Shares, upon the written request of the Seller that HEI effect the
registration under the Securities Act of 1933 (the "Securities Act") of all or
part of the HEI Shares, and specifying the number of HEI Shares sought to be
registered and the intended method of distribution thereof, HEI shall use its
reasonable best efforts to effect as promptly as practicable the registration of
the HEI Shares under the Securities Act, and any applicable state securities
laws, and in connection therewith shall prepare and file with the SEC a
registration statement with respect to the offer and sale of the HEI Shares and
any other shares of common stock of HEI which HEI or other holders of HEI common
stock having registration rights may elect to register in connection with such
offering, provided that HEI shall not be required to effect a registration under
this Section 7 on more than one occasion. At the request of the Seller, the
registration statement to be filed pursuant to this Section 7 shall be on Form
S-3 under the Securities Act (if HEI is then eligible to utilize such form) in
order to allow the offer and sale by the Seller of the HEI Shares on a delayed
or continuous basis in accordance with Rule 415 under the Securities Act. If a
registration under this Section 7 involves an underwritten offering, and the
managing underwriter advises HEI in writing that, in its opinion, the number of
shares requested to be included in such registration exceeds the number which
can be sold in such offering within an acceptable price range, HEI will include
in such registration, to the extent of the number which HEI is so advised can be
sold in such offering, first, the HEI Shares, second, securities that HEI
proposes to sell, and third, securities of HEI held by other persons having
registration rights proposed to be included in such registration, pro rata among
such holders. HEI shall pay all fees and expenses in connection with a
registration described in this Section 7, except that the Seller shall pay for
any fees, discounts and commissions of any underwriter applicable to the HEI
Shares to be sold in such offering.
8. Piggyback Registration Rights. If at any time while Seller holds
the HEI Shares, HEI proposes to file on its behalf and/or on behalf of any other
holder of shares of HEI common stock a registration statement under the
Securities Act to register an offering of shares of HEI common stock on any form
under the Securities Act, other than a registration statement on Form S-4 or S-8
(or any successor form) for securities to be offered in a transaction of the
type referred to in Rule 145 under the Securities Act or to be offered to
employees of or consultants to HEI, it shall include in such registration
statement, at the request of the Seller, all or any part of the HEI Shares, and
register such HEI Shares under any applicable state securities laws.
Notwithstanding the foregoing, if the registration statement involves an
underwritten offering and the managing underwriter advises HEI in writing that,
in its opinion, the number of shares requested to be included in such
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registration exceeds the number which can be sold in such offering within an
acceptable price range, HEI will include in such registration, to the extent of
the number which HEI is so advised can be sold in such offering, first,
securities of HEI that HEI proposes to sell and second, securities of HEI held
by other persons, including the Seller, having registration rights proposed to
be included in such registration, pro rata among such holders. HEI shall pay all
fees and expenses in connection with a registration described in this Section 8,
except that the Seller shall pay for any fees, discounts and commissions of any
underwriter applicable to the HEI Shares to be sold in such offering. The rights
of the Seller under Sections 7 and 8 hereof may be assigned by the Seller to any
transferee of the HEI Shares.
9. Further Assurances. Each of HEI and Seller agree to execute and
deliver such other documents and to do such other acts and things necessary for
the purpose of carrying out the intent of this letter agreement.
10. Entire Agreement. This letter agreement constitutes the entire
agreement between HEI and the Seller with respect to the transactions
contemplated hereby, and supersedes all negotiations, agreements,
representations, warranties and commitments, whether in writing or oral, prior
to the date hereof.
11. Governing Law. This letter agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, regardless of
the laws that might otherwise govern under applicable principles of conflict of
laws thereof.
Please acknowledge acceptance of the terms of this letter agreement
by signing in the space provided below for that purpose, whereupon this letter
agreement will constitute a binding agreement between us.
Very truly yours,
HEI, INC.
By: /s/ Xxx Xxxxxxxx
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Name: Xxx Xxxxxxxx
Title: President and COO
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AGREED TO AS OF THE DATE
FIRST ABOVE WRITTEN:
/s/ Xxxxxxx X. Xxxx
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Xxxxxxx X. Xxxx, individually
