SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No ___ )*
WTC Industries, Inc.
(Name of Issuer)
Common Stock, $0.01 par value
(Title of Class of Securities)
929341 10 5
(CUSIP Number)
Richard D. McNeil, Lindquist & Vennum P.L.L.P.,
4200 IDS Center
80 South Eighth Street
Minneapolis, Minnesota 55402
Telephone: (612) 371-3266
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
March 31, 1994
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box.
NOTE: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page. The information required in the
remainder of this cover page shall not be deemed to be "filed" for the purpose
of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise
subject to the liabilities of that section of the Act but shall be subject to
all other provisions of the Act (however, see the Notes).
Page 1 of 8 Pages
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CUSIP No. 929341 10 5
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
ROBERT C. KLAS, SR.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [ ]
(b) [x]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS (See instructions) PF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
[ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION UNITED STATES
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER 9,168,918 (includes warrant--right
to buy--2,400,000)
NUMBER OF
SHARES ----------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER 235,000 (includes warrant--right
OWNED BY to buy--10,000)
EACH
REPORTING ----------------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER 9,168,918 (includes warrant--right
WITH to buy--2,400,000)
----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER 235,000 (includes warrant--right
to buy--10,000)
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
9,403,918
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(See instructions)
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
71.78%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (See instructions)
IN
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Item 1. Security and Issuer
This Statement relates to the Common Stock, par value $.01 per share
(the "Common Stock") of WTC Industries, Inc. (the "Company"). The address of the
Company is 14405 - 21st Avenue North, Minneapolis, Minnesota 55447.
Item 2. Identity and Background
(a) Robert C. Klas, Sr. (the "Purchaser")
(b) 150 East Marie Avenue
West St. Paul, Minnesota 55118
(c) Chairman
The Tapemark Company
150 East Marie Avenue
West St. Paul, Minnesota 55118
(d) No
(e) No
(f) United States
Note: The Tapemark Company Cash or Deferred Profit Sharing Plan
("Tapemark") is an employee benefit plan utilized by The Tapemark
Company, a company of which Purchaser is the controlling shareholder.
Item 3. Source and Amount of Funds or Other Consideration
Purchaser first acquired shares of Common Stock on September 16, 1991,
when he acquired 25,000 for a consideration of $5 per share or a total of
$125,000. The source of the funds for this acquisition was Purchaser's personal
funds.
Purchaser next acquired shares of Common Stock on November 14, 1991,
when he acquired 4,000 for a consideration of $8.752 per share or a total of
$35,006. The source of the funds for this acquisition was Purchaser's personal
funds.
Purchaser next acquired shares of Common Stock on November 5, 1993,
when he acquired 13,800 for a consideration of $1.05 per share or a total of
$14,490. The source of the funds for this acquisition was Purchaser's personal
funds.
Purchaser next acquired shares of Common Stock on December 31, 1993,
when he acquired 6,900 for a consideration of $0.583 per share or a total of
$4,022.70. The source of the funds for this acquisition was Purchaser's personal
funds.
On March 31, 1994, the Purchaser acquired 690,000 shares of Common
Stock for a consideration of $0.50 per share, or a total of $345,000, which was
paid by conversion to Common Stock of $345,000 of direct indebtedness of the
Company to Purchaser evidenced by promissory notes. The source of the funds used
for the direct loans that were converted to Common Stock was Purchaser's
personal funds.
On June 15, 1994, the Purchaser acquired 380,000 shares of Common Stock
for a consideration of $0.50 per share, or a total of $190,000, which was paid
on the Company's behalf to a commercial bank to which the Company was indebted
in that amount under a line of credit. The source of the funds used for the
payment to the bank was Purchaser's personal funds.
Purchaser next acquired shares of Common Stock on July 19, 1994, when
he acquired 1,000 for a consideration of $1.45 per share or a total of $1,450.
The source of the funds for this acquisition was Purchaser's personal funds.
Purchaser next acquired shares of Common Stock on July 20, 1994, when
he acquired 1,000 for a consideration of $1.844 per share or a total of $1,844.
The source of the funds for this acquisition was Purchaser's personal funds.
Tapemark first acquired shares of Common Stock on September 12, 1994,
when it acquired 25,000 shares of Common Stock and warrants (right to buy) to
purchase 10,000 shares of Common Stock. The Common Stock and the warrants were
purchased as a unit for a total consideration of $43,750. The source of funds
for this acquisition was Tapemark's investment funds.
Purchaser next acquired shares of Common Stock on December 21, 1994,
when he acquired 500 for a consideration of $2.375 per share or a total of
$1,187.50. The source of the funds for this acquisition was Purchaser's personal
funds.
On August 23, 1995, the Purchaser acquired 1,646,718 shares of Common
Stock for a consideration of $1.25 per share, or a total of $2,058,397.50, which
was paid by conversion to Common Stock of $920,612.67 of direct indebtedness of
the Company to Purchaser evidenced by promissory notes, and $1,137,785.20 which
Purchaser paid on the Company's behalf to a commercial bank to which the Company
was indebted in that amount under a line of credit. The source of the funds used
for the direct loans that were converted to Common Stock and for the payment to
the bank was Purchaser's personal funds.
On December 27, 1995, Tapemark acquired 200,000 shares of Common Stock
for a consideration of $1.25 per share, or a total of $250,000, which was paid
by conversion to Common Stock of $250,000 of direct indebtedness of the Company
to Tapemark evidenced by promissory notes. The source of the funds used for the
direct loans that were converted to Common Stock was Tapemark's investment
funds.
On March 22, 1996, the Purchaser purchased from the Company 2,400,000
shares of Common Stock and a warrant to purchase an additional 2,400,000 shares
for an exercise price of $2.00 per share. The purchase price paid to the Company
for the 2,400,000 shares and the warrant was $3,000,000, which consisted of
$900,000 in cash, $900,000 under a promissory note to be paid over approximately
90 days, and the cancellation of $1,200,000 of indebtedness of the Company to
the Purchaser. The purchase was pursuant to a Stock Purchase Agreement between
the Company and the Purchaser, and the source of funds for the purchase was
Purchaser's personal funds.
On March 22, 1996 the Purchaser purchased from Jan H. Magnusson, the
Company's chief executive officer, 1,600,000 shares of Common Stock for a
purchase price of $1,000,000, or $0.625 per share, consisting of $500,000 in
cash and a short term promissory note for the $500,000 balance. The source of
funds for the purchase was Purchaser's personal funds.
Item 4. Purpose of Transaction
Purchaser has acquired the securities described in Item 3 above for
investment purposes. The Purchaser is a member and the chairman of the Company's
board of directors.
By virtue of the Purchaser's holdings of shares of Common Stock and a
Warrant to purchase 2,400,000 additional shares of Common Stock, the Purchaser
may be deemed to control the Company. On May 6, 1996, the Purchaser requested
and received the resignation Robert R. Martin as a director on May 6, 1996 and,
on July 30, 1996, the Purchaser caused the election of Robert C. Klas, Jr., who
is the Purchaser's son, as a member of the Company's board of directors. While
the Purchaser has no present plans or proposals to effect any additional changes
in the Company's board of directors or management, the Purchaser might, in the
future, formulate such plans or proposals.
The Purchaser may, from time to time, (1) acquire additional shares of
Common Stock (subject to availability at prices deemed favorable to the
Purchaser) in the open market, in privately negotiated transactions, or
otherwise, or (2) attempt to dispose of shares of Common Stock in the open
market, in privately negotiated transactions or otherwise.
Except as set forth above, the Purchaser has no present plans or
intentions that would result in or relate to any of the transactions described
in subparagraphs (a) through (j) of Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer
(a) As of October 21, 1996, the Purchaser beneficially owned 9,403,918
shares of the outstanding Common Stock of the Company. This number includes: (i)
2,400,000 shares that the Purchaser has the right to acquire through the
exercise of stock purchase warrants, (ii) 225,000 shares owned directly by
Tapemark and (iii) 10,000 shares which Tapemark has the right to acquire through
the exercise of stock purchase warrants. This represents 65.41% of the
outstanding Common Stock (prior to the exercise of any warrants or options) and
71.78% of the outstanding Common Stock (assuming full exercise of warrants and
options).
(b) The responses of the Purchaser to Items (7) through (11) of the
portions of the cover page of this Schedule which relate to beneficial ownership
of shares of Common Stock are incorporated herein by reference.
(c) Other than the transactions described in Item 3 above, the
Purchaser has not effected any transactions in the Common Stock during the past
sixty days.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer
The Purchaser and the Company entered into a Stock Purchase Agreement
dated March 22, 1996 with the Company under which, for so long as Purchaser is
the beneficial owner of at least a majority of the Company's outstanding shares
of Common Stock, the Company will make its best efforts to cause the nomination
and election to the Company's board of directors the Purchaser and one other
person nominated by Purchaser. Nothing in that agreement limits the right of the
purchaser to seek, in the event he wishes to do so, greater representation on
the Company's board of directors. Other than Purchaser and Robert C. Klas, Jr.,
the other members of the board of directors have advised Purchaser that they are
willing to resign from the board of directors if requested by Purchaser.
Except as stated in the preceding paragraph, there are no contracts,
arrangements, understandings or relationships between the Purchaser and any
person with respect to any securities of the Company.
Item 7. Material to be Filed as Exhibits
A copy of the Stock Purchase Agreement dated March 22, 1996 between the
Purchaser and the Company is attached hereto as an exhibit.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: February 7, 1997 /s/ Robert C. Klas, Sr.
-------------------------------
Robert C. Klas, Sr.
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
1 Stock Purchase Agreement dated March 22, 1996 between the
Purchaser and the Company.
Exhibit 1
STOCK PURCHASE AGREEMENT
This Agreement is made this 22nd day of March, 1996 by and between
Robert C. Klas, Sr. ("Purchaser") and WTC Industries, Inc., a Delaware
corporation (the "Company").
Whereas, Purchaser is a director and significant stockholder of the
Company;
Whereas, the Company is currently indebted to Purchaser in the
principal amount of $1,200,000 for loans which the Purchaser has extended to the
Company to permit it to make payroll and make critical payments to certain
vendors;
Whereas, the Company faces a critical need for working capital to fund
its continued operations, and the Purchaser is willing to provide such capital
to the Company on the terms of this Agreement;
Now, therefore, the parties agree as follows:
1. Sale and Purchase of Shares. Effective as of the date of this
Agreement, the Company hereby sells to Purchaser, and the Purchaser hereby
purchases, (a) 2,400,000 shares (the "Shares") of the Company's common stock,
and (b) a five year warrant in the form attached hereto as Exhibit A (the
"Warrant") to purchase 2,400,000 shares (the "Warrant Shares") of Company common
stock for an exercise price of $2.00 per share (the Shares and the Warrant being
collectively referred to herein as the "Securities").
2. Purchase Price. In consideration for the Securities, the Purchaser
hereby agrees to pay the Company a purchase price of $3,000,000 (the "Purchase
Price") consisting of the following:
(a) the sum of $1,200,000 by conversion to Company common
stock, as of the date of this Agreement, of $1,200,000 of the Company's
indebtedness to the Purchaser as of March 13, 1996 and Purchaser's full release
of his security interest in certain of the Company's assets;
(b) the sum of $400,000, which was advanced to the Company by
the Purchaser on March 14, 1996 in anticipation of this Agreement;
(c) the sum of $500,000, which is being paid to the Company in
cash upon the execution of this Agreement; and
(d) the delivery by the Purchaser to the Company of the
Purchaser's Promissory Note in the principal amount of $900,000 in the form
attached hereto as Exhibit B (the "Note") requiring three installment payments
of $300,000 each on April 15, May 15 and June 15, 1996.
3. Company Representations and Warranties. The Company represents and
warrants to the Purchaser that the Shares being issued and sold to the Purchaser
are, and any Warrant Shares issued and sold to the Purchaser upon any exercise
of the Warrant and payment for the Warrant Shares will be, duly authorized,
validly issued, and non-assessable shares of the Company's common stock.
4. Purchaser Representations and Warranties. The Purchaser represents
and warrants to the Company that:
(a) He is an "accredited investor" as defined in Rule 501(a)
of Regulation D promulgated under the Securities Act of 1933, as amended (the
"Act"), has such knowledge and experience in financial and business matters as
is necessary to evaluate the merits and risks involved in purchasing the
Securities. He has been given access to full and complete information concerning
the Company and has utilized such access to his satisfaction to obtain such
information as he desires concerning the Company and the Securities.
(b) He understands that the Shares and the Warrant have not
been, and any Warrant Shares issued upon exercise of the Warrant will not have
been, registered under the Act or applicable state securities laws and may be
resold or otherwise transferred only pursuant to registration under the Act and
such state laws or an opinion of legal counsel acceptable to the Company that
such registration is not required.
(c) He is purchasing the Shares and the Warrants, and any
Warrant Shares issued upon exercise of the Warrant, for investment and for his
own account without the intention of reselling or redistributing the same.
5. Closing Contingencies. The Purchaser's entry into this Agreement and
purchase of the Securities is subject to the conditions precedent that:
(a) The Purchaser shall have purchased, simultaneous with the
purchase under this Agreement, 1,600,000 shares of Company common stock from Jan
H. Magnusson on terms acceptable to the Purchaser.
(b) The other members of the Company's board of directors and
its officers shall have offered, in a form acceptable to the Purchaser, their
resignations from their positions, subject to acceptance of any such
resignations as the Purchaser determines to accept.
(c) The Company's board of directors shall have received an
opinion from an investment banking firm acceptable to the board of directors
(exclusive of the Purchaser) that the Company's sale of the Securities to the
Purchaser is fair from a financial point of view to the Company and its
shareholders other than the Purchaser.
(d) The Company shall have entered into an agreement with Jan
H. Magnusson concerning payment of his accrued unpaid salary and other rights to
payments from the Company which is acceptable to the Purchaser.
6. Board of Directors Representation. The Company agrees that, for so
long as Purchaser is the beneficial owner of at least a majority of the
Company's outstanding shares of common stock, it will make its best efforts to
cause the nomination and election to the Company's board of directors of the
Purchaser and one other person nominated by the Purchaser. The parties agree
that nothing in this Agreement shall limit the right of the Purchaser to seek,
in the event he wishes to do so, greater representation on the Company's board
of directors.
7. Registration Rights.
(a) Piggyback Registration Rights. If, at any time prior to
the date which is two years after the expiration date of the Warrant, the
Company shall propose to file any Registration Statement (except for any
registration on Forms S-4, S-8 or any other similarly inappropriate form) under
the Act covering a public offering of the Company's common stock, it will notify
the holder(s) of the Shares and any Warrant Shares (each, a "Holder") at least
30 days prior to each such filing and include in such Registration Statement (to
the extent permitted by applicable regulation) all or a portion of the Shares or
the Warrant Shares to the extent requested by any Holder. Notwithstanding the
foregoing, the number of Shares and Warrant Shares proposed to be registered
thereby on behalf of Holders shall be reduced pro rata with any other selling
shareholder (other than the Company) upon the good faith request of the managing
underwriter of such offering. If the Registration Statement filed pursuant to
such 30 day notice has not become effective within six months following the date
such notice is given to the Holders, the Company must again notify such Holders
in the manner provided above.
(b) Limited Demand Registration Right. If, at any time prior
to the date which is two years after the expiration date of the Warrant, the
Company is eligible to file a Registration Statement under the Act on Form S-3
(or its equivalent), then if the Holders of 50% or more of the Shares and
Warrant Shares purchased or purchasable under the Warrant (which have not
previously been registered and sold) shall request in writing the registration
for their benefit of such Shares or Warrant Shares on Form S-3 (or its
equivalent), then the Company shall promptly use its best efforts to effect the
registration under the Act of all such Shares and Warrant Shares which such
Holders have requested be so registered.
(c) Expenses. All filing fees and expenses of any of the
registrations referred to in this Section 6, except the fees of counsel to the
Holders and any underwriting commissions or fees, shall be borne by the Company.
(d) Miscellaneous. The Company will maintain the effectiveness
of any Registration Statement filed by the Company for an least nine months
following its effective date. To the extent permissible under the Act and
controlling precedent thereunder, the Company and the Holders of Shares or
Warrant Shares covered by such Registration Statement shall provide cross
indemnification to each other in customary scope covering the accuracy and
completeness of the information furnished by each. In connection with each such
Registration Statement the Company will provide to each Holder of Shares or
Warrant Shares covered by such Registration Statement a copy of the opinion of
the Company's legal counsel covering such matters as are customarily covered by
such opinions relating to such registrations.
8. Miscellaneous. This Agreement shall be governed by the laws of the
State of Minnesota. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, personal
representatives, successors and assigns.
In Witness Whereof, the parties have executed this Agreement as of the
date first written above.
WTC INDUSTRIES, INC.
By /s/ Jan Magnusson /s/ Robert C. Klas, Sr.
--------------------------------- ---------------------------------
Its Chief Executive Officer Robert C. Klas, Sr.
By /s/ Todd Johnson
---------------------------------
Its Chief Financial Officer
Warrant No. A-1
COMMON STOCK WARRANT
To Purchase 2,400,000
Shares of Common Stock of
WTC INDUSTRIES, INC.
March 22, 1996
THIS CERTIFIES THAT, for good and valuable consideration, the receipt
of which is hereby acknowledged, Robert C. Klas, Sr. is entitled to subscribe
for and purchase from WTC Industries, Inc., a Delaware corporation, (herein
called the "Company"), at any time after the date hereof to and including March
21, 2001, 2,400,000 fully paid and nonassessable shares of the Company's common
stock at the following price: $2.00 per share.
This Warrant is subject to the following provisions, terms and
conditions:
1. Exercise. The rights represented by this Warrant may be exercised by
the holder hereof, in whole or in part (but not as to a fractional share of
common stock), by written notice of exercise delivered to the Company twenty
(20) days prior to the intended date of exercise and by the surrender of this
Warrant (properly endorsed if required) at the principal office of the Company
and upon payment to it by certified or cashier's check of the purchase price for
such shares.
2. Issuance of Shares. The Company agrees that the shares purchased
hereby shall be and are deemed to be issued to the record holder hereof as of
the close of business on the date on which this Warrant shall have been
surrendered and the payment made for such shares as aforesaid. Subject to the
provisions of the next succeeding paragraph, certificates for the shares of
stock so purchased shall be delivered to the holder hereof within a reasonable
time, not exceeding ten (10) days after the rights represented by this Warrant
shall have been so exercised, and, unless this Warrant has expired, a new
Warrant representing the number of shares, if any, with respect to which this
Warrant shall not then have been exercised shall also be delivered to the holder
hereof within such time.
Notwithstanding the foregoing, however, the Company shall not be
required to deliver any certificate for shares of stock upon exercise of this
Warrant, except in accordance with the provisions, and subject to the
limitations, set forth in the paragraphs below.
3. Covenants of Company. The Company covenants and agrees that all
shares which may be issued upon the exercise of the rights represented by this
Warrant will, upon issuance, be duly authorized and issued, fully paid,
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof, and without limiting the generality of the foregoing, the Company
covenants and agrees that it will from time to time take all such action as may
be required to assure that the par value per share of the common stock is at all
times equal to or less than the then effective purchase price per share of the
common stock issuable pursuant to this Warrant. The Company further covenants
and agrees that during the period within which the rights represented by this
Warrant may be exercised, the Company will at all times have authorized, and
reserved for the purpose of issue or transfer upon exercise of the subscription
rights evidenced by this Warrant, a sufficient number of shares of its common
stock to provide for the exercise of the rights represented by this Warrant.
4. Anti-dilution Adjustments. The above provisions are, however,
subject to the following:
(a) In case the Company shall at any time hereafter subdivide or
combine the outstanding shares of common stock or declare a dividend payable in
common stock, the exercise price of this Warrant in effect immediately prior to
the subdivision, combination or record date for such dividend payable in common
stock shall forthwith be proportionately increased, in the case of combination,
or decreased, in the case of subdivision or dividend payable in common stock,
and each share of common stock purchasable upon exercise of the warrant shall be
changed to the number determined by dividing the then current exercise price by
the exercise price as adjusted after the subdivision, combination, or dividend
payable in common stock.
(b) No fractional shares of common stock are to be issued upon the
exercise of the Warrant, but the Company shall pay a cash adjustment in respect
of any fraction of a share which would otherwise be issuable in an amount equal
to the same fraction of the market price per share of common stock on the day of
exercise as determined in good faith by the Company.
(c) If any merger, capital reorganization or reclassification of the
capital stock of the Company, or consolidation or merger of the Company with
another corporation, or the sale of all or substantially all of its assets to
another corporation shall be effected in such a way that holders of common stock
shall be entitled to receive stock, securities or assets with respect to or in
exchange for common stock then, as a condition of such reorganization,
reclassification, consolidation, merger or sale, lawful and adequate provision
shall be made whereby the holder hereof shall hereafter have the right to
purchase and receive upon the basis and upon the terms and conditions specified
in this Warrant and in lieu of the shares of the common stock of the Company
immediately theretofore purchasable and receivable upon the exercise of the
rights represented hereby, such shares of stock, securities or assets as may be
issued or payable with respect to or in exchange for a number of outstanding
shares of such common stock equal to the number of shares of such stock
immediately theretofore purchasable and receivable upon the exercise of the
rights represented hereby had such reorganization, reclassification,
consolidation, merger or sale not taken place, and in any such case appropriate
provisions shall be made with respect to the rights and interests of the holder
of this Warrant to the end that the provisions hereof (including without
limitation provisions for adjustments of the warrant purchase price and of the
number of shares purchasable upon the exercise of this Warrant) shall thereafter
be applicable, as nearly as may be, in relation to any shares of stock,
securities or assets thereafter deliverable upon the exercise hereof. The
Company shall not effect any such consolidation, merger or sale, unless prior to
the consummation thereof the successor corporation (if other than the Company)
resulting from such consolidation or merger, or the corporation purchasing such
assets, shall assume by written instrument executed and mailed to the registered
holder hereof at the last address of such holder appearing on the books of the
Company, the obligation to deliver to such holder such shares of stock,
securities or assets as, in accordance with the foregoing provisions such holder
may be entitled to purchase.
(d) Upon any adjustment of the warrant purchase price, then and in each
such case, the Company shall give written notice thereof, by first class mail,
postage prepaid, addressed to the registered holder of this Warrant at the
address of such holder as shown on the books of the Company, which notice shall
state the warrant purchase price resulting from such adjustment and the increase
or decrease, if any, in the number of shares purchasable at such price upon the
exercise of this Warrant, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based.
5. Common Stock. As used herein, the term "common stock" shall mean and
include the Company's presently authorized shares of common stock and shall also
include any capital stock of any class of the Company hereafter authorized which
shall not be limited to a fixed sum or percentage in respect of the rights of
the holders thereof to participate in dividends or in the distribution of assets
upon the voluntary or involuntary liquidation, dissolution or winding up of the
Company.
6. No Voting Rights. This Warrant shall not entitle the holder hereof
to any voting rights or other rights as a stockholder of the Company.
7. Transfer of Warrant or Resale of Shares. The holder acknowledges
that it has obtained this Warrant for investment and not with the intention of
making any resale or distribution. The holder further acknowledges (a) that
neither this Warrant nor any of the shares of common stock obtainable under it
have been registered under the Securities Act of 1933 or any state securities
statute, and (b) that neither this Warrant nor any shares of common stock
obtained under it may be transferred without such registration or an opinion of
legal counsel acceptable to the Company that such transfer may be made without
such registration. The holder of this Warrant, by acceptance hereof, agrees to
give written notice to the Company before transferring this Warrant, or
transferring any common stock issued upon the exercise hereof, of such holder's
intention to do so, describing briefly the manner of any proposed transfer and
accompanied by an opinion of legal counsel, in form and substance satisfactory
to the Company, that the transfer may lawfully be made. Promptly upon receiving
such written notice and opinion, the Company shall present copies thereof to the
Company's legal counsel and to counsel to the original purchaser of this
Warrant. If in the opinion of each such counsel the proposed transfer may be
effected without registration or qualification under any Federal or State law,
the Company, as promptly as practicable, shall notify such holder of such
opinion, whereupon such holder shall be entitled to transfer this Warrant or to
dispose of shares of common stock received upon the previous exercise of this
Warrant, provided that an appropriate legend may be endorsed on this Warrant or
the certificates for such shares respecting restrictions upon transfer thereof
necessary or advisable in the opinion of the Company's legal counsel to prevent
further transfers which would be in violation of the Securities Act of 1933.
If in the opinion of either of the counsel referred to in this
paragraph 7 hereof, the proposed transfer or disposition of shares described in
the written notice given pursuant to this paragraph 7 may not be effected
without registration or qualification of this Warrant or the shares of common
stock issued on the exercise hereof, the Company shall promptly give written
notice thereof to the holder hereof, and such holder will limit its activities
in respect to such as, in the opinion of both such counsel, are permitted by
law.
IN WITNESS WHEREOF, WTC Industries, Inc. has caused this Warrant to be
signed by its duly authorized officers and dated March 22, 1996.
WTC INDUSTRIES, INC.
By
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Chief Executive Officer
EXHIBIT B
PROMISSORY NOTE
$900,000 March 22, 1996
For Value Received, Robert C. Klas, Sr. (the "Debtor") hereby promises
to pay to the order of WTC Industries, Inc. at its office in Minneapolis,
Minnesota or such other address as the holder hereof may specify, in lawful
money of the United States of America, the principal sum of Nine Hundred
Thousand Dollars ($900,000), without interest.
The indebtedness evidenced by this note shall be repaid in three
installments of $300,000 each which shall be due and payable on each of April
15, May 15 and June 15, 1996.
The Debtor shall have the right to prepay this Note, in whole or in
part, without premium or penalty.
The Debtor hereby waives presentment, notice of nonpayment, protest and
notice of protest, and agrees to pay all costs of collection (including
reasonable attorney's fees) of the holder of this Note in the event the Debtor
defaults in making any payment due hereunder, and such costs of collection shall
be owed whether or not suit is instituted. This Note shall be governed by the
laws of the State of Minnesota.
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Robert C. Klas, Sr.
