<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
--------------------------
NICOLLET PROCESS ENGINEERING, INC.
(Name of Registrant as Specified In Its Charter)
NICOLLET PROCESS ENGINEERING, INC.
(Name of Person(s) Filing Proxy Statement)
--------------------------
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1 Title of each class of securities to which transaction applies:
---------------------------------------
2 Aggregate number of securities to which transaction applies:
---------------------------------------
3 Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
---------------------------------------
4 Proposed maximum aggregate value of transaction:
---------------------------------------
5 Total fee paid:
---------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1 Amount Previously Paid:
---------------------------------------
2 Form, Schedule or Registration Statement No.:
---------------------------------------
3 Filing Party:
---------------------------------------
4 Date Filed:
<PAGE>
1998 ANNUAL MEETING
NICOLLET PROCESS ENGINEERING, INC.
420 NORTH FIFTH STREET
FORD CENTRE, SUITE 1040
MINNEAPOLIS, MINNESOTA 55401
TO THE SHAREHOLDERS OF NICOLLET PROCESS ENGINEERING, INC.:
You are cordially invited to attend our Annual Meeting of Shareholders to
be held on February 5, 1998, at 3:30 p.m., local time, at the Marriott Hotel --
City Center, 30 South Seventh Street, Minneapolis, Minnesota.
The formal Notice of Meeting, Proxy Statement and form of proxy are
enclosed.
Whether or not you plan to attend the meeting, please date, sign and return
the enclosed proxy in the envelope provided as soon as possible so that your
vote will be recorded.
Very truly yours,
/s/ Pierce A. McNally
Pierce A. McNally
CHAIRMAN OF THE BOARD
December 23, 1997
PLEASE SIGN, DATE AND RETURN
THE ENCLOSED PROXY PROMPTLY
TO SAVE THE COMPANY THE EXPENSE
OF ADDITIONAL SOLICITATION.
<PAGE>
NICOLLET PROCESS ENGINEERING, INC.
420 NORTH FIFTH STREET
FORD CENTRE, SUITE 1040
MINNEAPOLIS, MINNESOTA 55401
------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 5, 1998
-----------------------------
TO THE SHAREHOLDERS OF NICOLLET PROCESS ENGINEERING, INC.:
Notice is hereby given that the Annual Meeting of Shareholders of Nicollet
Process Engineering, Inc. will be held on February 5, 1998, at 3:30 p.m., local
time, at the Marriott Hotel -- City Center, 30 South Seventh Street,
Minneapolis, Minnesota, for the following purposes:
1. To elect five directors to serve for the ensuing year or until their
successors are elected and qualified;
2. To ratify the appointment of Ernst & Young LLP, certified public
accountants, as independent auditors for the Company for the year
ending August 31, 1998; and
3. To consider and act upon such other matters as may properly come
before the meeting or any adjournment thereof.
The close of business on December 12, 1997 has been fixed as the record
date for the determination of shareholders who are entitled to vote at the
meeting or any adjournments thereof.
By Order of the Board of Directors,
/s/ Kristine L. Gabel
Kristine L. Gabel
SECRETARY
December 23, 1997
- --------------------------------------------------------------------------------
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. NO ADMISSION
TICKET OR OTHER CREDENTIALS WILL BE NECESSARY. IF YOU DO NOT PLAN TO ATTEND THE
MEETING, PLEASE BE SURE YOU ARE REPRESENTED AT THE MEETING BY MARKING, SIGNING,
DATING AND MAILING YOUR PROXY IN THE REPLY ENVELOPE PROVIDED.
- --------------------------------------------------------------------------------
2
<PAGE>
NICOLLET PROCESS ENGINEERING, INC.
420 NORTH FIFTH STREET
FORD CENTRE, SUITE 1040
MINNEAPOLIS, MINNESOTA 55401
-------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 5, 1998
-------------------
INTRODUCTION
The Annual Meeting of Shareholders (the "Annual Meeting") of Nicollet
Process Engineering, Inc. (the "Company") will be held on February 5, 1998, at
3:30 p.m., local time, at the Marriott Hotel -- City Center, 30 South Seventh
Street, Minneapolis, Minnesota, or at any adjournment or adjournments thereof,
for the purposes set forth in the Notice of Annual Meeting of Shareholders.
A proxy card is enclosed for your use. You are solicited on behalf of the
Board of Directors to SIGN AND RETURN THE PROXY CARD IN THE ACCOMPANYING
ENVELOPE. No postage is required if mailed within the United States. The cost
of soliciting proxies, including the preparation, assembly and mailing of the
proxies and soliciting material, as well as the cost of forwarding such material
to the beneficial owners of the Company's Common Stock, will be borne by the
Company. Directors, officers and regular employees of the Company may, without
compensation other than their regular compensation, solicit proxies by
telephone, telegraph or personal conversation. The Company may reimburse
brokerage firms and others for expenses in forwarding proxy materials to the
beneficial owners of Common Stock.
Any shareholder giving a proxy may revoke it at any time prior to its use
at the Annual Meeting either by giving written notice of such revocation to the
Secretary of the Company, by filing a duly executed proxy bearing a later date
with the Secretary of the Company, or by appearing at the Annual Meeting and
filing written notice of revocation with the Secretary of the Company prior to
use of the proxy. Proxies will be voted as specified by shareholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
PROPOSALS SET FORTH IN THE NOTICE OF MEETING.
The Company expects that this proxy material will first be mailed to
shareholders on or about December 23, 1997.
3
<PAGE>
VOTING OF SHARES
Only holders of Common Stock of record at the close of business on December
12, 1997 will be entitled to vote at the Annual Meeting. On December 12, 1997,
the Company had 4,635,195 outstanding shares of Common Stock, each such share
entitling the holder thereof to one vote on each matter to be voted on at the
Annual Meeting.
The presence at the Annual Meeting, in person or by proxy, of the holders
of fifty percent (50%) of the outstanding shares of Common Stock entitled to
vote at the meeting (2,317,598 shares) is required for a quorum for the
transaction of business. In general, shares of Common Stock represented by a
properly signed and returned proxy card will be counted as shares present and
entitled to vote at the Annual Meeting for purposes of determining a quorum,
without regard to whether the card reflects abstentions (or is left blank) or
reflects a "broker non-vote" on a matter (I.E., a card returned by a broker on
behalf of its beneficial owner customer that is not voted on a particular matter
because voting instructions have not been received and the broker has no
discretionary authority to vote).
The election of a nominee for director and any other proposals that may
come before the Annual Meeting described in this Proxy Statement require the
approval of a majority of the shares present and entitled to vote in person or
by proxy on that matter (and at least a majority of the minimum number of votes
necessary for a quorum to transact business at the meeting). Shares represented
by a proxy card including any broker non-votes on a matter will be treated as
shares not entitled to vote on that matter, and thus will not be counted in
determining whether that matter has been approved. Shares represented by a
proxy card voted as abstaining on any of the other proposals will be treated as
shares present and entitled to vote that were not cast in favor of a particular
matter, and thus will be counted as votes against that matter.
ELECTION OF DIRECTORS
PROPOSAL 1
NOMINATION
The Restated Bylaws of the Company provide that the number of directors
must be at least one, or such other number as may be determined by the Board of
Directors or by the shareholders at a regular meeting. The Board of Directors
(the "Board") has set its size at five and has nominated the five individuals
below to serve as directors of the Company until the next annual meeting of the
shareholders or until their respective successors have been elected and
qualified. All of the nominees are members of the current Board. Mr. Richard
Koontz, a current member of the Board, is not standing for reelection. Mr.
Boszhardt was elected as a member of the Board to fulfill the Company's
obligations under certain Subscription Agreements dated November 7, 1997, among
the Company and several investors. See "Certain Transactions."
The Board recommends a vote FOR the election of each of the nominees listed
below. In absence of other instructions, the proxies will be voted FOR the
election of the nominees named below. If prior to the meeting the Board should
learn that any nominee will be unable to serve by reason of death, incapacity or
other unexpected occurrence, the proxies that otherwise would have been voted
for such nominee will be voted for such substitute nominee as selected by the
Board. Alternatively, the proxies, at the Board's discretion, may be voted for
such fewer number of nominees as results from such death, incapacity or other
unexpected occurrence. The Board has no reason to believe that any of the
nominees will be unable to serve.
4
<PAGE>
INFORMATION ABOUT DIRECTORS AND NOMINEES
The following information has been furnished to the Company, as of November
20, 1997, by the existing directors of the Company and by persons who have been
nominated by the Board to serve as directors for the ensuing year.
NAME OF DIRECTOR OR NOMINEE AGE PRINCIPAL OCCUPATION
- --------------------------- --- ----------------------------------------
Pierce A. McNally 48 Chairman of the Board and Director of
Corporate Development of the Company
Robert A. Pitner 54 President, Chief Executive Officer and
Chief Financial Officer of the Company
Thomas W. Bugbee (1) 46 President of Bugbee and Associates, Inc.
Benton J. Case, Jr. (1) 61 President of Rainy River Resources, Inc.
Richard W. Koontz (1)(2) 48 President of Object Technologies Group,
Inc.
Andrew K. Boszhardt, Jr. 41 Chief Executive Officer of Oscar Capital
Management, LLC
- ------------------------
(1) Member of the Audit Committee and Compensation Committee.
(2) Mr. Koontz is not standing for reelection to the Board.
PIERCE A. MCNALLY has served as the Director of Corporate Development of
the Company since October 1, 1996, the Chairman of the Board since May 1995 and
has been a director since 1992. He also currently serves as Chairman of the
Board and Chief Executive Officer of Minnesota American, Inc., a Minnetonka,
Minnesota based holding company which owns LockerMate Corporation, a developer
of locker products. From January 1992 until October 1994, he was President and
Co-Chief Executive Officer of Minnesota American, Inc. Prior to that time, Mr.
McNally was an officer and director of Midwest Communications, Inc., a
communications company. He also serves on the board of directors of Imaging
Institute, Inc., Rainy River Resources, Inc. ("Rainy River") and Minnesota
American, Inc.
ROBERT A. PITNER has served as President, Chief Executive Officer and
director of the Company since April 1991, and as Chief Financial Officer since
April 1997. From April 1991 to May 1995, Mr. Pitner also served as the
Company's Chief Financial Officer. From June 1989 to April 1991, Mr. Pitner was
a Vice President at Wiken Advertising and Promotion, a consulting firm
specializing in "high tech" industries. From 1988 to 1989, he was President and
Chief Operating Officer of Springboard Software, Inc., a software company.
Prior to 1988, Mr. Pitner spent twenty years in the banking industry in various
executive positions, most recently as a senior executive at First Bank System.
THOMAS W. BUGBEE joined the Company's Board of Directors in 1988. He has
been the Chief Financial Officer of Datalog, Inc., a medical
technology/information company, since January 1, 1997. Mr. Bugbee has also been
the President of Bugbee and Associates, Inc., a corporate finance advisory
services company, since January 1996 when he founded the company. From November
1991 through
5
<PAGE>
January 1996, Mr. Bugbee was the President of Bugbee, Anton and Associates,
Inc., a corporate finance advisory services company. In addition, Mr. Bugbee
served as the Chief Financial Officer of D.V. Talbott, a high technology
fabric company, from June 1995 through June 1996. From 1989 to 1991, he was
a Senior Manager for Ernst & Young LLP and managed the Minneapolis Debt
Restructuring Group.
RICHARD W. KOONTZ has served on the Board of Directors since January 1996
and was the Chief Technology Officer from August 31, 1996 through December 31,
1997. Since May 1994, Mr. Koontz has also been the President of Object
Technologies Group, Inc., a software engineering services company. From October
1993 through April 1994, he served as the General Manager of Poliac Research
Corporation. Mr. Koontz was also a real estate developer and investor from 1989
through 1993. Prior to his employment with Poliac Research Corporation, Mr.
Koontz served as President of Reldom Nevada, Inc., a computer software company
of on-line casino management and player tracking systems and President of W.R.
Casey, Inc., a computer software company for the health insurance industry. Mr.
Koontz has also served as a Controller and Vice President of Reldom Corporation,
a light manufacturing company.
BENTON J. CASE, JR., joined the Company's Board of Directors in 1988.
Since May 1978, Mr. Case has been employed by Rainy River, a company engaged in
oil and gas exploration. Mr. Case has served as President of Rainy River since
February 1991 and prior to that time, held the position of Treasurer. Mr. Case
has also served as Vice President of Future Care Systems, Inc. since 1994. From
October 1990 until March 1994, he was a general partner of Skylark II, a venture
capital firm. Skylark II was sold to Rainy River in 1994. Mr. Case is also a
member of the Board of Directors of Future Care Systems, Inc.
ANDREW K. BOSZHARDT, JR., joined the Company's Board of Directors in
November 1997. Mr. Boszhardt currently serves as the Chief Executive Officer of
Oscar Capital Management, LLC, an investment advisory firm, which he co-founded
in December 1996. From 1980 through November 1996, Mr. Boszhardt was employed
by Goldman Sachs & Co. where he served as a Vice President and was active in
securities brokerage and asset management.
INFORMATION ABOUT THE BOARD AND ITS COMMITTEES
The business and affairs of the Company are managed by the Board, which met
seven (7) times during the fiscal year ended August 31, 1997. Committees
established and maintained by the Board of Directors include the Audit Committee
and the Compensation Committee.
The members of the Audit Committee during fiscal 1997 were Messrs. Bugbee,
Case and Koontz. The function of the Audit Committee is to review Company
financial statements, oversee the financial reporting and disclosures prepared
by management, make recommendations regarding the Company's financial controls,
and confer with the Company's outside auditors. The Audit Committee met one
time during fiscal 1997. Messrs. Bugbee and Case will serve as members of the
Audit Committee for fiscal 1998.
The members of the Compensation Committee during fiscal 1997 were Messrs.
Bugbee, Case and Koontz. The function of the Compensation Committee is to set
the compensation for those officers who are also directors, and set the terms
of, and grants of awards under, the Company's 1990 Stock Option Plan (the "1990
Plan") and the 1995 Amended and Restated Stock Incentive Plan (the "1995 Plan")
and to act on other matters relating to compensation as it deems appropriate.
The Compensation Committee met twice during fiscal 1997. Messrs. Bugbee and
Case will serve as members of the Compensation Committee for fiscal 1998.
6
<PAGE>
All of the Directors attended 75% or more of the aggregate meetings of the
Board and all committees on which they served during fiscal 1997.
DIRECTOR COMPENSATION
The Company does not pay fees to the members of the Board of Directors
except to Mr. McNally, who, pursuant to a written agreement, currently receives
compensation of $52,500 per year, plus a discretionary bonus. See "Executive
Compensation and Other Benefits--Employment and Consulting Agreements." On
August 7, 1997, for service for fiscal 1997, all of the non-employee directors
of the Company were each granted an option to purchase 12,500 shares of Common
Stock at a price of $0.72 per share, and Messrs. McNally, Pitner and Koontz were
each granted an option to purchase 10,000 shares of Common Stock at a price of
$0.72 per share. All of these options are fully vested and remain exercisable
until August 7, 2002.
PRINCIPAL SHAREHOLDERS AND BENEFICIAL OWNERSHIP OF MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of the Common Stock of the Company as of November 20, 1997 unless
otherwise noted (a) by each shareholder who is known by the Company to own
beneficially more than 5% of the outstanding Common Stock, (b) by each director,
(c) by each executive officer named in the Summary Compensation Table and (d) by
all executive officers and directors of the Company as a group.
SHARES OF COMMON
STOCK
BENEFICIALLY OWNED (1)
----------------------
PERCENT OF
NAME AMOUNT CLASS (2)
- ---- ------ ----------
Oscar Capital Management Group (3). . . . . . . . . . 1,043,500 22.2%
David L. Chamberlain (4). . . . . . . . . . . . . . . 432,167 9.3%
Pierce A. McNally (5)(6). . . . . . . . . . . . . . . 617,828 12.7%
Robert A. Pitner (6)(7) . . . . . . . . . . . . . . . 617,828 12.7%
Richard W. Koontz (8) . . . . . . . . . . . . . . . . 89,598 1.9%
Benton J. Case, Jr. (9) . . . . . . . . . . . . . . . 161,265 3.4%
Thomas W. Bugbee (10) . . . . . . . . . . . . . . . . 127,790 2.7%
Andrew K. Boszhardt, Jr. (11) . . . . . . . . . . . . 1,043,500 22.2%
All executive officers and directors as a
group (6 persons) (12). . . . . . . . . . . . . . . . 2,039,981 38.9%
- ---------------------------
(1) Except as otherwise indicated in the footnotes to this table, the persons
named in the table have sole voting and investment power with respect to
all shares of Common Stock. Shares of Common Stock subject to options or
warrants currently exercisable or exercisable within 60 days are deemed
outstanding for computing the percentage of the person holding such options
but are not deemed outstanding for computing the percentage of any other
person.
(2) Based on 4,635,195 shares of Common Stock outstanding as of November 20,
1997.
7
<PAGE>
(3) Includes 233,333 shares of Common Stock held by Oscar Capital Management,
LLC ("Oscar Capital"); 621,500 shares of Common Stock held by Andrew K.
Boszhardt, Jr.; 72,000 shares of Common Stock issuable upon the exercise of
outstanding warrants held by Mr. Boszhardt; and 116,667 shares of Common
Stock held by Anthony Scaramucci. Does not include 399,167 shares of
Common Stock held by David R. Chamberlain or 33,000 shares of Common Stock
issuable upon the exercise of outstanding warrants held by Mr. Chamberlain.
Mr. Boszhardt and Mr. Scarmucci are the sole members of Oscar Capital. Mr.
Chamberlain is a former co-worker and long-time friend of Mr. Boszhardt and
is not otherwise affiliated with Oscar Capital or Mr. Boszhardt. The
address for Oscar Capital is 900 Third Avenue, New York, NY 10022.
(4) Includes 33,000 shares of Common Stock issuable upon the exercise
of outstanding warrants. Does not include 233,333 shares of Common
Stock held by Oscar Capital; 621,500 shares of Common Stock held by
Andrew K. Boszhardt, Jr.; 72,000 shares of Common Stock issuable upon
the exercise of outstanding warrants held by Mr. Boszhardt; or 116,667
shares of Common Stock held by Anthony Scaramucci. The address for Mr.
Chamberlain is 260 Wrights Road, Aspen, Colorado 81612.
(5) Includes 77,500 shares of Common Stock beneficially owned by
Robert A. Pitner who shares voting power with Mr. McNally regarding the
election of a director of the Company. See footnote (6). Also
includes: (i) 74,000 shares of Common Stock issuable to Mr. McNally
upon the exercise of outstanding stock options; (ii) 258,500 shares of
Common Stock issuable to Mr. Pitner upon the exercise of outstanding
stock options; (iii) 4,000 shares of Common Stock issuable upon
exercise of outstanding warrants held by Mr. McNally's wife as
custodian for the benefit of their daughters as to which Mr. McNally
disclaims any beneficial interest; and (iv) an aggregate of 16,000
shares of Common Stock held by Mr. McNally's wife as custodian for the
benefit of their daughters as to which Mr. McNally disclaims any
beneficial interest. Mr. McNally's address is 420 North Fifth Street,
Ford Centre, Suite 1040, Minneapolis, MN 55401.
(6) Messrs. McNally and Pitner are parties to a Letter Agreement dated
November 7, 1997 (the "Letter Agreement") whereby they agreed to vote
all shares of Common Stock of the Company held by them "FOR" the
election of Andrew K. Boszhardt, Jr., or his nominee, as director of
the Company. Under the rules of the Securities and Exchange
Commission, Messrs. Pitner and McNally may be deemed to share voting
power over each other's shares of Common Stock. Messrs. Pitner and
McNally disclaim any beneficial interest in the other person's shares
of Common Stock.
(7) Includes 187,828 shares of Common Stock beneficially owned by
Pierce A. McNally who shares voting power with Mr. Pitner regarding the
election of a director of the Company. See footnote (6). Also
includes: (i) 258,500 shares of Common Stock issuable to Mr. Pitner
upon the exercise of outstanding stock options; (ii) 74,000 shares of
Common Stock issuable to Mr. McNally upon the exercise of outstanding
options; (iii) 4,000 shares of Common Stock issuable upon exercise of
outstanding warrants held by Mr. McNally's wife as custodian for the
benefit of their daughters as to which Mr. McNally disclaims any
beneficial interest; and (iv) an aggregate of 16,000 shares of Common
Stock held by Mr. McNally's wife as custodian for the benefit of their
daughters as to which Mr. McNally disclaims any beneficial interest.
The address for Mr. Pitner is 420 North Fifth Street, Ford Centre,
Suite 1040, Minneapolis, MN 55401
(8) Includes 85,000 shares of Common Stock issuable upon the exercise
of outstanding stock options; and 4,598 shares of Common Stock of
Nicholson Systems, Inc. ("NSI"). Mr. Koontz is the
8
<PAGE>
President and Chief Executive Officer of NSI. Mr. Koontz, together with
his wife, own all of the outstanding shares of capital stock of NSI.
(9) Includes 60,000 shares of Common Stock issuable upon the exercise
of outstanding stock options; 46,501 shares of Common Stock held by Mr.
Case's wife, as to which Mr. Case disclaims any beneficial interest;
17,430 shares of Common Stock held by Rainy River Resources, Inc.
("Rainy River"); and 4,000 shares of Common Stock held by FCSI Business
Development Corp. ("FCSI"). Mr. Case is an executive of Rainy River
and the Vice President of FCSI. Mr. Case disclaims beneficial ownership
of shares held by Rainy River and FCSI except to the extent of his
pecuniary interest therein.
(10) Includes 62,500 shares of Common Stock issuable upon the exercise of
outstanding stock options.
(11) Includes 72,000 shares of Common Stock issuable upon the exercise
of outstanding warrants; 233,333 shares of Common Stock held by Oscar
Capital; and 116,667 shares of Common Stock held by Anthony Scaramucci.
Does not include 399,167 shares of Common Stock held by David R.
Chamberlain or 33,000 shares of Common Stock issuable upon the exercise
of outstanding warrants held by Mr. Chamberlain.
(12) Includes 540,000 shares of Common Stock issuable upon exercise of
outstanding options; 438,529 shares of Common Stock held by directors'
spouses, a director's spouse as custodian for the benefit of their
children, and certain affiliates of directors, as to which such
directors disclaim any beneficial interest except to the extent of
their pecuniary interest therein; 72,000 shares of Common Stock
issuable upon exercise of outstanding warrants held by a director; and
4,000 shares of Common Stock issuable upon exercise of outstanding
warrants held by a director's wife as custodian for his children, as to
which such director disclaims any beneficial interest.
EXECUTIVE COMPENSATION AND OTHER BENEFITS
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth the cash and non-cash compensation for each
of the last two fiscal years awarded to or earned by the Chief Executive Officer
of the Company and the three other most highly compensated executive officers of
the Company whose salary and bonus exceeded $100,000 in the last fiscal year
(the "Named Executive Officers"). Other than Mr. Pitner and Mr. Koontz, no
other executive officer of the Company had salary and bonus which exceeded
$100,000 in the fiscal year ended August 31, 1997.
9
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES
-------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS($)(1) OPTIONS (#) COMPENSATION
- --------------------------- ---- ---------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Robert A. Pitner 1997 $108,000 $ 34,000 26,000 --
PRESIDENT AND CHIEF EXECUTIVE 1996 108,000 50,000 7,500 --
OFFICER
Richard A. Koontz 1997 $100,000 $ 950 10,000 --
FORMER CHIEF TECHNOLOGY 1996 -- -- 75,000 $74,644.50(3)
OFFICER(2)
</TABLE>
- ---------------------------
(1) Cash bonuses for services rendered have been included as compensation for
the year earned, even though such bonuses were actually paid in the
following year.
(2) Mr. Koontz was the Company's Chief Technology Officer from August 31, 1996
through December 31, 1997.
(3) Represents an aggregate of $62,000 paid to Object Technologies Group, Inc.
("OTG") and $12,644.50 representing the value of a stock grant of 4,598
shares of Common Stock to NSI. Mr. Koontz and his wife are the sole
owners of each of OTG and NSI.
OPTION GRANTS AND EXERCISES
The following tables summarize option grants and exercises during the
year ended August 31, 1997 to or by the Named Executive Officers and the
potential realizable value of the options held by such persons at August 31,
1997.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------------------------
PERCENT OF TOTAL
NUMBER OF OPTIONS GRANTED TO
SECURITIES UNDERLYING EMPLOYEES IN EXERCISE OR BASE EXPIRATION
NAME OPTIONS GRANTED(#)(1) FISCAL YEAR PRICE ($/S) DATE
- ---- --------------------- ------------------ ---------------- ----------
<S> <C> <C> <C> <C>
Robert A. Pitner 16,000 (2) 8.1% $2.63 10/07/01
10,000 (3) 5.1% $0.72 08/07/02
Richard W. Koontz 10,000 (3) 5.1% $0.72 08/07/02
</TABLE>
- ------------------
(1) The options listed above were granted under the 1995 Plan. Options become
exercisable under the 1995 Plan so long as the executive remains in the
employ of the Company or one of its subsidiaries. To the extent not
already exercisable, options granted under the 1995 Plan become immediately
exercisable in full upon certain changes in control of the Company,
provided that, upon such a change in control, the Compensation Committee
may determine that holders of
10
<PAGE>
options granted under the 1995 Plan will receive cash in an amount equal to
the excess of the fair market value of such shares immediately prior to the
effective date of such change in control of the Company over the exercise
price of such options. See "Executive Compensation and Other Benefits --
Stock Option Plans."
(2) These options were granted on October 7, 1996 and are exercisable in full.
(3) These options were granted on August 7, 1997 and are exercisable in full.
AGGREGATED OPTION EXERCISES IN
LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FY-END (#)(1) AT FY-END ($)(2)
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ------------ ------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
Robert A. Pitner 37,500 $57,422 (3) 258,500/0 $1,200/$0
Richard W. Koontz -- -- 85,000/0 $1,200/$0
</TABLE>
- ------------------
(1) The exercise price of options granted under the Company's 1995 Plan
may be paid in cash or in shares of the Company's Common Stock valued at
fair market value on the date of exercise. In addition, the exercise
price of options granted may be paid pursuant to a cashless exercise
procedure under which the executive provides irrevocable instructions to
a brokerage firm to sell the purchased shares and to remit to the
Company, out of the sale proceeds, an amount equal to the exercise price
plus all applicable withholding taxes. Under the 1995 Plan, the
Compensation Committee also has the discretion to grant a supplemental
cash bonus to an optionee in connection with the grant or exercise of an
option or both the grant and exercise of an option. See "Executive
Compensation and Other Benefits -- Stock Option Plans."
(2) Value is based on the difference between the fair market value of
the Common Stock on August 29, 1997 and the exercise price of the
options. The fair market value of the Common Stock as of August 29,
1997, was calculated as the average of the bid and asked prices as
quoted on the Nasdaq Small Cap Market ($0.84). The exercise price of
outstanding options range from approximately $0.72 to $3.00 per share.
(3) Value is based on the difference between the fair market value of
the Common Stock on the date of exercise ($2.53) and the exercise price
of the options ($1.00).
STOCK OPTION PLANS
The Company's 1995 Amended and Restated Stock Incentive Plan (the "1995
Plan"), which was approved by the Company's shareholders in January 1996,
replaced the Company's 1990 Stock Option Plan (the "1990 Plan"). The 1995 Plan
provides for the grant to participating eligible recipients of the Company of
options to purchase Common Stock, restricted stock awards, performance units,
stock bonuses and stock appreciation rights.
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In the event a "change in control" of the Company occurs, then, if approved
by the Compensation Committee, (i) all outstanding options and stock
appreciation rights will become immediately exercisable in full and will remain
exercisable for the remainder of their terms, regardless of whether the
participant remains in the employ or service of the Company or any subsidiary,
(ii) all outstanding restricted stock awards will become immediately fully
vested, and (iii) all outstanding performance units and stock bonuses will vest
and/or continue to vest in the manner determined by the Compensation Committee
and reflected in the award agreement. In addition, the Compensation Committee,
without the consent of any affected participant, may determine that some or all
participants holding outstanding options will receive cash in an amount equal to
the excess of the fair market value immediately prior to the effective date of
such change in control over the exercise price per share of the options.
For purposes of the 1995 Plan, a "change in control" of the Company will be
deemed to have occurred, among other things, upon (i) the sale or other
disposition of substantially all of the assets of the Company, (ii) the approval
by the Company's shareholders of a plan or proposal for the liquidation or
dissolution of the Company, (iii) a merger or consolidation to which the Company
is a party if the Company's shareholders immediately prior to the merger or
consolidation beneficially own, immediately after the merger or consolidation,
securities of the surviving corporation representing (A) more than 50%, but not
more than 80%, of the combined voting power of the surviving corporation's then
outstanding securities, unless the transaction was approved in advance by the
directors as of the effective date of the 1995 Plan or by any persons who
subsequently become directors and whose election or nomination was approved by a
majority vote of the directors comprising the Board as of the effective date of
the 1995 Plan (the "Incumbent Directors"), or (B) 50% or less of the combined
voting power of the surviving corporation's then outstanding securities
(regardless of any approval by the Incumbent Directors), (iv) any person
becoming, after the effective date of the 1995 Plan, the beneficial owner of (A)
20% or more, but not 50% or more, of the combined voting power of the Company's
Common Stock, unless the transaction resulting in such ownership was approved in
advance by the Incumbent Directors, or (B) 50% or more of the combined voting
power of the Company's outstanding securities (regardless of any approval by the
Incumbent Directors), or (v) the Incumbent Directors cease for any reason to
constitute at least a majority of the Board, or (vi) any other change in control
of the Company of a nature that would be required to be reported pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended.
The terms of the 1990 Plan are substantially similar to those of the 1995
Plan, although the 1990 Plan does not provide for the grant of performance
units, restricted stock awards or stock bonuses. Also, under the 1990 Plan, in
the event of a dissolution or liquidation of the Company, a merger (other than a
merger effecting a reincorporation of the Company in another state) or
consolidation in which the Company is not the surviving corporation, or a
transaction in which another corporation becomes the owner of 50% or more of the
total combined voting power of all classes of stock of the Company, all
outstanding options and stock appreciation rights will become immediately
exercisable in full and will remain exercisable for the remainder of their
terms; provided, however, that such acceleration of exercisability shall not
apply to a given option or stock appreciation right if any surviving or
acquiring corporation agrees to assume such option or stock appreciation right
in connection with the merger, consolidation, or transaction or agrees to
substitute a new option satisfying the requirements of Section 425(a) of the
Internal Revenue Code of 1986, as amended, or to substitute a new stock
appreciation right.
EMPLOYMENT AND CONSULTING AGREEMENTS
The Company entered into an employment agreement in April 1991, as modified
and amended on July 31, 1994, and as of October 26, 1995, with its President and
Chief Executive Officer, Robert A. Pitner (the "Pitner Employment Agreement")
that provides for an annual base salary of $108,000, which
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amount may be increased by the Board of Directors, and a discretionary bonus,
payable in cash, stock options or any other manner, with the amount and terms
to be determined by the Board of Directors. Under the terms of the Pitner
Employment Agreement, Mr. Pitner was granted stock options for (i) the
purchase of 100,000 shares of Common Stock at an exercise price of $1.00 per
share exercisable until July 31, 2004; (ii) the purchase of 50,000 shares of
Common Stock at an exercise price of $2.00 per share, exercisable until
August 31, 2004; and (iii) the purchase of 50,000 shares of Common Stock at
an exercise price of $2.50 per share, exercisable until August 31, 2005. The
Pitner Employment Agreement contains provisions providing for the assignment
of inventions by Mr. Pitner, the maintenance of confidential information of
the Company and is subject to a two-year non-competition clause in the event
of termination of employment. The Pitner Employment Agreement may be
terminated (i) by either party upon twelve month's notice for whatever
reason; and (ii) by the Company immediately in the event Mr. Pitner defaults
or does not perform. Upon termination, if Mr. Pitner does not obtain
employment consistent with his training and education because of the
non-competition clause, the Company must compensate Mr. Pitner until he
secures employment at a rate of 100% of his current base salary for the first
twelve months of separation from the Company.
On May 1, 1995, the Company entered into an agreement with Pierce A.
McNally providing for Mr. McNally's services as Chairman of the Board of the
Company on an as needed, up to full time basis. For Mr. McNally's services, he
currently receives compensation of $52,500 per year plus a bonus payable at the
discretion of the Board of Directors. As part of the agreement, on September 1,
1995, Mr. McNally was granted options to purchase 10,000 shares of Common Stock
at an exercise price of $3.00 for five years. These options were immediately
vested and remain exercisable until September 1, 2000. On October 26, 1995, the
Company amended this agreement to provide for the future grant of additional
options to purchase 15,000 shares should the Board of Directors so determine.
The Board of Directors granted such options to Mr. McNally on October 7, 1996.
These options have an exercise price of $2.63 and are fully exercisable until
October 7, 2001.
Effective August 31, 1996, the Company entered into a three (3) year
employment agreement with its Chief Technology Officer, Richard A. Koontz (the
"Koontz Agreement") that provides for an annual base salary of $100,000, which
amount may be increased by the Chief Executive Officer and the Board of
Directors. In addition to the annual salary, Mr. Koontz is entitled to an
annual bonus of one-third of one percent of the amount of net sales of the
Company that exceed certain thresholds. The threshold for fiscal 1997 was $2.0
million of net sales. Mr. Koontz is also entitled to an additional bonus of
fifty percent (50%) of his salary to the extent that net sales exceed twelve
million dollars in any consecutive twelve month period during the term of the
Koontz Agreement. Mr. Koontz was also granted options to purchase 75,000 shares
of the Company's Common Stock at an exercise price of $2.75 per share (the
"Koontz Option"). The Koontz Option will become exercisable on a cumulative
basis with respect to 25,000 shares on each anniversary of the Koontz Agreement.
The Koontz Agreement contains provisions providing for the assignment of
inventions by Mr. Koontz, the maintenance of confidential information of the
Company and is subject to a one-year non-competition clause in the event of
termination of employment. The Koontz Agreement may be terminated (i) by either
party upon thirty (30) days notice for whatever reason; (ii) by the Company
immediately for cause (including fraud, misrepresentation, theft, embezzlement
or breach of the Koontz Agreement); or (iii) automatically upon Koontz's death
or permanent disability. Upon termination for any reason other than termination
for cause, the Company must pay Mr. Koontz, in one lump sum, an amount equal to
six (6) months salary, plus all non-contingent compensation earned through the
termination date, including any bonus payments.
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RATIFICATION OF SELECTION OF
INDEPENDENT AUDITORS
PROPOSAL NO. 2
PROPOSAL
The Board has appointed Ernst & Young LLP, independent certified public
accountants, as auditors of the Company for the year ending August 31, 1998.
Although it is not required to do so, the Board wishes to submit the selection
of Ernst & Young LLP to the shareholders for ratification. Representatives of
Ernst & Young LLP will be present at the Annual Meeting, will have an
opportunity to make a statement if they so desire, and will be available to
respond to appropriate questions.
BOARD OF DIRECTORS' RECOMMENDATION
The Board recommends a vote FOR ratification of the appointment of Ernst &
Young LLP as auditors of the Company for the year ending August 31, 1998. The
affirmative vote of the holders of a majority of shares of Common Stock of the
Company present in person or by proxy at the Annual Meeting, assuming a quorum
is present, is necessary for approval. Unless a contrary choice is specified,
proxies solicited by the Board will be voted FOR the ratification of Ernst &
Young LLP.
CERTAIN TRANSACTIONS
On December 4, 1995, Pierce A. McNally personally guaranteed a $200,000
note to BankWindsor. The unsecured note matured May 4, 1996 and had an interest
rate at prime plus 2%. The loan provided capital to fund the Company's on-going
operations. In exchange for Mr. McNally's guarantee, he was granted options to
purchase up to 4,000 shares of Common Stock at a price of $3.30 per share,
exercisable until May 4, 2000. Mr. McNally also received a cash fee of 20 basis
points per month on the outstanding balance of the loan until retirement or
maturity, including extensions, if any. Mr. McNally received a total of $1,500
under this arrangement. In addition, the Company has agreed to indemnify and
hold Mr. McNally harmless from and against any liability, loss, cost or expense
associated with his guarantee of the loan. The loan to BankWindsor was paid in
full in April 1996.
On August 31, 1996, NSI, a company wholly owned by Mr. Koontz, a director
and executive officer of the Company, and his wife, received a stock grant of
4,598 shares of Common Stock of the Company for providing software consulting
services to the Company. In addition, OTG, a company wholly owned by Mr. Koontz
and his wife, received cash payments aggregating approximately $62,000 for the
year ending August 31, 1996 for such services.
On November 7, 1997, the Company entered into Subscription Agreements (the
"Subscription Agreements") with certain investors (collectively, the
"Investors"), including Andrew K. Boszhardt, Jr., a member of the Company's
Board of Directors, pursuant to which the Investors agreed to purchase an
aggregate of 1,166,667 shares of Common Stock at purchase price of $0.60 per
share. As a condition to the Investors' purchase of such shares, members of the
Company's Board of Directors, were required to purchase an aggregate of 100,000
shares of Common Stock (the "Director Shares") at a purchase price of $0.60 per
share. In connection with the Subscription Agreements, the Company agreed to
allow Mr. Boszhardt, or his designee, to nominate one director (such nominee,
the "Boszhardt Nominee") for election as a member of the Board of Directors of
the Company at each annual meeting of shareholders or any other meeting at which
directors are elected (such director, the "Boszhardt Director"). The Company
agreed to use its good faith, reasonable efforts to ensure that the Boszhardt
Director will
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continue as a member of the Board of Directors for such period as the
Investors and/or any affiliates of Mr. Boszhardt own, in the aggregate,
beneficially and of record not less than 500,000 shares of Common Stock of
the Company (the "Minimum Holding Period"). Additionally, in connection with
the Subscription Agreements, Messrs. McNally and Pitner entered into a Letter
Agreement dated as of November 7, 1997 with Mr. Boszhardt, pursuant to which
Messrs. McNally and Pitner agreed to vote all of the shares of Common Stock
beneficially held by them to elect Mr. Boszhardt, or his nominee, as a member
of the Board of Directors of the Company for such Minimum Holding Period.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, and persons who own more than
10% of the Company's Common Stock, to file with the Securities and Exchange
Commission (the "SEC") initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Executive
officers, directors and greater than 10% shareholders are required by SEC
regulations to furnish the Company with copies of all Section 16(a) reports they
file. To the Company's knowledge, based on review of the copies of such reports
furnished to the Company during the period ended August 31, 1997, and based on
representations by such persons, all Section 16(a) filing requirements
applicable to its executive officers, directors, and greater than 10%
shareholders were complied with, except that: (i) each of Messrs. Bugbee, Case
and Koontz filed late Form 5s reporting stock option grants received by them on
August 7, 1997; (ii) Mr. Pitner filed a late Form 5 reporting stock option
grants received by him on August 7, 1997 and October 7, 1997; and (iii) Mr. Case
filed a late Form 4 reporting three transactions which took place in December
1996 and January 1997. All such required reports have subsequently been filed.
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Proposals of shareholders intended to be presented in the proxy materials
relating to the next Annual Meeting must be received by the Company at its
principal executive offices on or before August 25, 1998.
OTHER MATTERS
The management of the Company does not intend to present other items of
business and knows of no items of business that are likely to be brought before
the Annual Meeting except those described in this Proxy Statement. However, if
any other matters should properly come before the Annual Meeting, the persons
named in the enclosed proxy will have discretionary authority to vote such proxy
in accordance with their best judgment on such matters.
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MISCELLANEOUS
THE COMPANY WILL FURNISH WITHOUT CHARGE A COPY OF ITS ANNUAL REPORT ON
FORM 10-KSB (EXCLUSIVE OF EXHIBITS) FOR THE FISCAL YEAR ENDED AUGUST 31, 1997 TO
EACH PERSON WHO WAS A SHAREHOLDER OF THE COMPANY AS OF DECEMBER 12, 1997, UPON
RECEIPT FROM ANY SUCH PERSON OF A WRITTEN REQUEST FOR SUCH AN ANNUAL REPORT.
SUCH REQUEST SHOULD BE SENT TO: 420 NORTH FIFTH STREET, FORD CENTRE, SUITE
1040, MINNEAPOLIS, MINNESOTA 55401; ATTN.: SHAREHOLDER INFORMATION.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Kristine L. Gabel
Kristine L. Gabel
SECRETARY
Minneapolis, Minnesota
December 23, 1997
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NICOLLET PROCESS ENGINEERING, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Robert A. Pitner and Pierce A. McNally, and
each of them, as Proxies, each with full power to appoint his substitute, and
hereby authorizes each of them to represent and to vote, as designated below,
all the shares of Common Stock of Nicollet Process Engineering, Inc. held of
record by the undersigned on December 12, 1997, at the Annual Meeting of
Shareholders to be held on February 5, 1998, or any adjournment, thereof.
<TABLE>
<S> <C> <C> <C>
1. ELECTION OF DIRECTORS. / / FOR all nominees listed below / / AGAINST all nominees listed
(EXCEPT AS MARKED TO THE CONTRARY below
BELOW)
</TABLE>
Pierce A. McNally
Robert A. Pitner
Thomas W. Bugbee
Benton J. Case, Jr.
Andrew K. Boszhardt, Jr.
(INSTRUCTION: TO VOTE AGAINST ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE
NOMINEE'S NAME.)
<TABLE>
<S> <C> <C> <C>
2. PROPOSAL TO RATIFY THE SELECTION OF ERNST & YOUNG LLP, CERTIFIED PUBLIC ACCOUNTANTS, AS INDEPENDENT
ACCOUNTANTS OF THE COMPANY FOR THE FISCAL YEAR ENDING AUGUST 31, 1998.
</TABLE>
/ / FOR / / AGAINST / / ABSTAIN
<TABLE>
<S> <C> <C> <C>
3. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before
the meeting.
</TABLE>
(CONTINUED ON REVERSE SIDE)
<PAGE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSAL 2 AND FOR ALL NOMINEES NAMED IN PROPOSAL 1 ABOVE. Please
sign exactly as name appears below. When shares are held by joint tenants, both
should sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such. If a corporation, please sign in full
corporate name by President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
Dated: _________________, ________
__________________________________
Signature
__________________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
