SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
NICOLLET PROCESS ENGINEERING, INC.
(Name of Issuer)
COMMON STOCK, NO PAR VALUE
(Title of Class of Securities)
654085 10 9
(CUSIP Number)
Karen Kusko, Esq.
c/o Oscar Capital Management LLC
900 Third Avenue
New York, NY 10022
(212) 750-6915
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
November 7, 1997
(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
disclosures provided in a prior cover page.
The information required on 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>
SCHEDULE 13D
CUSIP No.: 654085 10 9 Page 5
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
David R. Chamberlin
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
|X|(a)
| |(b)
3 SEC USE ONLY
4 SOURCE OF FUNDS*
PF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEM 2(d) or 2(e)
|_|
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
NUMBER OF 7 SOLE VOTING POWER
SHARES 399,167
BENEFICIALLY
OWNED BY
EACH 8 SHARED VOTING POWER
REPORTING
PERSON WITH 9 SOLE DISPOSITIVE POWER
399,167
10 SHARED DISPOSITIVE POWER
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
432,167 (includes 33,000 warrants)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
|_|
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.52%
14 TYPE OF REPORTING PERSON*
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
<PAGE>
This Amendment No. 1 amends the reporting of the number of shares
beneficially owned by David R. Chamberlin and Items 5 and 7 of the Schedule 13D
Statement dated November 17, 1997, to correctly reflect the number of shares
owned by the Reporting Persons and to file relevant agreements and forms of
agreements as exhibits thereto.
Item 5. Interest in Securities of the Issuer.
(a) As of November 7, 1997, shares of the Common Stock of the
Issuer were beneficially owned as follows:
Common Stock Warrants
Andrew K. Boszhardt, Jr. 621,500 72,000
Anthony Scaramucci 116,667
David R. Chamberlin 399,167 33,000
Oscar Capital Management LLC 233,333
The Issuer currently has 4,535,194 shares of Common Stock outstanding.
The persons named in answer to Item 2(a) hereof own an aggregate of
1,475,167 shares of Common Stock, constituting 32.53% of the Common Stock which
will then be outstanding.
(b) See the answer to Item 2 hereof.
(c) On November 7, 1997, each of the reporting persons referred to
in Item 5 entered into a subscription agreement (each a "Subscription
Agreement", and, collectively, the "Subscription Agreements") with the Company
to purchase an aggregate of 1,166,667 shares of the Company's common stock, no
par value (the "Shares"), at a purchase price of $.60 per share. Each of the
individual subscribers purchased the following amounts of Shares pursuant to the
Subscription Agreements:
Andrew K. Boszhardt, Jr. 500,000
Anthony Scaramucci 116,667
David R. Chamberlin 316,667
Oscar Capital Management LLC 233,333
The Subscription Agreements provide for certain preemptive rights for the
purchasers. On November 7, 1997, the parties to the Subscription Agreements also
entered into a registration rights agreement with respect to the Shares.
Concurrently with the purchase of the Shares, Mr. Pierce McNally and Mr. Robert
Pitner, each an officer with the Company, entered into a letter agreement
agreeing to vote or cause their respective transferees to vote, during the
Minimum Holding Period (so long as the reporting persons referred to in Item 5
own in the aggregate a minimum of 500,000 Shares), in favor of electing Mr.
Boszhardt to the Board of Directors of the Company.
Item 7. Material Filed as Exhibits.
The following exhibits relating to the transactions that led to
the filing of the Schedule 13D on November 17, 1997 are filed
herewith:
1. Joint Reporting Agreement and Power of Attorney. (Exhibit A)
2. Subscription Agreement. (Exhibit B)
3. Registration Rights Agreement. (Exhibit C)
4. Letter Agreement regarding election of Andrew K. Bozhardt,
Jr., to the Board of Directors of the Company. (Exhibit D)
<PAGE>
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.
Dated: November 17, 1997
OSCAR CAPITAL MANAGEMENT LLC
for itself
By: *
Andrew K. Boszhardt, Jr.
*
Andrew K. Boszhardt, Jr.
*
Anthony Scaramucci
*
David R. Chamberlin
OSCAR CAPITAL MANAGEMENT LLC
As Attorney in Fact
By: /S/ ANDREW K. BOSZHARDT, JR*
Andrew K. Boszhardt, Jr.
<PAGE>
EXHIBIT A
JOINT REPORTING AGREEMENT
AND
POWER OF ATTORNEY
WHEREAS, the statement or amended statement of Schedule 13D (the "Joint
Statement") to which this joint reporting agreement and power of attorney (the
"Agreement") is an exhibit is being filed on behalf of two or more persons
(collectively, the "Reporting Persons"); and
WHEREAS, the Reporting Persons prefer to file the Joint Statement on behalf
of all of the Reporting Persons rather than individual statements on Schedule
13D on behalf of each of the Reporting Persons;
NOW THEREFORE, each of the undersigned hereby agrees as follows with each
of the other Reporting Persons:
1. Each of the Reporting Persons is responsible for the timely filing of
the Joint Statement and any amendments thereto.
2. Each of the Reporting Persons is responsible for the completeness and
accuracy of the information concerning such Reporting Person contained in the
Joint Statement.
3. None of the Reporting Persons is responsible for the completeness or
accuracy of the information concerning the other Reporting Persons contained in
the Joint Statement, unless such Reporting Person knows or has reason to believe
that such information is inaccurate.
4. The undersigned agrees that the Joint Statement is, and any amendment
thereto will be, filed on behalf of each of the Reporting Persons.
5. The undersigned hereby appoint Oscar Management LLC, as attorney-in-fact
for the undersigned with authority to execute and deliver on behalf of the
undersigned any and all documents (including any amendments thereto) required to
be filed by the undersigned or otherwise executed and delivered by the
undersigned pursuant to the Securities Exchange Act of 1934, as amended, the
Securities Act of 1933, as amended, all other federal, state and local
securities and corporation laws, and all regulations promulgated thereunder.
6. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same document.
Dated: November 17, 1997
ANDREW K. BOSZHARDT, JR.
(Name of Reporting Person)
/S/ ANDREW K. BOSZHARDT, JR.
(Signature)
ANTHONY SCARAMUCCI
(Name of Reporting Person)
/S/ ANTHONY SCARAMUCCI
(Signature)
DAVID R. CHAMBERLIN
(Name of Reporting Person)
/S/ DAVID R. CHAMBERLIN
(Signature)
AGREED TO
AND ACCEPTED:
OSCAR CAPITAL MANAGEMENT LLC
By: /S/ ANDREW K. BOSZHARDT, JR.
Name: Andrew K. Boszhardt, Jr.
Title: Chief Executive Officer
EXHIBIT B
FORM OF SUBSCRIPTION AGREEMENT
NOTE: FOUR COMPLETED AND EXECUTED COPIES OF THIS
SUBSCRIPTION AGREEMENT MUST BE RETURNED, AND THE
ENTIRE PURCHASE PRICE FOR THE COMMON
STOCK SUBSCRIBED FOR MUST BE PAID AS SET FORTH HEREIN,
TO SUBSCRIBE FOR THIS OFFERING.
Name of Subscriber: ______________________
Number of Shares of Common Stock,
no par value, at $0.60 per Share: ______________
Aggregate Purchase Price: $_____________
* * * * * * * *
SUBSCRIPTION AGREEMENT, dated as of November 7, 1997, by and among Nicollet
Process Engineering, Inc., a Minnesota corporation (the "Company"), and certain
investors executing counterparts of this Agreement (collectively, the
"Investors," or each individually, an "Investor").
W I T N E S S E T H
WHEREAS, the Company desires to sell to the Investors and the Investors
desire to purchase from the Company, an aggregate of 1,166,667 shares of the
Company's common stock, no par value per share (the "Common Stock"), at a
purchase price of $0.60 per share; and
WHEREAS, the Company's business and financial performance is described in
the Company's Annual Report on Form 10-KSB for the fiscal year ended August 31,
1996 and its Quarterly Reports on Forms 10-QSB for the periods ended November
30, 1996, February 28, 1997 and May 31, 1997 (collectively, the "Reports") as
filed with the Securities and Exchange Commission (the "Commission"). Copies of
such Reports have been provided to each of the Investors;
NOW, THEREFORE, the parties hereto agree as follows:
1. SUBSCRIPTION AND PAYMENT.
Subject to the terms and conditions herein set forth, the undersigned (the
"Investor") hereby subscribes for the number of shares of Common Stock set forth
above.
The Investor agrees to deliver to the Company at the Closing (as defined
below) the aggregate purchase price of $___________, payable in immediately
available funds, for the shares of Common Stock subscribed for hereby.
2. CLOSING.
The closing (the "Closing") of the purchase and sale of the Common Stock
(the "Offering") shall occur on November 7, 1997 or the earliest date
thereafter on which the closing conditions specified in Sections 7 and 8 of this
Agreement shall have been satisfied or waived (any such date, the "Closing
Date"); provided, however, that if the Closing has not occurred by November 10,
1997, then this Agreement shall terminate and the Closing shall not take place.
At the Closing, the Company will deliver to the Investor two executed copies of
this Agreement with instructions to the Company's transfer agent to issue the
shares of Common Stock subscribed for hereby.
3. TERMINATION OF OFFERING.
If (a) the Company or the Investor shall have reasonably determined that an
event has occurred or a condition exists which could materially and adversely
affect the business or proposed business of the Company and that such
possibility warrants termination of the Offering, (b) the conditions to the
Closing of the Offering are not satisfied or (c) the Investor elects to withdraw
its subscription hereunder, the Offering will be terminated, and the Company
will not issue the Common Stock and the Company will not be entitled to payment
of the purchase price for the Common Stock.
4. REPRESENTATIONS AND WARRANTIES BY INVESTOR.
The Investor hereby represents and warrants to the Company that:
(a) it is an "accredited investor" as that term is defined in
Rule 501(a) under the Securities Act of 1933, as amended (the "Act");
(b) it has the requisite knowledge and experience in financial
and business matters to be capable of evaluating the merits and risks
of an investment in the Company;
(c) it understands that the Common Stock involves risk of loss
of such Investor's investment;
(d) its financial situation is such that such Investor is able
to bear the economic risks of its investment made hereby and at the
present time and in the foreseeable future could afford a complete loss
of such investment;
(e) it has received and read the Reports and has evaluated the
risks of investing in the Company;
(f) it has been given the opportunity to ask questions of, and
receive answers from, the Company concerning the terms and conditions
of the Offering or such other information as it desired in order to
evaluate its investment;
(g) it understands that an investment in the Company involves
certain risks and it has taken full cognizance of and understands such
risks;
(h) it understands that the Common Stock has not been
registered under the Act and agrees that the Common Stock may not be
sold, offered for sale, transferred, pledged, hypothecated or otherwise
disposed of except in compliance with the Act and subject to the terms
of this Subscription Agreement;
(i) it understands that no federal or state agency has made
any finding or determination as to the fairness for investment in, or
any recommendation or endorsement of, the Common Stock;
(j) the Common Stock herein subscribed for is being acquired
by it in good faith solely for its own account, for investment purposes
and not with a view to subdivision, distribution or resale. It will not
sell or otherwise dispose of any shares of the Common Stock, unless:
i) it shall have advised the Company in writing that it
intends to dispose of such shares of Common Stock in a
manner to be described in such advice, and counsel
reasonably acceptable to the Company shall have delivered to
the Company an opinion that such transfer may be lawfully
made without registration under the Act or under any
applicable securities laws of any jurisdiction; or
ii) a registration statement on an appropriate form
under the Act, or a post-effective amendment to such
registration statement, covering the proposed sale or other
disposition of such shares of Common Stock shall be in
effect under the Act and such shares of Common Stock or the
proposed sale or other disposition thereof shall have been
registered or qualified under applicable securities laws of
any jurisdiction.
The Investor undertakes to notify the Company as soon as practicable of any
material change in any representation, warranty or other information relating to
the Investor set forth herein which occurs prior to the Closing in order to
insure compliance of the Investor with the terms of this Agreement.
The Investor acknowledges and agrees that the certificates representing the
Common Stock shall bear the following legend (unless not required under the
Act):
"The securities represented by this certificate have not been
registered under the Securities Act of 1933 or under any state
securities law and may not be sold, exchanged, hypothecated or
transferred in any manner except in compliance with federal and state
securities laws and that certain Subscription Agreement dated as of
November 7, 1997 among the Company and various investors in the
Company."
The Investor also acknowledges that the Company may place a stop transfer
order against transfer of the Common Stock, if necessary in the Company's
reasonable judgment in order to assure compliance by the Investor with the terms
of this Agreement.
The Investor represents and warrants that this Agreement has been duly and
validly executed by the Investor and constitutes the legal, valid and binding
agreement of the Investor, enforceable in accordance with its terms, subject to
the effect of bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and similar laws relating to or affecting creditors' rights generally
and court decisions with respect thereto.
If the Investor is an individual, the Investor represents and warrants that
the Investor has the legal capacity to enter into this Agreement and to carry
out the transactions contemplated herein. If the Investor is a partnership,
corporation, trust or other entity, the Investor represents and warrants that
(i) the individual executing this Agreement has appropriate authority to act on
behalf of the Investor and (ii) the Investor was not specifically formed to
acquire the Common Stock subscribed for hereby. If the Investor is a
partnership, the Investor further represents that the funds to make this
investment were not derived from additional capital contributions of the
partners of such partnership made solely for the purpose of enabling such
partnership to purchase the Preferred Stock and that such partnership was not
formed solely for the purpose of enabling such partnership to purchase the
Preferred Stock.
If the Investor is an individual, the Investor represents and warrants that
the Investor is a bona fide resident of the state of ___________. If the
Investor is a partnership, corporation, trust or other entity, the Investor
represents and warrants that its is organized under the laws of the state of
_____________ and its principal place of business is located in the state of
______________.
The foregoing representations, warranties, agreements, undertakings and
acknowledgments are made by the Investor with the intent that they be relied
upon in determining its suitability as a purchaser of Common Stock.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to the Investor that:
(a) The Company has duly filed with the Commission all reports
required by the Securities Exchange Act of 1934 (the "Exchange Act").
The Company has furnished to the Investor a true and correct copy of
the Reports. Each Report does not, as of the date on which it was
signed, contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(b) The financial statements (including the related notes) of
the Company included in the Reports present fairly the financial
position of the Company as of the dates indicated and its results of
operations for the periods specified therein. All such financial
statements have been prepared in accordance with United States
generally accepted accounting principles ("GAAP") on a basis
consistently applied; provided, however, that the unaudited financial
statements are subject to normal recurring year- end audit adjustments
and do not contain all footnotes required by GAAP.
(c) The Company does not have any subsidiaries. The Company
has been duly organized and is validly existing as a corporation in
good standing under the laws of its jurisdiction of organization, with
full power and authority (corporate and other) to own its properties
and conduct its business as described in the Reports, and is duly
qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which the character of the business
conducted by it or the location of the properties owned or leased by it
makes such licenses, certificates and permits from governmental
authorities necessary for the conduct of its business as described in
the Reports, except for those jurisdiction in which a failure to do so
would not have a material adverse effect on the business, operations
and financial condition of the Company.
(d) The authorized capital stock of the Company consists of
(i) 3,000,000 shares of preferred stock, no par value, no shares of
which are issued and outstanding, and (ii) 12,000,000 shares of Common
Stock, no par value, of which ___________ shares are issued and
outstanding. Except as set forth herein and except for stock options
and warrants outstanding, as set forth on SCHEDULE 5(D) hereto, there
are no additional shares of capital stock of the Company issued and
outstanding as of the date hereof and there are no other securities of
the Company issued and outstanding that are convertible into shares of
its capital stock. The Company has all requisite power and authority to
issue, sell and deliver the Common Stock subscribed for hereby in
accordance with and upon the terms and conditions set forth in this
Agreement; and all corporate action required to be taken by the Company
for the due and proper authorization, issuance, sale and delivery of
the Common Stock has been validly and sufficiently taken. The shares of
Common Stock currently issued and outstanding are, and the shares of
Common Stock being subscribed for hereby, when issued, delivered and
paid for in accordance with this Agreement, will be, duly authorized,
validly issued, fully paid and nonassessable.
(e) Except as set forth on SCHEDULE 5(E) hereto, subsequent to
the respective dates as of which information is given in the Reports,
the Company has not incurred any material liability or obligation,
direct or contingent, or entered into any material transaction, whether
or not in the ordinary course of business, and there has not been any
material change on a consolidated basis in the capital stock, or any
material increase in the short-term debt or long-term debt, or any
material adverse change in the condition (financial or other),
business, key personnel, properties or results of operations of the
Company.
(f) The Company is not in violation of its Articles of
Incorporation or Bylaws or in default in the performance of any
material obligation contained in any material agreement, indenture or
other instrument. The performance by the Company of its obligations
under this Agreement and under that certain Registration Rights
Agreement among the Company and the Investors, dated as of the date
hereof (the "Registration Rights Agreement"), and the consummation of
the transactions herein and therein contemplated will not conflict with
or result in a breach of the Articles of Incorporation or Bylaws of the
Company, or any material agreement, material indenture or other
material instrument to which the Company is a party or by which it is
bound, or any law, rule, administrative regulation or decree of any
court or governmental authority having jurisdiction over the Company or
its properties, or result in the creation or imposition of any material
lien, charge, claim or encumbrance upon any property or asset of the
Company. No consent, approval, authorization or order of any court or
governmental authority is required in connection with the consummation
of the transactions contemplated by this Agreement and the Registration
Rights Agreement. Except as set forth on SCHEDULE 5(F) hereto, the
rights granted to the Investors hereunder and under the Registration
Rights Agreement do not in any way conflict with and are not
inconsistent with any rights granted to the holders of the Company's
securities or debt instruments.
(g) The Common Stock subscribed for hereunder, when issued,
will conform to the description thereof contained in the Reports.
Except as described in the Reports or as set forth in this Agreement,
including on SCHEDULE 5(G) hereto, there are no preemptive rights or
other rights to subscribe for or to purchase, or any restriction upon
the voting or transfer of, any shares of Common Stock pursuant to the
Company's Articles of Incorporation or Bylaws or any agreement or other
instrument to which the Company is a party. Neither the Offering nor
the sale of the Common Stock as contemplated in this Agreement gives
rise to any anti-dilution rights, other than those which have been
waived, relating to the Common Stock (other than any such rights as are
granted to the Investors).
(h) The Company has full right, power and authority to enter
into this Agreement and the Registration Rights Agreement and this
Agreement and the Registration Rights Agreement have been duly
authorized, executed and delivered by the Company and constitute the
legal, valid and binding agreements of the Company enforceable against
the Company in accordance with their respective terms, subject to the
effect of bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance and similar laws relating to or affecting
creditors' rights generally and court decisions with respect thereto.
(i) Except as otherwise stated in the Reports and as set forth
on SCHEDULE 5(I) hereto, (A) the Company has good and marketable title
(in fee simple, in the case of real property), free and clear of all
liens and encumbrances, to all of the real and personal property
described in the Reports as being owned by it, except for any liens and
encumbrances which are not material in the aggregate and do not
materially interfere with the conduct of the business of the Company,
and (B) has valid leases to the real property described in the Reports
as under lease to it with such exceptions as do not materially
interfere with the conduct of the business of the Company.
(j) Except as set forth in the Reports, there are no actions,
suits or proceedings pending before or by any court or governmental
agency or authority, or any arbitrator, which seek to restrain or
prohibit the consummation of the transactions contemplated hereby or
which might reasonably be expected to result in any material adverse
change in the condition (financial or other), business or results of
operations of the Company and, to the best of the Company's knowledge,
no such action, suit or proceeding has been threatened.
(k) The Company is not in violation of any law, ordinance,
governmental rule or regulation or court degree to which it may be
subject, which violation is likely to have a material adverse effect on
the condition (financial or other), business or results of operations
of the Company; and the Company has not failed to obtain any license,
permit, franchise or other governmental authorization necessary to the
ownership of its property or to the conduct of its business, which
failure to obtain is likely to have a material adverse effect on the
condition (financial or other), business or results of operations of
the Company.
(l) The Offering constitutes an exempted transaction under the
Act and under the laws of any state; provided, however, that the
representations and warranties of the Investors contained herein are
true and accurate. Neither the Company nor any of its employees or
other persons directly or indirectly affiliated with it has, either
directly or through an agent, participated in the organization or
management of any entity or has engaged or proposes during any time
after the Closing to engage in any other activity, in a manner or under
circumstances that would jeopardize the status of the Offering as an
exempted transaction under the Act or under the laws of any state in
which it is represented by the Company that the Offering may be made.
(m) No person is entitled to receive any commission, fee or
compensation from the Company for services rendered as placement agent
or lender in connection with the offer or sale of the Common Stock
pursuant to the Offering.
(n) No approval of the existing stockholders of the Company
is required for the Company to enter into this Agreement or the
Registration Rights Agreement or to effect the transactions
contemplated hereby or thereby.
(o) The Company has taken all actions required under Section
302A.673 of the Minnesota Business Corporation Act to approve the
transactions contemplated hereby or by the Registration Rights
Agreement.
6. COVENANTS OF THE COMPANY.
The Company covenants with the Investor that:
(a) The Company will apply the net proceeds from the sale of
the Common Stock for working capital and general corporate purposes.
(b) The Company will, so long as the Investor shall be the
holder of Common Stock, furnish to the Investor, (i) if the Company is
not required to file reports with the Commission pursuant to the
Exchange Act, (A) as soon as practicable after the end of each fiscal
year, an annual report with respect to such year (including financial
statements audited by independent public accountants) and (B) as soon
as practicable after the end of each quarterly period (other than the
last quarterly period) of each fiscal year, a statement (which need not
be audited) of the results of operations of the Company for such
period, (ii) promptly upon the filing thereof, copies of all reports
filed by the Company with the Commission pursuant to the Exchange Act
and, (iii) to the extent not otherwise furnished, any other documents
furnished to holders of publicly held shares of Common Stock.
(c) So long as the Investor shall be the holder of Common
Stock, the Company will permit, upon 48 hours prior notice, any person
designated by the Investor in writing, at the sole expense of the
Investor, to visit and inspect any of the properties and books of
account of the Company and to discuss its affairs, finances and
accounts with the principal officers of the Company, all at such
reasonable times during regular business hours and at such reasonable
intervals as the Investor may reasonably request; provided, that the
Company shall not be required to reveal trade secrets or information
not reasonably pertinent to an evaluation of the credit of the Company
or compliance with this Agreement; and provided further that the
Investor shall have entered into a confidentiality agreement with the
Company in the form of EXHIBIT 6(C) hereto.
(d) So long as the Investor shall be the holder of Common
Stock, the Company shall use its best efforts to continue its
existence, pay all applicable taxes and comply with all applicable
material laws.
(e) The Company undertakes to notify the Investor as soon as
practical of any material change in any representation, warranty or
other information relating to the Company set forth herein which occurs
prior to the Closing.
(f) Neither the Company nor any of its employees or other
persons directly or indirectly affiliated with it will engage in any
activity that would jeopardize the status of the Offering as an exempt
transaction under the Act or under the laws of any state in which the
Offering is made.
(g) For such period as the Investors and/or any other
Affiliate(s) (as defined below) of Andrew K. Boszhardt, Jr. or the
other Investors own, in the aggregate, beneficially and of record not
less than 500,000 shares (or, in the event the Company combines its
outstanding shares of Common Stock into a smaller number of shares of
Common Stock, such lesser number of shares as is the product of 500,000
multiplied by a fraction, the numerator of which shall be the aggregate
number of shares of Common Stock outstanding immediately subsequent to
such event and the denominator of which shall be the aggregate number
of shares of Common Stock outstanding immediately prior to such event)
of Common Stock of the Company (such period, the "Minimum Holding
Period"): (i) Mr. Boszhardt or his designee shall be entitled to
nominate one (1) director (such nominee, the "Boszhardt Nominee") for
election as a member of the Board of Directors of the Company at each
annual meeting of stockholders or any other meeting at which directors
are elected, and the Company shall include such nominee in the slate of
nominee directors recommended for election by the incumbent directors
and management; and (ii) in the event a Boszhardt Nominee is elected as
a member of the Board of Directors of the Company (such director, the
"Boszhardt Director"), the Company shall use its reasonable efforts in
good faith to ensure that such Boszhardt Director will continue as a
member of the Board of Directors. As used herein, "Affiliate" shall
mean, when used with respect to a specified person or entity, (x)
another person or entity that, either directly or indirectly through
one or more intermediaries, controls or is controlled by or is under
common control with the person or entity specified and (ii)
additionally, in the case of Andrew K. Boszhardt, Jr., any of his
immediate family members.
(h) If, during the Minimum Holding Period, the Company should
decide to issue and sell additional shares of any Common Stock of the
Company, or any warrants or securities convertible into shares of
Common Stock of the Company or other rights to subscribe for or to
purchase any shares of Common Stock of the Company, for consideration
(calculated as described below) of less than $5.00 per share, as
appropriately adjusted upon the occurrence of any event described in
clause (v) below, other than:
(i) securities sold to the public pursuant to a
registration statement filed under the Act or pursuant to
Regulation A under the Act, including any warrants or other
rights to purchase securities of the Company issued to
underwriters in connection with such offering, and
securities issuable upon exercise of such warrants or
rights;
(ii) securities awarded or issued in connection with
the grant, exercise or vesting of options or other incentive
awards to directors, officers, employees or consultants
pursuant to benefit plans adopted by the Company;
(iii) securities issued pursuant to subscriptions,
warrants, options, convertible securities or other rights
that are outstanding as of the date hereof;
(iv) securities issued in connection with a joint
venture, strategic investment or business combination; and
(v) securities issued in connection with any stock
split, stock dividend or recapitalization of the Company,
(all such capital stock, warrants, securities convertible into capital
stock and other rights, other than securities referred to in clauses
(i) through (v) above, being hereinafter sometimes collectively
referred to as "Additional Securities"), the Company shall first offer
to sell to each of the Investors, upon the same terms and conditions as
the Company is proposing to issue and sell such Additional Securities
to others such Investor's pro rata share (as defined below) of such
Additional Securities. Such offer shall be made by written notice given
to each such Investor and specifying therein the amount of the
Additional Securities being offered, the purchase price and other terms
of such offer. Such Investor shall have a period of 30 days from and
after the date of receipt by it of such notice within which to accept
such offer. If an Investor elects to accept such offer, in whole or in
part, such Investor shall so accept by written notice to the Company
given within such 30 day period and shall pay for such Additional
Securities at the same time as the other investors purchasing such
Additional Securities purchase such Additional Securities and on the
same terms. If an Investor fails to accept such offer in whole or in
part within such 30-day period, any of such Additional Securities not
purchased by such Investor pursuant to such offer may be offered for
sale to others by the Company for a period of 120 days from the last
day of such 30-day period, but only if such sales are made on terms no
more favorable than those set forth in the initial offer to such
Investor, free and clear of the restrictions imposed by this Section
6(h).
For purposes of this Section 6(h), an Investor's "pro rata
share" is the number of Additional Shares being offered (rounded to the
nearest whole share) multiplied by a fraction, the numerator of which
is the number of shares of Common Stock issued, or issuable upon the
exercise or conversion of rights, options or convertible securities
without the payment of any additional cash consideration or with the
payment of a nominal cash consideration, as the case may be
(collectively, "Fully Paid Securities"), to such Investor immediately
prior to the issuance of the Additional Securities being offered, and
the denominator of which is the total number of Fully Paid Securities
issued or issuable by the Company immediately prior to the issuance of
the Additional Securities.
For purposes of this Section 6(h), the "consideration"
received shall be deemed to be the amount received by the Company upon
the grant or issuance of such securities, without deduction for
expenses incurred or commissions paid or allowed, plus the amount of
additional consideration, if any, received or receivable upon the
conversion or exercise of any convertible securities, warrants or other
rights.
(i) The Company acknowledges that its representations,
warranties, agreements, undertakings and acknowledgments herein are
made by the Company with the intent that they be relied upon by each
Investor in determining whether to invest in the Common Stock.
(j) The Company shall enter into an indemnification agreement
with each person who is elected a Bozhardt Director upon substantially
the same terms as, and in no event upon terms less favorable than, the
indemnifications provided by the Company to its current directors.
7. CONDITIONS OF INVESTOR OBLIGATIONS.
The Investor's obligations under this Agreement are subject (i) to the
accuracy, in accordance with their terms, of the representations and warranties
of the Company made in Section 5 that are qualified as to materiality, and to
the accuracy, in all material respects, of the representations and warranties of
the Company made in Section 5 that are not so qualified, in each case as of the
date of this Agreement and as of the Closing as though made on and as of the
Closing Date, except to the extent such representations and warranties speak as
of an earlier date or except for transactions explicitly permitted by this
Agreement, (ii) to the performance by the Company of its other obligations under
this Agreement to be performed at or prior to the Closing and (iii) to the
following further conditions:
(a) At the Closing, the Investor shall have received the
favorable opinion of counsel to the Company, dated the Closing Date and
in form and substance satisfactory to the Investor, to the effect that:
i) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of
the State of Minnesota, with full power and authority to own
its properties and conduct its business as described in the
Reports.
ii) The authorized capital stock of the Company
consists of 3,000,000 shares of preferred stock, no par
value, and 12,000,000 shares of Common Stock, no par value.
The Company has all requisite power and authority to issue,
sell and deliver the Common Stock subscribed for hereby in
accordance with and upon the terms and conditions set forth
in this Agreement; and all corporate action required to be
taken by the Company for the due and proper authorization,
issuance, sale and delivery of the Common Stock has been
validly and sufficiently taken. Upon payment by the Investor
at the Closing of the purchase price for the shares of
Common Stock subscribed for hereby, such Common Stock will
be, upon issuance and delivery thereof, duly authorized,
validly issued, fully paid and nonassessable. There are no
preemptive or other rights to subscribe for or to purchase,
nor any restriction upon the voting or transfer of, any
shares of Common Stock pursuant to the Company's Articles of
Incorporation, Bylaws or any document filed as an exhibit to
the Reports, to which the Company is a party.
iii) The execution and delivery of this Agreement and
the Registration Rights Agreement and the consummation of
the transactions contemplated hereby and thereby do not
result in a violation of, or constitute a default under, the
Articles of Incorporation or Bylaws of the Company, or any
agreement, indenture or other instrument, filed as an
exhibit to the Reports, to which the Company is a party or
by which it may be bound, or to which any property of the
Company is subject, nor will the performance by the Company
of its obligations hereunder or under the Registration
Rights Agreement violate any law, rule, administrative
regulation or decree of any court, or any governmental
agency or authority having jurisdiction over the Company or
its properties (excluding state securities laws), or, to the
knowledge of such counsel, result in the creation or
imposition of any lien, charge, claim or encumbrance upon
any property or asset of the Company. No consent, approval,
authorization or other order of any court, governmental
agency or authority is required in connection with the
consummation of the transactions contemplated by this
Agreement and the Registration Rights Agreement, except such
as have been obtained hereunder and except for filings under
federal or state securities laws which filings have been
made at or prior to Closing.
iv) The Company has full legal right, power and
authority to enter into this Agreement and the Registration
Rights Agreement. This Agreement and the Registration Rights
Agreement have been validly authorized, executed and
delivered by the Company and constitute legal, valid and
binding agreements of the Company, enforceable in accordance
with their respective terms, subject to the effect of
bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance and similar laws relating to or
affecting creditors' rights generally and court decisions
with respect thereto (provided that no opinion need be
expressed with respect to (A) the application of equitable
principles in any proceeding, whether at law or in equity or
(B) as to the enforceability of indemnity and contribution
provisions under applicable securities laws for being void
as against principles of public policy).
v) Except as set forth in the Reports, to the best of
such counsel's knowledge, there are no actions, suits or
proceedings pending before or by any court or governmental
agency or authority, or any arbitrator, which seek to
restrain or prohibit the consummation of the transactions
contemplated hereby or which might reasonably be expected to
result in any material adverse change in the condition
(financial or other), business or results of operations of
the Company and, to the best of the such counsel's
knowledge, no such action, suit or proceeding has been
threatened.
vi) No approval of the existing stockholders of the
Company is required for the Company to enter into this
Agreement or the Registration Rights Agreement or to effect
the transactions contemplated hereby or thereby.
(vii) The Company has taken all actions required under
Section 302A.673 of the Minnesota Business Corporation Act
to approve the transactions contemplated hereby or by the
Registration Rights Agreement.
In expressing such opinion, such counsel may state (i) that,
as to questions of fact not independently established by such counsel,
such counsel has relied on certificates of the Company or its officers
and of public officials, (ii) that such opinion is limited to the laws
of the United States and the Laws of the State of Minnesota and (iii)
that, when reference is made in such opinion to "knowledge" or to what
is "known" to such counsel, such reference means the actual knowledge
of only those attorneys who have given substantive attention to the
representation of the Company and the preparation and negotiation of
this Agreement.
(b) At the Closing, the Investor shall have received a
certificate, dated the date thereof and signed by the Chief Executive
Officer and President of the Company, to the effect that:
i) The representations and warranties of the Company in
this Agreement are true and correct in all material
respects, as if made at and as of the Closing Date, and the
Company has complied with all the agreements and satisfied
all the conditions on its part to be performed or satisfied
at or prior to the Closing Date; and
ii) The signer of said certificate has carefully
examined the Reports and, after giving effect to all
amendments or supplements thereto, on the Closing Date, such
Reports do not include, except as set forth in such
certificate, any untrue statement of a material fact or omit
to state any material fact necessary to make the statements
therein not misleading.
(c) At or prior to Closing, Pierce McNally and Robert Pitner shall have
entered into a written agreement with Andrew K. Boszhardt, Jr. to the effect
that Messrs. McNally and Pitner shall agree to vote, during the Minimum Holding
Period, all shares of Common Stock held by them to elect the Boszhardt Nominee
as a member of the Board of Directors of the Company.
(d) At or prior to Closing, a majority of the members of the Board of
Directors shall have resolved to elect a Boszhardt Director on an interim basis
to the Board of Directors of the Company, until the next annual meeting of
stockholders of the Company.
(e) At or prior to Closing, the Company shall have entered into the
Registration Rights Agreement with the Investors which shall be in the form of
EXHIBIT 7(E) hereto.
(f) Concurrently with the Closing, the members of the Board of Directors of
the Company as of September 24, 1997 shall purchase collectively an aggregate of
100,000 shares of Common Stock for a purchase price of $0.60 per share.
If any of the conditions specified in this Section 7 have not been
fulfilled in all material respects when and as required by this Agreement to be
fulfilled, the Investor may cancel this Agreement and all its obligations under
this Agreement by notifying the Company of such cancellation in writing or by
telegram or by facsimile at any time at or before the Closing and any such
cancellation will be without liability or obligation of any party to any other
party (except in the case of willful breach).
8. CONDITIONS OF OBLIGATIONS OF THE COMPANY.
The Investor's obligations under this Agreement are subject (i) to the
accuracy, in accordance with their terms, of the representations and warranties
of the Investor made in Section 4 that are qualified as to materiality, and to
the accuracy, in all material respects, of the representations and warranties of
the Investor made in Section 4 that are not so qualified, in each case as of the
date of this Agreement and as of the Closing as though made on and as of the
Closing Date, except to the extent such representations and warranties speak as
of an earlier date or except for transactions explicitly permitted by this
Agreement, (ii) to the performance by the Investor of its other obligations
under this Agreement to be performed at or prior to the Closing and (iii) to the
following further conditions:
(a) All other Investors shall concurrently make the
Investments contemplated to be made in connection with this Offering.
(b) At the Closing, the Company shall have received a
certificate of the Investor, dated the date thereof, to the effect that
the representations and warranties of the Investor in this Agreement
are true and correct in all material respects, as if made at and as of
the Closing Date, and the Investor has complied with all the agreements
and satisfied all the conditions on its part to be performed or
satisfied at or prior to the Closing Date.
(c) At or prior to the Closing, the Investor shall have
executed the Registration Rights Agreement.
If any of the conditions specified in this Section 8 have not been
fulfilled in all material respects when and as required by this Agreement to be
fulfilled, the Company may cancel this Agreement and all its obligations under
this Agreement by notifying the Investor of such cancellation in writing or by
telegram at any time at or before the Closing and any such cancellation will be
without liability or obligation of any party to any other party (except in the
case of willful breach).
9. RULE 144.
The Company covenants that it will file the reports required to be filed by
it under the Act and the Exchange Act and the rules and regulations adopted by
the Commission thereunder (or, if it ceases to be required to file such reports,
it will, upon the request of the Investor, make publicly available other
information), and it will take such further action as the Investor may
reasonably request, all to the extent required from time to time to enable the
Investor to sell the Common Stock without registration under the Act within the
limitation of the exemptions provided by (a) Rule 144 under the Act, as such
Rule may be amended from time to time, or (b) any similar rule or regulation
hereafter adopted by the Commission. Upon the request of the Investor, the
Company will deliver to it a written statement as to whether the Company has
complied with such information disclosure and other requirements.
10. EXPENSES.
Each party hereto shall bear its own legal and other expenses incurred in
connection with this Offering.
11. NOTICES.
(a) Any notice required to be given or delivered to the
Investor shall be mailed first class, postage prepaid, return receipt
requested, to such Investor's address shown on the signature page
hereof.
(b) Any notice required to be given or delivered to the
Company shall be mailed first class, postage prepaid, return receipt
requested, to:
Nicollet Process Engineering, Inc.
420 North Fifth Street
Ford Centre, Suite 1040
Minneapolis, Minnesota 55401
Attn: Robert A. Pitner
with a copy to:
Oppenheimer Wolff & Donnelly
45 South Seventh Street
Suite 3400
Minneapolis, Minnesota 55402
Attn: Kristine L. Gabel, Esq.
12. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties and agreements hereunder shall survive execution of this Agreement
and delivery of the Common Stock for the periods specified under applicable law.
13. GOVERNING LAW. This Agreement and the rights and obligations of the
parties shall be governed by and construed in accordance with the laws of the
State of New York applicable to contracts made and to be performed wholly within
that State, without giving effect to principles of conflicts of law
14. PUBLICITY. The parties hereto will consult with each other as to the
form, substance and timing of any press release or other public disclosure with
respect to this Agreement or any of the transactions contemplated hereby, and no
such release or other public disclosure shall be made without the consent of the
other party, which shall not be unreasonably withheld or delayed; provided,
however, that the parties may make such disclosures as are required by law after
making reasonable efforts in the circumstances to consult in advance with the
other parties.
15. COUNTERPARTS. This Agreement may be executed in counterparts (including
executed counterparts delivered and exchanged by facsimile transmission) each of
which shall be deemed to constitute one and the same instrument.
16. WAIVER; AMENDMENT.
(a) Any provision of this Agreement may be amended or waived
if, and only if, (i) such amendment or waiver is in writing and, in the
case of an amendment, signed by the Company and the Investor and (ii)
in the case of a waiver, by the party against whom the waiver is to be
effective.
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative
and not exclusive of any rights or remedies provided by law.
17. ENTIRE AGREEMENT; ASSIGNMENT. This Agreement and the Registration
Rights Agreement and the other agreements contemplated hereby represent the
entire understanding of the parties hereto with reference to the transactions
contemplated hereby and supersede any and all other oral or written agreements
heretofore made. All terms and provisions of this Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement as of the date first above written.
OSCAR CAPITAL MANAGEMENT, LLC
Name of Subscriber
By: /S/ Andrew K. Boszhardt, Jr.
Name: Andrew K. Boszhardt, Jr.
Title: Chief Executive Officer
Address:
900 Third Avenue
New York, New York
10022
Tax Identification Number:
13-3918825
The terms of the foregoing including
the subscription described therein are
agreed to and accepted as of
the date first above written:
NICOLLET PROCESS ENGINEERING, INC.
By: /S/ Pierce McNally
Name: Pierce McNally
Title:
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement as of the date first above written.
Subscriber:
/S/ Andrew K. Boszhardt, Jr.
Name: Andrew K. Boszhardt, Jr.
Address:
900 Third Avenue
New York, New York
10022
Tax Identification Number:
13-3918825
The terms of the foregoing including
the subscription described therein are
agreed to and accepted as of
the date first above written:
NICOLLET PROCESS ENGINEERING, INC.
By: /S/ Pierce McNally
Name: Pierce McNally
Title:
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement as of the date first above written.
Subscriber:
/S/ Anthony Scaramucci
Name: Anthony Scaramucci
Address:
900 Third Avenue
New York, New York
10022
Tax Identification Number:
13-3918825
The terms of the foregoing including
the subscription described therein are
agreed to and accepted as of
the date first above written:
NICOLLET PROCESS ENGINEERING, INC.
By: /S/ Pierce McNally
Name: Pierce McNally
Title:
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement as of the date first above written.
Subscriber:
/S/ David R. Chamberlin
Name: David R. Chamberlin
Address:
260 Wrights Road
Aspen, CO.
81612
Tax Identification Number:
None
The terms of the foregoing including
the subscription described therein are
agreed to and accepted as of
the date first above written:
NICOLLET PROCESS ENGINEERING, INC.
By: /S/ Pierce McNally
Name: Pierce McNally
Title:
<PAGE>
EXHIBIT C
FORM OF REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement"), dated as of November
7, 1997, by and among Nicollet Process Engineering, Inc., a Minnesota
corporation (together with its successors, the "Company") and those persons or
entities designated as Investors on the signature pages hereto (the
"Investors").
The Company desires to grant to each of the Investors certain registration
rights with respect to the 1,166,667 shares (the "Shares") of the Company's
common stock, no par value (the "Common Stock"), sold to such Investors on
November 7, 1997 (the "Effective Date") pursuant to those certain Subscription
Agreements dated as of November 7, 1997 between the Company and each Investor,
respectively. Each Investor owns that number of Shares specified in SCHEDULE A
hereto.
Accordingly, the parties hereto hereby agrees as follows:
Section 1. DEFINITIONS. As used in this Agreement
the following terms shall have the following respective meanings:
"COMMISSION" shall mean the Securities and Exchange
Commission.
"COMMON STOCK" shall have the meaning given to such term in
the recitals hereto.
"EFFECTIVE DATE" shall have the meaning given to such term in
the recitals hereto.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended, or any federal statute or code which is a successor thereto.
"FORM S-1," "FORM S-2", "FORM S-3", "FORM SB-1" and "FORM
SB-2" shall mean the forms so designated, promulgated by the Commission for
registration of securities under the Securities Act, and any forms succeeding to
the functions of such forms, whether or not bearing the same designation.
"NASD" means the National Association of Securities Dealers,
Inc.
"NASDAQ" means the National Association of Securities
Dealers, Inc. Automated Quotation System.
"REGISTER," "REGISTERED" and "REGISTRATION" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and the declaration or ordering by the
Commission of effectiveness of such registration statement.
"REGISTRABLE SECURITIES" shall mean, collectively, as at any
particular time, (i) the Shares and (ii) any securities issued or issuable with
respect to the Shares by way of a stock dividend or stock split or in connection
with a combination of shares, recapitalization, merger, consolidation or other
reorganization; provided, however, that Registrable Securities shall not
include, at any particular time, any such Shares or securities which are
beneficially owned by an Investor who is not an "affiliate" (as such term is
defined under Rule 144) of the Company at such time and which Shares or
securities may be sold without restriction by such non-affiliate in reliance
upon paragraph (k) of Rule 144, as evidenced by an opinion of counsel to the
Company, addressed to the transfer agent of the Company, that such Shares or
securities, as the case may be, may be sold without restriction by such
non-affiliate pursuant to paragraph (k) of Rule 144.
"RULE 144" shall mean Rule 144 issued by the Commission under
the Securities Act, or any subsequent rule pertaining to the disposition of
securities without registration.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, or any federal statute or code which is a successor thereto.
"SHARES" shall have the meaning given to such term in the
recitals hereto.
"TRANSFER" shall mean any transfer, sale, assignment,
pledge, hypothecation or other disposition of any interest. "TRANSFEROR" and
"TRANSFEREE" shall have correlative meanings.
"UNDERWRITTEN REGISTRATION" or "UNDERWRITTEN OFFERING" shall
refer to any registration in which securities of the Company are sold or to be
sold pursuant to a firm commitment underwriting.
Section 2. DEMAND REGISTRATIONS.
(a) REQUESTS FOR DEMAND REGISTRATIONS.
(i) Subject to the limitations contained in the
following paragraphs of this Section 2, an Investor or any
group of Investors may, at any time commencing one year
after the Effective Date, give to the Company, pursuant to
this clause (i), a written request for the registration by
the Company under the Securities Act of all or any part of
the Registrable Securities of such Investors (each such
registration being herein called a "Demand Registration").
Within ten (10) days after the receipt by the Company of any
such written request, the Company will give written notice
of such registration request to all holders of Registrable
Securities.
(ii) Subject to the limitations contained in the
following paragraphs of this Section 2, after the receipt of
each such written request for a Demand Registration, (a) the
Company will be obligated and required to include in such
Demand Registration all Registrable Securities with respect
to which the Company shall receive from Investors holding
Registrable Securities, within thirty (30) days after the
date on which the Company shall have given to all such
Investors a written notice of registration request pursuant
to Section 2(a)(i) hereof, the written requests of such
Investors for inclusion in such Demand Registration, and (b)
the Company will use its best efforts in good faith to
effect within sixty (60) days after the expiration of such
thirty (30) day period the registration of all such
Registrable Securities. All written requests made by
Investors holding Registrable Securities pursuant to this
clause (ii) will specify the number of shares of Registrable
Securities to be registered and will also specify the
intended method of disposition thereof. Such method of
disposition shall, in any case, be an underwritten offering
if an underwritten offering is requested by the holders of a
majority in interest of the Registrable Securities to be
included in such Demand Registration.
(b) LIMITATIONS ON DEMAND REGISTRATIONS.
(i) The Investors holding Registrable Securities, as a
group, will be entitled to require the Company to effect,
pursuant to Section 2(a) hereof, (A) an unlimited number of
Demand Registrations on Form S-3 and (B) one (1) Demand
Registration on any of Form S-1, Form S-2, Form SB-1 or Form
SB-2 as may at the time of such request be available to the
Company; provided, however, that no registration under
Section 2(a) hereof may be demanded within six (6) months
after the completion of any other registration under Section
2(a) or Section 3(a) hereof. The Company will be obligated
to pay all Registration Expenses (as that term is defined in
Section 7 hereof) of each such registration which
constitutes a Demand Registration for purposes of this
Section 2.
(ii) The Company shall not be obligated or required to
effect any Demand Registration of any Registrable
Securities(A) pursuant to Section 2(b)(i)(A) hereof unless
and until the Investors shall have requested, pursuant to
Section 2(a)(ii) hereof, the inclusion in such Demand
Registration of not less than 1/5 of the Registrable
Securities or (B) pursuant to Section 2(b)(i)(B) hereof
unless and until the Investors shall have requested,
pursuant to Section 2(a)(ii) hereof, the inclusion in such
Demand Registration of not less than 500,000 shares of
Registrable Securities.
(iii) Any registration initiated by Investors as a
Demand Registration pursuant to Section 2(a) hereof shall
not, for purposes of this Section 2, count as a Demand
Registration unless and until such registration shall have
become and remained effective for at least eighteen months.
(iv) The Company may refuse to effect any Demand
Registration of any Registrable Securities pursuant to
Section 2(a) hereof for any ninety (90) day period following
receipt of any written request for registration if, in the
good faith judgment of the Board of Directors of the
Company, the filing of any registration statement during
such ninety (90) day period would adversely affect a
material proposed or pending acquisition, merger or other
similar corporate event to which the Company is or expects
to be a party; provided, however, that the Company may only
elect such refusal or cause a suspension pursuant to Section
5(a) hereof once within any consecutive twelve month period.
(c) EFFECTIVE REGISTRATION - EXPENSES. In any registration initiated by
Investors as a Demand Registration pursuant to Section 2(a) hereof, the Company
will pay all Registration Expenses (as defined in Section 7 hereof) of each such
registration regardless of whether such registration constitutes a Demand
Registration for purposes of this Section 2.
(d) RIGHTS TO PIGGYBACK ON DEMAND REGISTRATIONS.
(i) Subject to the provisions of Section 2(e) hereof,
the Company may include any of the Company's securities in
any registration initiated by Investors as a Demand
Registration pursuant to Section 2(a) hereof, provided, that
(A) such securities are of the same class as the Registrable
Securities to be included in such Demand Registration, and
(B) if such Demand Registration is an underwritten offering,
the Company shall have duly and properly agreed in writing
to sell its securities on the same terms and conditions as
shall apply to the Registrable Securities to be included in
such Demand Registration.
(ii) The Company shall not grant or agree to grant to
any persons any registration rights which will conflict or
be inconsistent in any respect with any of the provisions of
clause (i) of this Section 2(d). In the event of any such
conflict or inconsistency, the provisions of such clause (i)
shall in any case prevail and be controlling.
(e) PRIORITY ON DEMAND REGISTRATIONS. If any Demand Registration or any
registration effected pursuant to Section 2 hereof is an underwritten offering,
and the managing underwriters shall give written advice to the Company and the
Investors requesting such Demand Registration that, in the reasonable opinion of
such managing underwriters, marketing factors require a limitation on the total
number of securities to be underwritten (in this paragraph (e) called the
"Underwriters' Maximum Number"), then: (i) the Company will be obligated and
required to include in such registration that number of Registrable Securities
requested by the holders thereof to be included in such registration which does
not exceed the Underwriters' Maximum Number, and such number of Registrable
Securities shall be allocated PRO RATA among such holders requesting such Demand
Registration on the basis of the number of Registrable Securities requested to
be included therein by each such holder; (ii) if the Underwriters' Maximum
Number exceeds the number of Registrable Securities requested by the holders
thereof to be included in such registration, then, subject to Section 2(d)(i)
hereof, the Company will be entitled to include in such registration that number
of securities which other securityholders shall have requested be included in
such registration which shall not be greater than such excess, and such number
of securities shall be allocated among such securityholders in such proportion
as the Company and such securityholders may agree; and (iii) if the
Underwriters' Maximum Number exceeds the sum of the number of Registrable
Securities which the Company shall be required to include in such Demand
Registration and the number of securities which other securityholders have
requested to include in such Demand Registration, then, subject to Section
2(d)(i) hereof, the Company may include in such registration that number of
other securities which shall have been requested by the Company to be included
in such registration for the account of the Company and which shall not be
greater than such excess.
(f) SELECTION OF UNDERWRITERS. If any Demand Registration effected pursuant
to Section 2(b)(i)(B) hereof is an underwritten offering, or a best efforts
underwritten offering, the investment bankers and managing underwriters in such
registration shall be selected by a majority in interest of the Investors
requesting such Demand Registration, subject to the approval of the Company
(which approval will not be unreasonably withheld or delayed).
Section 3. PIGGYBACK REGISTRATIONS.
(a) RIGHTS TO PIGGYBACK.
(i) If (and on each occasion that) the Company proposes
to register any of its securities under the Securities Act,
either for the Company's own account or for the account of
any of its securityholders (including at the request of
Investors pursuant to Section 2 hereof), and provided that
(A) Registrable Securities are of the same class as the
securities to be included in such registration and, (B) if
such registration is an underwritten offering, the Investors
shall have duly and properly agreed in writing to sell their
securities on the same terms and conditions as shall apply
to the securities to be included in such registration (each
such registration being herein called a "Piggyback
Registration"), the Company will give written notice to all
Investors holding Registrable Securities of the Company's
intention to effect such Piggyback Registration not later
than the earlier to occur of (x) the tenth day following the
receipt by the Company of notice of exercise of any
registration rights by any persons, and (y) thirty (30) days
prior to the anticipated filing date of such Piggyback
Registration.
(ii) Subject to the provisions contained in paragraph
(c) of this Section 3 and in the last sentence of this
clause (ii) and subject to the terms of certain registration
rights granted by the Company prior to the date hereof,
which terms are set forth on SCHEDULE 3(A)(II) hereto, (A)
the Company will be obligated and required to include in
each Piggyback Registration all Registrable Securities with
respect to which the Company shall receive from Investors,
within thirty (30) days after the date on which the Company
shall have given written notice of such Piggyback
Registration to all such Investors pursuant to Section 3(a)
(i) hereof, the written requests of such Investors for
inclusion in such Piggyback Registration, and (B) the
Company will use its best efforts in good faith to effect
promptly the registration of all such Registrable
Securities; provided, however, that the Company will have
the right to postpone or withdraw any Piggyback Registration
effected pursuant to this Section 3(a) without obligation to
any of the Investors. Any Investor holding Registrable
Securities shall be permitted to withdraw all or any part of
the Registrable Securities of such person from any Piggyback
Registration at any time prior to the effective date of such
Piggyback Registration. Any registration of Registrable
Securities pursuant to this Section 3 shall not be counted
as a Demand Registration pursuant to Section 2 hereof. The
Company will not be obligated or required to include any
Registrable Securities in any registration effected solely
to implement an employee benefit plan or a transaction to
which Rule 145 promulgated under the Securities Act is
applicable.
(iii) If any Piggyback Registration is an underwritten
primary registration initiated by the Company, all persons
whose securities are included in such Piggyback Registration
shall be obligated to sell their securities on the same
terms and conditions as shall apply to the securities being
issued and sold by the Company. If any Piggyback
Registration is an underwritten secondary registration
initiated by holders of the Company's securities, all
persons whose securities are included in such Piggyback
Registration shall be obligated to sell their securities on
the same terms and conditions as shall apply to the
securities being sold by the holders who initiated the
underwritten secondary registration.
(b) PIGGYBACK REGISTRATION EXPENSES. The Company will pay all
Registration Expenses (as defined in Section 7 hereof) of each Piggyback
Registration attributable to Registrable Securities or otherwise incurred or
sustained in connection with or arising out of the inclusion in each such
Piggyback Registration of Registrable Securities.
(c) PRIORITY ON PIGGYBACK REGISTRATION. If a Piggyback
Registration is an underwritten registration and the managing underwriters shall
give written advice to the Company that, in the reasonable opinion of such
managing underwriters, marketing factors require a limitation on the total
number of securities to be underwritten (in this clause (c) called the
"Underwriters' Maximum Number"), then, subject to the terms of certain
registration rights granted by the Company prior to the date hereof, which terms
are set forth on SCHEDULE 3(A)(II) hereto: (i) the Company shall be entitled to
include in such registration, to the extent of the Underwriters' Maximum Number,
that number of securities which the Company proposes to offer and sell for its
own account in such registration or which securityholders initiating such
registration shall have requested to be included in such registration, as the
case may be, such securities to be allocated among the Company and such
securityholders in such proportion as the Company and such securityholders may
agree; (ii) if the Underwriters' Maximum Number exceeds the number of securities
to be included in such registration by the Company and by securityholders
initiating such registration, as the case may be, then the Company will be
obligated and required to include in such registration that number of
Registrable Securities which shall have been requested by Investors to be
included in such registration which does not exceed the Underwriters' Maximum
Number, and such number of Registrable Securities shall be allocated PRO RATA
among such Investors on the basis of the number of Registrable Securities
requested to be included therein by each such Investor; and (iii) if the
Underwriters' Maximum Number exceeds the sum of the number of securities which
the Company proposes to offer and sell for its own account or for the account of
the securityholders initiating such registration, as the case may be, and the
number of Registrable Securities which the Investors shall have requested to
include in such registration, then the Company may include in such registration
that number of other securities which its other securityholders having rights to
include such securities in a Piggyback Registration shall have requested be
included in such registration, which shall not be greater than such excess, and
the number of securities which such persons shall have requested to include in
such registration shall be allocated among such persons making such requests as
the Company and such persons may agree.
(d) SELECTION OF UNDERWRITERS. In any Piggyback Registration,
the Company shall (unless the Company shall otherwise agree) have the right to
select the investment bankers
and managing underwriters in such registration.
Section 4. LOCKUP AGREEMENTS.
(a) RESTRICTIONS ON PUBLIC SALE BY INVESTORS. Each Investor, if the
Company or the managing underwriters so request in connection with a
registration pursuant to which Registrable Securities are registered, will not,
without the prior written consent of the Company or such underwriters, effect
any public sale or other distribution of any equity securities of the Company,
including any sale pursuant to Rule 144, during the thirty (30) days prior to,
and during the period commencing on, the effective date of such underwritten
registration and ending on the earlier of (i) 180 days after such effective date
and (ii) the earliest date on which such underwriters permit other stockholders
of the Company to so sell or distribute any equity securities of the Company,
except in connection with such underwritten registration; provided that each
officer and director of the Company and each holder of more than five percent
(5%) of the issued and outstanding shares of Common Stock shall enter into
similar agreements.
(b) RESTRICTIONS ON PUBLIC SALE BY COMPANY. The Company agrees not to
effect any public sale or other distribution of its equity securities, or any
securities convertible into or exchangeable or exercisable for such equity
securities, during the period commencing on the seventh day prior to, and ending
on the ninetieth day following, the effective date of any underwritten Demand
Registration or any underwritten Piggyback Registration, except in connection
with any such underwritten registration.
Section 5. REGISTRATION PROCEDURES. If and whenever the Company shall,
in accordance with the terms of this Agreement, become obligated to effect any
registration (whether a Demand Registration or a Piggyback Registration) of any
Registrable Securities, the Company will use its best efforts in good faith to
effect promptly the registration of such Registrable Securities under the
Securities Act and to permit the public offering and sale of such Registrable
Securities in accordance with the intended method of disposition thereof, and in
connection therewith, the Company, as expeditiously as shall be reasonably
possible, will:
(a) prepare and file (within 45 days of a request in the case of a
Demand Registration pursuant to Section 2(b)(i)(A) and within 60 days of a
request in the case of a Demand Registration pursuant to Section 2(b)(i)(B), and
otherwise as promptly as practicable) with the Commission a registration
statement with respect to such Registrable Securities, and use its best efforts
in good faith to cause such registration statement to become and remain
effective until the earlier of two (2) years after the effectiveness of such
registration statement with the Commission or the date on which all such shares
are sold; it being understood and acknowledged that the Company may be required
to suspend effectiveness of such registration statement or notify the Investors
to suspend any effort to effect sales of such shares if, in the good faith
judgment of the Board of Directors of the Company, such suspension is required
to prevent a material adverse effect on a material proposed or pending
acquisition, merger or other similar corporate event to which the Company is or
expects to be a party, provided that the Company may only cause any such
suspension or a refusal pursuant to Section 2(b)(iv) hereof once within any
consecutive twelve month period; it being further understood and acknowledged
that any period of any such suspension shall toll the two (2) year period set
forth in the first clause of this Section 5(a).
(b) enter into such customary agreements (including, if applicable,
underwriting agreements) and take all such other action in connection therewith
as the Investors holding a majority in interest of Registrable Securities being
registered reasonably request in order to expedite or facilitate the disposition
of such Registrable Securities;
(c) notify each seller of Registrable Securities and other securities
covered by such registration statement at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, upon discovery
that, or upon the happening of any event as a result of which, the prospectus
included in such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they were made, and subject to Section
5(e) hereof, prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
to comply with the provisions of the Securities Act and the Exchange Act with
respect to the disposition of all Registrable Securities covered by such
registration statement until such time as all of such Registrable Securities
have been disposed of in accordance with the method of disposition set forth in
such registration statement;
(d) before filing any registration statement or prospectus or any
amendments or supplements thereto, furnish to and afford the Investors then
holding Registrable Securities, one firm of counsel for such Investors
designated by the holders of a majority of the Registrable Securities included
in the registration statement (the "Investors' Counsel") and the managing
underwriters, if any designated by such Investors, a reasonable opportunity to
review copies of all such documents (including copies of any documents to be
incorporated by reference therein and all exhibits thereto) proposed to be filed
(at least five (5) business days prior to such filing). The Company shall not
file any registration statement or prospectus or any amendments or supplements
thereto in respect of which the Investors must be afforded an opportunity to
review prior to the filing of such document, if the holders of a majority of the
shares of Registrable Securities covered by such registration statement, the
Investors' Counsel, or the managing underwriters, if any, shall reasonably
object. Any registration statement, when declared effective by the Commission or
when subsequently amended (by an amendment which is declared effective by the
Commission) or any prospectus in the form included in the registration statement
as declared effective by the Commission or when subsequently supplemented will
not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
(e) use its best efforts to obtain the prompt withdrawal of any order
suspending the effectiveness of a registration statement, and in any event
shall, within thirty (30) days of such cessation of effectiveness, use its best
efforts to amend the registration statement in a manner reasonably expected to
obtain the withdrawal of the order suspending the effectiveness thereof;
(f) if requested by the managing underwriters, if any, or the holders
of a majority of the Registrable Securities being sold in connection with an
underwritten offering, (i) promptly incorporate in a prospectus supplement or
post-effective amendment such information as the managing underwriters, if any,
or such holders or counsel reasonably request to be included therein, (ii) make
all required filings of such prospectus supplement or such post- effective
amendment as soon as practicable after the Company has received notification of
the matters to be incorporated in such prospectus supplement or post-effective
amendment, and (iii) supplement or make amendments to such registration
statement;
(g) furnish to each seller of Registrable Securities covered by such
registration statement such reasonable number of copies of such drafts and final
conformed versions of such registration statement and of each such amendment and
supplement thereto (in each case including all exhibits and any documents
incorporated by reference), such number of copies of such drafts and final
versions of the prospectus contained in such registration statement (including
each preliminary prospectus and any summary prospectus) and any other prospectus
filed under Rule 424 under the Securities Act, in conformity with the
requirements of the Securities Act, and such other documents, as such seller may
reasonably request in writing;
(h) use its best efforts in good faith to register and qualify the
Registrable Securities covered by such registration statement under such
securities or Blue Sky laws of such jurisdictions as any seller or underwriter
shall reasonably require and do any and all such other acts and things as may be
reasonably necessary or advisable to enable such seller or underwriter to
consummate the disposition in such jurisdictions of the Registrable Securities
held by such seller or underwriter; provided that the Company shall not be
required to qualify generally to do business in any jurisdiction where it is not
then so qualified or to take any action which would subject it to general
service of process in any jurisdiction where it is not then so subject;
(i) use its best efforts to cause all the Registrable Securities
covered by such registration statement (i) to be listed on a national securities
exchange on which similar securities issued by the Company are then listed, if
the listing of such Registrable Securities is then permitted under the rules of
such exchange or (ii) if the Company is not required pursuant to clause (i)
above to list such securities covered by such registration statement on a
national securities exchange, use its best efforts to secure designation of all
Registrable Securities covered by such registration statement as a NASDAQ
"national market system security" within the meaning of Rule 11Aa2-l of the
Commission or, failing that, to secure NASDAQ authorization for such Registrable
Securities and, without limiting the generality of the foregoing, to arrange for
at least two market makers to register with the NASD as such with respect to
such Registrable Securities or (iii) failing listing or designation under
clauses (i) and (ii) above, use its best efforts to cause all such Registrable
Securities to be listed on the Nasdaq Stock Market's Small-Cap Market;
(j) file all annual and quarterly reports required by the Exchange
Act, and, in the event that the Company is no longer subject to the reporting
requirements of the Exchange Act, furnish to the Investors reports substantially
comparable to those previously required to be filed by the Company under the
Exchange Act and the rules and regulations adopted by the Commission thereunder
in the same manner and at such times as if it were subject to such reporting
requirements; and
(k) furnish to each prospective seller a signed counterpart, addressed
to the prospective sellers, of (i) an opinion of counsel for the Company, dated
the effective date of the registration statement, and (ii) in the case of any
underwritten registration which includes Registrable Securities, a "comfort"
letter signed by the independent public accountants who have certified the
Company's financial statements included in the registration statement, covering
substantially the same matters with respect to the registration statement (and
the prospectus included therein) and (in the case of the "comfort letter") with
respect to events subsequent to the date of the financial statements, as are
customarily covered (at the time of such registration) in opinions of issuer's
counsel and in "comfort" letters delivered to the underwriters in underwritten
public offerings of securities.
Section 6. COOPERATION BY PROSPECTIVE SELLERS, ETC.
(a) Each prospective seller of Registrable Securities will furnish to
the Company in writing such information as the Company may reasonably require
from such seller in connection with any registration statement with respect to
such Registrable Securities.
(b) The failure of any prospective seller of Registrable Securities to
furnish any information or documents in accordance with any provision contained
in this Agreement shall not affect the obligations of the Company under this
Agreement to any remaining sellers who furnish such information and documents
unless, in the reasonable opinion of counsel to the Company or the underwriters,
such failure impairs or may impair the viability of the offering or the legality
of the registration statement or the underlying offering.
(c) The Investors holding Registrable Securities included in any
registration statement will not (until further notice) effect sales thereof
after receipt of telegraphic or written notice from the Company to suspend sales
to permit the Company to correct or update such registration statement or
prospectus; but the obligations of the Company with respect to maintaining any
registration statement current and effective shall be extended by a period of
days equal to the period such suspension is in effect.
(d) At the end of any period during which the Company is obligated to
keep any registration statement current and effective as provided by Section 5
hereof (and any extensions thereof required by the preceding paragraph (c) of
this Section 6), the Investors holding Registrable Securities included in such
registration statement shall discontinue sales of shares pursuant to such
registration statement upon receipt of notice from the Company of its intention
to remove from registration the shares covered by such registration statement
which remain unsold, and such Investors shall notify the Company of the number
of shares registered which remain unsold promptly after receipt of such notice
from the Company.
Section 7. REGISTRATION EXPENSES.
(a) All costs and expenses incurred or sustained in connection with or
arising out of each registration pursuant to Section 2 or Section 3 (as the case
may be), including, without limitation, all registration and filing fees, fees
and expenses of compliance with securities or Blue Sky laws (including
reasonable fees and disbursements of counsel for the underwriters in connection
with the Blue Sky qualification of Registrable Securities), printing expenses,
messenger, telephone and delivery expenses, fees and disbursements of counsel
for the Company and for the sellers of Registrable Securities (subject to the
limitations contained in paragraph (b) of this Section 7), fees and
disbursements of all independent certified public accountants (including the
expenses relating to the preparation and delivery of any special audit or
"comfort" letters required by or incident to such registration), and fees and
disbursements of underwriters (excluding discounts and commissions, but
including underwriters' liability insurance if the Company or if the
underwriters so require), the reasonable fees and expenses of any special
experts retained by the Company of its own initiative or at the request of the
managing underwriters in connection with such registration, and fees and
expenses of all (if any) other persons retained by the Company (all such costs
and expenses being herein called, collectively, the "Registration Expenses"),
will be borne and paid by the Company as provided by the provisions contained in
this Agreement. The Company will, in any case, pay its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any annual
audit, the expense of liability insurance referred to above, and the fees and
expenses incurred in connection with the listing of the securities to be
registered on each securities exchange on which similar securities of the
Company are then listed.
(b) In connection with each registration of Registrable Securities
pursuant to this Agreement, the Company will reimburse the Investors holding
Registrable Securities being registered in such registration for the reasonable
fees and disbursements of any one counsel chosen by the holders of a majority in
interest of such Registrable Securities; provided, however, that (i) in the
event of a Demand Registration pursuant to Section 2(b)(i)(B), the Company shall
not be required to bear more than $20,000 of the reasonable legal expenses
incurred by the Investors and (ii) in the event of a Demand Registration
pursuant to Section 2(b)(i)(A), the Company shall not be required to bear any of
the legal expenses of the Investors. The Company will not bear the cost of nor
pay for any stock transfer taxes imposed in respect of the transfer of any
Registrable Securities to any purchaser thereof by any Investor in connection
with any registration of Registrable Securities pursuant to this Agreement.
(c) To the extent that Registration Expenses incident to any
registration are, under the terms of this Agreement, not required to be paid by
the Company, each Investor holding Registrable Securities included in such
registration will pay all Registration Expenses which are clearly solely
attributable to the registration of such Investor's Registrable Securities so
included in such registration, and all other Registration Expenses not so
attributable to one holder will be borne and paid by all sellers of securities
included in such registration in proportion to the number of securities so
included by each such seller.
Section 8. INDEMNIFICATION.
(a) INDEMNIFICATION BY COMPANY. The Company will indemnify each
Investor requesting or joining in a registration, the officers, directors and
partners of each such Investor, each person who controls any thereof (within the
meaning of the Securities Act) and each underwriter of the securities so
registered, against any and all claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of any material fact contained in any prospectus,
offering circular or other document incident to any registration, qualification
or compliance (or in any related registration statement, notification or the
like) or any omission (or alleged omission) to state therein any material fact
required to be stated therein or necessary to make the statements therein not
misleading, or any violation by the Company of any rule or regulation
promulgated under the Securities Act applicable to the Company in connection
with any such registration, qualification or compliance, and the Company will
reimburse each such Investor, officer, director, partner, controlling person and
underwriter for any reasonable legal and any other reasonable expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action; provided, however, that the Company
will not be liable in any such case to the extent that any such claim, loss,
damage or liability arises out of or is based on any untrue statement or
omission based upon written information furnished to the Company by such holder,
officer, director, partner, controlling person, or underwriter and stated to be
specifically for use therein.
(b) INDEMNIFICATION BY EACH INVESTOR. Each Investor holding
Registrable Securities requesting or joining in a registration, and each
underwriter of the securities so registered, will indemnify each other Investor,
the Company and its officers and directors and each person, if any, who controls
any thereof (within the meaning of the Securities Act) and their respective
successors in title and assigns against any and all claims, losses, damages and
liabilities (or actions in respect thereof) arising out or based on any untrue
statement (or alleged untrue statement) of any material fact contained in any
prospectus, offering circular or other document incident to any registration,
qualification or compliance (or in any related registration statement,
notification or the like) or any omission (or alleged omission) to state therein
any material fact required to be stated therein or necessary to make the
statement therein not misleading, and such Investor will reimburse the Company
and each other person indemnified pursuant to this paragraph (b) for any legal
and any other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action; provided, however,
that this paragraph (b) shall apply only if (and only to the extent that) such
statement or omission was made in reliance upon written information furnished to
the Company by such Investor or underwriter and stated by such Investor or
underwriter to be specifically for use in such prospectus, offering circular or
other document (or related registration statement, notification or the like) or
any amendment or supplement thereto. The maximum liability under this paragraph
(b) of each Investor joining in any registration shall be limited to the
aggregate amount of all sales proceeds actually received by such Investor upon
the sale of such Investor's Registrable Securities in connection with such
registration.
(c) INDEMNIFICATION PROCEEDINGS. Each party entitled to
indemnification pursuant to this Section 8 (the "indemnified party") shall give
notice to the party required to provide indemnification pursuant to this Section
8 (the "indemnifying party") promptly after such indemnified party acquires
actual knowledge of any claim as to which indemnity may be sought, and shall
permit the indemnifying party (at the indemnifying party's expense) to assume
the defense of any claim or any litigation resulting therefrom; provided that
counsel for the indemnifying party, who shall conduct the defense of such claim
or litigation, shall be reasonably acceptable to the indemnified party, and the
indemnified party may participate in such defense at such party's expense; and
provided further that, if any indemnified party shall have reasonably concluded
that there may be one or more legal defenses available to such indemnified party
which are different from or additional to and are inconsistent with those
available to the indemnifying party, or that such claim or litigation involves
or could have an effect upon matters beyond the scope of the indemnity agreement
provided in this Section 8, the indemnified party shall have the right to select
separate counsel to participate in such defense and the indemnifying party shall
reimburse such indemnified party and any person controlling such indemnified
party for that portion of the fees and expenses of any counsel so retained by
the indemnified party which are reasonably related to the matters covered by the
indemnity agreement provided in this Section 8; and provided, further, that the
failure by any indemnified party to give notice as provided in this paragraph
(c) shall not relieve the indemnifying party of its obligations under this
Section 8 except to the extent that the failure results in a failure of actual
notice to the indemnifying party and such indemnifying party is damaged (or the
indemnification liability of such indemnifying party hereunder would be
increased) solely as a result of the failure to give notice. No indemnifying
party, in the defense of any such claim or litigation, shall, except with the
consent of each indemnified party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified party of a release from
all liability in respect to such claim or litigation. The reimbursement required
by this Section 8 shall be made by periodic payments during the course of the
investigation or defense, as and when bills are received or expenses incurred.
(d) CONTRIBUTION. If the indemnification provided for in this Section
8 shall for any reason be unavailable to an indemnified party under subsection
(a) or (b) of this Section 8 in respect of any claims, losses, damages and
liabilities (collectively, "Losses"), then, in lieu of the amount paid or
payable under subsection (a) or (b) of this Section 8, the indemnified party and
the indemnifying party under subsection (a) or (b) of this Section 8 shall
contribute to the aggregate Losses (including reasonable legal or other
reasonable expenses reasonably incurred in connection with investigating the
same) (i) in such proportion as is appropriate to reflect the relative fault of
the Company and the prospective sellers of Registrable Securities covered by the
registration statement which resulted in such Loss or action in respect thereof,
with respect to the statements, omissions or action which resulted in such Loss
or action in respect thereof, as well as any other relevant equitable
considerations, or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as shall be appropriate to
reflect the relative benefits received by the Company, on the one hand, and such
prospective sellers, on the other hand, from their sale of Registrable
Securities; provided that, for purposes of this clause (ii), the relative
benefits received by the prospective sellers shall be deemed not to exceed the
amount received by such sellers. No person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any other person or entity who was not
guilty of such fraudulent misrepresentation. The obligations, if any, of the
selling holders of Registrable Securities to contribute as provided in this
subsection (d) are several in proportion to the relative value of their
respective Registrable Securities covered by such registration statement and not
joint. In addition, no person or entity shall be obligated to contribute
hereunder any amounts in payment for any settlement of any action or Loss
effected without the consent of such person or entity.
Section 9. RULE 144 REQUIREMENTS. The Company will make every effort
in good faith to make publicly available and available to the Investors holding
Registrable Securities, pursuant to Rule 144 of the Commission under the
Securities Act, such information as shall be necessary to enable such Investors
to make sales of Registrable Securities pursuant to that Rule. The Company will
furnish to any Investor holding Registrable Securities, upon request made by
such Investor, a written statement signed by the Company, addressed to such
Investor, describing briefly the action the Company has taken or proposes to
take to comply with the current public information requirements of Rule 144. The
Company will, at the request of any Investor holding Registrable Securities,
upon receipt from such Investor of a certificate certifying (i) that such
Investor currently intends to transfer such Registrable Securities, (ii) that
such Investor has held such Registrable Securities for a period of not less than
two (2) consecutive years within the meaning of Rule 144(d) or any successor
rule, and (iii) that such Investor has not been an affiliate (as defined in Rule
144) of the Company for more than the ninety (90) preceding days, remove from
the stock certificates representing such Registrable Securities that portion of
any restrictive legend which relates to the registration provisions of the
Securities Act.
Section 10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No person may
participate in any underwritten registration pursuant to this Agreement unless
such person (a) agrees to sell such person's securities on the basis provided in
any underwriting arrangements approved by the persons entitled, under the
provisions contained in this Agreement, to approve such arrangements, and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required by the terms of
such underwriting arrangements; provided, however, that no such indemnities or
underwriting agreements shall provide for indemnification or contribution
obligations of any Investor to a greater extent than the obligations of such
Investor set forth in Section 8 hereof. Any Investor holding Registrable
Securities to be included in any underwritten registration shall be entitled at
any time to withdraw such Registrable Securities from such registration in the
event that such Investor shall disapprove of any of the terms of the related
underwriting agreement.
Section 11. NO INCONSISTENT AGREEMENTS. The Company will not, at any
time after the effective date of this Agreement, enter into, and, except as set
forth on SCHEDULE 11 hereto, is not now a party to or otherwise bound by, any
agreement or contract (whether written or oral) with respect to any of its
securities which is inconsistent in any respect with the registration rights
granted by the Company to the Investors pursuant to this Agreement.
Section 12. NO OTHER GRANT OF REGISTRATION RIGHTS. The Company will
not at any time, without the prior written consent of Investors holding a
majority in interest of Registrable Securities, grant to any other persons any
rights with respect to the registration of any of securities of the Company
which have priority over or are inconsistent with the registration rights
granted by the Company to the Investors pursuant to this Agreement.
Section 13. REGISTRABLE SECURITIES HELD BY THE Company. Whenever the
consent or approval of Investors holding Registrable Securities is required
pursuant to this Agreement, Registrable Securities held by the Company shall not
be counted in determining whether such consent or approval was duly and properly
given by such Investors pursuant to and in compliance with any of the terms of
this Agreement.
Section 14. NOTICES.
(a) All notices and other communications pursuant to this Agreement
shall be in writing, either delivered in person or duly sent by registered mail,
postage prepaid, return receipt requested, or by overnight courier guaranteeing
next day delivery, and shall be sent addressed to such party at the address
specified below or at such other address as may hereafter be designated in
writing by the addressee to the addressor:
IF TO THE COMPANY:
Nicollet Process Engineering, Inc.
420 North Fifth Street
Ford Centre, Suite 1040
Minneapolis, Minnesota 55401
Attn: Robert A. Pitner
with a copy to:
Oppenheimer Wolff & Donnelly
45 South Seventh Street
Suite 3400
Minneapolis, Minnesota 55402
Attn: Kristine L. Gabel, Esq.
IF TO ANY INVESTOR: at their respective addresses set forth
on the signature pages hereto
(b) Any notice or other communication shall be deemed given at the
time delivered by hand, if personally delivered, four business days after being
deposited in the mail, postage prepaid, if mailed, the next business day after
timely delivery to the courier, if sent by overnight courier guaranteeing next
day delivery, and when receipt is acknowledged, if telecopied.
Section 15. GOVERNING LAW. This Agreement shall be construed in
accordance with and governed by the laws of the State of New York without regard
to the conflict of laws principles thereof.
Section 16. AMENDMENTS AND WAIVERS.
(a) Except as otherwise provided by paragraph (b) of this Section 16,
none of the terms or provisions contained in this Agreement, and none of the
agreements, obligations or covenants of any party contained in this Agreement,
may be amended, modified, supplemented, waived or terminated unless (i) the
Company shall execute an instrument in writing agreeing or consenting to such
amendment, modification, supplement, waiver or termination, and (ii) the Company
shall receive, in writing, the consent, approval, or vote of Investors holding
more than fifty percent (50%) in interest of all Registrable Securities.
(b) Any action taken pursuant to and in compliance with paragraph (a)
of this Section 16 shall be binding upon the Company and upon all Investors,
including all of such Investors who shall have failed or refused to give a
written consent or approval for such action.
Section 17. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among the parties hereto with respect to the subject matter hereof and
supersedes any prior understandings or agreements concerning the subject matter
hereof.
Section 18. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of each of
the parties. Any Investor may assign to any permitted Transferee (as permitted
under applicable law) of its Registrable Securities its rights and obligations
under this Agreement, provided that such Transferee shall agree in writing with
the parties hereto prior to the assignment to be bound by this Agreement as if
it were an original party hereto, whereupon such assignee shall for all purposes
be deemed to be an Investor under this Agreement. Except as provided above or
otherwise permitted by this Agreement, neither this Agreement nor any right,
remedy, obligation or liability arising hereunder or by reason hereof shall be
assignable by any Investor without the prior written consent of the other
parties hereto. The Company may not assign this Agreement or any right, remedy,
obligation or liability arising hereunder or by reason hereof.
Section 19. COUNTERPARTS. This Agreement may be executed
simultaneously in several counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same agreement.
In making proof of this Agreement, it shall not be necessary to produce or
account for more than one such counterpart signed by each of the parties hereto.
<PAGE>
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
NICOLLET PROCESS ENGINEERING, INC.
By: /S/ Pierce McNally
Name: Pierce McNally
Title:
<PAGE>
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
OSCAR CAPITAL MANAGEMENT, LLC
By: /S/ Andrew K. Boszhardt, Jr.
Name: Andrew K. Boszhardt, Jr.
Title: Chief Executive Officer
Address for Notices:
900 Third Avenue
New York, New York
10022
/S/ Andrew K. Boszhardt
Andrew K. Boszhardt
Address for Notices:
900 Third Avenue
New York, New York
10022
/S/ Anthony Scaramucci
Anthony Scaramucci
Address for Notices:
900 Third Avenue
New York, New York
10022
/S/ David R. Chamberlin
David R. Chamberlin
Address for Notices:
260 Wrights Road
Aspen, Colorado
81612
<PAGE>
SCHEDULE A
NAME OF INVESTOR Number of Shares
Oscar Capital Management, LLC 233,333
Andrew K. Boszhardt, Jr. 500,000
Anthony Scaramucci 116,667
David R. Chamberlin 316,667
<PAGE>
EXHIBIT D
November 7, 1997
Mr. Pierce McNally
Mr. Robert Pitner
c/o Nicollet Process Engineering, Inc.
420 North Fifth Street
Ford Centre, Suite 1040
Minneapolis, Minnesota 55401
Dear Gentlemen:
Reference is hereby made to that certain subscription agreement (the
"Subscription Agreement") dated as of today between myself and Nicollet Process
Engineering, Inc. (the "Company"). All capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed thereto in the
Subscription Agreement.
This letter will serve to confirm my agreement and understanding with
each of you that you shall vote, or shall cause your respective Transferees (as
defined below) to vote, during the Minimum Holding Period, all shares of Common
Stock held by you, or your Transferees, as the case may be, to elect the
Boszhardt Nominee as a member of the Board of Directors of the Company. As used
herein, "Transferee" shall mean any person or entity to whom either of you,
respectively, transfers or assigns any shares of Common Stock held by you;
provided, however, that, if you sell shares of Common Stock in the market, in
compliance with the manner of sale requirements set forth in the first sentence
of paragraph (f) of Rule 144, to a person or entity that is an unaffiliated
third party with respect to you, such person or entity shall not be deemed your
"Transferee" and shall not be subject to the provisions of this letter
agreement.
You shall retain at all times the right to vote your respective shares
of Common Stock in your sole discretion on all other matters which are at any
time, and from time to time, presented for a vote to the Company's stockholders
generally.
<PAGE>
If the foregoing correctly sets forth our agreement and understanding,
please sign the enclosed copies of this letter in the space provided and return
them to me.
Very truly yours,
/S/ ANDREW K. BOSZHARDT, JR.
Andrew K. Boszhardt, Jr.
AGREED TO
AND ACCEPTED:
/S/ PIERCE MCNALLY
Pierce McNally
- -----------------------------
Robert Pitner
