<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Amendment No. 1
Nicollet Process Engineering, Inc.
----------------------------------
(Name of Issuer)
Common Stock, No Par Value
--------------------------
(Title of Class of Securities)
654085 10 9
-----------
(CUSIP Number)
Pierce A. McNally
Robert A. Pitner
420 North Fifth Street
Ford Centre, Suite 1040
Minneapolis, Minnesota 55401
(612) 339-7958
--------------
(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: [X]
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SCHEDULE 13D
CUSIP No. 654085 10 9
- -------------------------------------------------------------------------------
1) NAME OF REPORTING PERSON AND S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE
PERSON
Pierce A. McNally
- -------------------------------------------------------------------------------
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ X ]
- -------------------------------------------------------------------------------
3) SEC USE ONLY
- -------------------------------------------------------------------------------
4) SOURCE OF FUNDS
PF
- -------------------------------------------------------------------------------
5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
- -------------------------------------------------------------------------------
6) CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- -------------------------------------------------------------------------------
7) SOLE VOTING POWER
-0-
----------------------------------------------------------
8) SHARED VOTING POWER
NUMBER OF 597,828 (1)
SHARES ----------------------------------------------------------
BENEFICIALLY 9) SOLE DISPOSITIVE POWER
OWNED BY EACH 261,828 (2)
REPORTING ----------------------------------------------------------
PERSON 10) SHARED DISPOSITIVE POWER
WITH -0-
- -------------------------------------------------------------------------------
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
617,828 (3)
- -------------------------------------------------------------------------------
12) CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[X]
- -------------------------------------------------------------------------------
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
12.7%
- -------------------------------------------------------------------------------
14) TYPE OF REPORTING PERSON
IN
- -------------------------------------------------------------------------------
(1) Includes 77,500 shares of Common Stock beneficially owned by Robert A.
Pitner who shares voting power with Mr. McNally regarding the election of a
director of the Company pursuant to a letter agreement dated as of November 7,
1997. See "Item 4 -- Purpose of Transaction." Also includes: (i) 74,000
shares of Common Stock issuable to Mr. McNally upon the exercise of outstanding
stock options; and (ii) 258,500 shares of Common Stock issuable to Mr. Pitner
upon the exercise of outstanding stock options. Does not include: (i) 4,000
shares of Common Stock issuable upon exercise of outstanding warrants held by
Mr. McNally's wife as custodian for the benefit of their daughters but as to
which Mr. McNally disclaims any beneficial interest; and (ii) 16,000 shares of
Common Stock held by Mr. McNally's wife as custodian for the benefit of their
daughters but as to which Mr. McNally disclaims any beneficial interest.
(2) Includes 74,000 shares of Common Stock issuable to Mr. McNally upon the
exercise of outstanding stock options. Does not include: (i) 4,000 shares of
Common Stock issuable upon exercise of outstanding warrants held by Mr.
McNally's wife as custodian for the benefit of their daughters as to which Mr.
McNally disclaims any
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beneficial interest; and (ii) 16,000 shares of Common Stock held by Mr.
McNally's wife as custodian for the benefit of their daughters as to which
Mr. McNally disclaims any beneficial interest.
(3) Includes 77,500 shares of Common Stock beneficially owned by Robert A.
Pitner who shares voting power with Mr. McNally regarding the election of a
director of the Company pursuant to a letter agreement dated as of November 7,
1997. See "Item 4 -- Purpose of Transaction." Also includes: (i) 74,000
shares of Common Stock issuable to Mr. McNally upon the exercise of outstanding
stock options; and (ii) 258,500 shares of Common Stock issuable to Mr. Pitner
upon the exercise of outstanding stock options. Also includes: (i) 4,000
shares of Common Stock issuable upon exercise of outstanding warrants held by
Mr. McNally's wife as custodian for the benefit of their daughters but as to
which Mr. McNally disclaims any beneficial interest; and (ii) 16,000 shares of
Common Stock held by Mr. McNally's wife as custodian for the benefit of their
daughters but as to which Mr. McNally disclaims any beneficial interest.
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SCHEDULE 13D
CUSIP No. 654085 10 9
- -------------------------------------------------------------------------------
1) NAME OF REPORTING PERSON AND S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE
PERSON
Robert A. Pitner
- -------------------------------------------------------------------------------
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ X ]
- -------------------------------------------------------------------------------
3) SEC USE ONLY
- -------------------------------------------------------------------------------
4) SOURCE OF FUNDS
PF
- -------------------------------------------------------------------------------
5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
- -------------------------------------------------------------------------------
6) CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- -------------------------------------------------------------------------------
7) SOLE VOTING POWER
-0-
----------------------------------------------------------
8) SHARED VOTING POWER
NUMBER OF 597,828 (1)
SHARES ----------------------------------------------------------
BENEFICIALLY 9) SOLE DISPOSITIVE POWER
OWNED BY EACH 336,000 (2)
REPORTING ----------------------------------------------------------
PERSON 10) SHARED DISPOSITIVE POWER
WITH -0-
- -------------------------------------------------------------------------------
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
617,828 (3)
- -------------------------------------------------------------------------------
12) CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[X]
- -------------------------------------------------------------------------------
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
12.7%
- -------------------------------------------------------------------------------
14) TYPE OF REPORTING PERSON
IN
- -------------------------------------------------------------------------------
(1) Includes 187,828 shares of Common Stock beneficially owned by Pierce A.
McNally who shares voting power with Mr. Pitner regarding the election of a
director of the Company pursuant to a letter agreement dated as of November 7,
1997. See "Item 4 -- Purpose of Transaction." Also includes: (i) 258,500
shares of Common Stock issuable to Mr. Pitner upon the exercise of outstanding
stock options; and (ii) 74,000 shares of Common Stock issuable to Mr. McNally
upon the exercise of outstanding stock options. Does not include: (i) 4,000
shares of Common Stock issuable upon exercise of outstanding warrants held by
Mr. McNally's wife as custodian for the benefit of their daughters but as to
which Mr. McNally disclaims any beneficial interest; and (ii) 16,000 shares of
Common Stock held by Mr. McNally's wife as custodian for the benefit of their
daughters but as to which Mr. McNally disclaims any beneficial interest.
(2) Includes 258,500 shares of Common Stock issuable to Mr. Pitner upon the
exercise of outstanding stock options.
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(3) Includes 187,828 shares of Common Stock beneficially owned by Pierce A.
McNally who shares voting power with Mr. Pitner regarding the election of a
director of the Company pursuant to a letter agreement dated as of November 7,
1997. See "Item 4 -- Purpose of Transaction." Also includes: (i) 258,500
shares of Common Stock issuable to Mr. Pitner upon the exercise of outstanding
stock options; and (ii) 74,000 shares of Common Stock issuable to Mr. McNally
upon the exercise of outstanding stock options. Also includes: (i) 4,000
shares of Common Stock issuable upon exercise of outstanding warrants held by
Mr. McNally's wife as custodian for the benefit of their daughters but as to
which Mr. McNally disclaims any beneficial interest; and (ii) 16,000 shares of
Common Stock held by Mr. McNally's wife as custodian for the benefit of their
daughters but as to which Mr. McNally disclaims any beneficial interest.
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SCHEDULE 13D
Pursuant to Rule 13d-2(c), this Amendment No. 1 amends Mr. McNally's
Schedule 13G and Mr. Pitner's Schedule 13G each dated February 12, 1997.
ITEM 1. SECURITY AND ISSUER.
The securities to which this statement relates are the common stock, no par
value ("Common Stock"), of Nicollet Process Engineering, Inc., a Minnesota
corporation (the "Company"), whose principal executive offices are located at
420 North Fifth Street, Ford Centre, Suite 1040, Minneapolis, Minnesota 55401.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(c) This Statement is being filed on behalf of Pierce A. McNally and Robert
A. Pitner (the "Reporting Persons" or individually the "Reporting Person") with
respect to the acquisition of 50,000 shares by Mr. McNally and 16,667 shares by
Mr. Pitner (collectively, the "Acquired Shares") of Common Stock from the
Company. The names, addresses, and present principal occupation of each
Reporting Person are as follows:
1. Name: Pierce A. McNally
Address: c/o Nicollet Process Engineering, Inc.
Ford Centre, Suite 1040
420 North Fifth Street
Minneapolis, Minnesota 55401
Principal Occupation: Chairman of the Board
Nicollet Process Engineering, Inc.
Ford Centre, Suite 1040
420 North Fifth Street
Minneapolis, Minnesota 55401
2. Name: Robert A. Pitner
Address: c/o Nicollet Process Engineering, Inc.
Ford Centre, Suite 1040
420 North Fifth Street
Minneapolis, Minnesota 55401
Principal Occupation: President and Chief Executive Officer
Nicollet Process Engineering, Inc.
Ford Centre, Suite 1040
420 North Fifth Street
Minneapolis, Minnesota 55401
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(d)-(e) During the last five years, none of the Reporting Persons have
been convicted in a criminal proceeding (excluding traffic violations and
similar misdemeanors) nor have they been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws.
(f) Each of the Reporting Persons is a citizen of the United States.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Messrs. McNally and Pitner each paid $0.60 per share for his respective
portion of the Acquired Shares. Mr. McNally paid for his portion of the
Acquired Shares from his own personal funds. Mr. Pitner borrowed $10,000 to
purchase his portion of the Acquired Shares from the Company pursuant to a
promissory note that is due and payable on December 15, 1997. The note bears
interest at a rate of 5% per annum.
ITEM 4. PURPOSE OF TRANSACTION.
On November 7, 1997, the Company entered into certain Subscription
Agreements dated November 7, 1997, (the "Subscription Agreements") with certain
investors (collectively, the "Investors"), pursuant to which the Investors
agreed to purchase an aggregate of 1,166,667 shares of Common Stock of the
Company at purchase price of $0.60 per share. As a condition to the Investors'
purchase of such shares, certain directors of the Company, including the
Reporting Persons, were required to purchase an aggregate of 100,000 shares of
Common Stock of the Company at a purchase price of $0.60 per share. The
Acquired Shares to which this statement relates were acquired by the Reporting
Persons in connection with the Subscription Agreements.
In connection with the Subscription Agreements, the Company agreed to allow
Andrew K. Boszhardt, Jr., or his designee, to nominate one director (such
nominee, the "Boszhardt Nominee") for election as a member of the Board of
Directors of the Company at each annual meeting of shareholders or any other
meeting at which directors are elected (such director, the "Boszhardt
Director"). The Company agreed to use its good faith, reasonable efforts to
ensure that the Boszhardt Director will continue as a member of the Board of
Directors for such period as the Investors and/or any affiliates of Mr.
Boszhardt own, in the aggregate, beneficially and of record not less than
500,000 shares of Common Stock of the Company (the "Minimum Holding Period").
Additionally, in connection with the Subscription Agreements, the Reporting
Persons entered into a Letter Agreement dated November 7, 1997 with Andrew K.
Boszhardt, Jr., pursuant to which the Reporting Persons agreed to vote all of
the shares of Common Stock held by them to elect Mr. Boszhardt, or his nominee,
as a member of the Board of Directors of the Company for such Minimum Holding
Period.
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ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a)-(b) The following table sets forth information regarding the
beneficial ownership of the Common Stock of the Company as of November 7, 1997,
unless otherwise noted, by each Reporting Person.
Shares of Common Stock
Name Beneficially Owned(1)
---- ----------------------
Amount Percent of
------ Class(2)
----------
Pierce A. McNally 617,828 (3) 12.7%
Robert A. Pitner 617,828 (4) 12.7%
- -----------------
(1) Shares not outstanding but deemed beneficially owned by virtue of the right
of a person to acquire them within 60 days, whether by the exercise of
options or warrants, are deemed outstanding in determining the amount and
person owned by such person or group.
(2) For purposes of calculating the percent of class for each person or group,
all rights to acquire Common Stock within 60 days, whether by the exercise
of options or warrants, are deemed outstanding for such person or group.
Such rights to acquire Common Stock are not, however, deemed to be
outstanding for the purpose of computing the percentage of the class by any
other person or group.
(3) Includes 77,500 shares of Common Stock beneficially owned by Robert A.
Pitner who shares voting power with Mr. McNally regarding the election of a
director of the Company pursuant to a letter agreement dated November 7,
1997. See "Item 4 -- Purpose of Transaction." Also includes: (i) 74,000
shares of Common Stock issuable to Mr. McNally upon the exercise of
outstanding stock options; (ii) 258,500 shares of Common Stock issuable to
Mr. Pitner upon the exercise of outstanding stock options; (iii) 4,000
shares of Common Stock issuable upon exercise of outstanding warrants held
by Mr. McNally's wife as custodian for the benefit of their daughters but
as to which Mr. McNally disclaims any beneficial interest; and (iv) 16,000
shares of Common Stock held by Mr. McNally's wife as custodian for the
benefit of their daughters but as to which Mr. McNally disclaims any
beneficial interest.
(4) Includes 187,828 shares of Common Stock beneficially owned by Pierce A.
McNally who shares voting power with Mr. Pitner regarding the election of a
director of the Company pursuant to a letter agreement dated November 7,
1997. See "Item 4 -- Purpose of Transaction." Also includes: (i)
258,500 shares of Common Stock issuable to Mr. Pitner upon the exercise of
outstanding stock options; (ii) 74,000 shares of Common
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Stock issuable to Mr. McNally upon the exercise of outstanding stock
options; (iii) 4,000 shares of Common Stock issuable upon exercise of
outstanding warrants held by Mr. McNally's wife as custodian for the
benefit of their daughters but as to which Mr. McNally disclaims any
beneficial interest; and (iv) 16,000 shares of Common Stock held by Mr.
McNally's wife as custodian for the benefit of their daughters but as to
which Mr. McNally disclaims any beneficial interest.
- -------------
(c) Other than as described in Item 4 above, during the past 60 days,
the Reporting Persons have not effected any other transactions in any shares of
the Company's Common Stock.
(d)-(e) Items 5(d) and (e) are inapplicable to the Reporting Persons.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
In connection with the Subscription Agreements, the Reporting Persons
entered into a Letter Agreement dated November 7, 1997 with Andrew K. Boszhardt,
Jr., pursuant to which the Reporting Persons agreed to vote all of the shares of
Common Stock held by them to elect Mr. Boszhardt, or his nominee, as a member of
the Board of Directors of the Company for such Minimum Holding Period.
ITEM 7. MATERIALS TO BE FILED AS EXHIBITS.
Exhibit 1 Form of Subscription Agreement dated November 7, 1997 by and
among Nicollet Process Engineering, Inc. and certain investors.
Exhibit 2 Letter Agreement dated November 7, 1997 by and among Pierce A.
McNally, Robert A. Pitner and Andrew K. Boszhardt, Jr.
Exhibit 3 Promissory Note, dated November 7, 1997 payable to the Company
be Robert A. Pitner in the principal amount of $10,000.
Exhibit 4 Subscription Agreement dated September 30, 1997 from Pierce A.
McNally.
Exhibit 5 Subscription Agreement dated October 10, 1997 from Robert A.
Pitner.
Exhibit 6 Letter dated November 11, 1997 from Pierce A. McNally and Robert
A. Pitner to the Company.
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SIGNATURES
After reasonable inquiry and to the best knowledge and belief, we
certify that the information set forth in this statement is true,
complete and correct.
/s/ Robert A. Pitner
----------------------------------
November 11, 1997 Robert A. Pitner
/s/ Pierce A. McNally
----------------------------------
Pierce A. McNally
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EXHIBIT INDEX
Exhibit No. Description Method of Filing
- ---------- ----------- ----------------
1 Form of Subscription Agreement dated November
7, 1997 by and among Nicollet Process Filed herewith
Engineering, Inc. and certain investors. electronically.
2 Letter Agreement dated November 7, 1997 by Filed herewith
and among Pierce A. McNally, Robert A. Pitner electronically.
and Andrew K. Boszhardt, Jr.
3 Promissory Note, dated November 7, 1997 payable
to the Company by Robert A. Pitner in the Filed herewith
principal amount of $10,000. electronically.
4 Subscription Agreement dated September 30, 1997 Filed herewith
from Pierce A. McNally. electronically.
5 Subscription Agreement dated October 10, 1997 Filed herewith
from Robert A. Pitner electronically.
6 Letter dated November 11, 1997 from Pierce A. Filed herewith
McNally and Robert A. Pitner to the Company electronically.
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Exhibit 1
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;
<PAGE>
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 __, 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;
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(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
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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
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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
- 5 -
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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
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<PAGE>
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
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<PAGE>
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.
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<PAGE>
(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,
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<PAGE>
"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.
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<PAGE>
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.
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<PAGE>
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,
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<PAGE>
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.
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<PAGE>
(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.
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<PAGE>
(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
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<PAGE>
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
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<PAGE>
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.
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<PAGE>
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]
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<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement as of the date first above written.
--------------------------------
Name of Subscriber
By:
----------------------------
Name:
Title:
Address:
----------------------------
----------------------------
----------------------------
Tax Identification Number:
----------------------------
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:
------------------------------
Name:
Title:
<PAGE>
Exhibit 2
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
/s/ Robert Pitner
- ----------------------------------
Robert Pitner
<PAGE>
Exhibit 3
PROMISSORY NOTE
Minneapolis, MN
$10,000.00 November 7, 1997
FOR VALUE RECEIVED, the undersigned promises to pay to the order of
NICOLLET PROCESS ENGINEERING, INC., a Minnesota corporation (the "Holder")
located at 420 North Fifth Street, Ford Centre, Suite 1040, Minneapolis,
Minnesota 55401, the principal amount of TEN THOUSAND and no/100 Dollars
($10,000.00), together with interest thereon from the date hereof until paid
in full at the annual rate of Five Percent (5.0%). The entire unpaid
principal of this Note together with accrued and unpaid interest thereon will
become due and payable on or before December 15, 1997. All payments under
this Note will be applied first to accrued interest and the balance to
principal.
Presentment and other demand for payment (other than written demand as
provided above), notice of dishonor and protest are hereby waived by the
undersigned. The undersigned agrees to reimburse the holder of this Note for
all reasonable fees and expenses (including reasonable attorneys fees and court
costs) incurred in connection with the collection of the indebtedness
represented by this Note.
All agreements between the undersigned and the Holder are hereby
expressly limited so that in no event will the rate of interest charged or
agreed to be charged to the Holder for the use, forbearance, loaning or
detention of such indebtedness exceed the maximum permissible interest rate
under applicable law (the "Maximum Rate"). If for any reason, the interest
rate applied exceeds the Maximum Rate, then the interest rate will
automatically be reduced to the Maximum Rate. If the Holder receives
interest at a rate exceeding the Maximum Rate, the amount of interest
received in excess of the maximum amount receivable will be applied to the
reduction of the principal balance of the outstanding obligation for which
the amount was paid and not to the payment of interest thereunder.
No recourse will be had for the payment of the principal amount of this
Note or interest thereon or for any claim based hereon or otherwise in respect
hereof against any stockholder, officer or director as such, past, present or
future of the undersigned.
Time is of the essence. No delay on the part of the holder hereof in
exercising any right hereunder will operate as a waiver thereof, nor will any
single or partial exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other right, nor will the
holder hereof be liable for exercising or failing to exercise any such right.
The rights and remedies herein expressly specified are cumulative and not
exclusive of any rights or remedies which the holder hereof may or would
otherwise have. This Note is non-negotiable and may not be assigned by the
Holder.
IN WITNESS WHEREOF, the undersigned has executed this Note effective as
of November 7, 1997.
/s/ Robert A. Pitner
-------------------------------
Robert A. Pitner
<PAGE>
EXHIBIT 4
SUBSCRIPTION AGREEMENT AND
LETTER OF INVESTMENT INTENT
Nicollet Process Engineering, Inc.
420 North Fifth Street
Ford Centre, Suite 1040
Minneapolis, Minnesota 55401
Ladies and Gentlemen:
The undersigned (the "Subscriber") hereby subscribes to purchase Fifty
Thousand (50,000) shares (the "Shares") of the common stock, no par value (the
"Common Stock"), of Nicollet Process Engineering, Inc., a Minnesota corporation
(the "Company"), for a purchase price of Sixty Cents ($0.60) per share and upon
the other terms and conditions set forth below. A check or other payment
payable to "Nicollet Process Engineering, Inc." in the amount of Thirty Thousand
Dollars ($30,000) for the Shares is also delivered herewith.
The Subscriber and the Company agree that this subscription for Shares is
conditioned upon and the obligation of the Subscriber to purchase the Shares
contemplated by this Agreement is subject to the purchase by Boszhardt Investor
Group of a minimum of Six Hundred Thousand Dollars ($600,000) of shares of
Common Stock of the Company at a purchase price of Sixty Cents ($0.60) per share
on or before October 15, 1997.
The Subscriber acknowledges that the Company is relying upon the accuracy
and completeness of the representations contained herein in complying with its
obligations under applicable securities laws and that a subscription for Shares
may be rejected for any reason. The Subscriber acknowledges and represents as
follows:
1. The Subscriber has received copies of all documents and any other
information requested from the Company and has had an opportunity to ask
questions of and receive answers from the management of the Company concerning
the terms and conditions of the offering and to obtain any additional
information desired or has elected to waive such opportunity. The Subscriber
confirms that the Subscriber is fully informed regarding the financial condition
of the Company, the administration of its business affairs and its prospects for
the future, and that the Company makes no assurance whatsoever concerning the
present and prospective value of the Shares to be acquired.
2. The Subscriber realizes that the Shares, as an investment, are
speculative and involve a high degree of risk. The Subscriber believes that an
investment in the Shares is suitable for the Subscriber based upon the
Subscriber's investment objectives and financial needs, and the Subscriber has
the financial means to undertake the risks of an investment in the Shares, to
hold the Shares for an indefinite period of time, and to withstand a complete
loss of the Subscriber's investment in the Shares.
3. The Subscriber, either alone or with the assistance of a professional
advisor, has such knowledge and experience in financial and business matters
that the Subscriber is capable of evaluating the merits and risks of an
investment in the Shares. The Subscriber has obtained, to the
<PAGE>
extent deemed necessary, personal professional advice with respect to the risks
inherent in, and the suitability of, an investment in the Shares in light of the
Subscriber's financial condition and investment needs.
4. The Shares are being purchased by the Subscriber for investment
purposes in the Subscriber's name solely for Subscriber's own beneficial
interest and not as nominee for, or for the beneficial interest of, or with the
intention to transfer to, any other person, trust or organization.
5. The Subscriber acknowledges that (a) the Subscriber must bear the
economic risk of an investment in the Shares for an indefinite period of time
because the Shares have not been registered under the Securities Act of 1933 or
any applicable state securities laws and therefore may not be sold, transferred,
assigned or otherwise disposed of unless such disposition is subsequently
registered under such laws or exemptions from such registrations are available,
and (b) a legend will be placed on the certificate evidencing the Shares stating
that the Shares have not been registered under the Securities Act of 1933 and
referencing the restrictions on the transferability of the Shares.
6. The Subscriber is a bona fide resident of the State of Minnesota.
7. The Subscriber is an "accredited investor" within the meaning of Rule
501 under the Securities Act of 1933 since the Subscriber is a director or
executive officer of the Company.
8. The Subscriber desires that the Shares be held as follows (check one):
(a) /X/ Individual Ownership (e) / / Tenants in Common
(b) / / Community Property (f) / / Corporation*
(c) / / Jt. Tenant with Right of (g) / / Trust*
Survivorship
(both parties must sign)
(d) / / Partnership* (h) / / Other (please describe)
-----------------------------
Dated: September 30, 1997
/s/ Pierce A. McNally
---------------------------------------
Pierce A. McNally
420 North Fifth Street
Ford Centre, Suite 1040
Minneapolis, Minnesota 55401
Social Security Number: ###-##-####
* * * * * * * *
This Subscription Agreement is accepted by the Company as of September 30, 1997.
NICOLLET PROCESS ENGINEERING, INC.
By: /s/ Robert A. Pitner
--------------------
Robert A. Pitner
Its: President and Chief Executive
Officer
2
<PAGE>
EXHIBIT 5
SUBSCRIPTION AGREEMENT AND
LETTER OF INVESTMENT INTENT
Nicollet Process Engineering, Inc.
420 North Fifth Street
Ford Centre, Suite 1040
Minneapolis, Minnesota 55401
Ladies and Gentlemen:
The undersigned (the "Subscriber") hereby subscribes to purchase Sixteen
Thousand Six Hundred Sixty-Seven (16,667) shares (the "Shares") of the common
stock, no par value (the "Common Stock"), of Nicollet Process Engineering, Inc.,
a Minnesota corporation (the "Company"), for a purchase price of Sixty Cents
($0.60) per share and upon the other terms and conditions set forth below. A
check or other payment payable to "Nicollet Process Engineering, Inc." in the
amount of Ten Thousand and 20/100 Dollars ($10,000.20) for the Shares is also
delivered herewith.
The Subscriber and the Company agree that this subscription for Shares is
conditioned upon and the obligation of the Subscriber to purchase the Shares
contemplated by this Agreement is subject to the purchase by Boszhardt Investor
Group of a minimum of Six Hundred Thousand Dollars ($600,000) of shares of
Common Stock of the Company at a purchase price of Sixty Cents ($0.60) per share
on or before December 15, 1997.
The Subscriber acknowledges that the Company is relying upon the accuracy
and completeness of the representations contained herein in complying with its
obligations under applicable securities laws and that a subscription for Shares
may be rejected for any reason. The Subscriber acknowledges and represents as
follows:
1. The Subscriber has received copies of all documents and any other
information requested from the Company and has had an opportunity to ask
questions of and receive answers from the management of the Company
concerning the terms and conditions of the offering and to obtain any
additional information desired or has elected to waive such opportunity. The
Subscriber confirms that the Subscriber is fully informed regarding the
financial condition of the Company, the administration of its business
affairs and its prospects for the future, and that the Company makes no
assurance whatsoever concerning the present and prospective value of the
Shares to be acquired.
2. The Subscriber realizes that the Shares, as an investment, are
speculative and involve a high degree of risk. The Subscriber believes that
an investment in the Shares is suitable for the Subscriber based upon the
Subscriber's investment objectives and financial needs, and the Subscriber
has the financial means to undertake the risks of an investment in the
Shares, to hold the Shares for an indefinite period of time, and to withstand
a complete loss of the Subscriber's investment in the Shares.
3. The Subscriber, either alone or with the assistance of a professional
advisor, has such knowledge and experience in financial and business matters
that the Subscriber is capable of evaluating the merits and risks of an
investment in the Shares. The Subscriber has obtained, to the extent deemed
necessary, personal professional advice with respect to the risks inherent
in, and the
<PAGE>
suitability of, an investment in the Shares in light of the Subscriber's
financial condition and investment needs.
4. The Shares are being purchased by the Subscriber for investment
purposes in the Subscriber's name solely for Subscriber's own beneficial
interest and not as nominee for, or for the beneficial interest of, or with
the intention to transfer to, any other person, trust or organization.
5. The Subscriber acknowledges that (a) the Subscriber must bear the
economic risk of an investment in the Shares for an indefinite period of time
because the Shares have not been registered under the Securities Act of 1933
or any applicable state securities laws and therefore may not be sold,
transferred, assigned or otherwise disposed of unless such disposition is
subsequently registered under such laws or exemptions from such registrations
are available, and (b) a legend will be placed on the certificate evidencing
the Shares stating that the Shares have not been registered under the
Securities Act of 1933 and referencing the restrictions on the
transferability of the Shares.
6. The Subscriber is a bona fide resident of the State of Minnesota.
7. The Subscriber is an "accredited investor" within the meaning of Rule
501 under the Securities Act of 1933 since the Subscriber is a director or
executive officer of the Company.
8. The Subscriber desires that the Shares be held as follows (check one):
(a) /X/ Individual Ownership (e) / / Tenants in Common
(b) / / Community Property (f) / / Corporation*
(c) / / Jt. Tenant with Right of Survivorship (g) / / Trust*
(both parties must sign)
(d) / / Partnership* (h) / / Other (please describe)
-----------------------
Dated: October 10, 1997
/s/ Robert A. Pitner
--------------------------------
Robert A. Pitner
420 North Fifth Street
Ford Centre, Suite 1040
Minneapolis, Minnesota 55401
Social Security Number: ###-##-####
* * * * * * * *
This Subscription Agreement is accepted by the Company as of October 10,
1997.
NICOLLET PROCESS ENGINEERING, INC.
By: /s/ Pierce A. McNally
-----------------------------
Pierce A. McNally
Its: Chairman of the Board
2
<PAGE>
EXHIBIT 6
November 11, 1997
Nicollet Process Engineering, Inc.
Ford Centre, Suite 1040
420 North Fifth Street
Minneapolis, Minnesota 55401
RE: NICOLLET PROCESS ENGINEERING, INC.
SCHEDULE 13D
Dear Ladies and Gentlemen:
Enclosed please find one Schedule 13D prepared and filed on behalf of each of
the undersigned, Pierce A. McNally and Robert A. Pitner.
Very truly yours,
/s/ Pierce A. McNally
- ----------------------------------
Pierce A. McNally
/s/ Robert A. Pitner
- ----------------------------------
Robert A. Pitner
