<PAGE>
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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-KSB/A
AMENDMENT NO. 2
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended August 31, 1998
/ / TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from __________________ to _____________________.
COMMISSION FILE NO.: 0-27928
____________________
NICOLLET PROCESS ENGINEERING, INC.
(Name of small business issuer in its charter)
MINNESOTA 41-1528120
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
420 NORTH FIFTH STREET, FORD CENTRE, SUITE 1040,
MINNEAPOLIS, MINNESOTA 55401
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (612) 339-7958
Securities registered under Section 12(b) of the Exchange Act: NONE.
Securities registered under Section 12(g) of the Exchange Act:
COMMON STOCK, NO PAR VALUE
____________________
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
YES /X/ NO / /
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this Form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. /X/
State issuer's revenues for its most recent fiscal year. $1,122,579
As of November 20, 1998, 6,211,861 shares of Common Stock of the
Registrant were deemed outstanding, and the aggregate market value of the Common
Stock of the Registrant (based upon the average of the closing bid and asked
prices of the Common Stock at that date as reported by the OTC Bulletin Board),
excluding outstanding shares beneficially owned by directors and executive
officers, was approximately $2,621,000.
Transitional Small Business Disclosure Format (check one): YES / / NO /X/
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PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
(a) DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
OF THE COMPANY
The following persons are directors of the Company, as of December 15,
1998.
<TABLE>
<CAPTION>
NAME OF DIRECTOR OR NOMINEE AGE PRINCIPAL OCCUPATION
- --------------------------- --- -----------------------------------------------
<S> <C> <C>
Pierce A. McNally 49 Chairman of the Board of the Company
Robert A. Pitner 55 Chief Executive Officer of the Company
Thomas W. Bugbee (1) 47 President of Bugbee and Associates, Inc. and
President of Datalog, Inc.
Benton J. Case, Jr. (1) 63 President of Rainy River Resources, Inc.
Andrew K. Boszhardt, Jr. 42 Chief Executive Officer of Oscar Capital
Management, LLC
Frank van Luttikhuizen 44 Chief Financial Officer of the Company and
Chief Financial Officer of TECHinspirations, Inc.
John van Leeuwen 40 Chairman of the Board of TECHinspirations, Inc.
</TABLE>
(1) Member of the Audit Committee and Compensation Committee.
PIERCE A. MCNALLY has served as the Director of Corporate Development
of the Company from October 1, 1996 to December 1998, the Chairman of the
Board since May 1995 and has been a director since 1992. He also currently
serves as Chairman of the Board and Chief Executive Officer of Minnesota
American, Inc., a Minnetonka, Minnesota based holding company which owns
LockerMate Corporation, a developer of locker products. From January 1992
until October 1994, he was President and Co-Chief Executive Officer of
Minnesota American, Inc. Prior to that time, Mr. McNally was an officer and
director of Midwest Communications, Inc., a communications company. He also
serves on the board of directors of Imaging Institute, Inc., Rainy River
Resources, Inc. ("Rainy River") and Minnesota American, Inc.
ROBERT A. PITNER has served as Chief Executive Officer and director of
the Company since April 1991, as President from April 1991 to November 1998,
and as Chief Financial Officer from April 1997 to December 1998. From April
1991 to May 1995, Mr. Pitner also served as the Company's Chief Financial
Officer. From June 1989 to April 1991, Mr. Pitner was a Vice President at
Wiken Advertising and Promotion, a consulting firm specializing in "high
tech" industries. From 1988 to 1989, he was President and Chief Operating
Officer of Springboard Software, Inc., a software company. Prior to 1988, Mr.
Pitner spent twenty years in the banking industry in various executive
positions, most recently as a senior executive at First Bank System.
2
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THOMAS W. BUGBEE joined the Company's Board of Directors in 1988. He
has been the Chief Financial Officer of Datalog, Inc., a medical
technology/information company, since January 1, 1997. Mr. Bugbee has also been
the President of Bugbee and Associates, Inc., a corporate finance advisory
services company, since January 1996 when he founded the company. From November
1991 through January 1996, Mr. Bugbee was the President of Bugbee, Anton and
Associates, Inc., a corporate finance advisory services company. In addition,
Mr. Bugbee served as the Chief Financial Officer of D.V. Talbott, a high
technology fabric company, from June 1995 through June 1996. From 1989 to 1991,
he was a Senior Manager for Ernst & Young LLP and managed the Minneapolis Debt
Restructuring Group.
BENTON J. CASE, JR., joined the Company's Board of Directors in 1988.
Since May 1978, Mr. Case has been employed by Rainy River, a company engaged in
oil and gas exploration. Mr. Case has served as President of Rainy River since
February 1991 and prior to that time, held the position of Treasurer. Mr. Case
has also served as Vice President of Future Care Systems, Inc. since 1994. From
October 1990 until March 1994, he was a general partner of Skylark II, a venture
capital firm. Skylark II was sold to Rainy River in 1994. Mr. Case is also a
member of the Board of Directors of Future Care Systems, Inc.
ANDREW K. BOSZHARDT, JR., joined the Company's Board of Directors in
November 1997. Mr. Boszhardt currently serves as the Chief Executive Officer of
Oscar Capital Management, LLC, an investment advisory firm, which he co-founded
in December 1996. From 1980 through November 1996, Mr. Boszhardt was employed
by Goldman Sachs & Co. where he served as a Vice President and was active in
securities brokerage and asset management.
JOHN VAN LEEUWEN, joined the Company's Board of Directors in December
1998. Mr. Leeuwen currently serves as Chairman of the Board of
TECHinspirations, Inc., a venture capital investment firm which he co-founded
in June 1996. From October 1992 to June 1996, Mr. van Leeuwen was the
President and General Manager of Baan Company Canada, a European software
company. In September 1987, Mr. van Leeuwen founded STROHN Systems Inc., a
computer systems integration and engineering services business.
FRANK VAN LUTTIKHUIZEN, joined the Company's Board of Directors in
December 1998 and has served as the Chief Financial Officer since December
1998. Since September 1996, Mr. Luttikhuizen has been the Chief Financial
Officer of TECHinspirations, Inc., a venture capital investment firm. From
June 1993 to March 1996, Mr. Luttikhuizen was the Director of Finance and
Administration of Baan Company Canada, a European software company.
Mr. Luttikhuizen was an independent consultant from August 1990 to June 1993.
From July 1985 to July 1990, Mr. Luttikhuizen held various positions in
administration and finance at Victoria Hospital. From June 1983 to July 1985,
he held various positions in administration and finance at Union Gas and from
August 1979 to June 1983, Mr. Luttikhuizen was an accountant at Coopers &
Lybrand.
Information concerning executive officers of the Company is included in
this Report under Item 4A, "Executive Officers of the Company."
(b) SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and executive officers and all persons who
beneficially own more than 10% of the outstanding shares of the Company's Common
Stock to file with the Securities and Exchange Commission initial reports of
ownership and reports of changes in ownership of the Company's Common Stock.
Executive officers, directors and greater than 10% beneficial owners are also
required to furnish the Company with copies of all Section 16(a) forms they
file. To the Company's knowledge, based upon a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the year ended August 31, 1998, none of the
Company's directors or officers or beneficial owners of greater than 10% of the
Company's Common Stock failed to file on a timely basis the forms required by
Section 16 of the Exchange Act.
3
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION.
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth the cash and non-cash compensation for
each of the last two fiscal years awarded to or earned by the Chief Executive
Officer of the Company and the three other most highly compensated executive
officers of the Company whose salary and bonus exceeded $100,000 in the last
fiscal year (the "Named Executive Officers"). Other than Mr. Pitner, no other
executive officer of the Company had salary and bonus which exceeded $100,000 in
the fiscal year ended August 31, 1998.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES
-------------------------- UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) OPTIONS(#)
- --------------------------- ---- --------- ----------- ----------
<S> <C> <C> <C> <C>
Robert A. Pitner 1998 $108,000 $ 0 263,500(2)
(PRESIDENT AND CHIEF EXECUTIVE 1997 108,000 34,000 26,000
OFFICER AND INTERIM CHIEF 1996 108,000 50,000 7,500
FINANCIAL OFFICER)
</TABLE>
- ---------------------------
(1) Cash bonuses for services rendered have been included as compensation
for the year earned, even though such bonuses were actually paid in the
following year.
(2) Mr. Pitner was granted options to purchase an aggregate of 263,500
shares of Common Stock during fiscal 1998. Of this amount, an aggregate of
248,500 shares represented options originally granted in December 1993, July
1994, August 1994, August 1995, September 1995 and October 1996, respectively,
that were canceled and reissued in June 1998. See "Board of Directors Report on
Repricing of Options."
4
<PAGE>
OPTION GRANTS AND EXERCISES
The following tables summarize option grants and exercises during the
year ended August 31, 1998 to or by the Named Executive Officers and the
potential realizable value of the options held by such persons at August 31,
1998.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------------
PERCENT OF TOTAL
NUMBER OF OPTIONS GRANTED TO
SECURITIES EMPLOYEES IN EXERCISE EXPIRATION
NAME UNDERLYING FISCAL YEAR OR BASE DATE
- ---- OPTIONS ----------- PRICE($/Sh) -----------
GRANTED(#)(1) -----------
-------------
<S> <C> <C> <C> <C>
Robert A. Pitner 15,000(2)(10) 3.0% $0.3125 08/31/00
100,000(3)(10) 20.2% $0.3125 07/31/04
50,000(4)(10) 10.1% $0.3125 08/31/04
16,000(5)(10) 3.2% $0.3125 10/07/01
10,000(6)(10) 2.0% $0.3125 08/01/99
50,000(7)(10) 10.1% $0.3125 08/31/00
7,500(8)(10) 1.5% $0.3125 09/01/00
15,000(9) 3.0% $0.5000 04/23/03
</TABLE>
- ------------------
(1) The options listed above were granted under the 1995 Plan. Options
become exercisable under the 1995 Plan so long as the executive remains
in the employ of the Company or one of its subsidiaries. To the extent
not already exercisable, options granted under the 1995 Plan become
immediately exercisable in full upon certain changes in control of the
Company, provided that, upon such a change in control, the Compensation
Committee may determine that holders of options granted under the 1995
Plan will receive cash in an amount equal to the excess of the fair
market value of such shares immediately prior to the effective date of
such change in control of the Company over the exercise price of such
options.
(2) These options were granted on December 1, 1993 and were subsequently
canceled and reissued on June 1, 1998. See Note (10) below.
(3) This option was granted on July 31, 1994 and was subsequently canceled
and reissued on June 1, 1998. See Note (10) below.
(4) This option was granted on August 31, 1994 and was subsequently canceled
and reissued on June 1, 1998. See Note (10) below.
(5) This option was granted on October 7, 1996 and was subsequently canceled
and reissued on June 1, 1998. See Note (10) below.
(6) This option was granted on August 1, 1994 and was subsequently canceled
and reissued on June 1, 1998. See Note (10) below.
5
<PAGE>
(7) This option was granted on August 31, 1995 and was subsequently canceled
and reissued on June 1, 1998. See Note (10) below.
(8) This option was granted on September 1, 1995 and was subsequently
canceled and reissued on June 1, 1998. See Note (10) below.
(9) This option was granted on April 23, 1998 and is exercisable in full.
(10) These options were granted on June 1, 1998 during the repricing program
and replaced a like number of previously granted options.
AGGREGATED OPTION EXERCISES IN
LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT FY-END IN-THE-MONEY OPTIONS
ACQUIRED VALUE (#)(1) AT FY-END ($)(2)
NAME ON REALIZED ------------------------- -------------------------
- ---- EXERCISE(#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
----------- --- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Robert A. Pitner 0 $ 0 273,500/0 $18,767/$0
</TABLE>
- -------------------
(1) The exercise price of options granted under the Company's 1995 Plan may
be paid in cash or in shares of the Company's Common Stock valued at
fair market value on the date of exercise. In addition, the exercise
price of options granted may be paid pursuant to a cashless exercise
procedure under which the executive provides irrevocable instructions to
a brokerage firm to sell the purchased shares and to remit to the
Company, out of the sale proceeds, an amount equal to the exercise price
plus all applicable withholding taxes. Under the 1995 Plan, the
Compensation Committee also has the discretion to grant a supplemental
cash bonus to an optionee in connection with the grant or exercise of an
option or both the grant and exercise of an option.
(2) Value is based on the difference between the fair market value of the
Common Stock on August 29, 1998 and the exercise price of the options.
The fair market value of the Common Stock as of August 29, 1998, was
calculated as the average of the bid and asked prices as quoted in the
local over-the-counter market ($.4063). The exercise price of
outstanding options range from approximately $0.3125 to $0.72 per share.
STOCK OPTION PLANS
The Company's 1995 Amended and Restated Stock Incentive Plan (the "1995
Plan"), which was approved by the Company's shareholders in January 1996,
replaced the Company's 1990 Stock Option Plan (the "1990 Plan"). The 1995 Plan
provides for the grant to participating eligible recipients of the Company of
options to purchase Common Stock, restricted stock awards, performance units,
stock bonuses and stock appreciation rights. See "Proposal to Amend the Amended
and Restated 1995 Stock
6
<PAGE>
Incentive Plan" for a description of the 1995 Plan, including terms related to a
change in control of the Company.
The terms of the 1990 Plan are substantially similar to those of the
1995 Plan, although the 1990 Plan does not provide for the grant of performance
units, restricted stock awards or stock bonuses. Also, under the 1990 Plan, in
the event of a dissolution or liquidation of the Company, a merger (other than a
merger effecting a reincorporation of the Company in another state) or
consolidation in which the Company is not the surviving corporation, or a
transaction in which another corporation becomes the owner of 50% or more of the
total combined voting power of all classes of stock of the Company, all
outstanding options and stock appreciation rights will become immediately
exercisable in full and will remain exercisable for the remainder of their
terms; provided, however, that such acceleration of exercisability shall not
apply to a given option or stock appreciation right if any surviving or
acquiring corporation agrees to assume such option or stock appreciation right
in connection with the merger, consolidation, or transaction or agrees to
substitute a new option satisfying the requirements of Section 425(a) of the
Internal Revenue Code of 1986, as amended, or to substitute a new stock
appreciation right.
EMPLOYMENT AND CONSULTING AGREEMENTS
The Company entered into a new employment agreement with its President
and Chief Executive Officer, Robert A. Pitner (the "Pitner Employment
Agreement") on September 1, 1998 that provides for an annual base salary of
$120,000, which amount may be increased by the Board of Directors, and a
discretionary bonus, payable in cash, stock options or any other manner, with
the amount and terms to be determined by the Board of Directors. Under the
terms of the Pitner Employment Agreement, Mr. Pitner was granted stock
options for the purchase of 351,834 shares of Common Stock at an exercise
price of $.25 per share exercisable until September 1, 2004. The Pitner
Employment Agreement contains provisions providing for the assignment of
inventions by Mr. Pitner, the maintenance of confidential information of the
Company and is subject to a one-year non-competition clause in the event of
termination of employment. The Pitner Employment Agreement may be terminated
(i) by either party upon six month's notice for whatever reason; and (ii) by
the Company immediately in the event Mr. Pitner defaults or does not perform.
Upon termination, if Mr. Pitner does not obtain employment consistent with
his training and education because of the non-competition clause, the Company
must compensate Mr. Pitner until he secures employment at a rate of 100% of
his current base salary for the first twelve months of separation from the
Company.
On May 1, 1995, the Company entered into an agreement with Pierce A.
McNally providing for Mr. McNally's services as Chairman of the Board of the
Company on an as needed, up to full time basis. For Mr. McNally's services, he
currently receives compensation of $52,500 per year plus a bonus payable at the
discretion of the Board of Directors. As part of the agreement, on September 1,
1995, Mr. McNally was granted options to purchase 10,000 shares of Common Stock
at an exercise price of $3.00 for five years. These options were immediately
vested and remain exercisable until September 1, 2000. On October 26, 1995, the
Company amended this agreement to provide for the future grant of additional
options to purchase 15,000 shares should the Board of Directors so determine.
The Board of Directors granted such options to Mr. McNally on October 7, 1996.
These options have an exercise price of $2.63 and are fully exercisable until
October 7, 2001.
On June 18, 1998, the Company entered into a letter agreement with Evros
Psiloyenis providing for his employment on an "at will" basis as the Company's
President. Mr. Psiloyenis began employment
7
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on November 1, 1998. Mr. Psiloyenis is paid an annual base salary of $120,000,
which amount may be increased by the Board of Directors, and a discretionary
bonus, payable on completion of quarterly financial statements. In December
1998, Mr. Psiloyenis was granted an option to purchase 500,000 shares of Common
Stock at an exercise price of $0.25 per share which vests with respect to
200,000 shares after two years and 100,000 after each of the next three years.
DIRECTOR COMPENSATION
The Company does not pay fees to the members of the Board of Directors
except to Mr. McNally, who, pursuant to a written agreement, currently receives
compensation of $52,500 per year, plus a discretionary bonus. See "Executive
Compensation and Other Benefits--Employment and Consulting Agreements." On
April 23, 1998, for fiscal 1998, Messrs. McNally, Pitner and Case were each
granted an option to purchase 15,000 shares of Common Stock at a price of $0.50
per share. All of these options are fully vested and remain exercisable until
April 23, 2003.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
PRINCIPAL SHAREHOLDERS AND BENEFICIAL OWNERSHIP OF MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of the Common Stock of the Company as of December 15, 1998 unless
otherwise noted (a) by each shareholder who is known by the Company to own
beneficially more than 5% of the outstanding Common Stock, (b) by each director,
(c) by each executive officer named in the Summary Compensation Table and (d) by
all executive officers and directors of the Company as a group.
8
<PAGE>
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
BENEFICIALLY OWNED(1)
-------------------------
PERCENT OF
NAME AMOUNT CLASS (2)
---- ------ ---------
<S> <C> <C>
Oscar Capital Management Group (3).......................... 2,308,833 36.6%
David L. Chamberlain (4).................................... 765,500 12.3%
Pierce A. McNally (5)(6).................................... 1,014,662 14.7%
Robert A. Pitner (6)(7)..................................... 1,014,662 14.7%
Benton J. Case, Jr. (8)..................................... 176,265 2.8%
Thomas W. Bugbee (9)........................................ 127,790 2.0%
Andrew K. Boszhardt, Jr. (10)............................... 2,308,833 36.6%
Frank van Luttikhuizen (11)................................. 0 0%
John van Leeuwen (12)....................................... 0 0%
Evros Psiloyenis (13)....................................... 0 0%
All executive officers and directors as a
group (8 persons) (14)...................................... 3,627,550 50.9%
</TABLE>
- ---------------------------
(1) Except as otherwise indicated in the footnotes to this table, the
persons named in the table have sole voting and investment power with
respect to all shares of Common Stock. Shares of Common Stock subject
to options or warrants currently exercisable or exercisable within 60
days are deemed outstanding for computing the percentage of the person
holding such options but are not deemed outstanding for computing the
percentage of any other person.
(2) Based on 6,211,861 shares of Common Stock outstanding as of December 15,
1998.
(3) Includes 233,333 shares of Common Stock held by Oscar Capital
Management, LLC ("Oscar Capital"); 1,804,833 shares of Common Stock held
by Andrew K. Boszhardt, Jr.; 104,000 shares of Common Stock issuable
upon the exercise of outstanding warrants held by Mr. Boszhardt; and
166,667 shares of Common Stock held by Anthony Scaramucci. Does not
include 732,500 shares of Common Stock held by David R. Chamberlain or
33,000 shares of Common Stock issuable upon the exercise of outstanding
warrants held by Mr. Chamberlain. Mr. Boszhardt and Mr. Scaramucci are
the sole members of Oscar Capital. Mr. Chamberlain is a former
co-worker and long-time friend of Mr. Boszhardt and is not otherwise
affiliated with Oscar Capital or Mr. Boszhardt. The address for Oscar
Capital is 900 Third Avenue, New York, NY 10022.
(4) Includes 33,000 shares of Common Stock issuable upon the exercise of
outstanding warrants. Does not include 233,333 shares of Common Stock
held by Oscar Capital; 1,804,833 shares of Common Stock held by Andrew
K. Boszhardt, Jr.; 104,000 shares of Common Stock issuable upon the
exercise of outstanding warrants held by Mr. Boszhardt; or 166,667
shares of Common Stock held by Anthony Scaramucci. The address for Mr.
Chamberlain is 260 Wrights Road, Aspen, Colorado 81612.
(5) Includes 92,500 shares of Common Stock beneficially owned by Robert A.
Pitner who shares voting power with Mr. McNally regarding the election
of a director of the Company. See footnote (6). Also includes: (i)
89,000 shares of Common Stock issuable to Mr. McNally upon the exercise
of outstanding stock options; (ii) 610,334 shares of Common Stock
issuable to Mr. Pitner upon the exercise of outstanding stock options;
(iii) 4,000 shares of Common Stock issuable upon
9
<PAGE>
exercise of outstanding warrants held by Mr. McNally's wife as custodian
for the benefit of their daughters as to which Mr. McNally disclaims any
beneficial interest; and (iv) an aggregate of 16,000 shares of Common
Stock held by Mr. McNally's wife as custodian for the benefit of their
daughters as to which Mr. McNally disclaims any beneficial interest.
Mr. McNally's address is 420 North Fifth Street, Ford Centre, Suite
1040, Minneapolis, MN 55401.
(6) Messrs. McNally and Pitner are parties to a Letter Agreement dated
November 7, 1997 (the "Letter Agreement") whereby they agreed to vote
all shares of Common Stock of the Company held by them "FOR" the
election of Andrew K. Boszhardt, Jr., or his nominee, as director of the
Company. Under the rules of the Securities and Exchange Commission,
Messrs. Pitner and McNally may be deemed to share voting power over each
other's shares of Common Stock. Messrs. Pitner and McNally disclaim any
beneficial interest in the other person's shares of Common Stock.
(7) Includes 187,828 shares of Common Stock beneficially owned by Pierce A.
McNally who shares voting power with Mr. Pitner regarding the election
of a director of the Company. See footnote (6). Also includes: (i)
610,334 shares of Common Stock issuable to Mr. Pitner upon the exercise
of outstanding stock options; (ii) 89,000 shares of Common Stock
issuable to Mr. McNally upon the exercise of outstanding options; (iii)
4,000 shares of Common Stock issuable upon exercise of outstanding
warrants held by Mr. McNally's wife as custodian for the benefit of
their daughters as to which Mr. McNally disclaims any beneficial
interest; and (iv) an aggregate of 16,000 shares of Common Stock held by
Mr. McNally's wife as custodian for the benefit of their daughters as to
which Mr. McNally disclaims any beneficial interest. The address for
Mr. Pitner is 420 North Fifth Street, Ford Centre, Suite 1040,
Minneapolis, MN 55401.
(8) Includes 60,000 shares of Common Stock issuable upon the exercise of
outstanding stock options; 46,501 shares of Common Stock held by Mr.
Case's wife, as to which Mr. Case disclaims any beneficial interest;
17,430 shares of Common Stock held by Rainy River Resources, Inc.
("Rainy River"); and 4,000 shares of Common Stock held by FCSI Business
Development Corp. ("FCSI"). Mr. Case is an executive of Rainy River and
the Vice President of FCSI. Mr. Case disclaims beneficial ownership of
shares held by Rainy River and FCSI except to the extent of his
pecuniary interest therein.
(9) Includes 47,500 shares of Common Stock issuable upon the exercise of
outstanding stock options.
(10) Includes 104,000 shares of Common Stock issuable upon the exercise of
outstanding warrants; 233,333 shares of Common Stock held by Oscar
Capital; and 166,667 shares of Common Stock held by Anthony Scaramucci.
Does not include 732,500 shares of Common Stock held by David R.
Chamberlain or 33,000 shares of Common Stock issuable upon the exercise
of outstanding warrants held by Mr. Chamberlain.
(11) The address for Mr. van Luttikhuizen is 2275 No. 8 Side Road, R.R. #2,
Milton, Ontario, Canada. Does not include any shares of Common Stock
issuable upon exercise of options to be issued to TECH under the TECH
Letter of Intent.
(12) The address for Mr. van Leeuwen is 2275 No. 8 Side Road, R.R. #2,
Milton, Ontario, Canada. Does not include any shares of Common Stock
issuable upon exercise of options to be issued to TECH under the TECH
Letter of Intent.
10
<PAGE>
(13) The address for Mr. Psiloyenis is 420 North Fifth Street, Ford Centre,
Suite 1040, Minneapolis, MN 55401.
(14) Includes 806,834 shares of Common Stock issuable upon exercise of
outstanding options; 438,529 shares of Common Stock held by directors'
spouses, a director's spouse as custodian for the benefit of their
children, and certain affiliates of directors, as to which such
directors disclaim any beneficial interest except to the extent of their
pecuniary interest therein; 104,000 shares of Common Stock issuable upon
exercise of outstanding warrants held by a director; and 4,000 shares of
Common Stock issuable upon exercise of outstanding warrants held by a
director's wife as custodian for his children, as to which such director
disclaims any beneficial interest.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information under Item 9 is incorporated herein by reference.
On November 7, 1997, the Company entered into Subscription Agreements
(the "Subscription Agreements") with certain investors (collectively, the
"Investors"), including Andrew K. Boszhardt, Jr., a member of the Company's
Board of Directors, pursuant to which the Investors agreed to purchase an
aggregate of 1,166,667 shares of Common Stock at purchase price of $0.60 per
share. As a condition to the Investors' purchase of such shares, members of the
Company's Board of Directors, were required to purchase an aggregate of 100,000
shares of Common Stock (the "Director Shares") at a purchase price of $0.60 per
share. In connection with the Subscription Agreements, the Company agreed to
allow Mr. Boszhardt, or his designee, to nominate one director (such nominee,
the "Boszhardt Nominee") for election as a member of the Board of Directors of
the Company at each annual meeting of shareholders or any other meeting at which
directors are elected (such director, the "Boszhardt Director"). The Company
agreed to use its good faith, reasonable efforts to ensure that the Boszhardt
Director will continue as a member of the Board of Directors for such period as
the Investors and/or any affiliates of Mr. Boszhardt own, in the aggregate,
beneficially and of record not less than 500,000 shares of Common Stock of the
Company (the "Minimum Holding Period"). Additionally, in connection with the
Subscription Agreements, Messrs. McNally and Pitner entered into a Letter
Agreement dated as of November 7, 1997 with Mr. Boszhardt, pursuant to which
Messrs. McNally and Pitner agreed to vote all of the shares of Common Stock
beneficially held by them to elect Mr. Boszhardt, or his nominee, as a member of
the Board of Directors of the Company for such Minimum Holding Period.
On December 31, 1997, the Company entered into a termination agreement
with Richard Koontz, a former officer of the Company, providing for termination
of his employment. Mr. Koontz was paid an aggregate of $50,000 under this
agreement and released all claims against the Company.
On February 26, 1998, the Company sold 450,000 shares of Common Stock at
a price of $0.50 per share, for an aggregate purchase price of $225,000, to
Andrew K. Boszhardt, Jr., a director and shareholder of the Company. On March
12, 1998, the Company sold an additional 450,000 shares of Common Stock, at a
price of $0.50 per share, for an aggregate purchase price of $225,000, to Andrew
K. Boszhardt, Jr. and Anthony Scaramucci.
On June 3, 1998, Norwest Business Credit, Inc. assigned all of its
right, title and interest in the Company's credit facilities with Norwest
Business Credit, Inc. to TECH. The loan documents underlying the credit
facility consisted of a revolving promissory note, dated May 28, 1997, in the
principal amount of $800,000, a credit and security agreement which, among
other things, granted the lender a security interest in all of the Company's
assets. The outstanding balance at the time of the assignment was approximately
$142,000. TECH has continued to make advances available to the Company under
these loan documents. The advances bear interest at the rate of 1% in excess
of the prime rate. As of November 30, 1998, the principal outstanding
balance was $1,955,000.
On December 15, 1998, the Company agreed to pay TECH a fee of
$25,000 per month and to grant to TECH a warrant to purchase an aggregate of
4,750,000 shares of Common Stock, at an exercise price of $.15 per share, in
connection with the Financing, which has been arranged by TECH. Mr. van
Luttikhuizen and Mr. van Leeuwen are principals of TECH.
11
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Date: December 31, 1998 NICOLLET PROCESS ENGINEERING, INC.
By: /s/ Evros Psiloyenis
----------------------------------------------
Evros Psiloyenis
President
(executive officer)
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<PAGE>
NICOLLET PROCESS ENGINEERING, INC.
Exhibit Index to Annual Report On
Form 10-KSB
For Fiscal Year Ended August 31, 1998
<TABLE>
<CAPTION>
ITEM NO. DESCRIPTION METHOD OF FILING
- -------- ----------- ----------------
<S> <C> <C>
3.1 Articles of Incorporation, as amended............................................ (3)
3.2 Bylaws, as amended............................................................... (2)
4.1 Specimen Form of the Company's Common Stock Certificate.......................... (1)
4.2 Warrant for Purchase of Shares of Common Stock of the Company issued to Anelise
Sawkins dated August 9, 1993................................................. (1)
4.3 Form of Warrant for Purchase of Shares of Common Stock of the Company issued in
connection with November 1993 private placement.............................. (1)
4.4 Warrant for Purchase of Shares of Common Stock of the Company issued to Charlie
Phelps dated May 5, 1994..................................................... (1)
4.5 Form of Warrant for Purchase of Shares of Common Stock of the Company issued in
connection with advertising design services.................................. (1)
4.6 Form of Warrant for Purchase of Shares of Common Stock of the Company issued in
connection with January 1995 private placement............................... (1)
4.7 Form of Warrant for Purchase of Shared of Common Stock of the Company issued in
connection with February 1995 private placement.............................. (1)
4.8 Warrant for Purchase of Shares of Common Stock of the Company issued to Tuschner
& Company, Inc. dated February 7, 1995....................................... (1)
4.9 Form of Warrant for Purchase of Shares of Common Stock of the Company issued in
connection with March 1995 private placement................................. (1)
4.10 Warrant for Purchase of Shares of Common Stock of the Company issued to Tuschner
& Company dated March 2, 1995................................................ (1)
4.11 Form of Warrant for Purchase of Shares of Common Stock of the Company issued in
connection with March 1995 bridge financing.................................. (1)
4.12 Form of Warrant for Purchase of Shares of Common Stock of the Company issued in
connection with repayment of March 1995 bridge financing..................... (1)
4.13 Form of Warrant for Purchase of Shares of Common Stock of the Company issued in
connection with January 1996 bridge financing................................ (1)
</TABLE>
E-1
<PAGE>
<TABLE>
<CAPTION>
ITEM NO. DESCRIPTION METHOD OF FILING
- -------- ----------- ----------------
<S> <C> <C>
4.14 Warrant for Purchase of Shares of Common Stock of the Company issued to Dillon
Advertising dated July 31, 1997.............................................. (7)
4.15 Warrant for Purchase of Shares of Common Stock of the Company issued to Dillon
Advertising dated August 31, 1997............................................ (7)
4.16 Registration Rights Agreement Dated as of November 7, 1997
among the Company and certain Investors...................................... (6)
10.1 1990 Stock Option Plan........................................................... (1)
10.2 1995 Amended and Restated Stock Incentive Plan................................... (1)
10.3 Agreement between the Company and Pierce A. McNally, dated June 1, 1995.......... (1)
10.4 Amendment No. 1, dated effective October 26, 1995 to Agreement between the
Company and Pierce A. McNally, dated June 1, 1995............................ (1)
10.5 Settlement Agreement between the Company and John W. Mickowski, dated October 1,
1995......................................................................... (1)
10.6 Form of Indemnification Agreement by and between the Company and the Officers and
Directors of the Company..................................................... (1)
10.7 Lease Agreement by and between Hillcrest Development and the Company, dated
January 11, 1993............................................................. (1)
10.8 Agreement for the First Amendment to a Lease between Hillcrest Development and
the Company, dated June 8, 1993.............................................. (1)
10.9 Agreement for the Second Amendment to a Lease between Hillcrest Development and
the Company, dated July 20, 1993............................................. (1)
10.10 Agreement for the Third Amendment to a Lease between Hillcrest Development and
the Company, dated November 12, 1993......................................... (1)
10.11 Agreement for the Sixth Amendment to a Lease between Hillcrest Development and
the Company, dated October 7, 1994........................................... (1)
</TABLE>
E-2
<PAGE>
<TABLE>
<CAPTION>
ITEM NO. DESCRIPTION METHOD OF FILING
- -------- ----------- ----------------
<S> <C> <C>
10.12 Agreement for the Seventh Amendment to a Lease between Hillcrest Development and
the Company dated September 3, 1996.......................................... (2)
10.13 Agreement for the Eighth Amendment to a Lease between Hillcrest Development and
the Company dated October 18, 1996........................................... (2)
10.14 Software Purchase Agreement between Larry D. Glendenning, dba LDG Software
Solutions and the Company dated effective August 1, 1995..................... (1)
10.15 Promissory Note and Security Agreement in favor of Larry D. Glendenning, dba LDG
Software Solutions dated effective August 1, 1995............................ (1)
10.16 Termination Agreement dated December 31, 1997 between the Company and Richard A.
Koontz....................................................................... (8)
10.17 Credit and Security Agreement dated as of May 28, 1997 by and between Norwest
Business Credit, Inc. and the Company........................................ (4)
10.18 Credit and Security Agreement dated as of May 28, 1997 by and between Norwest
Bank Minnesota, National Association and the Company......................... (4)
10.19 Subscription Agreement dated as of November 7, 1997 among the Company and certain
Investors.................................................................... (5)
10.20 First Amendment dated as of November 24, 1997 to Credit and Security Agreement
dated as of May 28, 1997 by and between Norwest Business Credit, Inc. and the
Company...................................................................... (7)
10.21 Nonrecourse Assignment dated as of June 8, 1998 by and between Norwest Business
Credit Inc. and TECHinspirations, Inc. (8)
10.22 Employment Proposal Agreement dated June 18, 1998 between the Company and Evros
Psiloyenis................................................................... (8)
10.23 Employment Agreement between the Company and Robert A. Pitner, dated
September 1, 1998............................................................ Filed Herewith
23.1 Consent of Ernst & Young LLP..................................................... (9)
27.1 Financial Data Schedule.......................................................... (9)
</TABLE>
- ------------------------------------
(1) Incorporated by reference for the Company's Registration Statement on
Form SB-2 (File No. 333-00852C).
(2) Incorporated by reference for the Company's Annual Report on Form 10-KSB
for the fiscal year ended August 31, 1996 (File No. 0-27928).
E-3
<PAGE>
(3) Incorporated by reference for the Company's Quarterly Report on Form
10-QSB for the fiscal quarter ended February 28, 1997 (File No.
0-27928).
(4) Incorporated by reference for the Company's Quarterly Report on Form
10-QSB for the fiscal quarter ended May 31, 1997 (File No. 0-27928).
(5) Incorporated by reference for a Schedule 13D/A dated November 12, 1997,
filed on behalf of Pierce A. McNally and Robert A. Pitner.
(6) Incorporated by reference for the Company's Current Report on Form 8-K
as filed with the Securities and Exchange Commission on November 17,
1997 (File No. 0-27928).
(7) Incorporated by reference for the Company's Annual Report on Form 10-KSB
for the year ended August 31, 1997 (File No. 0-27928).
(8) Incorporated by reference for the Company's Annual Report on Form 10-KSB
for the year ended August 31, 1998 (File No. 0-27928).
(9) Incorporated by reference to Amendment No. 1 for the Company's Annual
Report on Form 10-KSB for the year ended August 31, 1998 (File No.
0-27928).
E-4
<PAGE>
NICOLLET PROCESS ENGINEERING, INC.
EMPLOYMENT AGREEMENT
WITH
This Employment Agreement (the "Agreement") is effective as of SEPTEMBER 1, 1998
by and between NICOLLET PROCESS ENGINEERING, INC. (the "Company") and ROBERT A.
PITNEY (the "Employee").
RECITALS
WHEREAS, the Company desires to employ Employee and Employee desires to be
employed by the Company;
WHEREAS, Employee and the Company recognize the importance of protecting
the Company's rights with respect to its business information and inventions as
well as its business relationships and goodwill;
WHEREAS, the Company and the Employee agree that it is fair to provide
Employee severance pay in the event Employee is terminated and unable to find
new employment as a result of his agreement not to compete with the Company;
NOW THEREFORE, in consideration of the foregoing and the mutual promises
contained in this Agreement, the parties, intending to be legally bound, agree
as follows:
1. DEFINITIONS. As used in this Agreement:
(a) "Company" means Nicollet Process Engineering, Inc., its
successors and assigns, and any of its present or future subsidiaries, or
organizations controlled by, controlling, or under common control with it.
(b) "Confidential Information" means any and all information
disclosed or made available to the Employee or known by the Employee as a direct
or indirect consequence of, or through, his employment by the Company and not
generally known in the industry in which the Company is, or may become, engaged,
or any information related to the Company's products, processes, or services,
including, but not limited to, information relating to research, development,
Inventions (as hereinafter defined), manufacture, purchasing, accounting,
engineering, marketing, merchandising, selling, or methods of doing business.
Any information that Employee reasonable considers Confidential Information, or
that the Company treats as confidential Information, will be presumed to be
Confidential Information (whether Employee or others originated it and
regardless of how Employee obtained it). Notwithstanding the foregoing,
"Confidential Information" does not include any information which is properly
published or in
1
<PAGE>
the public domain; provided, however, that information which is published by or
with the aid Employee outside the scope or contrary to the requirements of this
Agreement will not be considered to have been properly published, and therefore
will not be in public domain for purposes of this Agreement.
(c) "Inventions" means discoveries, improvements, concepts,
ideas, and works of authorship, whether patentable or copyrightable or not,
whether or not they are in writing or reduced to practice, relating to any
present or prospective activities of the Company, including, but not limited to,
devices, processes, methods, formulae, techniques, computer software and
programs, and any improvements to the foregoing.
(d) "Company Monthly Base Pay" means the Employee's last monthly
remuneration, prior to termination of his employment with the Company, before
federal, state, and local taxes and other withholding, but exclusive of extra
compensation, such as that attributable to bonuses, overtime, or employee
retirement or pension benefits.
(e) "Conflicting Organization" means any person or organization
engaged, directly or indirectly, in the research, development, production,
marketing or selling of a Conflicting Product or Service in the United States.
(f) "Conflicting Product or Service" means any product, process
or service of any person or organization, other than the Company, in existence
or under development, which resembles, competes with or is marketed or offered
for sale or lease to the same or similar potential customers as a product,
process, or service which is the subject of research, development, production,
marketing or selling activities of the Company.
2. DUTIES. The Employee shall be employed by the Company as its
Chief Executive Officer and Chief Financial Officer and shall faithfully, and to
the best of his ability, perform such duties and render such services as may be
directed by the Company. During the term of his employment with the Company,
the Employee shall devote all of his working time to the Company.
3. COMPENSATION AND TERM.
(a) SALARY. As Compensation for his services, the Employee
shall receive a base salary of $120,000 per annum, payable in biweekly
installments, subject to periodic revision.
(b) TERM AND TERMINATION.
(i) Employment hereunder shall continue subject to the
right of the Company or Employee to terminate the employment for whatever reason
or no reason on a six month's notice.
2
<PAGE>
(ii) The Company shall have the right to terminate such
employment immediately, without notice of any kind, at any time in the event of
default or nonperformance by the Employee of any of the provisions of this
Agreement.
(iii) In the event of notice given by either party, the
Employee shall continue to work for the Company for the full notice period, if
so requested by the Company. The Company reserves the right at any time to pay
to the Employee his full salary for any required notice period and to terminate
his employment immediately or at any time during such notice period.
(c) STOCK RIGHTS.
(i) As of the date hereof, the Employee shall receive a
incentive stock option to purchase 351,834 shares of the Company's Common
Stock within five years of the date hereof at a price of $.25 per share.
(ii) Such incentive stock options shall be generally on
terms and conditions comparable to the 1995 Amended and Restated Stock Incentive
Plan.
(d) PERFORMANCE BONUS. Annually, the Board of Directors of the
Company shall, in its sole discretion, consider a bonus of $100,000 for the
Employee. Such bonus, if granted, may be payable in cash, additional stock
options, or in any other manner the Board of Directors in its discretion may
choose.
(e) BENEFIT PLANS AND PROGRAMS. Subject to the terms and
conditions of such plans and programs, during the term of this Agreement
described in Paragraph 3(b) the Employee shall be entitled to participate in any
medical or other benefit plan of the Company now existing and hereafter
maintained or hereafter adopted. The Employee will continue vacation benefits
of four weeks (120 Hours) per year.
(f) EXPENSES. The Employee is authorized to incur reasonable
expenses for promoting the business of the Company, as determined by the Board
of Directors. The Company will reimburse the Employee for all such expenses
upon the presentation of an itemized account of such expenditures from time to
time.
(g) AUTOMOBILE ALLOWANCE. In addition to the compensation set
forth above, during the term of this agreement, the Company shall lease a car
for the Employee's use.
4. RIGHT TO INVENTIONS. Employee agrees that all inventions made by
Employee during the term of this Agreement, and for a period of six months after
termination, will be the Company's sole and exclusive property. With respect to
all Inventions made or conceived by the Employee, whether or not during the
hours of his employment, either solely or jointly with others, consultant will,
with respect to any invention, without royalty or any other consideration:
3
<PAGE>
(a) Inform the Company promptly and fully of such Inventions by
a written report, setting forth in detail the structures, procedures, and
methodology employed and the results achieved. A report shall also be submitted
by the Employee upon completion of any study or research project undertaken on
the Company's behalf, whether or not in the Employee's opinion a given study or
project has resulted in an Invention.
(b) Assign (and Employee does hereby assign) to the Company all
of Employee's rights to such Inventions and to all proprietary rights therein,
based thereon or related thereto, including, but not limited to, copyright and
applications for United States and foreign letters patent and resulting letters
patent; provided, however, that Employee shall not be required to assign his
rights to any Invention for which no equipment, supplies, facility or trade
secret information of the Company was used and which was developed entirely on
the Employee's own time, and (1) which does not relate (a) directly to the
business of the Company or (b) to the Company's actual or demonstrably
anticipated research or development, or 92) which does not result from any work
performed by the Employee for the Company.
(c) Execute, acknowledge and deliver such documents and provide
such assistance as may be deemed necessary by the Company to preserve property
rights in the Invention against forfeiture, abandonment or loss and to apply
for, defend or enforce any United States and foreign copyrights or letters of
patent based on, or related to, such Inventions and to vest the entire right and
title to the Invention in the Company.
(d) TRADE NAMES AND TRADEMARKS. The Employee hereby assigns and
agrees to assign to the Company any right or interest he may have in any trade
name or trademark used by the Company.
Employee represents that, except as previously disclosed to the Company in
writing, as of the date of this Agreement, Employee has no rights under, and
will make no claims against the Company with respect to any inventions,
discoveries, improvements, ideas or works of authorship which would be
Inventions if made, conceived, authored or acquired by Employee during the term
of this Agreement. With respect to any obligations performed by Employee under
this subsection following termination of this Agreement, the Company will pay or
reimburse all reasonable out-of-pocket expenses.
5. DISCLOSURE OF CONFIDENTIAL INFORMATION.
(a) CONFIDENTIALITY. Except as required in the performance of
Employee's duties to the Company, the Employee shall treat as confidential and
shall not, directly or indirectly, use, disseminate, disclose, publish, or
otherwise make available any Confidential Information or any portion thereof
during the term hereof and thereafter.
(b) RETURN OF CONFIDENTIAL INFORMATION. Upon termination of
Employee's employment with the Company, all documents, records, notebooks,
computer disks and tapes, and similar repositories containing Confidential
Information, including copies thereof,
4
<PAGE>
then in the Employee's possession, whether prepared by him or others, shall be
promptly returned to the Company. If at any time after the termination of
employment the Employee determines that he has any Confidential Information in
his possession or control, the Employee shall immediately return to the Company
all such Confidential Information, including all copies and portions thereof.
(c) WAIVER. Unless expressly set forth in detail in Exhibit A,
the Employee waives any and all rights to claim that any discoveries, concepts,
ideas, structures, processes, methods, formulae, or techniques have been made,
acquired, conceived, or reduced to practice prior to his employment by the
Company and not subject to the terms and conditions of this Agreement.
(d) RESTRICTIVE COVENANTS. Employee covenants and agrees that
during his employment, he will not plan, organize or engage in any Conflicting
Organization o conspire with others to do so. For a period of one year after
termination by the Employee or by the Company of his employment with the
Company, the Employee covenants and agrees that he will not, without the express
consent of the Company, give advice or render services as an employee, director
of or consultant to, not invest or acquire any interest in, any Conflicting
Organization or any person or organization which is engaged, or plans to engage
in, the business of producing, marketing, offering to sell or lease a
Conflicting Product or Service, provided, however, that Employee may invest in
securities of any company which is listed on a national securities exchange.
Employee further covenants and agrees that, for a period of one year after
termination by the Employee or by the Company of his employment with the
Company, Employee will not in any manner personally solicit or cause to be
solicited in competition with the Company any persons or companies who were,
are, or will be employees or customers of the Company during the term of this
Agreement.
6. SUBSEQUENT EMPLOYMENT. With respect to employment after
termination of his employment with the Company:
(a) BASE PAY. If the Employee is unable, after conscientious
effort, to obtain employment consistent with his training and education, solely
because of the provisions of Paragraph 5(d), such provisions shall bind the
Employee only so long as the Company shall make monthly payment to the Employee
equal to one hundred percent (100%) of the Employee's termination of employment
hereunder, as if he were an employee of the Company (hereinafter, the period
during which Employee receives payment pursuant to this Paragraph 6(a) shall be
referred to as the "Severance Period"; provided however, the Company's
obligation to make payments pursuant to this Paragraph 6(a) shall terminate
after the Company has paid the Employee a maximum of twelve (12) times one
hundred percent (100%) of the Employees" Company Monthly Base Pay or after the
Employee has found employment consistent with his training and education with a
Non Conflicting Organization.
5
<PAGE>
(b) CONTINUATION OF BENEFITS. Employee shall be entitled to
continuation of health insurance coverage and automobile benefits during the
Severance Period as if he were an employee of the Company.
(c) EMPLOYMENT SEARCH. The Employee will, before the close of
each month of such unemployment for which he claims payment pursuant to
Subparagraph (a) of the Paragraph, give the Company a detailed written account
of his efforts to obtain employment, and such account will include a statement
by the Employee that although he conscientiously sought employment, he was
unable to obtain comparable employment solely because of the provisions of
Paragraph 5(d).
(d) FAILURE TO REPORT. It is understood that the Company shall,
at its option, be relieved of making a monthly payment to the Employee pursuant
to Subparagraph (a) of the Paragraph for any month during which the Employee
either failed to seek comparable employment or failed to account to the Company,
as required in Subparagraph (c) of the Paragraph.
(e) INCONSISTENT EMPLOYMENT. If the Company so authorizes, the
Employee may accept employment not necessarily consistent with his training and
education, and the Company shall pay the Employee the difference between the New
Monthly Base Pay earned and the monthly amount to be paid to the Employee
pursuant to Subparagraph (a) of the paragraph in each month during the period of
time the Employee is bound by the provisions of Paragraph 5(d).
(f) PRIOR APPROVAL. The Company is obligated to make payments
to the Employee pursuant to Subparagraphs (a) and (e) of this Paragraph upon the
fulfillment of the conditions wet forth herein, unless the Company gives the
Employee written permission to accept available employment, or gives the
Employee a written release from his obligations under Paragraph 5(d).
(g) EMPLOYMENT BY A NON CONFLICTING ORGANIZATION. If the
Employee chooses to accept employment in whatever capacity with an employer
which in not a Conflicting Organization, the Company shall thereafter have no
obligation for payments under this Paragraph.
(h) NOTICE OF EMPLOYMENT. In all events, the employee shall
promptly give written notice to the Company of any employment during the term of
the post- employment obligations of Paragraph 5(d).
(i) LIMITATION OF LIABILITY. In no event shall the Company be
liable to the Employee, under the Agreement, for any amount greater than the
twelve (12) times one hundred percent (100%) of the Company Monthly Base Pay
plus the value of the benefits provided to the Employee under Paragraph 6(b).
6
<PAGE>
7. SPECIFIC ENFORCEMENT. Employee acknowledges and agrees that a
breach by him of the provisions of this Agreement, including without limitation
the provisions of Paragraph 5 hereof, may cause the Company irreparable injury
and damage which cannot be reasonably or adequately compensated by damages at
law. Employee, therefore, expressly agrees that the Company shall be entitled
to injunctive relief or other equitable relief to prevent a breach of this
Agreement or any part thereof, in addition to any other remedies legally
available to it.
8. BINDING EFFECT. This Agreement shall be binding upon the parties
hereto and upon their respective executors, administrators, legal
representatives, successors and assigns.
9. APPLICABLE LAW. This Agreement shall be governed for all
purposes by the laws of the State of Minnesota. If any provision of this
Agreement is declared void, such provision shall be deemed severed from this
Agreement, which shall otherwise remain in full force and effect.
10. EMPLOYEE'S OBLIGATIONS. Employee's obligation to the Company
hereunder are in addition to, and not exclusive of, any and all of Employee's
other obligations and duties to the Company, whether express or implied, in fact
or in law (including without limitation any rights of the Company with respect
to protection of trade secrets or confidential information arising out of common
or statutory laws), and will survive completion or termination of the Services
for a period of five years.
11. EMPLOYMENT AT-WILL. Employee acknowledges that Employee's
employment with the Company is at-will. Employee acknowledges that Company may,
at any time, for any reason, terminate the Employee's employment with the
Company.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the day and year first above written.
/s/ Robert A. Pitner
----------------------------------------
Employee
NICOLLET PROCESS ENGINEERING, INC.
("Company")
By: Pierce A. McNally
----------------------------------
Its: Chairman of the Board
----------------------------------
7
