<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Nicollet Process Engineering, Inc.
----------------------------------
(Name of Issuer)
Common Stock, no par value
--------------------------
(Title of Class of Securities)
654085 10 9
-----------
(CUSIP Number)
c/o CIBC Bank and Trust Company (Cayman) Limited
P.O. Box 694
CIBC Building, Edward Street
Georgetown, Grand Cayman
B.W.I.
(345) 949-8666
--------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
July 29, 1999
-------------
(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(e)(3), 13d-1(f) or 13d-1(g), check the following
box: [ ]
Page 1 of 8 Pages
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SCHEDULE 13D
CUSIP No: 654085 10 9
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1) NAME OF REPORTING PERSON AND S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE
PERSON
TEChinspirations, Inc. (Cayman)
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2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
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3) SEC USE ONLY
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4) SOURCE OF FUNDS
WC
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5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) [ ]
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6) CITIZENSHIP OR PLACE OF ORGANIZATION
Cayman Island Corporation
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7) SOLE VOTING POWER
24,750,000 (1)
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NUMBER OF 8) SHARED VOTING POWER
SHARES BENEFICIALLY
OWNED BY EACH 0
REPORTING PERSON --------------------------------------------------------
WITH 9) SOLE DISPOSITIVE POWER
24,750,000 (1)
--------------------------------------------------------
10) SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
24,750,000 (1)
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12) CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
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13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
79.7%
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14) TYPE OF REPORTING PERSON
CO
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(1) Includes an aggregate of 4,750,000 shares of Common Stock issuable pursuant
to an outstanding warrant.
Page 2 of 8 Pages
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SCHEDULE 13D
ITEM 1. SECURITY AND ISSUER.
This Statement on Schedule 13D (the "Statement") relates to the Common
Stock, no par value (the "Common Stock"), of Nicollet Process Engineering, Inc.,
a Minnesota corporation (the "Company"). The principal executive offices of the
Company are located at 420 North Fifth Street, Ford Centre, Suite 1040,
Minneapolis, Minnesota 55401.
ITEM 2. IDENTITY AND BACKGROUND.
(a) This statement is filed by TECHinspirations, Inc. (Cayman), a Cayman
Island corporation ("TECH Cayman").
(b) The business address of TECH Cayman is c/o CIBC Bank and Trust Company
(Cayman) Limited, P.O. Box 694, CIBC Building, Edward Street, Georgetown, Grand
Cayman, B.W.I.
(c) TECH Cayman is a venture capital corporation.
(d) TECH Cayman has not, during the last five years, been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors).
(e) TECH Cayman was not, during the last five years, 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 security laws or finding any violation with respect
to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
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 TECHinspirations, Inc. ("TECH"), a Nevada corporation and a
wholly-owned subsidiary of TECH Cayman. The loan documents underlying the
credit facility (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 TECH a security interest
in all of the Company's assets. TECH Cayman has advanced funds to the Company
under the Credit Facility since June 3, 1998, and as of June 30, 1999, the
aggregate amount advanced to the Company was $3,277,277. TECH Cayman used
internal funds to make the advance. On July 29, 1999, the Company, TECH and
TECH Cayman entered into an Acknowledgement and Amending Agreement pursuant to
which the Credit Facility was assigned to TECH Cayman. TECH Cayman may continue
to make discretionary advances to the Company under the Credit Facility.
ITEM 4. PURPOSE OF TRANSACTION.
Effective November 30, 1998, the Company entered into a Letter of Intent
with TECH which provided for the basis on which TECH Cayman would provide
$3,000,000 in debt/equity financing (the "Financing") to the Company. The
terms of the Financing included the issuance of 1,500,000 shares of Preferred
Stock at a price of $1.00 per share, the proceeds of which would be used to
repay $1,500,000 of the advances under the Credit Facility. In addition, the
Company would issue TECH Cayman a warrant to purchase an additional 1,500,000
shares of Preferred Stock at an exercise price of
Page 3 of 8 Pages
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$1.00 per share (the "Preferred Stock Warrant"). The Preferred Stock Warrant
would expire three years after the closing of the Financing or repayment of
the Credit Facility, whichever were later. The Preferred Stock would have
the following rights and preferences. Each share of Preferred Stock would be
convertible at the option of the holder into 6-2/3 shares of Common Stock and
have the right to vote on all matters submitted to holders of the Common
Stock on an as-if-converted basis. Each share of Preferred Stock would have
the right to participate in all dividends declared on the Common Stock on an
as-if-converted basis. In addition, each share of Preferred Stock would be
entitled to a liquidation preference of $1.00 per share prior to any
distributions to be made on the Common Stock and, after payment of such
preference, would share, PARI PASSU, with any distributions made to holders
of the Common Stock on an as-if-converted basis.
TECH Cayman would continue to make available to the Company a $1,500,000
revolving operating line of credit. The line of credit would continue to be
secured by a security interest in the Company's assets, bear interest at the
rate of 1% in excess of the prime rate and have a term of three years. The
Company also agreed to pay TECH a fee of $200,000 payable in monthly
installments of $25,000 each beginning December 1, 1998 through June 30, 1999.
The Company had previously paid TECH an aggregate of $100,000 for the period
from July 31, 1998 through November 30, 1998. The Company has agreed to issue
TECH warrants to purchase up to 4,750,000 shares of Common Stock at a price of
$.15 per share (the "Common Stock Warrant"). The Common Stock Warrant would be
immediately exercisable with respect to 1,500,000 shares, and become exercisable
with respect to an additional 1,000,000 shares, 1,000,000 shares and 1,250,000
shares after the Company's Common Stock had closed at a price of at least $1.00,
$2.00 and $3.00 per share, respectively, for a period of ten days. TECH Cayman
also has the right to designate a majority of the nominees for election to the
Board of Directors. John van Leeuwen and Manuel Schiappa Pietra, both of whom
are officers and employees of TECH, are members of the Board of Directors of the
Company, as designees of TECH Cayman.
On July 29, 1999, the Company entered into a Stock Purchase Agreement with
TECH Cayman (the "Purchase Agreement") in order to consummate the transactions
contemplated by the Letter of Intent. Under the Purchase Agreement, TECH Cayman
converted (a) $3,000,000 of indebtedness under the Credit Facility into
20,000,000 shares of the Company's Common Stock at a conversion price of $.15
per share (the "Shares") and (b) $100 of indebtedness under the Credit Facility
into the Common Stock Warrant. The Shares and the Common Stock Warrant were
issued in lieu of the Preferred Stock and Preferred Stock Warrant under the
Letter of Intent at an equivalent price per share of Common Stock. In
connection with the Purchase Agreement, the Company and TECH entered into a
Consulting Agreement under which TECH agreed to provide various consulting
service to the Company. The Consulting Agreement has a term from July 1, 1999
through June 30, 2001 and provides for a consulting fee of $25,000 per month.
The foregoing summary of certain provisions of the Purchase Agreement,
Conversion Agreement, Common Stock Warrant and Consulting Agreement is qualified
by the copies of such documents filed as Exhibits to this Schedule 13D, and
which are incorporated herein in its entirety by this reference.
The Company currently plans to transfer certain operating assets and
liabilities relating to its traditional core business to Fullmetrics, Inc. a
newly- formed, wholly owned subsidiary of the Company. In addition, the Company
has entered into a non-binding letter of intent to acquire Amyyon Company from
TECH. The letter of intent contemplates that the Company would issue 2,800,000
shares of a newly created class of preferred stock, which would have a
liquidation preference and redemption price of $1.00 per share, for a total
value of $2,800,000.
Page 4 of 8 Pages
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Except as described above in Item 3 and 4, TECH Cayman does not have any
present plans or proposals that relate to or would result in: (a) the
acquisition by any person of additional securities of the Company or the
disposition of securities of the Company; (b) an extraordinary corporate
transaction, such as a merger, reorganization or liquidation, involving the
Company or any of its subsidiaries; (c) a sale or transfer of a material amount
of assets of the Company or of any of its subsidiaries; (d) any change in the
present Board of Directors or management of the Company, including any plans or
proposals to change the number or term of directors or to fill any existing
vacancies on the Board; (e) a material change in the present capitalization or
dividend policy of the Company; (f) any other material change in the Company's
business or corporate structure; (g) changes in the Company's charter, by-laws
or instruments corresponding thereto or other actions that may impede the
acquisition of control of the Company by any person; (h) causing a class of
securities of the Company to be delisted from a national securities exchange or
to cease to be authorized to be quoted in an inter-dealer quotation system of a
registered national securities association; (i) a class of equity securities of
the Company becoming eligible for termination of registration pursuant to
Section 12(g) (4) of the Act; or (j) any action similar to any of those
enumerated above.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) TECH Cayman is the beneficial owner of an aggregate 24,750,000 shares
of Common Stock, consisting of 20,000,000 shares of Common Stock and the Common
Stock Warrant covering 4,750,000 shares of Common Stock, or approximately 79.7%
of the current outstanding shares of Common Stock.
(b) TECH Cayman possesses sole voting and investment power with respect to
the 20,000,000 outstanding shares of Common Stock and shares voting and
investment power with respect to no shares of Common Stock reported in this
statement.
(c) TECH Cayman received the Shares and the Common Stock Warrant in
connection with the conversion of indebtedness as described in Item 4.
(d) Not Applicable.
(e) Not Applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE COMPANY.
Except as disclosed in Items 3, 4 and 5, there are no contracts,
arrangements, understanding or relationships among the person named in Item 2 or
between such persons and any other person with respect to any securities of the
Company.
Page 5 of 8 Pages
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ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1 Purchase Agreement, dated as of July 29, 1999, between the
Company and TECH Cayman.
Exhibit 2 Conversion Agreement, dated as of July 29, 1999, between the
Company and TECH Cayman.
Exhibit 3 Common Stock Warrant, dated as of July 29, 1999, issued by
the Company to TECH Cayman.
Exhibit 4 Consulting Agreement, dated as of July 29, 1999, between the
Company and TECH.
Exhibit 5 Acknowledgment and Amending Agreement, dated as of July 29,
1999 between the Company, TECH and TECH Cayman.
Page 6 of 8 Pages
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SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, the
undersigned certify that the information set forth in this Statement is true,
complete and correct.
August 4, 1999 TECHinspirations, Inc. (Cayman)
By: /s/ Susan McGregor
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Its: On behalf of Commerce Corporate
Services Limited, a director of
TECHinspirations, Inc. (Cayman)
By: /s/ Frank Hynd
--------------------------------------
Its: On behalf of Commerce Advisory
Services Limited, a director of
TECHinspirations, Inc. (Cayman)
Page 7 of 8 Pages
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Method of Filing
----------- ----------- ----------------
<S> <C> <C>
1 Purchase Agreement, dated as of July 29, 1999,
between the Company and TECH Cayman . . . . . . Filed herewith electronically
2 Conversion Agreement, dated as of July 29, 1999,
between the Company and TECH Cayman . . . . . . Filed herewith electronically
3 Common Stock Warrant, dated as of July 29, 1999,
issued by the Company to TECH Cayman . . . . . Filed herewith electronically
4 Consulting Agreement, dated as of July 29, 1999,
between the Company and TECH . . . . . . . . . Filed herewith electronically
5 Acknowledgment and Amending Agreement, dated as
of July 29, 1999, between the Company, TECH and
TECH Cayman . . . . . . . . . . . . . . . . . . Filed herewith electronically
</TABLE>
Page 8 of 8 Pages
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EXHIBIT 1
THIS PURCHASE AGREEMENT MADE WITH EFFECT AS OF THE 29TH DAY OF JULY,
1999.
A M O N G S T:
NICOLLET PROCESS ENGINEERING, INC.
a corporation incorporated under the
laws of the state of Minnesota
(hereinafter called the "Corporation")
OF THE FIRST PART;
- AND -
TECHINSPIRATIONS INC. (CAYMAN),
a Cayman Island corporation
(hereinafter referred to as the "Investor")
OF THE SECOND PART.
RECITALS:
1. The Corporation and TECHinspiration Inc., a Nevada corporation ("TECH")
that is associated with the Investor, entered into a certain letter
agreement with effect as of the 30th day of November 1998 (the "Letter
of Intent") whereby TECH agreed to furnish the Investor to purchase
certain securities of the Corporation (the "Original Securities")
consisting of, inter alia:
(a) 1,500,000 shares of preferred stock of the
Corporation at a price of $1,500,000 convertible into
common stock of $0.01 par value (the "Common Stock")
of the Corporation on a 1: 6 2/3 ratio;
(b) a warrant (the Preferred Stock Warrant") permitting
the Investor to purchase for $1,500,000 an additional
1,500,000 shares of the aforesaid preferred stock of
the Corporation similarly convertible to Common
Stock;
(c) a warrant (the "Common Stock Warrant") permitting the
Investor to purchase up to 4,750,000 shares of Common
Stock of the Corporation at an exercise price of
$0.15 per share, the exercise of such right being
dependent upon achievement of certain thresholds in
the trading price of the Corporation's Common Stock;
and
(d) certain secured debt (the "Secured Debt")of the
Corporation through which the Investor would provide
loans of up to $1,500,000 under a revolving operating
line of credit (the "Credit Facility");
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2. Pursuant to the provisions of the Letter of Intent, the Corporation
agreed to pay certain fees to TECH at the rate of $25,000/month which
fees have either been paid or accrued payable by the Corporation to the
30th day of June, 1999;
3. The proxy statement circulated to the Shareholders of the Corporation
in conjunction with the Corporation's annual and special meeting of
shareholders held on or around April 2nd 1999, disclosed the
transactions with the Investor on the basis set out in the Letter of
Intent including, without limitation, the issue and sale of the
Securities to the Investor and at that meeting the Shareholders
approved amendments to the share capital of the Corporation sufficient
to accommodate that transaction;
4. As of the date of this Agreement, the Investor has advanced in excess
of $3 million plus accrued interest thereon (the "Debt") to the
Corporation by way of loan under the secured Credit Facility as
purchased from Norwest Business Credit, Inc;
5. The Investor has agreed to bypass its purchase of Preferred Stock and
its right to receive the Preferred Stock Warrant and, in lieu thereof,
has agreed to purchase directly the underlying securities (in each case
being shares of the Common Stock of the Corporation) at the conversion
price of $0.15 per share as agreed in the Letter of Intent and as
intended to be stipulated in the terms and conditions of the Preferred
Stock and Preferred Stock Warrant;
6. Accordingly, this Agreement sets out the terms and conditions whereby
the Investor will purchase from the Corporation the following
securities: (x) 20 million shares of the Common Stock of the
Corporation, for a purchase price of $0.15 per share, or $3 million in
the aggregate; (y) the Common Stock Warrant for $100.00 (including the
right to purchase shares of Common Stock underlying the Common Stock
Warrant); and (z) the Secured Debt. Upon completion of the transactions
contemplated hereby, the Parties will be deemed to have waived any
entitlements to receive, or obligation to issue, the Preferred Stock
and Preferred Stock Warrant contemplated by the Letter of Intent.
NOW THEREFORE THIS AGREEMENT WITNESSES THAT, in consideration of the
premises and the mutual covenants hereinafter contained, the parties hereto
agree as follows:
ARTICLE 1 - INTERPRETATION
1.1 DEFINED TERMS
Capitalized terms denoting defined terms used in this Agreement that
are not defined in the recitals or body to this Agreement shall bear
the meanings attributable to them in Schedule 1.1 to this Agreement.
1.2 CURRENCY
All dollar amounts referred to in this Agreement are in the lawful
currency of the United States of America ($US).
1.3 TIME
Time shall be of the essence of this Agreement and of every part
hereof.
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1.4 HEADINGS
The division of this Agreement into sections, clauses and subclauses
and the insertion of headings are for convenience of reference only and
shall not affect the construction or interpretation hereof.
1.5 SCHEDULES
The following are the Schedules attached to and incorporated in this
Agreement by reference and deemed to be part hereof:
SCHEDULE DESCRIPTION
1.1 Definitions
1.1(j) Closing Agenda
2.1(b) Common Stock Warrant
3.3 Exceptions, if any, to Representations and Warrantie
3.3(q) NPE System Description
3.3(x) Clients
1.6 JURISDICTIONS
This Agreement shall be construed in accordance with, and the rights of
the parties hereto shall be governed by, the laws of the state of
Minnesota. Each of the parties hereto hereby irrevocably attorns to the
jurisdiction of the courts of the state of Minnesota.
1.7 CONSTRUCTION
In this Agreement:
(a) words denoting the singular include the plural and vice versa
and words denoting any gender include all genders;
(b) the word "including" shall mean "including without limitation";
(c) any reference to a statute shall mean the statute in force as
at the date hereof and any regulation in force thereunder,
unless otherwise expressly provided;
(d) the use of headings is for convenience of reference only and
shall not affect the construction of this Agreement;
(e) when calculating the period of time within which or following
which any act is to be done or step taken, the date which is
the reference day in calculating such period shall be
excluded. If the last day of such period is not a Business
Day, the period shall end on the next Business Day;
(f) any tender of documents under this Agreement may be made upon
the parties or their respective counsel; and
(g) words or abbreviations which have well known or trade meanings
are used herein in accordance with their recognized meanings.
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1.8 ACKNOWLEDGEMENT
Each of the Parties hereto acknowledges and agrees that the recitals to
this Agreement are true in substance and in fact and are incorporated
into this Agreement.
1.9 LETTER OF INTENT
The Transaction Documents herein are being executed and delivered on
the date hereof in furtherance of the implementation of transactions
contemplated in the Letter of Intent. The parties to this Agreement,
and the remaining party to the Letter of Intent (being TECH) by it's
consent endorsed at the end of this Agreement, acknowledge and agree
that the Letter of Intent is superseded and replaced by the Transaction
Documents herein and that, subject to Section 2.3 hereof, the Letter of
Intent is hereby terminated without further benefit to or liability of
the parties thereto.
ARTICLE 2- PURCHASE OF SHARES, FUNDAMENTAL AGREEMENTS
2.1 SUBSCRIPTION
Subject to the terms and conditions hereof, the Investor hereby subscribes
irrevocably for and agrees to purchase from the Corporation, and the Corporation
agrees to issue to the Investor:
(a) 20 million shares of the Common Stock of the Corporation
"Purchased Common Shares"). The subscription price (the "Share Purchase
Price") for the Purchased Common Shares shall be $0.15 per share, or $3
million in the aggregate; and
(b) the Common Stock Warrant, in or substantially in the former thereof
annexed as Schedule 2.1 (b) hereto for a purchase price (the "Warrant
Purchase Price", and together with the Share Purchase Price sometimes
collectively referred to as the "Purchase Price") of $100.
2.2 PAYMENT
Payment of the Purchase Price shall be made at the Time of Closing on the
Closing Date and shall be made by the Investor tabling its irrevocable direction
to convert $3,000,100 of the Debt owed by the Corporation to the Investor in
full satisfaction of the Purchase Price pursuant to the Conversion Agreement,
dated the date hereof, between the Corporation and the Investor.
2.3 FURTHER SUPPORT
Notwithstanding the provisions of Section 1.9, it is acknowledged that the
Transaction Documents include, and coincidentally with the execution and
delivery of this Agreement there has been executed and delivered, a consulting
agreement between the Corporation and TECH providing for the consulting services
of the TECH to be rendered to the Corporation. It is further acknowledged that,
to the extent there remains any portion of the fee payable by the Corporation to
TECH under section C.1(a) of the Letter of Intent that is unpaid, the same shall
remain a continuing and effective obligation of the Corporation to TECH and the
same shall be paid by the Corporation to TECH forthwith after the date hereof,
notwithstanding the provisions of section 1.9 above.
2.4 CREDIT FACILITY
The parties acknowledge and agree that coincidentally with the Closing of the
transactions contemplated by this Agreement, the parties have executed and
delivered the security and other
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agreements set out in Section B of the Closing Agenda, being the `Secured
Debt' referred to in the definition herein of `Securities'. It is
acknowledged that the Investor has fulfilled its obligation to provide an
operating line of credit to the Corporation in the manner contemplated under
the Letter of Intent. It is further acknowledged that the Investor may in its
sole discretion, but need not, supply additional operating credit to the
Corporation and that, if it does so, such additional credit shall be secured
by the Securities delivered pursuant to section B of the Closing Agenda.
2.5 REGISTRATION RIGHTS
If the Corporation shall receive from the Investor at any time after the Closing
Date, a written request that the Corporation effect any registration under the
Securities Act of 1933, as amended (the "Securities Act") with respect to the
Purchased Common Shares or the Common Stock underlying the Common Stock Warrant
(provided that the Investor, if it is not already done so, exercises the Common
Stock Warrant in respect of such underlying Common Stock for which registration
is requested) then, with respect to such Purchased Common Stock and underlying
Common Stock (collectively, the Registrable Securities") the Corporation shall,
as soon as a practical , use its commercially reasonable efforts to effect such
registration in accordance with this Agreement (including, without limitation,
the execution of an undertaking to file post -- effective amendments,
appropriate qualifications under applicable blue sky or other state securities
laws, and appropriate compliance with applicable regulations issued under the
Securities Act as may be so requested and as would permit or facilitate the sale
and distribution of all such Registrable Securities as are specified in such
request). Notwithstanding the foregoing, the Corporation shall not be obligated
to effect, or take any action to effect, any such registration pursuant to this
Section: if, upon receipt of a registration request pursuant to this Section,
the Corporation is advised in writing (with a copy to the Investor) by a
recognized regional or national independent investment banking firm selected by
the Corporation that, in such firms opinion, a registration at the time and on
the terms requested would adversely affect any public offering of securities of
the Corporation by the Corporation with respect to which the Corporation has
commenced preparation of a registration prior to the receipt of a registration
request for the Investor pursuant to this Section, then the Corporation shall
not be required to effect a registration pursuant to this Section until the
earlier of (x) 30 days after the completion of the Corporation's offering, (y)
promptly after abandoned meant of the Corporation's offering, or (z) 60 days
after the date of receipt of a registration request by the Investor pursuant to
this Section.
The Investor may request registration from time to time hereunder in respect of
any Purchased Common Shares or the Common Stock underlying the Common Stock
Warrant that have not previously been subject to a registration request, or that
have been so subject to a registration request and for any reason were withdrawn
from registration or were not distributed during the effectiveness of the
relevant registration statement; provided however, that the Investor may not
request registration pursuant to this Agreement more frequently than once every
twelve (12) months. All registration expenses incurred in connection with any
registration, qualification or compliance pursuant to this Agreement shall be
borne by the Corporation.
2.6 UNDERWRITING
If any registration request hereunder is to be conducted by an underwriter, the
Investor and the Corporation shall enter into underwriting and related
agreements in customary form with the representatives of the underwriter or
underwriters selected for the underwriting of such distribution by the Investor
and reasonably acceptable to the Corporation. Such underwriting agreement will
<PAGE>
-6-
contain such representations and warranties by the Corporation and such other
terms and provisions as are customarily contained in underwriting agreements
with respect to secondary distributions, including without limitation,
indemnities and contribution and the provision of opinions of counsel and
accountants letters in accordance with customary practice. The said
representations and warranties by, and the other agreements on the part of, the
Corporation and such opinions and accountants letter to and for the benefit of
such underwriters shall also be made to and for the benefit of the Investor. The
Corporation shall cooperate fully with the Investor and the underwriters in
connection with any underwritten offering. Notwithstanding any other provisions
of this Agreement, if the representative of the underwriter advises the Investor
in writing that market factors require a limitation on the number of the shares
to be underwritten, the number of shares included in the registration by the
Investor shall be reduced by such minimum number of shares as is necessary to
comply with such request; and no Registrable Securities or any other securities
excluded from the underwriting by reason of the underwriters marketing
limitation shall be included in such registration.
2.7 REGISTRATION PROCEDURES
The Corporation shall execute such further and other documents, instruments and
agreements and shall do or cause to be done such further acts or things as made
be necessary to give effect to the full nature and intent of section 2.5 and 2.6
hereof, and as may be necessary to keep the Investor and the underwriter fully
informed (with copies of all relevant documents and drafts thereof) of the
Corporation's progress on such registration request.
In addition, and without limiting the foregoing, the Corporation will:
(a) Keep such registration effective for a period of three months, or until
the Investor has completed the distribution described in the
registration statement relating thereto, whichever occurs first;
(b) Provide the underwriters and the Investor no less than five business
days to review and comment upon any registration statement, prospectus,
or supplemental documents prior to the filing thereof and accommodate
any reasonable comments thereon;
(c) Make available at all reasonable times for inspection and review by the
Investor, any underwriter, and any attorney or accountant retained by
the Investor or any underwriter, all financial and other records,
pertinent corporate documents and properties of the Corporation and any
document relevant to the registration and cause the officers, directors
and employees of the Corporation to supply all information reasonably
requested by the Investor, any such underwriter, attorney or accountant
in connection with such registration and whether before or after the
filing of the applicable registration statement or the effectiveness of
the applicable registration statement;
(d) Use its commercially reasonable efforts to register or qualify all
Registrable Securities covered by such registration under such other
securities or blue sky laws of such states of the United States of
America where an exemption is not available and as the sellers of
Registrable Securities covered by such registration shall reasonably
request and to keep such registration or qualification in effect for so
long as the applicable registration statement remains in effect;
(e) use its commercially reasonable efforts to obtain the withdrawal of any
order suspending the
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effectiveness of any such registration, or the lifting of any
suspension of the qualification (or exemption from qualification) of
any of the Registrable Securities for sale in any jurisdiction;
(f) Use its commercially reasonable efforts to cause all Registrable
Securities included in any registration pursuant hereto to be listed on
each securities exchange on which securities of the same class are then
listed, or, if not then listed on any securities exchange, to be
eligible for trading in any over-the-counter market or trading system
in which the Corporation's securities of the same class are then
traded.
2.8 OTHER MATTERS
In the event of any registration of shares of Common Stock pursuant to Section
2.5, the Corporation shall indemnify the Investor, its officers and directors
and each person, if any, who controls such holder within the meaning of Section
15 of the Securities Act against all losses, claims, damages and liabilities
caused by any untrue statement or alleged untrue statement of a material fact
contained in any registration statement or prospectus (and as amended or
supplemented) relating to such registration, or caused by any omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances under which they are made unless such statement or omission was
made in reliance upon and in conformity with information furnished in writing to
the Corporation by such holder expressly for use therein. The obligations of the
Corporation to register any of its securities in accordance with the foregoing
shall be subject to the condition that each holder shall agree in writing to
indemnify the Corporation, its officers and directors, and each person, if any,
who controls the Corporation within the meaning of Section 15 of the Securities
Act, and each underwriter of the Registrable Securities so registered, and each
person, if any, who controls such underwriter within the meaning of Section 15
of the Securities Act, with respect to losses, claims, damages and liabilities
caused by any untrue statement or omission made in reliance upon and in
conformity with information furnished in writing by such holder to the
Corporation expressly for use in such registration statement or prospectus. The
costs and expenses, if any, incurred by the Corporation in connection with any
registration made pursuant to Section 2.5, including but not limited to legal
fees, special audit fees, printing expenses, filing fees, fees and expenses
relating to qualifications under state securities or blue sky laws and the
premiums for insurance shall be borne entirely by the Corporation; provided,
however, that the Investor shall bear its own underwriting discounts and
commissions and the fees and expenses of its own counsel or accountants in
connection with any such registration. The Investor, with respect to the
distribution of Registrable Securities to be included in any registration, shall
furnish to the Corporation such information regarding the Investor and the
distribution proposed by such Investor as the Corporation may reasonably request
in writing and as shall be reasonably required in connection with any
registration, qualification or compliance referred to in this Agreement.
Notwithstanding any other provision contained in the sections 2.5, 2.6, 2.7, or
2.8, if the board of directors of the Corporation determines in good faith that
it is in the best interests of the Corporation not to disclose the existence of
facts surrounding any proposed or pending acquisition, disposition, strategic
alliance or financing transaction involving the Corporation, the Corporation may
by notice to the Investor in writing postpone any registration request for such
period of time that the Board of Directors may reasonably determined, but in no
event for a period exceeding 60 days.
<PAGE>
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ARTICLE 3- REPRESENTATIONS, WARRANTIES AND INDEMNITIES
3.1 THE INVESTOR'S REPRESENTATIONS AND WARRANTIES
The Investor hereby represents and warrants to the Corporation that the
following representations are true and correct at the Time of Closing.
The Investor acknowledges and confirms that the Corporation is relying
upon such representations and warranties in connection with the
issuance of the Securities to the Investor and the completion of the
transactions contemplated under the Agreement.
GOOD STANDING
(a) The Investor is a Cayman Island corporation duly constituted
and validly subsisting under the laws of the Cayman Islands;
INVESTOR AUTHORITY
(b) The Investor has power and authority to enter into and perform
its obligations under this Agreement and all other Transaction
Documents executed and delivered by the Investor in
furtherance of the Closing of the transactions contemplated
under this Agreement including, without limitation, to
subscribe for the Securities in accordance with the terms of
this Agreement;
AGREEMENT BINDING
(c) Each of the Transaction Documents delivered by the Investor on
or before the Closing Date are, valid and legally binding
obligations of the Investor enforceable in accordance with
their respective terms except that: (i) the enforcement
thereof may be limited by bankruptcy, insolvency and other
laws effecting the enforcement of credits' rights generally,
(ii) rights of indemnity, contribution and waiver of
contribution thereunder may be limited under applicable law
and (iii) equitable remedies, including, without limitation,
specific performance and injunctive relief, may be granted
only in the discretion of a court of competent jurisdiction.
Neither the execution of this Agreement, or such other
Transaction Documents by the Investor, nor the performance by
the Investor of the various terms and provisions hereof and
thereof, will violate the trust instruments constituting the
Investor. The Investor is not a party to, subject to or bound
by any judgment, injunction or decree of any court or
government body that prevents the performance of this
Agreement, or any document referred to herein;
COMMISSIONS
(d) No commissions or brokerage or finders fees are payable by the
Corporation, through or on account of any acts of the Investor
or its representatives in connection with this Agreement or
the Closing Documents;
SECURITIES MATTERS
(e) The Investor:
<PAGE>
-9-
(i) is subscribing for the Securities to be issued to be
held for its own account not for the purpose of
distributing the same in specie to any beneficiary;
(ii) has not been created, established, or formed solely
to acquire the Securities without a prospectus in
reliance on an exemption from the prospectus
requirements of applicable securities legislation;
and
(iii) is resident in the Cayman Islands.
(f) The Securities are being acquired for investment for the
Investor's own account and not with the view to, or for resale
in connection with, any distribution or public offering
thereof. The Investor understands that the Securities have not
been registered under the Securities Act, or any state
securities laws by reason of their contemplated issuance in
transactions exempt from the registration requirements of the
Securities Act and applicable state securities laws and that
the reliance of the Corporation and others upon these
exemptions is predicated in part upon this representation by
each Investor. The Investor further understands that the
Securities may not be transferred or resold without
registration under the Securities Act and any applicable state
securities laws, or an exemption from the requirements of the
Securities Act and applicable state securities laws.
(g) The Investor qualifies as an "accredited investor," as defined
in Rule 501 of Regulation D under the Securities Act. The
Investor acknowledges that the Corporation has made available
to each such Investor at a reasonable time prior to the
execution of this Agreement the opportunity to ask questions
and receive answers concerning the business, operations and
financial condition of the Corporation and the terms and
conditions of the sale of securities contemplated by this
Agreement and to obtain any additional information (which the
Corporation possesses or can acquire without unreasonable
effort or expense) as may be necessary to verify the accuracy
of information furnished to such Investor. The Investor is
able to bear the loss of its entire investment in the
Securities without any material adverse affect on its
business, operations or prospects, and has such knowledge and
experience of financial and business matters that it is
capable of evaluating the merits and risks of the investment
to be made by it pursuant to this Agreement.
3.2 SURVIVAL
All statements contained in any Transaction Document, certificate or
other instrument delivered by or on behalf of the Investor pursuant to
or in connection with the transaction contemplated by this Agreement
shall be deemed to be made by the Investor hereunder. The
representations, warranties and covenants of the Investor contained or
deemed to be contained in this Agreement, or in the other Transaction
Documents shall survive the Closing of the subscription for, and issue
of, and sale of the Securities, and notwithstanding such Closing, and
regardless of any investigation by or on behalf of the Corporation with
respect thereto, shall continue in full force and effect for the
benefit of the Corporation for the Corporation's Period as defined
hereafter. For these purposes, "Corporation's Period" means that period
of time that obligations are explicitly expressed to survive in each
particular Transaction Document, or failing any such explicit
expression of survival, for the period of time starting from and
including the Closing Date and thereafter forever in the case of the
<PAGE>
-10-
covenants herein or in the case of fraud and, otherwise with respect to
representations and warranties to and excluding the third (3rd)
anniversary of the Closing Date. After the expiration of the
Corporation's Period, the Investor shall be released from all
obligations and liabilities hereunder in respect of such
representations, warranties and covenants except with respect to any
claims made by the Corporation in writing prior to the expiration of
the particular Corporation's Period (in which event, liability shall
survive until the final determination or settlement of such claims).
3.3 CORPORATION'S REPRESENTATIONS AND WARRANTIES
Subject to the provisions of Section 7.2, the Corporation hereby
jointly and severally represents, warrants and covenants to the
Investor that, save and except as set out in Schedule 3.3 hereto, the
following representations are true and correct at the Time of Closing.
The Corporation acknowledges and confirms that the Investor is relying
upon such representations, warranties and covenants, in connection with
the subscription by the Investor for the Securities and the completion
of the transactions contemplated under the Agreement.
GOOD STANDING
(a) The Corporation is a corporation:
(i) duly incorporated and organized, validly subsisting
and in good standing under the laws of the state of
Minnesota;
(ii) duly authorized, qualified and licensed to own its
properties, and to carry on business as presently
owned and carried on by it; and
(iii) having the power and authority and the right to enter
into and perform its obligations, if applicable,
under this Agreement and all other Transaction
Documents executed and delivered by such Company in
furtherance of the Closing of the transactions
contemplated under this Agreement including, without
limitation, to issue the Securities in accordance
with the terms of this Agreement.
CORPORATE AUTHORITY
(b) The execution and delivery of the Transaction Documents
including, without limitation, this Agreement and the
performance by the Corporation, of the transactions
contemplated by the Transaction Documents have been duly
authorized by all necessary corporate action of the
Corporation and by all other necessary corporate proceedings;
GUARANTEES AND UNDISCLOSED LIABILITIES
(c) The Corporation is not a party to nor bound by any agreement
of guarantee, indemnification, assumption or endorsement (or
any other like commitment) of the obligations, liabilities,
contingent or otherwise, or indebtedness of any other person,
firm or corporation, nor is the Corporation subject to any
liabilities save and except
<PAGE>
-11-
those disclosed in the SEC Reports, except if incurred since
June 30th, 1999 to the date hereof in the ordinary course of
business consistent with past experience;
AGREEMENT BINDING
(d) Each of the Transaction Documents delivered by the
Corporation, are valid and legally binding obligations of the
Corporation, enforceable in accordance with their respective
terms except that: (i) the enforcement thereof may be limited
by bankruptcy, insolvency and other laws effecting the
enforcement of credits' rights generally, (ii) rights of
indemnity, contribution and waiver of contribution thereunder
may be limited under applicable law and (iii) equitable
remedies, including, without limitation, specific performance
and injunctive relief, may be granted only in the discretion
of a court of competent jurisdiction. Neither the execution of
this Agreement, or such other Transaction Documents by the
Corporation nor the performance by the Corporation of the
various terms and provisions hereof and thereof, will violate
the articles of incorporation or other charter documents of
the Corporation. The Corporation is not a party to, subject to
or bound by any judgment, injunction or decree of any court or
governmental body that prevents the performance of this
Agreement, or any document referred to herein;
CONSENTS
(e) All Regulatory Approvals and all necessary consents or
approvals of any person or entity under any material contract
pertaining to each the Corporation or its assets or under any
regulatory authority having jurisdiction for the transactions
contemplated by the Transaction Documents have been obtained
by the Closing Date;
ADVERSE INFORMATION/EVENTS AND SEC REPORTS
(f) The Corporation has no information nor knowledge of any facts
specific to it's business or the Securities and not of general
knowledge that have not been disclosed to the Investor which,
if known to the Investor, might reasonably be expected to
deter an investor from completing the transaction herein. None
of the information or documents furnished by the Corporation
or the employees or agents of the Corporation, prior to the
date hereof to the Agent or the Investor in furtherance of the
Transaction Documents or in conjunction with this Agreement is
false, misleading or inaccurate in any material respect or
omits to state a material fact necessary in order to make any
of the statements therein not misleading. The Corporation has
previously furnished or made available to the Investor true
and complete copies of (i) its Annual Report on Form 10-KSB
for the fiscal year ended August 31, 1998, (ii) its quarterly
reports on Form 10-QSB filed since the fiscal year end for its
most recently filed Annual Report on Form 10-KSB was filed,
and (iii) its Proxy Statement relating to its most recent
Annual Meeting of Stockholders (collectively, the "SEC
Reports"). As of their respective dates, the SEC Reports (x)
complied as to form in all material respects with the
applicable requirements of the Securities Act and the rules
and regulations thereunder and the Securities Exchange Act of
1934, as amended, and the rules and regulations thereunder, as
the case may be, and (y) did not contain any untrue statement
of a material fact or omit to state a material fact required
to be
<PAGE>
-12-
stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made,
not misleading;
TRANSACTION COMPLIANCE
(g) The entering into of the Transaction Documents by the
Corporation, and the completion of the transactions
contemplated thereby do not result in the violation of any of
the terms and provisions of any indenture or other agreement,
written or oral, to which the Corporation may be a party, or,
of any applicable federal or state law or regulation;
LITIGATION
(h) Except as set forth in Schedule 3.3 or in the SEC Reports,
there are no actions, suits, arbitrations, or proceedings
pending or to the Corporation's knowledge threatened against,
by, or affecting the Securities, the business of the
Corporation, or the Corporation at law or in equity, or before
or by any federal, provincial, municipal or other governmental
department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which action, suit or
proceeding involves the possibility of any judgment against or
liability of the Corporation or the Investor, which would have
a material adverse effect on the Corporation. The Corporation
is not aware of any existing ground on which any such action,
claim, or proceeding may be commenced with any reasonable
likelihood of success which would produce a material adverse
effect;
RESIDENCY
(i) The Corporation is domiciled in the United States of America
for purposes of the Internal Revenue Code of 1986, as amended
("IRS Code");
CAPITAL
(j) The authorized capital of the Corporation consists of those
numbers and classes of shares set out in the SEC Reports which
schedule also sets out the names of all persons who are
registered owners of issued and outstanding shares or rights
to shares in the capital stock of the Corporation holding 10%
or more of the shares and rights to shares of that class
together with the number of such shares or rights to shares
held by that person and, on a fully diluted basis, the number
of shares and rights to shares of each class of stock that are
currently issued and outstanding.
LICENSES
(k) The Corporation possess all material certificates, authority,
permits or licenses issued by the appropriate state,
provincial, municipal or federal regulatory agencies or bodies
necessary to conduct the business now operated by it and the
Corporation has not received any notice of proceedings
relating to the revocation or modification of any such
certificate, authority, permit or license which, if the
subject of an unfavourable decision, ruling or finding would
materially and adversely affect the conduct of the business,
operations, financial condition or income of the Corporation;
<PAGE>
-13-
OPTIONS
(l) The Corporation is not a party to nor has granted any
agreement, warrant or right or privilege capable of becoming
an agreement, for the purchase, subscription or issuance of
any of the common shares or any other class of shares in the
capital stock of the Corporation, or securities convertible
into or exchangeable for such shares, other than as
described in the SEC Reports;
FINANCIAL STATEMENTS/TITLE TO ASSETS
(m) The financial statements of the Corporation included in the
SEC Reports present fairly, in all material respects, the
financial position of the Corporation as of the periods set
out therein in accordance with generally accepted United
States accounting principles applied on a consistent basis.
The Corporation owns all of its assets recorded as assets on
the said financial statements with a full and complete legal
and beneficial title thereto free and clear of all liens,
claims, or encumbrances save and except as more particularly
referred to in the aforesaid financial statements or
otherwise disclosed in the SEC Reports or as may have
subsequently been disposed of for fair value in the ordinary
course of business;
COMMISSIONS
(n) No commissions, brokerage, or finders fees are payable by
the Corporation or the Investor through or on account of any
acts of the Corporation, it's shareholders, or it's
representatives in connection with this Agreement or the
Closing Documents;
CEASE TRADING
(o) No order ceasing or suspending trading in securities of the
Corporation or prohibiting the sale of securities by the
Corporation has been issued and no proceedings for this
purpose have been instituted, are pending, contemplated or
threatened;
DIVIDENDS
(p) Since June 30th, 1999, the Corporation has not, directly or
indirectly, declared or paid any dividend or declared or
made any other distribution on any of its shares or
securities of any class, or, directly or indirectly,
redeemed, purchased or otherwise acquired any of its shares
or securities or agreed to do any of the foregoing;
SOFTWARE AND INTELLECTUAL PROPERTY
(q) Schedule 3.3(q) annexed hereto contains a description of the
hardware and software components that constitutes the
corporation principle product and services lines (the "NPE
System"). Except as disclosed in Schedules 3.3(m) or 3.3(q),
the Corporation has the ultimate right to use, free and
clear of any liens, all trade secrets, copyrights,
intellectual property, source and object code,
documentation, and all other intellectual property that
constitutes the NPE System or is furnished by the
Corporation to its clients as ancillary to the use of the
NPE System. To the best of its knowledge, the Corporation is
not using or in any way making use of any
<PAGE>
-14-
confidential information or trade secrets, copyrights, trade
marks, or other intellectual property of any third party
that is material to the NPE System or the business of the
Corporation which is not under a subsisting right or license
in good standing granted by such third party to the
Corporation, and no claim has been asserted by any person to
the contrary effect. The NPE System to date has been
developed, coded, structured, and documented in accordance
with the standard of care of professional software
developers and in accordance with current technical
standards. The NPE System that has been supplied to
customers of the Corporation up to the date hereof has
operated, and hereafter will continue to operate, in
accordance with the descriptions, documentation, and
specifications pertaining thereto supplied to such customers
without any abnormal abends or aborts or invalid or
incorrect results or degradation of performance; save and
except as experienced within customer expectations and
within acceptable industry experience for well developed
software and, with respect to future experience with such
installed NPE System, at frequency and severity levels no
greater than experienced by the Corporation with respect to
the NPE System to the date hereof.
(r) To the best of the knowledge of the Corporation, the
computer systems, including hardware and software used
internally in the business of the Corporation, and the NPE
Systems furnished by the Corporation to third parties, are
free from significant viruses and disabling devices, and the
Corporation has taken, and shall continue to take, all steps
and implement all procedures necessary to ensure, so far as
reasonably possible, that such systems are free from viruses
and disabling devices and will remain so. All such systems
including, without limitation, the NPE Systems are "year
2000 compliant". For these purposes, "year 2000 compliant"
means that the relevant computer hardware and software are
fully capable of sorting, interpreting, manipulating,
calculating, processing and reporting dates based upon the
full four digits for each year such that all arithmetic
operations, comparisons, sorts and reporting involving dates
yield correct results for the year 2000 and all years before
and after the year 2000 and that such computer systems are
capable of processing all dates (including leap years)
before January 1, 2000 and after December 31, 1999 without
experiencing any abnormal abends or aborts or invalid or
incorrect results or degradation of performance.
SECURITIES
(s) Upon receipt of the Purchase Price for the Securities, the
Securities shall be at the Time of Closing duly and validly
issued, as fully paid and non-assessable securities of the
Corporation.
(t) The issue and delivery of the Securities to the Investor on
the Closing Date shall be made in compliance with all
applicable securities laws pertaining to the Corporation or
the issue of the Securities and such issue shall be exempt
from any requirement respecting the filing of a prospectus
or registration statement and no rulings, orders, consents
or approvals required to permit the sale of the Securities
to the Investor under such securities legislation are
required.
(u) One year after the date of issuance, the Purchased Common
Shares may be resold pursuant to Rule 144 under the
Securities Act, as currently in effect, provided that (x)
<PAGE>
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the Corporation's Common Stock continues to be registered
pursuant to Section 12 of the Securities and Exchange Act of
1934, as amended (the "Exchange Act") and (y) the
Corporation has filed all reports required to be filed under
Section 13 or 15(d) of the Exchange Act during the one-year
period prior to any resale of Purchased Common Shares.
CONTRACTS AND CLIENT RELATIONS
(v) A true and complete list of all material contracts (the
"Contracts") in effect to which the Corporation is a party
have been filed as Exhibits to the SEC Reports and the
Corporation has prior to the date hereof provided the
Investor with true and complete copies of all such
Contracts. All Contracts have been duly authorized and
delivered by the Corporation, are in full force and effect
against the Corporation and constitute the valid and binding
obligations of the Corporation and, to the best of the
Corporation's knowledge, the other parties thereto,
enforceable in accordance with their respective terms. As to
the Contracts, (i) there are no existing breaches or
defaults by the Corporation thereunder or, to the knowledge
of the Corporation by the other parties to such Contracts,
(ii) no event, act or omission has occurred or, as the
result of the consummation of the transactions contemplated
hereby will occur which (with or without notice, lapse of
time or the happening or occurrence of any other event)
would result in a default by the Corporation or give cause
for termination thereof, provided that insofar as the
foregoing representation involves the actions or omissions
of parties other than the Corporation it shall be limited to
the expressed terms of the Contracts together with the
knowledge of the Corporation and (iii) none of the parties
to such Contracts have expressed an indication to the
Corporation of their intention to cancel, renegotiate or
exercise or not exercise any right under such Contracts.
(w) Schedule 3.3(w) hereof sets forth those clients of the
Corporation for the previous two fiscal years of the
Corporation and for the current fiscal year to June 30th,
1999 making a 5% or greater contribution to the revenue of
the Corporation for such fiscal period and set opposite each
such client's name in such period are the fees and revenues
paid or payable by that client for such periods. No such
client of the Corporation has advised the Corporation in
writing that it (i) is terminating or considering
terminating the services being supplied by the Corporation
(including its license of the NPE System) as a whole or in
respect of any particular project, product or service, or
(ii) is planning to reduce its future maintenance contract
spending with the Corporation in any material manner. To the
best knowledge, information and belief of the Corporation
(without making any inquiry of any clients), no client has
orally advised the Corporation of any of the foregoing
events or plans to implement any of the foregoing events.
RELATED TRANSACTIONS
(x) Except as disclosed in the SEC Reports no current or former
shareholder, director or officer or employee of the
Corporation or any Associate of any such person is
presently, directly or indirectly, through his or its
affiliation with any other person or entity, party to any
transaction with the Corporation providing for the
furnishing of services (other than employment of such
individuals by the Corporation), or products
<PAGE>
-16-
by or to, or rental of real or personal property from or to,
or otherwise requiring cash payments to or by, any such
persons that would be required to be disclosed in the SEC
Reports).
SUBSIDIARIES AND INDIRECT INVESTMENTS
(y) The Corporation has no subsidiaries, or other indirect
investments, except for Fullmetrics, Inc.
3.4 SURVIVAL OF CORPORATION'S REPRESENTATIONS
All statements contained in any Transaction Document, certificate or
other instrument delivered by or on behalf of the Corporation
pursuant to or in connection with the transaction contemplated by
this Agreement shall be deemed to be made by the Corporation
hereunder. The representations, warranties and covenants of the
Corporation contained or deemed to be contained in this Agreement or
in the other Transaction Documents, shall survive the Closing of the
subscription for, and issue of, the Securities, and notwithstanding
such Closing, and regardless of any investigation by or on behalf of
the Investor with respect thereto, shall continue in full force and
effect for the benefit of the Investor for the Investor's Period as
defined hereafter. For these purposes, "Investor's Period" means
that period of time that obligations are explicitly expressed to
survive in each particular Transaction Document, or failing any such
explicit expression of survival, for the period of time starting
from and including the Closing Date and thereafter forever in the
case of the covenants herein or in the case of fraud or in respect
of matters pertaining to the shares set out in subsection 3.3(s)
hereof, and otherwise with respect to representations and
warranties, to and including the date of expiration of potential
liability under the IRS Code in respect of liability thereunder, and
in all other cases, to and excluding the third (3rd) anniversary of
the Closing Date. After the expiration of the Investor's Period, the
Corporation shall be released from all obligations and liabilities
hereunder in respect of such representations, warranties and
covenants except with respect to any claims made by the Investor in
writing prior to the expiration of the particular Investor's Period
(in which event, liability shall survive until the final
determination or settlement of such claims).
ARTICLE 4 - CLOSING ARRANGEMENTS
4.1 PLACE OF CLOSING
The parties will use all reasonable best efforts to avoid a formal
closing requiring personal attendance in one place at the same time.
Instead, the parties will use all reasonable efforts to effect
closing procedures through escrow of documents at Brien G. McKenna,
Barrister & Solicitor, Toronto, and through Oppenhimer, Wolff &
Donnelly LLP, Minnesota, in accordance with procedures agreed
between those two law firms. In the event that a formal closing is
required with the attendance of parties, such closing will take
place at the Time of Closing at the offices of:
Oppenhimer, Wolff & Donnelly LLP
Attorneys Plaza VII
45 South Seventh Street
Suite 3400
<PAGE>
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Minneapolis MN
55402-1609
The time and place for any such closing may be amended by agreement
between the parties hereto.
4.2 TENDER
Any tender of documents or money under this Agreement may be made
upon the parties or their respective counsel and money may be
tendered by official bank draft drawn upon a USA chartered bank or
by negotiable cheque payable in USA funds and certified by a
Canadian chartered bank or trust company.
4.3 CLOSING PROCEDURES FOR SECURITIES
(a) Without limiting the other matters to be deduced at the Time
of Closing, at the Time of Closing, the Corporation shall
deliver to the Investor:
(i) a certificate representing the Securities
subscribed for herein duly registered in the name
of the Investor; and
(ii) the requisite legal opinion and certificates and
other conditions of closing as contemplated in the
agenda tabled at Closing;
(b) Without limiting the other matters to de deduced at the Time
of Closing, at the Time of Closing, the Investor shall
deliver to the Corporation:
(i) an irrevocable direction to convert to equity a
portion of the Debt owed by the Corporation to the
Investor that is equal to the Purchase Price;
(ii) the requisite certificates and other conditions of
closing as contemplated in the agenda delivered at
Closing.
ARTICLE 5 - COVENANTS OF THE PARTIES RE CLOSING
5.1 APPROVALS AND CONSENTS
Prior to the Closing Date, each of the Corporation and Investor have
obtained all necessary consents of all other third parties, and
shall after the Closing Date comply with any conditions thereof,
which are required in connection with the completion of any of the
transactions contemplated by this Agreement, the execution of this
Agreement or the Closing, or the performance of any of the terms and
conditions hereof, provided that the Investor shall not be obliged
to comply with any such conditions unless the same have been
disclosed to and accepted by the Investor prior to Closing. To the
extent that a necessary consent to this transaction is to be
obtained by the Investor, the Corporation shall not be obliged to
comply with any conditions of such consent unless, prior to Closing,
such conditions have been disclosed to and accepted by the person(s)
from whom compliance is required.
<PAGE>
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5.2 NATURE OF COVENANTS
The covenants of the Corporation and the Investor, as the case may
be, set forth in this Agreement shall survive the Closing and,
notwithstanding the Closing, shall continue in full force and effect
for the benefit of the Investor and the Corporation, as the case may
be.
5.3 COVENANTS OF THE CORPORATION
The Corporation hereby covenants to and with the Investor that it will:
(a) fulfil all legal requirements to permit the issuance and
offering of the Securities as contemplated in this Agreement
including, without limitation, compliance with all
applicable securities laws and regulations to enable the
same to be offered for subscription and issued without the
necessity of filing a prospectus or registration statement;
(b) obtain the necessary regulatory consents to the issue of the
Securities, if any; and
(c) within the time periods prescribed by law, after the Closing
Date (as herein defined), file such documents as may be
required under the applicable securities laws relating to
the private placement of the Securities, if applicable.
ARTICLE 6 - SIMULTANEOUS CLOSING
6.1 SIGN AND CLOSE
This Agreement has been executed and delivered coincidentally with
the closing of the transactions contemplated hereunder.
ARTICLE 7- INDEMNIFICATIONS
7.1 INDEMNIFICATION BY INVESTOR
The Investor hereby agrees to indemnify and save harmless the
Corporation from and against all manner of debts, losses, demands,
claims, actions, causes of action, damage, liabilities, costs,
expenses or penalties whatsoever and howsoever arising
(collectively, the "Corporation's Damages") incurred by the
Corporation at any time hereafter, whether directly, or indirectly,
that are existing, arising, accruing, incurred or outstanding as at
the Time of Closing on the Closing Date, or that arise thereafter in
respect of transactions to and including the Time of Closing of the
Closing Date and that are:
(a) Attributable to the breach or incorrectness of any and each
representations, warranties or covenants given in this
Agreement or that are given in any of the Transaction
Documents in favour of the Corporation;
(b) All reasonable costs and expenses of the Corporation in
pursuing its remedies under this Agreement, including
reasonable legal fees and expenses on a solicitor and client
basis; and
(c) Interest on all of the amounts aforesaid at the pre-judgment
and post-judgment interest rates allowed by courts of
competent jurisdiction in the state of Minnesota;
<PAGE>
-19-
provided however, that notice of such claim for indemnity is given
by the Corporation to the Investor during the Corporation's Period.
The indemnities given in this Section 7.1 are separate and distinct
from any indemnities given by, or any obligations of, the Investor
in any other Transaction Document and shall not merge with, or be in
substitution for, any such indemnities or obligations, all of which
are hereby expressed to be separately enforceable covenants. The
foregoing liability of the Investor shall not arise or be effective,
except in the case of fraud, until the aggregate amount of all
liability claims hereunder exceeds $25,000.00 at which time the
Investor shall be liable for all such liability claims including the
first $25,000.00 thereof.
7.2 INDEMNIFICATION BY CORPORATION
The Corporation hereby agrees to indemnify and save harmless the
Investor from and against all manner of debts, losses, demands,
claims, actions, causes of action, damage, liabilities, costs,
expenses, or penalties, whatsoever and howsoever arising
(collectively, the "Investor's Damages"), incurred by the Investor
at any time hereafter, whether directly, or indirectly, or through
the diminished value of the Securities, that are existing, arising,
accruing, incurred or outstanding as of the Time of Closing on the
Closing Date, or that arise thereafter in respect of transactions to
and including the Time of Closing on the Closing Date and that are:
(a) Attributable to the breach or incorrectness of any and each
of the representations, warranties or covenants in this
Agreement or that are given in any of the Transaction
Documents in favour of the Investor;
(b) All reasonable costs and expenses of the Investor in
pursuing its remedies under this Agreement, including
reasonable legal fees and expenses on a solicitor and client
basis; and
(c) Interest on all of the amounts aforesaid at the pre-judgment
and post-judgment interest rates allowed by courts of
competent jurisdiction in the state of Minnesota;
provided, however, that notice of such claim for indemnity is given
by the Investor to the Corporation during the Investor's Period. The
indemnities given in this Section 7.2 are separate and distinct from
any indemnities given by, or any obligations of, the Corporation in
any other Transaction Document and shall not merge with, or be in
substitution for, any such indemnities or obligations, all of which
are hereby expressed to be separately enforceable covenants. The
foregoing liability of the Corporation shall not arise or be
effective, except in the case of fraud, until the aggregate amount
of all liability claims hereunder exceeds $25,000.00 at which time
the Corporation shall be liable for all such liability claims
including the first $25,000.00 thereof.
7.3 PROCEDURE FOR INDEMNIFICATION
(a) CLAIMS OTHER THAN THIRD PARTY CLAIMS. Following receipt from
the Corporation or the Investor, as the case may be (the
"Indemnified Party"), of a written notice of a claim for
indemnification which has not arisen in respect of a Third
Party Claim (as defined in Section 7.3(b) below), the party
who is in receipt of such notice (the "Indemnifying Party")
shall have 30 days to make such investigation of the claim as
the Indemnifying Party considers necessary or desirable. For
the purpose of such investigation, the Indemnified Party shall
make available to the Indemnifying Party
<PAGE>
-20-
the information relied upon by the Indemnified Party to
substantiate the claim. If the Indemnified Party and the
Indemnifying Party agree at or prior to the expiration of
such 30 day period (or any mutually agreed upon extension
thereof) to the validity and amount of the claim, the
Indemnifying Party shall immediately pay to the Indemnified
Party the full agreed upon amount of the claim. If the
Indemnified Party and the Indemnifying Party do not agree
within such period (or any mutually agreed upon extension
thereof), such dispute shall be resolved by an action in a
court of law.
(b) THIRD PARTY CLAIMS. The Indemnified Party shall notify the
Indemnifying Party in writing as soon as is reasonably
practicable after being informed in writing that facts exist
which may result in a claim originating from a Person other
than the Indemnified Party (a "Third Party Claim") and in
respect of which a right of indemnification given pursuant
to Section 7.1 or 7.2 may apply. The Indemnifying Party
shall have the right to elect, by written notice delivered
to the Indemnified Party within 10 days of receipt by the
Indemnifying Party of the notice from the Indemnified Party
in respect of the Third Party Claim, at the sole expense of
the Indemnifying Party, to participate in or assume control
of the negotiation, settlement or defence of the Third Party
Claim, provided that:
(i) such will be done at all times in a diligent and
bona fide matter;
(ii) the Indemnifying Party acknowledges in writing its
obligation to defend the Indemnified Party in
accordance with the terms contained in this
Agreement in respect of that Third Party Claim; and
(iii) the Indemnifying Party shall pay all reasonable
out-of-pocket expenses incurred by, the
Indemnified Party as a result of such
participation or assumption.
If the Indemnifying Party elects to assume such control, the
Indemnified Party shall cooperate with the Indemnifying
Party and its counsel and shall have the right to
participate in the negotiation, settlement or defence of
such Third Party Claim at its own expense. If the
Indemnifying Party does not so elect or, having elected to
assume such control, thereafter fails to proceed with the
settlement or defence of any such Third Party Claim, the
Indemnified Party shall be entitled to assume such control.
In such case, the Indemnifying Party shall cooperate where
necessary with the Indemnified Party and its counsel in
connection with such Third Party Claim and the Indemnifying
Party shall be bound by the results obtained by the
Indemnified Party with respect to such Third Party Claim.
7.4 ADDITIONAL RULES AND PROCEDURES
The obligation of the parties to indemnify each other pursuant to
this Article 7 shall also be subject to the following:
(a) an Indemnified Party shall only be entitled to make a claim
for indemnification pursuant to Section 7.1 or 7.2, as the
case be, if written notice containing reasonable particulars
of such claim is delivered to the Indemnifying Party within
the time periods provided for in Section 3.2 or 3.4, as the
case may be;
<PAGE>
-21-
(b) if any Third Party Claim is of a nature such that the
Indemnified Party is required by applicable law to make a
payment to any Person (a "Third Party") with respect to such
Third Party Claim before the completion of settlement
negotiations or related legal proceedings, the Indemnified
Party may make such payment and the Indemnifying Party
shall, forthwith after demand by the Indemnified Party,
reimburse the Indemnified Party for any such payment. If the
amount of any liability under the Third Party Claim in
respect of which such a payment was made, as finally
determined, is less than the amount which was paid by the
Indemnifying Party to the Indemnified Party, the Indemnified
Party shall, forthwith after receipt of the difference from
the Third Party, pay such difference to the Indemnifying
Party;
(c) except in the circumstances contemplated by subsection
7.4(b) above, and whether or not the Indemnifying Party
assumes control of the negotiation, settlement or defence of
any Third Party Claim, the Indemnified Party shall not
settle or compromise any Third Party Claim except with the
prior written consent of the Indemnifying Party;
(d) the Indemnifying Party and the Indemnified Party shall
provide each other on an ongoing basis with all information
which may be relevant to the other's liability relating to a
Third Party Claim hereunder and shall supply copies of all
relevant documentation promptly as they become available; and
(e) notwithstanding subsection 7.4(c), the Indemnifying Party
shall not settle any Third Party Claim or conduct any
related legal or administrative proceeding in a manner which
would, in the opinion of the Indemnified Party, acting
reasonably, have a material adverse impact on the
Indemnified Party.
7.5 RIGHTS CUMULATIVE
The rights of indemnification contained in this Article 7 are
cumulative and are in addition to every other right or remedy of the
parties contained in this Agreement or otherwise.
ARTICLE 8 - GENERAL
8.1 NON-MERGER
Each party hereby agrees that all provisions of this Agreement shall
not merge on the Closing of the transactions contemplated in this
Agreement and shall, thereafter, survive for the periods of time
expressly set out in this Agreement and if such survival is not
limited in time shall, subject to applicable limitation periods
otherwise imposed by law, forever survive the execution and delivery
of this Agreement until fully fulfilled or performed.
8.2 EXPENSES
Except as set out hereafter, each of the parties hereto shall bear
all expenses incurred by it in connection with this Agreement
including, without limitation, the charges of their respective,
accountants and financial advisors. Notwithstanding the foregoing
however, the Corporation shall bear the reasonable legal and
accounting fees incurred by the Investor in connection with its due
diligence and the drafting and legal review of the transactions,
agreements and documents contemplated by and directly relating to
the transactions contemplated herein.
<PAGE>
-22-
Such amounts payable by the Corporation accruing to, or known by,
the Time of Closing shall be paid by the Corporation at the Time of
Closing.
8.3 FURTHER ASSURANCES
The parties shall do all such things and provide all such reasonable
assurances as may be required to consummate the transactions
contemplated hereby, and each party shall provide such further
documents or instruments required by any other party as may be
reasonably necessary or desirable to effect the purpose of this
Agreement and carry out its provisions, whether before or after the
closing.
8.4 BENEFIT OF THE AGREEMENT
This Agreement shall enure to the benefit of and be binding upon the
respective heirs, executors, administrators, successors and
permitted assigns of the parties.
8.5 ENTIRE AGREEMENT
With respect to the subject matter of the Transaction Documents, the
Transaction Documents (a) set forth the entire agreement between the
parties and any persons who have in the past or who are now
representing any of the parties, (b) supersedes all prior
understandings and communications between the parties or any of
them, oral or written, express or implied including the Letter of
Intent, and (c) constitutes the entire agreement between the
parties. Each party acknowledges that it shall have no right to rely
upon any amendment, promise, modification, statement or
representation made or occurring subsequent to the execution of this
Agreement unless the same is in writing and executed by the parties
hereto.
8.6 WAIVER
The failure of any party to enforce at any time any of the
provisions of this Agreement or any of its rights in respect thereto
or to insist upon strict adherence to any term of this Agreement
shall not be considered to be a waiver of such provision, right or
term or in any way to affect the validity of this Agreement or
deprive the applicable party of the right thereafter to insist upon
strict adherence to that term or any other term of this Agreement.
The exercise by any party of any of its rights provided by this
Agreement shall not preclude or prejudice such party from exercising
any other right it may have under this Agreement, irrespective of
any previous action or proceeding taken by it hereunder. Any waiver
by any party of the performance of any of the provisions of this
Agreement shall be effective only if in writing and signed by a duly
authorized representative of such party.
8.7 NOTICES
All communications which may be or are required to be given by any
party to any other party, shall be in writing and (i) delivered
personally, (ii) sent by prepaid courier service or mail, or (iii)
sent by prepaid telecopier or other similar means of electronic
communication to the parties at their following respective address.
<PAGE>
-23-
TO THE CORPORATION:
Nicollet Process Engineering, Inc
420 North Fifth Street
Suite 1040
Minneapolis, MN 55401
Attention: President
Telecopier: (612) 339-6027
with a copy to:
Oppenhimer, Wolff & Donnelly LLP
Attorneys Plaza VII
45 South Seventh Street
Suite 3400
Minneapolis, MN
55402-1609
Attention: Mr. Thomas A. Letscher
Telecopier: (612) 607-7100
TO THE INVESTOR:
TECHinspirations Inc. (Cayman)
c/o CIBC Bank and Trust Company (Cayman) Limited
P.O. Box 694
CIBC Building, Edward Street
Georgetown, Grand Cayman
B.W.I.
Attention: Mr. Ian Phillips
Telecopier: (345) 949-7904
with a copy to TECHinspirations (Canada) Inc.
2275 No. 8 Side Road
R.R. #2
Milton, Ontario L9T 2X6
Attention: Mr. Frank van Luttikhuizen
Telecopier: (905) 335-1889
and with a copy to the Investor's counsel at:
Brien G. McKenna
60 Bedford Road, 2nd Floor
Toronto, ON M5R 2K2
<PAGE>
-24-
Attention: Mr. Brien G. McKenna
Telecopier: (416) 929-9931
8.8 ASSIGNMENT
Neither this Agreement nor any rights or obligations hereunder shall
be assignable by any party without the prior written consent of each
of the other parties.
8.9 SEVERABILITY
If any provision of this Agreement is invalid or unenforceable, such
provision shall be severed and the remainder of this Agreement shall
be unaffected thereby, but shall continue to be valid and
enforceable to the fullest extent permitted by law.
8.10 COUNTERPARTS
This Agreement may be executed by the parties in separate
counterparts (by original or facsimile signature) each of which when
so executed and delivered shall be an original, but all such
counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF the parties have hereunder duly executed this
Agreement on the date first above written.
[remainder of page intentionally left blank]
<PAGE>
-25-
NICOLLET PROCESS ENGINEERING, INC.
Per:
------------------------------------
Name:
Title:
TECHinspirations INC. (CAYMAN)
Per:
------------------------------------
Name:
Title:
<PAGE>
-26-
FOR VALUE RECEIVED the undersigned Advisor confirms the
provisions of Section 1.9 of this Agreement, acknowledges that it
entered into the Letter of Intent for the Investor and without
personal benefit, and confirms that the Investor is the entity with
which the Corporation should complete the Transaction Documents and
the matters contemplated under the Letter of Intent applicable to
the `Investor to be identified', other than the consulting agreement
referred to in the Closing Agenda which is to be completed with the
Advisor.
TECHinspirations INC.
Per:
-------------------------------
Name: Manuel Pietra
Title: President
<PAGE>
SCHEDULE 1.1
DEFINITIONS
This is Schedule 1.1 of the Agreement between Nicollet Process Engineering,
Inc and TECHinspirations Inc. (Cayman) made as of the 15th day of July, 1999.
Where used herein or in any amendment hereto, the following terms have the
following meanings, respectively:
(a) "Advisor" means TECHinspirations, Inc. a Nevada corporation.
(b) "Agreement" means this Agreement and includes all Schedules
annexed to this Agreement and referenced in Section 1.5 of
this Agreement;
(c) "Agreement Date" means the date first above written in this
Agreement;
(d) "Authority" means any governmental or regulatory authority,
body, agency or department, whether federal, provincial or
municipal;
(e) "Business Day" means a day other than a Saturday, Sunday or
any other day on which the principal commercial banks
located at the City of Minneapolis, Minnesota are not open
for business during normal banking hours;
(f) "Closing" means the completion of the issuance by the
Corporation, and subscription by the Investor, of the
Security as provided hereunder;
(g) Closing Date" or "Date of Closing" means the Agreement Date;
(h) "Closing Documents" means all documents of conveyance,
instruments and agreements delivered at the Closing of the
transactions contemplated hereunder as described on the
closing agenda of documents annexed hereto as Schedule
1.1(j);
(i) "Common Shares" or "common shares" bears the meaning
attributable to it in subsection 3.3(j) of the Agreement;
(j) "Corporation's Liabilities" bears the meaning attributable
to it in Section 7.1 of the Agreement;
(k) "Corporation's Period" bears the meaning attributable to it
in Section 3.2 of the Agreement;
(l) "Indemnified Party" bears the meaning attributable to it in
subsection 7.3(a) of the Agreement;
(m) "Indemnifying Party" bears the meaning attributable to it in
subsection 7.3(a) of the Agreement;
(n) "Investor's Damages" bears the meaning attributable to that
term in Section 7.2 of this Agreement;
<PAGE>
-2-
(o) "Investor's Period" bears the meaning attributable to that
term in Section 3.4 of this Agreement;
(p) "Person" includes an individual, corporation, partnership,
trustee, trust, unincorporated association, organization,
syndicate, executor, administrator or other legal or
personal representative and pronouns have a similarly
extended meaning;
(q) "Regulatory Approvals" means all necessary approvals,
permits, sanctions, rulings, orders or consents from any
government, governmental body, regulatory authority or
self-regulatory organization within the United States with
respect to the transactions contemplated by this Agreement;
(r) "SEC Reports" bears the meaning attributable to that term in
paragraph 3.3(f) hereof;
(s) "Securities" means the Purchased Common Shares, the Common
Stock Warrant, the shares of Common Stock underlying the
Common Stock Warrant, and the Secured Debt.
(t) "Shares" bears the meaning attributable to that term in
Section 2.1 of this Agreement;
(u) "Third Party Claim" bears the meaning attributable to it in
Section 7.3(b) of the Agreement;
(v) "Time of Closing" means 10:00 a.m. (Minnesota time) on the
Closing Date or such other time as the Investor and the
Corporation may agree upon; and
(w) "Transaction Documents" collectively means Closing and this
Agreement.
<PAGE>
EXHIBIT 2
- ------------------------------------------------------------------------------
CONVERSION AGREEMENT
MADE AS OF 29TH DAY OF JULY 1999 (THE "EFFECTIVE DATE")
- ------------------------------------------------------------------------------
BETWEEN: NICOLLET PROCESS ENGINEERING, INC., a corporation duly incorporated
under the laws of the State of Minnesota, of the United States,
having its registered office and principal place of business located
at 420 North Fifth Street, Suite 1040, Minneapolis, Minnesota 55401.
(hereinafter referred to as the "CORPORATION")
AND: TECHINSPIRATIONS INC. (CAYMAN), having its registered office and
principal place of business located at CIBC Bank and Trust Company
(Cayman) Limited, P.O. Box 694, CIBC Building, Edward Street,
Goergetown, Grand Cayman B.W.I
(hereinafter referred to as "Investor")
- ------------------------------------------------------------------------------
CERTAIN DEFINITIONS
In this Conversion Agreement capitalized terms denoting defined terms shall,
if not specifically defined herein, bear the meanings attributable to them in
the Purchase Agreement (as defined below). Subject to the foregoing, for the
purposes hereof, unless there is something in the subject-matter or context
inconsistent therewith, the following terms and expressions shall have the
following meanings:
CHARGE: a hypothec, mortgage, priority, charge, pledge, assignment
in guaranty, security interest, lien, encumbrance, action,
claim, demand, option, offer, right or equity of any nature
whatsoever or howsoever arising on one or more assets or
rights;
CREDIT FACILITY: means the secured revolving operating line of credit
extended by the Investor to the Corporation supported,
originally, by an assignment of the security held, and a
credit facility advanced, by Norwest Business Credit, Inc.
under credit extended to the Corporation
DEBT: means the amount of accrued interest and outstanding
principal owed by the Corporation to the Investor under the
Credit Facility on the date hereof;
PURCHASE means that purchase agreement between the Corporation, as
AGREEMENT: issuer, and the Investor, as purchaser, dated as of the date
hereof whereunder the
<PAGE>
2
Investor has purchased 20,000,000 shares of Common Stock of
the Corporation, and a Common Stock Warrant covering
4,750,000 shares of Common Stock.
FOR VALUE RECEIVED AND IN CONSIDERATION OF THE MATTERS SET
OUT IN THE PURCHASE AGREEMENT, IT IS AGREED AS FOLLOWS:
1. Pursuant to the provisions of the Purchase Agreement, and
coincidentally with the Closing of the transactions contemplated
under the Purchase Agreement, the Corporation and Investor hereby
confirm their agreement, and the Investor's irrevocable direction,
to convert the following portion of the Debt with the effect as of
the date hereof;
1.1 $3,000,000 of the Debt shall be converted into 20,000,000 shares
of Common Stock of the Corporation at a conversion price of $0.15
per share and in full satisfaction of the subscription price for
20,000,000 shares of Common Stock purchased by the Investor from the
Corporation pursuant to the Purchase Agreement; and
1.2 $100 of the Debt shall be converted into the Common Stock
Warrant covering 4,750,000 shares of Common Stock of the Corporation
in full satisfaction of the subscription price for the Common Stock
Warrant purchased by the Investor from the Corporation pursuant to
the Purchase Agreement.
2. Each of the Corporation and the Investor hereby acknowledges and
confirms that the amount of the Debt outstanding on the date hereof
exceeds $3,000,100. The Corporation hereby acknowledges receipt of
the subscription price referred to in paragraph 1 above and the
Investor hereby confirms that the amount of the Debt outstanding
shall be reduced accordingly.
3. The Corporation and the Investor hereby waive any notice requirement
from one another and any other procedure, condition or other right
precedent to the conversion of the Debt pursuant to this Agreement.
4. Each party hereto represents and warrants that it has the necessary
power, authority and capacity to execute this agreement and to
perform its obligations hereunder.
5. The Investor hereby represents and warrants to the Corporation that
the Debt so converted pursuant to this Agreement is free and clear
of any Charges created by the Investor whatsoever, except for
Charges created under the Credit Facility.
6. Each party hereto shall at the request of the other party execute
and deliver any further documents and do all acts and things as that
party may reasonably require to carry out the true intent and
meaning of this agreement.
<PAGE>
3
7. Any notice or other communication to be given in connection with
this agreement shall be given in writing and transmitted by any
means providing proof of receipt by the addressee, to the addresses
indicated at the beginning hereof, or to such other address as any
party may designate by notice given to the other party.
8. This agreement shall be governed by the laws in force in the State
of Minnesota and the parties hereto agree irrevocably to attorn to
the jurisdiction of the courts of the State of Minnesota and agree
that any proceedings taken in respect of this agreement shall be
taken in such courts and in no other.
9. This agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective personal representatives, heirs,
successors and administrators.
10. This agreement may be executed in separate counterparts, all of
which shall constitute one and the same instrument. This Agreement
may be effectively delivered by the facsimile delivery of a signed
original and such facsimile copy shall be as effective as the signed
original.
- ------------------------------------------------------------------------------
IN WITNESS WHEREOF, the parties hereto have executed this agreement as of the
Effective Date.
NICOLLET PROCESS ENGINEERING, INC.
BY:
-------------------------------
ITS:
-------------------------------
TECHINSPIRATIONS INC (CAYMAN)
BY:
-------------------------------
ITS:
-------------------------------
<PAGE>
EXHIBIT 3
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED, ASSIGNED
OR OTHERWISE DISPOSED OF, AND NO TRANSFER OF THE SECURITIES WILL BE MADE BY THE
COMPANY OR ITS TRANSFER AGENT, IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION
OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
NICOLLETT PROCESS ENGINEERING, INC..
COMMON STOCK PURCHASE WARRANT
Date of Issuance: July 29th, 1999 Certificate No. CW-1
FOR VALUE RECEIVED, Nicollet Processing Engineering, Inc., a Minnosota
corporation (the "Company"), hereby grants to TECHinspirations Inc. (Cayman)
(the "Investor") or its registered assigns (the "Registered Holder") the right
to purchase from the Company 4,750,000 shares of Warrant Stock at a price of
$0.15 per share (as adjusted from time to time as provided herein, the "Exercise
Price"), subject to adjustments set forth herein The amount and kind of
securities receivable pursuant to the rights granted hereunder are subject to
adjustment pursuant to the provisions contained in this Warrant.
The Company acknowledges that of the purchase price paid for the
Warrants pursuant to a certain purchase agreement made with effect as of the
29th day of July 1999 between the Company and the Investor (the "Agreement"),
being the amount of one hundred dollars ($100.00) in the aggregate, has been
paid by the Investor hereof as a nonrefundable payment for the Warrant Stock
from time to time issued hereunder. Certain terms used in this Common Stock
purchase warrant (the "Warrant") are defined in section 7 hereof. Each
capitalized term used in this Warrant but not otherwise defined herein has the
meaning set forth for such term in the Agreement.
This Warrant is subject to the following provisions:
<PAGE>
- 2 -
SECTION 1
EXERCISE OF WARRANT
1.1 EXERCISE PERIOD
The Registered Holder may exercise, in whole or in part, the purchase
rights represented by this Warrant at any time and from time to time during the
periods (the "Exercise Periods") set out in the paragraphs below in respect of
that number of shares of Warrant Stock set out in such paragraph:
(a) With respect to the warrants for 1,500,000 shares of the
Warrant Stock, the same may be exercised in whole or in part
at any time after the Date of Issuance to and including the
fifth anniversary of the Date of Issuance (the "End Date").
(b) With respect to the warrants for 1,000,000 shares of the
Warrant Stock, the same may only be exercised after the
Company's Common Stock Closing Price has reached or exceeded
$1.00 per share for ten consecutive trading days and
thereafter does not trade below $1.00 per share prior to the
exercise of the warrant entitlement in this paragraph; and
further provided that the unexercised rights in this paragraph
shall be suspended if the Company's Common Stock Closing Price
falls below $1.00 (in which event, the rights hereunder may be
reactivated and thereafter suspended from time to time up to
the End Date, in accordance with the foregoing provisions of
this paragraph);
(c) With respect to the warrants for 1,000,000 shares of the
Warrant Stock, the same may only be exercised after the
Company's Common Stock Closing Price has reached or exceeded
$2.00 per share for ten consecutive trading days and
thereafter does not trade below $2.00 per share prior to the
exercise of the warrant entitlement in this paragraph; and
further provided that the unexercised rights in this paragraph
shall be suspended if the Company's Common Stock Closing Price
falls below $2.00 (in which event, the rights hereunder may be
reactivated and thereafter suspended from time to time up to
the End Date, in accordance with the foregoing provisions of
this paragraph); and
(d) With respect to the warrants for 1,250,000 shares of the
Warrant Stock, the same may only be exercised after the
Company's Common Stock Closing Price has reached or exceeded
$3.00 per share for ten consecutive trading days and
thereafter does not trade below $3.00 per share prior to the
exercise of the warrant entitlement in this paragraph; and
further provided that the unexercised rights in this paragraph
shall be suspended if the Company's Common Stock Closing Price
falls below $3.00 (in which event, the rights hereunder may be
reactivated and thereafter suspended from time to time to the
End Date, in accordance with the foregoing provisions of this
paragraph).
In the event that this Warrant has not been exercised in full as of the
End Date, the Registered Holder's right to exercise this Warrant in
respect of any remaining unexercised Warrant Stock shall expire and be
of no further force and effect.
<PAGE>
- 3 -
1.2 EXERCISE PROCEDURE
(a) This Warrant shall be deemed to have been exercised when the
Company has received all of the following items (the "Exercise
Time") in respect of that number of shares of Warrant Stock
specified in the Exercise Agreement and authorized for
purchase pursuant to Section 1.1 above::
(i) a completed Exercise Agreement, as described in
Section 1.3 below, executed by the Person exercising
all or part of the rights represented by this Warrant
(the "Purchaser");
(ii) this Warrant;
(iii) if this Warrant is not registered in the name of the
Purchaser, an Assignment or Assignments in the form
set forth in Exhibit II hereto evidencing the
assignment of this Warrant to the Purchaser, in which
case the Registered Holder shall have complied with
the provisions set forth in Section 9 hereof; and,
(iv) either
(A) a check payable to the Company in an amount
equal to the product of the Exercise Price
multiplied by the number of shares of
Warrant Stock being purchased upon such
exercise (the "Aggregate Exercise Price"),
(B) the surrender to the Company of debt or
equity securities of the Company having a
Market Price equal to the Aggregate Exercise
Price of the Warrant Stock being purchased
upon such exercise (provided that for
purposes of this subparagraph, the Market
Price of any note or other debt security or
any preferred stock shall be deemed to be
equal to the aggregate outstanding principal
amount or liquidation value thereof plus all
accrued and unpaid interest thereon or
accrued or declared and unpaid dividends
thereon) or
(C) a written notice to the Company that the
Purchaser is exercising the Warrant (or a
portion thereof) by authorizing the Company
to withhold from issuance a number of shares
of Warrant Stock issuable upon such exercise
of the Warrant which when multiplied by the
Market Price of the Warrant Stock is equal
to the Aggregate Exercise Price (and such
withheld shares shall no longer be issuable
under this Warrant).
(a) Certificates for shares of Warrant Stock purchased upon
exercise of this Warrant shall be delivered by the Company to
the Purchaser (or the Person specified in the applicable
Exercise Agreement, as provided in Section 1.3 below) within
five
<PAGE>
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business days after the date of the Exercise Time. Unless
this Warrant has expired or all of the purchase rights
represented hereby have been exercised, the Company shall
prepare a new Warrant, substantially identical hereto,
representing the rights formerly represented by this Warrant
which have not expired or been exercised and shall, within
such five-day period, deliver such new Warrant to the Person
designated for delivery in the Exercise Agreement.
Notwithstanding that this Warrant may have expired or that all
of the purchase rights represented hereby may have been
exercised, the rights of the Registered Holder hereof
otherwise represented by this Warrant shall survive such
expiration or exercise.
(e) The Warrant Stock issuable upon the exercise of this Warrant
shall be deemed to have been issued to the Purchaser at the
Exercise Time, and the Purchaser shall be deemed for all
purposes to have become the record holder of such Warrant
Stock at the Exercise Time.
(f) The issuance of certificates for shares of Warrant Stock upon
exercise of this Warrant shall be made without charge to the
Registered Holder or the Purchaser for any issuance tax in
respect thereof or other cost incurred by the Company in
connection with such exercise and the related issuance of
shares of Warrant Stock. Each share of Warrant Stock issuable
upon exercise of this Warrant shall, upon payment of the
Exercise Price therefor, be fully paid and nonassessable and
free from all liens and charges with respect to the issuance
thereof.
(g) The Company shall not close its books against the transfer of
this Warrant or of any share of Warrant Stock issued or
issuable upon the exercise of this Warrant in any manner which
interferes with the timely exercise of this Warrant. The
Company shall from time to time take all such action as may be
necessary to assure that the par value per share of the
unissued Warrant Stock acquirable upon exercise of this
Warrant is at all times equal to or less than the sum of the
Exercise Price then in effect plus the portion of the purchase
price of the Warrant allocated (as described in the preface
above) as payment for one share of the Warrant Stock issuable
hereunder.
(h) The Company shall assist and co-operate with any Registered
Holder or Purchaser required to make any governmental filings
or obtain any governmental approvals prior to or in connection
with any exercise of this Warrant (including, without
limitation, making any filings required to be made by the
Company).
(i) Notwithstanding any other provision hereof, if an exercise of
any portion of this Warrant is to be made in connection with a
public offering of the Company's Stock, the exercise of any
portion of this Warrant may, at the election of the holder
hereof, be conditioned upon the consummation of the public
offering in which case such exercise shall not be deemed to be
effective until the consummation of such public offering.
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(j) The Company shall at all times reserve and keep available out
of its authorized but unissued shares of Warrant Stock, solely
for the purpose of issuance upon the exercise of the Warrants,
such number of shares of Warrant Stock as are issuable upon
the exercise of all outstanding Warrants. All shares of
Warrant Stock which are so issuable shall, when issued, be
duly and validly issued, fully paid and nonassessable and free
from all taxes, liens and charges. The Company shall take all
such actions as may be necessary to assure that all such
shares of Warrant Stock may be so issued without violation of
any applicable law or governmental regulation or any
requirements of any domestic securities exchange upon which
shares of Warrant Stock or Common may be listed (except for
official notice of issuance which shall be immediately
delivered by the Company upon each such issuance).
1.3 EXERCISE AGREEMENT
With respect to any exercise of this Warrant, the Exercise Agreement shall be
substantially in the form set forth in Exhibit I hereto, except that if the
shares of Warrant Stock are not to be issued in the name of the Person in whose
name this Warrant is registered, the Exercise Agreement shall also state the
name of the Person to whom the certificates for the shares of Warrant Stock are
to be issued, and if the number of shares of Warrant Stock to be issued does not
include all the shares of Warrant Stock purchasable hereunder, it shall also
state the name of the Person to whom a new Warrant for the unexercised portion
of the rights hereunder is to be delivered. Such Exercise Agreement shall be
dated the actual date of execution thereof.
SECTION 2
ADJUSTMENT OF NUMBER OF SHARES
2.1 APPLICATION AND EXERCISE PRICE
In order to prevent dilution of the rights granted under this Warrant, the
number of shares of Warrant Stock obtainable upon exercise of this Warrant shall
be subject to adjustment from time to time as provided in this Section 2. Upon
each adjustment of the number of shares of Warrant Stock obtainable upon
exercise of this Warrant, the Warrant Exercise Price shall be adjusted by
multiplying the Warrant Exercise Price in effect immediately prior to such
adjustment by a fraction, the numerator of which is the number of shares of
Warrant Stock obtainable upon exercise immediately prior to such adjustment and
the denominator of which is the number of shares of Warrant Stock obtainable
upon exercise immediately after such adjustment.
2.2 SUBDIVISION OR COMBINATION OR COMMON STOCK
If the Company at any time subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its outstanding shares of
Common Stock into a greater number of shares, the number of shares of Warrant
Stock obtainable upon exercise of this Warrant shall be proportionately
increased. If the Company at any time combines (by reverse stick split or
otherwise) one or more classes of its outstanding shares of Common Stock into
smaller number of shares, the number of shares of Warrant Stock obtainable upon
exercise of this Warrant shall be proportionately decreased.
<PAGE>
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2.3 REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE
Any recapitalization, reorganization, reclassification, consolidation, merger,
sale of all or substantially all of the Company's assets to another Person or
other transaction which is effected in such a way that holders of Common Stock
are entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock is referred
to herein as an "Organic Change". Prior to the consummation of any Organic
Change, the Company shall make appropriate provision (in form and substance
satisfactory to the Registered Holder) with respect to such holders' rights and
interests to insure that the provisions of this Section 2 and Sections 3 and 4
hereof shall thereafter be applicable to the Warrants (including, in the case of
any such consolidation, merger or sale in which the successor entity or
purchasing entity is other than the Company and in which the value of the Common
Stock reflected by the terms of such consolidation, merger or sale multiplied by
the ratio of the Market Price in effect immediately prior to such consolidation,
merger or sale divided by such value of the Common Stock). The Company shall not
effect any such consolidation, merger or sale, unless prior to the consummation
thereof, the successor entity (if other than the Company) resulting from
consolidation or merger or the entity purchasing such assets assumes by written
instrument (in the form and substance satisfactory to the Registered Holder) the
obligation to deliver to each such holder such shares of stock, securities or
assets as, in accordance with the foregoing provisions, such holder may be
entitled to acquire.
2.4 NOTICES
(v) Immediately upon any adjustment of the number of shares of
Warrant Stock acquirable upon exercise of this Warrant, the
company shall give written notice thereof to the Registered
Holder, setting forth in reasonable detail and certifying the
calculation of such adjustment.
(vi) The Company shall give written notice to each holder of
Underlying Warrant Stock at least 20 days prior to the date on
which the Company closes its books or takes a record (A) with
respect to any dividend or distribution upon the Common Stock,
(B) with respect to any pro rata subscription offer to holders
of Common Stock; or (C) for determining rights to vote with
respect to any Organic Change, dissolution or liquidation.
2.5 NO AVOIDANCE
In the event that the Company shall enter into any transaction for the purpose
of avoiding the application of the provisions of this Section 2, the benefits
provided by such provisions shall nevertheless apply and be preserved.
SECTION 3
LIQUIDATING AND OTHER DIVIDENDS
3.1 PAYMENT OF LIQUIDATING DIVIDENDS
Subject to Section 4, if the Company declares or pays a dividend upon the Common
Stock payable otherwise than in cash out of earnings or earned surplus
(determined in accordance with
<PAGE>
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GAAP), including a stock dividend payable in shares of Common Stock (a
"Liquidating Dividend"), then the Company shall pay to the Registered Holder
of this Warrant at the time of payment thereof the Liquidating Dividend which
would have been paid to such Registered Holder on the Warrant Stock had this
Warrant been fully exercised in respect of that number of shares of
Underlying Warrant Stock that the Registered Holder is otherwise entitled at
that time to exercise this Warrant pursuant to Section 1.1 hereof (the
"Applicable Shares") immediately prior to the time as of which a record is
taken for such Liquidation Dividend, or, if no record is taken, the time as
of which the record holders of Common Stock entitled to such dividends are to
be determined.
3.2 ADJUSTMENT OF NUMBER OF SHARES IN CONNECTION WITH OTHER DIVIDENDS
Subject to Section 4, if the Company declares or pays a dividend upon the Common
Stock in cash out of earnings or earned surplus (determined in accordance with
GAAP), then:
(a) such Dividend shall be allocated proportionately to the
holders of outstanding Common Stock and holders of all
Warrants as though all Warrants (and, to the extent required
by the terms thereof, any other warrants, options or other
rights to acquire shares of Common Stock) for Applicable
Shares immediately prior to the date on which a record was
taken for such Dividend, or, if no record was taken, the date
as of which the record holders of Common Stock entitled to
such dividends were determined;
(b) the amount allocable to the holders of Warrants shall be
deposited by the Company in a separate interest-bearing
account concurrently with the payment of such Dividend to the
holders of Common Stock; and
(c) the amount allocated to the Warrants, plus all accrued
interest thereon, shall be paid to each holder thereof
promptly after the exercise of the Warrants by such holder in
the amount allocable to the Common Stock obtained by such
holder upon exercise.
SECTION 4
QUALIFICATION FOR SECTION 3 DIVIDENDS
4.1 PROVISO
The Registered Holder shall only be entitled to receive the Liquidating
Dividends or other dividends payable to the Registered Holder on Applicable
Shares pursuant to Section 3 if, within 30 days of receipt of notice of the
decision to declare such dividends, the Registered Holder exercises this Warrant
in respect of such Applicable Shares and pays to the Company the Purchase Price
therefor.
<PAGE>
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SECTION 5
PURCHASE RIGHTS
5.1 ENTITLEMENT
If at any time the Company grants, issue or sells any Options, Convertible
Securities or rights to purchase stock, warrants, securities or other property
pro rata to the record holders of Common Stock (the "PURCHASE RIGHTS"), then the
Registered holder of this Warrant shall be entitled to obtain, upon the same
terms on which holders of Common Stock are to receive such Purchase Rights, the
aggregate purchase Rights which such holder could have acquired if such holder
had held the number of shares of Warrant Stock acquirable upon complete exercise
of this Warrant immediately before the time as of which a record is taken for
the grant, issuance or sale of such Purchase Rights, or, if no such record is
taken, the time as of which the record holders of Common Stock are to be
determined for the grant, issue or sale of such Purchase Rights.
SECTION 6
CERTIFICATES, NOTICES AND CONSENTS
6.1 CERTIFICATES
Upon the occurrence of any event requiring adjustments to the number of shares
subject to this Warrant pursuant to Section 2, the Company shall mail to each
holder of Underlying Warrant Stock (by registered or certified mail, postage
prepaid) a certificate signed by the authorized signing officers of the Company,
setting forth in reasonable detail the events requiring the adjustment and the
method by which such proposed adjustment was calculated, specifying the adjusted
number of shares subject to this Warrant after giving effect to the proposed
adjustment.
6.2 NOTICE
If the Company after the date hereof shall propose to:
(a) Pay any dividend payable in stock to the holders of Common
Stock or to make any other distribution to the holders of
Common Stock or any extraordinary dividend or Liquidating
Dividend directly or indirectly attributable to proceeds from
the sale or other disposition of a significant business or
asset of the Company;
(b) Offer to the holders of Common Stock rights to subscribe for
or purchase any additional shares of any class of stock or any
other rights or options;
(c) Effect any reclassification except the subdivision or
combination of shares of outstanding Common Stock; or
(d) Effect any Organic Change or sale transaction described in
Section 2.4 or the liquidation, dissolution or winding up of
the Company;
then, in each such case, the Company shall mail (by registered or certified
mail, postage prepaid) to the holders of Underlying Warrant Stock notice of such
proposed action, which shall specify
<PAGE>
- 9 -
the date on which the books of the Company shall close, or a record date
shall be established, for determining holders of Common Stock entitled to
receive such stock dividends or other distribution of such rights or options,
or the date on which other distribution of such rights or options, or the
date on which such reclassification, reorganization, consolidation, merger,
sale, transfer, other disposition, liquidation, dissolution or winding up
shall take place or commence, as the case may be, and the date as of which it
is expected that holders of Common Stock of record shall be entitled to
receive securities or other property deliverable upon such action, if any
such date is to be fixed. Such notice shall be mailed, in the case of any
action covered by clauses (a), (b) or (c) above, at least 10 days prior to
the record date for determining holders of Common Stock for purposes of
receiving such payment or offer and, in the case of any action covered by
clause (c) above, at least 10 days prior to the date upon which such action
takes place, and, in the case of any action covered by clause (d) above, at
least 30 days prior to the date upon which such action takes place, at least
20 days prior to the date on which the Company closes its books or takes a
record for determining rights to vote with respect to any event covered by
clause (d) and 30 days prior to any record date to determine holders of
Common Stock entitled to receive such securities or other property.
6.3 FAILURE AND DEFECTS
Failure to file any certificate or notice or to mail any notice, or any defect
in any certificate or notice, pursuant to this Section 6 shall not affect the
legality or validity of the adjustment of the Exercise Price and/or number of
shares of Warrant Stock subject to this Warrant pursuant to Section 2 hereof.
SECTION 7
DEFINITIONS
The following terms have the meanings set forth below:
"COMMON" means the Common Stock, par value $0.01 per share, of the Company.
"CLOSING PRICE"of any security of the Company with reference to any particular
date means, the closing price on that day on the principal securities exchange
on which such security may at that time be listed or quoted (determined by
virtue of general trading volume), including for this purpose, the NASDAQ stock
market, or, if there have been no such sales on such exchange on that day, the
average of the highest bid and lowest asked price on that exchange during that
day, or, if on that day such security is not so listed or quoted, the average of
the highest bid and lowest asked price on such date in the domestic
over-the-counter market as reported by the National Quotation Bureau, Inc., or
any similar successor organization; provided that if the particular date is not
a business date on which such securities may be traded, the particular date
shall be deemed to be the first immediately preceding date on which such
securities may generally be traded. If it any time such security is not listed
on any domestic exchange or quoted on the NASDAQ stock market or the domestic
over-the-counter market, the "Closing Price" shall be, for that day, the fair
value of the security on that day determined jointly by the Company and
<PAGE>
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the Warrant Holder (with disputes to be resolved in the manner herein
provided for the resolution of disputes on the determination of Market Price
under similar circumstances).
"COMMON STOCK" means, collectively, Common and any capital stock of any class of
the Company hereafter authorized which is not limited to a fixed sum or
percentage of par or stated value in respect to the rights of the holders
thereof to participate in dividends or in the distribution of assets upon any
liquidation, dissolution or winding up of the Company.
"CONVERTIBLE SECURITIES" means any stock or securities directly or indirectly
convertible into or exchangeable for Common Stock including the Common Stock to
which this Warrant relates.
"DATE OF ISSUANCE" means the date of initial issuance of the Warrants pursuant
to the Agreement (as of immediately after such issuance) regardless of the
number of times new certificates representing the unexpired and unexercised
rights formerly represented by this Warrant shall be issued.
"GAAP" means those accounting principles which are recognized as being generally
accepted in the United States of America from time to time, consistently
applied.
"MARKET PRICE" means as to any security (other than the Warrants) the average of
the closing prices of such security's sales on all domestic securities exchanges
on which such security may at the time be listed or quoted, including for this
purpose, The NASDAQ Stock Market, or, if there have been no sales on any such
exchange on any day, the average of the highest bid and lowest asked prices on
all such exchanges at the end of such day, or, if on any day such security is
not so listed or quoted, the average on the highest bid and lowest asked prices
on such day in the domestic over-the-counter market as reported by the National
Quotation Bureau, Incorporated, or any similar successor organization, in each
such case averaged over a period of 21 days consisting of the day as of which
"MARKET PRICE" is being determined and the 20 consecutive business days prior to
such day; provided that if such security is listed on any domestic securities
exchange the term "business day" as used in this sentence means business days on
which such exchange is open for trading. If at any time such security is not
listed on any domestic securities exchange or quoted on The NASDAQ Stock Market
or the domestic over-the-counter market, the "MARKET PRICE" shall be the fair
value thereof determined jointly by the Company and the Warrant Holder; provided
that if such holder and the Company are unable to agree within 10 days of
delivery of the notice by the Company in connection with the event giving rise
to the determination of Market Price (or, if earlier, within 3 days of delivery
of a notice by the Company to the holders of Underlying Warrant Stock or by the
Warrant Holder to the Company, in either case requesting designation of an
independent arbitrator), then by an investment banking firm selected by the
American Arbitration Association. The fees and expenses of such investment
banking firm shall be paid by the Company. Any determination of Market Price of
a security will be made without giving effect to any discount for any lack of
liquidity attributable to a lack of a public market for such security, any block
discount or discount attributable to the size of any Person's holdings of such
security, any minority interest or any voting rights thereof or lack thereof.
<PAGE>
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"PERSON" means an individual, a partnership, a limited liability company, a
joint venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.
"REGISTERED HOLDER" with respect to any Warrant means the Person who is
reflected as the holder thereof on the register maintained by the Company for
such purpose, and "REGISTERED HOLDERS" at any time means all Registered Holder
of Warrants then outstanding.
"UNDERLYING WARRANT STOCK" means (i) Common Stock issued or issuable upon
exercise of this Warrant and any Common Stock issued or issuable with respect to
such Common Stock by way of stock dividend or stock split or in connection with
a combination or other reorganization. For purposes of this Warrant, any Person
who holds Warrants shall be deemed to be the holder of the Underlying Warrant
Stock obtainable upon exercise of the Warrants in connection with the transfer
thereof or otherwise regardless of any restriction or limitation on the exercise
of the Warrants. As to any particular shares of Underlying Warrant Stock, such
shares shall cease to be Underlying Warrant Stock when they have been (a)
effectively registered under the SECURITIES ACT and disposed of in accordance
with the registration statement covering them or (b) distributed to the public
through a broker, dealer or market maker pursuant to Rule 144 under the
SECURITIES ACT (or any similar provision then in force).
"UNDERLYING WARRANT STOCK HOLDER" AND "WARRANT HOLDER" means, respectively, any
holder of Underlying Warrant Stock or of a Warrant.
"WARRANT STOCK" means the Common; provided that if there is a change such that
the securities issuable upon exercise of the Warrants originally exercisable
into Common are issued by an entity other than the Company or there is a change
in the class of securities so issuable, then the term "Common Warrant Stock"
shall mean one share of the security issuable upon exercise of such Warrants if
such security is issuable in shares, or shall mean the smallest unit in which
such security is issuable if such security is not issuable in shares. .
SECTION 8
GENERAL
8.1 NO VOTING RIGHTS; LIMITATIONS OF LIABILITY
Prior to the exercise of this Warrant and except as otherwise specifically
provided herein, this Warrant shall not entitle the holder hereof to any voting
rights or other rights as a stockholder of the Company. No provision hereof, in
the absence of affirmative action by the Registered Holder to purchase Warrant
Stock, and no enumeration herein of the rights or privileges of the Registered
Holder shall give rise to any liability of such holder for the exercise of
Warrants hereunder or as a stockholder of the Company.
8.2 WARRANT TRANSFERABLE
Subject to this Section 8.2, this Warrant and all rights hereunder are
transferable, in whole or in part, without charge to the Registered Holder, upon
surrender of this Warrant with a properly executed Assignment (in the form of
EXHIBIT II hereto) at the principal office of the Company.
<PAGE>
- 12 -
The Registered Holder, by acceptance hereof, represents and warrants that (a)
it is acquiring this Warrant for its own account for investment purposes only
and not with a view to its resale or distribution and (b) it has no present
intention to resell or otherwise dispose of all or any part of this Warrant.
Other than pursuant to registration under federal and state securities laws
or an exemption from such registration, the availability of which the Company
shall determine in its sole discretion, (y) the Company will not accept the
exercise of this Warrant or issue certificates for shares of Warrant Stock
and (z) neither this Warrant nor any shares of Warrant Stock may be sold,
pledged, assigned or otherwise disposed of (whether voluntarily or
involuntarily). The Company man condition such issuance or sale, pledge,
assignment or other disposition on the receipt from the party to whom this
Warrant is to be so transferred or to whom Warrant Stock is to be issued or
so transferred of any representations and agreement requested by the Company
in order to permit such issuance or transfer to be made pursuant to
exemptions from registration under federal and applicable state securities
laws. Each certificate representing this Warrant (or any part hereof) and any
shares of Warrant Stock shall be stamped with appropriate legends setting
forth these restrictions on transferability. The Registered Holder, by
acceptance hereof, agrees to give written notice to the Company before
exercising transferring this Warrant or transferring any shares of Warrant
Stock of the Registered Holder's intention to do so, describing briefly the
manner of any proposed exercise or transfer. Within thirty (30) days after
receiving such written notice, the Company shall notify the Registered Holder
as to whether such exercise or transfer may be effected.
8.3 WARRANT EXCHANGEABLE FOR DIFFERENT DENOMINATIONS
This Warrant is exchangeable, upon the surrender hereof by the Registered Holder
at the principal office of the Company, for new Warrants of like tenor
representing in the aggregate the purchase rights hereunder, and each of such
new Warrants shall represent such portion of such rights as is designated by the
Registered Holder at the time of such surrender. All Warrants representing
portions of the rights hereunder are referred to herein as "WARRANTS".
8.4 REPLACEMENT
Upon receipt of evidence reasonably satisfactory to the Company (an affidavit of
the Registered Holder shall be satisfactory) of the loss, theft, destruction or
mutilation of any certificate evidencing this Warrant, and in the case of any
such loss, theft or destruction , upon receipt of an indemnity reasonably
satisfactory to the Company (it being understood that an unsecured indemnity by
any Registered Holder who is a Purchaser or Affiliate of the Purchaser will in
any event be satisfactory), or in the case of any such mutilation, upon
surrender and cancellation of such certificate, the Company shall (at is
expense) execute and deliver in lieu of such certificate a new certificate of
like tenor and dated the date of such lost, stolen, destroyed or mutilated
certificate.
8.5 NOTICES
Except as otherwise expressly provided herein, all notices referred to in this
Warrant shall be in writing and shall be delivered personally, sent by reputable
express courier service (charges prepaid) or sent by registered or certified
mail, return receipt requested, postage prepaid and shall be deemed to have been
given when so delivered, sent or deposited in the U.S. Mail (i) to the Company,
at its principal executive offices, (ii) to the Registered Holder of this
Warrant or to any
<PAGE>
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other holder of Underlying Warrant Stock, at such holder's address as it
appears in the records of the Company (unless otherwise indicated by any such
holder).
8.6 AMENDMENT AND WAIVER
Except as otherwise provided herein, the provisions of the Warrants may be
amended and the Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, only if the Company has
obtained the written consent of the Registered Holder.
8.7 DESCRIPTIVE HEADINGS; GOVERNING LAW
The descriptive headings of the several Sections and paragraphs of this Warrant
are inserted for convenience only and do not constitute a part of this Warrant.
The corporate law of the State of Minnesota shall govern all issues concerning
the relative rights of the Company and its stockholders. All other questions
concerning the construction, validity and interpretation of this Warrant shall
be governed by and construed and enforced in accordance with the laws of the
State of Minnesota, without giving effect to any choice of law or conflict
provision or rule (whether of the State of Minnesota or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of Minnesota.
CERTAIN EXPENSES
The Company shall pay all expenses incurred in connection with, and all taxes
(other than stock transfer taxes) and other governmental charges that may be
imposed in respect of, the issuance, sale and delivery of the Warrants or the
shares of Warrant Stock.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
and attested by its duly authorized officers under its corporate seal and to be
dated the date first set forth above.
NICOLLETT PROCESSING
ENGINEERING, INC.
Per:
------------------------------
Title
Attest:
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- --------------------------------------
Secretary
<PAGE>
EXHIBIT I
EXERCISE AGREEMENT
To: Dated:
The undersigned, pursuant to the provisions set forth in the attached
Warrant (Certificate No. PW-____), hereby agrees to subscribe for the purchase
of ____ shares of the Warrant Stock covered by such Warrant and makes payment
herewith in full therefor at the price per share provided by such Warrant.
----------------------------------------
Signature
----------------------------------------
Address
<PAGE>
EXHIBIT II
ASSIGNMENT
FOR VALUE RECEIVED, __________________________________________________
hereby sells, assigns and transfers all of the rights of the undersigned under
the attached Warrant (Certificate No. PW-_____ ) with respect to the number of
shares of the Warrant Stock covered thereby set forth below, unto:
NAME OF ASSIGNEE ADDRESS NO. OF SHARES
Dated:
----------------------------------------
Signature
----------------------------------------
Witness
<PAGE>
EXHIBIT 4
THIS CONSULTING SERVICES AGREEMENT MADE WITH EFFECT AS OF THE 29TH DAY
OF JULY, 1999.
B E T W E E N:
NICOLLETT PROCCESS ENGINEERING, INC.
420 North Fifth Street
Suite 1040
Minneapolis, Minnesota
USA 55401
Attention: President
Telephone: (612) 339-7958
Telefax: (612) 339-6027
(hereinafter called the "Customer")
OF THE FIRST PART;
- AND -
TECHINSPIRATIONS, INC.,
a Nevada corporation having its business office at:
2665 South Bayshore Drive
Suite PH2B
Coconut Grove, Florida
USA 33133
Attention: Manuel Pietra
Telephone: (305) 913-3300
Telecopier: (305) 913-3306
(hereinafter called the "Consultant")
OF THE SECOND PART.
RECITALS:
1. The Customer is engaged in the business of supplying process control
hardware and software facilities to the plastics industries;
2. The Consultant has expertise in the area of information processing
technology, and in the areas of sales, marketing, and financing in the
information processing industry market;
<PAGE>
-2-
3. The Consultant was instrumental in procuring debt and equity financing
for the Customer; and
4. The Customer wishes to retain the Consultant to provide to the Customer
on a standby fee basis the review and advisory services more
particularly set out in this agreement.
NOW THEREFORE in consideration of the premises herein contained and
other good and valuable consideration (the receipt and sufficiency whereof is
hereby acknowledged), the parties hereto agree as follows:
ARTICLE 1 - GENERAL TERMS OF APPOINTMENT
1.1 APPOINTMENT
Subject to the provisions of this Agreement, the Customer hereby
appoints the Consultant to carry out the duties specified in this
agreement with the powers and authority set out herein, until this
Agreement is terminated in accordance with Section 8.1 hereof, and the
Consultant hereby accepts such appointment in accordance with the terms
of this Agreement
1.2 DELEGATION
In fulfilling its duties set out in this Agreement, the Consultant may
assign or delegate from time to time and at any time any or all of the
obligations of the Consultant under this Agreement to any person or
entity as the Consultant, in its discretion, deems appropriate to
fulfill such function (collectively, the "Sub-Agents"); provided
however:
(a) such assignment or delegation shall contain, with respect to
the assigned obligations, such rights, obligations, and
indemnities of the Sub-Agent (the "Transferred Obligations")
as are equivalent to those of the Consultant hereunder; and
(b) in all such cases, the Consultant shall retain ultimate
responsibility hereunder for the performance of the
Transferred Obligations.
The Consultant agrees with the Customer that in the event that the
Consultant elects to assign or delegate to any Sub-Agent any or all of
the tasks of the Consultant hereunder, the Consultant shall ensure that
its agreements with each such Sub-Agent contain terms and conditions
incorporating the Transferred Obligations.
1.3 FURTHER ASSURANCES
The Consultant shall have all of the power and authority necessary for,
appropriate or incidental to, the carrying out of its duties hereunder
and each of the parties agrees to do or cause to be done all such
further acts or things as may be necessary to more fully and
effectually implement the full nature and intent of this Agreement.
1.4 INDEPENDENT CONTRACTORS
It is acknowledged that this Agreement is a contract for services and
that the Customer and the Consultant are independent contractors and in
no event shall any of the Consultant, or any Sub-Agent on the one hand,
and the Customer on the other, or any officer, director or
<PAGE>
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employee of any of the foregoing be deemed, by virtue of this
Agreement, to be an employee of the Customer, nor have the authority
to take action on behalf of the Customer other than as specifically
set out in this Agreement.
1.5 CONSULTANT'S BASIC COVENANTS
The Consultant shall devote as much time as may reasonably be required
to ensure that the Consultant performs its obligations hereunder. The
Consultant shall maintain its corporate existence in good standing and
maintain all requisite authorities, registrations, licenses and permits
necessary to provide the service contributed herein. The Consultant
will exercise its powers and discharge its duties under this Agreement
honestly, in good faith and in the best interests of the Customer, all
in a manner consistent with the provisions of this Agreement.
1.6 CUSTOMER'S BASIC COVENANTS
The Customer shall maintain its corporate existence in good standing
and maintain all requisite authorities, registrations, licenses and
permits as may be necessary to engage the Consultant to provide the
services contributed hereunder for so long as this Agreement is in
effect. The Customer represents and warrants that it has full power and
authority to enter into this Agreement; that this Agreement has been
duly authorized, executed and delivered by it.
1.7 CONFIDENTIALITY
Both parties to this Agreement agree to hold confidential all
confidential information received by that party from and regarding the
other party unless such information or advice is required to be
disclosed by law. Each party agrees not to use the other parties
confidential or proprietary information, except in performing its
duties under this Agreement. Confidential and proprietary information
shall not include, and the provisions of this paragraph shall not apply
to, such information that generally becomes available to the public
(other than as the result of disclosure by the recipient or its
agents), is legally in the recipient's possession at the time of
disclosure, or is received from a Third Party (not subject to any
constraints on information use imposed upon that Third Party directly
or indirectly by the Customer or the Consultant, as the case may be).
1.8 WORK PRODUCT
Subject to the provisions of section 1.7 hereof, which shall be
paramount, the work product of the Consultant resulting from the
relationship hereunder (including without limitation, inventions,
discoveries, improvements, ideas (whether or not written or reduced to
practice) or works of authorship (whether or not they can be patented
or copyrighted), and whether generated alone or with others (the "Work
Product"):
(a) Shall, to the extent that it requires or is dependant upon the
Customer's confidential or proprietary information, be the
property of the Company; and otherwise,
(b) shall be the property of the Consultant with a license, in
favour of the Customer, to use the same for the benefit of the
Customer's business and for the purpose for which such Work
Product was intended.
<PAGE>
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For greater certainty, no element or component of the Work Product shall be
deemed to be a "work for hire" within the meaning of the copyright law of the
United States of America, including the United States Copyright Law of 1996
unless the parties have so agreed in writing with respect to each such specific
component or element.
ARTICLE 2 - GENERAL ADVISORY SERVICES
2.1 DESCRIPTION
The Consultant either directly, or through Sub-Agents retained by the
Consultant, shall provide the following services to the Customer:
(a) The Consultant shall keep a watching brief on the information
processing industry and, in particular, on the business,
products (both marketed and in development), finances, plans
and strategies of the Customer. To that end, the Consultant
shall have access to one or more of the members of the Board
of Directors of the Customer and to its senior officers and
shall be entitled to full disclosure of all relevant matters
pertaining to the Customer, subject to maintaining the
Customer's confidential information in strictest confidence
pursuant to Section 1.7 above;
(b) The Consultant in its discretion from time to time shall
provide to the Customer comments and analysis relating to the
existing or potential marketing, product, and financial plans
of the Customer as the Consultant may deem necessary or
appropriate; and
(c) The Consultant shall make it or its employees available from
time to time at appropriate times to provide `sounding board'
advice to the Customer on matters noted under section 2.1(b)
as and when requested by the Customer. The Customer
acknowledges that the Consultant's views obtained from the
foregoing process are merely intended to be points of view for
the Customer's evaluation, together with the Customer's own
and other points of view, and that the Customer will
ultimately be responsible for the consequences of the
decisions drawn from all such points of view, and whether or
not such decisions accord with the Consultant's point of view.
2.2 PROVISO
The Customer acknowledges and agrees that the fees payable to the
Consultant set out in sections 4.1(a) and 4.1(b) hereunder shall be
fully earned by the Consultant as and by way of a stand-by fee and in
order to provide the Customer with access to the Consultant's industry
knowledge and expertise, on a general advisory basis initiated by the
Customer. Nothing herein contained shall obligate the Consultant to
initiate any particular advice to the Customer, nor to provide any
particular warnings with respect to the Customer's conduct of its
business, nor to identify any latent or obvious defects, deficiencies,
or problems related thereto.
<PAGE>
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ARTICLE 3 - SPECIFIC SERVICES
3.1 SPECIFIC SERVICES
From time to time, it is anticipated that, utilizing the knowledge base
built up under Article 2, the Consultant and the Customer shall
negotiate and agree particular projects to be undertaken by the
Consultant on behalf of the Customer and, in respect of each such
project, the parties shall negotiate and agree the terms and conditions
of such work and the remuneration therefor.
ARTICLE 4 - REMUNERATION
4.1 FEES
For its services hereunder, the Consultant shall be paid:
(a) a fully earned stand-by retainer fee of $600,000.00 ("US$")
which earned fee for the Customer's cash flow purposes shall
be due in 24 monthly instalments of $25,000.00 each, the first
such installment being due on the 1st day of July, 1999, with
subsequent installments being due on the 1st day of each
consecutive month thereafter to and including the 1st day of
June, 2001. In the event that the Customer fails to pay any
installment within ten days of its due date, the entire
remaining balance of the installments due under this
subsection 4.1(a) shall be accelerated and be then immediately
due and payable without further notice or demand; and
(b) the Consultant shall be paid such further and other fees as
may be negotiated between the parties from time to time with
respect to the projects implemented pursuant to Article 3
hereof.
4.2 EXPENSES
The Consultant shall be reimbursed for its reasonable out-of-pocket
expenses incurred for the services provided hereunder and, in respect
thereof, the Consultant may be provided with an agreed expense
allowance, subject to reconciliation and accounting; provided that any
single expense in excess of $3,000.00 shall be approved in advance by
the Customer. If the Consultant is provided with an allowance on
account of expenses, the Consultant shall account to the Customer
semi-annually (or more or less frequently as may be mutually agreed)
for its out-of-pocket expenses paid or incurred by it on behalf of the
Customer in connection with the Consultant's duties hereunder. Such
amounts shall be reconciled to the payments on account thereof made
pursuant to this subsection. The parties agree to forthwith settle such
reconciliation by payment by the Customer to the Consultant, or by
refund from the Consultant to the Customer, as may be necessary to
result in the compensation of the Consultant for out-of-pocket expenses
actually incurred.
4.3 SALES TAXES
In addition to the fees and expenses set out herein, the Customer shall
pay any retail sales tax, value added tax, goods and services tax, or
other ad valorum taxes which are properly payable by the Consultant, or
properly collectible by the Customer, in respect of the fees and
expenses paid to the Consultant under this Agreement. Nothing herein
contained shall be
<PAGE>
-6-
construed so as to oblige the Customer to pay income taxes on behalf
of the Consultant on the revenue generated under this Agreement.
ARTICLE 5 - RESPONSIBILITY, LIABILITIES AND EXCLUSIONS, INDEMNITIES
5.1 CONSULTANT'S LIABILITY
The Consultant shall not be liable for any act or omission or
negligence in the course of or connected with this Agreement except
that the Consultant shall be liable and shall assume the entire
responsibility for the Customer's losses, liabilities, expenses and
disbursements, arising out of a breach of the Consultant's duties under
this Agreement or in the course of or connected with rendering services
hereunder to the Customer to the extent that the same are occasioned by
the Consultant's wilful misconduct, fraudulent or criminal act, lack of
good faith and the wilful misconduct, fraudulent or criminal act, or
lack of good faith of any of its directors, officers or employees or
Sub-Agents in rendering of such services.
5.2 CUSTOMER INDEMNITY
The Customer agrees to indemnify and to hold the Consultant, and the
Sub-Agents and their respective directors, officers, employees and
agents harmless from and against any and all taxes (except income
taxes), duties, charges, costs, expenses, damages, claims, actions,
demands and liabilities which they, or any of them, may incur or become
subject to, including legal costs and reasonable counsel fees, for or
in respect of anything done by the Customer, or omitted to be done by
the Customer in connection with this Agreement, except as referred to
in paragraph 5.1.
ARTICLE 6 - AMENDMENTS
6.1 AMENDMENTS
This Agreement may only be amended by the mutual written agreement of
the Customer and the Consultant.
ARTICLE 7 - TERMINATION
7.1 NOTICE AND EFFECT
This Agreement will take effect as of July 1st, 1999 and shall continue in full
force and effect until the 30th day of June 2001 (the "First Term") at which
time this Agreement shall automatically be renewed for a term of 12 months, and
so on from year to year unless terminated at the end of a particular term in
accordance with this section 7.1. Either party to this Agreement on no less than
60 days written notice to the other may terminate this Agreement at the end of
any particular term hereof.
<PAGE>
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ARTICLE 8 - OTHER MATTERS
8.1 ASSIGNMENT
Save as set out in Section 1.2, neither this Agreement nor any of the
rights or obligations of either party under it, may be assigned or
transferred to any other person without the express written consent of
the other party.
8.2 ENUREMENT
This Agreement shall extend to and enure to the benefit of and be
binding upon the successors and permitted assigns of the Customer and
the Consultant.
8.3 NON-WAIVER
If either party fails to exercise, or delays in exercising any right
under this Agreement, such failure or delay shall not constitute a
waiver of such right.
8.4 LAW OF CONTRACT
This Agreement shall be governed by the laws of the State of Minnesota
and any dispute regarding it shall be resolved by the courts in that
jurisdiction.
8.5 ADDITIONAL INTERPRETATION
The division of this Agreement and articles, sections, and paragraphs
and the insertion of headings are for convenience of reference only and
shall not affect the construction or interpretation of this Agreement.
All words herein importing gender shall be deemed to include the male,
female and neuter genders and the singular number shall include the
plural number and vice versa as the context requires.
ARTICLE 9 - NOTICE
9.1 NOTICE
Any statement to be given by the Consultant to the Customer, notice of
an audit, notice of termination, or any other notice required or
permitted to be given pursuant to this Agreement shall be in writing
and shall be hand delivered or mailed during any period when normal
postal services prevail or sent by facsimile, transmission confirmed,
to the addresses for the parties set out in the recitals on page 1 of
the parties to this Agreement.
Any such notice shall be deemed to have been given, if hand delivered,
upon delivery, or if mailed on the fifth postal delivery day following
the day of mailing, or if sent by confirmed facsimile on the day of
sending. Either party may change their address as set out above by
giving written notice in accordance with this section.
<PAGE>
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IN WITNESS WHEREOF this Agreement has been signed by the parties hereto
by their duly authorized signing officers.
NICOLLETT PROCESS ENGINEERING, INC.
PER:
------------------------------------
NAME:
TITLE:
I have the authority to bind the corporation.
TECHINSPIRATIONS, INC.
PER:
------------------------------------
NAME: MANUEL PIETRA
TITLE: PRESIDENT
I have the authority to bind the corporation.
<PAGE>
EXHIBIT 5
ACKNOWLEDGMENT AND AMENDING AGREEMENT
This Agreement is made as of the 29th day of July 1999 by and
between Nicollet Process Engineering, Inc., a Minnesota corporation
(the "Company"), TECHinspirations, Inc. a Nevada corporation ("TECH
US"), and TECHinspiration's Inc. (Cayman), a Cayman Island
corporation ("TECH Cayman").
RECITALS
A) TECH US is the holder of the instruments and documents
(collectively, the "Documents") listed in Exhibit A to a June
8th, 1998 nonrecourse assignment, a true copy whereof is
annexed hereto as Schedule A (the "Assignment ");
B) The Documents include, without limitation, a certain credit
and security agreement dated as of May 28,1997 (the "Security
Agreement") granted by Nicollet to Norwest Business Credit,
Inc. (the successor to which is TECH USA pursuant to the
Assignment);
C) In this Agreement the parties intend to confirm the
effectiveness of the Documents, subject to certain amendments
as specified herein, and to effect the assignment of the
Documents, so amended, from TECH US to TECH Cayman.
AGREEMENT
NOW THEREFORE, in consideration of the mutual premises herein contained
and for other good and valuable consideration, the receipt and
sufficiency of which each party acknowledges, the parties hereto agree
as follows:
1. In this Agreement, capitalized terms denoting defined terms
shall, if not specifically defined in this Agreement, bear the
meanings attributable to them in the Security Agreement; and
"Holder "means TECH US prior to giving effect to the
assignment set out in paragraph 5 hereof, and thereafter means
TECH Cayman or any successor to TECH Cayman.
2. The Company hereby acknowledges and confirms that each of the
Documents, including without limitation the Security
Agreement, are and continue to be in full force and effect as
binding legal documents enforceable against the Company in
accordance with their respective terms. The Company and TECH
US hereby acknowledge and confirm that as of June 30th, 1999
the amount of debt owing by the Company to TECH
<PAGE>
2
US under the credit facilities supported by the documents
("Credit Facilities") was $3,277,277 (consisting of
$3,070,000 of principal and $207,277 of accrued and unpaid
interest), and that as of July 29th, 1999, $3,000,100 of
that debt is to be converted to equity pursuant to a
purchase agreement and a conversion agreement: each dated
July 29th, 1999 and made between the Company and TECH Cayman
(the "Conversion Transaction")
3. The Company hereby acknowledges and agrees that the failure
of the Holder to enforce, or the election not to enforce, at
any time, any of the provisions of the Documents or any of
its rights in respect thereto or to insist upon strict
adherence to any term of any of the Documents shall not be
considered to be a waiver of such provision, right or term
or in any way to effect the validity of such Documents or
deprive the Holder of the right thereafter to insist upon
strict adherence to that term or any other term of any of
the Documents. The exercise by the Holder of any of its
rights provided by any of the Documents shall not preclude
or prejudice such person from exercising any other right it
may have under such Documents, or under any other Document,
irrespective of any previous action or proceeding taken by
it. Any waiver by the Holder of the performance of any of
the provisions of any Document shall be effective only if in
writing and signed by a duly authorized representative of
such person.
4. The parties hereto agree and confirm that the Security
Agreement has been and hereafter shall be amended as follows:
a) The definition therein of "Maturity Date" shall be
amended to mean May 28th, 2001, or such earlier
date as the Holder may advise on no less than
thirty days notice in writing;
b) The definition therein of "Maximum Line" shall be
amended to mean $800,000, or such greater or
lesser amount as the Holder may in its sole and
unfettered discretion elect, which election may be
sufficiently evidenced by written or oral
communication, or by a course of conduct.
5. After having giving effect to the amendments set out in this
Agreement, but prior to the completion of the Conversion
Transaction, TECH US hereby sells, transfers, and assigns to
TECH Cayman, all of TECH US's right, title and interest in
each of the Documents, including all rights, privileges and
obligations thereunder. TECH US and TECH Cayman agree that
the assignment aforesaid shall include all of Tech US's
right, title and interest in and to monies owed by the
Company to TECH US under the Credit Facility provided
pursuant to the Documents (including accrued and unpaid
interest thereon). TECH Cayman hereby accepts the assignment
of the Company's debt set out in this paragraph 5 as full
satisfaction of an equivalent amount of monies owed by TECH
US to
<PAGE>
3
TECH Cayman.
6. The Company hereby consents to the assignment herein of the
Documents from TECH US to TECH Cayman and accepts TECH
Cayman as the provider of the Credit Facilities set out
therein.
7. Each of the parties hereto agrees to execute and deliver
such further documents or instruments of transfer, and to do
or cause to be done such further acts or things, as may be
reasonably required to give effect to the provisions of this
Agreement.
8. This Agreement shall be governed by the laws of the state of
Minnesota and shall inure to the benefit of and be binding
upon each of the parties hereto and their respective
successors or assigns.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to
be duly authorized, executed and delivered as of the date set forth
above.
NICOLETT PROCESS ENGINEERING, INC.
Per:
-----------------------------------
Name:
Title:
TECHINSPIRATIONS, INC.
Per:
-----------------------------------
Name:
Title:
TECHINSPIRATIONS INC. (CAYMAN)
Per:
-----------------------------------
Name:
Title:
