-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, K3ypaR49rMvIet7VC8DYuBa7KlO7otQGyN5Or8eT+wbbyfpuOz8yCxIBiSgFzq6B nPusDR3X1dTOIBi+QNUvZw== 0000895345-97-000354.txt : 19971003 0000895345-97-000354.hdr.sgml : 19971003 ACCESSION NUMBER: 0000895345-97-000354 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19971002 SROS: NASD GROUP MEMBERS: BRIDGE STREET FUND 1996, L.P. GROUP MEMBERS: GOLDMAN SACHS GROUP LP GROUP MEMBERS: GOLDMAN, SACHS & CO. GROUP MEMBERS: GOLDMAN, SACHS & CO. OHG GROUP MEMBERS: GS ADVISORS II (CAYMAN), L.P. GROUP MEMBERS: GS ADVISORS, L.P. GROUP MEMBERS: GS CAPITAL PARTNERS II (GERMANY) CIVIL LAW GROUP MEMBERS: GS CAPITAL PARTNERS II OFFSHORE, L.P. GROUP MEMBERS: GS CAPITAL PARTNERS II, L.P. GROUP MEMBERS: PARTNERSHIP GROUP MEMBERS: STONE STREET EMPIRE CORP. GROUP MEMBERS: STONE STREET FUND 1996. L.P. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: RECOVERY ENGINEERING INC CENTRAL INDEX KEY: 0000818203 STANDARD INDUSTRIAL CLASSIFICATION: REFRIGERATION & SERVICE INDUSTRY MACHINERY [3580] IRS NUMBER: 411557115 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-44835 FILM NUMBER: 97690081 BUSINESS ADDRESS: STREET 1: 2229 EDGEWOOD AVE S CITY: MINNEAPOLIS STATE: MN ZIP: 55426 BUSINESS PHONE: 6125411313 MAIL ADDRESS: STREET 1: 2229 EDGEWOOD AVENUE SOUTH CITY: MINNEAPOLIS STATE: MN ZIP: 55426 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: GOLDMAN SACHS GROUP LP CENTRAL INDEX KEY: 0000904571 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 133501777 STATE OF INCORPORATION: NY FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 85 BROAD ST CITY: NEW YORK STATE: NY ZIP: 10004 BUSINESS PHONE: 2129021000 MAIL ADDRESS: STREET 1: 85 BROAD STREET CITY: NEW YORK STATE: NY ZIP: 10004 SC 13D/A 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. 3) RECOVERY ENGINEERING, INC. - -------------------------------------------------------------------------------- (Name of Issuer) COMMON STOCK, PAR VALUE $0.01 PER SHARE - -------------------------------------------------------------------------------- (Title of Class of Securities) 756269106 --------------------------------------------- (CUSIP Number) DAVID J. GREENWALD, ESQ. GOLDMAN, SACHS & CO. 85 BROAD STREET NEW YORK, NY 10004 (212) 902-1000 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) October 1, 1997 --------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ]. SCHEDULE 13D CUSIP NO. 756269106 Page 2 of 22 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Goldman, Sachs & Co. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) | | (b) | | 3 SEC USE ONLY 4 SOURCE OF FUNDS 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) |X| 6 CITIZENSHIP OR PLACE OF ORGANIZATION New York NUMBER OF 7 SOLE VOTING POWER SHARES 0 BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 1,020,101 EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON 0 WITH 10 SHARED DISPOSITIVE POWER 1,020,101 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,020,101 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES | | 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 18.4% 14 TYPE OF REPORTING PERSON BD-PN-IA SCHEDULE 13D CUSIP NO. 756269106 Page 3 of 22 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON The Goldman Sachs Group, L.P. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) | | (b) | | 3 SEC USE ONLY 4 SOURCE OF FUNDS 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) | | 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware NUMBER OF 7 SOLE VOTING POWER SHARES 5,000 BENEFICIALLY 8 SHARED VOTING POWER 1,020,101 OWNED BY EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON 5,000 WITH 10 SHARED DISPOSITIVE POWER 1,020,101 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,025,101 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES | | 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 18.5% 14 TYPE OF REPORTING PERSON HC-PN SCHEDULE 13D CUSIP NO. 756269106 Page 4 of 22 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON GS Capital Partners II, L.P. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) | | (b) | | 3 SEC USE ONLY 4 SOURCE OF FUNDS WC 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) | | 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware NUMBER OF 7 SOLE VOTING POWER SHARES 0 BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 633,767 EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON 0 WITH 10 SHARED DISPOSITIVE POWER 633,767 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 633,767 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES | | 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 12.3% 14 TYPE OF REPORTING PERSON PN SCHEDULE 13D CUSIP NO. 756269106 Page 5 of 22 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON GS Capital Partners II Offshore, L.P. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) | | (b) | | 3 SEC USE ONLY 4 SOURCE OF FUNDS WC 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) | | 6 CITIZENSHIP OR PLACE OF ORGANIZATION Cayman Islands NUMBER OF 7 SOLE VOTING POWER SHARES 0 BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 251,948 EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON 0 WITH 10 SHARED DISPOSITIVE POWER 251,948 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 251,948 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES | | 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.3% 14 TYPE OF REPORTING PERSON PN SCHEDULE 13D CUSIP NO. 756269106 Page 6 of 22 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON GS Capital Partners II (Germany) Civil Law Partnership (with limitation of liability) 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) | | (b) | | 3 SEC USE ONLY 4 SOURCE OF FUNDS WC 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) | | 6 CITIZENSHIP OR PLACE OF ORGANIZATION Germany NUMBER OF 7 SOLE VOTING POWER SHARES 0 BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 23,376 EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON 0 WITH 10 SHARED DISPOSITIVE POWER 23,376 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 23,376 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES | | 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.5% 14 TYPE OF REPORTING PERSON PN SCHEDULE 13D CUSIP NO. 756269106 Page 7 of 22 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON GS Advisors, L.P. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) | | (b) | | 3 SEC USE ONLY 4 SOURCE OF FUNDS AF 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) | | 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware NUMBER OF 7 SOLE VOTING POWER SHARES 0 BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 633,767 EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON 0 WITH 10 SHARED DISPOSITIVE POWER 633,767 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 633,767 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES | | 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 12.3% 14 TYPE OF REPORTING PERSON PN SCHEDULE 13D CUSIP NO. 756269106 Page 8 of 22 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON GS Advisors II (Cayman), L.P. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) | | (b) | | 3 SEC USE ONLY 4 SOURCE OF FUNDS AF 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) | | 6 CITIZENSHIP OR PLACE OF ORGANIZATION Cayman Islands NUMBER OF 7 SOLE VOTING POWER SHARES 0 BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 251,948 EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON 0 WITH 10 SHARED DISPOSITIVE POWER 251,948 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 251,948 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES | | 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.3% 14 TYPE OF REPORTING PERSON PN SCHEDULE 13D CUSIP NO. 756269106 Page 9 of 22 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Goldman, Sachs & Co. oHG 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A G (a) | | (b) | | 3 SEC USE ONLY 4 SOURCE OF FUNDS AF 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) | | 6 CITIZENSHIP OR PLACE OF ORGANIZATION Germany NUMBER OF 7 SOLE VOTING POWER SHARES 0 BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 23,376 EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON 0 WITH 10 SHARED DISPOSITIVE POWER 23,376 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 23,376 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES | | 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.5% 14 TYPE OF REPORTING PERSON PN SCHEDULE 13D CUSIP NO. 756269106 Page 10 of 22 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Stone Street Fund 1996, L.P. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) | | (b) | | 3 SEC USE ONLY 4 SOURCE OF FUNDS WC 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) | | 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware NUMBER OF 7 SOLE VOTING POWER SHARES 0 BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 60,191 EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON 0 WITH 10 SHARED DISPOSITIVE POWER 60,191 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 60,191 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES | | 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 1.3% 14 TYPE OF REPORTING PERSON PN SCHEDULE 13D CUSIP NO. 756269106 Page 11 of 22 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Bridge Street Fund 1996, L.P. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) | | (b) | | 3 SEC USE ONLY 4 SOURCE OF FUNDS WC 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware NUMBER OF 7 SOLE VOTING POWER SHARES 0 BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 40,819 EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON 0 WITH 10 SHARED DISPOSITIVE POWER 40,819 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 40,819 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES | | 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.9% 14 TYPE OF REPORTING PERSON PN SCHEDULE 13D CUSIP NO. 756269106 Page 12 of 22 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Stone Street Empire Corp. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) | | (b) | | 3 SEC USE ONLY 4 SOURCE OF FUNDS AF 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) | | 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware NUMBER OF 7 SOLE VOTING POWER SHARES 0 BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 101,010 EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON 0 WITH 10 SHARED DISPOSITIVE POWER 101,010 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 101,010 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* | | 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.2% 14 TYPE OF REPORTING PERSON CO This Amendment No. 3 (this "Amendment No. 3") is being filed by GS Capital Partners II, L.P. ("GSCP"), GS Capital Partners II Offshore, L.P. ("GSCP II Offshore"), GS Capital Partners II (Germany) Civil Law Partnership (with limitation of liability) ("GSCP II Germany," and together with GSCP and GSCP II Offshore, "GSCP II"), GS Advisors, L.P. ("GS Advisors"), GS Advisors II (Cayman), L.P. ("GS Advisors Cayman"), Goldman, Sachs & Co. oHG ("GS oHG"), Stone Street Fund 1996, L.P. ("Stone Street"), Bridge Street Fund 1996, L.P. ("Bridge Street," and together with Stone Street, the "Stone/Bridge Funds"), Stone Street Empire Corp. ("Empire Corp."), Goldman, Sachs & Co. ("Goldman Sachs") and The Goldman Sachs Group, L.P. ("GS Group," and together with GSCP, GSCP II Offshore, GSCP II Germany, GS Advisors, GS Advisors Cayman, GS oHG, Stone Street, Bridge Street, Empire Corp. and Goldman Sachs, the "Filing Persons")1 to amend and supplement the Statement on Schedule 13D (the "Original Schedule 13D") filed by the Filing Persons on July 29, 1996, Amendment No. 1 to the Original Schedule 13D ("Amendment No. 1"), filed by the Filing Persons on April 9, 1997, and Amendment No. 2 to the Original Schedule 13D filed by the Filing Persons on April 29, 1997, in respect of the Common Stock ("Amendment No. 2"), par value $0.01 per share (the "Common Stock"), of Recovery Engineering, Inc., a Minnesota corporation (the "Company"). This Amendment No. 3 is being filed primarily to report the terms of a letter agreement entered into between GSCP II, the Stone/Bridge Funds and the Company. Capitalized terms used but not defined herein shall have the respective meanings given to them in the Original Schedule 13D. Schedule II-A-iii hereto is hereby substituted for Schedule II-A-iii attached to Amendment No. 1. Each reference to Schedule II-A-iii contained in the Original Schedule 13D, as amended, shall be deemed to be a reference to Schedule II-A-iii hereto. ITEM 2. IDENTIFY AND BACKGROUND Item 2 of the Original Schedule 13D, as amended, is hereby further amended by substituting for the first paragraph thereof the following paragraph: As of October 1, 1997, (a) Goldman Sachs may be deemed to own beneficially 1,020,101 shares of Common Stock, in the aggregate, (i) by reason of the ownership by GSCP II and the Stone/Bridge Funds (collectively, the "Limited Partnerships") of the Notes, which are convertible into 1,010,101 shares of Common Stock, in the aggregate, and (ii) by reason of there being 10,000 shares of Common Stock, in the aggregate, in client accounts managed by Goldman Sachs (collectively, the "Managed Accounts"), and (b) GS Group may be deemed to own beneficially 1,025,101 shares of Common Stock, in the aggregate, (i) by reason of the ownership by the Limited Partnerships of the Notes, (ii) by reason of Mr. Sanjay H. Patel, a Managing Director of Goldman Sachs, holding for the benefit of the GS Group, options (received by him in his capacity as a director of the Company) to purchase 5,000 shares of Common Stock (the "Directors Options") and (iii) by reason of there being 10,000 shares of Common Stock, in the aggregate, in the Managed Accounts. Goldman Sachs and GS Group each disclaim beneficial ownership of the shares of Common Stock beneficially owned by the Limited Partnership to the extent of partnership interests in the Limited Partnerships held by persons other than Goldman Sachs, GS Group or their affiliates. Each of Goldman Sachs and GS Group disclaims beneficial ownership of the shares of Common Stock in the Managed Accounts. [FN] - -------- 1 Neither the Original Schedule 13D, Amendment No. 1, Amendment No. 2 nor anything contained therein or herein shall be construed as an admission that any Filing Person constitutes a "person" for any purpose other than Section 13(d) of the Securities Exchange Act of 1934, as amended. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION Paragraph (b) of Item 3 of the Original Schedule 13D, as amended, is hereby supplemented with the following paragraph: On April 24, 1997, Mr. Sanjay H. Patel, a Managing Director of Goldman Sachs, in his capacity as a director of the Company, received, pursuant to the Company's 1993 Director Stock Option Plan and pursuant to a Directors' Nonqualified Stock Option Agreement entered into between Mr. Patel and the Company (which Agreement is substantially in the form of the option agreement attached as Exhibit (1) to Amendment No. 1), a Director Option, entitling Mr. Patel to purchase form the Company, at $5.84 per share, 4,000 shares of Common Stock, in the aggregate, (in addition to the 1,000 shares of Common Stock which Mr. Patel is entitled to purchase at $11.25 per share pursuant to a Director Option previously issued to him). Mr. Patel has entered into an agreement (the "Patel/GS Group Agreement") pursuant to which Mr. Patel has agreed, among other things, that he holds the Director Options, and each share of Common Stock issuable upon exercise thereof, in trust for the benefit of GS Group. A copy of the Patel/GS Group Agreement is attached as Exhibit (2) to Amendment No. 1. ITEM 4. PURPOSE OF TRANSACTION The Limited Partnerships and the Company have entered into a letter agreement (a copy of which is attached as Exhibit (1) hereto), dated October 1, 1997, pursuant to which the Limited Partnerships and the Company, agreed that, notwithstanding the restrictions set forth in the Securities Purchase Agreement, dated July 19, 1996, between the Company and the Limited Partnerships, as amended, during the Company's fiscal year ending December 31, 1997, the Company and its subsidiaries may permit to exist an amount of indebtedness not to exceed $15 million on a consolidated basis. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER Paragraph (a) of Item 5 of the Original Schedule 13D, as amended, is hereby supplemented with the following paragraphs: As of October 1, 1997, GSCP beneficially owned, and GS Advisors, by reason of the ownership by GSCP of Notes, may be deemed to have beneficially owned, 633,767 shares of Common Stock, GSCP II Offshore beneficially owned, and GS Advisors Cayman, by reason of the ownership by GSCP II Offshore of Notes, may be deemed to have beneficially owned, 251,948 shares of Common Stock, GSCP II Germany beneficially owned, and GS oHG, by reason of the ownership by GSCP II Germany of Notes, may be deemed to have beneficially owned, 23,376 shares of Common Stock, Stone Street beneficially owned 60,191 shares of Common Stock, Bridge Street beneficially owned 40,819 shares of Common Stock, and Empire Corp., by reason of the ownership by Stone Street and Bridge Street of Notes, may be deemed to have beneficially owned 101,010 shares of Common Stock. Based on the foregoing and based on the number of shares of Common Stock reported to be outstanding in the Quarterly Report on Form 10-Q filed by the Company for the period ended June 30, 1997, as of October 1, 1997, GSCP beneficially owned, and GS Advisors may be deemed to have beneficially owned, approximately 12.3%, GSCP II Offshore beneficially owned, and GS Advisors Cayman may be deemed to have beneficially owned, approximately 5.3%, GSCP II Germany beneficially owned, and GS oHG may be deemed to have beneficially owned, approximately 0.5%, Stone Street beneficially owned approximately 1.3%, Bridge Street beneficially owned approximately 0.9%, and Empire Corp. may be deemed to have beneficially owned approximately 2.2%, in each case of the shares of Common Stock. Each of GS Advisors, GS Advisors Cayman, GS oHG and Empire Corp. disclaims beneficial ownership of shares of Common Stock beneficially owned by the Limited Partnerships to the extent of partnership interests in the Limited Partnerships held by persons other than GS Advisors, GS Advisors Cayman, GS oHG and Empire Corp., as applicable. As of October 1, 1997, (a) Goldman Sachs may be deemed to beneficially own 1,020,101 shares of Common Stock, in the aggregate, (i) by reason of the ownership by the Limited Partnership of the Notes, which are convertible into 1,010,101 shares of Common Stock, in the aggregate, and (ii) by reason of there being 10,000 shares of Common Stock in the Managed Accounts, and (b) GS Group may be deemed to own beneficially 1,025,101 shares of Common Stock, in the aggregate, (i) by reason of the ownership by the Limited Partnerships of the Notes, (ii) by reason of Mr. Sanjay H. Patel, a director of the Company and a Managing Director of Goldman Sachs, holding for the benefit of GS Group the Director Options, which are currently exercisable and which entitle Mr. Patel to purchase 5,000 shares of Common Stock, in the aggregate, and (iii) by reason of there being 10,000 shares of Common Stock in the Managed Accounts. Accordingly, as of October 1, 1997, Goldman Sachs may be deemed to beneficially own approximately 18.4% of the shares of Common Stock, and GS Group may be deemed to beneficially own 18.5% of the shares of Common Stock. Goldman Sachs and GS Group each disclaim beneficial ownership of shares of Common Stock beneficially owned by the Limited Partnerships to the extent of partnership interests in the Limited Partnerships held by persons other than Goldman Sachs, GS Group or their affiliates. Each of Goldman Sachs and GS Group disclaims beneficial ownership of the shares of Common Stock held in the Managed Accounts. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS Exhibit (1): Letter, dated October 1, 1997, from the Limited Partnerships to the Company. SIGNATURE After reasonable inquiry and to the best of its knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct. Dated: October 1, 1997 GS CAPITAL PARTNERS II, L.P. By: GS Advisors, L.P., its general partner By: GS Advisors, Inc., its general partner By: /s/Richard A. Friedman -------------------------- Name: Richard A. Friedman Title: President GS ADVISORS, L.P. By: GS Advisors, Inc., its general partner By: /s/Richard A. Friedman -------------------------- Name: Richard A. Friedman Title: President GS CAPITAL PARTNERS II OFFSHORE, L.P. By: GS Advisors II (Cayman), L.P., its general partner By: GS Advisors II, Inc., its general partner By: /s/Richard A. Friedman -------------------------- Name: Richard A. Friedman Title: President GS ADVISORS II (CAYMAN), L.P. By: GS Advisors II, Inc., its general partner By: /s/Richard A. Friedman -------------------------- Name: Richard A. Friedman Title: President GS CAPITAL PARTNERS II (Germany) CIVIL LAW PARTNERSHIP (with limitation of liability) By: Goldman, Sachs & Co. oHG, its managing partner By: /s/Richard A. Friedman -------------------------- Name: Richard A. Friedman Title: Attorney-in-Fact GOLDMAN, SACHS & CO. oHG By: /s/Richard A. Friedman -------------------------- Name: Richard A. Friedman Title: Attorney-in-Fact GOLDMAN, SACHS & CO. By: /s/Richard A. Friedman -------------------------- Name: Richard A. Friedman Title: Managing Director THE GOLDMAN SACHS GROUP, L.P. By: The Goldman Sachs Corporation, its general partner By: /s/Richard A. Friedman -------------------------- Name: Richard A. Friedman Title: Executive Vice President STONE STREET FUND 1996, L.P. By: Stone Street Empire Corp., its general partner By: /s/Richard A. Friedman -------------------------- Name: Richard A. Friedman Title: Vice President BRIDGE STREET FUND 1996, L.P. By: Stone Street Empire Corp., its managing general partner By: /s/Richard A. Friedman -------------------------- Name: Richard A. Friedman Title: Vice President STONE STREET EMPIRE CORP. By: /s/Richard A. Friedman -------------------------- Name: Richard A. Friedman Title: Vice President INDEX OF EXHIBITS Exhibit (1): Letter, dated October 1, 1997, from the Limited Partnerships to the Company. SCHEDULE II-A-III The name, position and present principal occupation of each director and executive officer of Stone Street Empire Corp., the sole general partner of Stone Street Fund 1996, L.P. and the managing general partner of Bridge Street 1996, L.P., are set forth below. The business address for each of the executive officers and directors listed below is 85 Broad Street, New York, New York 10004. All executive officers and directors listed below are United States citizens. NAME POSITION PRESENT ---- -------- PRINCIPAL OCCUPATION -------------------- Richard A. Friedman Director/President Managing Director of Goldman, Sachs & Co. Nash, Avi M. Director/Vice President Managing Director of Goldman, Sachs & Co. Goldenberg, Jeffrey Director/Vice President Managing Director of Goldman, Sachs & Co. McMahon, J. William Director/Vice President Vice President of Goldman, Sachs & Co. Singh, Dinakar Director/Vice President Director/Vice President of Goldman, Sachs & Co. Kolatch, Jonathan L. Director/Vice President Managing Director of Goldman, Sachs & Co. Mehra, Sanjeev K. Director/Vice President Managing Director of Goldman, Sachs & Co. Mindich, Eric M. Director/Vice Managing Director of President/Treasurer Goldman, Sachs & Co. Sachs, Peter G. Director/Vice President Limited Partner of The Goldman Sachs Group, L.P. Fuhrman, Glenn R. Director/Vice President Vice President of Goldman, Sachs & Co. Sacerdote, Peter M. Director/Chairman/C.E.O. Limited Partner of The President Goldman Sachs Group, L.P Greenwald, David J. Vice President Vice President of Goldman, Sachs & Co. Skondinski, Carla H. Vice President/Secretary Vice President of Goldman, Sachs & Co. Stecher, Esta E. Vice President Managing Director of Goldman, Sachs & Co. Yacenda, Richard A. Vice President Vice President of Goldman, Sachs & Co. Fuge, C. Douglas Assistant Treasurer Managing Director of Goldman, Sachs & Co. EX-1 2 October 1, 1997 Brian F. Sullivan Chief Executive Officer Recovery Engineering, Inc. 2229 Edgewood Avenue South Minneapolis, MN 55246 Dear Brian: Reference is made to that certain Securities Purchase Agreement (as amended, the "Securities Purchase Agreement"), dated as of July 19, 1996, between Recovery Engineering, Inc. (the "Company") and GS Capital Partners II, L.P., GS Capital Partners II Offshore, L.P., Goldman, Sachs & Co. Verwaltungs GmbH, Stone Street Fund 1996, L.P. and Bridge Street Fund 1996, L.P. (collectively, the "GS Entities"), as amended by Amendment No. 1 to the Securities Purchase Agreement, dated March 31, 1996, between the Company and the GSCP Entities and by that certain letter agreement, dated as April 14, 1997, between the Company and the GS Entities. Capitalized terms not defined herein shall have the respective meanings given to them in the Securities Purchase Agreement. The GS Entities agree that, notwithstanding Section 6.1(a) of the Securities Purchase Agreement, solely during the Company's fiscal year ending December 31, 1997 (the "1997 Fiscal Year"), the Company and its Subsidiaries may permit to exist Indebtedness not to exceed $15 million on a consolidated basis. The Company agrees and acknowledges that, except as specifically provided in the foregoing sentence, the Company shall be required to be in compliance at all times with the provisions of Section 6.1(a) of the Securities Purchase Agreement. Please execute this letter and the enclosed copy in the space indicated below and return the enclosed copy to us. GS CAPITAL PARTNERS II, L.P. By: GS Advisors, L.P., its general partner By: GS Advisors, Inc., its general partner By: /s/Richard A. Friedman -------------------------------------- Name: Richard A. Friedman Title: President GS CAPITAL PARTNERS II OFFSHORE, L.P. By: GS Advisors II (Cayman), L.P., its general partner By: GS Advisors II, Inc., its general partner By: /s/Richard A. Friedman -------------------------------------- Name: Richard A. Friedman Title: President GOLDMAN, SACHS & CO. VERWALTUNGS GmbH By: /s/Richard A. Friedman -------------------------------------- Name: Richard A. Friedman Title: Managing Director By: /s/Joseph Gleberman -------------------------------------- Name: Joseph Gleberman Title: Managing Director STONE STREET FUND 1996, L.P. By: Stone Street Empire Corp., its general partner By: /s/Richard A. Friedman -------------------------------------- Name: Richard A. Friedman Title: Vice President BRIDGE STREET FUND 1996, L.P. By: Stone Street Empire Corp., its managing general partner By: /s/Richard A. Friedman -------------------------------------- Name: Richard A. Friedman Title: Vice President Agreed to and accepted as of the date first above written RECOVERY ENGINEERING, INC. By: /s/Brian F. Sullivan ------------------------------ Name: Brian F. Sullivan Title: Chief Executive Officer cc: Eric O. Madson -----END PRIVACY-ENHANCED MESSAGE-----