SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest event reported)
June 28, 1996
INTELLIGENT DECISION SYSTEMS, INC.
(as successor to Resource Finance Group, Ltd.)
(Exact name of registrant as specified in its charter)
Delaware 0-22254 38-3286394
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
Suite 400
2025 East Beltline Avenue, S.E.
Grand Rapids, Michigan 49546
(Address of principal executive offices) (Zip Code)
(616) 285-5830
(Registrant's telephone number, including area code)
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INTELLIGENT DECISION SYSTEMS, INC.
Index to Current Report on Form 8-K
Page No.
Item 2 Acquisition or Disposition of Assets 3
Item 7 Financial Statements and Exhibits 4
Signatures 5
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Item 2 Acquisition or Disposition of Assets
On June 28, 1996, Intelligent Decision Systems, Inc. ("IDSI"), a Delaware
corporation purchased substantially all of the assets of The Neptune Group, Inc.
("TNG"), a Delaware corporation, and those of its subsidaries. The assets
purchased consisted primarily of cash, accounts receivable and notes receivable,
the total value of which is approximately $2.1 million . IDSI issued 750,000
unregistered shares of its common stock, par value of $.001, to TNG for those
assets and assumed certain liabilities, which totalled approximately $515,000.
IDSI agreed to file a registration statement covering the stock issued to TNG by
September 30, 1996, and TNG agreed not to sell those shares for a period of one
year plus one day after the closing date of the transaction.
TNG specializes in the area of medical and computer equipment leasing. In
the past eight months TNG has purchased from and leased back to Digital
Sciences, Inc. ("DSI"), a wholly owned subsidiary of IDSI, over $250,000 dollars
in computer and software systems. TNG will continue this relationship with DSI,
as well as continue to develop other leasing relationships.
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Item 7 Financial Statements and Exhibits
(a) Financial Statements of the Business Acquired June 28, 1996
and of the Businesses Combined on April 1, 1996
It is not practicable to file the required Financial Statements
within the fifteen day reporting period for this 8-K report. The
required financial statements are expected to be filed, as an
amendment, within fifty days of the filing of this 8-K report.
(b) Pro-Forma Financial Information
It is not practicable to file the required Pro Forma Disclosures
within the fifteen day reporting period for this 8-K report. The
required Pro Forma Disclosures are expected to be filed, as an
amendment, within fifty days of the filing of this 8-K report.
(c) Exhibits
The Neptune Group Purchase Agreement, dated as of June 28, 1996.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
INTELLIGENT DECISION SYSTEMS, INC.
Dated: July 12, 1996 By: /s/ Mark A. Babin
Mark A. Babin
President
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AGREEMENT OF SALE dated as of this 28th day of June, 1996, by and between
Intelligent Decision Systems, Inc., a Delaware corporation (the "Purchaser"),
The Neptune Group, Inc., a Delaware corporation (the "Seller"), Stephen M.
Chaleff ("SMC") and Fred Wiener ("FW") (SMC and FW are herein sometimes
collectively called the "Stockholders").
WHEREAS, the Stockholders own all the issued and outstanding common stock
of Seller and Seller, directly or indirectly, owns all of the issued and
outstanding stock of the corporations listed on Schedule A hereto (the
"Subsidiaries" and, together with Seller, individually and collectively the
"Consolidated Group");
WHEREAS, the Purchaser desires to acquire from the Seller substantially
all of the assets, subject to substantially all of the liabilities, of the
Consolidated Group, all in accordance with the terms and conditions hereof;
NOW, THEREFORE, in consideration of the above premises and of the
representations, warranties, covenants and agreements herein contained, the
parties hereto agree as follows:
1. Purchase of the Assets
1.01 Sold Assets.Subject to the terms and conditions and upon the
representations and warranties herein set forth, the Seller hereby agrees to
(and to cause of each of the Subsidiaries to) sell, transfer and convey to the
Purchaser, and the Purchaser hereby agrees to purchase, acquire and assume from
the Seller and the Subsidiaries, on the Closing Date (as hereinafter defined),
the existing business of the Consolidated Group, and all of the Consolidated
Group's right, title and interest in its
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assets, properties and rights (other than Retained Assets, as hereinafter
defined) including, without limitation, the following (collectively the
"Acquired Assets"):
(a) $1,300,000 in cash, marketable securities, security
deposits, certificates of deposit, letters of credit and other cash items;
(b) The existing business of the Consolidated Group;
(c) All accounts receivable and notes receivable of the
Consolidated Group or other rights to receive payments arising out of the
leasing, sale, financing or marketing of the Consolidated Group's equipment and
products and any claims against suppliers or others with regard to defective
equipment, products and materials;
(d) All inventories of finished goods, work-in-process, raw
materials, production supplies, office supplies and other miscellaneous supplies
and materials of the Consolidated Group, wherever situated;
(e) All prepaid expenses, rent, freight and deposits; (f) All
land, buildings and improvements; (g) All machinery,
equipment, tools, motor vehicles, supplies,
and furniture and fixtures, of every kind and description, wherever situated,
including that which has been ordered for such use on or before the date of this
Agreement, and ordered and/or purchased by the Consolidated Group after the date
of execution of this Agreement in the ordinary course of business, whether or
not received prior to the Closing Date;
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(h) All of the Consolidated Group's rights under all
contracts, leases and agreements to which any of them is, or may be, a party at
the Closing Date;
(I) All copyrights, licenses, processes, formulae, trade
secrets, inventions and royalties of the Consolidated Group;
(j) All customer lists, uncollected invoices, credit files,
schedules of fixed assets, inventory cost records, schedules of trade and other
receivables, contracts, files, papers and records and all other public or
confidential business records which are used in connection with the conduct of
the business of the Consolidated Group;
(k) All employment contracts, restrictive covenants, non-
disclosure agreements and related obligations of the present and former officers
and employees of the Consolidated Group and of all other individuals and
corporations with whom the Consolidated Group has or presently conducts
business;
(l) All tangible and intangible assets, actual and contingent,
reflected or referenced on the Financial Statements (as hereinafter defined)
and/or Schedule C hereto; and
(m) All rights and benefits under that certain litigation
between the Seller and MKT, Inc., more particularly referenced on Schedule C
(the "Litigation") including control of the prosecution and settlement thereof.
1.02 Retained Assets. Notwithstanding the provisions of Section
1.01 hereof, there shall be excluded from the transfer hereunder and from the
definition of Acquired Assets the following: (a) all cash, marketable
securities, security deposits, certificates of deposit, letters of credit and
other cash items in excess of $1,300,000, (b)
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the 300,000 warrants owned by one of the Subsidiaries to purchase common stock
of Purchaser, (c) the debt (and collateral therefor) owed by Wheelers, Inc. (and
its subsidiaries), Ron and Tammy Smith and Orrin Tobbe to Seller and (d)
intercompany accounts receivable within the Consolidated Group ("Retained
Assets").
1.03 Title to Acquired Assets. Except as specifically set forth in
this Agreement or the Schedules annexed hereto, all of the Acquired Assets to be
transferred hereunder shall be transferred free and clear of all liens, claims,
encumbrances or rights of others of every kind and description.
Section 2. Assumption of Liabilities
2.01 Assumed Liabilities. Subject to all of the terms and conditions of
this Agreement, the Purchaser hereby agrees to assume and pay, perform or
otherwise discharge on and after the Closing Date, as the same shall become due
in accordance with their respective terms, all of the liabilities and
obligations of the Consolidated Group (other than Retained Liabilities)
including without limitation, the following (collectively the "Assumed
Liabilities): (a) all liabilities and obligations of Seller reflected on
Schedule H hereto (including with respect to the Litigation and the defense
and/or settlement thereof), (b) all liabilities and obligations otherwise
incurred by the Consolidated Group in the ordinary course of its business
between the date of the latest Financial Statements and the Closing Date and (c)
all liabilities and obligations arising under or out of any agreements,
instruments and documents constituting Acquired Assets.
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2.02 Retained Liabilities. Purchaser shall not assume as a part of the
Assumed Liabilities, and Seller shall retain, all liabilities and obligations
for the following ("Retained Liabilities"):
(a) Any cost, expense, or tax liability of the Seller and/or the
Subsidiaries arising from or growing out of the sale and exchange provided for
by this Agreement;
(b) Liabilities for Federal taxes, interest, penalties, costs and
expenses arising out of the audit being currently conducted by the Internal
Revenue Service of Seller for its fiscal years ended November 30, 1991 and 1992;
and
(c) Intercompany accounts payable with the Consolidated Group.
3. Purchase Price. In payment for the Acquired Assets, on the Closing Date,
the Purchaser shall issue and deliver to the Seller of an aggregate of 750,000
shares of the common stock of the Purchaser (collectively the "Purchaser's
Stock"). On or before September 30, 1996, Purchaser shall, at its expense, take
all steps necessary to cause an appropriate registration statement covering the
Purchaser's Stock to be duly filed with the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Act") and thereafter
Purchaser shall diligently process and pursue such registration and any
necessary amendments thereto, as well as all appropriate registrations and
qualifications with applicable State regulatory bodies, so that the Purchaser's
Stock is fully and freely publicly tradable by Sellers as soon as possible after
such date. The Seller is acquiring the Purchaser's Stock for its own account,
and not with a view toward the sale or distribution thereof in violation of the
Act. The certificates representing the
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Purchaser's Stock issued to Seller pursuant to this Agreement shall bear a
legend in substantially the following form:
"The shares represented by this Certificate may not be transferred
unless a Registration Statement with respect to such shares shall be
effective under the Securities Act of 1933, as amended, and any
other applicable law, or the Company shall have received an opinion
of counsel satisfactory to it that no violation of such laws will be
involved in such transfer."
Notwithstanding the aforesaid registration of the Purchaser's Stock, the
Seller hereby acknowledges and agrees that it will not sell or otherwise
transfer the Purchaser's Stock during the one year period after the Closing
Date, other than transfers to the Stockholders and/or members of their families
and/or other corporations, trusts and other entities owned or controlled by them
or either of them, in each case subject to the aforesaid one-year transfer
restriction. The Purchaser's Stock shall be legended to reflect the restrictions
contained in this paragraph.
4. Closing Date. Transfer of the Acquired Assets and Assumed Liabilities
and delivery of the Purchaser's Stock will be made at the offices of the Seller,
1266 Main Street, Sixth Floor, Stamford, CT at 10:00 A.M., Eastern Daylight
Time, on June 28th, 1996, or such other date and time as shall be mutually
agreed upon (said date and time is hereinafter called the "Closing Date"). On
the Closing Date the Seller will deliver to the Purchaser instruments for the
transfer of the Acquired Assets against delivery by the Purchaser to the Seller
of certificates for the Purchaser's Stock, and instruments of assumption for the
Assumed Liabilities.
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5. Representations and Warranties of the Seller.
The Seller represents and warrant to the Purchaser as follows:
(a) The Seller is a corporation duly incorporated, validly existing and in
good standing as a corporation under the laws of the State of Delaware and is
duly qualified and in good standing as a foreign corporation under the laws of
the State of Connecticut. The Seller has an authorized capital stock consisting
of 1,000 shares of Common Stock, $1.00 par value ("Common Stock"), of which 100
shares of Common Stock have been validly issued and are outstanding, fully paid
and nonassessable and all of which are owned by the Stockholders as follows: 60
shares are owned by SMC and 40 shares are owned by FW. There are no outstanding
rights, options, warrants, contracts, commitments or demands of any character
which would require the issuance (or transfer out of treasury) by the Seller of
any shares of its capital stock. The Seller does not own any interest in any
other corporation, partnership or proprietorship other than (I) the Subsidiaries
listed on Schedule A hereto, each of which is duly incorporated, validly
existing and in good standing in its respective state of its incorporation
listed on Schedule A-1 and (ii) the interests in the entities described on
Schedule A-2 hereto.
(b) Schedule B annexed hereto contains a true, correct and complete
list of the officers and directors of the Seller and each of the Subsidiaries
and all bank accounts and lock boxes of the Seller and each of the Subsidiaries.
(c) Other than as indicated on Schedule A, neither the Seller nor
any of the Subsidiaries is qualified as a foreign corporation in any
jurisdiction nor is it authorized to do business or in good standing in any
jurisdiction and, to the best of
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Seller's knowledge, the character of the properties owned or leased by it and/or
the nature of the business transacted by it do not make any such qualification
necessary.
(d) Except as set forth in Schedule C annexed hereto, there is no
pending or (to Seller's knowledge) threatened suit, arbitration or other
proceeding to which any member of the Consolidated Group is a party before or by
any court, government instrumentality, agency or body or any arbitration
tribunal or other forum which might result in any material adverse change in the
condition (financial or other), business, properties, or prospects of the
Consolidated Group or which may materially adversely affect its properties or
assets; it being understood and agreed by Purchaser that the Acquired Assets and
Assumed Liabilities include all rights, benefits, rewards, losses, costs and
expenses of the contingent assets and liabilities referenced on Schedule C
(other than the Retained Asset and Retained Liabilities).
(e) The compliance with the terms of this Agreement and the
consummation of the transactions herein contemplated will not conflict with or
result in a breach of the terms, conditions, or provisions of, or constitute a
default under, the Certificate of Incorporation, as amended, or By-laws of the
Consolidated Group, any note, indenture, mortgage, deed of trust, or other
agreement or instrument to which the Consolidated Group is a party, or by which
any of them are bound, or any existing law, order, rule, regulation, writ,
injunction or decree of any union or any government, governmental
instrumentality, agency, body or court, domestic or foreign, having jurisdiction
over the Consolidated Group. To the knowledge of the Seller, no consent,
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approval, authorization or order of any court or governmental agency or body is
required by the Consolidated Group to consummate the transactions contemplated
herein.
(f) Except as reflected in the Financial Statements comprising
Schedule E or as set forth on Schedule C annexed hereto, no member of the
Consolidated Group is a party to any contract not made in the ordinary course of
business nor is it a party to any (1) contract for the employment of any officer
or individual employee, (2) contract with any union, (3) bonus, deferred
compensation, profit sharing, pension or retirement arrangement, (4) leases for
real or personal property, or (5) other material contract, agreement or
commitment not terminable without penalty on not more than thirty days' prior
written notice. To the best of the Seller's knowledge, each member of the
Consolidated Group has in all material respects performed all obligations
required to be performed by it and is not in default under any of such
agreements, leases or other instruments.
(g) Except as set forth in Schedule D hereto, the Consolidated Group
does not own or have any interest in any patents, trademarks, tradenames or
copyrights and, to the best of Seller's knowledge, is not infringing any
patents, trademarks, trade names or copyrights of others and has not received
any notice of conflict with the asserted rights of others.
(h) There is annexed hereto as Schedule E the following financial
statements of the Consolidated Group:
(A) A balance sheet at May 31, 1996 and a statement of income for
the six months then ended, which are unaudited (the "Current Year Statements").
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(B) A balance sheet at November 30, 1995 and a statement of income
for the fiscal year then ended, which have been audited by Bloom, Hochberg &
Co., which is an independent accounting firm with respect to the Corporation.
(C) An audited Balance Sheet and Statement of Income for the fiscal
year ended November 30, 1994.
The foregoing financial statements are sometimes herein collectively
called the "Financial Statements". The Financial Statements are true and correct
and have been prepared in accordance with generally accepted accounting
principles consistently applied in accordance with prior periods and fairly
present the financial position of the Consolidated Group at their respective
dates and the results of operations of the Consolidated Group for the periods
covered thereby. Within ten (10) days after the Closing Date, Seller shall
deliver to Purchaser an unqualified opinion of Bloom Hochberg & Co. with respect
to the year-end Financial Statements referenced in (B) and (C) above.
(I) Except as reflected in the Financial Statements or as set forth on
Schedule C or as included in Retained Assets and/or Retained Liabilities, there
is no indebtedness due from (or to) the Consolidated Group as of the date hereof
or to (or from) the Stockholders or any relative of either of them, or any
partnerships, corporations or proprietorships in which either of them or a
relative of either of them has an equity interest, except for current salaries.
(j) Schedule H hereto contains a true and complete description of all
Assumed Liabilities of which Seller has knowledge or reasonably should have
knowledge and, except as set forth on Schedule H hereto, to the best of Seller's
knowledge, the
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Consolidated Group has no material liabilities or obligations of any nature
whether accrued, absolute, contingent or otherwise, including, without
limitation, tax liabilities due or to become due and whether incurred in, or in
respect of or measured by its income for, any period prior to the date hereof or
arising out of transactions entered into or any state of facts existing prior
hereto. Seller further represents that there are, and on the Closing Date will
be, no unpaid Federal, State or local employee withholding or other payroll
taxes due, owing or accrued by the Consolidated Group for any period prior to
the Closing Date.
(k) Between the date of the Current Year Statements and the date hereof,
to the best of Seller's knowledge, there has been no material adverse change in
the financial condition and the operations of the Consolidated Group and the
properties and assets of the Consolidated Group have not been materially
affected by any damage, destruction or loss, whether or not covered by
insurance.
(l) Each member of the Consolidated Group has full corporate authority to
conduct its business as presently conducted and, to the best of Seller's
knowledge, such business of the Consolidated Group is currently being conducted
in compliance with all laws and governmental regulations and orders applicable
thereto.
(m) The execution and delivery of this Agreement have been duly authorized
by all necessary action by the Seller and constitutes the valid and binding
obligation of the Seller enforceable in accordance with its terms.
6. Representations and Warranties of the Purchaser.
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The Purchaser represents and warrants to the Seller and Stockholders
as follows:
(a) The execution of this Agreement and consummation of the
transactions contemplated hereby, including the authorization and issuance of
the Purchaser's Stock, have been duly authorized by all necessary action by the
Purchaser and constitute the valid and binding obligations of the Purchaser
enforceable in accordance with their terms.
(b) The compliance with the terms of this Agreement and the
consummation of the transactions herein contemplated will not conflict with or
result in a breach of the terms, conditions or provisions of, or constitute a
default under, any note, indenture, mortgage, deed of trust or other agreement
or instrument of which the Purchaser is a party, or by which it is bound, or any
existing law, order, rule, regulation, writ, injunction or decree of any union
or any government, governmental instrumentality, agency, body or court, domestic
or foreign, having jurisdiction over the Purchaser or any of its property. No
consent, approval, authorization or order of any court or governmental agency or
body or union is required by the Purchaser to consummate the transactions
contemplated herein.
(c) The Purchaser is a corporation duly organized, validly existing
and in good standing under the laws of the State of its incorporation, is duly
authorized to transact business and is in good standing in every other
jurisdiction in which it is doing business, and is duly authorized and empowered
to execute, deliver and perform this Agreement, and all documents and
instruments relating thereto.
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(d) The Purchaser has furnished to the Seller its filed and
effective Registration Statement on Form S-4 and the audited and unaudited
financial statements and Prospectus contained therein, all as set forth on
Schedule F annexed hereto and made a part hereof (such Registration Statement,
Prospectus and financial statements being collectively called the "Purchaser
Disclosure Documents"). The Purchaser Disclosure Documents are true and complete
and fairly present the financial condition of the Purchaser as of the dates
therein specified, and have been prepared in accordance with generally accepted
accounting principles consistently applied. Since the date of the Prospectus
included in the Purchaser Disclosure Documents there has been no material
adverse change in the condition, financial or otherwise, of the Purchaser, or in
its relationship with any suppliers, customers, lenders, investors or other
business affiliates which have not been disclosed in writing to Seller.
(e) All documentation and information heretofore furnished (or
hereafter furnished pursuant to Section 9(I) hereof ) by the Purchaser to the
Seller with respect to the Purchaser, its shareholders, officers and directors
and the Vision System (as defined and described on Exhibit I hereto) is true and
accurate in every material aspect.
(f) As of the date hereof, except as set forth in the Purchaser
Disclosure Documents and except as incurred in the ordinary course of business
of the Purchaser since the date of such Purchaser Disclosure Documents or
otherwise disclosed in writing to Seller, the Purchaser has no liabilities or
obligations of any nature whether accrued, absolute, contingent or otherwise,
including, without limitation, tax liabilities due or to become due, and whether
incurred in or in respect of or measured by its income,
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for any period prior to the date hereof or arising out of transactions entered
into or any state of facts existing prior hereto.
(g) For purposes of Purchaser's representations and warranties
contained in subsections (d) through (f) hereof, Purchaser shall include any and
all subsidiaries of Purchaser.
(h) Purchaser has been informed about and understands the
liabilities and potential liabilities of the Consolidated Group referenced on
Schedules C and H hereto and has conducted and completed its due diligence and
all other investigations with respect thereto and otherwise with respect to the
Consolidated Group as it has deemed necessary and, without limiting Seller's
representations and warranties contained herein and Purchaser's reliance
thereon, Purchaser assumes all risks attendant with such liabilities (other than
Retained Liabilities) and/or any other potential liabilities resulting from the
business and operations of the Consolidated Group prior to the Closing Date.
7. Covenants of the Seller.
(a) The Seller will continue to afford to the officers and
authorized representatives of the Purchaser additional access to the properties,
books and records of the Consolidated Group prior to the Closing Date, and will
cause the officers of the Seller to furnish the Purchaser with such additional
financial and operating data and other information as to the business and the
properties of the Consolidated Group which the Purchaser shall from time to time
reasonably request prior to the Closing Date. Purchaser agrees that all
information so provided and identified as "confidential" will be treated as
such, that Purchaser will not make any use of such information unless the same
shall
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become available to it through non-confidential means or shall otherwise come
into the public domain, and that if this Agreement shall be terminated without
the consummation of the transactions herein contemplated, Purchaser will return
all such confidential documents (and all copies thereof) in its possession or
will certify to Seller that all of such documents not returned have been
destroyed by Purchaser.
(b) Between the date hereof and the Closing Date, the Seller will
not, nor will the Seller permit the Consolidated Group, without the prior
written consent of Purchaser (not to be unreasonably withheld), to (1) issue any
stock, notes, options or other corporate securities, (2) incur any material
obligation or liability, absolute or contingent, except in each case in the
ordinary course of business, (3) discharge or satisfy any material lien or
encumbrance or pay any material obligation or liability, absolute or contingent,
except in each case in the ordinary course of business, (4) declare or make any
payment or distribution to its shareholders or purchase or redeem any of its
capital stock, (5) mortgage, pledge or subject to lien or any other encumbrance
any material tangible assets or cancel any material debts or claims, except in
each case in the ordinary course of business, or (7) amend their respective
Certificates of Incorporation or By-laws in any materially adverse respect.
(c) Between the date hereof and the Closing Date, the Seller will,
and the Seller will cause the Consolidated Group to, (1) conduct its business in
the same manner as currently conducted, (2) use their best efforts to preserve
the business organization and preserve the relationship of the Consolidated
Group with its customers, (3) maintain in force the Consolidated Group's
existing policies of hazard and liability
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insurance and (4) not materially increase the annual level of compensation of
any employee of the Consolidated Group and not increase at all the annual level
of compensation of any person whose compensation from the Consolidated Group in
the last preceding fiscal year exceeded $75,000, nor grant any unusual or
extraordinary bonuses, benefits or other forms of direct or indirect
compensation to any employee, officer, director or consultant of the
Consolidated Group except in amounts in keeping with past practices by formula
or otherwise, and not increase, terminate, amend or otherwise modify any plan
for the benefit of employees.
8. Conditions to Obligations of the Purchaser.
The obligations of the Purchaser hereunder are, at the option of the
Purchaser, subject to compliance with each of the following conditions at or
prior to the Closing Date:
(a) The representations and warranties of the Seller and
Stockholders contained in this Agreement shall be true and correct on and as of
the Closing Date, with the same effect as though all such representations and
warranties had been made on and as of that date.
(b) All the terms, covenants and conditions hereof to be complied
with and performed by the Seller on or before the Closing Date shall be duly
complied with and performed.
(c) The Purchasers shall have received an opinion of Charles E.
Matthews, Esq., counsel to the Seller, dated the Closing Date, as to such
reasonable and customary matters as Purchaser's counsel shall request.
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(d) Between the date hereof and the Closing Date, the Consolidated
Group shall not have incurred any material liabilities or obligations, direct or
contingent, or entered into any material transactions, except as consented to be
the Purchaser pursuant to the provisions of Section 7(b) hereof or in the
ordinary course of business, and there shall not have been any material change
in the capital stock ownership of the Seller or any material adverse change in
the condition, financial or otherwise, net worth or results of operations of the
Consolidated Group.
(e) On or before the Closing Date, the Purchaser shall not have
discovered any material error, mistake or omission in the representations and
warranties made by the Seller herein.
(f) All consents, approvals, authorizations, waivers or orders of
any court, tribunal, arbitrator or governmental agency or body or union required
or necessary for the consummation of the transactions contemplated by this
Agreement shall have been obtained. Except as disclosed in the Financial
Statements or on Exhibit C, no agency or department of any government unit or
subdivision shall have threatened any action against the Seller and/or Purchaser
to prevent, or as a result of, the acquisition of the Acquired Assets by the
Purchaser.
(g) Each of the Stockholders and a consulting entity owned and
controlled by them and the Purchaser shall have entered into a consulting,
management and non-compete agreement in the form of Schedule G hereto (the
"Consulting Agreement").
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(h) Purchaser and each of Evan Bokor, Patricia Small, Mary Ann
Vetter, John Costa, Eugene Feher, Jon Preiser and Scott Preiser (the
"Employees") shall have made mutually acceptable arrangements for the continued
employment of the Employees with the Purchaser.
9. Conditions to Obligations of the Seller.
The obligations of the Seller hereunder are, at the option of the
Seller, subject to the compliance with each of the following conditions at or
prior to the Closing Date:
(a) The representations and warranties of the Purchaser contained in
this Agreement shall be true and correct on and as of the Closing Date, with the
same effect as though all such representations and warranties had been made on
and as of that date.
(b) All the terms, covenants and conditions hereof to be complied
with and performed by the Purchaser on or before the Closing Date shall be duly
complied with and performed.
(c) The Seller shall have received the opinion of David Keller,
Esq., counsel to the Purchaser, dated the Closing Date, as to such customary and
reasonable matters as Seller's counsel shall request.
(d) On or before the Closing Date, the Seller shall not have
discovered any material error, mistake or omission in the representations and
warranties made by the Purchaser hereunder.
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(e) All consents, approvals, authorizations, waivers or orders of
any court, tribunal, arbitrator or governmental agency or body or union required
or necessary for the consummation of the transactions contemplated by this
Agreement shall have been obtained.
(f) Each of the Stockholders and a consulting entity owned and
controlled by them and the Purchaser shall have entered into the Consulting
Agreement.
(g) The Seller and Stockholders shall have been released by each of
the Employees (or indemnified by Purchaser) with respect to any and all claims
for compensation, benefits or other remuneration relating to, accruing or
arising out of periods or events prior to the Closing Date.
(h) Purchaser shall agree to make available to Seller, without
charge, from and after the Closing Date, the services of Evan Bokor, on a
reasonable basis as needed by Seller, to assist in connection with the
administration of the Retained Assets and Retained Liabilities.
(I) The Purchaser's publicly traded common stock shall have a
publicly traded sale price, as quoted by NASDAQ of at least $3.25 per share for
each of the five most recent consecutive trading days prior to the Closing Date.
NASDAQ quoted sales price shall mean the last sale on the applicable date or, if
there is no sale on such date, the average of the closing bid and asked prices
on such date.
(j) The Purchaser shall have afforded to the Seller and its
authorized representatives access to the properties, books and records of the
Purchaser prior to the Closing Date, and shall have caused the officers of the
Purchaser to furnish the Seller
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with such additional financial and operating data and other information as to
the business and the properties of the Purchaser which the Seller shall have
from time to time reasonably requested prior to the Closing Date, subject, with
respect to Seller, to the same confidentiality and non-disclosure restrictions
as those contained in Section 7(a) hereof with respect to Purchaser.
10. Seller's Indemnity.
(a) The Seller agrees to indemnify and hold harmless the Purchaser
against any loss, liability, claim, damage or expense against the Purchaser
resulting from the breach of any representations, warranties or covenants of the
Seller in this Agreement or from acts, omissions or conduct of the Consolidated
Group prior to the Closing Date except for the Assumed Liabilities. The
indemnification hereunder shall include the reasonable cost of investigating or
defending any alleged loss, liability, claim, damage or expense and reasonable
counsel fees in connection therewith. Purchaser shall give written notice to the
Seller, within ten days of receipt by Purchaser of notification of any loss,
liability, claim, damage or expense covered by this indemnification, and the
Seller shall have the right, but not the obligation, to contest and defend any
action brought against the Purchaser at its sole expense; provided, however,
that if the Seller shall fail to notify the Purchaser within ten (10) days after
written notice by the Purchaser of any such loss, liability, claim, damage or
expense of their election not to defend and contest any such action, then the
Purchaser shall have the right to take any action it deems appropriate to
defend, contest, settle or compromise any such action or claim at the expense of
the Seller.
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(b) In no event shall the aggregate of all liabilities imposed upon the
Seller under the foregoing subsection (a) exceed the value of the Purchaser's
Stock.
11. Purchaser's Indemnity
Purchaser agrees to indemnify and hold harmless the Seller and
Stockholders against any loss, liability, claim, damage or expense against any
of them resulting from the Assumed Liabilities or the breach of any
representations, warranties or covenants of Purchaser in this Agreement or from
acts, omissions or conduct of the Consolidated Group after the Closing Date. The
indemnification hereunder shall include the reasonable cost of investigating or
defending any alleged loss, liability, claim, damage or expense and reasonable
counsel fees in connection therewith. Seller or the Stockholders (as applicable)
shall give written notice to the Purchaser, within ten days of receipt by any of
them of notification of any loss, liability, claim, damage or expense covered by
this indemnification, and the Purchaser shall have the right, but not the
obligation, to contest and defend any action brought against any of them at its
sole expense; provided, however, that if the Purchaser shall fail to notify the
Seller and/or Stockholders (as applicable) within ten (10) days after written
notice by any of them of any such loss, liability, claim, damage or expense of
Purchaser's election not to defend and contest any such action, then the Sellers
and/or Stockholders (as applicable) shall have the right to take any action they
deem appropriate to defend, contest, settle or compromise any such action or
claim at the expense of the Purchaser.
12. Miscellaneous.
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(a) The Purchaser and the Seller represent, warrant and agree that
they have not engaged any broker or any other person who would be entitled to
any brokerage fee or commission in respect of the execution of this Agreement
and/or the consummation of the transactions contemplated hereby; and the Seller
agrees to, and do hereby, exonerate, indemnify and hold harmless the Purchaser,
against and in respect of any and all claims, losses, liabilities or expenses
which may be asserted against the Purchaser or the Seller, as the case may be,
by any broker or other person on the basis of any arrangements or agreements
made or alleged to have been made by the Seller; and the Purchaser agrees to,
and does hereby exonerate, indemnify and hold harmless of the Seller, in respect
of any and all claims, losses, liabilities or expenses which may be asserted
against it by any such broker or other person on the basis of any arrangement or
agreement made or alleged to have been made by the Purchaser.
(b) Any notice, request, instruction or other document to be given
hereunder shall be in writing, and except as otherwise provided for herein,
shall be delivered personally, or sent by registered or certified mail as
follows:
(I) If , to the Purchaser:
2025 East Beltline Ave., S.E., Suite 400
Grand Rapids, MI 49546
(ii) If, to the Seller or Stockholders:
1266 Main Street
Stamford, CT 06902
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or to such other addresses as any of the parties hereto may hereinafter
designate in writing to the other parties hereto.
(c) The representations, warranties, covenants and agreements herein
contained shall survive the execution of this Agreement and the Closing Date.
(d) After the Closing Date, each of the parties hereto, at the reasonable
request of the other, will take such action and execute and deliver such further
documents and instruments as may be necessary to assure complete and full and
effective consummation of the transactions contemplated hereunder.
(e) This Agreement shall be binding upon and shall inure to the benefit of
the Seller, Stockholder and the Purchaser and their respective heirs,
representatives, successors and assigns; provided however that Purchaser shall
not have the right to transfer or delegate any of its rights or obligations
hereunder. Except as set forth above, nothing in this Agreement expressed or
implied is intended to confer upon any persons, other than the Seller,
Stockholder and the Purchaser and their respective heirs, representatives,
successors and assigns, any rights or remedies under or by reason thereof.
(f) This Agreement cannot be modified, changed, discharged or terminated
except by an instrument in writing, signed by the party against whom the
enforcement of any waiver, change, discharge or termination is sought. This
Agreement contains the entire understanding between the parties with respect to
the transactions covered hereby.
(g) In the event that any one or more provisions of this Agreement shall
be deemed to be illegal or unenforceable such illegality or unenforceability
shall not affect the validity and enforceability of the remaining legal and
enforceable provisions hereof,
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which shall be construed as if such illegal or unenforceable provision or
provisions had not been inserted.
(h) This Agreement will be construed and governed in accordance with the
laws of the State of Connecticut.
(I) This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the day and year first above written.
SELLER: PURCHASER:
THE NEPTUNE GROUP, INC. INTELLIGENT DESIGN SYSTEMS, INC.
By: /s/ Steven Chaleff By: /s/ Mark A. Babin
Title: President Title: President
STOCKHOLDERS:
/s/ Steven M. Chaleff
Stephen M. Chaleff
/s/ Fred Wiener
Fred Wiener
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