As filed with the Securities and Exchange Commission on April 9, 1997
Registration No. 333-_____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
INTELLIGENT DECISION SYSTEMS, INC.
(Exact name of registrant as specified in charter)
Delaware 38-3286394
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
2025 E. Beltline Ave., S.E. Ste 400 Mark A. Babin, President
Grand Rapids, Michigan 49546 2025 E. Beltline Ave., S.E., Suite 400
(616) 285-5830 Grand Rapids, Michigan 49546
(Address and telephone number of (616) 285-5830
registrant's principal executive
offices and principal place (Name, address, and telephone number of
of business) agent for service)
Copies to:
Christopher J. Littlefield, Esq.
Snell & Wilmer L.L.P.
One Arizona Center
Phoenix, Arizona 85004-0001
(602) 382-6323
EMPLOYMENT AND NON-STATUTORY STOCK OPTION AGREEMENTS OF
EUGENE FEHER, JON PREISER AND SCOTT PREISER
(Full Title of the Plan)
<TABLE>
<CAPTION>
Title of Each Class Proposed Maximum Proposed Maximum Amount of
of Securities Amount Being Offering Aggregate Offering Registration
Being Registered Registered Price Per Share(2) Price(2) Fee
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
Common Stock(1) 162,825 $.97 $157,940 $48.00
- ---------------------------------------------------------------------------------------------
</TABLE>
(1) The securities registered hereunder are shares of the registrant's common
stock, $.001 par value. 120,000 shares are issuable upon the exercise of
options granted pursuant to non-statutory stock option agreements and 42,825
shares were issued pursuant to employment agreements and are being
registered for resale hereunder.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee, pursuant to rules 457(c) and 457(h) of the Securities Act
of 1933, on the basis of the average of the high and low prices for shares
of Common Stock on April 7, 1997.
Exhibit Index on Page 22
Page 1 of 61
1
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PART I
INFORMATION REQUIRED IN SECTION 10(a) PROSPECTUS
This Registration Statement on Form S-8 relates to 42,825 shares of the
registrant's common stock that have been issued to Eugene Feher, Jon Preiser and
Scott Preiser pursuant to their respective employment agreements with the
registrant. A prospectus with respect to the resale of such shares by Messrs.
Feher, Preiser and Preiser is set forth herein on pages 3 through 17.
This Registration Statement also relates to the issuance of up to 120,000
shares of the Registrant's common stock upon the exercise of stock options
granted to Messrs. Feher, Preiser and Preiser pursuant to their respective
non-statutory stock option agreements. The documents containing the information
specified in Part I, Items 1 and 2, with respect to these shares will be
delivered to Messrs. Feher, Preiser and Preiser in accordance with Form S-8 and
Rule 428 under the Securities Act of 1933, as amended.
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PROSPECTUS
FOR UP TO 42,825 SHARES
OF COMMON STOCK
INTELLIGENT DECISION SYSTEMS, INC.
To Be Offered by Several Holders of the Common
Stock of Intelligent Decision Systems, Inc.
This Prospectus relates to the resale by certain selling securityholders
(the "Selling Securityholders") an aggregate of up to 42,825 shares of Common
Stock, $.001 par value per share ("Common Stock"), of Intelligent Decision
Systems, Inc., a Delaware corporation (the "Company"), that were previously
acquired by the Selling Securityholders.
The shares of Common Stock registered for resale hereby have been
registered pursuant to the Company's obligations contained in written agreements
with certain of the Selling Securityholders. The Selling Securityholders may
elect to sell all, a portion or none of the Common Stock offered by them
hereunder. The amount of shares of common stock to be sold hereunder by any
Selling Securityholder, and any other person with whom he is acting in concert
for the purpose of selling securities of the registrant, cannot exceed during
any three-month period, the amount specified in Rule 144(e) under the Securities
Act of 1933, as amended (the "Securities Act")
The Common Stock is traded under the symbol "IDSI" in the over-the-counter
market on the "OTC Electronic Bulletin Board" operated by the National
Association of Securities Dealers, Inc. (the "OTC Bulletin Board"). On April 7,
1997, the low "bid" and high "asked" prices for the Common Stock were $.9375 and
$1.00, respectively.
The Selling Securityholders may sell the Common Stock from time to time in
underwritten public offerings, in transactions pursuant to Rule 144 under the
Securities Act, in privately negotiated transactions, in ordinary brokers'
transactions through the facilities of Nasdaq or otherwise, at market prices
prevailing at the time of such sale, at prices relating to such prevailing
market prices, or at negotiated prices. The Company will not receive any of the
proceeds from the sale of Common Stock by the Selling Securityholders. The net
proceeds to the Selling Securityholders will be the proceeds received by such
Selling Securityholders upon such sales, less brokerage commissions. All
expenses incurred in connection with the registration of the Common Stock, other
than any underwriting or brokerage discounts, commissions and selling expenses
with respect to the Common Stock being sold by the Selling Securityholders, will
be borne by the Company. See "Plan of Distribution" and "Selling
Securityholders."
In order to comply with certain states' securities laws, if applicable, the
shares may be sold in such jurisdiction only through registered or licensed
brokers or dealers. In certain states the shares may not be sold unless the
shares have been registered or qualified for sale in such state, or unless an
exemption from registration or qualification is available and is obtained.
INVESTMENT IN THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF
RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 6 OF THIS PROSPECTUS.
EACH SELLING SECURITYHOLDER AND ANY BROKER EXECUTING SELLING ORDERS ON
BEHALF OF THE SELLING SECURITYHOLDERS MAY BE DEEMED TO BE AN "UNDERWRITER"
WITHIN THE MEANING OF THE SECURITIES ACT. COMMISSIONS RECEIVED BY ANY SUCH
BROKER MAY BE DEEMED TO BE UNDERWRITING COMMISSIONS UNDER THE SECURITIES ACT.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is April 9, 1997
3
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copies thereof may be
obtained, at prescribed rates, at the public reference facilities maintained by
the Commission at the Public Reference Section, Room 1024, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the Commission's Regional Offices located
at 7 World Trade Center, 13th Floor, New York, New York 10048, and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511.
Copies of such material may be obtained at prescribed rates by writing to the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission maintains a web site (http://www.sec.gov)
that contains reports, proxy, and information statements and other information
regarding registrants, such as the Company, that file electronically with the
Commission.
The Company has filed a Registration Statement on Form S-8 under the
Securities Act covering the Common Stock included in this Prospectus. As
permitted by the rules and regulations of the Commission, this Prospectus omits
certain of the information contained in the Registration Statement and reference
is hereby made to the Registration Statement and related exhibits for further
information with respect to the Company and the securities offered hereby. Any
statements contained herein concerning the provisions of any documents filed as
an exhibit to the Registration Statement are not necessarily complete, and, in
each instance reference is made to the copy of such document so filed.
Each such statement is qualified in its entirety by such reference.
No person is authorized to give any information or make any representation
other than those contained or incorporated by reference in this Prospectus, and
if given or made, such information or representation must not be relied upon as
having been authorized. This Prospectus does not constitute an offer to sell or
a solicitation of an offer to buy any of the securities offered hereby in any
jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction. Neither the delivery of this Prospectus nor
any sale made hereunder shall, under any circumstances, create any implication
that there has been no change in the affairs of the Company since the date
hereof.
INFORMATION INCORPORATED BY REFERENCE
The following documents have been previously filed by the Company with the
Commission and are hereby incorporated by reference in this Prospectus: (i) the
Company's Joint Proxy Statement-Prospectus included in the Registration
Statement on Form S-4, File No. 33-93058, as filed pursuant to Rule 424(b) under
the Securities Act; (ii) the Annual Report of the Company on Form 10-KSB for the
fiscal year ended June 30, 1996; (iii) the Quarterly Reports of the Company on
Form 10-QSB for the fiscal quarters ended September 30, 1996 and December 31,
1996; (iv) the Current Reports on Form 8-K, filed with the Commission on
November 6, 1996, December 20, 1996 and January 3, 1997; and (vi) the
description of the Company's Common Stock contained in the Company's Form 8-A
filed under the Exchange Act. All other documents and reports filed by the
Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of this Prospectus and prior to the termination of the
offering of the securities described herein shall be deemed to be incorporated
by reference into this Prospectus and to be made a part hereof from the
respective dates such documents and reports are filed.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of the Registration Statement and this Prospectus to the extent
that a statement contained herein or in any subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of the
Registration Statement or this Prospectus.
4
<PAGE>
The Company will cause to be furnished, without charge, to each person who
receives this Prospectus, upon the written or telephonic request of any such
person, a copy of any or all of the documents which have been incorporated
herein by reference, other than exhibits to such documents (unless such exhibits
are specifically incorporated by reference). Requests should be directed in
writing to the Secretary, Intelligent Decision Systems, Inc., 2025 East Beltline
Avenue SE, Suite 400, Grand Rapids, Michigan 49546 or by telephone at (616)
285-5830.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus, including all documents incorporated by reference,
includes "forward-looking statements" within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act. All statements other than
statements of historical facts included in this prospectus (and in documents
incorporated by reference), including without limitation, statements under "The
Company," and "Risk Factors," regarding the Company's financial position,
business strategy and plans and objectives of management of the Company for
future operations, are forward-looking statements. Although the Company believes
that the expectations reflected in such forward-looking statements are
reasonable, it can give no assurance that such expectations will prove to have
been correct. Important factors that could cause actual results to differ
materially from the Company's expectations are disclosed under "Risk Factors"
and elsewhere in this Prospectus, including without limitation in conjunction
with the forward-looking statements included in this Prospectus. All subsequent
written and oral forward-looking statements attributable to the Company or
persons acting on its behalf are expressly qualified in their entirety by this
section.
5
<PAGE>
RISK FACTORS
Investment in the Common Stock offered hereby involves certain risks. In
addition to the other information included elsewhere in this Prospectus,
prospective investors should give careful consideration to the following factors
before purchasing any shares of the Common Stock offered hereby. This Prospectus
contains forward-looking statements which include risks and uncertainties. The
Company's actual results could differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including those set
forth in the following risk factors and elsewhere in this Prospectus. See
"Disclosure Regarding Forward-Looking Statements."
Limited Trading Market for Common Stock; Compliance with Blue Sky Laws
The Common Stock is traded in the over-the-counter market through the OTC
Bulletin Board under the symbol "IDSI." The trading market for the Common Stock
of the Company has been extremely limited and sporadic. There can be no
assurance that an active trading market will develop or be sustained. In
addition, in certain states the shares may not be sold unless the shares have
been registered or qualified for sale in such states, or unless an exemption
from registration or qualification is available and is obtained. there can be no
assurance that the sale of shares hereunder will qualify for registration or
qualification in any state or that an exemption for such sale will be available
or be able to be obtained.
Net Operating Losses; Expectation of Future Losses
The Company has generated cumulative operating losses in the past and there
can be no assurance that the Company will become profitable in the future. The
continuing development and commercialization of the Company's products will
require substantial expenditures. There can be no assurance that the Company's
products will ever gain commercial acceptance or that the Company will ever
generate significant revenues or achieve profitability.
The Company is currently spending approximately $400,000 per month on the
development of its products and its administrative structure and currently
generates monthly cash flow of approximately $100,000 from leasing services and
the sales and rental of its products. The prospective cash flows from sales of
the interactive, multimedia computerized management business system for long
term health care providers (the "Vision System") through the Company's marketing
agreement with National Purchasing Corporation, a California corporation doing
business as HPSI (the "HPSI Agreement"), and prospective cash flows from sales
of the interactive, multimedia computerized management business system for
physicians offices (the "Focus System") and cash flows from the Company's
subsidiary's leasing activities are the Company's material sources of
operational cash flow. The Company addresses its capital needs through financing
negotiated by Neptune Technology Leasing Corp. (formerly named The Neptune
Group, Inc.) ("Neptune"), a Michigan corporation and wholly owned subsidiary of
the Company, and its own financial reserves. The Company can give no assurances
that it will have sufficient working capital to maintain its operations for the
next twelve months.
Period of Transition
The Company is experiencing a period of transition as it emerges from its
status as a development stage company. The transition has placed, and will
continue to place, a significant strain on the Company's resources. The
likelihood of success of the Company must be considered in light of the
expenses, difficulties and delays frequently encountered in connection with the
continuing development of a new business. If the Company is unable to manage the
transition out of the development stage, the Company's business, competitive
position, results of operations and financial condition will be materially and
adversely affected.
6
<PAGE>
In April 1996 the Company completed a restructuring involving the merger of
Resource Finance Group, Ltd., a Colorado corporation and the Company's parent
corporation ("RFG"), with and into the Company and the merger of Digital
Sciences, Inc., a Nevada corporation ("Old DSI"), with and into Digital
Sciences, Inc., a wholly-owned subsidiary of the Company ("New DSI")
(collectively, the "Mergers"), and the entire board of directors and the
management has changed. See "Certain Recent Developments." The Company's ability
to manage growth successfully will require the personnel of RFG and Old DSI to
work together effectively and will require the Company to improve its
operational, management and financial systems and controls. Prior to the
consummation of the Mergers, Old DSI and RFG had been operated as separate,
independent corporations. While Old DSI and RFG were engaged in related
businesses and were parties to a joint operating agreement pursuant to which
certain administrative, financial and other services were performed
cooperatively, there can be no assurance that management of the Company will be
able to integrate or allocate properly the two businesses on an economic basis
or be able to oversee and implement successfully the business strategy of the
Company after the Mergers. If the Company is unable to manage this transition
effectively, the Company's business, competitive position, results of operation
and financial condition will be materially and adversely affected.
Dependence on the Vision and Focus Systems; Uncertainty of Market Acceptance
The Vision System and Focus System are currently the Company's primary
products. The Company has only sold the Vision System and Focus System products
in limited quantities and there can be no assurance that the Company's
continuing efforts will be successful or that the Vision System, Focus System or
any other product developed by the Company will be effective, capable of being
manufactured at commercial quantities at acceptable costs, or successfully
marketed. The Company expects that the Vision System and Focus System, when
fully commercialized, will account for the majority of the Company's earnings
for the foreseeable future. Because the Vision System and Focus System currently
represent the Company's main product focus, if the Vision System and Focus
System are not successful, the Company's business, financial condition and
results of operation would be materially and adversely affected.
Dependence on Collaborative Relationships
The Company is reliant on other companies for the marketing, sales and
installation of the Vision System. There can be no assurances that the Company
will be able to oversee and implement successfully the business strategy of the
Company.
The Company has minimal direct sales or marketing capability. The Company
will rely on its internal sales team for the marketing and sales of the Focus
System. The Company will rely on HPSI for sales of the Vision System. See
"Certain Recent Developments." The failure or inability of HPSI to perform its
obligations under the HPSI Agreement or to effectively sell or market the Vision
System would have a material adverse effect on the Company. If the Company
determines to broaden its business to provide the Vision System or other systems
to users other than HPSI's clients, the Company will be required to develop the
capabilities to commercialize and market its technologies itself or will be
dependent on others to do so. Should the Company elect to commercialize and
market its technologies itself, the Company would need to develop additional
resources. There can be no assurance that it will be successful in developing
these capabilities. Also, should the Company elect to obtain additional
collaborative partners to assist in commercializing and marketing its
technologies and the resultant products, there can be no assurance that the
Company will be successful in reaching satisfactory arrangements with such third
parties.
The Company's ability to install and maintain the Vision System and Focus
System is limited. The Company has entered into certain agreements with IBM
Corporation (collectively, the "IBM Agreement") pursuant to which IBM installs
and services the Vision System. The failure or inability of IBM to
satisfactorily perform its obligations under the IBM Agreement or to adequately
install and service the Vision System would have a material adverse effect on
the Company.
7
<PAGE>
Risk of Product Defects
Software products as complex as those offered by the Company may contain
defects or failures when introduced or when new versions are released. The
Company may discover software defects in the Vision System, Focus System or its
other products and may experience delays or lost revenues to correct such
defects in the future. There can be no assurance that despite testing by the
Company, errors will not be found in new products released after the
commencement of commercial shipment, resulting in loss of market share or
failure to achieve market acceptance. Any such occurrence could have a material
adverse effect upon the Company's business, operating results or financial
condition.
Products in Development
The markets for the Company's existing and future computer software and
hardware products are characterized by rapidly changing technology, evolving
industry standards, frequent new product introductions and enhancements. The
successful development and commercialization of new products involve many risks,
including the identification of new product opportunities, the successful
completion of the development process, and the retention and hiring of
appropriate research and development personnel. The introduction of products
embodying new technologies and the emergence of new industry standards could
render the Company's existing products and products currently under development
obsolete and unmarketable. The Company's future success will depend upon
successfully developing and distributing the Focus System and the Vision System
in connection with the HPSI Agreement, and thereafter upon its ability to
enhance the Vision System and Focus System and to develop and introduce new
products that keep pace with technological developments, respond to evolving
end-user requirements and achieve market acceptance. Any failure by the Company
to anticipate or respond adequately to technological developments or end-user
requirements, or any significant delays in product development or introduction,
could result in a loss of competitiveness or revenues. There can be no assurance
that products or technologies developed by others will not render the Company's
products or technologies noncompetitive or obsolete or that the Company will not
experience significant delays in introducing new products in the future, which
could have a material adverse effect on the Company's results of operations. In
addition, there can be no assurance the Company will be successful in developing
and marketing new products or product enhancements on a timely basis or that new
products or product enhancements developed by the Company will achieve market
acceptance.
In addition, the life cycle of the Company's products are difficult to
predict due to the effect of new product introductions or product enhancements
by the Company or its competitors, market acceptance of new or enhanced versions
of the Company's products and competition in the Company's marketplace. Declines
in the demand for the Vision System or Focus System, whether as a result of
competition, technological change, price reductions or otherwise, could have a
material adverse effect on the Company's business, operating results and
financial condition.
Limited Production Capabilities
The Company currently integrates various components into the Vision System
and Focus System in limited quantities in Draper, Utah. However, the Company
does not have experience in producing the Vision System and Focus System in
commercial quantities. The Company may encounter difficulties in scaling up
production of the Vision System and Focus System to meet customer demand,
including problems involving production yields, quality control and assurance,
components supply and shortages of qualified personnel. There can be no
assurance that the Company will not encounter manufacturing difficulties, which
could have a material adverse effect on the Company's business and financial
condition and results of operation. Should the Company elect to obtain
additional collaborative partners to assist in producing Vision Systems and
Focus Systems in commercial quantities, there can be no assurance that the
Company will be successful in reaching satisfactory arrangements with such
parties.
8
<PAGE>
Commercial/Consumer Acceptance of PICK Operating System
The Company's Screenware software, which is used for the Vision System and
Focus System, is designed to be used on a unique operating system called PICK.
PICK is a multi-user, multi-tasking operating system which results in a less
costly investment in hardware. In addition, PICK's operating system is itself a
data base which results in a much faster system that is more user-friendly than
most other operating systems and eliminates the need for purchasing a third
party database. It is estimated that nearly 80% of the Fortune 1000 companies
have PICK-based applications in their organizations. The Company's products are
based on the PICK operating system. Any factors that adversely affect the
availability or popularity of PICK in the market would have a material adverse
effect on the Company's operating system. The Company has no control over the
factors that affect the availability or commercial acceptance of the PICK
operating system.
Competition
A large number of companies compete in the computer software business,
including the portion of the market targeted at developing and providing
business management systems in which the Company will compete. Many of these
companies have far greater capital, technical, personnel, marketing and other
resources than the Company. Furthermore, there can be no assurance that these or
other firms will not develop new or enhanced products and software systems that
are more effective than any that have been or may be developed by the Company.
Importance of Intellectual Property
The Company does not currently hold any Federal patent or copyright
protection for its principal assets. Management of the Company may file for
appropriate intellectual property protection in the future but there can be no
assurance that such protection will be granted or that it will be adequate to
deter misappropriation of the Company's technologies or that there will not be
independent third party development of similar technologies. The Company's
success and revenues will depend, in part, on its ability to obtain or license
patents, protect trade secrets and operate without infringing on the proprietary
rights of others.
The Company has not in the past adhered to a disciplined regimen relating
to the execution of confidential disclosure, proprietary rights and
non-competition agreements with its vendors, customers, employees and
consultants. Accordingly, there are significant risks that claims may be brought
against the Company in the future for infringing on the proprietary rights of
others. The Company is not aware of any infringement, and no such claims are
currently pending against the Company.
The patent and proprietary protection of software is highly competitive and
involves complex legal and factual questions. There can be no assurance that any
patents issued to the Company will provide it with competitive advantages or
will not be challenged by others, or that the patents or proprietary rights of
others will not have an adverse effect on the ability of the Company to do
business. Furthermore, there can be no assurance that others will not
independently develop similar products or, if patents are issued to the Company,
that others will not design around such patents or proprietary rights. In
addition, the Company may be required to obtain licenses to patents or other
proprietary rights of other parties. No assurance can be given that any licenses
required under any such patents or proprietary rights would be made available on
terms acceptable to the Company, if at all. If the Company does not obtain such
licenses, it could encounter delays in product market introductions while it
attempts to design around such patents, or could find that the development,
manufacture or sale of products requiring such licenses could be foreclosed. In
addition, the Company could experience a loss of revenues as well as incur
substantial costs in defending itself and indemnifying its partners in suits
brought against it or one or more of them on such patents or proprietary rights
or in suits in which the Company's patents or proprietary rights may be asserted
by it against another party. Further, there can be no assurance that any patent
obtained or licensed by the Company will be held valid and enforceable if
challenged by another party.
9
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Dividends
Neither the Company nor its predecessor has ever paid cash dividends on
shares of its Common Stock, and the Company does not intend to pay any dividends
in the foreseeable future. The Company intends to reinvest earnings, if any, in
the development of its business.
Dependence on Key Employees
The Company's success will depend, to a significant extent, on the
Company's Chief Executive and Financial Officer, and President, Mark A. Babin,
New DSI's President, Chief Executive Officer and Treasurer, David A. Horowitz,
and New DSI's Executive Vice President, Chief Science Officer and Secretary,
Robert B. Hyte, and on other members of its senior management. Mr. Hyte is the
creator of the Screenware Software which operates on the PICK operating system
upon which New DSI's existing software is based, and upon which the Company's
software is based. The Company maintains "key-man" life insurance on the life of
Mr. Hyte but does not maintain "key-man" life insurance on the lives of Messrs.
Babin or Horowitz. The loss of the services of Mr. Babin, Mr. Horowitz or Mr.
Hyte or any of its other key employees, could have a material adverse effect on
the Company. The Company's future success will also depend largely upon its
ability to attract and retain other highly qualified personnel. There can be no
assurance that the Company will be successful in attracting and retaining such
personnel.
Possible Volatility of Stock Price
The market price of the Company's common stock has been volatile. Future
announcements concerning the Company or its competitors, quarterly variations in
operating results, announcements of technological innovations, the introduction
of new products or changes in product pricing policies by the Company or its
competitors, litigation relating to proprietary rights or other litigation,
changes in earnings estimates by analysts or other factors could cause the
market price of the Common Stock to fluctuate substantially. In addition, the
stock market has from time to time experienced significant price and volume
fluctuations that have particularly affected the market price for the common
stock of technology companies and that have often been unrelated to the
operating performance of particular companies. These broad market fluctuations
may also adversely affect the market price of the Company's common stock. In
certain circumstances, following periods of volatility in the market price of a
company's securities, securities class action litigation has occurred against
the issuing company. There can be no assurances that such litigation will not
occur in the future with respect to the Company. Such litigation could result in
substantial cost and divert management's attention and resources, which could
have a material and adverse effect on the Company's business, financial
condition and results of operation.
Potential Dilution
Certain events, including the issuance of additional shares of Common Stock
upon the exercise or conversion of outstanding options and warrants of the
Company, could result in substantial dilution of the Common Stock. Such options,
warrants and other rights are exercisable at per share prices ranging from $.50
to $20.00 per share and most are exercisable through the year 2000. The issuance
of 3,153,400 and 8,494,651 additional shares of Common Stock underlying such
warrants and options, respectively, and the potential "overhang" of such shares
on the market could adversely affect the prevailing market price of the
Company's Common Stock and would substantially dilute the ownership percentage
of holders of Common Stock.
10
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SEC Investigation of Regulation S Offerings
The Company is being investigated by the staff of the Commission.
Management of the Company believes that this investigation primarily concerns
certain offerings in 1994 and earlier of the common stock of the Company's
predecessor, RFG, to overseas investors made by RFG in reliance upon Regulation
S under the Securities Act, but may relate to other operational matters as well.
Although the management of the Company believes that the Company has not engaged
in any wrongdoing, there can be no assurances as to the outcome of any such
investigation.
11
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THE COMPANY
The Company is a holding corporation formed under the laws of Delaware. The
Company's primary operations, the development and marketing of its Vision System
and Focus System and the leasing of these systems, are conducted through its
wholly owned subsidiaries, Digital Sciences, Inc., a Delaware corporation
formerly known as DSI Acquisition Corp. ("DSI"), and Neptune Technology Leasing
Corp. respectively. Both the Company and DSI were formed in June 1995 in
connection with the merger (the "Merger") of Resource finance Group, Ltd.
("RFG") and Digital Sciences, Inc., a Nevada corporation ("Old DSI"). Under the
terms of the Merger, which was effective on April 1, 1996, (i) Old DSI merged
with and into DSI, and (ii) RFG merged with and into the Company. Also on April
1, 1996, the Company issued 7,314,636 shares of Common Stock in exchange for all
of the outstanding capital stock of Old DSI. These shares were registered on a
Form S-4 Registration Statement that was declared effective by the Commission in
February, 1996.
RFG was incorporated in August 1991 under the laws of the State of
Colorado. From inception until April 15, 1993, RFG attempted to engage in the
business of financing equipment for operators of South American mines, which
efforts ceased April, 1993.
On June 30, 1993, RFG acquired all of the assets of Digital Video
Graphics, Inc., a Michigan corporation then doing business as ONYX Systems, Ltd.
("ONYX"), owned by Joseph J. Walsh and James M. Keller, Jr. The assets involved
included equipment, inventory, customer relationships and other business
intangibles. The acquired company possessed relationships with established
customers and vendors in the commodity computer hardware business. The purchase
was financed by promissory notes totaling $26,500 issued to the previous owners
and the assumption of the acquired company's liabilities which were $315,153.
The acquisition was effected, to, among other things, leverage ONYX's
relationships with other computer and hardware suppliers and similar networks.
In 1993, RFG entered into a supply agreement with Crutchfield Corporation,
a large electronics catalogue company, which called for sales of RFG's Onyx
personal computer under the Crutchfield name. Approximately $3 million of these
sales were made during fiscal 1994, accounting for 43% of RFG's revenues during
fiscal 1994. Early in fiscal 1995, RFG permitted the agreement to lapse by its
terms, due to increasing losses.
During fiscal 1994, RFG attempted to sell its multimedia line of computers
through the establishment of a telemarketing and customer service operation. RFG
discontinued these efforts in December, 1994. Subsequently, RFG briefly entered
the wholesale computer component business, incurred losses, and ceased its
efforts later in fiscal 1994. In fiscal 1994, RFG opened a retail computer store
named "Floppy Joe's" in Grand Rapids, Michigan, and closed the operation in
January, 1995 after experiencing losses.
In May, 1994, RFG entered into an agreement with Old DSI to acquire Old
DSI's intellectual property ("Screenware") for 1 million shares of RFG's common
stock. Under this agreement, RFG retained voting rights over those shares for a
two year period. RFG then licensed Screenware to Old DSI for 99 years, but
retained the right to 30% of all revenues from projects performed using
Screenware that were arranged by RFG, and 5% of all revenues derived from any
other use of Screenware.
Additional infusions of equity occurred during fiscal 1994 via a series of
private placements. Gross proceeds from these offerings were in excess of $2
million in equity capital, which had been substantially utilized as of December
31, 1994.
In August, 1994, RFG entered into an agreement (the "Consortium Agreement")
with Old DSI and National Purchasing Corporation ("NPC") that provided for the
development and distribution of computerized business systems designed
specifically for the long term health care industry. Nursing homes form the
greater part of this market segment.
In April, 1995, RFG agreed to provide Old DSI with software programming,
accounting and other administrative services in return for funding of these
services.
12
<PAGE>
In August, 1995, RFG and Old DSI entered into a Joint Operating Agreement
pursuant to which RFG and Old DSI would cooperate in sharing the costs of
certain operational matters. Under the Joint Operating Agreement, RFG provided
Old DSI with accounting, financial reporting, payroll and administrative
services and programmers on a subcontracted basis and Old DSI provided RFG with
funds adequate to cover the costs of maintaining RFG's corporate, legal,
financial, accounting and administrative capabilities. The Joint Operating
Agreement was terminated as of April 1, 1996, effective the date of the merger
(the "Merger") of Old DSI with RFG's successor corporation, IDSI.
On June 28, 1996, IDSI purchased substantially all the assets of The
Neptune Group, Inc. ("TNG") and those of its subsidiaries. The assets purchased
consisted of primarily cash, accounts receivable and notes receivable, the total
value of which is approximately $1.73 million. IDSI issued 750,000 restricted
shares of common stock to TNG for those assets and assumed certain liabilities,
which totaled approximately $0.25 million. 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 after the closing date of the
transaction.
On June 28, 1996, IDSI privately placed 1,631 shares of its Series A
Convertible Preferred Stock at a per share price of $1,000 for net proceeds of
$1,500,520. The preferred shares are convertible into common shares of IDSI
after the following dates: one-third on or after August 17, 1996, an additional
one-third on or after September 11, 1996 and the final one-third on or after
October 6, 1996. These shares are convertible at 78% of the average market price
of IDSI common stock for the five days immediately prior to conversion. All of
the preferred shares have been converted into Common Stock. The Company formed a
wholly owned subsidiary which is now named Neptune Technology Leasing Corp.
Neptune Technology Leasing Corp. owns lease agreements for its own account and
also performs lease brokering services for large financing companies. Neptune
Technology Leasing Corp. writes leases resulting from installations of the
Vision Systems and Focus Systems.
On October 29, 1996, the Company finalized an agreement to retain the
services of James N. Lane, R. Wayne Fritzsche and Anthony Kamin. They will
advise the Company on strategic planning, licensing, technical issues, identify
strategic alliances/partners and assist in the development of business
opportunities. The Company has also agreed to appoint two of the above
individuals (or their designee) to two seats on the board of directors of the
Company, subject to certain conditions and limitations.
On December 11, 1996, the Company increased the size of its Board of
Directors from five members to seven and added R. Wayne Fritzsche to fill one of
the vacancies.
On December 30, 1996, the Company dismissed the auditing firm of Wilber &
Townshend, P.C. and approved the engagement of Coopers & Lybrand as principal
auditor for the Company. In connection with the audits of the two fiscal years
ended June 30, 1995 and 1996, and the subsequent interim period through December
30, 1996, there were no disagreements with Wilber & Townshend, P.C. on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedures, which disagreements if not resolved to their
satisfaction would have caused them to make reference in connection with their
opinion to the subject matter of the disagreement, and said firm has not advised
the registrant of any reportable events. The accountants' report of Wilber &
Townshend, P.C. on the consolidated financial statements of Intelligent Decision
Systems, Inc. and subsidiaries as of and for the year ended June 30, 1996 and of
Resource Finance Group, Ltd. and subsidiaries for the year ended June 30, 1995
did not contain any adverse opinion or disclaimer of opinion, nor were they
qualified or modified as to uncertainty, audit scope, or accounting principles.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Common Stock offered hereby. The Company will pay the costs of this offering,
which are estimated to be $4,000.
13
<PAGE>
SELLING SECURITYHOLDERS
The following table sets forth certain information as of April 1, 1997 with
respect to the Selling Securityholders. The shares to be sold by the Selling
Securityholders represent shares of Common Stock currently owned by the Selling
Securityholders or which may be acquired by them upon exercise of the Options.
Beneficial ownership after this offering will depend on the number of shares of
Common Stock actually sold by the Selling Securityholders.
<TABLE>
<CAPTION>
Shares of Common Stock Shares of Shares of Common Stock
Name of Beneficially Owned Prior Common Stock Beneficially Owned After
Securityholder to the Offering Offered Hereby the Offering(1)
Number % of Class Number Number Percent
<S> <C> <C> <C> <C> <C>
Eugene Feher(2) 169,275(5) 1.2% 14,275 155,000(5) 1.1%
Jonathan Preiser(3) 216,275(5) 1.5% 14,275 202,000(5) 1.4%
Scott Preiser(4) 169,275(5) 1.5% 14,275 155,000(5) 1.1%
</TABLE>
(1) Assumes that the Selling Securityholders dispose of all of the shares of
Common Stock covered by this Prospectus and do not acquire any additional
shares of Common Stock.
(2) Eugene Feher has served as President of the Company's subsidiary, Neptune
Technology Leasing Corp. since June 28, 1996. Prior to that time Mr.
Feher was employed by the Neptune Group, Inc. (a leasing company) since
November of 1993 and served as vice president.
(3) Jon Preiser has served as Vice President of the Company's subsidiary,
Neptune Technology Leasing Corp. since June 28, 1996. Prior to that time
Mr. Feher was employed by the Neptune Group, Inc. (a leasing company) since
November of 1993 and served as vice president.
(4) Scott Preiser has served as Vice President of the Company's subsidiary,
Neptune Technology Leasing Corp. since June 28, 1996. Prior to that time
Mr. Feher was employed by the Neptune Group, Inc. (a leasing company)
since November of 1993 and served as vice president.
(5) Includes 90,000 shares of the Company's Common Stock underlying a Warrant,
40,000 shares of the Company's Common Stock underlying an Option and 25,000
shares of the Company's Common Stock underlying an Option.
14
<PAGE>
DESCRIPTION OF SECURITIES
The Company has authorized 30,000,000 shares of common stock ("Common
Stock") and 1,000,000 of preferred stock ("Preferred Stock"). As of the date of
this Prospectus, 14,463,565 shares of Common Stock were issued and outstanding
and 1,631 shares of Preferred Stock were issued and cancelled and 0 shares of
Preferred Stock remain outstanding.
The Company's Board of Directors has the authority, without further action
by the shareholders, to issue additional shares of Preferred Stock in one or
more series and to fix the rights, preferences, privileges and restrictions
granted to or imposed upon any series of unissued shares of Preferred Stock and
to fix the number of shares constituting any series and the designation of such
series, without any further vote or action by the shareholders. The issuance of
Preferred Stock may have the effect of delaying, deferring or preventing a
change in control of the Company without further action by the shareholders, may
discourage bids for the Company's Common Stock at a premium over the market
price of the Common Stock, and may adversely affect the market price of and
other rights of the holders of Common Stock.
The following summary of certain provisions of the Common Stock and
Preferred Stock does not purport to be complete and is subject to, and is
qualified in its entirety by, the Certificate of Incorporation of the Company
and the Bylaws of the Company and by the provisions of applicable law.
Common Stock
Holders of Common Stock are entitled to one vote per share on all matters
on which shareholders are entitled to vote. Subject to the rights of holders of
any class or series of shares, including holders of Preferred Stock, having a
preference over the Common Stock as to dividends or upon liquidation, holders of
Common Stock are entitled to such dividends as may be declared by the Company's
Board of Directors out of funds lawfully available therefor, and are entitled
upon liquidation to receive pro rata the assets available for distribution to
shareholders. Holders of the Common Stock have no preemptive, subscription or
conversion rights. The Common Stock is not subject to assessment and has no
redemption provisions.
Options
The Company has outstanding options to purchase a total of 8,494,651 shares
of the Company's Common Stock at exercise prices which range from $.50 to $20.00
per share. The options have expiration dates which range from 1997 to 2002.
Warrants
The Company has outstanding warrants to purchase a total of 3,153,400
shares of the Company's Common Stock at exercise prices which range from $.50 to
$4.00 per share. The warrants have expiration dates which range from 1998 to
2001.
Transfer Agent and Registrar
The Transfer Agent and Registrar for the Common Stock is American
Securities Transfer, Incorporated. Their address is America Securities Transfer,
Inc., P.O. Box 1596, Denver, CO 80201.
15
<PAGE>
PLAN OF DISTRIBUTION
The Common Stock offered hereby is being sold by the Selling
Securityholders acting as principal for their own accounts. The Company will
receive none of the proceeds from such offering.
The distribution of the shares of Common Stock by the Selling
Securityholders is not subject to any underwriting agreement. The Company
expects that the Selling Securityholders will sell the shares covered by this
Prospectus through customary brokerage channels, either through broker-dealers
acting as principals, who may then resell the shares in the over-the-counter
market, or at private sales or otherwise, at market prices prevailing at the
time of sale, at prices related to such prevailing market prices or at
negotiated prices. The Selling Securityholders may effect such transactions by
selling shares through broker-dealers, and such broker-dealers will receive
compensation in the form of commissions from the Selling Securityholders and/or
the purchasers of the Common Stock for whom they may act as agent (which
compensation may be in excess of customary commissions). The Selling
Securityholders and any broker-dealers that participate with such Selling
Securityholders in the distribution of the Common Stock may be deemed to be
underwriters and any commission received by such broker-dealers and any profit
on resale of the Common Stock sold by them might be deemed to be underwriting
discounts or commissions under the Securities Act. All expenses of registration
incurred in connection with this offering are being borne by the Company, but
all brokerage commissions and other similar expenses incurred by any Selling
Securityholder will be borne by such Selling Securityholder.
The Selling Securityholders are not restricted as to the price or prices at
which they may sell the Common Stock. Sales of shares of the Common Stock at
less than market prices may depress the market price of the Company's Common
Stock. The amount of shares of Common Stock to be sold hereunder by any Selling
Securityholder, and any other person with whom he is acting in concert for the
purpose of selling securities of the registrant, cannot exceed during any
three-month period, the amount specified in Rule 144(e) under the Securities
Act.
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of the Common Stock may not simultaneously engage in
market making activities with respect to the Common Stock for a period of nine
business days prior to the commencement of such distribution. In addition and
without limiting the foregoing, the Selling Securityholders will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including without limitation rules 10b-6 and 10b-7, which provisions
may limit the timing of purchases and sales of the shares by the Selling
Securityholders.
In order to comply with certain states' securities laws, if applicable, the
shares may be sold in such jurisdiction only through registered or licensed
brokers or dealers. In certain states the shares may not be sold unless the
shares have been registered or qualified for sale in such state, or unless an
exemption from registration or qualification is available and is obtained.
EXPERTS
Certain financial statements of Intelligent Decision Systems, Inc. are
incorporated by reference in this Prospectus from the Company's Form 10-KSB for
the fiscal year ended June 30, 1996 which have been audited by Wilber &
Townshend, P.C., independent certified public accountants, as indicated in their
report with respect thereto, and included herein in reliance upon the authority
of said firm as experts in auditing and accounting in giving said report.
LEGAL MATTERS
The validity of the shares offered under the Registration Statement of
which this Prospectus is a part will be passed upon for the Company by Snell &
Wilmer L.L.P., special counsel to the Company.
16
<PAGE>
========================================= =============================
No dealer, sales representative or other
person has been authorized to give any
information or to make any representation
not contained in this Prospectus and,
if given or made, such information or 42,825 Shares of
representations must not be relied upon Common Stock
as having been authorized by the Company,
the Selling Securityholders, or any
other person. This Prospectus does not
constitute an offer of any securities INTELLIGENT DECISION
other than those to which it relates or SYSTEMS, INC.
an offer to sell, or a solicitation of
an offer to buy, to any person in any
jurisdiction where such an offer to buy,
to any person in any jurisdiction where
such an offer or solicitation would be
unlawful. Neither the delivery of this
Prospectus nor any sale made hereunder and
thereunder shall, under any circumstances,
create any implication that the information
contained herein is correct as of any time
subsequent to the date hereof.
_________________
PROSPECTUS
_________________
____________
TABLE OF CONTENTS
Page
Available Information................4
Information Incorporated
by Reference.......................4
Risk Factors.........................6
The Company..........................12
Use of Proceeds......................13
Selling Securityholders..............14
Description of Securities............15
Plan of Distribution ...............16
Experts..............................16
Legal Matters........................16
April 9, 1997
========================================= =============================
17
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents are incorporated by reference in this Registration
Statement of Intelligent Decision Systems, Inc., a Delaware corporation
("Company"), and in the related Section 10(a) prospectus:
(a) The Company's Annual Report on Form 10-KSB for the fiscal year ended
June 30, 1996;
(b) The Company's Quarterly Reports on Form 10-QSB for the fiscal
quarters ended September 30, 1996 and December 31, 1996;
(c) The Company's Current Reports on Form 8-K filed on November 6, 1996,
December 20, 1996 and January 3, 1997.
(d) Description of the Company's Common Stock included in the
Registration Statement on Form S-4 filed on February 7, 1996, SEC
File No. 33-93058.
In addition, all documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934,
prior to the filing of a post-effective amendment which indicates that all
securities registered hereunder have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be incorporated by
reference in this registration statement, and to be a part hereof from the date
of filing of such documents. Any statement contained in a document incorporated
or deemed to be incorporated by reference herein shall be deemed to be modified
or superseded for purposes of this Registration Statement to the extent that a
statement contained herein or in any subsequently filed document which also is
or is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Registration
Statement.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Officers and Directors.
Section 145 of the General Corporation Law of the State of Delaware
(the "Delaware Law") empowers a Delaware corporation to indemnify any persons
who are, or are threatened to be made, parties to any threatened, pending or
completed legal action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of such
corporation), by reason of the fact that such person was an officer or director
of such corporation, or is or was serving at the request of such corporation as
a director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided that such officer or
director acted in good faith and in a manner he reasonably believed to be in, or
not opposed to, the corporation's best interests, and for criminal proceedings,
had no reasonable cause to believe his conduct was illegal. A Delaware
corporation may indemnify officers and directors in an action by or in the right
of the corporation under the same conditions, except that no indemnification is
permitted without judicial approval if the officer or director is adjudged to be
liable to the corporation in the performance of his duty. Where an officer or
director is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify him against the expenses which
such officer or directly actually and reasonably incurred.
18
<PAGE>
In accordance with the Delaware Law, the Certificate of Incorporation
of the Company contains a provision to limit the personal liability of the
directors for violations of their fiduciary duty. This provision eliminates each
director's liability to the Company or its respective securityholders for
monetary damages except (i) for any breach of the director's duty of loyalty to
the Company or its securityholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii)
under Section 174 of the Delaware Law providing for liability of directors for
unlawful payment of dividends or unlawful stock purchases or redemptions, or
(iv) for any transaction from which a director derived an improper personal
benefit. The effect of this provision is to eliminate the personal liability of
directors for monetary damages for actions involving a breach of their fiduciary
duty of care, including any such actions involving gross negligence.
Article VIII of the Amended By-Laws of the Company provides for
indemnification of directors, officers and employees as follows:
Each Director and officer of the Corporation now or hereafter serving
as such shall be indemnified by the Corporation against any and all claims and
liabilities to which he or she has or may become subject by reason or serving or
having served as such Director or officer, or by reason of any action alleged to
have been taken, omitted, neglected as such Director or officer and the
Corporation shall reimburse each such person for all legal expenses reasonably
incurred in connection with any such claim or liability or wrong payments made
by him or her in satisfaction of such claim or claims, either by compromise or
in satisfaction of judgment. No such person shall be indemnified against, or be
reimbursed for any expense or payments incurred in connection with, any claim or
liability established to have arisen out of his own willful misconduct or gross
negligence.
The right of indemnification hereinabove provided for shall not be
exclusive of any right to which any Director or officer of the Corporation may
otherwise be entitled by law.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
Exhibit Index located at Page 22
Item 9. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933 (the "1933 Act");
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this registration
statement or any material change to such information in this
registration statement;
19
<PAGE>
provided, however, that paragraphs (i) and (ii) do not apply if the
registration statement is on Form S-3 or Form S-8 and the information required
to be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the 1933
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the 1933 Act, each filing of the registrant's
annual report pursuant to section 13(a) or section 15(d) of the 1934 Act (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the 1934 Act) that is incorporated by reference in
the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the 1933 Act
may be permitted to directors, officers, and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the 1933 Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
20
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Grand Rapids, Michigan, on the date below.
DATED: April 9, 1997 INTELLIGENT DECISION SYSTEMS, INC.
By /s/ Mark A. Babin
---------------------------------
Mark A. Babin, President and CEO
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons, in the
capacities and on the dates respectively indicated.
Signature Title Date
/s/ Mark A. Babin President, Chief Executive April 9, 1997
- --------------------- Officer, Chief Financial and
Mark A. Babin Accounting Officer and Director
/s/ Raymond F. Blue Director April 9, 1997
- ---------------------
Raymond F. Blue
/s/ David A. Horowitz Chairman of the Board April 9, 1997
- --------------------- and Director
David A. Horowitz
/s/ Robert B. Hyte Director April 9, 1997
- ---------------------
Robert B. Hyte
/s/ James M. Keller, Jr. Director, Secretary, and April 9, 1997
- ------------------------ Treasurer
James M. Keller, Jr.
/s/ R. Wayne Fritzsche Director April 9, 1997
- ----------------------
R. Wayne Fritzsche
21
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
EXHIBITS
INTELLIGENT DECISION SYSTEMS, INC.
(Exact name of registrant as specified in charter)
EXHIBIT INDEX
The following exhibits are included as part of this registration statement.
References to the "Company" in this Exhibit Index mean INTELLIGENT DECISION
SYSTEMS, INC., a Delaware corporation.
4.1 Employment Agreement - Eugene Feher................................. 23
4.2 Employment Agreement - Jon Preiser.................................. 28
4.3 Employment Agreement - Scott Preiser................................ 33
4.4 Employment Contract Modification.................................... 38
4.5 Non-Statutory Stock Option Agreement Dated March 7, 1997
between the Registrant and Eugene Feher............................ 40
4.6 Non-Statutory Stock Option Agreement Dated March 7, 1997
between the Registrant and Jon Preiser............................. 46
4.7 Non-Statutory Stock Option Agreement Dated March 7, 1997
between the Registrant and Scott Preiser........................... 52
5.1 Opinion of Snell & Wilmer L.L.P., counsel to registrant............. 58
23.1 Consent of Wilber & Townshend, P.C., independent accountants........ 60
23.2 Consent of Snell & Wilmer L.L.P. (included in Exhibit 5.1)
22
INTELLIGENT DECISION SYSTEMS, INC.
FORM S-8
REGISTRATION STATEMENT
Exhibit No. 4.1
Employment Agreement - Eugene J. Feher
23
<PAGE>
EXECUTIVE EMPLOYMENT AND MANAGEMENT
AGREEMENT
AGREEMENT dated June 28, 1996, between Intelligent Decision Systems, Inc. a
Delaware corporation (the "Company" or "IDS"), and Eugene J. Feher (the
"Executive").
1. Employment and Duties:
The Company hereby employs the Executive, and the Executive accepts
employment, in an executive capacity for the Company and its subsidiaries to
perform such duties consistent with his position as may be assigned to him from
time to time by the Company's President. (He shall report directly to the
President of IDS). The Executive shall also serve without additional
compensation as an officer of the Company's Subsidiary, The Neptune Group, Inc.
The Executive shall devote his best efforts and his entire business time to
advancing the interests of the Company and its subsidiaries. He shall be
entitled to three (3) weeks vacation per year which must be used during the year
earned.
2. Term; Termination:
(a) This Agreement shall be effective as of July 1, 1996 and the term
hereof shall continue until June 30, 2001 (and shall be automatically renewed
for successive one year periods thereafter unless, at least 90 days before the
end of the initial term or any subsequent renewal period, either party gives
written notice to the other of his to its desire to terminate this Agreement, in
which case it shall terminate as of the end of such term period).
(b) This Agreement shall terminate upon the Executive's death and may
be terminated at the option of the Company if, as a result of any physical or
mental disability, the Executive is unable to perform his major duties hereunder
for a continuous period of 40 work days or at least 40 days in any consecutive
period of 180 days. The Executive shall continue to receive his full salary for
60 days under Section 3 hereof regardless of any illness or incapacity, unless
this Agreement is terminated. If the Executive's employment is terminated
pursuant to this Section 2(b), the Executive (or his personal representative, in
the case of death) shall be entitled to receive his full salary through the
effective date of termination and 60 days, thereafter; however, said amount
shall be reduced by any life or disability insurance proceeds the executive may
receive.
(c) This Agreement may also be terminated by the Company at any time
for "cause". "Cause" shall be defined as (i) the commission by the Executive of
an act of fraud or embezzlement, (ii) a felony conviction to a guilty plea by
the Executive with respect to a felony, (iii) willful misconduct by the
Executive as an employee of the Company or (iv) the substantial failure by the
Executive to render effective services to the Company in accordance with this
Agreement.
3. Compensation; Expenses; Benefits:
(a) As compensation for his services hereunder in whatever capacity
rendered, the Company shall pay the Executive a salary, payable in equal
semi-monthly installments at such times during the month as is customary with
the Company with respect to its Executives, at a rate of $100,000 per year. Such
salary shall be adjusted annually on July 1st of each year as agreed upon by the
Company's Board of Directors. Notwithstanding the foregoing, the salary for any
year shall not be less than the preceding year). In addition, the Executive
shall be entitled to such increases, bonuses or other
24
<PAGE>
payments as may be determined from time to time by the Board of Directors in its
discretion and, consistent with benefits provided for other executives, shall be
eligible to participate in any pension, profit sharing, incentive, retirement,
401-K or other employee benefit plans now or hereafter in effect for executives
for the Company. Additionally, the Executive shall receive term life insurance
in the amount of $50,000.
(b) The Executive shall also receive a sign-on bonus, stock warrants,
incentive bonus plan and stock option plan, during the term of this agreement,
as further described on attachment "A" attached hereto and made a part hereof.
(c) The Executive shall be entitled to reimbursement for his ordinary
and necessary business expenses incurred in the performance of his duties
hereunder provided that his claims therefor are supported by the documentation
required by the Company in accordance with its usual practice.
4. Covenants:
(a) The Executive shall not, during the term of his employment or at
any time thereafter, directly or indirectly, publish or disclose to any person,
firm or corporation or other entity, whether or not a competitor of the Company
or its subsidiaries, any confidential information concerning the assets,
business or affairs of the Company or its subsidiaries including, without
limitation, any trade secrets, sources of supply costs, pricing practices,
customer lists, financial data, employee information as to organizational
structure.
(b) During the term of his employment, the Executive shall not,
directly or indirectly, engage in or be interested in (as owner, partner,
shareholder, employee, director, officer, agent, consultant or otherwise), with
or without compensation, any business which is competitive with the business
being conducted by the Company (on the date hereof and at any time during the
term of the Executive's employment and extending for six months after the
termination of this agreement).
(c) During the term of his employment (and for one (1) year
thereafter), the Executive shall not, directly or indirectly, solicit or
contract any employee of the Company with a view toward inducing or encouraging
such employee to leave the employ of the Company for the purpose of being hired
by the Executive, an employer affiliated with the Executive or any competitor of
the Company.
(d) Any claims, actions, demands, or proceedings with respect to
compensation, benefits, ownership or other remuneration which the executive may
have or have had against its former employer, The Neptune Group, Inc. ("TNG") (a
Delaware Corporation), any of TNG's subsidiaries, Steve Chaleff and/or Fred
Wiener are hereby released and discharged during the term of the Executive's
employment with the Company or its subsidiary; provided however, in the event
that the Executive's employment with the Company or its subsidiary is five (5)
years or more, any claims, actions, demands, or proceedings with respect to
compensation, benefits, ownership or other remuneration which the executive may
have or have had against its former employer, The Neptune Group, Inc. ("TNG") (a
Delaware Corporation), any of TNG's subsidiaries, Steve Chaleff and/or Fred
Wiener are hereby released and forever discharged.
(e) The Executive acknowledges that the provisions of this Section 4 are
reasonable and necessary for the protection of the Company and that the Company
will be irrevocably damaged if such covenants are not specifically enforced.
Accordingly, the Executive agrees that, in addition to any other relief to which
the Company may be entitled in the form of actual or punitive damages, the
Company
25
<PAGE>
shall be entitled to seek and obtain injunctive relief from a court of competent
jurisdiction for the purposes of restraining the Executive from any actual or
threatened breach of such covenants.
5. Miscellaneous:
(a) Governing Law: This Agreement shall be governed by and
constructed in accordance with the laws of the State of Michigan.
(b) Notices: Any notice or other communication under this Agreement
shall be in writing and shall be considered given when delivered personally or
three (3) business days after mailing by U.S. registered mail, return receipt
requested, to the parties at the following addresses or at such other address as
a party may specify by notice to the other.
If to the Executive:
Eugene J. Feher
IDS' President:
Intelligent Decision Systems, Inc.
2025 Beltline Ave., SE., Suite 400
Grand Rapids, MI 49546
(c) Entire Agreement Amendment: This Agreement, when it becomes
effective shall supersede all existing agreements between the Executive and the
Company relating to the terms of his employment. It may not be amended by a
written agreement signed by both parties.
(d) Waiver: The failure of a party to insist upon strict adherence to
any term of this Agreement on any occasion shall not be considered a waiver
thereof or deprive that party of the right thereafter to insist upon strict
adherence to that term or any other term of this Agreement.
(e) Assignment: Subject to the limitations below, this Agreement shall
inure to the benefits of and be binding upon the parties hereto and their
respective heirs, representatives, successors and assigns. This Agreement shall
not be assignable by the Executive, and shall be assignable by the Company only
to any corporation resulting from the reorganization, merger or consolidation of
the Company with any other corporation or any other corporation which the
Company may sell all or substantially all of its assets, and it must be so
assigned by the Company to, and accepted as binding upon it by such other
corporation, in connection with any such reorganization, merger, consolidation
or sale.
INTELLIGENT DECISION SYSTEMS, INC.
By: /s/ Mark A. Babin EXECUTIVE:
Title: President By: /s/ Eugene J. Feher
26
<PAGE>
Attachment "A"
Compensation per person for five year Employment/Management contracts:
1. Sign-on Bonus $50,000 cash and 14,275 shares of IDS common stock
2. Stock Warrants: 90,000 warrants to purchase IDS common stock at a
strike price of $3.50 for a term of five years from
the effective date of this Agreement.
3. Incentive Bonus Plan: 5% of pre-tax income (net of operating expenses) of
which 50% is to be paid quarterly and the balance
is to be paid annually after the first $1,000,000 in
income is realized (this is calculated prior to Steve
and Fred's per Vision System compensation,
consultant's fees and any other extraordinary
income or expenses created by or inherited from the
sale of the Company and/or its assets or liabilities).
4. Stock Option Plan: During the first fiscal year, 25,000 options to
purchase IDS common stock at an exercise price of
$3.50 (issuable immediately) and 25,000 options to
purchase common stock of IDS common stock (at market
when the option is issued) to be earned for each
1,000,000 generated in income, (this is calculated
prior to Steve and Fred's per Vision System
compensation, consultant's fees and any other
extraordinary income or expenses) (or a pro rata
amount after the first $1 Million is met) in Neptune.
At the end of each fiscal year following the first
fiscal year 50,000 options to purchase IDS common
stock would be earned for each $1,000,000 generated
in income, (this is calculated prior to Steve and
Fred's per Vision System compensation, consultant's
fees and any other extraordinary income or expenses)
(or a pro rata amount after the first $1 Million is
met) in Neptune. The exercise price for these options
will be set at the market price of IDS common stock
when the option is issued.
27
INTELLIGENT DECISION SYSTEMS, INC.
FORM S-8
REGISTRATION STATEMENT
Exhibit No. 4.2
Employment Agreement - Jonathan Preiser
28
<PAGE>
EXECUTIVE EMPLOYMENT AND MANAGEMENT
AGREEMENT
AGREEMENT dated June 28, 1996, between Intelligent Decision Systems, Inc. a
Delaware corporation (the "Company" or "IDS"), and Jonathan Preiser (the
"Executive").
1. Employment and Duties:
The Company hereby employs the Executive, and the Executive accepts
employment, in an executive capacity for the Company and its subsidiaries to
perform such duties consistent with his position as may be assigned to him from
time to time by the Company's President. (He shall report directly to the
President of IDS). The Executive shall also serve without additional
compensation as an officer of the Company's Subsidiary, The Neptune Group, Inc.
The Executive shall devote his best efforts and his entire business time to
advancing the interests of the Company and its subsidiaries. He shall be
entitled to three (3) weeks vacation per year which must be used during the year
earned.
2. Term; Termination:
(a) This Agreement shall be effective as of July 1, 1996 and the term
hereof shall continue until June 30, 2001 (and shall be automatically renewed
for successive one year periods thereafter unless, at least 90 days before the
end of the initial term or any subsequent renewal period, either party gives
written notice to the other of his to its desire to terminate this Agreement, in
which case it shall terminate as of the end of such term period).
(b) This Agreement shall terminate upon the Executive's death and may
be terminated at the option of the Company if, as a result of any physical or
mental disability, the Executive is unable to perform his major duties hereunder
for a continuous period of 40 work days or at least 40 days in any consecutive
period of 180 days. The Executive shall continue to receive his full salary for
60 days under Section 3 hereof regardless of any illness or incapacity, unless
this Agreement is terminated. If the Executive's employment is terminated
pursuant to this Section 2(b), the Executive (or his personal representative, in
the case of death) shall be entitled to receive his full salary through the
effective date of termination and 60 days, thereafter; however, said amount
shall be reduced by any life or disability insurance proceeds the executive may
receive.
(c) This Agreement may also be terminated by the Company at any time
for "cause". "Cause" shall be defined as (i) the commission by the Executive of
an act of fraud or embezzlement, (ii) a felony conviction to a guilty plea by
the Executive with respect to a felony, (iii) willful misconduct by the
Executive as an employee of the Company or (iv) the substantial failure by the
Executive to render effective services to the Company in accordance with this
Agreement.
3. Compensation; Expenses; Benefits:
(a) As compensation for his services hereunder in whatever capacity
rendered, the Company shall pay the Executive a salary, payable in equal
semi-monthly installments at such times during the month as is customary with
the Company with respect to its Executives, at a rate of $100,000 per year. Such
salary shall be adjusted annually on July 1st of each year as agreed upon by the
Company's Board of Directors. Notwithstanding the foregoing, the salary for any
year shall not be less than the preceding year). In addition, the Executive
shall be entitled to such increases, bonuses or other
29
<PAGE>
payments as may be determined from time to time by the Board of Directors in its
discretion and, consistent with benefits provided for other executives, shall be
eligible to participate in any pension, profit sharing, incentive, retirement,
401-K or other employee benefit plans now or hereafter in effect for executives
for the Company. Additionally, the Executive shall receive term life insurance
in the amount of $50,000.
(b) The Executive shall also receive a sign-on bonus, stock warrants,
incentive bonus plan and stock option plan, during the term of this agreement,
as further described on attachment "A" attached hereto and made a part hereof.
(c) The Executive shall be entitled to reimbursement for his ordinary
and necessary business expenses incurred in the performance of his duties
hereunder provided that his claims therefor are supported by the documentation
required by the Company in accordance with its usual practice.
4. Covenants:
(a) The Executive shall not, during the term of his employment or at
any time thereafter, directly or indirectly, publish or disclose to any person,
firm or corporation or other entity, whether or not a competitor of the Company
or its subsidiaries, any confidential information concerning the assets,
business or affairs of the Company or its subsidiaries including, without
limitation, any trade secrets, sources of supply costs, pricing practices,
customer lists, financial data, employee information as to organizational
structure.
(b) During the term of his employment, the Executive shall not,
directly or indirectly, engage in or be interested in (as owner, partner,
shareholder, employee, director, officer, agent, consultant or otherwise), with
or without compensation, any business which is competitive with the business
being conducted by the Company (on the date hereof and at any time during the
term of the Executive's employment and extending for six months after the
termination of this agreement).
(c) During the term of his employment (and for one (1) year
thereafter), the Executive shall not, directly or indirectly, solicit or
contract any employee of the Company with a view toward inducing or encouraging
such employee to leave the employ of the Company for the purpose of being hired
by the Executive, an employer affiliated with the Executive or any competitor of
the Company.
(d) Any claims, actions, demands, or proceedings with respect to
compensation, benefits, ownership or other remuneration which the executive may
have or have had against its former employer, The Neptune Group, Inc. ("TNG") (a
Delaware Corporation), any of TNG's subsidiaries, Steve Chaleff and/or Fred
Wiener are hereby released and discharged during the term of the Executive's
employment with the Company or its subsidiary; provided however, in the event
that the Executive's employment with the Company or its subsidiary is five (5)
years or more, any claims, actions, demands, or proceedings with respect to
compensation, benefits, ownership or other remuneration which the executive may
have or have had against its former employer, The Neptune Group, Inc. ("TNG") (a
Delaware Corporation), any of TNG's subsidiaries, Steve Chaleff and/or Fred
Wiener are hereby released and forever discharged.
(e) The Executive acknowledges that the provisions of this Section 4 are
reasonable and necessary for the protection of the Company and that the Company
will be irrevocably damaged if such covenants are not specifically enforced.
Accordingly, the Executive agrees that, in addition to any other relief to which
the Company may be entitled in the form of actual or punitive damages, the
Company
30
<PAGE>
shall be entitled to seek and obtain injunctive relief from a court of competent
jurisdiction for the purposes of restraining the Executive from any actual or
threatened breach of such covenants.
5. Miscellaneous:
(a) Governing Law: This Agreement shall be governed by and
constructed in accordance with the laws of the State of Michigan.
(b) Notices: Any notice or other communication under this Agreement
shall be in writing and shall be considered given when delivered personally or
three (3) business days after mailing by U.S. registered mail, return receipt
requested, to the parties at the following addresses or at such other address as
a party may specify by notice to the other.
If to the Executive:
Jonathan Preiser
IDS' President:
Intelligent Decision Systems, Inc.
2025 Beltline Ave., SE., Suite 400
Grand Rapids, MI 49546
(c) Entire Agreement Amendment: This Agreement, when it becomes
effective shall supersede all existing agreements between the Executive and the
Company relating to the terms of his employment. It may not be amended by a
written agreement signed by both parties.
(d) Waiver: The failure of a party to insist upon strict adherence to
any term of this Agreement on any occasion shall not be considered a waiver
thereof or deprive that party of the right thereafter to insist upon strict
adherence to that term or any other term of this Agreement.
(e) Assignment: Subject to the limitations below, this Agreement shall
inure to the benefits of and be binding upon the parties hereto and their
respective heirs, representatives, successors and assigns. This Agreement shall
not be assignable by the Executive, and shall be assignable by the Company only
to any corporation resulting from the reorganization, merger or consolidation of
the Company with any other corporation or any other corporation which the
Company may sell all or substantially all of its assets, and it must be so
assigned by the Company to, and accepted as binding upon it by such other
corporation, in connection with any such reorganization, merger, consolidation
or sale.
INTELLIGENT DECISION SYSTEMS, INC.
By: /s/ Mark A. Babin EXECUTIVE:
Title: President By: /s/ Jonathan Preiser
31
<PAGE>
Attachment "A"
Compensation per person for five year Employment/Management contracts:
1. Sign-on Bonus $50,000 cash and 14,275 shares of IDS common stock
2. Stock Warrants: 90,000 warrants to purchase IDS common stock at a
strike price of $3.50 for a term of five years from
the effective date of this Agreement.
3. Incentive Bonus Plan: 5% of pre-tax income (net of operating expenses) of
which 50% is to be paid quarterly and the balance
is to be paid annually after the first $1,000,000 in
income is realized (this is calculated prior to Steve
and Fred's per Vision System compensation,
consultant's fees and any other extraordinary
income or expenses created by or inherited from the
sale of the Company and/or its assets or liabilities).
4. Stock Option Plan: During the first fiscal year, 25,000 options to
purchase IDS common stock at an exercise price of
$3.50 (issuable immediately) and 25,000 options to
purchase common stock of IDS common stock (at market
when the option is issued) to be earned for each
1,000,000 generated in income, (this is calculated
prior to Steve and Fred's per Vision System
compensation, consultant's fees and any other
extraordinary income or expenses) (or a pro rata
amount after the first $1 Million is met) in Neptune.
At the end of each fiscal year following the first
fiscal year 50,000 options to purchase IDS common
stock would be earned for each $1,000,000 generated
in income, (this is calculated prior to Steve and
Fred's per Vision System compensation, consultant's
fees and any other extraordinary income or expenses)
(or a pro rata amount after the first $1 Million is
met) in Neptune. The exercise price for these options
will be set at the market price of IDS common stock
when the option is issued.
32
INTELLIGENT DECISION SYSTEMS, INC.
FORM S-8
REGISTRATION STATEMENT
Exhibit No. 4.3
Employment Agreement - Scott J. Preiser
33
<PAGE>
EXECUTIVE EMPLOYMENT AND MANAGEMENT
AGREEMENT
AGREEMENT dated June 28, 1996, between Intelligent Decision Systems, Inc. a
Delaware corporation (the "Company" or "IDS"), and Scott J. Preiser
"Executive").
1. Employment and Duties:
The Company hereby employs the Executive, and the Executive accepts
employment, in an executive capacity for the Company and its subsidiaries to
perform such duties consistent with his position as may be assigned to him from
time to time by the Company's President. (He shall report directly to the
President of IDS). The Executive shall also serve without additional
compensation as an officer of the Company's Subsidiary, The Neptune Group, Inc.
The Executive shall devote his best efforts and his entire business time to
advancing the interests of the Company and its subsidiaries. He shall be
entitled to three (3) weeks vacation per year which must be used during the year
earned.
2. Term; Termination:
(a) This Agreement shall be effective as of July 1, 1996 and the term
hereof shall continue until June 30, 2001 (and shall be automatically renewed
for successive one year periods thereafter unless, at least 90 days before the
end of the initial term or any subsequent renewal period, either party gives
written notice to the other of his to its desire to terminate this Agreement, in
which case it shall terminate as of the end of such term period).
(b) This Agreement shall terminate upon the Executive's death and may
be terminated at the option of the Company if, as a result of any physical or
mental disability, the Executive is unable to perform his major duties hereunder
for a continuous period of 40 work days or at least 40 days in any consecutive
period of 180 days. The Executive shall continue to receive his full salary for
60 days under Section 3 hereof regardless of any illness or incapacity, unless
this Agreement is terminated. If the Executive's employment is terminated
pursuant to this Section 2(b), the Executive (or his personal representative, in
the case of death) shall be entitled to receive his full salary through the
effective date of termination and 60 days, thereafter; however, said amount
shall be reduced by any life or disability insurance proceeds the executive may
receive.
(c) This Agreement may also be terminated by the Company at any time
for "cause". "Cause" shall be defined as (i) the commission by the Executive of
an act of fraud or embezzlement, (ii) a felony conviction to a guilty plea by
the Executive with respect to a felony, (iii) willful misconduct by the
Executive as an employee of the Company or (iv) the substantial failure by the
Executive to render effective services to the Company in accordance with this
Agreement.
3. Compensation; Expenses; Benefits:
(a) As compensation for his services hereunder in whatever capacity
rendered, the Company shall pay the Executive a salary, payable in equal
semi-monthly installments at such times during the month as is customary with
the Company with respect to its Executives, at a rate of $100,000 per year. Such
salary shall be adjusted annually on July 1st of each year as agreed upon by the
Company's Board of Directors. Notwithstanding the foregoing, the salary for any
year shall not be less than the preceding year). In addition, the Executive
shall be entitled to such increases, bonuses or other
34
<PAGE>
payments as may be determined from time to time by the Board of Directors in its
discretion and, consistent with benefits provided for other executives, shall be
eligible to participate in any pension, profit sharing, incentive, retirement,
401-K or other employee benefit plans now or hereafter in effect for executives
for the Company. Additionally, the Executive shall receive term life insurance
in the amount of $50,000.
(b) The Executive shall also receive a sign-on bonus, stock warrants,
incentive bonus plan and stock option plan, during the term of this agreement,
as further described on attachment "A" attached hereto and made a part hereof.
(c) The Executive shall be entitled to reimbursement for his ordinary
and necessary business expenses incurred in the performance of his duties
hereunder provided that his claims therefor are supported by the documentation
required by the Company in accordance with its usual practice.
4. Covenants:
(a) The Executive shall not, during the term of his employment or at
any time thereafter, directly or indirectly, publish or disclose to any person,
firm or corporation or other entity, whether or not a competitor of the Company
or its subsidiaries, any confidential information concerning the assets,
business or affairs of the Company or its subsidiaries including, without
limitation, any trade secrets, sources of supply costs, pricing practices,
customer lists, financial data, employee information as to organizational
structure.
(b) During the term of his employment, the Executive shall not,
directly or indirectly, engage in or be interested in (as owner, partner,
shareholder, employee, director, officer, agent, consultant or otherwise), with
or without compensation, any business which is competitive with the business
being conducted by the Company (on the date hereof and at any time during the
term of the Executive's employment and extending for six months after the
termination of this agreement).
(c) During the term of his employment (and for one (1) year
thereafter), the Executive shall not, directly or indirectly, solicit or
contract any employee of the Company with a view toward inducing or encouraging
such employee to leave the employ of the Company for the purpose of being hired
by the Executive, an employer affiliated with the Executive or any competitor of
the Company.
(d) Any claims, actions, demands, or proceedings with respect to
compensation, benefits, ownership or other remuneration which the executive may
have or have had against its former employer, The Neptune Group, Inc. ("TNG") (a
Delaware Corporation), any of TNG's subsidiaries, Steve Chaleff and/or Fred
Wiener are hereby released and discharged during the term of the Executive's
employment with the Company or its subsidiary; provided however, in the event
that the Executive's employment with the Company or its subsidiary is five (5)
years or more, any claims, actions, demands, or proceedings with respect to
compensation, benefits, ownership or other remuneration which the executive may
have or have had against its former employer, The Neptune Group, Inc. ("TNG") (a
Delaware Corporation), any of TNG's subsidiaries, Steve Chaleff and/or Fred
Wiener are hereby released and forever discharged.
(e) The Executive acknowledges that the provisions of this Section 4 are
reasonable and necessary for the protection of the Company and that the Company
will be irrevocably damaged if such covenants are not specifically enforced.
Accordingly, the Executive agrees that, in addition to any other relief to which
the Company may be entitled in the form of actual or punitive damages, the
Company
35
<PAGE>
shall be entitled to seek and obtain injunctive relief from a court of competent
jurisdiction for the purposes of restraining the Executive from any actual or
threatened breach of such covenants.
5. Miscellaneous:
(a) Governing Law: This Agreement shall be governed by and
constructed in accordance with the laws of the State of Michigan.
(b) Notices: Any notice or other communication under this Agreement
shall be in writing and shall be considered given when delivered personally or
three (3) business days after mailing by U.S. registered mail, return receipt
requested, to the parties at the following addresses or at such other address as
a party may specify by notice to the other.
If to the Executive:
Scott J. Preiser
IDS' President:
Intelligent Decision Systems, Inc.
2025 Beltline Ave., SE., Suite 400
Grand Rapids, MI 49546
(c) Entire Agreement Amendment: This Agreement, when it becomes
effective shall supersede all existing agreements between the Executive and the
Company relating to the terms of his employment. It may not be amended by a
written agreement signed by both parties.
(d) Waiver: The failure of a party to insist upon strict adherence to
any term of this Agreement on any occasion shall not be considered a waiver
thereof or deprive that party of the right thereafter to insist upon strict
adherence to that term or any other term of this Agreement.
(e) Assignment: Subject to the limitations below, this Agreement shall
inure to the benefits of and be binding upon the parties hereto and their
respective heirs, representatives, successors and assigns. This Agreement shall
not be assignable by the Executive, and shall be assignable by the Company only
to any corporation resulting from the reorganization, merger or consolidation of
the Company with any other corporation or any other corporation which the
Company may sell all or substantially all of its assets, and it must be so
assigned by the Company to, and accepted as binding upon it by such other
corporation, in connection with any such reorganization, merger, consolidation
or sale.
INTELLIGENT DECISION SYSTEMS, INC.
By: /s/ Mark A. Babin EXECUTIVE:
Title: President By: /s/ Scott J. Preiser
36
<PAGE>
Attachment "A"
Compensation per person for five year Employment/Management contracts:
1. Sign-on Bonus $50,000 cash and 14,275 shares of IDS common stock
2. Stock Warrants: 90,000 warrants to purchase IDS common stock at a
strike price of $3.50 for a term of five years from
the effective date of this Agreement.
3. Incentive Bonus Plan: 5% of pre-tax income (net of operating expenses) of
which 50% is to be paid quarterly and the balance
is to be paid annually after the first $1,000,000 in
income is realized (this is calculated prior to Steve
and Fred's per Vision System compensation,
consultant's fees and any other extraordinary
income or expenses created by or inherited from the
sale of the Company and/or its assets or liabilities).
4. Stock Option Plan: During the first fiscal year, 25,000 options to
purchase IDS common stock at an exercise price of
$3.50 (issuable immediately) and 25,000 options to
purchase common stock of IDS common stock (at market
when the option is issued) to be earned for each
1,000,000 generated in income, (this is calculated
prior to Steve and Fred's per Vision System
compensation, consultant's fees and any other
extraordinary income or expenses) (or a pro rata
amount after the first $1 Million is met) in Neptune.
At the end of each fiscal year following the first
fiscal year 50,000 options to purchase IDS common
stock would be earned for each $1,000,000 generated
in income, (this is calculated prior to Steve and
Fred's per Vision System compensation, consultant's
fees and any other extraordinary income or expenses)
(or a pro rata amount after the first $1 Million is
met) in Neptune. The exercise price for these options
will be set at the market price of IDS common stock
when the option is issued.
37
INTELLIGENT DECISION SYSTEMS, INC.
FORM S-8
REGISTRATION STATEMENT
Exhibit No. 4.4
Employment Contract Modification and Settlement Agreement
38
<PAGE>
Employment Contract Modification and Settlement Agreement
This agreement is made this 7th day of March, 1997 between Intelligent
Decision Systems, Inc. (hereafter "IDS") and Eugene Feher, Jon Preiser and Scott
Preiser (hereafter "Employees").
WHEREAS, IDS entered into employment agreements with the Employees on
June 28, 1996 ("Employment Agreements").
WHEREAS, as part of the compensation package the Employees were each
granted 14,275 shares of IDS common stock, 90,000 warrants to purchase IDS
common stock and 25,000 options to purchase IDS common stock. The Employment
Agreements were silent as to registration of the above shares and the shares
underlying the warrants and options and a dispute arose as to whether the shares
should have been registered.
WHEREAS, it has been agreed between the Employees and IDS that IDS
shall grant 40,000 additional Options to each of the Employees, register the
shares underlying said Options and register the 14,275 shares owned by each of
the Employees and the Employees will accept such action as full satisfaction and
discharge of the claims and disputes made by the Employees regarding their
Employment Agreements.
NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES, and the mutual covenants
of the parties hereto and other good and valuable consideration had and received
by each of the parties to this settlement agreement, receipt and sufficiency of
which is hereby acknowledged, the parties hereto hereby agree as follows:
1. IDS shall issue to each of the Employees a Non-Statutory Option
Agreement to purchase 40,000 shares of IDS's common at an exercise price of
$1.22 which shall expire on June 27, 2001 and further, IDS shall register under
the Securities Act of 1933, as amended, under cover of a registration statement
on Form S-8, the shares underlying said Non-Statutory Option Agreements and the
14,275 shares of common stock owned by each of the Employees.
2. The Employees agree to accept said Non-Statutory Option Agreements
in full settlement of the claims made by Employees against IDS relating to the
Employees' Employment Agreements and the Employees shall release and forever
discharge IDS from all sums of money, debts, accounts, actions, proceedings and
demands which Employees had or have against IDS arising from their Employment
Agreements.
INTELLIGENT DECISION SYSTEMS, INC. EMPLOYEES
By: /s/ Mark A. Babin /s/ Eugene Feher
------------------------------ ----------------------------------
Mark A. Babin, President Eugene Feher
/s/ Jonathan Preiser
----------------------------------
Jonathan Preiser
/s/ Scott Preiser
----------------------------------
Scott Preiser
39
INTELLIGENT DECISION SYSTEMS, INC.
FORM S-8
REGISTRATION STATEMENT
Exhibit No. 4.5
Non-Statutory Stock Option Agreement Dated March
7, 1997 between the Registrant and Eugene Feher
40
<PAGE>
NON-STATUTORY STOCK OPTION AGREEMENT
INTELLIGENT DECISION SYSTEMS, INC., a Delaware corporation whose principal
executive offices are located at 2025 East Beltline, Ave., S.E., Suite 400,
Grand Rapids, Michigan 49548 ("Optionor") and EUGENE J. FEHER ("Optionee"), an
individual residing at 36 Wilton Crest, Wilton CT 06897, hereby agree as of the
7th day of March, 1997 as follows:
W I T N E S S E T H :
WHEREAS, Optionee acknowledges that the shares of Optionor subject to this Stock
Option Agreement ("Agreement") are restricted shares under the federal and state
securities laws, and any resales of shares are subject to such federal and state
securities laws;
WHEREAS, Optionor desires to grant an option to Optionee to acquire a stated
amount of Optionor's shares, but said Option is subject to restrictions as
imposed herein:
Now, Therefore, in consideration of Optionees services and of the
mutual covenants and promises contained herein, Optionor and Optionee hereby
agree as follows:
1. Optionee is entitled to purchase from Optionor, up to 40,000 fully paid and
non-assessable shares of Common Stock of Optionor, $.001 par value per share
(hereinafter called "Capital Stock"), at the price of $1.22 per share for a
period ending on June 27, 2001, subject, however, to the provisions and upon the
terms and conditions hereinafter set forth. The rights granted pursuant to this
paragraph shall hereinafter be referred to as the "Option". The Option granted
hereunder shall not be an incentive stock option, as defined in Section 422A of
the Internal Revenue Code.
2. The Option and all rights granted hereunder shall expire at midnight,
Grand Rapids, Michigan, June 27, 2001.
3. The Option may be exercised by the Optionee hereof, in whole or in part (but
not for fractional shares of Capital Stock) by delivery of notice in writing at
the office of Optionor (or such other office or agency as Optionor may designate
by notice in writing to the Optionee at the address of such Optionee appearing
at the end of this Agreement at any time within the period above named) and upon
payment to Optionor by certified check or cashier's cheek of the purchase price
for such shares. In the event of any exercise of the rights represented by this
Option, certificates for the shares of Capital Stock so purchased shall be
delivered to the Optionee hereof within thirty (30) days after the rights
represented by this Option shall have been so exercised.
4. The above provisions are, however, subject to the following:
(A) In case Optionor shall declare any dividend or other
distribution upon its outstanding Capital Stock payable in Capital Stock or
shall subdivide its outstanding shares of
41
<PAGE>
Capital Stock into a greater number of shares, then the number of shares of
Capital Stock which may thereafter be purchased upon the exercise of the rights
represented hereby shall be increased in proportion to the increase through such
dividend or subdivision and the purchase price per share shall be decreased in
such proportion. In case Optionor shall at any time combine the outstanding
shares of its Capital Stock into a smaller number of shares, then the number of
shares of Capital stock which may thereafter be purchased upon the exercise of
the rights represented hereby shall be decreased in proportion to the decrease
through such combination and the purchase price per share shall be increased in
such proportion. Notwithstanding the foregoing, nothing herein shall cause the
number of shares of Capital Stock which may be purchased upon exercise of the
rights represented hereby to be adjusted in the event that the number of shares
of Capital Stock outstanding of Optionor are increased through the issuance of
shares in exchange for new consideration or the conversion of securities
convertible into shares of Capital Stock of Optionor.
(B)(i) If any capital reorganization or reclassification of the Capital
Stock of Optionor, or consolidation or merger of Optionor with another
corporation, or the sale of all or substantially all of its assets to another
corporation shall be effected, then, as a condition of such reorganization,
reclassification, consolidation, merger or sale, lawful and adequate provision
shall be made by Optionor whereby Optionee shall thereafter have the right to
purchase and receive from Optionor upon the basis and upon the terms and
conditions specified in this Option and in lieu of the shares of the Capital
Stock of Optionor immediately theretofore purchasable and receivable upon the
exercise of the rights represented hereby, such shares of stock, securities or
assets as may be issued or such shares of stock, securities or assets as may be
issued or payable with respect to or in exchange for a number of outstanding
shares of such Capital Stock equal to the number of shares of such Capital Stock
immediately theretofore purchasable and receivable upon the exercise of the
rights represented hereby had such reorganization, reclassification,
consolidation, merger or sale not taken place and in any such case appropriate
provision shall be made with respect to the rights and interests of the Optionee
to the end that the provisions hereof (including, without limitation, provisions
for adjustment of the purchase price per share and of the number of shares
purchasable upon the exercise of this Option) shall thereafter be applicable as
nearly as may be in relation to any shares of stock, securities or assets
thereafter deliverable upon the exercise hereof. Any such shares of stock,
securities or assets which the Optionee hereof may be entitled to purchase
pursuant to this paragraph (B) shall be included within the term "Capital Stock"
as used herein.
(B)(ii) Notwithstanding the foregoing, in the event of a transaction
described in subsection (B)(i) hereof entered into for the primary purpose of
changing the state of jurisdiction of incorporation, the sole right of Optionee
hereunder shall be to receive the equivalent rights under this Stock Option
Agreement with respect to the securities of the surviving entity.
(C) Upon any adjustment of the number shares of Capital Stock which may
be purchased upon the exercise of the rights represented hereby and/or of the
purchase price per share, then and in each such case the Optionor shall give
written notice thereof, by first class mail, postage prepaid, addressed to the
Optionee at the address of such Optionee as shown herein, which notice shall
state the purchase price per share resulting from such adjustment and
42
<PAGE>
the increase or decrease, if any, in the number of shares purchasable at such
price upon the exercise of this Option, setting forth in reasonable detail the
method of calculation and the facts upon which such calculation is based.
5. Optionee represents that this Option is being acquired with no present
intention of selling or distributing any Capital Stock received upon the
exercise hereof unless registered under federal and applicable state laws or
pursuant to exemptions from such registration.
6. Neither this Option, nor the shares to be acquired hereunder, have been
registered under the Securities Act of 1933, as amended (the "Act") or the laws
of any other jurisdiction, and neither this Option nor the shares to be acquired
hereunder may he offered, sold, transferred, pledged, hypothecated or otherwise
disposed of unless so registered, or unless an exemption from registration is
available pursuant to applicable law.
The sale, assignment or other disposition of this Option and
the shares to be acquired hereunder are further restricted by Rule 144,
promulgated by the Securities and Exchange Commission.
The Optionee accepts and receives such securities without a
view to the distribution of same.
Before any transfer in connection with the resale of this
Option, or sale of the shares issuable to be acquired hereunder, written
approval must first be obtained from counsel for the Optionor, and such approval
will be based upon compliance with the requirements of the Act and appropriate
state law.
7. This Option shall be construed in accordance with the laws of the State
of Michigan.
8. Optionee warrants and acknowledges that:
(A) Optionee has received and carefully reviewed the Articles of
Incorporation of Optionor, and at or prior to the exercise of this Option will
have the knowledge and understanding of the fundamental aspects of the
investment and its risks, and will have relied solely on his own independent
investigation and his independent advisors, and will not have relied upon any
other written materials or oral representations.
(B) Optionee has had (and will continue to have) an opportunity to
obtain all information which may he related to the exercise of this Option and
the rights hereunder so as to make a reasonable investment decision with regards
to the exercise of this Option.
(C) Optionee has been informed by Optionor that neither the Option nor
the shares issuable thereunder have been registered under the Act or the
securities laws of any other State, and may not be offered, sold or transferred
in the absence of such registration or an opinion of counsel for the Company
that an exemption from registration is available.
43
<PAGE>
(D) Optionee is entering into this Option Agreement and will acquire
the shares issuable pursuant hereto for his/her own investment, not on behalf of
others, and not with a view to resell or otherwise distribute the Capital Stock,
will not sell or otherwise distribute the Capital Stock without registration
under the Act or other applicable State securities laws or exemptions therefrom.
(E) The Optionee understands that Optionor will permit the transfer of
the Capital Stock only if, in the opinion of Optionor's counsel neither the sale
nor the proposed transfer of such Capital Stock will result in a violation of
any applicable securities law, rule or regulation.
(F) Optionee has been informed by Optionor and agrees that (i) stock
transfer notations may be made on the stock transfer records of Optionor with
respect to the shares related to this Agreement, and (ii) that a legend will be
placed on any certificate or other document evidencing ownership of the Capital
Stock regarding the restrictions on transfer and sale of the Capital Stock.
(G) Optionee represents that its financial condition is presently
adequate to justify this investment, it, either alone or with its personal
representatives, has sufficient knowledge and experience in investment and
business matters in order to evaluate this investment and it is aware of the
risks involved in any enterprises such as the Optionor.
9. The Optionee shall not be deemed for any purposes to be a shareholder of the
Optionor with respect to any of the optioned shares except to the extent that
the Option herein granted shall have been exercised with respect thereto and a
stock certificate issued therefor.
10. As a condition of the granting of the Option herein granted, the Optionee
agrees, for himself and his personal representatives, that any disputes or
disagreements which may arise under or as a result of or pursuant to this
Agreement shall be determined by the Board of Directors of the Optionor in its
sole discretion, and that any interpretation by the Board of the terms of this
Agreement shall be final, binding and conclusive.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of
the date first above written.
OPTIONOR OPTIONEE
INTELLIGENT DECISION SYSTEMS, INC.
/s/ Mark A. Babin /s/ Eugene J. Feher
By:_______________________________ ______________________________
Mark A. Babin Eugene J. Feher
Its: President
44
<PAGE>
INTELLIGENT DECISION SYSTEMS, INC.
STOCK OPTION AGREEMENT
EXERCISE FORM
I desire to exercise my vested Options to purchase __________ shares of Common
Stock at _____________ per share, for a total purchase price of
$_______________, pursuant to my Non-Statutory Stock Option Agreement dated
_________, _______.
Enclosed is payment in full by [ ] cash [ ] cashier's check [ ] bank draft [ ]
money order [ ] other (describe) ______________.
I intend to hold the shares for Investment for my own account and will sell or
transfer them only in full compliance with applicable federal and state
securities laws.
I have, or have been given access to, all information necessary for me to make
an informed decision as to the advisability of investing in the Company's stock,
and I have the skill and experience necessary to make such decision.
Dated:____________, _____. Signature: __________________________
Print full name: __________________________
Social Security No.: __________________________
45
INTELLIGENT DECISION SYSTEMS, INC.
FORM S-8
REGISTRATION STATEMENT
Exhibit No. 4.6
Non-Statutory Stock Option Agreement Dated March
7, 1997 between the Registrant and Jonathan Preiser
46
<PAGE>
NON-STATUTORY STOCK OPTION AGREEMENT
INTELLIGENT DECISION SYSTEMS, INC., a Delaware corporation whose principal
executive offices are located at 2025 East Beltline, Ave., S.E., Suite 400,
Grand Rapids, Michigan 49548 ("Optionor") and JONATHAN PREISER ("Optionee"), an
individual residing at 848 Stillwater Road, Stamford, CT 06902, hereby agree as
of the 7th day of March, 1997 as follows:
W I T N E S S E T H :
WHEREAS, Optionee acknowledges that the shares of Optionor subject to this Stock
Option Agreement ("Agreement") are restricted shares under the federal and state
securities laws, and any resales of shares are subject to such federal and state
securities laws;
WHEREAS, Optionor desires to grant an option to Optionee to acquire a stated
amount of Optionor's shares, but said Option is subject to restrictions as
imposed herein:
Now, Therefore, in consideration of Optionees services and of the
mutual covenants and promises contained herein, Optionor and Optionee hereby
agree as follows:
1. Optionee is entitled to purchase from Optionor, up to 40,000 fully paid and
non-assessable shares of Common Stock of Optionor, $.001 par value per share
(hereinafter called "Capital Stock"), at the price of $1.22 per share for a
period ending on June 27, 2001, subject, however, to the provisions and upon the
terms and conditions hereinafter set forth. The rights granted pursuant to this
paragraph shall hereinafter be referred to as the "Option". The Option granted
hereunder shall not be an incentive stock option, as defined in Section 422A of
the Internal Revenue Code.
2. The Option and all rights granted hereunder shall expire at midnight, Grand
Rapids, Michigan, June 27, 2001.
3. The Option may be exercised by the Optionee hereof, in whole or in part (but
not for fractional shares of Capital Stock) by delivery of notice in writing at
the office of Optionor (or such other office or agency as Optionor may designate
by notice in writing to the Optionee at the address of such Optionee appearing
at the end of this Agreement at any time within the period above named) and upon
payment to Optionor by certified check or cashier's cheek of the purchase price
for such shares. In the event of any exercise of the rights represented by this
Option, certificates for the shares of Capital Stock so purchased shall be
delivered to the Optionee hereof within thirty (30) days after the rights
represented by this Option shall have been so exercised.
4. The above provisions are, however, subject to the following:
(A) In case Optionor shall declare any dividend or other distribution
upon its outstanding Capital Stock payable in Capital Stock or shall subdivide
its outstanding shares of
47
<PAGE>
Capital Stock into a greater number of shares, then the number of shares of
Capital Stock which may thereafter be purchased upon the exercise of the rights
represented hereby shall be increased in proportion to the increase through such
dividend or subdivision and the purchase price per share shall be decreased in
such proportion. In case Optionor shall at any time combine the outstanding
shares of its Capital Stock into a smaller number of shares, then the number of
shares of Capital stock which may thereafter be purchased upon the exercise of
the rights represented hereby shall be decreased in proportion to the decrease
through such combination and the purchase price per share shall be increased in
such proportion. Notwithstanding the foregoing, nothing herein shall cause the
number of shares of Capital Stock which may be purchased upon exercise of the
rights represented hereby to be adjusted in the event that the number of shares
of Capital Stock outstanding of Optionor are increased through the issuance of
shares in exchange for new consideration or the conversion of securities
convertible into shares of Capital Stock of Optionor.
(B)(i) If any capital reorganization or reclassification of the Capital
Stock of Optionor, or consolidation or merger of Optionor with another
corporation, or the sale of all or substantially all of its assets to another
corporation shall be effected, then, as a condition of such reorganization,
reclassification, consolidation, merger or sale, lawful and adequate provision
shall be made by Optionor whereby Optionee shall thereafter have the right to
purchase and receive from Optionor upon the basis and upon the terms and
conditions specified in this Option and in lieu of the shares of the Capital
Stock of Optionor immediately theretofore purchasable and receivable upon the
exercise of the rights represented hereby, such shares of stock, securities or
assets as may be issued or such shares of stock, securities or assets as may be
issued or payable with respect to or in exchange for a number of outstanding
shares of such Capital Stock equal to the number of shares of such Capital Stock
immediately theretofore purchasable and receivable upon the exercise of the
rights represented hereby had such reorganization, reclassification,
consolidation, merger or sale not taken place and in any such case appropriate
provision shall be made with respect to the rights and interests of the Optionee
to the end that the provisions hereof (including, without limitation, provisions
for adjustment of the purchase price per share and of the number of shares
purchasable upon the exercise of this Option) shall thereafter be applicable as
nearly as may be in relation to any shares of stock, securities or assets
thereafter deliverable upon the exercise hereof. Any such shares of stock,
securities or assets which the Optionee hereof may be entitled to purchase
pursuant to this paragraph (B) shall be included within the term "Capital Stock"
as used herein.
(B)(ii) Notwithstanding the foregoing, in the event of a transaction
described in subsection (B)(i) hereof entered into for the primary purpose of
changing the state of jurisdiction of incorporation, the sole right of Optionee
hereunder shall be to receive the equivalent rights under this Stock Option
Agreement with respect to the securities of the surviving entity.
(C) Upon any adjustment of the number shares of Capital Stock which may
be purchased upon the exercise of the rights represented hereby and/or of the
purchase price per share, then and in each such case the Optionor shall give
written notice thereof, by first class mail, postage prepaid, addressed to the
Optionee at the address of such Optionee as shown herein, which notice shall
state the purchase price per share resulting from such adjustment and
48
<PAGE>
the increase or decrease, if any, in the number of shares purchasable at such
price upon the exercise of this Option, setting forth in reasonable detail the
method of calculation and the facts upon which such calculation is based.
5. Optionee represents that this Option is being acquired with no present
intention of selling or distributing any Capital Stock received upon the
exercise hereof unless registered under federal and applicable state laws or
pursuant to exemptions from such registration.
6. Neither this Option, nor the shares to be acquired hereunder, have been
registered under the Securities Act of 1933, as amended (the "Act") or the laws
of any other jurisdiction, and neither this Option nor the shares to be acquired
hereunder may he offered, sold, transferred, pledged, hypothecated or otherwise
disposed of unless so registered, or unless an exemption from registration is
available pursuant to applicable law.
The sale, assignment or other disposition of this Option and the
shares to be acquired hereunder are further restricted by Rule 144, promulgated
by the Securities and Exchange Commission.
The Optionee accepts and receives such securities without a view
to the distribution of same.
Before any transfer in connection with the resale of this Option,
or sale of the shares issuable to be acquired hereunder, written approval must
first be obtained from counsel for the Optionor, and such approval will be based
upon compliance with the requirements of the Act and appropriate state law.
7. This Option shall be construed in accordance with the laws of the State
of Michigan.
8. Optionee warrants and acknowledges that:
(A) Optionee has received and carefully reviewed the Articles of
Incorporation of Optionor, and at or prior to the exercise of this Option will
have the knowledge and understanding of the fundamental aspects of the
investment and its risks, and will have relied solely on his own independent
investigation and his independent advisors, and will not have relied upon any
other written materials or oral representations.
(B) Optionee has had (and will continue to have) an opportunity to
obtain all information which may he related to the exercise of this Option and
the rights hereunder so as to make a reasonable investment decision with regards
to the exercise of this Option.
(C) Optionee has been informed by Optionor that neither the Option nor
the shares issuable thereunder have been registered under the Act or the
securities laws of any other State, and may not be offered, sold or transferred
in the absence of such registration or an opinion of counsel for the Company
that an exemption from registration is available.
49
<PAGE>
(D) Optionee is entering into this Option Agreement and will acquire the
shares issuable pursuant hereto for his/her own investment, not on behalf of
others, and not with a view to resell or otherwise distribute the Capital Stock,
will not sell or otherwise distribute the Capital Stock without registration
under the Act or other applicable State securities laws or exemptions therefrom.
(E) The Optionee understands that Optionor will permit the transfer of
the Capital Stock only if, in the opinion of Optionor's counsel neither the sale
nor the proposed transfer of such Capital Stock will result in a violation of
any applicable securities law, rule or regulation.
(F) Optionee has been informed by Optionor and agrees that (i) stock
transfer notations may be made on the stock transfer records of Optionor with
respect to the shares related to this Agreement, and (ii) that a legend will be
placed on any certificate or other document evidencing ownership of the Capital
Stock regarding the restrictions on transfer and sale of the Capital Stock.
(G) Optionee represents that its financial condition is presently
adequate to justify this investment, it, either alone or with its personal
representatives, has sufficient knowledge and experience in investment and
business matters in order to evaluate this investment and it is aware of the
risks involved in any enterprises such as the Optionor.
9. The Optionee shall not be deemed for any purposes to be a shareholder of the
Optionor with respect to any of the optioned shares except to the extent that
the Option herein granted shall have been exercised with respect thereto and a
stock certificate issued therefor.
10. As a condition of the granting of the Option herein granted, the Optionee
agrees, for himself and his personal representatives, that any disputes or
disagreements which may arise under or as a result of or pursuant to this
Agreement shall be determined by the Board of Directors of the Optionor in its
sole discretion, and that any interpretation by the Board of the terms of this
Agreement shall be final, binding and conclusive.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of
the date first above written.
OPTIONOR OPTIONEE
INTELLIGENT DECISION SYSTEMS, INC.
/s/ Mark A. Babin /s/ Jonathan Preiser
By:___________________________ ______________________________
Mark A. Babin Jonathan Preiser
Its: President
50
<PAGE>
INTELLIGENT DECISION SYSTEMS, INC.
STOCK OPTION AGREEMENT
EXERCISE FORM
I desire to exercise my vested Options to purchase __________ shares of Common
Stock at _____________ per share, for a total purchase price of
$_______________, pursuant to my Non-Statutory Stock Option Agreement dated
_________, _______.
Enclosed is payment in full by [ ] cash [ ] cashier's check [ ] bank draft [ ]
money order [ ] other (describe) ______________.
I intend to hold the shares for Investment for my own account and will sell or
transfer them only in full compliance with applicable federal and state
securities laws.
I have, or have been given access to, all information necessary for me to make
an informed decision as to the advisability of investing in the Company's stock,
and I have the skill and experience necessary to make such decision.
Dated:____________, _____. Signature: __________________________
Print full name: _________________________
Social Security No.: _________________________
51
INTELLIGENT DECISION SYSTEMS, INC.
FORM S-8
REGISTRATION STATEMENT
Exhibit No. 4.7
Non-Statutory Stock Option Agreement Dated March
7, 1997 between the Registrant and Scott J. Preiser
52
<PAGE>
NON-STATUTORY STOCK OPTION AGREEMENT
INTELLIGENT DECISION SYSTEMS, INC., a Delaware corporation whose principal
executive offices are located at 2025 East Beltline, Ave., S.E., Suite 400,
Grand Rapids, Michigan 49548 ("Optionor") and SCOTT J. PREISER ("Optionee"), an
individual residing at 50 Aiken Street, #112, Norwalk, CT 06851, hereby agree as
of the 7th day of March, 1997 as follows:
W I T N E S S E T H :
WHEREAS, Optionee acknowledges that the shares of Optionor subject to this Stock
Option Agreement ("Agreement") are restricted shares under the federal and state
securities laws, and any resales of shares are subject to such federal and state
securities laws;
WHEREAS, Optionor desires to grant an option to Optionee to acquire a stated
amount of Optionor's shares, but said Option is subject to restrictions as
imposed herein:
Now, Therefore, in consideration of Optionees services and of the
mutual covenants and promises contained herein, Optionor and Optionee hereby
agree as follows:
1. Optionee is entitled to purchase from Optionor, up to 40,000 fully paid and
non-assessable shares of Common Stock of Optionor, $.001 par value per share
(hereinafter called "Capital Stock"), at the price of $1.22 per share for a
period ending on June 27, 2001, subject, however, to the provisions and upon the
terms and conditions hereinafter set forth. The rights granted pursuant to this
paragraph shall hereinafter be referred to as the "Option". The Option granted
hereunder shall not be an incentive stock option, as defined in Section 422A of
the Internal Revenue Code.
2. The Option and all rights granted hereunder shall expire at midnight, Grand
Rapids, Michigan, June 27, 2001.
3. The Option may be exercised by the Optionee hereof, in whole or in part (but
not for fractional shares of Capital Stock) by delivery of notice in writing at
the office of Optionor (or such other office or agency as Optionor may designate
by notice in writing to the Optionee at the address of such Optionee appearing
at the end of this Agreement at any time within the period above named) and upon
payment to Optionor by certified check or cashier's cheek of the purchase price
for such shares. In the event of any exercise of the rights represented by this
Option, certificates for the shares of Capital Stock so purchased shall be
delivered to the Optionee hereof within thirty (30) days after the rights
represented by this Option shall have been so exercised.
4. The above provisions are, however, subject to the following:
(A) In case Optionor shall declare any dividend or other
distribution upon its outstanding Capital Stock payable in Capital Stock or
shall subdivide its outstanding shares of
53
<PAGE>
Capital Stock into a greater number of shares, then the number of shares of
Capital Stock which may thereafter be purchased upon the exercise of the rights
represented hereby shall be increased in proportion to the increase through such
dividend or subdivision and the purchase price per share shall be decreased in
such proportion. In case Optionor shall at any time combine the outstanding
shares of its Capital Stock into a smaller number of shares, then the number of
shares of Capital stock which may thereafter be purchased upon the exercise of
the rights represented hereby shall be decreased in proportion to the decrease
through such combination and the purchase price per share shall be increased in
such proportion. Notwithstanding the foregoing, nothing herein shall cause the
number of shares of Capital Stock which may be purchased upon exercise of the
rights represented hereby to be adjusted in the event that the number of shares
of Capital Stock outstanding of Optionor are increased through the issuance of
shares in exchange for new consideration or the conversion of securities
convertible into shares of Capital Stock of Optionor.
(B)(i) If any capital reorganization or reclassification of the Capital
Stock of Optionor, or consolidation or merger of Optionor with another
corporation, or the sale of all or substantially all of its assets to another
corporation shall be effected, then, as a condition of such reorganization,
reclassification, consolidation, merger or sale, lawful and adequate provision
shall be made by Optionor whereby Optionee shall thereafter have the right to
purchase and receive from Optionor upon the basis and upon the terms and
conditions specified in this Option and in lieu of the shares of the Capital
Stock of Optionor immediately theretofore purchasable and receivable upon the
exercise of the rights represented hereby, such shares of stock, securities or
assets as may be issued or such shares of stock, securities or assets as may be
issued or payable with respect to or in exchange for a number of outstanding
shares of such Capital Stock equal to the number of shares of such Capital Stock
immediately theretofore purchasable and receivable upon the exercise of the
rights represented hereby had such reorganization, reclassification,
consolidation, merger or sale not taken place and in any such case appropriate
provision shall be made with respect to the rights and interests of the Optionee
to the end that the provisions hereof (including, without limitation, provisions
for adjustment of the purchase price per share and of the number of shares
purchasable upon the exercise of this Option) shall thereafter be applicable as
nearly as may be in relation to any shares of stock, securities or assets
thereafter deliverable upon the exercise hereof. Any such shares of stock,
securities or assets which the Optionee hereof may be entitled to purchase
pursuant to this paragraph (B) shall be included within the term "Capital Stock"
as used herein.
(B)(ii)Notwithstanding the foregoing, in the event of a transaction
described in subsection (B)(i) hereof entered into for the primary purpose of
changing the state of jurisdiction of incorporation, the sole right of Optionee
hereunder shall be to receive the equivalent rights under this Stock Option
Agreement with respect to the securities of the surviving entity.
(C) Upon any adjustment of the number shares of Capital Stock which may
be purchased upon the exercise of the rights represented hereby and/or of the
purchase price per share, then and in each such case the Optionor shall give
written notice thereof, by first class mail, postage prepaid, addressed to the
Optionee at the address of such Optionee as shown herein, which notice shall
state the purchase price per share resulting from such adjustment and
54
<PAGE>
the increase or decrease, if any, in the number of shares purchasable at such
price upon the exercise of this Option, setting forth in reasonable detail the
method of calculation and the facts upon which such calculation is based.
5. Optionee represents that this Option is being acquired with no present
intention of selling or distributing any Capital Stock received upon the
exercise hereof unless registered under federal and applicable state laws or
pursuant to exemptions from such registration.
6. Neither this Option, nor the shares to be acquired hereunder, have been
registered under the Securities Act of 1933, as amended (the "Act") or the laws
of any other jurisdiction, and neither this Option nor the shares to be acquired
hereunder may he offered, sold, transferred, pledged, hypothecated or otherwise
disposed of unless so registered, or unless an exemption from registration is
available pursuant to applicable law.
The sale, assignment or other disposition of this Option and the
shares to be acquired hereunder are further restricted by Rule 144, promulgated
by the Securities and Exchange Commission.
The Optionee accepts and receives such securities without a view
to the distribution of same.
Before any transfer in connection with the resale of this Option,
or sale of the shares issuable to be acquired hereunder, written approval must
first be obtained from counsel for the Optionor, and such approval will be based
upon compliance with the requirements of the Act and appropriate state law.
7. This Option shall be construed in accordance with the laws of the State
of Michigan.
8. Optionee warrants and acknowledges that:
(A) Optionee has received and carefully reviewed the Articles of
Incorporation of Optionor, and at or prior to the exercise of this Option will
have the knowledge and understanding of the fundamental aspects of the
investment and its risks, and will have relied solely on his own independent
investigation and his independent advisors, and will not have relied upon any
other written materials or oral representations.
(B) Optionee has had (and will continue to have) an opportunity to
obtain all information which may he related to the exercise of this Option and
the rights hereunder so as to make a reasonable investment decision with regards
to the exercise of this Option.
(C) Optionee has been informed by Optionor that neither the Option nor
the shares issuable thereunder have been registered under the Act or the
securities laws of any other State, and may not be offered, sold or transferred
in the absence of such registration or an opinion of counsel for the Company
that an exemption from registration is available.
55
<PAGE>
(D) Optionee is entering into this Option Agreement and will acquire the
shares issuable pursuant hereto for his/her own investment, not on behalf of
others, and not with a view to resell or otherwise distribute the Capital Stock,
will not sell or otherwise distribute the Capital Stock without registration
under the Act or other applicable State securities laws or exemptions therefrom.
(E) The Optionee understands that Optionor will permit the transfer of
the Capital Stock only if, in the opinion of Optionor's counsel neither the sale
nor the proposed transfer of such Capital Stock will result in a violation of
any applicable securities law, rule or regulation.
(F) Optionee has been informed by Optionor and agrees that (i) stock
transfer notations may be made on the stock transfer records of Optionor with
respect to the shares related to this Agreement, and (ii) that a legend will be
placed on any certificate or other document evidencing ownership of the Capital
Stock regarding the restrictions on transfer and sale of the Capital Stock.
(G) Optionee represents that its financial condition is presently
adequate to justify this investment, it, either alone or with its personal
representatives, has sufficient knowledge and experience in investment and
business matters in order to evaluate this investment and it is aware of the
risks involved in any enterprises such as the Optionor.
9. The Optionee shall not be deemed for any purposes to be a shareholder of the
Optionor with respect to any of the optioned shares except to the extent that
the Option herein granted shall have been exercised with respect thereto and a
stock certificate issued therefor.
10. As a condition of the granting of the Option herein granted, the Optionee
agrees, for himself and his personal representatives, that any disputes or
disagreements which may arise under or as a result of or pursuant to this
Agreement shall be determined by the Board of Directors of the Optionor in its
sole discretion, and that any interpretation by the Board of the terms of this
Agreement shall be final, binding and conclusive.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of
the date first above written.
OPTIONOR OPTIONEE
INTELLIGENT DECISION SYSTEMS, INC.
/s/ Mark A. Babin /s/ Scott J. Preiser
By:___________________________ ______________________________
Mark A. Babin Scott J. Preiser
Its: President
56
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INTELLIGENT DECISION SYSTEMS, INC.
STOCK OPTION AGREEMENT
EXERCISE FORM
I desire to exercise my vested Options to purchase __________ shares of Common
Stock at _____________ per share, for a total purchase price of
$_______________, pursuant to my Non-Statutory Stock Option Agreement dated
_________, _______.
Enclosed is payment in full by [ ] cash [ ] cashier's check [ ] bank draft [ ]
money order [ ] other (describe) ______________.
I intend to hold the shares for Investment for my own account and will sell or
transfer them only in full compliance with applicable federal and state
securities laws.
I have, or have been given access to, all information necessary for me to make
an informed decision as to the advisability of investing in the Company's stock,
and I have the skill and experience necessary to make such decision.
Dated:____________, _____. Signature: __________________________
Print full name: __________________________
Social Security No.: __________________________
57
INTELLIGENT DECISION SYSTEMS, INC.
FORM S-8
REGISTRATION STATEMENT
Exhibit No. 5.1
Consent and Legal Opinion of Snell & Wilmer L.L.P.
58
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Snell & Wilmer L.L.P.
One Arizona Center
Phoenix, Arizona 85004-0001
April 9, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Intelligent Decision Systems, Inc.
Ladies and Gentlemen:
We have acted as special counsel to Intelligent Decision Systems, Inc., a
Delaware corporation (the "Company"), in connection with its Registration
Statement on Form S-8 (the "Registration Statement") filed under the Securities
Act of 1933, relating to the registration of 120,000 shares of its Common Stock,
$.001 par value (the "Shares"), issuable pursuant to those certain non-Statutory
Stock Option Agreements dated March 7, 1997 between each of Eugene Feher, Jon
Preiser and Scott Preiser (the "Option Agreements").
In that connection, we have examined such documentation, corporate
records, and other instruments as we have deemed necessary or appropriate for
purposes of this opinion, including the Certificate of Incorporation and Bylaws
of the Company.
Based upon the foregoing, we are of the opinion that:
1. The Company has been duly organized and is validly existing as
a corporation under the laws of the State of Delaware.
2. Assuming that the laws of the state of Michigan are identical
in all respects to the laws of Delaware, the Shares, when
issued and sold in accordance with the terms of the Option
Agreements, will be validly issued, fully paid, and non-
assessable.
This opinion is limited to the General Corporation Law of the State of
Delaware, and we express no opinion with respect to the laws of any other
jurisdiction.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ SNELL & WILMER L.L.P.
59
INTELLIGENT DECISION SYSTEMS, INC.
FORM S-8
REGISTRATION STATEMENT
Exhibit No. 23.1
Consent of Wilber & Townshend, independent accountants
60
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WILBER &
TOWNSHEND
A Professional Corporation 465 Baldwin Street
Certified Public Accountants Jenison, MI 49428
PH: 615-457-4880
FX: 615-457-1114
CONSENT OF INDEPENDENT AUDITORS
We consent to the use of our names as experts as found in the "Experts"
section on page 16 in the Form S-8 registration statement of Intelligent
Decision Systems, Inc. which reads:
Certain financial statements of Intelligent Decision Systems, Inc. are
incorporated by reference in this Prospectus from the Company's Form 10-KSB
for the fiscal year ended June 30, 1996 which have been audited by Wilber &
Townshend, P.C., independent certified public accountants, as indicated in
their report with respect thereto, and included herein in reliance upon the
authority of said firm as experts in auditing and accounting in giving said
report.
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8, to be filed by Intelligent Decision Systems, Inc. of our
auditors' report dated September 19, 1996 accompanying the financial statements
of Intelligent Decision Systems, Inc. (formerly, Resource Finance Group, Ltd.),
as of June 30, 1996 and 1995 which appears in the Company's Annual Report on
Form 10-KSB for the year ended June 30, 1996.
/s/ Wilber & Townshend
Jenison, MI
April 9, 1997
Member: American Institute of Certified Public Accountants
Michigan Association of Certified Public Accountants
61
