<PAGE>
As filed with the Securities and Exchange Commission April 27, 1999
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
INSCI Corp.
(Exact name of registrant as specified in its charter)
Delaware 06-1302773
(Jurisdiction of incorporation) (I.R.S. employer I.D. Number)
Two Westborough Business Park, Westborough, Massachusetts 01581
(508) 870-4000
(Address and telephone number of
Registrant's principal executive offices)
INSCI Corp.
1997 EQUITY INCENTIVE PLAN
(FULL TITLE OF THE PLAN)
JOSEPH A. BARATTA
BARATTA & GOLDSTEIN
Attorneys At Law
597 Fifth Avenue
New York, New York 10017
(Name and address of agent for service)
(212) 750-9700
(Telephone Number of agent for service)
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Maximum Maximum
Amount Offering Aggregate Amount of
Title of Securities To Be Price Per Offering Registration
To Be Registered Registered(1) Share Price Fee
- ---------------- ------------- --------- --------- ------------
Common Stock 3,000,000 $3.4375(2) $10,312,500 $3,042.25
$.01 Par Value
(1) Pursuant to Rule 416(c) promulgated under the Securities Act of 1933, as
amended, the Registration Statement also covers an indeterminate amount of
Shares to be offered or sold as a result of any adjustment from stock
splits, stock dividends or similar events.
(2) Estimated solely for the purpose of calculating the registration fee, and
based upon the average of the reported high and low prices of the
Registrant's Common Stock on the NASDAQ SmallCap Market on April 26, 1999 in
accordance with Rules 457(c) and 457(h) of the Securities Act of 1933.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
In accordance with the rules and regulations of the Securities and
Exchange Commission, the documents containing the information called for in Part
I of Form S-8 will be sent or given to participating individuals. A copy of the
1997 Equity Incentive Plan is attached as an exhibit to the Registration
Statement.
REOFFER PROSPECTUS STATEMENT
The material which follows, up to but not including the page beginning
Part II of this Registration Statement, constitutes a Reoffer Prospectus,
prepared in accordance with the requirements of Part I of Form S-3 pursuant to
General Instruction C to Form S-8, to be used in connection with resales of
securities acquired under the 1997 Equity Incentive Plan by certain affiliates
of the registrant as defined in Rule 405 under the Securities Act of 1933, as
amended.
REOFFER PROSPECTUS
INSCI CORP.
2 Westborough Business Park
Westborough, Massachusetts 01581
(508) 870-4000
1,041,000 Shares of Common Stock
Nasdaq SmallCap Market Trading Symbol: INSI
Boston Exchange Trading Symbol: INI
This Prospectus relates to 1,041,000 Shares of Common Stock of INSCI
Corp., $.01 par value per share (the "Common Stock" or the "Shares"), a Delaware
corporation which may be sold from time to time by the Selling Stockholders
named under the caption "Selling Stockholders".
The Shares are issuable upon the exercise of Options granted or to be
granted to the Selling Stockholders pursuant to our 1997 Equity Incentive Plan
(the "Plan"). If the Options are exercised, we will receive the exercise price
of outstanding Options. The exercise price of the Options is based on the fair
market value of our Common Stock as of the date of the grant. If the Shares are
sold, we will not receive any proceeds from the sale. We are paying the cost of
this Registration Statement, estimated at approximately $5,000, but the Selling
Stockholders will pay their own brokerage commissions and other expenses of
sale.
The Selling Stockholders may sell the Shares from time to time in
transactions (which may include block transactions) on the Nasdaq SmallCap
Market ("Nasdaq"), in negotiated transactions or both. They may sell the Shares
at fixed prices which may be changed, at market prices or in negotiated
transactions, a combination of such methods of sale or otherwise. The Selling
Stockholders may also transfer Shares by gift. The Selling Stockholders may not
transfer their Options except in case of death.
The Selling Stockholders may sell the Shares directly to purchasers
through broker-dealers acting as agents for the Selling Stockholders or to
broker-dealers who may purchase securities as principals for their own account.
The Selling Stockholders pay the broker-dealers a brokerage fee or a discount
from the sales price. The purchaser of the Shares may also pay a brokerage fee
or other charge. The compensation to a particular broker-dealer may exceed
customary commissions. We do not know of any arrangements by any Selling
Stockholder for the sale of any of the Shares.
Investing in the Shares involves a high degree of risk. You should
purchase the Shares only if you can afford to lose your entire investment. See
"Risk Factors" on Page 5.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED WHETHER
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
--------------------
THE DATE OF THIS REOFFER PROSPECTUS IS APRIL 27, 1999
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TABLE OF CONTENTS
Page
Where You Can Find More Information 1
Incorporation of Certain Documents by Reference 1
Cautionary Statement Regarding Forward-Looking Statements 2
Prospectus Summary 3
Our Business 3
The Offering 5
Risk Factors 5
Use of Proceeds 10
Selling Stockholders 11
Plan of Distribution 12
Legal Matters 13
Experts 13
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and periodic reports, proxy statements and
other information with the Securities and Exchange Commission (the "Commission")
using the Commission's EDGAR System. You may inspect these documents and copy
information from them at the Commission's public reference facilities at 450
Fifth Street, N.W., Washington, DC 20549 or at the regional offices of the
Commission at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, IL
60661 and Seven World Trade Center, Suite 1300, New York, NY 10048. Copies of
such material can be obtained at prescribed rates from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, DC 20549. The
Commission maintains a Web Site that contains reports, proxy and information
regarding registrants that file electronically with the Commission. The address
of the site is http://www.sec.gov.
We have filed a registration statement with the Commission relating to
the offering of the Shares. The registration statement contains information
which is not included in this Prospectus. You may inspect or copy the
registration statement at the Commission's public reference facilities or its
Web site.
We furnish our stockholders with annual reports containing audited
financial statements and with such other periodic reports as we, from time to
time, deem appropriate or as may be required by law. We use April 1st through
March 31st as our fiscal year.
You should rely only on the information contained in this Prospectus and
the information that we have referred you to. We have not authorized any person
to provide you with any information that is different.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
We have filed the following documents with the Commission. We are
incorporating these documents in this Prospectus, and they are a part of this
Prospectus. We are allowed to "incorporate by reference" the information we file
with the Commission, which means that we can disclose important information to
you by referring you to another document we filed with the Commission. The
information incorporated by reference is an important part of this Prospectus,
and information that we file later with the Commission will automatically update
and supersede this information. We incorporate by reference the documents listed
below and any future filings made with the Commission under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, until the
selling stockholders sell all of the shares of common stock.
(1) Our Annual Report on Form 10-KSB for our fiscal year ended March 31, 1998;
(2) Our Quarterly Reports on Form 10-QSB for the quarters ended June 30, 1998,
September 30, 1998 and December 31, 1998;
(3) Our Proxy Statement for our 1998 Annual Meeting of Stockholders;
(4) Our Current Report on Form 8-K dated December 23, 1998 and filed December
30, 1998
(5) The Company's Registration Statement on Form S-1 which became effective on
October 6, 1997.
We are also incorporating by reference in this Prospectus all documents
which we file pursuant to Section 13(a), 13(c), 14 or 15 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") after the date of this
Prospectus. Such documents are incorporated by reference in this Prospectus and
are a part of this Prospectus from the date we file the documents with the
Commission.
If we file with the Commission any document that contains information
which is different from the information contained in this Prospectus, you may
rely only on the most recent information which we have filed with the
Commission.
We will provide a copy of the documents referred to above without charge
if you request the information from us. However, we may charge you for the cost
of providing any exhibits to any of these documents unless we specifically
incorporate the exhibits in this Prospectus. You should contact Mr. Roger Kuhn,
Chief Financial Officer, INSCI Corp., 2 Westborough Business Park, Westborough,
MA 01581, (508) 870-4000, if you wish to receive any of such material.
This prospectus is part of a registration statement we filed with the
Commission. You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement. We have not authorized anyone
else to provide you with different information. The selling stockholders will
not make an offer of the shares of common stock in any state where the offer is
not permitted. You should not assume that the information in this prospectus or
any supplement is accurate as of any date other than the date on the front of
those documents.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains certain "forward-looking statements" as defined
in the Private Securities Litigation Reform Act of 1995 and information relating
to us that is based on the beliefs of our management, as well as assumptions
made by and information currently available to our management. When used in this
prospectus, the words "estimate," "project," "believe," "anticipate," "intend,"
"expect" and similar expressions are intended to identify forward-looking
statements. These forward-looking statements reflect our current views with
respect to future events and are subject to risks and uncertainties that could
cause actual results to differ materially from those contemplated in these
forward-looking statements, including those risks discussed under "Risk
Factors." You are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date on this prospectus. We have no
obligation to publicly release any revisions to these forward-looking statements
to reflect events or circumstances after the date of this prospectus or to
reflect the occurrence of unanticipated events.
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PROSPECTUS SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS PROSPECTUS AND
MAY NOT CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU. TO UNDERSTAND
THE TERMS OF OUR SECURITIES, YOU SHOULD CAREFULLY READ THIS DOCUMENT. YOU SHOULD
ALSO READ THE DOCUMENTS WE HAVE REFERRED YOU TO IN THE SECTION ENTITLED "WHERE
YOU CAN FIND MORE INFORMATION" ON PAGE 1 FOR INFORMATION ON OUR COMPANY AND OUR
FINANCIAL STATEMENTS.
OUR BUSINESS
We develop and market a family of integrated document management
software products designed to meet the enterprise-wide needs of organizations,
which rely on a large quantity of computer-generated documents in their
business. We provide our customers with the ability to electronically capture
and store computer output and source documents and to enable access and delivery
of these documents electronically or via reprints in a way that lowers cost,
improves quality, and service and provides greater competitive advantage. We
market our products in more than 40 countries through a combination of direct
sales and reseller channels.
We have recently focused our attention in four areas:
- - expansion of the functionality and performance of our existing Unix based
products,
- - development of our core technology products to operate on the Windows NT
platform,
- - expansion of indirect sales channels, and
- - expansion of our services infrastructure.
In the past two years we have added six new software products;
- - WebCOINS, an Internet product;
- - COINSflow, a workflow product;
- - Advanced COINSCAN, an imaging product;
- - Advanced COINSERV, a document archive and retrieval product;
- - COINS Demander, a database interface; and
- - Setup Expert, an application set up interface.
We also released a new product in the latter part of 1997, COINSERV for
Windows NT, an electronic digital document repository with Internet access and
integrated imaging and workflow. This software product can archive and retrieve
high volumes of documents operating on the NT platform. The market for our
products is organizations that require the electronic availability of
customer-facing documents, source documents, and reports.
Customer-facing documents vary from industry to industry but generally
include invoices, statements, purchase orders, bills, policies, and transaction
confirmation documents which are produced in high volume on high-speed printers.
They require electronic indexing and storage to allow retrieval and viewing for
customer support functions and to satisfy regulatory archiving requirements.
Source documents include new account applications, signature cards,
purchase orders, signed bills of lading, insurance claim forms, and other paper-
based documents which, through the use of our products can be electronically
captured, indexed, stored, routed and displayed in support of the process. The
result of putting these document types in electronic form is improved
efficiency, cost reduction, and ability of an organization to more effectively
serve its internal and external customers.
Electronic commerce is rapidly becoming a market requirement. New
capabilities such as electronic bill presentment, customer access to statements
and bills and integrated invoicing and marketing extend the value of
conventional printing and distribution of customer-facing documents. Our
products deliver the capability for document-enabled electronic commerce.
We offer numerous services including software installation, training,
software maintenance, support and systems integration. Our advanced systems
integration services division works with its customers to integrate these
various technologies into existing technical environments to leverage
investments in technology.
Our current business strategy is to develop and provide document
management solutions in a fully integrated and customized manner that enables
customers to improve their business processes and competitive position.
THE OFFERING
Common Stock offered ......................... 1,041,000 shares
Common Stock outstanding ..................... 10,905,605 (1) shares
Use of Proceeds .............................. We will not receive any proceeds
from the sale of the Common
Stock other than from the
exercise of underlying options.
from the offering of Common
Stock
- --------------------
(1) Assumes the exercise of all stock options permitted under the 1997 Equity
Incentive Plan and issuance of the underlying shares of Common Stock
included in this Registration and the previously filed S-8 Registration File
No. 333- 72855.
RISK FACTORS
The statements in this Prospectus that are not descriptions of
historical facts may be forward- looking statements that are subject to risks
and uncertainties. In particular, statements in this Prospectus, including any
material incorporated by reference in this Prospectus, that state our
intentions, beliefs, expectations, strategies, predictions or any other
statements relating to our future activities or other future events or
conditions are "forward-looking statements." Forward-looking statements are
subject to risks, uncertainties and other factors, including, but not limited
to, those identified under "Risk Factors", those described in Management's
Discussion and Analysis of Financial Condition and Results of Operations in our
Form 10-KSB for the year ended March 31, 1998, the Form 10-QSB for the quarter
ended December 31, 1998 and in any other filings which are incorporated by
reference in this Prospectus, as well as general economic conditions, any one or
more of which could cause actual results to differ materially from those stated
in such statements.
An investment in our Common Stock involves a high degree of risk. You
should consider carefully, along with other factors, the following risks and
consult with your own legal, tax and financial advisors.
1. HISTORY OF LOSSES
We have had losses since our organization in 1989. For the nine months
ended December 31, 1998, we had a net loss of approximately $278,000 or $0.11
per share. For the fiscal years ended March 31, 1998 and 1997 we had net losses
of approximately $2,543,000 or $0.73 per share, and approximately $936,000, or
$0.62 per share, respectively. Our revenues and results of operations fluctuate
as a result of a variety of factors some of which include the amount of revenue
generated from our alliances with other companies selling our products; the
length of the sales cycle for our products; demand for our products; the
introduction of new products and product enhancements by us or our competitors,
among other factors. Although we realized revenues of approximately $3,725,000
and a net profit of approximately $386,000, or $0.03 per share for our most
recently completed financial quarter ended December 31, 1998, we may not be
profitable in the future.
2. PREFERRED STOCK DIVIDEND OBLIGATION
In the past four years we have completed three private placement
offerings for shares convertible into our Common Stock. In one of the three
placements, all the preferred shares have been converted into our Common Stock.
The remaining two placements still have outstanding preferred shares which are
convertible into shares of our Common Stock. The first offering was for 10%
Convertible Redeemable Preferred Stock. The 10% Convertible Redeemable Preferred
Stock is convertible at the option of the holder into shares of our Common Stock
at the greater of $.10 per share or 50% of the 20-day average trading price of
our Common Stock prior to a conversion notice being given to us by a holder.
Currently, there are 134,883 shares of 10% Convertible Redeemable Preferred
Stock outstanding which are held by one person. The holder of our 10%
Convertible Redeemable Preferred Stock receives dividends of 10% per year
payable at our option in cash or in shares of our Common Stock. The second
placement with outstanding convertible securities was for Units that are made up
of shares of our 8% Convertible Redeemable Preferred Stock and three-year
warrants. Each warrant entitles the holder the right to purchase a share of our
Common Stock at an exercise price of $5.00. Currently we are obligated until
October 1, 2001, or the conversion of the 8% Convertible Redeemable Preferred
Shares, whichever happens first, to pay dividends in the amount of 11% a year in
the form of our Common Stock or in cash. We can choose the form of dividend
payment. The requirement for us to pay dividends will have a negative effect on
any profits we earn and will result in a reduction in our earnings per share.
3. POTENTIAL NEGATIVE EFFECT TO OUR COMMON STOCK TRADING PRICE WITH CONVERSION
OF PREFERRED SHARES AND EXERCISE OF OPTIONS AND WARRANTS
Our continued issuance of dividends of Common Stock and the exercise or
conversion by holders of our 10% Convertible Redeemable Preferred Stock, 10%
Convertible Preferred Stock, 8% Convertible Redeemable Preferred Stock, Options
and Warrants may have a depressive effect on the price of our Common Stock in
the open market. In addition, the existence of such warrants and options and the
registration for the underlying shares and /or possible qualification under Rule
144 of the Securities Act of 1933, which would provide an exemption from
registration, may adversely affect the terms at which we can obtain additional
equity financing. The holders of options and warrants are likely to exercise
them at a time when we would otherwise be able to obtain capital on better terms
than those provided by the options and warrants.
4. NEED FOR ADDITIONAL WORKING CAPITAL
We believe that we will require substantial additional funds for working
capital and additional future product development. We have established a bank
line for working capital and equipment financing totaling $1,500,000 with
Silicon Valley Bank. The credit line contains restrictions related to financial
ratios and profitability that we must obtain in order to utilize the bank line.
Additionally, if we utilize the credit line, and wish to pay cash dividends, we
will be required to obtain Silicon Valley Bank's permission to pay cash
dividends.
5. BOARD OF DIRECTOR CONTROL
On April 19, 1999, our directors and officers and certain principal
stockholders and their affiliates beneficially owned (as defined by the
Commission) in the aggregate approximately 3,705,572 shares of Common Stock,
representing 39% of the outstanding shares of Common Stock. Accordingly, they
have the ability to influence significantly our affairs and matters requiring a
stockholder vote, including the election of the directors, the amendment of
charter documents, the merger or dissolution of us and the sale of all or
substantially all of our assets. The voting power of these holders may also
discourage or prevent any proposed takeover of us pursuant to a tender offer.
6. DIVIDENDS ON OUR COMMON STOCK NOT LIKELY
We do not anticipate paying dividends on Common Stock. We presently
intend to retain future earnings, if any, in order to provide funds for use in
the operation and expansion of our business and, accordingly, we do not
anticipate paying cash dividends on our Common Stock in the foreseeable future.
7. TECHNOLOGY CHANGES
Our business is subject to the effect of technological advances and
possible product obsolescence. The market for our products and related systems
integration and consulting services are characterized by rapidly changing
technology, extensive competition, technological complexity and evolving
industry standards. We must continue to insure that our computer software and
products which service electronic information and document management systems
are compatible with products offered by third party vendors, including server
platforms for our software and optical disk storage devices. We have no
contractual commitments with third party vendors and there can be no assurances
that we will be able to modify our software products to be compatible with new
products that are introduced by others. Our ability to provide products and
technology at a competitive price will be subject to potential technological
alternative solutions that may be provided by competitors In addition, there can
be no assurance that products or technologies developed by others will not
render our products or technologies noncompetitive or obsolete.
8. INTENSE COMPETITION
Competition among companies that provide document archival, indexing and
retrieval solutions is intense. Several companies market products that compete
directly with our products. Other companies offer products that potential
customers may consider to be acceptable alternatives to our products and
services. Several larger competitors with substantially more resources market
computer document storage and retrieval systems utilizing optical disk drive
technology. Other competitors offer alternative methods for storing and
retrieving computer generated documents in competition with our services and
products. Newly developed products could be more effective and cost efficient
than our current products or those we may develop in the future. Many of our
current and potential future competitors have substantially more engineering,
sales and marketing capabilities; substantially greater financial technological
and personnel resources; and broader product lines than we do. Additionally,
alliances between major suppliers of data stream software may be formed to
create new standards that may cause our products to become obsolete.
9. DEPENDENCE ON PROPRIETARY TECHNOLOGY
Our business depends upon proprietary software technology. We have no
patent protection for our proprietary software. Although we require our
employees and others to whom we disclose proprietary information to sign
non-disclosure agreements, such protection may not be sufficient. Our business
will be adversely affected if anyone improperly uses or discloses our
proprietary software and other proprietary information.
10. ATTRACTION AND RETENTION OF KEY PERSONNEL
Our future success depends in significant part on the continued service
of key technical, sales and senior management personnel. The loss of the
services of any of our executive officers or other key employees could have a
materially adverse effect on our business, results of operations and financial
condition. We currently have employment agreements with certain key executive
officers and personnel. Our continued success also depends upon our continued
ability to attract and retain highly qualified technical, sales and managerial
personnel. While we have a college recruiting and contract recruiting program to
attract qualified personnel, competition for such personnel is intense, and
there can be no assurances that we can retain our key technical, sales and
managerial employees. Additionally, there can be no assurances that we can
attract, assimilate or retain other highly qualified technical, sales and
managerial personnel in the future.
11. DEPENDENCE UPON KEY SUPPLIERS
Optical disk storage devices which are necessary for the use of our
software systems are currently available from a number of third party vendors.
We do not intend to manufacture optical disk drive systems or optical disks. An
extended interruption of the supply of optical disk drive systems or optical
disks or extended performance problems could have an adverse effect on us. We
also rely on third party vendors to provide certain industry standard
communication protocols. We currently do not have any fixed commitments from
suppliers to provide equipment.
12. SUBSTANTIAL DEPENDENCE ON OUTSIDE SALES LEADS
We depend upon introductions to potential customers provided by
companies with which we maintain strategic alliances for a significant
percentage of our sales. Although we have written agreements with UNISYS, Xerox
Corporation, Storage Technology Corporation, Moore Corporation and OCE; and our
principal Value Added Resellers, which generally provide for discounts,
commissions or referral fees for sales of our software generated by them or by
referral to their customers, such agreements do not require customer
introductions or provide for minimum required purchases of our products. If any
of the companies with which we maintain strategic alliances at any time decide
not to refer potential customers to us, we may suffer reduced sales and
increased operating losses. In addition, there can be no assurance that we will
be able to maintain our strategic alliances on current terms, or at all.
13. YEAR 2000 COMPLIANCE
Many computer systems will experience problems handling dates beyond the
year 1999. Therefore, some computer hardware and software will need to be
modified prior to the year 2000 in order to remain functional. We are presently
assessing both internal readiness of our computer systems and the compliance of
our computer software sold to customers for its ability to process the year
2000. We expect to successfully implement the systems and programming changes
necessary to address the 2000 issues, and do not believe that the cost of such
actions will have a material effect on our results of operations or financial
condition. There can be no assurance, however, that there will not be a delay
in, or increased costs associated with the implementation of such changes. Our
inability to implement such changes could have an adverse effect on future
results of operations.
14. POSSIBILITY OF DELISTING
We face the possibility of delisting from The Nasdaq System. Our Common
Stock is presently listed on The Nasdaq SmallCap Market. The Nasdaq SmallCap
Market requires us to either maintain net tangible assets (i.e. total assets
less liabilities and goodwill) of $2 million, or a market capitalization of $35
million or net income of $500,000 for two of the last three years in order to
maintain our listing. We are also required to meet certain corporate governance
requirements. Additionally, our stock must maintain an average bid price in
excess of $1.00. If the average bid price is less than $1.00 for 30 consecutive
trading days we may be deemed not to satisfy The Nasdaq SmallCap listing
requirements. If we are unable to satisfy Nasdaq's requirements for continued
listing, our stock may be delisted from The Nasdaq SmallCap Market. In such
event, trading, if any, in our Common Stock would thereafter be conducted in the
over-the-counter market in the so-called "pink sheets" or the Nasdaq's
"Electronic Bulletin Board." If the Common Stock is delisted by Nasdaq, the
liquidity of our Common Stock could be impaired, not only in the number of
securities which could be bought and sold, but also through delays in the timing
of transactions, reduction in security analysts' and the news media's coverage,
and low prices for our Common Stock that might otherwise be attained.
If our Common Stock were to be delisted from The Nasdaq SmallCap Market,
it may become subject to additional sales practice requirements on
broker-dealers which sell such securities to persons other than established
customers and institutional accredited investors. If the broker-dealer is
subject to such restrictions, the broker-dealer must make a special suitability
determination for the purchaser and have received the purchaser's written
consent to the transaction prior to sale. Consequently, the rule may affect the
price of the Common Stock and your ability to sell our Common Stock.
The Commission's regulations define a "penny stock" to be any equity
security that has a market price which is less than $5.00 per share, subject to
certain exceptions. The penny stock restrictions will not apply to our Common
Stock as long as it is listed on The Nasdaq SmallCap Market.
15. ISSUANCE OF ADDITIONAL SHARES OF PREFERRED STOCK
The rights of the holders of our Common Stock may be affected by the
potential issuance of Preferred Stock. Our certificate of incorporation gives
the board of directors the right to determine the designations, rights,
preferences and privileges of the holders of one or more series of Preferred
Stock. Accordingly, the board of directors is empowered, without stockholder
approval, to issue Preferred Stock with voting, dividend, conversion,
liquidation or other rights which could adversely affect the voting power and
equity interest of the holders of Common Stock. Although we have no present
intention to issue any additional shares of Preferred Stock or to create any
additional series of Preferred Stock, we may issue such shares in the future.
Furthermore, if we issue Preferred Stock in a manner which dilutes the voting
rights of the holders of Common Stock, our listing on The Nasdaq SmallCap Market
may be impaired.
16. CHANGE IN CONTROL PROVISIONS
Our Bylaws and the Delaware General Corporation Law contain provisions
that may have the effect of making more difficult or delaying attempts by others
to obtain control of us, even when these attempts may be in the interests of
stockholders. The Delaware General Corporation Law also imposes conditions on
certain business combinations with "interested stockholders" (as defined by
Delaware law). We also have provided in certain agreements with key personnel
that in the event of a change of control and a termination of those employment
agreements without cause that each key employee will be entitled to stock
options. Additionally, we have provided that if a change of control occurs,
certain directors will receive immediate vesting of stock options granted under
our 1992 Directors Option Plan.
17. LACK OF PRODUCT LIABILITY INSURANCE
We develop, market, install and service electronic information and
document management systems. Any failure of our products may result in a claim
against us. Due to the high cost of product liability insurance, we do not
maintain insurance to protect against claims associated with the use of our
products. Any claim against us whether or not successful may result in our
expenditure of substantial funds in litigation. Further, any claim may require
management's time and the use of our resources and may have a materially adverse
impact on us.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the Shares. If any Selling
Stockholders exercise Options, we will receive the exercise price of such
Options. The Company will use any such proceeds for working capital and general
corporate purposes.
Federal Income Tax Effects
Under the Equity Incentive Plan pursuant to which the Securities are to be
issued, the exercise of the Securities may result in the recognition of taxable
income to the Selling Shareholder. Correspondingly, we will be entitled to a
deduction equal to the amount of ordinary income charged to the Selling
Shareholder.
Restrictions Under Securities Laws
The sale of any shares of Common Stock issued under the Equity Incentive Plan
must be made in compliance with federal and state securities laws. Officers,
directors and 10% or greater shareholders of Insci Corp, as well as certain
other persons or parties who may be deemed to be "affiliates" of Insci Corp.
under Federal securities laws, should be aware that resales by affiliates can
only be made pursuant to an effective Registration Statement, Rule 144 or any
other applicable exemption.
SELLING STOCKHOLDERS
The following table sets forth (i) the name of each Selling Stockholder; (ii)
any position, office or other material relationship which he had with the
Company or any of its affiliates during the last three years; (iii) the number
of Shares of common stock owned by him prior to the offering; (iv) the number of
Shares of common stock offered by him; and (v) the number of Shares of common
stock he would own if he exercised all of his Options and sells the Shares. The
shares are being registered to permit public secondary trading of the shares,
and the Selling Stockholders may offer the shares for resale from time to time.
See "Plan of Distribution." Unless otherwise noted the Selling Security Holders
business address is 2 Westborough Business Park, Westborough Massachusetts
01581.
<TABLE>
<CAPTION>
Shares of Common Shares of Common Stock Shares of Common
Stock Owned Offered for Account of Stock Owned After
Selling Stockholder Prior to Offering (1) Selling Stockholder The Offering (2)
- ------------------- --------------------- ---------------------- -----------------
<S> <C> <C> <C>
Darryl Dobin (3) 9,000 250,000 9,000
John Gillis (4) 344,336 41,000 303,336
Roger Kuhn (5) 0 175,000 0
Edward Prince (6) 1,482,787 575,000 1,232,787
</TABLE>
- -----------------
1. The number of Shares of common stock owned by each person includes Shares of
common stock issuable upon the exercise of Options granted under the Plans
that are currently exercisable within 60 days of April 13, 1999, except as
otherwise noted below.
2. The number of Shares of common stock owned by each person after the offering,
assumes that such person exercises all of his 1997 Equity Incentive Plan
Options and sells all of his shares underlying the options.
3. Mr. Dobin has been the President of the Company since July 1998 and a member
of the Board of Directors since September 1998. Shares owned by Mr. Dobin
include: (a) 9,000 shares of common stock; (b) 250,000 shares of common stock
underlying 250,000 stock options granted under the 1997 Equity Incentive
Plan. The options were granted to Mr. Dobin on July 27, 1998 with an exercise
price of $0.92. The options vest on an annual basis in one-third increments
on the anniversary date of the grant.
4. Mr. Gillis was a former Executive Vice President of the Company. Mr. Gillis
resigned from the Company pursuant to a Separation Agreement March 31, 1999.
Shares owned by Mr. Gillis include: (a) 5,000 shares of common stock; (b)
41,000 shares of common stock underlying 41,000 vested options under the 1997
Equity Incentive Plan, the options are exercisable at $0.93 per share and
expire July 31, 1999; (c) 298,336 shares of common stock underlying 298,336
vested stock options exercisable at $1.66 per share, these options expire on
April 1, 2001. To date, Mr. Gillis has not exercised any of his options.
5. Mr. Kuhn has been the Chief Financial Officer of the Company since July 1996.
Shares owned by Mr. Kuhn include: (a) 100,000 shares of common stock
underlying 100,000 options under the 1997 Equity Incentive Plan with an
exercise price of $1.22 per share, 50% of these options vest August 26, 1999
with the balance vesting August 26, 2000; (b) 50,000 shares of common stock
underlying 50,000 options under the 1997 Equity Incentive Plan with an
exercise price of $0.93 per share, these options will vest in increments of
one-third on April 1, 2000, April 1, 2001 and April 1,2002; (c) 25,000 shares
of common stock underlying 25,000 stock options under the 1997 Equity
Incentive Plan with an exercise price of $2.83 per share, these options vest
in one-third increments on April 1, 2000, April 1, 2001 and April 1, 2002.
6. Dr. Prince was appointed President and Chief Executive Officer of the Company
in June 1995. Dr Prince is currently the Chairman of the Board of Directors
and Chief Executive Officer of the Company. Shares owned by Dr. Prince
include: (a) 32,787 shares of common stock; (b) 950,000 shares of common
stock underlying 950,000 vested options exercisable at $1.66 per share; (c)
250,000 shares of common stock underlying 250,000 vested stock options
exercisable at $2.00 per share; (d) 200,000 shares of common stock underlying
200,000 vested stock options granted under the 1997 Equity Incentive Plan,
the options have an exercise price of $0.95 per share; (e) 300,000 shares of
common stock underlying 300,000 stock options granted under the 1997 Equity
Incentive Plan with an exercise price of $1.75 per share, 50% of the options
vest September 30, 2000 and the balance of these options vest September 30,
2001; (f) 75,000 shares of common stock underlying 75,000 stock options
granted under the 1997 Equity Incentive Plan exercisable at $3.75 per share
of which 25,000 options are vested with 25,000 options vesting May 7, 1999
and 25,000 vesting May 7, 2000. To date, Dr. Prince has not exercised any of
his options.
PLAN OF DISTRIBUTION
The Selling Stockholders may sell the Shares from time to time in transactions
(which may include block transactions) on Nasdaq, in negotiated transactions or
both. They may sell the Shares at fixed prices which may be changed, at market
prices or in negotiated transactions, a combination of such methods of sale or
otherwise. The Selling Stockholders may also transfer Shares by gift. The
Selling Stockholders may not transfer their Options except in case of death.
The Selling Stockholders may sell the Shares directly to purchasers, through
broker-dealers acting as agents for the Selling Stockholders or to
broker-dealers who may purchase securities as principals for their own account.
The Selling Stockholders pay the broker-dealers a brokerage fee or a discount
from the sales price. The purchaser of the Shares may also pay a brokerage fee
or other charge. The compensation to a particular broker-dealer may exceed
customary commissions. We do not know of any arrangements by any Selling
Stockholder for the sale of any of the Shares.
The Selling Stockholders and broker-dealers, if any, acting in connection with
such sales might be deemed to be "underwriters" within the meaning of Section
2(11) of the Securities Act and any commission received by them and any profit
on the resale of the securities might be deemed to be underwriting discounts and
commissions under the Securities Act.
The Selling Stockholders understand that the anti-manipulative rules under the
Exchange Act, which are set forth in Regulation M, may apply to its sales in the
market. We have furnished the Selling Stockholders with a copy of Regulation M,
and we have informed them that they should deliver a copy of this Prospectus
when they sell any Shares.
LEGAL MATTERS
The validity of the common stock offered hereby has been passed upon by our
counsel, Baratta & Goldstein.
EXPERTS
The consolidated financial statements, incorporated by reference in this
Prospectus and elsewhere in the Registration Statement, to the extent for the
periods indicated in their report, have been audited by Pannell Kerr Forster PC,
independent certified public accountants, and are included herein in reliance
upon the authority of such firm, as experts in accounting and auditing in giving
such report.
<PAGE>
PART II. INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The Registrant is subject to the informational and reporting requirements of
Sections 13(a), 13(c), 14 and 15(d) of the Securities and Exchange Act of 1934,
as amended (the "Exchange Act") and, in accordance therewith, files reports,
proxy statements and/or information statements and other information with the
Securities and Exchange Commission ("Commission"). The following documents,
which are filed with the Commission, are incorporated in this Registration
Statement by reference:
(a) Annual report on Form 10-KSB for the year ended March 31, 1998;
(b) Quarterly reports on Form 10-QSB for the quarters ended June 30,
1998, September 30, 1998, December 31, 1998;
(c) All other reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year covered by the
annual report or the prospectus referred to in (a) above.
(d) The description of the common stock of the Registrant $.01 par
value per share (the "Common Stock"), contained in the S-1
Registration Statement filed under the Exchange Act, effective
October 6, 1997, including any Amendment or Report filed for the
purpose of updating such description.
All documents subsequently filed by the Registrant pursuant to Sections 13(a),
13(c), 14, and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment which indicates that all shares of Common Stock offered
hereby have been sold or which deregisters all shares of Common Stock then
remaining unsold, shall be deemed to be incorporated by reference herein and to
be part hereof from the date of the filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
None.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under the Delaware General Corporation Law ("DGCL"), a corporation may indemnify
any director, officer, employee or agent against expense (including attorneys'
fees), judgments, fines and amounts paid in settlement in connection with any
specified, threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the corporation) if such person acted in good faith and in a manner
such person reasonably believed to be in, or not opposed to, the best interests
of the corporation and, with respect to any criminal proceeding, had no
reasonable cause to believe that his or her conduct was unlawful.
Article EIGHTH of the Registrant's Restated Certificate of Incorporation provide
for indemnification of directors and officers of the Registrant to the fullest
extent permitted by the DGCL.
The Company also maintains directors' and officers' liability insurance ("D&O
Insurance"). The D&O Insurance covers any person who has been or is an officer
or director of the Company or of any of its subsidiaries for all expense,
liability and loss (including attorneys' fees, investigation costs, judgments,
fines, penalties and amounts paid, or to be paid, in settlement) actually and
reasonably incurred by such person in connection with such action, suit or
proceeding, net of the deductible.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers or 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 Securities 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 hereunder, 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 of whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
The Exhibit Index immediately preceding the exhibits is incorporated herein by
reference.
ITEM 9. UNDERTAKINGS.
(a) The 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, as amended (the
"Securities 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 the
Registration Statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would
not exceed that which was registered) and any deviation
from the low or high end of the estimated maximum
offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective Registration
Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement; provided
however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a
post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to
the Commission by the Registrant pursuant to Section 13
or Section 15(d) of the Exchange Act that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities 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.
(b). The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act, each filing
of the Registrant's annual report, pursuant to Section 13(a) or
Section 15(d) of the Exchange Act (and, where applicable, each
filing of an employee benefit plan's annual report, pursuant to
the Section 15(d) of the Exchange 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.
(h). Insofar as indemnification for liabilities arising under the
Securities 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 Commission such indemnification is against
public policy as expressed in the securities 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 Securities Act and will be governed by the final
adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of 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 the City of Westborough, Massachusetts on the 22nd day of
April 1999.
INSCI CORP.
By: /s/ E. Ted Prince
------------------------------------
E. Ted Prince
Chief Executive Officer and Director
Pursuant to the requirements of the Securities Act of 1933 as amended,
this registration statement has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates indicated. Each
person whose signature appears below hereby authorizes E. Ted Prince and Roger
Kuhn or either of them acting in the absence of the others, as his true and
lawful attorney-in-fact and agent, with full power of substitution and
re-substitution for him and in his name, place and stead, in any and all
capacities to sign any and all amendments (including post-effective amendments)
to this registration statement, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission.
Signature Title Date
/s/ E. Ted Prince Chief Executive Officer
------------------------ and Director April 22, 1999
E. Ted Prince
/s/ Andre Daniel-Dreyfus Director April 22, 1999
------------------------
Andre Daniel-Dreyfus
/s/ Thomas Farkas Director April 22, 1999
------------------------
Thomas Farkas
/s/ Robert Little Director April 22, 1999
------------------------
Robert Little
/s/ Francis X. Murphy Director April 22, 1999
------------------------
Francis X. Murphy
/s/ John Lopiano Director April 22, 1999
------------------------
John Lopiano
/s/ Darryl Dobin President and Director April 22, 1999
------------------------
Darryl Dobin
/s/ Roger Kuhn Chief Financial Officer April 22, 1999
------------------------
Roger Kuhn
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
4.1 Amended Certificate of Incorporation of
the Registrant *
4.2 By-Laws *
4.3 Specimen Certificate of Common Stock of
the Registrant *
4.4 INSCI Corp. 1997 Equity Incentive Plan
5 Opinion of Baratta & Goldstein
23.1 Consent of Baratta & Goldstein
(included in Exhibit 5)
23.2 Consent of Pannell Kerr Forster PC
24 Power of Attorney
(included in Signature Page)
*Incorporated herein by reference.
<PAGE>
EXHIBIT 4.4
INSCI Corp
1997 EQUITY INCENTIVE PLAN
SECTION 1. General Purpose of Plan; Definitions.
The name of this plan is the INSCI Corp 1997 Equity Incentive Stock Plan (the
"Plan"). The purpose of the Plan is to enable INSCI Corp (the "Company") and its
Subsidiaries to retain and attract executives and employees who contribute to
the Company's success by their ability, ingenuity and industry, and to enable
such executives and employees to participate in the long-term success and growth
of the Company by giving them a proprietary interest in the Company.
For purposes of the Plan, the following terms shall be defined as set forth
below.
a. "Board" means the Board of Directors of the Company.
b. "Cause" means a felony conviction of a participant or the failure of a
participant to contest prosecution for a felony, or a participant's willful
misconduct or dishonesty, any of which is directly and materially harmful to the
business or reputation of the Company.
c. "Change in Control" shall mean [a change in common control of the Company due
to (i) the sale or transfer of 50% or more of the Company's stock and/or assets
to a person or persons other than the persons unrelated to the Company at the
time of such sale and/or (ii) the majority of directors elected at any Annual
Meeting being persons other than the persons nominated by the Company's
management in the proxy statement for such Annual Meeting.]
d. "Code" means the Internal Revenue Code of 1986, as amended.
e. "Committee" means the Committee referred to in Section 2 of the Plan. If at
any time no committee shall be in office, then the functions of the Committee
specified in the Plan shall be exercised by the Board.
f. "Company" means INSCI Corp a corporation organized under the laws of the
State of Delaware (or any successor corporation).
g. "Deferred Stock" means an award of Stock that is made on a deferred basis
pursuant to Section 8 below.
h. "Disinterested Person" shall have the meaning set forth in Rule 16b-3(d)(3)
as promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934, or any successor definition adopted by the Commission.
i. "Employee" means an employee of the Company and/or its Subsidiaries.
j. "Fair Market Value" means the average of the closing high bid and low asked
prices on the over-the-counter market for the stock as reported by the National
Association of Securities Dealers Automatic Quotation System, or in the absence
of such price, the value of the stock on a given date as determined by the
Committee based on such relevant factors as shall, in the Committee's sole
discretion, be applicable to such valuation and in accordance with
generally-accepted accounting practices and applicable securities regulations.
k. "Incentive Stock Option" means any Stock Option intended to be and designated
as an "Incentive Stock Option" within the meaning of Section 422A of the Code.
l. "Non-Qualified Stock Option" means any Stock Option that is not an Incentive
Stock Option.
m. "Retirement" means retirement from active employment with the Company and/or
any Subsidiary of the Company on or after age 65.
n. "Restricted Stock" means an award of shares of Stock that are subject to
restrictions under Section 7 below.
o. "Stock" means the Common Stock, $.01 par value, of the Company.
p. "Stock Appreciation Right" means the right pursuant to an award granted under
Section 6 below to surrender to the Company all or a portion of a Stock Option
in exchange for an amount equal to the difference between (i) the Fair Market
Value, as of the date such Stock Option or such portion thereof is surrendered,
of the shares of Stock covered by such Stock Option or such portion thereof, and
(ii) the aggregate exercise price of such Stock Option or such portion thereof.
q. "Stock Appreciation Award" means the right, independent of any Stock Option,
to receive, pursuant to an award granted under paragraph (c) of Section 6 of
this Plan, with respect to a specified number of shares of Stock, an amount
equal to the difference on the date that such right is exercised between (i) the
Fair Market Value of such shares on the date that such right is exercised, and
(ii) the Fair Market Value of such shares on the date that such right was
granted.
r. "Stock Option" means any option to purchase shares of Stock granted pursuant
to Section 5 below.
s. "Subsidiary" means any corporation in which the Company possesses directly or
indirectly 50% or more of the combined voting power of all classes of stock of
such corporation.
SECTION 2. ADMINISTRATION.
The Plan shall be administered by a Committee of not less than two non-employee
directors who are Disinterested Persons, and who shall be appointed by the Board
of Directors of the Company (the "Board") and serve at the pleasure of the
Board.
Subject to such directions or resolutions as may from time to time be issued or
adopted by the Board, the Committee shall have the power and authority to grant
to eligible employees, pursuant to the terms of the Plan: (i) Stock Options,
(ii) Stock Appreciation Rights and/or Awards, (iii) Restricted Stock, (iv)
Deferred Stock or (v) any other Stock-based awards permitted hereunder.
In particular, the Committee shall have the authority: (i) to select the
officers and other employees of the Company and its Subsidiaries to whom Stock
Options, Stock Appreciation Rights, Stock Appreciation Awards, Restricted Stock,
Deferred Stock or other Stock-based awards may from time to time be granted
hereunder; (ii) to determine whether and to what extent Incentive Stock Options,
Non-Qualified Stock Options, Stock Appreciation Rights, Stock Appreciation
Awards, Restricted Stock, Deferred Stock or other Stock-based awards, or a
combination of the foregoing, are to be granted hereunder, (iii) to determine
the number of shares to be covered by each such award granted hereunder, (iv) to
determine the terms and conditions, not inconsistent with the terms of the Plan,
of any award granted hereunder (including, but not limited to, any vesting
requirement or restriction on any Stock Option, Stock Appreciation Right, Stock
Appreciation Award, Restricted Stock, Deferred Stock or other Stock-based award
and/or the shares of Stock relating thereto; (v) to determine whether, to what
extent and under what circumstances Restricted Stock, Deferred Stock or other
Stock-based awards may be settled in cash; and (vi) to determine whether, to
what extent and under what circumstances Stock and other amounts payable with
respect to an award under this Plan shall be deferred either automatically or at
the election of the participant.
The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable; to interpret the terms and provisions of the
Plan and any award issued under the Plan (and any agreements relating thereto);
and to otherwise supervise the administration of the Plan.
Subject to any applicable directions and resolutions of the Board, all decisions
made by the Committee pursuant to the provisions of the Plan shall be final and
binding on all persons, including the Company and Plan participants.
SECTION 3. STOCK SUBJECT TO PLAN.
The total number of shares of Stock reserved and available for distribution
under the Plan shall be 3,000,000. Such shares may consist, in whole or in part
of authorized and unissued shares of treasury shares, except that treasury
shares must be used in the case of restricted stock and deferred stock awards.
If any shares that have been optioned cease to be subject to option, or if any
shares subject to any Stock Appreciation Award, Restricted Stock award, Deferred
Stock award or other Stock-based award granted hereunder are forfeited, they
shall again be available for distribution in connection with future awards under
the Plan. In the event of exercise of a Stock Appreciation Right or Award, the
number of shares issued [or issuable] at the time of exercise based on the Fair
Market Value of the Stock at such time shall not be available for distribution
in connection with any other awards under the Plan.
In the event of any merger, reorganization, consolidation, recapitalization,
Stock dividend, or other change in corporate structure affecting the Stock, such
substitution or adjustment shall be made in the aggregate number of shares
reserved for issuance under the Plan, in the number and option price of shares
subject to outstanding options granted under the Plan, and in the number of
shares subject to Stock Appreciation Awards, Restricted Stock, Deferred Stock or
other Stock-based awards granted under the Plan as may be determined to be
appropriate by the Committee, in its sole discretion, provided that the number
of shares subject to any award shall always be a whole number. Such adjusted
option price shall also be used to determine the amount payable by the Company
upon the exercise of any Stock Appreciation Right associated with any option.
SECTION 4. ELIGIBILITY.
Officers and other employees of the Company and its Subsidiaries (but excluding
members of the Committee and any person who serves only as a director) who are
responsible for the management, growth and profitability of the business of the
Company and its Subsidiaries or who are otherwise selected by the Committee are
eligible to be granted Stock Options, Stock Appreciation Rights or Awards,
Restricted Stock, Deferred Stock or other Stock-based awards under the Plan. The
optionees and participants under the Plan shall be selected from time to time by
the Committee, in its sole discretion, from among those eligible, and the
Committee shall determine, in its sole discretion, the number of shares covered
by each award.
SECTION 5. STOCK OPTIONS.
Any stock option granted under the Plan shall be in such form as the Committee
may from time to time approve.
The stock options granted under the Plan may be of two types: (i) Incentive
Stock Options and (ii) Non-Qualified Stock Options.
The Committee shall have the authority to grant any optionee Incentive Stock
Options, Non-Qualified Stock Options, or both types of options (in each case
with or without Stock Appreciation Rights). To the extent that any option does
not qualify as an Incentive Stock Option, it shall constitute a separate
Non-Qualified Stock Option.
Anything in the Plan to the contrary notwithstanding, no term or condition of
this Plan relating to Incentive Stock Options shall be interpreted, amended or
altered, nor shall any discretion or authority granted under the Plan to be so
exercised, so as to disqualify either the Plan or any Incentive Stock Option
under Section 422A of the Code.
Options granted under the Plan shall be subject to the following terms and
conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable.
(a) Option Price. The option price per share of Stock purchasable under a Stock
Option shall be determined by the Committee at the time of grant but shall not
be less than 100% of the Fair Market Value of the Stock on the date of the grant
of the option. If an employee owns or is deemed to own (by reason of the
attribution rules applicable under Section 425 (d) of the Code) more than 10% of
the combined voting power of all classes of Stock of the Company or any
Subsidiary and an Incentive Stock Option is granted to such employee, the option
price shall be no less than 110% of the fair market value of the Stock on the
date the option is granted.
(b) Option Term. The term of each Stock Option shall be fixed by the Committee,
but no Incentive Stock Option shall be exercisable more than ten years after the
date the option is granted and no Non-Qualified Stock Option shall be
exercisable more than ten years and one day after the date the option is
granted. If an employee owns or is deemed to own (by reason of the attribution
rules of Section 425(d) of the Code) more than 10% of the combined voting power
of all classes of Stock of the Company or any Subsidiary and an Incentive Stock
Option is granted to such employee, the term of such option shall be no more
than five years from the date of grant.
(c) Exercisability. Stock Options shall be exercisable at such time or times as
determined by the Committee at or after grant. If the Committee provides, in its
discretion, that any option is exercisable only in installments, the Committee
may waive such installment exercise provisions at any time. Unless otherwise
determined by the Committee at or after grant, no Stock Option shall be
exercisable during the year ending on the day before the first anniversary date
of the granting of the option, except as provided in paragraph (9) of this
Section 5. Notwithstanding this Section 5(c), the Committee may in the event of
a change in control, accelerate vesting of unexercised options.
(d) Method of Exercise. Stock Options may be exercised in whole or in part at
any time during the option period, by giving written notice of exercise to the
Company specifying the number of shares to be purchased. Such notice shall be
accompanied by payment in full of the purchase price, either by certified or
bank check or, with Committee's approval, by a note. As determined by the
Committee, in its sole discretion, at or after grant, payment in full or in part
may also be made in the form of unrestricted Stock already owned by the optionee
or, in the case of the exercise of a Non-Qualified Stock Option, Restricted
Stock or Deferred Stock subject to an award hereunder (based, in each case, on
the fair market value of the Stock on the date the option is exercised, as
determined by the Committee), provided, however, that, in the case of an
Incentive Stock Option, the right to make a payment in the form of already owned
shares may be authorized only at the time the option is granted. No shares of
Stock shall be issued until full payment therefor has been made. An optionee
shall have the rights to dividends or other rights of a shareholder with respect
to shares subject to the option when the optionee has given written notice of
exercise, has paid in full for such shares, and, if requested, has given the
representation described in paragraph (a) of Section 13.
(f) Non-transferability of Options. No Stock Option shall be transferable by the
optionee otherwise than by will or by the laws of descent and distribution, and
such options shall be exercisable, during the optionee's lifetime, only by the
optionee.
(g) Termination by Death.If an optionee's employment by the Company or a
Subsidiary terminates by reason of death, the Stock Option may thereafter be
immediately exercised in full by the legal representative of the estate or by
the legatee of the optionee under the will of the optionee, for a period of
twelve months from the date of such death or until the expiration of the stated
term of the option, whichever period is the shorter.
(h) Termination by Reason of Permanent Disability. If an optionee's employment
by the Company or any Subsidiary terminates by reason of permanent disability,
any Stock Option held by such optionee may thereafter be exercised to the extent
it was exercisable at the time of permanent disability, but may not be exercised
after two years from the date of such termination of employment or the
expiration of the stated term of the option, whichever period is the shorter;
provided, however, that, if the optionee dies within such two-year period, any
unexercised Stock Option held by such optionee shall thereafter be exercisable
to the extent to which it was exercisable at the time of death for a period of
twelve months from the date of such death or for the stated term of the option,
whichever period is the shorter. In the event of termination of employment by
reason of permanent disability, if an Incentive Stock Option is exercised prior
to the expiration of the holding periods that apply for purposes of Section 422A
of the Code, the option will thereafter be treated as a Non-Qualified Stock
Option.
(i) Termination by Reason of Retirement. If an optionee's employment by the
Company and any Subsidiary or Parent Corporation terminates by reason of Normal
or Early Retirement, any Stock Option held by such optionee may thereafter be
exercised to the extent it was exercisable at the time of such Retirement, but
may not be exercised after three years from the date of such termination of
employment or the expiration of the stated term of the option, whichever period
is the shorter; provided, however, that, if the optionee dies within such
three-year period, any unexercised Stock Option held by such optionee shall
thereafter be exercisable to the extent to which it was exercisable at the time
of death for a period of twelve months from the date of such death or for the
stated term of the option, whichever period is the shorter. In the event of
termination of employment by reason of Retirement, if an Incentive Stock Option
is exercised prior to the expiration of the holding periods that apply for
purposes of Section 422A of the Code, the option will thereafter be treated as a
Non-Qualified Stock Option.
(j) Other Termination. Unless otherwise determined by the Committee, if an
optionee's employment by the Company and/or any Subsidiary terminates for any
reason other than death, permanent disability, or Retirement, the Stock Option
shall thereupon terminate, except that the option may be exercised for the
lesser of three months or the balance of the option's term if the optionee is
involuntarily terminated by the Company and/or any Subsidiary without Cause.
(k) Incentive Stock Options. The aggregate fair market value of any Incentive
Stock Options which an employee may exercise for the first time during any
calendar year shall not exceed $100,000 as required under Section 422A of the
code.
(l) Form of Settlement. In its sole discretion, the Committee may provide, at
the time of grant, that the shares to be issued upon the exercise of a Stock
Option shall be in the form of Restricted Stock or Deferred Stock, or may, in
the option agreement, reserve a right to so provide after the time of grant.
SECTION 6. STOCK APPRECIATION RIGHTS AND AWARDS.
(a) Grant and Exercise. Stock Appreciation Rights may be granted in conjunction
with all or part of any Stock Option granted under the Plan, as follows: (i) in
the case of a Non-Qualified Stock Option, such rights may be granted either at
the time of the grant of such option or at any subsequent time during the term
of the option; and(ii) in the case of an Incentive Stock Option, such rights may
be granted only at the time of the grant of the option. A Stock Appreciation
Right or applicable portion thereof granted with respect to a given Stock Option
shall terminate and no longer be exercisable upon the termination or exercise of
the related Stock Option, except that a Stock Appreciation Right granted with
respect to less than the full number of shares covered by a related Stock Option
shall not be reduced until the exercise or termination of the related Stock
Option exceeds the number of shares not covered by the Stock Appreciation Right.
A Stock Appreciation Right may be exercised by an optionee, in accordance with
paragraph (b) of this Section 6, by surrendering the applicable portion of the
related Stock Option. Upon such exercise and surrender, the optionee shall be
entitled to receive an amount determined in the manner prescribed in paragraph
(b) of this Section 6. Stock Options which have been so surrendered, in whole or
in part, shall no longer be exercisable to the extent the related Stock
Appreciation Rights have been exercised.
(b) Terms and Conditions.Stock Appreciation Rights shall be subject to such
terms and conditions, not inconsistent with the provisions of the Plan, as shall
be determined from time to time by the Committee, including the following:
(i) Stock Appreciation Rights shall be exercisable only at such time or times
and to the extent that the Stock Options to which they relate shall be
exercisable in accordance with the provisions of Section 5 and this
Section 6 of the Plan; provided, however, that any Stock Appreciation
Right granted subsequent to the grant of the related Stock Option shall
not be exercisable during the first six months of its term, except that
this limitation shall not apply in the event of death or permanent
disability of the optionee prior to the expiration of the six-month
period.
(ii) Upon the exercise of a Stock Appreciation Right, an optionee shall be
entitled to receive up to, but not more than, an amount in cash equal to
the excess of the Fair Market Value of one share of Stock over the option
price per share specified in the related option multiplied by the number
of shares in respect of which the Stock Appreciation Right shall have been
exercised.
(iii) Stock Appreciation Rights shall be transferable only when and to the
extent that the underlying Stock Option would be transferable under
paragraph (f) of Section 5 of the Plan.
(iv) Upon the exercise of a Stock Appreciation Right, the Stock Option or part
thereof to which such Stock Appreciation Right is related shall be deemed
to have been exercised for the purpose of the limitation of the number of
shares of Stock to be issued under the Plan, as set forth in Section 3 of
the Plan.
(v) Stock Appreciation Rights granted in connection with Incentive Stock
Options may be exercised only when the market price of the Stock subject
to the Incentive Stock Option exceeds the exercise price of the Incentive
Stock Option.
(c) To the extent deemed appropriate by the Committee, the Committee may also
award Stock Appreciation Awards, subject, where appropriate, to terms and
conditions similar to those set forth in paragraph (b) of this Section 6 and
such other terms and conditions as the Committee shall deem appropriate.
SECTION 7. RESTRICTED STOCK.
(a) Administration. Shares of Restricted Stock may be issued either alone or in
addition to other awards granted under the Plan. The Committee shall determine
the officers and key employees of the Company and its subsidiaries to whom, and
the time or times at which, grants of Restricted Stock will be made, the number
of shares to be awarded, the time or times within which such awards may be
subject to forfeiture, and all other conditions of the awards. The provisions of
Restricted Stock awards need not be the same with respect to each recipient.
(b) Awards and Certificates. The prospective recipient of an award of shares of
Restricted Stock shall not, with respect to such award, be deemed to have become
a participant, or to have any rights with respect to such award, until and
unless such recipient shall have executed an agreement evidencing the award and
delivered a fully executed copy thereof to the Company, and otherwise complied
with the then applicable terms and conditions.
(i) Each participant shall be issued a stock certificate in respect of shares
of Restricted Stock awarded under the Plan. Such certificate shall be
registered in the name of the participant, and shall bear an appropriate
legend referring to the terms, conditions, and restrictions applicable to
such award, substantially in the following form:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) of the INSCI Corp 1997 Equity Incentive Plan and an
Agreement entered into between the registered owner and INSCI Corp.
Copies of such Plan and Agreement are on file in the offices of INSCI
Corp., 2 Westborough Business Park, Westborough, MA 01581."
(ii) The Committee shall require that the stock certificates evidencing such
shares be held in custody by the Company until the restrictions thereon
shall have lapsed, and that, as a condition of any Restricted Stock award,
the participant shall have delivered a stock power, endorsed in blank,
relating to the stock covered by such award.
(c) Restrictions and Conditions.The shares of Restricted Stock awarded pursuant
to the Plan shall be subject to the following restrictions and conditions:
(i) Subject to the provisions of this Plan and the award agreements, during a
period set by the Committee commencing with the date of such award (the
"Restriction Period"), the participant shall not be permitted to sell,
transfer, pledge, or assign shares of Restricted Stock awarded under the
Plan. Within these limits the Committee may provide for the lapse of such
restrictions in installments where deemed appropriate.
Except as provided in paragraph (c)(i) of this Section 7, the participant
shall have, with respect to the shares of Restricted Stock, all of the
rights of a shareholder of the Company, including the right to vote the
shares, and the right to receive any cash dividends. The Committee, in its
sole discretion, may permit or require the payment of cash dividends to be
deferred and, if the Committee so determines, reinvested in additional
Restricted Stock or otherwise reinvested. Certificates for shares of
unrestricted Stock shall be delivered to the grantee promptly after, and
only after, the period of forfeiture shall expire without forfeiture in
respect of such shares of Restricted Stock.
(iii) Subject to the provisions of paragraph (c)(iv) of this Section 7, upon
termination of employment for any reason during the Restriction Period,
all shares still subject to restriction shall be forfeited by the
participant and reacquired by the Company.
(iv) In the event of a participant's Retirement, permanent disability, or
death, or in the event of a Change in Control, the Committee may, in its
sole discretion, waive in whole or in part any or all remaining
restrictions with respect to such participant's shares of Restricted
Stock.
SECTION 8. DEFERRED STOCK AWARDS.
(a) Administration. Deferred Stock may be awarded either alone or in addition to
other awards granted under the Plan. The Committee shall determine the officers
and key employees of the Company and its subsidiaries to whom and the time or
times at which Deferred Stock shall be awarded, the number of shares of Deferred
Stock to be awarded to any participant, the duration of the period (the
"Deferral Period") during which, and the conditions under which, receipt of the
Stock will be deferred, and the terms and conditions of the award in addition to
those contained in paragraph (b) of this Section 8. In its sole discretion, the
Committee may provide for a minimum payment at the end of the applicable
Deferral Period based on a stated percentage of the full fair market value on
the date of grant of the number of shares covered by a Deferred Stock award. The
Committee may also provide for the grant of Deferred Stock upon the completion
of a specified performance period. The provisions of Deferred Stock awards need
not be the same with respect to each recipient.
(b) Terms and Conditions:
(i) Subject to the provisions of this Plan and the award agreement, Deferred
Stock awards may not be sold, assigned, transferred, pledged or otherwise
encumbered during the Deferral Period. At the expiration of the Deferral
Period, share certificates shall be delivered to the participant, or legal
representative, in a number equal to the shares covered by the Deferred
Stock award.
(ii) Amounts equal to any dividends declared during the Deferral Period with
respect to the number of shares covered by a Deferred Stock award will be
paid to the participant currently or deferred and deemed to be reinvested
in additional Deferred Stock or otherwise reinvested, as determined at the
time of the award by the Committee, in its sole discretion.
(iii) Subject to the provisions of the award agreement and paragraph (b)(iv) of
this Section 8, upon termination of employment for any reason during the
Deferral Period for a given award, the Deferred Stock in question shall be
forfeited by the participant.
(iv) In the event of the participant's Retirement, permanent disability or
death during the Deferral Period, or in the event of a Change in Control,
the Committee may, in its sole discretion, waive in whole or in part any
or all of the remaining deferral limitations imposed hereunder with
respect to any or all of the participant's Deferred Stock.
(v) Prior to the completion of the Deferral Period, a participant may elect to
further defer (the "Elective Deferral Period") receipt of the award for a
specified period or until a specified event, subject in each case to the
Committee's approval and to such terms as are determined by the Committee,
all in its sole discretion.
(vi) Each award shall be confirmed by, and subject to the terms of, a Deferred
Stock agreement executed by the Company and the participant.
SECTION 9. OTHER STOCK-BASED AWARDS.
(a) Administration. Other awards of, or based on, Stock ("other Stock-based
awards") may be granted either alone or in addition to Stock Options, Stock
Appreciation Rights or Awards, Restricted Stock or Deferred Stock granted under
the Plan. Subject to the provisions of the Plan, the Committee shall have sole
and complete authority to determine the officers and employees of the Company
and its subsidiaries to whom and the time or times at which such awards shall be
made, the number of shares of Stock to be awarded pursuant to such awards, and
all other conditions of the awards. The Committee may also provide for the grant
of stock upon the completion of a specified performance period. The provisions
of other Stock-based awards need not be the same with respect to each recipient.
(b) Terms and Conditions:
(i) Subject to the provisions of this Plan, shares subject to awards made
under this Section 9, may be sold, assigned, transferred, pledged or
otherwise encumbered only to the extent (if any) permitted under the award
agreement.
(ii) Subject to the provisions of this Plan and the award agreement, the
recipient of an award under this Section 9 may be entitled to receive,
currently or on a deferred basis, dividends or dividend equivalents with
respect to the number of shares covered by the award, as determined at the
time of the award by the Committee, in its sole discretion, and the
Committee may provide that such amounts (if any) shall be deemed to have
been reinvested in additional Stock or otherwise reinvested.
(iii) The shares covered by any award under this Section 9 may be forfeited to
the extent so provided in the award agreement, as determined by the
Committee, in its sole discretion.
(iv) In the event of the participant's Retirement, permanent disability or
death, or in the event of a Change in Control, the Committee may, in its
sole discretion, waive in whole or in part any or all of the remaining
limitations imposed hereunder (if any) with respect to any or all of the
participant's shares awarded under this Section 9.
(v) Each award under this Section 9 shall be confirmed by, and subject to the
terms of, an agreement executed by the Company and the participant.
SECTION 10. TRANSFER, LEAVE OF ABSENCE, ETC.
For purposes of the Plan, the following events shall not be deemed a termination
of employment.
(a) a transfer of an employee from the Company to a Subsidiary, or from a
Subsidiary to the Company, or from one Subsidiary to another;
(b) a leave of absence, approved in writing by the Committee, for military
service or sickness, or for any other purpose approved by the Company if the
period of such leave does not exceed ninety (90) days; and
(c) a leave of absence in excess of ninety (90) days, approved in writing by the
Committee, but only of the employee's rights to reemployment is guaranteed
either by statute or by contract, and provided that, in the case of any leave of
absence, the employee returns to work within 30 days after the end of such
leave.
SECTION 11. AMENDMENTS AND TERMINATION.
The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration, or discontinuation shall be made which would impair the rights of an
optionee or participant under a Stock Option, Stock Appreciation Right or Award,
Restricted Stock, Deferred Stock or other Stock-based award theretofore granted,
without the optionee's or participant's consent, or which without the approval
of the stockholders would:
(a) except as expressly provided in this Plan, increase the total number of
shares reserved for the purpose of the Plan;
(b) decrease the option price of any Stock Option to less than 100% of the fair
market value on the date of the granting of the option;
(c) extend the maximum option period under paragraph (b) of Section 5 of the
Plan.
The Committee may amend the terms of any award or option theretofore granted,
prospectively or retroactively, but no such amendment shall impair the rights of
any holder without his consent. The Committee may also substitute new Stock
Options for previously granted options, including previously granted options
having higher option prices.
SECTION 12. UNFUNDED STATUS OF PLAN.
The Plan is intended to constitute an "unfunded" plan for incentive and deferred
compensation. With respect to any payments not yet made to a participant or
optionee by the Company, nothing contained herein shall give any such
participant or optionee any rights that are greater than those of a general
creditor of the Company. In its sole discretion, the Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Stock or payments in lieu of or with respect to awards
hereunder, provided, however, that the existence of such trusts or other
arrangements is consistent with the unfunded status of the Plan.
SECTION 13. GENERAL PROVISIONS.
(a) The Committee may require each person purchasing shares pursuant to a Stock
Option under the Plan to represent to and agree with the Company in writing that
the optionee is acquiring the shares without a view to distribution thereof. The
certificates for such shares may include any legend which the Committee deems
appropriate to reflect any restrictions on transfer.
All certificates for shares of Stock delivered under the Plan pursuant to any
Restricted Stock, Deferred Stock or other Stock-based awards shall be subject to
such stock-transfer orders and restrictions as the Committee may deem advisable
under the rules, regulations, and other requirements of the Securities and
Exchange Commission, any stock exchange upon which the Stock is then listed, and
any applicable Federal or state securities law, and the Committee may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.
(b) Recipients of Restricted Stock, Deferred Stock and other Stock-based awards
under the Plan (other than options) are not required to make any payment or
provide consideration other than the rendering of services.
(c) Nothing contained in this Plan shall prevent the Board of Directors from
adopting other or additional compensation arrangements, subject to stockholder
approval if such approval is required; and such arrangements may be either
generally applicable or applicable only in specific cases.
(d) If any participant properly elects, within the applicable time limits
following grant, to include in gross income for Federal income tax purposes an
amount equal to the fair market value (on the date of grant of the award) of the
Stock subject to the award, such participant shall make arrangements
satisfactory to the Committee to pay to the Company, in the year of such award,
any Federal state, or local taxes required to be withheld with respect to such
shares. If such employee shall fail to make such tax payments as are required,
the Company and its subsidiaries shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind otherwise due to the
participant.
Any participant who does not or cannot make the election described in the
preceding subparagraph with respect to an award, shall, no later than the date
as of which the value of the award first becomes includible in the gross income
of the participant for Federal income tax purposes, pay to the Company, or make
arrangements satisfactory to the Committee regarding payment of, any Federal,
state, or local taxes of any kind required by law to be withheld with respect to
the Stock subject to such award, and the Company and its subsidiaries shall, to
the extent permitted by law, have the right to deduct any such taxes from any
payment of any kind otherwise due to the participant.
SECTION 14. EFFECTIVE DATE OF PLAN.
The Plan shall be effective on the date it is approved by a vote of the holders
of a majority of the total outstanding Stock.
SECTION 15. TERM OF PLAN.
No Stock Option, Stock Appreciation Right or Award, Restricted Stock, Deferred
Stock, or other Stock-based award shall be granted pursuant to the Plan on or
after the tenth anniversary of the date of stockholder approval, but awards
theretofore granted may extend beyond that date.
<PAGE>
EXHIBIT 5
Baratta & Goldstein
Attorneys at Law
597 Fifth Avenue
New York, NY 10017
April 27, 1999
INSCI Corp.
2 Westborough Business Park
Westborough, MA 01581
Re: Insci Corp. Registration Statement on Form S-8
Ladies and Gentlemen:
We have acted as counsel to INSCI Corp., a Delaware corporation (the
"Company"), in connection with the filing of its Registration Statement on Form
S-8 (the "Registration Statement") with the Securities and Exchange Commission
(the "Commission") under the Securities Act of 1933, as amended (the "Act"), of
3,000,000 shares of Common Stock, par value $.01 per share (the "Common Stock"),
of the Company (the "Shares") issuable pursuant to the terms of the Company's
1997 Equity Incentive Plan (the "Plan").
We have examined originals or copies, certified or otherwise identified to our
satisfaction, of such records of the Company, resolutions of the Board of the
Company and such agreements, certificates of public officials, certificates of
officers or other representatives of the Company and others, and such other
documents, certificates and records as we have deemed necessary or appropriate
as a basis for the opinions set forth herein.
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents submitted to
us as certified, conformed or photostatic copies and the authenticity of the
originals of such latter documents. In making our examination of documents
executed or to be executed by parties other than the Company, we have assumed
that such parties had or will have the power, corporate or other, to enter into
and perform all obligations thereunder and have also assumed the due
authorization by all requisite action, corporate or other, and execution and
delivery by such parties of such documents and the validity and binding effect
thereof. As to any facts material to the opinions expressed herein which we have
not independently established or verified, we have relied upon statements and
representations of officers and other representatives of the Company and others,
as well as Option Holders.
This opinion is being furnished in accordance with the requirements of
Item 601(b)(5) of Regulation S-K under the Act.
Members of our firm are admitted to the Bar in the State of New York and
we do not express any opinion as to the laws of any other jurisdiction.
Based upon and subject to the foregoing, it is our opinion that (i) upon
the issuance and sale of Shares of the Common Stock upon the exercise of the
Options granted pursuant to the Plan, compliance by option holders of applicable
federal and state securities laws as made and provided, including but not
limited to the representations made by the Option Holders, and receipt by the
Company of the exercise price of such Options, and subject to the Company
completing all procedures required on its part to be taken prior to the issuance
of the Common Stock upon the exercise of the Options pursuant to the terms of
the Plan, the Common Stock to be issued upon exercise of the Options will be
validly issued, fully paid and nonassessable; and (ii) the Issued Shares are
validly issued, fully paid and nonassessable.
This opinion is furnished to you solely for your benefit in connection
with the filing of the Registration Statement and, except as set forth in the
next sentence, is not to be used, circulated, quoted or otherwise referred to
for any other purpose or relied upon by any other person for any purpose without
our prior express written consent. We hereby consent to the filing of this
opinion with the Commission as Exhibit 5.1 to the Registration Statement. In
giving this consent, we do not thereby admit that we are included in the
category of persons whose consent is required under Section 7 of the Act or the
rules and regulations of the Commission.
Very truly yours,
BARATTA & GOLDSTEIN
By: /s/ Joseph P. Baratta
<PAGE>
EXHIBIT 23.2
CONSENT OF PANNELL KERR FORSTER PC
As independent public accountants, we hereby consent to the incorporation by
reference in this Form S-8 Registration Statement of our report dated June 19,
1998 on the consolidated financial statements included in the Insci Corp. Annual
Report on Form 10-KSB for the year ended March 31, 1998 and to all references to
our Firm included in this Registration Statement.
PANNELL KERR FORSTER PC
New York, New York
April 27, 1999
