<PAGE>
As filed with the Securities and Exchange Commission on February 24, 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.
CONSULTANT NONQUALIFIED STOCK OPTION AGREEMENTS
(FULL TITLE OF THE PLANS)
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 196,000 $2.813(2) $551,348 $162.65
$.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 February 22, 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. Copies of the
individual consulting agreements are attached as exhibits 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 consulting agreement by certain consultants
qualifying under such "employee benefit plan", 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
33,000 Shares of Common Stock
Nasdaq SmallCap Market Trading Symbol: INSI
Boston Exchange Trading Symbol: INI
This Prospectus relates to 33,000 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 have been issued upon the exercise of Options granted or to
be granted to the Selling Stockholders pursuant to Business Consulting Agreement
with Xcel Associates, Inc., (the "Agreement" or "Plan"). For Options exercised
we received $1.04 per share, based on the exercise price of outstanding Options.
The exercise price of the Options is based upon the average closing price of our
common stock for the ten trading days immediately before the date of the
Agreement. If the Shares are sold, we will not receive any proceeds from the
sale. We are paying the cost of this Registration Statement, 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.
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THE DATE OF THIS REOFFER PROSPECTUS IS FEBRUARY 24, 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 4
Risk Factors 4
Use of Proceeds 9
Business Consulting Agreements and Issuance of Common Stock 10
Selling Stockholders 11
Plan of Distribution 12
Legal Matters 13
Experts 13
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We will file annual, quarter 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 such 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 are 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 its 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 ......................... 33,000 shares
Common Stock outstanding ..................... 7,672,605(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 and issuance of the underlying
shares of Common Stock included in this Registration.
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 Conditions 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, 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 February 23, 1999, our directors and officers and certain principal
stockholders and their affiliates beneficially owned (as defined by the
Commission) in the aggregate approximately 3,765,908 shares of Common Stock,
representing 40% 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. The employment agreement for Dr. E. Ted Prince, our
current Chief Executive Officer expires September 11, 1999. In the event we are
unable to renew Dr. Prince's employment agreement at mutually favorable terms,
we may be unable to replace Dr. Prince with a suitably qualified replacement
within a short period of time. 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
managements' 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. We will only
receive payment for the exercise of Options. The Company will use any such
proceeds for working capital and general corporate purposes.
<PAGE>
BUSINESS CONSULTING AGREEMENTS AND ISSUANCE OF COMMON STOCK AND OPTIONS
General
We have entered into individual consulting agreements with Xcel Associates,
Inc., D. Weckstein & Co., Inc., J. Michael Reisert Group, Jerry Franz and Marc
Kalish. The respective agreements provide for business consultation and advisory
services related to increasing market awareness of our common stock, and
providing strategic planning. Each of the Selling Security Holders has provided
us written representations that the consulting services rendered and/or to be
rendered will not directly or indirectly be related to the promotion and
maintenance of a trading market for our Common Stock. Additionally, the Selling
Security Holders have also represented that the services provided and to be
provided will not be in connection with the offer of our securities in
capital-raising transactions.
In consideration for the consulting services to be provided by Xcel Associates,
Inc. ("XAI"), we have agreed pay XAI the sum of $5,000 per month for a period of
six months in addition, we have agreed at our sole option to either pay XAI the
additional sum of $4,000 per month for the six (6) month term of the agreement
or to grant 100,000 stock options, exercisable in one/sixth increments every 30
days over the term of the agreement to purchase our Common Stock at $1.04 per
share. We have elected to grant the options. The exercise price of the options
is based upon the 10 day average closing price of our Common Stock immediately
proceeding the date of the agreement. To date XAI has exercised 33,000 options.
In accordance with the terms of the agreement, the option may not be exercised
after January 1, 2002.
In consideration for the consulting services to be provided by D. Weckstein &
Co., Inc. ("Weckstein"), we have agreed at our sole option to either pay
Weckstein the sum of $2,000 per month for the six (6) month term of the
agreement or to grant 50,000 stock options, exercisable in one/sixth increments
every 30 days over the term of the agreement to purchase our Common Stock at
$1.04 per share. We have elected to grant the options. The exercise price of the
options is based upon the 10 day average closing price of our Common Stock
immediately proceeding the date of the agreement. In accordance with the terms
of the agreement, the option may not be exercised after January 1, 2002.
In consideration for the consulting services to be provided by J. Michael
Reisert Group ("Reisert"), we have agreed at our sole option to either pay
Reisert the sum of $1,500 per month for the six (6) month term of the agreement
or to grant 36,000 stock options, exercisable in one/sixth increments every 30
days over the term of the agreement to purchase our Common Stock at $1.04 per
share. We have elected to grant the options. The exercise price of the options
is based upon the 10 day average closing price of the our Common Stock
immediately proceeding the date of the agreement. In accordance with the terms
of the agreement, the option may not be exercised after January 4, 2001.
We have also entered into separate Business Consulting Agreements with Messrs.
Jerry Franz and Marc Kalish. Under the terms of the respective consulting
agreements, at our sole option we may pay a one-time fee of $5,000, or, in the
alternative, grant 5,000 stock options exercisable at $1.04 per share. We have
elected to grant the options. The exercise price of the options is based upon
the 10 day average closing price of the our Common Stock immediately proceeding
the agreements. In accordance with the terms of the respective agreements, the
options may not be exercised after January 5, 2000.
Federal Income Tax Effects
Under the business consulting agreements pursuant to which the securities are
issued and to be issued, the exercise of the Securities will 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 business consulting
agreements 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 and address 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; (v) the number of Shares of
common stock he would own if he exercised all of his Options and sells the
Shares; and (vi) his percentage ownership of common stock if he sells all of his
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."
<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 Selling Stockholder(1) The Offering (2)
- ------------------- --------------------- ------------------- ----------------
<S> <C> <C> <C>
Xcel Associates, Inc. 0 33,000(3) 0
224 Middle Road
2nd Floor
Hazlet, NJ 07730
</TABLE>
- ----------------
1. The number of Shares of common stock owned includes Shares of common stock
issued upon exercise of Options granted under the Agreement.
2. The number of Shares of common stock owned by each person after the offering,
assumes that such person sells all of his Shares.
3. The shares of Common Stock issued and issuable to Xcel Associates upon
exercise of stock options granted as partial compensation under a consulting
agreement with us. Under the terms of the consulting agreement with us dated
January 4, 1999, Xcel will be entitled to exercise 100,000 options in 1/6
increments every 30 days over the term of the six month consulting agreement
with us.
PLAN OF DISTRIBUTION
The Selling Stockholders may sell the Shares from time to time in transaction
(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 23rd day of
February 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
Chief Executive Officer
/s/ E. Ted Prince and Director February 23, 1999
------------------------
E. Ted Prince
/s/ Andre Daniel-Dreyfus Director February , 1999
------------------------
Andre Daniel-Dreyfus
/s/ Thomas Farkas Director February 23, 1999
------------------------
Thomas Farkas
/s/ Robert Little Director February 23, 1999
------------------------
Robert Little
/s/ Francis X. Murphy Director February 23, 1999
------------------------
Francis X. Murphy
/s/ John Lopiano Director February 23, 1999
------------------------
John Lopiano
/s/ Darryl Dobin Director, President February 23, 1999
------------------------
Darryl Dobin
/s/ Roger Kuhn Chief Financial Officer February 23, 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 Board Resolution Authorizing the Consulting
Agreements and S-8 Registration
5 Opinion of Baratta & Goldstein
10.1 Business Consulting Agreement with Xcel
Associates, Inc. and Option Agreement
10.2 Business Consulting Agreement with D.
Weckstein & Co. and Option Agreement
10.3 Business Consulting Agreement with J.
Michael Reisert Group and Option Agreement
10.4 Business Consulting Agreement with
Jerry Franz
10.5 Business Consulting Agreement with
Marc Kalish
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
OFFICER'S CERTIFICATE
INSCI CORP.
The undersigned, E. TED PRINCE, Chairman and Chief Executive Officer of
INSCI Corp. ("INSCI" or the "Company"), hereby certifies that at a duly called
Board of Directors Meeting held on January 26, 1999, the following resolutions
were ratified, adopted and confirmed. It was
RESOLVED, that the Business Consulting Agreements entered into
with: Xcel Associates, Inc.; Weckstein & Co., Inc.; Michael
Reisert, as representative of the Reisert Group; Jerry Franz
and Marc Kalish be ratified adopted and confirmed as of the
dates of the respective agreements.
it was further
RESOLVED, that the Company issue stock options pursuant to the
Business Consulting Agreements as follows:
a) Xcel Associates, Inc. - 100,000 options
b) Weckstein & Co., Inc. - 50,000 options
c) Michael Reisert, as representative of the Reisert Group -
36,000 options
d) Jerry Franz - 5,000 options
e) Marc Kalish - 5,000 options
it was further
RESOLVED, that the stock options be granted at $1.04 per
share, at the 10-day average trading market price prior to the
respective consulting agreements;
it was further
RESOLVED, that the Company take the necessary action to file a
Form S-8 Registration Statement with the securities and
Exchange Commission to register the underlying shares pursuant
to the stock options granted to Xcel Associates, Inc.,
Weckstein & Co., Inc., Michael Reisert, Jerry Franz and Marc
Kalish;
it was further
RESOLVED, that the Company file the appropriate disclosure
concerning the filing of the Form S-8 Registration Statement;
it was further
RESOLVED, that the Company authorize E. Ted Prince and Roger
Kuhn to execute all documents required to finalize the Form
S-8 Registration Statement.
IN WITNESS WHEREOF, the undersigned has set his hand and seal with the
authority of the Board of Directors of the Company.
Dated: Westborough, Massachusetts
February 19, 1999
INSCI Corp.
By: /s/ E. Ted Prince
-------------------------
E. Ted Prince
Chairman and Chief Executive Officer
<PAGE>
EXHIBIT 5
BARATTA & GOLDSTEIN
ATTORNEYS AT LAW
597 FIFTH AVENUE
NEW YORK, NY 10017
February 24, 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
196,000 shares of Common Stock, par value $.01 per share (the "Common Stock"),
of the Company (the "Shares") issuable pursuant to satisfaction of conditions
set forth in the agreements with various consultants to the Company (the
"Consulting Agreements").
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 Consulting Agreements, 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 Consulting Agreement, 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 10.1
BUSINESS CONSULTING AGREEMENT
AGREEMENT, made and entered into as of the 4th day of January, 1999, by
and between Xcel Associates, Inc. a New Jersey Corporation, with offices located
at 224 Middle Road, 2nd floor, Hazlet, New Jersey 07730 ("XAI") and INSCI Corp.,
a Corporation with offices located at Two Westborough Business Park,
Westborough, MA 01581("INSI").
W I T N E S S E T H:
WHEREAS, XAI provides consultation and advisory services;
WHEREAS, INSI desires to utilize XAI services in connection with
increasing the market awareness of INSCI's common stock.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, XAI and INSI hereby agree as follows:
Consulting Services. Effective as of January 4, 1999, by and subject to the
terms and conditions herein contained, XAI shall provide consultation and
advisory services relating to increasing the market awareness of INSCI's common
stock. These services will include, but are not limited to, presenting INSCI to
investors, retail brokers, analysts, institutional investors, establishing
meetings with INSCI and parties with buyside interest, preparing a company
profile and news article and placing INSCI news and company information on
investor news services and internet services.
Payment. In consideration for the services of XAI to be provided hereunder,
INSCI will pay XAI the sum of $5,000 per month for a period of six months
commencing with the execution of this Agreement. In addition, INSI agrees, at
its sole option, to either pay XAI the sum of $4,000 per month for the term of
this Agreement, or to grant 100,000 options (Options) to purchase INSCI Common
Stock at $1.04, the fair market value as of the date of this Agreement. This
option is first exercisable in one/sixth increments every thirty days over the
term of this agreement, with the first increment being the date of this
Agreement.
3. Expenses. INSI shall reimburse XAI for all pre-approved travel and other
expenses incurred by it in rendering services hereunder, including any expenses
incurred by consultants when such consultants are temporarily located outside of
the metropolitan New York, area for the purpose of rendering services to or for
the benefit of INSI pursuant to this Agreement. XAI shall provide receipts and
vouchers to INSI for all expenses for which reimbursement is claimed.
4. Invoices. All pre-approved invoices for services provided to INSI and
expenses incurred by XAI in connection therewith shall be payable in full within
ten (10) days of the date of such invoice.
5. Personnel. XAI shall be an independent contractor and no personnel utilized
by XAI in providing services hereunder shall be deemed an employee of INSI.
Moreover, neither XAI nor any such person shall be empowered hereunder to act on
behalf of INSI. XAI shall have the sole and exclusive responsibility and
liability for making all reports and contributions, withholdings, payments and
taxes to be collected, withheld, made and paid with respect to persons providing
services to be performed hereunder on behalf of INSI, whether pursuant to any
social security, unemployment insurance, worker's compensation law or other
federal, state or local law now in force and effect or hereafter enacted.
XAI Assistance. INSI agrees to provide XAI with such secretarial, clerical and
bookkeeping assistance as XAI may reasonably request and shall otherwise
cooperate with XAI personnel in their rendering of services hereunder. INSI
further agrees to provide XAI monthly a shareholders list.
7. Term and Termination. This Agreement shall be effective from January 4, 1999,
and shall continue in effect for a period of six months thereafter. This
Agreement may be renewed upon mutual agreement of the parties.
8. Non-Assignability. The rights, obligations, and benefits established by this
Agreement shall not be assignable by either party hereto. This Agreement shall,
however, be binding upon and shall inure to the benefit of the parties and their
successors.
9. Confidentiality. Neither XAI nor any of its consultants, other employees,
officers, or directors shall disclose knowledge or information concerning the
confidential affairs of INSI with respect to INSI's business or finances that
was obtained in the course of performing services provided for herein.
10. Limited Liability. Neither XAI or INSCI nor any of their respective
consultants, other employees, officers or directors shall be liable for
consequential or incidental damages of any kind to each other that may arise out
of or in connection with any services performed by XAI hereunder.
11. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New Jersey without giving effect to the
conflicts of law principles thereof or actual domicile of the parties.
12. Notice. Notice hereunder shall be in writing and shall be deemed to have
been given at the time when deposited for mailing with the United States Postal
Service enclosed in a registered or certified postpaid envelope addressed to the
respective party at the address of such party first above written or at such
other address as such party may fix by notice given pursuant to this paragraph.
13. No other Agreements. This Agreement supersedes all prior understandings,
written or oral, and constitutes the entire Agreement between the parties hereto
with respect to the subject matter hereof. No waiver, modification or
termination of this Agreement shall be valid unless in writing signed by the
parties hereto.
<PAGE>
IN WITNESS WHEREOF, INSI and XAI have dully executed this Agreement as of the
day and year first above written.
INSCI CORP.
By: /s/ E. Ted Prince
----------------------------
Dr. E. Ted Prince, Chairman
XCEL ASSOCIATES, INC.
By: /s/ Edward t. Whelan
----------------------------
Edward T. Whelan, President
<PAGE>
OPTION AGREEMENT
THIS AGREEMENT, made as of this 4th day of January 1999, by and between
INSCI Corp. (Company) a Corporation, with its principal place of business
located at INSCI Corp., a Corporation with offices located at Two Westborough
Business Park, Westborough, MA 01581 and XCEL ASSOCIATES, Inc., a New Jersey
Corporation having its principal office at 224 Middle Road, 2nd floor, Hazlet,
New Jersey 07730, a consultant to the Company (the "Optionee").
W I T N E S S E T H:
WHEREAS, the Company, in accordance with the Business Consulting
Agreement executed by the Company and Optionee on January 4, 1999, grants to the
Optionee, in lieu of cash payments of $4,000 per month for a period of six
months, for services to be provided by the Optionee, options to purchase shares
of the Company's Common Stock.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the parties agree as follows:
1. Grant of Options. Subject to all terms and conditions of this
Agreement and the Business Consulting Agreement executed by the Company and
Optionee on January 4, 1999, the Company hereby grants to the Optionee the right
and option (the "Option") to purchase all or any part of an aggregate of one
hundred thousand (100,000) shares (the "Shares") of Common Stock at $1.04, the
fair market value of the Common Stock at the date of this grant. The Option is
first exercisable in one/sixth increments every thirty days over the term of
this agreement, with the first increment being the date of this Agreement.
2. Expiration. The Option may not be exercised after January 1, 2002
(the "Expiration Date").
3. Exercise of Option. The Option is first exercisable in one/sixth
increments every thirty days over the term of this agreement, with the first
increment being the date of this Agreement. Subject to the aforementioned
condition, the Option may be exercised, in whole or in part, at any time prior
to the Expiration Date or the earlier termination of the Option. If the Option
is not exercised to the maximum extent permissible, it shall be exercisable, in
whole or in part, with respect to all Shares not so purchased at any time prior
to the Expiration Date or the earlier termination of the Option.
4. Payment of Purchase Price Upon Exercise. The Option granted under
this Agreement may be exercised in whole or in part by the Optionee's delivering
or mailing to the Company at its principal office, or such other place as the
Company may designate, written notice of exercise duly signed by the Optionee.
Such exercise shall be effective upon (a) receipt of such written notice by the
Company and (b) payment to the Company of the full purchase price in cash.
5. Issuance and Delivery. The Optionee's written notice to the Company
shall state the number of Shares with respect to which the Option is being
exercised and specify a date, not less than five (5) or more than fifteen (15)
business days after the date of the mailing of such notice, on which the Shares
will be taken and payment made therefor. On the date specified in the notice of
exercise, the Company shall deliver, or cause to be delivered, to the Optionee
(or his personal representative, as the case may be) stock certificates for the
number of Shares with respect to which the Option is being exercised, against
receipt of payment therefor. Certificates evidencing the Shares issued upon
exercise of the Option may contain such legends reflecting any restrictions upon
transfer of the Shares evidenced thereby as in the opinion of counsel to the
Company may be necessary for the lawful and proper issuance of such
certificates. Delivery of the Shares may be made at the office of the Company or
at the office of a transfer agent appointed for the transfer of shares of Common
Stock.
6. Transferability. The Option shall not be transferable. The Option
shall not be subject, in whole or in part, to attachment, execution or levy of
any kind.
No Rights as a Shareholder. Neither the Optionee nor his legal representative
shall be, nor have any of the rights or privileges of, a shareholder of
the Company in respect of any of the Shares, unless and until
certificates representing such Shares shall have been issued and
delivered to the Optionee (or his legal representative).
Adjustment. (a) In case, prior to the expiration of the Option by exercise or by
its terms, the Company subdivide the number of outstanding shares of
Common Stock into a greater number of shares, then, in either of such
cases, the purchase price per share of the Shares issuable upon
exercise of the Option in effect at the time of such action shall be
proportionately reduced and the number of Shares at that time
purchasable pursuant to the Option shall be proportionately increased;
and conversely, in the event the Company shall contract the number of
outstanding shares of Common Stock by combining such shares into a
smaller number of shares, then, in such case, the purchase price per
share of the Shares issuable upon exercise of the Option in effect at
the time of such action shall be proportionately increased and the
number of Shares at that time purchasable pursuant to Option shall be
proportionately decreased.
(b) In case, prior to the expiration of this Option by exercise or by
its terms, the Company or a successor corporation shall be consolidated
or merge with or convey all or substantially all of its or of any
successor corporation's property and assets to any other corporation or
corporations (any such corporation being included within the meaning of
the term "successor corporation" in the event of any consolidation or
merger of any such corporation with, or the sale of all or
substantially all of the property of any such corporation to, another
corporation or corporations), in exchange for stock or securities of a
successor corporation, and if the Company is not the surviving Company,
the Optionee shall thereafter have the right to purchase upon the terms
and conditions and during the time specified in this Option, in lieu of
the Shares theretofore purchasable upon the exercise of this Option,
the kind and amount of shares of stock and other securities receivable
upon such consolidation, merger or conveyance by a holder of the number
of shares of Common Stock which the Optionee might have purchased
immediately prior to such consolidation, merger or conveyance. In the
event of a sale of the Company, all options shall vest immediately
prior to such sale and are exercisable by the Optionee at his election.
9. Compliance with Law and Regulations. The Option and the obligation
of the Company to sell and deliver Shares hereunder shall be subject to all
applicable federal and state laws, rules and regulations and to such approvals
by any governmental or regulatory agency as may be required. The Company shall
not be required to issue or deliver any certificates for Shares prior to (i) the
listing of such Shares on any stock exchange on which the Common Stock may then
be listed and (ii) the completion of any registration or qualification of such
Shares under any federal or state law, or any rule or regulation of any
government body which the Board of Directors of the Company shall, in its sole
discretion, determine to be necessary or advisable. Moreover, the Option may not
be exercised if its exercise or the receipt of Shares pursuant thereto, would be
contrary to applicable law.
10. Investment Representation. The Board of Directors of the Company
may require the Optionee to furnish to the Company, prior to the issuance of any
Shares upon the exercise of any Option, an agreement (in such form as the Board
of Directors may specify) in which the Optionee represents that the Shares
acquired by the Optionee upon exercise are being acquired for investment and not
with a view to the sale or distribution thereof.
11. Continued Services. Neither this Agreement nor any Option granted
hereunder shall confer upon the Optionee any right to continue to render
services to the Company or any subsidiary of the Company, or limit in any
respect the right of the Company, the Board of Directors of the Company or any
subsidiary of the Company to terminate the services of the Optionee at any time.
12. Notices. Any notice hereunder to the Company shall be addressed to
it at its offices, Two Westborough Business Park Westborough, MA 01581 Attn.:
Dr. E. Ted Prince Chairman & CEO and any notice hereunder to Optionee shall be
addressed to Edward T. Whelan, President, at 224 Middle Road, 2nd floor, Hazlet,
New Jersey 07730, subject to the right of either party to designate at any time
hereafter in writing some other address.
13. Governing Law. This Agreement shall be interpreted, and the rights
and liabilities of the parties hereto determined, in accordance with the
internal laws of the State of New Jersey, without regard to the conflicts of law
principles thereof.
14. Counterparts. This Agreement may be executed in two counterparts
each of which shall constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the undersigned have signed this Agreement as of
the date and year first above written.
INSCI CORP.
By: /s/ E. Ted Prince
----------------------------
Dr. E. Ted Prince, Chairman
XCEL ASSOCIATES, INC.
By: /s/ Edward T. Whelan
----------------------------
Edward T. Whelan, President
<PAGE>
EXHIBIT 10.2
BUSINESS CONSULTING AGREEMENT
AGREEMENT, made and entered into as of the 28th day of December, 1998,
by and between D. Weckstein & Co. Inc. with offices located at 230 Park Avenue,
Suite 1516, New York, NY 10169("Weckstein") and INSCI Corp., a Corporation with
offices located at Two Westborough Business Park, Westborough, MA 01581("INSI").
W I T N E S S E T H:
WHEREAS, Weckstein provides consultation and advisory services;
WHEREAS, INSI desires to utilize Weckstein services.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, Weckstein and INSI hereby agree as follows:
Consulting Services. Effective as of December 28, 1998, by and subject
to the terms and conditions herein contained, Weckstein shall
provide consultation and advisory services relating to
providing strategic planning and introduction to parties.
These services include the strategy meeting held in
Weckstein's offices on December 28, 1998 with E. Ted Prince,
Chairman and CEO of INSCI Corp and Mr. Edward T. Whelan,
President of Xcel Associates, Inc.
Payment. In consideration for the services of Weckstein to be provided
hereunder, INSI agrees, at its sole option, to either pay
Weckstein the sum of $2,000 per month for the term of this
Agreement, or to grant 50,000 options (Options) to purchase
INSCI Common Stock at $1.04, the fair market value as of the
date of this Agreement. This option is first exercisable in
one/sixth increments every thirty days over the term of this
Agreement, with the first increment being the date of this
Agreement. INSCI Common Stock shares underlying these Options
will be issued as registered shares under applicable
securities laws by the Company.
Personnel. Weckstein shall be an independent contractor and no
personnel utilized by Weckstein in providing services
hereunder shall be deemed an employee of INSI. Moreover,
neither Weckstein nor any such person shall be empowered
hereunder to act on behalf of INSI.
Term and Termination. This Agreement shall be effective from
December 28, 1998, and shall continue in effect for a period
of six months thereafter.
Non-Assignability. The rights, obligations, and benefits established by
this Agreement shall not be assignable by either party hereto.
This Agreement shall, however, be binding upon and shall inure
to the benefit of the parties and their successors.
Confidentiality. Neither Weckstein nor any of its consultants,
employees, officers, or directors shall disclose knowledge or
information concerning the confidential affairs of INSI with
respect to INSI's business or finances that was obtained in
the course of performing services provided for herein.
Limited Liability. Neither Weckstein or INSCI nor any of their
respective consultants, other employees, officers or directors
shall be liable for consequential or incidental damages of any
kind to each other that may arise out of or in connection with
this Agreement.
GoverningLaw. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without
giving effect to the conflicts of law principles thereof or
actual domicile of the parties.
Notice. Notice hereunder shall be in writing and shall be deemed to
have been given at the time when deposited for mailing with
the United States Postal Service enclosed in a registered or
certified postpaid envelope addressed to the respective party
at the address of such party first above written or at such
other address as such party may fix by notice given pursuant
to this paragraph.
Waiver and Modification. No waiver, modification or termination of
this Agreement shall be valid unless in writing signed by the
parties hereto.
IN WITNESS WHEREOF, INSI and Weckstein have dully executed this Agreement as of
the day and year first above written.
INSCI CORP. D. Weckstein & CO., INC.
By: /s/ Roger C. Kuhn By: /s/ Donald E. Weckstein
------------------------- ----------------------
Roger C. Kuhn, Donald E. Weckstein,
Chief Financial Officer President
<PAGE>
OPTION AGREEMENT
THIS AGREEMENT, made as of this 28th day of December, 1998, by and between INSCI
Corp. (Company) a Corporation, with its principal place of business located at
Two Westborough Business Park, Westborough, MA 01581 and D. Weckstein & CO.
INC., with offices located at 230 Park Avenue, Suite 1516, New York, NY 10169, a
consultant to the Company (the "Optionee").
W I T N E S S E T H:
WHEREAS, the Company, in accordance with the Business Consulting Agreement
executed by the Company and Optionee on December 28, 1998, grants to the
Optionee, in lieu of cash payments of $2,000 per month for a period of six
months, for services to be provided by the Optionee, options to purchase shares
of the Company's Common Stock.
NOW, THEREFORE, in consideration of the foregoing and other good and valuable
consideration, the parties agree as follows:
Grant of Options. Subject to all terms and conditions of this
Agreement and the Business Consulting Agreement executed by
the Company and Optionee on December 28, 1998, the Company
hereby grants to the Optionee the right and option (the
"Option") to purchase all or any part of an aggregate of fifty
thousand (50,000) shares (the "Shares") of Common Stock of the
Company at $1.04 per share, the fair market value of the
Common Stock at the date of this grant.
Expiration. The Option may not be exercised after January 1, 2002 (the
"Expiration Date").
Exercise of Option. The Option is first exercisable in one/sixth
increments every thirty days over the term of this agreement,
with the first increment being the date of this Agreement.
Subject to the aforementioned condition, the Option may be
exercised, in whole or in part, at any time prior to the
Expiration Date or the earlier termination of the Option. If
the Option is not exercised to the maximum extent permissible,
it shall be exercisable, in whole or in part, with respect to
all Shares not so purchased at any time prior to the
Expiration Date. INSCI Common Stock shares underlying these
Options will be issued as registered shares by the Company.
Payment of Purchase Price Upon Exercise. The Option granted under this
Agreement may be exercised in whole or in part by the
Optionee's delivering or mailing to the Company at its
principal office, or such other place as the Company may
designate, written notice of exercise duly signed by the
Optionee. Such exercise shall be effective upon (a) receipt of
such written notice by the Company and (b) payment to the
Company of the full purchase price in cash.
Issuance and Delivery. The Optionee's written notice to the Company
shall state the number of Shares with respect to which the
Option is being exercised and specify a date, not less than
five (5) or more than fifteen (15) business days after the
date of the mailing of such notice, on which the Shares will
be taken and payment made therefor. On the date specified in
the notice of exercise, the Company shall deliver, or cause to
be delivered, to the Optionee (or his personal representative,
as the case may be) stock certificates for the number of
Shares with respect to which the Option is being exercised,
against receipt of payment therefor. Delivery of the Shares
may be made at the office of the Company or at the office of a
transfer agent appointed for the transfer of shares of Common
Stock.
Transferability. The Option shall not be transferable. The Option shall
not be subject, in whole or in part, to attachment, execution
or levy of any kind.
No Rights as a Shareholder. Neither the Optionee nor his legal
representative shall be, nor have any of the rights or
privileges of, a shareholder of the Company in respect of any
of the Shares, unless and until certificates representing such
Shares shall have been issued and delivered to the Optionee
(or his legal representative).
Adjustment. (a) In case, prior to the expiration of the Option by
exercise or by its terms, the Company subdivides the number of
outstanding shares of Common Stock into a greater number of
shares, then, in either of such cases, the purchase price per
share of the Shares issuable upon exercise of the Option in
effect at the time of such action shall be proportionately
reduced and the number of Shares at that time purchasable
pursuant to the Option shall be proportionately increased; and
conversely, in the event the Company shall contract the number
of outstanding shares of Common Stock by combining such shares
into a smaller number of shares, then, in such case, the
purchase price per share of the Shares issuable upon exercise
of the Option in effect at the time of such action shall be
proportionately increased and the number of Shares at that
time purchasable pursuant to Option shall be proportionately
decreased.
In case, prior to the expiration of this Option by exercise or
by its terms, the Company or a successor corporation shall be
consolidated or merge with or convey all or substantially all
of its or of any successor corporation's property and assets
to any other corporation or corporations (any such corporation
being included within the meaning of the term "successor
corporation" in the event of any consolidation or merger of
any such corporation with, or the sale of all or substantially
all of the property of any such corporation to, another
corporation or corporations), in exchange for stock or
securities of a successor corporation, and if the Company is
not the surviving Company, the Optionee shall thereafter have
the right to purchase upon the terms and conditions and during
the time specified in this Option, in lieu of the Shares
theretofore purchasable upon the exercise of this Option, the
kind and amount of shares of stock and other securities
receivable upon such consolidation, merger or conveyance by a
holder of the number of shares of Common Stock which the
Optionee might have purchased immediately prior to such
consolidation, merger or conveyance. In the event of a sale of
the Company, all options shall vest immediately prior to such
sale and are exercisable by the Optionee at his election.
Compliance with Law and Regulations. The Option and the obligation of
the Company to sell and deliver Shares hereunder shall be
subject to all applicable federal and state laws, rules and
regulations and to such approvals by any governmental or
regulatory agency as may be required.
Continued Services. Neither this Agreement nor any Option granted
hereunder shall confer upon the Optionee any right to continue
to render services to the Company or any subsidiary of the
Company, or limit in any respect the right of the Company, the
Board of Directors of the Company or any subsidiary of the
Company to terminate the services of the Optionee at any time.
Notices. Any notice hereunder to the Company shall be addressed to it
at its offices, Two Westborough Business Park Westborough, MA
01581 Attn.: Dr. E. Ted Prince Chairman & CEO and any notice
hereunder to Optionee shall be addressed to Donald E.
Weckstein, President, at 230 Park Avenue, Suite 1516, New
York, NY 10169, subject to the right of either party to
designate at any time hereafter in writing some other address.
GoverningLaw. This Agreement shall be interpreted, and the rights and
liabilities of the parties hereto determined, in accordance
with the internal laws of the State of New York, without
regard to the conflicts of law principles thereof.
Counterparts. This Agreement may be executed in two counterparts each
of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have signed this Agreement as of
the date and year first above written.
INSCI CORP. D. Weckstein & CO., INC.
By: /s/ Roger C. Kuhn By: /s/ Donald E. Weckstein
------------------------- ----------------------
Roger C. Kuhn, Donald E. Weckstein,
Chief Financial Officer President
<PAGE>
EXHIBIT 10.3
BUSINESS CONSULTING AGREEMENT
AGREEMENT, made and entered into as of the 4th day of January, 1999, by
and between the J. Michael Reisert Group ("Reisert") with offices located at
Suite 307,2455 East Sunrise Blvd., Ft. Lauderdale, FL 33304, and INSCI Corp., a
Corporation with offices located at Two Westborough Business Park, Westborough,
MA 01581("INSI").
W I T N E S S E T H:
WHEREAS, REISERT provides consultation and advisory services;
WHEREAS, INSI desires to utilize REISERT services in connection with
increasing the market awareness of INSCI's common stock.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, REISERT and INSI hereby agree as follows:
Consulting Services. Effective as of January 4, 1999, by and subject to the
terms and conditions herein contained, REISERT shall provide consultation
and advisory services relating to increasing the market awareness of
INSCI's common stock. These services will include, but are not limited to,
presenting INSCI to investors, retail brokers, analysts, institutional
investors, establishing meetings with INSCI and parties with buyside
interest.
Payment. In consideration for the services of REISERT to be provided hereunder,
INSCI will pay REISERT, at INSCI's sole option, either the sum of $1,500
per month for the term of this Agreement, or grant 36,000 options (Options)
to purchase INSCI Common Stock at $1.04, the fair market value as of the
date of this Agreement. This option is first exercisable in one/sixth
increments every thirty days over the term of this agreement.
Expenses. INSI shall reimburse REISERT for all pre-approved travel and other
expenses incurred by it in rendering services hereunder. REISERT shall
provide receipts and vouchers to INSI for all expenses for which
reimbursement is claimed.
Personnel. REISERT shall be an independent contractor and no personnel utilized
by REISERT in providing services hereunder shall be deemed an employee of
INSI. Moreover, neither REISERT nor any such person shall be empowered
hereunder to act on behalf of INSI.
Term and Termination. This Agreement shall be effective from January 4, 1999,
and shall continue in effect for a period of six months thereafter.
Non-Assignability. The rights, obligations, and benefits established by this
Agreement shall not be assignable by either party hereto. This Agreement
shall, however, be binding upon and shall inure to the benefit of the
parties and their successors.
Confidentiality. Neither REISERT nor any of its consultants, other employees,
officers, or directors shall disclose knowledge or information concerning
the confidential affairs of INSI with respect to INSI's business or
finances that was obtained in the course of performing services provided
for herein.
Limited Liability. Neither REISERT or INSCI nor any of their respective
consultants, other employees, officers or directors shall be liable for
consequential or incidental damages of any kind to each other that may
arise out of or in connection with any services performed by REISERT
hereunder.
Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts without giving effect to
the conflicts of law principles thereof or actual domicile of the parties.
Notice. Notice hereunder shall be in writing and shall be deemed to have been
given at the time when deposited for mailing with the United States Postal
Service enclosed in a registered or certified postpaid envelope addressed
to the respective party at the address of such party first above written or
at such other address as such party may fix by notice given pursuant to
this paragraph.
No other Agreements. This Agreement supersedes all prior understandings,
written or oral, and constitutes the entire Agreement between the parties
hereto with respect to the subject matter hereof. No waiver, modification
or termination of this Agreement shall be valid unless in writing signed by
the parties hereto.
IN WITNESS WHEREOF, INSI and REISERT have dully executed this Agreement as of
the day and year first above written.
INSCI CORP. J. Michael Reisert Group
By: /s/ Roger Kuhn By: /s/ Michael Reisert
-------------------------- ------------------
Roger Kuhn Michael Reisert
Chief Financial Officer
<PAGE>
STOCK OPTION AGREEMENT
THIS AGREEMENT, made as of this 4th day of January 1999, by and between
INSCI Corp. (Company) a Corporation, with its principal place of business
located Two Westborough Business Park, Westborough, MA 01581 and J. Michael
Reisert Group ("Reisert") with offices located at Suite 307,2455 East Sunrise
Blvd., Ft. Lauderdale, FL 33304, a consultant to the Company (the "Optionee").
W I T N E S S E T H:
WHEREAS, the Company, in accordance with the Business Consulting
Agreement executed by the Company and Optionee on January 4, 1999, grants to the
Optionee, in lieu of cash payments of $1,500 per month for a period of six
months for services to be provided by the Optionee, options to purchase shares
of the Company's Common Stock.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the parties agree as follows:
Grant of Options. Subject to all terms and conditions of this Agreement and the
Business Consulting Agreement executed by the Company and Optionee on January 4,
1999, the Company hereby grants to the Optionee the right and option (the
"Option") to purchase all or any part of an aggregate of thirty six thousand
(36,000) shares (the "Shares") of Common Stock at $1.04, the fair market value
of the Common Stock at the date of this grant. The Option is first exercisable
in one/sixth increments every thirty days over the term of this agreement.
Expiration. The Option may not be exercised after January 4, 2001 (the
"Expiration Date").
Exercise of Option. The Option is first exercisable in one/sixth increments
every thirty days over the term of this agreement. Subject to the aforementioned
condition, the Option may be exercised, in whole or in part, at any time prior
to the Expiration Date. If the Option is not exercised to the maximum extent
permissible, it shall be exercisable, in whole or in part, with respect to all
Shares not so purchased at any time prior to the Expiration of the Option.
Payment of Purchase Price Upon Exercise. The Option granted under this Agreement
may be exercised in whole or in part by the Optionee's delivering or mailing to
the Company at its principal office, or such other place as the Company may
designate, written notice of exercise duly signed by the Optionee. Such exercise
shall be effective upon (a) receipt of such written notice by the Company and
(b) payment to the Company of the full purchase price in cash.
Issuance and Delivery. The Optionee's written notice to the Company shall state
the number of Shares with respect to which the Option is being exercised and
specify a date, not less than five (5) or more than fifteen (15) business days
after the date of the mailing of such notice, on which the Shares will be taken
and payment made therefor. On the date specified in the notice of exercise, the
Company shall deliver, or cause to be delivered, to the Optionee (or his
personal representative, as the case may be) stock certificates for the number
of Shares with respect to which the Option is being exercised, against receipt
of payment therefor. Delivery of the Shares may be made at the office of the
Company or at the office of a transfer agent appointed for the transfer of
shares of Common Stock.
Transferability. The Option shall not be transferable. The Option shall not be
subject, in whole or in part, to attachment, execution or levy of any kind.
No Rights as a Shareholder. Neither the Optionee nor his legal representative
shall be, nor have any of the rights or privileges of, a shareholder of the
Company in respect of any of the Shares, unless and until certificates
representing such Shares shall have been issued and delivered to the Optionee
(or his legal representative).
Adjustment. (a) In case, prior to the expiration of the Option by exercise or by
its terms, the Company subdivide the number of outstanding shares of Common
Stock into a greater number of shares, then, in either of such cases, the
purchase price per share of the Shares issuable upon exercise of the Option in
effect at the time of such action shall be proportionately reduced and the
number of Shares at that time purchasable pursuant to the Option shall be
proportionately increased; and conversely, in the event the Company shall
contract the number of outstanding shares of Common Stock by combining such
shares into a smaller number of shares, then, in such case, the purchase price
per share of the Shares issuable upon exercise of the Option in effect at the
time of such action shall be proportionately increased and the number of Shares
at that time purchasable pursuant to Option shall be proportionately decreased.
(b) In case, prior to the expiration of this Option by exercise or by
its terms, the Company or a successor corporation shall be consolidated or merge
with or convey all or substantially all of its or of any successor corporation's
property and assets to any other corporation or corporations (any such
corporation being included within the meaning of the term "successor
corporation" in the event of any consolidation or merger of any such corporation
with, or the sale of all or substantially all of the property of any such
corporation to, another corporation or corporations), in exchange for stock or
securities of a successor corporation, and if the Company is not the surviving
Company, the Optionee shall thereafter have the right to purchase upon the terms
and conditions and during the time specified in this Option, in lieu of the
Shares theretofore purchasable upon the exercise of this Option, the kind and
amount of shares of stock and other securities receivable upon such
consolidation, merger or conveyance by a holder of the number of shares of
Common Stock which the Optionee might have purchased immediately prior to such
consolidation, merger or conveyance
Compliance with Law and Regulations. The Option and the obligation of the
Company to sell and deliver Shares hereunder shall be subject to all applicable
federal and state laws, rules and regulations and to such approvals by any
governmental or regulatory agency as may be required. The Company shall not be
required to issue or deliver any certificates for Shares prior to (i) the
listing of such Shares on any stock exchange on which the Common Stock may then
be listed and (ii) the completion of any registration or qualification of such
Shares under any federal or state law, or any rule or regulation of any
government body which the Board of Directors of the Company shall, in its sole
discretion, determine to be necessary or advisable. Moreover, the Option may not
be exercised if its exercise or the receipt of Shares pursuant thereto, would be
contrary to applicable law.
Continued Services. Neither this Agreement nor any Option granted hereunder
shall confer upon the Optionee any right to continue to render services to
the Company or any subsidiary of the Company, or limit in any respect the
right of the Company, the Board of Directors of the Company or any
subsidiary of the Company to terminate the services of the Optionee at any
time.
Notices. Any notice hereunder to the Company shall be addressed to it at its
offices, Two Westborough Business Park, Westborough, MA 01581 and any
notice hereunder to Optionee shall be addressed to J. Michael Reisert
Group ("Reisert") Suite 307,2455 East Sunrise Blvd., Ft. Lauderdale, FL
33304, subject to the right of either party to designate at any time
hereafter in writing some other address.
Governing Law. This Agreement shall be interpreted, and the rights and
liabilities of the parties hereto determined, in accordance with the
internal laws of the Commonwealth of Massachusetts, without regard to the
conflicts of law principles thereof.
Counterparts. This Agreement may be executed in two counterparts each of which
shall constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the undersigned have signed this Agreement as of
the date and year first above written.
INSCI CORP. J. Michael Reisert Group
By: /s/ Roger Kuhn By: /s/ Michael Reisert
------------------------- ------------------
Roger Kuhn Michael Reisert
Chief Financial Officer
<PAGE>
EXHIBIT 10.4
JERRY FRANZ
60 Sutton Place South, Apt. 17 DS
New York, New York 10022
February 5, 1999
INSCI Corp.
Two Westborough Business Park
Westborough, MA 01681
Re: Business Consulting Agreement
Gentlemen:
The within is to confirm our understanding and agreement wherein the undersigned
has performed consulting services effective as of January 4, 1999 for your
Company, which services have included, but are not limited to, presenting INSCI
to analysts, institutional investors, establishing meetings with INSCI and
providing ideas for the preparation of a Company profile for INSCI so as to
achieve a market awareness of INSCI.
It is understood that the undersigned is an independent contractor and that
INSCI will not be responsible for any actions or acts of the undersigned unless
approved in writing by INSCI, and that all information provided to INSCI will be
maintained as confidential except for public information which has been released
by INSCI through press releases and filings of reports available to the public
with the Securities and Exchange Commission, etc.
Insofar as payment is concerned, INSCI shall have the right to pay to the
undersigned a one-time fee of $5,000, or, in the alternative, at INSCI's option,
to grant 5,000 stock options exercisable at $1.04, the fair market value, as of
the effective date of the within agreement, which options shall be for a term of
one year from the date hereof. The options shall be exercisable upon ten days'
written notice to INSCI.
It is understood that all expenses incurred will be paid by the undersigned and
that INSCI will not be responsible for any expenses. The agreement herein will
terminate on February 28, 1999 and not be extended unless mutually agreed upon
in writing by INSCI and the undersigned.
If the within meets with your understanding, please execute a copy of same.
Very truly yours,
/s/ Jerry Franz
-----------------
JERRY FRANZ
<PAGE>
EXHIBIT 10.5
MARC KALISH
565 West End Avenue
New York, New York 10024
February 5, 1999
INSCI Corp.
Two Westborough Business Park
Westborough, MA 01681
Re: Business Consulting Agreement
Gentlemen:
The within is to confirm our understanding and agreement wherein the undersigned
has performed consulting services effective as of January 4, 1999 for your
Company, which services have included, but are not limited to, presenting INSCI
to analysts, institutional investors, establishing meetings with INSCI and
providing ideas for the preparation of a Company profile for INSCI so as to
achieve a market awareness of INSCI.
It is understood that the undersigned is an independent contractor and that
INSCI will not be responsible for any actions or acts of the undersigned unless
approved in writing by INSCI, and that all information provided to INSCI will be
maintained as confidential except for public information which has been released
by INSCI through press releases and filings of reports available to the public
with the Securities and Exchange Commission, etc.
Insofar as payment is concerned, INSCI shall have the right to pay to the
undersigned a one-time fee of $5,000, or, in the alternative, at INSCI's option,
to grant 5,000 stock options exercisable at $1.04, the fair market value, as of
the effective date of the within agreement, which options shall be for a term of
one year from the date hereof. The options shall be exercisable upon ten days'
written notice to INSCI.
It is understood that all expenses incurred will be paid by the undersigned and
that INSCI will not be responsible for any expenses. The agreement herein will
terminate on February 28, 1999 and not be extended unless mutually agreed upon
in writing by INSCI and the undersigned.
If the within meets with your understanding, please execute a copy of same.
Very truly yours,
/s/ Marc Kalish
--------------------
MARC KALISH
<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
February 23, 1999
