Exhibit 4
STOCK PURCHASE AGREEMENT
AMENDED STOCK PURCHASE as of December 10, 1999 by and among INSCI
CORP., a Delaware corporation, with its principal place of business at Two
Xxxxxxxxxxx Xxxxxxxx Xxxx, Xxxxxxxxxxx, XX 00000 (hereinafter referred to as
"INSCI"), INTERNET BROADCASTING COMPANY, INC., with its principal place of
business located at 000 X.X. 00xx Xxxxxx , Xxxxx 000, Xxxxxxx Xxxxx, XX 00000
(hereinafter referred to as "IBC" or "CORPORATION"), and the individuals and/or
entities listed on Exhibit "I" (hereinafter referred to as "SELLERS" or
"PRINCIPAL STOCKHOLDERS".)
W I T N E S S E T H:
WHEREAS, the within Amended Agreement supersedes in all respects any
prior understandings or agreements, written or otherwise, entered into by and
between the parties and is effective as of December 10, 1999; and
WHEREAS, SELLERS are desirous of selling, transferring and/or
exchanging all the issued and outstanding capital stock consisting of Common
Stock owned by SELLERS in IBC; and
WHEREAS, INSCI is desirous of purchasing from SELLERS listed on Exhibit
"I" (Listing of all STOCKHOLDERS) annexed hereto, all the issued and outstanding
IBC stock owned by SELLERS; and
WHEREAS, certain specific SELLERS (the "PRINCIPAL STOCKHOLDERS") are
agreeable to warranties and representations; and
WHEREAS, all other SELLERS are not providing all of the warranties and
representations; and
WHEREAS, the parties are desirous of defining their rights and
obligations with respect to said purchase and sale.
NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS AND
CONDITIONS HEREINAFTER SET FORTH, THE PARTIES AGREE AS
FOLLOWS:
1. SALE, PURCHASE AND EXCHANGE OF COMMON STOCK
Subject to the satisfaction of the terms and conditions of this
Agreement, and in reliance upon the covenants, representations and warranties
contained herein:
1.1 Sale of IBC Stock Owned by SELLERS
On the Closing Date (as hereinafter defined), all SELLERS shall sell,
assign, convey, exchange and transfer to INSCI, free and clear of any liens or
encumbrances or restrictions, and INSCI shall purchase and/or receive in
exchange from SELLERS, all right, title, and interest of SELLERS in and to the
IBC stock owned by SELLERS as listed on Exhibit "I" and Exhibit "I-A" for the
consideration stated herein.
It is understood and agreed that SELLERS listed on Exhibit "I-A" will
provide limited warranties and representations, as per a separate Agreement with
those SELLERS , the form of which Agreement is annexed to Exhibit "I-A" and the
delivery of an executed agreement from each such SELLER is a condition precedent
to the closing herein.
2. PURCHASE PRICE AND EXCHANGE BY INSCI FOR IBC COMMON STOCK
The purchase price and exchange for all of the issued and outstanding
IBC stock (the "Purchase Price" and "Exchange") shall be shares of restricted
Common Stock and Warrants to purchase Common Stock of INSCI payable as follows
on closing:
One Million (1,000,000) shares of fully paid non-assessable
Common Stock of INSCI, to be distributed to SELLERS pro rata based on their
ownership of IBC Stock; and
i) The price per share to be exchanged by INSCI will be
computed at the average closing price as reported by NASDAQ over the
ten (10) trading day period that precedes the Closing Date, subject to
a minimum purchase price of $4.00 per share on closing. In the event
that the price of INSCI Common Stock is less than $4.00 per share on
closing, then in that event, SELLERS will have the right to terminate
the within Agreement without liability on the part of either SELLERS or
INSCI.
ii) INSCI agrees to file a Registration Statement for the
Common Stock issued to SELLERS under this Agreement. Annexed hereto and
made a part hereof and marked EXHIBIT "II" is a Registration Rights
Agreement. The parties further agree that all sales will be in
accordance with Securities and Exchange Commission Regulations. INSCI
agrees to pay for the cost and expense of the Registration Statement.
The SELLERS listed on Exhibit "I" (that have deposited 125,000 shares
of INSCI Common Stock) are subject to the indemnification provisions of
the Agreement.
It is understood and agreed that the 125,000 shares (at $4.00 per
share) will be subject to the Escrow-Indemnification Agreement for a period of
one (1) year from the date of closing of the within transaction. Thereafter, for
the second year of said escrow indemnification, the value of the number of
shares to be held in escrow will be $100,000 calculated by the number of shares
based upon the bid price of the Common Stock of INSCI on the date that the
second year commences. There will be no shares in the third year of said
Indemnification Agreement, if no claims have been asserted against the Escrow.
(d) The CORPORATION shall include the CORPORATION and all existing
Subsidiaries, so long as it shall remain an operating company, and any future
subsidiary, so long as it is an operating subsidiary, together with such other
entities or offices engaged in or in the business of IBC.
(e) It is understood and agreed that the SELLERS listed on Exhibit "I"
make no warranties and/or representations with respect to any of the warranties
and representations herein and shall not be parties to the Escrow Agreement
referred to herein.
(f) IBC and SELLERS agree to provide, on or prior to closing, the
audited Financial Statements and unaudited interim period, as per Exhibit IV,
which qualifies for audit in accordance with the principles of general
acceptable accounting procedures, and Securities and Exchange Commission
Regulations, as provided for herein in Section 4.5.
(g) IBC and SELLERS agree to provide on closing, a cold comfort letter
from IBC's auditing firm in a form acceptable to INSCI's auditors, which is a
condition precedent to closing and further provides that there have been and are
no material adverse changes in IBC's Financial Statements from the last audited
statement, as required, in accordance with the applicable Securities and
Exchange Commission filing and reporting requirements and interim unaudited
statement to the day of closing.
3. REPRESENTATIONS AND WARRANTIES OF PRINCIPAL STOCKHOLDERS TO THE
CORPORATION
It is understood and agreed by the PRINCIPAL STOCKHOLDERS that, as an
inducement to INSCI to enter into this Agreement, PRINCIPAL STOCKHOLDERS have
made to INSCI the representations and warranties hereinafter set forth in
Section 4, all of which are true and correct on the date hereof in all material
respects, and that said warranties and representations will be true as of the
Closing Date in all material respects, except as otherwise provided in or
contemplated by this Agreement. In the event of any material misrepresentations
by PRINCIPAL STOCKHOLDERS, which is made known to or by INSCI prior to closing,
INSCI shall have the exercise right and option to terminate the within Agreement
without any further liability to INSCI. The representations and warranties shall
survive the purchase and sale of the IBC stock hereunder as to the extent set
forth in Section l3.4(a).
4. REPRESENTATIONS AND WARRANTIES OF PRINCIPAL STOCKHOLDERS
IBC and the PRINCIPAL STOCKHOLDERS represent and warrant to INSCI that:
4.1 Organization
IBC is a CORPORATION, duly organized, validly existing and in good
standing under the laws of the State of Delaware, and is licensed to do business
as a foreign corporation in any state or jurisdiction that the CORPORATION
carries on its business. Annexed hereto and marked EXHIBIT "V" is a listing of
all subsidiary corporations and jurisdictions in which IBC does business.
4.2 Qualification
The CORPORATION has the corporate power and authority to own its
properties and to carry on its business as now being conducted and is qualified
to do business and is in good standing in every jurisdiction in which the nature
of its business or the ownership or leasing of its properties require such
qualification, except where the failure to do so would not have any material
adverse effect on the business, assets or financial conditions of the
CORPORATION taken as a whole.
4.3 Authorization of Agreement
SELLERS have the power and authority to enter into this Agreement and
to sell to INSCI or exchange the IBC stock owned by them, and that the Board of
Directors of IBC has approved the within amended agreement. This Agreement
constitutes the legal, valid and binding obligation of SELLERS, enforceable in
accordance with its terms. Neither the execution and performance of this
Agreement, nor the consummation of the transactions contemplated hereby will
result in the violation of any provision of state or federal law, any order by
any court or other agency of government applicable to SELLERS or the
CORPORATION, the Certificate of Incorporation or By-laws of the CORPORATION or
any indenture, Financing Agreement, Stockholders Agreement, or other instrument
or agreement to which they are a party or by which they are bound, or be in
conflict herewith, result in a breach thereof, or constitute (with due notice or
lapse of time or both) a default thereunder or, except as may be provided in
this Agreement, result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon any of the properties or assets of any
of the CORPORATION pursuant to any such indenture, agreement or instrument.
SELLERS and IBC will provide to INSCI a certified copy of a Board of Directors
Consent and the executed SELLERS agreements as provided for in the within
Agreement.
4.4 Capitalization
Copies of the Certificate of Incorporation and By-laws of the
CORPORATION have been delivered to INSCI. Exhibit "VI" hereto sets forth a list
of all authorized, issued, and outstanding shares of capital stock of the
CORPORATION. There are no other shares issued and outstanding of any
CORPORATION. As of the date hereof, the only issued and outstanding IBC stock is
owned by the persons listed in Exhibits "I" and "I-A", all of which have been
validly issued, fully paid, and are non-assessable. SELLERS and IBC warrant and
represent that neither has granted any rights, warrants, options, or other
commitments with respect to the IBC stock owned by them, and further warrant and
represent that there are no agreements, commitments or understandings, including
Stockholders Agreements, oral or written, with respect to the IBC stock owned by
SELLERS (other than this Agreement), which will not be terminated on Closing.
4.5 Financial Statements
(a) The Financial Statements as of IBC, audited by Xxxxxxxxx Xxxxx &
Co., consisting of each of said year balance sheet, income statement changes in
financial position, including the footnotes, have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis and
fairly present the financial position of the CORPORATION as of each respective
year end (June 30, 1998 and 1999), and that the CORPORATION will provide the
unaudited stub period to September 30, 1999, and unaudited roll forward to five
(5) days prior to the Closing Date as stated herein. SELLERS and IBC warrant and
represent that all financial statements provided for herein will be in
accordance with Regulation S-X as promulgated by appropriate Securities and
Exchange Commission Regulations.
(b) The unaudited Financial Statements of IBC, as of September 30,
1999, will consist of a balance sheet and income statement and changes in
financial position as of five (5) days prior to the Closing Date, which are
attached hereto, including the footnotes, and been prepared in accordance with
generally accepted accounting principles and Securities and Exchange Commission
Regulations, and fairly present the financial position of the CORPORATION as of
the Closing Date, and as of such date present the results of operations for the
CORPORATION which have been included in said Financial Statements.
(c) SELLERS and IBC further represent that there are no material
matters since June 30, 1999, and up to and including the Closing Date, that will
impact on the business of IBC that has not been disclosed to INSCI, and that all
proprietary trade secrets and related information is the property of IBC, and
that there are no known claims against said property.
4.6 Subsidiaries and Affiliates
The CORPORATION has no subsidiaries and does not own of record, or
beneficially, any capital stock or equity interest investment in, and does not
control, any other corporation, partnership, association or business entity or
concern.
4.7 Regulation
The CORPORATION has obtained and maintains all permits and licenses
which are necessary for the conduct of its business.
4.8 Taxes
The CORPORATION has filed all tax returns as may be required by the
CORPORATION including, without limitation, income, franchise, sales, use and
payroll tax returns, and all annual reports and other returns and reports,
heretofore required to be filed by them, all of which were prepared on a cash
basis. All taxes known to be due on such returns have been paid, other than
taxes not yet due or which may hereafter be paid without penalty. The
CORPORATION'S federal and state income tax returns have not, since formation of
the CORPORATION, and to SELLERS' knowledge and belief, been audited by the
Internal Revenue Service or by any state taxing authority in the jurisdictions
in which the CORPORATION is incorporated or qualified to do business. SELLERS
have no knowledge of any tax deficiency or additional assessments not adequately
provided for on the books of the CORPORATION. There are no tax audits, pending
or due, and SELLERS have no information which would lead them to reasonably
believe that a tax audit may be imminent. Additionally, SELLERS warrant and
represent that they will be responsible for any taxes due, or that may become
due, as a result of any claims for taxes due which arouse prior to the purchase
of stock by INSCI or after said closing, but have resulted due to the actions of
SELLERS or IBS, or their Officers and Directors, and agree to indemnify and hold
harmless INSCI from any taxes, interest or penalty as a result of INSCI
purchasing all of the issued and outstanding shares of Common Stock herein.
4.9 Litigation
Except as set forth in Exhibit "VII", there are no actions, suits or
proceedings, pending or threatened, at law or in equity or, to the best of the
knowledge of SELLERS, there are no grounds for any such litigation against or
affecting the CORPORATION, whether or not purportedly on behalf of the
CORPORATION, involving the possibility of a judgment against the CORPORATION
that is not covered by a policy of insurance and does not involve
(a) the loss or suspension of any license or permit necessary
to the business of the CORPORATION, or
(b) any judgment for damages or for injunctive or other legal,
equitable, monetary or non-monetary relief which, either individually
or in the aggregate, if adversely determined, would result in a
material adverse change in the business, operation, properties or
assets or in the condition, financial or otherwise, of the CORPORATION
taken as a whole. SELLERS have no knowledge of any unasserted claim,
the assertion of which is likely and which, if asserted, will seek
damages or injunctive or other legal, equitable, monetary or
non-monetary relief which, if adversely determined, would result in
such a material adverse change.
4.l0 Indebtedness
Subject to the exceptions referred to in Section 4.3 or in Section 4.5,
there exists no default under the provisions of any instrument evidencing any
indebtedness of the CORPORATION or any agreement relating thereto which entitles
the holder thereof to accelerate the repayment of any such indebtedness. SELLERS
expressly represent and warrant to INSCI that the indebtedness of the
CORPORATION is not in default.
The CORPORATION and SELLERS agree on Closing that the CORPORATION will
have a negative net worth not to exceed $650,000 (Net worth being the
Shareholders' deficit as set forth on the balance sheet), and that its working
capital will not be negative working capital in excess of $870,000 (working
capital for these purposes, being defined as current assets less current
liabilities, excluding the current portion of convertible loans payable included
in current liabilities, as set forth on the balance sheet) and that, in the
event the Company's negative working capital exceeds a negative of $870,000,
then in that event, INSCI will have the option of terminating the Agreement
without any liability on the part of INSCI, the Company or SELLERS or, in the
alternative, of adjusting the purchase price by a reduction in the number of
Shares and to reflect the increase in negative working capital in excess of the
aforesaid $870,00. To the extent that the CORPORATION meets the balance sheet
test described above, then INSCI agrees that it will, within a reasonable time
after closing, make payments related to the accounts payables of the CORPORATION
described on Exhibit XXI. INSCI will use its best efforts to pay the items
listed on the schedule of priority accounts payable.
4.11 Title to Properties
Except as set forth in Exhibit "VIII", and except any other minor
non-material liens and encumbrances or obligations of the CORPORATION of a
character which, in the aggregate, are not substantial in amount (not in excess
of $5,000) and do not materially detract from the value of the property or
assets subject thereto, or materially impair the operations of the CORPORATION,
and that the CORPORATION has good and marketable title to the properties and
assets owned by it, subject to no mortgage, pledge, lien, charge, security
interest or encumbrance, except those liens and encumbrances described on the
Financial Statements herein. It is understood and agreed that the $5,000 sum
herein is based upon the representation of SELLERS that they have no specific
knowledge or reason to believe that the financial statements and schedules of
liabilities of the CORPORATION as of the closing date are not true and correct
and have provided for all known and contingent liabilities.
4.12 Title to the Shares
(a) SELLERS own, and will on the Closing Date convey and exchange title
to the shares of IBC stock owned by them, free and clear of any liens,
encumbrances and restrictions.
(b) SELLERS, on closing, will issue a General Release in favor of the
CORPORATION and of INSCI, except for the terms and conditions to be performed by
INSCI under the within Agreement.
4.13 Broker or Finder
There is no person, firm or corporation retained by SELLERS of the
CORPORATION which is entitled to any brokerage or finders' fee with respect to
the transactions contemplated by this Agreement, except Xxxxx Harness and Hill
and Xxxxxxxx Xxxxxx. SELLERS will indemnify and hold INSCI harmless from any
claim for brokerage or finders' fees arising out of the transactions
contemplated by this Agreement made by any person, including the Brokers stated
herein, claiming to have been engaged by SELLERS.
4.14 Absence of Certain Changes with respect to CORPORATION
Except as set forth in the Financial Statements, officers and
accounting certificates of the CORPORATION between June 30, 1999, and the date
of closing and the date hereof, there has not been:
(a) Any material adverse change in the condition, assets
liabilities or business of the CORPORATION, taken as a whole, from that
shown in the Financial Statements, otherwise or known by SELLERS.
(b) Any damage, destruction or loss of any of the properties
or assets of the CORPORATION (whether or not covered by insurance)
materially adversely affecting the business of the CORPORATION, taken
as a whole;
(c) Any declaration, setting aside for payment or other
distribution in respect of any of the issued and outstanding IBC stock,
or any direct or indirect redemption, dividends, purchase or other
acquisition of any such stock. SELLERS are responsible for any
liability that results from any action taken by the CORPORATION.
(d) Any labor trouble of any character, materially adversely
affecting the business of the CORPORATION, taken as a whole;
(e) Any increase (individually or in the aggregate), except in
the ordinary course of business, in the contingent obligations of the
CORPORATION by way of guaranty, endorsement, indemnity, warranty or
otherwise;
(f) Any waiver or compromise by the CORPORATION of a valuable
right or of a material debt owed to them, taken as a whole;
(g) Any loans made by the CORPORATION to its employees,
officers, or directors other than travel and other expense advances
made in the ordinary course of business, except as provided for in
Exhibit "IX";
(h) Any issuance or sale by the CORPORATION of any shares of
its common stock or other securities;
(i) Any other event or condition of any character that has
materially and adversely affected the CORPORATION'S business taken as a
whole would that cause a material misrepresentation.
(j) Any agreement or commitment by the CORPORATION to do any
of the things described in this Section that would be in violation of
the warranties and representations contained herein.
(k) That there has been no material change with respect to the
payment of salaries or other benefits to employees of the CORPORATION,
and that the SELLERS have no knowledge of any circumstances which would
cause them to believe that any client or clients which comprise
material revenues of the CORPORATION will cease to do business with the
CORPORATION within the twelve month period from the date of Closing. In
addition thereto, that no party or parties to any agreement with the
CORPORATION is in default which would require the CORPORATION to take
legal action to enforce its rights.
(l) That the SELLERS have no information or knowledge that any
key employee will leave the employment of the CORPORATION (a Schedule
of Key Employees is annexed as Exhibit "X"), as a result of the
contemplated transaction and that, in addition, that SELLERS have no
knowledge or information as to the loss of a materially important
customer or supplier of the CORPORATION, and that the technology
utilized by the CORPORATION is proprietary and owned by the CORPORATION
as described in Exhibit "XI" herein, termed as a schedule of
Proprietary Technology, and that there are no known claims to the
technology.
(M) That the CORPORATION warrants and represents that all of
its software systems and products are Y2K compliant.
4.15 Contracts; Leases; Agreements
Exhibit XII sets forth all currently existing contracts, obligations,
plans, arrangements, commitments or like (written or oral) of any material
nature, to which the CORPORATION is a party or by which the CORPORATION is
bound, including without limitation the following of said agreements that at the
option of INSCI, all of said agreements may be modified, or revised by INSCI
consistent with the policies and plans as are acceptable to INSCI,
(a) Employment or consulting agreements, pension, profit
sharing, deferred compensation, stock bonus, retirement, stock option,
stock purchase, phantom stock or similar plans, including agreements
evidencing rights to purchase securities of the CORPORATION and
agreements among shareholders and the CORPORATION. All existing bonus
agreements are based upon performance, and the aggregate amount of
bonus payments due or to be paid to employees are reflected on the
Financial Statements of the CORPORATION;
(b) Loan or other agreements, notes, indentures, or
instruments relating to or evidencing indebtedness for borrowed money,
or mortgaging, pledging or granting or creating a lien or security
interest or other encumbrance on any of the CORPORATION's property or
any agreement or instrument evidencing any guaranty which may be
required for the CORPORATION to obtain bank financing for present
working capital needs;
(c) There are no agreements with dealers, sales
representatives, brokers or other distributors, jobbers, advertisers or
sales agencies;
(d) Agreements with any labor union or collective bargaining
organization or other labor agreements;
(e) Any contract or series of contracts with the same person
for the furnishing, leasing or purchase of machinery, equipment, goods
or services, including without limitation, agreements with processors
and subcontractors, except in the ordinary course of business;
(f) Any indenture, agreement or other (including private
placement brochures) relating to the sale or repurchase of shares of
capital stock;
(g) Any joint venture, contract or arrangement or other
agreement involving a sharing of profits or expenses;
(h) Agreements limiting the freedom of the CORPORATION to
compete in any line of business or in any geographic area or with any
person;
(i) Agreements providing for disposition or acquisition of the
business, assets or capital stock of the CORPORATION, agreements of
merger of consolidation to which the CORPORATION is a party, agreements
involving the acquisition of the business, assets or capital stock of
any other corporation, or letters of intent with respect to the
foregoing;
(j) All leases of real or personal property;
(k) All franchises, permits, licenses and other similar
authority and patents, patent rights, trade names, trade name rights,
copyrights and applications therefor owned, held, used, leased, relied
upon or licensed by the CORPORATION, together with a description of any
payment which any person has asserted the CORPORATION is or hereafter
may be obligated to pay in order to use such right; and
(l) All research and development agreements, other agreements
involving technology, systems, products, know-how and the like.
(m) All agreements of the CORPORATION are agreements made in
the ordinary course of business and are consistent with the financial
statements as annexed hereto and made a part hereof.
(n) All marketing, distribution and reseller agreements,
except as set forth on Exhibit "XIII"), the CORPORATION is not a party
to any agreement or instrument or subject to any charter or other
corporate restriction materially adversely affecting their business,
properties, or assets, operations or condition, financial or otherwise,
taken as a whole, and the CORPORATION is not in material default or
material adverse change in the business or prospectus that is not
discussed in the financial statements that are provided for in the
within Agreement or that is known by SELLERS of IBC in the performance,
observance or fulfillment of any of the obligations, covenants or
conditions contained in any agreement or instrument to which they are a
party, which default would have a material adverse affect on the
business operations, properties, assets or condition, financial or
otherwise, of the CORPORATION taken as a whole.
(o) All convertible or other outstanding securities have been
converted by the Holders thereof and on closing each Holder has
provided a General Release to IBC with respect to the conversion of the
security or securities held by them.
(p) IBC's Officers and Board of Directors, as set forth on
Exhibit "XIV", will submit their resignations to the Board of IBC on
closing of the within transaction.
(q) That all intellectual property rights are the property of
the corporation and that there are no claims with respect to said
property and additionally that the CORPORATION does not use any
intellectual property of IBC.
4.16 Insurance
Exhibit "XV" is an accurate list of each insurance policy owned or
maintained by the CORPORATION, copies of which have been delivered to INSCI. All
such policies are in full force and effect, and the CORPORATION has not received
any notice of cancellation with respect to any such policy. No claims are
pending under any such policy, except as explained on Exhibit "XV". To the best
of SELLERS' knowledge, there is no basis for the insurer thereunder to terminate
any such policy.
4.17 Shareholders' Directors and Officers;
Indebtedness
Exhibit "XIV" sets forth the names of the directors and officers of the
CORPORATION. Except as will be set forth in the Financial Statements, there are
no material indebtedness by the CORPORATION, to its officers, directors,
employees and shareholders or material indebtedness of such persons to the
CORPORATION. Except as described herein to the best of SELLERS' knowledge, none
of the officers, directors or shareholders of the CORPORATION, or their
respective spouses, owns directly or indirectly, individually or collectively, a
material interest in any entity which is a competitor, customer or supplier of
(or has any existing contractual relationship with) the CORPORATION. As of the
Closing Date, all loans and advances to SELLERS and their relatives from the
CORPORATION, and from the CORPORATION to SELLERS and their relatives, will have
been paid in full.
4.18 Consents
Except as set forth in Section 4.3, all material consents, approvals,
qualifications, orders or authorizations of, filings with, any governmental
authority, or any other party or entity, including any court, required in
connection with SELLERS' valid execution, delivery or performance of this
Agreement or the consummation of any other transaction contemplated on the part
of the CORPORATION and SELLERS by this Agreement and the agreements related
hereto have been obtained.
4.19 Employees
To SELLERS' knowledge, no employee of the CORPORATION (including, but
not limited to, the CORPORATION'S development personnel who have executed
agreements that all software developed and in process is the property of the
CORPORATION) is, by virtue of his employment by the CORPORATION and the nature
of the duties which he performs for the CORPORATION, in violation of any
non-competition or confidentiality agreement with any third-party. To SELLERS'
knowledge, no union is attempting to represent any of the CORPORATION'S
employees as a collective bargaining agent. SELLERS and IBC agree that all of
IBC's employees that will remain in the employ of IBC, or in the event of the
liquidation of IBC, at the option of INSCI will execute non-competitor,
non-disclosure agreements and confidential agreements.
4.20 Registration Rights
By his, her or its execution of this Agreement, each SELLER hereby
waives and forever releases IBC from any obligation related to the registration
of any IBC Securities.
4.21 Personal Holding Company
To the best of SELLERS' knowledge and belief, the CORPORATION is not a
personal holding company, nor is it subject to a Xxxx Xxxxx Xxxxxx filing.
4.22 Inactive Corporations
IBC has not formed any corporation or corporations except as stated on
Exhibit "V" annexed hereto. SELLERS warrant that the CORPORATION constitutes the
entire operating entity as established by the SELLERS, and that there are no
affiliates and/or subsidiaries of IBC. SELLERS warrant and represent that (a)
any prior or past Inactive Corporations are currently inactive, and (b) none of
the Inactive Corporations, to the best of SELLERS' knowledge, has any material
unpaid liabilities, except only franchise and similar taxes. SELLERS agree, at
the Closing, to assign to INSCI all of SELLERS' right, title and interest in and
to each of the Inactive Corporations.
4.23 Treasury Stock
All amounts payable for treasury stock, if any, purchased by IBC, has
been fully paid.
4.24 Representations Complete
No representation or warranty of the SELLERS or IBC made in this
Agreement or in any document or certificate furnished by SELLERS pursuant to
this Agreement or in connection with the transactions contemplated hereby
contains or will contain any untrue statement of a material fact, or omits to
state a material fact necessary to make any statement or act contained herein or
therein, in the light of the circumstances under which such statements and acts
were made, not misleading, except that any such document or certificate which is
dated speaks as of the date stated and not the present.
4.25 SELLERS and IBC warrant and represent they have been provided with
the INSCI 10-K/SB Report for the fiscal year ending March 31, 1999, and copies
of INSCI Form 10-Q/SB Reports for the quarter ending June 30, 1999, and have had
access to all Form 8-K Reports, and copies of all current proxy material filed
with the Securities and Exchange Commission, and that SELLERS are qualified
investors as that term is defined under the Securities Act.
4.26 SELLERS warrant and represent that there is no violation of the
applicable rules and regulations of the Securities and Exchange Commission,
and/or of State Blue Sky Regulatory Agencies in the State or States in which
SELLERS reside with respect to SELLERS purchasing or obtaining their shares from
the CORPORATION.
4.27 SELLERS warrant and represent that there is no material claim of
Stockholders, creditors or any regulatory agency, federal or state, that is
imminent, threatened or pending with respect to the CORPORATION.
5. REPRESENTATIONS AND WARRANTIES OF INSCI
INSCI represents and warrants to SELLERS as follows:
5.1 Organization and Qualification
INSCI is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. INSCI has the corporate power
and authority to own its assets, conduct its business as and where such business
is presently conducted, and enter into this Agreement.
INSCI represents that within the 24 months preceding the within
Agreement, it has filed all reports required to be filed by NASDAQ and the
Securities Act, and that said reports are true, complete and correct in all
material respects.
5.2 Effect of Agreement
INSCI's execution, delivery and performance of this Agreement, and the
consummation by INSCI of the transactions contemplated hereby, (a) have been
duly authorized by all necessary corporate actions by INSCI's Board of
Directors, (b) does not constitute a violation of or default under INSCI's
Certificate of Incorporation or Bylaws or any material contract or agreement to
which INSCI is a party or by which INSCI is bound, (c) do not constitute a
violation of any law, rule or regulation, or judgment or order, applicable to
INSCI, and (d) do not require the consent of, notice to or filing with any
person, company or governmental authority. This Agreement constitutes the valid
and legally binding agreement of INSCI, enforceable against INSCI in accordance
with its terms.
5.3 Reports
INSCI has timely filed all reports, schedules, forms, statements and
other documents with the SEC since January 1, 1997 (collectively the SEC
Documents"). As of their respective dates, the SEC Documents complied in all
material respect with the requirements of applicable law and none contained
anywhere statements of a material fact required to be stated therein or
necessary to make the statement therein, in light of the circumstances under
which they were merely misleading.
5.4 Broker or Finder
No person or company acting on INSCI's behalf is entitled to any
brokerage or finder's fee in connection with the transactions contemplated by
this Agreement, except Xxxxxxxx Xxxxxx & Xxxxxxxxxx, Inc.
5.5 Investment Matters
INSCI is purchasing the IBC stock for its own account for investment
and not with a view to or for sale in connection with any distribution thereof.
5.6 Representations Complete
INSCI warrants and represents to SELLERS that INSCI has not
made any untrue statement of material fact or omitted any material facts
concerning INSCI and that INSCI is aware that SELLERS are relying upon any
certificate or documents provided by INSCI to SELLERS.
6. COVENANTS OF SELLERS
INSCI, the CORPORATION and the SELLERS listed on Exhibit "I" warrant
and represent:
6.1 Documents or Information
Between the date hereof and the Closing Date, IBC, as per the
Confidentiality Agreement, shall permit INSCI's Representative to visit and
inspect any of the properties of the CORPORATION including its books of account
and records, and to discuss its affairs, finances and accounts with the
CORPORATION's officers and its independent public accountants, all at such
reasonable times and as often as any such person may reasonably request in
writing.
6.2 Conduct Pending Closing
Between the date of this Agreement and the Closing Date, except with
the prior written consent to INSCI.
(a) SELLERS shall maintain in full force and effect the corporate
existence of the CORPORATION, their respective rights and franchises ad all
business permits, trademarks and trade names owned or possessed by the
CORPORATIONS which are material to the conduct of the business of the
CORPORATION.
(b) Any outstanding taxes, assessments, and other governmental charges
imposed upon the CORPORATIONS with respect to their franchises or income will be
paid or accrued provided, however, that unless and until a foreclosure restrain
sale or any similar proceeding shall have been commenced, no such tax or charge
need be paid if the same is being contested in good faith by proper proceedings
diligently conducted.
(c) INSCI will be responsible for payment of any obligations of the
CORPORATION within the $870,000 negative working capitol covenant (excluding the
current portion of Convertible Loans Payable).
(d) SELLERS will cause the CORPORATION to keep its fixed assets in
working order and condition, reasonable wear and tear excepted, and the
CORPORATION will comply in all material respects with each provision of all
leases to which any of them is a party or under which any of them occupies
property if the breach of such provision might have a material adverse effect,
other than in the ordinary course of business, on the condition, financial or
otherwise, or operations of the CORPORATION taken as a whole, and the
CORPORATION will obtain all required consents in favor of INSCI to assure that
the within Agreement does not violate any leases, agreements or contracts of the
CORPORATION.
(e) The CORPORATION shall not enter into any material transaction or
agreement, including, but not limited to, a loan, lease, royalty, purchase or
sale agreement, directly or indirectly, with or which will benefit any officer,
director, or holder of the IBC stock or any family member or relative of such
officer, director, or shareholder or any corporation or other entity or person
which directly or indirectly controls, is controlled by or is under common
control with such officer, director or stockholder or family member or relative
of such officer, director, or stockholder.
(f) The CORPORATION will not: (i) sell or agree to sell any of the
assets listed in the CORPORATION'S financial statements, other than in the
ordinary course of business or in connection with the performance of this
Agreement; (ii) incur any obligations or liabilities (fixed or contingent),
except obligations or liabilities in the ordinary course of business and as
provided herein; (iii) discharge or satisfy any lien or encumbrance or pay any
obligations or liabilities (fixed or contingent) other than current liabilities
(including current installments of long-term debt) except as provided for or
contemplated by this Agreement; (iv) mortgage, pledge or subject to lien or any
other encumbrance any of their assets, tangible or intangible, except for
purchase money obligations or pursuant to existing agreements; (v) sell or
transfer any of their tangible assets or cancel any debts or claims except, in
each case, the ordinary course of business; (vi) waive any rights of a
substantial nature; (vii) sell, assign or transfer or grant rights under any
patents, trademarks, trade names, licenses or other intangible assets, except in
the ordinary course of business; or (viii) enter into any other transactions
except in the ordinary course of business.
6.3 Notice of Default
In the event that all of or any portion or an indebtedness of the
CORPORATION, including but not limited to loans and advances due from the
CORPORATION to the CORPORATION'S lending institution, shall be declared due and
payable before their stated maturity or due date, and prior to Closing, SELLERS
shall promptly notify INSCI.
6.4 Notice of Commencement of Proceedings or Change in Condition
SELLERS shall give written notice to INSCI within three (3) days of the
occurrence of any of the following events prior to Closing, stating in
reasonable detail the nature thereof; (a) any proceedings instituted against the
CORPORATION by or in any federal or state court or before any commission, board
or other regulatory body, federal, state or local, which if adversely
determined, would have a material adverse effect upon the CORPORATION'S business
operations, properties, assets or condition, financial or otherwise taken as a
whole; (b) any material adverse change in the CORPORATION'S condition, financial
or otherwise, taken as a whole; and (c) the occurrence of any event which
constitutes, or with notice or passage of time or both would constitute, a
material default in the performance of the CORPORATION'S obligations hereunder.
6.5 No Pension and Retirement Plans
SELLERS warrant and represent to INSCI that there are no pension and/or
retirement plans of the CORPORATION other than a 401K Plan wherein employees
must contribute, and that the employees of the CORPORATION, and the CORPORATION,
do not have liability with respect to said plan other than its administration.
Furthermore, that any pension or retirement plans are in accordance with current
ERISA Laws and/or any applicable Federal or State Regulations as made and
provided, and that within 90 days from the Closing, SELLERS will take the
necessary action to terminate the 401(K) Plan currently in effect with the
CORPORATION. Additionally, that SELLERS understand and agree that the SELLERS'
and/or Trustees' liability, if any, will survive for the applicable Statute of
Limitations following the period of the within Agreement.
6.6 Financing
SELLERS and INSCI agree that, prior to closing INSCI will have obtained
a commitment to financing on terms mutually satisfactory to INSCI and SELLERS to
consummate the Purchase Agreement. In the event that such financing is not
completed prior to closing, either party will have the right to terminate the
within Agreement without liability on the part of either the Sellers or INSCI.
INSCI represents that it has received several financing proposals and that
INSCI's board of directors has approved entering into an agreement for said
financing in accordance with the board resolution attached as exhibit XXI.
6.7 Minute Books.
Prior to the Closing, SELLERS shall deliver to INSCI copies of the
Minute Book of the CORPORATION, together with a representation by SELLERS that
(a) there is no omission from any such minute book of minutes of meetings of the
board of directors or stockholders of the respective CORPORATION at which action
was taken which would create any material obligation or liability of such
CORPORATION which remains outstanding as of the Closing Date and (b) the minutes
contained in such minute books are true and correct.
6.8 Assignment of Intellectual Property with each of the EMPLOYEES (the
"EMPLOYEES Proprietary and Confidentiality Agreements" as stated in Paragraph
4.19 herein in the form of Exhibit "XVII" annexed hereto.
7. COVENANTS OF INSCI.
7.1 Execution and Delivery of Employment Agreements. At the Closing,
INSCI shall cause the CORPORATION to execute and deliver:
(a) Employment Agreements with Messrs. Xxxxxx, XxxXxxxxxx and Xxxxxxxxx
( "SELLERS' Employment Agreements") in the form of Exhibit "XVI" annexed hereto;
and
8. COVENANTS OF SELLERS AND INSCI
8.1 Escrow Agreement.
At the Closing, the SELLERS and INSCI shall execute and deliver the
Escrow Agreement with respect to shares of stock of INSCI with Xxxxxxx &
Xxxxxxxxx and Xxxxxx, Beach & Xxxxxx, listed as Exhibit "XVIII" herein.
9. CONDITIONS TO INSCI'S OBLIGATION TO PURCHASE SHARES
Each obligation of INSCI to be performed on the Closing Date shall be
subject to the satisfaction of each of the conditions stated in the within
Agreement in this Section 9, except to the extent that such satisfaction is
waived by INSCI in writing.
9.1 Performance by SELLERS.
(a) SELLERS shall have performed in all material respects all
obligations and agreements and complied in all material respects with all
covenants contained in this Agreement required to be performed or complied with
by SELLERS on or before Closing.
(b) SELLERS agree to deliver to INSCI, as a post closing
representation, the audited financial statements as provided for herein within
thirty (30) days after Closing, as well as a certificate from Xxxxxxxxx Xxxxx &
Co., dated the Closing Date stating that they have reviewed the CORPORATION's
books and records and that there is no material adverse change in the financial
condition of the CORPORATION as of the Closing Date. SELLERS agree to provide
said cold comfort letter to INSCI's auditors and its counsel for their review
five (5) days prior to closing and to update said letter effective on Closing
Date. The within is in accordance with Section 4.5 as provided for herein.
9.2 Employment Agreements.
(a) Each of SELLERS identified in Section 7.1(a) shall have executed
and delivered a SELLERS' Employment Agreements.
(b) Each of the employees shall have executed and delivered to INSCI an
EMPLOYEES' Non Compete and assignment of Proprietary Rights agreements annexed
hereto and marked Exhibit "XVII".
9.3 Opinion of SELLERS' Counsel.
INSCI shall have received from counsel to SELLERS, an opinion addressed
to INSCI, dated as of the Closing Date in the form attached as Exhibit "XIX"
hereto.
9.4 INSCI and IBC agree that, prior to closing, INSCI and IBC will
mutually agree, in writing, that INSCI will do the following:
(a) Provide that Messrs. Xxxxxx, XxxXxxxxxx and Xxxxxxxxx will
participate in the INSCI incentive-based Employee Stock Option Plan,
and that Messrs. Xxxxxx, XxxXxxxxxx and Xxxxxxxxx will be awarded an
aggregate of 250,000 stock options in said Plan. Said options will vest
over a three (3) year period at the an exercise price equal to the fair
market value of INSCI Common Stock at the time of Closing.
(b) INSCI's Board will establish and/or permit IBC employees
to participate in an existing INSCI incentive-based Stock Option Plan.
9.5 Contract Execution.
IBC shall have delivered a signature page to this agreement, duly
executed by each of the SELLERS described in Exhibit "I", as well as a signature
page to the Agreement annexed to Exhibit "I-A", duly executed by each SELLER
identified in Exhibit "I-A".
(a) Since June 30, 1999 and to the date of closing, there have been no
material adverse changes in the business, prospects, operations, earnings,
assets or financial condition of IBC.
10. CONDITIONS TO SELLERS' CLOSING OBLIGATIONS
Each obligation of SELLERS to be performed on the Closing Date shall be
subject to the satisfaction of each of the conditions stated in this Section 10,
except to the extent that such satisfaction is waived by SELLERS in writing.
10.1 Performance by INSCI. INSCI shall have performed in all material
respects all obligations and agreements and complied in all material respects
with all covenants contained in this Agreement required to be performed or
complied with by INSCI on or before Closing.
10.2 Representations True.
SELLERS shall have delivered to INSCI a certificate of the President
and Secretary of IBC and of Stockholders dated as of the Closing Date,
certifying that all of the representations and warranties made to INSCI by
SELLERS in this Agreement are true and correct in all material respect on
closing.
10.3 Defaults.
There shall exist, as of the Closing Date, no condition or event which
constitutes, or which after notice or lapse of time or both would constitute, a
material default by SELLERS under this Agreement.
10.4 Employment Agreements.
(a) INSCI shall have caused the CORPORATION or INSCI to execute and
deliver the SELLERS' Employment Agreements described in Section 7.1.
(b) SELLERS shall have caused the employees to execute and deliver the
employees' Non Compete Agreements.
10.5 INSCI's Assignee and Option to Liquidate Corporation.
If INSCI shall assign its rights hereunder to a wholly-owned
subsidiary, the assignee shall, at the Closing, deliver a certificate, dated the
Closing Date and executed by its President, certifying that INSCI has taken the
appropriate Board of Directors' action to ratify and adjust and approve the
within Agreement. INSCI shall have the exclusive right and option to liquidate
and/or dissolve or merge the CORPORATION into INSCI.
11. TAXES FOR PERIOD ENDING ON CLOSING DATE
11.1 Preparation and Filing of Corporation Returns for the CORPORATION.
(a) SELLERS, or their representatives, shall prepare the federal and
any state and local income and other tax returns of the CORPORATION
(collectively "Returns") for the period from the end of the most recent federal
income tax year of each of the CORPORATION to the Closing Date based on the
books and records of the CORPORATION maintained for such periods by the
CORPORATION. SELLERS shall submit such Returns to the CORPORATION and SELLERS
shall promptly execute and file such Returns, as all of such Returns will be the
sole responsibility of SELLERS, and SELLERS agree to be responsible for any
taxes due or that may become due as a result of changing from a cash to an
accrual method. At the request of SELLERS, INSCI agrees to cause the CORPORATION
to make available to SELLERS, for the purpose of preparing such Returns (and
contesting any claims subsequently made for adjustment of such Returns), all
books and records of the CORPORATION for any relevant periods, and SELLERS shall
have the right to make extracts from and copies of such books and records.
(b) INSCI will promptly notify the SELLERS in the event any tax return
of the CORPORATION for any taxable period that SELLERS are responsible for is
audited. If the SELLERS, by notice to INSCI, appoint a representative (the
"Representative") to participate in such audit, INSCI will keep the
Representative apprised of the status of the audit, provide him with copies of
any revenue agent's reports, 30-day letters, 90-day letters or similar documents
and allow him to participate in the audit with respect to issues which, if
decided adversely to the CORPORATION, would increase the SELLERS' tax liability
without reimbursement under the within Agreement by the CORPORATION or would
give rise to any claim by INSCI against SELLERS under this Agreement. If any
such proceeding shall result in a refund of tax interest or penalty paid which
payment is subject to the provisions of Section 13 hereof, such refund shall be
paid over by the CORPORATION to SELLERS. No settlement with the Internal Revenue
Service or other taxing authority will be entered into for any Prior Period
without the written consent of the SELLERS with respect to any of SELLERS
liability as a result of any tax return filed by SELLERS. The SELLERS shall have
the right to prosecute on behalf of the CORPORATION in the Tax Court or other
court of competent jurisdiction (and to appeal) at their expense by counsel of
their choice in an appeal from an adverse decision of a taxing authority with
respect to SELLERS. If any such proceeding shall result in the refund of any
amounts paid by the SELLERS, such amounts, together with any interest thereon,
shall belong to the SELLERS. The parties hereto are aware that the provisions of
the Internal Revenue Code shall apply for purposes of any administrative or
judicial proceeding involving the federal income tax liability of the
CORPORATION for any Prior Period that is reflected on tax returns filed by
SELLERS.
11.2 SELLERS warrant and represent to INSCI that SELLERS will indemnify
and hold harmless INSCI for the payment of any taxes, interest or penalties due
as a result of the within Agreement, or SELLERS filing, failing to file, or any
taxes, interest or penalties due as a result of the operations of IBC to the
date of Closing which were due or should have been accrued prior to the date of
Closing and that, in the event any assessment and or claim is made before any
federal, state or municipal taxing authority as a result of SELLERS non-payment
of taxes due based upon the filing of federal income tax or any claim by the
taxing authority for the period up to and including Closing or for the period of
any tax return filed by SELLERS, that SELLERS agree to be bound by the terms and
conditions of the escrow agreement referred to herein.
12. EXPENSES.
Neither SELLERS nor INSCI will be responsible for fees, expenses and
charges incurred by the other in connection with this Agreement, with the
exception that upon completion of the closing herein, INSCI will pay certain
vendor obligations, as indicated in Exhibit XXI, by issuing to these vendors a
total of 58,293 warrants to purchase shares of INSCI common stock at a price of
$6.00 per share In the event that the within Agreement is terminated, SELLERS,
IBC and INSCI agree that each will be responsible for their own expenses. Upon
completion of the closing herein, INSCI agrees to accept liabilities associated
with any fees in connection with this agreement to the extent that they are
within the $870,000 negative net worth limitation.
13. INDEMNIFICATION.
13.1 The PRINCIPAL STOCKHOLDERS' Obligation to Indemnify.
From and after the Closing Date, the PRINCIPAL STOCKHOLDERS shall,
subject to the limitations hereinafter set forth, indemnify and hold harmless
INSCI and the CORPORATION from and against any and all actions, suits, claims,
demands, debts, liabilities, obligations, losses, damages, costs and expenses,
including without limitation reasonable attorney's fees (collectively,
"Damages"), arising out of or caused by any or all of the following:
(a) Any misrepresentation or breach of any warranty or representation
made by PRINCIPAL STOCKHOLDERS in this Agreement.
(b) Any failure by PRINCIPAL STOCKHOLDERS to perform any term or
provision of this Agreement to be performed by them.
(c) Any debt or liability of the CORPORATION which arose or was
incurred at any time before the Closing Date, other than (i) those which are
reflected on the balance sheet which is part of the financial statements as
certified by Xxxxxxxxx Xxxxx & Co. and delivered pursuant to the within
Agreement, or in the notes thereto and (ii) those which are incurred between the
date of execution of the within Agreement and the Closing Date in the ordinary
course of business or with the consent of INSCI.
(d) Any deficiency or adjustment in income, franchise, sales, use,
payroll or other taxes, assessed against the CORPORATION with respect to any
period ending before the Closing Date.
(e) That certain specified SELLERS will indemnify and hold harmless
INSCI on a joint and several basis as to any liability hereunder with respect to
the amount of shares deposited in escrow by them.
13.2 INSCI's Obligation to Indemnify.
From and after the Closing Date, INSCI shall indemnify and hold
harmless SELLERS (and their respective heirs, estates, and representatives) from
and against any and all Damages arising out of or caused by any of the
following:
(a) Any misrepresentation or breach of any warranty or
representation made by INSCI in this Agreement.
(b) Any failure by INSCI to perform any term or provision of
this Agreement to be performed by it.
(c) Any debt or liability of the CORPORATION which arose or
was incurred before the Closing Date, if such debt or liability (i) was
reflected on the balance sheet which is part of the Financial
Statements certified by Xxxxxxxxx Xxxxx & Co. and delivered to SELLERS.
(d) Any obligation or liability of any of the STOCKHOLDERS
under guarantees heretofore made by any of them of obligations or
liabilities of any of the CORPORATION and set forth herein.
13.3 Notices, Defenses and Payments.
With respect to each event, occurrence or matter ("Indemnification
Matter") as to which INSCI, on the one hand, and SELLERS, on the other hand, (in
either case referred to as the "Indemnitee"), is entitled to indemnification
from the other (the "Indemnitor") under this Section 13:
(a) Upon the Indemnitee's receipt of written documents
underlying the Indemnification Matter, or, if the Indemnification
Matter does not involve a third party action, suit, claim or demand,
after the Indemnitee first has actual knowledge of the Indemnification
Matter, the Indemnitee shall promptly give notice to the Indemnitor of
the nature of the Indemnification Matter and the amount demanded or
claimed in connection therewith ("Indemnification Notice").
(b) If a third party action, suit, claim or demand is
involved, then, upon receipt of the Indemnification Notice, the
Indemnitor shall, at its expense and through counsel of its choice,
assume and have sole control over the litigation, defense or settlement
thereof (collectively, "Defense"), except that the Indemnitee may, at
its option and expense and through counsel of its choice, participate
in the Defense. The Indemnitor and the Indemnitee shall fully cooperate
with each other in connection with such third party action, suit, claim
or demand, including without limitation by furnishing all available
documentary or other evidence as is reasonably requested by the other.
(c) All amounts owed by the Indemnitor to the Indemnitee (if
any) shall be paid in full within thirty (30) days after a final
settlement or agreement as to the amount owed is reached, or after a
final judgment or order (without further right of appeal) determining
the amount owed is rendered.
13.4 Limitations.
The Indemnitor's liability for indemnification under this Section 13
shall be limited as follows:
(a) Limits.
INSCI's sole recourse except, as to the three principal
officers for fraud or intentional misrepresentation, with respect to
any indemnity obligations hereunder shall be by set off against the
INSCI shares held in escrow pursuant to the Escrow Agreement attached
as Exhibit XVIII. In no event shall any SELLER have liability hereunder
except to the extent of such SELLER's pro rata interest in any INSCI
stock that, at any time, remains held in escrow.
(b) Payment of Undisclosed or Unknown
Liabilities.
The escrow shall be drawn upon only in the event that damages
incurred, as specified in Section 13.1, exceed $50,000 in the
aggregate. In the event damages do not exceed $50,000, INSCI will bear
the responsibility. SELLERS understand and agree that SELLERS will have
90 days from the date of any claim or claims to attend to said claim.
SELLERS further understand and agree that the CORPORATION and or INSCI,
at its right and option, after a 30 day period, shall have the right to
make payment for any and all claims either from the escrow fund, as
provided for herein, or, in the alternative, demand payment directly
from SELLERS unless a mutually agreeable arrangement for processing and
handling of any claim or claims is made by and between SELLERS, the
CORPORATION, and or INSCI, as the case may be.
(c) Right of Off-Set of Shares From Escrow.
So long as any shares of stock shall remain in escrow pursuant to the
Escrow Agreement, INSCI is entitled to a right of off-set under Section 13
herein.
14. CLOSING.
The closing (the "Closing") under this Agreement will be subject to
mutual agreement to all exhibits and shall take place at or about 10:00 A.M.
local time on , 1999 (the "Closing Date"), at the offices of Xxxxxxx & Xxxxxxxxx
in New York City, New York or at such other time, date and place as SELLERS and
INSCI mutually agree.
Immediately following the closing, INSCI agrees that it will appoint to
its Board of Directors a qualified candidate recommended by the CORPORATION as
long as the candidate is acceptable to INSCI's Board to serve until the next
Annual Meeting of Shareholders. INSCI further agrees to nominate such director
for election by its Shareholders at the next Annual Meeting of Shareholders.
Additionally, INSCI further agrees to provide the opportunity to a designee of
the CORPORATION to attend INSCI Board Meetings as an observer. Such observer
shall have the right to attend all Meetings of the Board of Directors, to
receive notices of such Meetings, and to receive all information provided by
INSCI's Directors, provided that such observer shall be non-voting and shall not
have the liabilities of a Director. Such observer shall be designated as a Board
observer in any listing of Directors of INSCI.
15. NOTICES.
All notices, which are permitted or required under this Agreement shall
be in writing and delivered personally or sent by photocopy, facsimile or other
electronic means or by registered or certified mail, postage prepaid, addressed
as follows, or to such other person or address as may be designated by notice to
the other party:
If to SELLERS:
X/X Xxx Xxxxxx, Xxx.
Xxxxxx, Xxxxx & Xxxxxx
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
If to INSCI:
Two Xxxxxxxxxxx Xxxxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
With a copy, which copy shall not constitute notice, to:
Xxxxxxx & Xxxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
If to IBC:
000 X.X. 00xx Xxxxxx
Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Notices will be deemed delivered (except as otherwise provided in this
Agreement) when delivered personally or upon being mailed by prepaid certified
or registered mail with return receipt requested or by such other method
(including air courier) which provides for a signed receipt upon delivery,
provided that any notice of change of address shall be effective only upon
receipt.
The addresses set forth above shall be conclusive for all purposes
unless and until written notice of a change of addresses shall be sent to the
parties herein.
16. MISCELLANEOUS.
16.1 Payments.
All payments pursuant to this Agreement shall be made in United States
dollars.
16.2 Waiver, Remedies Cumulative, etc.
(a) Waiver.
No delay on the part of INSCI or SELLERS in the exercise of any right,
power, privilege or remedy hereunder shall operate as a waiver thereof, nor
shall any exercise or partial exercise of any such right, power, privilege or
remedy preclude any further exercise thereof or the exercise of any right,
power, privilege or remedy. No modification or waiver of any provision of this
Agreement, nor consent to any departure by INSCI or SELLERS therefrom, shall be
effective in any event unless the same shall be in writing, and then such
waiver, consent or modification shall be effective only in the specific
instance, and for the purpose, for which given.
(b) Special Waiver.
Notwithstanding the foregoing, INSCI shall have the right to waive
compliance by SELLERS with any of the provisions hereof, or to modify such
provisions to a less restrictive obligation of SELLERS, on such terms as INSCI
shall determine in its sole discretion, with or without prior notice to SELLERS.
(c) Remedies.
The rights, powers, privileges and remedies hereunder are hereby
expressly specified to be cumulative and not exclusive of any right, power,
privilege or remedy which the par ties hereto would otherwise have, except that
the rights of the parties hereto to obtain damages shall be limited as provided
in the within Agreement.
16.3 Entire Agreement.
This Agreement and the other agreements provided for herein embody the
entire agreement and understanding among INSCI and SELLERS, and supersede all
prior agreements and understandings between INSCI and SELLERS relating to the
subject matter hereof and thereof.
16.4 Parties in Interest.
All the terms and provisions of this Agreement shall be binding upon
and inure to the benefit of and be enforce able by the respective legal
representatives, successors and assigns of the parties hereto, whether so
expressed or not; provided, however, that INSCI shall not have the right to
assign this Agreement, or its rights hereunder, prior to the Closing, except to
a wholly-owned subsidiary of INSCI. Any such assignment by INSCI shall be
effective only if the permitted assignee shall assume all of INSCI's obligations
under this Agreement and all agreements referred to herein.
16.5 Law Governing.
This Agreement is being executed and delivered and is intended to be
performed in New York and shall be construed and enforced in accordance with,
and governed by, the laws and decisions of such State.
16.6 Counterparts.
This Agreement may be executed simultaneously in one or more
counterparts thereof, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
16.7 Severability.
If any provision of this Agreement is construed to be prohibited or
unenforceable, then the remaining provisions hereof shall not be affected
thereby and shall be enforced with out regard thereto.
16.8 Section Headings.
Section and subsection headings in this Agreement are for convenience
of reference only, do not constitute a part of this Agreement, and shall not
affect its interpretation.
16.9 References.
All words used in this Agreement shall be construed to be of such
number and gender as the context requires or permits. Unless a particular
context clearly provides otherwise, the words "hereof" and "hereunder" and
similar references refer to this Agreement in its entirety and not to any
specific Section or Subsection.
16.10 Consent to Jurisdiction.
Each of INSCI and SELLERS hereby submits to the exclusive jurisdiction
of the courts of the State of New York and/or the Federal courts of the United
States of America located in the Southern District of New York in respect of the
interpretation and enforcement of the provisions of this Agreement, or any
document or instrument delivered pursuant hereto and hereby waives, and agrees
not to assert, as a defense in any action, suit or proceeding for the
interpretation or enforcement of this Agreement or any document or instrument
delivered pursuant hereto, that he or it is not subject thereto or that such
action, suit or proceeding may not be brought or is not maintainable in said
courts or that this Agreement or any document or instrument delivered pursuant
hereto may not be enforced in or by said courts that the action, suit or
proceeding is brought in an inconvenient forum, or that the venue of the action,
suit or proceeding is improper.
SELLERS and INSCI agree that final judgment (with all rights of appeal
having been expired or waived) against them in any such action, suit or
proceeding shall be conclusive and that INSCI is, or the SELLERS are, as the
case may be, entitled to enforce such judgment in any other jurisdiction by suit
on the judgment, a certified or exemplified copy of which shall be conclusive
evidence of the fact and amount of indebtedness arising from such judgment.
16.11 No Third Party Beneficiaries.
Except as specifically provided in Section 16.4 hereof, no provision of
this Agreement is intended to or shall be construed to grant or confer any right
to enforce this Agreement or any remedy for breach of this Agreement to or upon
any third party.
IN WITNESS WHEREOF, the parties hereto have each caused this Agreement
to be executed in the name and on behalf of each of them by one of their
respective officers, thereunto duly authorized, as of the day and year first
above written.
INSCI CORP.
By:
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INTERNET BROADCASTING COMPANY, INC.
By:
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Xxxx Xxxxxx
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Xxxxxxx XxxXxxxxxx
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Xxxxx Xxxxxxxxx
LISTING OF EXHIBITS
Exhibit "I" Listing of SELLERS (all Stockholders).
Exhibit "I-A" Listing of PRINCIPAL STOCKHOLDERS (Limited Warranties)
Exhibit "II" Registration Rights Agreement.
Exhibit "III" (Eliminated).
Exhibit "IV" Audited Financial Statements and Unaudited Interim Period.
Exhibit "V" Listing of all Subsidiary Corporations and Jurisdictions
in which IBC does Business.
Exhibit "VI" Listing of all Authorized, Issued and Outstanding Shares of
Capital Stock of IBC.
Exhibit "VII" Litigation.
Exhibit "VIII" Title to Properties.
Exhibit "IX" Loans made by IBC to Employees, Officers or Directors.
Exhibit "X" Schedule of Key Employees.
Exhibit "XI" Schedule of Proprietary Technology.
Exhibit "XII" Currently Existing Contracts, Leases and Agreements.
Exhibit "XIII" Marketing, Distribution and Re-selling Agreements.
Exhibit "XIV" IBC's Officers and Board of Directors (Resignations).
Exhibit "XV" Listing of Insurance Policies owned or maintained by IBC.
Exhibit "XVI" Sellers' Employment Agreements (Messrs. Xxxxxx, XxxXxxxxxx
and Xxxxxxxxx).
Exhibit "XVII" Employees' Non-Compete, Proprietary and Confidentiality
Agreements.
Exhibit "XVIII" Escrow Agreement.
Exhibit "XIX" Opinion Letter of Sellers' counsel.
Exhibit "XX" (Eliminated).
INDEMNIFICATION AGREEMENT
EXHIBIT
The undersigned, XXXX XXXXXX, XXXXXXX XXXXXXXXXX and XXXXX XXXXXXXXX
agree to hold harmless and indemnify INSCI CORP. ("INSCI") with respect to the
Stock Purchase Agreement dated , 1999, from any undisclosed or unknown
liabilities or claims which are not disclosed on Internet Broadcasting Company,
Inc.'s (IBC's) Financial Statements and/or Schedule of Liabilities, including
all contingent liabilities, as of the Closing Date up to an aggregate of 125,000
Shares on a pro rata basis as follows:
XXXX XXXXXX - 41,666 Shares
XXXXXXX XXXXXXXXXX - 41,666 Shares
XXXXX XXXXXXXXX - 41,666 Shares
The within Indemnification and Hold Harmless Agreement is limited to the pro
rata number of shares deposited in escrow by Messrs. Xxxxxx, XxxXxxxxxx and
Xxxxxxxxx, as per the Escrow Agreement executed of even date with the firms of
Xxxxxxx & Xxxxxxxxx and Xxxxxx Beach and Xxxxxx as Escrow Agents except for a
claim against the Sellers for fraud and misrepresentation. In the event of any
such claim by INSCI, damages will be governed by applicable law as made and
provided.
INSCI agrees that it will inform Messrs. Xxxxxx, XxxXxxxxxx and
Xxxxxxxxx in writing of any claim that is not scheduled on the Financial
Statement and Schedule of Liabilities of IBC as of the Closing Date, including
any contingent liabilities and that, in the event that any claim is asserted and
presented by INSCI to Messrs. Xxxxxx, XxxXxxxxxx and Xxxxxxxxx which claim is
not resolved and discharged to INSCI's satisfaction, within thirty (30) days
from the date of said notification, then in that event, INSCI will have the
right to notify the Escrow Agents of the amount of said claim and after payment
of same, to demand that the Escrow Agents turn over and return to INSCI in
satisfaction of said claim, on a pro rata basis, the number of shares standing
in the name of Messrs. Xxxxxx, XxxXxxxxxx and Xxxxxxxxx by multiplying the
number of shares held in escrow by the market price at the time of the payment
of said claim by INSCI so that INSCI will receive the return of the dollar value
of the claim paid in shares of stock.
It is understood and agreed that the aggregate of 125,000 shares of
Common Stock as stated herein will be subject to the within indemnification for
a period of one year from the date of the Stock Purchase Agreement and,
thereafter, during the second year from said date, that the aggregate number of
shares subject to the indemnification will be reduced to the sum of $100,000 in
value of said shares. The shares in escrow will be valued at the bid market
price on the second anniversary of the within Agreement (i.e., 25,000 shares at
$4.00 per share). It is understood and agreed that in the event there are no
claims either threatened or pending with respect to the Stock Purchase
Agreement, then in that event, on the third anniversary from the closing date of
the stock purchase transaction, all shares of Common Stock held by the joint
Escrow Agents will be released to Messrs. Xxxxxx, XxxXxxxxxx and Xxxxxxxxx.
Messrs. Xxxxxx, XxxXxxxxxx and Xxxxxxxxx agree that they will execute
all certificates and documents required by INSCI and the Escrow Agents to cause
the turn over or return to INSCI of the INSCI shares to INSCI.
INSCI, Messrs. Xxxxxx, XxxXxxxxxx and Xxxxxxxxx agree that they will
indemnify and hold harmless the Escrow Agents from any liability, except for
gross negligence, in accordance with the Escrow Agreement, which is annexed as
Exhibit "XVIII" herein.
The within agreement is governed by the laws of the State of New York
and may not be changed or modified except by the written agreement of the
parties herein.
Each of the parties agrees that if notice is required, that said notice
will be sent to the following parties:
Xxxx Xxxxxx, Xxxxxxx XxxXxxxxxx and Xxxxx Xxxxxxxxx
X/X Xxx Xxxxxx, Xxx.
Xxxxxx, Xxxxx & Xxxxxx
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
With a copy, which copy shall not constitute notice, to:
Xxx Xxxxxx, Esq.
Xxxxxx, Beach & Xxxxxx
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
XXXXX
Xxx Xxxxxxxxxxx Xxxxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
With a copy, which copy shall not constitute notice, to:
Xxxxxxx & Xxxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
IN WITNESS WHEREOF, we have set our hands and seals this day of , 1999.
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XXXX XXXXXX
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XXXXXXX XXXXXXXXXX
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XXXXX XXXXXXXXX
INSCI CORP.
By:
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