CONSULTING AGREEMENT
This Consulting Agreement (this "Agreement") is made as of the 4th day
of October, 2004, by and among INSYNQ, Inc., a Washington corporation, having
its principal place of business at 0000 Xxxxxxxx Xxxxx, Xxx 000, Xxxxxx, XX
00000 (Company), and Xxxxxxx Xxxxxxxx, an individual and resident of 000 Xxxxxxx
Xxx, Xxx X, Xxxxxx Xxxxx, XX 00000 ("Consultant") and is made in light of the
following recitals which are a material part hereof.
RECITALS:
A. Consultant is a corporate finance consultant,
experienced with both technology and financing of
small-cap companies generally. Accordingly,
notwithstanding Consultant's familiarity with
securities law, neither Consultant nor the Company
desires that Consultant furnish any legal services but
only information, evaluation and analysis.
B. Consultant has knowledge and experience to provide such
information, evaluation, analysis as the Company
believes can assist it in furthering execution of its
business model.
C. The Company desires to retain the services of the
Consultant for those consulting services regarding
certain financing contemplated as well as the impact of
such financing on the functions and operations of the
Company as more fully set forth in that confidential
schedule of services and deliverables attached hereto
as Schedule A which services are incorporated herein by
reference and referred to herein as the "Consultant
Services"
D. Consultant desires to provide the Consultant Services
to and consult with the Board of Directors, the
officers of the Company, and the administrative staff,
and to undertake for the Company, consultations and
recommendations in conformity with such Consultant upon
the terms and conditions provided herein including but
not limited to the compensation promised herein.
NOW THEREFORE, for and in consideration of good and valuable
consideration, in hand paid, including, but not limited to the mutual promises
set forth herein, the receipt and sufficiency of which is acknowledged by each
party hereto, the parties hereby agree as follows:
1. RECITALS GOVERN. The parties desire to enter into this agreement for purposes
of carrying out the above recitals and intentions set forth above and this
Agreement shall be construed in light thereof.
2. STOCK ONLY FOR SERVICES. The parties desire to memorialize their agreement to
adhere to Securities Act Release No. 33-7646, dated February 26, 1999 regarding
registration of securities on Form S-8, a copy of which is attached hereto as
Exhibit A and incorporated herein by reference. No duty, obligation, engagement
or other thing imposed on either the Company or the Consultant hereunder shall
be construed to impose any duty, obligation or other engagement in violation of
the letter or spirit of said release.
3. CONSULTING SERVICES. The Consultant agrees to provide the Consultant Services
to the Company during the "Term" (as hereinafter defined). Consultant agrees to
provide such information, evaluation and analysis, in accordance with the
Consultant Services as will assist in maximizing the effectiveness of Client's
business model both relative to its business model and to its present and
contemplated capital structure. The Consultant shall personally provide the
Consultant Services and the Company understands that the nature of the services
to be provided are part time and that the Consultant will be engaged in other
business and consulting activities during the term of this Agreement.
3.A CONFLICTS. The Company waives any claim of conflict and
acknowledges that Consultant has owned and continues to own
and has consulted with and continues to consult with interests
in competitive businesses which might compete but for
location.
3.B CONFIDENTIAL INFORMATION. The consultant agrees that any
information received by the consultant during any furtherance
of the consultant's obligations in accordance with this
contract, which concerns the personal, financial or other
affairs of the company will be treated by the consultant in
full confidence and will not be revealed to any other persons,
firms or organizations. In connection herewith, Consultant and
the Company have entered into that Confidentiality Agreement
in the form attached hereto as Schedule B.
3.C ROLE OF CONSULTANT. Consultant shall be available to consult
with the Board of Directors, the officers of the Company, and
the heads of the administrative staff, at reasonable times,
concerning matters pertaining to the organization of the
administrative staff, the fiscal policies of the Company, the
relationship of the Company with its employees or with any
organization representing its employees, and, in general, the
important problems of concern in the business affairs of the
Company all in fulfillment of the Consultant Services.
Consultant shall not represent the Company, its Board of
Directors, its officers or any other members of the Company in
any transactions or communications nor shall Consultant make
claim to do so.
3.D LIABILITY. With regard to the services to be performed by the
Consultant pursuant to this Agreement, the Consultant shall
not be liable to the Company, or to anyone who may claim any
right due to any relationship with the Company, for any acts
or omissions in the performance of services on the part of the
Consultant or on the part of the agents or employees of the
Consultant, except when said acts or omissions of the
Consultant are due to willful misconduct or gross negligence.
The Company shall hold the Consultant free and harmless from
any obligations, costs, claims, judgments, attorneys' fees,
and attachments arising from or growing out of the services
rendered to the Company pursuant to the terms of this
agreement or in any way connected with the rendering of
services, except when the same shall arise due to the willful
misconduct or gross negligence of the Consultant and the
Consultant is adjudged to be guilty of willful misconduct or
gross negligence by a court of competent jurisdiction.
4. TERM. The term of this Agreement shall commence as of the date hereof and
shall continue for a period of one (1) year from that date, unless sooner
terminated as provided herein. It is understood that this Agreement shall not
automatically renew and no obligations to renew are implied notwithstanding
continued efforts to fulfill terms and conditions incomplete as of the
termination of this Agreement. This Agreement and the duties and obligations of
the Consultant may be terminated by either party giving thirty (30) days' prior
written notice to the other but the compensation and any previously incurred and
approved expenses shall be deemed earned by and due to Consultant.
5. COMPENSATION. In consideration of the execution of the Agreement, and the
performance of his obligations hereunder, and in lieu of cash compensation on an
hourly basis, the Consultant shall receive a fee of Six Million Five Hundred
Thousand, (6,500,000) common shares issued from the Company's 2002 Officers,
Directors and Consultants Stock Option Plan (hereinafter, the "Shares"). The
Shares will be, prior to delivery to Consultant, registered pursuant to valid
and effective registration statements under Form 144 Rule 701 and the Company
agrees that the Shares shall be freely tradable and that the existence of any
restriction, buy-sell or other limitation under state or Federal securities laws
including but not limited to Rule 144 of the Securities Act of 1933 and/or the
limitations on manner of sale imposed under the Securities and Exchange Act of
1934 shall be lifted and/or waived by the Company prior to delivery of the
Shares. The Shares shall be tendered within Twenty (20) days of the effective
date of this Agreement.
6. EXPENSES. The Company shall pay or reimburse the Consultant for all
reasonable travel, business and miscellaneous expenses incurred by the
Consultant in performing its duties under this Agreement, subject to prior
approval.
7. CONTROL AS TO TIME AND PLACE AND MANNER WHERE SERVICES WILL BE RENDERED,
INDEPENDENT CONTRACTOR. It is anticipated the Consultant will spend up to 200
hours in fulfilling its obligations under this Agreement. The particular amount
of time may vary from day to day or week to week. The Consultant shall not be
entitled to any additional compensation except where the Consultant performs
more than 200 hours, subject to the prior written approval of the Company,
whereupon the Consultant will be paid at the rate of $150 per hour for work
performed in accordance with this Agreement. If additional work is approved, the
Consultant will submit an itemized statement setting forth the time spent and
services rendered, and the Company will pay the Consultant the amounts due as
indicated by statements submitted by the Consultant within ten (10) days of
receipt.. Both the Company and the Consultant agree that the Consultant will act
as an independent contractor in the performance of its duties under this
Agreement. The Consultant will perform most services in accordance with this
Agreement at a location and at times chosen in Consultant's discretion. The
Company may from time to time request that the Consultant arrange for the
services of others but Consultant shall choose and contract with same. All costs
to the Consultant for those services will be paid by the Company, but in no
event shall the Consultant employ others without the prior authorization of the
Company. Accordingly, the Consultant shall be responsible for payment of all
taxes including Federal, State and local taxes arising out of the Consultant's
activities in accordance 4with this Agreement, including by way of illustration
but not limitation, Federal and state income tax, Social Security tax,
unemployment insurance taxes, and any other taxes or business license fee as
required. Except as otherwise may be agreed, the Consultant shall at all times
be in an independent contractor, rather than a co-venturer, agent, employee or
representative of the Company.
8. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants that (I)
the shares being issued and/or sold pursuant to option are authorized to be
issued by the Company; (ii) The Company has full right, power, and corporate
authority to execute and enter into this Agreement, and to execute all
underlying documents and to bind such entity to the terms and obligations hereto
and to the underlying documents and to deliver the interests and consideration
conveyed thereby, same being authorized by power and authority vested in the
party signing on behalf of the Company; (iii) the Company has and will have full
right, power, and authority to sell, transfer, and deliver the shares being
issued and/or sold pursuant to option; (iv) the Company has no knowledge of any
adverse claims affecting the subject shares and there are no notations of any
adverse claims marked on the certificates for same; and (v) upon receipt,
Consultant or his nominee will acquire the shares being issued and/or sold
pursuant to option, free and clear of any security interests, mortgage, adverse
claims, liens, or encumbrances of any nature or description whatsoever, subject
only to matters pertaining to the sale of securities generally including but not
limited to the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder, or any state statute, rule, or regulation relating to
the sale of securities (collectively, "Securities Laws"). In the event that
Consultant accepts shares not yet subject to a valid registration statement
(notwithstanding or waiving the Company's obligations to deliver shares duly and
properly registered), Consultant represents and warrants to the Company that he
will acquire same for investment and not with a view to the sale or other
distribution thereof and will not at any time sell, exchange, transfer, or
otherwise dispose of same under circumstances that would constitute a violation
of Securities Laws. Each party acknowledges the creation, modification and/or
transfer of securities and represents and warrants to all others that it has
reviewed the transaction with counsel and that no registration or
representations are required and that all rights of recourse or rescission
resulting from such transfer, to the extent permitted by law, are waived and
each party represents and warrants to all others that no marketing of securities
to the public has occurred. Each of the warranties, representations, and
covenants contained in this Agreement by any party thereto shall be continuous
and shall survive the delivery of Consultant Services, the Compensation and the
termination of this Agreement.
9. ARBITRATION. Any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, shall be settled by arbitration in accordance
of the rules of the American Arbitration Association, and judgment upon the
award rendered by the arbitrator(s) shall be entered in any court having
jurisdiction thereof. For that purpose and the resolution of any other claim
hereunder, the parties hereto consent to the jurisdiction and venue of an
appropriate court located in Jefferson County, State of Florida. In the event
that litigation results from or arises out of this Agreement or the performance
thereof, the parties agree to reimburse the prevailing party's reasonable
attorney's fees, court costs, and all other expenses, whether or not taxable by
the court as costs, in addition to any other relief to which the prevailing
party may be entitled. In such event, no action shall be entertained by said
court or any court of competent jurisdiction if filed more than one year
subsequent to the date the cause(s) of action actually accrued regardless of
whether damages were otherwise as of said time calculable.
10. NOTICES. All notices, requests, consents, and other communications under
this Agreement shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, or delivered by Facsimile or delivered
personally to the address written above or to such other address of which the
addressee shall have notified the sender in writing. Notices mailed in
accordance with this section shall be deemed given when mailed.
11. BINDING EFFECT, ASSIGNMENT AND SUCCESSION. All covenants and agreements
contained in this Agreement by or on behalf of any of the parties hereto shall
bind and inure to the benefit of his, her or its respective heirs, personal
representatives, successors, and assigns, whether so expressed or not. Except
for assignment of the options as provided above, no party to this Agreement may,
however, assign his rights hereunder or delegate his obligations hereunder to
any other person or entity without the express prior written consent of the
other parties hereto.
12. ENTIRE AGREEMENT AND INTERPRETATION. This Agreement, including any exhibits
and schedules hereto, constitutes and contains the entire agreement of the
Company and the Consultant with respect to the provision of Consultant Services
and Compensation and supersedes any prior agreement by the parties, whether
written or oral. It may not be changed orally but only by an agreement in
writing signed by the party against whom enforcement of any waiver, change,
modification, extension, or discharge is sought. The waiver of a breach of any
term or condition of this Agreement must be in writing and signed by the party
sought to be charged with such waiver, and such waiver shall not be deemed to
constitute the waiver of any other breach of the same or of any other term or
condition of this agreement. This Agreement shall be construed in accordance
with and governed by the laws of the State of Florida without regard to its
rules and laws regarding conflicts of laws and each of the parties hereto
irrevocably submit to the exclusive jurisdiction of any Florida State or United
States Federal court sitting in Palm Beach County, Florida over any action or
proceeding arising out of or relating to this Agreement. The parties hereto
further waive any objection to venue in the State of Florida and any objection
to an action or proceeding in the State of Florida on the basis of forum non
conveniens.
13. MISCELLANEOUS. The section headings contained in this Agreement are inserted
as a matter of convenience and shall not be considered in interpreting or
construing this Agreement. This Agreement may be executed concurrently in two or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. The invalidity or
unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of the remaining provisions. Time is of the essence
of this Agreement and the obligations of the parties hereto.
IN WITNESS WHEREOF, the Company and the Consultant have executed this
Agreement as of the day and year first written above.
Company: Consultant:
/s/ Xxxx X. Xxxxx /s/ Xxxxxxx Russostto
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INSYNQ, INC. XXXXXXX XXXXXXXX
XXXX X. XXXXX
EXHIBIT A
ADOPTION OF SECURITIES ACT RELEASE NO. 33-7646, DATED FEBRUARY 26, 1999
REGARDING REGISTRATION OF SECURITIES ON FORM S-8
PURPOSE
To clarify that S-8 is not available to consultants who directly or indirectly
promote or maintain a market for the issuer's securities ,declaring that these
persons take from an issuer with a view to distribution and are therefore
"statutory underwriters" (who presumably would not have an exemption for the
resale of securities issued in these types of transactions [Section 4(1) of the
Securities Act of 1933, as amended (the "Act"), the exemption relied upon for
secondary sales of securities, is not available to "issuers, underwriters or
dealers" in securities]).
BACKGROUND
As of April 7, 1999, the availability of S-8's streamlined registration process
was restricted to deter the abuse of the Form to make sales to the general
public through so-called "consultants" and "advisors," and to eliminate
registration on the Form to "stock promoters." S-8 eliminated a need to file a
prospectus that duplicated information usually available to plan participants
who were being compensated by the issuance of securities rather than cash, and
it reflected the Commission's distinction between offerings made to employees
for compensatory reasons and offerings made for capital raising. The Commission
reasoned that the relationship of the employee to the issuer provided the
employee with a familiarity of the issuer's business sufficient to justify the
abbreviated disclosure, which would not be adequate in a capital raising
transaction. The 1990 amendment included "consultants" whom the Commission found
no reason to distinguish from regular employees, for bona fide non-capital
raising services rendered.
ABUSES
Since 1990, the Form has been used to distribute securities to the public
without the protections to investors of registration under Section 5 of the Act.
Securities are often issued to so-called "consultants" for nominal services,
with pre-arrangements for exercise and distribution to the public in the
underlying markets. Often the options granted are exercised to provide funds to
the issuer or the proceeds of the sales are for the payment of debts of the
issuer that are not related to any services provided by the consultants.
The initial registration of the shares underlying these options did not
register the public "capital raising" transaction which actually takes place via
the secondary sales. In these instances, the employee or consultant acts as a
conduit to the public, and the shares are not actually issued as compensation
for services, for which the Form is solely intended. Securities have also been
issued to consultants whose services are to promote the issuer's securities.
This practice invites fraud by providing inexpensive compensation to person who
hype the securities of the issuer and expand the issuer's market through resales
by these and other persons. Through its recent amendments to Form S-8, the
Commission has sought to curb these practices, while maintaining, to the extent
possible, the initial intent of the Form, i.e., the registration of compensatory
transactions between the issuer and consultants and advisors who render bona
fide services outside of "capital raising" circumstances, as well as to
traditional employees.
AMENDMENTS
The Form's availability is for employees or employees or subsidiaries, pursuant
to any employee benefit plan. An "employee" is defined to include a consultant
or advisor who provides bona fide services to the issuer other than in capital
raising transactions. Like the traditional employee, the consultant or advisor
must be a natural person, and there must be a contract between the issuer and
the consultant or advisor. The Commission has determined that "capital raising"
includes (i) compensation for any service that directly or indirectly promotes
or maintains a market for the issuer's securities, or (ii) where the securities
are issued to persons who act as conduits for a distribution to the general
public. Securities issued to persons who promote the issuer's securities are
outside the intent of the Form. Securities cannot be issued to anyone who
directly or indirectly promotes or maintains a market in the issuer's
securities. Issuers cannot use the Form for the issuance of securities to
consultants and advisors whose services related to potential capital
restructuring because this service is a predicate to "capital raising" and
market maintenance; however, services rendered in structuring the compensation
scheme would be included under the Form. Public relations services are also
prohibited as the Commission believes these services enhance and expand the
market of the issuer and its securities.
RULE 701 AMENDMENTS
As of April 7, 1999, the Commission amended Rule 701 to harmonize the
definition of "consultants and advisors" permitted to use the Rule to the
narrower definition of Form S-8. As revised, securities promoters will clearly
be excluded from the scope of persons eligible to use Rule 701.
SCHEDULE A TO CONSULTING AGREEMENT
SCHEDULE OF SERVICES AND DELIVERABLES
Consultant shall provide the following Strategic Services:
1. Business Development and Planning: Develop an in-depth familiarization
with the Corporation's business objectives and bring to its attention
potential or actual opportunities that meet those objectives or logical
extensions thereof. Alert the Corporation to new or emerging high
potential forms of production and distribution that could either be
acquired or developed internally. Comment on the Corporation's
corporate development including such factors as position in competitive
environment, financial performances vs. competition, strategies,
operational viability, etc. Identify prospective suitable merger or
acquisition partners for the Corporation, perform appropriate diligence
investigations with respect thereto, advise the Corporation with
respect to the desirability of pursuing such prospects, and assist the
Corporation in any negotiations which may ensue therefrom.
2. Corporate Strategic Analysis: Evaluate business strategies and
recommend changes where appropriate.
3. Critically evaluate the Corporation's performance in view of its
corporate planning and business objectives.
4. Strategic Contacts and formation of Strategic alliances and
Introduction to strategic partners and other alliance candidates;
5. Strategic consulting regarding high level product planning, market
development, marketing and intellectual property planning; Business
development
6. Introduction to prospective customers for the Company's products or
services.
7. Review of existing and contemplated financing including lending and
convertible debt.
8. The consultant will consult with the officers and employees of the
company concerning matters relating to the management and organization
of the company, their financial policies, the terms and conditions of
employment, and generally any matter arising out of the business
affairs of the Company.
SCHEDULE B TO CONSULTING AGREEMENT
CONFIDENTIALITY AGREEMENT
This Confidentiality Agreement (hereafter this "Agreement"), made this 4th day
of October 2004, by and between InsynQ Inc, a Washington corporation
("Company"), having its residence at 0000 Xxxxxxxx Xxxxx, Xxx 000, Xxxxxx, XX
00000 and Xxxxxxx Xxxxxxxx, an individual and resident of 000 Xxxxxxx Xxx, Xxx
X, Xxxxxx Xxxxx, XX 00000 ("Consultant"). Given that the Company and Consultant
each desire to make certain confidential information concerning the Company, its
technology, its investments, its processes, its marketing strategies, its
capitalization and finances and its business as well as similar confidential
information lawfully possessed by the Consultant (collectively, the
"Information") for purposes agreed to be legitimate and the Company and
Consultant each agree to hold such Information confidential pursuant to the
terms of this Agreement, in consideration of the mutual promises and other good
and valuable consideration, the receipt and sufficiency of which is acknowledged
and with the intent to be legally bound hereby, the Company and the Consultant
agree as follows.
1. The Information includes, but is not limited to, (I) all information
on the Company, (ii) any and all data and information given or made
available to the Consultant by the Company for evaluation purposes,
whether written or in machine-readable form, (iii) any and all of the
Company's and Consultant's notes, work papers, investigations, studies,
computer printouts, and any other work product including electronic data
files, regardless of nature containing any such data and information and
(iv) all copies of any of the foregoing.
2. The Consultant and Company each understand that the Information is
proprietary to the Company and Consultant and each agrees to hold the
Information given by the other strictly confidential. The Company and
Consultant each agree that the Information shall be used only by the
Company and Consultant and only for the purpose of reviewing and
evaluating the activities of the Company, and shall not be used for any
other purpose or be disclosed to any third party. Neither the Company
nor Consultant shall have the right to make copies or hold copies or
documents except for reports and notes which have been generated by
them, which reports and notes shall be retained for their exclusive use
and shall remain confidential.
3. It is understood that this Confidentiality Agreement shall not apply
to any information otherwise covered herein (I) which is known to either
the Company or the Consultant prior to the date of the Confidentiality
Agreement, (ii) which is disclosed to the Consultant or the Company by a
third party who has not directly or indirectly received such Information
in violation of an agreement with party from whom it was received or
(iii) which is generally known within the industry.
4. The Company and the Consultant each agree to be fully responsible and
liable to the other for any and all damages caused by reason of
disclosure of Information in violation of this Confidentiality Agreement
by the receiving party or any of its assigns or successors.
5. This Confidentiality Agreement shall be governed by and construed in
accordance with the laws of the State of Florida and shall be
enforceable solely by and be for the sole benefit of the Consultant and
Company, their successors and assigns.
In witness whereof, the Company and the Consultant have executed this Agreement
as of the date above .
Company: Consultant:
/s/ Xxxx X. Xxxxx /s/Xxxxxxx Xxxxxxxx
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INSYNQ, INC. XXXXXXX XXXXXXXX
XXXX X. XXXXX
