PROMISSORY NOTE AND SECURITY AGREEMENT
Principal Amount: $75,000.00
Date of This Note: September 2, 2003
Location of Execution: Denver, Colorado
Primary Note Rate: Eight (8%) percent per annum
Default Note Rate: Twelve (12%) percent per annum
Due Date: November 2, 2003
FOR VALUE RECEIVED, the undersigned, Xxxxxx Xxxxx, (hereinafter, the
"Borrower"), with his address of 000 Xxxxxx Xx., Xxxxxx, Xx 00000, promises to
pay to the order of Insynq, Inc. with its address of 0000 Xxxxxxxx Xxxxx, Xxxxx
000, Xxxxxx, XX 00000 or its successors and assigns, (hereinafter, collectively
with its endorsees, transferees, successors and assigns, "Lender"), the above
listed "Principal Amount" plus interest on the unpaid balance of said Principal
Amount outstanding from time to time from the "Date of This Note" until paid at
the above at the "Primary Note Rate." The principal and interest shall be due
and payable, if not sooner paid on or before, the above Due Date. Any payments
made shall be first applied to interest and any other charges due as described
hereafter and then to the unpaid principal balance. The above terms shall be
used as defined terms and shall govern and control this Promissory Note and
Security Agreement (hereinafter, this "Note").
Borrower may prepay the principal amount outstanding, plus interest, in whole or
in part at any time from the Date of this Note. In the event that this note is
paid in full within Sixty (60) days of the Date of this Note, Xxxxxx agrees that
interest due hereunder will be waived. If any payment of principal, interest or
any other charge under this Note is not paid within ten (10) days from the date
it is due or if bankruptcy proceedings, whether voluntary or involuntary, are
instituted against the Borrower, or any representation or warranty of the
Borrower in this Note shall prove to have been incorrect in any material respect
when made; or Borrower shall fail to observe or perform any of its obligations
hereunder for ten (10) days after receipt by the Borrower of notice of such
failure from the Lender (each of the foregoing constituting a "Default" for
purposes hereunder), then all amounts due under this Note shall commence
accruing interest at the above "Default Note Rate," and the entire unpaid
balance of this Note shall at once become due and payable at the option of the
Lender.
As an inducement for the Lender to loan the Principal Amount and to secure the
complete and timely payment, performance and discharge in full, as the case may
be, of all of the obligations hereunder, the Borrower hereby, unconditionally
and irrevocably, pledges, grants and hypothecates to the Lender, a continuing
security interest in and a continuing lien upon, (the "SECURITY INTEREST") and
an unqualified right to possession and disposition of and a right of set-off
against, in each case to the fullest extent permitted by law, all of the
Borrower's right, title and interest of whatsoever kind and nature in and to
that certain common stock evidenced by Certificate No.____ representing ____
shares of common stock in Insynq, Inc., a Nevada corporation, which interests
shall include all rights thereunder and all rights accruing (collectively, the
"Collateral"). Xxxxxx agrees that it will either return the certificate if it
desires recourse against the Borrower or elect as its sole recourse for the
payment of the principal, interest and any other charges on this Note shall be
the Collateral and Lender waives personal recourse to the Borrower in the event
it deposits the Collateral with a broker for purposes of selling same.
1. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF THE
BORROWER. The Borrower represents and warrants to, and
covenants and agrees with, the Lender as follows:
a. The Borrower has the requisite power and authority to execute,
deliver this Note and perform the obligations under this Note.
This Note constitutes a legal, valid and binding obligation of
the Borrower enforceable in accordance with its terms, except
only as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditor's rights generally.
b. The Borrower is the sole owner of the Collateral free and
clear of any liens, security interests, encumbrances, rights
or claims, and is fully authorized to grant the Security
Interest in and to pledge the Collateral encumbered thereby. .
c. This Note creates in favor of the Lender a valid first
priority security interest in the Collateral securing the
payment and performance of the obligations hereunder and, upon
making the filings permitted to Lender, a perfected first
priority security interest in such Collateral.
d. On or immediately after the date of execution of this Note,
upon request by Xxxxxx, the Borrower will deliver to the
Lender one or more executed UCC financing statements on Form-1
with respect to the Security Interest for filing with such
jurisdictions as are requested. On or immediately after the
date of execution of this Note, upon request by Xxxxxx, the
Borrower will deliver to the Lender one or more executed
irrevocable stock powers or assignments separate from
certificate allowing for the transfer of the Collateral to
Lender in the event of Default hereunder.
e. All information heretofore, herein or hereafter supplied to
the Lender by or on behalf of the Borrower with respect to the
Collateral is accurate and complete in all material respects
as of the date furnished.
2. RIGHTS AND REMEDIES UPON DEFAULT. Upon occurrence of any
Default and at any time thereafter, the Lender shall have the
right to exercise all of the remedies conferred hereunder and
the Lender shall have all the rights and remedies of a lender
under any other applicable law (including the Uniform
Commercial Code of any jurisdiction in which any collateral is
then located). Without limitation, the Lender shall have the
right to take possession of the Collateral and remove same,
and Lender shall have the right to assign, sell, lease or
otherwise dispose of and deliver all or any part of the
Collateral, at public or private sale or otherwise, either
with or without special conditions or stipulations, for cash
or on credit or for future delivery, in such manners on such
terms and conditions and at such times and at such places, as
the Lender may deem commercially reasonable, all without
(except as shall be required by applicable statute and cannot
be waived) advertisement or demand upon or notice to the
Borrower or right of redemption of the Borrower, which are
hereby expressly waived. Upon each such sale, assignment or
other transfer of Collateral, the Lender may, unless
prohibited by applicable law which cannot be waived, purchase
all or any part of the Collateral being sold, free from and
discharged of all trusts, claims, right of redemption and
equities of the Borrower, which are hereby waived and
released.
3. APPLICATIONS OF PROCEEDS. The proceeds of any such sale or
other disposition of the Collateral hereunder shall be applied
first, to the expenses of retaking, holding, and preparing for
sale, and, next to the payment of the Principal Amount due and
any interest, fees and costs, added thereto and any other
amounts required by applicable law, after which the Lender
shall pay to the Borrower any surplus proceeds. To the extent
permitted by applicable law, the Borrower waives all claims,
damages and demands against the Lender arising out of the
repossession, removal, retention or sale of the Collateral,
unless due to the gross negligence or willful misconduct of
the Lender.
4. COSTS AND EXPENSES. The Borrower agrees to pay all
out-of-pocket fees, costs and expenses incurred in connection
with any filing required hereunder, and all other claims and
charges which in the reasonable opinion of the Lender might
prejudice, imperil or otherwise affect the Collateral or the
Security Interest therein. Until so paid, any fees payable
hereunder shall be added to the principal amount of the Note
and shall bear interest at the Default Note Rate.
5. SECURITY INTEREST ABSOLUTE. All rights of the Lender and all
obligations of the Borrower hereunder, shall be absolute and
unconditional, irrespective of: (a) any lack of validity or
enforceability of any portion of this Note; (b) any change in
the time, manner or place of payment or performance of, or in
any other term of, all or any of the Obligations, or any other
amendment or waiver of or any consent to any departure from
the Note or any other agreement entered into in connection
with the foregoing; (c) any exchange, release or
non-perfection of any of the Collateral, or any release or
amendment or waiver of or consent to departure from any other
collateral for, or any guaranty, or any other security, for
all or any of the Obligations; (d) any action by the Lender to
obtain, adjust, settle and cancel in its sole discretion any
insurance claims or matters made or arising in connection with
the Collateral; or (e) any other circumstance which might
otherwise constitute any legal or equitable defense available
to the Borrower, or a discharge of all or any part of the
Security Interest granted hereby. The Borrower expressly
waives presentment, protest, notice of protest, demand, notice
of nonpayment and demand for performance. The Borrower waives
all right to require the Lender to proceed against any other
person or to apply any Collateral which the Lender may hold at
any time, or to marshal assets, or to pursue any other remedy.
The Borrower waives any defense arising by reason of the
application of the statute of limitations to any obligation
secured hereby.
6. TERM OF AGREEMENT. This Note and the Security Interest
conveyed hereunder shall terminate on the date on which all
payments under the Note have been made in full and all other
obligations have been paid or discharged. Upon such
termination, the Lender, at the request and at the expense of
the Borrower, will join in executing any termination statement
with respect to any financing statement executed and filed
pursuant to this Note.
7. NOTICES. All notices, requests, demands and other
communications hereunder shall be in writing, with copies to
all the other parties hereto, and shall be deemed to have been
duly given when mailed by first-class certified mail, return
receipt requested, postage prepaid, four days after posting in
the U.S. mails, in each case if delivered to the addresses
hereinabove given for each of the parties hereto
8. MISCELLANEOUS.
a. No course of dealing between the Borrower and the Lender, nor
any failure to exercise, nor any delay in exercising, on the
part of the Lender, any right, power or privilege hereunder or
under the Note shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, power or
privilege hereunder or thereunder preclude any other or
further exercise thereof or the exercise of any other right,
power or privilege. No waiver of any breach or default or any
right under this Note shall be considered valid unless in
writing and signed by the party giving such waiver, and no
such waiver shall be deemed a waiver of any subsequent breach
or default or right, whether of the same or similar nature or
otherwise.
b. All of the rights and remedies of the Lender with respect to
the Collateral, whether established hereby or by the Note or
by any other agreements, instruments or documents or by law
shall be cumulative and may be exercised singly or
concurrently.
c. In the event that any provision of this Note is held to be
invalid, prohibited or unenforceable in any jurisdiction for
any reason, unless such provision is narrowed by judicial
construction, this Note shall, as to such jurisdiction, be
construed as if such invalid, prohibited or unenforceable
provision had been more narrowly drawn so as not to be
invalid, prohibited or unenforceable. If, notwithstanding the
foregoing, any provision of this Note is held to be invalid,
prohibited or unenforceable in any jurisdiction, such
provision, as to such jurisdiction, shall be ineffective to
the extent of such invalidity, prohibition or unenforceability
without invalidating the remaining portion of such provision
or the other provisions of this Note and without affecting the
validity or enforceability of such provision or the other
provisions of this Note in any other jurisdiction.
d. This Note shall be binding upon and inure to the benefit of
each party hereto and its successors and assigns. e. Each
party shall take such further action and execute and deliver
such further documents as may be necessary or appropriate in
order to carry out the provisions and purposes of this Note.
f. This Note shall be construed in accordance with the laws of
the Washington State and each party parties hereto irrevocably
submit to the exclusive jurisdiction of any Washington State
or United States Federal court sitting in Xxxxxx County,
Washington over any action or proceeding arising out of or
relating to this Note, and the parties hereto hereby
irrevocably agree that all claims in respect of such action or
proceeding may be heard and determined in such Washington
State or Federal court.
g. Each party hereto hereby agrees to waive its respective rights
to a jury trail of any claim or cause of action based upon or
arising out of this note. Each party hereto acknowledges that
this waiver is a material inducement for each party to enter
into a business relationship and that each party relies on
this waiver in entering into this note.
IN WITNESS WHEREOF, the parties hereto have caused this Note to be duly
executed as of the Date of This Note at the Location of Execution above written.
Borrower:
By: /s/ Xxxxxx Xxxxx
Accepting same, for and in consideration of the consideration provided herein
and other good and valuable consideration:
Lender: Insynq, Inc.
By: /s/ Xxxx X. Xxxxx Attest: /s/ X. Xxxxxxx Xxxxxx
Its: Chief Executive Officer: Its: Chief Administrative Officer
