WARRANT TO PURCHASE
COMMON STOCK OF
INSYNQ, INC.
______________________________________________
Dated: April 25, 2001
_______________________________________________________________________________
NEITHER THE SECURITIES REPRESENTED BY THIS WARRANT NOR THE SECURITIES ISSUABLE
UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE; THEREFORE, THIS WARRANT AND THE
SECURITIES ISSUABLE UPON EXERCISE HEREOF, IF ANY, MAY NOT BE SOLD OR
TRANSFERRED EXCEPT UPON SUCH REGISTRATION OR UPON DELIVERY TO THE CORPORATION
OF AN OPINION OF COUNSEL OR OTHER EVIDENCE SATISFACTORY TO THE CORPORATION THAT
REGISTRATION IS NOT REQUIRED FOR SUCH SALE OR TRANSFER.
International Fluid Dynamics, Inc./$0.07 per share
===============================================================================
Warrant to Purchase
315,000 Shares of
Common Stock, Subject to
Adjustment as herein provided
WARRANT TO PURCHASE COMMON STOCK
INSYNQ, INC.
Dated as of the 25th day of April 2001.
WHEREAS, the undersigned desires to purchase for investment purposes this
Warrant to Purchase Common Stock providing for the acquisition of 315,000
shares of common stock, $0.001 par value per share (the "Common Stock"), of
InsynQ, Inc. (the "Company"), subject to adjustment as provided herein;
WHEREAS, there are currently outstanding 29,392,830 shares of Common Stock
of the Company;
NOW, THEREFORE, for and in consideration of ten (10) dollars and other
good and valuable consideration, and of the mutual covenants, representations,
warranties and agreements contained herein, this is to certify that:
1. The undersigned or his permitted and registered assigns ("Holder"),
is entitled to purchase from time to time, subject to the provisions and
conditions herein, not later than the termination of the Exercise Period of
this Warrant to Purchase Common Stock (this "Warrant") as set forth in
Paragraph 4 below, an aggregate of Three Hundred Fifteen Thousand (315,000)
shares of Common Stock, at the Exercise Price per share set forth in
paragraph 2(c) herein, and upon such purchase to receive a certificate or
certificates representing such shares of Common Stock. The number of shares of
Common Stock to be received upon the exercise of this Warrant may be adjusted
from time to time as hereinafter set forth.
2. DEFINED TERMS. As used in this Warrant, the following capitalized
terms shall have the meanings respectively assigned to them below, which
meanings shall be applicable equally to the singular and plural forms of the
terms so defined.
(a) "BUSINESS DAY" shall mean any day except a Saturday, Sunday or
other day on which commercial banks in the State of Washington are
authorized or required by law to close.
(b) "EXERCISE PERIOD" means the period commencing on the date of
this Warrant and terminating at 5:00 p.m., Tacoma, Washington time, on
the fifth (5th) anniversary following the Registration Date or, in the
event that the fifth (5th) anniversary of the Registration Date is not a
Business Day, the Business Day next following.
(c) "EXERCISE PRICE" shall mean a strike price of $0.07 per share.
(d) "Holder" shall mean the Person(s) then registered as the owner of
the Warrant or Warrant Securities, as the case may be, on the books and
records of the Company.
(e) "PERSON" shall mean any natural person, corporation, limited
partnership, limited liability company, general partnership, joint
venture, association, company, or other organization, whether or not a
legal entity, and any government agency or political subdivision thereof.
(f) "WARRANT SECURITIES" shall mean the shares of Common Stock (or
other securities) of the Company purchasable or purchased from time to
time under this Warrant or acquired upon any transfer of any such shares,
together with all additional securities received in payment of dividends
or distributions on or splits of those securities or received as a result
of the adjustments provided for in Paragraph 6 hereof.
3. EXERCISE OF WARRANT. Subject to and in accordance with the
provisions and conditions hereof, this Warrant may be exercised from time to
time in whole or in part during the term of this Warrant as set forth in
Paragraph 5 hereof.
4. TERM OF WARRANT. The term of this Warrant shall commence on the date
hereof and shall expire on the exercise in full of this Warrant by Holder or at
5:00 p.m. Tacoma, Washington time on the expiration of the Exercise Period.
5. MANNER OF EXERCISE. Holder may exercise this Warrant in whole or in
part in accordance with the terms hereof by mailing or personally delivering to
the Company (i) this Warrant, (ii) a Notice of Exercise in the form of Exhibit
I hereto duly executed by Xxxxxx, (iii) either a written certificate that
Holder is not a U.S. Person and the Warrant is not being exercised on behalf of
a U.S. Person or a written opinion of counsel stating that the Warrant and the
securities delivered upon its exercise have been registered under the Act or
are exempt from registration and (iv) payment of the Exercise Price per share,
such payment to be in the form of cash, a certified or official bank check made
payable to the Company, or a wire transfer of funds to an account designated by
the Company, or any combination of the foregoing, together with all federal and
state excise taxes applicable upon such exercise. Upon receipt by the Company
of this Warrant, the Notice of Exercise and such payment, this Warrant shall be
deemed to have been exercised with respect to the number of shares of Common
Stock subject to such exercise and specified in the Notice of Exercise, and
Holder shall thereupon become the holder of record of the shares of Common
Stock issuable upon such exercise, notwithstanding the fact that the stock
transfer books of the Company may then be closed or that certificates
representing such shares of Common Stock shall not then be actually delivered
to Holder. As soon as practicable after any exercise, in whole or in part, of
the Warrant, and in any event within ten (10) Business Days thereafter, the
Company will deliver to Holder a stock certificate or certificates representing
the shares of Common Stock so purchased, with such certificate or certificates
to be in such name(s) and such denominations as Holder may specify in the
Notice of Exercise. If this Warrant is exercised for less than all of the
shares of Common Stock subject hereto, the Company shall, upon such exercise
and surrender of this Warrant for cancellation, promptly execute and deliver to
Holder a new Warrant of like tenor evidencing the right of Holder to purchase
the balance of shares of Common Stock purchasable hereunder.
6. ADJUSTMENT PROVISIONS.
(a) If the Company shall, during the term hereof, (i) declare a
dividend and make a distribution on the Common Stock payable in shares of
Common Stock, (ii) subdivide or combine its outstanding shares of Common
Stock, (iii) change the number of shares of Common Stock issuable upon
exercise of this Warrant by reclassification, exchange or substitution, or
(iv) reorganize the capital structure of the Company by merger,
reorganization, consolidation or sale of assets, then this Warrant shall,
after the happening of any such event, evidence the right to purchase the
number of shares of Common Stock or other securities that would have been
received as a result of that change with respect to the shares of Common
Stock as if such shares had been purchased under this Warrant immediately
before occurrence of such event. Such adjustment shall be made
successively whenever any event listed above shall occur. Any adjustment
under this subparagraph (a) shall become effective at the close of
business on the date any such event occurs (the "Adjustment Date") and the
exercise price shall be adjusted proportionately.
(b) If, during the term of this Warrant, the number of shares of
Common Stock of the Company is adjusted pursuant to subparagraph (a)
above, then the Exercise Price per share to be in effect after such
Adjustment Date shall be determined by multiplying the Exercise Price per
share in effect immediately prior to such Adjustment Date by a fraction,
the numerator of which shall be the number of shares of Common Stock
outstanding at the closing of business on the Business Day immediately
preceding such Adjustment Date and the denominator of which shall be the
number of shares of Common Stock (or the equivalent amount of other
securities) outstanding at the opening of business on the first Business
Day after the Adjustment Date.
(c) NOTICE OF ADJUSTMENT. The Company shall give notice of each
adjustment or readjustment of the number of shares of Common Stock or
other securities issuable upon exercise of this Warrant to Holder or of
the Exercise Price per share at the address set forth in Paragraph 17
hereof.
7. FRACTIONAL SHARES. No fractional shares or scrip representing
fractional shares of Common Stock shall be issued in connection with the
exercise of this Warrant, but Grantor shall pay, in lieu of any fractional
share, a cash payment on the basis of the Exercise Price per share of the
Common Stock to be acquired pursuant to such exercise for such fractional
share.
8. RESTRICTIONS RIGHTS. Holder has been granted piggyback registration
rights and one demand registration with respect to the shares underlying this
Warrant as follows:
(a) DEFINITIONS. As used herein:
1. The terms "register," "registered" and "registration" refer
to a registration effected by preparing and filing with the
Securities and Exchange Commission (the "SEC") a registration
statement pursuant to the Securities Act of 1933, as amended (the
"Act"), and the declaration or order of effectiveness of such
registration statement, other than any registration statement on a
Form S-8, Form S-4 or as contemplated under Rule 145 of the Act.
2. For the purposes of this Section 8 the term "Registerable
Securities" means any Warrant Securities purchasable or purchased
pursuant to this Warrant which have not been sold to the public.
(b) If the Company at any time proposes to register any of its
securities under the Act, whether of its own accord or at the demand of
any holders of other such securities pursuant to an agreement with respect
to the registration thereof, and if the form of registration statement
proposed to be used may be used for the registration of Registerable
Securities as contemplated hereunder, the Company will give confirmed
receipt, written notice to Holder not less than 10 days nor more than
30 days prior to the filing of such registration statement of its
intention to proceed with the proposed registration (the "Registration"),
and, upon written request of the Holder made within ten (10) days after
the receipt of any such notice (which request will specify the
Registerable Securities intended to be disposed of or registered by the
Holder and state the intended method of disposition thereof if the shares
are already issued to Holder), the Company will use its best efforts to
cause all Registerable Securities of Holder as to which registration has
been requested to be registered under the Act, provided that if such
Registration is in connection with an underwritten public offering,
Holder's Registerable Securities to be included in such Registration shall
be offered upon the same terms and conditions as apply to any other
securities included in such Registration. Notwithstanding anything
contained in this Section 8(b) to the contrary, the Company shall have no
obligation to cause Registerable Securities to be registered with respect
to any Registerable Securities which shall be already eligible for resale
under Rule 144 of the Securities Act.
(c) If a Registration is a primary registration on behalf of the
Company and is in connection with an underwritten public offering, and if
the managing underwriters using reasonable judgment and good faith advise
the Company in writing that in their opinion the amount of securities
requested to be included in such Registration (whether by the Company, the
Holder, or other holders of the Company's securities pursuant to any other
rights granted by the Company to participate in such Registration) exceeds
the amount of such securities which can be successfully sold in such
offering, the Company will include in such Registration the amount of
securities requested to be included which in the opinion of such
underwriters can be sold, in the following order (A) first, all of the
securities the Company reasonably and in good faith proposes to sell, and
(B) second, any other securities held by holders with registration rights
requested to be included in such Registration, pro rata among the holders
thereof on the basis of the amount of such securities then owned by such
holders.
(d) If a Registration is a secondary registration on behalf of
holders of securities of the Company and is in connection with an
underwritten public offering, and if the managing underwriters using
reasonable judgment and good faith advise the Company in writing that in
their opinion the amount of securities requested to be included in such
Registration (whether by such holders, by the Holder, or by holders of the
Company's securities pursuant to any other rights granted by the Company
to participate in such Registration) exceeds the amount of such securities
which can be sold in such offering, the Company will include in such
Registration the amount of securities requested to be included which in
the opinion of such underwriters can be sold, in the following order (A)
first, all of the securities requested to be included by holders with
demand registration rights who are demanding such Registration, pro rata
among the holders thereof on the basis of the amount of such securities
then owned by such holders, and (B) second, any other securities held by
holders with piggyback registration rights, requested to be included in
such Registration, pro rata among the holders thereof on the basis of the
amount of such securities then owned by such holders.
(e) INDEMNIFICATION BY THE COMPANY. The Company will indemnify
Holder against any and all claims, losses, damages, and liabilities (or
actions in respect thereof) arising out of or based on any untrue
statement (or alleged untrue statement) of any material fact contained in
any prospectus, offering circular or other document incident to any
registration, qualification or compliance (or in any related registration
statement, notification or the like) or any omission (or alleged omission)
to state therein any material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation
by the Company of any rule or regulation promulgated under the Act
applicable to, and relating to any action or inaction required of, the
Company in connection with any such registration, qualification or
compliance, and the Company will reimburse Holder for any legal and any
other expenses reasonably incurred by them in connection with
investigating or defending any such claim, loss, damage, liability or
action; provided, however, that the Company will not be liable in any such
case to the extent that any such claim, loss, damage or liability arises
out of or is based on any untrue statement or omission based upon written
information furnished to the Company by Holder for use in such prospectus,
offering circular or other document.
(f) Indemnification by Xxxxxx. Holder will indemnify the Company
and its officers and directors and each entity or individual who controls
the Company (within the meaning of the Act) and their respective
successors in title and assigns against any and all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of or
based on any untrue statement (or alleged untrue statement) of any
material fact contained in any prospectus, offering circular or other
document incident to any registration, qualification or compliance (or in
any related registration statement, notification or the like) or any
omission (or alleged omission) to state therein any material fact required
to be stated therein or necessary to make the statement therein not
misleading, and Xxxxxx will reimburse the Company and its officers,
directors, and controlling entities or individuals for any legal and any
other expenses reasonably by them incurred in connection with
investigating or defending any such claim, loss, damage, liability or
action; provided, however, that this paragraph (b) shall apply only if
(and only to the extent that) such statement or omission was made in
reliance upon written information furnished to the Company in an
instrument duly executed by Holder or any of its officers, directors, or
controlling entities or individuals and stated to be specifically for use
in such prospectus, offering circular or other document (or related
registration statement, notification or the like) or any amendment or
supplement thereto.
(g) INDEMNIFICATION PROCEEDINGS. Each party entitled to
indemnification pursuant to this Section 8 (the "Indemnified Party") shall
give notice to the party required to provide indemnification pursuant to
this Section 8 (the "Indemnifying Party") promptly after such Indemnified
Party acquires actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party (at its expense) to assume
the defense of any claim or any litigation resulting therefrom; provided
that counsel for the Indemnifying Party, who shall conduct the defense of
such claim or litigation, shall be acceptable to the Indemnified Party,
and the Indemnified Party may participate in such defense at such party's
expense; and provided, further, that the failure by any Indemnified Party
to give notice as provided in this paragraph (c) shall not relieve the
Indemnifying Party of its obligations under Section 8 except to the extent
that the failure results in a failure of actual notice to the Indemnifying
Party and such Indemnifying Party is damaged solely as a result of the
failure to give notice. No Indemnifying Party, in the defense of any such
claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which
does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation. The reimbursement
required by this Section 8 shall be made by periodic payments during the
course of the investigation or defense, as and when bills are received or
expenses incurred.
9. RESTRICTIONS ON TRANSFER. The undersigned represents and warrants
that this Warrant and Warrant Securities are being purchased for his investment
account without a view towards the resale or distribution thereof in violation
of applicable securities laws. It is understood that in case of subsequent
sale of such Warrant or the Warrant Securities under certain circumstances,
such sale might be deemed to constitute a public distribution within the
meaning of, and require registration under, the provisions of the Securities
Act of 1933, as amended (the "Act").
(a) The undersigned acknowledges and agrees that unless and until
the Warrant and the Warrant Securities are registered under the Act, this
Warrant and the Warrant Securities shall be "restricted securities" for
purposes of Rule 144 under the Act. The undersigned shall, prior to any
transfer or disposition or attempted transfer or disposition of the
Warrant or the Warrant Securities give written notice to the Company of
his intention to effect such transfer or disposition and shall, if
required in then current, specific writing by the Company, deliver to the
Company an opinion of legal counsel (reasonably suitable to the Company)
that the proposed transfer or disposition of the Warrant or the Warrant
Securities may be effected without registration thereof under the Act and
without taking any similar action under any other applicable securities
laws, in which case Holder shall be entitled to transfer or dispose of the
Warrant or the Warrant Securities, as applicable, in accordance with the
terms of the notice delivered by the undersigned to the Company. Unless
the Warrant Securities are registered under the Act pursuant to
Paragraph 8 hereof, each certificate evidencing the Warrant Securities so
transferred or disposed of (and each certificate evidencing any
untransferred Warrant Securities) shall bear the following restrictive
legend unless in the opinion of Company counsel such legend is not
required:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933 (the "Act") or any state securities
laws. These shares may not be offered for sale, sold or otherwise
transferred except pursuant to an effective registration statement
under the Act or pursuant to an opinion of counsel satisfactory to
the Company stating that an exemption from such registration is
available for such sale and transfer."
(b) Until this Warrant is transferred on the books of the Company,
the Company may treat the registered holder thereof as the absolute owner
and Holder thereof for all purposes, notwithstanding any notice to the
contrary.
10. STOCK TO BE DELIVERED UPON EXERCISE. The Company will at all times
keep available through the term of the Exercise Period, solely for delivery
upon the exercise of this Warrant, such number of the shares of Common Stock or
other securities as shall from time to time be sufficient to effect the
exercise of this Warrant.
11. REPLACEMENT OF WARRANT. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction, upon
delivery of an indemnity agreement reasonably satisfactory in form and amount
to the Company or, in the case of any such mutilation, upon surrender and
cancellation of this Warrant, the Company will execute and deliver, in lieu
thereof, a new warrant of like tenor to Holder.
12. SPECIFIC PERFORMANCE. The Company stipulates that the remedies at
law available to the holder of this Warrant in the event of any default or
threatened default by it in the performance of or compliance with any of the
terms of the Agreement are not and will not be adequate, and that such terms
may be specifically enforced by a decree for the specific performance of any
agreement contained herein or by an injunction against a violation of any of
the terms hereof or otherwise.
13. APPLICABLE LAW. THIS WARRANT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO
PRINCIPLES OF CHOICE OF LAWS OF SUCH STATE.
14. ENTIRE AGREEMENT. This Warrant constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes
any and all prior agreements and understandings relating to the subject matter
hereof. This Warrant and any of the terms hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought.
15. SUCCESSORS AND ASSIGNS. This Warrant shall be binding upon and inure
to the benefit of the Company and the undersigned and their respective
successors and permitted assigns; provided, however, nothing herein shall be
construed to permit assignment of the Warrant except in accordance with the
provisions herein.
16. SEVERABILITY. Every provision of this Warrant is intended to be
severable. If any term or provision hereof (or portion thereof) is determined
to be illegal or unenforceable for any reason whatsoever, such illegality or
unenforceability shall not affect any other term or provision (or portion
thereof) of this Warrant.
17. NOTICES. All notices and other communications from the Company to
the holder of this Warrant shall be mailed by first class registered or
certified mail, postage prepaid, at the following address or at such other
address as may have been furnished to the Company in writing by such holder,
or, until an address is so furnished, to the address of the last holder of such
Warrant who has so furnished an address to the Company:
If to the Company:
InsynQ, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Telecopy No.: (000) 000-0000
If to Holder:
International Fluid Dynamics, Inc.
0000 Xxxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
IN WITNESS WHEREOF, this Warrant has been executed by INSYNQ, INC., by its
duly authorized officers, as of the date first above written.
INSYNQ, INC.
By: /s/ Xxxx X. Xxxxx
Name: Xxxx X. Xxxxx
Title: Chief Executive Officer
The terms and provisions of the Warrant are accepted and agreed to by the
undersigned this 25th day of April 2001.
INTERNATIONAL FLUID DYNAMICS, INC.
By: __________________________________
Its: __________________________________
===============================================================================
EXHIBIT "I"
NOTICE OF EXERCISE
(To be executed by Xxxxxx to exercise the
Warrant in whole or in part)
Insynq, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Re: Warrant to Purchase Common Stock dated April 25, 2001 by and between
the Company and International Fluid Dynamics, Inc. (the "Warrant")
Dear Sir or Madam:
The undersigned holder irrevocably elects to exercise the Warrant of
Insynq, Inc. to purchase _________ shares of Common Stock of Insynq, Inc. (the
"Company") subject to the Warrant, and hereby makes payment of the amount of
$________in the manner described below, representing the Exercise Price per
share of Common Stock multiplied by the number of shares of Common Stock to be
purchased pursuant to this exercise.
By: ____________________________________
$__________cash
$__________certified or bank cashier's check
$__________wire transfer
$__________crediting amounts payable
