EXHIBIT 4.35
AGREEMENT
THIS AGREEMENT (this "Agreement") is made and entered into as of November
1, 2000 by and between Insynq, Inc., a Delaware corporation (the "Company"), and
Xxxxxxx Xxxxx ("Xxxxx").
WHEREAS, the parties have entered into that certain Registration and
Repurchase Agreement dated as of May 17, 2000 (the "Registration Agreement")
under which Xxxxx has the right to "put" 50,000 shares of the Company's common
stock, par value $.001 per share (the "Common Stock") purchased under the
Subscription Agreement between the parties dated as of the same date as the
Registration Agreement back to the Company at $2.86 per share under certain
conditions; and
WHEREAS, the parties agree that it will be less burdensome and more
administratively feasible for the Company, in exchange for canceling Xxxxx'x
"put" rights valued at $143,000 (50,000 shares multiplied by $2.86), to issue
286,000 shares of its Common Stock to Xxxxx at an agreed to, arms-length
negotiated value of $0.50 per share (the "Put Conversion Shares").
NOW, THEREFORE, in consideration of the foregoing, and of the mutual
covenants hereinafter contained, and of other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Conversion of Put Shares. The 50,000 shares of Common Stock which
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Xxxxx currently has the right to "put" to the Company at $2.86 per
share under the Registration Agreement (the "Put Shares") are hereby
converted into the right to receive 286,000 shares pursuant to an
agreed-to value of $0.50 per share. If the effective date of a
registration statement filed with the Securities and Exchange
Commission ("SEC") registering the Put Conversion Shares (the
"Effective Date") occurs prior to May 17, 2001, Xxxxx shall promptly
return the Put Shares to the Company after the Effective Date, and the
certificates representing the Put Conversion Shares shall thereafter
promptly be issued to Xxxxx. If, however, the Effective Date occurs
after May 17, 2001, Xxxxx shall be entitled to retain the Put Shares
and the Company shall only be obligated to issue such number of
additional shares equal to the number of Put Conversion Shares less
the number of Put Shares retained by Xxxxx.
2. Termination of Certain Provisions of Registration Agreement. Section
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1(a) and 1(b) of the Registration Agreement are hereby terminated in
their entirety.
3. Remaining Provisions of Registration Agreement. The remaining
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provisions of the Registration Agreement shall remain in effect with
respect to the Warrant Agreement issued to Xxxxx on May 17, 2000 (the
"Warrant Agreement") and the Common Stock subject to that Warrant
Agreement.
4. Registration Rights. The Put Conversion Shares issued in exchange for
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the cancellation of the Put Shares pursuant to this Agreement are hereby
granted the same registration rights as set forth in the remaining
provisions of the Registration Agreement pursuant to which the Company will
promptly file a registration statement with the SEC. The term "Shares" as
defined under the Registration Agreement shall be amended to include only
the shares of Common Stock subject to the Warrant Agreement and the 286,000
shares issued hereunder in exchange for the Put Shares.
Put Conversion Shares issued hereunder and the remaining Put Shares that
Xxxxx does not return pursuant to Section 1 above.
5. Certain Acknowledgements and Agreements of Xxxxx. Xxxxx hereby
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acknowledges and agrees that:
(a) All documents pertaining to the investment in the Shares have been
made available for inspection by the Company, and the books and records of
the Company will be available, upon reasonable notice, for inspection by
Xxxxx during reasonable business hours at the Company's principal place of
business.
(b) NO FEDERAL OR STATE AUTHORITY HAS MADE ANY FINDINGS OR DETERMINATIONS
TO THE FAIRNESS FOR INVESTMENT IN THE SHARES, AND NO FEDERAL OR STATE
AUTHORITY HAS RECOMMENDED OR ENDORSED OR WILL RECOMMEND OR ENDORSE THE
PLACEMENT.
(c) The issuance of the Shares was made only through direct, personal
communication between Xxxxx and an authorized representative of the
Company.
(d) Xxxxx agrees not to sell nor attempt to sell all or any part of the
Shares allocated to Xxxxx unless the offer and sale of such Shares have
first been registered under the Securities Act of 1933, as amended (the
"Securities Act"), and all applicable state securities laws, or the
undersigned furnishes, at the option of the Company, an opinion of counsel
satisfactory to the Company and its counsel and knowledgeable as to the
securities matters stating that exemptions from such registration
requirements are available and that the proposed sale is not, and will not
place the Company or any affiliate thereof, in violation of any applicable
Federal or state securities law, or any rule or regulation promulgated
thereunder.
(e) The certificate evidencing Shares shall bear a legend substantially as
follows:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT
OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION. AS A PREREQUISITE TO ANY TRANSFER OF SHARES WITHOUT SUCH
REGISTRATION, THE
CORPORATION MAY REQUIRE THAT IT BE FURNISHED AN OPINION OF COUNSEL
SATISFACTORY TO THE CORPORATION THAT SUCH TRANSFER DOES NOT REQUIRE
SUCH REGISTRATION.
6. Representatiions and Warranties of Xxxxx. Xxxxx understands that the
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Shares are being sold in reliance upon the exemptions provided in the
Securities Act and/or Regulation D thereunder, together with exemptions
provided under applicable state securities laws, for transactions involving
limited offers and sales, and Xxxxx, for himself and for his heirs,
personal representatives, successors and assigns, makes the following
representations, declarations and warranties with the intention that the
same may be relied on by the Company in determining the suitability of
Xxxxx as an investor in the Company:
(a) Xxxxx has consulted his attorney, accountant or investment advisor
with respect to the investment contemplated hereby and its suitability for
Xxxxx. The undersigned has received no representations or warranties from
the Company or its officers, directors, employees or agents, or any other
person, and, in making an investment decision, Xxxxx is relying solely on
independent investigations made by Xxxxx or representative(s) of Xxxxx.
(b) Xxxxx has read and fully understands the public filings of the Company
as filed with the SEC.
(c) The Company has made available to Xxxxx, during the course of this
transaction and prior to the purchase of any of the Shares, the opportunity
to ask questions of and receive answers from the Company or any of its
representatives concerning the Company, and to obtain any additional
information relative to the financial condition and business of the
Company, to the extent that such parties possess such information or can
acquire it without unreasonable effort or expense. All such questions, if
asked, have been answered satisfactorily, and all such documents, if
requested, have been received and found to be fully satisfactory. In
connection therewith, Xxxxx is not relying on any documents, records or
other information, except that contained in written form and signed by the
President of the Company.
(d) Xxxxx understands and acknowledges that: (i) while the Company has an
operating history, the purchase of Shares by Xxxxx involves a high degree
of risk of loss of Xxxxx'x entire investment, and there is no assurance of
any income from such investment; (ii) Xxxxx must bear the economic risk of
an investment in the Shares for an indefinite period because the offer and
sale of the Shares have not been registered under the Securities Act or any
state securities laws and are being offered and sold in reliance upon
exemptions provided in the Securities Act and state securities laws for
transactions not involving any public offering and, therefore, cannot be
resold or transferred unless they are subsequently registered under the
Securities Act and applicable state laws, or unless an exemption from
such registration is available; (iii) there may not be a public market for
the Shares in the future; (iv) Xxxxx is purchasing the Shares for
investment purposes only for Xxxxx'x account and not for the benefit of any
other person or with any view toward the resale or distribution thereof;
(v) because there are substantial restrictions on the transferability of
the Shares, it may not be possible for Xxxxx to liquidate an investment
therein readily in case of an emergency; and (vi) Xxxxx has no contract,
undertaking, agreement or arrangement with any person to sell, transfer or
pledge to such person or anyone else any of the Shares which Xxxxx hereby
subscribes to purchase or any part thereof, and Xxxxx has no present plans
to enter into any such contract, undertaking, agreement or arrangement.
(e) The undersigned is an "accredited investor" within the meaning of
Regulation D promulgated under the Securities Act. The net worth, annual
income and total assets, as the case may be, of Xxxxx and the other
information set forth in Section 9 are true, correct and complete in all
material respects. Any information which Xxxxx has heretofore furnished to
the Company with respect to Xxxxx is correct and complete as of the date of
this Agreement, and if there should be any material change in such
information prior to the purchase of Shares, Xxxxx will immediately furnish
such revised or corrected information to the Company.
(f) Xxxxx is at least 21 years of age, is knowledgeable and experienced in
evaluating investments and is experienced in financial and business matters
and he has evaluated the risks of investing in the Shares, and has
determined that the Shares are a suitable investment for him. Xxxxx has
adequate net worth and means of providing for his current needs and
possible personal contingencies and has no need, and anticipates no need in
the foreseeable future, to sell the Shares the purchase of which is
subscribed. Xxxxx can bear the economic risk of an investment in the Shares
and has a sufficient net worth to sustain a complete loss of his
investment. The aggregate amount of the investments of Xxxxx in, and his
commitments to, all similar investments that are illiquid is reasonable in
relation to his net worth.
(g) Xxxxx maintains his domicile, and is not merely a transient or
temporary resident, at the residence address shown on the signature page of
this Agreement.
(h) Xxxxx is a United States citizen or is otherwise a U.S. Person* as
defined below.
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* For purpose of this representation, a U.S. Person is (i) a natural person
who is a citizen of or resident in the United States, (ii) a partnership or
corporation organized or incorporated under the laws of the United States, (iii)
an estate of which any executor or administrator is a U.S. person; (iv) a trust
of which any trustee is a U.S. person, (v) an agency or branch of a foreign
entity located in the United States, or (vi) a non-discretionary account or
similar account (other than an estate or trust) held by a dealer or other
fiduciary organized, incorporated or (if an individual) resident in the United
States.
(i) The representations, warranties, agreements and acknowledgements made
by Xxxxx in this Agreement are made with the intention that they be relied
upon by the Company in determining the suitability of Xxxxx as a purchaser
of Shares, and shall survive their purchase. In addition, Xxxxx undertakes
to notify the Company immediately of any change in any representation or
warranty of Xxxxx set forth herein.
7. Indemnification. Xxxxx understands that the offer and sale of Shares
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to him is being made, and the sale of Shares will be made, in reliance upon
the acknowledgments and agreements of Xxxxx set forth in Section 5 and the
representations and warranties of Xxxxx set forth in Section 6. Xxxxx
agrees to provide, if requested, any additional information that may
reasonably be required to determine the eligibility of Xxxxx to purchase
Shares. Xxxxx hereby agrees to indemnify the Company and its affiliates,
agents, attorneys and representatives and to hold each of them harmless,
from and against all claims, losses, damages or liability, including costs
and reasonable attorneys' fees (collectively, "Claims"), that may arise in
connection with, due to or as a result of the breach of any representation,
warranty, acknowledgement or agreement of Xxxxx contained in this Agreement
or in any other document provided by Xxxxx to the Company in connection
with Xxxxx'x offer to purchase Shares. Xxxxx agrees to indemnify the
Company and any of its affiliates, agents, attorneys and representatives
and to hold each of them harmless, from and against all Claims that may
arise in connection with, due to or as a result of the sale or distribution
of Shares by Xxxxx in violation of the Securities Act or other applicable
law. Notwithstanding any provision of this Agreement, Xxxxx does not waive
any rights granted to him under applicable securities laws. Xxxxx agrees
that the affiliates, agents, attorneys and representatives of the Company
are intended third-party beneficiaries to this Agreement for the purposes
of the indemnification provided above.
8. Arbitration. Any dispute or controversy arising under or in connection
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with this Agreement shall be resolved by binding arbitration. The
arbitration shall be held in the City of Tacoma, Washington, and except to
the extent inconsistent with this Agreement, shall be conducted in
accordance with the rules of the American Arbitration Association in effect
at the time of the arbitration, and otherwise in accordance with principles
which would be applied by a court of law or equity. The arbitrator shall be
acceptable to both the Company and Xxxxx. If the parties cannot agree on an
acceptable arbitrator, the dispute shall be heard by a panel of three
arbitrators, one of which shall be appointed by each of the parties, and
the third shall be appointed by the other two arbitrators.
9. Suitability. Xxxxx warrants and represents to the Company that the
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following information supplied by Xxxxx pursuant to Section 6 is correct
and complete:
(a) Those of the following statements indicated by a check marked in
the box opposite such statement are true and correct with respect to the
undersigned:
[_] (i) The undersigned is a natural person whose individual
net worth, or joint net worth with its spouse, exceeds $1,000,000.00.
[_] (ii) The undersigned is a natural person who had an
individual income in excess of $200,000.00 or joint income with its
spouse in excess of $300,000.00 in both 1998 and 1999, and who
reasonably expects an income in excess of $200,000.00, if individual,
or $300,000.00, if joint, in 2000.
[_] (iii) The undersigned is an entity or institution that
qualifies as one or more of the following:
(A) Any bank as defined in Section 3(a)(2) of the
Securities Act, or any savings and loan association or other
institution as defined in Section 3(a)(5)(A) of the Securities
Act whether acting in its individual or fiduciary capacity; any
broker or dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934; any insurance company as defined
in Section 2(13) of the Securities Act; any investment company
registered under the Investment Company Act of 1940 or a business
development company as defined in Section 2(a)(48) of that act;
any Small Business Investment Company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the Small
Business Investment Act of 1958; any plan established and
maintained by a state, its political subdivisions, or any agency
or instrumentality of a state or its political subdivisions for
the benefit of its employees, if such plan has total assets in
excess of $5,000,000; any employee benefit plan within the
meaning of the Employee Retirement income Security Act of 1974 if
the investment decision is made by a plan fiduciary, as defined
in Section 3(21) of such act, which is either a bank, savings and
loan association, insurance company, or registered investment
adviser, or if the employee benefit plan has total assets in
excess of $5,000,000 or, if a self-directed plan, with investment
decisions made solely by persons that are accredited investors;
(B) Any private business development company as defined in
Section 202(a)(22) of the Investment Advisers Act of 1940;
(C) Any organization described in Section 501(c)(3) of the
Internal Revenue Code, a corporation, Massachusetts or similar
business trust, or company, nor formed for the specific purpose
of acquiring the securities offered, with total assets in excess
of $5,000,000;
[_] (iv) The undersigned is a director or executive officer of
the Company.
[_] (v) The undersigned is a trust, with total assets in
excess of
$5,000,000.00, not formed for the specific purpose of acquiring the
Securities, whose purchase is directed by a sophisticated person as
described in Rule 506(b)(2)(ii) under the Securities Act.
[_] (vi) The undersigned is an entity in which all of the
equity owners meet the criteria set forth under either (i), (ii),
(iii), (iv), or (v) above.
[_] (vii) None of the statements in (i), (ii), (iii), (iv), (v),
or (vi) above is a true statement with regard to the undersigned.
(b) The undersigned has knowledge and experience in financial and
business matters so as to be capable of evaluating the merits and risks of,
and protecting its own interest in connection with, investing in the
Securities.
10. General. This Agreement (i) shall be binding on Xxxxx and the heirs,
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personal representatives, successors and permitted assigns of Xxxxx, (ii)
shall be governed construed and enforced in accordance with the laws of the
State of Washington, without reference to any principles of conflicts of
law, and (iii) shall survive the acceptance by the Company of the
subscription evidenced by this Agreement and the admission of Xxxxx as a
shareholder in the Company.
11. Notices. Any notice, request, instruction or other document to be
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given under this Agreement after the date hereof by any party hereto to any
other party shall be in writing and shall be deemed to have been duly given
on the date of service if delivered personally or by telecopier with
confirmed receipt via overnight delivery, or on the third day after mailing
if sent by certified mail, postage prepaid, at the addresses set forth
below, or to such other address or person as any party may designate by
written notice to the others:
If to the Company: Insynq, Inc.
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0000 Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: President
Telecopier No.: (000) 000-0000
If to Xxxxx: At the last address indicated on the Company's books
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and records.
12. Assignment. Xxxxx agrees that neither this Agreement nor any rights
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which may accrue to him hereunder may be transferred or assigned.
13. Entire Agreement. This Agreement contains the entire understanding of
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the parties relating to the subject matter contained herein and supersedes all
prior agreements and understandings, written or oral, relating to the subject
matter hereof. This Agreement shall not be modified, amended or terminated
except in a writing signed by the party against whom enforcement is sought.
14. Confidentiality. Xxxxx acknowledges that all Confidential Information
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(as defined herein) shall be and remain the exclusive property of the Company at
all times. Xxxxx hereby agrees to keep in strict confidence all Confidential
Information. Xxxxx shall not disclose any Confidential Information, or any
portion thereof, to any person or entity nor use, license, sell, convey or
otherwise exploit any Confidential Information, or any portion thereof, for any
purpose other than for the benefit of the Company. As used in this Agreement,
the term "Confidential Information" refers to all information proprietary to,
used by or in the possession of the Company and not generally known in the
industry, which is disclosed to or learned by Xxxxx, whether or not reduced to
writing and whether or not conceived, originated, discovered or developed in
whole or in part by Xxxxx, including, without limitation: (a) information not
generally known in the industry which relates to the business, products or work
of the Company (x) of a technical nature, such as trade secrets, methods,
know-how, formulas, compositions, designs, processes, information regarding
product development and other similar information and materials, and (y) of a
business or commercial nature, such as information or compilation of data about
the Company's costs, pricing, profits, compensation, sales, product plans,
markets, marketing plans and strategies, equipment and operational requirements,
operating policies or plans, finances, financial records, methods of operation
and competition, management organization customers and suppliers, and other
similar information and materials; and (b) any other technical business or
commercial information designated as confidential or proprietary that the
Company or any of its affiliates may receive belonging to any supplier, customer
or others who do business with the Company or any of its affiliates. The
foregoing limitations on use and disclosure shall not apply to information that
(i) was lawfully known to the recipient before the receipt thereof, (ii) is
learned by the recipient from a third party that is entitled to disclose same,
(iii) becomes publicly known other than through the actions of the recipient, or
(iv) is required by law or court order to be disclosed by the recipient.
15. Pronouns; Headings. All pronouns and any variations thereof shall be deemed
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to refer to the masculine, feminine, neuter, singular or plural, as the identity
of the entities or persons referred may require. The headings of the sections of
this Agreement are inserted for convenience only and shall not constitute a part
hereof nor affect in any way the meaning or interpretation of this agreement.
16. Severability. In the event that any provision contained herein shall be
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held to be invalid, illegal or unenforceable for any reason, such invalidity,
illegality or unenforceability shall not affect any other provision hereof, and
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein.
17. Conflict. If any conflict shall arise between the terms of the Registration
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Agreement and this Agreement, or the Warrant Agreement and this Agreement, this
Agreement shall control.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
INSYNQ, INC.
a Delaware corporation
By: /s/ Xxxx X. Xxxxx
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Name: Xxxx X. Xxxxx
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Title: Chairman
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XXXXXXX XXXXX, individually
/s/ Xxxxxxx Xxxxx
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