Insynq, Inc.
1127 Broadway Plaza, Suite 10 Tacoma, Washington 98402
- --------------------------------------------------------------------------------
July 25, 2002
Dear Stockholder:
We target small and medium enterprises and the high-end segment of the
small office and home office market for the sale of hardware and hosted software
and access to Internet-related services. The products and services are provided
by developing a customer subscriber base that adopts a cost-effective, on-line
solution to building and maintaining an information technology system through
the adoption of "Web-based" computing as an alternative to both traditional
local wide area networks and traditional client-server implementations.
Generally, we market our self as an Internet utility company that can
cost-effectively provide all of the computer software, hardware, connectivity
and Internet-access needs for its customers.
We currently have several independent software vendors' products on line
using the IQ Data Utility Service computing services and anticipate signing
various agreements with additional organizations in the next few months. We
expect to increase the subscriber base through these respective sales channels.
Software vendor relationships currently in place include Microsoft Corporation,
Network Associates, Inc./McAfee, Remedy Corporation, Macola Software, and
Novell, Inc.
The complete IQ Delivery System and Internet Utility Service includes
managed network and application services, and can span from a customer's
keyboard to the data center. Insynq provides certain equipment, which is kept on
its customer's premises, including a simplified, diskless workstation or thin
client, and a multi-function router, our IQ Delivery System, which is entirely
managed and maintained by us. The system can also include Internet- access
services provided by us or by a user selected telecommunications
partner/provider. The final piece of the system is the data center, which is
located in Tacoma Washington. This facility, with redundant power, bandwidth,
and cooling, houses the server equipment and routers. While this is the
recommended configuration for customer use to take advantage of the full
services, customers are free to choose which components they use.
In the process of developing the IQ Delivery System, our management
believes we have acquired valuable technological expertise. We have created new
methodologies and produced proprietary hardware and software that is believed to
be essential to the configuration and effective management of Internet-based
networks and outside deployment of shared software applications.
To further our efforts in improving shareholder value, we are offering to
exchange outstanding shares of common which you currently hold for our Preferred
Warrants. More specifically, we are offering to each of you in exchange for each
ten (10) shares of Common Stock one share of Series A Convertible Preferred
Stock that is automatically converted into ten (10) shares of Common Stock after
a change in the capitalization of the Company.
Carefully read the attached Exchange Agreement in its entirety, consult
with your financial advisors as you deem necessary; if you agree to the
exchange, execute the attached Exchange Agreement and mail or deliver it to us
at the following address:
Insynq, Inc.
1127 Broadway Plaza, Suite 10
Tacoma, WA 98402
Very truly yours,
/s/ John P. Gorst
John P. Gorst
President & CEO
EXCHANGE AGREEMENT
To: Insynq, Inc.
1127 Broadway Plaza, Suite 10
Tacoma, WA 98402
The undersigned ("Subscriber") hereby agrees to exchange, and Insynq, Inc.,
a Delaware corporation (the "Company") hereby agrees to issue and exchange with
the Subscriber, the number of shares of the Company's $.001 par value common
stock (the "Company Shares") set forth on the signature page hereof for Series A
Convertible Preferred Stock, $.001 par value (the "Preferred Stock") convertible
in accordance with the terms thereof at the exchange ratio of one share of
Preferred Stock for each ten shares of the Company Shares exchanged (the
"Exchange"). The Certificate of Designations of Series A Convertible Preferred
Stock, $.001 par value per share is annexed hereto as Exhibit A ("Certificate of
Designation"). (The Company Shares are sometimes referred to herein as the
"Shares" or "Common Stock"). (The Preferred Stock and Common Stock issuable upon
conversion of the Preferred Stock are collectively referred to herein as, the
"Securities"). Upon acceptance of this Agreement by the Subscriber, the Company
shall issue and deliver to the Subscriber the Preferred Stock against receipt of
certificates representing the Company Shares endorsed or with stock powers
attached in proper form for transfer. This Exchange Agreement and other similar
Exchange Agreements relate to the Exchange of a maximum of 2,100,000 shares of
Preferred Stock for a maximum of 21,000,000 shares of Company Shares.
This subscription is subject to the following terms and conditions:
1. Subscriber's Representations and Warranties. The Subscriber hereby
represents and warrants to and agrees with the Company that:
(a) Information on Company. The Subscriber has been furnished with and has
read the Company's Form 10KSB, filed on October 1, 2001 and the
Company's Form 10QSB/A filed on May 15, 2002 with the U.S. Securities
and Exchange Commission (the "Commission") (collectively, with
exhibits thereto, hereinafter referred to as the "Reports"). In
addition, the Subscriber has received from the Company such other
information concerning its operations, financial condition and other
matters as the Subscriber has requested, and considered all factors
the Subscriber deems material in deciding on the advisability of
investing in the Securities (such information in writing is
collectively, the "Other Written Information").
(b) Information about Subscriber. The Subscriber is an "accredited
investor", as such term is defined in Regulation D promulgated by the
Commission under the Securities Act of 1933, as amended, is
experienced in investments and business matters, has made investments
of a speculative nature and has purchased securities of United States
publicly-owned companies in private placements in the past and, with
its representatives, has such knowledge and experience in financial,
tax and other business matters as to enable the Subscriber to utilize
the information made available by the Company to evaluate the merits
and risks of and to make an informed investment decision with respect
to the proposed purchase, which represents a speculative investment.
The Subscriber has the authority and is duly and legally qualified to
purchase and own the Securities. The Subscriber is able to bear the
risk of such investment for an indefinite period and to afford a
complete loss thereof.
(c) Exchange of Company Shares. On the Closing Date, the Subscriber will
exchange Company Shares for the Preferred Stock for its own account
and not with a view to any distribution thereof.
(d) Compliance with Securities Act. The Subscriber understands and agrees
that the Securities have not been registered under the Securities Act
of 1933, as amended (the "1933 Act") by reason of their issuance in a
transaction that does not require registration under the 1933 Act, and
that such Securities must be held unless a subsequent disposition is
registered under the 1933 Act or is exempt from such registration.
(e) Preferred Stock Legend. The Preferred Stock shall bear the following
legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE AND THE COMMON SHARES ISSUABLE
UPON CONVERSION OF THE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THESE SHARES
AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THE SHARES MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID ACT AND
APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO INSYNQ THAT SUCH REGISTRATION IS NOT REQUIRED."
(f) Common Stock Legend. The shares of Common Stock issuable upon
conversion of the Preferred Stock shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. THESE SHARES MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
INSYNQ THAT SUCH REGISTRATION IS NOT REQUIRED."
(g) Communication of Offer. The offer to exchange the Securities was
directly communicated to the Subscriber. At no time was the Subscriber
presented with or solicited by any leaflet, newspaper or magazine
article, radio or television advertisement, or any other form of
general advertising or solicited or invited to attend a promotional
meeting otherwise than in connection and concurrently with such
communicated offer.
(h) Correctness of Representations. The Subscriber represents that the
foregoing representations and warranties are true and correct as of
the date hereof, must be true as of the Closing Date (as hereinafter
defined), and unless the Subscriber otherwise notifies the Company
prior to the Closing Date, shall be true and correct as of the Closing
Date. The foregoing representations and warranties shall survive the
Closing Date.
2. Company Representations and Warranties. The Company represents and warrants
to and agrees with the Subscriber that:
(a) Due Incorporation. Each of the Company and each of its subsidiaries is
a corporation duly organized, and validly existing under the laws of
the state of its incorporation and has the requisite corporate power
to own its properties and to carry on its business as now being
conducted. The Company and each of its subsidiaries is duly qualified
as a foreign corporation to do business and is in good standing in
each jurisdiction where the nature of the business conducted or
property owned by it makes such qualification necessary, other than
those jurisdictions in which the failure to so qualify would not have
a material adverse effect on the business, operations or prospects or
condition (financial or otherwise) of the Company.
(b) Outstanding Stock. All issued and outstanding shares of capital stock
of the Company and each of its subsidiaries has been duly authorized
and validly issued and are fully paid and non-assessable.
(c) Authority; Enforceability. This Agreement has been duly authorized,
executed and delivered by the Company and is a valid and binding
agreement enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights generally and to general principles of
equity; and the Company has full corporate power and authority
necessary to enter into this Agreement and to perform its obligations
hereunder and all other agreements entered into by the Company
relating hereto.
(d) Additional Issuances. Except as described in the separate disclosure
schedule delivered by the Company to the Subscriber, there are no
outstanding agreements or preemptive or similar rights affecting the
Company's common stock and no outstanding rights, warrants or options
to acquire, or instruments convertible into or exchangeable for, or
agreements or understandings with respect to the sale or issuance of
any shares of common stock or equity of the Company or other equity
interest in any of the subsidiaries of the Company, except as
described in the Reports or Other Written Information.
(e) Consents. No consent, approval, authorization or order of any court,
governmental agency or body or arbitrator having jurisdiction over the
Company, or any of its affiliates or NASDAQ or the Company's
Shareholders is required for execution of this Agreement, and all
other agreements entered into by the Company relating hereto,
including, without limitation issuance and sale of the Securities, and
the performance of the Company's obligations hereunder.
(f) No Violation or Conflict. Assuming the representations and warranties
of the Subscriber in Paragraph 1 are true and correct and the
Subscriber complies with its obligations under this Agreement, neither
the issuance and sale of the Securities nor the performance of its
obligations under this Agreement and all other agreements entered into
by the Company relating thereto by the Company will:
(i) violate, conflict with, result in a breach of, or constitute a
default (or an event which with the giving of notice or the lapse
of time or both would be reasonably likely to constitute a
default) under (A) the articles of incorporation, charter or
bylaws of the Company, or any of its affiliates, (B) to the
Company's knowledge, any decree, judgment, order, law, treaty,
rule, regulation or determination applicable to the Company, or
any of its affiliates of any court, governmental agency or body,
or arbitrator having jurisdiction over the Company, or any of its
affiliates or over the properties or assets of the Company, or
any of its affiliates, (C) the terms of any bond, debenture, note
or any other evidence of indebtedness, or any agreement, stock
option or other similar plan, indenture, lease, mortgage, deed of
trust or other instrument to which the Company, or any of its
affiliates is a party, by which the Company, or any of its
affiliates is bound, or to which any of the properties of the
Company, or any of its affiliates is subject, or (D) the terms of
any "lock-up" or similar provision of any underwriting or similar
agreement to which the Company, or any of its affiliates is a
party; or
(ii) result in the creation or imposition of any lien, charge or
encumbrance upon the Securities or any of the assets of the
Company, or any of its affiliates.
(g) The Securities. The Securities upon issuance:
(i) are, or will be, free and clear of any security interests, liens,
claims or other encumbrances, subject to restrictions upon
transfer under the 1933 Act and State laws;
(ii) have been, or will be, duly and validly authorized and on the
date of issuance and on the Closing Date, as hereinafter defined,
and the date the Preferred Stock is converted, and the Warrants
and Placement Warrants are exercised, the Securities will be duly
and validly issued, fully paid and nonassessable (and if
registered pursuant to the 1933 Act, and resold pursuant to an
effective registration statement will be free trading and
unrestricted provided the Subscriber complies with the Prospectus
delivery requirements);
(iii) will not have been issued or sold in violation of any preemptive
or other similar rights of the holders of any securities of the
Company;
(iv) will not subject the holders thereof to personal liability by
reason of being such holders; and
(h) Litigation. There is no pending or, to the best knowledge of the
Company, threatened action, suit, proceeding or investigation before
any court, governmental agency or body, or arbitrator having
jurisdiction over the Company, or any of its affiliates that would
affect the execution by the Company or the performance by the Company
of its obligations under this Agreement, and all other agreements
entered into by the Company relating hereto.
(i) Reporting Company. The Company is a publicly-held company whose common
stock is (and has been for the past 90 days) registered pursuant to
Section 12(g) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). The Company's Common Stock is listed for trading on
the NASD OTC Bulletin Board. Pursuant to the provisions of the
Exchange Act, the Company has timely filed all reports and other
materials required to be filed thereunder with the Securities and
Exchange Commission during the preceding twelve months.
(j) No Market Manipulation. The Company has not taken, and will not take,
directly or indirectly, any action designed to, or that might
reasonably be expected to, cause or result in stabilization or
manipulation of the price of the common stock of the Company to
facilitate the sale or resale of the Securities or affect the price at
which the Securities may be issued.
(k) Information Concerning Company. The Reports and Other Written
Information contain all material information relating to the Company
and its operations and financial condition as of their respective
dates which information is required to be disclosed therein. Since the
date of the most recent financial statements included in the Reports,
and except as modified in the Other Written Information, there has
been no material adverse change in the Company's business, financial
condition or affairs not disclosed in the Reports. The Reports and
Other Written Information do not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
(l) Judgment of Board of Directors. The Company's executive officers and
directors have studied and fully understand the nature of the
Securities being exchanged hereby. The board of directors of the
Company has concluded, in its good faith business judgment, that such
issuance is in the best interests of the Company.
(m) Stop Transfer. The Securities are restricted securities as of the date
of this Agreement. The Company will not issue any stop transfer order
or other order impeding the sale and delivery of the Securities at
such time as the Securities are registered for public sale or an
exemption from registration is available.
(n) Defaults. Neither the Company nor any of its subsidiaries is in
violation of its Articles of Incorporation or Bylaws. Neither the
Company nor any of its subsidiaries is (i) in default under or in
violation of any other material agreement or instrument to which it is
a party or by which it or any of its properties are bound or affected,
which default or violation would have a material adverse effect on the
Company, (ii) in default with respect to any order of any court,
arbitrator or governmental body or subject to or party to any order of
any court or governmental authority arising out of any action, suit or
proceeding under any statute or other law respecting antitrust,
monopoly, restraint of trade, unfair competition or similar matters,
or (iii) to its knowledge in violation of any statute, rule or
regulation of any governmental authority material to its business.
(o) No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has directly
or indirectly made any offers or sales of any security or solicited
any offers to buy any security under circumstances that would cause
the offering of the Securities pursuant to this Agreement to be
integrated with prior offerings by the Company for purposes of the
1933 Act or any applicable stockholder approval provisions, including,
without limitation, under the rules and regulations of The NASDAQ
National Market ("NASDAQ National Market"), as applicable, nor will
the Company or any of its affiliates or subsidiaries take any action
or steps that would cause the offering of the Securities to be
integrated with other offerings.
(p) No General Solicitation. Neither the Company, nor any of its
affiliates, nor to its knowledge, any person acting on its or their
behalf, has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D under the Act) in
connection with the offer or sale of the Securities.
(q) Listing. The Company's common stock is quoted on, and listed for
trading on the OTC Bulletin Board ("Bulletin Board"). The Company has
not received any oral or written notice from the NASD that its Common
Stock will be delisted from the Bulletin Board or that the Common
Stock does not meet all requirements for the continuation of such
listing.
(r) Correctness of Representations. The Company represents that the
foregoing representations and warranties are true and correct as of
the date hereof in all material respects and, unless the Company
otherwise notifies the Subscriber prior to the Closing Date, shall be
true and correct in all material respects and must be true as of the
Closing Date, as of the Closing Date. The foregoing representations
and warranties shall survive the Closing Date.
3. Regulation D Offering. This Offering is being made pursuant to the
exemption from the registration provisions of the Securities Act of 1933,
as amended, afforded by Rule 506 of Regulation D promulgated thereunder.
4. Reissuance of Securities. The Company agrees to reissue certificates
representing the Securities without the legends set forth in Sections 1(e)
and 1(f) above at such time as (a) the holder thereof is permitted to
dispose of such Securities pursuant to Rule 144(k) under the Act, or (b)
upon resale subject to an effective registration statement after the
Securities are registered under the Act. The Company agrees to cooperate
with the Subscriber in connection with all resales pursuant to Rule 144(d)
and Rule 144(k) and provide legal opinions necessary to allow such resales
provided the Company and its counsel receive reasonably requested
representations from the Subscriber and selling broker, if any.
5. Redemption. The Company may not redeem the Securities without the consent
of the holder of the Securities, except as described in the Certificate of
Designation.
6. Commissions/Fees. The Company will not pay any commission or other
compensation in connection with the Exchange.
7. Covenants of the Company. The Company covenants and agrees with the
Subscriber as follows:
(a) The Company will advise the Subscriber, promptly after it receives
notice of issuance by the Securities and Exchange Commission, any
state securities commission or any other regulatory authority of any
stop order or of any order preventing or suspending any offering of
any securities of the Company, or of the suspension of the
qualification of the common stock of the Company for offering or sale
in any jurisdiction, or the initiation of any proceeding for any such
purpose.
(b) The Company will use its best efforts to maintain the listing and
trading of its Common Stock on the Bulletin Board, and will comply in
all respects with the Company's reporting, filing and other
obligations under the bylaws or rules of the National Association of
Securities Dealers ("NASD") and such exchanges, as applicable. The
Company will provide the Subscriber copies of all notices it receives
notifying the Company of the actual delisting of the Common Stock on
any exchange or quotation system on which the Common Stock is listed
or quoted.
(c) The Company shall notify the SEC, NASD and applicable state
authorities, in accordance with their requirements, of the
transactions contemplated by this Agreement, and shall take all other
necessary action and proceedings as may be required and permitted by
applicable law, rule and regulation, for the legal and valid issuance
of the Securities to the Subscriber and promptly provide copies
thereof to Subscriber.
(d) The Company will (i) cause its Common Stock to continue to be
registered under Sections 12(b) or 12(g) of the Exchange Act, (ii)
comply in all respects with its reporting and filing obligations under
the Exchange Act, (iii) comply with all reporting requirements that is
applicable to an issuer with a class of securities registered pursuant
to Section 12(g) of the Exchange Act, and (iv) use its commercial best
efforts to continue the listing or trading of its common stock on the
Bulletin Board or NASDAQ Small Cap Market and will comply in all
respects with the Company's reporting, filing and other obligations
under the bylaws or rules of the NASD and NASDAQ. The Company will not
take any action or file any document (whether or not permitted by the
Act or the Exchange Act or the rules thereunder) to terminate or
suspend such registration or to terminate or suspend its reporting and
filing obligations under said Acts until conversion of all the
Preferred Stock issued by the Company pursuant to this Agreement.
8. Covenants of the Company and Subscriber Regarding Indemnification.
(a) The Company agrees to indemnify, hold harmless, reimburse and defend
Subscriber against any claim, cost, expense, liability, obligation,
loss or damage (including reasonable legal fees) of any nature,
incurred by or imposed upon Subscriber which results, arises out of or
is based upon (i) any misrepresentation by Company or breach of any
warranty by Company in this Agreement or in any Exhibits or Schedules
attached hereto, or Reports or other Written Information; or (ii) any
breach or default in performance by Company of any covenant or
undertaking to be performed by Company hereunder, or any other
agreement entered into by the Company and Subscribers relating hereto.
(b) Subscriber agrees to indemnify, hold harmless, reimburse and defend
the Company at all times against any claim, cost, expense, liability,
obligation, loss or damage (including reasonable legal fees) of any
nature, incurred by or imposed upon the Company which results, arises
out of or is based upon (a) any misrepresentation by Subscriber in
this Agreement or in any Exhibits or Schedules attached hereto; or (b)
any breach or default in performance by Subscriber of any covenant or
undertaking to be performed by Subscriber hereunder, or any other
agreement entered into by the Company and Subscribers relating hereto.
9. Conversion/Liquidated Damages.
(a) The Preferred Stock will be convertible under the circumstances and
according to the procedure set forth in the Certificate of
Designation.
(b) The Company understands that a mandatory conversion of the Preferred
Stock will occur automatically without any action on the part of the
holder of Preferred Stock under the circumstances and according to the
procedure set forth in the Certificate of Designation
(c) Nothing contained herein or in any document referred to herein or
delivered in connection herewith shall be deemed to establish or
require the payment of interest or dividends on the Preferred Stock.
10. Miscellaneous.
(a) Notices. All notices or other communications given or made hereunder
shall be in writing and shall be personally delivered or deemed
delivered the first business day after being telecopied (provided that
a copy is delivered by first class mail) to the party to receive the
same at its address set forth below or to such other address as either
party shall hereafter give to the other by notice duly made under this
Section: (i) if to the Company, to Insynq, 1127 Broadway Plaza, Suite
10, Tacoma, Washington 98402, Attn: John P. Gorst, President,
telecopier number: (253) 722-5605, with a copy by telecopier only to
Sonfield & Sonfield, 770 South Post Oak Lane, Suite 435, Houston,
Texas 77056, Attn: Robert L. Sonfield, Jr., Esq., telecopier number:
(713) 877-1547, and (ii) if to the Subscriber, to the name, address
and telecopy number set forth on the signature page hereto.
(b) Closing. The consummation of the transactions contemplated herein
shall take place at the offices of Sonfield & Sonfield, 770 South Post
Oak Lane, Suite 435, Houston, Texas 77056, upon the satisfaction of
all conditions to Closing set forth in this Agreement (the "Closing
Date").
(c) Entire Agreement; Assignment. This Agreement represents the entire
agreement between the parties hereto with respect to the subject
matter hereof and may be amended only by a writing executed by both
parties. No right or obligation of either party shall be assigned by
that party without prior notice to and the written consent of the
other party.
(d) Execution. This Agreement may be executed simultaneously 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. A
facsimile signature by any party on a counterpart of this Agreement
shall be binding and effective for all purposes. Such party shall,
however, subsequently deliver to the other party an original executed
copy of this Power of Agreement may be executed by facsimile
transmission, and in counterparts, each of which will be deemed an
original.
(e) Law Governing this Agreement. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas without
regard to principles of conflicts of laws. Any action brought by
either party against the other concerning the transactions
contemplated by this Agreement shall be brought only in the state
courts of Texas or in the federal courts located in the city of
Houston and state of Texas. Both parties and the individuals executing
this Agreement and other agreements on behalf of the Company agree to
submit to the jurisdiction of such courts and waive trial by jury. The
prevailing party shall be entitled to recover from the other party its
reasonable attorney's fees and costs. In the event that any provision
of this Agreement or any other agreement delivered in connection
herewith is invalid or unenforceable under any applicable statute or
rule of law, then such provision shall be deemed inoperative to the
extent that it may conflict therewith and shall be deemed modified to
conform with such statute or rule of law. Any such provision which may
prove invalid or unenforceable under any law shall not affect the
validity or enforceability of any other provision of any agreement.
(f) Consent to Jurisdiction. Subject to Section 12(e) hereof, each of the
Company and Subscriber hereby waives, and agrees not to assert in any
such suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of such court, that the suit, action or
proceeding is brought in an inconvenient forum or that the venue of
the suit, action or proceeding is improper. Nothing in this Section
shall affect or limit any right to serve process in any other manner
permitted by law.
(g) Automatic Termination. This Agreement shall automatically terminate
without any further action of either party hereto if the Closing shall
not have occurred by the tenth (10th) business day following the date
this Agreement is accepted by the Subscriber.
Please acknowledge your acceptance of the foregoing Exchange Agreement by
signing and returning a copy to the undersigned whereupon it shall become a
binding agreement between us.
INSYNQ, INC.
By:/s/ John P. Gorst
John P. Gorst, Chairman & CEO
Dated: July 25, 2002
Exchange: Number of Company Shares Exchanged: (at one share of Preferred Stock
for ten Company Shares) 150,000
ACCEPTED: Dated as of Oct. 16, 2002
/s/ Robert A Harville
(Holder of Company Shares)
CERTIFICATE OF DESIGNATION
(Insert)
LETTER OF TRANSMITTAL
To Accompany Certificates Representing
Company Shares of
INSYNQ, INC.
(a Delaware Corporation)
Exchanged for Shares of Preferred Stock
Pursuant to the Exchange Agreement
The Exchange Agreement should be read carefully before this Letter of
Transmittal is completed. If certificates are registered in different names, a
separate Exchange Agreement must be submitted for each different registered
owner.
<table>
<caption>
- ------------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF CERTIFICATES SURRENDERED
- ------------------------------------------------------------------------------------------------------------------------------------
<c> <c>
Name(s) and Address(es) of Certificate(s) Enclosed
Registered Owner(s) (Attach additional
(Please fill in, if blank) list if necessary)
- ------------------------------------------------------------------------------------------------------------------------------------
Robert A. Harville
5632 S "I" St.
Tacoma WA 98408
Total Number
of Shares
Certificate Represented by
Number(s) Certificate(s)
7328 150,000
____________________________________________
____________________________________________
____________________________________________
Total Shares: 150,000
- ------------------------------------------------------------------------------------------------------------------------------------
</table>
SIGNATURES MUST BE PROVIDED AND GUARANTEED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
The undersigned understands that a certificate representing the whole
number of shares of Preferred Stock will be sent by mail as soon as practicable
following the receipt of the Company Shares and this Exchange Agreement.
Please issue and deliver the certificate representing the number of shares
of Preferred Stock to which the undersigned is entitled in exchange for the
Company Shares surrendered pursuant to this Exchange Agreement to the
undersigned at the address specified under "Description of Company Shares
Surrendered" above unless otherwise indicated under "Special Registration
Instructions" or "Special Delivery Instructions" below.
<table>
<c> <c>
SPECIAL REGISTRATION INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instruction 2 below) (See Instruction 2 below)
COMPLETE ONLY if the certificates for COMPLETE ONLY if the certificates for
Preferred Stock are to be registered in the name of a Preferred Stock are to be issued in the name of but are
person OTHER than the name(s) of the registered to be sent OTHER than to the address of the registered
holder(s) appearing under "DESCRIPTION OF CERTIFICATES holder(s) appearing under "DESCRIPTION OF CERTIFICATES
SUBMITTED." SUBMITTED" or, if the box immediately to the left is
filled in, OTHER THAN to the address appearing therein.
Issue and mail certificate to:
Name ______________________________ Mail or deliver to:
(Please Print)
Name _____________________________
Address ___________________________ (Please Print)
___________________________________ Address __________________________
(Include Zip Code)
__________________________________
___________________________________ (Include Zip Code)
(Signature)
__________________________________
___________________________________ (Tax Identification or Social
(Tax Identification or Social Security Number)
Security Number) (See Substitute Form W-9)
(See Substitute Form W-9)
</table>
The undersigned hereby warrants to the Company that the undersigned has
full power and authority to submit, sell, assign and transfer the Company Shares
described above, free and clear of all liens, charges and encumbrances and not
subject to any adverse claim. The undersigned will, upon request, execute any
additional documents necessary or desirable to complete the transfer of the
Company Shares.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and all obligations of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned.
SIGN HERE AND, IF REQUIRED, HAVE SIGNATURES GUARANTEED (If Special
Registration Instructions are given, or if signature is by other than the
registered holder, signature(s) must be guaranteed. See Instruction 2.)
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/s/ Robert A. Harville
(Signature(s) of Shareholder(s)
Dated: October 16, 2002, 2002
(Must be signed by the registered holder(s) exactly as name(s) appear(s) on
Company Shares or on a security position listing or by person(s) authorized to
become registered holder(s) by certificates and documents transmitted herewith.
If signature is by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, please set forth full title and see Instructions 2 and
3)
Name(s):_______________________________________________________________
- --------------------------------------------------------------------------------
(Please Type or Print)
Capacity (Full Title)__________________________________________________
Address _______________________________________________________________
(include Zip Code)
Area Code and Tel. No. ______________________________________________
Tax Identification or
Social Security No. __________________________________________________
Guarantee of Signature(s)
(See Instruction 2)
Authorized Signature __________________________________________________
Name __________________________________________________________________
(Please Type or Print)
Name of Firm __________________________________________________________
Address _______________________________________________________________
- --------------------------------------------------------------------------------
(Include Zip Code)
Area Code and Tel. No. ______________________________________________
Dated: __________________________________________________________, 2002