EXHIBIT 4.31
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
TCA Investments, Inc. ("TCA").
WHEREAS, in exchange for TCA lending the Company $325,000 the Company
issued to TCA that certain Convertible Debenture dated as of June 16, 2000 (the
"Convertible Debenture") under which TCA has the right to convert the principal
amount of the debenture into 457,746 shares of common stock, par value $.001 per
share (the "Common Stock"), and accrued interest thereon can be converted into
shares of the Company's Common Stock at a conversion price of $0.71 per share;
and
WHEREAS, in exchange for TCA lending the Company $125,000, the Company
issued to TCA that certain Convertible Debenture dated as of September 11, 2000
(the "September Convertible Debenture") under which TCA has the right to convert
the principal amount of the debenture into 125,000 shares of Common Stock and
accrued interest thereon can be converted into shares of the Company's Common
Stock at a conversion price of the lesser of $1.00 or 60% of the average of the
bid price on the date of conversion; and
WHEREAS, the parties agree that it will be less burdensome and more
administratively feasible for the Company, in exchange for TCA's agreement to
terminate the June Convertible Debenture and the September Convertible
Debenture, to issue shares of its Common Stock to TCA at the agreed upon,
arms-length negotiated value of $0.50 per share; and
WHEREAS, the Company wishes further to grant registration rights for the
shares issued hereunder to TCA as partial consideration for its agreement
hereunder; and
WHEREAS, on June 16 the parties also executed a Warrant Agreement under
which the Company issued warrants to purchase 457,746 shares of Common Stock to
TCA at an exercise price of $1.00 per share (the "June Warrants"); and
WHEREAS, on September 11 the parties also executed a Warrant Agreement
under which the Company issued warrants to purchase 125,000 shares of Common
Stock to TCA at an exercise price of $1.00 per share (the "September Warrants");
and
WHEREAS, on each of June 16 and September 11, 2000, the parties executed a
Subscription Agreement. The "June Subscription Agreement" and the "September
Subscription Agreement," respectively, under which the Warrants, the September
Warrants, the June Debentures and the September Debentures were granted demand
and piggyback registration rights.
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. June Debenture Conversion. All principal and accrued interest
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currently outstanding under the June Convertible Debenture which may be
converted into shares of the Company's Common Stock at $0.71 per share is
hereby converted into [650,000 plus accrued interest] shares of Common
Stock pursuant to an agreed to value of $0.50 per share. Such shares shall
be issued upon the execution of this Agreement by TCA and the return of the
June Convertible Debenture to the Company, marked cancelled.
2. September Debenture Conversion. All principal and accrued interest
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currently outstanding under the September Convertible Debenture which may
be converted into shares of the Company's Common Stock at the lesser of
$1.00 or 60% of the bid price on the date of conversion is hereby converted
into [250,000 plus accrued interest] shares of Common Stock pursuant to an
agreed to value of $0.50 per share. Such shares shall be issued upon the
execution of this Agreement by TCA and the return of the September
Convertible Debenture to the Company, marked cancelled.
3. Termination of Certain Provisions of June Subscription Agreement.
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Sections 5.3, 5.6 and 5.7 of the June Subscription Agreement are hereby
terminated in their entirety. The remaining provisions of the June
Subscription Agreement shall remain in effect with respect to the June
Warrants and the Common Stock subject to the June Warrants.
4. Termination of Certain Provisions of September Subscription Agreement.
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Section 5.1 of the September Subscription Agreement is hereby terminated in
its entirety. The remaining provisions of the September Subscription
Agreement shall remain in effect with respect to the September Warrants and
the Common Stock subject to the September Warrants.
5. Registration Rights for June Conversion. The [650,000 plus accrued
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interest] shares issued pursuant to this Agreement are hereby granted the
same registration rights as set forth in Section 5.4 of the June
Subscription Agreement, pursuant to which the Company will promptly file a
registration statement with the SEC.
6. Registration Rights for September Conversion. The [250,000 plus
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accrued interest] shares issued pursuant to this Agreement are hereby
granted the same registration rights as set forth in Section 5.1 of the
September Subscription Agreement, pursuant to which the Company will
promptly file a registration statement with the SEC.
7. Certain Acknowledgements and Agreements of TCA. TCA 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
TCA 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, persons
communications between TCA and an authorized representative of the Company.
(d) TCA agrees not to sell nor attempt to sell all or any part of the
Shares allocated to TCA 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.
8. Representations and Warranties of TCA. TCA 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 TCA, for itself 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 TCA
as an investor in the Company:
(a) TCA has consulted its attorney, accountant or investment advisor with
respect to the investment contemplated hereby as its suitability for TCA.
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, TCA is relying solely on
independent investigations made by TCA or representative(s) of TCA.
(b) TCA has read and fully understands the public filings of the Company
as filed with the SEC.
(c) The Company has made available to TCA, 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, TCA 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) TCA understands and acknowledges that: (i) while the Company has an
operating history, the purchase of Shares by TCA involves a high degree of
risk of loss of TCA's entire investment, and there is no assurance of any
income from such investment; (ii) TCA 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) TCA is purchasing the Shares for investment
purposes only for TCA's 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 TCA to liquidate an investment therein readily in
case of an emergency; and (vi) TCA 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 TCA hereby subscribes to purchase or
any part thereof, and TCA 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 TCA and the other
information set forth in Section 11 are true, correct and complete in all
material respects. Any information which TCA has heretofore furnished to
the Company with respect to TCA is correct and complete as of the date of
this Agreement, and if there should by any material change in such
information prior to the purchase of Shares, TCA will immediately furnish
such revised or corrected information to the Company.
(f) TCA 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. TCA 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 forseeable future, to sell the Shares the purchase of which is
subscribed. TCA 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 TCA in, and his
commitments to, all similar investments that are illiquid is reasonable in
relation to his net worth.
(g) TCA maintains its domicile, and is not merely a transient or temporary
resident, at the residence address shown on the signature page of this
Agreement.
(h) TCA is a United States citizen or is otherwise a U.S. Person* as
defined below.
(i) The representations, warranties, agreements and acknowledgements made
by TCA in this Agreement are made with the intention that they be relied
upon by the Company in determining the suitability of TCA as a purchaser of
Shares, and shall survive their purchase. In addition, TCA undertakes to
notify the Company immediately of any change in any representation or
warranty of TCA set forth herein.
9. Indemnification. TCA understands that the offer and sale of Shares to
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him is being made, and the sale of Shares will be made, in reliance upon
the acknowledgements and agreements of TCA set forth in Section 7 and the
representations and warranties of TCA set forth in Section 8. TCA agrees to
provide, if requested, any additional information that may reasonably be
required to determine the eligibility of TCA to purchase Shares. TCA 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 TCA contained in this Agreement or in any
other document provided by TCA to the Company in connection with TCA's
offer to purchase Shares. TCA agrees to indemnify the Company and any of
its affiliates, agents, attorneys and representatives and to
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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.
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 TCA in violation of the Securities Act
or other applicable law. Notwithstanding any provision of this
Agreement, TCA does not waive any rights granted to him under
applicable securities laws. TCA 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.
10. Arbitration. Any dispute or controversy arising under or in
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connection 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 TCA. 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.
11. Suitability. TCA warrants and represents to the Company that
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the following information supplied by TCA pursuant to Section 4
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.
12. General. This Agreement (i) shall be binding on TCA and the heirs, personal
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representatives, successors and permitted assigns of TCA, (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 TCA as a shareholder in the Company.
13. 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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1101 Broadway Plaza
Tacoma, Washington 98402
Attention: President
Telecopier No.: (253) 404-3842
If to TCA: At the last address indicated on the Company's books and
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records.
14. Assignment. TCA agrees that neither this Agreement nor any rights
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which may accrue to him hereunder may be transferred or assigned.
15. 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.
16. Confidentiality. TCA 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. TCA hereby agrees to keep in strict confidence all
Confidential Information. TCA 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 TCA, whether or not reduced to writing and whether or not
conceived, originated, discovered or developed in whole or in part by TCA,
including, without limitation: (a) information not generally known in the
industry which relates to the business, products or the 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.
17. Pronouns; Headings. All pronouns and any variations thereof shall be
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deemed 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.
18. Severability. In the event that any provision contained herein shall
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be 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.
19. Conflict. If any conflict shall arise between the terms of either of
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the June Subscription Agreement or September Subscription Agreement and
this Agreement, or the June or September Warrants 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.
By: /s/ John P. Gorst
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Name: John P. Gorst
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Title: Chairman CEO
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TCA INVESTMENTS, INC.
By: /s/ F.C. Fisher - Pres
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Name: F.C. Fisher, Jr.
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Title: President
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