ACQUISITION PURCHASE
AGREEMENT
Between
InsynQ Inc.
and
Omnibus Subscriber Computing Inc.
This agreement (the" Agreement') is entered into this 1st day of June, 2001
("The Date of This Agreement'), between InsynQ, Inc., ("InsynQ'') a Delaware
corporation, having its principal place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇, ▇ A 98402, and Omnibus Subscriber Computing Inc, ("USC'), a Delaware
corporation, having its principal place of business at the offices of its
wholly owned subsidiary Omnibus Canada Corporation ("OCC') located at
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇.
WHEREAS, USC entire assets consist of their Canadian based company Omnibus
Canada Corporation (OCC);
WHEREAS, OCC provides Application Hosting and Outsourced Management
Services ("Services" to customers with offices in various cities in
Canada;
WHEREAS, InsynQ provides Application Hosting Services to customers
throughout the United States and foreign countries including Canada;
WHEREAS, ▇▇▇▇▇▇ ▇▇▇▇▇▇ beneficially owns all of the issued and outstanding
shares of USC, and USC owns all of the issued and outstanding shares of
OCC;
WHEREAS, InsynQ and USC wish to combine their business operations;
WHEREAS, USC wishes to sell 100% of its shares for shares in InsynQ as
defined herein and in a manor so as to qualify for a tax-free exchange
under United States Tax Codes;
NOW THEREFORE, in consideration of the promises and mutual covenants
contained herein and other good and valuable consideration, the adequacy
and receipt of which is hereby acknowledged, the parties agree as follows:
A. STRUCTURE OF THE TRANSACTION
1. This transaction (the "Transaction") will close on The Date of
This Agreement (the "Closing") and its material provisions will be carried
out in two phases: The Combine Business Operations Phase and the Share
Swap Phase as set out herein.
2. USC and InsynQ agree that the Combine Operations Phase will be
completed by a date thirty days after The Date Of This Agreement.
3. USC and InsynQ will use their best efforts to complete the Share
Swap Phase by a date six months after The Date Of This Agreement.
4. USC and InsynQ understand and agree that in order to carry out
the material provisions of the Share Swap Phase of the Transaction the
following events must have first occurred:
(a) an audit of USC and its subsidiary OCC
(b) completion of SEC related legal work
(c) a significant financial raise into InsynQ
B. THE COMBINE BUSINESS OPERATIONS STAGE
1. ▇▇▇▇▇▇ ▇▇▇▇▇▇ will be issued options to acquire 1,000,000 shares
of InsynQ at $.13.
2. InsynQ will execute a promissory note in the amount of $220,000
(the 'Promissory Note') in favor of USC, which shall be paid at a rate of
$10,000 per month starting 60 days after Closing or upon a minimum funding
of $500,000 until paid in full with an interest rate of 8% per annum and
further described and allocated in Schedule "B" hereto as part of this
agreement. Notwithstanding the aforesaid, the last full payment of $10,000
called for in Schedule "B" will be made on a date thirty days after
Closing.
3. InsynQ will execute an employment agreement with ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ ('▇▇▇▇▇▇') pursuant to Schedule "C" attached hereto as part of this
agreement;
4. InsynQ will offer ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇, employees of
OCC, employment on an at will basis consistent with their current
compensation and duties.
5. InsynQ agree and understands OCC will terminate employment of
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ('Boduryan') and ▇▇▇▇▇ ▇▇▇▇▇▇ ('▇▇▇▇▇▇'), both of whom are
employees of OCC and agree to pay compensation for back pay and severance
pay pursuant to Schedule "D" attached hereto as part of this agreement
upon a minimum funding of $500,000.
6. InsynQ shall indemnify ▇▇▇▇▇▇ and ▇▇▇▇▇▇ for actual liabilities
arising out of both their employment by OCC to pay certain liabilities as
defined in Schedule "E" attached hereto as part of this agreement.
7. The parties hereto wish to establish an immediate relationship
allowing InsynQ to manage the assets of USC. To facilitate this, the
parties hereto will execute a management services agreement (the
'Management Services Agreement') pursuant to Schedule "Fl " attached
hereto as part of this agreement, and whose terms ends on a date six
months after The Date Of This Agreement.
8. InsynQ assumes the current liabilities of USC and OCC as of the
Date of this Agreement, which are set out in Schedule "F2" attached hereto
as part of this agreement. These liabilities include current liabilities
and termination and settlement agreements with former employees and
vendors.
C. THE SHARE SW AP PHASE
1. InsynQ will issue 2,871,280 shares of lnsynQ Common stock in
exchange for 100% of the issued and outstanding stock of USC of which
approximately 71,280 will be issued as allocated pursuant to Schedule "A"
attached hereto as part of this agreement.
2. USC will become a wholly owned subsidiary of InsynQ and OCC
shall remain a subsidiary of USC.
3. The shares of USC acquired by InsynQ as a result of the
acquisition will be held in escrow by a reasonably mutually agreed upon
escrow agent ("Escrow Agent").
4. InsynQ shall execute a Security Agreement for the stock of USC
held by the Escrow agent, which shall include, but not limited to certain
default provisions some of which are set out below. The shares of USC held
by the Escrow Agent are to be returned forthwith to USC if any of the
following occur:
a. InsynQ defaults on the Promissory Note due USC as set out
in Schedule "B";
b. InsynQ defaults in making payments on behalf of OCC as set
out in Schedule "F2" for the liquidation of the current liabilities;
c. InsynQ files for protection under Chapter 11 or otherwise
becomes or is declared bankrupt.
Upon any such return of the shares as aforesaid, the customers of InsynQ
that are customers of OCC at Closing are to be transferred by InsynQ back
to OCC as per the business continuity agreement (the "Business Continuity
Agreement"), which agreement is incorporated herewith as Schedule "G".
D. REPRESENTATIONS & WARRANTEES
1. USC represents and warrants that the customers, seat counts and
associated ▇▇▇▇▇▇▇▇ of OCC are as set out in Schedule "H" hereto attached
as part of this agreement.
2. USC represents and warrants: (i) that the customers of OCC on
the Date of this Agreement are being provided with Services in a proper
fashion acceptable to the said customers, (ii) that the computer equipment
being operated by OCC at its processing center is fully capable of
providing the Services to said customers, and (iii) that the present
operations and support staff of OCC comprised of Paraninfo, Chan and
Boduryan is capable and sufficient to operate the said computer equipment
and to adequately support the said customers.
3. USC represents and warrants that the shares of lnsynQ that
comprise some 871,280 shares, will be used by USC in a share swap with The
▇▇▇▇▇▇▇ Corporation ('▇▇▇▇▇▇▇') to repatriate all of the shares in USC
that USC issued to ▇▇▇▇▇▇▇ (i) in consideration of ▇▇▇▇▇▇▇ having issued
▇▇▇▇▇▇▇ shares to creditors and former employees of OCC to settle trade
accounts and severance arrangements, this accounting for 400,000 shares
(ii) in consideration of ▇▇▇▇▇▇▇ having issued ▇▇▇▇▇▇▇ shares to HDL
Capital Corporation to settle their promissory notes, this accounting for
400,000 shares, and (iii) in consideration of a cash advance made by
▇▇▇▇▇▇▇ to OCC, this accounting for 71,280 shares. ▇▇▇▇▇▇▇'▇ acceptance of
these arrangements is expressed in the letter from ▇▇▇▇▇▇▇ incorporated as
Exhibit "A" to this Agreement. On closing of this repatriation
transaction, USC will again be 100% owned by ▇▇▇▇▇▇ and will receive the
remaining shares, approximately 2,000,000 at closing. At his discretion,
▇▇▇▇▇▇ may cause USC to transfer some of these shares to persons who are
or were employees of OCC as at the Date of this Agreement.
4. Both parties hereto will co-operate and provide information so
that InsynQ may carry out due diligence to verify the schedules and
representations herein.
E. RESET PROVISIONS
The 2,000,000 shares of lnsynQ stock comprising ▇▇▇▇▇▇'▇ portion due on
completion of the Share Swap Phase shall be entitled to a reset provision,
InsynQ hereby covenants that if lnsynQ's share price for the previous 30
days is less than US$.50 one year from the Closing of this Transaction,
then InsynQ will issue USC additional lnsynQ shares to retroactively
augment the number of shares in the original share swap so that the total
value of the shares is equivalent to $1,000,000 USD on said date. This
reset is limited to the original shareholders of record on the day of
closing.
F. ORGANIZATION AND MANAGEMENT
Immediately upon Closing, OCC will have its name changed from Omnibus
Canada Corporation to InsynQ Canada Corporation. This name change of the
corporation does not affect any of the representations, warrantees,
covenants or terms of this Agreement, in that each and every reference to
'OCC' in this Agreement serves to identify one and the same corporation,
whatever its actual registered name might be at the time pertinent to
the said reference.
1. After Closing, ▇▇▇▇▇▇ will continue as President of OCC albeit
renamed. There will be no Chief Executive Officer o fOCC per se. ▇▇▇▇▇▇
will report to the Chief Executive Officer of lnsynQ, ▇▇▇▇ ▇▇▇▇▇.
2. ▇▇▇▇▇▇ will be appointed Chairman of the Board of lnsynQ.
Suitable indemnification of ▇▇▇▇▇▇ will be put in place to mitigate any
potential liability associated with this appointment.
3. Press releases, stationery and business cards will be created to
announce and give effect to these changes.
4. USC covenants that apart from disbursements under Schedule 3.4
hereof to liquidate current liabilities, OCC will be in a monthly cash
break even position upon Closing as set out in Schedule 6.5 hereto.
5. The existing contract with Buck Consultants Limited for Services
and the existing equipment lease with Data General Financial Services will
remain with OCC.
6. The contract with Simplified Telephony Solutions Inc. (▇▇▇▇▇▇
▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇) for marketing services will remain with OCC.
7. OCC will use exclusively the InsynQ web site. InsynQ will
develop a section of the web site that focuses on delivering Services in
Canada.
8. Business currently under contract or management through the
Tacoma office of InsynQ that is essentially Eastern Canada in venue will
be transferred for management purposes to the Toronto office, that is to
OCC. This is chiefly the CPA Accounting channel and the OnSite
opportunity.
9. All current OCC purchase order approvals and accounting
functions will be transferred to InsynQ offices in Tacoma. Vendor invoices
and other transactions will be posted by Toronto staff to the Tacoma
office accounting system. Payroll cheques will be written in Toronto
through a local Toronto impress bank account funded from the Tacoma
office. Other arrangements will be made as necessary.
H. LEGAL
1. This Agreement will be interpreted under the laws of the State
of Washington.
2. This Agreement cannot be assigned by one of the Parties without
the reasonable written permission of the other Party.
3. This Agreement represents the complete and total agreement
between the Parties.
InsynQ Inc.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇ Date 6/01/01
per: ▇▇▇▇ ▇▇▇▇▇, President
Omnibus Subscriber Computing Inc.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Date 6/01/01
per: ▇▇▇▇▇▇ ▇▇▇▇▇▇, President