SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT (this "Agreement") is made and entered into as
of April 25, 2001 by and between Insynq, Inc., a Delaware corporation (the
"Company"), and International Fluid Dynamics, Inc. (the "Investor").
W I T N E S S E T H
WHEREAS, there are currently outstanding 29,392,830 shares of Common Stock
of the Company;
WHEREAS, the Company has agreed to sell and the Investor has agreed to
purchase 315,000 shares of the Company's Common Stock, $0.001 par value, at a
purchase price of $0.07 per share (the "Shares);
WHEREAS, the Company desires to accept the subscription of Investor on the
terms and conditions hereinafter set forth.
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. SUBSCRIPTION FOR SHARES.
The Investor agrees to become a shareholder in the Company and in
connection therewith subscribes for and agrees to purchase such number of
Shares set forth on the signature page hereof, on the terms and conditions
described herein.
2. CERTAIN ACKNOWLEDGMENTS AND AGREEMENTS OF THE INVESTOR. The Investor
acknowledges and agrees that:
(a) All documents pertaining to the investment in the Shares have been
made available for inspection by the Investor, and the books and
records of the Company will be available, upon reasonable notice, for
inspection by the Investor 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 the Investor and an authorized representative
of the Company.
(d) The Investor agrees not to sell nor attempt to sell all or any part
of the Shares allocated to the Investor 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.
3. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR. The Investor understands
that the 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 the Investor, 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 the Investor as an investor in the Company:
(a) The Investor has consulted his attorney, accountant or investment
advisor with respect to the investment contemplated hereby and its
suitability for the Investor. 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, the Investor is relying solely on independent
investigations made by the Investor or representative(s) of the
Investor.
(b) The Investor has read and fully understands that certain Information
Statement as filed with the Securities and Exchange Commission on
April 25, 2000.
(c) The Company has made available to the Investor, 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, the Investor 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) The Investor understands and acknowledges that: (i) while the Company
has an operating history, the purchase of Shares by the Investor
involves a high degree of risk of loss of the Investor's entire
investment, and there is no assurance of any income from such
investment; (ii) the Investor 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) the Investor is purchasing the Shares for investment purposes
only for the Investor'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 the Investor to liquidate
an investment therein readily in case of an emergency; and (vi) the
Investor 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 the Investor hereby subscribes to purchase or
any part thereof, and the Investor 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 the Investor
and the other information set forth in Section 6 are true, correct
and complete in all material respects. Any information which the
Investor has heretofore furnished to the Company with respect to the
Investor 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, the Investor will immediately furnish such
revised or corrected information to the Company.
(f) The Investor 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. The Investor 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. The Investor
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 the Investor in, and his
commitments to, all similar investments that are illiquid is
reasonable in relation to his net worth.
(g) The Investor 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) The Investor is a United States citizen or is otherwise a
U.S. Person* as defined below.
(i) The representations, warranties, agreements and acknowledgements made
by the Investor in this Agreement are made with the intention that
they be relied upon by the Company in determining the suitability of
the Investor as a purchaser of Shares, and shall survive their
purchase. In addition, the Investor undertakes to notify the Company
immediately of any change in any representation or warranty of the
Investor set forth herein.
4. INDEMNIFICATION. The Investor understands that the offer and sale of
Shares to him is being made, and the sale of Shares will be made, in
reliance upon the acknowledgments and agreements of the Investor set forth
in Section 2 and the representations and warranties of the Investor set
forth in Section 3. The Investor agrees to provide, if requested, any
additional information that may reasonably be required to determine the
eligibility of the Investor to purchase Shares. The Investor 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 the Investor contained in this Agreement
or in any other document provided by the Investor to the Company in
connection with the Investor's offer to purchase Shares. The Investor
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 the Investor in violation
of the Securities Act or other applicable law. Notwithstanding any
provision of this Agreement, the Investor does not waive any rights
granted to him under applicable securities laws. The Investor 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.
5. ARBITRATION. Any dispute or controversy arising under or in 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 the Investor. 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.
6. SUITABILITY. The Investor warrants and represents to the Company that the
following information supplied by the Investor pursuant to Section 3 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.
[X] (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.
7. GENERAL. This Agreement (i) shall be binding on the Investor and the
heirs, personal representatives, successors and permitted assigns of the
Investor, (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 the
Investor as a shareholder in the Company.
8. NOTICES. Any notice, request, instruction or other document to be 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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Attention: President
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Investor: At the last address indicated on the Company's
books and records.
9. ASSIGNMENT. The Investor agrees that neither this Agreement nor any
rights which may accrue to him hereunder may be transferred or assigned.
10. ENTIRE AGREEMENT. This Agreement contains the entire understanding of 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.
11. CONFIDENTIALITY. The Investor acknowledges that all Confidential
Information (as defined herein) shall be and remain the exclusive property
of the Company at all times. The Investor hereby agrees to keep in strict
confidence all Confidential Information. The Investor 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 the Investor, whether or not
reduced to writing and whether or not conceived, originated, discovered or
developed in whole or in part by the Investor, 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.
12. PRONOUNS; HEADINGS. All pronouns and any variations thereof shall be
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.
13. SEVERABILITY. In the event that any provision contained herein shall 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.
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IN WITNESS WHEREOF, the Investor has executed this Subscription Agreement
as of the day and year indicated below.
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Subscriber Name (Please print) if different from Residence
Address: _______________________________
5433 Westheimer, Suite 500___________ ________________________________________
Residence or ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ 77056_________________ ________________________________________
City, State, Zip Code City, State, Zip Code
________________________________________
Signature of Subscriber
State in which Subscription Agreement was signed, if other than state of
residence or office: _____Texas_____
TOTAL NUMBER OF SHARES SUBSCRIBED: __________315,000__________
TOTAL PURCHASE PRICE: __________$22,050__________
Date of execution by Subscriber: _______April 25, 2001______
Social Security No.: ___________________________
[Must be completed.]
ACCEPTED this 25th day of April, 2001:
INSYNQ, INC.
By:
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Chief Executive Officer
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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.
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