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Exhibit 4.27
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement"), dated as of the
22nd day of September, 2000 is entered into between INSYNQ, Inc., a Delaware
corporation (the "Company"), Interactive Information Systems Corporation, a
Washington corporation and Charles Benton (each a "Holder" and collectively the
"Holders").
WHEREAS, there are currently outstanding 20,354,348 shares of Common
Stock of the Company;
WHEREAS, pursuant to an Agreement dated as of the date hereof (the
"Release"), by and among the Company and the Holders, the Holders have been
granted registration rights for their currently held shares ("Shares") of common
stock, $0.001 par value per share (the "Common Stock"), of the Company as of the
date hereof; and
WHEREAS, in order to insure liquidity in the future the Holders wish to
have the Shares registered and the Company wishes to grant such registration
rights.
NOW, THEREFORE, in consideration of the mutual covenants and
obligations hereinafter set forth, the parties hereto, intending to be legally
bound, agree as follows:
DEFINITIONS. As used herein, the following terms have the following
meanings:
"Register," "registered" and "registration" refer to a registration
effected by filing a registration statement in compliance with the Securities
Act of 1933, as amended (the "Securities Act") and the declaration or ordering
by the Securities and Exchange Commission (the "SEC") of effectiveness of the
registration statement, other than any registration statement on Form S-8, Form
S-4 or as otherwise contemplated under Rule 145 of the Act.
1. DEMAND REGISTRATION RIGHTS
(a) Holders each have the right to one demand
registration to have their Shares owned as of the date hereof included
on the Company's registration statement on Form SB-2 (the "Registration
Statement") to be filed with the SEC on or about September 25, 2000.
Subject to the registration procedures outlined in Section (i) below
the Company shall:
(i) Prepare and file with the SEC a Registration
Statement on Form SB-2 registering resales of the Shares by the Holders
from time to time through the over-the-counter quotation system of the
Nasdaq Market or the facilities of any national securities exchange or
the Nasdaq National Market if the Common Stock is then listed or quoted
thereon or in privately-negotiated transactions. The Registration
Statement shall
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register all of the Shares requested by the Holders to be registered.
The Company hereby agrees that it shall (a) prepare and file such
post-effective amendments to the initial Registration Statement and/or
such additional Registration Statements as may be necessary to ensure
that at all times there shall be registered with the SEC for resale by
the Holders from time to time as provided in this Section 1 sufficient
shares of Common Stock to account for all Shares requested by the
Holders to be registered and (b) cause such post-effective amendments
to the initial Registration Statement and/or such additional
Registration Statements to be declared effective as soon as possible
after the filing thereof.
(ii) The Company agrees to use reasonable best
efforts to keep the Registration Statement(s) continuously effective
and usable for resale of Registration Securities until two years (the
"Effectiveness Period") from the date hereof or such shorter period
which will terminate when all Shares are freely tradable without
registration or restriction (under Rule 144(k) promulgated under the
Securities Act or otherwise) ("Registrable Securities").
(b) PIGGYBACK REGISTRATION. The Company shall notify
Holders in writing at least ten (10) days prior to the filing of any
registration statement under the Securities Act for purposes of a
public offering of securities of the Company (including, but not
limited to, registration statements relating to secondary offerings of
securities of the Company, but excluding registration statements
relating to employee benefit plans with respect to corporate
reorganizations, acquisitions or other transactions under Rule 145 of
the Securities Act) and will afford each such Holder an opportunity to
include in such registration statement all or part of such Registrable
Securities held by such Holder. Each Holder desiring to include in any
such registration statement all or any part of the Registrable
Securities held by it shall, within five (5) days after the
above-described notice from the Company, so notify the Company in
writing. Such notice shall state the intended method of disposition of
the Registrable Securities by such Holder. If a Holder decides not to
include all of its Registrable Securities in any registration statement
thereafter filed by the Company, such Holder shall nevertheless
continue to have the right to include any Registrable Securities in any
subsequent registration statement or registration statements as may be
filed by the Company with respect to offerings of its securities, all
upon the terms and conditions set forth herein.
(i) UNDERWRITING
A. If the registration statement under
which the Company gives notice under this Section 1(b) is for
an underwritten offering, the Company shall so advise the
Holders of Registrable Securities. In such event, the right of
any such Holder to be included in a registration pursuant to
this Section 1(b) shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting to the
extent provided herein. All Holders proposing to distribute
their Registrable Securities through such underwriting shall
enter into an underwriting agreement in
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customary form with the underwriter or underwriters selected
for such underwriting by the Company.
B. Notwithstanding any other provision
of the Agreement, if the underwriter determines in good faith
that marketing factors require a limitation of the number of
shares to be underwritten, the number of shares that may be
included in the underwriting shall be allocated, first, to the
Company; second, to the Holders on a pro rata basis based on
the total number of Registrable Securities and other
securities subject to demand registration rights held by the
Holders and other holders of demand registration rights; and
third, to any other stockholder of the Company with piggyback
registration rights (other than a Holder) on a pro rata basis.
No such reduction shall reduce the securities being offered by
the Company for its own account to be included in the
registration and underwriting.
(ii) RIGHT TO TERMINATE REGISTRATION. The Company
shall have the right to terminate or withdraw any registration
initiated by it under this Section 1(b) prior to the effectiveness of
such registration whether or not any Holder has elected to include
securities in such registration. The registration expenses of such
withdrawn registration shall be borne by the Company in accordance with
Section 3 hereof.
(c) REGISTRATION PROCEDURES
In connection with the Company's obligation to file a
Registration Statement as provided in Section 1 hereof, the Company
will as expeditiously as possible:
(i) Prepare and file with the SEC such
amendments and post-effective amendments to the Registration Statement,
and such supplements to the Prospectus, as may be required by the
rules, regulations or instructions applicable to the registration form
utilized by the Company or by the Securities Act or rules and
regulations thereunder for shelf registrations or otherwise necessary
to keep the Registration Statement effective for the Effectiveness
Period and cause the Prospectus as so supplemented to be filed pursuant
to Rule 424 under the Securities Act; and comply with the provisions of
the Securities Act with respect to the disposition of all securities
covered by such Registration Statement during the applicable period in
accordance with the methods of disposition by the sellers thereof set
forth in such Registration Statement or supplement to the Prospectus;
(ii) Notify the Holders of Registrable Securities
promptly, and confirm such advice in writing,
(a) when the Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and,
with respect to the Registration Statement or any
post-effective amendment, when the same has become effective,
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(b) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or
the initiation of any proceedings for that purpose, and
(c) of the receipt by the Company of any
notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any
proceeding for such purpose;
(iii) make every reasonable effort to obtain the
withdrawal of any order suspending the effectiveness of the
Registration Statement at the earliest possible moment;
(iv) furnish, without charge to Holders, at least
one conformed copy of the Registration Statement and any post-effective
amendment thereto, including financial statements and schedules, all
documents incorporated therein by reference and all exhibits (including
those incorporated by reference);
(v) deliver to Holders without charge, as many
copies of the Prospectus (including each preliminary prospectus) and
any amendment or supplement thereto as Holders may reasonably request;
the Company consents to the use of the Prospectus or any amendment or
supplement thereto by Holders in connection with the offering and sale
of the Registrable Securities covered by the Prospectus or any
amendment or supplement thereto;
(vi) use its reasonable efforts to cause the
Registrable Securities covered by the Registration Statement to be
registered with or approved by such governmental agencies or
authorities as may be necessary to enable the Holders thereof to
consummate the disposition of such Registrable Securities in such
jurisdictions as the Holders may reasonably specify in response to
inquiries to be made by the Company, provided that the Company will not
be required to qualify generally to do business in any jurisdiction
where it is not then so qualified or to take any action which would
subject it to general service of process in any such jurisdiction where
it is not then so subject;
(vii) if any event shall occur as a result of
which it is necessary, in the opinion of counsel for the Company, to
amend or supplement the Prospectus in order to make the Prospectus not
misleading in the light of the circumstances existing at the time it is
delivered by Holders, prepare a supplement or post-effective amendment
to the Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document
so that, as thereafter delivered to the Holders of the Registrable
Securities, the Prospectus will not contain an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading;
(viii) make available for inspection during normal
business hours by a representative of the Holders and any attorney or
accountant retained by such
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representative, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's
officers, directors and employees to supply all information reasonably
requested by Holders or any such attorney or accountant in connection
with the Registration Statement; provided that all such records,
information or documents shall be kept confidential by Holders or any
such attorney or accountant unless disclosure of such records,
information or documents is required by court or administrative order
or is generally available to the public other than as a result of
disclosure in violation of this paragraph (viii);
(ix) otherwise use its best efforts to comply
with all applicable rules and regulations of the SEC, and make
generally available to its security holders an earnings statement
satisfying the provisions of Section 11(a) of the Securities Act (in
accordance with Rule 158 thereunder or otherwise), no later than 45
days after the end of the 12-month period (or 90 days, if such period
is a fiscal year) beginning with the first month of the Company's first
fiscal quarter commencing after the Effective Date, which statements
shall cover said 12-month period;
(x) if at any time the Company declares a
"black-out" period (the Company will not declare any such "black-out"
periods in excess of twenty business days during any twelve month
period, unless otherwise required), notify Holders that the use of the
Prospectus must be discontinued.
Holders agree, as a condition to the registration obligations
with respect to such Holders provided herein, to furnish to the Company
such information regarding the distribution of such Shares as the
Company may from time to time reasonably request in writing.
Holders agree that, upon receipt of any notice from the
Company described in this paragraph 1(b), Holders will forthwith
discontinue disposition of Registrable Securities until Holders'
receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 1(b)(vii) hereof, or until it is advised in
writing by the Company (which notice the Company shall give as promptly
as possible), that the use of the Prospectus may be resumed, and has
received copies of any additional or supplemental filings which are
incorporated by reference in the Prospectus, and if so directed by the
Company, Holders will deliver to the Company (at the Company's expense)
all copies, other than permanent file copies then in Holder's
possession, of the Prospectus covering such Registrable Securities
current at the time of receipt of such notice.
2. COOPERATION BY THE HOLDERS.
(a) The Holders will furnish to the Company in writing
such information about the Holders as the Company may reasonably
require from the Holders in connection with the preparation of the
registration statement (and the prospectus included therein).
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(b) The Holders will not (until further notice) effect
sales of Shares after receipt of telegraphic or written notice from the
Company to suspend sales to permit the Company to correct or update a
registration statement or prospectus; the Company agrees to use
commercially reasonable efforts to promptly prepare and file any such
correction or update. At the end of the Effectiveness Period (and any
extensions thereof), the Holders shall discontinue sales of Shares
pursuant to the registration statement upon receipt of notice from the
Company of its intention to remove from registration the Shares covered
by the registration statement which remain unsold, and the Holders
shall notify the Company of the number of Shares registered which
remain unsold immediately upon receipt of the notice from the Company.
(c) If required by the Company, Holders agree to provide
the Company with written representations of fact about the Holders
reasonably necessary to permit the Company and its counsel to conclude
that all sales of Shares made in connection with the registration were
made in compliance with all applicable securities laws, including,
without limitation, the prospectus delivery requirements of Section 5
of the Securities Act and any applicable restrictions of Rules 10b-6
and 10b-7 of the Securities Exchange Act of 1934, as amended.
(d) In connection with the sale of any Shares under any
applicable Registration Statement, the Holders will comply with any and
all requirements of Rule 144 promulgated under the Securities Act
pursuant to the definition therein of the term "affiliate" and the
application of such term to each Holder.
If any Registration is underwritten, Holders shall (i) agree to sell their
Shares on the basis provided in any underwriting arrangement approved by the
Company and (ii) complete and execute all questionnaires, powers of attorney,
indemnities, indemnity agreements, and other documents requested thereunder;
provided that Holders shall only be required to make representations and
warrants regarding Holders and their intended method of distribution.
3. EXPENSES OF REGISTRATION.
All expenses incurred in effecting any registration pursuant
to this Agreement including, without limitation, all registration and
filing fees, printing expenses, expenses of compliance with blue sky
laws, fees and disbursements of counsel for the Company and expenses of
any audits incidental to or required by any such registration, shall be
borne by the Company, except that (i) all underwriting discounts and
commissions attributable to Shares being sold by the Holders, and (2)
any cost or expenses of Holders' individual accountants or attorneys or
other costs or expenses incurred in their discretion shall be borne by
the Holders. Without limiting the generality of the foregoing, the
Company shall pay all of the following registration expenses: (a) the
Company's internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), (b) to the extent not already incurred, the fees
and expenses incurred in connection with the listing on an exchange,
the Nasdaq Stock Market, or inter-dealer quotation system of the
Shares, (c) all registration and filing fees, (d) fees and expenses of
compliance with securities or blue sky laws (including fees
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and disbursements of counsel in connection with blue sky qualifications
of the Shares), (e) printing expenses and engraving expenses, (f) fees
and disbursements of counsel to the Company and customary fees and
expenses for independent certified public accountants retained by the
Company, and (g) the fees and expenses of any special experts retained
by the Company. Holders shall be responsible for the fees and expenses
incurred by this agreement, including but not limited to costs of
Holders' counsel.
4. NOTICES.
Any and all notices, designations, consents, offers,
acceptances or other communications provided for herein (each a
"Notice") shall be given in writing by overnight courier, telegram or
telecopy which shall be addressed, or sent, to the Company as follows
(or such other address as the Company or the Holders may specify to the
Company and all other parties by Notice):
INSYNQ, Inc.
1101 Broadway Plaza
Tacoma, Washington 98402
Attn: President
Telecopy: (253) 404-3842
and to the Holders at:
Interactive Information Systems Corporation
C/o Mark Patterson, Vandeberg, Johnson & Gandara
Post Office Box 1315
Tacoma, WA 98401-1315
Telecopy: (253) 383-6377
Charles Benton
Post Office Box 1996
Tacoma, WA 98401-1996
Telecopy: (253) 404-3854
All Notices shall be deemed effective and received (a) if given by telecopy,
when the telecopy is transmitted to the telecopy number specified above and
receipt thereof is confirmed; (b) given by overnight courier, on the business
day immediately following the date on which the Notice is delivered to a
reputable overnight courier service; or (c) if given by telegram, when the
Notice is delivered at the address specified above.
5. AMENDMENT.
The terms of this Agreement may not be amended, modified or
otherwise revised except by the written consent of the Company and each
of the Holders.
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6. COUNTERPARTS; FACSIMILE EXECUTION.
This Agreement may be executed in two or more counterparts and
each counterpart shall be deemed to be an original and which
counterparts together shall constitute one and the same agreement of
the parties hereto. Each party to this Agreement agrees that it will be
bound by its own telecopy signature and that it accepts the telecopy
signature of each other party to this Agreement.
7. CHOICE OF LAW.
THIS AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF WASHINGTON WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF
LAWS THEREOF AND WILL, TO THE MAXIMUM EXTENT PRACTICABLE, BE DEEMED TO
CALL FOR PERFORMANCE IN PIERCE COUNTY, WASHINGTON.
8. ENTIRE AGREEMENT.
This Agreement contains the entire understanding of the
parties hereto respecting the subject matter hereof and supersedes all
prior agreements, discussions and understandings with respect thereto.
9. CUMULATIVE RIGHTS.
The rights of the parties under this Agreement are cumulative
and in addition to all similar and other rights of the parties under
other agreements.
10. SEVERABILITY AND REFORMATION.
If any provision of this Agreement is held to be illegal,
invalid or unenforceable under any present or future law, such
provision shall be fully separable, and this Agreement shall be
construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part thereof, the remaining provisions
of this Agreement shall remain in full force and effect and shall not
be affected by the illegal, invalid or unenforceable provision or by
its severance therefrom, and in lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically as a part
of this Agreement, a legal, valid and enforceable provision as similar
in terms to such illegal, invalid or unenforceable provision as may be
possible, and the parties hereto request the court or any arbitrator to
whom disputes relating to this Agreement are submitted to reform the
otherwise illegal, invalid or unenforceable provision in accordance
with this Section 10.
11. ARBITRATION.
IN THE EVENT OF A DISPUTE HEREUNDER WHICH CANNOT BE RESOLVED
BY THE PARTIES AMONG THEMSELVES, SUCH DISPUTE SHALL
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BE SETTLED BY ARBITRATION IN ACCORDANCE WITH THE COMMERCIAL ARBITRATION
RULES OF THE AMERICAN ARBITRATION ASSOCIATION AND JUDGMENT ON THE AWARD
RENDERED BY THE ARBITRATION PANEL (WHICH SHALL BE A ONE PERSON PANEL)
MAY BE ENTERED IN ANY COURT OR TRIBUNAL OF COMPETENT JURISDICTION. THE
COMPANY AND THE HOLDERS AGREE THAT ALL ARBITRATIONS OCCURRING UNDER
THIS SECTION 11 SHALL BE HELD IN THE CITY OF TACOMA, WASHINGTON.
12. INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. The Company will
indemnify Holders against any and all claims, losses, damages, and
liabilities (or actions in respect thereof) arising out of or based on
any untrue statement (or alleged untrue statement) of any material fact
contained in any prospectus, offering circular or other document
incident to any registration, qualification or compliance (or in any
related registration statement, notification or the like) or any
omission (or alleged omission) to state therein any material fact
required to be stated therein or necessary to make the statements
therein not misleading, or any violation by the Company of any rule or
regulation promulgated under the Securities Act applicable to, and
relating to any action or inaction required of, the Company in
connection with any such registration, qualification or compliance, and
the Company will reimburse Holders for any legal and any other expenses
reasonably incurred by them in connection with investigating or
defending any such claim, loss, damage, liability or action; provided,
however, that the Company will not be liable in any such case to the
extent that any such claim, loss, damage or liability arises out of or
is based on any untrue statement or omission based upon written
information furnished to the Company by Holders for use in such
prospectus, offering circular or other document.
(b) INDEMNIFICATION BY HOLDERS. Each Holder will, if
securities held by such Holder are included in the securities as to
which such registration qualification or compliance is being effected,
indemnify the Company and its officers and directors and each entity or
individual who controls the Company (within the meaning of the
Securities Act) and their respective successors in title and assigns
against any and all claims, losses, damages and liabilities (or actions
in respect thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of any material fact contained in any
prospectus, offering circular or other document incident to any
registration, qualification or compliance (or in any related
registration statement, notification or the like) or any omission (or
alleged omission) to state therein any material fact required to be
stated therein or necessary to make the statement therein not
misleading, and such Holder will reimburse the Company and its
officers, directors, and controlling entities or individuals for any
legal and any other expenses reasonably by them incurred in connection
with investigating or defending any such claim, loss, damage, liability
or action; provided, however, that this paragraph (b) shall apply only
if (and only to the extent that) such statement or omission was made in
reliance upon written information furnished to the Company in an
instrument duly executed by such Holder or any of its officers,
directors, or controlling entities or individuals and stated to be
specifically for use in such prospectus, offering circular or other
document (or related registration statement,
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notification or the like) or any amendment or supplement thereto,
provided further that the indemnity agreement contained in this Section
12(b) shall not apply to amounts paid in settlement of any such claims,
losses, damages, liabilities and actions if such settlement is effected
without the consent of the Holder, which such consent shall not be
unreasonably withheld provided further, that in no event shall any
indemnity under this Section 12(b) exceed the net proceeds from the
offering reviewed by such Holder.
(c) INDEMNIFICATION PROCEEDINGS. Each party entitled to
indemnification pursuant to this Section 12 (the "Indemnified Party")
shall give notice to the party required to provide indemnification
pursuant to this Section 12 (the "Indemnifying Party") promptly after
such Indemnified Party acquires actual knowledge of any claim as to
which indemnity may be sought, and shall permit the Indemnifying Party
(at its expense) to assume the defense of any claim or any litigation
resulting therefrom; provided that counsel for the Indemnifying Party,
who shall conduct the defense of such claim or litigation, shall be
acceptable to the Indemnified Party, and the Indemnified Party may
participate in such defense at such party's expense; and provided,
further, that the failure by any Indemnified Party to give notice as
provided in this paragraph (c) shall not relieve the Indemnifying Party
of its obligations under Section 12 except to the extent that the
failure results in a failure of actual notice to the Indemnifying Party
and such Indemnifying Party is damaged solely as a result of the
failure to give notice. No Indemnifying Party, in the defense of any
such claim or litigation, shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a
release from all liability in respect to such claim or litigation. The
reimbursement required by this Section 12 shall be made by periodic
payments during the course of the investigation or defense, as and when
bills are received or expenses incurred.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
INSYNQ, INC.
a Delaware corporation
By: /s/ JOHN P. GORST
-------------------------------
Name: John P. Gorst
Title: Chairman CEO
INTERACTIVE INFORMATION
SYSTEMS CORPORATION
a Washington corporation
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By: /s/ M. CARROLL BENTON
-------------------------------
Name: M. Carroll Benton
Title: Shareholder
CHARLES BENTON
/s/ CHARLES BENTON
-----------------------------------
Charles Benton, an individual
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