Document:

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                                                                   EXHIBIT 10.42

                                   AGREEMENT
                                   ---------

STATE OF WASHINGTON      (S)
                         (S)       KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF PIERCE         (S)

     WHEREAS, on September 16, 1998, Charles Benton sold 2,750,000 shares of
common stock in Insynq, Inc., a Washington corporation ("Insynq I") (the "Gorst
Shares") to John P. Gorst ("Gorst") in exchange for that certain Stock Purchase
Promissory Note in the original principal amount of $65,000, which note was made
due and payable on September 15, 2003 (the "Gorst Note"); and

     WHEREAS, the Gorst Note was secured by the Gorst Shares as evidenced by
that certain Pledge of Shares agreement and that certain Assignment Separate
from Certificate, both of which were executed by Gorst on September 16, 1998
(collectively, the "Gorst Pledge"); and

     WHEREAS, on February 18, 2000, Insynq I sold substantially all of its
assets to Xcel Management, Inc. ("Xcel"), a public company (the "Xcel
Transaction"); and

     WHEREAS, on August 3, 2000, Xcel merged into its wholly owned
subsidiary, Insynq, Inc., a Delaware corporation (the "Subsidiary Merger"),
leaving Insynq, Inc., a Delaware corporation as the sole surviving entity
("Insynq II").

     WHEREAS, prior to the Xcel Transaction, Mr. Benton agreed to accept and did
accept 65,000 shares of Insynq I common stock from Mr. Gorst (the "Gorst Release
Shares") as payment in full satisfaction of the Gorst Note; and

     WHEREAS, 65,000 shares of Insynq II representing the Gorst Release Shares
have been issued to Mr. Benton; and

AGREEMENT - Page 1
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     WHEREAS, Mr. Benton has agreed as a result of the payment of the Gorst Note
to return to Gorst the originals of the Gorst Note, the Gorst Pledge, and the
certificate representing the Gorst Shares; and

     WHEREAS, a suit has been filed by Kathleen McHenry against Gorst, Carroll
Benton, Insynq I and Insynq II (the "McHenry Suit") relating to shares of stock
in Insynq I previously owned by Patrick McHenry and now owned by Gorst (the
"McHenry Shares");

     WHEREAS, Mr. and Mrs. Benton have agreed to accept an additional 150,000
shares of Insynq II shares from John Gorst (the "Gorst Additional Release
Shares") as consideration for giving Gorst a general release of any and all
alleged rights, claims, causes of action, duties and obligations arising in
whole or in part prior to the execution of this agreement, including, but not
limited to a release of any claim to any portion of the McHenry Shares either
may allege to have, the release of all obligations and duties owned to Mr. or
Mrs. Benton from Gorst relating to or arising out of the McHenry Suit, as well
as additional consideration for the agreements between Interactive Information
Systems Corporation, Mr. and Mrs. Benton and Insynq II as reflected in separate
Agreements executed by and between Interactive, Mr. and Mrs. Benton and Insynq
on September 22, 2000.

     NOW THEREFORE, Mr. Benton, Mrs. Benton, and Gorst state as follows:

     1.   TRANSFER OF GORST SHARES

     Gorst shall within five business days of the execution of this Agreement,
transfer to Mr. Benton and Mr. Benton shall at that time accept 150,000 shares
of Insynq II representing the Gorst Additional Release Shares. Gorst's timely
tender of the Gorst Additional Release Shares shall be sufficient to invoke the
releases contained herein regardless of the actual timing of the acceptance of
such shares by Mr. Benton. Mr. Benton acknowledges that he has previously

AGREEMENT - Page 2
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received from Gorst 65,000 shares of Insynq II representing the Gorst Release
Shares. Mr. Benton acknowledges and agrees that he is taking all such shares
(the Gorst Release Shares and the Gorst Additional Release Shares), without a
view to distribution, that such shares are "restricted securities" which may not
be resold without registration or an exemption from the restrictions, and that
his shares will contain a legend referring to such restrictions.

     2.  RELEASE OF GORST.
         -----------------

     A.  In exchange for the prior transfer of the Gorst Release Shares to Mr.
Benton and upon the tendering of the Gorst Additional Release Shares to Mr.
Benton, of which Mr. Benton will not withhold receipt, Mr. and Mrs. Benton and
each of their affiliates or entities owned or controlled by either hereby fully
and finally release, acquit and forever discharge, to the fullest extent
permitted by applicable law, Gorst and his representatives, successors and
assigns of and from any and all rights, claims, causes of action, duties and
obligations which may have arisen or accrued in whole or in part prior to the
execution of this Agreement, including, but not limited to those rights, claims,
causes of action, duties or obligations relating to or arising out of (1) the
Gorst Note, including, but not limited to any claim for further payment, the
Gorst Note having now been paid in full; (2) the McHenry Shares, including, but
not limited to any claim Mr. or Mrs. Benton may allege to have directly or
indirectly to any portion of the McHenry Shares; (3) any claim Mr. or Mrs.
Benton may alleged to have in or to any other shares now or previously owned or
held in any capacity by Gorst or any obligation by Gorst to issue or transfer
any additional shares of Insynq II to either of them for any reason, other than
the obligation by Gorst to transfer 150,000 shares to Mr. Benton as specifically
set forth specifically in 1. above; (4) Mr. Benton's claim that he executed a
waiver of his rights relating to a forward stock split of Insynq I's shares in
or about January, 2000 (in a ratio of approximately 1.4 to 1) under duress and
that

AGREEMENT - Page 3
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he is therefore entitled to any additional shares, damages or other compensation
from Gorst as a result of his allegedly executing such waiver under duress; or
(5) any claim for attorneys' fees incurred by Mr. or Mrs. Benton relative to any
claim released herein. Furthermore, upon Gorst's and Insynq's settlement of the
McHenry lawsuit, and such settlement includes a release of any and all claims by
McHenry against Mrs. Benton, then Mr. and Mrs. Benton agree to fully and finally
release, acquit and forever discharge, to the fullest extent permitted by
applicable law, Gorst and his representatives, successors and assigns of and
from any and all rights, claims, causes of action, duties and obligations
relating to or arising out of the McHenry Suit, including, but not limited to
any duty to defend or indemnify Mr. or Mrs. Benton or to reimburse Mr. or Mrs.
McHenry for any costs, expenses or attorneys' fees incurred by either of them in
the McHenry Suit.

     B.   Mr. Benton shall return to Gorst, within five (5) business days of the
execution of this Agreement, the original Gorst Note, prominently marked as
"Paid In Full," and will otherwise return or destroy all copies of the Gorst
Note in his possession, custody or control. Mr. Benton shall also return to
Gorst, within five (5) business days of the execution of this Agreement, the
original Gorst Pledge and the original certificate of Insynq I representing the
Gorst Shares and shall otherwise return or destroy all copies of the Gorst
Pledge and the certificate representing the Gorst Shares.

     3.   GOVERNING LAW. The parties hereto agree that the validity, effect, and
          -------------
construction of this Agreement shall be governed by the laws of the State of
Washington, without regard to any conflict of laws provisions.

AGREEMENT - Page 4
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     4.   OWNERSHIP OF CLAIMS. Each of the parties hereto represents and
          -------------------
warrants to each of the other parties that: (i) they have not assigned,
transferred or abandoned any of the claims released herein, and (ii) they are
the sole owners of the claims released herein.

     5.   CONSIDERATION. Each of the parties hereto acknowledge, warrant, and
          -------------
agree that each have received adequate consideration for their execution of this
Agreement.

     6.   STRICT CONSTRUCTION. This Agreement shall not be strictly construed
          -------------------
against any the parties hereto.

     7.   COUNTERPARTS. This Agreement may be executed in one or more
          ------------
counterparts, each of which shall be deemed an original.

     8.   TITLES. Headings and Sections of this Agreement are inserted for
          ------
convenience only and shall not affect the meaning or construction of any of the
terms of this Agreement.

     9.   NO DURESS / REPRESENTATION BY COUNSEL. Each of the parties hereto
          -------------------------------------
represent and warrant that they have entered into this Agreement voluntarily and
not by reasons of any fraud, duress, undue influence or mistake. Each of the
parties hereto further represent and warrant that they have been represented by
counsel of their own selection with respect to the negotiation of the terms of
this Agreement.

    10.   FURTHER INSTRUMENTS. The parties hereto agree they will each execute
          -------------------
such other and further instruments and documents as may become necessary to
carry out the agreements set forth herein.

    11.   LEGAL CONSTRUCTION. If any one or more of the provisions contained in
          ------------------
this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision hereof and this

AGREEMENT - Page 5
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Agreement shall be construed as if such invalid, illegal, or unenforceable
provision had never been contained herein.

     12.  ACKNOWLEDGMENT. Each of the parties hereto acknowledge that each has
          --------------
read this Agreement and that each fully knows, understands, and appreciates this
Agreement and executes this Agreement voluntarily and of their own free will and
by executing this Agreement signifies their assent to and willingness to be
bound by its terms.

     IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have
executed this Agreement on the date set forth below.

                                      By:  /s/ Charles F. Benton
                                          ---------------------------------
                                          CHARLES BENTON

STATE OF WASHINGTON (S)
                    (S)
COUNTY OF PIERCE    (S)

     Before me, the undersigned authority, on this day personally appeared
Charles Benton, known to me to be the individual whose name is subscribed to the
foregoing instrument through a current identification card issued by the federal
government or any state government that contains the photograph and signature of
the acknowledging person, and acknowledged to me that he executed the same for
the purposes and consideration therein expressed.

     Given under my hand and seal of office this 22nd day of September, 2000.

                                         Susan J. Hudson
                                      ------------------------------------
                                       Notary Public State of Washington
                                         Susan J. Hudson
                                      ------------------------------------
                                      Printed Name of Notary Public
                                      My commission expires: 1-14-2002

AGREEMENT - Page 6
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                                                         By:  /s/ Carroll Benton
                                                            --------------------
                                                            CARROLL BENTON

STATE OF WASHINGTON (S)
                    (S)
COUNTY OF PIERCE    (S)

     Before me, the undersigned authority, on this day personally appeared
Carroll Benton, known to me to be the individual whose name is subscribed to the
foregoing instrument through a current identification card issued by the federal
government or any state government that contains the photograph and signature of
the acknowledging person, and acknowledged to me that she executed the same for
the purposes and consideration therein expressed.

     Given under my hand and seal of office this 22nd day of September, 2000.

                                                     Susan J. Hudson
                                               ---------------------------------
                                               Notary Public State of Washington

                                                 SUSAN J. HUDSON
                                               ---------------------------------
                                               Printed Name of Notary Public
                                               My commission expires:  1-14-2002

                                                   /s/ John P. Gorst
                                               By:------------------------------
                                                  JOHN P. GORST

STATE OF WASHINGTON (S)
                    (S)
COUNTY OF PIERCE    (S)

     Before me, the undersigned authority, on this day personally appeared
John P. Gorst, known to me to be the individual whose name is subscribed to the
foregoing instrument through a current identification card issued by the federal
government or any state government that contains the photograph and signature of
the acknowledging person, and acknowledged to me that he executed the same for
the purposes and consideration therein expressed.

     Given under my hand and seal of office this 22nd day of September, 2000.

                                                     Susan J. Hudson
                                               ---------------------------------
                                               Notary Public State of Washington

                                                 SUSAN J. HUDSON
                                               ---------------------------------
                                               Printed Name of Notary Public
                                               My Commission Expires:  1-14-2002

AGREEMENT - Page 7
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                                                                   EXHIBIT 10.43

                             EMPLOYMENT AGREEMENT

          This Employment Agreement (this "Agreement") is entered into as of
September 18, 2000 ("Effective Date") between INSYNQ, INC, a Delaware
corporation with its principal offices located at 1101 Broadway Plaza, Tacoma,
Washington 98402 (the "Company"), and Stephen C. Smith, a resident of Carlsbad,
California (the "Employee").

     In consideration of the promises and the terms and conditions set forth in
this Agreement, the parties agree as follows:

     1.   Position. During the term of this Agreement, the Company will employ
          --------
the Employee, and the Employee will serve the Company in the capacity of Chief
Financial Officer.  The Employee will report directly to John P. Gorst, the
Company's Chief Executive Officer and Chairman.

     2.   Duties. The Employee will perform duties described in Exhibit "A,"
          ------
attached to this Agreement and incorporated by this reference, together with
such additional reasonably related duties assigned by the Chief Executive
Officer or Board of Directors, none of which may include relocation from his
current residence in San Diego County, California.

     3.   Exclusive Service. Except with respect to the matters specified below,
          -----------------
Employee will devote substantially all his working time and efforts to the
business and affairs of the Company.  The foregoing shall not, however, preclude
the Employee:  (a) from engaging in appropriate civic, charitable or religious
activities; (b) from serving on the boards of directors of other entities, with
the consent of the Company, which consent shall not be unreasonably withheld;
(c) from providing incidental assistance to family members on matters of family
business, so long as the foregoing activities and service do not conflict with
the Employee's responsibilities to the Company; (d) complete, manage and
supervise Employee's personal business affairs including, but not limited to,
two real estate projects/syndications common known as the "Tennessee land
development" and the "Riverside airport hangar project".  (e) complete open and
pending matters with Employee's former employer, Tradeway Securities Group, Inc.
("Tradeway") including, but not limited to, KMS Energy, Inc.; and, (f)
consulting to Alternative Logistic Technologies, Inc., an entity in which
Employee has a significant equity position and financial interest.  Company
further acknowledges that Employee is a "licensed person" with the NASD and that
Employee's U-4 is currently lodged with Tradeway where it will remain unless
changed by Employee.  Company agrees to allow Employee to keep his securities
licenses active with Tradeway or another NASD member broker-dealer during the
term hereof.

                                       1

<PAGE>

                                                                   EXHIBIT 10.47

                             EMPLOYMENT AGREEMENT

          This Employment Agreement (this "Agreement") is entered into as of
September 18, 2000 ("Effective Date") between INSYNQ, INC, a Delaware
corporation with its principal offices located at 1101 Broadway Plaza, Tacoma,
Washington 98402 (the "Company"), and Stephen C. Smith, a resident of Carlsbad,
California (the "Employee").

     In consideration of the promises and the terms and conditions set forth in
this Agreement, the parties agree as follows:

     1.   Position. During the term of this Agreement, the Company will employ
          --------
the Employee, and the Employee will serve the Company in the capacity of Chief
Financial Officer.  The Employee will report directly to John P. Gorst, the
Company's Chief Executive Officer and Chairman.

     2.   Duties. The Employee will perform duties described in Exhibit "A,"
          ------
attached to this Agreement and incorporated by this reference, together with
such additional reasonably related duties assigned by the Chief Executive
Officer or Board of Directors, none of which may include relocation from his
current residence in San Diego County, California.

     3.   Exclusive Service. Except with respect to the matters specified below,
          -----------------
Employee will devote substantially all his working time and efforts to the
business and affairs of the Company.  The foregoing shall not, however, preclude
the Employee:  (a) from engaging in appropriate civic, charitable or religious
activities; (b) from serving on the boards of directors of other entities, with
the consent of the Company, which consent shall not be unreasonably withheld;
(c) from providing incidental assistance to family members on matters of family
business, so long as the foregoing activities and service do not conflict with
the Employee's responsibilities to the Company; (d) complete, manage and
supervise Employee's personal business affairs including, but not limited to,
two real estate projects/syndications common known as the "Tennessee land
development" and the "Riverside airport hangar project".  (e) complete open and
pending matters with Employee's former employer, Tradeway Securities Group, Inc.
("Tradeway") including, but not limited to, KMS Energy, Inc.; and, (f)
consulting to Alternative Logistic Technologies, Inc., an entity in which
Employee has a significant equity position and financial interest.  Company
further acknowledges that Employee is a "licensed person" with the NASD and that
Employee's U-4 is currently lodged with Tradeway where it will remain unless
changed by Employee.  Company agrees to allow Employee to keep his securities
licenses active with Tradeway or another NASD member broker-dealer during the
term hereof.

                                       1
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     4.   Term of Agreement.
          -----------------

          4.1  Initial Term. The Company agrees to continue the Employee's
               ------------
employment, and the Employee agrees to remain in the employ of the Company,
pursuant to the terms of this Agreement for a period of Fifteen Weeks (15) after
the Effective Date, unless the Employee's employment is earlier terminated
pursuant to the provisions of this Agreement.

          4.2  Renewal. The term of this Agreement shall be extended
               -------
automatically, without further action of either party, as of fifteen weeks (15)
after the Effective Date and on each succeeding Friday, for terms of one (1)
year.  Any such renewal shall be upon such terms and conditions set forth in
this Agreement, unless otherwise agreed between the Company and the Employee.
The notice of non-renewal by either party shall in no way constitute a breach of
this Agreement.

     5.   Compensation and Benefits.
          -------------------------

          5.1  Base Salary. The Employee's initial base weekly salary will be
               -----------
no less than ONE HUNDRED DOLLARS ($100.00) per week for the first fifteen weeks
of his employment with the Company plus a signing bonus in consideration of
Employee's agreement to accept employment with the Company in the form of TWO
THOUSAND FIVE HUNDRED DOLLARS ($2,500.00) signing bonus and an Incentive Stock
Option for 60,000 shares of the Company's Common Stock at an exercise price of
THIRTY CENTS (.30) PER SHARE as of the effective date of this Agreement and
deemed to be earned at FIVE THOUSAND SHARES PER week and subject to the terms
and conditions of the 2000 Long Term Incentive Plan.  The Employee's base salary
will be reviewed by the Chief Executive Officer and/or Board of Directors at
least quarterly.  Employee's salary will be payable as earned in accordance with
the Company's customary payroll practice.

          5.2  Additional Benefits. The Employee will be eligible to participate
               -------------------
in the Company's employee benefit plans of general application, including
without limitation pension and profit-sharing plans, stock option, incentive or
other bonus plans, life, disability, accident and other programs as they become
available, paid vacations and sabbatical leave plans, and similar plans or
programs, in accordance with the rules established for individual participation
in any such plan. The Employee will also be entitled to reasonable holidays and
illness days with full pay in accordance with the Company's policy from time to
time in effect. The Employee will be entitled to the same benefits extended to
members of the senior management staff of the Company, including but not limited
to vacation accrual.

          5.3  Expenses. The Company will reimburse (monthly) the Employee for
               --------
all reasonable and necessary expenses incurred by the Employee in connection
with the Company's business, including cell phone, entertainment, airfare,
automobile, hotel and miscellaneous expenses incurred by Employee, including
travel to the Company's offices in Tacoma, Washington.

                                       2
<PAGE>

     6.   Termination.
          -----------

          6.1  Events of Termination. The Employee's employment with the Company
               ---------------------
shall terminate upon any one of the following:

          (a)  Five (5) days after the date of a written notice sent to the
Employee stating the Company's determination made in good faith that it is
terminating the Employee for "Cause" as defined under Section 6.2 below
("Termination for Cause"); or

          (b)  Five (5) days after the date of a written notice sent to the
Employee stating the Company's determination made in good faith that, due to a
mental or physical incapacity, the Employee has been unable to perform his
duties under this Agreement for a period of not less than five (5) consecutive
months ("Termination for Disability"); or

          (c)  Upon the Employee's death ("Termination Upon Death"); or

          (d)  Upon the date of a written notice sent to the Company stating the
Employee's determination made in good faith of "Constructive Termination" by the
Company, as defined under Section 6.3 below ("Constructive Termination"); or

          (e)  Five (5) days after the date of a notice sent to the Employee
stating that the Company is terminating his employment, without Cause, which
notice can only be given by the Company at any time after the Effective Date at
the Company's sole discretion, for any reason or for no reason ("Termination
Without Cause"); or

          (f)  The date of a notice sent to the Company from the Employee
stating that the Employee is electing to terminate his employment with the
Company ("Voluntary Termination").

          6.2  "Cause" Defined. For purposes of this Agreement, "Cause" for the
               ---------------
Employee's termination will exist at any time after the occurrence of one or
more of the following events:

          (a)  Any willful act or acts of dishonesty undertaken by the Employee
intended to result in substantial gain or personal enrichment of the Employee at
the expense of the Company; or

          (b)  Any willful act of gross misconduct which is materially and
demonstrably injurious to the Company.  No act, or failure to act, by the
Employee shall be considered "willful" if done, or omitted to be done, by him in
good faith and in the reasonable belief that his act or omission was in the best
interest of the Company and/or required by applicable law.

          6.3  "Constructive Termination" Defined.  "Constructive Termination"
               ----------------------------------
shall mean:

                                       3
<PAGE>

          (a)  A material reduction in the Employee's salary or benefits not
agreed to by the Employee;

          (b)  A material change in the Employee's responsibilities not agreed
to by the Employee;

          (c)  The Company's breach or failure to comply in any material respect
with any material term of this Agreement after five (5) days written notice of
the Employee's claim of such failure;

          (d)  A requirement that the Employee relocate to an office that would
increase the Employee's one-way commute distance by more than thirty (30) miles
from his home in Carlsbad, California; or

          (e)  The failure of the Company to obtain the unconditional assumption
of the Company's obligations to Employee under this Agreement by any successor
entity or acquirer in any sale, reorganization or merger transaction.

          6.4  "Termination Without Cause" shall mean:
               ---------------------------

          (a)  Termination of the Employee's employment with the Company for any
reason other than Cause; or

          (b)  Termination of the Employee's employment with the Company for any
reason following a Change in Control. "Change in Control" shall mean the
occurrence of any of the following events:  (i) a merger or consolidation
involving the Company in which the shareholders of the Company immediately prior
to such merger or consolidation own less that fifty percent (50%) of the voting
power of the surviving corporation; (ii) the sale of all, or substantially all,
of the assets of the Company; (iii) any "person" or "group" (as defined in the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) becoming the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) directly or
indirectly of securities representing more than fifty percent (50%) of the
voting power of the Company then outstanding; or (iv) less than a majority of
the Board of Directors are persons who were either nominated for election by the
Board of Directors or were elected by the Board of Directors.

     7.   Effect of Termination.
          ---------------------

          7.1  Termination for Cause or Voluntary Termination.  In the event of
               ----------------------------------------------
any termination of the Employee's employment pursuant to Section 6.1(a) or
Section 6.1(f), the Company shall immediately pay to the Employee the
compensation and benefits accrued and otherwise payable to the Employee under
Section 5 through the date of termination. The Employee's rights under the
Company's benefit plans of general application shall be determined under the
provisions of those plans.

                                       4
<PAGE>

          7.2  Termination for Disability. In the event of termination of
               --------------------------
employment pursuant to Section 6.1(b):

          (a)  The Company shall immediately pay to the Employee the
compensation and benefits accrued and otherwise payable to the Employee under
Section 5 through the date of termination;

          (b)  For five (5) days after the termination of the Employee's
employment, the Company shall pay the Employee:  (i) his salary under Section
5.1 above at the Employee's then-current salary, less applicable withholding
taxes, payable on the Company's normal payroll dates during that period; (ii)
healthcare premium for a period of three months;

          (c)  The Employee shall receive other benefit payments as provided in
the Company's standard benefit plans, and

          (d)  The Employee shall become fully and immediately vested in 100% of
the shares issuable under the Initial Option.

          7.3  Termination Upon Death.  In the event of termination of
               ----------------------
employment pursuant to Section 6.1(c), all obligations of the Company and the
Employee shall cease, except the Company shall immediately pay to the Employee
(or to the Employee's estate) the compensation and benefits accrued and
otherwise payable to the Employee under Section 5 through the date of
termination, and the Employee shall become fully and immediately vested in 100%
of the shares issuable under the Initial Option.

     7.4  Constructive Termination or Termination Without Cause.  In the event
          -----------------------------------------------------
of any termination of this Agreement pursuant to Section 6.1(d) or Section
6.1(e):

          (a)  The Company shall immediately pay to the Employee the
compensation and benefits accrued and otherwise payable to the Employee under
Section 5 through the date of termination;

          (b)  For five (5) days after the termination of the Employee's
employment, the Company shall pay the Employee:  (i) his salary under Section
5.1 above at the Employee's then-current salary, less applicable withholding
taxes, payable on the Company's normal payroll dates during that period; (ii)
healthcare premium for a period of three months.

          (c)  If the termination occurs within the first (15) fifteen weeks
following the Effective Date, in addition to the First Option, the Employee
shall be vested in such number of shares of the Initial Option provided in
Section 5.3 equal to the product of 60,000 multiplied by the result of dividing
the number of weeks the Employee has provided services to the Company by
fifteen; provided, however, in no event shall the vested amount of the Initial
Option be less than 15,00 shares.

                                       5
<PAGE>

          (d)  If the termination occurs for any reason after a Change in
Control, then in addition to the foregoing benefits, the remainder of the
Initial Option shall, as of the date of employment termination, be immediately
100% vested and shall remain exercisable for the periods specified in Section
5.3; provided, that if the total amount of the benefits available to the
Employee under this Section 7.4, either alone or together with other payments
which the Employee has the right to receive from the Company, would constitute a
"parachute payment" as defined in Section 280G of the Internal Revenue Code (the
"Code"), then the Employee will receive whichever provides him with the greater
economic benefit:  (i) the total amount of such benefits; or (ii) the largest
amount that would result in no portion of such benefits being subject to the
excise tax imposed by Section 4999 of the Code. The determination of which of
the foregoing would provide the greatest economic benefit to the Employee shall
be made by an independent accounting firm the fees for which determination shall
be paid by the Company.

     8.   Nondisclosure. The Employee acknowledges that during the course of his
          -------------
employment by the Company, the Company will provide, and the Employee will
acquire, knowledge of special and unique value with respect to the Company's
business operations, including, by way of illustration, the Company's existing
and contemplated product line, trade secrets, compilations, business and
financial methods or practices, plans, hardware and software technology
products, systems, programs, projects and know-how, pricing, cost of providing
service and equipment, operating and maintenance costs, marketing and selling
techniques and information, customer data, customer names and addresses,
customer service requirements, supplier lists, and confidential information
relating to the Company's policies, employees, and/or business strategy (all of
such information herein referenced to as the "Confidential Information").  The
Employee recognizes that the business of the Company is dependent upon
Confidential Information and that the protection of the Confidential Information
against unauthorized disclosure or use is of critical importance to the Company.
The Employee agrees that, without prior written authorization of the Chief
Executive Officer of the Company, the Employee will not, during his employment,
divulge to any person, directly or indirectly, except to the Company or its
officers and agents or as reasonably required in connection with the Employee's
duties on behalf of the Company, or make any independent use of, except on
behalf of the Company, any of the Company's Confidential Information, whether
acquired by the Employee during his employment or not.  The Employee further
agrees that the Employee will not, at any time after his employment has ended,
use or divulge to any person directly or indirectly any Confidential
Information, or use any Confidential Information in subsequent employment of any
nature.  If the Employee is subpoenaed, or is otherwise required by law to
testify concerning Confidential Information, the Employee agrees to notify the
Company upon receipt of a subpoena, or upon belief that such testimony shall be
required.  This nondisclosure provision shall survive the termination of this
Agreement for any reason.  The Employee acknowledges that the Company would not
employ the Employee but for his covenants and promises contained in this Section
8.

     9.   Return of Documents. The Employee agrees that if the Employee's
          -------------------
relationship with the Company is terminated (for whatever reason), the Employee
shall not remove or take with the Employee, but will leave with the Company or
return to Company, all Confidential Information, records, files, data,
memoranda, reports, customer lists, customer information,

                                       6
<PAGE>

product information, price lists, documents and other information, in whatever
form (including on computer disk), and any and all copies thereof, or if such
items are not on the premises of the Company, the Employee agrees to return such
items immediately upon the Employee's termination or the request of the Company.
The Employee acknowledges that all such items are and remain the property of the
Company.

     10.  No Interference or Solicitation. The Employee agrees that during his
          -------------------------------
employment, and for a period of six (6) months following the termination of his
employment (for whatever reason), that neither he nor any individual,
partner(s), limited partnership, corporation or other entity or business with
which he is in any way affiliated, including, without limitation, any partner,
limited partner, director, officer, shareholder, employee, or agent of any such
entity or business, will:  (i) request, induce or attempt to influence, directly
or indirectly, any employee of the Company to terminate their employment with
the Company; or  (ii) employ any person who as of the date of this Agreement
was, or after such date is or was, an employee of the Company.  The Employee
further agrees that during the period beginning with the commencement of the
Employee's engagement with the Company and ending six (6) months after the
termination of the Employee's employment with the Company (for whatever reason),
he shall not, directly or indirectly, as an employee, agent, consultant,
stockholder, director, partner or in any other individual or representative
capacity of the Company or of any other person, entity or business, solicit or
encourage any present or future customer, supplier, contractor, partner or
investor of the Company to terminate or otherwise alter his, his or its
relationship with the Company.  This provision shall survive the termination of
this Agreement for any reason.

     11.  Non-Competition. In consideration of the numerous mutual promises
          ---------------
contained in the Agreement between the Company and the Employee, including,
without limitation, those involving Confidential Information, and in order to
protect the Company's Confidential Information and to reduce the likelihood of
irreparable damage which would occur in the event such information is provided
to or used by a competitor of the Company, the Employee agrees that during his
employment and for an additional period of six (6) months immediately following
the termination by the Company of his employment for Cause or by Employee
voluntarily terminating his employment, (the "Non-Competition Term"), not to,
directly or indirectly, either through any form of ownership or as a director,
officer, principal, agent, employee, employer, adviser, consultant, shareholder,
partner, or in any individual or representative capacity whatsoever, without the
prior written consent of the Company (which consent may be withheld in its sole
discretion):  (i) compete for or solicit business related to "Application
Service Provider Services," then presently being offered by the Company to, for
or on behalf of any person or business entity with a place of business in the
United States or Canada; (ii) own, operate, participate in, undertake any
employment with or have any interest in any entity with a place of business in
the United States or Canada in the business of marketing and selling of
Application Service Provider Services to persons or business entities, except
owning publicly traded stock for investment purposes only in which the Employee
owns less than 5%; (iii) compete for or solicit application service provider
services business from any customer of the Company (or its successors by
merger); or (iv) use in any competition, solicitation, or marketing effort any
Confidential Information, any proprietary list, any information concerning
customers of the Company.  "Application Service Provided Services" shall mean
providing a combination of

                                       7
<PAGE>

software applications, Web hosting and access and telecommunication integration
through the Company's server based computing model.

     If, during any period within the Non-Competition Term, the Employee is not
in compliance with the terms of this Section 11, the Company shall be entitled
to, among other remedies, compliance by the Employee with the terms of this
Section 11 for an additional period equal to the period of such noncompliance.
For purposes of this Agreement, the term "Non-Competition Term" shall also
include this additional period.  The Employee hereby acknowledges that the
geographic boundaries, scope of prohibited activities and the time duration of
the provisions of this Section 11 are reasonable and are no broader than are
necessary to protect the legitimate business interests of the Company.

     This non-competition provision shall survive the termination of the
Employee's employment and can only be revoked or modified by a writing signed by
the parties which specifically states an intent to revoke or modify this
provision.  The Employee acknowledges that the Company would not employ him but
for his covenants or promises contained in this Section 11.

     12.  Reformation of Section 11. The Company and the Employee agree and
          -------------------------
stipulate that the agreements and covenants not to compete contained in Section
11 hereof are fair and reasonable in light of all of the facts and circumstances
of the relationship between the Employee and the Company; however, the Employee
and the Company are aware that in certain circumstances courts have refused to
enforce certain agreements not to compete.  Therefore, in furtherance of, and
not in derogation of the provisions of Section 11, the Company and the Employee
agree that in the event a court should decline to enforce the provisions of
Section 11, that Section 11 shall be deemed to be modified or reformed to
restrict the Employee's competition with the Company or its affiliates to the
maximum extent, as to time, geography and business scope, which the court shall
find enforceable; provided, however, in no event shall the provisions of Section
11 be deemed to be more restrictive to the Employee than those contained herein.

     13.  Injunctive Relief. The Employee acknowledges and agrees that the
          -----------------
agreements and covenants contained in this Agreement are essential to protect
the Confidential Information, business, and goodwill of the Company.  The
Employee further acknowledges that the breach of any of the agreements contained
herein, including, without limitation, the confidentiality covenants specified
in Section 8, the non-solicitation covenants specified in Section 10, and the
non-competition covenants contained in Section 11, will give rise to irreparable
injury to the Company, inadequately compensable in damages.  Accordingly, the
Company shall be entitled to injunctive relief to prevent or cure breaches or
threatened breaches of the provisions of this Agreement and to enforce specific
performance of the terms and provisions hereof in any court of competent
jurisdiction, in addition to any other legal or equitable remedies which may be
available.  The Employee further acknowledges and agrees that in the event of
the termination of the Employee's employment with the Company, whether voluntary
or involuntary, that the enforcement of a remedy hereunder by way of injunction
shall not prevent the Employee from

                                       8
<PAGE>

earning a reasonable livelihood. The Employee further acknowledges and agrees
that the covenants contained herein are necessary for the protection of the
Company's legitimate business interests and are reasonable in scope and content.

     14.  Miscellaneous
          -------------

          14.1  Indemnification and Errors and Omissions Insurance. The Company
                --------------------------------------------------
agrees to indemnify and defend the Employee to the full extent provided by
Delaware law, and on terms no less favorable than any indemnification agreement
the Company has at any time during the term of this Agreement with an executive
or officer of the Company.  The Company agrees to reimburse Employee upon demand
for any costs incurred in requesting or obtaining indemnification under this
paragraph.

          14.2  Arbitration. The Employee and the Company shall submit to
                -----------
mandatory binding arbitration to held in Pierce County, Washington, in any
controversy or claim arising out of, or relating to, this Agreement or any
breach hereof.  Such arbitration shall be conducted in accordance with the
commercial arbitration rules of the American Arbitration Association in effect
at that time, and judgment upon the determination or award rendered by the
arbitrator may be entered in any court having jurisdiction thereof. The
arbitrator is hereby authorized to award to the prevailing party the costs
(including reasonable attorneys' fees and expenses) of any such arbitration.

          14.3  Severability. If any provision of this Agreement shall be found
                ------------
by any arbitrator or court of competent jurisdiction to be invalid or
unenforceable, then the parties hereby waive such provision to the extent that
it is found to be invalid or unenforceable and to the extent that to do so would
not deprive one of the parties of the substantial benefit of its bargain. Such
provision shall, to the extent allowable by law and the preceding sentence, be
modified by such arbitrator or court so that it becomes enforceable and, as
modified, shall be enforced as any other provision hereof, all the other
provisions continuing in full force and effect.

          14.4  No Waiver. The failure by either party at any time to require
                ---------
performance or compliance by the other of any of its obligations or agreements
shall in no way affect the right to require such performance or compliance at
any time thereafter.  The waiver by either party of a breach of any provision
hereof shall not be taken or held to be a waiver of any preceding or succeeding
breach of such provision or as a waiver of the provision itself.  No waiver of
any kind shall be effective or binding, unless it is in writing and is signed by
the party against whom such waiver is sought to be enforced.

          14.5  Assignment. This Agreement and all rights hereunder are personal
                ----------
to the Employee and may not be transferred or assigned by the Employee at any
time.  The Company may assign its rights, together with its obligations
hereunder, to any parent, subsidiary, affiliate or successor, or in connection
with any sale, transfer or other disposition of all or substantially all of its
business and assets, provided, however, that any such assignee assumes the
Company's obligations hereunder.

                                       9
<PAGE>

          14.6  Withholding. All sums payable to the Employee hereunder shall be
                -----------
reduced by all federal, state, local and other withholding and similar taxes and
payments required by applicable law.

          14.7  Entire Agreement. This Agreement constitutes the entire and only
                ----------------
agreement between the parties relating to employment of the Employee with the
Company, and this Agreement supersedes and cancels any and all previous
contracts, arrangements or understandings with respect thereto.

          14.8  Amendment. This Agreement may be amended, modified, superseded,
                ---------
cancelled, renewed or extended only by an agreement in writing executed by both
parties hereto.

          14.9  Notices. All notices and other communications required or
                -------
permitted under this Agreement shall be in writing and hand delivered, sent by
telecopier, sent by registered first class mail, postage pre-paid, or sent by
nationally recognized express courier service. Such notices and other
communications shall be effective upon receipt if hand delivered or sent by
telecopier, five (5) days after mailing if sent by mail, and one (l) day after
dispatch if sent by express courier, to the following addresses, or such other
addresses as any party shall notify the other parties:

          If to the Company:

                INSYNQ, INC.
                Attn:  John P. Gorst
                1101 Broadway Plaza
                Tacoma, Washington 98402

          If to the Employee:
                Stephen C. Smith
                8004  Paseo Aliso
                Carslbad, California  92009

          14.10 Binding Nature. This Agreement shall be binding upon, and inure
                --------------
to the benefit of, the successors and personal representatives of the respective
parties hereto.

          14.11 Headings. The headings contained in this Agreement are for
                --------
reference purposes only and shall in no way affect the meaning or interpretation
of this Agreement. In this Agreement, the singular includes the plural, the
plural included the singular, the masculine gender includes both male and female
referents, and the word "or" is used in the inclusive sense.

          14.12 Counterparts. This Agreement may be executed in two or more
                ------------
counterparts, each of which shall be deemed to be an original but all of which,
taken together, constitute one and the same agreement.

                                       10
<PAGE>

          14.13  Governing Law. This Agreement and the rights and obligations of
                 -------------
the parties hereto shall be construed in accordance with the laws of the State
of Washington, without giving effect to the principles of conflict of laws.

          14.14  Attorneys' Fees. In the event of any claim, demand or suit
                 ---------------
arising out of or with respect to this Agreement, the prevailing party shall be
entitled to reasonable costs and attorneys' fees, including any such costs and
fees upon appeal.

          IN WITNESS WHEREOF, the Company and the Employee have executed this
Agreement as of the date first above written.

"THE COMPANY"                                "EMPLOYEE"

INSYNQ, INC.

By: /s/ John P. Gorst                        /s/ Stephen C. Smith
    -------------------------------          ----------------------------------

John P. Gorst                                Stephen C. Smith
Chief Executive Officer & Chairman

                                       11
<PAGE>

                                  EXHIBIT "A"
                                      TO
                             EMPLOYMENT AGREEMENT

                              DUTIES OF EMPLOYEE
                              ------------------

     Coordinate and manage the Financial affairs of the Company .

     Coordinate analysts regarding the Company financial condition including the
Company's activities and 10K, 10Q, etc.

     Consult, advise, and assist the Chairman's activities as requested with
particular emphasis financial management.

     Assist the Chairman as directed in matters that benefit the Company's
future and market presence.

                                       12

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