IMAGEX, INC.
STOCK SUBSCRIPTION AND REPURCHASE AGREEMENT
This Stock Subscription and Repurchase Agreement is entered into as
of August 7, 1997 by and between ImageX, Inc., a Washington corporation
(the "Company"), and Xxxxxx X. Xxxxx, Xx. (the "Shareholder").
RECITALS
A. In connection with the execution and delivery of this Agreement, the
Company is issuing to the Shareholder, in exchange for an aggregate of $20,000
payable pursuant to a promissory note in substantially the form attached hereto
as Exhibit A (the "Note"), 200,000 shares of common stock of the Company (the
"Stock").
B. The Stock is being issued as an Award pursuant to the Company's Amended
and Restated 1996 Stock Incentive Compensation Plan (the "Plan"), a copy of
which is attached hereto as Exhibit B. Capitalized terms used herein without
definition shall have the meanings assigned thereto in the Plan.
C. In order to induce the Company to issue the Stock, the Shareholder has
agreed that all of the Stock will be subject to a repurchase option in favor of
the Company as set forth herein.
AGREEMENTS
In consideration of the foregoing and the other provisions set forth
herein, the parties hereby agree as follows:
1. Stock Subscription and Shareholder Representations
The Shareholder hereby subscribes for and agrees to purchase the Stock at
a purchase price of $.10 per share, or $20,000 in the aggregate, payable
pursuant to the Note. For purposes of complying with applicable securities laws
in connection with such purchase, the Shareholder represents and warrants to the
Company as follows:
(a) I am a resident of the State of Washington and, as a director of
the Company, I am familiar with its business and prospects and have had a full
opportunity to analyze the merits and risks of an investment in the Stock. I am
aware that the Stock has not been registered under the Securities Act of 1933
(the "1933 Act") or any state securities laws pursuant to exemption(s) from
registration. I understand that the reliance by the Company on such exemption(s)
is predicated in part upon the truth and accuracy of the representations
contained in this Section.
(b) I am purchasing the Stock for my own personal account for
investment and not with a view to the sale or distribution of all or any part of
the Stock. I agree that I will in no event sell or distribute all or any part of
the Stock unless (1) there is an effective registration statement under the 1933
Act and applicable state securities laws covering any such transaction or (2)
the Company receives an opinion of my legal counsel (concurred in by legal
counsel for the Company) stating that such transaction is exempt from
registration or the Company otherwise satisfies itself that such transaction is
exempt from registration.
(c) I consent to the placing of a legend on my certificate(s) for
the Stock stating that the Stock has not been registered and setting forth the
restriction on transfer contemplated hereby and to the placing of a stop
transfer order on the books of the Company and with any transfer agents against
the Stock until the Stock may be legally resold or distributed.
2. Consulting Agreement and Repurchase Option
In order to induce the Company to issue the Stock, the Shareholder agrees
to provide consulting services to the Company during the term that the
Repurchase Option (as defined below) is in effect. The Shareholder's consulting
services shall consist of mentoring the Company's President and CEO, assisting
the President and CEO in capital raising efforts, advising management on sales
strategy, advising on strategic planning matters and such other consulting
services as may be reasonably requested by the Company from time to time. The
parties agree that the scope of any consulting services requested shall not be
excessive or unduly burdensome to Shareholder in light of his other business
activities and personal pursuits.
The Stock shall be subject to the following repurchase option in favor of
the Company (the "Repurchase Option"):
(a) In the event that the Shareholder's consulting services for the
Company are terminated for any reason prior to April 30, 2000, whether by the
Company or by the Shareholder or involuntarily due to death of the Shareholder
or other circumstance, the Company may exercise the Repurchase Option as
provided herein. For the purpose of this Section 2, the Shareholder's consulting
services shall be deemed to have terminated when the Shareholder ceases to be
actively engaged in advising management on matters referred to in Section 1 as
determined in the reasonable discretion of the members of the Board of Directors
of the Company other than the Shareholder after at least 30 days' notice that
such a determination is under consideration. The date when such consulting
services terminate is hereinafter referred to as the "Termination Date." The
Shareholder's service as a director of the Company shall be considered entirely
separate from the consulting services hereunder, and in no event shall any
cessation of the Shareholder's service on the Board of Directors of the Company
due to resignation, removal or other cause be deemed to constitute
unavailability to perform consulting services under this Agreement or be
considered in determining whether any such unavailability has occurred.
Vacations and temporary
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unavailability due to illness, disability or family crisis shall not be
considered in determining whether the consulting services have terminated.
(b) The Company shall have the right at any time within sixty (60)
days after the Termination Date, provided that the Termination Date shall have
occurred prior to the termination of the Repurchase Option and prior to April
30, 2000, to repurchase from the Shareholder, at a price per share of $.10
(appropriately adjusted for any subsequent stock split, dividend, combination,
or other recapitalization) (the "Repurchase Price"), up to but not exceeding the
total number of shares of Stock (200,000) less 5,556 shares (subject to
appropriate adjustment for any subsequent stock split, stock dividend,
combination, or other recapitalization) for each completed month elapsed between
May 1, 1997 and the Termination Date. The Repurchase Option shall not be
exercisable as to any Stock if the Termination Date occurs on or after April 30,
2000.
(c) The Repurchase Option, if exercised by the Company, shall be
exercised by written notice signed by an officer or director (other than the
Shareholder) of the Company after approval by the Board of Directors (excluding
the Shareholder) and shall be delivered to the Shareholder on or prior to the
expiration of the 60-day period referred to in paragraph (b) above. The Company
may pay for the shares of Stock it has elected to repurchase (i) by delivery to
the Shareholder of a check in the amount of the aggregate Repurchase Price for
the number of shares of Stock being repurchased, (ii) by cancellation by the
Company of an amount of the Shareholder's indebtedness to the Company equal to
the aggregate Repurchase Price for the number of shares of Stock being
repurchased or (iii) by a combination of (i) and (ii). Payment of the Repurchase
Price shall be completed within five business days after notice of exercise of
the Repurchase Option is delivered to the Shareholder.
(d) In the event that, in connection with any exercise of the
Repurchase Option under this Agreement, the Company elects to exercise the
Repurchase Option as to fewer than all the shares of Stock then subject thereto,
the Repurchase Option shall expire as to all the shares of Stock that the
Company has not elected to repurchase.
(e) Upon the closing of any of the following transactions, provided
any such transaction is duly and validly approved by the Company's Board of
Directors (excluding the Shareholder) and shareholders in accordance with
applicable law, the Repurchase Option shall automatically lapse and terminate in
its entirety:
(i) the liquidation, dissolution or indefinite
cessation of business operations of the Company; or
(ii) the execution by the Company of a general assignment for
the benefit of creditors, the appointment of a receiver or trustee to take
possession of the property and assets of the Company, or the filing of a
petition under applicable bankruptcy laws with respect to the Company.
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(f) Notwithstanding subsections (b) and (c) of this Section 2, the
Company shall be entitled for a period of one year from the Termination Date
(rather than 60 days) to give notice to the Shareholder and to repurchase the
shares to the extent that the Company reasonably determines that such an
extension of time is necessary to prevent the repurchase of the Shareholder's
Stock from causing other capital stock of the Company to not qualify as "small
business stock" under Section 1202 of the Internal Revenue Code of 1986, as
amended.
3. Transfer Restrictions; Right of First Offer
(a) Without the prior written consent of the Company, no shares of
Stock may be transferred by the Shareholder under any circumstances, voluntarily
or involuntarily; provided, however, that shares of Stock may be transferred
without such prior written consent if and only if (i) the Repurchase Option
shall have ceased to apply to such shares as provided in this Agreement and (ii)
the Shareholder shall have complied fully with the requirements of this Section
3 and the other provisions of this Agreement.
(b) If and to the extent that any Stock shall no longer be subject
to the Repurchase Option as provided in this Agreement (such Stock being
referred to herein as "Vested Stock"), such Vested Stock shall be subject to a
right of first refusal in favor of the Company as provided in this Section 3.
(i) In the event that the Shareholder wishes to sell, transfer
or otherwise dispose of ("Transfer") any Vested Stock, the Shareholder shall
first provide written notice to the Company of the proposed Transfer and all
material terms thereof, including without limitation the number of shares of
Vested Stock proposed to be Transferred, the proposed Transferee and the
consideration, if any, to be paid by or on behalf of the Transferee in exchange
therefor (the "Offer").
(ii) Within 60 days after receipt of the written notice
referred to in the preceding sentence, the Company may accept the Offer as to
all, but not less than all, the shares of Vested Stock proposed to be
Transferred (as indicated in the Offer) by delivery of written notice to such
effect to the Shareholder. If there is any change in the terms of the proposed
Transfer after delivery of the Offer to the Company but prior to expiration of
the 60-day period referred to in the preceding sentence, the Shareholder shall
give written notice thereof to the Company, in which case such 60-day period
shall be extended by an additional 30 days beyond the date on which such 60-day
period otherwise would have expired.
(iii) In the event that the Company accepts the Offer, the
parties shall use reasonable efforts to close the transaction contemplated
thereby within 30 days after the date as of which the Offer is accepted. In the
event the Company does not accept the Offer within the prescribed time period,
the Shareholder shall be free to complete the Transfer to the Transferee
indicated in the Offer on terms no more favorable to the Transferee than those
contained in the Offer and any update thereof communicated to the Company as
required by this Section 3.
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(iv) In the event the proposed Transferee changes or the terms
of the proposed Transfer change, in a manner favorable to the Transferee, after
the Offer is rejected by the Company or after expiration of the period in which
the Offer could have been accepted by the Company, the proposed Transfer shall
be deemed to be abandoned and the Shareholder shall again comply in full with
the requirements of this Section 3 prior to completing the Transfer.
(c) Any purported Transfer without compliance with this Section
shall be void. The Company may place a legend on the certificate or certificates
evidencing the Stock referencing the restrictions on transfer set forth in this
Agreement. Any Transfer made in compliance with this Section (or otherwise)
shall be conditioned upon the Transferee agreeing in writing, in a form
reasonably acceptable to the Company, to be bound by the right of first refusal
in favor of the Company and other terms set forth in this Section with respect
to any future transfers by such Transferee.
(d) The provisions of this Section 3 shall terminate upon the
closing of any underwritten public offering of Common Stock of the Company.
4. Legend
All certificates representing any shares of Stock subject to this
Agreement shall have endorsed thereon the following legend, in addition to any
other legend required by the Company respecting the restricted nature of the
Stock:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS
AND CONDITIONS OF A CERTAIN STOCK SUBSCRIPTION AND REPURCHASE AGREEMENT
THAT INCLUDES A REPURCHASE RIGHT AND A RIGHT OF FIRST OFFER IN FAVOR OF
THE CORPORATION RELATING TO THESE SECURITIES."
5. Rights as Shareholder
Subject to the terms hereof, the Shareholder shall have all the rights of
a shareholder with respect to the Stock during the term of this Agreement,
including without limitation the right to vote and receive any dividends or
other distributions declared thereon.
6. Adjustments for Stock Splits, Recapitalizations and Similar Events
(a) If, at any time or from time to time, there is (i) a dividend of
any security, stock split or other change in the character or amount of any of
the outstanding securities of the Company, or (ii) any consolidation, merger or
similar event in connection with which the Repurchase Option does not lapse and
terminate under the terms of this Agreement, then, in such event, any and all
new, substituted or additional securities or other property to which the
Shareholder is entitled by reason of his ownership of the shares of Stock then
subject to the Repurchase Option shall be immediately included in the definition
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of "Stock" under this Agreement and shall be subject to the Repurchase Option
with the same force and effect as the Stock currently subject to this Agreement
and the Repurchase Option. The Repurchase Price per share upon exercise of the
Repurchase Option shall be appropriately adjusted as determined by the Board of
Directors of the Company to reflect any such event referred to in this Section
6.
(b) Section 13.2 of the Plan with respect to Corporate Transactions
(as defined therein) shall not apply to the Stock subject to this Agreement, and
in no event shall the vesting restrictions embodied in the Repurchase Option
terminate in the event of a transaction contemplated by such Section 13.2.
7. Termination
This Agreement shall terminate in its entirety (a) upon the completion of
a repurchase transaction pursuant to an exercise of the Repurchase Option, (b)
upon completion of an initial underwritten public offering of the Company's
common stock or (c) at April 30, 2000, whichever is earliest.
8. Tax Matters
The Shareholder acknowledges that he has considered and analyzed the
appropriate treatment by him of the transactions contemplated hereby under the
Internal Revenue Code of 1986, as amended (the "Code"), including without
limitation Section 83 thereof. The Shareholder agrees that any decision as to
whether to file an election relating thereto, and the due and proper filing of
any such election, are solely the Shareholder's responsibilities.
9. Cooperation
The parties agree to execute such further instruments and to take such
further action as may reasonably be necessary to carry out the intent of this
Agreement.
10. Specific Enforcement
Each party expressly agrees that the other party would be irreparably
damaged if this Agreement were not specifically enforced. Upon a breach or
threatened breach of the terms, covenants and/or conditions of this Agreement by
any party, the other party shall, in addition to all other remedies, each be
entitled to a temporary or permanent injunction, without showing any actual
damage, and/or a decree for specific performance, in accordance with the
provisions of this Agreement.
11. Notices
All notices and other communications required or permitted hereunder shall
be in writing and shall be mailed by first class mail, postage prepaid, or
otherwise delivered by hand or by messenger, facsimile or courier, addressed (a)
if to the Shareholder, at the
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Shareholder's then current address on the Company's books or at such other
address as the Shareholder shall have furnished to the Company in writing, or
(b) if to the Company, at its principal executive office, attention President,
with a copy to Xxxxxxx X. Xxxx, Xx., Xxxxxxx Coie, 0000 Xxxxx Xxxxxx, 00xx
Xxxxx, Xxxxxxx, XX 00000. If notice is provided by mail, it shall be deemed to
be given three (3) business days after proper deposit in the U.S. Mail, and if
notice is given by hand or by messenger, facsimile or courier, it shall be
deemed to be given upon receipt.
12. Entire Agreement
This Agreement constitutes the entire agreement of the parties with
respect to the subject matter hereof and supersedes all prior agreements and
undertakings, both oral and written, among such parties, or any of them, with
respect to such subject matter. No such prior agreement or undertaking may
contradict, vary or supplement this Agreement.
13. Amendment and Waiver
Neither this Agreement nor any provision hereof may be modified, amended
or terminated except by a written agreement signed by the parties hereto, and no
waiver of any provision of this Agreement shall be effective unless in writing
and signed by or on behalf of the party to be bound by such waiver.
14. Governing Law
This Agreement shall be governed by and construed under the laws of the
state of Washington as applied to agreements among Washington residents, made
and to be performed entirely within Washington.
15. Successors and Assigns
The provisions hereof shall inure to the benefit of, and be binding upon,
the successors, permitted assigns, heirs, executors, administrators and personal
representatives of the parties hereto. Notwithstanding anything to the contrary
contained in this Agreement, no shares of Stock may be transferred by the
Shareholder under any circumstances, without the prior written consent of the
Company which may be withheld for any reason, so long as such shares are subject
to the Repurchase Option contained in this Agreement. Any transfer or purported
transfer in violation of this Section 15 shall be void.
16. Headings
The headings of the sections and paragraphs of this Agreement are for
convenience and shall not by themselves determine the interpretation of this
Agreement.
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17. Counterparts
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
18. Severability
If one or more provisions of this Agreement are held to be unenforceable
under applicable law, such provisions shall be excluded from this Agreement and
the balance of this Agreement shall be interpreted as if such provisions were so
excluded and shall be enforceable in accordance with its terms.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
IMAGEX, INC.
By /s/ F. XXXXXX XXXXXXXXXXX
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Name: F. Xxxxxx Xxxxxxxxxxx
-------------------------------
Title: President
------------------------------
Address:
00000 X.X. 0xx, Xxxxx 000
Xxxxxxxx, XX 00000
SHAREHOLDER
/s/ XXXXXX X. XXXXX, XX.
------------------------------------
Xxxxxx X. Xxxxx, Xx.
Address:
XXXXXX X. XXXXX, XX.
------------------------------------
0000 - 00XX XXX XX
------------------------------------
XXXXXX XXXXXX, XX 00000
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EXHIBIT A
PROMISSORY NOTE
Bellevue, Washington
$20,000 Principal Amount August 7, 1997
FOR VALUE RECEIVED, Xxxxxx X. Xxxxx, Xx. ("Maker") hereby promises to pay
to the order of ImageX, Inc., a Washington corporation ("Payee"), the principal
sum of twenty thousand dollars ($20,000) (the "Original Principal Amount"),
together with simple interest on the unpaid principal balance at a rate of seven
percent (7%) per annum (calculated on the basis of actual days elapsed). This
Note is being made in connection with the purchase by Maker from Payee of
200,000 shares of the Common Stock of Payee pursuant to the Amended and Restated
1996 Stock Incentive Compensation Plan of Payee and a Stock Subscription and
Repurchase Agreement of even date herewith (the "Repurchase Agreement") relating
to such shares under which Maker is agreeing that such shares shall be subject
to repurchase by Payee under certain conditions as provided therein.
1. Payments. All payments on account of the indebtedness evidenced by this
Note shall be applied first to full payment of accrued interest and then to
reduction of the outstanding principal balance. All such payments shall be made
in the form of cash or check.
2. Maturity and Repayment Schedule. This Note shall mature, and all unpaid
principal and accrued interest shall be due and payable, on the earliest to
occur of (a) an Event of Default (as defined below) or (b) April 30, 2000 (the
"Maturity Date"). Principal and accrued interest under this Note shall be
repaid according to the following schedule: (x) accrued interest on the
outstanding principal balance hereof shall be paid on or before the last day of
each month ending after the date hereof, and (y) the entire outstanding
principal balance hereof shall be paid in full in one lump sum payment on or
before the earlier of the Maturity Date and the date of any Event of Default.
3. Default. The entire unpaid principal of, and all accrued interest on,
this Note shall become immediately due and payable upon the occurrence of any
one or more of the following events of default (each, an "Event of Default"):
(a) Failure to pay all or any part of the principal or accrued interest
on this Note when the same shall be due and payable as provided in
the repayment schedule set forth herein;
(b) Maker shall (i) be made the subject of any proceeding under
the Bankruptcy Code of the United States, as amended or any
similar statute and which proceeding shall not be dismissed
within 60 days thereafter, (ii) admit in writing its inability
to pay its debts generally as they become due, (iii)
voluntarily seek the benefit of the Bankruptcy Code of the
United States, as amended, or any other applicable
liquidation, conservatorship, bankruptcy, moratorium,
rearrangement, receivership, insolvency, reorganization, or
similar debtor relief laws, from time to time in effect,
affecting the rights of creditors generally (collectively,
"Debtor Relief Laws"), or (iv) be made the subject of any
proceeding provided for by any Debtor Relief Laws that
suspends or otherwise materially affects any of the rights of
Payee under this Note and which proceeding shall not be
dismissed within 60 days thereafter; or
(c) Lapse of the Repurchase Option under the Repurchase Agreement for
any reason, or termination of the Repurchase Agreement for any
reason.
4. Prepayment. Maker may, at any time, prepay all or any portion of the
principal and accrued interest due under this Note without premium or penalty.
5. Notices. Any notices to be given to Payee in connection with this Note
shall be deemed to be delivered (i) ten days after deposit in the United States
mail, first-class postage prepaid, registered or certified, and addressed to the
recipient or (ii) one business day after the transmission by facsimile.
6. Waiver. Maker hereby waives presentment, notice of dishonor, protest,
notice of protest and diligence in collection, and consents that the time of
payment on any part of this Note may be extended by Payee without otherwise
modifying, altering, releasing, affecting or limiting its liability.
7. Attorneys' Fees. If any suit or action arising out of or related to
this Note is brought by any party, the prevailing party or parties shall be
entitled to recover the costs and fees (including without limitation reasonable
attorneys' fees, the fees and costs of experts and consultants, and copying,
courier and telecommunication costs) incurred by such party or parties in such
suit or action, including without limitation any post-trial or appellate
proceeding, or in the collection or enforcement of any judgment or award entered
or made in such suit or action.
8. Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of Washington.
10. Assignment; Successors. This Note shall not be assignable by Maker, by
operation of law or otherwise, without the prior written consent of Payee. This
Note shall be binding upon, and shall inure to the benefit of, Maker, Payee and
their respective permitted successors, assigns, heirs and legal representatives,
as the case may be.
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Maker hereby executes and delivers this Note, and Payee hereby accepts
this Note, as of the date first set forth above.
/s/ XXXXXX X. XXXXX, XX.
-------------------------
Xxxxxx X. Xxxxx, Xx.
ACCEPTED:
IMAGE X, INC.
By /s/ F. XXXXXX XXXXXXXXXXX
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Title PRESIDENT
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