EXHIBIT 10.17
STOCK RESTRICTION AGREEMENT
THIS STOCK RESTRICTION AGREEMENT (the "Agreement") is made as of the
____ day of ______________, ____, by and between Advancis Pharmaceutical
Corporation, a Delaware corporation (the "Company"), and ____________________
(the "Shareholder").
For valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. Option Shares. The Shareholder was granted the right to
purchase up to __________________ shares (the "Option Shares") of common stock
of the Company, par value $0.01 per share (the "Common Stock"), pursuant to
stock options awarded under the Company's 2000 Stock Incentive Plan (the "Plan")
on ____________________ subject to the terms and conditions of the applicable
option grant agreement evidencing such award (the "Option Grant Agreement"). The
Shareholder has purchased on even date herewith, ____________ Option Shares (the
"Shares"). The Shareholder agrees that the Shares shall be subject to the terms,
conditions and restrictions set forth in this Agreement and the Option Grant
Agreement. The Shareholder further agrees that any additional Option Shares
purchased by the Shareholder shall be subject to the terms, conditions and
restrictions set forth in this Agreement, and such shares shall be deemed Shares
for all purposes hereunder. Upon receipt of payment by the Company for the
Shares, the Company shall issue and deliver to the Shareholder one or more
certificates in the name of the Shareholder for that number of Shares purchased
by the Shareholder.
2. Restrictions on Transfer. The Shareholder shall not transfer
any of the Shares, except by a transfer that meets the following requirements:
(a) Notice Requirement. If at any time the Shareholder
proposes to sell or otherwise transfer or assign for cash, cash equivalents or
any other form of consideration (including a promissory note) pursuant to a bona
fide offer from any third party all or any part of his or her vested Shares (the
"Offered Shares"), the Shareholder shall first give written notice of the
proposed transfer (the "Transfer Notice") to the Company. The Transfer Notice
shall name the proposed transferee(s) and state the number of shares to be
transferred, the price per share and all other material terms and conditions of
the transfer.
(b) Company's Right to Purchase. For 30 days following
its receipt of such Transfer Notice, the Company shall have the right to
purchase all or any lesser part of the Offered Shares at the price and upon the
terms and conditions set forth in the Transfer Notice. In the event the Company
elects to purchase all or any lesser part of the Offered Shares, it shall give
written notice of its election to the Shareholder within such 30-day period, and
the settlement of the sale on such Offered Shares shall be made as provided
below in Section 2(c) of this Agreement.
(c) Settlement. If the Company elects to acquire all or
any lesser part of the Offered Shares, the Company shall so notify the
Shareholder, and settlement shall be made at the principal office of the Company
in cash within 60 days after the Company receives the Transfer Notice; provided,
however, if the terms of payment set forth in the Shareholder's Transfer Notice
were other than cash against delivery, the Company may pay for such Offered
Shares on the same terms and conditions set forth in the Transfer Notice.
Notwithstanding anything in this Agreement to the contrary, the provisions of
Section 6 of this Agreement shall be controlling, to the extent applicable,
regarding any payment due with respect to the Company's purchase of the Offered
Shares and shall not preclude a determination for purposes of this Agreement
that "settlement" of the Company's purchase of the Offered Shares has been duly
made pursuant to this Section 2(c) if any payment due the Shareholder is
deferred accordingly.
(d) Sales Free of Restrictions. If the Company does not
elect to purchase all of the Offered Shares, the Shareholder may, not sooner
than 35 or later than 120 days following delivery of the Transfer Notice, enter
into an agreement providing for the closing of the transfer of the Offered
Shares covered by the Transfer Notice within 30 days of the date such agreement
is entered into on the same terms and conditions as those described in the
Transfer Notice. Any proposed transfer on different terms and conditions than
those described in the Transfer Notice, as well as any subsequent proposed
transfer of any of the Shares, shall again be subject to the right of first
refusal of the Company and shall require compliance by the Shareholder with the
procedures described in this Section 2.
(e) Exempt Transactions. The following transactions shall
be exempt from the provisions of this Section 2:
(i) the Shareholder's transfer of any or all of
the Shareholder's Shares, either during the Shareholder's lifetime by gift or
domestic relations order or on death by will or the laws of descent and
distribution, to: (A) his or her child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, or any persons sharing the
Shareholder's household (other than a tenant or employee of the Shareholder)
("family members"), (B) a trust in which family members have more than 50% of
the beneficial interest, (C) a foundation in which family members (or the
Shareholder) control the management of assets, or (D) any other entity in which
family members (or the Shareholder) own more than 50% of the voting interests
("Permitted Transferee"); provided, however, that no such transfers are made for
value. A transfer under a domestic relations order in settlement of marital
property rights and a transfer to an entity in which more than 50% of the voting
interests are owned by family members (or the Shareholder) in exchange for an
interest in that entity shall not be treated as transfers for value. Each
Permitted Transferee shall receive the Shares subject to the provisions of this
Agreement, and, as a condition precedent to any transfer permitted under this
Section 2(e)(i), the Permitted Transferee must deliver to the Company a written
instrument confirming that such transferee is bound by all of the terms and
conditions of this Agreement;
(ii) any transfer to the Company in pledge as
security for any purchase-money indebtedness incurred by the Shareholder in
connection with the acquisition of the Shares; or
(iii) any transfer pursuant to a registration
statement filed by the Company with the Securities and Exchange Commission.
Notwithstanding anything to the contrary contained elsewhere
in this Section 2, except with respect to a transfer pursuant to Section
2(e)(iii), any proposed transferee or Permitted Transferee of the Shareholder
shall receive and hold such stock subject to the provisions of this Agreement,
and, as a condition of such transfer, shall deliver to the Company a written
instrument confirming that such transferee shall be bound by all of the terms
and conditions of this Agreement. There shall be no subsequent transfer of such
stock except in accordance with this Section 2.
(f) Termination of Restrictions on Transfer. The
foregoing restrictions on transfer in this Section 2 shall terminate upon the
closing of the first public offering of securities of the Company that is
effected pursuant to a registration statement filed with, and declared effective
by, the Securities and Exchange Commission under the Securities Act of 1933.
3. Effect of Prohibited Transfer. The Company shall not be
required to (a) transfer on its books any of the Shares that have been sold or
transferred in violation of any of the provisions set forth in this Agreement,
or (b) treat as owner of such Shares or to pay dividends or other distributions
to any transferee to whom any such Shares shall have been so sold or
transferred.
4. Company's Repurchase Option.
(a) Upon the termination of the Shareholder's employment
or consulting relationship with the Company for any reason, the Company shall
have the right and option to purchase, and the Shareholder or the Shareholder's
personal representative, estate, heirs, legatees, or Permitted Transferees, as
the case may be, shall have the obligation to sell upon request, any or all of
the Shareholder's Shares, which option may be exercised at any time and from
time to time by the Company by giving written notice to the Shareholder or
personal representative, estate, heirs, legatees, or Permitted Transferees, as
the case may be, stating the number of Shares to be purchased. The purchase
price for such Shares shall be determined pursuant to Section 4(b) of this
Agreement. Settlement of the purchase shall be made at the principal office of
the Company within 30 days after delivery of such written notice. In the
discretion of the Board of Directors of the Company, payment of the purchase
price will be made via cash, a promissory note, or a combination of the two. Any
such promissory note shall provide for substantially equal installments, payable
at least annually, over a period not to exceed five years and shall accrue
interest at the applicable Federal mid-term rate in effect under Code section
1274(d) as of the settlement date, compounded annually. Notwithstanding the
foregoing, the repurchase option of the Company described in this Section 4: (i)
shall not be exercisable with respect to Offered Shares when the Company has a
right to purchase such Offered Shares pursuant to Section 2(b) of this Agreement
nor, if the Company does not elect to purchase all of the Offered Shares, during
the period set forth in Section 2(d) of this Agreement in which the Offered
Shares are transferable pursuant to the terms of the Transfer Notice; and (ii)
shall terminate, solely with respect to vested Shares, upon the closing of the
first public offering of securities of the Company that is effected pursuant to
a registration statement filed with, and declared effective by, the Securities
and Exchange Commission under the Securities Act of 1933.
(b) The purchase price for any Shares sold and purchased
pursuant to this Section 4 shall be equal to their Fair Market Value as
determined under Section 4(c) of this Agreement. Notwithstanding the immediately
preceding sentence, in the event that the Shareholder's employment or other
service relationship is terminated by the Company for "Misconduct," the purchase
price for any Shares sold and purchased pursuant to this Section 4 shall be
equal to the lesser of the Fair Market Value of the Shares as determined under
Section 4(c) of this Agreement or the exercise price per Share (adjusted to
reflect adjustments made under Section 7(d) of the Plan) tendered to the Company
by the Shareholder upon exercise of the Option pursuant to which the Shares were
acquired. For purposes of this Agreement, if the Shareholder is a party to a
written employment agreement or other service agreement with the Company or an
affiliate which contains a definition of "cause," "termination for cause" or any
other similar term or phrase, whether the Shareholder is terminated for
Misconduct pursuant to this Section 4 shall be determined according to the terms
of and in a manner consistent with the provisions of such written agreement. If
the Shareholder is not party to such a written employment agreement or other
service agreement with the Company or an affiliate, then for purposes of this
Section 4, "Misconduct" shall mean the Shareholder's (i) conviction of, or plea
of nolo contendere to, a felony or crime involving moral turpitude; (ii) fraud
on or misappropriation of any funds or property of the Company; (iii) personal
dishonesty, incompetence, willful misconduct, willful violation of any law, rule
or regulation (other than minor traffic violations or similar offenses), or
breach of fiduciary duty which involves personal profit; (iv) willful misconduct
in connection with the Shareholder's duties or willful failure to perform the
Shareholder's responsibilities in the best interests of the Company; (v) chronic
use of alcohol, drugs or other similar substances which affects the
Shareholder's work performance; or (vi) breach of any provision of any
employment, non-disclosure, non-competition, non-solicitation or other similar
agreement executed by the Shareholder for the benefit of the Company. The good
faith determination by the Board of Directors of the Company of whether the
Shareholder's employment or other service relationship was terminated by the
Company for Cause shall be final and binding for all purposes hereunder.
(c) For purposes of this Agreement, the Fair Market Value
of Shares shall be determined in good faith by the Board of Directors of the
Company. In making such determination, the Board of Directors may take into
account any valuation factors it deems appropriate or advisable in its sole
discretion, including, without limitation, profitability, financial position,
asset value or other factor relating to the value of the Company, as well as
discounts to account for minority interests and lack of marketability.
5. Take-Along Right. Notwithstanding anything contained herein to
the contrary, if at any time any shareholder of the Company, or group of
shareholders, owning a majority or more of the voting capital stock of the
Company (hereinafter, collectively the "Transferring Stockholders") proposes to
enter into any transaction involving (a) a sale of more than 50% of the
outstanding voting capital stock of the Company in a non-public sale or (b) any
merger, share exchange, consolidation or other reorganization or business
combination of the Company immediately after which a majority of the directors
of the surviving entity is not comprised of persons who were directors of the
Company immediately prior to such transaction or after which persons who hold a
majority of the voting capital stock of the surviving entity are not persons who
held voting capital stock of the Company immediately prior to such transaction
(a "Change-in-Control transaction"), the Company may require the Shareholder to
participate in such Change-in-Control transaction with respect to all or such
number of the Shareholder's Shares as the Company may specify in its discretion,
by giving the Shareholder written notice thereof at least ten days in advance of
the date of the transaction or the date that tender is required, as the case may
be. Upon receipt of such notice, the Shareholder shall tender the specified
number of Shares, at the same price and upon the same terms and conditions
applicable to the Transferring Shareholders in the transaction or, in the
discretion of the acquirer or successor to the Company, upon payment of the
purchase price to the Shareholder in immediately available funds. In addition,
if at any time the Company and/or any Transferring Shareholders propose to enter
into any such Change-in-Control transaction, the Company may require the
Shareholder to vote in favor of such transaction, where approval of the
shareholders is required by law or otherwise sought, by giving the Shareholder
notice thereof within the time prescribed by law and the Company's Certificate
of Incorporation and By-Laws for giving notice of a meeting of shareholders
called for the purpose of approving such transaction. If the Company requires
such vote, the Shareholder agrees that he or she will, if requested, deliver his
or her proxy to the person designated by the Company to vote his or her Shares
in favor of such Change-in-Control transaction.
6. Company's Right to Defer Payments. Notwithstanding anything
herein to the contrary, no payment shall be made under this Agreement, or under
any promissory note issued by the Company pursuant to this Agreement, that would
cause the Company to violate any banking agreement or loan or other financial
covenant or cause default of any senior indebtedness of the Company, regardless
of when such agreement, covenant or indebtedness was created, incurred or
assumed. Any payment under this Agreement that would cause such violation or
default shall be deferred until, in the sole discretion of the Board of
Directors of the Company, such payment shall no longer cause any such violation
or default. Any payment deferred in consequence of the provisions of the
preceding sentence shall bear simple interest from the date such payment would
otherwise have been made to the date when such payment is actually made, at a
rate which is equal to the prime rate of interest published in the Wall Street
Journal from time-to-time during the period of such deferral, but in no event
shall such rate of interest exceed 10 percent per annum. The Company shall pay
interest at the same time as it makes the payment to which such interest
relates.
7. Restrictive Legend. All certificates representing Shares shall
have affixed thereto a legend in substantially the following form, in addition
to any other legends that may be required under federal or state securities
laws:
The shares of stock represented by this certificate are
subject to restrictions on transfer, an option to purchase and
a market stand-off agreement set forth in a certain Stock
Restriction Agreement between the corporation and the
registered owner of this certificate (or his predecessor in
interest), and no transfer of such shares may be made without
compliance with that Agreement. A copy of that Agreement is
available for inspection at the office of the Corporation upon
appropriate request and without charge.
The securities represented by this stock certificate have not
been registered under the Securities Act of 1933 (the "Act")
or applicable state securities laws (the "State Acts"), and
shall not be sold, pledged, hypothecated, donated, or
otherwise transferred (whether or not for consideration) by
the holder except upon the issuance to the corporation of a
favorable opinion of its counsel and/or submission to the
corporation of such other evidence as may be satisfactory to
counsel for the corporation, to the effect that any such
transfer shall not be in violation of the Act and the State
Acts."
8. Investment Representations. The Shareholder represents,
warrants and covenants as follows:
(a) Shareholder is purchasing the Shares for the
Shareholder's own account for investment only, and not with a view to, or for
sale in connection with, any distribution of the Shares in violation of the
Securities Act of 1933 (the "Securities Act"), or any rule or regulation under
the Securities Act.
(b) Shareholder has had such opportunity as the
Shareholder deemed adequate to obtain from representatives of the Company such
information as is necessary to permit the Shareholder to evaluate the merits and
risks of the Shareholder's investment in the Company.
(c) Shareholder has sufficient experience in business,
financial and investment matters to be able to evaluate the risks involved in
the purchase of the Shares and to make an informed investment decision with
respect to such purchase.
(d) Shareholder can afford a complete loss of the value
of the Shares and is able to bear the economic risk of holding such Shares for
an indefinite period.
(e) Shareholder understands that (i) the Shares have not
been registered under the Securities Act and are "restricted securities" within
the meaning of Rule 144 under the Securities Act; (ii) the Shares cannot be
sold, transferred or otherwise disposed of unless they are subsequently
registered under the Securities Act or an exemption from registration is then
available; (iii) in any event, the exemption from registration under Rule 144
will not be available for at least one year (or, if the Shares were acquired in
compliance with Rule 701 of the Securities Act, 90 days after an initial public
offering of the Common Stock) and even then will not be available unless a
public market then exists for the Common Stock, adequate information concerning
the Company is then available to the public, and other terms and conditions of
Rule 144 are met; and (iv) there is now no registration statement on file with
the Securities and Exchange Commission with respect to any stock of the Company
and the Company has no obligation or current intention to register the Shares
under the Securities Act.
9. Adjustments for Stock Splits, Stock Dividends, etc.
(a) If from time to time there is any spin-off, stock
split-up, stock dividend, stock distribution or other reclassification of the
Common Stock of the Company, any and all new, substituted or additional
securities to which the Shareholder is entitled by reason of his or her
ownership of the Shares shall be immediately subject to the restrictions on
transfer and other provisions of this Agreement in the same manner and to the
same extent as the Shares.
(b) If the Shares are converted into or exchanged for, or
stockholders of the Company receive by reason of any distribution in total or
partial liquidation, securities of another corporation, or other property
(including cash), pursuant to any merger of the Company or acquisition of its
assets, then the rights of the Company under this Agreement shall inure to the
benefit of the Company's successor, and this Agreement shall apply to the
securities or other property received upon such conversion, exchange or
distribution in the same manner and to the same extent as the Shares.
10. Market Stand-Off. Following the effective date of a
registration statement of the Company filed under the Securities Act, the
Shareholder, for the duration specified by and to the extent requested by the
Company and an underwriter of Common Stock or other securities of the Company,
shall not directly or indirectly sell, offer to sell, contract to sell
(including, without limitation, any short sale), grant any option to purchase,
or otherwise transfer or dispose of any securities of the Company held by the
Shareholder at any time during such period except Common Stock (or other
securities) included in such registration, provided however, that: (a) such
agreement shall be applicable only to the first such registration statement of
the Company which covers Common Stock (or other securities) to be sold on its
behalf to the public in an underwritten offering; and (b) all officers and
directors of the Company enter into similar agreements.
11. Withholding Taxes. The Shareholder acknowledges and agrees
that the Company has the right to deduct from payments of any kind otherwise due
to the Shareholder any federal, state or local taxes of any kind required by law
to be withheld with respect to the purchase, sale or vesting of the Shares by
the Shareholder. To the extent that any of the Shares were vested upon purchase
by the Shareholder, the Shareholder is required to satisfy certain tax
withholding obligations. The Shareholder may choose to make an election in
accordance with Internal Revenue Code section 83(b) to recognize income in the
Shareholder's taxable year in which the unvested Shares are purchased. If the
Shareholder makes such an election, the Shareholder shall promptly thereafter
provide a written notice of such election to the Company.
12. Invalidity or Unenforceability. It is the intention of the
Company and the Shareholder that this Agreement shall be enforceable to the
fullest extent allowed by law. In the event that a court having jurisdiction
holds any provision of this Agreement to be invalid or unenforceable, in whole
or in part, the Company and the Shareholder agree that, if allowed by law, that
provision shall be reduced to the degree necessary to render it valid and
enforceable without affecting the rest of this Agreement.
13. Waiver. No delay or omission by the Company in exercising any
right under this Agreement shall operate as a waiver of that or any other right.
A waiver or consent given by the Company on any one occasion shall be effective
only in that instance and shall not be construed as a bar or waiver of any right
on any other occasion.
14. Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the Company and the Shareholder and their respective heirs,
executors, administrators, legal representatives, successors and assigns,
subject to the terms, conditions and restrictions set forth in this Agreement.
The
Company may assign its rights under this Agreement to a third party, provided
such assignee agrees to be bound by all of the Company's obligations under this
Agreement.
15. No Rights To Employment. Nothing contained in this Agreement
shall be construed as giving the Shareholder any right to be retained, in any
position, as an employee or other service provider of the Company for any period
of time or to restrict the Company's right to terminate the Shareholder's
employment or other service relationship at any time with or without cause or
notice.
16. Notices. All notices and other communications made or given
pursuant to this Agreement shall be in writing and shall be sufficiently made or
given if hand delivered or mailed by certified mail, addressed to the
Shareholder at the address contained in the records of the Company, or addressed
to the Company for the attention of its Corporate Secretary at its principal
office or, if the receiving party consents in advance, transmitted and received
via telecopy or via such other electronic transmission mechanism as may be
available to the parties.
17. Pronouns. Whenever the context may require, any pronouns used
in this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular form of nouns and pronouns shall include the plural, and
vice versa.
18. Shareholder. Whenever the word "Shareholder" is used in any
provision of this Agreement under circumstances where the provision should
logically be construed, as determined by the Board of Directors of the Company,
to apply to the Shareholder's estate, personal representative, beneficiary to
whom the Shares may be transferred by will or by the laws of descent and
distribution, transferees, successors or assignees, the word "Shareholder" shall
be deemed to include such persons.
19. Entire Agreement. This Agreement constitutes the entire
agreement between the parties, and supersedes all prior agreements and
understandings, relating to the subject matter of this Agreement.
20. Amendment. This Agreement may be amended or modified only by a
written instrument executed by both the Company and the Shareholder.
21. Governing Law. This Agreement shall be construed, interpreted
and enforced in accordance with the laws of the State of Delaware, without
regard to its provisions concerning the applicability of laws of other
jurisdictions. Any suit with respect hereto will be brought in the federal or
state courts in the districts which include the principal offices of the
Company, and the Shareholder hereby agrees and submits to the personal
jurisdiction and venue thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
ADVANCIS PHARMACEUTICAL CORPORATION
By: _______________________________
Print Name: _______________________
Title: ____________________________
SHAREHOLDER
___________________________________
Print Name: _______________________
Address: ___________________________________
___________________________________
___________________________________
If the Shareholder resides in community property states (currently AZ, CA, ID,
LA, NV, NM, TX, WA, WI), the Shareholder's spouse must execute the following:
SPOUSE CONSENT
The undersigned spouse of the Shareholder has read, understands, and
hereby approves the purchase of shares of Common Stock pursuant to this Stock
Restriction Agreement and the related Option Grant Agreement between the
Shareholder and the Company (the "Agreements"). In consideration of the
Company's granting my spouse the right to purchase the Shares as set forth in
the Agreements, the undersigned hereby agrees to be irrevocably bound by the
Agreements and further agrees that any community property interest shall
similarly be bound by the Agreements. The undersigned hereby appoints the
Shareholder as my attorney-in-fact with respect to any amendment or exercise of
any rights under the Agreements.
Date: ______________________ ___________________________________
Signature of Shareholder's Spouse
Address: ___________________________________
___________________________________
___________________________________
