Exhibit 10.1

 

CUBIST PHARMACEUTICALS, INC.

 

AMENDED AND RESTATED
1997 EMPLOYEE STOCK PURCHASE PLAN

 

1.                                       Definitions.  As used in this 1997
Employee Stock Purchase Plan of Cubist Pharmaceuticals, Inc., the following
terms shall have the meanings respectively assigned to them below:

 

(a)                                  Base Compensation means annual or
annualized base compensation, exclusive of overtime, bonuses, contributions to
employee benefit plans, or other fringe benefits.

 

(b)                                 Beneficiary means the person designated as
the Participating Employees’ beneficiary on the Participating Employee’s
Membership Agreement or other form provided by the personnel department of the
Company for such purpose or, if no such beneficiary is named, the person to whom
the Option is transferred by will or under the applicable laws of descent and
distribution.

 

(c)                                  Board means the board of directors of the
Company, except that, if and so long as the board of directors of the Company
has delegated pursuant to Section 4 its authority with respect to the Plan to
the Committee, then all references in this Plan to the Board shall refer to the
Committee acting in such capacity.

 

(d)                                 Code means the Internal Revenue Code of
1986, as amended.

 

(e)                                  Committee means the Compensation Committee
of the Board.

 

(f)                                    Company means Cubist Pharmaceuticals,
Inc., a Delaware corporation.

 

(g)                                 Disability means, with respect to any
Participating Employee, that an independent medical doctor (selected by the
Company’s health or disability insurer) certifies that such Participating
Employee has for four (4) months, consecutive or non-consecutive, in any
twelve-month period been disabled in a manner which seriously interferes with
the performance of his or her responsibilities for the Company or applicable
Related Corporation.

 

(h)                                 Eligible Employee means a person who is
eligible under the provisions of Section 7 to receive an Option as of a
particular Offering Commencement Date.

 

(i)                                     Employer means, as to any particular
Offering Period, the Company and any Related Corporation which is designated by
the Board as a corporation whose Eligible Employees are to receive Options as of
that Offering Period’s Offering Commencement Date.

 

(j)                                     Market Value means, as of a particular
date, (i) if the Stock is listed on an exchange, the closing price of the Stock
on such date on such exchange, (ii) if the Stock is quoted through the National
Association of Securities Dealers, Inc. Automated Quotation (“NASDAQ”) National
Market System or any successor thereto, the closing price of the Stock on such
date and (iii) if the Stock is quoted through NASDAQ (but not on the National
Market System) or otherwise publicly traded, the average of the closing bid and
asked prices of the Stock on such date.

 

(k)                                  Membership Agreement means an agreement
whereby a Participating Employee authorizes an Employer to withhold payroll
deductions from his or her Base Compensation.

 

(l)                                     Offering Commencement Date means the
first business day of an Offering Period on which Options are granted to
Eligible Employees.

 

(m)                               Offering Period means a semi-annual period,
running from either January 1 to the next following June 30 or July 1 to the
next following December 31, during which Options will be offered under the Plan
pursuant to a determination by the Board.

 

(n)                                 Offering Termination Date means the last
business day of an Offering Period, on which Options must, if ever, be
exercised.

 

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(o)                                 Option means an option to purchase shares of
Stock granted under the Plan.

 

(p)                                 Option Shares means shares of Stock
purchasable under an Option.

 

(q)                                 Participating Employee means an Eligible
Employee to whom an Option is granted.

 

(r)                                    Plan means this 1997 Employee Stock
Purchase Plan of the Company, as amended from time to time.

 

(s)                                  Related Corporation means any corporation
which is or during the term of the Plan becomes a parent corporation of the
Company, as defined in Section 424(e) of the Code, or a subsidiary corporation
of the Company, as defined in Section 424(f) of the Code.

 

(t)                                    Retires means termination of employment
with the Company and all Related Corporations at or after attaining age 65.

 

(u)                                 Stock means the common stock, par value
$0.001 per share, of the Company.

 

2.                                       Purpose of the Plan.  The Plan is
intended to encourage ownership of Stock by employees of the Company and any
Related Corporations and to provide an additional incentive for the employees to
promote the success of the business of the Company and any Related
Corporations.  It is intended that the Plan shall be an “employee stock purchase
plan” within the meaning of Section 423 of the Code.

 

3.                                       Term of the Plan.  The Plan shall
become effective on December 1, 1997 (the “Effective Date”), subject to the
approval by the stockholders of the Company on or prior to the first anniversary
of the Effective Date.  No Option shall be granted under the Plan after the date
immediately preceding the tenth anniversary of the Effective Date.

 

4.                                       Administration of the Plan.  The Plan
shall be administered by the Board.  The Board shall determine semi-annually, on
or before either December 15 and June 15, whether to grant options under the
Plan with respect to the Offering Period which would otherwise begin as of
January 1 and July 1, respectively.  The Board shall determine which (if any)
Related Corporations shall be Employers as of each Offering Commencement Date. 
Either such determination may in the discretion of the Board apply to all
subsequent Offering Periods until modified or revoked by the Board.  The Board
shall have authority to interpret the Plan, to prescribe, amend and rescind
rules and regulations relating to the Plan, to determine the terms of Options
granted under the Plan, and to make all other determinations necessary or
advisable for the administration of the Plan.  All determinations of the Board
under the Plan shall be final and binding as to all persons having or claiming
any interest in or arising out of the Plan.  The Board may delegate all or any
portion of its authority with respect to the Plan to the Committee, and
thereafter, until such delegation is revoked by the Board, all powers under the
Plan delegated to the Committee shall be exercised by the Committee.

 

5.                                       Termination and Amendment of Plan.  The
Board may terminate or amend the Plan at any time; provided, however, that the
Board may not, without approval by the holders of a majority of the outstanding
shares of Stock, increase the maximum number of shares of Stock purchasable
under the Plan or change the description of employees or classes of employees
eligible to receive Options.  Without limiting the generality of the foregoing
but subject to the foregoing proviso, the Board may amend the Plan from time to
time to increase or decrease the length of any future Offering Periods (e.g., to
a nine month period) and to make all required conforming changes to the Plan. 
No termination of or amendment to the Plan may adversely affect the rights of a
Participating Employee with respect to any Option held by the Participating
Employee as of the date of such termination or amendment without his or her
consent.

 

6.                                       Shares of Stock Subject to the Plan. 
No more than an aggregate of 500,000 shares of Stock may be issued or delivered
pursuant to the exercise of Options granted under the Plan, subject to
adjustments made in accordance with Section 9.7.  Shares to be delivered upon
the exercise of Options may be either shares of Stock which are authorized but
unissued or shares of Stock held by the Company in its treasury.  If an Option
expires or terminates for any reason without having been exercised in full, the
unpurchased shares subject to the Option shall become available for other
Options granted under the Plan.  The Company shall, at all times during which
Options are outstanding, reserve and keep available shares of Stock sufficient
to satisfy such Options (or, if less, the maximum number still available for
issuance under the foregoing limit), and shall pay all fees and expenses
incurred by the Company in connection therewith.  In the event of any capital
change in the outstanding Stock as contemplated by Section 9.7, the number of
shares of Stock reserved and kept available by the Company shall be
appropriately adjusted.

 

7.                                       Persons Eligible to Receive Options. 
Each employee of an Employer shall be granted an Option on each Offering
Commencement Date on which such employee meets all of the following
requirements:

 

(a)                                  The employee is customarily employed by an
Employer for more than twenty hours per week and for more than five months per
calendar year and, in the case of any Offering Period after the first Offering
Period under the Plan, has been employed by one or more of the Employers for at
least one week prior to the applicable Offering Commencement Date.

 

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(b)                                 The employee will not, after grant of the
Option, own Stock possessing five percent or more of the total combined voting
power or value of all classes of stock of the Company or of any Related
Corporation.  For purposes of this paragraph (b), the rules of Section 424(d) of
the Code shall apply in determining the Stock ownership of the employee, and
Stock which the employee may purchase under outstanding options shall be treated
as Stock owned by the employee.

 

(c)                                  Upon grant of the Option, the employee’s
rights to purchase Stock under all employee stock purchase plans (as defined in
Section 423(b) of the Code) of the Company and its Related Corporations will not
accrue at a rate which exceeds $25,000 of fair market value of the Stock
(determined as of the grant date) for each calendar year in which such option is
outstanding at any time.  The accrual of rights to purchase Stock shall be
determined in accordance with Section 423(b)(8) of the Code.

 

8.                                       Offering Commencement Dates.  Options
shall be granted on the first business day of each semi-annual period, running
from either January 1 to the next following June 30 or July 1 to the next
following December 31, which is designated by the Board as an Offering Period. 
Following designation by the Board of the initial Offering Period under the
Plan, all succeeding semi-annual periods described above shall be deemed
Offering Periods without need of further Board action unless and until contrary
action shall have been taken by the Board prior to the beginning of what would
otherwise be an Offering Period.

 

9.                                       Terms and Conditions of Options.

 

9.1                                 General.  All Options granted on a
particular Offering Commencement Date shall comply with the terms and conditions
set forth in Sections 9.2 through 9.11.  Subject to Sections 7(c) and 9.9, each
Option granted on a particular Offering Commencement Date shall entitle the
Participating Employee to purchase that number of shares equal to the result of
$25,000 (or such lesser amount as is selected by the Board, prior to the
applicable Offering Commencement Date, and applied uniformly during such
Offering Period) divided by the Market Value of one such share on the Offering
Commencement Date and then rounded down, if necessary, to the nearest whole
number.

 

9.2                                 Purchase Price.  The purchase price of
Option Shares shall be 85% of the lesser of (a) the Market Value of the shares
as of the Offering Commencement Date or (b) the Market Value of the shares as of
the Offering Termination Date.

 

9.3                                 Restrictions on Transfer.

 

(a)                                  Options may not be transferred otherwise
than by will or under the laws of descent and distribution.  An Option may not
be exercised by anyone other than the Participating Employee during the lifetime
of the Participating Employee.

 

(b)                                 The Optionee shall agree in the Membership
Agreement to notify the Company of any transfer of Option Shares within two
years of the Offering Commencement Date for such Option Shares.  The Company
shall have the right to place a legend on all stock certificates representing
Option Shares instructing the transfer agent to notify the Company of any
transfer of such Option Shares.  The Company shall also have the right to place
a legend on all stock certificates representing Option Shares setting forth or
referring to the restriction on transferability of such Option Shares.

 

9.4                                 Expiration.  Each Option shall expire at the
close of business on the Offering Termination Date or on such earlier date as
may result from the operation of Section 9.6.

 

9.5                                 Termination of Employment of Optionee.  If a
Participating Employee ceases for any reason (other than death or Retirement) to
be continuously employed by an Employer, whether due to voluntary severance,
involuntary severance, transfer, or disaffiliation of a Related Corporation with
the Company, his or her Option shall immediately expire, and the Participating
Employee’s accumulated payroll deductions shall be returned to the Participating
Employee.  For purposes of this Section 9.5, a Participating Employee shall be
deemed to be employed throughout any leave of absence for military service,
illness or other bona fide purpose which does not exceed the longer of ninety
days or the period during which the Participating Employee’s reemployment rights
are guaranteed by statute (including without limitation the Veterans
Reemployment Rights Act or similar statute relating to military service) or by
contract.  If the Participating Employee does not return to active employment
prior to the termination of such period, his or her employment shall be deemed
to have ended on the ninety-first day of such leave of absence (or such longer
period guaranteed by statute or by contract as provided above).

 

9.6                                 Retirement or Retirement or Death of
Optionee.  If a Participating Employee Retires or dies, the Participating
Employee or, in the case of death, his or her Beneficiary shall be entitled to
withdraw the Participating Employee’s accumulated payroll deductions, or to
purchase shares on the Offering Termination Date to the extent that the
Participating Employee would be so entitled had he or she continued to be
employed by an Employer.  The number of shares purchasable shall be limited by
the amount of the Participating Employee’s accumulated payroll deductions as of
the date of his or her Retirement or death.  Accumulated payroll deductions
shall be applied by the Company toward the purchase of shares only if the
Participating Employee or, in the case of death, his or her Beneficiary submits
to the Employer not later than the Offering Termination Date a written request
that the deductions be so applied.  Accumulated payroll deductions not withdrawn
or applied to the purchase of shares shall be delivered by the Company to the

 

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Participating Employee or Beneficiary within a reasonable time after the
Offering Termination Date.

 

9.7                                 Capital Changes Affecting the Stock.  In the
event that, between the Offering Commencement Date and the Offering Termination
Date with respect to an Option, a stock dividend is paid or becomes payable in
respect of the Stock or there occurs a split-up or contraction in the number of
shares of Stock, the number of shares for which the Option may thereafter be
exercised and the price to be paid for each such share shall be proportionately
adjusted.  In the event that, after the Offering Commencement Date, there occurs
a reclassification or change of outstanding shares of Stock or a consolidation
or merger of the Company with or into another corporation or a sale or
conveyance, substantially as a whole, of the property of the Company, the
Participating Employee shall be entitled on the Offering Termination Date to
receive shares of Stock or other securities equivalent in kind and value to the
shares of Stock he or she would have held if he or she had exercised the Option
in full immediately prior to such reclassification, change, consolidation,
merger, sale or conveyance and had continued to hold such shares (together with
all other shares and securities thereafter issued in respect thereof) until the
Offering Termination Date.  In the event that there is to occur a
recapitalization involving an increase in the par value of the Stock which would
result in a par value exceeding the exercise price under an outstanding Option,
the Company shall notify the Participating Employee of such proposed
recapitalization immediately upon its being recommended by the Board to the
Company’s shareholders, after which the Participating Employee shall have the
right to exercise his or her Option prior to such recapitalization; if the
Participating Employee fails to exercise the Option prior to recapitalization,
the exercise price under the Option shall be appropriately adjusted.  In the
event that, after the Offering Commencement Date, there occurs a dissolution or
liquidation of the Company, except pursuant to a transaction to which Section
424(a) of the Code applies, each Option shall terminate, but the Participating
Employee shall have the right to exercise his or her Option prior to such
dissolution or liquidation.

 

9.8                                 Payroll Deductions.  A Participating
Employee may purchase shares under his or her Option during any particular
Offering Period by completing and returning to the Company’s personnel
department at least ten days prior to the beginning of such Offering Period a
Membership Agreement indicating a percentage (which shall be a full integer
between one and fifteen) of his or her Base Compensation which is to be withheld
each pay period.  Unless the Board decides otherwise prior to the commencement
of an Offering Period, all Participating Employees shall be permitted, no more
often than once per Offering Period, to change the percentage of Base
Compensation withheld during an Offering Period by submitting an amended
Membership Agreement to the Company’s personnel department indicating a
different percentage of Base Compensation to be withheld.  Any such amended
Membership Agreement shall become effective at the time determined pursuant to
rules adopted by the Board from time to time.  In addition, no more than once
per Offering Period, the Participating Employee may cancel his or her Agreement
and withdraw all, but not less than all, of his or her accumulated payroll
deductions by submitting a written request therefor to the Company’s personnel
department no later than the close of business on the last business day of the
Offering Period.  The percentage of Base Compensation withheld may also be
changed from one Offering Period to another.

 

9.9                                 Exercise of Options.  On the Offering
Termination Date the Participating Employee may purchase the number of shares
purchasable by his or her accumulated payroll deductions, or, if less, the
maximum number of shares subject to the Option as provided in Section 9.1,
provided that:

 

(a)                                  If the total number of shares which all
Optionees elect to purchase, together with any shares already purchased under
the Plan, exceeds the total number of shares which may be purchased under the
Plan pursuant to Section 6, the number of shares which each Optionee is
permitted to purchase shall be decreased pro rata based on the Participating
Employee’s accumulated payroll deductions in relation to all accumulated payroll
deductions otherwise to be applied to the purchase of shares as of that Offering
Termination Date.

 

(b)                                 If the number of shares purchasable includes
a fraction, such number shall be adjusted to the next smaller whole number and
the purchase price shall be adjusted accordingly.

 

Accumulated payroll deductions not withdrawn prior to the Offering Termination
Date shall be automatically applied by the Company toward the purchase of Option
Shares or, to the extent in excess of the aggregate purchase price of the shares
then purchasable by the Participating Employee, refunded to the Participating
Employee, except that where such excess is less than the purchase price for a
single share of Stock on the Offering Termination Date, such excess shall not be
refunded but instead shall be carried over and applied to the purchase of shares
in the first following Offering Period (subject to the possibility of withdrawal
by the Participating Employee during such Offering Period in accordance with the
terms of the Plan).

 

9.10                           Delivery of Stock.  Except as provided below,
within a reasonable time after the Offering Termination Date, the Company shall
deliver or cause to be delivered to the Participating Employee a certificate or
certificates for the number of shares purchased by the Participating Employee. 
A stock certificate representing the number of Shares purchased will be issued
in the participant’s name only, or if his or her Membership Agreement so
specifies, in the name of the employee and another person of legal age as joint
tenants with rights of survivorship.  If any law or applicable regulation of the
Securities and Exchange Commission or other body having jurisdiction in the
premises shall require that the Company or the Participating Employee take any
action in connection with the shares being purchased under the Option, delivery
of the certificate or certificates for such shares shall be postponed until the
necessary action shall have been completed, which action shall be taken by the
Company at its own expense, without unreasonable delay.  The Optionee shall have
no rights as a shareholder in respect of shares for which he or she has not

 

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received a certificate.

 

9.11                           Return of Accumulated Payroll Deductions.  In the
event that the Participating Employee or the Beneficiary is entitled to the
return of accumulated payroll deductions, whether by reason of voluntary
withdrawal, termination of employment, Retirement, death, or in the event that
accumulated payroll deductions exceed the price of shares purchased, such amount
shall be returned by the Company to the Participating Employee or the
Beneficiary, as the case may be, not later than within a reasonable time
following the Offering Termination Date applicable to the Option Period in which
such deductions were taken.  Accumulated payroll deductions held by the Company
shall not bear interest nor shall the Company be obligated to segregate the same
from any of its other assets.

 

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