**Exhibit10.2**

 

PRAECISPHARMACEUTICALS INCORPORATED

 

Form of

Non-QualifiedStock Option Agreement

 

PRAECIS PHARMACEUTICALSINCORPORATED, a Delaware corporation (the “Company”), hereby grants as of this [**DATE**], to [**NAME**] (the “Recipient”),an option to purchase a maximum of [**NUMBER OF SHARES**]shares of its common stock, par value $.01 per share (“Common Stock”), at theprice of $[**EXERCISE PRICE**] per share.  To the extent the option granted hereby isexercisable pursuant to the terms hereof, such option may be exercised for aperiod of up to ten years from the date granted.  The option granted hereby is subject to thefollowing terms and conditions:

 

1.                                       GrantUnder Third Amended and Restated 1995 Stock Plan.  This option is granted pursuant to and isgoverned by the Company’s Third Amended and Restated 1995 Stock Plan (asamended from time to time, the “Plan”) and, unless the context otherwiserequires, terms used herein shall have the same meaning as in the Plan.

 

2.                                       Grantas Non-Qualified Stock Option; Other Options.  This option is not intended to qualify as anincentive stock option under Section 422(b) of the Internal Revenue Codeof 1986, as amended (the “Code”).  Thisoption is in addition to any other options heretofore or hereafter granted tothe Recipient by the Company.

 

3.                                       Extentof Option if [Directorship/Consultancy] Continues.  So long as the Recipient continues to be a [memberof the Board of Directors of] [Consultant to] the Company, this option shallbecome fully exercisable after a period of one year according to the followingschedule:

 

Prior to [**DATE**], zero shares may be exercised.

 

On or after [**DATE**], [**NUMBER OF SHARESEXERCISABLE**] shares may be exercised.

 

On the [**DAY OF MONTH**] day of each month thereafter, the option shallbecome exercisable with respect to approximately [**NUMBER OFSHARES EXERCISABLE**] additional shares on each such date while theRecipient continues as a [Director of] [Consultant to] the Company.  All of the foregoing rights are subject toArticles 4 and 5, as appropriate, if the Recipient ceases to be a [member ofthe Board of Directors] [Consultant to the Company] or dies or becomes disabledwhile acting as a [member of the Board of Directors] [Consultant to theCompany].

 

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4.                                       Cessationof [Directorship/Consultancy]. If the Recipient ceases to be a [member ofthe Board of Directors] [Consultant to the Company], no further installments ofthis option shall become exercisable and, except as provided in Article 5,this option shall terminate after the passage of ninety (90) days from the datethe Recipient ceases to be a [member of the Board of Directors] [Consultant tothe Company], but in no event later than the scheduled expiration date.  In such a case, the Recipient’s only rightshereunder shall be those which are properly exercised before the termination ofthe option.

 

5.                                       Death;Disability.  If the Recipient dieswhile a [member of the Board of Directors] [Consultant to the Company], thisoption may be exercised, to the extent of the number of shares with respect towhich the Recipient could have exercised it on the date of his or her death, byhis or her estate, personal representative or beneficiary to whom this optionhas been assigned pursuant to Article 9, at any time within 180 days afterthe date of death, but not later than the scheduled expiration date.  If the Recipient ceases to be a [member ofthe Board of Directors] [Consultant to the Company] by reason of his or herdisability (as defined in the Plan), this option may be exercised, to theextent of the number of shares with respect to which the Recipient could haveexercised it on the date the Recipient ceased to be a [member of the Board ofDirectors] [Consultant to the Company], at any time within 180 days after suchcessation, but not later than the scheduled expiration date.  At the expiration of such 180-day period orthe scheduled expiration date, whichever is the earlier, this option shallterminate and the only rights hereunder shall be those as to which the optionwas properly exercised before such cessation.

 

6.                                       PartialExercise.  Exercise of this option upto the extent above stated may be made in part at any time and from time totime within the above limits, except that this option may not be exercised fora fraction of a share unless such exercise is with respect to the finalinstallment of stock subject to this option and, absent the provisions of this Article 6,a fractional share would be required to be issued to permit the Recipient toexercise completely such final installment. Any fractional share with respect to which an installment of this optioncannot be exercised because of the limitation contained in the precedingsentence shall remain subject to this option and shall be available for later purchaseby the Recipient in accordance with the terms hereof.  No fractional shares shall be issued underthe Plan and the Recipient shall receive from the Company cash in lieu of suchfractional shares.

 

7.                                       Paymentof Price.  The option price ispayable in United States dollars and may be paid (i) in cash, (ii) by check,(iii) at the discretion of the Committee, by delivery of shares of Common Stock(the value of which for this purpose shall be determined by the Committee)equal as of the date of exercise to the option price, (iv) at the discretion ofthe Committee, by delivery of the Recipient’s personal recourse note bearinginterest payable not less than annually at no less than 100% of the lowestapplicable Federal rate, as defined in Section 1274(d) of the Code, or (v)subject to clauses (iii) and (iv), by any combination of the foregoing, equalin amount to the option price.

 

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Notwithstanding theforegoing, the Recipient may not pay any part of the exercise price hereof bytransferring Common Stock to the Company if such Common Stock is both subjectto a substantial risk of forfeiture and not transferable within the meaning of Section 83of the Code.  If the Recipient delivers apersonal recourse note as provided above, the Recipient shall concurrentlyexecute and deliver to the Company a pledge agreement in a form reasonablysatisfactory the Company, together with a stock certificate or certificatesrepresenting shares of Common Stock (having an aggregate fair market value (asdetermined by the Committee) equal as of the date of exercise to at least thevalue of the principal amount of the note), duly endorsed or accompanied by astock power or powers duly endorsed, to secure the Recipient’s obligations undersuch personal recourse note.

 

8.                                       Methodof Exercising Option.  Subject to theterms and conditions of this Agreement, this option may be exercised by writtennotice to the Company, at the principal executive office of the Company at 830Winter Street, Waltham, MA 02451-1420, or to such transfer agent as the Companyshall designate.  Such notice shall statethe election to exercise this option and the number of shares in respect ofwhich it is being exercised and shall be signed by the person or persons soexercising this option.  Such noticeshall be accompanied by payment of the full purchase price of such shares, andthe Company shall deliver a certificate or certificates representing suchshares as soon as practicable after the notice shall be received.  The certificate or certificates for theshares as to which this option shall have been so exercised shall be registeredin the name of the person or persons so exercising this option (or, if thisoption shall be exercised by the Recipient and if the Recipient shall sorequest in the notice exercising this option, shall be registered in the nameof the Recipient and another person jointly, with right of survivorship) andshall be delivered as provided above to or upon the written order of the personor persons exercising this option.  Inthe event this option shall be exercised pursuant to Article 5 hereof byany person or persons other than the Recipient, such notice shall beaccompanied by appropriate proof of the right of such person or persons to exercisethis option.  All shares that shall bepurchased upon the exercise of this option as provided herein shall be fullypaid and non-assessable.

 

9.                                       OptionNot Transferable.  This option is nottransferable or assignable except by will or by the laws of descent anddistribution, or as otherwise permitted by the Committee in its solediscretion.  During the Recipient’slifetime, only the Recipient or his or her guardian or legal representative canexercise this option.

 

10.                                 NoObligation to Exercise Option.  Thegrant and acceptance of this option imposes no obligation on the Recipient toexercise it.

 

11.                                 NoObligation to Continue [Directorship/Consultancy Relationship].  The Company and any Related Corporation (asdefined in the Plan) are not by the Plan or this option obligated to continuethe Recipient in his capacity as a [member of the Board] [Consultant to theCompany].

 

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12.                                 NoRights as Stockholder until Exercise. The Recipient shall have no rights as a stockholder with respect toshares subject to this Agreement until a stock certificate therefor has beenissued to the Recipient and is fully paid for. Except as is expressly provided in the Plan with respect to certainchanges in the capitalization of the Company, no adjustment shall be made fordividends or similar rights for which the record date is prior to the date suchstock certificate is issued.

 

13.                                 CapitalChanges and Business Successions. The Plan contains provisions covering the treatment of options in anumber of contingencies such as stock splits and mergers.  Provisions in the Plan for adjustment withrespect to stock subject to options and the related provisions with respect tosuccessors to the business of the Company are hereby made applicable hereunderand are incorporated herein by reference. In general, you should not assume that options necessarily would survivethe acquisition of the Company.  In particular,without affecting the generality of the foregoing, it is understood that forthe purposes of Articles 3 through 5 hereof, both inclusive, by the Board ofDirectors of a Related Corporation (as defined in the Plan).

 

14.                                 WithholdingTaxes.  The Recipient hereby agreesthat if required by applicable law, the Company may withhold from the Recipient’swages the appropriate amount of federal, state and local withholding taxesattributable to the Recipient’s exercise of such option.  At the Company’s discretion, the amountrequired to be withheld may be withheld in cash from such wages, or (withrespect to compensation income attributable to the exercise of this option) inkind from the Common Stock otherwise deliverable to the optionee on exercise ofthis Option. The Recipient further agrees that, if the Company does notwithhold an amount from the Recipient’s wages sufficient to satisfy the Company’swithholding obligation, the Recipient will reimburse the Company on demand, incash, for the amount underwithheld.

 

15.                                 NoExercise of Option if Recipient [Removed from Board] [Terminated] forMisconduct.  If the Recipient is [removedfrom the Board of Directors] [ terminated as a Consultant] for “Misconduct,”this option shall terminate on the date the Recipient is so [removed/terminated]and shall thereupon not be exercisable to any extent whatsoever.  “Misconduct” is conduct, as determined by theCompany’s Board of Directors, involving one or more of the following:  (i) the substantial and continuing failure ofthe Recipient to render services to the Company in accordance with his or herassigned duties; (ii) disloyalty, gross negligence, dishonesty or breach offiduciary duty to the Company; (iii) the commission of an act of embezzlement,fraud, disloyalty, dishonesty or deliberate disregard of the rules or policiesof the Company which results in loss, damage or injury to the Company, whetherdirectly or indirectly; (iv) the unauthorized disclosure of any trade secret orconfidential information of the Company; or (v) the commission of an act whichconstitutes unfair competition with the Company or which induces any customerof the Company to break a contract with the Company.  In making such determination, the Board ofDirectors shall act fairly and in utmost good faith and shall give the Recipientan opportunity to appear and to be heard at a hearing before the Board ofDirectors and present evidence on his or her behalf.  For the purposes of this Article 15,removal from the 

 

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Board of Directors shallbe deemed to occur when the Recipient receives notice that his or her serviceon the Board of Directors is terminated.

 

16.                                 Lock-upAgreement.  In the event of anunderwritten public offering of the Company’s securities, the Recipient (or anypermitted transferee pursuant to Article 9), whether or not such Recipient’sshares issuable upon exercise of the option granted herein are included in suchregistration, hereby agrees not to effect any public sale or distribution,including any sale pursuant to Rule 144 under the Act, of any shares (otherthan as part of such underwritten offering), without the consent of themanaging underwriter(s) for such offering (the “Managing Underwriter”), duringa period commencing on the effective date of such registration and ending 180calendar days thereafter, or such lesser period as the Company and the ManagingUnderwriter shall reasonably determine is required to effect a successfuloffering.

 

17.                                 Incorporationof Plan.  The Plan is herebyincorporated herein by reference and made a part hereof and the option and thisAgreement are subject to all terms and conditions of the Plan.

 

18.                                 Provisionof Documentation to Recipient.  Bysigning this Agreement or a counterpart hereof, the Recipient acknowledgesreceipt of a copy of this Agreement and a copy of the Plan.

 

19.                                 Failureto Enforce Not a Waiver.  The failureof the Company to enforce at any time any provision of this Agreement shall inno way be construed to be a waiver of such provision or of any other provisionhereof.

 

20.                                 GoverningLaw.  This Agreement shall begoverned by and interpreted in accordance with the laws of the Commonwealth ofMassachusetts, without regard to the conflicts of laws provisions thereof.

 

21.                                 Counterparts.  This Agreement may be executed incounterparts, each of which shall be an original but all of which shallrepresent one and the same agreement.

 

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IN WITNESS WHEREOF, theCompany and the Recipient have caused this Agreement to be executed, and theRecipient whose signature appears below acknowledges receipt of a copy of thePlan incorporated herein by reference and acceptance of an original copy of theAgreement.

 
| PRAECIS PHARMACEUTICALS  INCORPORATED |
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