**Exhibit 10.1**

 

PRAECIS PHARMACEUTICALS INCORPORATED

SECOND AMENDED AND RESTATED EMPLOYEE STOCKPURCHASE PLAN

 

PRAECIS PHARMACEUTICALS INCORPORATED, aDelaware corporation (the “Company”), establishes this Second Amended andRestated Employee Stock Purchase Plan (the “Plan”) so that Eligible Employees(as defined herein), if any, may be granted options to purchase Common Stock,par value $.01 per share, of the Company (“Common Stock”).

 

1.                                       Purpose.

 

The Plan provides Eligible Employees anopportunity to acquire shares of Common Stock under circumstances which enablethem to obtain the income tax benefits described in Section 423 of the InternalRevenue Code of 1986, as amended (the “Code”). The Plan is intended to provide employees an incentive to continue topromote the Company’s best interests and to enhance its long-term performance.

 

2.                                       Definitions.

 

Wherever used, the following words andphrases will have the meanings stated below unless a different meaning isplainly required by the context:

 

“Affiliated Company” means any subsidiary corporation of the Company,as defined in Section 424(f) of the Code.

 

“Applicable Grant Date” means for any Option the date on which suchOption was granted, which shall be a Semiannual Grant Date.

 

“Board” means the Board of Directors of the Company.

 

“Committee” means a committee appointed by the Board to which the Boardmay (but shall not be required to) delegate its powers to administer the Plan.

 

“Compensation” means the total cash remuneration a Participant receivesduring an Exercise Period as salary or wages, including overtime pay andbonuses and excluding all other forms of remuneration.

 

“Disability” means permanent and total disability as defined in Section22(e)(3) of the Code.

 

“Effective Date” means July 3, 2000.

 

“Eligible Employee” means each person who, on an applicable SemiannualGrant Date, is employed by the Company or an Affiliated Company and has been anemployee for six (6) or more months at that date.  An employee will not be eligible toparticipate during an Exercise Period if his or her customary employment as ofthe first day of the period is either (i) less than 20 hours per week or (ii) 5months or less on a calendar year basis. No employee will be eligible if he or she is on an applicable SemiannualGrant Date an owner of 5% or more of the

 

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outstanding capital stock of the Company or an Affiliated Company, asdetermined under Section 424(d) of the Code.

 

“Exercise Date” means any date on which an Eligible Employee purchasesCommon Stock pursuant to an Option under the Plan, which shall, with respect toeach Option, be the last day of the Exercise Period in which such Option isgranted.

 

“Exercise Period” means the approximate six-month period commencing oneach of July 3, 2000, January 1, 2001, July 2, 2001, December 31, 2001, July 1,2002,  December 30, 2002, June 30, 2003,December 29, 2003, June 28, 2004, January 3, 2005, June 27, 2005, January 2,2006, June 26, 2006 and January 1, 2007, and ending at 5 p.m. (Boston time) oneach of December 31, 2000, July 1, 2001, December 30, 2001, June 30, 2002,December 29, 2002, June 29, 2003, December 28, 2003, June 27, 2004, January 2,2005, June 26, 2005, January 1, 2006, June 25, 2006, December 31, 2006 and June24, 2007, respectively.  If the Plan is terminated,then the Exercise Period in which it is terminated shall end on the dateimmediately preceding the effective date of such termination.

 

“Fair Market Value Per Share of Common Stock” on the day ofdetermination shall mean the last sale price per share of Common Stock on suchday reported on the Nasdaq National Market as published in The Wall StreetJournal or, if no such sale is so reported, the average of the reported closingbid and asked prices on such day in the over-the-counter market, as furnishedby the National Association of Securities Dealers Automated Quotation System,or, if such price at the time is not available from such system, as furnishedby any similar system then engaged in the business of reporting such prices andselected by the Board or, if there is no such system, as furnished by anymember of the National Association of Securities Dealers, selected by theBoard.  If the Common Stock is neitherreported on the Nasdaq National Market nor traded on the over-the-countermarket, fair market value shall be such value as the Board, in good faith,determines.  Notwithstanding anyprovision of the Plan to the contrary, no determination made with respect tothe Fair Market Value Per Share of Common Stock subject to an Option shall be inconsistentwith Section 423 of the Code.

 

“Initial Notice Period” means the period beginning on the EffectiveDate and ending on the 15th day thereafter.

 

“Notice Period” means that period beginning 30 days prior to theapplicable Semiannual Grant Date (other than the first Semiannual Grant Date)and ending on the 15th day prior to said date.

 

“Option” means an option granted hereunder which will entitle anEligible Employee to purchase shares of Common Stock.

 

“Option Price” means the lower of: (1) 85% of the Fair Market Value Per Share of Common Stock as of theApplicable Grant Date on which the Option being exercised was granted or (2)85% of the Fair Market Value Per Share of Common Stock as of the Exercise Dateon which such Option is exercised.

 

“Participant” means an Eligible Employee who has elected to participatein the Plan during the period between such election and the termination of suchEligible Employee’s participation in the Plan.

 

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“Retirement” means a termination of a Participant’s employment with theCompany on or after the first day of the month of a Participant’s 65thbirthday.

 

“Semiannual Grant Date” means each of July 3, 2000, January 1, 2001,July 2, 2001, December 31, 2001, July 1, 2002, December 30, 2002, June 30, 2003, December 29, 2003, June 28, 2004,January 3, 2005, June 27, 2005, January 2, 2006, June 26, 2006 and January 1,2007.

 

“Withholding Account” means a bookkeeping record of all amountswithheld during an Exercise Period for a specific Eligible Employee, which areavailable for the exercise of an Option granted hereunder.  Specific segregation of funds is notrequired.

 

3.                                       Administration.

 

The Plan shall be administered by the Board,which, to the extent it shall determine, may delegate its powers with respectto the administration of the Plan (except its powers to terminate or amend thePlan) to the Committee.  If the Boardchooses to appoint a Committee, references hereinafter to the Board shall bedeemed to refer to the Committee. Subject to the express provisions of the Plan, the Board may interpretthe Plan, prescribe, amend and rescind rules and regulations relating to it,determine the terms and provisions of the Options granted hereunder and makeall other determinations necessary or advisable for the administration of thePlan; provided, however, that all such interpretations, rules, determinations,terms and conditions shall be made and prescribed in the context of preservingthe tax treatment of the Options under this Plan granted to Eligible Employeessubject to United States federal income taxation and preserving the taxtreatment of the Plan itself under Section 423 of the Code.  The determinations of the Board on allmatters regarding the Plan shall be conclusive.

 

4.                                       MaximumShares to be Granted under the Plan.

 

The aggregate number of shares of CommonStock available for issuance upon the exercise of Options granted pursuant toSection 5 shall be four hundred thousand (400,000) shares.  Shares of Common Stock delivered pursuant tothe Plan will be authorized but unissued shares or treasury shares.  In the event that any Option granted pursuantto Section 5 expires or is terminated, surrendered or cancelled without beingexercised, in whole or in part, for any reason, the number of shares of CommonStock theretofore subject to such Option shall again be available as sharesunderlying Options which may be granted for grant at the next Semiannual GrantDate pursuant to Section 5 and shall increase the aggregate number of shares ofCommon Stock underlying Options available for grant during the succeedingExercise Period.

 

5.                                       Eligibilityfor Participation and Granting of Options.

 

(a) Each employee of the Company who enrolls in the Plan and who is anEligible Employee on an applicable Semiannual Grant Date is granted without anyfurther action by the Board an Option hereunder which will entitle him or herto purchase, on the immediately following Exercise Date at the Option Price pershare for Options granted on such date,

 

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shares of Common Stock equal in value up to ten percent (10%) of theEligible Employee’s Compensation during the Exercise Period divided by suchapplicable Option Price per share of Common Stock.

 

(b)  Ifthe number of shares of Common Stock for which Options are granted pursuant toSection 5(a) exceeds the applicable number provided for in Section 4, then theOptions granted under Section 5(a) to all Eligible Employees shall, in anondiscriminatory manner, be reduced on a pro rata basis in a manner which theBoard determines to be consistent with Section 423 of the Code.

 

(c)  NoEligible Employee shall be granted an Option under the Plan which permits hisor her rights to purchase stock under all employee stock purchase plans (asdefined in Section 423 of the Code) of the Company and any Affiliated Companyto accrue at a rate which exceeds $25,000 of fair market value of such stock(determined at the time of the grant of such Option) for each calendar year inwhich such Option is outstanding at any time. Any Option granted under the Plan shall be deemed to be modified to theextent necessary to satisfy this Section 5(c).

 

6.                                       Terms ofOptions.

 

(a) Each Option shall automatically be exercised on the last day of theExercise Period for such Option, using the funds which have accrued in aParticipant’s Withholding Account as of such day, unless the Participantwithdraws from the Plan or is deemed to withdraw during the ExercisePeriod.  An Option granted hereunder maybe exercised only through the use of the funds which have accrued in aParticipant’s Withholding Account.  AnyOption, to the extent unexercised on the Exercise Date, shall expire on theExercise Date.

 

(b)  Assoon as reasonably possible following exercise in accordance with Section 6(a)and upon the Participant’s written request, a certificate representing thewhole number of shares of Common Stock purchased, registered in the name of theParticipant, shall be delivered to the Participant or to such other persondesignated by the Participant, including, without limitation, the Participant’sbroker.

 

(c)  AParticipant shall be deemed to have withdrawn from participation in the Planupon the occurrence of any of the following events:

 

(i)            VoluntaryDiscontinuance while Employed.  AParticipant may discontinue his or her election and withdraw from the Plan bygiving written notice to the Company, no later than the third business dayprior to the end of the then-ongoing Exercise Period, specifying that theParticipant is so withdrawing from the Plan; provided, however, that aParticipant who shall have so discontinued his or her election to participateand withdrawn from the Plan may not participate in the Plan during the nextfollowing Exercise Period.  Upon such avoluntary discontinuance of participation, amounts withheld from compensationduring the Exercise Period will be refunded

 

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(ii)           Terminationof Employment.  Unless employment hasterminated due to Retirement, Disability or death, a Participant will be deemedto have discontinued participation on the first day of the Exercise Period inwhich such Participant’s termination of employment occurs and amounts withheldfrom compensation during the Exercise Period will be refunded.

 

(iii)          Retirement.  In the event a Participant’s employmentterminates because of Retirement during the first three months of an ExercisePeriod, the Participant will be deemed to have discontinued participation onthe first day of the Exercise Period in which Retirement occurs and amountswithheld from Compensation during the Exercise Period will be refunded.  If Retirement occurs during the last threemonths of the Exercise Period, the Participant will continue to participatethrough the balance of the Exercise Period in which Retirement occurs (withoutfurther withholding) unless he or she elects a voluntary discontinuance duringthat Exercise Period.

 

(iv)          Deathor Disability.  In the event theemployment of the Participant by the Company or an Affiliated Companyterminates as a result of the Participant’s Disability or death, theParticipant will be deemed to participate (without further withholding) throughthe balance of the Exercise Period in which death or Disability occurs, unlesshe or she (or the executor, administrator or representative, as the case maybe) elects a voluntary discontinuance during that Exercise Period.

 

(v)           Levyor Attachment.  The filing with orlevying upon the Company or the custodian of any judgment, attachment,garnishee or other court order affecting the Participant’s account under thePlan will automatically terminate such Participant’s participation in the Planand amounts withheld from compensation during the Exercise Period will berefunded.

 

(vi)          PlanTermination/Expiration.  Subject toSection 12(b), termination of the Plan will terminate the participation of allParticipants in the Plan.

 

(d)  AParticipant’s employment shall not be deemed terminated by reason of a transferto another employer which is related to the Company within the meaning ofSections 424(e) or (f) of the Code.  AParticipant who has elected participation under the Plan who is absent fromwork with the Company or with an Affiliated Company because of temporarydisability (any disability other than a permanent and total Disability) or whois on leave of absence for a period of less than 90 days shall not, during theperiod of any such absence, be deemed, by virtue of such absence alone, to haveterminated employment.  In the case of aleave of absence which is longer than 90 days, a Participant will not be deemedto have terminated employment until the later of the 91st day of such leave or,if later, such date as the Participant’s reemployment rights are not protectedby contract or law.

 

(e) Upon the discontinuance of an election and withdrawal from the Plan by aParticipant, all withheld amounts in such Participant Withholding Account shallbe transferred to such Participant within thirty (30) days of such discontinuanceand withdrawal, except to the extent such withheld amounts are applied to theexercise of an Option as provided above. In no event shall any amounts be withheld from a Participant’sCompensation

 

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for allocation to such Participant’s Withholding Account after the datesuch Participant’s employment shall cease.

 

(f)  Inno event may any discontinuance of a Participant’s election and withdrawal fromthe Plan be in respect to a portion rather than all of such Participant’sWithholding Account on such date.

 

7.                                       Payment forCommon Stock Through Withholding.

 

(a)  EmployeeContributions

 

Each Eligible Employee may elect toparticipate in  the Plan by filing anenrollment application and payroll withholding form with his or her employer’spayroll department during the Initial Notice Period or during a Notice Period,which election shall be effective in the case of an election filed during theInitial Notice Period, for the Exercise Period commencing on the Effective Dateand all subsequent Exercise Periods, or, in the case of an election filedduring a Notice Period, for the next Exercise Period and for all subsequentExercise Periods, until, in any case, such Participant’s participation in thePlan terminates.  Each Eligible Employeewho elects to participate shall specify the amount of his or her contributionsto be made by payroll deduction by specifying a whole percentage from 1% to 10%of such Participant’s Compensation payable for each payroll period.

 

No interest shall accrue or be payable to anyParticipant in the Plan with respect to any sums withheld at the Participant’selection, whether such sums be applied to purchase Common Stock, or arereturned to the Participant.

 

Payroll deductions may be increased by aParticipant only during a subsequent Notice Period, but may be decreased, uponthe Participant’s written election, effective as of the first payroll periodfor which it is administratively practical to put the decrease into effect.

 

(b)  Applicationof Payroll Contributions

 

The Company shall maintain a separate accountinto which it shall deposit all amounts withheld for payment of shares ofCommon Stock and shall maintain sufficient records reflecting each Participant’sWithholding Account.

 

On the last day of each Exercise Period allamounts in a Participant’s Withholding Account shall be paid over to theCompany in payment of the Option Price for the number of whole shares of CommonStock which can be purchased on such date with such withheld total amount,unless otherwise directed in accordance with Section 6 above.  In lieu of fractional shares, unapplied cashshall be carried forward to the next Exercise Period unless the Participantrequests a cash payment.

 

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8.                                       Transferabilityof Options and Common Stock.

 

(a)  NoOption may be transferred, assigned, pledged or hypothecated (whether byoperation of law or otherwise), except as provided by will or the applicablelaws of descent or distribution, and no Option shall be subject to execution,attachment or similar process.  Anyattempted assignment, transfer, pledge, hypothecation or other disposition ofan Option, or levy of attachment or similar process upon the Option notspecifically permitted herein shall be null and void and without effect.  An Option may be exercised only by theEligible Employee during his or her lifetime, or by his or her legalrepresentative if permitted by Section 423 of the Code, or pursuant to Section6 by his or her estate or the person who acquires the right to exercise suchOption upon his or her death by bequest or inheritance.

 

(b) Participants in the Plan who wish to avail themselves of the favorabletax benefits of Section 423 of the Code may not transfer or otherwise disposeof shares of Common Stock acquired by them or on their behalf under the Plan(other than in the case of a Participant’s death) until after the later of oneyear from the date of acquisition of said shares and two years after the ApplicableGrant Date of the Option pursuant to which said shares of Common Stock wereacquired.

 

(c) Each Eligible Employee who receives shares of Common Stock pursuant tothe Plan agrees, by electing to participate, to notify the Company, in writing,immediately after such Participant makes a Disqualifying Disposition of anyshares acquired pursuant to the exercise of an Option under the Plan.  A Disqualifying Disposition is anydisposition (including any sale) of such shares before the later of two yearsafter the Applicable Grant Date for said Option or one year after the receiptof shares pursuant to the exercise of said Option.  If the Participant has died before such stockis sold, these holding period requirements do not apply and no DisqualifyingDisposition can occur thereafter.

 

9.                                       AdjustmentProvisions.

 

The aggregate number of shares of CommonStock with respect to which Options may be granted, the aggregate number ofshares of Common Stock subject to each outstanding Option and the Option Priceper share of each Option shall all be appropriately adjusted if any of thefollowing occur after the Plan’s adoption by the Board:  any increase or decrease in the number ofshares of issued Common Stock resulting from a subdivision or consolidation ofshares, whether through reorganization, recapitalization, stock split, stockdistribution or combination of shares, or the payment of a share dividend orother increase or decrease in the number of such shares outstanding effectedwithout receipt of consideration by the Company.  Adjustments shall be made according to thesole discretion of the Board, and its decision shall be binding and conclusive.

 

10.                                 Dissolution, Mergerand Consolidation

 

Upon the dissolution or liquidation of theCompany, or upon a merger or consolidation of the Company in which the Companyis not the surviving corporation, the holder of each Option then outstandingunder the Plan will thereafter be entitled to receive at the next Exercise Dateupon the exercise of such Option for each share of Common Stock as to whichsuch Option shall be exercised, as nearly as reasonably may be determined, thecash,

 

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securities and/or property which a holder of one share of the CommonStock was entitled to receive upon and at the time of such transaction.  The Board shall take such steps in connectionwith such transactions as the Board shall deem necessary to assure that theprovisions of this Section 10 shall thereafter be applicable, as nearly asreasonably may be determined, in relation to the said cash, securities and/orproperty as to which such holder of such Option might thereafter be entitled toreceive.

 

11.                                 StockholderApproval.

 

The Plan is subject to approval by theholders of a majority of the outstanding shares of Common Stock (and theholders of any other class of stock to the extent required by law, agreement orSection 423 of the Code) within 12 months before or after the date of adoptionof the Plan by the Board.  The Plan shallbe null and void and of no effect if the foregoing condition is not fulfilled.

 

12.                                 Miscellaneous

 

(a)  Legaland Other Requirements.  Theobligations of the Company to sell and deliver Common Stock under the Planshall be subject to all applicable laws, regulations, rules and approvals,including, but not by way of limitation, the effectiveness of a registrationstatement under the Securities Act of 1933, as amended, if deemed necessary orappropriate by the Company.  Certificatesfor shares of Common Stock issued hereunder may be legended to such effect asthe Board shall deem appropriate.

 

(b)  Terminationand Amendment of Plan.  Except asprovided in the following sentence, the Plan may be terminated or amended bythe stockholders of the Company, by the Board, or by the Committee, includingamendment of the Plan from time to time to designate corporations whoseemployees may be offered options under the Plan from among a group consistingof the Company and any corporation which is or becomes its Affiliate.  Amendments effecting:  (1) any increase in the aggregate number ofshares of Common Stock which may be issued under the Plan (other than anincrease merely reflecting a change in capitalization such as a stock dividendor stock split) or (2) changing the designation of corporations whose employeesmay be offered options under the Plan, except designations described in thepreceding sentence, must be approved by the stockholders of the Company withintwelve (12) months after such amendment is adopted by the Board or by theCommittee or such amendment is void ab initio. No amendment to the Plan shall affect any Options theretofore granted orany Common Stock theretofore acquired by a Participant, unless such amendmentshall expressly so provide and unless any Participant to whom an Option hasbeen granted who would be adversely affected by such amendment consents inwriting thereto.  Unless otherwisedetermined by the Board, no Options will be granted under the Plan afterJanuary 1, 2007.  The Plan shall expireon June 25, 2007, unless extended or earlier terminated in accordance with theterms hereof.

 

(c)  WithholdingTaxes.  Upon a DisqualifyingDisposition, within the meaning of Section 8(d), of any shares of Common Stockreceived pursuant to the exercise of any Option under the Plan, the Companyshall have the right to require the Participant to remit to the Company anamount sufficient to satisfy all federal, state and local requirements as toincome tax withholding and employee contributions to employment taxes or,alternatively, in the

 

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Board’s sole discretion, the Company may withhold all such amounts fromother compensation due to the Participant by the Company.

 

(d)  Rightto Terminate Employment.  Nothing inthe Plan or any agreement entered into pursuant to the Plan shall confer uponany Eligible Employee or other optionee the right to continue in the employmentof the Company or any Affiliated Company or affect any right which the Companyor any Affiliated Company may have to terminate the employment of such EligibleEmployee or other optionee.

 

(e)  Rightsas a Stockholder.  A Participantshall not have any right as a stockholder of the Company with respect to sharesof Common Stock issuable pursuant to the exercise of an Option hereunder,unless and until a certificate or certificates for such shares of Common Stockare issued to him or her or the Company reflects the Participant’s ownership inits stock ledger or other appropriate record of Common Stock ownership.

 

(f)  Leavesof Absence.  The Board shall beentitled to make such rules, regulations and determinations as it deemsappropriate under the Plan in respect of any leave of absence taken by anyEligible Employee, provided such rules are consistent with Section 423 of theCode.

 

(g)  Notices.  Every direction, revocation or noticeauthorized or required by the Plan shall be deemed delivered to the Company (1)on the date it is personally delivered to the Treasurer of the Company (or suchother person as may be designated by the Company from time to time with noticegiven to each Participant) at its principal executive offices or (2) threebusiness days after it is sent by registered or certified mail, postageprepaid, addressed to the Treasurer of the Company (or such other person as maybe designated by the Company from time to time with notice given to eachParticipant) at such offices or (3) on the date on which delivery wasguaranteed by a third party business (such as Federal Express and including thepostage service); and shall be deemed delivered to a Participant (A) on thedate it is personally delivered to him or her or (B) three business days afterit is sent by registered or certified mail, postage prepaid, addressed to himor her at the last address shown for him or her on the records of the Companyor of any Affiliate or (C) on the date on which delivery was guaranteed by athird party business (such as Federal Express and including the postalservice), provided that the documents were sent to him or her at the lastaddress shown for him or her on the records of the Company or of any Affiliate.

 

(h)  Uniformity.  All Eligible Employees shall have the samerights and privileges under the Plan, except that the amount of Common Stockwhich may be purchased under Options granted under the Plan shall bear auniform relationship to the Compensation of Eligible Employees.  All rules and determinations of the Board inthe administration of the Plan shall be uniformly and consistently applied toall persons in similar circumstances.

 

(i)  ApplicableLaw.  All questions pertaining to thevalidity, construction and administration of the Plan and Options grantedhereunder shall be determined in conformity with the laws of the Commonwealthof Massachusetts, to the extent not inconsistent with Section 423 of the Codeand the regulations thereunder.

 

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