Exhibit 10.1


 


PRAECIS PHARMACEUTICALS INCORPORATED


SECOND AMENDED AND RESTATED EMPLOYEE STOCK
PURCHASE PLAN


 


PRAECIS PHARMACEUTICALS INCORPORATED, a
Delaware corporation (the “Company”), establishes this Second Amended and
Restated 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 an
opportunity to acquire shares of Common Stock under circumstances which enable
them to obtain the income tax benefits described in Section 423 of the Internal
Revenue Code of 1986, as amended (the “Code”). 
The Plan is intended to provide employees an incentive to continue to
promote the Company’s best interests and to enhance its long-term performance.


 


2.                                       Definitions.


 


Wherever used, the following words and
phrases will have the meanings stated below unless a different meaning is
plainly 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 such
Option 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 Board
may (but shall not be required to) delegate its powers to administer the Plan.


 


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


 


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


 


“Effective Date” means July 3, 2000.


 


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


 





















 


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


 


“Exercise Date” means any date on which an Eligible Employee purchases
Common Stock pursuant to an Option under the Plan, which shall, with respect to
each Option, be the last day of the Exercise Period in which such Option is
granted.


 


“Exercise Period” means the approximate six-month period commencing on
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, and ending at 5 p.m. (Boston time) on
each 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 June
24, 2007, respectively.  If the Plan is terminated,
then the Exercise Period in which it is terminated shall end on the date
immediately preceding the effective date of such termination.


 


“Fair Market Value Per Share of Common Stock” on the day of
determination shall mean the last sale price per share of Common Stock on such
day reported on the Nasdaq National Market as published in The Wall Street
Journal or, if no such sale is so reported, the average of the reported closing
bid and asked prices on such day in the over-the-counter market, as furnished
by the National Association of Securities Dealers Automated Quotation System,
or, if such price at the time is not available from such system, as furnished
by any similar system then engaged in the business of reporting such prices and
selected by the Board or, if there is no such system, as furnished by any
member of the National Association of Securities Dealers, selected by the
Board.  If the Common Stock is neither
reported on the Nasdaq National Market nor traded on the over-the-counter
market, fair market value shall be such value as the Board, in good faith,
determines.  Notwithstanding any
provision of the Plan to the contrary, no determination made with respect to
the Fair Market Value Per Share of Common Stock subject to an Option shall be inconsistent
with Section 423 of the Code.


 


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


 


“Notice Period” means that period beginning 30 days prior to the
applicable 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 an
Eligible 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 the
Applicable 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 Date
on which such Option is exercised.


 


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


 


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


 


“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 amounts
withheld during an Exercise Period for a specific Eligible Employee, which are
available for the exercise of an Option granted hereunder.  Specific segregation of funds is not
required.


 


3.                                       Administration.


 


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


 


4.                                       Maximum
Shares to be Granted under the Plan.


 


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


 


5.                                       Eligibility
for Participation and Granting of Options.


 


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


 


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


 


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


 


(c)  No
Eligible Employee shall be granted an Option under the Plan which permits his
or her rights to purchase stock under all employee stock purchase plans (as
defined in Section 423 of the Code) of the Company and any Affiliated Company
to 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 in
which such Option is outstanding at any time. 
Any Option granted under the Plan shall be deemed to be modified to the
extent necessary to satisfy this Section 5(c).


 


6.                                       Terms of
Options.


 


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


 


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


 


(c)  A
Participant shall be deemed to have withdrawn from participation in the Plan
upon the occurrence of any of the following events:


 


(i)            Voluntary
Discontinuance while Employed.  A
Participant may discontinue his or her election and withdraw from the Plan by
giving written notice to the Company, no later than the third business day
prior to the end of the then-ongoing Exercise Period, specifying that the
Participant is so withdrawing from the Plan; provided, however, that a
Participant who shall have so discontinued his or her election to participate
and withdrawn from the Plan may not participate in the Plan during the next
following Exercise Period.  Upon such a
voluntary discontinuance of participation, amounts withheld from compensation
during the Exercise Period will be refunded


 


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(ii)           Termination
of Employment.  Unless employment has
terminated due to Retirement, Disability or death, a Participant will be deemed
to have discontinued participation on the first day of the Exercise Period in
which such Participant’s termination of employment occurs and amounts withheld
from compensation during the Exercise Period will be refunded.


 


(iii)          Retirement.  In the event a Participant’s employment
terminates because of Retirement during the first three months of an Exercise
Period, the Participant will be deemed to have discontinued participation on
the first day of the Exercise Period in which Retirement occurs and amounts
withheld from Compensation during the Exercise Period will be refunded.  If Retirement occurs during the last three
months of the Exercise Period, the Participant will continue to participate
through the balance of the Exercise Period in which Retirement occurs (without
further withholding) unless he or she elects a voluntary discontinuance during
that Exercise Period.


 


(iv)          Death
or Disability.  In the event the
employment of the Participant by the Company or an Affiliated Company
terminates as a result of the Participant’s Disability or death, the
Participant will be deemed to participate (without further withholding) through
the balance of the Exercise Period in which death or Disability occurs, unless
he or she (or the executor, administrator or representative, as the case may
be) elects a voluntary discontinuance during that Exercise Period.


 


(v)           Levy
or Attachment.  The filing with or
levying upon the Company or the custodian of any judgment, attachment,
garnishee or other court order affecting the Participant’s account under the
Plan will automatically terminate such Participant’s participation in the Plan
and amounts withheld from compensation during the Exercise Period will be
refunded.


 


(vi)          Plan
Termination/Expiration.  Subject to
Section 12(b), termination of the Plan will terminate the participation of all
Participants in the Plan.


 


(d)  A
Participant’s employment shall not be deemed terminated by reason of a transfer
to another employer which is related to the Company within the meaning of
Sections 424(e) or (f) of the Code.  A
Participant who has elected participation under the Plan who is absent from
work with the Company or with an Affiliated Company because of temporary
disability (any disability other than a permanent and total Disability) or who
is on leave of absence for a period of less than 90 days shall not, during the
period of any such absence, be deemed, by virtue of such absence alone, to have
terminated employment.  In the case of a
leave of absence which is longer than 90 days, a Participant will not be deemed
to 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 protected
by contract or law.


 


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


 


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


 


(f)  In
no event may any discontinuance of a Participant’s election and withdrawal from
the Plan be in respect to a portion rather than all of such Participant’s
Withholding Account on such date.


 


7.                                       Payment for
Common Stock Through Withholding.


 


(a)  Employee
Contributions


 


Each Eligible Employee may elect to
participate in  the Plan by filing an
enrollment application and payroll withholding form with his or her employer’s
payroll department during the Initial Notice Period or during a Notice Period,
which election shall be effective in the case of an election filed during the
Initial Notice Period, for the Exercise Period commencing on the Effective Date
and all subsequent Exercise Periods, or, in the case of an election filed
during a Notice Period, for the next Exercise Period and for all subsequent
Exercise Periods, until, in any case, such Participant’s participation in the
Plan terminates.  Each Eligible Employee
who elects to participate shall specify the amount of his or her contributions
to 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 any
Participant in the Plan with respect to any sums withheld at the Participant’s
election, whether such sums be applied to purchase Common Stock, or are
returned to the Participant.


 


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


 


(b)  Application
of Payroll Contributions


 


The Company shall maintain a separate account
into which it shall deposit all amounts withheld for payment of shares of
Common Stock and shall maintain sufficient records reflecting each Participant’s
Withholding Account.


 


On the last day of each Exercise Period all
amounts in a Participant’s Withholding Account shall be paid over to the
Company in payment of the Option Price for the number of whole shares of Common
Stock 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 cash
shall be carried forward to the next Exercise Period unless the Participant
requests a cash payment.


 


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8.                                       Transferability
of Options and Common Stock.


 


(a)  No
Option may be transferred, assigned, pledged or hypothecated (whether by
operation of law or otherwise), except as provided by will or the applicable
laws of descent or distribution, and no Option shall be subject to execution,
attachment or similar process.  Any
attempted assignment, transfer, pledge, hypothecation or other disposition of
an Option, or levy of attachment or similar process upon the Option not
specifically permitted herein shall be null and void and without effect.  An Option may be exercised only by the
Eligible Employee during his or her lifetime, or by his or her legal
representative if permitted by Section 423 of the Code, or pursuant to Section
6 by his or her estate or the person who acquires the right to exercise such
Option upon his or her death by bequest or inheritance.


 


(b) 
Participants in the Plan who wish to avail themselves of the favorable
tax benefits of Section 423 of the Code may not transfer or otherwise dispose
of 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 one
year from the date of acquisition of said shares and two years after the Applicable
Grant Date of the Option pursuant to which said shares of Common Stock were
acquired.


 


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


 


9.                                       Adjustment
Provisions.


 


The aggregate number of shares of Common
Stock with respect to which Options may be granted, the aggregate number of
shares of Common Stock subject to each outstanding Option and the Option Price
per share of each Option shall all be appropriately adjusted if any of the
following occur after the Plan’s adoption by the Board:  any increase or decrease in the number of
shares of issued Common Stock resulting from a subdivision or consolidation of
shares, whether through reorganization, recapitalization, stock split, stock
distribution or combination of shares, or the payment of a share dividend or
other increase or decrease in the number of such shares outstanding effected
without receipt of consideration by the Company.  Adjustments shall be made according to the
sole discretion of the Board, and its decision shall be binding and conclusive.


 


10.                                 Dissolution, Merger
and Consolidation


 


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


 


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


 


11.                                 Stockholder
Approval.


 


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


 


12.                                 Miscellaneous


 


(a)  Legal
and Other Requirements.  The
obligations of the Company to sell and deliver Common Stock under the Plan
shall be subject to all applicable laws, regulations, rules and approvals,
including, but not by way of limitation, the effectiveness of a registration
statement under the Securities Act of 1933, as amended, if deemed necessary or
appropriate by the Company.  Certificates
for shares of Common Stock issued hereunder may be legended to such effect as
the Board shall deem appropriate.


 


(b)  Termination
and Amendment of Plan.  Except as
provided in the following sentence, the Plan may be terminated or amended by
the stockholders of the Company, by the Board, or by the Committee, including
amendment of the Plan from time to time to designate corporations whose
employees may be offered options under the Plan from among a group consisting
of the Company and any corporation which is or becomes its Affiliate.  Amendments effecting:  (1) any increase in the aggregate number of
shares of Common Stock which may be issued under the Plan (other than an
increase merely reflecting a change in capitalization such as a stock dividend
or stock split) or (2) changing the designation of corporations whose employees
may be offered options under the Plan, except designations described in the
preceding sentence, must be approved by the stockholders of the Company within
twelve (12) months after such amendment is adopted by the Board or by the
Committee or such amendment is void ab initio. 
No amendment to the Plan shall affect any Options theretofore granted or
any Common Stock theretofore acquired by a Participant, unless such amendment
shall expressly so provide and unless any Participant to whom an Option has
been granted who would be adversely affected by such amendment consents in
writing thereto.  Unless otherwise
determined by the Board, no Options will be granted under the Plan after
January 1, 2007.  The Plan shall expire
on June 25, 2007, unless extended or earlier terminated in accordance with the
terms hereof.


 


(c)  Withholding
Taxes.  Upon a Disqualifying
Disposition, within the meaning of Section 8(d), of any shares of Common Stock
received pursuant to the exercise of any Option under the Plan, the Company
shall have the right to require the Participant to remit to the Company an
amount sufficient to satisfy all federal, state and local requirements as to
income 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 from
other compensation due to the Participant by the Company.


 


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


 


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


 


(f)  Leaves
of Absence.  The Board shall be
entitled to make such rules, regulations and determinations as it deems
appropriate under the Plan in respect of any leave of absence taken by any
Eligible Employee, provided such rules are consistent with Section 423 of the
Code.


 


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


 


(h)  Uniformity.  All Eligible Employees shall have the same
rights and privileges under the Plan, except that the amount of Common Stock
which may be purchased under Options granted under the Plan shall bear a
uniform relationship to the Compensation of Eligible Employees.  All rules and determinations of the Board in
the administration of the Plan shall be uniformly and consistently applied to
all persons in similar circumstances.


 


(i)  Applicable
Law.  All questions pertaining to the
validity, construction and administration of the Plan and Options granted
hereunder shall be determined in conformity with the laws of the Commonwealth
of Massachusetts, to the extent not inconsistent with Section 423 of the Code
and the regulations thereunder.


 


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