Exhibit 10.1


 


MOMENTA
PHARMACEUTICALS, INC.


 


2004 EMPLOYEE
STOCK PURCHASE PLAN


 


The
purpose of this Plan is to provide eligible employees of Momenta
Pharmaceuticals, Inc. (the “Company”) and certain of its subsidiaries with
opportunities to purchase shares of the Company’s common stock, par value
$0.0001 per share (the “Common Stock”), commencing on the date on which the
Securities and Exchange Commission (the “SEC”) declares a registration
statement on Form S-1 for the initial public offering (the “IPO”) of the
Company’s Common Stock effective (the “Effective Date”). An aggregate of
524,652 shares of Common Stock in the aggregate have been approved for this
purpose. This Plan is intended to qualify as an “employee stock purchase plan”
as defined in Section 423 of the Internal Revenue Code of 1986, as amended
(the “Code”), and the regulations promulgated thereunder, and shall be
interpreted consistent therewith.


 


1.      ADMINISTRATION. The Plan will be
administered by the Company’s Board of Directors (the “Board”) or by a
Committee appointed by the Board (the “Committee”). The Board or the Committee
has authority to make rules and regulations for the administration of the
Plan and its interpretation and decisions with regard thereto shall be final
and conclusive.


 


2.      ELIGIBILITY. All employees of the
Company, including Directors who are employees, and all employees of any
subsidiary of the Company (as defined in Section 424(f) of the Code)
designated by the Board or the Committee from time to time (a “Designated
Subsidiary”), are eligible to participate in any one or more of the offerings
of Options (as defined in Section 9) to purchase Common Stock under the
Plan provided that:


 


(a)   they
are customarily employed by the Company or a Designated Subsidiary for more
than 20 hours a week and for more than five (5) months in a calendar year;
and 


 


(b)   they
have been employed by the Company or a Designated Subsidiary for at least
ninety (90) days prior to enrolling in the Plan; and


 


(c)   they
are employees of the Company or a Designated Subsidiary on the first day of the
applicable Plan Period (as defined below).


 


No
employee may be granted an option hereunder if such employee, immediately after
the option is granted, owns 5% or more of the total combined voting power or
value of the stock of the Company or any subsidiary. For purposes of the
preceding sentence, the attribution rules of Section 424(d) of
the Code shall apply in determining the stock ownership of an employee, and all
stock which the employee has a contractual right to purchase shall be treated
as stock owned by the employee.


 


3.     
OFFERINGS. The Company will make one or more offerings (“Offerings”) to
employees to purchase stock under this Plan. Offerings will begin each February 1,
or the first business day thereafter (the “Offering Commencement Dates”). Each
Offering Commencement Date will begin a twelve-month period (a “Plan Period”)
during which payroll deductions will be


 

















 


made and held for
the purchase of Common Stock at the end of the Plan Period. The Board or the
Committee may, at its discretion, choose a different Plan Period of twelve (12)
months or less for subsequent Offerings. Notwithstanding anything to the
contrary, the first Plan Period shall begin on the first date that the Common
Stock is publicly traded following the Company’s IPO and shall end on January 31,
2005.


 


4.      PARTICIPATION. An employee eligible on
the Offering Commencement Date of any Offering may participate in such Offering
by completing and forwarding a payroll deduction authorization form to the
employee’s appropriate payroll office at least ten (10) days prior to the
applicable Offering Commencement Date. The form will authorize a regular
payroll deduction from the Compensation received by the employee during the
Plan Period. Unless an employee files a new form or withdraws from the Plan,
his deductions and purchases will continue at the same rate for future
Offerings under the Plan as long as the Plan remains in effect. The term “Compensation”
means the amount of money reportable on the employee’s Federal Income Tax
Withholding Statement, excluding overtime, shift premium, incentive or bonus
awards, allowances and reimbursements for expenses such as relocation
allowances for travel expenses, income or gains on the exercise of Company
stock options or stock appreciation rights, and similar items, whether or not
shown on the employee’s Federal Income Tax Withholding Statement, but
including, in the case of salespersons, sales commissions to the extent
determined by the Board or the Committee.


 


5.      DEDUCTIONS. The Company will maintain
payroll deduction accounts for all participating employees. With respect to any
Offering made under this Plan, an employee may authorize a payroll deduction in
any dollar amount up to a maximum of 15% of the Compensation he or she receives
during the Plan Period or such shorter period during which deductions from
payroll are made. The minimum payroll deduction is such percentage of
compensation as may be established from time to time by the Board or the
Committee.


 


6.      DEDUCTION CHANGES. An employee may
decrease or discontinue his payroll deduction once during any Plan Period, by
filing a new payroll deduction authorization form. However, an employee may not
increase his payroll deduction during a Plan Period. If an employee elects to
discontinue his payroll deductions during a Plan Period, but does not elect to
withdraw his funds pursuant to Section 8 hereof, funds deducted prior to
his election to discontinue will be applied to the purchase of Common Stock on
the Exercise Date (as defined below).


 


7.      INTEREST. Interest will not be paid on
any employee accounts, except to the extent that the Board or the Committee, in
its sole discretion, elects to credit employee accounts with interest at such
per annum rate as it may from time to time determine.


 


8.      WITHDRAWAL OF FUNDS. An employee may at
any time prior to the close of business on the last business day in a Plan
Period and for any reason permanently draw out the balance accumulated in the
employee’s account and thereby withdraw from participation in an Offering.
Partial withdrawals are not permitted. The employee may not begin participation
again during the remainder of the Plan Period. The employee may participate in
any subsequent Offering in accordance with terms and conditions established by
the Board or the Committee.


 

















 


9.      PURCHASE OF SHARES. On the Offering
Commencement Date of each Plan Period, the Company will grant to each eligible
employee who is then a participant in the Plan an option (“Option”) to purchase
on the last business day of such Plan Period (the “Exercise Date”), at the
Option Price hereinafter provided for, the largest number of whole shares of
Common Stock of the Company as does not exceed the number of shares determined
by multiplying $2,083 by the number of full months in the Offering Period and
dividing the result by the closing price (as defined below) on the Offering
Commencement Date of such Plan Period.


 


Notwithstanding
the above, no employee may be granted an Option (as defined in Section 9)
which permits his rights to purchase Common Stock under this Plan and any other
employee stock purchase plan (as defined in Section 423(b) of the Code) of
the Company and its subsidiaries, to accrue at a rate which exceeds $25,000 of
the fair market value of such Common Stock (determined at the Offering
Commencement Date of the Plan Period) for each calendar year in which the
Option is outstanding at any time.


 


The purchase price
for each share purchased will be 85% of the closing price of the Common Stock
on (i) the first business day of such Plan Period or (ii) the
Exercise Date, whichever closing price shall be less. Such closing price shall
be (a) the closing price on any national securities exchange on which the
Common Stock is listed, (b) the closing price of the Common Stock on the
Nasdaq National Market or (c) the average of the closing bid and asked
prices in the over-the-counter-market, whichever is applicable, as published in
THE WALL STREET JOURNAL; PROVIDED, HOWEVER, that, with respect to the first
Plan Period, the closing price on the Offering Commencement Date shall be the
initial public offering price provided for in the underwriting agreement
entered into by the Company in connection with the IPO. If no sales of Common
Stock were made on such a day, the price of the Common Stock for purposes of
clauses (a) and (b) above shall be the reported price for the next
preceding day on which sales were made.


 


Each employee who
continues to be a participant in the Plan on the Exercise Date shall be deemed
to have exercised his Option at the Option Price on such date and shall be
deemed to have purchased from the Company the number of full shares of Common
Stock reserved for the purpose of the Plan that his accumulated payroll
deductions on such date will pay for, but not in excess of the maximum number
determined in the manner set forth above.


 


Any balance
remaining in an employee’s payroll deduction account at the end of a Plan
Period will be automatically refunded to the employee, except that any balance
which is less than the purchase price of one share of Common Stock will be
carried forward into the employee’s payroll deduction account for the following
Offering, unless the employee elects not to participate in the following
Offering under the Plan, in which case the balance in the employee’s account
shall be refunded.


 


10.     ISSUANCE OF CERTIFICATES. Certificates
representing shares of Common Stock purchased under the Plan may be issued only
in the name of the employee, in the name of the employee and another person of
legal age as joint tenants with rights of survivorship, or (in the Company’s
sole discretion) in the name of a brokerage firm, bank or other nominee holder
designated by the employee. The Company may, in its sole discretion and in
compliance with


 

















 


applicable laws,
authorize the use of book entry registration of shares in lieu of issuing stock
certificates.


 


11.     RIGHTS ON DEATH OR TERMINATION OF
EMPLOYMENT. In the event of a participating employee’s termination of
employment prior to the last business day of a Plan Period, no payroll
deduction shall be taken from any pay due and owing to an employee and the
balance in the employee’s account shall be paid to the employee or, in the
event of the employee’s death, (a) to a beneficiary previously designated
in a revocable notice signed by the employee (with any spousal consent required
under state law) or (b) in the absence of such a designated beneficiary,
to the executor or administrator of the employee’s estate or (c) if no
such executor or administrator has been appointed to the knowledge of the
Company, to such other person(s) as the Company may, in its discretion,
designate. If, prior to the last business day of the Plan Period, the
Designated Subsidiary by which an employee is employed shall cease to be a
subsidiary of the Company, or if the employee is transferred to a subsidiary of
the Company that is not a Designated Subsidiary, the employee shall be deemed
to have terminated employment for the purposes of this Plan.


 


12.     OPTIONEES NOT STOCKHOLDERS. Neither the
granting of an Option to an employee nor the deductions from his pay shall
constitute such employee a stockholder of the shares of Common Stock covered by
an Option under this Plan until such shares have been purchased by and issued
to him.


 


13.     RIGHTS NOT TRANSFERABLE. Rights under this
Plan are not transferable by a participating employee other than by will or the
laws of descent and distribution, and are exercisable during the employee’s
lifetime only by the employee.


 


14.     APPLICATION OF FUNDS. All funds received
or held by the Company under this Plan may be combined with other corporate
funds and may be used for any corporate purpose.


 


15.     ADJUSTMENT IN CASE OF CHANGES AFFECTING
COMMON STOCK. In the event of a subdivision of outstanding shares of Common
Stock, or the payment of a dividend in Common Stock, the number of shares
approved for this Plan, and the share limitation set forth in Section 9,
shall be increased proportionately, and such other adjustment shall be made as
may be deemed equitable by the Board or the Committee. In the event of any
other change affecting the Common Stock, such adjustment shall be made as may
be deemed equitable by the Board or the Committee to give proper effect to such
event.


 


16.     MERGER. If the Company shall at any time
merge or consolidate with another corporation and the holders of the capital
stock of the Company immediately prior to such merger or consolidation continue
to hold at least 80% by voting power of the capital stock of the surviving
corporation (“Continuity of Control”), the holder of each Option then
outstanding will thereafter be entitled to receive at the next Exercise Date
upon the exercise of such Option for each share as to which such Option shall
be exercised the securities or property which a holder of one share of the
Common Stock was entitled to upon and at the time of such merger or
consolidation, and the Board or the Committee shall take such steps in
connection with such merger or consolidation as the Board or the Committee
shall deem necessary to assure that the provisions of Section 15 shall
thereafter be applicable, as nearly as reasonably may be, in


 

















 


relation to the said securities
or property as to which such holder of such Option might thereafter be entitled
to receive thereunder.


 


In the event of a
merger or consolidation of the Company with or into another corporation which
does not involve Continuity of Control, or of a sale of all or substantially
all of the assets of the Company while unexercised Options remain outstanding
under the Plan, (a) subject to the provisions of clauses (b) and (c),
after the effective date of such transaction, each holder of an outstanding
Option shall be entitled, upon exercise of such Option, to receive in lieu of
shares of Common Stock, shares of such stock or other securities as the holders
of shares of Common Stock received pursuant to the terms of such transaction;
or (b) all outstanding Options may be cancelled by the Board or the
Committee as of a date prior to the effective date of any such transaction and
all payroll deductions shall be paid out to the participating employees; or (c) all
outstanding Options may be cancelled by the Board or the Committee as of the
effective date of any such transaction, provided that notice of such
cancellation shall be given to each holder of an Option, and each holder of an
Option shall have the right to exercise such Option in full based on payroll deductions
then credited to his account as of a date determined by the Board or the
Committee, which date shall not be less than ten (10) days preceding the
effective date of such transaction.


 


17.     AMENDMENT OF THE PLAN. The Board may at
any time, and from time to time, amend this Plan in any respect, except that (a) if
the approval of any such amendment by the stockholders of the Company is
required by Section 423 of the Code, such amendment shall not be effected
without such approval, and (b) in no event may any amendment be made which
would cause the Plan to fail to comply with Section 423 of the Code.


 


18.     INSUFFICIENT
SHARES. In the event that the total number of shares of Common Stock specified
in elections to be purchased under any Offering plus the number of shares
purchased under previous Offerings under this Plan exceeds the maximum number
of shares issuable under this Plan, the Board or the Committee will allot the
shares then available on a pro rata basis.


 


19.     TERMINATION
OF THE PLAN. This Plan may be terminated at any time by the Board. Upon
termination of this Plan all amounts in the accounts of participating employees
shall be promptly refunded.


 


20.     GOVERNMENTAL
REGULATIONS. The Company’s obligation to sell and deliver Common Stock under
this Plan is subject to listing on a national stock exchange or quotation on
the Nasdaq National Market (to the extent the Common Stock is then so listed or
quoted) and the approval of all governmental authorities required in connection
with the authorization, issuance or sale of such stock.


 


21.     GOVERNING
LAW. The Plan shall be governed by Delaware law except to the extent that such
law is preempted by federal law.


 


22.     ISSUANCE
OF SHARES. Shares may be issued upon exercise of an Option from authorized but
unissued Common Stock, from shares held in the treasury of the Company, or from
any other proper source.


 

















 


23.     NOTIFICATION
UPON SALE OF SHARES. Each employee agrees, by entering the Plan, to promptly
give the Company notice of any disposition of shares purchased under the Plan
where such disposition occurs within two years after the date of grant of the
Option pursuant to which such shares were purchased.


 


24.     WITHHOLDING.
Each employee shall, no later than the date of the event creating the tax
liability, make provision satisfactory to the Board for payment of any taxes
required by law to be withheld in connection with any transaction related to
Options granted to or shares acquired by such employee pursuant to the Plan.
The Company may, to the extent permitted by law, deduct any such taxes from any
payment of any kind otherwise due to an employee.


 


25.     EFFECTIVE
DATE AND APPROVAL OF STOCKHOLDERS. The Plan shall take effect on the Effective
Date, subject to approval by the stockholders of the Company as required by Section 423
of the Code, which approval must occur within twelve months of the adoption of
the Plan by the Board.


 


26.     SPECIAL
PROVISIONS FOR FIRST PLAN PERIOD. The following provisions of this Section 26
shall apply with respect to the first Plan Period notwithstanding any provision
of the Plan to the contrary:


 


(a)    
Every eligible employee shall automatically become a participant in the
Plan for the first Plan Period at the highest percentage of Compensation permitted
under Section 5. No payroll deductions shall be required for the first
Plan Period; HOWEVER, a participant may, at any time after the effectiveness of
the Plan’s Registration Statement on Form S-8, elect to have payroll
deductions up to the aggregate amount which would have been credited to his or
her account if a deduction of fifteen percent (15%) of the Compensation which
he or she received on each pay day during the first Plan Period had been made
(the “Maximum Amount”) or decline to participate by filing an appropriate
subscription agreement.


 


(b)    
Upon the automatic exercise of a participant’s option on the Exercise
Date for the First Plan Period, a participant shall be permitted to purchase
shares with (i) the accumulated payroll deductions in his or her account,
if any, (ii) a direct payment form the participant, or (iii) a
combination thereof; PROVIDED, HOWEVER, that the total amount applied to the
purchase may not exceed the Maximum Amount.


 


Adopted by the Board of Directors on March 8, 2004


Updated to reflect a
1.28-for-1 split of the Company’s Common Stock effected on May 10, 2004