Document:

Exhibit
10.2

 

PRAECIS
PHARMACEUTICALS INCORPORATED

 

Form of

Non-Qualified
Stock Option Agreement

 

PRAECIS PHARMACEUTICALS
INCORPORATED, 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 the
price of $[EXERCISE PRICE] per share.  To the extent the option granted hereby is
exercisable pursuant to the terms hereof, such option may be exercised for a
period of up to ten years from the date granted.  The option granted hereby is subject to the
following terms and conditions:

 

1.                                       Grant
Under Third Amended and Restated 1995 Stock Plan.  This option is granted pursuant to and is
governed by the Company’s Third Amended and Restated 1995 Stock Plan (as
amended from time to time, the “Plan”) and, unless the context otherwise
requires, terms used herein shall have the same meaning as in the Plan.

 

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

 

3.                                       Extent
of Option if [Directorship/Consultancy] Continues.  So long as the Recipient continues to be a [member
of the Board of Directors of] [Consultant to] the Company, this option shall
become fully exercisable after a period of one year according to the following
schedule:

 

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

 

On or after [DATE], [NUMBER OF SHARES
EXERCISABLE] shares may be exercised.

 

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

 

1

 

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

 

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

 

6.                                       Partial
Exercise.  Exercise of this option up
to the extent above stated may be made in part at any time and from time to
time within the above limits, except that this option may not be exercised for
a fraction of a share unless such exercise is with respect to the final
installment 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 to
exercise completely such final installment. 
Any fractional share with respect to which an installment of this option
cannot be exercised because of the limitation contained in the preceding
sentence shall remain subject to this option and shall be available for later purchase
by the Recipient in accordance with the terms hereof.  No fractional shares shall be issued under
the Plan and the Recipient shall receive from the Company cash in lieu of such
fractional shares.

 

7.                                       Payment
of Price.  The option price is
payable 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 of
the Committee, by delivery of the Recipient’s personal recourse note bearing
interest payable not less than annually at no less than 100% of the lowest
applicable 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, equal
in amount to the option price.

 

2

 

Notwithstanding the
foregoing, the Recipient may not pay any part of the exercise price hereof by
transferring Common Stock to the Company if such Common Stock is both subject
to a substantial risk of forfeiture and not transferable within the meaning of Section 83
of the Code.  If the Recipient delivers a
personal recourse note as provided above, the Recipient shall concurrently
execute and deliver to the Company a pledge agreement in a form reasonably
satisfactory the Company, together with a stock certificate or certificates
representing shares of Common Stock (having an aggregate fair market value (as
determined by the Committee) equal as of the date of exercise to at least the
value of the principal amount of the note), duly endorsed or accompanied by a
stock power or powers duly endorsed, to secure the Recipient’s obligations under
such personal recourse note.

 

8.                                       Method
of Exercising Option.  Subject to the
terms and conditions of this Agreement, this option may be exercised by written
notice to the Company, at the principal executive office of the Company at 830
Winter Street, Waltham, MA 02451-1420, or to such transfer agent as the Company
shall designate.  Such notice shall state
the election to exercise this option and the number of shares in respect of
which it is being exercised and shall be signed by the person or persons so
exercising this option.  Such notice
shall be accompanied by payment of the full purchase price of such shares, and
the Company shall deliver a certificate or certificates representing such
shares as soon as practicable after the notice shall be received.  The certificate or certificates for the
shares as to which this option shall have been so exercised shall be registered
in the name of the person or persons so exercising this option (or, if this
option shall be exercised by the Recipient and if the Recipient shall so
request in the notice exercising this option, shall be registered in the name
of the Recipient and another person jointly, with right of survivorship) and
shall be delivered as provided above to or upon the written order of the person
or persons exercising this option.  In
the event this option shall be exercised pursuant to Article 5 hereof by
any person or persons other than the Recipient, such notice shall be
accompanied by appropriate proof of the right of such person or persons to exercise
this option.  All shares that shall be
purchased upon the exercise of this option as provided herein shall be fully
paid and non-assessable.

 

9.                                       Option
Not Transferable.  This option is not
transferable or assignable except by will or by the laws of descent and
distribution, or as otherwise permitted by the Committee in its sole
discretion.  During the Recipient’s
lifetime, only the Recipient or his or her guardian or legal representative can
exercise this option.

 

10.                                 No
Obligation to Exercise Option.  The
grant and acceptance of this option imposes no obligation on the Recipient to
exercise it.

 

11.                                 No
Obligation to Continue [Directorship/Consultancy Relationship].  The Company and any Related Corporation (as
defined in the Plan) are not by the Plan or this option obligated to continue
the Recipient in his capacity as a [member of the Board] [Consultant to the
Company].

 

3

 

12.                                 No
Rights as Stockholder until Exercise. 
The Recipient shall have no rights as a stockholder with respect to
shares subject to this Agreement until a stock certificate therefor has been
issued to the Recipient and is fully paid for. 
Except as is expressly provided in the Plan with respect to certain
changes in the capitalization of the Company, no adjustment shall be made for
dividends or similar rights for which the record date is prior to the date such
stock certificate is issued.

 

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

 

14.                                 Withholding
Taxes.  The Recipient hereby agrees
that if required by applicable law, the Company may withhold from the Recipient’s
wages the appropriate amount of federal, state and local withholding taxes
attributable to the Recipient’s exercise of such option.  At the Company’s discretion, the amount
required to be withheld may be withheld in cash from such wages, or (with
respect to compensation income attributable to the exercise of this option) in
kind from the Common Stock otherwise deliverable to the optionee on exercise of
this Option. The Recipient further agrees that, if the Company does not
withhold an amount from the Recipient’s wages sufficient to satisfy the Company’s
withholding obligation, the Recipient will reimburse the Company on demand, in
cash, for the amount underwithheld.

 

15.                                 No
Exercise of Option if Recipient [Removed from Board] [Terminated] for
Misconduct.  If the Recipient is [removed
from 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 the
Company’s Board of Directors, involving one or more of the following:  (i) the substantial and continuing failure of
the Recipient to render services to the Company in accordance with his or her
assigned duties; (ii) disloyalty, gross negligence, dishonesty or breach of
fiduciary duty to the Company; (iii) the commission of an act of embezzlement,
fraud, disloyalty, dishonesty or deliberate disregard of the rules or policies
of the Company which results in loss, damage or injury to the Company, whether
directly or indirectly; (iv) the unauthorized disclosure of any trade secret or
confidential information of the Company; or (v) the commission of an act which
constitutes unfair competition with the Company or which induces any customer
of the Company to break a contract with the Company.  In making such determination, the Board of
Directors shall act fairly and in utmost good faith and shall give the Recipient
an opportunity to appear and to be heard at a hearing before the Board of
Directors and present evidence on his or her behalf.  For the purposes of this Article 15,
removal from the 

 

4

 

Board of Directors shall
be deemed to occur when the Recipient receives notice that his or her service
on the Board of Directors is terminated.

 

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

 

17.                                 Incorporation
of Plan.  The Plan is hereby
incorporated herein by reference and made a part hereof and the option and this
Agreement are subject to all terms and conditions of the Plan.

 

18.                                 Provision
of Documentation to Recipient.  By
signing this Agreement or a counterpart hereof, the Recipient acknowledges
receipt of a copy of this Agreement and a copy of the Plan.

 

19.                                 Failure
to Enforce Not a Waiver.  The failure
of the Company to enforce at any time any provision of this Agreement shall in
no way be construed to be a waiver of such provision or of any other provision
hereof.

 

20.                                 Governing
Law.  This Agreement shall be
governed by and interpreted in accordance with the laws of the Commonwealth of
Massachusetts, without regard to the conflicts of laws provisions thereof.

 

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

 

5

 

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

 

	
  PRAECIS PHARMACEUTICALS
  INCORPORATED

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Recipient

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Print Name of Recipient

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Street Address

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  City

  	
  State

  	
  Zip Code

  	
   

  
					

 

6Exhibit 10.5

 

CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY

WITH THE SECURITIES AND EXCHANGE COMMISSION.

ASTERISKS (*) DENOTE SUCH OMISSIONS.

 

AMENDMENT NO. 2 dated as of August 30, 2004 (this “Amendment”) TO
THE DEVELOPMENT AND SUPPLY AGREEMENT concluded between UCB S.A. and AMGEN INC.
(thereafter assigned to PRAECIS PHARMACEUTICALS INCORPORATED) dated June 21,
2000

 

 

	
  BETWEEN

  	
   

  	
  UCB S.A., acting in its own name and on behalf of its
  affiliated companies, with registered offices at Allée de la Recherche 60,
  B-1070 Brussels, Belgium, hereinafter “UCB”, on the
  one hand,

  
	
   

  	
   

  	
   

  
	
  AND

  	
   

  	
  PRAECIS PHARMACEUTICALS
  INCORPORATED,
  with registered office at 830 Winter Street, Waltham, Massachusetts 02451,
  hereinafter “Praecis”,

  

 

 

WHEREAS, by agreement dated June 21, 2000 UCB and
Amgen Inc., hereinafter “Amgen”,
entered into a contract (the “Original Agreement”) for the development and
supply of bulk API for a compound identified as abarelix; and

 

WHEREAS, effective as of December 17, 2001, Amgen
assigned to Praecis, and Praecis accepted such assignment and assumed, all of
Amgen’s rights, interests, and obligations under the Original Agreement (the “Assignment”); and

 

WHEREAS, further to Amgen’s forecasts made prior to the
Assignment, UCB had reasonably anticipated further purchase of API by Amgen
under the Original Agreement and had therefore purchased a significant amount
of Raw Materials (as defined below); which further to the Assignment did remain
in UCB’s inventory; and

 

WHEREAS, following the Assignment, UCB and Praecis
amended the Original Agreement as of March 26, 2002 to replace certain
exhibits thereto (the Original Agreement, as so amended, the “Agreement”); and

 

WHEREAS, UCB and Praecis desire to further amend the
Agreement to provide for the purchase by Praecis of a certain quantity of API
produced using the Raw Materials and to make certain other modifications to the
rights and obligations of the Parties thereunder;

 

NOW, THEREFORE in consideration of
the foregoing and the agreements contained herein, and intending to be legally
bound, the Parties have agreed as
follows:

 

1.                                     Amendment of Article One - Definitions.
 Article One of the Agreement is hereby
amended to add the following definitions:

 

 

“New Process” shall mean a new *** manufacturing process for API being developed by the
Parties, involving a *** process.

 

“Raw Materials” shall mean certain excess
abarelix-specific amino acid derivatives currently in UCB’s inventory in such
quantities as detailed separately by UCB to Praecis.  UCB shall provide periodic reports to Praecis
updating the amount of such Raw Materials remaining in its inventory.  All Raw Materials shall be stored at UCB at
no cost to Praecis.  UCB shall ensure that
the Raw Materials meet UCB’s abarelix raw material specifications for cGMP
manufacture at the specific time(s) of API manufacture in accordance with the
Production Schedule specified in Section C.2. of Exhibit A hereto.

 

Capitalized terms used in this Amendment and
not otherwise defined shall have the meanings ascribed to such terms in the
Agreement.

 

2.                                     Amendment of Exhibit A.  Exhibit
A of the Agreement is hereby amended by adding the following Sections C. and
D.:

 

“C.                            Notwithstanding the provisions of Sections 4.2(a)(ii) and 4.3 of the
Agreement and Section B of this Exhibit A, the Parties agree that as of August 30,
2004, the following terms and conditions shall be in effect with respect to all
purchases of API by Praecis under the Agreement until the earlier of (i) the
purchase by Praecis of *** of API
produced by UCB using the Raw Materials; and (ii) the purchase by Praecis of
all Raw Materials remaining in UCB’s inventory:

 

1.                                     Supply of Product in 2005

 

Praecis commits to issue on August 30,
2004 a purchase order for the delivery in 2005 of ***
of API (the “Initial Purchase”) at an agreed upon unit price of USD ***.  UCB shall
produce the API according to the *** Synthesis
process, using a portion of the Raw Materials.

 

Praecis shall execute prior to the end of
2004 the initial milestone payment of USD 1,800,000, representing payment for
the production of *** which will
be used in the manufacture of the Initial Purchase.

 

Praecis agrees to pay to UCB the second
milestone payment of [***] USD
2,100,000, representing the remaining amount due for the Initial Purchase, no
later than December 31, 2005, provided, however, that such second
milestone payment shall not be due unless and until UCB delivers the *** of API to Praecis.

 

2.                                     Option to Purchase remaining ***
of API in lieu of Raw Materials

 

Following the Initial Purchase, Praecis
undertakes to purchase the remaining inventory of Raw Materials, representing
an outstanding amount of USD 3,339,000. 
In lieu of purchasing the remaining inventory of Raw Materials, Praecis
may elect to exercise, in whole or in part, the option hereby granted by UCB
(the “Option”) to purchase up to a total additional amount of *** of API (which will consume all the remaining Raw
Materials), in accordance with the production schedule set forth below
(the “Production Schedule”).  Except as
provided in Section D. below, purchases under the Option shall be made at
an agreed upon unit price of USD *** and shall be manufactured according to the
*** Synthesis process.

 

CONFIDENTIAL INFORMATION OMITTED AND FILED SEPERATELY WITH

THE SECURITIES AND EXCHANGE COMMISSION.

ASTERISKS (*) DENOTE SUCH OMMISSIONS.

 

2

 

For each year following 2005, Praecis may
exercise this Option by the issuance of a purchase order for the minimum amount
of API set forth below for the applicable year. 
The purchase order for each year must be issued by Praecis no later than
the end of the first quarter of the preceding year (i.e., by March 31,
2005 for the 2006 delivery of ***, etc.):

 

Production Schedule:

 

> 2006 :          *** of API

> 2007 :          *** of API

> 2008 :          *** of API

> 2009 :          *** of API

 

The deliveries of such ordered quantities
will be made during the corresponding calendar year according to a schedule mutually
agreed upon by the Parties.

 

With respect to any given year, Praecis may
in its sole discretion order in excess of the minimum amounts set forth in the
Production Schedule (up to an aggregate maximum of ***).  UCB shall use its reasonable efforts to
produce and deliver such increased quantity during the corresponding calendar
year.

 

In the event that Praecis exercises this
Option in full by, at the latest, March 31, 2008, Praecis shall have no
further obligations with respect to the Raw Materials, as all Raw Materials
will then have been used in the manufacture of the ***
of API.

 

However, each year in which the minimum
volume set forth in the Production Schedule above is not ordered by
Praecis, the cost of Raw Materials corresponding to such order shortfall will
be paid by Praecis to UCB, up to the following annual maximum:

 

> 2006 :          USD   600,000

> 2007 :          USD   800,000

> 2008 :          USD
1,000,000

> 2009 :          USD
1,000,000

 

Notwithstanding the foregoing, in no event
shall Praecis be required to purchase Raw Materials, or API produced with Raw
Materials, that do not meet the UCB abarelix raw material specifications for
cGMP production.

 

3.                                     New Process

 

***

 

D.                                  Should Praecis and UCB mutually agree to move
to the New Process following its successful development and qualification, the
maximum price for all future API purchases under the Agreement, including
amounts not yet purchased pursuant to the Option discussed in Section C
hereof, shall be *** to USD ***.

 

CONFIDENTIAL INFORMATION OMITTED AND FILED SEPERATELY WITH

THE SECURITIES AND EXCHANGE COMMISSION.

ASTERISKS (*) DENOTE SUCH OMMISSIONS.

 

3

 

To the extent that Praecis is required to
purchase Raw Materials due to an order shortfall in any given year under the
Option, and provided such Raw Materials are later used in the manufacture of
API in excess of the yearly production of the following year under the
Production Schedule set forth in Subsection C.2. hereof, Praecis
shall receive a credit of *** from UCB
for each kg of API manufactured using the *** Synthesis
process and *** from UCB for each kg of API
manufactured using the New Process.  For
the avoidance of doubt, the following example of the calculation of such credit
is provided:

 

***

 

3.                                     Parties
in Interest; No Other Modification.  This Amendment
shall be binding upon and inure solely to the benefit of each Party hereto and
its respective successors and assigns. 
Nothing in this Amendment, express or implied, is intended to or shall
confer upon any other person any rights, benefits or remedies of any nature
whatsoever under or by reason of this Amendment.  This Amendment shall effect the modifications
to the Agreement provided for herein. All other provisions of the Agreement not
modified hereby shall remain in full force and effect.

 

4.                                     Counterparts. 
This Amendment may be executed in counterparts, each of which, when so
executed and delivered, will be deemed an original and which shall together
constitute one and the same instrument.

 

5.                                     Effect of
this Amendment.  Except as set forth herein, all terms and
conditions of the Agreement remain in full force and effect.

 

[Remainder of page intentionally left blank.]

 

CONFIDENTIAL INFORMATION OMITTED AND FILED SEPERATELY WITH

THE SECURITIES AND EXCHANGE COMMISSION.

ASTERISKS (*) DENOTE SUCH OMMISSIONS.

 

4

 

IN WITNESS WHEREOF, the parties
hereto have caused this Amendment to be executed by affixing their signatures
below.

 

Done in two copies, each party having
received its copy.

 

 

	
  UCB SA

  	
  PRAECIS PHARMACEUTICALS

  INCORPORATED

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
  /s/ Vincent Bille

  	
   

  	
  By

  	
  /s/ Kevin F. McLaughlin

  	
   

  
	
  Name: Vincent Bille

  	
  Name: Kevin F. McLaughlin

  
	
  Title:   Peptide B.V. Manager

  	
  Title:

  	
  Executive Vice President and

  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  UCB Legal Affairs

  	
   

  
	
  Sw/vc/c-pharma/amend/Praecis addendnr1-10308-2

  	
   

  
	
  28/7/2004

  	
   

  
	
   

  	
   

  
	
  /s/ A. Jordens

  	
   

  	
   

  
	
  A. Jordens

  	
   

  
	
  President UCB-Bioproducts

  	
   

  
								

 

5

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