Exhibit 10.4
CUBIST PHARMACEUTICALS, INC.
1997 EMPLOYEE STOCK PURCHASE PLAN
1. Definitions. As used in this 1997 Employee Stock Purchase Plan of
Cubist Pharmaceuticals, Inc., the following terms shall have the meanings
respectively assigned to them below:
(a) Base Compensation means annual or annualized base compensation,
exclusive of overtime, bonuses, contributions to employee benefit plans, or
other fringe benefits.
(b) Beneficiary means the person designated as the Participating
Employees' beneficiary on the Participating Employee's Membership Agreement
or other form provided by the personnel department of the Company for such
purpose or, if no such beneficiary is named, the person to whom the Option is
transferred by will or under the applicable laws of descent and distribution.
(c) Board means the board of directors of the Company, except that,
if and so long as the board of directors of the Company has delegated
pursuant to Section 4 its authority with respect to the Plan to the
Committee, then all references in this Plan to the Board shall refer to the
Committee acting in such capacity.
(d) Code means the Internal Revenue Code of 1986, as amended.
(e) Committee means the Compensation Committee of the Board.
(f) Company means Cubist Pharmaceuticals, Inc., a Delaware
corporation.
(g) Disability means, with respect to any Participating Employee,
that an independent medical doctor (selected by the Company's health or
disability insurer) certifies that such Participating Employee has for four
(4) months, consecutive or non-consecutive, in any twelve-month period been
disabled in a manner which seriously interferes with the performance of his
or her responsibilities for the Company or applicable Related Corporation.
(h) Eligible Employee means a person who is eligible under the
provisions of Section 7 to receive an Option as of a particular Offering
Commencement Date.
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(i) Employer means, as to any particular Offering Period, the
Company and any Related Corporation which is designated by the Board as a
corporation whose Eligible Employees are to receive Options as of that
Offering Period's Offering Commencement Date.
(j) Market Value means, as of a particular date, (i) if the Stock is
listed on an exchange, the closing price of the Stock on such date on such
exchange, (ii) if the Stock is quoted through the National Association of
Securities Dealers, Inc. Automated Quotation ("NASDAQ") National Market
System or any successor thereto, the closing price of the Stock on such date
and (iii) if the Stock is quoted through NASDAQ (but not on the National
Market System) or otherwise publicly traded, the average of the closing bid
and asked prices of the Stock on such date.
(k) Membership Agreement means an agreement whereby a Participating
Employee authorizes an Employer to withhold payroll deductions from his or
her Base Compensation.
(l) Offering Commencement Date means the first business day of an
Offering Period on which Options are granted to Eligible Employees.
(m) Offering Period means a semi-annual period, running from either
January 1 to the next following June 30 or July 1 to the next following
December 31, during which Options will be offered under the Plan pursuant to
a determination by the Board.
(n) Offering Termination Date means the last business day of an
Offering Period, on which Options must, if ever, be exercised.
(o) Option means an option to purchase shares of Stock granted under
the Plan.
(p) Option Shares means shares of Stock purchasable under an Option.
(q) Participating Employee means an Eligible Employee to whom an
Option is granted.
(r) Plan means this 1997 Employee Stock Purchase Plan of the
Company, as amended from time to time.
(s) Related Corporation means any corporation which is or during the
term of the Plan becomes a parent corporation of the Company, as defined in
Section 424(e) of the Code, or a subsidiary corporation of the Company, as
defined in Section 424(f) of the Code.
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(t) Retires means termination of employment with the Company and all
Related Corporations at or after attaining age 65.
(u) Stock means the common stock, par value $0.001 per share, of the
Company.
2. Purpose of the Plan. The Plan is intended to encourage ownership
of Stock by employees of the Company and any Related Corporations and to
provide an additional incentive for the employees to promote the success of
the business of the Company and any Related Corporations. It is intended that
the Plan shall be an "employee stock purchase plan" within the meaning of
Section 423 of the Code.
3. Term of the Plan. The Plan shall become effective on December 1,
1997 (the "Effective Date"), subject to the approval by the stockholders of
the Company on or prior to the first anniversary of the Effective Date. No
Option shall be granted under the Plan after the date immediately preceding
the tenth anniversary of the Effective Date.
4. Administration of the Plan. The Plan shall be administered by the
Board. The Board shall determine semi-annually, on or before either December
15 and June 15, whether to grant options under the Plan with respect to the
Offering Period which would otherwise begin as of January 1 and July 1,
respectively. The Board shall determine which (if any) Related Corporations
shall be Employers as of each Offering Commencement Date. Either such
determination may in the discretion of the Board apply to all subsequent
Offering Periods until modified or revoked by the Board. The Board shall have
authority to interpret the Plan, to prescribe, amend and rescind rules and
regulations relating to the Plan, to determine the terms of Options granted
under the Plan, and to make all other determinations necessary or advisable
for the administration of the Plan. All determinations of the Board under the
Plan shall be final and binding as to all persons having or claiming any
interest in or arising out of the Plan. The Board may delegate all or any
portion of its authority with respect to the Plan to the Committee, and
thereafter, until such delegation is revoked by the Board, all powers under
the Plan delegated to the Committee shall be exercised by the Committee.
5. Termination and Amendment of Plan. The Board may terminate or
amend the Plan at any time; provided, however, that the Board may not,
without approval by the holders of a majority of the outstanding shares of
Stock, increase the maximum number of shares of Stock purchasable under the
Plan or change the description of employees or classes of employees eligible
to receive Options. Without limiting the generality of the foregoing but
subject to the foregoing proviso, the Board may amend the Plan from time to
time to increase
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or decrease the length of any future Offering Periods (e.g., to a nine month
period) and to make all required conforming changes to the Plan. No
termination of or amendment to the Plan may adversely affect the rights of a
Participating Employee with respect to any Option held by the Participating
Employee as of the date of such termination or amendment without his or her
consent.
6. Shares of Stock Subject to the Plan. No more than an aggregate of
250,000 shares of Stock may be issued or delivered pursuant to the exercise
of Options granted under the Plan, subject to adjustments made in accordance
with Section 9.7. Shares to be delivered upon the exercise of Options may be
either shares of Stock which are authorized but unissued or shares of Stock
held by the Company in its treasury. If an Option expires or terminates for
any reason without having been exercised in full, the unpurchased shares
subject to the Option shall become available for other Options granted under
the Plan. The Company shall, at all times during which Options are
outstanding, reserve and keep available shares of Stock sufficient to satisfy
such Options (or, if less, the maximum number still available for issuance
under the foregoing limit), and shall pay all fees and expenses incurred by
the Company in connection therewith. In the event of any capital change in
the outstanding Stock as contemplated by Section 9.7, the number of shares of
Stock reserved and kept available by the Company shall be appropriately
adjusted.
7. Persons Eligible to Receive Options. Each employee of an Employer
shall be granted an Option on each Offering Commencement Date on which such
employee meets all of the following requirements:
(a) The employee is customarily employed by an Employer for more
than twenty hours per week and for more than five months per calendar year
and, in the case of any Offering Period after the first Offering Period under
the Plan, has been employed by one or more of the Employers for at least one
week prior to the applicable Offering Commencement Date.
(b) The employee will not, after grant of the Option, own Stock
possessing five percent or more of the total combined voting power or value
of all classes of stock of the Company or of any Related Corporation. For
purposes of this paragraph (b), the rules of Section 424(d) of the Code shall
apply in determining the Stock ownership of the employee, and Stock which the
employee may purchase under outstanding options shall be treated as Stock
owned by the employee.
(c) Upon grant of the Option, the employee's rights to purchase
Stock under all employee stock purchase plans (as defined in Section 423(b)
of the Code) of the Company and its Related Corporations will not accrue at a
rate
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which exceeds $25,000 of fair market value of the Stock (determined as of the
grant date) for each calendar year in which such option is outstanding at any
time. The accrual of rights to purchase Stock shall be determined in
accordance with Section 423(b)(8) of the Code.
8. Offering Commencement Dates. Options shall be granted on the
first business day of each semi-annual period, running from either January 1
to the next following June 30 or July 1 to the next following December 31,
which is designated by the Board as an Offering Period. Following designation
by the Board of the initial Offering Period under the Plan, all succeeding
semi-annual periods described above shall be deemed Offering Periods without
need of further Board action unless and until contrary action shall have been
taken by the Board prior to the beginning of what would otherwise be an
Offering Period.
9. Terms and Conditions of Options.
9.1 General. All Options granted on a particular Offering
Commencement Date shall comply with the terms and conditions set forth in
Sections 9.2 through 9.11. Subject to Sections 7(c) and 9.9, each Option
granted on a particular Offering Commencement Date shall entitle the
Participating Employee to purchase that number of shares equal to the result
of $25,000 (or such lesser amount as is selected by the Board, prior to the
applicable Offering Commencement Date, and applied uniformly during such
Offering Period) divided by the Market Value of one such share on the
Offering Commencement Date and then rounded down, if necessary, to the
nearest whole number.
9.2 Purchase Price. The purchase price of Option Shares shall be 85%
of the lesser of (a) the Market Value of the shares as of the Offering
Commencement Date or (b) the Market Value of the shares as of the Offering
Termination Date.
9.3 Restrictions on Transfer.
(a) Options may not be transferred otherwise than by will or under
the laws of descent and distribution. An Option may not be exercised by
anyone other than the Participating Employee during the lifetime of the
Participating Employee.
(b) The Optionee shall agree in the Membership Agreement to notify
the Company of any transfer of Option Shares within two years of the Offering
Commencement Date for such Option Shares. The Company shall have the right to
place a legend on all stock certificates representing Option Shares
instructing the transfer agent to notify the Company of any transfer of such
Option Shares. The Company shall also have the right to place a legend on all
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stock certificates representing Option Shares setting forth or referring to
the restriction on transferability of such Option Shares.
9.4 Expiration. Each Option shall expire at the close of business on
the Offering Termination Date or on such earlier date as may result from the
operation of Section 9.6.
9.5 Termination of Employment of Optionee. If a Participating
Employee ceases for any reason (other than death or Retirement) to be
continuously employed by an Employer, whether due to voluntary severance,
involuntary severance, transfer, or disaffiliation of a Related Corporation
with the Company, his or her Option shall immediately expire, and the
Participating Employee's accumulated payroll deductions shall be returned to
the Participating Employee. For purposes of this Section 9.5, a Participating
Employee shall be deemed to be employed throughout any leave of absence for
military service, illness or other bona fide purpose which does not exceed
the longer of ninety days or the period during which the Participating
Employee's reemployment rights are guaranteed by statute (including without
limitation the Veterans Reemployment Rights Act or similar statute relating
to military service) or by contract. If the Participating Employee does not
return to active employment prior to the termination of such period, his or
her employment shall be deemed to have ended on the ninety-first day of such
leave of absence (or such longer period guaranteed by statute or by contract
as provided above).
9.6 Retirement or Death of Optionee. If a Participating Employee
Retires or dies, the Participating Employee or, in the case of death, his or
her Beneficiary shall be entitled to withdraw the Participating Employee's
accumulated payroll deductions, or to purchase shares on the Offering
Termination Date to the extent that the Participating Employee would be so
entitled had he or she continued to be employed by an Employer. The number of
shares purchasable shall be limited by the amount of the Participating
Employee's accumulated payroll deductions as of the date of his or her
Retirement or death. Accumulated payroll deductions shall be applied by the
Company toward the purchase of shares only if the Participating Employee or,
in the case of death, his or her Beneficiary submits to the Employer not
later than the Offering Termination Date a written request that the
deductions be so applied. Accumulated payroll deductions not withdrawn or
applied to the purchase of shares shall be delivered by the Company to the
Participating Employee or Beneficiary within a reasonable time after the
Offering Termination Date.
9.7 Capital Changes Affecting the Stock. In the event that, between
the Offering Commencement Date and the Offering Termination Date with respect
to an Option, a stock dividend is paid or becomes payable in respect of the
Stock or there occurs a split-up or contraction in the number of shares of
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Stock, the number of shares for which the Option may thereafter be exercised
and the price to be paid for each such share shall be proportionately
adjusted. In the event that, after the Offering Commencement Date, there
occurs a reclassification or change of outstanding shares of Stock or a
consolidation or merger of the Company with or into another corporation or a
sale or conveyance, substantially as a whole, of the property of the Company,
the Participating Employee shall be entitled on the Offering Termination Date
to receive shares of Stock or other securities equivalent in kind and value
to the shares of Stock he or she would have held if he or she had exercised
the Option in full immediately prior to such reclassification, change,
consolidation, merger, sale or conveyance and had continued to hold such
shares (together with all other shares and securities thereafter issued in
respect thereof) until the Offering Termination Date. In the event that there
is to occur a recapitalization involving an increase in the par value of the
Stock which would result in a par value exceeding the exercise price under an
outstanding Option, the Company shall notify the Participating Employee of
such proposed recapitalization immediately upon its being recommended by the
Board to the Company's shareholders, after which the Participating Employee
shall have the right to exercise his or her Option prior to such
recapitalization; if the Participating Employee fails to exercise the Option
prior to recapitalization, the exercise price under the Option shall be
appropriately adjusted. In the event that, after the Offering Commencement
Date, there occurs a dissolution or liquidation of the Company, except
pursuant to a transaction to which Section 424(a) of the Code applies, each
Option shall terminate, but the Participating Employee shall have the right
to exercise his or her Option prior to such dissolution or liquidation.
9.8 Payroll Deductions. A Participating Employee may purchase shares
under his or her Option during any particular Offering Period by completing
and returning to the Company's personnel department at least ten days prior
to the beginning of such Offering Period a Membership Agreement indicating a
percentage (which shall be a full integer between one and fifteen) of his or
her Base Compensation which is to be withheld each pay period. Unless the
Board decides otherwise prior to the commencement of an Offering Period, all
Participating Employees shall be permitted, no more often than once per
Offering Period, to change the percentage of Base Compensation withheld
during an Offering Period by submitting an amended Membership Agreement to
the Company's personnel department indicating a different percentage of Base
Compensation to be withheld. Any such amended Membership Agreement shall
become effective at the time determined pursuant to rules adopted by the
Board from time to time. In addition, no more than once per Offering Period,
the Participating Employee may cancel his or her Agreement and withdraw all,
but not less than all, of his or her accumulated payroll deductions by
submitting a written request therefor to the Company's personnel department
no later than the close of business on the last business day of the Offering
Period. The
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percentage of Base Compensation withheld may also be changed from one
Offering Period to another.
9.9 Exercise of Options. On the Offering Termination Date the
Participating Employee may purchase the number of shares purchasable by his
or her accumulated payroll deductions, or, if less, the maximum number of
shares subject to the Option as provided in Section 9.1, provided that:
(a) If the total number of shares which all Optionees elect to
purchase, together with any shares already purchased under the Plan, exceeds
the total number of shares which may be purchased under the Plan pursuant to
Section 6, the number of shares which each Optionee is permitted to purchase
shall be decreased pro rata based on the Participating Employee's accumulated
payroll deductions in relation to all accumulated payroll deductions
otherwise to be applied to the purchase of shares as of that Offering
Termination Date.
(b) If the number of shares purchasable includes a fraction, such
number shall be adjusted to the next smaller whole number and the purchase
price shall be adjusted accordingly.
Accumulated payroll deductions not withdrawn prior to the Offering
Termination Date shall be automatically applied by the Company toward the
purchase of Option Shares or, to the extent in excess of the aggregate
purchase price of the shares then purchasable by the Participating Employee,
refunded to the Participating Employee, except that where such excess is less
than the purchase price for a single share of Stock on the Offering
Termination Date, such excess shall not be refunded but instead shall be
carried over and applied to the purchase of shares in the first following
Offering Period (subject to the possibility of withdrawal by the
Participating Employee during such Offering Period in accordance with the
terms of the Plan).
9.10 Delivery of Stock. Except as provided below, within a
reasonable time after the Offering Termination Date, the Company shall
deliver or cause to be delivered to the Participating Employee a certificate
or certificates for the number of shares purchased by the Participating
Employee. A stock certificate representing the number of Shares purchased
will be issued in the participant's name only, or if his or her Membership
Agreement so specifies, in the name of the employee and another person of
legal age as joint tenants with rights of survivorship. If any law or
applicable regulation of the Securities and Exchange Commission or other body
having jurisdiction in the premises shall require that the Company or the
Participating Employee take any action in connection with the shares being
purchased under the Option, delivery of the certificate or certificates for
such shares shall be postponed until the necessary action shall have been
completed, which action shall be taken by the Company at its own expense,
without unreasonable delay. The Optionee shall have no rights as a
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shareholder in respect of shares for which he or she has not received a
certificate.
9.11 Return of Accumulated Payroll Deductions. In the event that the
Participating Employee or the Beneficiary is entitled to the return of
accumulated payroll deductions, whether by reason of voluntary withdrawal,
termination of employment, Retirement, death, or in the event that
accumulated payroll deductions exceed the price of shares purchased, such
amount shall be returned by the Company to the Participating Employee or the
Beneficiary, as the case may be, not later than within a reasonable time
following the Offering Termination Date applicable to the Option Period in
which such deductions were taken. Accumulated payroll deductions held by the
Company shall not bear interest nor shall the Company be obligated to
segregate the same from any of its other assets.
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