-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HHRlJz8iGhW32oh8EqNnwqp6O4lKoaa73b7+pT3El8mSFOtiQ97EF848xSxZTMwZ gHXZFyQpFfV2ZExBWoCj1w== 0000950135-01-500463.txt : 20010410 0000950135-01-500463.hdr.sgml : 20010410 ACCESSION NUMBER: 0000950135-01-500463 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20010404 EFFECTIVENESS DATE: 20010404 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENOME THERAPEUTICS CORP CENTRAL INDEX KEY: 0000356830 STANDARD INDUSTRIAL CLASSIFICATION: IN VITRO & IN VIVO DIAGNOSTIC SUBSTANCES [2835] IRS NUMBER: 042297484 STATE OF INCORPORATION: MA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-58274 FILM NUMBER: 1595365 BUSINESS ADDRESS: STREET 1: 1OO BEAVER ST CITY: WALTHAM STATE: MA ZIP: 02453 BUSINESS PHONE: 7813982300 MAIL ADDRESS: STREET 1: 100 BEAVER STREET CITY: WALTHAM STATE: MA ZIP: 02453 FORMER COMPANY: FORMER CONFORMED NAME: COLLABORATIVE RESEARCH INC DATE OF NAME CHANGE: 19920703 S-8 1 b38796gts-8.txt GENOME THERAPEUTICS CORP. 1 As filed with the Securities and Exchange Commission on April 4, 2001 Registration No. 333-_______ ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------------- FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 -------------------------- GENOME THERAPEUTICS CORP. (Exact name of registrant as specified in its charter) MASSACHUSETTS 04-2297484 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 100 BEAVER STREET, WALTHAM, MASSACHUSETTS 02453 (Address of principal executive offices, including zip code) ------------------------- STOCK OPTION AGREEMENTS AND 2001 INCENTIVE PLAN (Full title of the plan) ------------------------- STEPHEN COHEN WITH A COPY TO: GENOME THERAPEUTICS CORP. DAVID C. CHAPIN, ESQ. 100 BEAVER STREET PATRICK O'BRIEN, ESQ. WALTHAM, MASSACHUSETTS 02453 ROPES & GRAY (781) 398-2300 ONE INTERNATIONAL PLACE BOSTON, MASSACHUSETTS 02110-2624 (617) 951-7000 ------------------------- (Name, address and telephone number, including area code, of agent for service) CALCULATION OF REGISTRATION FEE
================================================================================================================= Proposed Maximum Proposed Maximum Amount of Title of Each Class of Amount to be Offering Price Per Aggregate Offering Registration Securities to be Registered Registered Share(1) Price(1) Fee - ----------------------------------------------------------------------------------------------------------------- Common Stock, $.10 par value per share 3,912,296 shares $5.75 $22,495,702 $5,624 =================================================================================================================
(1) The offering price has been estimated solely for the purpose of determining the registration fee pursuant to Rule 457(c) and (h) on the basis of the average of the high and low prices of Genome Therapeutics Corp.'s common stock, par value $.10 per share, as reported by the National Association of Securities Dealers Automated Quotation system on April 2, 2001. Exhibit Index can be found on page II-6. This is page 1 of 24 pages. ================================================================================ 2 PART 1 INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS Information required by Part I to be contained in the Section 10(a) prospectus is omitted from this Registration Statement in accordance with Rule 428 under the Securities Act of 1933, as amended (the "Securities Act") and the Note to Part I of Form S-8. PART 2 INFORMATION REQUIRED IN THE REGISTRATION STATEMENT ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed by Genome Therapeutics Corp., a Massachusetts corporation (the "Company"), with the Securities and Exchange Commission (the "Commission") are incorporated herein by reference except to the extent any statement or information therein is modified, superseded or replaced by a statement or information contained in this document or in any other subsequently filed document incorporated herein by reference including: (a) Our Annual Report on Form 10-K for the fiscal year ended August 31, 2000, as filed with the Commission on November 22, 2000; (b) Our Quarterly Report on Form 10-Q for the quarter ended November 25, 2000, as filed with the Commission on January 9, 2001; (c) The description of the Common Stock, $.10 par value (the "Common Stock"), contained in the Company's Form 10/A (Commission File No. 000-10824); and (d) All reports and other documents subsequently filed by the Registrant pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective amendment which indicates that all securities offered hereby have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference herein and to be a part hereof from the date of the filing of such reports and documents. ITEM 4. DESCRIPTION OF SECURITIES Not Required. ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL Not Applicable. ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS The Company is organized under the laws of The Commonwealth of Massachusetts. The Massachusetts Business Corporation Law provides that indemnification of directors, officers, employees, and other agents of another organization, or who serve at its request in any capacity with respect to any employee benefit plan, may be provided by the corporation to whatever extent specified in its charter documents or votes adopted by its shareholders, except that no indemnification may be provided for any person with respect to any matter as to which the person shall have been adjudicated in any proceeding not to have acted in good faith in the reasonable belief that his action was in the best interest of the corporation. Under Massachusetts law, a corporation can purchase and II-1 3 maintain insurance on behalf of any person against any liability incurred as a director, officer, employee, agent, or person serving at the request of the corporation as a director, officer, employee, or other agent of another organization or with respect to any employee benefit plan, in his capacity as such, whether or not the corporation would have power to itself indemnify him against such liability. The Company's Restated Articles of Organization, as amended to date, provide that its directors shall not be liable to the Company or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent that the exculpation from liabilities is not permitted under the Massachusetts Business Corporation Law as in effect at the time such liability is determined. The By-Laws provide that the Company shall indemnify its directors and officers to the full extent permitted by the laws of The Commonwealth of Massachusetts. In addition, the Company holds a Directors and Officer Liability and Corporate Indemnification Policy. ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED Not Applicable. ITEM 8. EXHIBITS Exhibit 4(a) Form of Stock Option Agreement - Attached Herewith. Exhibit 4(b) Form of Stock Option Agreement - Attached Herewith. Exhibit 4(c) The Company's 2001 Incentive Plan--Attached Herewith. Exhibit 4(d) The Company's Restated Articles of Organization (filed as an exhibit to the Company's Registration Statement on Form S-1 (No. 2-75230) and incorporated herein by reference). Exhibit 4(e) Amendment dated January 5, 1982 to Restated Articles of Organization (filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended February 27, 1982 and incorporated herein by reference). Exhibit 4(f) Amendment dated January 24, 1983 to Restated Articles of Organization (filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended February 26, 1983 and incorporated herein by reference). Exhibit 4(g) Amendment dated January 17, 1984 to Restated Articles of Organization (filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended February 25, 1984 and incorporated herein by reference). Exhibit 4(h) Amendment dated December 9, 1987 to Restated Articles of Organization (filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended November 28, 1987 and incorporated herein by reference). Exhibit 4(i) Amendment dated January 24, 1994 to Restated Articles of Organization (filed as an exhibit to the Company's Annual Report on Form 10-K for the year ended August 31, 1994 and incorporated herein by reference). Exhibit 4(j) Amendment dated August 31, 1994 to Restated Articles of Organization (filed as an exhibit to the Company's Annual Report on Form 10-K for the year ended August 31, 1994 and incorporated herein by reference). Exhibit 4(k) The Company's By-laws (filed as an exhibit to the Company's Registration Statement on Form S-1 (No. 2-75230) and incorporated herein by reference). II-2 4 Exhibit 4(l) Amendment dated October 20, 1987 to the By-laws (filed as an exhibit to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1987 and incorporated herein by reference). Exhibit 4(m) Amendment dated October 16, 1989 to the By-laws (filed as an exhibit to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1989 and incorporated herein by reference). Exhibit 5 Opinion of Ropes & Gray. Exhibit 23(a) Consent of Ropes & Gray (contained in Exhibit 5). Exhibit 23(b) Consent of Arthur Andersen LLP. Exhibit 24 Power of Attorney (included as part of the signature pages to this Registration Statement). ITEM 9. UNDERTAKINGS (a) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) will not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of any employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-3 5 (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that its has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned thereunto duly authorized, in the city of Waltham, Commonwealth of Massachusetts, on this 30th day of March, 2001. GENOME THERAPEUTICS CORP. /s/ STEVEN M. RAUSCHER ------------------------ Name: Steven M. Rauscher Title: President and Chief Executive Officer II-4 6 KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Steven M. Rauscher and Stephen Cohen and each of them singly, with full power to act without the other, his true and lawful attorneys-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities to sign any or all amendments to this registration statement, including post-effective amendments, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents and each of them full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any substitutes lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE /s/ ROBERT J. HENNESSEY Director, Chairman of the March 30, 2001 - -------------------------------- Board Robert J. Hennessey /s/ STEVEN M. RAUSCHER Director, President and March 30, 2001 - -------------------------------- Chief Executive Officer Steven M. Rauscher Chief Financial Officer, March 30, 2001 /s/ STEPHEN COHEN Senior Vice President and - -------------------------------- Principal Financial Officer Stephen Cohen /s/ MARC GARNICK Director March 30, 2001 - -------------------------------- Marc Garnick /s/ PHILIP LEDER Director March 30, 2001 - -------------------------------- Philip Leder /s/ LAWRENCE LEVY Director March 30, 2001 - -------------------------------- Lawrence Levy /s/ NORBERT RIEDEL Director March 30, 2001 - -------------------------------- Norbert Riedel
II-5 7 EXHIBIT INDEX Number Title of Exhibit Page - ------ ---------------- ---- 4(a) Form of Stock Option Agreement II-7 4(b) Form of Stock Option Agreement II-11 4(c) 2001 Incentive Plan II-15 5 Opinion of Ropes & Gray II-22 23(a) Consent of Ropes & Gray Contained in Exhibit 5 23(b) Consent of Arthur Andersen LLP II-23 24 Power of Attorney Included as part of the Signatures to this Registration II-6 EX-4.(A) 2 b38796gtex4-a.txt FORM OF STOCK OPTION AGREEMENT 1 EXHIBIT 4(a) GENOME THERAPEUTICS CORP. STOCK OPTION AGREEMENT (Non-Statutory Option) NON-STATUTORY STOCK OPTION granted by Genome Therapeutics Corp., a Massachusetts corporation (the "Company"), to Steven M. Rauscher an employee of the Company (the "Optionee"). 1. GRANT OF OPTION This agreement evidences the grant by the Company to the Optionee of an option to purchase, on the terms provided herein, a total of 272,296 shares (the "Shares") of the Company's Common Stock, $.10 par value ("Common Stock"), at a price of $14.4375 per share. This option shall terminate as to all or any part of this option that has not been exercised by October 26, 2010 (the "Expiration Date"). This option is subject to earlier termination as provided in Sections 5, 6 and 10 below. Subject to the other terms hereof, 68,074 of the Shares subject to this option shall become exercisable on October 26 in each of 2001, 2002, 2003 and 2004. 2. EXERCISE OF OPTION Each election to exercise this option shall be in writing, signed by the Optionee or by his executor or administrator or the person or persons to whom this option is transferred by will or the applicable laws of descent and distribution (the "Legal Representative"), and received by the Company at its principal office in Waltham, Massachusetts, accompanied by this agreement and payment in full as provided in Section 3 below. In the event the option is exercised by such Legal Representative, the Company shall be under no obligation to deliver stock hereunder unless and until the Company is satisfied that the person or persons exercising the option is or are the duly appointed executor or administrator of the deceased Optionee or the person or persons to whom this option has been transferred by Optionee's will or by the applicable laws of descent and distribution. 3. PAYMENT FOR STOCK Shares shall be issued only upon receipt by the Company of full payment of the purchase price for the shares as to which the option is exercised. The purchase price is payable by the Optionee to the Company either (i) in cash or by certified check or cashier's check payable to the order of the Company; or (ii) through the delivery of shares of Common Stock (duly owned by the Optionee and as to which the Optionee has good title free and clear of any liens and encumbrances) having a fair market value (as determined by the Board of Directors of the Company) equal to the purchase price; or (iii) by a combination of cash and Common Stock as provided above. The Company will not be obligated to deliver any shares unless and until, in the opinion of the Company's counsel, all applicable federal and state laws and regulations have been complied with, nor, in the event the outstanding common stock is at the time listed upon any stock exchange, unless and until the shares to be delivered have been listed or authorized to be added to the list upon official notice of legal matters in connection with the issuance and delivery of shares have been approved by the Company's counsel. Without limiting the generality of the foregoing, the Company may require from the Optionee such investment representation or such agreement, if any, as counsel for the Company may consider necessary in order to comply with the Securities Act of 1933, as amended and may require that the Optionee agree that he will notify the Company when he makes any disposition of the shares whether by sale, gift or otherwise. The Company will use its best efforts to effect any such compliance or listing, and the Optionee will take any action reasonably requested by the Company in such connection. The Optionee will have the rights of a shareholder only as to shares actually acquired by him upon exercise of the option granted hereby. II-7 2 4. NON-TRANSFERABILITY OF OPTION This option may not be transferred by the Optionee otherwise than by will or by the laws of descent and distribution; and during the Optionee's lifetime this option may be exercised only by him. 5. TERMINATION OF SERVICE If the Optionee ceases to be an employee of the Company for any reason other than his death or disability and other than as set forth in Section 7 below, he may thereafter exercise this option to the extent he was entitled to exercise it on the date when his service terminated, but only within three months after the date of such termination (unless a longer period is allowed by the Board of Directors of the Company). In no event, however, may the Optionee exercise this option at a time when it would not be exercisable had the Optionee's service as an employee continued. For purposes of this provision, the Optionee's service as an employee will not be considered terminated in the case of a bona fide leave of absence approved by the Board of Directors of the Company. 6. DEATH OR DISABILITY If the Optionee dies at a time when he is entitled to exercise all or any part of this option, then at any time or times within three years after his death (or such longer period as the Board of Directors of the Company may allow) such option may be exercised, as to all or any of the shares that the Optionee was entitled to purchase immediately prior to his death, by his executor or administrator or the person or persons to whom the option is transferred by will or the applicable laws of descent and distribution, and except as so exercised such option will expire at the end of such period. In addition, if the Optionee's employment with the Company is terminated due to disability at any time when he is entitled to exercise all or any part of this option, then at any time or times within three years after such date of termination this option may be exercised, as to all or any of the shares that the Optionee was entitled to purchase on such date of termination, by the Optionee or his legal representative. In no event, however, may this option be exercised after the termination of the option pursuant to any other provision of this Agreement. 7. CHANGE OF CONTROL In the event that within twenty-four (24) months following a Change of Control (as hereinafter defined): (i) the Optionee's employment is terminated by the surviving company for any reason other than Cause (as defined in the Optionee's Employment Agreement with the Company dated [_______], 2001 (the "Employment Agreement")); or (ii) the Optionee terminates his employment with the surviving company due to the fact that (a) the surviving company takes any action that results in a material diminution in Optionee's position, authority or duties as such position, authority or duties existed immediately prior to the Change of Control or (b) the surviving company takes any action that would require Optionee to have his principal place of work changed to any location outside a thirty-five mile radius of the City of Boston, then this option shall immediately vest in full upon such termination date and shall remain exercisable for a period of two years therefrom but not to exceed the Expiration Date. For purposes of this Agreement, a "Change of Control" shall be deemed to have occurred if and when: (i) the Company executes an agreement of acquisition, merger, or consolidation which contemplates that after the effective date provided for in the agreement, all or substantially all of the business and/or assets of the Company shall be controlled by another corporation or other entity; PROVIDED, HOWEVER, for purposes of this clause (i) that (A) if such an agreement requires as a condition precedent approval by the Company's shareholders of the agreement or transaction, a Change in Control shall not be deemed to have taken place unless and until such approval is secured and, (B) if immediately after such effective date the voting shareholders of such other corporation or entity shall be substantially the same as the voting shareholders of the Company immediately prior to such effective date, the execution of such agreement shall not, by itself, constitute a "Change in Control;" or II-8 3 (ii) any "person" (as such term is used in Sections 13(d) or 14(d)(2) of the Securities Exchange Act of 1934 becomes the beneficial owner, directly or indirectly, of securities of the Company that represent 35% or more of the votes that could then be cast in an election for members of the Company's board of directors; or (iii) during any period of 24 consecutive months, commencing after the effective date of this Agreement, individuals who at the beginning of such 24-month period were directors of the Company shall cease to constitute at least a majority of the Company's board of directors, unless the election of each director who was not a director at the beginning of such period has been approved in advance by directors representing at least two thirds of (A) the directors then in office who were directors at the beginning of the 24-month period, or (B) the directors specified in clause (A) plus directors whose election has been so approved by directors specified in clause (A). 8. ADMINISTRATION The option granted by this agreement will be administered by the Board of Directors of the Company which will have the authority to interpret this agreement and to decide all questions and settle all controversies and disputes which may arise in connection therewith. All decisions, determinations and interpretations of the Board of Directors will be binding on all parties concerned. A majority of the members of the Board of Directors will constitute a quorum, and all determinations of the Board of Directors will be made by a majority of its members. Any determination of the Board of Directors under this agreement may be made without notice or meeting of the Board of Directors by a written instrument signed by a majority of the members of the Board of Directors. 9. STOCK TO BE DELIVERED Stock to be delivered upon exercise of this option will be common stock of the Company and may constitute an original issue of authorized but unissued stock or may consist of previously issued stock acquired by the Company as determined from time to time by the Board of Directors. The Board of Directors and the proper officers of the Company will take any appropriate action required for such delivery. 10. CHANGES IN STOCK In the event of a stock dividend, split-up or combination of shares, recapitalization or merger in which the Company is the surviving corporation, or other similar capital change, the number and kind of shares of stock or securities of the Company subject to the option granted hereby, the option price and other relevant provisions will be appropriately adjusted by the Board of Directors of the Company, whose determination will be binding on the Optionee. In the event of a consolidation or merger in which the Company is not the surviving corporation or which results in the acquisition of substantially all the Company's outstanding common stock by a single person or entity or by a group of persons and/or entities acting in concert, or in the event of the sale or transfer of substantially all the Company's assets, this option shall thereupon terminate, provided that this option shall become exercisable immediately prior to consummation of such merger, consolidation or sale of assets unless, if there is a surviving or acquiring corporation, the Board of Directors has arranged, subject to consummation of the merger, consolidation or sale of assets, for the assumption of this option or the grant to the Optionee of a replacement award (in each case, on substantially the same terms as set forth in this agreement, including without limitation the provisions of Sections 6 and 7 hereof) by the surviving or acquiring corporation or an affiliate of that corporation. 11. AMENDMENTS The Board of Directors of the Company may at any time or times amend the option granted hereby for the purpose of satisfying the requirements of any changes in applicable laws or regulations or for any other purpose which may at the time be permitted by law, provided that no such amendment will adversely affect the rights of the Optionee without his consent. II-9 4 12. GOVERNING LAW This agreement shall be governed by and construed in accordance with the internal laws of The Commonwealth of Massachusetts. IN WITNESS WHEREOF, the Company has caused this agreement to be executed by its duly authorized officer, under its corporate seal. This option is granted at the Company's office, on the date stated below. GENOME THERAPEUTICS CORP. By: /s/ NORBERT RIEDEL -------------------------------------------- Chairman of the Compensation Committee of the Board of Directors Date: As of October 26, 2000 Accepted and Agreed: /s/ STEVEN M. RAUSCHER - ------------------------------ Steven M. Rauscher II-10 EX-4.(B) 3 b38796gtex4-b.txt FORM OF STOCK OPTION AGREEMENT 1 EXHIBIT 4(b) GENOME THERAPEUTICS CORP. STOCK OPTION AGREEMENT (Non-Statutory Option) NON-STATUTORY STOCK OPTION granted by Genome Therapeutics Corp., a Massachusetts corporation (the "Company"), to Steven M. Rauscher an employee of the Company (the "Optionee"). 1. GRANT OF OPTION This agreement evidences the grant by the Company to the Optionee of an option to purchase, on the terms provided herein, a total of 240,000 shares (the "Shares") of the Company's Common Stock, $.10 par value ("Common Stock"), at a price of $14.4375 per share. This option shall terminate as to all or any part of this option that has not been exercised by October 26, 2010 (the "Expiration Date"). This option is subject to earlier termination as provided in Sections 5, 6 and 10 below. Subject to the other terms hereof, 60,000 of the Shares subject to this option shall become exercisable on October 26 in each of 2001, 2002, 2003 and 2004; provided, that if any Shares shall have vested on or prior to such October 26 pursuant to the accelerated vesting provisions set forth in the next sentence, then the number of accelerated Shares, in aggregate, shall be offset against the aggregate number of shares scheduled to have vested under the time vesting provisions of this sentence. The vesting of the Shares may be accelerated in accordance with the following schedule: 45,000 of the Shares will vest if the average closing price of the Common Stock as reported on the NASDAQ National Market ("NASDAQ") (or such other principal securities exchange as the Common Stock may be traded) for a period of ten (10) out of twenty (20) consecutive trading days after the date of grant is $35.00 or higher; 45,000 of the Shares will vest if the average closing price of the Common Stock as reported on NASDAQ (or such other principal securities exchange as the Common Stock may be traded) for a period of ten (10) out of twenty (20) consecutive trading days after the date of grant is $45.00 or higher; 50,000 of the Shares will vest if the average closing price of the Common Stock as reported on NASDAQ (or such other principal securities exchange as the Common Stock may be traded) for a period of ten (10) out of twenty (20) consecutive trading days after the date of grant is $55.00 or higher; and 100,000 of the Shares will vest if the average closing price of the Common Stock as reported on NASDAQ (or such other principal securities exchange as the Common Stock may be traded) for a period of ten (10) out of twenty (20) consecutive trading days after the date of grant is $60.00 or higher. 2. EXERCISE OF OPTION Each election to exercise this option shall be in writing, signed by the Optionee or by his executor or administrator or the person or persons to whom this option is transferred by will or the applicable laws of descent and distribution (the "Legal Representative"), and received by the Company at its principal office in Waltham, Massachusetts, accompanied by this agreement and payment in full as provided in Section 3 below. In the event the option is exercised by such Legal Representative, the Company shall be under no obligation to deliver stock hereunder unless and until the Company is satisfied that the person or persons exercising the option is or are the duly appointed executor or administrator of the deceased Optionee or the person or persons to whom this option has been transferred by Optionee's will or by the applicable laws of descent and distribution. 3. PAYMENT FOR STOCK Shares shall be issued only upon receipt by the Company of full payment of the purchase price for the shares as to which the option is exercised. The purchase price is payable by the Optionee to the Company either (i) in cash or by certified check or cashier's check payable to the order of the Company; or (ii) through the delivery of shares of Common Stock (duly owned by the Optionee and as to which the Optionee has good title free and clear of any liens and encumbrances) having a fair market value (as determined by the Board of Directors of the Company) equal to the purchase price; or (iii) by a combination of cash and Common Stock as provided above. The Company will not II-11 2 be obligated to deliver any shares unless and until, in the opinion of the Company's counsel, all applicable federal and state laws and regulations have been complied with, nor, in the event the outstanding common stock is at the time listed upon any stock exchange, unless and until the shares to be delivered have been listed or authorized to be added to the list upon official notice of legal matters in connection with the issuance and delivery of shares have been approved by the Company's counsel. Without limiting the generality of the foregoing, the Company may require from the Optionee such investment representation or such agreement, if any, as counsel for the Company may consider necessary in order to comply with the Securities Act of 1933, as amended and may require that the Optionee agree that he will notify the Company when he makes any disposition of the shares whether by sale, gift or otherwise. The Company will use its best efforts to effect any such compliance or listing, and the Optionee will take any action reasonably requested by the Company in such connection. The Optionee will have the rights of a shareholder only as to shares actually acquired by him upon exercise of the option granted hereby. 4. NON-TRANSFERABILITY OF OPTION This option may not be transferred by the Optionee otherwise than by will or by the laws of descent and distribution; and during the Optionee's lifetime this option may be exercised only by him. 5. TERMINATION OF SERVICE If the Optionee ceases to be an employee of the Company for any reason other than his death or disability, he may thereafter exercise this option to the extent he was entitled to exercise it on the date when his service terminated, but only within three months after the date of such termination (unless a longer period is allowed by the Board of Directors of the Company). In no event, however, may the Optionee exercise this option at a time when it would not be exercisable had the Optionee's service as an employee continued. For purposes of this provision, the Optionee's service as an employee will not be considered terminated in the case of a bona fide leave of absence approved by the Board of Directors of the Company. 6. DEATH OR DISABILITY If the Optionee dies at a time when he is entitled to exercise all or any part of this option, then at any time or times within three years after his death (or such longer period as the Board of Directors of the Company may allow) such option may be exercised, as to all or any of the shares that the Optionee was entitled to purchase immediately prior to his death, by his executor or administrator or the person or persons to whom the option is transferred by will or the applicable laws of descent and distribution, and except as so exercised such option will expire at the end of such period. In addition, if the Optionee's employment with the Company is terminated due to disability at any time when he is entitled to exercise all or any part of this option, then at any time or times within three years after such date of termination this option may be exercised, as to all or any of the shares that the Optionee was entitled to purchase on such date of termination, by the Optionee or his legal representative. In no event, however, may this option be exercised after the termination of the option pursuant to any other provision of this Agreement. 7. CHANGE OF CONTROL In the event that within twenty-four (24) months following a Change of Control (as hereinafter defined): (i) the Optionee's employment is terminated by the surviving company for any reason other than Cause (as defined in the Optionee's Employment Agreement with the Company dated [_______], 2001 (the "Employment Agreement")); or (ii) the Optionee terminates his employment with the surviving company due to the fact that (a) the surviving company takes any action that results in a material diminution in Optionee's position, authority or duties as such position, authority or duties existed immediately prior to the Change of Control or (b) the surviving company takes any action that would require Optionee to have his principal place of work changed to any location outside a thirty-five mile radius of the City of Boston, then this option shall immediately vest in full upon such termination date and shall remain exercisable for a period of two years therefrom but not to exceed the Expiration Date. For purposes of this Agreement, a "Change of Control " shall be deemed to have occurred if and when: II-12 3 (iv) the Company executes an agreement of acquisition, merger, or consolidation which contemplates that after the effective date provided for in the agreement, all or substantially all of the business and/or assets of the Company shall be controlled by another corporation or other entity; PROVIDED, HOWEVER, for purposes of this clause (i) that (A) if such an agreement requires as a condition precedent approval by the Company's shareholders of the agreement or transaction, a Change in Control shall not be deemed to have taken place unless and until such approval is secured and, (B) if immediately after such effective date the voting shareholders of such other corporation or entity shall be substantially the same as the voting shareholders of the Company immediately prior to such effective date, the execution of such agreement shall not, by itself, constitute a "Change in Control;" or (v) any "person" (as such term is used in Sections 13(d) or 14(d)(2) of the Securities Exchange Act of 1934 becomes the beneficial owner, directly or indirectly, of securities of the Company that represent 35% or more of the votes that could then be cast in an election for members of the Company's board of directors; or (vi) during any period of 24 consecutive months, commencing after the effective date of this Agreement, individuals who at the beginning of such 24-month period were directors of the Company shall cease to constitute at least a majority of the Company's board of directors, unless the election of each director who was not a director at the beginning of such period has been approved in advance by directors representing at least two thirds of (A) the directors then in office who were directors at the beginning of the 24-month period, or (B) the directors specified in clause (A) plus directors whose election has been so approved by directors specified in clause (A). 8. ADMINISTRATION The option granted by this agreement will be administered by the Board of Directors of the Company which will have the authority to interpret this agreement and to decide all questions and settle all controversies and disputes which may arise in connection therewith. All decisions, determinations and interpretations of the Board of Directors will be binding on all parties concerned. A majority of the members of the Board of Directors will constitute a quorum, and all determinations of the Board of Directors will be made by a majority of its members. Any determination of the Board of Directors under this agreement may be made without notice or meeting of the Board of Directors by a written instrument signed by a majority of the members of the Board of Directors. 9. STOCK TO BE DELIVERED Stock to be delivered upon exercise of this option will be common stock of the Company and may constitute an original issue of authorized but unissued stock or may consist of previously issued stock acquired by the Company as determined from time to time by the Board of Directors. The Board of Directors and the proper officers of the Company will take any appropriate action required for such delivery. 10. CHANGES IN STOCK In the event of a stock dividend, split-up or combination of shares, recapitalization or merger in which the Company is the surviving corporation, or other similar capital change, the number and kind of shares of stock or securities of the Company subject to the option granted hereby, the option price and other relevant provisions will be appropriately adjusted by the Board of Directors of the Company, whose determination will be binding on the Optionee. In the event of a consolidation or merger in which the Company is not the surviving corporation or which results in the acquisition of substantially all the Company's outstanding common stock by a single person or entity or by a group of persons and/or entities acting in concert, or in the event of the sale or transfer of substantially all the Company's assets, this option shall thereupon terminate, provided that this option shall become exercisable immediately prior to consummation of such merger, consolidation or sale of assets unless, if there is a surviving or II-13 4 acquiring corporation, the Board of Directors has arranged, subject to consummation of the merger, consolidation or sale of assets, for the assumption of this option or the grant to the Optionee of a replacement award (in each case, on substantially the same terms as set forth in this agreement, including, without limitation, the provisions of Sections 6 and 7 hereof) by the surviving or acquiring corporation or an affiliate of that corporation. 11. AMENDMENTS The Board of Directors of the Company may at any time or times amend the option granted hereby for the purpose of satisfying the requirements of any changes in applicable laws or regulations or for any other purpose which may at the time be permitted by law, provided that no such amendment will adversely affect the rights of the Optionee without his consent. 12. GOVERNING LAW This agreement shall be governed by and construed in accordance with the internal laws of The Commonwealth of Massachusetts. IN WITNESS WHEREOF, the Company has caused this agreement to be executed by its duly authorized officer, under its corporate seal. This option is granted at the Company's office, on the date stated below. GENOME THERAPEUTICS CORP. By: /s/ NORBERT RIEDEL ------------------------------------------- Chairman of the Compensation Committee of the Board of Directors Date: As of October 26, 2000 Accepted and Agreed: /s/ STEVEN M. RAUSCHER - --------------------------- Steven M. Rauscher II-14 EX-4.(C) 4 b38796gtex4-c.txt 2001 INCENTIVE PLAN 1 EXHIBIT 4(c) GENOME THERAPEUTICS CORP. 2001 INCENTIVE PLAN 1. DEFINED TERMS Exhibit A, which is incorporated by reference, defines the terms used in the Plan and sets forth certain operational rules related to those terms. 1. GENERAL The Plan has been established to advance the interests of the Company by giving selected Employees, directors and other persons (including both individuals and entities) who provide services to the Company or its Affiliates stock-based incentives or incentives based on Performance Criteria. 2. ADMINISTRATION The Administrator has discretionary authority, subject only to the express provisions of the Plan, to interpret the Plan; determine eligibility for and grant Awards; determine, modify or waive the terms and conditions of any Award; prescribe forms, rules and procedures (which it may modify or waive); and otherwise do all things necessary to carry out the purposes of the Plan. Once an Award has been communicated in writing to a Participant, the Administrator may not, without the Participant's consent, alter the terms of the Award so as to affect adversely the Participant's rights under the Award, unless the Administrator expressly reserved the right to do so in writing at the time of such communication. In the case of any Award intended to be eligible for the performance-based compensation exception under Section 162(m), the Administrator shall exercise its discretion consistent with qualifying the Award for such exception. 3. LIMITS ON AWARD UNDER THE PLAN a. NUMBER OF SHARES A maximum of 3,400,000 shares of Stock may be delivered in satisfaction of Awards under the Plan. For purposes of the preceding sentence, the following shares shall not be considered to have been delivered under the Plan: (i) shares remaining under an Award that terminates without having been exercised in full; (ii) shares subject to an Award, where cash is delivered to a Participant in lieu of such shares; and (iii) shares of Restricted Stock that have been forfeited in accordance with the terms of the applicable Award; and (iv) shares held back in satisfaction of tax withholding requirements from shares that would otherwise have been delivered pursuant to an Award. The number of shares of Stock delivered under an Award shall be determined net of any previously acquired shares of Stock tendered by the Participant in payment of withholding taxes. b. TYPE OF SHARES Stock delivered by the Company under the Plan may be authorized but unissued Stock or previously issued Stock acquired by the Company and held in treasury. No fractional shares of Stock will be delivered under the Plan. c. OPTION & SAR LIMITS The maximum number of shares of Stock for which Stock Options may be granted to any person in any calendar year, the maximum number of shares of Stock subject to SARs granted to any person in any calendar year and the aggregate maximum number of shares of Stock subject to other Awards (other than Restricted Stock Awards) that may be delivered to any person in any calendar year shall each be 1,000,000, and the aggregate II-15 2 maximum number of shares of Stock subject to Restricted Stock Awards that may be delivered to any person in any calendar year shall each be 100,000. For purposes of the preceding sentence, the repricing of a Stock Option or SAR shall be treated as a new grant to the extent required under Section 162(m). Subject to these limitations, each person eligible to participate in the Plan shall be eligible in any year to receive Awards covering up to the full number of shares of Stock then available for Awards under the Plan. d. OTHER AWARD LIMITS No more than $500,000 may be paid to any individual with respect to any Cash Performance Award. In applying the limitation of the preceding sentence: (A) multiple Cash Performance Awards to the same individual that are determined by reference to performance periods of one year or less ending with or within the same fiscal year of the Company shall be subject in the aggregate to one limit of such amount, and (B) multiple Cash Performance Awards to the same individual that are determined by reference to one or more multi-year performance periods ending in the same fiscal year of the Company shall be subject in the aggregate to a separate limit of such amount. With respect to any Performance Award other than a Cash Performance Award or a Stock Option or SAR, the maximum Award opportunity shall be 100,000 shares of Stock or their equivalent value in cash, subject to the limitations of Section 4.c. 4. ELIGIBILITY AND PARTICIPATION The Administrator will select Participants from among those Employees, directors and other individuals or entities providing services to the Company or its Affiliates who, in the opinion of the Administrator, are in a position to make a significant contribution to the success of the Company and its Affiliates. Eligibility for ISOs is further limited to those individuals whose employment status would qualify them for the tax treatment described in Sections 421 and 422 of the Code. 5. RULES APPLICABLE TO AWARDS a. ALL AWARDS (1) TERMS OF AWARDS. The Administrator shall determine the terms of all Awards subject to the limitations provided herein. (2) PERFORMANCE CRITERIA. Where rights under an Award depend in whole or in part on satisfaction of PERFORMANCE Criteria, actions by the Company that have an effect, however material, on such Performance Criteria or on the likelihood that they will be satisfied will not be deemed an amendment or alteration of the Award. (3) TRANSFERABILITY OF AWARDS. Except as the Administrator otherwise expressly provides, Awards may not be TRANSFERRED other than by will or by the laws of descent and distribution, and during a Participant's lifetime an Award requiring exercise may be exercised only by the Participant (or in the event of the Participant's incapacity, the person or persons legally appointed to act on the Participant's behalf). (4) VESTING, ETC. Without limiting the generality of Section 3, the Administrator may determine the time or times at which an Award will vest (i.e., become free of forfeiture restrictions) or become exercisable and the terms on which an Award requiring exercise will remain exercisable. Unless the Administrator expressly provides otherwise, immediately upon the cessation of the Participant's employment or other service relationship with the Company and its Affiliates, an Award requiring exercise will cease to be exercisable, and all Awards to the extent not already fully vested will be forfeited, except that: (A) all Stock Options and SARs held by the Participant immediately prior to the cessation of the Participant's employment or other service relationship for reasons other than death and except as provided in (B) below, to the extent then exercisable, will remain exercisable for the lesser of (i) a period of three months or (ii) the II-16 3 period ending on the latest date on which such Stock Option or SAR could have been exercised without regard to this Section 6.a.(5), and shall thereupon terminate; (B) all Stock Options and SARs held by a Participant immediately prior to his or her death, to the extent then exercisable, will remain exercisable by such Participant's executor or administrator or the person or persons to whom the Stock Option or SAR is transferred by will or the applicable laws of descent and distribution, for the lesser of (i) a one year ending with the first anniversary of the Participant's death period (or such longer or shorter period as is determined by the Administrator) or (ii) the period ending on the latest date on which such Stock Option or SAR could have been exercised without regard to this Section 6.a.(5) and shall thereupon terminate; and (C) all Stock Options and SARs held by the Participant whose cessation of employment or other service relationship is determined by the Administrator in its sole discretion to result for reasons which cast such discredit on the Participant as to justify immediate termination of the Award shall immediately terminate upon such cessation. Unless the Administrator expressly provides otherwise, a Participant's "employment or other service relationship with the Company and its Affiliates" will be deemed to have ceased, in the case of an employee Participant, upon termination of the Participant's employment with the Company and its Affiliates (whether or not the Participant continues in the service of the Company or its Affiliates in some capacity other than that of an employee of the Company or its Affiliates), and in the case of any other Participant, when the service relationship in respect of which the Award was granted terminates (whether or not the Participant continues in the service of the Company or its Affiliates in some other capacity). (5) TAXES. The Administrator will make such provision for the withholding of taxes as it deems necessary. The Administrator may, but need not, hold back shares of Stock from an Award or permit a Participant to tender previously owned shares of Stock in satisfaction of tax withholding requirements. (6) DIVIDEND EQUIVALENTS, ETC. The Administrator may provide for the payment of amounts in lieu of cash dividends or other cash distributions with respect to Stock subject to an Award. (7) RIGHTS LIMITED. NOTHING IN THE PLAN SHALL BE CONSTRUED AS GIVING ANY PERSON THE RIGHT TO CONTINUED EMPLOYMENT or service with the Company or its Affiliates, or any rights as a shareholder except as to shares of Stock actually issued under the Plan. The loss of existing or potential profit in Awards will not constitute an element of damages in the event of termination of employment or service for any reason, even if the termination is in violation of an obligation of the Company or Affiliate to the Participant. (8) SECTION 162(m). In the case of an Award intended to be eligible for the performance-based compensation exception under Section 162(m), the Plan and such Award shall be construed to the maximum extent permitted by law in a manner consistent with qualifying the Award for such exception. In the case of a Performance Award intended to qualify as performance-based for the purposes of Section 162(m) (other than a Stock Option or SAR with an exercise price at least equal to the fair market value of the underlying Stock on the date of grant), the Committee shall in writing preestablish one or more specific Performance Criteria no later than 90 days after the commencement of the period of service to which the performance relates (or at such earlier time as is required to qualify the Award as performance-based under Section 162(m)). Prior to payment of any Performance Award (other than a Stock Option or SAR with an exercise price at least equal to the fair market value of the underlying Stock on the date of grant) intended to qualify as performance-based under Section 162(m), the Committee shall certify whether the Performance Criteria have been attained and such determination shall be final and conclusive. If the Performance Criteria with respect to any such Award are not attained, no other Award shall be provided in substitution of the Performance Award. b. AWARDS REQUIRING EXERCISE (1) TIME AND MANNER OF EXERCISE. Unless the Administrator expressly provides otherwise, (a) an Award requiring exercise by the holder will not be deemed to have been exercised until the Administrator receives II-17 4 a written notice of exercise (in form acceptable to the Administrator) signed by the appropriate person and accompanied by any payment required under the Award; and (b) if the Award is exercised by any person other than the Participant, the Administrator may require satisfactory evidence that the person exercising the Award has the right to do so. (2) EXERCISE PRICE. The Administrator shall determine the exercise price of each Stock Option provided that each Stock Option intended to qualify for the performance-based exception under Section 162(m) of the Code and each ISO must have an exercise price that is not less than the fair market value of the Stock subject to the Stock Option, determined as of the date of grant. An ISO granted to an Employee described in Section 422(b)(6) of the Code must have an exercise price that is not less than 110% of such fair market value. (3) PAYMENT OF EXERCISE PRICE, IF ANY. Where the exercise of an Award is to be accompanied by payment, the Administrator may determine the required or permitted forms of payment, subject to the following: (a) all payments will be by cash or check acceptable to the Administrator, or, if so permitted by the Administrator (with the consent of the optionee of an ISO if permitted after the grant), (i) through the delivery of shares of Stock which have been outstanding for at least six months (unless the Administrator approves a shorter period) and which have a fair market value equal to the exercise price, (ii) by delivery of a promissory note of the person exercising the Award to the Company, payable on such terms as are specified by the Administrator, (iii) by delivery of an unconditional and irrevocable undertaking by a broker to deliver promptly to the Company sufficient funds to pay the exercise price, or (iv) by any combination of the foregoing permissible forms of payment; and (b) where shares of Stock issued under an Award are part of an original issue of shares, the Award shall require an exercise price equal to at least the par value of such shares. (4) ISOs. No ISO may be granted under the Plan after December 4, 2010, but ISOs previously granted may extend beyond that date. c. AWARDS NOT REQUIRING EXERCISE Awards of Restricted Stock and Unrestricted Stock may be made in return for either (i) services determined by the Administrator to have a value not less than the par value of the Awarded shares of Stock, or (ii) cash or other property having a value not less than the par value of the Awarded shares of Stock plus such additional amounts (if any) as the Administrator may determine payable in such combination and type of cash, other property (of any kind) or services as the Administrator may determine. 7. EFFECT OF CERTAIN TRANSACTIONS a. MERGERS, ETC. In the event of a consolidation or merger in which the Company is not the surviving corporation or which results in the acquisition of substantially all the Company's outstanding Stock by a single person or entity or by a group of persons and/or entities acting in concert, or in the event of the sale or transfer of substantially all the Company's assets, all outstanding awards shall thereupon terminate, provided that all outstanding awards shall become exercisable immediately prior to consummation of such merger, consolidation or sale of assets unless, if there is a surviving or acquiring corporation, the Board has arranged, subject to consummation of the merger, consolidation or sale of assets, for the assumption of the awards or the grant to participants of replacement awards by the surviving or acquiring corporation or an affiliate of that corporation, which awards in the case of incentive options shall satisfy the requirements of section 424(a) of the Code. The Board may grant awards under the Plan in substitution for awards held by directors, employees, consultants or advisers of another corporation who concurrently become directors, employees, consultants or advisers of the Company or a subsidiary of the Company as the result of a merger or consolidation of that corporation with the Company or a subsidiary of the Company, or as the result of the acquisition by the Company or a subsidiary of the Company of property or stock of that corporation. The Company may direct that substitute awards be granted on such terms and conditions as the Board considers appropriate in the circumstances. II-18 5 b. CHANGES IN AND DISTRIBUTIONS WITH RESPECT TO THE STOCK (1) BASIC ADJUSTMENT PROVISIONS. In the event of a stock dividend, stock split or combination of shares, recapitalization or other change in the Company's capital structure, the Administrator will make appropriate adjustments to the maximum number of shares that may be delivered under the Plan under Section 4.a. and to the maximum share limits described in Section 4.c., and will also make appropriate adjustments to the number and kind of shares of stock or securities subject to Awards then outstanding or subsequently granted, any exercise prices relating to Awards and any other provision of Awards affected by such change. (2) CERTAIN OTHER ADJUSTMENTS. The Administrator may also make adjustments of the type described in paragraph (1) above to take into account distributions to common stockholders other than those provided for in Section 7.a. and 7.b.(1), or any other event, if the Administrator determines that adjustments are appropriate to avoid distortion in the operation of the Plan and to preserve the value of Awards made hereunder; provided, that no such adjustment shall be made to the maximum share limits described in Section 4.c. or 4.d., or otherwise to an Award intended to be eligible for the performance-based exception under Section 162(m), except to the extent consistent with that exception, nor shall any change be made to ISOs except to the extent consistent with their continued qualification under Section 422 of the Code. (3) CONTINUING APPLICATION OF PLAN TERMS. References in the Plan to shares of Stock shall be construed to include any stock or securities resulting from an adjustment pursuant to Section 7.b.(1) or 7.b.(2) above. 6. LEGAL CONDITIONS ON DELIVERY OF STOCK The Company will not be obligated to deliver any shares of Stock pursuant to the Plan or to remove any restriction from shares of Stock previously delivered under the Plan until the Company's counsel has approved all legal matters in connection with the issuance and delivery of such shares; if the outstanding Stock is at the time of delivery listed on any stock exchange or national market system, the shares to be delivered have been listed or authorized to be listed on such exchange or system upon official notice of issuance; and all conditions of the Award have been satisfied or waived. If the sale of Stock has not been registered under the Securities Act of 1933, as amended, the Company may require, as a condition to exercise of the Award, such representations or agreements as counsel for the Company may consider appropriate to avoid violation of such Act. The Company may require that certificates evidencing Stock issued under the Plan bear an appropriate legend reflecting any restriction on transfer applicable to such Stock. 7. AMENDMENT AND TERMINATION Subject to the last sentence of Section 3, the Administrator may at any time or times amend the Plan or any outstanding Award for any purpose which may at the time be permitted by law, or may at any time terminate the Plan as to any further grants of Awards; provided, that (except to the extent expressly required or permitted by the Plan) no such amendment will, without the approval of the stockholders of the Company, effectuate a change for which stockholder approval is required in order for the Plan to continue to qualify under Section 422 of the Code and for Awards to be eligible for the performance-based exception under Section 162(m). 8. NON-LIMITATION OF THE COMPANY'S RIGHTS The existence of the Plan or the grant of any Award shall not in any way affect the Company's right to award a person bonuses or other compensation in addition to Awards under the Plan. 9. GOVERNING LAW The Plan shall be construed in accordance with the laws of The Commonwealth of Massachusetts. II-19 6 EXHIBIT A DEFINITION OF TERMS The following terms, when used in the Plan, shall have the meanings and be subject to the provisions set forth below: "ADMINISTRATOR": The Board or, if one or more has been appointed, the Committee. "AFFILIATE": Any corporation or other entity owning, directly or indirectly, 50% or more of the outstanding Stock of the Company, or in which the Company or any such corporation or other entity owns, directly or indirectly, 50% of the outstanding capital stock (determined by aggregate voting rights) or other voting interests. "AWARD": Any or a combination of the following: (i) Stock Options. (ii) SARs. (iii) Restricted Stock. (iv) Unrestricted Stock. (v) Deferred Stock. (vi) Securities (other than Stock Options) that are convertible into or exchangeable for Stock on such terms and conditions as the Administrator determines. (vii) Cash Performance Awards. (viii) Performance Awards. (ix) Grants of cash, or loans, made in connection with other Awards in order to help defray in whole or in part the economic cost (including tax cost) of the Award to the Participant. "BOARD": The Board of Directors of the Company. "CASH PERFORMANCE AWARD": A Performance Award payable in cash. The right of the Company under Section 6.a.(3) to extinguish an Award in exchange for cash or the exercise by the Company of such right shall not make an Award otherwise not payable in cash a Cash Performance Award. "CODE": The U.S. Internal Revenue Code of 1986 as from time to time amended and in effect, or any successor statute as from time to time in effect. "COMMITTEE": One or more committees of the Board which in the case of Awards granted to officers of the Company shall be comprised solely of two or more outside directors within the meaning of Section 162(m). Any Committee may delegate ministerial tasks to such persons (including Employees) as it deems appropriate. "COMPANY": Genome Therapeutics Corp. "DEFERRED STOCK": A promise to deliver Stock or other securities in the future on specified terms. "EMPLOYEE": Any person who is employed by the Company or an Affiliate. "ISO": A Stock Option intended to be an "incentive stock option" within the meaning of Section 422 of the Code. No Stock Option Awarded under the Plan will be an ISO unless the Administrator expressly provides for ISO treatment. "PARTICIPANT": An Employee, director or other person providing services to the Company or its Affiliates who is granted an Award under the Plan. II-20 7 "PERFORMANCE AWARD": An Award subject to Performance Criteria. The Committee in its discretion may grant Performance Awards that are intended to qualify for the performance-based compensation exception under Section 162(m) and Performance Awards that are not intended so to qualify. "PERFORMANCE CRITERIA": Specified criteria the satisfaction of which is a condition for the exercisability, vesting or full enjoyment of an Award. For purposes of Performance Awards that are intended to qualify for the performance-based compensation exception under Section 162(m), a Performance Criterion shall mean an objectively determinable measure of performance relating to any of the following (determined either on a consolidated basis or, as the context permits, on a divisional, subsidiary, line of business, project or geographical basis or in combinations thereof): (i) sales; revenues; assets; expenses; earnings before or after deduction for all or any portion of interest, taxes, depreciation, amortization or other items, whether or not on a continuing operations or an aggregate or per share basis; return on equity, investment, capital or assets; one or more operating ratios; borrowing levels, leverage ratios or credit rating; market share; capital expenditures; cash flow; stock price; stockholder return; network deployment; sales of particular products or services; customer acquisition, expansion and retention; or any combination of the foregoing; or (ii) acquisitions and divestitures (in whole or in part); joint ventures and strategic alliances; spin-offs, split-ups and the like; reorganizations; recapitalizations, restructurings, financings (issuance of debt or equity) and refinancings; transactions that would constitute a change of control; or any combination of the foregoing. A Performance Criterion measure and targets with respect thereto determined by the Administrator need not be based upon an increase, a positive or improved result or avoidance of loss. "PLAN": The Genome Therapeutics Corp. 2001 Incentive Plan as from time to time amended and in effect. "RESTRICTED STOCK": An Award of Stock subject to restrictions requiring that such Stock be redelivered to the Company if specified conditions are not satisfied. "SECTION 162(m)": Section 162(m) of the Code. "SARS": Rights entitling the holder upon exercise to receive cash or Stock, as the Administrator determines, equal to a function (determined by the Administrator using such factors as it deems appropriate) of the amount by which the Stock has appreciated in value since the date of the Award. "STOCK": Common Stock of the Company, par value $ .10 per share. "STOCK OPTIONS": Options entitling the recipient to acquire shares of Stock upon payment of the exercise price. "UNRESTRICTED STOCK": An Award of Stock not subject to any restrictions under the Plan. II-21 EX-5 5 b38796gtex5.txt OPINION OF ROPES & GRAY 1 EXHIBIT 5 [ROPES & GRAY LETTERHEAD] April 4, 2001 Genome Therapeutics Corp. 100 Beaver Street Waltham, Massachusetts 02453 Ladies and Gentlemen: We have acted as counsel for Genome Therapeutics Corp., a Massachusetts corporation (the "Company"), in connection with the preparation of a registration statement on Form S-8 and all exhibits thereto (the "Registration Statement") filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, for the registration of 3,912,296 shares of Common Stock, $.10 par value (the "Shares"). The Shares being registered are issuable either (i) upon the vesting of stock granted pursuant to certain stock option agreements (the "Option Agreements") or (ii) pursuant to the Company's 2001 Incentive Plan (the "Plan"), all of which are attached as exhibits to the Registration Statement. For purposes of this opinion, we have examined a copy of the Registration Statement; copies of the Option Agreements; the Plan; the Restated Articles of Organization of the Company, as amended to date; the By-laws of the Company, as amended to date; the votes of the Board of Directors of the Company granting the options and adopting the Plan; and such other documents and records as we deem necessary for purposes of this opinion. We have assumed that the Shares will be issued only as provided in the Option Agreements and the Plan and that the price at which such Shares are issued will not be less than the par value per share of the Company's Common Stock. We have also assumed that the issuance of any such shares will not result in the issuance by the Company of more than its authorized shares of Common Stock. Based upon and subject to the foregoing, we are of the opinion that the Shares have been duly authorized and that the Shares, when issued in accordance with the terms of the Option Agreements or the Plan, as applicable, will have been validly issued and will be fully paid and nonassessable. In connection with any issue and sale of the Shares, steps should be taken to effect compliance with all applicable laws, rules and regulations of governmental authorities regulating sales and offerings of securities. We understand that this opinion is to be used in connection with the Registration Statement. We consent to the filing of this opinion as an exhibit to the Registration Statement and to the use of our name therein. Very truly yours, /s/ ROPES & GRAY Ropes & Gray II-22 EX-23.(B) 6 b38796gtex23-b.txt CONSENT OF ARTHUR ANDERSEN LLP 1 Exhibit 23(b) CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this Registration Statement of our reports and to all references to our Firm included in or made a part of this registration statement. /s/ ARTHUR ANDERSEN LLP Arthur Andersen LLP Boston, Massachusetts April 3, 2001 II-23 -----END PRIVACY-ENHANCED MESSAGE-----