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GENAISSANCE PHARMACEUTICALS, INC. STOCK OPTION PLAN
I. ESTABLISHMENT OF PLAN; DEFINITIONS
1. PURPOSE. The purpose of the Genaissance Pharmaceuticals, Inc. Stock Option
Plan is to advance the interests of Genaissance Pharmaceuticals, Inc. (the
"Corporation") by providing an incentive to Employees, Directors and consultants
who are in a position to contribute materially to the long-term success of the
Corporation, to increase their interest in the Corporation's welfare, and to aid
in attracting and retaining Employees, Directors and consultants of outstanding
ability.
2. DEFINITIONS. Unless the context clearly indicates otherwise, the following
terms shall have the meanings set forth below:
(a) "Board" shall mean the Board of Directors of the Corporation.
(b) "Code" shall mean the Internal Revenue Code of 1986, as it may
be amended from time to time.
(c) "Committee" shall mean a committee whose members shall, from
time to time, be appointed by the Board; provided, however,
that effective on such date as the Corporation becomes subject
to the rules of the Securities Exchange Act of 1934, such
Committee shall consist of at least two Directors, all of whom
are "disinterested", as that term is used under Rule 16b-3 of
the Securities Exchange Act of 1934.
(d) "Consultant" shall mean those independent contractors,
including scientific advisors, who provide special technical
expertise to the Corporation.
(e) "Corporation" shall mean Genaissance Pharmaceuticals, Inc., a
Delaware corporation.
(f) "Directors" shall mean those members of the Board of Directors
of the Corporation who are not Employees.
(g) "Disability" shall mean a medically determinable physical or
mental condition which causes an Employee to be unable to
engage in any substantial gainful activity and which can be
expected to result in death or to be of long-continued and
indefinite duration.
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(h) "Employee" shall mean any common law employee, including
officers, of the Corporation as determined in the Code and the
Treasury Regulations thereunder.
(i) "Fair Market Value" shall mean the fair market value of the
Stock as determined by the Committee on the basis of a review
of the facts and circumstances at the time.
(j) "Grantee" shall mean an Employee, Director or consultant
granted a Stock Option under this Plan.
(k) "Incentive Stock Option" shall mean an option granted pursuant
to the Incentive Stock Option provisions as set forth in Part
II of this Plan.
(l) "Non-Qualified Stock Option" shall mean an option granted
pursuant to the Non-Qualified Stock Option provisions as set
forth in Part III of this Plan.
(m) "Plan" shall mean the Genaissance Pharmaceuticals, Inc. Stock
Option Plan as set forth herein and as amended from time to
time.
(n) "Stock" shall mean authorized but unissued shares of the
Common Stock of the Corporation or reacquired shares of the
Corporation's Common Stock.
(o) "Stock Option" shall mean an option granted pursuant to the
Plan to purchase shares of Stock.
(p) "Ten Percent Shareholder" shall mean an Employee who at the
time a Stock Option is granted owns stock possessing more than
ten percent (10%) of the total combined voting power of all
stock of the Corporation or of its parent or subsidiary
corporation.
3. SHARES OF STOCK SUBJECT TO THE PLAN. Subject to the provisions of Paragraph 2
of Part IV, the Stock which may be issued or transferred pursuant to Stock
Options granted under the Plan and the Stock which is subject to outstanding but
unexercised Stock Options under the Plan shall not exceed 1,297,000 shares in
the aggregate. If a Stock Option shall expire and terminate for any reason, in
whole or in part, without being exercised, the number of shares of Stock as to
which such expired or terminated Stock Option shall not have been exercised may
again become available for the grant of Stock Options. There shall be no terms
and conditions in a Stock Option which provide that the exercise of an Incentive
Stock Option reduces the number of shares of Stock for which an outstanding
Non-Qualified Stock Option may be exercised; and there shall be no terms and
conditions in a Stock Option which provide that the exercise of a Non-Qualified
Stock Option reduces the number of shares of Stock for which an outstanding
Incentive Stock Option may be exercised.
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4. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the Committee.
Subject to the express provisions of the Plan, the Committee shall have
authority to interpret the Plan, to prescribe, amend, and rescind rules and
regulations relating to it, to determine the terms and provisions of Stock
Option agreements, and to make all other determinations necessary or advisable
for the administration of the Plan. Any controversy or claim arising out of or
related to this Plan shall be resolved unilaterally by and at the sole
discretion of the Committee.
5. AMENDMENT OR TERMINATION. The Board may, at any time, alter, amend, suspend,
discontinue, or terminate this Plan; provided, however, that such action shall
not adversely affect the right of Grantees to Stock Options previously granted
and no amendment, without the approval, by vote or consent, of the stockholders
of the Corporation, taken in accordance with the Bylaws of the Corporation and
applicable law, shall increase the maximum number of shares which may be awarded
under the Plan in the aggregate, or materially modify the eligibility
requirements for participation in the Plan.
6. EFFECTIVE DATE AND DURATION OF THE PLAN. This Plan shall become effective on
September 1, 1993, subject to its subsequent approval by the stockholders of the
Corporation, taken, by vote or consent, in accordance with the Bylaws of the
Corporation and applicable law. This Plan shall terminate at the close of
business on the date which is ten years from the date the Plan becomes
effective, and no Stock Option may be granted under the Plan thereafter, but
such termination shall not affect any Stock Option theretofore granted.
II. INCENTIVE STOCK OPTION PROVISIONS
1. GRANTING OF INCENTIVE STOCK OPTIONS.
(a) Only Employees of the Corporation shall be eligible to receive
Incentive Stock Options under the Plan.
(b) The purchase price of each share of Stock subject to an
Incentive Stock Option shall not be less than 100% of the Fair
Market Value of a share of the Stock on the date the Incentive
Stock Option is granted; provided, however, that the purchase
price of each share of Stock subject to an Incentive Stock
Option granted to a Ten Percent Shareholder shall not be less
than 110% of the Fair Market Value of a share of the Stock on
the date the Incentive Stock Option is granted.
(c) No Incentive Stock Option shall be exercisable more than ten
years from the date the Incentive Stock Option was granted;
provided, however, that an Incentive Stock Option granted to a
Ten Percent Shareholder shall not be exercisable more than
five years from the date the Incentive Stock Option was
granted.
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(d) The Committee shall determine and designate from time to time
those Employees who are to be granted Incentive Stock Options
and specify the number of shares subject to each Incentive
Stock Option.
(e) Notwithstanding other provisions hereof, the aggregate Fair
Market Value (determined at the time the Incentive Stock
Option is granted) of the Stock with respect to which
Incentive Stock Options are exercisable for the first time by
the Employee during any calendar year (under all such plans of
the Grantee's employer corporation and its parent and
subsidiary corporations) shall not exceed $100,000.
(f) The Committee may make such other provisions as may appear
generally acceptable or desirable to the Committee or
necessary to qualify its grants under the provisions of
Section 422 of the Code.
(g) The Committee may grant at any time new Incentive Stock
Options to an Employee who has previously received Incentive
Stock Options or other options whether such prior Incentive
Stock Options or other options are still outstanding, have
previously been exercised in whole or in part, or are canceled
in connection with the issuance of new Incentive Stock
Options. The purchase price of the new Incentive Stock Options
may be established by the Board or the Committee, if so
authorized by the Board, without regard to the existing
Incentive Stock Options or other options.
2. EXERCISE OF INCENTIVE STOCK OPTIONS.
(a) The option price of an Incentive Stock Option shall be
payable on exercise of the option (i) in cash or by check, bank
draft or postal or express money order, (ii) by the surrender
of Stock then owned by the Grantee, provided that the Stock
surrendered by the Grantee has been owned by the Grantee for at
least six months, or (iii) partially in accordance with clause
(i) and partially in accordance with clause (ii) of this
Paragraph. Shares of Stock so surrendered in accordance with
clause (ii) or (iii) shall be valued at the Fair Market Value
thereof on the date of exercise, surrender of such Stock to be
evidenced by delivery of the certificate(s) representing such
shares in such manner, and endorsed in such form, or
accompanied by stock powers endorsed in such form, as the
Committee may determine.
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3. TERMINATION OF EMPLOYMENT.
(a) If a Grantee's employment is terminated (other than by
Disability or death) the terms of any then outstanding
Incentive Stock Option held by the Grantee shall extend for a
period ending on the earlier of (i) the date on which such
option would otherwise expire, or (ii) ninety days after such
termination of employment, and such option shall be
exercisable to the extent it was exercisable as of the date of
termination of employment.
(b) If a Grantee's employment is terminated by reason of
Disability, the term of any then outstanding Incentive Stock
Option held by the Grantee shall extend for a period ending on
the earlier of (i) the date on which such option would
otherwise expire or (ii) ninety days after the Grantee's last
date of employment, and such option shall be exercisable to
the extent it was exercisable as of such last date of
employment.
(c) If a Grantee's employment is terminated by death, the
representative of his estate or beneficiaries thereof to whom
the option has been transferred shall have the right during the
ninety day period following appointment of a legal
representative of the estate to exercise any then outstanding
Incentive Stock Options in whole or in part. If a Grantee dies
ninety days after his retirement without having fully exercised
any then outstanding Incentive Stock Options, the
representative of his estate or beneficiaries thereof to whom
the option has been transferred shall have the right during
such ninety day period to exercise such options in whole or in
part. The number of shares of Stock in respect of which an
Incentive Stock Option may be exercised after a Grantee's death
shall be the number of shares in respect of which such option
could be exercised as of the date of the Grantee's death or
retirement, whichever occurs first. In no event may the period
for exercising an Incentive Stock Option extend beyond the date
on which such option would otherwise expire.
III. NON-QUALIFIED STOCK OPTION PROVISIONS
1. GRANTING OF STOCK OPTIONS.
(a) Employees and Directors of the Corporation as well as
consultants to the Corporation shall be eligible to receive
Non-Qualified Stock Options under the Plan.
(b) The Committee shall determine and designate from time to time
those Employees, Directors and consultants who are to be
granted Non-Qualified Stock Options and the amount subject to
each Non-Qualified Stock Option.
(c) The Committee may grant at any time new Non-Qualified Stock
Options to an Employee, Director or consultant who has
previously received Non-Qualified
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Stock Options or other options, whether such prior
Non-Qualified Stock Options or other options are still
outstanding, have previously been exercised in whole or in
part, or are canceled in connection with the issuance of
new Non-Qualified Stock Options.
(d) When granting a Non-Qualified Stock Option, the Committee
shall determine the purchase price of the Stock subject
thereto.
(e) The Committee may make such other provisions as may appear
generally acceptable or desirable to the Committee.
(f) No Non-Qualified Stock Option shall be exercisable more than
ten years from the date such option is granted.
2. EXERCISE OF STOCK OPTIONS. The option price of a Non-Qualified Stock
Option shall be payable on exercise of the option (i) in cash or by check,
bank draft or postal or express money order, (ii) by the surrender of Stock
then owned by the Grantee, provided that the Stock surrendered by the Grantee
has been owned by the Grantee for at least six months, or (iii) partially in
accordance with clause (i) and partially in accordance with clause (ii) of
this Paragraph. Shares of Stock so surrendered in accordance with clause (ii)
or (iii) shall be valued at the Fair Market Value thereof on the date of
exercise, surrender of such to be evidenced by delivery of the certificate(s)
representing such shares in such manner, and endorsed in such form, or
accompanied by stock powers endorsed in such form, as the Committee may
determine.
3. TERMINATION OF EMPLOYMENT.
(a) If a Grantee's employment is terminated (other than by
Disability or death), the terms of any then outstanding
Non-Qualified Stock Option held by the Grantee shall extend
for a period ending on the earlier of (i) ninety days after
such termination of employment or (ii) the date on which such
option would otherwise expire, and such option shall be
exercisable to the extent it was exercisable as of the date of
termination of employment.
(b) If a Grantee's employment is terminated by reason of
Disability, the term of any then outstanding Non-Qualified
Stock Option held by the Grantee shall extend for a period
ending on the earlier of (i) the date on which such option
would otherwise expire or (ii) ninety days after the Grantee's
last date of employment, and such option shall be exercisable
to the extent it was exercisable as of such last date of
employment.
(c) If a Grantee's employment is terminated by death, the
representative of his estate or beneficiaries thereof to whom
the option has been transferred shall have the right during the
ninety day period following appointment of a legal
representative of the estate to exercise any then outstanding
Non-Qualified Stock Options in
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whole or in part. If a Grantee dies within ninety days after
his retirement without having fully exercised any then
outstanding Non-Qualified Stock Options, the representative of
his estate or beneficiaries thereof to whom the option has been
transferred shall have the right during such ninety day period
to exercise such options in whole or in part. The number of
shares of Stock in respect of which a Non-Qualified Stock
Option may be exercised after a Grantee's death shall be the
number of shares of Stock in respect of which such option could
be exercised as of the date of the Grantee's death or
retirement, whichever first occurs. In no event may the period
for exercising a Non-Qualified Stock Option extend beyond the
date on which such option would otherwise expire.
(d) If a Grantee ceases to be a Director or consultant, the
Committee may impose such restrictions as may appear generally
acceptable or desirable.
IV. GENERAL PROVISIONS
1. SUBSTITUTION OF OPTIONS. In the event of a corporate merger or
consolidation, or the acquisition by the Corporation of property or stock of
an acquired corporation or any reorganization or other transaction qualifying
under Section 424 of the Code, the Committee may, in accordance with the
provisions of that Section, substitute options under this Plan for options
under the plan of the acquired corporation provided (i) the excess of the
aggregate fair market value of the shares subject to option immediately after
the substitution over the aggregate option price of such shares is not more
than the similar excess immediately before such substitution and (ii) the new
option does not give the Employee additional benefits, including any
extension of the exercise period.
2. ADJUSTMENT PROVISIONS.
(a) If the shares of Stock outstanding are changed in number or
class by reason of a split-up, merger, consolidation,
reorganization, reclassification, recapitalization, or any
capital adjustment, including a stock dividend, or if any
distribution is made to the holders of common stock other than
a cash dividend, then
(i) the aggregate number and class of shares or other
securities that may be issued or transferred pursuant
to Paragraph 3 of Part I,
(ii) the number and class of shares or other securities
which are issuable under outstanding Stock Options,
and
(iii) the purchase price to be paid per share under
outstanding Stock Options, shall be adjusted as
provided hereinafter.
(b) Adjustment under this Paragraph 2 shall be made in an
equitable manner by the Committee, whose determination as to
what adjustments shall be made, and the extent thereof, shall
be final, binding, and conclusive.
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3. GENERAL.
(a) Each Stock Option shall be evidenced by a written instrument
containing such terms and conditions, not inconsistent with
this Plan, as the Committee shall approve.
(b) The granting of a Stock Option in any year shall not give the
Grantee any right to similar grants in future years or any
right to be retained in the employ of the Corporation, and all
Employees shall remain subject to discharge to the same extent
as if the Plan were not in effect.
(c) No Grantee, and no beneficiary or other person claiming under
or through the Grantee, shall have any right, title or
interest by reason of any Stock Option to any particular
assets of the Corporation, or any shares of Stock allocated or
reserved for the purposes of the Plan or subject to any Stock
Option except as set forth herein. The Corporation shall not
be required to establish any fund or make any other
segregation of assets to assure the payment of any Stock
Option.
(d) No right under the Plan shall be subject to anticipation,
sale, assignment, pledge, encumbrance, or charge except by
will or the laws of descent and distribution, and a Stock
Option shall be exercisable during the Grantee's lifetime only
by the Grantee or his conservator.
(e) Notwithstanding any other provision of this Plan or agreements
made pursuant thereto, the Corporation's obligation to issue
or deliver any certificate or certificates for shares of Stock
under a Stock Option, and the transferability of Stock
acquired by exercise of a Stock Option, shall be subject to
all of the following conditions:
(i) Any registration or other qualification of such
shares under any state or federal law or regulation,
or the maintaining in effect of any such registration
or other qualification which the Board shall, in its
absolute discretion upon the advice of counsel, deem
necessary or advisable;
(ii) The obtaining of any other consent, approval, or
permit from any state or federal governmental agency
which the Board shall, in its absolute discretion
upon the advice of counsel, determine to be necessary
or advisable; and
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(iii) Each stock certificate issued pursuant to a Stock
Option shall bear the following legend:
"The transferability of this certificate and the
shares of Stock represented hereby are subject to
restrictions, terms and conditions contained in the
Genaissance Pharmaceuticals, Inc. Stock Option Plan,
and an Agreement between the registered owner of such
Stock and Genaissance Pharmaceuticals, Inc. A copy of
the Plan and Agreement are on file in the office of
the Secretary of Genaissance Pharmaceuticals, Inc."
(iv) Each Grantee shall be a signatory to an Employee
Shareholders Agreement, if Grantee is an Employee, or
an agreement restricting the transfer of any and all
shares of the Corporation's capital stock issued
pursuant to a Stock Option, if Grantee is not an
Employee, as the Committee shall require.
(f) All payments to Grantees or to their legal representatives
shall be subject to any applicable tax, community property, or
other statutes or regulations of the United States or of any
state having jurisdiction thereof. The Grantee may be required
to pay to the Corporation the amount of any withholding taxes
which the Corporation is required to withhold with respect to
a Stock Option or its exercise. In the event that such payment
is not made when due, the Corporation shall have the right to
deduct, to the extent permitted by law, from any payment of
any kind otherwise due to such person all or part of the
amount required to be withheld.
(g) In the case of a grant of a Stock Option to any Employee of a
subsidiary of the Corporation, the Corporation may, if the
Committee so directs, issue or transfer the shares, if any,
covered by the Stock Option to the subsidiary, for such lawful
consideration as the Committee may specify, upon the condition
or understanding that the subsidiary will transfer the shares
to the Employee in accordance with the terms of the Stock
Option specified by the Committee pursuant to the provisions
of the Plan. For purposes of this Section, a subsidiary shall
mean any subsidiary corporation of the Corporation as defined
in Section 424 of the Code.
(h) A Grantee entitled to Stock as a result of the exercise of a
Stock Option shall not be deemed for any purpose to be, or
have rights as, a shareholder of the Corporation by virtue of
such exercise, except to the extent a stock certificate is
issued therefor and then only from the date such certificate
is issued. No adjustments shall be made for dividends or
distributions or other rights for which the record date is
prior to the date such stock certificate is issued. The
Corporation shall issue any stock certificates required to be
issued in connection with the exercise of a Stock Option with
reasonable promptness after such exercise.
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(i) The grant or exercise of Stock Options granted under the Plan
shall be subject to, and shall in all respects comply with,
applicable corporate law relating to such grant or exercise,
or to the number of shares which may be beneficially owned or
held by any Grantee.
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