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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.
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(Exact name of issuer as specified in its charter)
MASSACHUSETTS 04-2297484
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 Beaver Street
Waltham, Massachusetts 02154
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(Address of principal executive offices including zip code)
1997 DIRECTORS' DEFERRED STOCK PLAN
1997 STOCK OPTION PLAN
-------------------------
(Full title of the Plans)
Fenel M. Eloi
Genome Therapeutics Corp.
100 Beaver Street
Waltham, Massachusetts 02154
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(Name and address of agent for service)
(781) 893-5007
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(Telephone number, including area code, of agent for service)
Please send copies of all communications to:
David C. Chapin, Esq.
Ropes & Gray
One International Place
Boston, Massachusetts 02110-2624
Telephone: (617) 951-7371
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Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
To Be To Be Price Per Offering Registration
Registered Registered Share (1) Price (1) Fee
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Common Stock, 1,000,000 $8.875 $8,875,000.00 $2,619.00
$.10 par value
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(1) Estimated solely for the purpose of calculating the registration fee on the
basis of the average high and low prices of the Common Stock as reported by the
National Association of Securities Dealers Automated Quotation System on March
26, 1998. Exhibit Index can be found on page 8.
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Part II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended
August 31, 1997, the Company's Quarterly Report on Form 10-Q for the quarter
ended November 29, 1997, all the reports filed by the Company with the
Securities and Exchange Commission pursuant to Sections 13(a) and (c), 14 and
15(d) of the Securities Exchange Act of 1934 since the end of the fiscal year
covered by the Company's Annual Report referred to above, and the description of
the Company's Common Stock contained in its Form 10/A, File No. 0-10824 are
incorporated by reference and made a part of this registration statement.
All reports and other documents subsequently filed by the Company
pursuant to Sections 13(a) and (c), 14 and 15(d) of the Securities Exchange Act
of 1934, as amended, prior to the filing of a post-effective amendment which
indicates that all securities offered hereby have been sold or which deregisters
all securities 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 is 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 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
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Massachusetts Business Corporation Law as in effect at the time such liability
is determined. The ByLaws 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). The Company's 1997 Directors' Deferred Stock Plan.
Exhibit 4(b). The Company's 1997 Stock Option Plan.
Exhibit 4(c). 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(d). 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(e). 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(f). 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(g). 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(h). 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(i). Amendment dated August 31, 1994 to Restated Articles
of Organization (filed as an exhibit to the Company's
Annual Report on
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Form 10-K for the year ended August 31, 1994 and
incorporated herein by reference).
Exhibit 4(j). 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).
Exhibit 4(k). 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(l). 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
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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.
(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.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it 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 31st
day of March, 1998.
Genome Therapeutics Corp.
By: /s/ Fenel M. Eloi
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Title: Senior Vice President, Treasurer
and Chief Financial Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Robert J. Hennessey and Fenel M. Eloi and each of
them, 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.
Name Title Date
---- ----- ----
/s/ Robert J. Hennessey Chairman of the Board; March 31, 1998
- ----------------------------- President and Chief
Robert J. Hennessey Executive Officer (Principal
Executive Officer)
/s/ Lawrence Levy Director March 31, 1998
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Lawrence Levy
/s/ Donald J. Mccarren Director March 31, 1998
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Donald J. McCarren
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/s/ Steven M. Rausher Director March 31, 1998
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Steven M. Rausher
/s/ Philip Leder Director March 31, 1998
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Philip Leder
/s/ Fenel M. Eloi Senior Vice President; March 31, 1998
- ----------------------------- Treasurer and Chief
Fenel M. Eloi Financial Officer
(Principal Financial and
Accounting Officer)
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Number Title Of Exhibit Page
- ------ ---------------- ----
<S> <C> <C>
4(a). The Company's 1997 Directors' Deferred Stock Plan.
4(b). The Company's 1997 Stock Option Plan
5. Opinion of Ropes & Gray
23(a). Consent of Ropes & Gray Contained in Exhibit 5
23(b). Consent of Arthur Andersen LLP
24. Power of Attorney Included as Part of Signature
Pages to this Registration
</TABLE>
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EXHIBIT 4(a)
GENOME THERAPEUTICS CORP.
1997 STOCK OPTION PLAN
1. PURPOSE
The purpose of the 1997 Stock Option Plan (the "Plan") is to advance the
interests of Genome Therapeutics Corp. (the "Company") by enhancing the ability
of the Company and its subsidiaries to attract and retain employees, consultants
or advisers who are in a position to make significant contributions to the
success of the Company; to reward such individuals for their contributions; and
to encourage such individuals to take into account the long-term interests on
the Company through interests in shares of the Company's common stock ("Stock").
Any employee, consultant or adviser designated to participate in the Plan is
referred to as a "participant." The proceeds received from the sale of stock
pursuant to the Plan shall be used for general corporate purposes.
Options granted pursuant to the Plan may be incentive stock options as
defined in Section 422 of the Code (any option that is intended so to qualify as
an incentive stock option being referred to herein as an "incentive option"), or
options that are not incentive options, or both. Except as otherwise expressly
provided with respect to an option grant, no option granted pursuant to the Plan
shall be an incentive option.
2. ADMINISTRATION
The Plan shall be administered by a Stock Option Committee appointed by, or
in a manner authorized by, the Board of Directors (the "Board") of the Company
or such other committee of the Board as the Board shall from time to time
appoint or authorize to administer the Plan (the Stock Option Committee or such
other committee being hereinafter referred to as the "Committee"). The Committee
shall have authority, not inconsistent with the express provisions for the Plan,
(a) to grant awards consisting of options or stock appreciation rights ("SARs"),
or both, to such participants as the Committee may select; (b) to determine the
time or times when awards shall be granted and the number of shares of Stock
subject to each award; (c) to determine which options are, and which options are
not, incentive options; (d) to determine the terms and conditions of each award;
(e) to prescribe the form or forms of any instruments evidencing awards and any
other instruments required under the Plan and to change such forms from time to
time; (f) to adopt, amend and rescind rules and regulations for the
administration of the Plan; and (g) to interpret the Plan and to decide any
questions and settle all controversies and disputes that may arise in connection
with the Plan. Such determinations of the Committee shall be conclusive and
shall bind all parties. Subject to Section 8, the Committee shall also have the
authority, both generally and in particular instances, to waive compliance by a
participant with any obligation to be performed by him under an award, to waive
any condition or provision of an award, and to amend or cancel any award (and if
an award is canceled, to grant a new award on such terms as the Committee shall
specify), except that the Committee may not take any action with respect to an
outstanding award that would adversely affect the rights of the participant
under such award without such participant's consent. Nothing in the preceding
sentence shall be construed as limiting the power of the Board to make
adjustments required by Section 4(c) and Section 6(j).
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The Committee shall consist of two or more members of the Board who are, at
the time of their appointment and any time they exercise discretion in
administering the Plan, "disinterested persons" within the meaning of Rule 16b-3
under the Securities Exchange Act of 1934, and "outside directors" within the
meaning of Section 162(m) of the Code. A majority of the members of the
Committee shall constitute a quorum, and all determinations of the Committee
shall be made by a majority of its members. Any determination of the Committee
under the Plan may be made without notice or meeting of the Committee by a
writing signed by a majority of the Committee members.
3. EFFECTIVE DATE AND TERM OF PLAN
The Plan shall become effective on the date on which it is approved by the
shareholders of the Company. Grants of awards under the Plan may be made prior
to that date (but after Board adoption of the Plan), subject to approval of the
Plan by such shareholders.
No awards shall be granted under the Plan after the completion of ten years
from the date on which the Plan was adopted by the Board, but awards previously
granted may extend beyond that date.
4. SHARES SUBJECT TO THE PLAN
a. Number of Shares. Subject to adjustment as provided in Section 4(c), the
aggregate number of shares of Stock that may be delivered upon the exercise of
awards granted under the Plan shall be _______________. If any award granted
under the Plan terminates without having been exercised in full, or upon
exercise is satisfied other than by delivery of Stock, the number of shares of
Stock as to which such award was not exercised shall be available for future
grants within the limits set forth in this Section 4(a).
b. Maximum Shares. Subject to Section 4(d), the maximum number of shares of
Stock with respect to which an award may be granted to any participant during
any single fiscal year is ______________. For purposes of this paragraph, except
as otherwise provided in regulations or other guidance issued under Section
162(m) of the Code, any repricing of an option or Stock Appreciation Right shall
be treated as an additional grant.
c. Shares to be Delivered. Shares delivered under the Plan will be common
stock of the Company and shall be authorized but unissued Stock, or, if the
Board so decides in its sole discretion, previously issued Stock acquired by the
Company and held in its treasury. No fractional shares of Stock will be
delivered under the Plan.
d. Changes in Stock. In the event of a stock dividend or other distribution
to common stock holders other than a normal cash dividend, stock split or
combination of shares, recapitalization or other change in the Company's capital
stock, the number and kind of shares of stock or securities of the Company
subject to awards then outstanding or subsequently granted under the Plan, the
exercise price of such awards, the maximum number of shares or securities that
may be delivered under the Plan, and other relevant provisions shall be
appropriately adjusted by the Board, whose determination shall be binding on all
persons.
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The Board or Committee may also adjust the number of shares subject to
outstanding awards, the exercise price of outstanding awards and the terms of
outstanding awards, to take into consideration material changes in accounting
practices or principles, extraordinary dividends, consolidations or mergers
(except those described in Section 6(j)), acquisitions or dispositions of stock
or property or any other event if it is determined by the Board or Committee in
its sole discretion that such adjustment is appropriate to avoid distortion in
the operation of the Plan, provided that no such adjustment shall be made in the
case of an incentive option, without the consent of the participant, if it would
constitute a modification, extension or renewal of the option within the meaning
of section 424(h) of the Code.
5. ELIGIBILITY FOR AWARDS
Those eligible to receive awards under the Plan ("Participants") will be
employees of the Company or any of its subsidiaries ("Employees") and other
persons or entities (including without limitation non-Employee directors of the
Company or a subsidiary of the Company) who, in the opinion of the Committee,
are in a position to make a significant contribution to the success of the
Company and its subsidiaries. Incentive options shall be granted only to
"employees" as defined in the provisions of the Code or regulations thereunder
applicable to incentive stock options.
A subsidiary for purposes of the Plan shall be a corporation (i) in which
the Company owns, directly or indirectly, stock possessing 50% or more of the
total combined voting power of all classes of stock or (ii) over which the
Company has effective operating control; provided, however, that no corporation
shall be deemed a subsidiary for the purpose of any provisions applicable to
incentive options, and no incentive options shall be granted to employees of
such corporation, unless in each case such corporation shall constitute a
subsidiary as defined in clause (i) above.
6. TERMS AND CONDITIONS OF OPTIONS AND SARs
a. Exercise Price of Options. The exercise price of each option shall be
determined by the Committee but in the case of an incentive option shall not be
less than 100% (110%, in the case of an incentive option granted to a
ten-percent shareholder) of the fair market value of the Stock at the time the
option is granted; nor shall the exercise price be less, in the case of an
original issue of authorized stock, than par value. For this purpose, "fair
market value" in the case of incentive options shall have the same meaning as it
does in the provisions of the Code and the regulations thereunder applicable to
incentive options; and "ten-percent shareholder" shall mean any participant who
at the time of grant owns directly, or by reason of the attribution rules set
forth in section 424(d) of the Code is deemed to own, stock possessing more than
10% of the total combined voting power of all classes of stock of the Company or
of any of its parent or subsidiary corporations.
b. Duration of Options. An option shall be exercisable during such period or
periods as the Committee may specify. The latest date on which an option may be
exercised (the "Final Exercise Date") shall be the date which is ten years (five
years, in the case of an incentive option granted to a "ten-percent shareholder"
as defined in (a) above) from the date the option was granted or such earlier
date as may be specified by the Committee at the time the option is granted.
c. Exercise of Options.
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i. An option shall become exercisable at such time or times and upon such
conditions as the Committee shall specify. In the case of an option not
immediately exercisable in full, the Committee may at any time accelerate
the time at which all or any part of the option may be exercised.
ii. Any exercise of an option shall be in writing, signed by the proper
person and delivered or mailed to the Company, accompanied by (A) such
documents as may be required by the Committee and (B) payment in full as
specified below in Section 6(d) for the number of shares for which the
option is exercised.
iii. In the case of an option that is not an incentive option, the
Committee shall have the right to require that the participant exercising
the option remit to the Company an amount sufficient to satisfy any federal,
state, or local withholding tax requirements (or make any other arrangements
satisfactory to the Company with regard to such taxes) prior to the delivery
of any Stock pursuant to the exercise of the option. If permitted by the
Committee, either at the time of the grant of the option or the time of
exercise, the participant may elect, at such time and in such manner as the
Committee may prescribe, to satisfy such withholding obligation by (A)
delivering to the Company Stock owned by such individual having a fair
market value equal to such withholding obligation, or (B) requesting that
the Company withhold from the shares of Stock to be delivered upon the
exercise a number of shares of Stock having a fair market value equal to
such withholding obligation.
In the case of an incentive option, if at the time the option is
exercised the Committee determines that under applicable law and regulations
the Company could be liable for the withholding of any federal or state tax
with respect to a disposition of the Stock received upon exercise, the
Committee may require as a condition of exercise that the participant
exercising the option agree (A) to inform the Company promptly of any
disposition (within the meaning of section 424(c) of the Code and the
regulations thereunder) of Stock received upon exercise, and (B) to give
such security as the Committee deems adequate to meet the potential
liability of the Company for the withholding of tax, and to augment such
security from time to time in any amount reasonably deemed necessary by the
Committee to preserve the adequacy of such security.
iv. If an option is exercised by the executor or administrator of a
deceased participant, or by the person or persons to whom the option has
been transferred by the participant's will or the applicable laws of descent
and distribution, the Company shall be under no obligation to deliver Stock
pursuant to such exercise until the Company is satisfied as to the authority
of the person or persons exercising the option.
d. Payment for and Delivery of Stock. Stock purchased upon exercise of an
option under the Plan shall be paid for as follows: (i) in cash or by certified
check or cashier's check, bank draft or money order payable to the order of the
Company or (ii) if so permitted by the Committee (which, in the case of an
incentive option, shall specify such method of payment at the time of grant),
(A) through the delivery of shares of Stock (duly owned by the participant and
for which the participant has good title, free and clear of any liens and
encumbrances) having a fair market value on the last business day preceding the
date of exercise equal to the purchase price or (B) by delivery of an
unconditional and irrevocable undertaking by a broker to deliver promptly to the
Company
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sufficient funds to pay the exercise price or (C) by any combination of the
permissible forms of payment.
e. Stock Appreciation Rights. The Committee in its discretion may grant SARs
either in tandem with or independent of options awarded under the Plan. Except
as hereinafter provided, each SAR will entitle the participant to receive upon
exercise, with respect to each share of Stock to which the SAR relates, the
excess of (i) the share's value on the date of exercise, over (ii) the share's
fair market value on the date it was granted. For purposes of clause (i),
"value" shall mean fair market value; provided, that the Committee may adjust
such value to take into account dividends on the Stock and may also grant SARs
that provide, in such limited circumstances following a change in control of the
Company (as determined by the Committee) as the Committee may specify, that
"value" for purposes of clause (i) is to be determined by reference to an
average value for the Stock during a period immediately preceding the change in
control, all as determined by the Committee. The amount payable to a participant
upon exercise of an SAR shall be paid either in cash or in shares of Stock, as
the Committee determines. Each SAR shall be exercisable during such period or
periods and on such terms as the Committee may specify. No SAR shall be
exercisable after the date which is ten years from the date of grant.
f. Delivery of Stock. A participant shall not have the rights of a
shareholder with regard to awards under the Plan except as to Stock actually
received by him under the Plan.
The Company shall not be obligated to deliver any shares of Stock (i) until,
in the opinion of the Company's counsel, all applicable federal and state laws
and regulations have been complied with, (ii) if the outstanding Stock is at the
time listed on any stock exchange, until the shares to be delivered have been
listed or authorized to be listed on such exchange upon official notice of
issuance, and (iii) until all other legal matters in connection with the
issuance and delivery of such shares have been approved by the Company's
counsel. 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 representation or agreements as counsel of the Company may consider
appropriate to avoid violation of such Act and may require that the certificates
evidencing such Stock bear an appropriate legend restricting transfer.
g. Nontransferability of Awards. Except as the Board may otherwise determine
in connection with the gifts, no award may be transferred other than by will or
by the laws of descent and distribution, and during a participant's lifetime, an
award may be exercised only by him (or in the event of the participant's
incapacity, the person or persons legally appointed to act on the participant's
behalf).
h. Death. If a participant dies, each award held by the participant
immediately prior to death may be exercised, to the extent it was exercisable
immediately prior to death, by his executor or administrator, or by the person
or persons to whom the award is transferred by will or the applicable laws of
descent and distribution, at any time within the three-year period ending with
the third anniversary of the participant's death (or such shorter or longer
period as the Board or Committee may determine) but in no event beyond the Final
Exercise Date. All awards held by a participant immediately prior to death that
are not then exercisable shall terminate on the date of death.
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i. Other Termination of Service. If an employee's employment with the
Company and its subsidiaries terminates for any reason other than death, all
awards held by the employee that are not then exercisable on the date employment
terminates shall continue to be exercisable for a period of three months (or
such longer period as the Committee may determine, but in no event beyond the
Final Exercise Date) unless the employee was discharged for cause which in the
opinion of the Committee casts such discredit on him as to justify termination
of his awards. After completion of that three-month period (or such shorter or
longer period as the Board or Committee may determine) such awards shall
terminate to the extent not previously exercised, expired or terminated. For
purposes of this Section 6(i), employment shall not be considered terminated (i)
in the case of sick leave or other bona fide leave of absence approved for
purposes of the Plan by the Committee, so long as the employee's right to
reemployment is guaranteed either by statute or by contract, or (ii) in the case
of a transfer of employment between the Company and a subsidiary or between
subsidiaries, or to the employment of a corporation (or a parent or subsidiary
corporation of such corporation) issuing or assuming an award in a transaction
to which section 424(a) of the Code applies.
In the case of a participant who is not an employee, provisions relating to
the exercisability of awards following termination of service shall be specified
in the award. If not so specified, all awards held by such participant that are
not then exercisable shall terminate upon termination of service.
j. 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 at least 20 days prior to the
effective date of any such merger, consolidation or sale of assets, the Board or
Committee shall either (i) make all outstanding awards exercisable immediately
prior to consummation of such merger, consolidation or sale of assets or (ii) if
there is a surviving or acquiring corporation, arrange, subject to consummation
of the merger, consolidation or sale of assets, to have that corporation or an
affiliate of that corporation grant to participants replacement awards which in
the case of incentive awards satisfy, in the determination of the Board or
Committee, the requirement of section 424(a) of the Code.
The Board or Committee may grant awards under the Plan in substitution for
awards held by employees, consultants or advisers of another corporation who
concurrently becomes employees, consultants or advisers of the Company or a
subsidiary of the Company as a 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 or Committee considers
appropriate in the circumstances.
7. EMPLOYMENT RIGHTS
Neither the adoption of the Plan nor the grant of awards shall confer upon
any participant any right to continue as an employee of, or consultant or
adviser to, the Company or any parent or subsidiary or affect in any way the
right of the Company or parent or subsidiary to terminate such
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participant at any time. Except as specifically provided by the Committee in any
particular case, the loss of existing or potential profit in awards granted
under this Plan shall not constitute an element of damages in the event of
termination of the relationship of a participant even if the termination is in
violation of an obligation of the Company to the participant by contract or
otherwise.
8. EFFECT, DISCONTINUANCE, CANCELLATION, AMENDMENT AND TERMINATION
Neither adoption of the Plan nor the grant of awards to a participant shall
affect the Company's right to make awards to such participant that are not
subject to the Plan, to issue to such participant Stock as a bonus or otherwise,
or to adopt other plans or arrangements under which Stock may be issued.
The Committee may at any time discontinue granting awards under the Plan.
With the consent of the participant, the Committee may at any time cancel an
existing award in whole or in part and grant another award for such number of
shares as the Committee specified. The Board may at any time or times amend the
Plan or any outstanding award for the purpose of satisfying the requirements of
section 422 of the Code or of any changes in applicable laws or regulations or
for any other purpose that 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 shall, 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 Rule 16b-3 under the Securities Exchange Act
of 1934 or section 422 of the Code, and no such amendment shall adversely affect
the rights of any participant (without his consent) under any award previously
granted.
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<PAGE> 1
EXHIBIT 4(b)
GENOME THERAPEUTICS CORP.
1997 DIRECTORS' DEFERRED STOCK PLAN
1. PURPOSE.
The purpose of this 1997 Directors' Deferred Stock Plan (the "Plan") of
Genome Therapeutics Corp. (the "Company") is to assist the Company in recruiting
and retaining highly qualified directors and to strengthen the commonality of
interest between directors and shareholders by providing for the receipt by the
directors of the Company of all or a portion of their directors fees in the form
of Deferred Stock Rights (as defined below).
2. ADMINISTRATION.
The Plan will be administered by a committee (the "Committee") of not
less than two directors of the Company, whose construction and interpretation of
the terms and provisions of the Plan shall be final and conclusive. Unless the
Board of Directors otherwise decides, the Committee will be the Stock Option and
Compensation Committee of the Board. All questions of interpretation of the Plan
shall be determined by the Committee and such determination shall be final and
binding upon all persons having an interest in the Plan. No Committee member
shall be liable for any action or determination under the Plan made in good
faith.
3. PARTICIPATION IN THE PLAN.
All directors of the Company who are not employees of the Company
("Eligible Directors") shall be eligible to be granted deferred stock under the
Plan.
4. STOCK SUBJECT TO THE PLAN.
The maximum number of shares which may be issued under the Plan shall
be ___________ shares of the Company's Common Stock, $0.10 par value per share
("Common Stock"), subject to adjustment as provided in Section 9.
5. ELECTION OF DEFERRED STOCK RIGHT.
(a) Each Eligible Director shall receive his or her Annual
Retainer in the form of a Deferred Stock Right as provided hereunder. "Annual
Retainer" means the amount that a director is entitled to receive for serving as
a director for a fiscal year, as determined from time to time by the Board of
Directors. The Annual Retainer for fiscal 1998 is set at 800 shares of Common
Stock. "Deferred Stock Rights" represent the right to receive a specified number
of shares of Common Stock from the Company on a date that is the earlier of (i)
the date three years from the date of grant of such Defined Stock Right or (ii)
the date upon which the grantee ceases to be a director of the Company by reason
of death, permanent disability, resignation or retirement.
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<PAGE> 2
(b) Subject to adjustment from time to time by the Board of
Directors, each Eligible Director shall receive a fee in the amount of $2,000
for each board meeting attended by such Eligible Director (as so adjusted, the
"Meeting Fee"). On or before December 15 of each year, each Eligible Director
may elect to receive all of his or her Board Meeting Fees for the upcoming
calendar year (the "Elective Fee") in the form of Deferred Stock Rights by
completing and delivering to the Company a written election (the "Election
Form") in a form established by the Committee. The election shall become
effective for the next succeeding calendar year and shall be irrevocable. Any
Eligible Director who does not deliver an Election Form to the Company shall
receive his or her Board Meeting Fees in the form of cash.
6. TERMS, CONDITIONS AND FORM OF DEFERRED STOCK.
Each Deferred Stock Right granted under the Plan shall be evidenced by
a written agreement in such form as the Committee shall from time to time
approve, which agreements shall comply with and be subject to the following
terms and conditions:
(a) ANNUAL RETAINER. Subject to Section 13, on January 10 of
each of 1998, 1999 and 2000 each Eligible Director then in office shall receive
certificates representing Deferred Stock Rights in respect of the Annual
Retainer. Any Eligible Director who is first elected other than at an annual
meeting of stockholders shall be entitled to receive a Deferred Stock Right for
the Annual Retainer (appropriately prorated) and the grant date will be the date
of election.
(b) MEETING FEE. For directors who have elected to have the
Meeting Fee paid in the form of Deferred Stock Rights, the number of shares
underlying Deferred Stock Rights granted to any Eligible Director shall be equal
to the whole number (with any fractional interests rounded up to the next
highest whole number) obtained by dividing $2,000 (as adjusted from time to time
by the Board of Directors) by the Fair Market Value of the Common Stock on the
date of the meeting for which such fee is being calculated (the "Meeting Date")
(i) Certificates representing the Deferred Stock Rights shall be delivered to
the director as soon as practicable after the Meeting Date. The "Fair Market
Value" shall be (i) the average of the closing prices of the Common Stock on the
Nasdaq National Market or such other securities exchange or automated quotation
system on which the Common Stock shall be primarily traded at the time of such
determination for the ten trading days ending on the day before the applicable
reference date or (ii) if there is no such trading, as determined in good faith
by the Committee.
(d) PAYMENT UPON DEATH. In the event of a director's death,
the director's Deferred Stock Rights shall be issuable to the legal
representative or legatee of the grantee. In the alternative, an Eligible
Director may elect to designate a beneficiary to receive his or her Deferred
Stock Right in the event of such director's death. In order to designate a
beneficiary or beneficiaries, such director must complete and deliver to the
Company a written form (the "Beneficiary Form") on which he or she makes such
designation. Such a designation will become effective when received by the
Company but no later than six months following the date a Deferred Stock Right
is granted (the "Effective Date"). The designation shall be irrevocable unless
modified or revoked as provided in this subsection. In order to modify or revoke
a designation, the director must complete and deliver to the Company a change in
Beneficiary Form at least six months prior to the Effective Date, providing that
said modification or revocation shall be effective on the Effective Date. If the
director
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<PAGE> 3
shall die without making a designation, the Deferred Stock Right shall
be issued to the legal representative or legatee of the directors
estate.
7. ASSIGNMENTS.
Each Deferred Stock Right granted under the Plan by its terms shall
not be transferable by the grantee otherwise than by will or by the
laws of descent and distribution, or pursuant to a qualified domestic
relations order (as defined in Section 414(p) of the Internal Revenue
Code of 1986, as amended or replaced from time to time) and shall be
exercised during the lifetime of the grantee only by such grantee or
the transferee pursuant to a qualified domestic relations order.
8. LIMITATION OF RIGHTS.
(a) NO RIGHT TO CONTINUE AS DIRECTOR. Neither the Plan, nor the
granting of a Deferred Stock Right nor any other action taken pursuant
to the Plan, shall constitute or be evidence of any agreement or
understanding, expressed or implied, that the Company will retain a
director for any period of time.
(b) NO SHAREHOLDER RIGHTS. A grantee shall have no rights as a
shareholder with respect to the shares covered by his or her Deferred
Stock Right until the date of the issuance to him or her of a stock
certificate covering the shares underlying such Deferred Stock Right,
and no adjustment will be made for dividends or other rights for which
the record date is prior to the date such certificate is issued.
9. ADJUSTMENT PROVISIONS.
(a) RECAPITALIZATIONS. If, through or as a result of any merger,
consolidation, sale of all or substantially all of the assets of the
Company, reorganization, recapitalization, reclassification, stock
dividend, stock split, reverse stock split or other similar
transaction, (i) the outstanding shares of Common Stock are increased
or decreased or are exchanged for a different number or kind of shares
or other securities of the Company, or (ii) additional shares or new or
different shares or other securities of the Company or other non-cash
assets of the Company are distributed with respect to such shares of
Common Stock or other securities, an appropriate and proportionate
adjustment may be made in (x) the maximum number and kind of shares
reserved for issuance under the Plan, (y) the number and kind of shares
or other securities subject to any then outstanding Deferred Stock
Right under the Plan, and (z) the price for each share subject to any
then outstanding Deferred Stock Right under the Plan. In the event of
any other extraordinary dividend or distribution, whether in stock,
cash or other property, or a spinoff, split up or other extraordinary
transaction, the number of shares issuable under this Plan shall be
subject to such adjustment as the Committee or the Board may deem
appropriate, and the number of shares issuable pursuant to any Deferred
Stock Right theretofore granted and the price of such Deferred Stock
Right shall be subject to such adjustment as the Committee or the Board
may deem appropriate with a view toward preserving the value of such
Deferred Stock Right.
(b) 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 more than 50% of the Company's outstanding Stock by
a single person or entity or by a group of persons and/or entities
acting in
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<PAGE> 4
concert, or in the event of a sale or transfer of substantially all of
the Company's assets or a dissolution or liquidation of the Company,
all Deferred Stock Rights hereunder will terminate; PROVIDED, that
immediately prior to the effective date of any such merger,
consolidation, sale, dissolution or liquidation, all Deferred Stock
Rights hereunder that have been granted but are not otherwise issuable
shall be automatically issued.
10. AMENDMENT OF THE PLAN.
The Board may at any time amend or discontinue the Plan and the
Committee may at any time amend or cancel any outstanding option for
the purpose of satisfying changes in law or for any other lawful
purpose, but no such action shall adversely affect rights under any
outstanding Deferred Stock Right without the holder's consent.
11. NOTICE.
Any written notice to the Company required by any of the provisions
of the Plan shall be addressed to the Chief Financial Officer of the
Company and shall become effective when it is received.
12. EFFECTIVE DATE AND DURATION OF THE PLAN.
(a) EFFECTIVE DATE. The Plan shall become effective upon approval
by the Board. Amendments to the Plan shall become effective when
adopted by the Board of Directors.
(b) TERMINATION. Unless earlier terminated pursuant to Section 9,
the Plan shall terminate upon the date on which all shares available
for issuance under the Plan shall have been issued pursuant to the
Deferred Stock Rights granted under the Plan.
13. GENERAL RESTRICTIONS.
(a) INVESTMENT REPRESENTATIONS. The Company may require any person
to whom a Deferred Stock Right is granted, as a condition of such
Deferred Stock Right, to give written assurances in substance and form
satisfactory to the Company to the effect that such person is acquiring
the Common Stock subject to the Deferred Stock Right for his or her own
account for investment and not with any present intention of selling or
otherwise distributing the same, and to such other effects as the
Company deems necessary or appropriate in order to comply with federal
and applicable state securities laws.
(b) COMPLIANCE WITH SECURITIES LAWS. Each Deferred Stock Right
shall be subject to the requirements that if, at any time, counsel to
the Company shall determine that the listing, registration or
qualification of the shares subject to such Deferred Stock Right upon
any securities exchange or under any state or federal law is necessary
as a condition of, or in connection with, the issuance or purchase of
shares thereunder, such shares may not be issued unless such listing,
registration, qualification, consent or approval, or satisfaction of
such condition shall have been
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<PAGE> 5
effected or obtained on conditions acceptable to the Board of
Directors. Nothing herein shall be deemed to require the Company to
apply for or to obtain listing, registration or qualification, or to
satisfy such condition.
Adopted by the Board of Directors
on November 21, 1997.
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<PAGE> 1
ROPES & GRAY
ONE INTERNATIONAL PLACE
BOSTON, MASSACHUSETTS 02110-2624
(617) 951-7000
FAX: (617) 951-7050
30 KENNEDY PLAZA ONE FRANKLIN SQUARE
PROVIDENCE, RI 02903-2328 131 K STREET, N. W.
(401) 455-4400 SUITE 800 EAST
FAX: (401) 455-4401 WASHINGTON, DC 20005-3333
(202) 626-3900
FAX: (202) 626-3961
EXHIBIT 5
April 1, 1998
Genome Therapeutics Corp.
100 Beaver Street
Waltham, Massachusetts 02154
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 1,000,000 shares of Common Stock, $.10
par value (the "Shares").
The shares will be issuable with (a) upon the exercise of options granted
pursuant to the Company's 1997 Stock Option Plan, or (b) pursuant to the
Company's 1997 Directors' Deferred Stock Plan (the "Plans") and may be
authorized but unissued shares or shares held from time to time in its treasury.
For purposes of this opinion, we have examined a copy of the Registration
Statement; a copy of the Plans; 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 and the stockholders of the Company approving
and adopting the Plans; 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 in accordance with the
terms of the Plans and that the consideration received by the Company for such
shares 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:
<PAGE> 2
1. The Company is a duly organized and validly existing corporation under
the laws of The Commonwealth of Massachusetts.
2. The Shares, when issued pursuant to the terms and conditions of the Plans
and upon receipt of the consideration therefor by the Company, will be 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
<PAGE> 1
EXHIBIT 23(b)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference of our reports dated October 10, 1997 in Genome Therapeutics
Corp.'s Form 10-K for the year ended August 31, 1997 and to all references to
our Firm included in this Registration Statement.
/s/ Arthur Andersen LLP
----------------------
ARTHUR ANDERSEN LLP
March 31, 1998
