As filed with the Securities and Exchange Commission on December 18, 1996-
Registration No. 333-____________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
------------------------------
BIOMUNE SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Nevada 0-11472 87-0380088
(State or other jurisdiction (Commission file number) (I.R.S. Employer
of incorporation or organization) Identification No.)
2401 South Foothill Drive
Salt Lake City, Utah 84109-1405
(Address of Principal Executive Offices)
BIOMUNE SYSTEMS, INC. 1992 STOCK INCENTIVE PLAN
BIOMUNE SYSTEMS, INC. 1993 STOCK INCENTIVE PLAN
BIOMUNE SYSTEMS, INC. 1996 STOCK INCENTIVE PLAN
(Full title of the plans)
Copies to:
David G. Derrick, Chief Executive Officer Nolan S. Taylor, Esq.
Biomune Systems, Inc. Thomas R. Taylor, Esq.
2401 South Foothill Drive LeBoeuf, Lamb, Greene & MacRae, L.L.P.
Salt Lake City, Utah 84109-1405 136 South Main Street
Telephone: (801) 466-3441 1000 Kearns Building
(Name, address, including zip code, Salt Lake City, Utah 84101-1685
and telephone number, including area Telephone: (801) 320-6700
code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Proposed Maximum Proposed Maximum
Title of Securities Amount To Be Offering Price Per Aggregate Offering Amount of
To Be Registered Registered Share(1) Price(1) Registration Fee
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
$0.0001 par value 993,500(2) $2.02 $2,006,870 $608.14
- ---------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee, based
upon the average of the final bid and asked prices for Biomune Systems,
Inc. Common Stock as quoted on the NASDAQ SmallCap Market(sm) on December
16, 1996.
(2) Of these shares, a total of 187,000 shares are being registered for
issuance upon exercise of options and warrants that have not yet been
granted under the 1996 Stock Incentive Plan.
<PAGE>
Exhibit Index is on page 4
Page 1 of 37
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
The following documents are hereby incorporated by reference in this
Registration Statement:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 1996.
(b) The Company's Form S-8 Registration Statement, Registration No.
333-3794, filed with the Securities and Exchange Commission on April
19, 1996.
(c) The description of the Company's Common Stock included in the
Company's Registration Statement on Form 8-A filed with the Securities
and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended, on January 12, 1984.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934 after the date this Registration
Statement is filed with the Securities and Exchange Commission but prior to the
filing of a post-effective amendment which indicates that all securities offered
have been sold or which deregisters all securities then remaining unsold, shall
be deemed to be incorporated by reference in this Registration Statement and to
be a part hereof from the respective dates of the filing of such documents. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Registration Statement to the extent that a statement contained herein or
in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Registration Statement.
Item 8. Exhibits
The following exhibits are filed as a part of this Registration Statement:
Exhibit No. Description
5.1 Opinion of LeBoeuf, Lamb, Greene & MacRae, L.L.P. (including consent)
10.1 Agreement with Allan H. Barker
10.2 Agreement with Bruce M. Kartchner
10.3 Agreement with David O. Lucas
10.4 Agreement with Adam Kristcher
10.5 Incentive Stock Option Agreement with Frank A. Eldredge
10.6 Schedule Identifying Other Incentive Stock Option Agreements
23.1 Consent of Arthur Andersen LLP
23.2 Consent of LeBoeuf, Lamb, Greene & MacRae, L.L.P. (included in Exhibit 5.1
above)
<PAGE>
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 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 Salt Lake, State of Utah, on December 17, 1996.
BIOMUNE SYSTEMS, INC. (Registrant)
By: /s/ David G. Derrick
David G. Derrick
Its: Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers or directors
of the registrant, by virtue of their signatures to this Registration Statement
appearing below, hereby constitute and appoint David G. Derrick as
attorney-in-fact in his name, place and stead to execute any and all amendments
to this Registration Statement in the capacities set forth opposite their names
and hereby ratify all that said attorney-in-fact may do by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
SIGNATURE TITLE DATE
/s/ David G. Derrick Chief Executive Officer, December 17, 1996
- ----------------------------
(David G. Derrick) Chairman of the Board and
Director
(Principal Executive Officer)
/s/ James J. Dalton Senior Executive Vice December 17, 1996
- ----------------------------
(James J. Dalton) President -- Investor Relations,
Vice Chairman of the Board
and Director
/s/ Milton G. Adair President and Director December 17, 1996
- ----------------------------
(Milton G. Adair)
/s/ Michael G. Acton Chief Financial Officer December 17, 1996
- ----------------------------
(Michael G. Acton) (Principal Financial and
Accounting Officer)
/s/ Aaron Gold Director December 17, 1996
(Aaron Gold)
/s/ Charles J. Quantz Director December 17, 1996
- ----------------------------
(Charles J. Quantz)
/s/ Thomas Q. Garvey, III Director December 17, 1996
- ----------------------------
(Thomas Q. Garvey, III)
/s/ Christopher D. Illick Director December 17, 1996
- ----------------------------
(Christopher D. Illick)
INDEX TO EXHIBITS
<PAGE>
Exhibit No. Description Page No.
5.1 Opinion of LeBoeuf, Lamb, Greene & MacRae,
L.L.P. (including consent) 5
10.1 Agreement with Allan H. Barker 6
10.2 Agreement with Bruce M. Kartchner 7
10.3 Agreement with David O. Lucas 8
10.4 Agreement with Adam Kristcher 9
10.5 Incentive Stock Option Agreement with
Frank A. Eldredge 12
10.6 Schedule Identifying Other Incentive
Stock Option Agreements 23
10.7 Non-Qualified Stock Option Agreement with
Charles J. Quantz 25
10.8 Schedule Identifying Other Non-Qualified
Stock Option Agreements 35
23.1 Consent of Arthur Andersen LLP 36
23.2 Consent of LeBoeuf, Lamb, Greene & MacRae, L.L.P.
(included in Exhibit 5.1 above) 37
EXHIBIT 5.1
[LEBOEUF, LAMB, GREENE & MACRAE, L.L.P. LETTERHEAD]
(801) 320-6727
December 17, 1996
Securities and Exchange Commission,
Division of Corporate Finance
450 Fifth Street, N.W., Judicial Plaza
Washington, D.C. 20549
Re: Biomune Systems, Inc. Form S-8 Registration Statement
Relating to 993,500 Shares of Common Stock
Ladies and Gentlemen:
We have acted as counsel for Biomune Systems, Inc., a Nevada corporation,
in connection with its proposed registration of a total of 993,500 post-split
shares of Common Stock, $0.0001 par value per share. In that connection,
it is our opinion that the securities being registered will, upon receipt
by Biomune Systems, Inc. of consideration for the securities and the issuance
of the securities, be legally issued, fully-paid and non-assessable. We
consent to the inclusion of our opinion as an Exhibit to the Registration
Statement of Biomune Systems, Inc. on Form S-8 under the Securities Act of
1933, as amended. We express no opinion on the law of any jurisdiction other
than the Nevada Private Corporations Act, as amended, and the Securities Act
of 1933, as amended.
Very truly yours,
/s/ LeBoeuf, Lamb, Greene & MacRae, L.L.P.
EXHIBIT 10.1
LETTER OF AGREEMENT
This is a Letter of Agreement between Biomune Systems, Inc. (the "Company") and
Dr. Allan H. Barker ("Consultant") effective as of December 2, 1996.
CONSULTING DUTIES
Consultant has performed services for the Company which includes but are not
limited to the following:
A. Designed and reviewed protocols for clinical trials.
B. Reviewed research data the Company receives from various Universities.
C. Designed and reviewed information regarding IND's.
D. Various communication with the FDA.
COMPENSATION
Consultant will be compensated as follows:
a. 50,000 free-trading shares of the Company's Common Stock.
The above description of duties and compensation are agreed to by the
undersigned.
Biomune Systems, Inc.
By: /s/ Michael G. Acton /s/ Allan H. Barker
Michael G. Acton Allan H. Barker
Its: Chief Financial Officer and
Controller
December 3, 1996 December 3, 1996
- --------------------------- -----------------------------
Date Date
EXHIBIT 10.2
LETTER OF AGREEMENT
This is a Letter of Agreement between Biomune Systems, Inc. (the "Company") and
Bruce M. Kartchner ("Consultant") effective as of December 3, 1996.
CONSULTING DUTIES
Consultant has provided certain services to the Company including but not
limited to the following:
A. Aided Company personnel in the closing of monthly books.
B. Assisted Company personnel in preparation of monthly, quarterly and yearly
financial statements.
C. Developed specialized and customized sales reports to help Company track
incoming sales from many different locations.
COMPENSATION
Consultant will be compensated as follows:
a. 25,000 free-trading shares of the Company's Common Stock.
The above description of duties and compensation are agreed to by the
undersigned.
Biomune Systems, Inc.
By: /s/ Michael G. Acton /s/ Bruce M. Kartchner
Michael G. Acton Bruce M. Kartchner
Its: Chief Financial Officer and Controller
December 3, 1996 December 3, 1996
- ----------------------- ----------------------
Date Date
EXHIBIT 10.3
LETTER OF AGREEMENT
This is a Letter of Agreement between Biomune Systems, Inc. (the "Company") and
Dr. David Lucas ("Consultant") effective as of December 3, 1996.
CONSULTING DUTIES
Consultant has provided services to the Company including but not limited to
the following:
A. Reviewed and designed nutritional studies related to Optimune.
B. Designed new products for nutraceutical industry.
C. Assisted Company personnel in design of basic research with various
Universities.
COMPENSATION
Consultant will be compensated as follows:
a. 8,000 free-trading shares of the Company's Common Stock.
The above description of duties and compensation are agreed to by the
undersigned.
Biomune Systems, Inc.
By: /s/ Michael G. Acton /s/ David O. Lucas
Michael G. Acton David O. Lucas
Its: Chief Financial Officer and Controller
December 4, 1996 December 3, 1996
- ---------------------- -------------------------
Date Date
EXHIBIT 10.4
AGREEMENT
This Agreement, made effective November 25, 1996, by and between Adam Kristcher
("Kristcher") and Biomune Systems, Inc., a Nevada Corporation ("Biomune");
NOW THEREFORE, the parties agree as follows:
1. Engagement, Duties and Acceptance
1.1 Engagement by Biomune. Biomune hereby agrees to retain Kristcher for
the following purposes:
(a) Provide introductions to potential business partners;
(b) Provide introductions and information to and about potential
business partners.
1.2 Acceptance of Engagement by Kristcher. Kristcher hereby accepts such
engagement and shall render management services as described above.
2. Term of Agreement. The term of Kristcher's engagement under this Agreement
(the "Term") shall commence on November 1, 1996 (the "Commencement Date")
and shall continue through and expire on the 30th day of March, 1997,
unless sooner terminated by either Biomune or Kristcher upon thirty (30)
days written notice. This Agreement may continue in effect beyond the Term
if mutually agreed in writing by both Biomune and Kristcher.
3. Compensation. As compensation for services to be rendered pursuant to this
Agreement, Biomune shall pay Kristcher 30,000 shares of Biomune common
stock that will be registered pursuant to an S-8 registration statement.
4. Confidential Information. During the Term of this Agreement and for a
period of five (5) years after the termination of this Agreement, Kristcher
shall keep secret and retain in strictist confidence and shall not use, for
the benefit of itself or others, all confidential matters of the Biomune
including, without limitation, "know-how", trade secrets, customer lists,
details of client or consultant contracts, pricing policies, operational
methods, marketing plans or strategies, product development techniques or
plans, methods of production and distribution, technical processes, designs
and design projects, inventions and research projects of Biomune learned by
Kristcher heretofore or during the Term hereof.
<PAGE>
5. Other Provisions.
5.1 Any notice or other communication required or permitted hereunder
shall be in writing and shall be delivered personally, telegraphed,
telexed, sent by facsimile transmission or sent by certified,
registered or express mail, postage prepaid. Any such notice shall be
deemed given when so delivered personally, telegraphed, telexed or
sent by facsimile transmission or, if maile, five days after the date
of deposit in the United States mail, as follows:
(i) if to Biomune, to:
Biomune Systems, Inc.
2401 South Foothill
Drive Salt Lake City, Utah 84109
with a copy to:
Nolan Taylor, Esquire
LeBoeuf, Lamb, Greene & MacRae
1000 Kearns Building
136 South Main Street
Salt Lake City, Utah 84101
(ii) if to Kristcher, to:
100 Daly Blvd.
Unit 2807
Oceanside, New York 11572
5.2 Entire Agreement. This Agreement contains the entire agreement between
the parties with respect to the subject matter hereof and supersedes
all prior agreement, written or oral, with respect thereto.
5.3 Governing Law; Venue. This Agreement shall be governed and construed
in accordance with the laws of the State of Utah applicable to
agreements made and to be performed entirely within such state. The
parties submit themselves to the jurisdiction of the federal and state
courts located in Utah and agree to commence any lawsuit arising under
or relating to this Agreement in such courts.
<PAGE>
5.4 Assignment. This Agreement, and any rights and obligations hereunder,
may not be assigned by any party hereto without the prior written
consent of the other party.
5.5 Headings. The headings in this Agreement are for reference purposes
only and shall not in any way affect the meaning or interpretation of
this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the
date first above-written.
BIOMUNE SYSTEMS, INC.
By: /s/ Michael G. Acton
Its: Chief Financial Officer
KRISTCHER
/s/ Adam Kristcher
Adam Kristcher
EXHIBIT 10.5
Biomune Systems, Inc.
INCENTIVE STOCK OPTION AGREEMENT
Biomune Systems, Inc., a Nevada corporation (the "Company"), hereby grants
this 23rd day of October, 1996, to Frank Eldredge, an individual (the
"Employee"), an option to purchase a maximum of ten thousand (10,000) shares of
the Company's Common Stock, $0.0001 par value per share, at the price of $1.16
per share, on the following terms and conditions:
1. Grant Under 1996 Stock Incentive Plan. This option is granted pursuant
to and is governed by the Company's 1996 Stock Incentive Plan (the "Plan") and,
unless the context requires otherwise, terms used herein shall have the same
meaning as in the Plan. Determinations made in connection with this option
pursuant to the Plan shall be governed by the Plan as it exists on the date
hereof.
2. Grant as Incentive Stock Option; Other Options. This option is intended
to qualify as an incentive stock option under Section 422A of the Internal
Revenue Code of 1986, as amended (the "Code"). This option is in addition to any
other options heretofore or hereafter granted to the Employee by the Company. A
duplicate original of this option shall not effect the grant of another option
to the Employee.
3. Extent of Option if Employment Continues. If the Employee continues to
be employed by the Company, the Employee may exercise this option for a maximum
of ten thousand (10,000) shares of the Company's Common Stock, which option may
be exercised up to and including the date that is five (5) years from the date
this option is granted. The foregoing rights are cumulative and, while the
Employee continues to be employed by the Company, may be exercised up to and
including the date that is five (5) years from the date this option is granted.
All of the foregoing rights are subject to Sections 4 and 5 below, as
appropriate, if the Employee ceases to be employed by the Company or dies or
becomes disabled while in the employ of the Company.
4. Termination of Employment. Except as provided in Section 20 below, if
the Employee ceases to be employed by the Company, other than by reason of death
or disability as defined in Section 5 below, no further installments of this
option shall become exercisable and this option shall terminate after the
passage of ninety (90) days from the date employment ceases, but in no event
later than the scheduled expiration date of this option. In such a case, the
Employee's only rights hereunder shall be those that are properly exercised
before the termination of this option.
<PAGE>
5. Death; Disability. If the Employee dies while in the employ of the
Company, this option may be exercised to the extent of the number of shares with
respect to which the Employee could have exercised on the date of the Employee's
death, by the Employee's estate, personal representative or beneficiary to whom
this option has been assigned pursuant to Section 10 below, at any time within
one (1) year after the date of death, but not later than the scheduled
expiration date of this option. If the Employee ceases to be employed by the
Company by reason of the Employee's disability (as defined in the Plan), this
option may be exercised, to the extent of the number of shares with respect to
which the Employee could have exercised this option on the date of the
termination of the Employee's employment, at any time within one (1) year after
such termination, but not later than the scheduled expiration date of this
option. At the expiration of such one year period or the scheduled expiration
date, whichever is the earlier, this option shall terminate and the only rights
hereunder shall be those as to which the option was properly exercised before
such termination.
6. Partial Exercise. The exercise of this option up to the extent
above-stated may be made in part at any time and from time-to-time within the
above limits, except that this option may not be exercised for a fraction of a
share unless such exercise is with respect to the final installment of stock
subject to this option and a fractional share (or cash in lieu thereof) must be
issued to permit the Employee to exercise completely such final installment. Any
fractional share with respect to which an installment of this option cannot be
exercised because of the limitation contained in the preceding sentence shall
remain subject to this option and shall be available for later purchase by the
Employee in accordance with the terms hereof.
7. Payment of Price. The option price is payable as follows:
(a) in United States dollars in cash or by check, or any combination
of the foregoing, equal in amount to the option price. (Initials)
(b) in cash, by check (in United States dollars), by delivery of
shares of the Company's Common Stock having a fair market value (as determined
by the Board or the Committee, as appropriate) equal as of the date of exercise
to the option price, or by any combination of the foregoing, equal in amount to
the option price.
(Initials)
(c) As provided by Sections 7(a) and (b) above, payment of such
purchase price or any portion thereof may be made with shares of stock of the
same class as the shares then subject to this option, if shares of that class
are then Publicly Traded (as that term is defined in Section 20 below), such
shares to be credited toward such purchase price on the valuation basis set
forth below, in which event the stock certificate(s) evidencing the share to be
so used shall accompany the notice of exercise and shall be duly endorsed or
accompanied by a duly executed stock power(s) to transfer the same to the
<PAGE>
Company; the same to the Company; provided, however, that such payment in stock
instead of cash shall not be effective and shall be rejected by the Company if
(i) the Company is then prohibited from purchasing or acquiring shares of the
class of its stock tendered to it or (ii) the right or power of the individual
exercising the option to deliver such shares in payment of said purchase price
is subject to the prior interests of any other individual (excepting the Company
as indicated by legends upon the certificate(s) or as known to the Company). For
purposes of this Section 7(c): (a) "Publicly Traded" shares are those that are
listed or admitted to unlisted trading privileges on a national securities
exchange or as to which sales or bid and offer quotations are reported by the
National Association of Securities Dealers Automated Quotation ("NASDAQ")
system, operated by the National Association of Securities Dealers, Inc.
("NASD") and (b) for credit toward the purchase price , shares so surrendered
shall be valued as of the day immediately preceding the delivery to the Company
of the certificate(s) evidencing such shares (or, if such day is not a trading
day in the United States securities markets, on the nearest preceding trading
day), on the basis of the closing price of stock of that class as reported with
respect to the market (or the composite of the markets, if more than one exists)
in which such shares are then traded, or if no such closing prices are reported,
that lowest independent offer quotation reported, therefore in Level 2 of
NASDAQ, or if no such quotations are reported on the basis of the most nearly
comparable valuation method acceptable to the Company. If the Company rejects
the payment in stock, the tendered notice of exercise shall not be effective
hereunder unless promptly after being notified of such rejection the individual
exercising the option pays the purchase price in acceptable form. If and while
payment of the purchase price with stock is permitted in accordance with the
foregoing provisions, the individual then entitled to exercise this option may,
in lieu of using previously outstanding shares therefore, use some of the shares
as to which this option is then being exercised, in which case the notice of
exercise need not be accompanied by any stock certificate(s) but shall include a
statement directing the Company to withhold so many of the shares that would
otherwise have ben delivered upon that exercise of this option as equals the
number of shares that would have been transferred to the Company if the purchase
price had been paid with previously issued stock.
No person shall be entitled to the privileges of stock ownership in respect
of any shares issuable upon the exercise of this option, unless and until such
shares have been issued to such person as fully paid shares.
No certificated(s) for shares of stock purchased upon the exercise of this
option shall be issued and delivered prior to the admission of such shares to
listing on any stock exchange on which shares of that class are then listed, nor
unless and until, in the opinion of counsel for the Company, such securities may
be issued and delivered without causing the Company to be in violation of or to
incur any liability under any federal, state or other securities law, rule or
regulation, any requirement of any securities exchange listing agreement to
which the Company may be a party or any other requirement of law or of any
regulatory agency or body having jurisdiction over the Company or its
securities.
<PAGE>
Notwithstanding the foregoing, the Employee may not pay any part of the
exercise price hereof by transferring Common Stock to the Company if such Common
Stock is both (a) subject to a substantial risk of forfeiture and (b) not
transferable within the meaning of Section 83 of the Code.
8. Agreement to Purchase for Investment. By acceptance of this option, the
Employee agrees that a purchase of shares under this option will not be made
with a view to their distribution (as that term is used in the Securities Act of
1933, as amended (the "1993 Act")), unless in the opinion of counsel to the
Company such distribution is in compliance with or exempt from the registration
and prospectus requirements of the 1933 Act, and the Employee agrees to sign a
certificate to such effect at the time of exercising this option and agrees that
the certificate(s) for the shares of the Company's Common Stock so purchased may
be inscribed with a legend to ensure compliance with the requirements of the
1933 Act. The Employee has had access to all information required by the
Employee to make an investment decision and the Employee has had an opportunity
to ask questions of and received answers from the Company pertaining to the
Company, its business, this option and they underlying shares of the Company's
Common Stock.
9. Method of Exercising Option. Subject to the terms and conditions set
forth herein, this option may be exercised by written notice to the Company at
the principal executive office of the Company or to such transfer agent as the
Company shall designate. Such notice shall state the election to exercise this
option and the number of shares of the Company's Common Stock in respect of
which this option is being exercised and shall be signed by the individual(s)
exercising this option. Such notice shall be accompanied by payment of the full
purchase price of such shares as soon as practicable after the notice shall be
received. The certificate(s) for the shares as to which this option shall have
been so exercised shall be registered in the name of the individual(s) so
exercising this option (or, if this option shall be exercised by the Employee
and if the Employee shall so request in the notice of exercise, shall be
registered in the name of the Employee and another individual jointly, with full
rights of survivorship) and shall be delivered as provided above to or upon the
written order of the individual(s) exercising this option. In the event this
option shall be exercised, pursuant to Section 5 above, by any individual(s)
other than the Employee, such notice of exercise shall be accompanied by
appropriate proof of the right of such individual(s) to exercise this option.
All shares of the Company's Common Stock that shall be purchased upon the
exercise of this option as provided herein shall be fully paid and
non-assessable.
10. Option Not Transferable. This option is not transferable or assignable
except by will or by the law of descent and distribution or except as permitted
by Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended
(the "1934 Act"). The Employee can exercise this option only during the
Employee's lifetime.
11. No Obligation to Exercise Option. The grant and acceptance of this
option imposes no obligation on the Employee to exercise this option.
<PAGE>
12. No Obligation to Continue Employment. The Company and any Related
Corporation (as that term is defined in the Plan) are not by the Plan or this
option obligated to continue the Employee in employment.
13. No Rights as Stockholder Until Option Exercised. The Employee shall
have no rights as a stockholder with respect to shares of the Company's Common
Stock subject to this option until a stock certificate(s) therefore has been
issued to the Employee and is fully paid for. Except as is expressly provided in
the Plan with respect to certain changes in the capitalization of the Company,
no adjustment shall be made for dividends or similar rights for which the record
date is prior to the date a stock certificate is issued.
14. Capital Changes and Business Successions. Subject to Section 20 below,
the Plan contains provisions regarding the treatment of options in a number of
contingencies such as stock splits and mergers. Provisions in the Plan for
adjustment with respect to shares of the Company's Common Stock subject to
options and the related provisions with respect to successors to the business of
the Company and are hereby made applicable hereunder and are incorporated herein
by reference. In general, the Employee should not assume that options
necessarily would survive the acquisition of the Company. In particular, without
affecting the generality of the foregoing, it is understood that for the
purposes of Sections 3 through 5 above, employment by the Company includes
employment by a Related Corporation.
15. Early Disposition. The Employee agrees to notify the Company in writing
immediately after the Employee makes a Disqualifying Disposition (as that term
is defined below) of any shares of the Company's Common Stock received pursuant
to the exercise of this option. A "Disqualifying Disposition" is any disposition
(including any sale) of shares of the Company's Common Stock before the later of
(a) two (2) years after that date the Employee was granted this option or (b)
one (1) year after the date the Employee acquired Common Stock by exercising
this option. If the Employee dies before such stock is sold, these holding
period requirements do not apply and no Disqualifying Disposition can occur
thereafter. The Employee also agrees to provide the Company with any information
that it shall request concerning any such disposition. The Employee acknowledges
that he or she will forfeit the favorable income tax treatment otherwise
available with respect to the exercise of this ISO if the Employee makes a
Disqualifying Disposition of the stock received upon the exercise of this
option.
16. Withholding Taxes. If the Company in its discretion determines that it
is obligated to withhold tax with respect to a Disqualifying Disposition (as
that term is defined in Section 15 above) of shares of the Company's Common
Stock received by the Employee upon the exercise of this option, the Employee
hereby agrees that the Company may withhold form the Employee's wages the
appropriate amount of federal, state, and local withholding taxes attributable
to the Employee's exercise of such Non-Qualified Option. At the Company's
discretion, the amount required to be withheld may be withheld in cash from such
wages, or (with respect to compensation income attributable to the exercise of
this option) in kind from the Common Stock otherwise deliverable to the Employee
upon the exercise of this option. The Employee further agrees that, if the
<PAGE>
Company does not withhold an amount from the Employee's wages sufficient to
satisfy the Company's withholding obligation, the Employee will reimburse the
Company upon demand, in cash, for the amount underwithheld.
17. Company's Right of First Refusal.
(a) Exercise of Right. If the Employee desires to sell all or any part
of the shares acquired under this option (including any securities received in
respect thereof pursuant to any stock dividend, stock split, reclassification,
reorganization, recapitalization or the like), and an offeror (the "Offeror")
has made an offer therefore, which offer the Employee desires to accept, the
Employee shall: (i) obtain in writing an irrevocable and unconditional bona fide
offer (a "Bona Fide Offer") for the purchase thereof from the Offeror and (ii)
give written notice (the "Option Notice") to the Company setting forth the
Employee's desire to sell such shares, which Option Notice shall be accompanied
by a photocopy of the original executed Bona Fide Offer and shall set forth at
least the name and address of the Offeror and the price and terms of the Bona
Fide Offer. Upon receipt of the Option Notice, the Company shall have an
assignable option to purchase any or all of such shares (the "Option Shares")
specified in the Option Notice, such option to be exercisable by giving, within
thirty (30) days after receipt of the Option Notice, a written counter-notice to
the Employee. If the Company elects to purchase any or all of such Option
Shares, it shall be obligated to purchase, and the Employee shall be obligated
to sell to the Company, such Option Shares at the price and terms indicated in
the Bona Fide Offer within sixty (6) days from the date of receipt by the
Company of the Option Notice.
(b) Sale of Option Shares to Offerer. The Employee may sell, pursuant
to the terms of the Bona Fide Offer, any or all of such Option Shares not
purchased or agreed to be purchased by the Company during the period that is
sixty (60) days after the expiration of the thirty (30) day period during which
the Company may give the aforesaid counter-notice; provided, however, that the
Employee shall not sell such Option Shares to the Offeror if the Offeror is a
competitor of the Company and the Company gives written notice to the Employee,
within thirty (30) days of its receipt of the Option Notice, stating that the
Employee shall not sell the Option Shares to the Offeror; provided, further,
that prior to the sale of such Option Shares to the Offeror, the Offeror shall
execute an agreement with the Company pursuant to which the Offeror agrees to be
subject to the restrictions set forth in this Section 17. If any or all of such
Option Shares are not sold pursuant to a Bona Fide Offer within the time
permitted above, the unsold Option Shares shall remain subject to the terms of
this Section 17.
(c) Adjustments for Changes in Capital Structure. If there shall be
any change in the Company's Common Stock through merger, consolidation,
reorganization, recapitalization, stock dividend, split-up, combination or
exchange of shares or the like, the restrictions contained in this Section 17
shall apply with equal force to additional and/or substitute securities, if any,
received by the Employee in exchange for, or by virtue of his or her ownership
of, Option Shares.
<PAGE>
(d) Failure to Deliver Option Shares. In the event the Employee fails
or refuses to deliver on a timely basis a duly endorsed certificate(s)
representing the Option Shares to be sold to the Company pursuant to this
Section 17, the Company shall have the right to deposit the purchase price for
the Option Shares in a special account with any bank or trust company in the
State of Utah, giving notice of such deposit to the Employee, whereupon such
Option Shares shall be deemed to have been purchased by the Company. All such
monies shall be held by the bank or trust company for the benefit of the
Employee. All monies deposited with the bank or trust company but remaining
unclaimed for two (2) years after the date of deposit shall be repaid by the
bank or trust company tot he Company on demand and the Employee shall thereafter
look only to the Company for payment. The Company may place a legend on any
stock certificate(s) delivered to the Employee reflecting the restrictions on
transfer set forth in this Section 17.
18. No Exercise of Option if Employment Terminated for Misconduct. If the
employment of the Employee is terminated for "Misconduct," this option shall
terminate on the date of such termination of employment and all unvested or
unexercised options shall thereupon no longer be exercisable to any extent
whatsoever. For purposes of this Section 18, "Misconduct" is conduct, as
determined by the board, involving one or more of the following: (i) the
substantial and continuing failure of the Employee to render services to the
Company in accordance with the Employee's assigned duties; (ii) a determination
by two-thirds (2/3) of the members of the Board that the Employee has
inadequately performed the duties of the Employee's employment; (iii)
disloyalty, gross negligence, dishonesty or breach of a fiduciary duty owed to
the Company; (iv) the commission of an act of embezzlement, fraud, disloyalty,
dishonesty or deliberate disregard of rules or policies of the Company that
results in loss, damage or injury to the Company, whether directly or
indirectly; (v) the unauthorized disclosure of any trade secret or confidential
information owned by the Company; or (vi) the commission of an act that
constitutes unfair competition with the Company or that induces any customer or
client of the Company to break a contract or agreement with the Company. In
making such determination, the Board shall act fairly and in utmost good faith
and shall give the Employee an opportunity to appear and be heard at a hearing
before the Board or the Committee and to present evidence on the Employee's
behalf. For purposes of the Section 18, termination of employment shall be
deemed to occur when the Employee receives notice that the Employee's employment
is terminated.
19. Company's Right of Repurchase.
(a) Right of Repurchase. If any of the events specified in Section
19(b) below ------------------- occur, then:
(i) with respect to shares acquired upon exercise of this option
prior to the occurrence of such event, within sixty (60) days after
the Company receives actual knowledge of the event, and
<PAGE>
(ii) with respect to shares acquired upon exercise of this option
after the occurrence of such event, within sixty (60) days following
the later of the date of such exercise or the date the Company
receives actual knowledge of such event,
(in either case, the "Repurchase Period"), the Company shall have the option,
but not the obligation, to repurchase all, but not less than all, of the shares
from the Employee or the Employee's legal representative, as the case may be
(the "Repurchase Option"). The Repurchase Option shall be exercised by the
Company by giving the Employee, or the Employee's legal representative, written
notice of its intention to exercise the Repurchase Option on or before the last
day of the Repurchase Period, and, together with such notice, tendering to the
Employee or the Employee's legal representative, an amount equal to the higher
of the option price or the fair market value of the shares. The Company may, in
exercising the Repurchase Option, designate one or more nominees to purchase the
shares either within or without the Company. Upon timely exercise of the
Repurchase Option in the manner provided in the Section 19(a), the Employee or
Employee's legal representative shall deliver to the Company the stock
certificate(s) representing the shares being repurchased, duly endorsed and free
and clear of any and all liens, charges and encumbrances.
If shares are not purchased under the Repurchase Option, the Employee and
the Employee's successor in interest, if any, will hold any such shares in his
or her possession subject to all of the provisions of this option.
(b) Company's Right to Exercise Repurchase Option. The Company shall
have the Repurchase Option in the event any of the following events occurs:
(i) The termination of the Employee's employment with the Company
or any Related Corporation, voluntarily or involuntarily, for any
reason whatsoever, including death or permanent disability, prior to
the time this option shall be fully vested as provided in Section 3
above;
(ii) The receivership, bankruptcy or other creditor's proceedings
regarding the Employee or the taking of any of the Employee's shares
acquired upon exercise of this option by legal process, such as a levy
of execution;
(iii) Distribution of shares held by the Employee to the
Employee's spouse as such spouse's joint or community property
interest pursuant to a decree of dissolution, divorce, property
settlement agreement, operation of law or for any other reason, except
as may be otherwise permitted by the Company; or
(iv) The termination of the Employee's employment by the Company
for Misconduct (as that term is defined in Section 19 above).
(c) Determination of Fair Market Value. The fair market value of the
shares subject to this option shall be, for purposes of the Section 19, an
<PAGE>
amount per share determined on the basis of the price at which shares of the
Common Stock could reasonably be expected to be sold in an arms-length
transaction for cash, other than on an installment basis, to a person not
employed by, controlled by, in control of or under common control with the
Company. Fair market value shall be determined by the Board, giving due
consideration to recent grants of ISOs for shares of Common Stock, recent
transactions involving shares of the Common Stock, if any, earnings of the
Company to the date of such determination, projected earnings of the Company,
the effect of the transfer restrictions to which the public market for the
Common Stock and such other matters as the Board deems pertinent. The
determination by the Board of the fair market value shall be conclusive and
binding. The fair market value of the shares shall be determined as of the day
on which the event occurs.
20. Changes in Control. Notwithstanding any other provision hereof, this
option shall accelerate so that the Employee shall have the right, at all times
until the expiration or earlier termination of the option, to exercise the
unexercised portions of this option, including the portions thereof that would,
but for this Section 20, not yet be exercisable, from and after any Involuntary
Termination (as that term is defined below) within twenty-four (24) months after
a Change in Control (as that term is defined below) that occurs while the
Employee is an employee of the Company or any Related Corporation. For purposes
of this Section 20: (a) an "Involuntary Termination" is any termination of the
Employee's employment with the Company or with any Related Corporation for
reasons other than (i) the Employee's death, (ii) the Employee's total
disability (as that term is defined in the Plan), (iii) the Employee's
retirement under circumstances that entitle the Employee to full benefits under
one or another of his employer's retirement or pension plans or programs
generally applicable to salaried employees or (iv) termination for Misconduct
(as that term is defined in Section 18 above); and (b) a "Change in Control"
means any of the following events if they occur after the date of grant of this
option and after the class of stock then subject to this option becomes Publicly
Traded (as that term is defined in Section 7(c) above): the direct or indirect
beneficial ownership (within the meaning of Section 13(d) of the 1934 Act and
Regulations 13D through G thereunder) of thirty percent (30%) or more of the
class of securities then subject to this option is acquired or becomes held by
any person or group of persons (within the meaning of Section 13(d)(3) of the
1934 Act), or the sale, mortgage, lease or other transfer in one or more
transactions not in the ordinary course of the Company's business or assets or
earning power constituting more than fifty percent (50%) of the assets or
earning power of the Company and its Related Corporations (taken as a whole) to
any such person or group of persons.
21. Provision of Documentation to Employee. By signing this option the
Employee acknowledges receipt of a copy of this option and a copy of the Plan.
22. Governing Law. This option shall be governed by and interpreted in
accordance with the laws of the State of Utah.
23. Holding Period. The Employee acknowledges that if the shares acquires
upon exercise of this option are not held for at least six (6) months following
the date of grant, the grant of this option will be deemed a purchase that may
<PAGE>
be matched against any sale of the Company's securities occurring within six (6)
months of the grant and may create liability for the Employee pursuant to
Section 16(b) of the 1934 Act. Certain holding periods are also required under
the Code in order for this option to qualify as an ISO.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF the Company and the Employee have caused this option to
be executed, and the Employee whose signature appears below acknowledges receipt
of a copy of the Plan and of an original copy of this option.
THE EMPLOYEE:
/s/ Frank Eldredge
Signature
Frank Eldredge
THE COMPANY:
BIOMUNE SYSTEMS, INC., a Nevada
corporation
By: /s/ Michael G. Acton
Michael G. Acton
Its: Chief Financial Officer
EXHIBIT 10.6
SCHEDULE IDENTIFYING OTHER INCENTIVE STOCK OPTION AGREEMENTS
EFFECTIVE NUMBER OPTION
DATE OF OF EXERCISE DURATION--
NAME STATUS AGREEMENT OPTIONS PRICE YEARS
Frank A.
Eldredge(1) Officer 10/23/96 10,000 $1.16 5
Joy M.
Erickson Employee 10/23/96 10,000 $1.16 5
Cynthia
Donovan Employee 10/23/96 1,500 $1.16 5
Jillene
Cahill Employee 10/23/96 1,000 $1.16 5
Natalie
Philpott Employee 10/23/96 500 $1.16 5
Saundra J.
Biggs Employee 10/23/96 1,000 $1.16 5
Treesa
Parker Employee 10/23/96 500 $1.16 5
Rhonda
Gilmore Employee 10/23/96 3,000 $1.16 5
Julie
Hensley Employee 10/23/96 1,000 $1.16 5
Richard J.
Jones Employee 06/24/96 60,000 $1.16(4) 5
Treesa J.
Parker Employee 09/16/96 2,000 $1.16(5) 5
Jeffrey S.
Smith Employee 09/16/96 3,000 $1.16(5) 5
Eric S.
Cohen Employee 09/16/96 5,000 $1.16(5) 5
Richard J.
Jones Employee 09/16/96 20,000 $1.16(5) 5
Dawn T.
Perdue Employee 09/16/96 5,000 $1.16(5) 5
Saundra J.
Biggs Employee 09/16/96 500 $1.16(5) 5
David W.
Fredricks Employee 09/16/96 500 $1.16(5) 5
David G.
Derrick Officer 10/23/96 100,000 $1.16 5
James J.
Dalton Officer 10/23/96 100,000 $1.16 5
James J.
Dalton Officer 10/23/96 144,000 $1.16 5
TOTAL 468,500
(1) A copy of Frank A. Eldredge's Incentive Stock
Option Agreement dated effective as of October
23, 1996 is attached hereto as Exhibit 10.5. All
of the other Incentive Stock Option Agreements
between the Company and the individuals listed on
this Schedule are substantially identical to
Mr. Eldredge's Incentive Stock Option Agreement
except for the number of options granted, the
date of the grant agreement and the option
exercise price.
(2) Adjusted to take into consideration the effect of
the 1-for-100 reverse stock split of the
Company's Common Stock that was effective as of
March 22, 1993 and the effect of the stock split
that was effected as a 200% stock dividend
effective as of June 14, 1994.
(3) Adjusted to take into consideration the effect of
the stock split that was effected as a 200% stock
dividend effective as of June 14, 1994.
(4) Repriced on November 4, 1996 from an option
exercise price of $2.50 to $1.16.
(5) Repriced on November 4, 1996 from an option
exercise price of $2.25 to $1.16.
EXHIBIT 10.7
BIOMUNE SYSTEMS, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
Biomune Systems, Inc., a Nevada corporation (the "Company"), hereby grants
this 1st day of January, 1993, to Charles J. Quantz, an individual (the
"Optionee"), an option to purchase a maximum of thirty thousand (30,000) shares
of the Company's Common Stock, $0.0001 par value per share, at the price of Two
Dollars and No/100 ($2.00) per share, on the terms and conditions set forth
hereinbelow.
1. Grant Under 1992 Stock Incentive Plan. This option is granted pursuant
to and is governed by the Company's 1992 Stock Incentive Plan (the "Plan") and,
unless the context requires otherwise, terms used herein shall have the same
meanings as set forth in the Plan. Determinations made in connection with this
option pursuant to the Plan shall be governed by the Plan as it exists on the
date hereof.
2. Grant as Non-Qualified Option; Other Options. This option shall be
treated for federal income tax purposes as a Non-Qualified Option (rather than
as an ISO), and the Committee (as that term is defined in the Plan) or the Board
(as that term is defined in the Plan) will take appropriate action, if
necessary, to achieve this result. This option is in addition to any other
options heretofore or hereafter granted to the Optionee by the Company. A
duplicate original of this instrument shall not effect the grant of another
option to the Optionee.
3. Extent of Option if Business Relationship Continues. If the Optionee
continues to serve the Company or any Related Corporation (as defined in the
Plan) in the capacity of an employee, officer, director or consultant (such
service is described herein as maintaining or being involved in a "Business
Relationship" with the Company), the Optionee may exercise this option for a
maximum of thirty thousand (30,000) shares of the Company's Common Stock, which
option may be exercised up to and including the date that is five (5) years from
the date this option is granted. The foregoing rights are cumulative and, while
the Optionee continues to maintain a Business Relationship with the Company, may
be exercised up to and including the date that is five (5) years from the date
this option is granted. All of the foregoing rights are subject to Sections 4
and 5 below, as appropriate, if the Optionee ceases to maintain a Business
Relationship with the Company or dies, becomes disabled or undergoes dissolution
while involved in a Business Relationship with the Company.
4. Termination of Business Relationship. If the Optionee ceases to maintain
a Business Relationship with the Company, other than by reason of death or
disability (as those terms are defined in Section 5 below), no further
installments of this option shall become exercisable and this option shall
terminate upon the passage of ninety (90) days from the date the Business
Relationship ceases, but in no event later than the scheduled expiration date of
this option. In such a case, the Optionee's only rights hereunder shall be those
that are properly exercised before the termination of this option.
<PAGE>
5. Death; Disability; Dissolution. If the Optionee is a natural person who
dies while involved in a Business Relationship with the Company, this option may
be exercised, to the extent of the number of shares with respect to which the
Optionee could have exercised on the date of the Optionee's death, by the
Optionee's estate, personal representative or beneficiary to whom this option
has been assigned pursuant to Section 10 below, at any time within one (1) year
after the date of death, but not later than the scheduled expiration date of
this option. If the Optionee is a natural person whose Business Relationship
with the Company is terminated by reason of Optionee's disability (as that term
is defined in the Plan), this option may be exercised, to the extent of the
number of shares with respect to which the Optionee could have exercised on the
date the Business Relationship was terminated, at any time within one (1) year
after the date of such termination, but not later than the scheduled expiration
date of this option. At the expiration of such one year period or the scheduled
expiration date of this option, whichever is the earlier, this option shall
terminate and the only rights hereunder shall be those as to which the option
was properly exercised before such termination. If the Optionee is a
corporation, partnership, trust or other entity that is dissolved, liquidated,
becomes insolvent or enters into a merger or acquisition with respect to which
such Optionee is not the surviving entity at the time when such entity is
involved in a Business Relationship with the Company, this option shall
immediately terminate as of the date of such event, and the only rights
hereunder shall be those as to which this option was properly exercised before
such dissolution or other event.
6. Partial Exercise. Exercise of this option up to the extent above stated
may be made in part at any time and from time-to-time within the above limits,
except that this option may not be exercised for a fraction of a share unless
such exercise is with respect to the final installment of stock subject to this
option and a fractional share (or cash in lieu thereof) must be issued to permit
the Optionee to exercise completely such final installment. Any fractional share
with respect to which an installment of this option cannot be exercised because
of the limitation contained in the preceding sentence shall remain subject to
this option and shall be available for later purchase by the Optionee in
accordance with the terms hereof.
7. Payment of Option Price. The option price is payable as follows:
(a) In United States dollars in cash or by check, or any combination
of the foregoing, equal in amount to the option price, or (b) in the discretion
of the Committee or the Board in cash, by check, by delivery of shares of the
Company's Common Stock (as provided in Section 7(b) below), or by any
combination of the foregoing, equal in amount to the option price or (c) in the
discretion of the Committee or the Board, by delivery of the Optionee's personal
recourse promissory note bearing interest payable not less than annually at no
less than one hundred percent (100%) of the lowest applicable Federal rate (as
defined in Section 1274(d) of the Code), or by any combination of the foregoing,
equal in amount to the option price.
<PAGE>
(b) As provided in Section 7(a) above, payment of such purchase price
or any portion thereof may be made with shares of stock of the same class as the
shares then subject to this option, if shares of that class are then Publicly
Traded (as that term is defined below), such shares to be credited toward such
purchase price on the valuation basis set forth below, in which event the stock
certificates evidencing the shares to be so used shall accompany the notice of
exercise and shall be duly endorsed or accompanied by duly executed stock powers
to transfer the same to the Company; provided, however, that such payment in
stock instead of cash shall not be effective and shall be rejected by the
Company if (i) the Company is then prohibited from purchasing or acquiring
shares of the class of its stock tendered to it or (ii) the right or power of
the individual or entity exercising the option to deliver such shares in payment
of said purchase price is subject to the prior interests of any other individual
or entity (excepting the Company), as indicated by legends on the certificate(s)
or as known to the Company. For purposes of this Section 7(b): (a) "Publicly
Traded" shares are those shares that are listed or admitted to unlisted trading
privileges on a national securities exchange or as to which sales or bid and
offer quotations are reported in the National Association of Securities Dealers
Automated Quotation ("NASDAQ") system operated by the National Association of
Securities Dealers, Inc. ("NASD") and (b) for credit toward the purchase price,
shares so surrendered shall be valued as of the day immediately preceding the
delivery to the Company of the certificate(s) evidencing such shares (or, if
such day is not a trading day in the United States securities markets, on the
nearest preceding trading day), on the basis of the closing price of stock of
that class as reported with respect to the market (or the composite of the
markets, if more than one exists) in which such shares are then traded, or if no
such closing prices are reported, the lowest independent offer quotation
reported therefor in Level 2 of NASDAQ, or if no such quotations are reported,
on the basis of the most nearly comparable valuation method acceptable to the
Company. If the Company rejects the payment in stock, the tendered notice of
exercise shall not be effective hereunder unless promptly after being notified
of such rejection the individual or entity exercising the option pays the
purchase price in acceptable form. If and while payment of the purchase price
with stock is permitted in accordance with the foregoing provisions, the
individual or entity then entitled to exercise this option may, in lieu of using
previously outstanding shares therefor, use some of the shares as to which this
option is then being exercised, in which case the notice of exercise need not be
accompanied by any stock certificate(s) but shall include a statement directing
the Company to withhold so many of the shares that would otherwise have been
delivered upon that exercise of this option as equals the number of shares that
would have been transferred to the Company if the purchase price had been paid
with previously issued stock.
If the Optionee delivers shares of Common Stock held by the Optionee ("Old
Stock") to the Company in full or partial payment of the option price, and the
Old Stock so delivered is subject to restrictions or limitations imposed by
agreement between the Optionee and the Company, the Common Stock received by the
Optionee upon the exercise of this option shall be subject to all restrictions
and limitations applicable to the Old Stock to the extent that the Optionee paid
for such shares of Common Stock by delivering Old Stock to the Company, in
addition to any restrictions or limitations imposed by this option.
<PAGE>
No individual or entity shall be entitled to the privileges of stock
ownership in respect of any shares of Common Stock issuable upon exercise of
this option, unless and until such shares of Common Stock have been issued to
such individual or entity as fully paid shares.
No certificate(s) for shares of Common Stock purchased upon the exercise of
this option shall be issued and delivered prior to the admission of such shares
to listing on any stock exchange on which shares of that class are then listed,
nor unless and until, in the opinion of counsel for the Company, such securities
may be issued and delivered without causing the Company to be in violation of or
to incur any liability under any federal, state or other securities law, rule or
regulation, any requirement of any securities exchange listing agreement to
which the Company may be a party or any other requirement of law or of any
regulatory agency or body having jurisdiction over the Company or its
securities.
Notwithstanding the foregoing, the Optionee may not pay any part of the
exercise price hereof by transferring Common Stock to the Company if such Common
Stock is both (i) subject to a substantial risk of forfeiture and (ii) not
transferable within the meaning of Section 83 of the Code.
8. Agreement to Purchase for Investment. By acceptance of this option, the
Optionee agrees that a purchase of shares under this option will not be made
with a view to their distribution (as that term is used in the Securities Act of
1933, as amended (the "1933 Act")) unless in the opinion of counsel to the
Company such distribution is in compliance with or exempt from the registration
requirements of the 1933 Act, and the Optionee agrees to sign a certificate to
such effect at the time of exercising this option and agrees that the
certificate(s) for the shares of the Company's Common Stock so purchased may be
inscribed with a legend to ensure compliance with the requirements of the 1933
Act. The Optionee understands that the transferability of this option and the
underlying shares of the Company's Common Stock are restricted. The Optionee has
had access to all information required by the Optionee to make an investment
decision and the Optionee has had an opportunity to ask questions of and receive
answers from the Company pertaining to the Company, its business, this option
and the underlying shares of the Company's Common Stock.
9. Method of Exercising Option. Subject to the terms and conditions set
forth herein, this option may be exercised by written notice to the Company at
the principal executive office of the Company, or to such transfer agent as the
Company shall designate. Such notice shall state the election to exercise this
option and the number of shares of the Company's Common Stock in respect of
which this option is being exercised and shall be signed by the individual(s) so
exercising this option. Such notice shall be accompanied by payment of the full
purchase price of such shares of the Company's Common Stock, and the Company
shall deliver a certificate(s) representing such shares as soon as practicable
after the notice shall be received. The certificate(s) for the shares as to
which this option shall have been so exercised shall be registered in the name
of the individual(s) so exercising this option (or, if this option shall be
exercised by the Optionee and if the Optionee shall so request in the notice of
<PAGE>
exercise, shall be registered in the name of the Optionee and another individual
jointly, with full rights of survivorship) and shall be delivered as provided
above to or upon the written order of the individual(s) exercising this option.
In the event this option shall be exercised, pursuant to Section 5 above, by any
individual(s) other than the Optionee, such notice of exercise shall be
accompanied by appropriate proof of the right of such individual(s) or persons
to exercise this option. All shares of the Company's Common Stock that shall be
purchased upon the exercise of this option as provided herein shall be fully
paid and non-assessable.
10. Option Not Transferable. This option is not transferable or assignable
except by will or by the law of descent and distribution or except as permitted
by Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended
(the "1934 Act"). The Optionee can exercise this option only during the
Optionee's lifetime.
11. No Obligation to Exercise Option. The grant and acceptance of this
option imposes no obligation on the Optionee to exercise this option.
12. No Obligation to Continue Business Relationship. The Company and any
Related Corporation is not, pursuant to the Plan or this option, obligated to
continue to maintain a Business Relationship with the Optionee.
13. No Rights as Stockholder Until Option Exercised. The Optionee shall
have no rights as a stockholder with respect to shares of the Company's Common
Stock subject to this option until a stock certificate(s) therefor has been
issued to the Optionee and is fully paid for. Except as is expressly provided in
the Plan with respect to certain changes in the capitalization of the Company,
no adjustment shall be made for dividends or similar rights for which the record
date is prior to the date a stock certificate is issued.
14. Capital Changes and Business Successions. Subject to Section 19 below,
the Plan contains provisions regarding the treatment of options in a number of
contingencies such as stock splits and mergers. Provisions in the Plan for
adjustment with respect to shares of the Company's Common Stock subject to
options and the related provisions with respect to successors to the business of
the Company are hereby made applicable hereunder and are incorporated herein by
reference. In general, the Optionee should not assume that options necessarily
would survive the acquisition of the Company. In particular, without affecting
the generality of the foregoing, it is understood that for the purposes of
Sections 3 through 5 above, employment by the Company includes employment by a
Related Corporation.
15. Withholding Taxes. By accepting this option the Optionee agrees that
the Company may withhold from the Optionee's wages or other remuneration the
appropriate amount of federal, state and local taxes attributable to the
Optionee's exercise of any installment of this option. At the Company's
discretion, the amount required to be withheld may be withheld in cash from such
wages or other remuneration, or in kind from the Common Stock otherwise
deliverable to the Optionee upon the exercise of this option. The Optionee
<PAGE>
further agrees that, if the Company does not withhold an amount from the
Optionee's wages or other remuneration sufficient to satisfy the Company's
withholding obligation, the Optionee will reimburse the Company upon demand, in
cash, for the amount underwithheld.
16. Company's Right of First Refusal.
(a) Exercise of Right. If the Optionee desires to sell all or any part
of the shares acquired under this option (including any securities received in
respect thereof pursuant to any stock dividend, stock split, reclassification,
reorganization, recapitalization or the like), and an offeror (the "Offeror")
has made an offer therefor, which offer the Optionee desires to accept, the
Optionee shall: (i) obtain in writing an irrevocable and unconditional bona fide
offer (a "Bona Fide Offer") for the purchase thereof from the Offeror and (ii)
give written notice (the "Option Notice") to the Company setting forth the
Optionee's desire to sell such shares, which Option Notice shall be accompanied
by a photocopy of the original executed Bona Fide Offer and shall set forth at
least the name and address of the Offeror and the price and terms of the Bona
Fide Offer. Upon receipt of the Option Notice, the Company shall have an
assignable option to purchase any or all of such shares (the "Option Shares")
specified in the Option Notice, such option to be exercisable by giving, within
thirty (30) days after receipt of the Option Notice, a written counter-notice to
the Optionee. If the Company elects to purchase any or all of such Option
Shares, it shall be obligated to purchase, and the Optionee shall be obligated
to sell to the Company, such Option Shares at the price and terms indicated in
the Bona Fide Offer within sixty (60) days from the date of receipt by the
Company of the Option Notice.
(b) Sale of Option Shares to Offeror. The Optionee may sell, pursuant
to the terms of the Bona Fide Offer, any or all of such Option Shares not
purchased or agreed to be purchased by the Company during the period that is
sixty (60) days after the expiration of the thirty (30) day period during which
the Company may give the aforesaid counter-notice; provided, however, that the
Optionee shall not sell such Option Shares to the Offeror if the Offeror is a
competitor of the Company and the Company gives written notice to the Optionee,
within thirty (30) days of its receipt of the Option Notice, stating that the
Optionee shall not sell the Option Shares to the Offeror; provided, further,
that prior to the sale of such Option Shares to the Offeror, the Offeror shall
execute an agreement with the Company pursuant to which the Offeror agrees to be
subject to the restrictions set forth in this Section 16. If any or all of such
Option Shares are not sold pursuant to a Bona Fide Offer within the time
permitted above, the unsold Option Shares shall remain subject to the terms of
this Section 16.
(c) Adjustments for Changes in Capital Structure. If there shall be
any change in the Company's Common Stock through merger, consolidation,
reorganization, recapitalization, stock dividend, split-up, combination or
exchange of shares or the like, the restrictions contained in this Section 16
shall apply with equal force to additional and/or substitute securities, if any,
received by the Optionee in exchange for, or by virtue of his or her ownership
of, Option Shares.
<PAGE>
(d) Failure to Deliver Option Shares. In the event the Optionee fails
or refuses to deliver on a timely basis a duly endorsed certificate(s)
representing the Option Shares to be sold to the Company pursuant to this
Section 16, the Company shall have the right to deposit the purchase price for
the Option Shares in a special account with any bank or trust company in the
State of Utah, giving notice of such deposit to the Optionee, whereupon such
Option Shares shall be deemed to have been purchased by the Company. All such
monies shall be held by the bank or trust company for the benefit of the
Optionee. All monies deposited with the bank or trust company remaining
unclaimed for two (2) years after the date of deposit shall be repaid by the
bank or trust company to the Company upon demand and the Optionee shall
thereafter look only to the Company for payment. The Company may place a legend
on any stock certificate(s) delivered to the Optionee reflecting the
restrictions on transfer set forth in this Section 16.
17. No Exercise of Option if Business Relationship Terminated for
Misconduct. If the Business Relationship of the Optionee is terminated for
"Misconduct," this option shall terminate on the date of such termination of the
Business Relationship and all unvested or unexercised options shall thereupon no
longer be exercisable to any extent whatsoever. For purposes of this Section 17,
"Misconduct" is conduct, as determined by the Board, involving one or more of
the following: (i) the substantial and continuing failure of the Optionee to
render services to the Company in accordance with the terms or requirements of
the Business Relationship; (ii) a determination by two-thirds (2/3) of the
members of the Board that the Optionee has inadequately performed the
requirements of the Business Relationship; (iii) disloyalty, gross negligence,
dishonesty or breach of a fiduciary duty owed to the Company; (iv) the
commission of an act of embezzlement, fraud, disloyalty, dishonesty or
deliberate disregard of the rules or policies of the Company that results in
loss, damage or injury to the Company, whether directly or indirectly; (v) the
unauthorized disclosure of any trade secret or confidential information owned by
the Company; or (vi) the commission of an act that constitutes unfair
competition with the Company or that induces any customer or client of the
Company to break a contract or agreement with the Company. In making such
determination, the Board shall act fairly and in utmost good faith and shall
give the Optionee an opportunity to appear and be heard at a hearing before the
Board or the Committee and to present evidence on the Optionee's behalf. For
purposes of this Section 17, termination of the Business Relationship shall be
deemed to occur when the Optionee receives notice that the Business Relationship
is terminated.
18. Company's Right of Repurchase.
(a) Right of Repurchase. If any of the events specified in Section
18(b) below occur, then:
(i) with respect to shares acquired upon exercise of this option
prior to the occurrence of such event, within sixty (60) days after
the Company receives actual knowledge of the event, and
<PAGE>
(ii) with respect to shares acquired upon exercise of this option
after the occurrence of such event, within sixty (60) days following
the later of the date of such exercise or the date the Company
receives actual knowledge of such event,
(in either case, the "Repurchase Period"), the Company shall have the option,
but not the obligation, to repurchase all, but not less then all, of the shares
from the Optionee or the Optionee's legal representatives, as the case may be
(the "Repurchase Option"). The Repurchase Option shall be exercised by the
Company by giving the Optionee, or the Optionee's legal representative, written
notice of its intention to exercise the Repurchase Option on or before the last
day of the Repurchase Period, and, together with such notice, tendering to the
Optionee or the Optionee's legal representative, an amount equal to the higher
of the option price or the fair market value of the shares. The Company may, in
exercising the Repurchase Option, designate one or more nominees to purchase the
shares either within or without the Company. Upon timely exercise of the
Repurchase Option in the manner provided in this Section 18(a), the Optionee or
the Optionee's legal representative shall deliver to the Company the stock
certificate(s) representing the shares being repurchased, duly endorsed and free
and clear of any and all liens, charges and encumbrances.
If shares are not purchased under the Repurchase Option, the Optionee and
the Optionee's successor in interest, if any, will hold any such shares in his
or her possession subject to all of the provisions of this option.
(b) Company's Right to Exercise Repurchase Option. The Company shall
have the Repurchase Option in the event any of the following event occurs:
(i) The termination of the Optionee's Business Relationship with
the Company or any Related Corporation, voluntarily or involuntarily,
for any reason whatsoever, including death or permanent disability,
prior to the time this option shall be fully vested as provided in
Section 3 above;
(ii) The receivership, bankruptcy or other creditors' proceeding
regarding the Optionee or the taking of any of the Optionee's shares
acquired upon exercise of this option by legal process, such as a levy
of execution;
(iii) Distribution of shares held by the Optionee to the
Optionee's spouse as such spouse's joint or community property
interest pursuant to a decree of dissolution, divorce, property
settlement agreement, operation of law or for any other reason, except
as may be otherwise permitted by the Company; or
(iv) The termination of the Optionee's Business Relationship by
the Company for Misconduct (as that term is defined in Section 17
above).
<PAGE>
(c) Determination of Fair Market Value. The fair market value of the
shares subject to this option shall be, for purposes of this Section 18, an
amount per share determined on the basis of the price at which shares of the
Common Stock could reasonably be expected to be sold in an arms-length
transaction for cash, other than on an installment basis, to a person not
employed by, controlled by, in control of or under common control with the
Company. Fair market value shall be determined by the Board, giving due
consideration to recent grants of ISOs for shares of Common Stock, recent
transactions involving shares of the Common Stock, if any, earnings of the
Company to the date of such determination, projected earnings of the Company,
the effect of the transfer restrictions to which the shares are subject under
applicable law and this option, the existence or absence of a public market for
the Common Stock and such other matters as the Board deems pertinent. The
determination by the Board of the fair market value shall be conclusive and
binding. The fair market value of the shares shall be determined as of the day
on which the event occurs.
19. Changes in Control. Notwithstanding any other provision hereof, this
option shall accelerate so that the Optionee (if the Optionee is an employee of
the Company or any Related Corporation) shall have the right, at all times until
the expiration or earlier termination of the option, to exercise the unexercised
portions of this option, including the portions thereof that would, but for this
Section 19, not yet be exercisable, from and after any Involuntary Termination
(as that term is defined below) within twenty-four (24) months after a Change in
Control (as that term is defined below) that occurs while the Optionee is an
employee of the Company or any Related Corporation. For purposes of this Section
19: (a) an "Involuntary Termination" is any termination of the Optionee's
employment with the Company or any Related Corporation for reasons other than
(i) the Optionee's death, (ii) the Optionee's total disability (as that term is
defined in the Plan), (iii) the Optionee's retirement under circumstances that
entitle the Optionee to full benefits under one or another of his employer's
retirement or pension plans or programs generally applicable to salaried
employees or (iv) termination for Misconduct (as that term is defined in Section
17 above) and (b) a "Change in Control" means any of the following events if
they occur after the date of grant of this option and after the class of stock
then subject to this option becomes Publicly Traded (as that term is defined in
Section 7(b) above): the direct or indirect beneficial ownership (within the
meaning of Section 13(d) of the 1934 Act and Regulations 13D through G
thereunder) of thirty percent (30%) or more of the class of securities then
subject to this option is acquired or becomes held by any person or group of
persons (within the meaning of Section 13(d)(3) of the 1934 Act), or the sale,
mortgage, lease or other transfer in one or more transactions not in the
ordinary course of the Company's business or assets or earning power
constituting more than fifty percent (50%) of the assets or earning power of the
Company and its Related Corporations (taken as a whole) to any such person or
group of persons.
20. Governing Law. This option shall be governed by and interpreted in
accordance with the laws of the State of Utah.
<PAGE>
21. Holding Period. By accepting this option, the Optionee acknowledges
that if the shares acquired upon exercise of this option are not held for at
least six (6) months following the date of grant, the grant of this option will
be deemed a purchase that may be matched against any sale of the Company's
securities occurring within six (6) months of the grant and may create liability
for the Optionee pursuant to Section 16(b) of the 1934 Act.
IN WITNESS WHEREOF, the Company executed this option on January 1, 1993
effective as of the date first set forth above.
THE COMPANY:
BIOMUNE SYSTEMS, INC.,
a Nevada corporation
By: /s/ David G. Derrick
David G. Derrick
Its: President
EXHIBIT 10.8
SCHEDULE IDENTIFYING OTHER NON-QUALIFIED
STOCK OPTION AGREEMENTS
EFFECTIVE NUMBER OPTION
DATE OF OF EXERCISE DURATION--
NAME STATUS AGREEMENT OPTIONS PRICE YEARS
---- ------ --------- ------- ----- -----
Charles J. Quantz(1) Director 01/01/93 30,000(2) $1.16(4) 5
Charles J. Quantz Director 08/17/93 30,000(3) $1.16(5)
Aaron Gold Director 01/01/93 30,000 $1.16(4) 5
Aaron Gold Director 08/17/93 30,000(3) $1.16(5) 5
Thomas Q. Garvey, Director 03/15/94 30,000(3) $1.16(6) 5
III
James J. Dalton Officer 03/15/9(7) 75,000(3) $1.16(6) 5
-------
225,000
========
TOTAL
- ---------------------------------------
(1) A copy of Charles J. Quantz's Non-Qualified Stock Option Agreement dated
effective as of January 1, 1993 is attached hereto as Exhibit 10.7. All of
the other Non-Qualified Stock Option Agreements between the Company and the
individuals listed on this Schedule are substantially identical to Mr.
Quantz's Non-Qualified Stock Option Agreement except for the number of
options granted, the date of the grant agreement, the option exercise price
and the title of the plan under which those options were granted.
(2) Adjusted to take into consideration the effect of the 1-for-100 reverse
stock split of the Company's Common Stock that was effective as of March
22, 1993 and the effect of the stock split that was effected as a 200%
stock dividend effective as of June 14, 1994.
(3) Adjusted to take into consideration the effect of the stock split that was
effected as a 200% stock dividend effective as of June 14, 1994.
(4) Repriced on November 4, 1996 from an option exercise price of $2.00 to
$1.16.
(5) Repriced on November 4, 1996 from an option exercise price of $1.67 to
$1.16.
(6) Repriced on November 4, 1996 from an option exercise price of $4.00 to
$1.16.
(7) Option originally granted on March 15, 1994 with a three year term, but
subsequently amended and extended to a five year term.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Form S-8 Registration Statement of our report dated November
5, 1996, included in Biomune Systems, Inc.'s Annual Report on Form 10-K for the
year ended September 30, 1996 and to all references to our Firm included in this
Form S-8 Registration Statement.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Salt Lake City, Utah
December 16, 1996
EXHIBIT 23.2
See Exhibit 5.1 for Consent of LeBoeuf, Lamb, Greene & MacRae, L.L.P.
