SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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Biomune Systems, Inc.
(Exact name of registrant as specified in its charter)
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Nevada 87-0380088
(State or other jurisdiction I.R.S. Employer
of incorporation or organization) Identification No.
2401 South Foothill Drive
Salt Lake City, Utah 84109-1405
(801) 466-3441
(Address of Principal Executive Offices and Zip Code
and Telephone Number of Issuer)
Compensation Agreements
and
1999 Stock Option and Incentive Plan
--------------------------------
Michael G. Acton, President and CEO
Biomune Systems, Inc.
2401 South Foothill Drive
Salt Lake City, Utah 84109-1405
(801) 466-3441
(Name, address and telephone number, including area code,
of agent for service)
Copies to:
Wayne D. Swan, Esq.
Durham, Jones & Pinegar, P.C.
50 South Main Street, Suite 850
Salt Lake City, Utah 84144
(801) 538-2424
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------
Title of each class Proposed maximum Proposed maxi-
of securities to be Amount to be offering price per mum aggregate Amount of
registered registered(1) share(2) offering price registration fee(3)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Shares, 500,000 shares $1.50 $ 750,000 $ 208.50
par value $.0001
per share, subject
to stock awards,
stock options or
stock warrants to
be granted to
employees, directors
or consultants pursuant
to the Company's 1999
Stock Option Plan
Common Shares, 25,000 shares $1.50 $ 37,500 $ 10.43
par value $.0001
per share, subject to
stock awards, stock
options, or stock
warrants to be
granted to officers
or directors pursuant to
compensation agreements
$ 218.93
===========
- ---------------------------------------------------------------------------------------------------------
</TABLE>
(1) This Registration Statement also covers an indeterminate number of Common
Shares that may be issuable by reason of stock splits, stock dividends or
similar transactions in accordance with Rule 416 under the Securities Act of
1933, as amended.
(2) Calculated solely for the purpose of determining the registration fee
pursuant to Rule 457(c) and (h) under the Securities Act of 1933, based upon the
average of the high and low prices of the Common Shares as reported on NASDAQ on
January 28, 2000 (within 5 business days prior to the date of filing the
registration statement).
(3) $278 per $1,000,000 of aggregate offering price, pursuant to Section 6(b) of
the Securities Act of 1933.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The documents containing the information specified in Part I
of this Registration Statement will be sent or given to employees and
consultants as specified by Rule 428(b)(1). Such documents are not required to
be and are not filed with the Securities and Exchange Commission (the
"Commission") either as part of this Registration Statement or as prospectuses
or prospectus supplements pursuant to Rule 424. These documents and the
documents incorporated by reference in this Registration Statement pursuant to
Item 3 of Part II of this Form S-8, taken together, constitute a prospectus that
meets the requirements of Section 10(a) of the Securities Act of 1933, as
amended (the "Securities Act").
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents filed with the Commission by Biomune
Systems, Inc. (the "Company") are incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal
year ended September 30, 1999; and
(b) Description of the class of securities of the Company to
be offered, (incorporated by reference to the Registration Statement of the
Company previously filed, pursuant to which the class of Common Stock of the
Company was registered under the Securities Exchange Act of 1934, as amended).
All documents subsequently filed by the Company with the
Commission pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act,
prior to the filing of a post-effective amendment to this Registration Statement
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 date
of filing of such documents.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
The law firm of Durham, Jones & Pinegar, P.C. (the "Firm"),
Salt Lake City, counsel to the Company, has rendered an opinion attached as an
exhibit hereto with respect to the legality of the shares of Common Stock to be
registered herein. The Profit Sharing Plan of the Firm currently owns 4,500
shares of Common Stock of the Company.
Item 6. Indemnification of Directors and Officers.
Sections 78-7502 - 78.751 of the Corporation Law of Nevada,
together with Articles 4.15 - 4.17 of the Bylaws of the Company, provide for
indemnification of the Company's directors, officers, employees, fiduciaries or
agents, subject to the Company's determination in each instance that
indemnification is in accordance with the standards set forth in the General
Corporation Law and in the Bylaws. The Company may purchase and maintain
liability insurance on behalf of a person who is or was a director, officer,
employee, fiduciary, or agent of the Company against liability asserted against
or incurred by him or her in that capacity or arising from his or her status as
a director, officer, employee, fiduciary, or agent, whether or not the Company
would have power to indemnify him or her against the same liability under the
provisions of the Bylaws. See Articles 4.15 - 4.17 of the Company's Bylaws,
which is incorporated herein by reference and which qualifies the foregoing
summary statement.
<PAGE>
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or persons
controlling the Company pursuant to the foregoing provisions, or otherwise, the
Company has been informed that in the opinion of the Commission such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
4(a) 1999 Stock Option and Incentive Plan of Biomune
Systems, Inc. effective as of January 1, 1999.
4(b) Form of Incentive Stock Option Grant and Agreement
between the Company and certain directors, officers and
employees of the Company.
4(c) Form of Stock Option Grant and Agreement between the
Company and certain directors, officers and employees of the
Company.
4(d) Form of Stock Award Letter.
5 Opinion of Durham, Jones & Pinegar, P.C. regarding validity of
Common Stock registered herein.
23(a) Consent of Tanner+Co.
23(b) Consent of Durham, Jones & Pinegar, P.C. (included in
the opinion filed as Exhibit 5 to this Registration
Statement).
Item 9. Undertakings.
(a) The undersigned Company 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;
<PAGE>
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Company 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, 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 Company hereby undertakes that, for purposes of determining
any liability under the Securities Act, each filing of the Company'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 an 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 the time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company 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 Company 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 Securities Act and will be governed by the final
adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, 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 City, State of Utah, January 31, 2000.
Biomune Systems, Inc.
By /s/ Michael G. Acton
-----------------------------------------
Michael G. Acton
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Michael G. Acton his
attorney-in-fact, with the power of substitution, for him and in any and all
capacities, to sign any and all amendments to this Registration Statement
(including post effective amendments), and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that said
attorney-in-fact or his substitute or substitutes may do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act, this
Registration Statement has been signed by the following persons in the
capacities indicated and on the dates indicated.
Signature Title Date
/s/ Christopher D. Illick Chairman of the Board January 31, 2000
- --------------------------- of Directors
Christopher D. Illick
/s/ Michael G. Acton President, CEO and Director January 31, 2000
- --------------------------- (Principal Executive
Michael G. Acton Officer)
/s/ Thomas Q. Garvey
- --------------------------- Director January 31, 2000
Thomas Q. Garvey, III, M.D.
<PAGE>
EXHIBIT INDEX
Exhibits
4(a) 1999 Stock Option and Incentive Plan of Biomune
Systems, Inc. effective as of January 1, 1999.
4(b) Form of Incentive Stock Option Grant and Agreement
between the Company and certain directors, officers and
employees of the Company.
4(c) Form of Stock Option Grant and Agreement between the
Company and certain directors, officers and employees of the
Company.
4(d) Form of Stock Award Letter.
5 Opinion of Durham, Jones & Pinegar, P.C. regarding validity of
Common Stock registered herein.
23(a) Consent of Tanner+Co.
23(b) Consent of Durham, Jones & Pinegar, P.C. (included in
the opinion filed as Exhibit 5 to this Registration
Statement).
Biomune Systems, Inc.
a Nevada corporation
Stock Option and Incentive Plan
SECTION 1
GENERAL
1.1 Purpose. This Stock Option and Incentive Plan (the "Plan")
has been established by Biomune Systems, Inc. ("Company") to:
- attract and retain persons eligible to participate in the Plan;
- motivate participants in the Plan by means of appropriate
incentives to achieve long-range goals;
- provide incentive compensation opportunities that are
competitive with those of other similar companies;
- closely associate the interests of the participants
of the Plan with those of the Company and its other
shareholders by reinforcing the relationship between
participants' rewards and shareholder gains through
equity ownership in the Company and increased
shareholder value.
1.2 Eligibility for Participation. Participants in the Plan shall be
selected by the Committee, and awards under the Plan may be granted by the
Committee, to directors, officers and employees of the Company or any Subsidiary
of the Company, and to other individuals such as consultants and non-employee
agents of the Company or a Subsidiary, whom the Committee believes have made or
will make an essential contribution to the Company or a Subsidiary. Incentive
Stock Options may only be granted to executive officers and other employees of
the Company or a majority-owned Subsidiary who occupy responsible managerial or
professional positions, who have the capability of making a substantial
contribution to the success of the Company or Subsidiary, and who agree, in
writing, to remain in the employ of, and to render services to, the Company or
Subsidiary for a period of at least one (1) year from the date of the grant of
the Award. The Committee has the authority to select particular employees within
the eligible group to receive Awards under the Plan. In making this selection
and in determining the persons to whom Awards under the Plan shall be granted
and the form and amount of awards under the Plan, the Committee shall consider
any factors deemed relevant in connection with accomplishing the purposes of the
Plan, including the duties of the respective persons and the value of their
present and potential services and contributions to the success, profitability
and sound growth of the Company. A person to whom an Award has been granted is
sometimes referred to herein as an "Participant." In the discretion of the
Committee, a Participant may be
<PAGE>
granted any Award permitted by the Plan and more than one Award may be granted
to a Participant.
1.3 Participating Companies. For purposes of the Plan, the term
"Subsidiary" means any subsidiary of the Company, and any business venture
designated by the Committee in which the Company has a significant interest, as
determined in the discretion of the Committee.
1.4 Administration of the Plan. The operation and administration of the
Plan, including the Awards made under the Plan, will be subject to the
provisions of Section 4 (relating to operation and administration). Capitalized
terms in the Plan are defined as set forth in the Plan, including the definition
provisions of Section 7 of the Plan.
SECTION 2
OPTIONS AND SARS
2.1 Definitions. For purposes of this Plan:
2.1.1 The grant of an "Option" entitles the Participant to
purchase shares of the Company's common stock ("Stock") at an Exercise
Price established by the Committee. Options granted under this Section
2 may be either Incentive Stock Options ("ISOs"), the tax consequences
of which are intended to be governed by Section 422 of the Internal
Revenue Code, as amended, (the "Code") or Non-Qualified Stock Options
("NQOs"), as determined in the discretion of the Committee.
2.1.2 An SAR entitles the Participant to receive, in cash or
Stock (as determined in accordance with subsection 2.5), value equal to
(or otherwise based on) the excess of: (a) the Fair Market Value of a
specified number of shares of Stock at the time of exercise; over (b)
an Exercise Price established by the Committee.
2.2 Exercise Price. The Exercise Price of each Option and SAR granted
under this Plan will be established by the Committee or will be determined by a
method established by the Committee at the time the Option or SAR is granted;
except that the Exercise Price shall not be less than 100% of the Fair Market
Value of a share of Stock on the date of grant, unless the Committee shall
determine, in its sole discretion, that there are circumstances which reasonably
justify the establishment of a lower Exercise Price.
2.3 Term and Exercise. An Option and an SAR shall be exercisable in
accordance with such terms and conditions and during such periods as may be
established by the Committee.
2.4 Manner of Payment. The payment of the Exercise Price of an Option
granted under this Plan will be subject to the following:
2.4.1 Subject to the following provisions of this subsection
2.4, the full Exercise Price for shares of Stock purchased upon the
exercise of any Option shall be paid at the time of such exercise
(except that, in the case of an exercise arrangement approved by the
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<PAGE>
Committee and described in paragraph 2.4.3, payment may be made as soon
as practicable after the exercise).
2.4.2 The Exercise Price shall be payable in cash or by
tendering, by either actual delivery of shares or by attestation,
shares of Stock acceptable to the Committee, and valued at Fair Market
Value as of the day of exercise, or in any combination thereof, as
determined by the Committee.
2.4.3 The Committee may permit a Participant to elect to pay
the Exercise Price upon the exercise of an Option by irrevocably
authorizing a third party to sell shares of Stock (or a sufficient
portion of the shares) acquired upon exercise of the Option and remit
to the Company a sufficient portion of the sale proceeds to pay the
entire Exercise Price and any tax withholding resulting from such
exercise.
2.5 Authorization of Reload Options. Concurrently with the award of
Options to a Participant in the Plan, the Committee may, subject to the
provisions of the Plan, the Committee may prescribe and authorize reload options
to purchase for cash or for shares of Stock allotted by the Committee ("Reload
Options"). The number of Reload Options shall equal (i) the number of shares of
Stock used to exercise the underlying Options and (ii) to the extent authorized
by the Committee, the number of shares of Stock used to satisfy any tax
withholding requirement incident to the exercise of the underlying Options. The
grant of a Reload Option will become effective upon the exercise of underlying
Option or other Reload Options through the use of shares of Stock held by the
Participant for at least 12 months. Notwithstanding the fact that the underlying
Option may be an ISO, a Reload Option is not intended to qualify as an ISO under
Section 422 of the Code.
2.6 Reload Option Amendment. Each Award Agreement shall state whether
the Committee has authorized Reload Options with respect to the underlying
Option. Upon the exercise of an underlying Option or other Reload Option, the
Reload Option will be evidenced by an amendment to the underlying Award
Agreement.
2.7 Reload Option Exercise Price. The Exercise Price per share of Stock
deliverable upon the exercise of a Reload Option shall be the Fair Market Value
of a share of Stock on the date the grant of the Reload Option becomes
effective, unless the Committee shall determine, in its sole discretion, that
there are circumstances which reasonably justify the establishment of a lower
Exercise Price.
2.8 Term and Exercise. The term of each Reload Option shall be equal to
the remaining term of the underlying Option.
2.9 Termination of Employment. No additional Reload Options shall be
granted to a Participant when Options and/or Reload Options are exercised
pursuant to the terms of this Plan following termination of the Participant's
employment.
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<PAGE>
2.10 Settlement of Award. Shares of Stock delivered pursuant to the
exercise of an Option or SAR shall be subject to such conditions, restrictions
and contingencies as the Committee may establish in the applicable agreement.
Settlement of SARs may be made in shares of Stock (valued at their Fair Market
Value at the time of exercise), in cash, or in a combination thereof, as
determined in the discretion of the Committee. The Committee, in its discretion,
may impose such conditions, restrictions and contingencies with respect to
shares of Stock acquired pursuant to the exercise of an Option or an SAR as the
Committee determines to be desirable.
SECTION 3
OTHER STOCK AWARDS
3.1 Definitions. For purposes of this Plan:
3.1.1 A "Stock Unit" Award is the grant of a right to receive
shares of Stock in the future;
3.1.2 A "Performance Share" Award is a grant of a right to
receive shares of Stock or Stock Units which is contingent on the
achievement of performance or other objectives during a specified
period;
3.1.3 A "Restricted Stock" Award is a grant of shares of Stock
and a "Restricted Stock Unit" Award is the grant of a right to receive
shares of Stock in the future, with such shares of Stock or right to
future delivery of such shares of Stock subject to a risk of forfeiture
or other restrictions that will lapse upon the achievement of one or
more goals relating to completion of service by the Participant, or
achievement of performance or other objectives, as determined by the
Committee.
3.2 Restrictions on Stock Awards. Each Stock Unit Award, Restricted
Stock Award, Restricted Stock Unit Award and Performance Share Award under this
Plan will be subject to the following:
3.2.1 Any such Award shall be subject to such conditions,
restrictions and contingencies as the Committee shall determine.
3.2.2 The Committee may designate whether any such Award being
granted to any Participant is intended to be "performance-based
compensation" as that term is used in Section 162(m) of the Code. Any
such Awards designated as intended to be "performance-based
compensation" shall be conditioned upon the achievement of one or more
Performance Measures. The Performance Measures that may be used by the
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Committee for such Awards shall be based on any one or more of the
following, as selected by the Committee: (i) achievement of development
milestones or specific goals related to the Participant's role within
the Company; (ii) the experience, education and particular expertise of
the Participant in the context of his or her role within the Company;
and (iii) specific Measures identified by the Committee and made part
of the grant of the Award to such Participant. For Awards intended to
be "performance-based compensation," the grant of the Awards and the
establishment of the Performance Measures shall be made during the
period required under Code Section 162(m).
SECTION 4
OPERATION AND ADMINISTRATION
4.1 Effective Date. Subject to the approval of the shareholders of the
Company at the Company's 1998 annual meeting of its shareholders, the Plan shall
be effective as of January 1, 1999 (the "Effective Date"); provided, however,
that to the extent that Awards are granted under the Plan prior to its approval
by the shareholders, the Awards shall be contingent on approval of the Plan by
the shareholders of the Company at such annual meeting or an intervening special
meeting at which a vote is taken as to approval of the Plan. The Plan shall be
unlimited in duration and, in the event of Plan termination, shall remain in
effect as long as any Awards under it are outstanding; provided, however, that,
to the extent required by the Code, no ISO may be granted under the plan on a
date that is more than ten years from the date the Plan is adopted or, if
earlier, the date the Plan is approved by shareholders.
4.2 Shares Subject to Plan. The shares of Stock for which Awards may be
granted under the Plan shall be subject to the following:
4.2.1 Subject to the following provisions of this subsection
4.2, the maximum number of shares of Stock that may be delivered to
Participants and their beneficiaries under the Plan shall be 500,000
shares of Stock; however, the Board may increase such number of shares,
but not in any event without shareholder approval of an increase that
would result in the number of shares available in the aggregate for
Awards under the Plan exceeding 10% of the total authorized common
shares of the Company.
4.2.2 To the extent any shares of Stock covered by an Award
are not delivered to a Participant or beneficiary because the Award is
forfeited or canceled, or the shares of Stock are not delivered because
the Award is settled in cash or used to satisfy the applicable tax
withholding obligation, such shares will not be deemed to have been
delivered for purposes of determining the maximum number of shares of
Stock available for delivery under the Plan.
4.2.3 If the Exercise Price of any Option granted under the
Plan is satisfied by tendering shares of Stock to the Company (by
actual delivery or by attestation), only the
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number of shares of Stock issued net of the shares of Stock tendered
shall be deemed delivered for purposes of determining the maximum
number of shares of Stock available for delivery under the Plan.
4.2.4 Subject to paragraph 4.2.5, the following additional
maximums are imposed under the Plan:
(a) The maximum number of shares of Stock that may be
issued by Options intended to be ISOs shall be 100,000 shares.
(b) The maximum number of shares of Stock that may be
issued in conjunction with Awards granted to Section 3
(relating to Stock Awards) shall be 100,000 shares.
(c) The maximum number of shares that may be covered
by Awards granted to any one individual pursuant to Section 2
(relating to Options and SARs) shall be 100,000 shares during
any calendar year.
(d) No more than 100,000 shares of Stock may be
subject to Stock Unit Awards, Restricted Stock Awards,
Restricted Stock Unit Awards and Performance Share Awards that
are intended to be "performance-based compensation" (as that
term is used for purposes of Code Section 162(m)) granted to
any one individual during any one-calendar-year period
(regardless of when such shares are deliverable).
(e) In the event of a corporate transaction involving
the Company (including, without limitation, any stock
dividend, stock split, extraordinary cash dividend,
recapitalization, reorganization, merger, consolidation,
split-up, spin-off, combination or exchange of shares), the
Committee may adjust Awards to preserve the benefits or
potential benefits of the Awards. Action by the Committee may
include (i) adjustment of the number and kind of shares which
may be delivered under the Plan; (ii) adjustment of the number
and kind of shares subject to outstanding Awards; (iii)
adjustment of the Exercise Price of outstanding Options and
SARs; and (iv) any other adjustments that the Committee
determines to be equitable.
4.3 General Restrictions. Delivery of shares of Stock or other
amounts under the Plan shall be subject to the following:
4.3.1 Notwithstanding any other provision of the Plan, the
Company shall have no liability to deliver any shares of Stock under
the Plan or make any other distribution of benefits under the Plan
unless such delivery or distribution would comply with all
6
<PAGE>
applicable laws (including, without limitation, the requirements of the
Securities Act of 1933), and the applicable requirements of any
securities exchange or similar entity.
4.3.2 To the extent that the Plan provides for issuance of
stock certificates to reflect the issuance of shares of Stock, the
issuance may be effected on a non-certificated basis, to the extent not
prohibited by applicable law or the applicable rules of any stock
exchange.
4.4 Tax Withholding. All distributions under the Plan are subject to
withholding of all applicable taxes, and the Committee may condition the
delivery of any shares or other benefits under the Plan on satisfaction of the
applicable withholding obligations. The Committee, in its discretion, and
subject to such requirements as the Committee may impose prior to the occurrence
of such withholding, may permit such withholding obligations to be satisfied
through cash payment by the Participant, through the surrender of shares of
Stock which the Participant already owns, or through the surrender of shares of
Stock to which the Participant is otherwise entitled under the Plan.
4.5 Use of Shares. Subject to the overall limitation on the number of
shares of Stock that may be delivered under the Plan, the Committee may use
available shares of Stock as the form of payment for compensation, grants or
rights earned or due under any other compensation plans or arrangements of the
Company or a Subsidiary, including the plans and arrangements of the Company or
a Subsidiary assumed in business combinations.
4.6 Dividends and Dividend Equivalents. An Award (including without
limitation an Option or SAR Award) may provide the Participant with the right to
receive dividend payments or dividend equivalent payments with respect to Stock
subject to the Award (both before and after the Stock subject to the Award is
earned, vested, or acquired), which payments may be either made currently or
credited to an account for the Participant, and may be settled in cash or Stock
as determined by the Committee. Any such settlements, and any such crediting of
dividends or dividend equivalents or reinvestment in shares of Stock, may be
subject to such conditions, restrictions and contingencies as the Committee
shall establish, including the reinvestment of such credited amounts in Stock
equivalents.
4.7 Payments. Awards may be settled through cash payments, the delivery
of shares of Stock, the granting of replacement Awards, or combination thereof
as the Committee shall determine. Any Award settlement, including payment
deferrals, may be subject to such conditions, restrictions and contingencies as
the Committee shall determine. The Committee may permit or require the deferral
of any Award payment, subject to such rules and procedures as it may establish,
which may include provisions for the payment or crediting of interest, or
dividend equivalents, including converting such credits into deferred Stock
equivalents. Each Subsidiary shall be liable for payment of cash due under the
Plan with respect to any Participant to the extent that such benefits are
attributable to the services rendered for that Subsidiary by the
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Participant. Any disputes relating to liability of a Subsidiary for cash
payments shall be resolved by the Committee.
4.8 Transferability. Except as otherwise provided by the Committee,
Awards under the Plan are not transferable except as designated by the
Participant by will or by the laws of descent and distribution.
4.9 Form and Time of Elections. Unless otherwise specified herein, each
election required or permitted to be made by any Participant or other person
entitled to benefits under the Plan, and any permitted modification, or
revocation thereof, shall be in writing filed with the Committee at such times,
in such form, and subject to such restrictions and limitations, not inconsistent
with the terms of the Plan, as the Committee shall require.
4.10 Agreement With Company. An Award under the Plan shall be subject
to such terms and conditions, not inconsistent with the Plan, as the Committee
shall, in its sole discretion, prescribe. The terms and conditions of any Award
to any Participant shall be reflected in such form of written document as is
determined by the Committee. A copy of such document shall be provided to the
Participant, and the Committee may, but need not require that the Participant
shall sign a copy of such document. Such document is referred to in the Plan as
an "Award Agreement" regardless of whether any Participant signature is
required.
4.11 Action by Company or Subsidiary. Any action required or permitted
to be taken by the Company or any Subsidiary shall be by resolution of its
Board, or by action of one or more members of the Board (including a committee
of the Board) who are duly authorized to act for the Board, or (except to the
extent prohibited by applicable law or applicable rules of any stock exchange)
by a duly authorized officer of such company.
4.12 Gender and Number. Where the context admits, words in any gender
shall include any other gender, words in the singular shall include the plural
and the plural shall include the singular.
4.13 Limitation of Implied Rights.
(a) Neither a Participant nor any other person shall, by
reason of participation in the Plan, acquire any right or title to any
assets, funds or property of the Company or any Subsidiary whatsoever,
including, without limitation, any specific funds, assets, or other
property which the Company or any Subsidiary, in their sole discretion,
may set aside in anticipation of a liability under the Plan. A
Participant shall have only a contractual right to the Stock or
amounts, if any, payable under the Plan, unsecured by any assets of the
Company or any Subsidiary, and nothing contained in the Plan shall
constitute a guarantee that the assets of the Company or any Subsidiary
shall be sufficient to pay any benefits to any person.
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(b) The Plan does not constitute a contract of employment, and
selection as a Participant will not give any participating employee the
right to be retained in the employ of the Company or any Subsidiary,
nor any right or claim to any benefit under the Plan, unless such right
or claim has specifically accrued under the terms of the Plan. Except
as otherwise provided in the Plan, no Award under the Plan shall confer
upon the holder thereof any rights as a shareholder of the Company
prior to the date on which the individual fulfills all conditions for
receipt of such rights.
4.14 Evidence. Evidence required of anyone under the Plan may be by
certificate, affidavit, document or other information which the person acting on
it considers pertinent and reliable, and signed, made or presented by the proper
party or parties.
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SECTION 5
CHANGE IN CONTROL
5.1 Effect of Change in Control. Subject to the provisions of paragraph
4.2.5 (relating to the adjustment of shares), and except as otherwise provided
in the Plan or the Award Agreement reflecting the applicable Award, upon the
occurrence of a Change in Control:
5.1.1 All outstanding Options (regardless of whether in tandem
with SARs) shall become fully exercisable.
5.1.2 All outstanding SARs (regardless of whether in tandem
with Options) shall become fully exercisable.
5.1.3 All Stock Units, Restricted Stock, Restricted Stock
Units, and Performance Shares shall become fully vested.
5.2 Definition. For purposes of the Plan, the term "Change in Control"
shall mean a change in the beneficial ownership of the Company's voting Stock or
a change in the composition of the Board of the Company which occurs as follows:
5.2.1 Any "Person" (as such term is used in Section 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended ("Exchange
Act")) is or becomes a beneficial owner, directly or indirectly, of
Stock of the Company representing 25% or more of the total voting power
of the Company's then outstanding Stock.
5.2.2 A tender offer (for which a filing has been made with
the SEC which purports to comply with the requirements of Section 14(d)
of the Exchange Act and the corresponding SEC rules) is made for the
Stock of the Company. In case of such a tender offer, the Change in
Control will be deemed to have occurred upon the first to occur of (i)
any time during the tender offer when the Person making the offer owns
or has accepted for payment Stock of the Company with 25% or more of
the total voting power of the Company's outstanding Stock or (ii) three
business days before the offer is to terminate unless the offer is
withdrawn first, if the Person making the offer could own, by the terms
of the offer plus any shares owned by this Person, Stock with 50% or
more of the total voting power of the Company's outstanding Stock when
the offer terminates.
5.2.3 Individuals who were the Board's nominees for election
as directors of the Company immediately prior to a meeting of the
shareholders of the Company involving a contest for the election of
directors shall not constitute a majority of the Board following the
election.
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SECTION 6
COMMITTEE
6.1 Administration. The authority to control and manage the operation
and administration of the Plan shall be vested in a committee (the "Committee")
in accordance with this Section 6. The Committee shall be selected by the Board
of the Company and shall consist solely of two or more members of the Board who
are not also employees of the Company. If the Committee does not exist, or for
any other reason determined by the Board, the Board may take any action under
the Plan that would otherwise be the responsibility of the Committee.
6.2 Powers of Committee. The Committee's administration of the Plan
shall be subject to the following:
6.2.1 Subject to the Plan, the Committee will have the
authority and discretion to select from among the Eligible Employees
those persons who shall receive Awards, to determine the time or times
of receipt, to determine the types of Awards and the number of shares
covered by the Awards, to establish the terms, conditions, performance
criteria, restrictions, and other provisions of such Awards, and
(subject to the restrictions imposed by Section 7) to cancel or suspend
Awards.
6.2.2 To the extent that the Committee determines that the
restrictions imposed by the Plan preclude the achievement of the
material purposes of the Awards in jurisdictions outside the United
States, the Committee will have the authority and discretion to modify
those restrictions as the Committee determines to be necessary or
appropriate to conform to applicable requirements or practices of
jurisdictions outside of the United States.
6.2.3 The Committee will have the authority and discretion to
interpret the Plan, to establish, amend, and rescind any rules and
regulations relating to the Plan, to determine the terms and provisions
of any Award Agreement made pursuant to the Plan, and to make all other
determinations that may be necessary or advisable for the
administration of the Plan.
6.2.4 Any interpretation of the Plan by the Committee
and any decision made by it under the Plan is final and binding on all
persons.
6.2.5 In controlling and managing the operation and
administration of the Plan, the Committee shall take action in a manner
that conforms to the articles and bylaws of the Company, and applicable
state corporate law.
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6.3 Delegation by Committee. Except to the extent prohibited by
applicable law or the applicable rules of a stock exchange, the Committee may
allocate all or any portion of its responsibilities and powers to any one or
more of its members and may delegate all or any part of its responsibilities and
powers to any person or persons selected by it. Any such allocation or
delegation may be revoked by the Committee at any time.
6.4 Information to be Furnished to Committee. The Company and
Subsidiaries shall furnish the Committee with such data and information as it
determines may be required for it to discharge its duties. The records of the
Company and Subsidiaries as to an employee's or Participant's employment,
termination of employment, leave of absence, reemployment and compensation shall
be conclusive on all persons unless determined to be incorrect. Participants and
other persons entitled to benefits under the Plan must furnish the Committee
such evidence, data or information as the Committee considers desirable to carry
out the terms of the Plan.
SECTION 7
AMENDMENT AND TERMINATION
The Board may, at any time, amend or terminate the Plan, provided that
no amendment or termination may, in the absence of written consent to the change
by the affected Participant (or, if the Participant is not then living, the
affected beneficiary), adversely affect the rights of any Participant or
beneficiary under any Award granted under the Plan prior to the date such
amendment is adopted by the Board; provided that adjustments pursuant or subject
to subsection 4.2.5 shall not be subject to the foregoing limitations of this
Section 7.
SECTION 8
DEFINED TERMS
In addition to the other definitions contained herein, the following
definitions shall apply:
8.1 "Award" shall mean any award or benefit granted under the Plan,
including, without limitation, the grant of Options, SARs, Stock Unit Awards,
Restricted Stock Awards, Restricted Stock Unit Awards and Performance Share
Awards.
8.2 "Board" shall mean the Board of Directors of the Company.
8.3 "Code" shall mean the Internal Revenue Code of 1986, as amended. A
reference to any provision of the Code shall include reference to any successor
provision of the Code.
8.4 "Disability" is deemed to occur during the period in which a
Participant is unable, by reason of a medically determinable physical or mental
impairment, to engage in any
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substantial gainful activity, which condition, in the opinion of a physician
selected by the Committee, is expected to have a duration of not less than 120
days.
8.5 "Eligible Employee" shall mean any employee of the Company or a
Subsidiary. An Award may be granted to an employee, in connection with hiring,
retention or otherwise, prior to the date the employee first performs services
for the Company or the Subsidiaries, provided that such Award shall not become
vested prior to the date the employee first performs such services.
8.6 "Fair Market Value" of a share of Stock under the Plan, as of any
date, shall be determined as follows:
8.6.1 If the principal market for the Stock is a national
securities exchange or the Nasdaq stock market (including the Nasdaq
SmallCap Market), then "Fair Market Value" as of that date will be the
mean between the lowest and highest reported sale prices of the Stock
on that date on the principal exchange on which the Stock is then
listed or admitted to trading.
8.6.2 If sale prices are not available or if the principal
market for the Stock is not a national securities exchange and the
Stock is not quoted on the Nasdaq stock market, the average between the
highest bid and lowest asked prices for the Stock on such day as
reported on the Nasdaq OTC Electronic Bulletin Board Service or by the
National Quotation Bureau, Incorporated, or a comparable service.
8.6.3 If the day is not a business day, and as a result,
paragraphs 8.5.1 and 8.5.2 are not applicable, the Fair Market Value of
the Stock will be determined as of the last preceding business day. If
paragraphs 8.5.1 and 8.5.2 are otherwise inapplicable, then the Fair
Market Value of the Stock shall be determined in good faith by the
Committee.
8.7 "Retirement" of a Participant shall mean the occurrence of a
Participant's Date of Termination after completing at least five years of
service and attaining age 65.
8.8 "Subsidiary" means any company during any period in which it is a
subsidiary corporation as that term is defined in Code section 424(f) with
respect to the Company.
8.7 "Stock" means shares of the Company's common stock.
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<PAGE>
SECTION 9
MISCELLANEOUS
9.1 General Restriction. Each Award under the Plan shall be subject to
the requirement that, if at any time the Committee shall determine that (i) the
listing, registration or qualification of the shares of Stock subject or related
thereto upon any securities exchange or under any state or federal law, or (ii)
the consent or approval of any government regulatory body, or (iii) an agreement
by the Participant with respect to the disposition of Stock, is necessary or
desirable as a condition of, or in connection with, the granting of such Award
or the issue or purchase of Stock thereunder, such Award may not be exercised or
consummated in whole or in part unless and until such listing, registration,
qualification, consent, approval or agreement shall have been effected or
obtained free of any conditions not acceptable to the Committee.
9.2 Non-Uniform Determinations. The Committee's determinations under
the Plan (including without limitation determinations of the persons to receive
Awards, the form, amount and timing of such Awards, the terms and provisions of
such Awards and the agreements evidencing same) need not be uniform and may be
made by it selectively among persons who receive, or are eligible to receive,
Awards under the Plan, whether or not such persons are similarly situated.
9.3 Fractional Shares. Fractional shares shall not be granted under any
Award under this Plan, unless the provision of the Plan which authorizes such
Award also specifies the terms under which fractional shares or interests may be
granted.
9.4 Effects of Headings. The Section and Subsection headings contained
herein are for convenience only and shall not affect the construction hereof.
ADOPTED BY RESOLUTION OF THE BOARD OF DIRECTORS, EFFECTIVE THE
23rd DAY OF JUNE, 1999.
Kevin R. Pinegar, Secretary
14
Biomune Systems, Inc.
Incentive Stock Option Grant and Agreement
Pursuant to the terms and conditions of Biomune Systems, Inc. 1999 Stock Option
and Incentive Plan (the "Plan"), Biomune Systems, Inc. (the "Company"), hereby
grants to the Participant an Option to purchase shares of the Company's common
stock on the following terms and conditions:
1. Identifying Provisions. As used in this Option, the
following terms shall have the
following respective meanings:
a. Participant is .
-----------------
b. Date of Grant is .
-----------------
c. Number of Covered Shares is .
----------------------
d. Exercise Price Per Share is .
----------
2. Award. This Agreement specifies the terms of the option
("Option") granted to the Participant to purchase the number
of Covered Shares of Stock at the Exercise Price set forth
above in Paragraph 1. The Option is intended to constitute an
"incentive stock option" ("ISO") as that term is used in Code
section 422. To the extent that the aggregate Fair Market
Value (determined at the time of grant) of shares with respect
to which ISOs are exercisable for the first time by the
Participant during any calendar year under all plans of the
Company and its Affiliates exceeds $100,000, the options or
portions thereof which exceed such limit (according to the
order in which they were granted) shall be treated as
non-statutory stock options. It should be understood that
there is no assurance that the Option will in fact be treated
as an ISO.
3. Date of Exercise. Except as limited by this Agreement or by
the Plan, this Option shall become exercisable pursuant to the
vesting schedule set forth below until and including the
Expiration Date of this Option, whereupon the Option shall
expire and may thereafter no longer be exercised. Vesting
shall be immediate.
An installment shall not become exercisable on the otherwise
applicable vesting date if the Participant's Date of
Termination (as defined in Paragraph 9, below) occurs on or
before such vesting date. Notwithstanding the foregoing
provisions of this Paragraph 3, the Option shall become
exercisable with respect to all of the Covered Shares (to the
extent it is not then otherwise exercisable) as follows:
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a. The Option shall become fully exercisable upon the
Participant's Date of Termination, if the Date of
Termination occurs by reason of the Participant's death or
Disability.
b. The Option shall become fully exercisable upon a Change
in Control.
c. The Option may be exercised on or after the Date of
Termination only as to that portion of the Covered Shares
as to which it was exercisable immediately prior to the
Date of Termination, or as to which it became exercisable
on the Date of Termination in accordance with this
Paragraph 3.
4. Expiration. The Option shall not be exercisable after
the Company's close of business on the last business
day that occurs prior to the Expiration Date. The
Expiration Date shall be the earliest to occur of:
a. the five-year anniversary of the Grant Date;
b. if the Participant's Date of Termination occurs by
reason of death, Disability or Retirement, the one-year
anniversary of such Date of Termination; or
c. if the Participant's Date of Termination occurs for
reasons other than death, Disability, or Retirement, the
90-day anniversary of such Date of Termination.
5. Method of Exercise. Commencing with the date of vesting
and subject to the terms of this Agreement and the Plan,
the Option may be exercised anytime in whole or in
part by filing a written notice with the Secretary of the
Company at its corporate headquarters prior to the
Company's close of business on the last business day that
occurs prior to the Expiration Date. Such notice shall
specify the number of Covered Shares the Participant
elects to purchase, and shall be accompanied by payment
of the Exercise Price for such shares. Payment shall be
by cash or by check payable to the Company. Except as
otherwise provided by the Committee before the Option is
exercised, (i) all or a portion of the Exercise Price may
be paid by the Participant by delivery of shares of Stock
owned by the Participant and acceptable to the Committee
having an aggregate Fair Market Value (as of the date of
exercise) that is equal to the amount of cash that would
otherwise be required; and (ii) the Participant may pay
the Exercise Price by authorizing a third party to
sell shares of Stock (or a sufficient portion of the
shares) acquired upon exercise of the Option and remit
to the Company a sufficient portion of the sale proceeds
to pay the entire Exercise Price and any tax withholding
resulting from such exercise. The Option shall not be
exercisable if and to the extent the Company determines
that such exercise would violate applicable state or
federal securities laws or the rules and regulations of
any securities exchange on which the Stock is traded.
If the Company makes such a determination, it shall
use all reasonable efforts to obtain compliance with such
laws, rules or regulations. In
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<PAGE>
making any determination hereunder, the Company may rely on
the opinion of counsel for the Company.
6. Withholding. All deliveries and distributions under this
Agreement are subject to withholding of all applicable taxes.
At the election of the Participant, and subject to such rules
and limitations as may be established by the Committee from
time to time, such withholding obligations may be satisfied
through the surrender of shares of Stock which the Participant
already owns, or to which the Participant is otherwise
entitled under the Plan.
7. Transferability. Except as otherwise provided in this
Paragraph 7, the Option is not transferable other than as
designated by the Participant by will or by the laws of
descent and distribution, and during the Participant's life,
may be exercised only by the Participant. However, the
Participant, with the prior approval of the Committee, may
transfer the Option for no consideration to or for the benefit
of the Participant's Immediate Family (including, without
limitation, to a trust for the benefit of the Participant's
Immediate Family or to a partnership or limited liability
company for one or more members of the Participant's Immediate
Family), subject to such limits as the Committee may
establish, and the transferee shall remain subject to all
terms and conditions applicable to the Option prior to such
transfer. The foregoing right to transfer the Option shall
apply to the right to consent to amendments to this Agreement
and, in the discretion of the Committee, shall also apply to
the right to transfer ancillary rights associated with the
Option. The term "Immediate Family" means the Participant's
spouse, parents, children, stepchildren, adoptive
relationships, sisters, brothers and grandchildren.
8. Definitions. Capitalized terms in this Agreement shall have
the meaning given them in the Plan, or elsewhere in this
Agreement. In addition, the following definitions shall apply:
"Affiliate" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Exchange Act.
"Competitor" is any person or entity engaged in the
distribution or promotion of nutraceutical, medical or
functional foods and/or related services or products in the
United States.
"Date of Termination" is the first day occurring on or after
the Grant Date on which the Participant is not employed by the
Company or any Subsidiary, regardless of the reason for the
termination of employment; provided that a termination of
employment shall not be deemed to occur by reason of a
transfer of the Participant between the Company and a
Subsidiary or between two Subsidiaries; and further provided
that the Participant's employment shall not be considered
terminated while the Participant is on an authorized leave of
absence from the Company or Subsidiary.
3
<PAGE>
If, as a result of a sale or other transaction, the
Participant's employer ceases to be a Subsidiary (and the
Participant's employer is or becomes an entity that is
separate from the Company), the occurrence of such transaction
shall be treated as the Participant's Date of Termination
caused by the Participant being discharged by the employer.
9. Heirs and Successors. This Agreement shall be binding upon,
and inure to the benefit of, the Company and its successors
and assigns, and upon any person acquiring, whether by merger,
consolidation, purchase of assets or otherwise, all or
substantially all of the Company's assets and business. If any
rights exercisable by the Participant or benefits deliverable
to the Participant under this Agreement have not been
exercised or delivered, respectively, at the time of the
Participant's death, such rights shall be exercisable by the
Designated Beneficiary, and such benefits shall be delivered
to the Designated Beneficiary in accordance with the
provisions of this Agreement and the Plan. The "Designated
Beneficiary" shall be the beneficiary or beneficiaries
designated by the Participant in a writing filed with the
Committee in such form and at such time as the Committee shall
require. If a deceased Participant fails to designate a
beneficiary, or if the Designated Beneficiary does not survive
the participant, any rights that would have been exercisable
by the Participant and any benefits distributable to the
Participant shall be exercised by or distributed to the legal
representative of the estate of the Participant. If a deceased
Participant has designated a beneficiary but the Designated
Beneficiary dies before the Designated Beneficiary's exercise
of all rights under this Agreement or before the complete
distribution of benefits to the Designated Beneficiary under
this Agreement, then any rights that would have been
exercisable by the Designated Beneficiary shall be exercised
by the legal representative of the estate of the Designated
Beneficiary, and any benefits distributable to the Designated
Beneficiary shall be distributed to the legal representative
of the estate of the Designated Beneficiary.
10. Administration. The authority to manage and control the
operation and administration of this Agreement shall be vested
in the Committee, and the Committee shall have all powers with
respect to this Agreement as it has with respect to the Plan.
Any interpretation of the Agreement by the Committee and any
decision made by it with respect to the Agreement is final and
binding on all persons.
11. Plan Governs. This Option is subject to and the
Participant is bound by all of the terms and conditions of the
Plan, as the same may have been amended from time to time in
accordance with its terms. A copy of the Plan in its present
form is available from the office of the Secretary of the
Company. In the event of a conflict between the terms of the
Plan and the terms of this Agreement, the terms and provisions
of the Plan shall govern.
12. Not an Employment Contract. The Option does not confer any
right on the Participant with respect to continuation of
employment or other service with the
4
<PAGE>
Company or any Subsidiary, nor will it interfere in any way
with any right the Company or any Subsidiary would otherwise
have to terminate or modify the terms of such Participant's
employment or other service at any time.
13. Rights in Stock Before Issuance and Delivery. No person
shall be entitled to the privileges of stock ownership in
respect of any shares issuable upon exercise of this Option
unless and until such shares have been issued to such person
as fully-paid shares.
14. Notices. Any notice to be given to the Company shall be
addressed to the Company in care of its corporate Secretary at
its principal offices and any notice to be given to the
Participant shall be addressed to the Participant at the
address set forth beneath the Participant's signature hereto
or at such other address as the Participant may hereafter
designate in writing to the Company. Any such notice shall be
deemed duly given when enclosed in a properly sealed envelope
or wrapper addressed as before said, registered or certified
and deposited postage and registry or certification fees
prepaid in a post office or branch post office regularly
maintained by the United States Postal Service.
15. Other Terms. This Agreement has been executed and
delivered by the Company in Salt Lake City, Utah and shall be
construed and enforced in accordance with the laws of said
state, other than any choice of law rules calling for the
application of laws of another jurisdiction. This Agreement
may be amended by written agreement of the Participant and the
Company, without the consent of any other person. If the
Company enters into a transaction which is intended to be
accounted for using the pooling-of-interests method of
accounting, but it is determined by the Board that the Option
or any aspect thereof could reasonably be expected to preclude
such treatment, then the Board may modify (to the minimum
extent required) or revoke (if necessary) the Option or any of
the provisions thereof to the extent that the Board determines
that such modification or revocation is necessary to enable
the transaction to be subject to pooling-of-interests
accounting.
IN WITNESS WHEREOF the Company has granted this Option on the Date of Grant
specified above.
Biomune Systems, Inc.
2401 South Foothill Drive
Salt Lake City, Utah 84109
By:
----------------------------------
Its: President and Chief Executive Officer
5
<PAGE>
Participant:
- -----------------------------------------
Signature:
Address:
6
<PAGE>
NOTICE OF EXERCISE
Biomune Systems, Inc.
2401 South Foothill Drive
Salt Lake City, Utah 84109
Ladies and Gentlemen:
The undersigned hereby elects to purchase, pursuant to the provisions
of the Stock Option Agreement and Option held by the undersigned, dated
___________, _________ shares of Stock of Biomune Systems, Inc., a Nevada
corporation, issuable upon exercise of said Option.
The undersigned hereby represents and warrants that the undersigned is
acquiring such stock for his own account and not for resale or with a view to
distribution of any part thereof.
The undersigned hereby attaches the purchase price payable for such
shares at $______ per share in the form of ____________________________________
(specify cash, check, money order, other securities, etc.).
Dated:
--------------------------------------------
Signature
--------------------------------------------
Print Name
--------------------------------------------
Address:
- -------------------------
(Social Security Number)
Biomune Systems, Inc.
Stock Option Grant and Agreement
Pursuant to the terms and conditions of the Biomune Systems, Inc. 1999 Stock
Option and Incentive Plan (the "Plan"), Biomune Systems, Inc. (the "Company"),
hereby grants to the Participant an Option to purchase shares of the Company's
common stock on the following terms and conditions:
1. Identifying Provisions. As used in this Option, the
following terms shall have the following respective meanings:
a. Participant is ___________________.
b. Date of Grant is ____________________.
c. Number of Covered Shares is ____________________.
d. Exercise Price Per Share is $__________.
2. Award. This Agreement specifies the terms of the option
("Option") granted to the Participant to purchase the number
of Covered Shares of Stock at the Exercise Price set forth
above in Paragraph 1. The Option is not intended to constitute
an "incentive stock option" ("ISO") as that term is used in
Code section 422.
3. Date of Exercise. Except as limited by this Agreement or by
the Plan, this Option shall become exercisable immediately or
at any time prior to the Expiration Date of this Option,
whereupon the Option shall expire and may thereafter no longer
be exercised.
An installment shall not become exercisable on the otherwise
applicable vesting date if the Participant's Date of
Termination (as defined in Paragraph 9, below) occurs on or
before such vesting date. Notwithstanding the foregoing
provisions of this Paragraph 3, the Option shall become
exercisable with respect to all of the Covered Shares (to the
extent it is not then otherwise exercisable) as follows:
a. The Option shall become fully exercisable upon the
Participant's Date of Termination, if the Date of
Termination occurs by reason of the Participant's
death or Disability.
b. The Option shall become fully exercisable upon a
Change in Control, if the Participant's Date of
Termination does not occur on or before the Change in
Control.
<PAGE>
c. The Option may be exercised on or after the Date
of Termination only as to that portion of the Covered
Shares as to which it was exercisable immediately
prior to the Date of Termination, or as to which it
became exercisable on the Date of Termination in
accordance with this Paragraph 3.
4. Expiration. The Option shall not be exercisable after the
Company's close of business on the last business day that
occurs prior to the Expiration Date. The Expiration Date shall
be the earliest to occur of:
a. The five-year anniversary of the Grant Date;
b. If the Participant's Date of Termination occurs
by reason of death, Disability or Retirement, the
one-year anniversary of such Date of Termination;
or
c. If the Participant's Date of Termination occurs
for reasons other than death, Disability, or
Retirement, the 90-day anniversary of such Date
of Termination.
5. Method of Exercise. Subject to the terms of this Agreement
and the Plan, the Option may be exercised in whole or in part
by filing a written notice with the Secretary of the Company
at its corporate headquarters prior to the Company's close of
business on the last business day that occurs prior to the
Expiration Date. Such notice shall specify the number of
Covered Shares the Participant elects to purchase, and shall
be accompanied by payment of the Exercise Price for such
shares. Payment shall be by cash or by check payable to the
Company. Except as otherwise provided by the Committee before
the Option is exercised, (i) all or a portion of the Exercise
Price may be paid by the Participant by delivery of shares of
Stock owned by the Participant and acceptable to the Committee
having an aggregate Fair Market Value (as of the date of
exercise) that is equal to the amount of cash that would
otherwise be required; and (ii) the Participant may pay the
Exercise Price by authorizing a third party to sell shares of
Stock (or a sufficient portion of the shares) acquired upon
exercise of the Option and remit to the Company a sufficient
portion of the sale proceeds to pay the entire Exercise Price
and any tax withholding resulting from such exercise. The
Option shall not be exercisable if and to the extent the
Company determines that such exercise would violate applicable
state or federal securities laws or the rules and regulations
of any securities exchange on which the Stock is traded. If
the Company makes such a determination, it shall use all
reasonable efforts to obtain compliance with such laws, rules
or regulations. In making any determination
2
<PAGE>
hereunder, the Company may rely on the opinion of counsel for
the Company.
6. Withholding. All deliveries and distributions under this
Agreement are subject to withholding of all applicable taxes.
At the election of the Participant, and subject to such rules
and limitations as may be established by the Committee from
time to time, such withholding obligations may be satisfied
through the surrender of shares of Stock which the Participant
already owns, or to which the Participant is otherwise
entitled under the Plan.
7. Transferability. Except as otherwise provided in this
Paragraph 7, the Option is not transferable other than as
designated by the Participant by will or by the laws of
descent and distribution, and during the Participant's life,
may be exercised only by the Participant. However, the
Participant, with the prior approval of the Committee, may
transfer the Option for no consideration to or for the benefit
of the Participant's Immediate Family (including, without
limitation, to a trust for the benefit of the Participant's
Immediate Family or to a partnership or limited liability
company for one or more members of the Participant's Immediate
Family), subject to such limits as the Committee may
establish, and the transferee shall remain subject to all
terms and conditions applicable to the Option prior to such
transfer. The foregoing right to transfer the Option shall
apply to the right to consent to amendments to this Agreement
and, in the discretion of the Committee, shall also apply to
the right to transfer ancillary rights associated with the
Option. The term "Immediate Family" means the Participant's
spouse, parents, children, stepchildren, adoptive
relationships, sisters, brothers and grandchildren.
8. Definitions. Capitalized terms in this Agreement shall have
the meaning given them in the Plan, or elsewhere in this
Agreement. In addition, the following definitions shall apply:
"Affiliate" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Exchange Act.
"Competitor" is any person or entity engaged in the
distribution or promotion of nutraceutical, functional or
medical foods or related products in the United States.
"Date of Termination" is the first day occurring on or after
the Grant Date on which the Participant is not employed by the
Company or any Subsidiary, regardless of the reason for the
termination of employment; provided that a termination of
employment shall not be deemed to occur by reason of a
transfer of the Participant between the Company and a
Subsidiary or between two Subsidiaries; and further provided
that the Participant's employment shall not be considered
terminated while the Participant is on an authorized leave of
absence
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from the Company or Subsidiary. If, as a result of a sale or
other transaction, the Participant's employer ceases to be a
Subsidiary (and the Participant's employer is or becomes an
entity that is separate from the Company), the occurrence of
such transaction shall be treated as the Participant's Date of
Termination caused by the Participant being discharged by the
employer.
9. Heirs and Successors. This Agreement shall be binding upon,
and inure to the benefit of, the Company and its successors
and assigns, and upon any person acquiring, whether by merger,
consolidation, purchase of assets or otherwise, all or
substantially all of the Company's assets and business. If any
rights exercisable by the Participant or benefits deliverable
to the Participant under this Agreement have not been
exercised or delivered, respectively, at the time of the
Participant's death, such rights shall be exercisable by the
Designated Beneficiary, and such benefits shall be delivered
to the Designated Beneficiary in accordance with the
provisions of this Agreement and the Plan. The "Designated
Beneficiary" shall be the beneficiary or beneficiaries
designated by the Participant in a writing filed with the
Committee in such form and at such time as the Committee shall
require. If a deceased Participant fails to designate a
beneficiary, or if the Designated Beneficiary does not survive
the participant, any rights that would have been exercisable
by the Participant and any benefits distributable to the
Participant shall be exercised by or distributed to the legal
representative of the estate of the Participant. If a deceased
Participant has designated a beneficiary but the Designated
Beneficiary dies before the Designated Beneficiary's exercise
of all rights under this Agreement or before the complete
distribution of benefits to the Designated Beneficiary under
this Agreement, then any rights that would have been
exercisable by the Designated Beneficiary shall be exercised
by the legal representative of the estate of the Designated
Beneficiary, and any benefits distributable to the Designated
Beneficiary shall be distributed to the legal representative
of the estate of the Designated Beneficiary.
10. Administration. The authority to manage and control the
operation and administration of this Agreement shall be vested
in the Committee, and the Committee shall have all powers with
respect to this Agreement as it has with respect to the Plan.
Any interpretation of the Agreement by the Committee and any
decision made by it with respect to the Agreement is final and
binding on all persons.
11. Plan Governs. This Option is subject to and the
Participant is bound by all of the terms and conditions of the
Plan, as the same may have been amended from time to time in
accordance with its terms. A copy of the Plan in its present
form is available from the office of the Secretary of the
Company. In the event of a conflict between the terms of the
Plan and the terms of this Agreement, the terms
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<PAGE>
and provisions of the Plan shall govern.
12. Not an Employment Contract. The Option does not confer any
right on the Participant with respect to continuation of
employment or other service with the Company or any
Subsidiary, nor will it interfere in any way with any right
the Company or any Subsidiary would otherwise have to
terminate or modify the terms of such Participant's employment
or other service at any time.
13. Rights in Stock Before Issuance and Delivery. No person
shall be entitled to the privileges of stock ownership in
respect of any shares issuable upon exercise of this Option
unless and until such shares have been issued to such person
as fully-paid shares.
14. Notices. Any notice to be given to the Company shall be
addressed to the Company in care of its corporate Secretary at
its principal offices and any notice to be given to the
Participant shall be addressed to the Participant at the
address set forth beneath the Participant's signature hereto
or at such other address as the Participant may hereafter
designate in writing to the Company. Any such notice shall be
deemed duly given when enclosed in a properly sealed envelope
or wrapper addressed as before said, registered or certified
and deposited postage and registry or certification fees
prepaid in a post office or branch post office regularly
maintained by the United States Postal Service.
15. Other Terms. This Agreement has been executed and
delivered by the Company in Salt Lake City, Utah and shall be
construed and enforced in accordance with the laws of said
state, other than any choice of law rules calling for the
application of laws of another jurisdiction. This Agreement
may be amended by written agreement of the Participant and the
Company, without the consent of any other person. If the
Company enters into a transaction which is intended to be
accounted for using the pooling-of-interests method of
accounting, but it is determined by the Board that the Option
or any aspect thereof could reasonably be expected to preclude
such treatment, then the Board may modify (to the minimum
extent required) or revoke (if necessary) the Option or any of
the provisions thereof to the extent that the Board determines
that such modification or revocation is necessary to enable
the transaction to be subject to pooling-of-interests
accounting.
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<PAGE>
IN WITNESS WHEREOF the Company has granted this Option on the Date of
Grant specified above.
Biomune Systems, Inc.
2401 South Foothill Drive
Salt Lake City, Utah 84109
By:
-----------------------------------
Its: President & Chief Executive Officer
Participant:
- -----------------------------------------
6
<PAGE>
NOTICE OF EXERCISE
Biomune Systems, Inc.
2401 South Foothill Drive
Salt Lake City, Utah 84109
Ladies and Gentlemen:
The undersigned hereby elects to purchase, pursuant to the provisions of the
Stock Option Agreement and Option held by the undersigned, dated ___________,
_________ shares of Stock of Biomune Systems, Inc., a Nevada corporation,
issuable upon exercise of said Option.
The undersigned hereby represents and warrants that the undersigned is acquiring
such stock for his own account and not for resale or with a view to distribution
of any part thereof.
The undersigned hereby attaches the purchase price payable for such shares at
$______ per share in the form of ____________________________________ (specify
cash, check, money order, other securities, etc.).
Dated:
- ------------------------------------
Signature
- ------------------------------------
Printed Name
Address: --------------------------
- ------------------------------------
- ------------------------------------
- -----------------------------------
(Social Security Number)
7
, 2000
----------------
- --------------
- --------------
- --------------
Re: Award of Common Stock
Dear :
-----------
In consideration for your past and future advice, services and work as
the __________ of Biomune, Inc., the Board of Directors of the Company has
agreed to grant to you, as of the date of this letter, an award of __________
shares of Common Stock of the Company. These shares are restricted shares and
may not be resold or may not be freely transferable by you unless and until they
are the subject of an effective registration statement filed with the Securities
and Exchange Commission or an exemption from registration is available under
applicable state and federal laws. You hereby accept these shares acknowledging
these restrictions and without any view toward a further distribution of the
shares in violation of the applicable securities laws. If the shares are or
should they become the subject of a registration statement, you will be advised
by the Company regarding the effectiveness of the registration statement and
your rights under that registration.
We will promptly instruct our counsel to make the necessary filings to
have the shares issued as soon as possible.
Thank you again for your valuable services to the Company.
Respectfully,
Biomune, Inc.
By:
-----------------------------
Title:
--------------------------
Accepted and Agreed to:
- -------------------------
- -------------------------
DURHAM JONES & PINEGAR, P.C.
50 South Main Street, Suite 850
Salt Lake City, Utah 84144
February 1, 2000
Biomune Systems, Inc.
2401 South Foothill Drive
Salt Lake City, Utah 84109
Re: Registration Statement on Form S-8 of Biomune, Inc. (the
"Registration Statement")
Dear Sirs:
We have acted as counsel for Biomune, Inc., a Nevada corporation (the
"Company"), in connection with the registration under the Securities Act of
1933, as amended (the "Act"), of an aggregate of up to 500,000 shares of the
Company's Common Stock, par value $.0001 per share, which may be issued to
directors, officers, employee or key consultants of the Company pursuant to the
terms of the Plan, and up to 25,000 additional shares of Common Stock which may
be issued pursuant to written compensation agreements (the "Compensation
Agreements") with Company directors, officers or employees. The aggregate of
525,000 shares to be registered under the Act are referred to herein as the
"Shares."
In connection with the foregoing, we have examined originals or copies,
certified or otherwise authenticated to our satisfaction, of such corporate
records of the Company and other instruments and documents as we have deemed
necessary as a basis for the opinion hereinafter expressed.
Based upon the foregoing and in reliance thereon, it is our opinion that
the Shares described in the above-referenced Registration Statement, when issued
pursuant to the terms of the Registration Statement, and the Plan or
Compensation Agreements, as applicable, will be validly issued, fully paid and
non-assessable.
We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to our firm in the Registration Statement and the
prospectus to be delivered thereunder. In giving this consent, we do not thereby
admit that we come within the category of persons whose consent is required
under Section 7 of the Act or the rules and regulations of the Securities and
Exchange Commission promulgated thereunder.
Sincerely,
DURHAM JONES & PINEGAR P.C.
/s/ DURHAM JONES & PINEGAR, P.C.
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-8 our report dated January 11, 2000, which
appears on page F-1 of the 1999 Annual Report on Form 10K of Biomune Systems,
Inc., and the references to our firm under the caption "Experts" in the
Registration Statement.
TANNER + CO.
Salt Lake City, Utah
January 31, 2000
