Fill and Sign the Employees Stock Option Plan Form

EMPLOYEES' STOCK OPTION PLAN 1. PURPOSE OF THE PLAN. The purpose of this Employees' Stock Option Plan is to promote the success of Vivigen, Inc., and its Subsidiaries by attracting and retaining employees by supplementing their cash compensa tion and providing a means for them to increase their holdings of Common Stock of the Company. The opportunity so provided and the receipt of Shares as compensation are intended to foster i n participants a strong incentive to put forth maximum effort for the continued success and growt h of the Company for the benefit of customers and shareholders, to aid in retaining individuals who put forth such efforts, and to assist in attracting the best available individuals in the future. 2. DEFINITIONS. As used herein, the following definitions shall apply: 2.1 "Act" means the Securities Exchange Act of 1934, as amended. 2.2 "Board" means the Board of Directors of the Company. 2.3 "Business Day" means a day other than a Saturday or Sunday and other than a legal holiday or a day on which banking institutions are authorized to close under the laws of New Mexico. 2.4 "Code" means the Internal Revenue Code of 1986, as amended. 2.5 "Common Stock" means the Common Stock, par value $.01 per share, of the Company. 2.6 "Company" shall refer to Vivigen, Inc., a New Mexico corporation. 2.7 "Corporate Transaction" means a transaction in which the Company is wholly or partially liquidated, or participates in a merger, consolidation, or reorganization. 2.8 "Eligible Employee" means any person who is a full-time employee of the Company or of a Subsidiary and any part-time employee of the Company or of a Subsidiary approved by the Operating Committee to be an Eligible Employee. 2.9 "Executive Officers" means the Company's chairman of the board, president., principal financial officer, principal accounting officer or controller, as the case may be, any vice-president of the Company in charge of a principal business unit, division, or function, and any member of the Company's executive committee, as constituted from time to time. 2.10 "Fair Market Value" means with respect to the Company's Shares the mean between the high and low prices of Shares on the American Stock Exchange (or on such other national securities exchange on which the Shares may be traded hereafter) on the day on which an Option is granted or, if there is no sale on that date, on the next preceding day on which there was a sale. 2.11 "Initial Grant Date" means January 2, 1992. 2.12 "Initial Grant Price" means the Fair Market Value of a Share on the Initial Grant Date or on the date the Shareholders approve the Plan, whichever is higher. 2.13 "Operating Committee" means a committee consisting of the Chief Executive Officer of the Company and such other officers of the Company as the Chief Executive Officer may designate to serve thereon at the pleasure of the Chief Executive Officer. 2.14 "Option" means a stock option granted pursuant to the Plan. 2.15 "Option Agreement" means the agreement between the Company and an Optionee for the grant of an Option. 2.16 "Option Stock"means stock subject to an Option granted pursuant to the Plan. 2.17 "Optionee" means a person who receives an Option. 2.18 "Plan" means the Company's Employees' Stock Option Plan. 2.19 "Shares" means shares of the Common Stock. 2.20 "Stock Option Committee" means the members of the Board's Stock Option Committee who are "disinterested persons" as defined in Rule 16b-3 adopted pursuant to the Act. 2.21 "Subsidiary" means any corporation in which the Company, at the time an Option is granted to an employee thereof, or in other cases, at the time of reference, owns directly or indirectly not less than 80 percent of the voting equity interest. 3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 11 of the Plan, the maximum aggregate number of Shares which may be optioned and sold under the Plan, excluding those Shares constituting the unexercised portion of any canceled, terminated, or expired Options, is 200,000 Shares. The Shares shall be authorized, but unissued, Common Stock. If an Option should expire or become unexercisable for any reason without having been exercised in full, the unpurchased Shares which were subject thereto shall, unless the Plan has been terminated, become available for the grant of other Options under the Plan. 4. ADMINISTRATION OF THE PLAN. 4.1 General Administration- The Plan shall be administered by the Stock Option Committee, which shall have authority to adopt such rules and regulations and to make such determina tions as are consistent with the Plan and are necessary or desirable for its implementati on and administration. 4.2 Authority. Subject to the provisions of the Plan, the Stock Option Committee, as respect s Options granted to Eligible Employees who are Executive Officers of the Company or to any other person deemed to be an officer within the meaning of Section 16 of the Act shall have the exclusive authority to determine the levels at which those persons shall be or become entitled to receive an Option pursuant to Section 5.1, hereof; provided, however, that the chief executive officer of the Company shall always be at level 8, and that the other Executive Officers of the Company shall initially be at level 7. The Operating Committee, as respect s Eligible Employees who are neither Executive Officers nor officers within the meaning of Section 16 of the Ac t, shall have the authority to determine the levels at which those other employees shall be or become entitled to receive an Option pursuant to Section 5.1 hereof. 4.3 Immunity. No member of the Stock Option Committee or Operating Committee shall be liable, in the absence of bad faith, for any act or omission with respect to his or her service on the Stock Option Committee or service on the Operating Committee as respects the Pla n. Service on the Stock Option Committee is declared to constitute service as a Director of the Company, to the end that the members of the Stock Option Committee shall, in respect of thei r acts and omissions as such, be entitled to the benefits of the Company's Articles of Incorporation, as amended, and to indemnification and reimbursement as Directors of the Company pursuant t o its Bylaws or any contract and to the benefits of any letter of credit, insurance polic y, or other arrangement maintained by the Company providing coverage with respect to acts or omissi ons of Directors of the Company or benefits with respect to the payment by or on behalf of the Company of such indemnification and reimbursement. Service on the Operating Committee as respects the Plan is declared to be servic e as an officer of the Company, to the end that the members of the Operating Committee as respec ts their acts and omissions as such with respect to the Plan shall be entitled to indemnification and reimbursement as officers of the Company pursuant to its Bylaws or any contract and to the benefits of any letter of credit, insurance policy, or other arrangement maintained by the Company providing coverage with respect to acts or omissions of officers of the Company or benefits with respect to t he payment by or on behalf of the Company of such indemnification and reimbursement. 5. GRANTS OF OPTIONS. 5.1 Grants of Option. The Plan recognizes eight levels of responsibility within the Company; eight is the highest level. On the date that the Plan is approved by the Shareholders of the Company, each Eligible Employee shall receive an Option effective as of the Initial Grant Date to purchase that number of Shares which is equal to the number derived by dividing the Opti on Value corresponding to his or her level of responsibility as determined pursuant to Section 4.2 hereof by the Initial Grant Price according to the following schedule. Thereafter, each Eligible Employee shall receive an Option to purchase that number of Shares which is equal to t he number derived by dividing the Option Value corresponding to his or her level of responsibility as determined pursuant to Section 4.2 hereof by the Fair Market Value of a Share on the first Business Day of each calendar year according to the following schedule: Employment Category Level Option Value Chief Executive Officer 8 $100,000 Executive Officers 7 37,500 Laboratory Directors and 6 31,250 Medical Directors Managers or Section 5 10,000 Heads Technical and 4 5,000 Administrative 3 3,750 Personnel 2 2,500 Levels 1 1,250 5.2 Newly Hired Employees. When any person becomes an Eligible Employee subsequent to the first Business Day in any year, he or she shall receive that number of Shares for his or her l evel of responsibility shown above multiplied by a fraction, the denominator of which shall be 365, and the numerator of which shall be the number of days which remain until the first Busine ss Day in the next year, which number of Shares shall be rounded to the next highest whole number. 5.3 Part-time Employees. Part-time employees who are Eligible Employees shall receive that number of Shares in his or her level of responsibility shown above multiplied by a fraction, the denominator of which shall be 100, and the numerator of which shall be a number corresponding to the percentage of their part-time employment, e.g., 75/100, which number of Shares shall be rounded to the next highest whole number. 5.4 Pro Rata Grants. If on any date of grant of Options under the Plan there are an insufficient number of Shares available under the Plan which may be optioned and sold, Options shall be granted to Eligible Employees for that number ~f Shares which are so available on a pro rata basis. 5.5 Adjustment. The number of Shares subject to any Option shall be subject to adjustment from time to time in accordance with Section 11 hereof. 6. TERM OF PLAN. The Plan shall become effective upon its adoption by the Board, and shall continue in effect until all Options granted hereunder have expired or been exercised, unless sooner terminated under the provisions relating thereto. No Option shall be granted after ten (10) years from the earlier of the date of adoption of this Plan or its approval by the shareholders as contemplated by Section 13.1. 7. TERMS OF OPTION AGREEMENT. Upon the grant of each Option, the Company and the Eligible Employee shall enter into an Option Agreement which shall specify the date of grant and the purchase price, and shall include or incorporate by reference the substance of all of the following provisions and any other provisions consistent with the Plan as the Stock Option Committee determines. 7.1 Term The term of the Option shall be ten (10) years from the date of its grant, subject to earlier termination in accordance with the Plan. 7.2 Exercise Schedule. The Option shall be exercisable for up to (i) 50% of the Shares covered by the Option at any time after the Company's gross revenues (as determined in accordance with generally accepted accounting principles applied on a consistent basis and as adjusted for any mergers and acquisitions consummated by the Company during the relevant accounting period) meet or exceed a 30% increase for each of two consecutive calendar years ending subsequent to the grant of the Option and thereafter until the earlier of the period ending on December 31 of the fourth year subsequent to the year in which the Option was granted or the termination of the Option in accordance with the Plan, and (ii) 100% of the Shares covered by the Option at any time after the Company's gross revenues (as determined in accordance with generally accepted accounting principles applied on a consistent basis and as adjusted for any mergers and acquisitions consummated by the Company during the relevant accounting period) meet or exceed a 40% increase for each of two consecutive calendar years ending subsequent to the grant of the option and thereafter until the earlier of the period ending on December 31 of the fourth calendar year subsequent to the year in which the Option was granted or the termination of the Option in accordance with the Plan. 7.3 Purchase Price. The purchase price of the Shares subject to each Option shall be the Initial Grant Price or the Fair Market Value thereof on the date the Option is granted, whichever is applicable; provided, however, no Option may be granted under the Plan to any person who, immediately after such Option is granted, owns (as defined in Sections 422 and 424 of the Code) more than ten (10%) percent of the total voting power of the Shares of the Company or stock of any Subsidiary, unless the purchase price is at least 110% of the Initial Grant Price or Fair Market Value at the time the Option is granted, whichever is applicable. 7.4 Payment of Purchase Price. The purchase price of Shares acquired pursuant to an Option shall be paid in full when the Option is exercised in cash or by delivery of any property other than cash (including Shares or other securities of the Company, so long as such property constitutes valid consideration for the Shares purchased under applicable law and is surrendered in good form for transfer, or by some combination of cash and such other property); provided, however, that the purchase price may not be paid by the delivery of Shares More frequently than once every six (6) months. 7.5 Transferability. No Option is transferable by an Eligible Employee other than by will or the laws of descent and distribution or pursuant to a qualified domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act, or the rules thereunder. The designation of a beneficiary by an Eligible Employee does not constitute a transfer. 7.6 Termination of Employment with the Company. If an Eligible Employee's employment with the Company or a Subsidiary terminates for any reason, including disability (as determined by the Board in its sole determination), except by reason of death, an Option held at the date of termination (but only to the extent exercisable at the time of termination in accordance with Section 7.2 hereof) may be exercised in whole or in part at any time within one vear after the date of termination (but in no event after the term of the Option expires) and shall thereafter automatically terminate. In the case of an Eligible Employee's death, an Option held at the dat e of termination (to the extent exercisable in accordance with Section 7.2 hereof) may be exercised in whole or in part at any time within three years after the date of termination (but in no event after the term of the Option expires) and shall thereafter automatically terminate. 7.7 Six-Month Holding Period At least six months must elapse from the date of acquisition of the Option by the Eligible Employee to the date of disposition of the Option (other than upon exercise or conversion) or its underlying Shares. 8. USE OF PROCEEDS. Proceeds from the sale of Shares pursuant to the Plan shall be used by the Company for general corporate purposes. 9. TERM OF OPTIONS. The term of each Option granted under the Plan shall be ten (10) years from the date of the grant thereof, subject to earlier termination as herein provided. 10. EXERCISE OF OPTIONS. 10.1 Procedure for Exercise Any Option granted hereunder shall be exercisable, in whole or in part, at any time after becoming exercisable in accordance with Section 7.2 hereof, but not later than the date the Option expires. The minimum number of Shares with respect to which an Option may be exercised at any one time shall be one hundred (100) Shares, unless the number purchased is the total number at the time available for purchase under the Option. An Option may not be exercised for a fractional Share. No Option may be exercised after the expiration of its term as specified in Section 9. An Option shall be deemed to be exercised when written notice of such exercise has been given to the Company in accordance with the terms of the Option by the person entitled to exercise the Option, and full payment for the Shares with respect to which the Option is exercised has been received by the Company. Until the issuance of the stock certificates (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to Option Shares, notwithstanding the exercise of the Option. No adjustment will be made for a dividend or other rights for which the record date is prior to the date the stock certificates are issued, except as provided in Section 11 of the Plan. 10.2 Exercise Following Death. In the case of the Optionee's death, exercise shall be in accordance with Section 7.6 hereof by the person or persons (including his estate) to whom his rights under the Option have passed by will or by laws of descent and distribution. 10.3 Exercise by Holders of 10% or more of Shares. Any person granted an Option under the Plan who, immediately after such Option is granted, owns (as defined in Section 422 and 424 of the Code) more than ten percent (10%) of the total voting power of the Shares of the Company or stock of any Subsidiary must exercise such Option no later than five years after the date of grant of the Option. 11. ADJUSTMENT UPON CHANGES IN CAPITALIZATION. Any change in the number of outstanding Shares of the Company occurring through stock splits, combination of Shares, recapitalization, or dividends consisting of Shares after the adoption of the Plan shall be appropriately reflected in an increase or decrease in the aggregate number of Shares then available for the grant of Options under the Plan, or to become available through the termination, surrender, or lapse of Options previously granted; and appropriate adjustments shall be made in the per Share Option price or number of Shares subject to the Option as to any outstanding Options. No fractional Shares shall become available for Options as a result of such adjustments. Similar adjustments shall be made in the event of distribution of other securities or other consideration in respect of outstanding Shares or in the event of a Corporate Transaction or any other change in the corporate structure, if and to the extent that the Stock Option Committee deems such adjustments appropriate to maintain the interest of the Optionee (or the Optionee's successor) as it existed before the occurrence of the event. 12. TIME OF GRANTING OPTIONS. The date of granting an Option under this Plan shall be the date specified in Section 5.1. No Option shall be granted after expiration of the term of this Plan. 13. APPROVAL, AMENDMENT, AND TERMINATION OF THE PLAN. 13.1 Approval. This Plan shall be adopted by the Board, and shall be presented to the shareholders of the Company for their approval by vote of a majority of the shareholders present or represented at a meeting duly held, such approval to be given within twelve (12) months before or after the date of adoption hereof. Options may be granted prior to such approval, but they shall be contingent upon such approval being obtained and may not be exercised prior to such approval. 13.2 Amendment. The Board, without further approval of the shareholders, may amend this Plan at any time in any respect as the Board deems advisable, subject to any required stockholder or regulatory approval and to any conditions established by the terms of such amendment, provided that in no event shall the Plan be amended more than once every six (6) months other than to comport with changes in the Code, the Employee Retirement Income Security Act, or the rules promulgated by the Securities and Exchange Commission. 13.3 Termination and Suspension. The Board, without further approval of the shareholders, may at any time terminate or suspend this Plan. Any such termination or suspension of the Plan shall not affect Options already granted, and such Options shall remain in full force and effect as if this Plan had not been terminated or suspended. No Option may be granted while the Plan is suspended or after it is terminated. Rights and obligations under any Option granted while this Plan is in effect shall no be altered or impaired by suspension or termination of this Plan, except with the consent of the person to whom the Option was granted. 14. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued with respect to any Option granted under this Plan unless the exercise of the Option and the issuance and delivery of such Shares pursuant thereto comply with all relevant provisions of law and the requirements of any stock exchange upon which the Shares may then be listed. The issuance of Shares is also subject to the approval of counsel of the Company with respect to such compliance. 15. SHAREHOLDER STATUS. No person shall have any rights as a shareholder by virtue of the grant of an Option under the Plan except with respect to Shares actually issued or delivered to that person. 16. NONUNIFORM DETERMINATION PERMISSIBLE. The Stock Option Committee's or Operating Committee's determinations under the Plan, including, without limitation, determinations as to the level at which persons are to receive Options pursuant to Section 5.1 hereof, the terms and provisions of Options, and the written instruments evidencing Options, need not be uniform as among persons similarly situated and may be made selectively among Eligible Employees. 17. TAXES. The Company shall be entitled to withhold the amount of any withholding tax payable with respect to any Options and Shares deliverable upon exercise thereof and to sell such number of Shares as may be necessary to produce the amount so required to be withheld, unless the recipient supplies to the Company cash in the amount requested by the Company for the purpose. The person entitled to receive Shares pursuant to an Option will be given notice as far in advance as practicable to permit such cash payment to be made to the Company. The Company may, in lieu of sale of Shares, defer making delivery of Shares until indemnified to its satisfaction with respect to any such withholding tax. 18. TENURE. An Eligible Employee's right, if any, to continue in the employ of the Company or a Subsidiary shall not be affected by the fact that the Eligible Employee is a participant under the Plan; and the Company or Subsidiary shall retain the right to terminate his or her employment without regard to the effect such termination may have on any rights he or she may have under the Plan. 19. OTHER ACTIONS.Nothing in the Plan shall be construed to limit the authority of the Company to exercise all of its corporate rights and powers, including, by way of illustration and not by way of limitation, the right to grant options for proper corporate purposes otherwise than under the Plan to any employee or any other person, firm, corporation, association, or other entity, or to grant options to, or assume options of, any person in connection with the acquisition by purchase, lease, merger, consolidation, or otherwise of all or any part of the business or assets of any person, firm, corporation, association, or other entity. Vivigen, Inc 3/25/92