1996 Directors' Stock Option Plan

EXHIBIT 10.16


BIOSHIELD TECHNOLOGIES, INC.

1996 DIRECTORS' STOCK OPTION PLAN


1. PURPOSE
------- 2.


3. The purpose of this Directors' Stock Option Plan (the "PLAN") is to secure for Bioshield Technologies, Inc., a Georgia corporation (the "COMPANY"), and its shareholders the benefits arising from capital stock ownership by Directors of the Company who are expected to contribute to the Company's future growth and success.


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6. ADMINISTRATION
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8. (a) SHAREHOLDER CONTROL. The Plan is effective only upon adoption by the
------------------- shareholders and will remain in effect at the pleasure of the shareholders of the Company. The Shareholders reserve the right to terminate or modify the Plan at any time, although such modification or termination shall not affect any options granted prior to the time of such modification or termination.


9.


10. (b) ADMINISTRATION. The Plan shall be administered by the Board of
-------------- Directors of the Company or the Board may appoint a Plan committee (the "COMMITTEE") of one or more of its members to administer this Plan. The Committee shall have the authority, subject to the rights of the shareholders and other express provisions of the Plan, to construe the respective option agreements and the Plan, to prescribe, amend and rescind rules and regulations relating to the Plan, and to make all other determinations which, in the judgment of the Committee, are necessary or desirable for the administration of the Plan. The Committee may correct any defect, supply any omission, or reconcile any inconsistency in the Plan or in any option agreement in the manner and to the extent it shall be deemed expedient to carry the Plan into effect, and it shall be the sole and final judgment of such expediency.


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12. (c) INDEMNIFICATION. In addition to such other rights and indemnification
--------------- that they may have as Directors of the Company or as members of the Committee, the members of the Committee shall be indemnified by the Company against the reasonable expenses, including attorney's fees actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with the defense of any action, or appeal therefrom, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan or any option granted thereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment, except in relation to matters as to which it shall be adjudged in such action that such Committee member is liable for negligence or misconduct in the performance of his or her duties; provided that within 60 days after institution of any such action a Committee member shall in writing offer the Company the opportunity, at its own expense, to handle and defend the same.


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15. STOCK SUBJECT TO PLAN.
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17. Subject to adjustment as provided in Sections 9 and 10 hereof, the Company will reserve 1,000,000 shares of common stock of the Company for issuance under the Plan. If an option granted under the Plan shall expire or terminate for any reason without having been exercised in full, the unpurchased shares subject to such option shall again be available for subsequent option grants under the Plan. If the Company repurchases such shares which are issued pursuant to the Plan and repurchased by the Company from the grantee in accordance with the Stockholder Agreement entered into in connection with the exercise of the option, if any, the repurchase shares shall again be available for subsequent option grants under the Plan. Stock issuable upon exercise of an option granted under the Plan may be subject to such restrictions or transfer, repurchase rights, or other restrictions as shall be determined by the Committee.


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19. TERMS AND CONDITIONS OF DIRECTORS' OPTIONS.
------------------------------------------


20.


21. (a) INITIAL GRANT. Upon their initial election to the Board of Directors
------------- of the Company, each new Director shall receive an option to acquire 10,000 shares of common stock of the Company (the "INITIAL OPTION"), subject to the terms and conditions contained herein.


22.


23. (b) SUBSEQUENT OPTIONS. On each of the first, second, third and fourth
------------------ anniversary of a Director's initial election to the Board of Directors, the Director shall receive an additional option to acquire 5,000 shares of common stock of the Company (the "SUBSEQUENT OPTIONS"), subject to the terms and conditions contained herein.


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25. (c) OPTION PRICE. The purchase price per share of Common Stock (the
------------ "OPTION PRICE") for all options granted hereunder shall be the Fair Market Value of a share of Common Stock as of the date of the grant as determined herein; provided, however, that the first series of Initial Options granted to Directors on January 1, 1996 shall be set at an Option Price of $2.00 per share regardless of the Fair Market Value.


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27. (d) DETERMINATION OF FAIR MARKET VALUE. The Committee shall determine
---------------------------------- the Fair Market Value of the stock from all relevant available facts, which may (but need not) include opinions of independent experts as to the value and may take into account any recent sales and purchases of such stock to the extent they are represented.


28.


29. (e) PAYMENT OF PURCHASE PRICE. The Option Price shall be payable upon
------------------------- the exercise of the option in an amount equal to the number of shares being purchased times the per share Option Price. The Option Price shall be paid in cash or by check in United States currency; provided, however, the Committee may, in its discretion, provide that the exercise price of an option can also be paid by delivery to the Company of shares of stock of the Company already owned by the optionee having a fair market value (as determined pursuant to paragraph (c) of this section as of the date of transfer) equal in amount to the exercise price of the options being exercised, or by a combination of delivery of such stock and cash or check.


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31. (f) TERM OF OPTIONS. Each option granted hereunder shall be exercisable
--------------- immediately upon grant, and shall expire on the fifth anniversary following the day on which the option is granted. Notwithstanding the foregoing, in the event that any Director is no longer a member of the Board, whether the Director's termination is voluntary or involuntary by death or otherwise, all options granted to such Director shall expire 60 days following the last date on which the Director is a member of the Board of Directors. The option may be exercised at any time during such 60 day period by the Director, his or her executor or personal representative, but if not exercised in full, all options shall expire on the 60th day following the Director's last day as a member of the Board of Directors.


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33. (g) EXERCISE OF OPTIONS. Each option granted under the Plan shall be
------------------- exercisable either in full or in part at such time or times as the holder of the option may choose during the option period.


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36. METHOD OF EXERCISE; CLASSIFICATION OF SHARES ACQUIRED PURSUANT TO
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EXERCISE OF CERTAIN INCENTIVE STOCK OPTIONS.
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All options granted hereunder shall be exercised by written notice directed to the Treasurer of the Company (or such other person that the Committee may designate) at its principal place of business, accompanied by payment, make in accordance with the terms of paragraph (e) of Section 4 hereof, of the Option Price for the number of shares specified in the notice of exercise, and by any documents otherwise required. The Company shall make delivery of such shares within a reasonable period of time; provided, however,
-------- ------- that if any law or regulation required the Company to take any action (including, but not limited to, the filing of a registration statement under the Securities Act of 1933 and causing such registration statement to become effective) with respect to the shares specified in such notice before the issuance thereof, then the date of delivery of such shares shall be extended for the period necessary to take such action.


1. NONTRANSFERABILITY OF OPTIONS.
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2. No option granted under the Plan shall be assignable or transferable by the person to whom it is granted, either voluntarily or by operation of law, except by will or the laws of descent and distribution. During the life of the recipient, the option shall be exercisable only by such person or his guardian or legal representative.


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5. GENERAL RESTRICTIONS.
--------------------


2


(a) INVESTMENT REPRESENTATIONS. The Company may require any Director to
-------------------------- whom an option is granted, as a condition of exercising such option, to give written assurances in substance and form satisfactory to the Company to the effect that such person is acquiring the Stock subject to the option for his or her own account for investment and not with any present intention of selling or otherwise distributing the same, and to such other effects as the Company deems necessary or appropriate in order to comply with federal and applicable state securities laws.


(b) COMPLIANCE WITH SECURITIES LAWS. Each option shall be subject to the
------------------------------- requirement that, if at any time counsel to the Company shall determine that the listing, registration, or qualification of the shares subject to such option upon any securities exchange or under any state or federal law, or the consent to approval of any governmental or regulatory body, is necessary as a condition of, or in connection with, the issuance or purchase of shares thereunder, such option may not be accepted or exercised in whole or in part unless such listing, registration, qualification, consent, ...