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                                                                   EXHIBIT 10.24



                         RIBI IMMUNOCHEM RESEARCH, INC.
                             1996 STOCK OPTION PLAN


                               SECTION 1: PURPOSE

          The purpose of the Ribi ImmunoChem Research, Inc. 1996 Stock Option
Plan (the "Plan") is to further the growth and development of Ribi ImmunoChem
Research, Inc. (the "Company") by affording an opportunity for stock ownership
to selected employees, Directors and consultants of the Company and its
Subsidiaries who are responsible for the conduct and management of its business
or who are involved in endeavors significant to its success.

                             SECTION 2: DEFINITIONS

          Unless otherwise indicated, the following words when used herein shall
have the following meanings:

          (a)  "Board of Directors" shall mean the Board of Directors of the
               Company.

          (b)  "Code" shall mean the Internal Revenue Code of 1986, as amended
               from time to time.

          (c)  "Common Stock" shall mean the Company's common stock (par value
               $.001 per share) and any share or shares of the Company's stock
               hereafter issued or issuable in substitution for such shares.

          (d)  "Disability" shall mean a person's inability to engage in any
               substantial gainful activity by reason of any medically
               determinable physical or mental impairment which can be expected
               to result in death or which has lasted or can be expected to last
               for a continuous period of not less than 12 months.

          (e) "Director" shall mean a member of the Board of Directors.

          (f)  "Incentive Stock Option" shall mean any option granted to an
               eligible employee under the Plan, which the Company intends at
               the time the option is granted to be an Incentive Stock Option
               within the meaning of Section 422 of the Code.

          (g)  "Nonqualified Stock Option" shall mean any option granted to an
               eligible employee, Non-Employee Director or consultant under the
               Plan which is not an Incentive Stock Option.

          (h)  "Non-Employee Director" shall mean any Director who is not an
               employee of the Company.

          (i)  "Option" shall mean and refer collectively to Incentive Stock
               Options and Nonqualified Stock Options.

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          (j)  "Optionee" shall mean any employee, Non-Employee Director or
               consultant who is granted an option under the Plan. "Optionee"
               shall also mean the personal representative of an Optionee and
               any other person who acquires the right to exercise an Option by
               bequest or inheritance.

          (k)  "Stock Appreciation Right" shall mean a right to surrender to the
               Company all or a portion of an Option, to the extent the Option
               is then exercisable, and to receive in exchange a payment as
               provided in Section 11.

          (l)  "Subsidiary" shall mean a subsidiary corporation of the Company
               as defined in Section 424(f) of the Code.

                            SECTION 3: EFFECTIVE DATE

          The effective date of the Plan is February 11, 1996; provided,
however, that such adoption is subject to approval and ratification by the
stockholders of the Company within 12 months of the effective date. No Options
may be granted under the Plan prior to approval of the Plan by the stockholders
of the Company.

                            SECTION 4: ADMINISTRATION

          4.1 ADMINISTRATIVE COMMITTEE. The Plan shall be administered by the
Board of Directors of the Company (the "Board"). Subject to Subsection 4.3
below, the Board may delegate the responsibility for administering the Plan to a
committee, under such terms and conditions as the Board shall determine (the
"Committee"). The Committee shall consist of two or more members of the Board or
such lesser number of members of the Board as permitted by Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended ("Rule 16b-
3"). Except as permitted by Rule 16b-3, none of the members of the Committee
shall receive, while serving on the Committee, or during the one-year period
preceding appointment to the Committee, a grant or award of equity securities
under (a) the Plan or (b) any other plan of the Company or its affiliates under
which the participants are entitled to acquire Common Stock, Options, related
rights or Stock Appreciation Rights of the Company or any of its Subsidiaries,
other than pursuant to the grant of Options provided in Subsection 7.8 below,
and pursuant to transactions in any such other plan which do not disqualify a
Director from being a disinterested person under Rule 16b-3. The limitations set
forth in this Subsection 4.1 shall automatically incorporate any additional
requirements that may in the future be necessary for the Plan to comply with
Rule 16b-3. Members of the Committee shall serve at the pleasure of the Board.
If the Board does not delegate administration of the Plan to the Committee, then
each reference in this Plan to "the Committee" shall be construed to refer to
the Board.

          4.2 COMMITTEE MEETINGS AND ACTIONS. The Committee shall hold meetings
at such times and places as it may determine and shall select one of its members
as chairman. A majority of the members of the Committee shall constitute a



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quorum, and the acts of the majority of the members present at a meeting or a
consent in writing signed by all members of the Committee shall be the acts of
the Committee and shall be final, binding and conclusive upon all persons,
including the Company, its Subsidiaries, its stockholders, and all persons
having any interest in Options which may be or have been granted pursuant to the
Plan.

          4.3 POWERS OF COMMITTEE. Except for Options granted to Non-Employee
Directors pursuant to Subsection 7.8, the Committee shall have the full and
exclusive right to grant and determine terms and conditions of all Options
granted under the Plan and to prescribe, amend and rescind rules and regulations
for administration of the Plan. In granting Options, the Committee shall take
into consideration the contribution the Optionee has made or may make to the
success of the Company or its Subsidiaries and such other factors as the
Committee shall determine. Except for Options granted to Non-Employee Directors
pursuant to Subsection 7.8, the Committee may amend the terms of any outstanding
Option granted under this Plan, but any amendment which would adversely affect
the Optionee's rights under an outstanding Option shall not be made without the
Optionee's written consent. The Committee may, with the Optionee's written
consent, cancel any outstanding Option or accept any outstanding Option in
exchange for a new Option.

          4.4 INTERPRETATION OF PLAN. The determination of the Committee as to
any disputed question arising under the Plan, including questions of
construction and interpretation, shall be final, binding and conclusive upon all
persons, including the Company, its Subsidiaries, its stockholders and all
persons having any interest in Options which may be or have been granted
pursuant to the Plan.

                      SECTION 5: STOCK SUBJECT TO THE PLAN

          5.1 NUMBER. The aggregate number of shares of Common Stock which may
be issued under Options granted pursuant to the Plan shall not exceed 900,000
shares. Such shares may consist, in whole or in part, of authorized but unissued
stock or treasury stock of the Company not reserved for any other purpose.

          5.2 UNUSED STOCK. If any outstanding Option under the Plan expires or
for any other reason ceases to be exercisable, in whole or in part, other than
upon exercise of the Option or a related Stock Appreciation Right, the shares
which were subject to such Option and as to which the Option had not been
exercised shall continue to be available under the Plan.

          5.3 ADJUSTMENT FOR CHANGE IN OUTSTANDING SHARES. If there is any
change, increase or decrease, in the outstanding shares of Common Stock which is
effected without receipt of additional consideration by the Company, by reason
of a stock dividend (in excess of 2 percent), re-incorporation, reorganization,
recapitalization, merger, consolidation, stock split, combination or exchange of
stock, or other similar change in the capital structure of the Company, then in
each such event, the Committee shall make an appropriate adjustment in the
aggregate number of shares of stock available under the Plan, the number of
shares of stock subject to each outstanding Option and the option prices in



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order to preserve but not to increase the benefits to an Optionee; provided,
however, that fractional shares shall be rounded to the nearest whole share. The
Committee's determinations in making adjustments shall be final and conclusive.

                             SECTION 6: ELIGIBILITY

          All full- or part-time salaried employees of the Company and its
Subsidiaries who are responsible for the conduct and management of its business
or who are involved in endeavors significant to its success shall be eligible to
receive both Incentive Stock Options and Nonqualified Stock Options under the
Plan. Consultants who are neither full- nor part-time salaried employees of the
Company or its Subsidiaries but who are involved in endeavors significant to its
success shall be eligible to receive Nonqualified Stock Options, but not
Incentive Stock Options, under the Plan. Other than below-market Options granted
to Non-Employee Directors in lieu of part or all of his or her Director fees in
accordance with Subsection 7.8, Non-Employee Directors shall not be eligible to
receive grants under the Plan.

                           SECTION 7: GRANT OF OPTIONS

          7.1 GRANT OF OPTIONS. Except for Options granted pursuant to
Subsection 7.8, the Committee may from time to time in its discretion determine
which of the eligible employees of the Company or its Subsidiaries should
receive Options, the type of Options to be granted (whether Incentive Stock
Options or Nonqualified Stock Options), the number of shares subject to such
Options, and the dates on which such Options are to be granted. In the case of
Incentive Stock Options, the aggregate fair market value (determined as of the
time such option is granted) of the Common Stock with respect to which Incentive
Stock Options are exercisable for the first time by an eligible employee in any
calendar year (under this Plan and any other plans of the Company or its
Affiliates) shall not exceed $100,000. If the aggregate fair market value of
stock with respect to which Incentive Stock Options are exercisable by an
Optionee for the first time during any calendar year exceeds $100,000, such
Options shall be treated as Nonqualified Stock Options to the extent required by
Section 422 of the Code. The rule set forth in the preceding sentence shall be
applied by taking Options into account in the order in which they were granted.

          7.2 OPTION AGREEMENT. Except for grants to Non-Employee Directors
pursuant to Subsection 7.8, which shall be granted on the form of Option
Agreement attached hereto as Exhibit A, the Option Agreement may contain such
other terms, provisions and conditions as may be determined by the Committee not
inconsistent with this Plan. If an Option, or any part thereof is intended to
qualify as an Incentive Stock Option, the Option Agreement shall contain those
terms and conditions which are necessary to so qualify it.

          7.3 OPTION PRICE. Except as provided for in Subsection 7.8 below, the
option price per share of Common Stock under each Option shall be determined by
the Committee and stated in the Option Agreement. Except as provided for in
Subsection 7.8 below, the option price for Options granted under the Plan shall
not be less than 100% of the fair market value (determined as of the day the
Option is granted) of the shares subject to the Option.



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          7.4 DETERMINATION OF FAIR MARKET VALUE. If the Common Stock is listed
upon an established stock exchange or exchanges, then the fair market value per
share shall be deemed to be the mean between the highest and lowest quoted
selling prices of the Common Stock on such stock exchange or exchanges on the
day for which the determination is made, or if no sale of the Common Stock shall
have been made on any stock exchange on that day, on the next preceding day on
which there was such a sale. If the Common Stock is not listed upon an
established stock exchange but is traded in the national over-the-counter
market, the fair market value per share shall be deemed to be the closing price
of the Common Stock in the national over-the-counter market on the day for which
the determination is made, or if there shall have been no trading of the Common
Stock on that day, on the next preceding day on which there was such trading. If
the Common Stock is not listed upon an established stock exchange and is not
traded in the national over-the-counter market, the fair market value per share
shall be deemed to be an amount as determined by the Committee by applying any
reasonable valuation method.

          7.5 DURATION OF OPTIONS. Each Option shall be of a duration as
specified in the Option Agreement; provided, however, that the term of each
Option shall be no more than ten years from the date on which the Option is
granted and shall be subject to early termination as provided herein.

          7.6 ADDITIONAL LIMITATIONS ON GRANT. No Incentive Stock Option shall
be granted to an employee who, at the time the Incentive Stock Option is
granted, owns stock (as determined in accordance with Section 424(d) of the
Code) representing more than 10% of the total combined voting power of all
classes of stock of the Company, unless the option price of such Incentive Stock
Option is at least 110% of the fair market value (determined as of the day the
Incentive Stock Option is granted) of the stock subject to the Incentive Stock
Option and the Incentive Stock Option by its terms is not exercisable more than
five years from the date it is granted.

          7.7 OTHER TERMS AND CONDITIONS. Except for Options granted pursuant to
Subsection 7.8, Options may contain such other provisions, which shall not be
inconsistent with the Plan, as the Committee shall deem appropriate, including,
without limitation, provisions that relate the Optionee's ability to exercise an
Option to the passage of time or the achievement of specific goals established
by the Committee.

          7.8 NON-EMPLOYEE DIRECTOR OPTIONS. Each Non-Employee Director may
elect to receive below-market, Nonqualified Stock Options to purchase Common
Stock of the Company in lieu of part or all of his or her Director fees. Such
election must be made by June 30 of each year prior to the year services are
provided. Such Options shall have an exercise price of eighty percent (80%) of
the fair market value of the Common Stock on the grant date. The number of
Options to be granted shall be determined by dividing the amount of the
Director's fees (that the Director irrevocably elected to take in the form of
below-market Options instead of cash) by the fair market value of a share of
Common Stock on the date of the grant after subtracting the discounted option
exercise price from such fair market value. These Options shall be granted at



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the end of each calendar quarter and shall be fully vested as of the date of
grant; provided, however, said Options may not be exercised prior to six (6)
months after the date of grant. The term of these Options shall be for ten
years, and they shall not be transferable otherwise than by will or the laws of
descent and distribution and may only be exercised by the Director, his or her
guardian or legal representative during the exercise period as defined elsewhere
herein, except as provided in the Option Agreement attached hereto as Exhibit A.

                         SECTION 8: EXERCISE OF OPTIONS

          8.1 MANNER OF EXERCISE. Subject to the limitations and conditions of
the Plan or the Option Agreement, an Option shall be exercisable, in whole or in
part, from time to time, by giving written notice of exercise to the President
of the Company or the President's designee, which notice shall specify the
number of shares of Common Stock to be purchased and shall be accompanied by
payment in full to the Company of the purchase price of the shares to be
purchased. Payment of the purchase price upon exercise of any Option granted
under this Plan shall be made in cash, by Optionee's personal check, a certified
check, bank draft, or postal or express money order payable to the order of the
Company in lawful money of the United States (collectively, "Cash
Consideration'); provided, however, that, except for Options granted under
Subsection 7.8, the Committee, in its sole discretion, may permit an Optionee to
pay the option price in whole or in part (a) with shares of Common Stock owned
by the Optionee; (b) by delivery on a form prescribed by the Committee of an
irrevocable direction to a securities broker approved by the Committee to sell
shares of Common Stock and deliver all or a portion of the proceeds to the
Company in payment for the Common Stock; or (c) in any combination of the
foregoing. The exercise price of any Options granted under Subsection 7.8 shall
be paid in Cash Consideration, the consideration specified in clauses (a) or (b)
of the preceding sentence, or in any combination thereof. Any Common Stock used
to exercise Options shall be valued at its fair market value on the date of the
exercise of the Option.

          8.2 WITHHOLDING TAXES. No Common Stock shall be delivered under the
Plan to any participant until the participant has made arrangements acceptable
to the Committee for the satisfaction of federal, state, and local income and
social security tax withholding obligations, including, without limitation,
obligations incident to the receipt of Common Stock under the Plan or to the
failure to satisfy the conditions for treatment as Incentive Stock Options under
applicable tax law. Upon exercise of an Option, the Company may withhold from
the Optionee an amount sufficient to satisfy federal, state and local income and
social security tax withholding obligations.

          8.3 ACCELERATION OF EXERCISE PERIOD. Notwithstanding any vesting
requirements contained in any Option Agreement, all outstanding Options shall
become immediately exercisable (a) following the first purchase of Common Stock
pursuant to a tender offer or exchange offer (other than an offer made by the
Company) for all or part of the Common Stock, (b) at such time as a third
person, including a "group" as defined in Section 13(d)(3) of the Securities
Exchange Act of 1934, becomes the beneficial owner of shares of the Company
having 25% or more of the total number of votes that may be cast for the



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election of Directors of the Company, (c) on the date on which the stockholders
of the Company approve (i) any agreement for a merger or consolidation in which
the Company will not survive as an independent, publicly owned corporation or
(ii) any sale, exchange or other disposition of all or substantially all of the
Company's assets, or (d) on any date on which the persons who were the Directors
of the Company 90 days prior to such date no longer constitute a majority of the
Board of Directors of the Company or any successor to the Company. The
Committee's reasonable determination as to whether such an event has occurred
shall be final and conclusive.

                      SECTION 9: TERMINATION OF EMPLOYMENT

          9.1 TERMINATION UPON RETIREMENT OR WITH COMMITTEE APPROVAL. Upon
termination of an Optionee's employment with the Company or a Subsidiary upon
retirement at or after age 65 or under circumstances for which the Committee,
either before or after the termination, has given its approval, and other than
upon death or Disability, an Optionee may, at any time within three months after
the date of termination but not later than the date of expiration of the Option,
exercise the Option or Stock Appreciation Right to the extent the Optionee was
entitled to do so on the date of termination. Any Options not exercisable as of
the date of termination and any Options or portions of Options of terminated
employees not exercised as provided herein shall terminate.

          9.2 TERMINATION BY DEATH OF OPTIONEE. If an Optionee dies while in the
employ of the Company or a Subsidiary or within a period of three months after
the termination upon retirement pursuant to Subsection 9.1 above of his
employment with the Company or a Subsidiary, the personal representatives of the
Optionee's estate or the person or persons who shall have acquired the Option
from the Optionee by bequest or inheritance may exercise the Option or Stock
Appreciation Right at any time within the year after the date of death but not
later than the expiration date of the Option, to the extent the Optionee was
entitled to do so on the date of death. Any Options not exercisable as of the
date of death and any Options or portions of Options of deceased employees not
exercised as provided herein shall terminate.

          9.3 TERMINATION BY DISABILITY OF OPTIONEE. Upon termination of an
Optionee's employment with the Company or a Subsidiary by reason of the
Optionee's Disability, the Optionee may exercise the Option or Stock
Appreciation Right at any time within one year after the date of termination but
not later than the expiration date of the Option, to the extent the Optionee was
entitled to do so on the date of termination. Any Options not exercisable as of
the date of termination under this Subsection 9.3 and any Options or portions of
Options of disabled employees not exercised as provided herein shall terminate.

          9.4 OTHER TERMINATIONS. Upon termination of an Optionee's employment
with the Company or a Subsidiary under circumstances other than those set forth
in Subsections 9.1 through 9.3, Options granted to the Optionee shall terminate
immediately.

          9.5 TERMINATION OF DIRECTORS AND CONSULTANTS. For purposes of this
Section 9, a termination of employment shall be deemed to include the



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termination of a Director's service as a member of the Board of Directors and
the termination of a consulting arrangement in the case of consultants. The
effect of the termination of a Non-Employee Director's service as a member of
the Board of Directors on the exercisability of Options granted pursuant to
Subsection 7.8 shall be determined in accordance with the terms of the Option
Agreement evidencing such Options, attached hereto as Exhibit A.

                     SECTION 10:  NON-TRANSFERABILITY OF OPTION

          To the extent required by Rule 16b-3, no Option granted pursuant to
this Plan shall be transferable by the holder except by operation of law or by
will or the laws of descent and distribution; provided, that, if Rule 16b-3 is
amended after the date of the Board's adoption of the Plan to permit broader
transferability of Options under that Rule, (a) Options granted under Subsection
7.8 to Non-Employee Directors shall be transferable to the fullest extent
permitted by Rule 16b-3 as so amended, (b) any other Option shall be
transferable to the extent provided in the Option Agreement covering the Option,
and the Committee shall have discretion to amend any such outstanding Option to
provide for broader transferability of the Option as the Committee may authorize
within the limitations of Rule 16b-3. Notwithstanding the foregoing, if required
by the Code, each Incentive Stock Option under the Plan shall be transferable by
the Optionee only by will or the laws of descent and distribution, and, during
the Optionee's lifetime, shall be exercisable only by the Optionee. In the event
of any Rule 16b-3 permitted transfer of an Option hereunder, the transferee
shall be entitled to exercise the Option in the same manner and only to the same
extent as the Optionee (or his personal representative or the person who would
have acquired the right to exercise the Option by bequest or intestate
succession) would have been entitled to exercise the Option had the Option not
been transferred.

                      SECTION 11: STOCK APPRECIATION RIGHTS

          Except for Options granted pursuant to Subsection 7.8, any Option
under the Plan may include a right (the "Stock Appreciation Right") to surrender
to the Company all or a portion of the Option, to the extent the Option is then
exercisable, and to receive in exchange a payment equal to the excess of the
fair market value on the date preceding the date of surrender of the shares
covered by the Option (or the portion that is surrendered) over the aggregate
option price of such shares. Such payment shall be made by the Company in shares
of Common Stock, in cash or partly in Common Stock and partly in cash, as the
Committee in its sole discretion shall determine, whether before or after
exercise of the Stock Appreciation Right. A Stock Appreciation Right may be
granted by the Committee concurrently with the grant of the Option or thereafter
by amendment to the Option. A Stock Appreciation Right may contain such terms
and conditions, which shall not be inconsistent with the Plan, as the Committee
shall deem appropriate, including, without limitation, a provision that limits
the amount which may be paid in satisfaction of a Stock Appreciation Right to
some multiple of the option exercise price of the underlying Option or a
provision which limits the times at which a Stock Appreciation Right may be
exercised. Shares subject to Options (or such portion of an Option that has been
surrendered upon exercise of a Stock Appreciation Right) shall not thereafter be



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available for Option grants under the Plan.

                         SECTION 12: ISSUANCE OF SHARES

          12.1 TRANSFER OF SHARES TO OPTIONEE. As soon as practicable after the
Optionee has given the Company written notice of exercise of an Option or Stock
Appreciation Right and, upon exercise of an Option, has otherwise met the
requirements of Subsections 8.1 and 8.2, the Company shall issue or transfer to
the Optionee the number of shares of Common Stock as to which the Option has
been exercised or with respect to which the Stock Appreciation Right will be
paid and shall deliver to the Optionee a certificate or certificates therefor,
registered in Optionee's name. In no event shall the Company be required to
transfer fractional shares to the Optionee, and in lieu thereof, the Company may
pay an amount in cash equal to the fair market value of such fractional shares
on the date of exercise. If the issuance or transfer of shares by the Company
would for any reason, in the opinion of counsel for the Company, violate any
applicable federal or state laws or regulations, the Company may delay issuance
or transfer of such shares to the Optionee until compliance with such laws can
reasonably be obtained.

          12.2 INVESTMENT REPRESENTATION. Upon demand by the Company, the
Optionee shall deliver to the Company a representation in writing that the
purchase of all shares with respect to which notice of exercise of the Option or
Stock Appreciation Right has been given by Optionee is being made for investment
only and not for resale or with a view to distribution, and containing such
other representations and provisions with respect thereto as the Company may
require. Upon such demand, delivery of such representation promptly and prior to
the transfer or delivery of any such shares and prior to the expiration of the
Option period shall be a condition precedent to the right to purchase such
shares.

                             SECTION 13: AMENDMENTS

          The Board of Directors may at any time and from time to time alter,
amend, suspend or terminate the Plan or any part thereof as it may deem proper,
except that no such action shall diminish or impair the rights under an Option
previously granted; provided, however, that unless the stockholders of the
Company shall have given their approval, the total number of shares for which
Options may be issued under the Plan shall not be increased, except as

provided in Subsection 5.3, and no amendment shall be made which reduces the
price at which the Common Stock may be offered under the Plan below the minimum
required by Subsection 7.3, except as provided in Subsection 5.3, or which
materially modifies the requirements as to eligibility for participation in the
Plan. Notwithstanding the foregoing provisions of this Section 13, the
provisions set forth in Subsection 7.8 of the Plan (and any other sections of
the Plan that affect the terms of Options granted to Non-Employee Directors
required to be specified in the Plan by Rule 16b-3) shall not be amended
periodically and in no event more than once every six months, other than to
comport with changes to the Code, the Employee Retirement Income Security Act of
1974, as amended, or any applicable rules and regulations thereunder.



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                            SECTION 14: TERM OF PLAN

          This Plan shall terminate at midnight on February 11, 2006; provided,
however, that the Board of Directors may at any time prior thereto suspend or
terminate the Plan.

                        SECTION 15: RIGHTS AS STOCKHOLDER

          An Optionee shall have no rights as a stockholder of the Company with
respect to any shares of Common Stock covered by an Option until the date of the
issuance of the stock certificate for such shares.

                        SECTION 16: RULE 16B-3 COMPLIANCE

          Transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the Exchange Act. To the extent
any provision of the Plan or action by the Board or the Committee fails to so
comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Board or the Committee. Moreover, in the event the Plan
does not include a provision required by Rule 16b-3 to be stated therein in
order to qualify the grants under Subsection 7.8 hereof as grants under a non-
discretionary formula under Rule 16b-3 such provision (other than one relating
to eligibility requirements, or the price and amount of awards) shall be deemed
automatically to be incorporated by reference into the Plan with respect to
grants of Options to Non-Employee Directors.

                            SECTION 17: GOVERNING LAW

          Options granted under this Plan shall be construed and shall take
effect in accordance with the law of the State of Montana, except to the extent
it is superseded by the laws of the United States.



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                            EXHIBIT A (of Appendix A)

                         RIBI IMMUNOCHEM RESEARCH, INC.
                 DIRECTORS' NON-QUALIFIED STOCK OPTION AGREEMENT


          This agreement (the "Agreement") is made as of _____________, 199__
(the "Grant Date") between Ribi ImmunoChem Research, Inc. (the "Company") and
_________________ ("Optionee").

                                  WITNESSETH:

          WHEREAS, the Company has adopted the Ribi ImmunoChem Research, Inc.
1996 Stock Option Plan (the "Plan"), which Plan is incorporated in this
Agreement by reference and made a part of it (capitalized terms shall have the
meaning ascribed to them in the Plan);

          WHEREAS, the Plan provides for option grants to Non-Employee Directors
of the Company;

          NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth, the parties to this Agreement hereby agree as follows:


          1. OPTION GRANT. The Company hereby grants to Optionee the right and
option to purchase from the Company on the terms and conditions hereinafter set
forth, all or any part of an aggregate of _________ Thousand (___________)
shares of the Common Stock, $.001 par value, of the Company (the "Stock"). The
exercise price of the Stock subject to this option shall be $_______ per share,
which price is 80% of the per share fair market value as of the Grant Date.

          2. OPTION PERIOD. This option shall be exercisable only during the
Option Period, and during such Option Period, the exercisability of the option
shall be subject to the limitations of paragraph 3 and the vesting provisions of
paragraph 4. The Option Period shall commence on the Grant Date and, except as
provided in paragraph 3, shall end on the Terminal Date which shall be ten years
from the Grant Date.

          3. LIMITS ON OPTION PERIOD. The Option Period may end before the
Terminal Date, as follows:

               (a) If Optionee ceases to be a Director on the Company's Board of
Directors (the "Board") for any reason other than cause, disability (within the
meaning of subparagraph (c) below) or death during the Option Period, the Option
Period shall terminate three months after the date Optionee ceases to be a
Director or on the Terminal Date, whichever shall first occur, and the option
shall be exercisable only to the extent exercisable under paragraph 4 on the
date Optionee ceases to be a Director.

               (b) If Optionee dies while serving on the Board, the Option
Period shall end one year after the date of death or on the Terminal Date,



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whichever shall first occur, and Optionee's executor or administrator or the
person or persons to whom Optionee's rights under this option shall pass by will
or by the applicable laws of descent and distribution may exercise this option
only to the extent exercisable under paragraph 4 on the date of Optionee's
death.

               (c) If Optionee ceases to be a Director by reason of disability,
as defined below, the Option Period shall end one year after the date Optionee
ceases to be a Director or on the Terminal Date, whichever shall first occur,
and this option shall be exercisable only to the extent exercisable under
paragraph 4 on the date Optionee ceases to be a Director. For purposes of this
subparagraph (c), an individual is permanently and totally disabled if he is
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period of
not less than 12 months. An individual shall not be considered to be permanently
and totally disabled unless he or she furnishes proof of the existence thereof
in such form and manner, and at such times, as the Board may require.

               (d) If Optionee is removed from the Board for cause during the
Option Period, the Option Period shall terminate on the date of such Optionee's
removal as a Director and shall not thereafter be exercisable to any extent.

          4. VESTING OF RIGHT TO EXERCISE OPTIONS. This option is fully vested;
provided, however, said option may not be exercised prior to six (6) months
following the Grant Date. No partial exercise of this option may be for less
than five percent (5%) of the total number of shares then available under this
option to purchase shares of Stock. In no event shall the Company be required to
issue fractional shares. Notwithstanding the foregoing, all options granted
under this Agreement shall be subject to the provisions of Subsection 8.3 of the
Plan (relating to the acceleration of vesting upon the occurrence of certain
events).

          5. METHOD OF EXERCISE. Optionee may exercise the option with respect
to all or any part of the shares of Stock then subject to such exercise as
follows:

               (a) By giving the President of the Company or the President's
designee written notice of such exercise, specifying the number of such shares
as to which this option is exercised. Such notice shall be accompanied by an
amount equal to the exercise price of such shares, in the form of any one or
combination of the following: (1) Cash Consideration; or (2) by delivery on a
form prescribed by the Committee of an irrevocable direction to a securities
broker approved by the Committee to sell shares of Stock and deliver all or a
portion of the proceeds to the Company in payment for the Stock.

               (b) If required by the Company, Optionee shall give the Company
satisfactory assurance in writing, signed by Optionee or Optionee's legal
representative, as the case may be, that such shares are being purchased for
investment and not with a view to the distribution thereof, provided that such
assurance shall be deemed inapplicable to (1) any sale of such shares by such



                                     - 12 -
<PAGE>   13

Optionee made in accordance with the terms of a registration statement covering
such sale, which has heretofore been (or may hereafter be) filed and become
effective under the Securities Act of 1933, as amended, and with respect to
which no stop order suspending the effectiveness thereof has been issued, and
(2) any other sale of such shares with respect to which, in the opinion of
counsel for the Company, such assurance is not required to be given in order to
comply with the provisions of the Securities Act of 1933, as amended.

               (c) As soon as practicable after receipt of the notice required
in paragraph 5(a) and satisfaction of the conditions set forth in paragraph
5(b), the Company shall, without transfer or issue tax and without other
incidental expense to Optionee, deliver to Optionee at the office of the
Company, at 553 Old Corvallis Road, Hamilton, Montana 59840, attention of the
Corporate Secretary, or such other place as may be mutually acceptable to the
Company and Optionee, a certificate or certificates of such shares of Stock;
provided, however, that the time of such delivery may be postponed by the
Company for such period as may be required for it with reasonable diligence to
comply with applicable registration requirements under the Securities Act of
1933, as amended, the Securities Exchange Act of 1934, as amended, any
applicable listing requirements of any national securities exchange, and
requirements under any other law or regulation applicable to the issuance or
transfer of such shares. If Optionee fails to accept delivery of and pay for all
or any part of the number of shares specified in such notice upon tender or
delivery thereof, Optionee's right to purchase such shares may be terminated by
the Company at its election.

          6. CHANGES IN CAPITALIZATION. If there should be any change in a class
of Stock subject to this option, through merger, consolidation, reorganization,
recapitalization, re-incorporation, stock split, stock dividend (in excess of 2
percent) or other change in the capital structure of the Company, the Company
shall make appropriate adjustments in order to preserve, but not to increase,
the benefits to Optionee, including adjustments of the number and kind of shares
of such Stock subject to this option and of the price per share. Any adjustment
made pursuant to this paragraph 6 as a consequence of a change in the capital
structure of the Company shall not entitle Optionee to acquire a number of
shares of such Stock of the Company or shares of stock of any successor company
greater than the number of shares Optionee would receive if, prior to such
change, Optionee had actually held a number of shares of such Stock equal to the
number of shares subject to this option.

          7. LIMITATIONS ON TRANSFER. To the extent required by Rule 16b-3 of
the Exchange Act, no Option shall be transferable by an Optionee other than by
operation of law or by will or by the laws of descent or distribution; provided
that, if Rule 16b-3 is amended after the Board's adoption of the Plan to permit
greater transferability of an Option, the Option hereunder shall be transferable
to the fullest extent provided by Rule 16b-3 as so amended. In the event of any
Rule 16b-3 permitted transfer of the Option, the transferee shall be entitled to
exercise the Option in the same manner and only to the same extent as the
Optionee (or his personal representative or the person who would have acquired



                                     - 13 -
<PAGE>   14

the right to exercise the Option by bequest or intestate succession) would have
been entitled to exercise the Option had the Option not been transferred.

          8. NO STOCKHOLDER RIGHTS. Neither Optionee nor any person entitled to
exercise Optionee's rights in the event of Optionee's death shall have any of
the rights of a stockholder with respect to the shares of Stock subject to this
option except to the extent the certificates for such shares shall have been
issued upon the exercise of this option.

          9. NOTICE. Any notice required to be given under the terms of this
Agreement shall be addressed to the Company in care of its President at the
office of the Company at 553 Old Corvallis Road, Hamilton, Montana 59840, and
any notice to be given to Optionee shall be addressed to Optionee at the address
given by Optionee beneath Optionee's signature to this Agreement, or such other
address as either party to this Agreement may hereafter designate in writing to
the other. Any such notice shall be deemed to have been duly given when enclosed
in a properly sealed envelope addressed as aforesaid, registered or certified
and deposited (postage and registration or certification fee prepaid) in a post
office or branch post office regularly maintained by the United States.

          10. SUCCESSORS. This Agreement shall be binding upon and inure to the
benefit of any successor or successors of the Company. Where the context
permits, "Optionee" as used in this Agreement shall include Optionee's executor,
administrator or other legal representative or the person or persons to whom
Optionee's rights pass by will or the applicable laws of descent and
distribution.

          11. WITHHOLDING. Optionee agrees to make appropriate arrangements with
the Company for satisfaction of any applicable federal, state or local income
tax withholding requirements or social security requirements.

          12. APPLICABLE LAW. The interpretation, performance, and enforcement
of this Agreement shall be governed by the laws of the State of Montana.

          IN WITNESS WHEREOF, this Agreement has been executed as of the day and
year first written above.

                                        Ribi ImmunoChem Research, Inc.,
                                        a Delaware corporation

                                        By_________________________________

                                        ___________________________________

                                        __________________________,Optionee

                                        Address:



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