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                                                                    Exhibit 10.E


                                   ZILA, INC.

                          1997 STOCK OPTION AWARD PLAN


      1.    DEFINITIONS.

      The following definitions shall be applicable throughout the Plan:

            (a) "Board" means the Board of Directors of the Company.

            (b) "Certificate of Incorporation" means the Company's Certificate
      of Incorporation, as amended or restated from time to time.

            (c) "Code" means the Internal Revenue Code of 1986, as amended from
      time to time. Reference in the Plan to any Section of the Code shall be
      deemed to include any amendments or successor provisions to such Section
      and any rules or regulations under such Section.

            (d) "Committee" means the committee appointed by the Board to
      administer the Plan as referred to in Section 4.

            (e) "Commission" means the Securities and Exchange Commission or any
      successor agency.

            (f) "Company" means Zila, Inc., a Delaware corporation.

            (g) "Date of Grant" means the date on which the granting of an
      Option is authorized by the Board or such later date as may be specified
      by the Board in such authorization as referred to in Section 7.

            (h) "Eligible Employee" means any person regularly employed by the
      Company or a Subsidiary on a full-time salaried basis who satisfies all of
      the requirements of Section 6.

            (i) "Exchange Act" means the Securities Exchange Act of 1934, as
      amended from time to time, and the rules and regulations promulgated
      thereunder.

            (j) "Fair Market Value" shall mean, with respect to the date a given
      Option is granted or exercised, the value determined by the Board in good
      faith using a generally accepted valuation method and, in the case of
      Incentive Stock Options, determined in accordance with applicable Treasury
      regulations; provided, however, that where there is a public market for
      the Stock, the Fair Market Value per Share shall be the mean of the final
      bid and asked prices of the Stock on the date of grant, as reported in The
      Wall Street Journal (or, if not so reported, as otherwise reported
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      by the National Association of Securities Dealers Automated Quotation
      System) or, in the event the Stock is listed on a stock exchange, the Fair
      Market Value per Share shall be the closing price on such exchange on the
      date of grant of the Option, as reported in the Wall Street Journal.

            (k) "Holder" means an employee of the Company or a Subsidiary who
      has been granted an Option.

            (l) "Incentive Stock Option" means any Option intended to be and
      designated as an "incentive stock option" within the meaning of Section
      422 of the Code.

            (m) "Non-Employee Director" means a member of the Board who
      qualifies as a "Non-employee Director" as defined in Rule 16b-3, as
      promulgated by the Commission under the Exchange Act or any successor
      definition adopted by the Commission.

            (n) "Non-Qualified Options" means an Option which is not an
      Incentive Stock Option

            (o) "Normal Termination" means termination at retirement pursuant to
      the Company or Subsidiary retirement plan then in effect.

            (p) "Option" means an award granted under Section 6 of the Plan and
      includes both Non-Qualified Options and Incentive Stock Options.

            (q) "Plan" means the Zila, Inc. 1996 Stock Option Award Plan.

            (r) "Securities Act" means the Securities Act of 1933, as amended
      from time to time, and the rules and regulations promulgated thereunder.

            (s) "Share" means a share of Stock.

            (t) "Stock" means common stock of the Company as described in the
      Certificate of Incorporation.

            (u) "Subsidiary" means "subsidiary corporation" as defined in
      Section 424(f) of the Code.

            (v) "Termination" means separation from employment with the Company
      or any of its Subsidiaries for any reason except due to death.

            (w) "Treasury" means the Department of the Treasury of the United
      States of America.


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      2.    PURPOSE.

      The purpose of the Plan is to provide a means through which the Company
and its Subsidiaries may attract able persons to enter the employ of the Company
or its Subsidiaries and to provide a means whereby employees upon whom the
responsibilities of the successful administration and management of the Company
and its Subsidiaries rest, and whose present and potential contributions to the
welfare of the Company and its Subsidiaries are of importance, can acquire and
maintain stock ownership, thereby strengthening their commitment to the welfare
of the Company and its Subsidiaries and their desire to remain in its employ. A
further purpose of the Plan is to provide such employees with additional
incentive and reward opportunities designed to enhance the profitable growth of
the Company. So that the appropriate incentive can be provided, the Plan
provides for granting Non-Qualified Options and Incentive Stock Options, or any
combination of the foregoing.

      3.    EFFECTIVE DATE, DURATION, SCOPE AND STOCKHOLDER APPROVAL.

      The Plan is effective as of February 5, 1997. The grant of any Incentive
Stock Options under the Plan is effective only upon the approval of the Plan by
the stockholders. Options may be granted as provided herein for a period of ten
years after such date. The Plan shall continue in effect until all matters
relating to the payment of Options granted under the Plan and administration of
the Plan have been settled.

      4.    ADMINISTRATION.

      The Plan shall be administered by the Board or a Committee appointed by
the Board in accordance with Rule 16b-3 of the Exchange Act ("Rule 16b-3"). Any
Committee which has been delegated the duty of administering the Plan by the
Board shall be composed of two or more persons each of whom (i) is a
Non-Employee Director and (ii) is an "outside director" as defined in Section
162(m)(4) of the Code. To the extent reasonable and practicable, the Plan shall
be consistent with the provisions of Rule 16b-3 to the degree necessary to
ensure that transactions authorized pursuant to the Plan are exempt from the
operation of Section 16(b) of the Exchange Act. Any reference herein to the
Board shall, where appropriate, encompass a Committee appointed to administer
the Plan in accordance with this Section 4.

      The Board shall, from time to time, in its discretion, determine which of
the Eligible Employees are to be granted Options and the form, amount and timing
of such Options and, unless otherwise provided herein, the terms and provisions
thereof and the form of payment of an Option, if applicable, and such other
matters specifically delegated to It under this Plan. Subject to the express
provisions of the Plan, the Board shall have authority to interpret the Plan and
Options granted hereunder, to prescribe, amend and rescind rules and regulations
relating to the Plan, and to make all other determinations necessary or
advisable in administering the Plan, all of which determinations shall be final
and binding upon all persons. A quorum of the Board shall consist of


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a majority of its members and the Board may act by vote of a majority of its
members at a meeting at which a quorum is present, or without a meeting by a
written consent to the action taken signed by all members of the Board. No
member of the Board shall be liable for any action, interpretation or
construction made in good faith with respect to the Plan or any Option granted
hereunder.

      5.    OPTIONS, SHARES SUBJECT TO THE PLAN.

      The Board may, from time to time, grant Options to one or more employees
determined by it to be eligible for participation in the Plan, in accordance
with the provisions of Section 6; provided, however, that:

            (a) Subject to Section 9, the aggregate number of Shares made
      subject to Options under this Plan may not exceed 1,000,000.

            (b) Such Shares shall be deemed to have been used in the exercise of
      Options whether actually delivered or whether the Fair Market Value
      equivalent of such Share is paid in cash. To the extent that an Option
      lapses or the rights of its Holder terminate, such Shares subject to such
      Option shall again be available for the grant of an Option.

            (c) Stock delivered or retained by the Company in settlement under
      the Plan may be authorized and unissued Stock or Stock held in the
      treasury of the Company.

      6.    ELIGIBILITY.

      Officers and other employees of the Company and its Subsidiaries who, in
the opinion of the Board, are responsible for the continued growth and
development and financial success of the business of the Company or of its
Subsidiaries shall be eligible to be granted Options under the Plan. Subject to
the provisions of the Plan, the Board shall, from time to time, select from such
eligible persons those to whom Options shall be granted and determine the number
of Options to be granted. Non-Employee Directors shall not be eligible to
receive Options under the Plan.

      7.    STOCK OPTIONS.

      Stock Options under the Plan may be of two types: Incentive Stock Options
and Non-Qualified Options. Any Stock Option granted under the Plan will be in
such form as the Board may from time to time approve.

      The Board will have the authority to grant any optionee Incentive Stock
Options, Non-Qualified Options or both types of Options. Incentive Stock Options
may only be granted to Eligible Employees. To the extent that any Option is not
designated as an Incentive Stock Option or even


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if so designated does not qualify as an Incentive Stock Option, it will be
deemed to be a Non-Qualified Option.

      Options will be evidenced by Option agreements, the terms and provisions
of which may differ. An Option agreement will indicate on its face whether it is
an agreement for an Incentive Stock Option, a Non-Qualified Option, or both. The
Date of Grant of an Option will be the date the Committee by resolution selects
an individual to be a participant in any grant of an Option, determines the
number of Shares to be subject to such Option to be granted to such individual
and specifies the terms and provisions of the Option. The Company will notify a
participant of any grant of an Option, and a written option agreement or
agreements shall be duly executed and delivered by the Company to the
participant.

      Anything in the Plan to the contrary notwithstanding, no term of the Plan
relating to Incentive Stock Options will be interpreted, amended or altered nor
shall any discretion or authority granted under the Plan be exercised so as to
disqualify the Plan under Section 422 of the Code or, without the consent of the
optionee, to disqualify any Incentive Stock Option under such Section 422.

      Options granted under the Plan will be subject to the following terms and
conditions and will contain such additional terms and conditions as the
Committee shall deem desirable:

            (a) Option Price. The Option price per Share shall be set by the
      Board but shall in no instance be less than the Fair Market Value at the
      Date of Grant in the case of Incentive Stock Options (110% of the Fair
      Market Value in the case of a grant of Incentive Stock Options to Eligible
      Employees owning 10% or more of the combined voting power of all classes
      of stock of the Company). The Option price per Share for Shares to be
      issued pursuant to exercise of a Non-Qualified Option shall be determined
      by the Board.

            (b) Form of Payment. At the time of the exercise of the Option, the
      Option price (plus the applicable withholding tax) shall be payable in (i)
      cash, (ii) withheld Shares upon exercise of an Option having a Fair Market
      Value at the time the Option is exercised equal to the Option price (plus
      the applicable withholding tax) with the prior approval of the Company,
      (iii) a manner acceptable to the Company, (iii) with Shares owned by the
      Holder upon exercise of an Option having a Fair Market Value at the time
      the Option is exercised equal to the Option Price (plus the applicable
      withholding tax) with the prior approval of the Company, or (iv) any
      combination of the foregoing.

            (c) Other Terms and Conditions. If the Holder has not died or
      terminated employment, the Option shall become exercisable in such manner
      and within such period or periods, not to exceed ten years (in the case of
      Incentive Stock Options, not to exceed five years for Eligible Employees
      owning 10% or more of the combined voting power of all classes of stock of
      the Company) from its Date of Grant as shall


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      be set forth in the Stock Option Agreement relating to such grant. An
      Option may be exercised as to such number of Shares and at such times as
      set forth in the Stock Option Agreement; provided, however, no Option
      shall be exercised for less than the lesser of 100 Shares or the full
      number of Shares for which the Option is then exercisable. An Option shall
      lapse under the following circumstances:

                  (i) Ten years after it is granted, three months after Normal
      Termination, twelve months after the date of Termination if due to
      permanent disability, three months after any other Termination or any
      earlier time set by the grant.

                  (ii) If the Holder dies within the Option period, the Option
      shall lapse unless it is exercised within the Option period and in no
      event later than twelve months after the date of his death by the Holder's
      legal representative or representatives or by the person or persons
      entitled to do so under the Holder's last will and testament or, if the
      Holder shall fail to make testamentary disposition of such Option or shall
      die intestate, by the person or persons entitled to receive said Option
      under the applicable laws of descent and distribution.

                  (iii) Notwithstanding the foregoing, in no event shall the
      period of exercise be less than thirty days after Normal Termination or
      the death of the Holder; provided, however, that in no event shall an
      Incentive Stock Option be exercised more than ten years after the Date of
      Grant.

            (d) Stock Option Agreement. Each Option granted under the Plan shall
      be evidenced by a "Stock Option Agreement" between the Company and the
      Holder of the Option containing provisions determined by the Board. The
      provisions shall be subject to the following terms and conditions:

                  (i) Any Option or portion thereof that is exercisable shall be
      exercisable as to such number of Shares and at such times as set forth in
      the Stock Option Agreement, except as limited by the terms of the Plan
      heretofore.

                  (ii) Every Share purchased through the exercise of an Option
      shall be paid for in full at the time of the exercise. Each Option shall
      cease to be exercisable, as to any Share, when the Holder purchases the
      Share, or when the Option lapses.

                  (iii) Options shall not be transferable by the Holder except
      by will or the laws of descent and distribution and shall be exercisable
      during the Holder's lifetime only by the Holder.


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                  (iv) An unexpired Option shall become immediately exercisable
      (1) automatically on the Holder's Normal Termination, (2) at the
      discretion of the Board, in whole or in part, on the date the Holder
      becomes eligible to receive early retirement benefits, as defined under
      the retirement plan of the Company then in effect, and (3) under such
      other circumstances as the Board may direct.

            (e) Individual Dollar Limitations. In the case of an Incentive Stock
      Option, the aggregate Fair Market Value (determined as of the time such
      Option is granted) of the Stock with respect to which the Incentive Stock
      Option is exercisable for the first time by an individual during any
      calendar year (under all such plans of the Company or Subsidiaries) shall
      not exceed $100,000.

            (f) Restriction on Stock Subject to Option. The Board may require in
      connection with the grant of an Option that the Holder remain in the
      employ of the Company or a Subsidiary for at least one year following the
      exercise. The terms of such restriction shall be set forth in the Stock
      Option Agreement.

      8.    GENERAL.

            (a) Government and Other Regulations. Shares shall not be issued
      pursuant to the exercise of an Option unless the exercise of such Option
      and the issuance and delivery of such Shares pursuant thereto shall comply
      with all relevant provisions of law, including, without limitation, the
      Securities Act, the Exchange Act, and the requirements of any stock
      exchange upon which the Shares may then be listed and shall be further
      subject to the approval of counsel for the Company with respect to such
      compliance. Inability of the Company to obtain authority from any
      regulatory body having jurisdiction, which authority is deemed by the
      Company's counsel to be necessary to the lawful issuance and sale of any
      Shares hereunder, shall relieve the Company of any liability in respect of
      the failure to issue or sell such Shares as to which such requisite
      authority shall not have been obtained.

            (b) Reservation of Shares. The Company, during the term of this
      Plan, will at all times reserve and keep available such number of Shares
      as shall be sufficient to satisfy the requirements of the Plan. The
      inability of the Company to obtain authority from any regulatory body
      having jurisdiction, which authority is deemed by the Company's counsel to
      be necessary to the lawful issuance and sale of any Shares hereunder,
      shall relieve the Company of any liability in respect of the failure to
      issue or sell such Shares as to which such requisite authority shall not
      have been obtained.

            (c) Tax Withholding. The employee or other person receiving Stock
      upon exercise of an Option may be required to pay to the Company or to a
      Subsidiary, as appropriate, the amount of any such taxes which the Company
      or


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      Subsidiary is required to withhold with respect to such Stock. In
      connection with such obligation to withhold tax, the Company may defer
      making delivery of such Stock unless and until indemnified on such
      withholding liability to its satisfaction.

            (d) Claim to Options and Employment Rights. No employee or other
      person shall have any claim or right to be granted an Option under the
      Plan. Neither this Plan nor any action taken hereunder shall be construed
      as giving any employee any right to be retained in the employ of the
      Company or a Subsidiary.

            (e) Beneficiaries. Any payment of Options due under this Plan to a
      deceased participant shall be paid to the beneficiary designated by the
      participant and filed with the Board. If no such beneficiary has been
      designated or survives the participant, payment shall be made to the
      participant's legal representative. A beneficiary designation may be aged
      or revoked by a participant at any time provided the change or revocation
      is filed with the Board. The designation by a married participant of one
      or more persons other than the participant's spouse must be consented to
      by the spouse.

            (f) Nontransferability. A person's rights and interests under the
      Plan, including amounts payable, may not be assigned, pledged, or
      transferred except, in the event of an employee's death, to a designated
      beneficiary as provided in the Plan, or in the absence of such
      designation, by will or the laws of descent and distribution.

            (g) Indemnification. Each person who is or shall have been a member
      of the Board shall be indemnified and held harmless by the Company against
      and from any loss, cost, liability, or expense that may be imposed upon or
      reasonably incurred by him in connection with or resulting from any claim,
      action, suit, or proceeding to which he may be a party or in which he may
      be involved by reason of any action or failure to act under the Plan and
      against and from any and all amounts paid by him in satisfaction of
      judgment in such action, suit, or proceeding against him. He shall give
      the Company an opportunity, at its own expense, to handle and defend the
      same before he undertakes to handle and defend it on his own behalf. The
      foregoing right of indemnification shall not be exclusive of any other
      rights of indemnification to which such persons may be entitled under the
      Company's Bylaws or Certificate of Incorporation, as a matter of law, or
      otherwise, or any power that the Company may have to indemnify them or
      hold them harmless.

            (h) Reliance on Reports. Each member of the Board shall be fully
      justified in relying or acting in good faith upon any report made by the
      independent public accountants of the Company and its Subsidiaries and
      upon any other information furnished in connection with the Plan by any
      person or persons other than himself. In no event shall any person who is
      or shall have been a member of the


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      Board be liable for any determination made or other action taken,
      including the furnishing of information, or failure to act, if in good
      faith.

            (i) Relationship to Other Benefits. No payment under the Plan shall
      be taken into account in determining any benefits under any pension,
      retirement, savings, profit sharing, group insurance, welfare or other
      benefit plan of the Company or any Subsidiary.

            (j) Expenses. The expenses of administering the Plan shall be borne
      by the Company and its Subsidiaries.

            (k) Pronouns. Masculine pronouns and other words of masculine gender
      shall refer to both men and women.

            (l) Titles and Headings. The titles and headings of the Sections in
      the Plan are for convenience of reference only, and in the event of any
      conflict, the text of the Plan, rather than such titles or headings, shall
      control.

            (m) Fractional Shares. No fractional Shares shall be issued and the
      Board shall determine whether cash shall be given in lieu of fractional
      Shares or whether such fractional Shares shall be eliminated by rounding
      up or rounding down unless otherwise provided in the Plan.

            (n) Construction of Plan. The place of administration of the Plan
      shall be in the State of Arizona, and the validity, construction,
      interpretation, administration and effect of the Plan and of its rules and
      regulations, and rights relating to the Plan, shall be determined in
      accordance with the laws of the State of Arizona.

      9.    CHANGES IN CAPITAL STRUCTURE.

            (a) If the outstanding Stock of the Company shall at any time be
      changed or exchanged by declaration of a stock dividend, split-up,
      combination of Shares, recapitalization, merger, consolidation, or other
      corporate reorganization in which the Company is the surviving
      corporation, the number and kind of Shares subject to the Plan or subject
      to any Options theretofore granted, and the Option prices, shall be
      appropriately and equitably adjusted so as to maintain the proportionate
      number of Shares without changing the aggregate Option price and the Board
      may make any other adjustments as the Board deems appropriate for purposes
      of the Plan. The determination of the Board as to the terms of any
      adjustment shall be conclusive except to the extent governed by Treasury
      regulations applicable to Incentive Stock Options.


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            (b) In the event of a liquidation or dissolution of the Company,
      sale of all or substantially all of its assets, or a merger, consolidation
      or other corporate reorganization in which the Company is not the
      surviving corporation, or any merger or other reorganization in which the
      Company is the surviving corporation but the holders of its Stock receive
      securities of another corporation, or in the event a person makes a tender
      offer to the stockholders of the Company, the Board may, but need not,
      accelerate the time at which unexercised Options may be exercised. Nothing
      herein contained shall prevent the substitution of a new Option by the
      surviving or acquiring corporation.

      10.   AMENDMENTS AND TERMINATION.

      The Board may at any time or from time to time (i) amend, terminate or
suspend the Plan and, if suspended, reinstate the Plan in whole or in part, or
(ii) with the express written consent of an individual participant, cancel,
reduce or otherwise alter such participant's outstanding Options under the Plan;
provided, however, that any such amendment, termination, suspension,
cancellation, reduction or alteration shall be further approved by the
shareholders of the Company if such approval is required to preserve or comply
with any exemption, whether under Rule 16b-3 or otherwise, from Section 16(b) of
the Exchange Act or to preserve the status of Incentive Stock Options within the
meaning of Section 422 of the Code.

      As approved by the Board of Directors as of February 5, 1997.





                                    /s/ Joseph Hines
                                    ---------------------------------
                                    JOSEPH HINES
                                    Chairman


                                    ATTEST:



                                    /s/ Janice L. Backus
                                    ---------------------------------
                                    JANICE L. BACKUS
                                    Secretary


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