Document:

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                                                                    EXHIBIT 10.1

                       HOLLIS-EDEN PHARMACEUTICALS, INC.

                        1997 INCENTIVE STOCK OPTION PLAN
                          As Amended on March 18, 2002

                                  INTRODUCTION

   Hollis-Eden Pharmaceuticals, Inc., a Delaware corporation (hereinafter
referred to as the "Corporation"), hereby establishes an incentive compensation
plan to be known as the "Hollis-Eden Pharmaceuticals, Inc. 1997 Incentive Stock
Option Plan" (hereinafter referred to as the "Plan"), as set forth in this
document. The Plan permits the grant of Non-Qualified Stock Options and
Incentive Stock Options. The Plan became effective on February 5, 1997.

   The purpose of the Plan is to promote the success and enhance the value of
the Corporation by linking the personal interests of Participants to those of
the Corporation's stockholders by providing Participants with an incentive for
outstanding performance. The Plan is further intended to assist the Corporation
in its ability to motivate, and retain the services of, Participants upon whose
judgment, interest and special effort the successful conduct of its operations
is largely dependent.

                                   DEFINITIONS

   For purposes of this Plan, the following terms shall be defined as follows
unless the context clearly indicates otherwise:

      (a) "Award Agreement" shall mean the written agreement, executed by an
   appropriate officer of the Corporation, pursuant to which a Plan Award is
   granted.

      (b) "Board of Directors" shall mean the Board of Directors of the
   Corporation.

      (c) "Code" shall mean the Internal Revenue Code of 1986, as amended, and
   the rules and regulations thereunder.

      (d) "Committee" shall mean the Committee hereinafter described in Section
   I.

      (e) "Common Stock" shall mean the common stock, par value $.01 per share,
   of the Corporation.

      (f) "Consultant" shall mean an individual who is in a Consulting
   Relationship with the Corporation or any Parent or Subsidiary.

      (g) "Consulting Relationship" shall mean the relationship that exists
   between an individual and the Corporation (or any Parent or Subsidiary) if
   (i) such individual or (ii) any entity of which such individual is an
   executive officer or owns a substantial equity interest has entered into a
   written consulting contract with the Corporation or any Parent or Subsidiary.

      (h) "Corporation" shall mean Hollis-Eden Pharmaceuticals, Inc., a
   Delaware corporation.

      (i) "Disability" shall have the same meaning as the term "permanent and
   total disability" under Section 22(e)(3) of the Code.

      (j) "Employee" shall mean a common-law employee of the Company or of any
   Parent or Subsidiary.

      (k) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
   amended, and the rules and regulations thereunder.

      (l) "Executive" means an employee of the Corporation or of any Parent or
   Subsidiary whose compensation is subject to the deduction limitations set
   forth under Code Section 162(m).

      (m) "Fair Market Value" of the Corporation's Common Stock on a Trading Day
   shall mean the last reported sale price for Common Stock or, in case no such
   reported sale takes place on such

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   Trading Day, the average of the closing bid and asked prices for the Common
   Stock for such Trading Day, in either case on the principal national
   securities exchange on which the Common Stock is listed or admitted to
   trading, or if the Common Stock is not listed or admitted to trading on any
   national securities exchange, but is traded in the over-the-counter market,
   the closing sale price of the Common Stock or, if no sale is publicly
   reported, the average of the closing bid and asked quotations for the Common
   Stock, as reported by the National Association of Securities Dealers
   Automated Quotation System ("NASDAQ") or any comparable system or, if the
   Common Stock is not listed on NASDAQ or a comparable system, the closing sale
   price of the Common Stock or, if no sale is publicly reported, the average of
   the closing bid and asked prices, as furnished by two members of the National
   Association of Securities Dealers, Inc. who make a market in the Common Stock
   selected from time to time by the Corporation for that purpose. In addition,
   for purposes of this definition, a "Trading Day" shall mean, if the Common
   Stock is listed on any national securities exchange, a business day during
   which such exchange was open for trading and at least one trade of Common
   Stock was effected on such exchange on such business day, or, if the Common
   Stock is not listed on any national securities exchange but is traded in the
   over-the-counter market, a business day during which the over-the-counter
   market was open for trading and at least one "eligible dealer" quoted both a
   bid and asked price for the Common Stock. An "eligible dealer" for any day
   shall include any broker-dealer who quoted both a bid and asked price for
   such day, but shall not include any broker-dealer who quoted only a bid or
   only an asked price for such day. In the event the Corporation's Common Stock
   is not publicly traded, the Fair Market Value of such Common Stock shall be
   determined by the Committee in good faith.

      (n) "Incentive Stock Option" shall mean a stock option satisfying the
   requirements for tax-favored treatment under Section 422 of the Code.

      (o) "Non-Qualified Option" shall mean a stock option which does not
   satisfy the requirements for, or which is not intended to be eligible for,
   tax-favored treatment under Section 422 of the Code.

      (p) "Option" shall mean an Incentive Stock Option or a Non-Qualified Stock
   Option granted pursuant to the provisions of Section V hereof.

      (q) "Optionee" shall mean a Participant who is granted an Option under the
   terms of this Plan.

      (r) "Outside Directors" shall mean members of the Board of Directors of
   the Corporation who are classified as "outside directors" under Section
   162(m) of the Code.

      (s) "Parent" shall mean a parent corporation of the Corporation within the
   meaning of Section 424(e) of the Code.

      (t) "Participant" shall mean any Employee or other person participating
   under the Plan.

      (u) "Plan Award" shall mean an Option granted pursuant to the terms of
   this Plan.

      (v) "Securities Act" shall mean the Securities Act of 1933, as amended,
   and the rules and regulations thereunder.

      (w) "Subsidiary" shall mean a subsidiary corporation of the Corporation
   within the meaning of Section 424(f) of the Code.

      (x) "Termination of Consulting Relationship" shall mean the cessation,
   abridgement or termination of a Consultant's Consulting Relationship with the
   Corporation or any Parent or Subsidiary as a result of (i) the Consultant's
   death or Disability (ii) the cancellation, annulment, expiration, termination
   or breach of the written consulting contract between the Corporation (or any
   Parent or Subsidiary) and the Consultant (or any other entity) giving rise to
   the Consulting Relationship or (iii) if the written consulting contract is
   not directly between the Corporation (or any Parent or Subsidiary) and the
   Consultant, the Consultant's termination of service with, or sale of all or
   substantially all of his equity interest in, the entity which has entered
   into the written consulting contract with the Corporation, Parent or
   Subsidiary.

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                                    SECTION I

                                 ADMINISTRATION

   The Plan shall be administered by the Committee, which shall be composed
solely of at least two Non-Employee Directors, as defined in Rule 16b-3(b)(3)
promulgated under the Exchange Act, and who also qualify as "Outside Directors".
Subject to the provisions of the Plan, the Committee may establish from time to
time such regulations, provisions, proceedings and conditions of awards which,
in its sole opinion, may be advisable in the administration of the Plan. A
majority of the Committee shall constitute a quorum, and, subject to the
provisions of Section IV of the Plan, the acts of a majority of the members
present at any meeting at which a quorum is present, or acts approved in writing
by a majority of the Committee, shall be the acts of the Committee as a whole.

                                   SECTION II

                                SHARES AVAILABLE

   Subject to the adjustments provided in Section VI of the Plan, the aggregate
number of shares of the Common Stock which may be granted for all purposes under
the Plan shall be 3,750,000 shares. Shares of Common Stock underlying awards of
securities (derivative or not) and shares of Common Stock awarded hereunder
(whether or not on a restricted basis) shall be counted against the limitation
set forth in the immediately preceding sentence and may be reused to the extent
that the related Plan Award to any individual is settled in cash, expires, is
terminated unexercised, or is forfeited. Common Stock granted to satisfy Plan
Awards under the Plan may be authorized and unissued shares of the Common Stock,
issued shares of such Common Stock held in the Corporation's treasury or shares
of Common Stock acquired on the open market.

                                   SECTION III

                                   ELIGIBILITY

   Officers and key employees of the Corporation, or of any Parent or
Subsidiary, who are regularly employed on a salaried basis as common law
employees, Consultants, and directors of the Corporation or of any Parent or
Subsidiary who are not Employees, shall be eligible to participate in the Plan.
Where appropriate under this Plan, directors who are not Employees shall be
referred to as "employees" and their service as directors as "employment".

                                   SECTION IV

                             AUTHORITY OF COMMITTEE

   The Plan shall be administered by, or under the direction of, the Committee,
which shall administer the Plan so as to comply at all times with Section 16 of
the Exchange Act and the rules and regulations promulgated thereunder, to the
extent such compliance is required, and shall otherwise have plenary authority
to interpret the Plan and to make all determinations specified in or permitted
by the Plan or deemed necessary or desirable for its administration or for the
conduct of the Committee's business. Subject to the provisions of Section X
hereof, all interpretations and determinations of the Committee may be made on
an individual or group basis and shall be final, conclusive and binding on all
interested parties. Subject to the express provisions of the Plan, the Committee
shall have authority, in its discretion, to determine the persons to whom Plan
Awards shall be granted, the times when such Plan Awards shall be granted, the
number of Plan Awards, the exercise price of each Plan Award, the period(s)
during which a Plan Award shall be exercisable (whether in whole or in part),
the restrictions to be applicable to Plan Awards and the other terms and
provisions thereof (which need not be identical). In addition, the authority of
the Committee shall include, without limitation, the following:

      (a) Financing. The arrangement of temporary financing for an Optionee by
   registered broker-dealers, under the rules and regulations of the Federal
   Reserve Board, for the purpose of assisting an Optionee in the exercise of an
   Option, such authority to include the payment by the Corporation of the
   commissions of the broker-dealer.

      (b) Procedures for Exercise of Option. The establishment of procedures for
   an Optionee to exercise an Option by (i) payment of cash (including check),
   (ii) payment pursuant to a program developed under Regulation T as
   promulgated by the Federal Reserve Board which, prior to the

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   issuance of Common Stock, results in either the receipt of cash (or check) by
   the Corporation or the receipt of irrevocable instructions to pay the
   aggregate exercise price to the Corporation from the sales proceeds, (iii)
   provided that at the time of exercise the Common Stock is publicly traded and
   quoted regularly in the Wall Street Journal, payment by delivery of
   already-owned shares of Common Stock, held for the period required to avoid a
   charge to the Corporation's reported earnings, and owned free and clear of
   any liens, claims, encumbrances or security interests, which Common Stock
   shall be valued at its Fair Market Value on the date of exercise or (iv)
   payment by a combination of the methods of payment permitted by clauses
   (b)(i) through (b)(iii) above.

      (c) Withholding. The establishment of a procedure whereby a number of
   shares of Common Stock or other securities may be withheld from the total
   number of shares of Common Stock or other securities to be issued upon
   exercise of an Option or for the tender of shares of Common Stock owned by
   any Participant to meet any obligation of withholding for taxes incurred by
   the Participant upon such exercise.

                                    SECTION V

                                  STOCK OPTIONS

   The Committee shall have the authority, in its discretion, to grant Incentive
Stock Options or to grant Non-Qualified Stock Options or to grant both types of
Options. Notwithstanding anything contained herein to the contrary, an Incentive
Stock Option may be granted only to common law employees of the Corporation or
of any Parent or Subsidiary now existing or hereafter formed or acquired, and
not to any director or officer who is not also such a common law employee. In
order for an Option grant to satisfy the "performance-based compensation"
exemption to the deduction limitation under Code Section 162(m), the maximum
number of shares of Common Stock subject to Options which may be granted to any
single Executive during any one calendar year is 250,000. The terms and
conditions of the Options shall be determined from time to time by the
Committee; provided, however, that the Options granted under the Plan shall be
subject to the following:

      (a) Exercise Price. The Committee shall establish the exercise price at
   the time any Option is granted at such amount as the Committee shall
   determine; provided, however, that the exercise price for each share of
   Common Stock purchasable under any Incentive Stock Option granted hereunder
   shall be such amount as the Committee shall, in its best judgment, determine
   to be not less than one hundred percent (100%) of the Fair Market Value per
   share of Common Stock at the date the Option is granted; and provided,
   further, that in the case of an Incentive Stock Option granted to a person
   who, at the time such Incentive Stock Option is granted, owns shares of stock
   of the Corporation or of any Parent or Subsidiary which possess more than ten
   percent (10%) of the total combined voting power of all classes of shares of
   stock of the Corporation or of any Parent or Subsidiary, the exercise price
   for each share of Common Stock shall be such amount as the Committee, in its
   best judgment, shall determine to be not less than one hundred ten percent
   (110%) of the Fair Market Value per share of Common Stock at the date the
   Option is granted. The exercise price will be subject to adjustment in
   accordance with the provisions of Section VI of the Plan.

      (b) Payment of Exercise Price. The price per share of Common Stock with
   respect to each Option shall be payable at the time the Option is exercised.
   Such price shall be payable in cash or pursuant to any of the methods set
   forth in Sections IV(a) or (b) hereof, as determined by the Participant.
   Shares of Common Stock delivered to the Corporation in payment of the
   exercise price shall be valued at the Fair Market Value of the Common Stock
   on the date preceding the date of the exercise of the Option.

      (c) Exercisability of Options. Except as provided in Section V(e) hereof,
   each Option shall be exercisable in whole or in installments, and at such
   time(s), and subject to the fulfillment of any conditions on, and to any
   limitations on, exercisability as may be determined by the Committee at the
   time of the grant of such Options. The right to purchase shares of Common
   Stock shall be cumulative so that when the right to purchase any shares of
   Common Stock has accrued such shares of Common Stock or any part thereof may
   be purchased at any time thereafter until the expiration or termination of
   the Option.

      (d) Expiration of Options. No Incentive Stock Option by its terms shall be
   exercisable after the expiration of ten (10) years from the date of grant of
   the Option; provided, however, in the case of an Incentive Stock Option
   granted to a person who, at the time such Option is granted, owns shares of
   stock of the Corporation or of any Parent or Subsidiary possessing more than
   ten percent (10%) of the total

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   combined voting power of all classes of shares of stock of the Corporation or
   of any Parent or Subsidiary, such Option shall not be exercisable after the
   expiration of five (5) years from the date such Option is granted.

      (e) Exercise Upon Optionee's Termination of Employment or Termination of
   Consulting Relationship. If the employment of an Optionee by the Corporation
   or by any Parent or Subsidiary is terminated for any reason other than death,
   any Incentive Stock Option granted to such Optionee may not be exercised
   later than three (3) months (one (1) year in the case of termination due to
   Disability) after the date of such termination of employment. For purposes of
   determining whether any Optionee has incurred a termination of employment (or
   a Termination of Consulting Relationship), an Optionee who is both an
   employee (or a Consultant) and a director of the Corporation and/or any
   Parent or Subsidiary shall (with respect to any Non-Qualified Option that may
   have been granted to him) be considered to have incurred a termination of
   employment (or a Termination of Consulting Relationship) only upon his
   termination of service both as an employee (or as a Consultant) and as a
   director.

      (f) Maximum Amount of Incentive Stock Options. Each Plan Award under which
   Incentive Stock Options are granted shall provide that to the extent the
   aggregate of the (i) Fair Market Value of the shares of Common Stock
   (determined as of the time of the grant of the Option) subject to such
   Incentive Stock Option and (ii) the fair market values (determined as of the
   date(s) of grant of the option(s) of all other shares of Common Stock subject
   to incentive stock options granted to an Optionee by the Corporation or any
   Parent or Subsidiary, which are exercisable for the first time by any person
   during any calendar year, exceed(s) one hundred thousand dollars ($100,000),
   such excess shares of Common Stock shall not be deemed to be purchased
   pursuant to Incentive Stock Options. The terms of the immediately preceding
   sentence shall be applied by taking all options, whether or not granted under
   this Plan, into account in the order in which they are granted.

                                   SECTION VI

                         ADJUSTMENT OF SHARES; MERGER OR
                    CONSOLIDATION, ETC. OF THE CORPORATION

   (a) Recapitalization, Etc. In the event there is any change in the Common
Stock of the Corporation by reason of any reorganization, recapitalization,
stock split, stock dividend or otherwise, there shall be substituted for or
added to each share of Common Stock theretofore appropriated or thereafter
subject, or which may become subject, to any Option, the number and kind of
shares of stock or other securities into which each outstanding share of Common
Stock shall be so changed or for which each such share shall be exchanged, or to
which each such share be entitled, as the case may be, and the per share price
thereof also shall be appropriately adjusted. Notwithstanding the foregoing, (i)
each such adjustment with respect to an Incentive Stock Option shall comply with
the rules of Section 424(a) of the Code and (ii) in no event shall any
adjustment be made which would render any Incentive Stock Option granted
hereunder to be other than an incentive stock option for purposes of Section 422
of the Code.

   (b) Merger, Consolidation or Change in Control of Corporation. Upon (i) the
merger or consolidation of the Corporation with or into another corporation
(pursuant to which the stockholders of the Corporation immediately prior to such
merger or consolidation will not, as of the date of such merger or
consolidation, own a beneficial interest in shares of voting securities of the
corporation surviving such merger or consolidation having at least a majority of
the combined voting power of such corporation's then outstanding securities), if
the agreement of merger or consolidation does not provide for (1) the
continuance of the Options granted hereunder or (2) the substitution of new
options for Options granted hereunder, or for the assumption of such Options by
the surviving corporation, (ii) the dissolution, liquidation, or sale of all or
substantially all the assets of the Corporation to a person unrelated to the
Corporation or to a direct or indirect owner of a majority of the voting power
of the Corporation's then outstanding voting securities (such sale of assets
being referred to as an "Asset Sale") or (iii) a Change in Control of the
Corporation, the vesting and exercisability of Options theretofore granted and
still outstanding (and not otherwise expired) shall be accelerated in full
immediately prior to the effective date of such merger, consolidation,
dissolution, liquidation, Asset Sale or Change in Control. The Corporation, to
the extent practicable, shall give advance notice to affected Optionees of such
merger, consolidation, dissolution, liquidation, Asset Sale or Change in Control
of the Corporation. All such Options which are not exercised prior to the
effective date of such merger, consolidation, dissolution, liquidation or Asset

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Sale shall be forfeited as of the effective time of such merger, consolidation,
dissolution, liquidation or Asset Sale (but not in the case of a Change in
Control of the Corporation).

   (c) Definition of Change in Control of the Corporation. As used herein, a
"Change in Control of the Corporation" shall be deemed to have occurred if any
person (including any individual, firm, partnership or other entity) together
with all Affiliates and Associates (as defined under Rule 12b-2 of the General
Rules and Regulations promulgated under the Exchange Act) of such person (but
excluding (i) a trustee or other fiduciary holding securities under an employee
benefit plan of the Corporation or any subsidiary of the Corporation, (ii) a
corporation owned, directly or indirectly, by the stockholders of the
Corporation in substantially the same proportions as their ownership of the
Corporation, (iii) the Corporation or any subsidiary of the Corporation or (iv)
only as provided in the immediately following sentence, a Participant together
with all Affiliates and Associates of the Participant) is or becomes the
Beneficial Owner (as defined in Rule 13d-3 promulgated under the Exchange Act),
directly or indirectly, of securities of the Corporation representing 40% of
more of the combined voting power of the Corporation's then outstanding
securities. The provisions of clause (iv) of the immediately preceding sentence
shall apply only with respect to the Option(s) held by the Participant who,
together with his Affiliates or Associates, if any, is or becomes the direct or
indirect Beneficial Owner of the percentage of securities set forth in such
clause.

                                   SECTION VII

                            MISCELLANEOUS PROVISIONS

   (a) Administrative Procedures.  The Committee may establish any procedures
determined by it to be appropriate in discharging its responsibilities under
the Plan. Subject to the provisions of Section X hereof, all actions and
decisions of the Committee shall be final.

   (b) Assignment or Transfer. No grant or award of any Plan Award (other than a
Non-Qualified Option) or any rights or interests therein shall be assignable or
transferable by a Participant except by will or the laws of descent and
distribution. During the lifetime of a Participant, Incentive Stock Options
granted hereunder shall be exercisable only by the Participant.

   (c) Investment Representation. With respect to shares of Common Stock
received pursuant to the exercise of an Option, the Committee may require, as a
condition of receiving such securities, that the Participant furnish to the
Corporation such written representations and information as the Committee deems
appropriate to permit the Corporation, in light of the existence or nonexistence
of an effective registration statement under the Securities Act to deliver such
securities in compliance with the provisions of the Securities Act.

   (d) Withholding Taxes. In the case of the issuance or distribution of Common
Stock or other securities hereunder upon the exercise of any Plan Award, the
Corporation, as a condition of such issuance or distribution, may require the
payment (through withholding from the Participant's salary, reduction of the
number of shares of Common Stock or other securities to be issued, or otherwise)
of any such taxes. Each Participant may satisfy the withholding obligations by
paying to the Corporation a cash amount equal to the amount required to be
withheld or by tendering to the Corporation a number of shares of Common Stock
having a value equivalent to such cash amount, or by use of any available
procedure as described under Section IV(c) hereof.

   (e) Costs and Expenses. The costs and expenses of administering the Plan
shall be borne by the Corporation and shall not be charged against any award nor
to any employee receiving a Plan Award.

   (f) Other Incentive Plans.  The adoption of the Plan does not preclude the
adoption by appropriate means of any other incentive plan for employees.

   (g) Plurals and Gender. Where appearing in the Plan, masculine gender shall
include the feminine and neuter genders, and the singular shall include the
plural, and vice versa, unless the context clearly indicates a different
meaning.

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   (h) Headings. The headings and sub-headings in this Plan are inserted for the
convenience of reference only and are to be ignored in any construction of the
provisions hereof.

   (i) Severability. In case any provision of this Plan shall be held illegal or
void, such illegality or invalidity shall not affect the remaining provisions of
this Plan, but shall be fully severable, and the Plan shall be construed and
enforced as if said illegal or invalid provisions had never been inserted
herein.

   (j) payments Due Missing Persons. The Corporation shall make a reasonable
effort to locate all persons entitled to benefits under the Plan; however,
notwithstanding any provisions of this Plan to the contrary, if, after a period
of one (1) year from the date such benefits shall be due, any such persons
entitled to benefits have not been located, their rights under the Plan shall
stand suspended. Before this provision becomes operative, the Corporation shall
send a certified letter to all such persons at their last known addresses
advising them that their rights under the Plan shall be suspended. Subject to
all applicable state laws, any such suspended amounts shall be held by the
Corporation for a period of one (1) additional year and thereafter such amounts
shall be forfeited and thereafter remain the property of the Corporation.

   (k) Liability and Indemnification. (i) Neither the Corporation nor any Parent
or Subsidiary shall be responsible in any way for any action or omission of the
Committee, or any other fiduciaries in the performance of their duties and
obligations as set forth in this Plan. Furthermore, neither the Corporation nor
any Parent or Subsidiary shall be responsible for any act or omission of any of
their agents, or with respect to reliance upon advice of their counsel provided
that the Corporation and/or the appropriate Parent or Subsidiary relied in good
faith upon the action of such agent or the advice of such counsel.

   (ii) Except for their own gross negligence or willful misconduct regarding
the performance of the duties specifically assigned to them under, or their
willful breach of the terms of, this Plan, the Corporation, each Parent and
Subsidiary and the Committee shall be held harmless by the Participants, former
Participants, beneficiaries and their representatives against liability or
losses occurring by reason of any act or omission. Neither the Corporation, any
Parent or Subsidiary, the Committee, nor any agents, employees, officers,
directors or shareholders of any of them, nor any other person shall have any
liability or responsibility with respect to this Plan, except as expressly
provided herein.

   (l) Incapacity. If the Committee shall receive evidence satisfactory to it
that a person entitled to receive payment of any Plan Award is, at the time when
such benefit becomes payable, a minor, or is physically or mentally incompetent
to receive such Plan Award and to give a valid release thereof, and that another
person or an institution is then maintaining or has custody of such person and
that no guardian, committee or other representative of the estate of such person
shall have been duly appointed, the Committee may make payment of such Plan
Award otherwise payable to such person to such other person or institution,
including a custodian under a Uniform Gifts to Minors Act, or corresponding
legislation (who shall be an adult, a guardian of the minor or a trust company),
and the release by such other person or institution shall be a valid and
complete discharge for the payment of such Plan Award.

   (m) Cooperation of Parties. All parties to this Plan and any person claiming
any interest hereunder agree to perform any and all acts and execute any and all
documents and papers which are necessary or desirable for carrying out this Plan
or any of its provisions.

   (n) Governing Law.  All questions pertaining to the validity, construction
and administration of the Plan shall be determined in accordance with the laws
of the State of California.

   (o) Nonguarantee of Employment or Consulting Relationship. Nothing contained
in this Plan shall be construed as a contract of employment (or as a consulting
contract) between the Corporation (or any Parent or Subsidiary), and any
employee or Participant, as a right of any employee or Participant to be
continued in the employment of or in a Consulting Relationship with) the
Corporation (or any Parent or Subsidiary), or as a limitation on the right of
the Corporation or any Parent or Subsidiary to discharge any of its employees
(or Consultants), at any time, with or without cause.

   (p) Notices.  Each notice relating to this Plan shall be in writing and
delivered in person or by certified mail to the proper address. All notices to
the Corporation or the Committee shall be addressed to it at the Corporation's
then principal executive offices, Attn: Corporate Secretary. All notices to

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Participants, former Participants, beneficiaries or other persons acting for or
on behalf of such persons shall be addressed to such person at the last address
for such person maintained in the Committee's records.

   (q) Written Agreements.  Each Plan Award shall be evidenced by a signed
written agreement (the "Award Agreements") between the Corporation and the
Participant containing the terms and conditions of the award.

                                  SECTION VIII

                        AMENDMENT OR TERMINATION OF PLAN

   The Board of Directors of the Corporation shall have the right to amend,
suspend or terminate the Plan at any time, provided that no amendment shall be
made which shall increase the total number of shares of the Common Stock of the
Corporation which may be issued and sold pursuant to Incentive Stock Options,
reduce the minimum exercise price in the case of an Incentive Stock Option or
modify the provisions of the Plan relating to eligibility with respect to
Incentive Stock Options unless such amendment is made by or with the approval of
the stockholders within 12 months of the effective date of such amendment, but
only if such approval is required by any applicable provision of law. The Board
of Directors of the Corporation shall also be authorized to amend the Plan and
the Options granted thereunder to maintain qualification as "incentive stock
options" within the meaning of Section 422 of the Code, if applicable. Except as
otherwise provided herein, no amendment, suspension or termination of the Plan
shall alter or impair any Plan Awards previously granted under the Plan without
the consent of the holder thereof.

                                   SECTION IX

                                  TERM OF PLAN

   The Plan shall automatically terminate on the day immediately preceding the
tenth anniversary of the date the Plan was adopted by the Board of Directors of
the Corporation, unless sooner terminated by such Board of Directors. No Plan
Awards may be granted under the Plan subsequent to the termination of the Plan.

                                    SECTION X

                                CLAIMS PROCEDURES

   (a) Denial. If any Participant, former Participant or beneficiary is denied
any vested benefit to which he is, or reasonably believes he is, entitled under
this Plan, either in total or in an amount less than the full vested benefit to
which he would normally be entitled, the Committee shall advise such person in
writing the specific reasons for the denial. The Committee shall also furnish
such person at the time with a written notice containing (i) a specific
reference to pertinent Plan provisions, (ii) a description of any additional
material or information necessary for such person to perfect his claim, if
possible, and an explanation of why such material or information is needed and
(iii) an explanation of the Plan's claim review procedure.

   (b) Written Request for Review. Within 60 days of receipt of the information
stated in subsection (a) above, such person shall, if he desires further review,
file a written request for reconsideration with the Committee.

   (c) Review of Document. So long as such person's request for review is
pending (including the 60 day period in subsection (b) above), such person or
his duly authorized representative may review pertinent Plan documents and may
submit issues and comments in writing to the Committee.

   (d) Committee's Final and Binding Decision. A final and binding decision
shall be made by the Committee within 60 days of the filing by such person of
this request for reconsideration; provided, however, that if the Committee, in
its discretion, feels that a hearing with such person or his representative is
necessary or desirable, this period shall be extended for an additional 60 days.

                                        8

<PAGE>

   (e) Transmittal of Decision. The Committee's decision shall be conveyed to
such person in writing and shall (i) include specific reasons for the decision,
(ii) be written in a manner calculated to be understood by such person and (iii)
set forth the specific references to the pertinent Plan provisions on which the
decision is based.

   (f) Limitation on Claims. Notwithstanding any provisions of this Plan to the
contrary, no Participant (nor the estate or other beneficiary of a Participant)
shall be entitled to assert a claim against the Corporation (or against any
Parent or Subsidiary) more than three years after the date the Participant (or
his estate or other beneficiary) initially is entitled to receive benefits
hereunder.

                                        9<PAGE>
                                                                    EXHIBIT 10.3

                            NONSTATUTORY STOCK OPTION

____________________________, Optionee:

Hollis-Eden, Inc. (the "Company") has this day granted to you, the optionee
named above, an option to purchase shares of the common stock of the Company
("Common Stock"). This option is not intended to qualify as and will not be
treated as an "incentive stock option" within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code").

The grant hereunder is in connection with and in furtherance of the Company's
compensatory benefit plan for participation of the Company's employees
(including officers, directors and consultants) and is intended to comply with
the provisions of Rule 701 promulgated by the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Act").

The details of your option are as follows:

1. Number of Option Shares and Vesting. The total number of shares of Common
Stock subject to this option is ______________. Subject to the limitations
contained herein, this option shall vest with respect to each installment shown
below on or after the date of vesting applicable to such installment, as
follows:

DATE OF EARLIEST EXERCISE                           NUMBER OF SHARES
         (VESTING)                                   (INSTALLMENT)

___________ (Commencement Date)                     ______________

The ___ day of each of the 36 months                _____________ shares
following Commencement Date

2.       (a)  Exercise Price.  The exercise price of this option is $__________
per share.

         (b)  Method of Payment. Payment of the exercise price per share is due
in full upon exercise of all or any part of each installment which has accrued
to you. You may elect, to the extent permitted by applicable statutes and
regulations, to make payment of the exercise price under one of the following
alternatives:

               (i)  Payment of the exercise price per share in cash (including
               check) at the time of exercise;

               (ii) Payment pursuant to a program developed under Regulation T
               as promulgated by the Federal Reserve Board which, prior to the
               issuance of Common Stock, results in either the receipt of cash
               (or check) by the Company or the receipt of irrevocable
               instructions to pay the aggregate exercise price to the Company
               from the sales proceeds;

                                                                               1

<PAGE>

                  (iii) Provided that at the time of exercise the Company's
                  Common Stock is publicly traded and quoted regularly in the
                  Wall Street Journal, payment by delivery of already-owned
                  shared of Common Stock, held for the period required to avoid
                  a charge to the Company's reported earnings, and owned free
                  and clear of any liens, claims, encumbrances or security
                  interests, which Common Stock shall be valued at its fair
                  market value on the date of exercise;

                  (iv)  Provided that the option exercise price for the
                  installment, or portion thereof, being purchased is at least
                  one thousand dollars ($1,000), payment pursuant to the
                  deferred payment alternative as described in paragraph 2(c)
                  hereof; or

                  (v)   Payment by a combination of the methods of payment
                  permitted by subparagraph 2(b)(i) through 2(b)(iv) above.

         (c)      Conditions Deferred Payment. In the event that you elect to
make payment of the exercise price pursuant to the deferred payment alternative:

                  (i)   Not less than twenty-five percent (25%) of the aggregate
                  exercise price shall be due at the time of exercise, not less
                  than twenty-five percent (25%) of said exercise price, plus
                  accrued interest, shall be due each year after the date of
                  exercise, and final payment of the remainder of the exercise
                  price, plus accrued interest, shall be due three (3) years
                  from the date of exercise or, at the Company's election, upon
                  termination of your employment with the Company or an
                  affiliate;

                  (ii)  Interest shall be payable at least annually and shall be
                  charged at the minimum rate of interest necessary to avoid the
                  treatment as interest, under any applicable provisions of the
                  Code, of any portion of any amounts other than amounts stated
                  to be interest under the deferred payment arrangement; and

                  (iii) In order to elect the deferred payment alternative, you
                  must, as a part of your written notice of exercise, give
                  notice of the election of this payment alternative and, in
                  order to secure the payment of the deferred exercise price to
                  the Company hereunder, if the Company so requests, you must
                  tender to the Company a promissory note and a security
                  agreement covering the purchased shares, both in form and
                  substance satisfactory to the Company, or such other or
                  additional documentation as the Company may request.

3.       Securities Law Compliance. Notwithstanding anything to the contrary
contained herein, this option may not be exercised unless the shares issuable
upon exercise of this option are then registered under the Act or, if such
shares are not then so registered, the Company has determined that such exercise
and issuance would be exempt from the registration requirements of the Act.

4.       Exercise Prior to Vesting. (a) Subject to the provisions of this option
you may elect at any time during your employment with the Company or an
affiliate thereof, to exercise the option as to any part or all of the shares
subject to this option at any time during the term hereof, including without
limitation, a time prior to the date of earliest exercise ("vesting") stated in
paragraph 1 hereof; provided, however, that:

                                                                               2

<PAGE>

               (i)   a partial exercise of this option shall be deemed to cover
               first vested shares and then the earliest vesting installment of
               uninvested shares;

               (ii)  any shares so purchased from installments which have not
               vested as of the date of exercise shall be subject to the
               purchase option in favor of the Company as described in the Early
               Exercise Stock Purchase Agreement attached hereto; and

               (iii) you shall enter into an Early Exercise Stock Purchase
               Agreement in the form attached hereto with a vesting schedule
               that will result in the same vesting as if no early exercise had
               occurred.

         (b)   The election provided in this paragraph 4 to purchase shares upon
         the exercise of this option prior to the vesting dates shall cease upon
         you "Termination Date" and may not be exercised after the date thereof.
         Your Termination Date shall be the earlier of (i) the termination of
         your services as a director of the Company, or (ii) the termination of
         your service as chairman of the Scientific Advisory Board of the
         Company.

5.       Minimum Exercise. The minimum number of shares with respect to which
this option may be exercised at any one time is one hundred (100), except (a) as
to an installment subject to exercise, as set forth in paragraph 1, which
amounts to fewer than one hundred (100) shares, in which case, as to the
exercise of that installment, the number of shares in such installment shall be
the minimum number of shares, and (b) with respect to the final exercise of this
option this minimum shall not apply. In no event may this option be exercised
for any number of shares which would require the issuance of anything other than
whole shares.

6.       Term. The term of this option commences on _____, 199_ (the date of
grant) and, unless sooner terminated as set forth below, terminated on _______
(the "Expiration Date" which date shall be no more than ten (10) years from the
date this option is granted). In no event may this option be exercised on or
after the date on which it terminates. This option shall terminate prior to the
expiration of its term as follows: three (3) months after your Termination Date
for any reason or for no reason unless:

         (a)   such termination of service is due to your permanent and total
         disability (within the meaning of Section 422(c)(6) of the Code), in
         which event the option shall terminate on the earlier of the Expiration
         Date set forth above or twelve (12) months following such termination
         of service; or

         (b)   such termination of service is due to your death, in which event
         the option shall terminate on the earlier of the Expiration Date set
         forth above or eighteen (18) months after your death; or

         (c)   during any part of such three (3) month period the option is not
         exercisable solely because of the conditioned set forth in paragraph 3
         above, in which event the option shall not terminate until the earlier
         of the Expiration Date set forth above or until it shall have been
         exercisable for an aggregate period of three (3) months after the
         termination of service; or

                                                                               3

<PAGE>

         (d)   exercise of the option within three (3) months after your
         Termination Date would result in liability under section 16(b) of the
         Securities Exchange Act of 1934, in which case the option will
         terminate on the earlier of (i) the Expiration Date set forth above,
         (ii) the tenth (10th) day after the last date upon which exercise would
         result in such liability or (iii) six (6) months and ten (10) days
         after your Termination Date with the Company or an affiliate.

         However, this option may be exercised following your Termination Date
         only as to that number of shares as to which it was exercisable on the
         date of termination of service under the provisions of paragraph 1 of
         this option.

7.       Exercise. (a) This option may be exercised, to the extent specified
above, by delivering a notice of exercise (in a form designated by the Company)
together with the exercise price to the Secretary of the Company, or to such
other person as the Company may designate, during regular business hours,
together with such additional documents as the Company may then reasonably
require.

         (b)      By exercising this option you agree that:

                  (i)  as a precondition to the completion of any exercise of
                  this option, the Company may require you to enter an
                  arrangement providing for the cash payment by you to the
                  Company of any tax withholding obligation of the Company
                  arising by reason of: (1) the exercise of this option; (2) the
                  lapse of any substantial risk of forfeiture to which the
                  shares are subject at the time of exercise; or (3) the
                  disposition of shares acquired upon such exercise; and

                  (ii) the Company (or representative of the underwriters) may,
                  in connection with the first underwritten registration of the
                  offering of any securities of the Company under the Act,
                  require that you not sell or otherwise transfer or dispose of
                  any shares of Common Stock or other securities of the Company
                  during such period (not to exceed one hundred eighty (180)
                  days) following the effective date (the Effective Date") of
                  the registration statement of the Company filed under the Act
                  as may be requested by the Company or the representative of
                  the underwriters. You further agree that the Company may
                  impose stop-transfer instructions with respect to securities
                  subject to the foregoing restrictions until the end of such
                  period.

8.       Covenant of Company.  During the term of this option, the Company shall
keep available at all times the number of shares of stock required to satisfy
the exercise of such option.

9.       Adjustment Upon Changes in Stock. (a) If any change is made in the
stock subject to this option (through merger, consolidation, reorganization,
recapitalization, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or other transaction not involving the receipt of
consideration by the Company), this option will be appropriately adjusted in the
types(s) and number of securities and price per share of stock subject to the
option. Such adjustments shall be made by the Board of Committee, the
determination of which shall be final, binding and conclusive. (The conversion
of any convertible securities of the Company

                                                                               4

<PAGE>

shall not be treated as a "transaction not involving the receipt of
consideration by the Company.")

         (b) In the event of: (i) a merger or consolidation in which the Company
         is not the surviving corporation; or (ii) a reverse merger in which the
         Company is the surviving corporation but the shares of the Company's
         common stock outstanding immediately preceding the merger are converted
         by virtue of the merger into other property, whether in the form of
         securities, cash or otherwise; or (iii) a sale of all or substantially
         all of the assets of the Company, then, to the extent permitted by
         applicable law: (1) any surviving corporation shall assume this option
         or shall substitute a similar option (including an option to acquire
         the same consideration paid to stockholders in the transaction
         described in this subparagraph 9(b), if this option is still
         outstanding, or (2) in the event any surviving corporation refuses to
         assume or continue this option, or to substitute a similar option for
         this option (if still outstanding), then this option shall become fully
         vested and exercisable for a period of 30 days, following which it
         shall be terminated if not exercised during such 30 day period.
         Following any assumption or substitution of this option under this
         subparagraph 9(b), if your service to the Company or its successor is
         terminated other than upon your voluntary resignation, this option
         shall become fully vested and exercisable and shall remain exercisable
         until otherwise terminated in accordance with the provisions of this
         option. In the event of a dissolution or liquidation of the Company,
         this option (if still outstanding) shall terminate if not exercised
         prior to such event.

10.      Transferability. This option is not transferable, except by will or by
the laws of descent and distribution, and is exercisable during your life only
by you. By delivering written notice to the Company, in a form satisfactory to
the Company, you may designate a third party who, in the event of your death,
shall thereafter be entitled to exercise this option.

11.      Option Not a Service Contract. This option is not an employment
contract and nothing in this option shall be deemed to create in any way
whatsoever any obligation on your part to continue in the employ of the Company,
or of the Company to continue your employment with the Company. In the event
that this option is granted to you in connection with the performance of
services as a consultant or director, or in the event that this option is
granted to you in connection with the performance of services as an employee and
you subsequently perform services as a consultant or director, references to
employment, employee and similar terms shall be deemed to include the
performance of services as a consultant or a director, as the case may be,
provided, however, that no rights as an employee shall arise by reason of the
use of such terms.

12.      Notices. Any notices provided for in this option shall be given in
writing and shall be deemed effectively given upon receipt or, in the case of
notices delivered by the Company to you, five (5) days after deposit in the
United States mail, postage prepaid, addressed to you at the address specified
below or at such other address as you hereafter designate by written notice to
the Company.

13.      Amendment. This option may be amended by the Board of Directors (the
"Board") of the Company at any time; provided, however, that any change that
would adversely affect your rights in this option must first be approved by you
in writing before becoming effective.

                                                                               5

<PAGE>

14.   Administration. This option is subject to all interpretations, amendments,
rules and regulations which may form time to time be promulgated and adopted by
the Company. This authority shall be exercised by the Board, or by a committee
of one or more members of the Board in the event that the Board delegated its
authority to a committee. The Board, in exercise of this authority, may correct
any defect, omission or inconsistency in this option in a manner and to the
extent the Board shall deem necessary or desirable to make this option fully
effective. References to the Board shall mean the committee if a committee has
been appointed by the Board. Any interpretations, amendments, rules and
regulations promulgated by the Board shall be final and binding upon the Company
and its successors in interest as well as you and your heirs, assigns, and other
successors in interest.

15. Rights as Stockholder. Neither you nor any person to whom this option is
transferred under paragraph 10 of this option shall be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any shares subject
to this option unless and until such person has satisfied all requirements for
exercise of this option pursuant to its terms.

     Dated the ________ day of ________, 199_ .

                        Very truly your,

                        Hollis-Eden Pharmaceuticals, Inc.

                        By:_________________________________________
                             Duly authorized on behalf of
                             the Board of Directors

                                                                               6

<PAGE>

The undersigned:

         (a) Acknowledges receipt of the foregoing option and the attachments
         referenced therein and understands that all rights and liabilities with
         respect to this option are set forth in the option; and

         (b) Acknowledges that as of the date of grant of this option, it sets
         forth the entire understanding between the undersigned optionee and the
         Company and its affiliates regarding the acquisition of stock in the
         Company and supersedes all prior oral and written agreements on that
         subject with the exception of (i) the options previously granted and
         delivered to the undersigned under stock option plans of the Company,
         and (ii) the following agreements only:

         NONE     _________________
                  (Initial)

         OTHER    _________________________

                  _________________________

                  _________________________

                                                ________________________________

                                                 Address:   ____________________

                                                            ____________________

                                                            ____________________

                                                                               7

<PAGE>

Annex 1

Schedule of Officers and Directors Options

    Name               Quantity       Exercise Price       Grant Date
    ----               --------       --------------       ----------
Paul Bagley              25,000           $2.25           April 1, 1996

Thomas Merigan          125,000            2.25           April 1, 1996

Brendan McDonnell        25,000            2.25           April 1, 1996

Richard Hollis          200,000            2.25           April 1, 1996

Robert Marsella          10,000            2.25           April 1, 1996

Patrick Prendergast      50,000            2.25           April 1, 1996

Robert Weber             40,000            2.25           April 1, 1996

Robert Weber             25,000            2.25           April 1, 1996

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