<PAGE> 1
United States
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A1
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1999
-----------------------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-20791
AMARILLO BIOSCIENCES, INC.
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(Exact name of small business issuer as specified in its charter)
TEXAS 75-1974352
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
800 West Ninth, Amarillo, TX 79101
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(Address of principal executive offices) (Zip Code)
806-376-1741 FAX 806-376-9301
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(Issuer's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No .
--- ---
As of June 30, 1999 there were 6,360,326 shares of the issuer's common stock
outstanding.
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AMARILLO BIOSCIENCES, INC.
INDEX
<TABLE>
<CAPTION>
PART I: FINANCIAL INFORMATION PAGE NO.
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<S> <C> <C>
ITEM 1. Financial Statements
Consolidated Balance Sheets - December 31, 1998 and June
30, 1999.................................................................... 3
Consolidated Statements of Operations - Three Months and
Six Months Ended June 30, 1998 and 1999 and Cumulative
from June 25, 1984 (Inception) through June 30, 1999........................ 4
Condensed Consolidated Statements of Cash Flows - Six
Months Ended June 30, 1998 and 1999 and Cumulative from
June 25, 1984 (Inception) through June 30, 1999............................. 5
Notes to Consolidated Financial Statements.................................. 6
PART II: OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K............................................ 7
Signatures ............................................................................ 10
</TABLE>
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AMARILLO BIOSCIENCES, INC. AND SUBSIDIARIES
(COMPANIES IN THE DEVELOPMENT STAGE)
CONSOLIDATED BALANCE SHEETS
(unaudited)
<TABLE>
<CAPTION>
December 31, June 30,
1998 1999
----------------- -----------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 4,776,328 $ 1,869,062
Other current assets 43,415 32,574
----------------- -----------------
Total current assets 4,819,743 1,901,636
Property and equipment, net 116,761 114,424
Patent license, net of accumulated amortization of $81,177 and
$84,823 at December 31, 1998 and June 30, 1999, respectively 43,823 40,177
Investment in ISI common stock 5,735 738
----------------- -----------------
Total assets $ 4,986,062 $ 2,056,975
================= =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 88,920 $ 61,650
Accrued interest 208,356 --
Other accrued liabilities 20,722 19,086
----------------- -----------------
Total current liabilities 317,998 80,736
Notes payable to related party 2,600,000 --
----------------- -----------------
Total liabilities 2,917,998 80,736
Stockholders' equity:
Common stock, $.01 par value:
Authorized shares - 10,000,000
Issued shares - 6,360,326 54,142 63,603
Additional paid-in capital 13,392,138 16,220,202
Deficit accumulated during the development stage (11,378,216) (14,307,566)
----------------- -----------------
Total stockholders' equity 2,068,064 1,976,239
----------------- -----------------
Total liabilities and stockholders' equity $ 4,986,062 $ 2,056,975
================= =================
</TABLE>
See accompanying notes.
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AMARILLO BIOSCIENCES, INC. AND SUBSIDIARIES
(COMPANIES IN THE DEVELOPMENT STAGE)
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Cumulative
from
June 25,
1984
Three months ended Six months ended (Inception)
June 30, June 30, through
------------------------------------- -------------------------------------- June 30,
1998 1999 1998 1999 1999
------------------------------------- -------------------------------------- ------------------
<S> <C> <C> <C> <C> <C>
Revenues:
Contract revenues $ -- $ -- $ -- $ -- $ 9,000,000
Interferon sales -- -- -- -- 420,974
Interest income 77,664 27,951 167,475 76,638 1,491,275
Sublicense fees -- -- -- -- 113,334
Royalty income -- -- -- -- 31,544
Gain on sale of ISI stock -- -- -- -- 113,972
Other -- -- -- -- 604,431
------------------ ----------------- ------------------ ------------------ ------------------
77,664 27,951 167,475 76,638 11,775,530
Expenses:
Research and
development expenses 351,894 556,355 720,411 2,237,399 13,589,843
Selling, general, and
administrative expenses 260,312 415,090 558,991 739,419 11,612,139
Interest expense 29,250 321 58,500 29,170 846,114
------------------ ----------------- ------------------ ------------------ ------------------
641,456 971,766 1,337,902 3,005,988 26,048,096
------------------ ----------------- ------------------ ------------------ ------------------
Loss before income taxes (563,792) (943,815) (1,170,427) (2,929,350) (14,272,566)
Income tax expense -- -- -- -- 35,000
------------------ ----------------- ------------------ ------------------ ------------------
Net loss $ (563,792) $ (943,815) $ (1,170,427) $ (2,929,350) $ (14,307,566)
================== ================= ================== ================== ==================
Basic and diluted loss
per share $ (0.10) $ (0.15) $ (0.22) $ (0.50)
================== ================= ================== ==================
Weighted average shares
outstanding 5,414,232 6,349,929 5,414,232 5,884,665
================== ================= ================== ==================
</TABLE>
See accompanying notes.
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AMARILLO BIOSCIENCES, INC. AND SUBSIDIARIES
(COMPANIES IN THE DEVELOPMENT STAGE)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Six months ended Cumulative from
June 30, June 25,1984
------------------------------------------- (Inception) through
1998 1999 June 30, 1999
------------------ ------------------- -----------------------
<S> <C> <C> <C>
Net cash used in operating activities $ (997,211) $ (2,901,136) $ (13,071,973)
Net cash used in investing activities 556,356 (6,130) (535,987)
Net cash provided by financing activities -- -- 15,477,019
------------------ ------------------- ----------------------
Net increase (decrease) in cash and cash
equivalents (440,855) (2,907,266) 1,869,059
Cash and cash equivalents at beginning
of period 879,170 4,776,328 --
------------------ ------------------- ----------------------
Cash and cash equivalents at end of
period $ 438,315 $ 1,869,062 $ 1,869,059
================== ==================== ======================
Supplemental Disclosure of Cash Flow
Information
Cash paid for income taxes $ -- $ -- $ 37,084
================== ==================== ======================
Cash paid for interest $ -- $ -- $ 6,466
================== ==================== ======================
</TABLE>
See accompanying notes.
5
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AMARILLO BIOSCIENCES, INC. AND SUBSIDIARIES
(COMPANIES IN THE DEVELOPMENT STAGE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation. The accompanying consolidated financial
statements, which should be read in conjunction with the consolidated
financial statements and footnotes included in the Company's Form
10-KSB, are unaudited (except for the December 31, 1998 consolidated
balance sheet which was derived from the Company's audited financial
statements), but have been prepared in accordance with generally
accepted accounting principles for interim financial information.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting only of normal recurring adjustments) considered necessary
for a fair presentation have been included.
Operating results for the six months ended June 30, 1999 are not
necessarily indicative of the results that may be expected for the
full year ending December 31, 1999.
2. Loss per share. Loss per share is computed based on the weighted
average number of common shares outstanding.
3. Effective April 2, 1999, by agreement between the Company and
Hayashibara Biochemical Laboratories (HBL), two promissory notes dated
September 25, 1996 and September 16, 1997, issued by the Company to
HBL for loans, were converted into common stock of the Company. The
amount converted included principal of $2.6 million, and accrued
interest at $237,526. The total number of shares of common stock of
the Company issued to HBL in consideration for the cancellation of
said notes was 946,094 shares, at $2.9992 per share. The share price
was determined by the average of the high and low price weighted by
volume for the ten trading days prior to April 2, 1999. The shares are
"restricted stock" within the meaning of Rule 144 promulgated under
the U.S. Securities Act of 1933, and must be held for one year before
they can be sold under such rule.
As a consequence of the conversion, HBL's ownership of the Company has
increased from 22.8%, to 34.3%.
6
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBIT INDEX
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------ -------------------------------------------------------------
<S> <C>
3.1 Restated Articles of Incorporation of the Company, dated June
22, 1999.
3.3* Bylaws of the Company.
4.1* Specimen Common Stock Certificate.
4.2* Form of Underwriter's Warrant.
10.1* Agreement dated as of April 1, 1984 between University
Patents, Inc. and the Company.
10.2* License Agreement dated as of March 22, 1988 between the
Company and The Texas A&M University System.
10.3* License Agreement dated October 20, 1989 between the Company
and ISI.
10.4* Manufacturing and Supply Agreement dated October 20, 1989
between the Company and ISI.
10.5* Joint Development and Manufacturing/Supply Agreement dated
March 13, 1992 between the Company and HBL, as amended.
10.6* Amended and Restated Agreement dated as of November 24, 1992
between Mitsubishi and the Company.
10.7* Japan Animal Health License Agreement dated January 20, 1993
between the Company and HBL.
10.9* Employment Agreement dated as of March 4, 1994 between the
Company and Dr. Joseph M. Cummins, as amended.
10.11* Manufacturing/Supply Agreement dated June 1, 1994 between the
Company and HBL.
10.12* Settlement Agreement dated April 27, 1995 among the Company,
ISI, Pharma Pacific Management Pty. Ltd. ("PPM"), Pharma
Pacific Pty. Ltd., Pharma Pacific Ltd., and Fernz Corporation
Limited.
10.13* Amendment of ACC/ISI License Agreement dated April 27, 1995
between the Company and ISI.
10.14* PPM/ACC Sub-license Agreement dated April 27, 1995 between
PPM and the Company.
10.15* License and Supply Agreement dated July 10, 1995 between
Veldona Africa, Inc. ("VAF") and Innovative Therapeutics,
Ltd. ("ITL").
10.16* Pricing Amendment, dated December 5, 1995 between VAF and
ITL.
10.18* Form of Consulting Agreement between the Company and the
Underwriter.
10.19* Research Agreement dated March 25, 1996 between the Company
and Ajinomoto Co., Inc.
10.20 1996 Employee Stock Option Plan, Amended and Restated as of
May 11, 1999.
10.21 Outside Director and Advisor Stock Option Plan, Amended and
Restated as of May 11, 1999.
10.22* Form of Indemnification Agreement between the Company and
officers and directors of the Company.
</TABLE>
7
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<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------ -------------------------------------------------------------
<S> <C>
10.23* Indemnification Agreement between HBL and the Company.
10.24* Stock Purchase Agreement dated as of September 21, 1987
between Mesa Operating Limited Partnership and the Company.
10.26** License Agreement dated July 22, 1997, between Hoffmann-La
Roche Inc., and the Company.
10.27** Distribution Agreement dated January 12, 1998, between Global
Damon Pharmaceutical and the Company.
10.28** Distribution Agreement dated September 17, 1997, between HBL
and the Company (TNF-A).
10.29** Distribution Agreement dated September 17, 1997, between HBL
and the Company (IFN-G).
10.30*** Amendment No. 1 dated September 28, 1998 to License Agreement
of March 22, 1988, between The Texas A&M University System
and the Company.
10.31*** Employment Agreement dated as of November 29, 1998 between
the Company and Kathleen L. Kelleher.
10.32*** Employment Agreement dated as of September 14, 1998 between
the Company and Dr. Philip C. Fox.
10.33*** Employment Agreement dated as of September 14, 1998 between
the Company and John Smith.
10.34*** Engagement Agreement dated as of October 15, 1998 between
Trust Company of the South and the Company.
10.35(a) License Agreement dated June 16, 1999, between North China
Pharmaceutical Group Corporation, and the Company.
21. Subsidiaries of the Company. The following sets forth the
name and jurisdiction of incorporation of each subsidiary of
the Company. All of such subsidiaries are wholly-owned by the
Company.
NAME JURISDICTION OF INCORPORATION
----------------------------- -----------------------------
VANGUARD BIOSCIENCES, INC. TEXAS
VELDONA USA, INC. TEXAS
VELDONA AFRICA, INC. TEXAS
VELDONA POLAND, INC. TEXAS
ABI TAIWAN, INC. TEXAS
AMARILLO CELL OF CANADA, INC. TEXAS
27. Financial Data Schedule
</TABLE>
*The Exhibit is incorporated by reference to the exhibit of the same number to
the Company's Registration Statement on Form SB-2 filed with and declared
effective by the Commission (File No. 333-4413) on August 8, 1996.
**The Exhibit is incorporated by reference to the Company's 1997 Annual Report
on Form 10-KSB filed with the Commission on or before March 31, 1998.
***The Exhibit is incorporated by reference to the Company's 1998 Annual Report
on Form 10-KSB filed with the Commission on or before March 31, 1999.
(a) Portions of this exhibit have been omitted and filed separately with the
Commission.
8
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REPORTS ON FORM 8-K
The Company filed a report on Form 8-K on April 2, 1999. The item reported was
the conversion by Hayashibara Biochemical Laboratories, Inc. ("HBL") of debt
held by it in the amount of $2,837,526, to 946,094 shares of the Company's
common stock. Further information on this conversion is detailed at Note 3 to
the Consolidated Financial Statements contained in Part I of this report.
9
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SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMARILLO BIOSCIENCES, INC.
Date: 10 SEP 99 By: /s/ JOSEPH M. CUMMINS
----------------- ----------------------------------
Joseph M. Cummins
President, Chief Executive Officer
and Chief Financial Officer
10
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EXHIBIT INDEX
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------ -------------------------------------------------------------
<S> <C>
3.1 Restated Articles of Incorporation of the Company, dated June
22, 1999.
3.3* Bylaws of the Company.
4.1* Specimen Common Stock Certificate.
4.2* Form of Underwriter's Warrant.
10.1* Agreement dated as of April 1, 1984 between University
Patents, Inc. and the Company.
10.2* License Agreement dated as of March 22, 1988 between the
Company and The Texas A&M University System.
10.3* License Agreement dated October 20, 1989 between the Company
and ISI.
10.4* Manufacturing and Supply Agreement dated October 20, 1989
between the Company and ISI.
10.5* Joint Development and Manufacturing/Supply Agreement dated
March 13, 1992 between the Company and HBL, as amended.
10.6* Amended and Restated Agreement dated as of November 24, 1992
between Mitsubishi and the Company.
10.7* Japan Animal Health License Agreement dated January 20, 1993
between the Company and HBL.
10.9* Employment Agreement dated as of March 4, 1994 between the
Company and Dr. Joseph M. Cummins, as amended.
10.11* Manufacturing/Supply Agreement dated June 1, 1994 between the
Company and HBL.
10.12* Settlement Agreement dated April 27, 1995 among the Company,
ISI, Pharma Pacific Management Pty. Ltd. ("PPM"), Pharma
Pacific Pty. Ltd., Pharma Pacific Ltd., and Fernz Corporation
Limited.
10.13* Amendment of ACC/ISI License Agreement dated April 27, 1995
between the Company and ISI.
10.14* PPM/ACC Sub-license Agreement dated April 27, 1995 between
PPM and the Company.
10.15* License and Supply Agreement dated July 10, 1995 between
Veldona Africa, Inc. ("VAF") and Innovative Therapeutics,
Ltd. ("ITL").
10.16* Pricing Amendment, dated December 5, 1995 between VAF and
ITL.
10.18* Form of Consulting Agreement between the Company and the
Underwriter.
10.19* Research Agreement dated March 25, 1996 between the Company
and Ajinomoto Co., Inc.
10.20 1996 Employee Stock Option Plan, Amended and Restated as of
May 11, 1999.
10.21 Outside Director and Advisor Stock Option Plan, Amended and
Restated as of May 11, 1999.
10.22* Form of Indemnification Agreement between the Company and
officers and directors of the Company.
10.23* Indemnification Agreement between HBL and the Company.
10.24* Stock Purchase Agreement dated as of September 21, 1987
between Mesa Operating Limited Partnership and the Company.
10.26** License Agreement dated July 22, 1997, between Hoffmann-La
Roche Inc., and the Company.
</TABLE>
<PAGE> 12
<TABLE>
<S> <C>
10.27** Distribution Agreement dated January 12, 1998, between Global
Damon Pharmaceutical and the Company.
10.28** Distribution Agreement dated September 17, 1997, between HBL
and the Company (TNF-A).
10.29** Distribution Agreement dated September 17, 1997, between HBL
and the Company (IFN-G).
10.30*** Amendment No. 1 dated September 28, 1998 to License Agreement
of March 22, 1988, between The Texas A&M University System
and the Company.
10.31*** Employment Agreement dated as of November 29, 1998 between
the Company and Kathleen L. Kelleher.
10.32*** Employment Agreement dated as of September 14, 1998 between
the Company and Dr. Philip C. Fox.
10.33*** Employment Agreement dated as of September 14, 1998 between
the Company and John Smith.
10.34*** Engagement Agreement dated as of October 15, 1998 between
Trust Company of the South and the Company.
10.35(a) License Agreement dated June 16, 1999, between North China
Pharmaceutical Group Corporation, and the Company.
21. Subsidiaries of the Company. The following sets forth the
name and jurisdiction of incorporation of each subsidiary of
the Company. All of such subsidiaries are wholly-owned by the
Company.
NAME JURISDICTION OF INCORPORATION
-------------------------- -----------------------------
VANGUARD BIOSCIENCES, INC. TEXAS
VELDONA USA, INC. TEXAS
VELDONA AFRICA, INC. TEXAS
VELDONA POLAND, INC. TEXAS
ABI TAIWAN, INC. TEXAS
AMARILLO CELL OF CANADA, INC. TEXAS
27. Financial Data Schedule
</TABLE>
*The Exhibit is incorporated by reference to the exhibit of the same number to
the Company's Registration Statement on Form SB-2 filed with and declared
effective by the Commission (File No. 333-4413) on August 8, 1996.
**The Exhibit is incorporated by reference to the Company's 1997 Annual Report
on Form 10-KSB filed with the Commission on or before March 31, 1998.
***The Exhibit is incorporated by reference to the Company's 1998 Annual Report
on Form 10-KSB filed with the Commission on or before March 31, 1999.
(a) Portions of this exhibit have been omitted and filed separately with the
Commission.
<PAGE> 1
EXHIBIT 3.1
AMARILLO BIOSCIENCES, INC.
RESTATED ARTICLES OF INCORPORATION
ARTICLE I
AMARILLO BIOSCIENCES, INC., pursuant to the provisions of Article 4.07
of the Texas Business Corporation Act, hereby adopts Restated Articles of
Incorporation which accurately copy the Articles of Incorporation and all
amendments thereto that are in effect to date and as further amended by such
Restated Articles of Incorporation as hereinafter set forth and which contain no
other change in any provision thereof.
ARTICLE II
The Articles of Incorporation of the Corporation are amended by the
Restated Articles of Incorporation as follows:
Article Four is amended by changing the number of shares authorized in
the first paragraph thereof from "ten million (10,000,000)" to "twenty million
(20,000,000)".
A new Article Five is adopted, which Article Five shall read in its
entirety as follows:
"ARTICLE FIVE
The Corporation shall have the authority to issue ten million
(10,000,000) shares of preferred stock, one cent ($.01) par value. The
Board of Directors of the Corporation shall have authority to establish
series of the unissued preferred stock of the Corporation by affixing
and determining the designations, preferences, limitations, and
relative rights, including voting rights, of the shares of any series
so established to the same extent that such designations, preferences,
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limitations and relative rights could be stated if fully set
forth in these Articles of Incorporation."
Articles Five, Six and Seven, as so designated prior to the
addition of the new Article Five, shall be redesignated as Articles Six, Seven
and Eight, respectively.
ARTICLE III
The amendments made by these Restated Articles of Incorporation
have been effected in conformity with the provisions of the Texas Business
Corporation Act and such Restated Articles of Incorporation and the amendments
made by the Restated Articles of Incorporation were duly adopted by the
Shareholders of the Corporation on the 11th day of June, 1999.
ARTICLE IV
The number of shares of the Corporation outstanding at the time of such
adoption was 5,414,232, and the number of shares entitled to vote thereon was
5,414,232. The number of shares voted for such amendment was 3,616,162, and the
number of shares voted against such amendment was 24,300.
ARTICLE V
The amendment effects no change in the amount of stated capital of the
Corporation.
ARTICLE VI
A new Article Eight is added to the Articles of Incorporation, stating
the current names and addresses of the Directors of the Corporation, which
Article Eight shall read as follows:
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ARTICLE EIGHT
The names and addresses of the Directors of the Corporation are:
NAME ADDRESS
---- -------
Joseph M. Cummins 800 W. 9th
Amarillo, TX 79101
Katsuaki Hayashibara 800 W. 9th
Amarillo, TX 79101
James Cook 800 W. 9th
Amarillo, TX 79101
Dennis Moore 800 W. 9th
Amarillo, TX 79101
Steve Chen 800 W. 9th
Amarillo, TX 79101
Dr. James Page 800 W. 9th
Amarillo, TX 79101
Tom D'Alonzo 800 W. 9th
Amarillo, TX 79101
Brian McLean 800 W. 9th
Amarillo, TX 79101
Richard Franco 800 W. 9th
Amarillo, TX 79101
Ed Amento 800 W. 9th
Amarillo, TX 79101
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ARTICLE VII
The Articles of Incorporation and all amendments and supplements
thereto are hereby superseded by the following Restated Articles of
Incorporation which accurately copy the entire text thereof and as amended as
above set forth:
ARTICLE ONE
The name of the Corporation is AMARILLO BIOSCIENCES, INC.
ARTICLE TWO
The period of its duration is perpetual.
ARTICLE THREE
The purpose or purposes for which the Corporation is organized are:
(1) To transact all lawful business of every kind and character for
which a Corporation may be incorporated under the Texas Business Corporate Act.
(2) To prepare, write, make, provide, record, transcribe, computerize,
and/or generate data, information, articles, papers, forms, projections,
figures, and the application of the same, as well as to disseminate and publish
such materials and documentation thereof, and to market and sell the same.
(3) To develop, write, make, buy, file, prepare, license, sublicense
patents related to medicine, veterinary medicine, and/or agriculture and to
market and sell the same.
(4) To make, have made, use, sell or otherwise transfer substances
intended for human or nonhuman administration which, or the use or manufacture
of which, is covered in whole or in part by a claim of a Licensed Patent in the
country of manufacture, use, or sale.
(5) To engage for profit in the business of professional consultations
in such form and manner as will serve the medical, veterinary medical,
agricultural and/or livestock industries, as well as related industries.
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<PAGE> 5
(6) To purchase, own, hold, operate, rent, lease, sell, convey and deal
in real property, personal property and services incidental to the purposes of
the Corporation, subject to Part Four, Texas Miscellaneous Corporation Laws Act.
ARTICLE FOUR
The Corporation shall have authority to issue twenty million
(20,000,000) shares of capital stock, one cent ($.01) par value.
No holder of shares of any class of the Corporation shall have the
preemptive right to subscribe for or acquire additional shares of the
Corporation of the same or any other class, whether such shares shall be hereby
or hereafter authorized; and no holder of shares of any class of the Corporation
shall have any right to acquire any shares which may be held in the Treasury of
the Corporation. All such additional or Treasury shares may be sold for such
consideration, at such time, and to such person or persons as the Board of
Directors may from time to time determine.
The Corporation may purchase, directly or indirectly, its own shares to
the extent of the aggregate of unrestricted capital surplus available therefor
and unrestricted reduction surplus available therefor.
The right to cumulate votes in the election of directors is expressly
prohibited.
ARTICLE FIVE
The Corporation shall have the authority to issue ten million
(10,000,000) shares of preferred stock, one cent ($.01) par value. The Board of
Directors of the Corporation shall have authority to establish series of the
unissued preferred stock of the Corporation by affixing and determining the
designations, preferences, limitations, and relative rights, including voting
rights, of the shares of any series so established to the same extent that such
designations, preferences, limitations and relative rights could be stated if
fully set forth in these Articles of Incorporation.
ARTICLE SIX
The Corporation will not commence business until it has received for
the issuance of its shares a consideration of the value of One Thousand
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<PAGE> 6
Dollars ($1,000), consisting of money, labor done or property actually
received.
ARTICLE SEVEN
The address of the Corporation's registered office is 800 West 9th
Street, Amarillo, Texas 79101, and the name of its registered agent at such
address is JOSEPH M. CUMMINS.
ARTICLE EIGHT
The names and addresses of the Directors of the Corporation are:
NAME ADDRESS
---- -------
Joseph M. Cummins 800 W. 9th
Amarillo, TX 79101
Katsuaki Hayashibara 800 W. 9th
Amarillo, TX 79101
James Cook 800 W. 9th
Amarillo, TX 79101
Dennis Moore 800 W. 9th
Amarillo, TX 79101
Steve Chen 800 W. 9th
Amarillo, TX 79101
Dr. James Page 800 W. 9th
Amarillo, TX 79101
Tom D'Alonzo 800 W. 9th
Amarillo, TX 79101
Brian McLean 800 W. 9th
Amarillo, TX 79101
Richard Franco 800 W. 9th
Amarillo, TX 79101
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<PAGE> 7
Ed Amento 800 W. 9th
Amarillo, TX 79101
DATED this ____ day of June, 1999.
AMARILLO BIOSCIENCES, INC.
By:
----------------------------
Joseph M. Cummins, President
THE STATE OF TEXAS )
COUNTY OF POTTER )
BEFORE ME, a notary public, on this day personally appeared JOSEPH M.
CUMMINS, known to me to be the person whose name is subscribed to the foregoing
document and, being by me first duly sworn, declares that the statements therein
contained are true and correct.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this ____ day of
__________________, 1999.
-------------------------------
Notary Public, State of Texas
My Commission Expires:________
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<PAGE> 1
EXHIBIT 10.20
AMARILLO BIOSCIENCES, INC.
1996 EMPLOYEE STOCK OPTION PLAN
AMENDED AND RESTATED AS OF
MAY 11, 1999
ARTICLE I -- GENERAL
1.01. PURPOSES.
The purposes of this 1996 Employee Stock Option Plan (the
"Plan") are to: (1) closely associate the interests of the management of
AMARILLO BIOSCIENCES, INC. ("ABI") and its Subsidiaries and Affiliates
(collectively referred to as the "Company") with the shareholders by reinforcing
the relationship between participants' rewards and shareholder gains; (2)
provide management with an equity ownership in the Company commensurate with
Company performance, as reflected in increased shareholder value; (3) maintain
competitive compensation levels; and (4) provide an incentive to management for
continuous employment with the Company.
1.02. ADMINISTRATION.
(a) The Plan shall be administered by a committee of directors
appointed by the Board of Directors of ABI (the "Committee"), as constituted
from time to time. The Committee shall consist of at least two members of the
Board. Notwithstanding anything in this Section 1.02 to the contrary, so long as
any equity security of the Company is registered under Section 12 of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), or any successor
statute, all authority to exercise discretion with respect to participation in
the Plan by persons who are (i) "officers" within the meaning of the applicable
Securities and Exchange Commission rules and regulations relating to Section 16
of the 1934 Act, or any successor statute, (ii) directors of the Company and/or
(iii) beneficial owners of more than ten percent (10%) of any class of equity
securities of the Company who are otherwise eligible to participate in the Plan,
and the timing, pricing, amounts and other terms and conditions of awards
granted under the Plan to such officers, directors and beneficial owners, shall
be vested in the Committee, if all of the members of the Committee are
disinterested persons within the meaning ascribed to such term in Rule 16b-3
promulgated under the 1934 Act, or within any successor definition or under any
successor rule ("disinterested persons").
(b) The Committee shall have the authority, in its sole
discretion and from time to time to:
(i) designate the employees or classes of employees
eligible to participate in the Plan;
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(ii) grant awards provided in the Plan in such form and
amount, and subject to such vesting, as the Committee
shall determine, provided that in no event shall the
period for vesting be longer than that set forth in
Section 2.04, below.
(iii) impose such limitations, restrictions and conditions
upon any such awards as the Committee shall deem
appropriate; and
(iv) interpret the Plan, adopt, amend and rescind rules
and regulations relating to the Plan, and make all
other determinations and take all other action
necessary or advisable for the implementation and
administration of the Plan.
(c) Decisions and determinations of the Committee on all
matters relating to the Plan shall be in its sole discretion and shall be
conclusive. No member of the Committee shall be liable for any action taken or
decision made in good faith relating to the Plan or any award thereunder.
(d) With respect to persons subject to Section 16 of the
Securities Exchange act of 1934 (the "1934 Act"), transactions under the Plan
are intended to comply with all applicable conditions of Rule 16b-3 or its
successor under the 1934 Act. To the extent any provision of the Plan or action
by the Board of Directors 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 of Directors or the Committee, as applicable.
(e) All usual and reasonable expenses of the Committee shall
be paid by the Company, and no member shall receive compensation with respect to
his services for the Committee except as may be authorized by the Board of
Directors. The Board of Directors and the Committee may employ attorneys,
consultants, accountants or other persons, and the Board of Directors, the
Committee, the Company and its officers and directors shall be entitled to rely
upon the advice, opinions or valuations of any such persons. All actions taken
and all interpretations and determinations made by the Board of Directors or
the Committee in good faith shall be final and binding upon all Employees who
have received awards, and upon the Company and all other interested persons. No
member of Board of Directors or the Committee shall be personally liable for any
action, determination, or interpretation taken or made in good faith with
respect to the Plan or awards made thereunder, and the Company shall indemnify
and hold harmless each member of the Board of Directors or the Committee against
all loss, cost, expenses or damages, occasioned by any act or omission to act in
connection with any such action, determination or interpretation under or of the
Plan, consistent with the Company's certificate of incorporation and bylaws.
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1.03. ELIGIBILITY FOR PARTICIPATION.
Participants in the Plan shall be selected by the Committee
from among the employees of the Company. In making this selection and in
determining the form and amount of awards, the Committee shall consider any
factors deemed relevant, including the individual's functions, responsibilities,
value of services to the Company and past and potential contributions to the
Company's profitability and sound growth.
1.04. TYPES OF AWARDS UNDER PLAN.
Awards under the Plan will be in the form of Incentive Stock
Options, as described in Article II; provided, however, that Limited Rights, as
described in Article III, may be awarded with respect to Options concurrently or
previously awarded.
1.05. AGGREGATE LIMITATION ON AWARDS.
(a) Shares of stock which may be issued under the Plan shall
be authorized and unissued or treasury shares of Common Stock of ABI ("Common
Stock"). The maximum number of shares of Common Stock which may be issued under
the Plan shall be five hundred ninety thousand (590,000) shares. The maximum
number of shares of Common Stock with respect to which Incentive Stock Options
may be granted in any one year to any employee shall not exceed one hundred
fifty thousand (150,000).
(b) In addition to shares of Common Stock actually issued
pursuant to the exercise of Incentive Stock Options, there shall be deemed to
have been issued a number of shares equal to the number of shares of Common
Stock in respect of which Limited Rights (as described in Article III) shall
have been exercised.
(c) Any shares of Common Stock subject to an Incentive Stock
Option which for any reason is terminated unexercised or expires shall again be
available for issuance under the Plan, but shares subject to an Incentive Stock
Option which are not issued as a result of the exercise of Limited Rights shall
not again be available for issuance under the Plan.
1.06. EFFECTIVE DATE AND TERM OF PLAN.
(a) The Plan shall become effective on the date approved by
the holders of a majority of the shares of Common Stock present in person or by
proxy and entitled to vote at the 1996 Annual Meeting of Shareholders of ABI.
(b) No awards shall be made under the Plan after the last day
of the Company's 2001 fiscal year provided, however, that the Plan and all
awards made under the Plan prior to such
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date shall remain in effect until such awards have been satisfied or terminated
in accordance with the Plan and the terms of such awards.
ARTICLE II -- INCENTIVE STOCK OPTIONS
2.01. AWARD OF INCENTIVE STOCK OPTIONS.
The Committee may, from time to time and subject to the
provisions of the Plan and such other terms and conditions as the Committee may
prescribe, grant to any participant in the Plan one or more "Incentive Stock
Options," intended to qualify as such under the provisions of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code") ("Incentive Stock
Options") to purchase for cash the number of shares of Common Stock allotted by
the Committee. The date an Incentive Stock Option is granted shall mean the date
selected by the Committee as of which the Committee allots a specific number of
shares to a participant pursuant to the Plan.
2.02. INCENTIVE STOCK OPTION AGREEMENTS.
The grant of an Incentive Stock Option shall be evidenced by a
written Incentive Stock Option Agreement, executed by the Company and the holder
of an Incentive Stock Option (the "Optionee"), stating the number of shares of
Common Stock subject to the Incentive Stock Option evidenced thereby, and in
such form as the Committee may from time to time determine.
2.03. INCENTIVE STOCK OPTION PRICE.
The Option Price per share of Common Stock deliverable upon
the exercise of an Incentive Stock Option shall be 100% of the Fair Market Value
of a share of Common Stock on the date the Incentive Stock Option is granted;
provided, however, that with respect to any Optionee who owns stock possessing
more than 10% of the total combined voting power of all classes of stock of ABI
or of its parent or Subsidiary corporation (with such ownership determined in
view of the attribution provisions of Section 424(d) of the Code), the Option
Price per share of Common Stock deliverable upon the exercise of an Incentive
Stock Option shall be 110% of the Fair Market Value of a share of Common Stock
on the date the Incentive Stock Option is granted. The Committee shall determine
the date on which an option is granted, provided that such date is consistent
with the Code and any applicable rules or regulations thereunder; in the absence
of such determination, the date on which the Committee adopts a resolution
granting an option shall be considered the date on which such option is granted,
provided the Employee to whom the option is granted is promptly notified of the
grant and a written option agreement is duly executed as of the date of the
resolution.
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2.04. TERM AND EXERCISE.
Each Incentive Stock Option for employees who are not 10%
owners is exercisable during a period of ten years from the date of grant
thereof (the "Option Term"), subject to the Vesting Schedule for Employees who
are not 10% Owners, set forth below. With respect to any Optionee who at the
time the Option is granted owns stock possessing more than 10% of the total
combined voting power of all classes of stock of ABI or of its parent or
Subsidiary corporation (with such ownership determined pursuant to the
attribution rules set forth in Section 424(d) of the Code), each Incentive Stock
Option is exercisable during a period of five years from the date of grant
thereof, subject to the Vesting Schedule for Employees who are 10% Owners, set
forth below. No Incentive Stock Option shall be exercisable after the expiration
of its Option Term. The Committee may also in its sole discretion accelerate the
exerciseability or vesting of any option or installment thereof at any time.
VESTING SCHEDULE FOR EMPLOYEES WHO ARE NOT 10% OWNERS. Options
awarded shall be exercisable, subject to the other terms and conditions of the
Plan, only upon the expiration of the designated number of years of active
employment with the Company from date of award, as provided below:
20% of Options awarded - 1 year
40% of Options awarded - 2 years
60% of Options awarded - 3 years
80% of Options awarded - 4 years
100% of Options awarded - 5 years
VESTING SCHEDULE FOR EMPLOYEES WHO ARE 10% OWNERS.
25% of Options awarded - 1 year
50% of Options awarded - 2 years
75% of Options awarded - 3 years
100% of Options awarded - 4 years
Except as provided in Sections 2.06, 2.07 and 2.08 hereof, no
Incentive Stock Option shall be exercised at any time unless the holder thereof
is then a regular full-time employee of the Company or one of its subsidiaries.
2.05. MAXIMUM AMOUNT OF INCENTIVE STOCK OPTION GRANT.
In no event shall the aggregate Fair Market Value of all
Common Stock (determined at the time the option is granted) with respect to
which Incentive Stock Options are exercisable for the first time by an
individual during any calendar year (under all plans of the Company and its
subsidiaries) exceed $100,000.
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2.06. DEATH OF OPTIONEE.
(a) Upon the death of the Optionee, any Incentive Stock Option
exercisable on the date of death may be exercised by the Optionee's estate or by
a person who acquires the right to exercise such Incentive Stock Option by
bequest or inheritance or by reason of the death of the Optionee, provided that
such exercise occurs within both the remaining Option Term of the Incentive
Stock Option and one year after the Optionee's death.
(b) The provisions of this Section shall apply notwithstanding
the fact that the Optionee's employment may have terminated prior to death, but
only to the extent of any Incentive Stock Options exercisable on the date of
death.
2.07. RETIREMENT OR DISABILITY.
Upon the termination of the Optionee's employment by reason of
permanent disability (as defined herein) or retirement (as determined by the
Committee), the Optionee may, within 36 months from the date of such termination
of employment, exercise any Incentive Stock Options to the extent such Incentive
Stock Options were exercisable at the date of such termination of employment.
Notwithstanding the foregoing, the tax treatment available pursuant to Section
422 of the Code upon the exercise of an Incentive Stock Option will not be
available to an Optionee who exercises any Incentive Stock Options more than (i)
12 months after the date of termination of employment due to permanent
disability or (ii) three months after the date of termination of employment due
to retirement. For purposes hereof, "permanent disability" shall have the
meaning set forth in Section 22(e)(3) of the Code or any successor provision
thereto.
2.08. TERMINATION FOR OTHER REASONS.
Except as provided in Sections 2.06 and 2.07 or except as
otherwise determined by the Committee, all Incentive Stock Options shall
terminate upon the termination of the Optionee's employment; provided, however,
that if the Optionee's employment was involuntarily terminated (with or without
cause), Optionee may exercise, during a 90-day period commencing with date of
termination, all Options theretofore vested, or which vest during said 90-day
period, under the Vesting Schedules set forth in Paragraph 2.04, above. At the
end of the 90-day period, all rights of such Optionee under any then outstanding
option or right shall terminate and shall be forfeited immediately as to any
unexercised portion thereof.
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2.09. MANNER OF PAYMENT.
Each Stock Option Agreement shall set forth the procedure
governing the exercise of the Stock Option granted thereunder, and shall provide
that, upon such exercise in respect of any shares of Common Stock subject
thereto, the Optionee shall pay to the Company, in full, the Option Price for
such shares with cash or in shares of the Common Stock, valued at the Fair
Market Value per Share on the date of exercise.
2.10. ISSUANCE OF SHARES.
As soon as practicable after receipt of payment, the Company
shall deliver to the Optionee a certificate or certificates for such shares of
Common Stock. The Optionee shall become a shareholder of the Company with
respect to Common Stock represented by share certificates so issued and as such
shall be fully entitled to receive dividends, to vote and to exercise all other
rights of a shareholder.
2.11. EFFECT OF EXERCISE.
The exercise of any Stock Option shall cancel that number of
related Limited Rights, if any, which is equal to the number of shares of Common
Stock purchased pursuant to said Option.
2.12. RULE 16b-3 EXEMPTION.
Options granted under the Plan shall comply with the
applicable provisions of Rule 16b-3 promulgated under the 1934 Act, or any
successor, and shall contain such additional conditions or restrictions as may
be required thereunder to qualify for the maximum exemption from Section 16 of
the 1934 Act with respect to Plan transactions.
ARTICLE III -- LIMITED RIGHTS
3.01. AWARD OF LIMITED RIGHTS.
Concurrently with or subsequent to the award of any Incentive
Stock Option, the Committee may, subject to the provisions of the Plan and such
other terms and conditions as the Committee may prescribe, award to the Optionee
with respect to each Option, a related limited right permitting the Optionee,
during a specified limited time period, to be paid the appreciation on the
Common Stock in lieu of exercising the Option ("Limited Right").
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3.02. LIMITED RIGHTS AGREEMENT.
Limited Rights granted under the Plan shall be evidenced by
written agreements in such form as the Committee may from time to time
determine.
3.03. EXERCISE PERIOD.
Limited Rights shall (and must) be exercised immediately
preceding or simultaneous with the date of a Change in Control of ABI (the
"Exercise Period"), and all Limited Rights held by the Optionee shall be
exercised during such Exercise Period, without regard to the Vesting Schedules
set forth in Paragraph 2.04; provided, however, that if a Change in Control
shall have occurred without notice or opportunity for exercise of Limited
Rights, then the Limited Rights shall be exercised as soon as practicable after
a determination has been made that a "Change in Control" has occurred, or has
been deemed to have occurred.
As used in the Plan, a "Change in Control" shall be deemed to
have occurred if
(a) individuals who were directors of ABI, immediately prior
to a Control Transaction shall cease, within one year of such Control
Transaction, to constitute a majority of the Board of Directors of ABI (or of
the Board of Directors of any successor to ABI or to all or substantially all
of its assets), or
(b) any entity, person or Group other than ABI or a Subsidiary
of ABI or Hayashibara Biochemical Laboratories, Inc. or an Affiliate thereof
acquires shares of ABI in a transaction or series of transactions that result in
such entity, person or Group directly or indirectly owning beneficially
fifty-one percent (51%) or more of the outstanding shares.
As used herein, "Control Transaction" shall be
(i) any tender offer for or acquisition of capital stock
of ABI,
(ii) any merger, consolidation, or sale of all or
substantially all of the assets of ABI which has been
approved by the shareholders,
(iii) any contested election of directors of ABI, or
(iv) any combination of the foregoing;
which results in a change in voting power sufficient to elect a majority of the
Board of Directors of ABI. As used herein, "Group" shall mean persons who act in
concert as described in Sections 13(d)(3) and/or 14(d)(2) of the Securities
Exchange Act of 1934, as amended.
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3.04. AMOUNT OF PAYMENT.
The amount of payment to which an Optionee shall be entitled
upon the exercise of each Limited Right shall be equal to 100% of the amount, if
any, which is equal to the difference between the Fair Market Value per share of
Common Stock covered by the related Option on the date the Option was granted
and the Market Price of a share of such Common Stock. Market Price is defined to
be the greater of (i) the highest price per share of the Company's Common Stock
paid in connection with any Change in Control and (ii) the highest price per
share of the Company's Common Stock paid pursuant to an unsolicited brokerage
transaction during the 60-day period prior to the Change in Control.
3.05. FORM OF PAYMENT.
Payment of the amount to which an Optionee is entitled upon
the exercise of Limited Rights, as determined pursuant to Section 3.04, shall be
made solely in cash.
3.06. EFFECT OF EXERCISE.
If Limited Rights are exercised, the Stock Options related to
such Limited Rights cease to be exercisable to the extent of the number of
shares with respect to which the Limited Rights were exercised. Upon the
exercise or termination of the Options related to such Limited Rights, the
Limited Rights granted with respect thereto terminate to the extent of the
number of shares as to which the related Options were exercised or terminated.
3.07. RETIREMENT OR DISABILITY.
Upon termination of the Optionee's employment with the Company
by reason of permanent disability or retirement (as each is determined by the
Committee), the Optionee may, within 36 months from the date of termination,
exercise any Limited Right to the extent such Limited Right is otherwise
exercisable during such 36-month period.
3.08. DEATH OF OPTIONEE OR TERMINATION FOR OTHER REASONS.
Except as provided in Section 3.07, or except as otherwise
determined by the Committee, all Limited Rights granted under the Plan shall
terminate upon the termination of the Optionee's employment with the Company, or
upon the death of the Optionee.
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ARTICLE IV -- MISCELLANEOUS
4.01. GENERAL RESTRICTION.
Each award under the Plan shall be subject to the requirement
that, if at any time the Committee shall determine that (i) the listing,
registration or qualification of the shares of Common Stock subject or related
thereto upon any securities exchange or under any state or federal law, or (ii)
the consent or approval of any government regulatory body, or (iii) an agreement
by the grantee of an award with respect to the disposition of shares of Common
Stock, is necessary or desirable as a condition of, or in connection with, the
granting of such award or the issue or purchase of shares of Common Stock
thereunder, such award may not be consummated in whole or in part unless such
listing, registration, qualification, consent, approval or agreement shall have
been effected or obtained free of any conditions not acceptable to the
Committee.
4.02. NON-ASSIGNABILITY.
No award under the Plan shall be assignable or transferable by
the recipient thereof, except by will or by the laws of descent and
distribution. During the life of the recipient, such award shall be exercisable
only by such person or by such person's guardian or legal representative.
4.03. RIGHT TO TERMINATE EMPLOYMENT.
Nothing in the Plan or in any agreement entered into pursuant
to the Plan shall confer upon any participant the right to continue in the
employment of the Company or affect any right which the Company may have to
terminate the employment of such participant.
4.04. NON-UNIFORM DETERMINATIONS.
The Committee's determinations under the Plan (including
without limitation determinations of the persons to receive awards, the form,
amount and timing of such awards, the terms and provisions of such awards and
the agreements evidencing same) need not be uniform and may be made by it
selectively among persons who receive, or are eligible to receive, awards under
the Plan, whether or not such persons are similarly situated.
4.05. RIGHTS AS A SHAREHOLDER.
The recipient of any award under the Plan shall have no rights
as a shareholder with respect thereto unless and until certificates for shares
of Common Stock are issued to him.
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4.06. DEFINITIONS.
In this Plan the following definitions (along with other
definitions set forth elsewhere in the Plan) shall apply:
(a) "Affiliate" means any person or entity which directly, or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with ABI.
(b) "Fair Market Value" means, as of any date, the value of
Common Stock determined as follows:
(i) If the Common Stock is listed on any established
stock exchange or a national market system,
including without limitation the National Market
System of the National Association of Securities
Dealers, Inc. Automated Quotation ("NASDAQ")
System, the Fair Market Value of a Share of
Common Stock shall be the closing sales price for
such stock (or the closing bid, if no sales were
reported) as quoted on such system or exchange
(or the exchange with the greatest volume of
trading in Common Stock) on the date of grant, as
reported in The Wall Street Journal or such
other source as the Board deems reliable;
(ii) If the Common Stock is quoted on the NASDAQ
System (but not on the National Market System
thereof) or regularly quoted by a recognized
securities dealer but selling prices are not
reported, the Fair Market Value of a Share of
Common Stock shall be the mean between the bid
and asked prices for the Common Stock on the last
market trading day prior to the day of
determination, as reported in The Wall Street
Journal or such other source as the Board deems
reliable; or
(iii) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall
be determined in good faith by the Committee.
(c) "Option" means Incentive Stock Option.
(d) "Option Price" means the purchase price per share of
Common Stock deliverable upon the exercise of an Incentive Stock Option.
(e) "Subsidiary" means any corporation of which, at the time
more than 50% of the shares entitled to vote generally in an election of
directors are owned directly or indirectly by ABI or any Subsidiary thereof.
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4.07. LEAVES OF ABSENCE.
The Committee shall be entitled to make such rules,
regulations and determinations as it deems appropriate under the Plan in respect
of any leave of absence taken by the recipient of any award. Without limiting
the generality of the foregoing, the Committee shall be entitled to determine
(i) whether or not any such leave of absence shall constitute a termination of
employment within the meaning of the Plan and (ii) the impact, if any, of any
such leave of absence on awards under the Plan theretofore made to any recipient
who takes such leave of absence.
4.08. NEWLY ELIGIBLE EMPLOYEES.
The Committee shall be entitled to make such rules,
regulations, determinations and awards as it deems appropriate in respect of any
employee who becomes eligible to participate in the Plan or any portion thereof
after the commencement of an award or incentive period.
4.09. ADJUSTMENTS.
In the event of any change in the outstanding Common Stock by
reason of a stock dividend or distribution, recapitalization, merger,
consolidation, split-up, combination, exchange of shares or the like, the
Committee shall appropriately adjust the number of shares of Common Stock which
may be issued under the Plan, the number of shares of Common Stock subject to
Options theretofore granted under the Plan, the Option Price of Options
theretofore granted under the Plan, the amount and terms of any Limited Rights
theretofore awarded under the Plan, and any and all other matters deemed
appropriate by the Committee.
4.10. AMENDMENT OF THE PLAN.
(a) The Committee may, without further action by the
shareholders and without receiving further consideration from the participants,
amend this Plan or condition or modify awards under this Plan in response to
changes in securities or other laws or rules, regulations or regulatory
interpretations thereof applicable to this Plan or to comply with stock exchange
rules or requirements.
(b) The Committee may at any time and from time to time
terminate or modify or amend the Plan in any respect, except that without
shareholder approval the Committee may not (i) increase the maximum number of
shares of Common Stock which may be issued under the Plan (other than increases
pursuant to Section 4.10), (ii) extend the period during which any award may be
granted or exercised, or (iii) extend the term of the Plan. The termination or
any modification or amendment of the Plan, except as provided in subsection (a),
shall not without the consent of a participant, affect his or her rights under
an award previously granted to him or her.
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4.11. DISPOSITION OF OPTION SHARES; WITHHOLDING TAXES.
Upon the disposition (within the meaning of Code Section
424(c)) of shares of Common Stock acquired pursuant to the exercise of an
Incentive Stock Option prior to the expiration of the holding period
requirements of Code Section 422(a)(1), the Optionee shall be required to give
notice to the Company of such disposition and the Company shall have the right
to require the Optionee to pay to the Company the amount of any taxes that are
required by law to be withheld with respect to such disposition.
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EXHIBIT 10.21
AMARILLO BIOSCIENCES, INC.
OUTSIDE DIRECTOR AND ADVISOR STOCK OPTION PLAN
AMENDED AND RESTATED AS OF
MAY 11, 1999
ARTICLE I -- GENERAL
1.01. PURPOSES.
The purposes of this Outside Director and Advisor Stock Option
Plan (the "Plan") are to: (1) closely associate the interests of the Outside
Directors and Scientific Advisors of AMARILLO BIOSCIENCES, INC. ("ABI") and its
Subsidiaries and Affiliates (collectively referred to as the "Company") with the
shareholders by reinforcing the relationship between participants' rewards and
shareholder gains; (2) provide ABI's Outside Directors and Scientific Advisors
with an equity ownership in the Company commensurate with Company performance,
as reflected in increased shareholder value; and (3) provide an incentive to
Outside Directors and Scientific Advisors for continuous association with the
Company. The Plan is not an incentive stock option plan within the meaning of
Section 422 of the Internal Revenue Code of 1986 (the "Code").
1.02. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by a Committee of persons
appointed by the Board of Directors of ABI (the "Committee"), as constituted
from time to time. The Committee shall consist of at least two members of the
Board.
(b) The Committee shall have the authority, in its sole
discretion and from time to time, to:
(i) designate the Directors and Advisors eligible to
participate in the Plan;
(ii) grant awards provided in the Plan in such form and
amount, and subject to such vesting, as the
Committee shall determine, provided that in no event
shall the period for vesting be longer than that set
forth in Section 2.04, below.
(iii) impose such limitations, restrictions and conditions
upon any such awards as the Committee shall deem
appropriate; and
(iv) interpret the Plan, adopt, amend and rescind rules
and regulations relating to the Plan, and make all
other determinations and take all
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other action necessary or advisable for the
implementation and administration of the Plan.
(c) Decisions and determinations of the Committee on all
matters relating to the Plan shall be conclusive. No member of the Committee
shall be liable for any action taken or decision made in good faith relating to
the Plan or any award thereunder.
(d) With respect to persons subject to Section 16 of the 1934
Act, transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successor under the 1934 Act. To the extent any
provision of the Plan or action by the Board of Directors 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 of Directors or the Committee, as applicable.
(e) All usual and reasonable expenses of the Committee shall
be paid by the Company, and no member shall receive compensation with respect to
his services for the Committee except as may be authorized by the Board of
Directors. The Board of Directors and the Committee may employ attorneys,
consultants, accountants or other persons, and the Board of Directors, the
Committee, the Company and its officers and directors shall be entitled to rely
upon the advice, opinions or valuations of any such persons. All actions taken
and all interpretations and determinations made by the Board of Directors or
the Committee in good faith shall be final and binding upon all person who have
received awards, and upon the Company and all other interested persons. No
member of Board of Directors or the Committee shall be personally liable for any
action, determination, or interpretation taken or made in good faith with
respect to the Plan or awards made thereunder, and the Company shall indemnify
and hold harmless each member of the Board of Directors or the Committee against
all loss, cost, expenses or damages, occasioned by any act or omission to act in
connection with any such action, determination or interpretation under or of the
Plan, consistent with the Company's certificate of incorporation and bylaws.
1.03. AWARDS UNDER PLAN.
Each award under the Plan will include both:
(i) Stock Options, as described in Article II; and
(ii) Limited Rights, as described in Article III.
1.04. AGGREGATE LIMITATION ON AWARDS.
(a) Shares of stock which may be issued under the Plan shall
be authorized and unissued or treasury shares of Common Stock of ABI ("Common
Stock"). The maximum number of shares of Common Stock which may be issued under
the Plan shall be four hundred ten thousand (410,000) shares.
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(b) In addition to shares of Common Stock actually issued
pursuant to the exercise of Stock Options, there shall be deemed to have been
issued a number of shares equal to the number of shares of Common Stock in
respect of which Limited Rights (as described in Article III) shall have been
exercised.
(c) Any shares of Common Stock subject to a Stock Option which
for any reason is terminated unexercised or expires shall again be available for
issuance under the Plan, but shares subject to a Stock Option which are not
issued as a result of the exercise of Limited Rights shall not again be
available for issuance under the Plan.
1.05. EFFECTIVE DATE AND TERM OF PLAN.
(a) The Plan shall become effective on the date approved by
the holders of a majority of the shares of Common Stock present in person or by
proxy and entitled to vote at the 1996 Annual Meeting of Shareholders of ABI.
(b) No awards shall be made under the Plan after the last day
of the Company's 2001 fiscal year provided, however, that the Plan and all
awards made under the Plan prior to such date shall remain in effect until such
awards have been satisfied or terminated in accordance with the Plan and the
terms of such awards.
ARTICLE II -- STOCK OPTIONS
2.01. AWARD OF STOCK OPTIONS.
(a) The Committee may, from time to time and subject to the
provisions of the Plan and such other terms and conditions as the Committee may
prescribe, grant to any participant in the Plan one or more non-qualified stock
options ("Options") to purchase for cash the number of shares of Common Stock
allotted by the Committee.
(b) Each Outside Director shall be automatically granted an
Option to purchase ten thousand (10,000) shares on the date on which such person
first becomes an Outside Director, whether through election by the shareholders
of the Company or appointment by the Board to fill a vacancy. The foregoing
notwithstanding, any Outside Director who has previously received an Option
award as a Scientific Advisor under Section 2.01(c), below, shall be
automatically awarded, in his capacity as an Outside Director, an option to
purchase only five thousand (5,000) shares, instead of ten thousand (10,000)
shares, although additional Options may be awarded by the Committee.
(c) Each Scientific Advisor who is not also serving as an
Outside Director shall be automatically granted an Option to purchase five
thousand (5,000) shares on the date on which such person first becomes a
Scientific Advisor. The foregoing notwithstanding, any Scientific
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<PAGE> 4
Advisor who has previously received an Option award as an Outside Director shall
not automatically be awarded any additional Options as a Scientific Advisor,
although additional Options may be awarded by the Committee.
(d) In the event any Option granted under the Plan would cause
the number of shares subject to outstanding Options plus the number of shares
previously purchased under Options to exceed the total number of shares
available for issuance under the Plan, then the remaining Options shall be
granted to persons qualifying for same, on a pro rata basis, and no further
grants shall be made until such time, if any, as additional shares become
available for grant under the Plan through action of the shareholders to
increase the number of shares which may be issued under the Plan or through
cancellation or expiration of Options previously granted hereunder.
(e) Options may be granted only to Outside Directors and/or
Scientific Advisors.
(f) Options granted under the Plan shall comply with the
applicable provisions of Rule 16b-3 promulgated under the 1934 Act, or any
successor provisions thereto, and shall contain such additional conditions or
restrictions as may be required thereunder to qualify for the maximum exemption
from Section 16 of the 1934 Act with respect to Plan transactions.
2.02. STOCK OPTION AGREEMENTS.
The grant of a Stock Option shall be evidenced by a written
Stock Option Agreement, executed by the Company and the holder of a Stock Option
(the "Optionee"), stating the number of shares of Common Stock subject to the
Stock Option evidenced thereby, and in such form as the Committee may from time
to time determine.
2.03. STOCK OPTION PRICE.
The Option Price per share of Common Stock deliverable upon
the exercise of a Stock Option shall be 100% of the Fair Market Value of a share
of Common Stock on the date the Stock Option is granted.
2.04. TERM AND EXERCISE.
Each Stock Option may be exercised during a period of ten
years from the date of grant thereof (the "Option Term"), subject to the vesting
schedule set forth below. The Committee may also in its sole discretion
accelerate the exerciseability or vesting of any option or installment thereof
at any time. No Stock Option shall be exercisable after the expiration of its
Option Term.
VESTING SCHEDULE. Options awarded shall be exercisable,
subject to the other terms and conditions of the Plan, only upon the expiration
of the designated number of years of active
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<PAGE> 5
association with the Company as an Outside Director or Scientific Advisor, from
date of award, as provided below:
20% of Options awarded - 1 year
40% of Options awarded - 2 years
60% of Options awarded - 3 years
80% of Options awarded - 4 years
100% of Options awarded - 5 years
2.05. MANNER OF PAYMENT.
Each Stock Option Agreement shall set forth the procedure
governing the exercise of the Stock Option granted thereunder, and shall provide
that, upon such exercise in respect of any shares of Common Stock subject
thereto, the Optionee shall pay to the Company, in full, the Option Price for
such shares with cash or in shares of the Common Stock, valued at the Fair
Market Value per Share on the date of exercise.
2.06. ISSUANCE OF SHARES.
As soon as practicable after receipt of payment, the Company
shall deliver to the Optionee a certificate or certificates for such shares of
Common Stock. The Optionee shall become a shareholder of the Company with
respect to Common Stock represented by share certificates so issued and as such
shall be fully entitled to receive dividends, to vote and to exercise all other
rights of a shareholder.
2.07. DEATH OF OPTIONEE.
(a) Upon the death of the Optionee, any rights to the extent
exercisable on the date of death may be exercised by the Optionee's estate, or
by a person who acquires the right to exercise such Stock Option by bequest or
inheritance or by reason of the death of the Optionee, provided that such
exercise occurs within both the remaining effective term of the Stock Option and
one year after the Optionee's death.
(b) The provisions of this Section shall apply notwithstanding
the fact that the Optionee's association may have terminated prior to death, but
only to the extent of any rights exercisable on the date of death.
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<PAGE> 6
2.08. DISABILITY.
Upon termination of the Optionee's association by reason of
permanent disability (as defined herein), the Optionee may, within 36 months
from the date of termination, exercise any Stock Options to the extent such
Options are exercisable during such 36-month period. Notwithstanding the
foregoing, the tax treatment available pursuant to Section 422 of the Code upon
the exercise of an Incentive Stock Option will not be available to an Optionee
who exercises any Incentive Stock Options more than (i) 12 months after the date
of termination of employment due to permanent disability or (ii) three months
after the date of termination of employment due to retirement. For purposes
hereof, "permanent disability" shall have the meaning set forth in Section
22(e)(3) of the Code or any successor provision thereto.
2.09. TERMINATION FOR OTHER REASONS.
Except as provided in Sections 2.07 and 2.08, or except as
otherwise determined by the Committee, all Stock Options shall terminate upon
the termination of the Optionee's association with the Company as an Outside
Director or Scientific Advisor; provided, however, that if the Optionee's
association was involuntarily terminated (with or without cause), Optionee may
exercise, during a 90-day period commencing with date of termination, all
Options theretofore vested, or which vest during said 90-day period, under the
Vesting Schedule set forth in Paragraph 2.04, above. At the end of the 90-day
period, all rights of such Optionee under any then outstanding option or right
shall terminate and shall be forfeited immediately as to any unexercised portion
thereof.
2.10. EFFECT OF EXERCISE.
The exercise of any Stock Option shall cancel that number of
related Limited Rights, if any, which is equal to the number of shares of Common
Stock purchased pursuant to said Option.
2.11. RULE 16b-3 EXEMPTION.
Options granted under the Plan shall comply with the
applicable provisions of Rule 16b-3 promulgated under the 1934 Act, or any
successor provisions thereto, and shall contain such additional conditions or
restrictions as may be required thereunder to qualify for the maximum exemption
from Section 16 of the 1934 Act with respect to Plan transactions.
ARTICLE III -- LIMITED RIGHTS
3.01. AWARD OF LIMITED RIGHTS.
Concurrently with the award of each Stock Option, there shall
automatically be awarded to the Optionee, with respect to each Option, a related
limited right permitting the Optionee,
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<PAGE> 7
during a specified limited time period, to be paid the appreciation on the
Common Stock in lieu of exercising the Option ("Limited Right").
3.02. LIMITED RIGHTS AGREEMENT.
Limited Rights granted under the Plan shall be evidenced by
written agreements in such form as the Committee may from time to time
determine.
3.03. EXERCISE PERIOD.
Limited Rights shall (and must) be exercised immediately
preceding or simultaneous with the date of a Change in Control of ABI (the
"Exercise Period"), and all Limited Rights held by the Optionee shall be
exercised during such Exercise Period, without regard to the Vesting Schedule
set forth in Paragraph 2.04; provided, however, that if a Change in Control
shall have occurred without notice or opportunity for exercise of Limited
Rights, then the Limited Rights shall be exercised as soon as practicable after
a determination has been made that a "Change in Control" has occurred, or has
been deemed to have occurred.
As used in the Plan, a "Change in Control" shall be deemed to
have occurred if
(a) individuals who were directors of ABI immediately prior to
a Control Transaction shall cease, within one year of such Control Transaction,
to constitute a majority of the Board of Directors of ABI (or of the Board of
Directors of any successor to ABI or to all or substantially all of its
assets), or
(b) any entity, person or Group other than ABI or a Subsidiary
of ABI or Hayashibara Biochemical Laboratories, Inc. or an Affiliate thereof
acquires shares of ABI in a transaction or series of transactions that result in
such entity, person or Group directly or indirectly owning beneficially
fifty-one percent (51%) or more of the outstanding shares.
As used herein, "Control Transaction" shall be
(i) any tender offer for or acquisition of capital stock
of ABI,
(ii) any merger, consolidation, or sale of all or
substantially all of the assets of ABI which has
been approved by the shareholders,
(iii) any contested election of directors of ABI, or
(iv) any combination of the foregoing;
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<PAGE> 8
which results in a change in voting power sufficient to elect a majority of the
Board of Directors of ABI. As used herein, "Group" shall mean persons who act in
concert as described in Sections 13(d)(3) and/or 14(d)(2) of the 1934 Act, as
amended.
3.04. AMOUNT OF PAYMENT.
The amount of payment to which an Optionee shall be entitled
upon the exercise of each Limited Right shall be equal to 100% of the amount, if
any, which is equal to the difference between the Fair Market Value per share of
Common Stock covered by the related Option on the date the Option was granted
and the Market Price of a share of such Common Stock. Market Price is defined to
be the greater of (i) the highest price per share of the Company's Common Stock
paid in connection with any Change in Control and (ii) the highest price per
share of the Company's Common Stock paid pursuant to an unsolicited brokerage
transaction during the 60-day period prior to the Change in Control.
3.05. FORM OF PAYMENT.
Payment of the amount to which an Optionee is entitled upon
the exercise of Limited Rights, as determined pursuant to Section 3.04, shall be
made solely in cash.
3.06. EFFECT OF EXERCISE.
If Limited Rights are exercised, the Stock Options related to
such Limited Rights cease to be exercisable to the extent of the number of
shares with respect to which the Limited Rights were exercised. Upon the
exercise or termination of the Options related to such Limited Rights, the
Limited Rights granted with respect thereto terminate to the extent of the
number of shares as to which the related Options were exercised or terminated.
3.07. DISABILITY.
Upon termination of the Optionee's association with the
Company as either an Outside Director or Scientific Advisor by reason of
permanent disability (as determined by the Committee), the Optionee may, within
36 months from the date of termination, exercise any Limited Right to the extent
such Limited Right is otherwise exercisable during such 36-month period.
3.08. DEATH OF OPTIONEE OR TERMINATION FOR OTHER REASONS.
Except as provided in Section 3.07, or except as otherwise
determined by the Committee, all Limited Rights granted under the Plan shall
terminate upon the termination of the Optionee's association with the Company as
either an Outside Director or Scientific Advisor or upon the death of the
Optionee.
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<PAGE> 9
ARTICLE IV -- MISCELLANEOUS
4.01. GENERAL RESTRICTION.
Each award under the Plan shall be subject to the requirement
that, if at any time the Committee shall determine that (i) the listing,
registration or qualification of the shares of Common Stock subject or related
thereto upon any securities exchange or under any state or federal law, or (ii)
the consent or approval of any government regulatory body, or (iii) an agreement
by the grantee of an award with respect to the disposition of shares of Common
Stock, is necessary or desirable as a condition of, or in connection with, the
granting of such award or the issue or purchase of shares of Common Stock
thereunder, such award may not be consummated in whole or in part unless such
listing, registration, qualification, consent, approval or agreement shall have
been effected or obtained free of any conditions not acceptable to the
Committee.
4.02. NON-ASSIGNABILITY.
Unless otherwise provided in the agreement with the Optionee,
Options shall not be assignable or transferable by the recipient thereof, except
by will or by the laws of descent and distribution, and during the life of the
recipient, such award shall be exercisable only by such person or by such
person's guardian or legal representative. If provided in the agreement with the
Optionee, Options and rights may be transferred by the holder to Permitted
Transferees, provided that there cannot be any consideration for the transfer.
"Permitted Transferee" means a member of a holder's immediate family, trusts for
the benefit of such immediate family members, and partnerships in which the
holder and such immediate family members are the only partners. An immediate
family member shall include a holder's descendants, spouse, and spouses of
descendants.
4.03. RIGHT TO TERMINATE ASSOCIATION.
Nothing in the Plan or in any agreement entered into pursuant
to the Plan shall confer upon any participant the right to continue in
association with the Company or affect any right which the Company or the
shareholders of the Company may have to terminate the association of such
participant.
4.04. RIGHTS AS A SHAREHOLDER.
The recipient of any award under the Plan shall have no rights
as a shareholder with respect thereto unless and until certificates for shares
of Common Stock are issued to him.
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<PAGE> 10
4.05. DEFINITIONS.
In this Plan the following definitions (along with other
definitions elsewhere set forth in the Plan) shall apply:
(a) "Affiliate" means any person or entity which directly, or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with ABI.
(b) "Board" means the Board of Directors of ABI.
(c) "Fair Market Value" means, as of any date, the value of
Common Stock determined as follows:
(i) If the Common Stock is listed on any established
stock exchange or a national market system,
including without limitation the National Market
System of the National Association of Securities
Dealers, Inc. Automated Quotation ("NASDAQ") System,
the Fair Market Value of a Share of Common Stock
shall be the closing sales price for such stock (or
the closing bid, if no sales were reported) as
quoted on such system or exchange (or the exchange
with the greatest volume of trading in Common Stock)
on the date of grant, as reported in The Wall Street
Journal or such other source as the Board deems
reliable;
(ii) If the Common Stock is quoted on the NASDAQ System
(but not on the National Market System thereof) or
regularly quoted by a recognized securities dealer
but selling prices are not reported, the Fair Market
Value of a Share of Common Stock shall be the mean
between the bid and asked prices for the Common
Stock on the last market trading day prior to the
day of determination, as reported in The Wall Street
Journal or such other source as the Board deems
reliable; or
(iii) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be
determined in good faith by the Committee.
(d) "Option" or "Stock Option" means all or any Options
granted under the Plan.
(e) "Option Price" means the purchase price per share of
Common Stock deliverable upon the exercise of a Stock Option.
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<PAGE> 11
(f) "Outside Director" means a director of ABI, who is not an
employee of the Company.
(g) "Scientific Advisor" means a person named by the Board of
Directors of ABI to serve on the Company's Board of Scientific Advisors.
(h) "Shares" or "shares," unless otherwise specified, shall
mean shares of Common Stock.
(i) "Subsidiary" means any corporation of which, at the time,
more than 50% of the shares entitled to vote generally in an election of
directors are owned directly or indirectly by ABI or any Subsidiary thereof.
4.06. ADJUSTMENTS.
In the event of any change in the outstanding Common Stock by
reason of a stock dividend or distribution, recapitalization, merger,
consolidation, split-up, combination, exchange of shares or the like, the
Committee shall appropriately adjust the number of shares of Common Stock which
may be issued under the Plan, the number of shares of Common Stock subject to
Options theretofore granted under the Plan, the Option Price of Options
theretofore granted under the Plan, the amount and terms of any Limited Rights
theretofore awarded under the Plan, and any and all other matters deemed
appropriate by the Committee.
4.07. AMENDMENT OF THE PLAN.
(a) Subject to subsection (b), the Committee may, without
further action by the shareholders and without receiving further consideration
from the participants, amend this Plan or condition or modify awards under this
Plan in response to changes in securities or other laws or rules, regulations or
regulatory interpretations thereof applicable to this Plan or to comply with
stock exchange rules or requirements.
(b) The Committee may at any time and from time to time
terminate or modify or amend the Plan in any respect, except that without
shareholder approval the Committee may not extend the term of the Plan. ABI
shall seek and obtain shareholder approval of any amendment to increase the
number of shares of Common Stock which may be issued under the Plan or for any
other amendment to the Plan to the extent that such increase or other amendment
requires shareholder approval under the requirements of the stock exchange or
market system under which shares of Common Stock of the Company are then listed
or the Internal Revenue Code of 1986 or other laws then in effect and applicable
to the Company and the Plan. The termination or any modification or amendment of
the Plan, except as provided in subsection (a), shall not without the consent of
a participant affect his rights under an award previously granted to him.
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<PAGE> 1
EXHIBIT 10.35
LICENSE AGREEMENT
THIS LICENSE AGREEMENT ("Agreement") is made and effective this 16th
day of June, 1999, by and between AMARILLO BIOSCIENCES, INC., a Texas
corporation with its principal place of business at 800 W. 9th, Amarillo, Texas
79101 (hereinafter "ABI") and NORTH CHINA PHARMACEUTICAL GROUP CORPORATION, a
company organized under the laws of P.R. China with its principal place of
business at Heping Donglu 388, Shijiazhuang, China (hereinafter "NCPC") (ABI
and NCPC are hereinafter collectively referred to as the "Parties"). This
agreement shall be finally effective upon approval of the Foreign Trade &
Economic Co-operation Bureau of Hebei Province, P.R. China. MITSUBISHI
CORPORATION is ABI's shipping agent with respect to product shipped to NCPC
under this Agreement.
WHEREAS, ABI and its contract suppliers have substantial expertise in
the production and use of oral interferon alpha (hereinafter, "IFN-[alpha]") and
have proprietary rights and know-how in the field of production, purification
and formulation of IFN-[alpha];
WHEREAS, ABI is willing to disclose to NCPC Technical Information
including preliminary human data for hepatitis B; and
WHEREAS, ABI has an exclusive worldwide license to market and
distribute HBL IFN-[alpha] (as defined in ARTICLE I, below), and desires to
provide HBL IFN-[alpha] to NCPC on the terms and conditions herein set forth,
and NCPC desires to obtain the right to test, formulate, distribute and market
HBL IFN-[alpha] contained in Licensed Product on the terms and conditions herein
set forth;
***Indicates that a portion of the text has been omitted and filed separately
with the Commission.
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<PAGE> 2
NOW, THEREFORE, for and in consideration of the mutual covenants
contained herein, and for other good and adequate consideration the receipt and
sufficiency of which are evidenced by the execution hereof, ABI and NCPC agree
as follows:
ARTICLE I
DEFINITIONS
1.1. "ABI" and "NCPC" shall mean and include not only the indicated
company, but also such company's Assignees.
1.2. "Affiliate" means a corporation, company, partnership, or other
business entity which controls or is controlled by, or is under common control
with, the designated party. In the case of a corporation or company, "control"
means ownership either directly or indirectly of at least Fifty Percent (50%) of
the shares of stock entitled to vote for the election of directors.
1.3. "Agreement" means this License and Supply Agreement.
1.4. "Assignee" means any permitted assignee or sublicensee of rights
under this Agreement
1.5. "Bulk Product" means the major ingredients to be formulated by
NCPC into Licensed Product, to include the following: HBL IFN-[alpha]; diluents;
stabilizing components; and other components (if any) mutually agreed upon by
the Parties, as being required or desirable in the formulation of Licensed
Product.
1.6. "Dose" means *** International Units of IFN-[alpha].
1.7. "HBL IFN-[alpha]" means the cell culture derived human
lymphoblastoid IFN-[alpha] used for the formulation by HAYASHIBARA BIOCHEMICAL
LABORATORIES, INC. ("HBL")
***Indicates that a portion of the text has been omitted and filed separately
with the Commission.
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<PAGE> 3
of natural IFN-[alpha]-containing formulations approved for use in the treatment
of human renal cell carcinoma, hepatitis B and C, and chronic myelogenous
leukemia in Japan, which may be produced, purified and formulated by HBL in
Japan, or under license from HBL in Japan, or elsewhere.
1.8. "Licensed Indication" means the human disease of hepatitis B.
1.9. "Licensed Product" means a formulation or composition containing
HBL IFN-[alpha] and designated, detailed, or labeled for oral use in the
treatment of any Licensed Indication.
1.10. "Technical Information" means all information, reports, results,
inventions, know-how, materials, and any other technical and scientific data,
specifications and formulae directly related to the development, regulatory
approval, manufacture, testing, use, marketing and/or sale of Licensed Product,
and any non-public information relevant to the business of the Parties which is
necessarily disclosed by one to the other during the Parties' conduct under this
Agreement. "ABI Technical Information" refers to Technical Information
originating with ABI or which ABI has obtained through its contractual
relationships with third parties. "NCPC Technical Information" refers to
Technical Information originating with NCPC or which NCPC has obtained through
its contractual relationships with third parties. "Technical Information" when
not otherwise specified herein means both ABI Technical Information and NCPC
Technical Information.
1.11. "Territory" means P.R. China.
ARTICLE II
GRANT OF LICENSE
2.1. ABI grants to NCPC and NCPC accepts, subject to the terms of this
Agreement, the right to use HBL IFN-[alpha] for testing, trials, development,
and formulation into
***Indicates that a portion of the text has been omitted and filed separately
with the Commission.
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<PAGE> 4
Licensed Product, and upon proper regulatory approval, the exclusive right to
formulate, market and distribute Licensed Product to treat the Licensed
Indication in the Territory. ABI will provide NCPC technical information and
clinical trial samples for the above-mentioned purposes. ABI retains all other
rights to HBL IFN-[alpha], including without limitation, the right to test,
develop, license, sublicense, market, distribute or otherwise use HBL
IFN-[alpha] for treatment of all indications other than the Licensed Indication,
and for treatment of the Licensed Indication in all countries not included in
the Territory.
2.2. The license grant to NCPC under this Agreement shall commence on
the effective date of this Agreement and shall terminate immediately upon the
termination or expiration of this Agreement unless extended by consultation
between the parties at least one hundred and eighty (180) days prior to the
expiration date.
2.3. NCPC shall have the right to use and sell Licensed Product only in
the Territory. NCPC shall not seek customers, establish any branch or maintain
any distribution depot for Licensed Product in any country outside the
Territory. NCPC shall not sell Licensed Product to any customer in any country
outside the Territory or to any customer in the Territory if, to the knowledge
of NCPC, such customer intends to resell the Licensed Product in any country
outside the Territory. NCPC shall cause ABI's name to appear on each outer
package of the Licensed Product distributed in the Territory.
***Indicates that a portion of the text has been omitted and filed separately
with the Commission.
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<PAGE> 5
ARTICLE III
SUPPLY OF PRODUCT
3.1. Subject to the terms and conditions of this Agreement, ABI shall
supply Bulk Product to NCPC for formulation, testing, and (upon government
approval) sale in the Territory. Bulk Product shall be supplied in response to
issuance by NCPC of written purchase orders delivered to ABI specifying the
quantity to be supplied, along with any special instructions/requests regarding
supply and/or delivery. In addition to Bulk Product, ABI shall supply other
product or ingredients reasonably requested by NCPC, subject to agreement by the
Parties regarding price and other terms and conditions, and subject to
availability. ABI shall have no responsibility for formulating or manufacturing
lozenges, nor for obtaining any required regulatory approvals, nor for
packaging, distribution, promotion, pricing, or marketing of lozenges in the
Territory, all of which shall be completed by NCPC with the assistance of ABI.
3.2. ABI agrees to allow NCPC right of reference to ABI's US FDA Drug
Master File for HBL IFN-[alpha] and to do such other acts as are reasonably
necessary, and within ABI's control, to facilitate approval of HBL
IFN-[alpha]-containing lozenges in the Territory for use in the Licensed
Indication, and ABI also hereby agrees to consult with NCPC at NCPC's request
concerning regulatory affairs, to review documents to be submitted to
governmental agencies for approval, and to take such other actions as may be
necessary from time to time to facilitate approval of Licensed Product for sale
and use in the Territory. ABI also agrees to provide clinical data from its
past, current or future studies, that would be relevant to the testing, use or
sale of Licensed Products in the Territory. ABI further agrees to provide
sufficient Bulk Product for preliminary studies and
***Indicates that a portion of the text has been omitted and filed separately
with the Commission.
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<PAGE> 6
clinical trials as may be appropriate and necessary to support testing and
application for approval and commercialization of Licensed Products. ABI shall
reasonably provide to NCPC other support or assistance requested by NCPC and
within ABI's capabilities with respect to regulatory and clinical activities, on
a fully reimbursed basis.
ARTICLE IV
CONSIDERATION
4.1. ABI shall receive from NCPC a research reimbursement payment and a
fee for clinical study design and supplies for the Territory. The payments and
fees are set forth at Exhibit "A" hereto. The License Fee shall be due and
payable upon execution of this Agreement by the signatory parties and the
approval of the Foreign Trade & Economic Co-operation Bureau of Hebei Province,
P.R. China. ABI agrees to pay income tax on the up-front payment amount in
compliance with the Foreign Enterprise Income Tax Law of the People's Republic
of China.
4.2. For all Bulk Product supplied by ABI to NCPC (other than
quantities provided pursuant to Paragraph 3.2 above), ABI shall receive from
NCPC the payment per Dose specified at Exhibit "B". Payment for each shipment of
Bulk Product shall be made by NCPC by irrevocable letter of credit on a U.S.
bank. The price per Dose shall be further adjusted from time to time as may be
necessary to reflect any Change in the Producers Price Index, Drugs and
Pharmaceuticals, Subdivision Code 063, after the date of this Agreement. In
addition, both the price per Dose and the amount to be invoiced and paid for
Bulk Product shall be further adjusted to reflect any changes for (i) the
variable cost of any raw material or combination of raw materials that changes
by more than twenty percent (20%) from ABI's cost at the date of this Agreement,
and (ii) the variable cost arising
***Indicates that a portion of the text has been omitted and filed separately
with the Commission.
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<PAGE> 7
from changes in product specifications, manufacturing, testing, or release of
the product. NCPC shall receive Bulk Product at a named port of destination in
the Territory and the shipping arrangements shall be made by ABI's nominated
shipping agent. NCPC shall pay CIF price at the named port of destination in the
Territory against the invoice containing shipping charge, freight, and
insurance, in addition to the Bulk Product price specified above. Title to Bulk
Product purchased by NCPC shall transfer to NCPC, and NCPC shall pay all freight
charges and bear the risk of loss and damage, from the time Bulk Product, in
compliance with the standards of the Drug Quality Control Bureau of the Chinese
Port Customs Administration, is placed at the disposal of NCPC at the port of
destination.
4.3. NCPC shall within three (3) months of the Effective date of this
agreement commence the clinical trial already designed to achieve government
approval of the Licensed Product for marketing and distribution. NCPC will
conduct all clinical trials at its own expense, and will contract for and
utilize the services of ************** and ************** in the design,
supervision and implementation of the clinical trial for submission of the file
for government approval. NCPC shall, within three (3) months of the conclusion
of the afore mentioned clinical study, apply for, at its own cost and expense
and without any contribution from ABI, all necessary licenses or approvals
required to be issued in the Territory, or any agency or instrumentality
thereof, as a precondition to the import, formulation, manufacture, and sale of
Licensed Product, within three (3) months of any such approval being granted.
NCPC will apply for any pricing or reimbursement approvals, will exercise
diligence to maintain all such approvals, and will diligently market the
approved Licensed Product through the term of this Agreement. NCPC will launch
product in the Territory within three (3) months of receipt of all necessary
governmental approvals, and shall
***Indicates that a portion of the text has been omitted and filed separately
with the Commission.
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<PAGE> 8
thereafter use its best efforts to advertise, promote and sell such product
after approval. The import licenses shall be issued in the name of ABI. However,
both production license and production approval shall be issued in the name of
NCPC. If at any time during the term of this Agreement NCPC should fail to
comply in a timely way with any of the requirements set forth in this Section
4.3, or if at any time during the term of this Agreement NCPC should no longer
be actively pursuing the application for any such approval or license in the
Territory, or if, having obtained such approval or license, NCPC should no
longer be actively developing or marketing any Licensed Product under this
Agreement in the Territory, under the preconditions permitted by applicable laws
and regulations, both parties shall enter into consultation to decide the
assignment of such applications, approvals and/or licenses from NCPC.
4.4. NCPC shall provide ABI by December 31st of each year during the
term of this Agreement, a report of ongoing efforts for the development of
Licensed Products, including a report of efforts by NCPC with respect to
formulation development, pre-clinical and clinical testing, regulatory approval
efforts, marketing/sales strategy, and any other areas into which NCPC's
reasonable business efforts in accordance with this paragraph may reasonably be
categorized. Such report shall be provided in English and shall be accompanied
by labeling, instructions, promotional and other support materials developed for
NCPC's sales force, patients, physicians, or other outside parties. Such a
report shall be prepared more often if ABI so requests in writing, if ABI pays
to NCPC the expenses incurred by NCPC in generating such additional reports. It
is understood that ABI will receive a copy in English of all NCPC Technical
Information.
***Indicates that a portion of the text has been omitted and filed separately
with the Commission.
-8-
<PAGE> 9
4.5. During the term of this Agreement, both Parties shall provide to
the other all data relating to the testing and development of the Licensed
Product in the Licensed Indication.
4.6. Unless specifically authorized in writing by ABI, NCPC shall not
sell, or offer for sale, or act as sales agent for the solicitation of orders
for any oral products (other than Licensed Products) that contain any
IFN-[alpha] derived from any species and designated, detailed, or labeled for
oral use for the Licensed Indication. ABI shall not authorize any third parties,
directly or indirectly, to market or sell any IFN-[alpha] in the Territory for
oral use in the treatment of the Licensed Indication.
4.7. NCPC shall provide medical, pharmacovigilance and other
appropriate customer support services in connection with sale of Licensed
Products, and will report to ABI on a timely basis all material adverse
reactions, product complaints and other relevant customer feedback. NCPC agrees
to advise ABI fully with respect to all health, safety, environmental, and other
standards, specifications, and other requirements imposed by law, regulation, or
order in the Territory and applicable to Licensed Product. NCPC shall also
advise ABI of all instructions, warnings, and labels applicable to Licensed
Product that are necessary or desirable under laws, regulations, or practices in
the Territory. ABI shall meet such safety standards or specifications. ABI shall
not increase the price charged to NCPC for the Bulk Product unless changes to
the specification are required.
ARTICLE V
ORDERS AND SHIPMENTS
5.1. Within thirty (30) days of the date hereof, and at least ninety
(90) days prior to the commencement of each calendar year during the term of
this Agreement, NCPC will furnish
***Indicates that a portion of the text has been omitted and filed separately
with the Commission.
-9-
<PAGE> 10
ABI with its projected requirements for Bulk Product during the next succeeding
calendar year. NCPC may amend its projected requirements from time-to-time,
provided, however, that ABI shall be obligated only to make its best effort to
comply with any requests in excess of annual projections received by it at least
ninety (90) days prior to the commencement of the calendar year in question.
Under no circumstances shall ABI be required to deliver to NCPC hereunder, an
amount of Bulk Product which exceeds the amount ABI is able, in good faith, to
acquire from HBL, or from HBL's contract manufacturers. The exact composition of
Bulk Product shall be disclosed in writing by ABI to NCPC. Subject to the
foregoing, ABI shall use its best efforts to deliver Bulk Product in accordance
with NCPC's projected requirements and product specifications.
5.2. ABI shall ship product within thirty (30) days of request by NCPC,
against an irrevocable letter of credit on a U.S. bank (or other financial
surety acceptable to ABI or to the agent nominated by ABI) in an amount
sufficient to cover the CIF price payable to ABI or the agent nominated by ABI
under Paragraph 4.2 above. The letter of credit shall be issued by a financial
institution acceptable to ABI or to the agent nominated by ABI, shall be in U.S.
dollars and shall not expire until the final payment for the respective shipment
has been made to ABI or to the agent nominated by ABI.
5.3. Orders of Bulk Product for commercial sales shall be made for
"full lot" quantities of *** Doses. A minimum of *** Doses of Bulk Product shall
be purchased by NCPC for the Territory during each year during the term of this
Agreement, commencing with the first full calendar year after all necessary
approvals for marketing and reimbursement have been obtained.
***Indicates that a portion of the text has been omitted and filed separately
with the Commission.
-10-
<PAGE> 11
ARTICLE VI
TERM AND TERMINATION
6.1. This Agreement and all rights granted hereunder by each Party
shall terminate upon December 31, 2009, unless extended on a yearly basis by
request of NCPC at least one hundred and eighty (180) days prior to the
expiration date provided, however, that if NCPC does not commence application
for government approval, as may be required or advisable, within three (3)
months after NCPC receives all supporting documentation required for application
for approval of commencement of the pivotal clinical trial; and after approval
of the Licensed Product, place orders for minimum annual shipments as provided
in Paragraph 5.3, above; then ABI shall have the right to terminate this
Agreement upon three (3) months prior written notice to NCPC. NCPC will proceed
diligently to obtain market approval for the Territory according to the
timetable set forth in paragraph 4.3 of this Agreement.
6.2. Termination of this Agreement for any reason shall not relieve the
Parties of any obligation accruing prior to such termination. In addition,
ARTICLE VIII ("Confidentiality") shall survive termination of this Agreement.
6.3. On termination of this Agreement for any reason, NCPC shall cease
to sell Licensed Product and shall surrender to ABI all ABI Technical
Information that it may have received during the term of this Agreement, and at
the request of ABI, NCPC may conditionally assign any approval, permit, or
license it holds relating to Licensed Products to ABI. Any accrued payment
obligations shall be paid within thirty (30) days of the termination of this
Agreement.
***Indicates that a portion of the text has been omitted and filed separately
with the Commission.
-11-
<PAGE> 12
ARTICLE VII
WARRANTY AND INDEMNIFICATION
7.1. ABI represents and warrants that as of the date of this Agreement,
it is the exclusive owner of the right to sell and distribute HBL IFN-[alpha]
for use in treating the Licensed Indication in the Territory. ABI further
warrants that at the time of shipment, all product supplied by it (i) shall meet
all product specifications previously agreed in writing between ABI and NCPC;
(ii) shall not be adulterated or misbranded; and (iii) shall be manufactured in
accordance with good manufacturing practices in the country of manufacture. ABI
shall indemnify and hold NCPC harmless from any and all costs, expenses,
damages, judgments, and liabilities incurred by or rendered against NCPC arising
from any claim made or suit brought as a result of a breach by ABI of its
warranties under this Paragraph 7.1.
7.2. NCPC warrants that its operations and activities in the Territory shall be
in compliance with applicable laws, statutes and regulations; and NCPC shall
indemnify and hold ABI harmless from any and all costs, expenses, damages,
judgments, and liabilities incurred by or rendered against ABI or its affiliates
arising from the use, testing, recall, labelling, promotion, sale, distribution,
or use of Bulk Product or Licensed Product as a result of any breach of these
warrants by NCPC.
ARTICLE VIII
CONFIDENTIALITY
8.1. ABI owns or is licensed under confidential or secret
information relating to the Licensed Products, and NCPC intends to conduct
trials in the Territory which will generate
***Indicates that a portion of the text has been omitted and filed separately
with the Commission.
-12-
<PAGE> 13
confidential or secret information relating to the Licensed Products, and it is
the intention of both ABI and NCPC to maintain this confidentiality.
8.2. Each Party agrees to maintain confidential and secret all
Technical Information which may be disclosed or provided to it by the other
Party or that the Parties may together subsequently acquire.
8.3. Each Party's obligation to the other to maintain confidentiality
hereunder shall terminate with respect to any particular item and only said item
of the disclosing Party's Technical Information, when the recipient Party can
demonstrate that such item of information:
8.3.1. Is publicly known and available through some means other
than by the recipient Party's act or omission; or
8.3.2. Was in the recipient Party's possession prior to its
disclosure by the other Party, as established by written evidence; or
8.3.3. Has come into the recipient Party's possession through a
third party free of any obligation of confidentiality to the disclosing Party,
where said third party has acquired said information lawfully and not under
circumstances forbidding its disclosure.
8.4. Neither Party will permit the other Party's Technical Information
or any part thereof to be disclosed to third parties or to employees except on a
"need-to-know" basis and each will maintain such information and/or documents
with the same precautions it uses to safeguard its own confidential or secret
information.
8.5. Each Party will notify the other promptly if it has knowledge that
an unauthorized third party possesses Technical Information of the other Party.
***Indicates that a portion of the text has been omitted and filed separately
with the Commission.
-13-
<PAGE> 14
8.6. NCPC shall have the right to use ABI's Technical Information, and
to access ABI's US FDA Drug Master File for HBL IFN-[alpha], to the extent
reasonably necessary to accomplish the objectives of this Agreement, including
specifically the right to disclose such information to its contract consultants
and scientific investigators (from whom NCPC shall secure Confidential
Non-Disclosure Agreements) and to regulatory agencies of the Territory in
support of applications for regulatory agency approval to make, test and/or sell
Licensed Product.
8.7. With the written consent of NCPC, ABI may use NCPC's Technical
Information for the purposes of designing protocols and studies, and for
submission to regulatory authorities in any country outside the Territory in
connection with an application for drug approval of the Product.
ARTICLE IX
MISCELLANEOUS
9.1. Force Majeure. The failure of NCPC, ABI, or any of their
Affiliates to take any action required by this Agreement if such failure is
occasioned by an act of God or the public enemy, fire, explosion, perils of the
sea, floods, drought, war, riot, sabotage, accident, embargo or any circumstance
of like or different character beyond the reasonable control of the Party so
failing or by the interruption or delay in transportation, inadequacy, or
shortage or failure of the supply of materials and/or equipment, equipment
breakdown, labor trouble or compliance with any order, direction, action or
request of any governmental officer, department or agency and whether in any
case such circumstances now exist or hereafter arise, shall not subject said
Party to any liability to the other.
***Indicates that a portion of the text has been omitted and filed separately
with the Commission.
-14-
<PAGE> 15
9.2. Communication. Any payment, notice or other communication required
or permitted to be made or given to either Party pursuant to this Agreement
shall be sufficiently made or given on the date of sending if sent to such Party
by certified or registered mail, or by courier service, postage or delivery
charge prepaid, addressed to it at its address set forth below, or to such other
address as it may have designated by written notice given to the other Party.
Fax numbers are given for convenience only, as an additional method of delivery,
and no notice or other communication transmitted by fax shall be considered to
be sufficiently made or given until such notice or communication is also sent by
one of the other means described above.
In case of NCPC:
Chairman
North China Pharmaceutical Group Corporation
Heping Donglu 388
Shijiazhuang, China Fax: 011-86-311-5053560
In case of ABI:
President
Amarillo Biosciences, Inc.
800 W. 9th
Amarillo, Texas 79101 Fax: (806) 376-9301
And:
Edward L. Morris, Legal Counsel
Morris, Moore, Moss & Douglass, P.C.
P. O. Box 15208
Amarillo, TX 79105 Fax: (806) 371-8908
9.3. Amendments to Agreement. This Agreement constitutes the entire
Agreement between the Parties hereto on this subject matter and supersedes all
previous arrangements whether
***Indicates that a portion of the text has been omitted and filed separately
with the Commission.
-15-
<PAGE> 16
written or oral. Any amendment or modification of this Agreement shall be
effective only if made in writing, and executed by both Parties.
9.4. Enforceability. To the extent permitted by law, each Party waives
any provision of law which renders any provision herein invalid, illegal or
unenforceable in any respect.
9.5. Relationship of Parties. All purchases and resales of Bulk Product
and Licensed Product by NCPC shall be for NCPC's own account as a principal and
not as an agent of ABI. NCPC shall act in all respects as an independent
contractor and not as a representative or agent of ABI. This Agreement shall not
be construed to create a relationship of partners, joint venturers, brokers,
employees, agents, master or servant between the Parties. Neither Party shall
have any right or authority to assume or create any responsibility, express or
implied, in the name of the other Party or to bind the other Party in any manner
whatsoever.
9.6. Assignment. Neither Party hereto shall assign any of its rights
under this Agreement to any person or entity not an Affiliate of the assigning
Party without the prior written consent of the other Party, which consent shall
not be unreasonably withheld.
9.7. Venue and Jurisdiction. Venue of any action brought under this
Agreement shall be as follows: Actions initiated or filed by or behalf of ABI
shall be brought in the People's Court of Hebei Province, P.R. China; and
actions initiated or filed by or on behalf of NCPC shall be brought in the
federal district court for the Northern District of Texas, Amarillo Division.
9.8. Governing Language. The English language of this Agreement shall
govern and control any translations of the Agreement into any other language.
Documents furnished by
***Indicates that a portion of the text has been omitted and filed separately
with the Commission.
-16-
<PAGE> 17
NCPC to ABI under the terms of this Agreement shall be furnished in English, or
alternatively, shall be accompanied by an English translation.
IN WITNESS WHEREOF, the Parties hereunto have caused this instrument to be
executed in duplicate by their duly authorized representatives as of the date
first above written.
ABI: NCPC:
AMARILLO BIOSCIENCES, INC. NORTH CHINA PHARMACEUTICAL GROUP
CORPORATION
By: By:
------------------------------------ ---------------------------------
Joseph M. Cummins, Lu Weichuan,
President Chairman
***Indicates that a portion of the text has been omitted and filed separately
with the Commission.
-17-
<PAGE> 18
EXHIBIT "A"
This Exhibit "A" is attached to that certain License Agreement by and
between AMARILLO BIOSCIENCES, INC. and NORTH CHINA PHARMACEUTICAL GROUP
CORPORATION dated 16th, day of June, 1999, and constitutes a part of said
Agreement, as if fully set forth therein. For all purposes of said Agreement,
the "Territory" shall mean P.R. China. In addition, the License Fee referred to
in Section 4.1 of the Agreement is set forth below, for the Territory.
FEE $*** within 30 days of the signature and approval of this
Agreement.
$*** within 30 days of NCPC's acceptance of all applicable
information provided by ABI necessary for application for
approval (Exhibit "C") as well as clinical trial samples, and
ABI has transferred its clinical trial approval to NCPC.
$*** within 30 days of NCPC's receipt of production approval.
-A-1-
***Indicates that a portion of the text has been omitted and filed separately
with the Commission.
<PAGE> 19
EXHIBIT "B"
This Exhibit "B" is attached to that certain License Agreement by and between
AMARILLO BIOSCIENCES, INC. and NORTH CHINA PHARMACEUTICAL GROUP CORPORATION
dated 16th day of June, 1999, and constitutes a part of said Agreement, as if
fully set forth therein.
Per *** IU Dose Price (interferon and anhydrous crystalline maltose) f.o.b.
***** to ***** $*** per dose
***** to ***** $*** per dose
***** to ***** $*** per dose
Over ***** $*** per dose
Finished bulk tablets can be supplied ex Canada at prices above plus $***
tableting and packaging charge per dose up to a maximum of ****** doses per
year.
-B-1-
***Indicates that a portion of the text has been omitted and filed separately
with the Commission.
<PAGE> 20
EXHIBIT "C"
ABI shall provide NCPC the following information necessary to apply for clinical
trial and for production which includes:
1. New drug name (include official name, chemical name, Latin name,
foreign language name and Chinese Phonetic Alphabet etc. The evidence
of nomenclature shall be provided for new given name), aim and evidence
of topic selection, summary of current research status or manufacture,
application of the drug at home and abroad.
2. Experimental data, chromatography, explanation and analysis of
chromatography and related references to certify the drug chemical
structure or composition.
3. The drug's experimental profile, purification method,
specification/standard of chemical materials, source of biological
materials, generic name, description of formulation, evidence of
process and description, source and quality standard of excipients and
related references, etc. Evidence of revisions shall be provided if the
prescription, manufacture process, raw material and strain are
different from the main reference.
4. Quality controls such as physical/chemical constants, purity analysis
and determination of content (potency) etc.
5. Main pharmacodynamics related to treatment effects.
6. General pharmacologic research.
7. Animal acute toxicity.
8. Animal chronic toxicity.
9. Local toxicity.
10. Influence of excipients in formulation on pharmacodynamics and
toxicity.
11. Mutagenicity.
12. Toxicity in different species .
13. Carcinogenicity.
14. Dependence.
15. Pharmacokinetics.
-C-1-
***Indicates that a portion of the text has been omitted and filed separately
with the Commission.
<PAGE> 21
16. Preliminary stability on bulk drug and its formulation.
17. Proposed clinical trial drug quality standard and explanation of its
design. Standard samples and control samples.
18. Clinical trial samples and certificate of analysis (sample shall be at
least three times quantity necessary to do full scale analysis).
19. Protocol of proposed clinical trial and summary of preclinical
pharmacological and toxicological research for clinical physicians'
review.
20. Clinical pharmacokinetics.
21. Bioavailability or dissolution characteristics.
22. Stability study on bulk drug and its formulation. Conclusion (include
biological and chemical results) and shelf-life.
23. Proposal on drug quality standard in manufacture and explanation of
design (formulation shall include the active ingredient qualitative
test result and quantitative recovery test result).
Standard samples and control samples.
24. Samples of three to five consecutively manufactured batches and their
certificates of analysis (sample per batch shall be at least three
times the quantity needed for full-scale analysis).
25. Clinical trial summary issued by department responsible for clinical
trials and clinical trial reports.
26. Drug packaging material, label, trial-use or official instruction
leaflets designed by department responsible for clinical trials
(include new drug name, structural formula and molecular
formula)(formulation shall include active ingredient), mode of action
and indications, dosage and administration, toxic effects and side
effects, contraindications, precautions, packaging (specification and
content), storage condition and shelf life, etc.
27. Oral IFN manufacturing procedure (confidential technical data).
28. Quality standard and analytical methods on raw materials and product
(process procedures) etc. (confidential technical data).
29. GMP production requirements, etc. (confidential technical data).
-C-2-
***Indicates that a portion of the text has been omitted and filed separately
with the Commission.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) The
Consolidated Balance sheet as of June 30, 1999 and the Consolidated Statement of
Operations for the six months ended June 30, 1999. AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH (B) Financial Statements included in this Form
10-QSB for period ended June 30, 1999.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 1,869,062
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,901,636
<PP&E> 250,507
<DEPRECIATION> 136,083
<TOTAL-ASSETS> 2,056,975
<CURRENT-LIABILITIES> 80,736
<BONDS> 0
0
0
<COMMON> 63,603
<OTHER-SE> 1,912,636
<TOTAL-LIABILITY-AND-EQUITY> 2,056,975
<SALES> 0
<TOTAL-REVENUES> 76,638
<CGS> 0
<TOTAL-COSTS> 2,131,399
<OTHER-EXPENSES> 845,419
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 29,170
<INCOME-PRETAX> (2,929,350)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,929,350)
<EPS-BASIC> (.50)
<EPS-DILUTED> (.50)
</TABLE>
