<TABLE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
_X_ QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1998
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 0-15271
CISTRON BIOTECHNOLOGY, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 22-2487972
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
10 Bloomfield Avenue, Pine Brook, New Jersey 07058
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code:
(973) 575-1700
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 and 15 (d) of the Securities
Exchange Act of 1934 during the preceding 12 months and (2) has been
subject to such filing requirements for the past 90 days.
Yes _X_ No ___
The aggregate number of Registrant's outstanding shares on May 12, 1998 was
22,983,687 shares of Common Stock, .01 par value.
Page 1 of 14 pages
<PAGE> 1
CISTRON BIOTECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
INDEX
<S> <C>
PAGE
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance sheets as of March 31, 1998 and June 30, 1997 3
Statements of operations for the three months and nine months ended
March 31, 1998 and 1997 4
Statements of cash flows for the nine months ended
March 31, 1998 and 1997 6
Notes to financial statements 7
Item 2. Management's discussion and analysis of results of operations
and financial condition 9
PART II - OTHER INFORMATION 12
Signatures 14
<PAGE> 2
CISTRON BIOTECHNOLOGY,INC.
--------------------------
BALANCE SHEETS
--------------
<S> <C> <C>
June 30, March 31,
ASSETS 1997 1998
- ------ ------------ -------------
CURRENT ASSETS: (unaudited)
Cash and cash equivalents $ 6,368,228 $ 6,048,597
Accounts receivable-trade 55,309 95,989
Accounts receivable-other 3,000,000 2,901,124
Inventories 4,278 3,744
Prepaid expenses 475 9,000
Notes receivable $230,000; reserve $230,000 - -
---------- ----------
TOTAL CURRENT ASSETS 9,428,290 9,058,454
---------- ----------
ACCOUNTS RECEIVABLE - OTHER - Long Term 6,249,130 3,619,326
---------- ----------
PROPERTY AND EQUIPMENT:
Machinery and equipment 533,374 502,908
Furniture and fixtures 147,113 147,113
Leasehold improvements 77,674 77,674
---------- ----------
758,161 727,695
Less: Accumulated depreciation 726,877 700,283
---------- ----------
31,284 27,412
---------- ----------
SECURITY DEPOSITS 23,938 23,938
PATENTS, Net of accumulated amortization ---------- ----------
of $11,886 and $13,873, respectively 25,219 23,232
---------- ----------
TOTAL ASSETS $ 15,757,861 $ 12,752,362
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 869,909 $ 117,672
Taxes payable 46,175 -
Other current liabilities 705,000 681,764
---------- ----------
TOTAL CURRENT LIABILITIES 1,621,084 799,436
---------- ----------
Deferred income taxes 885,090 -
---------- ----------
Other non-current liabilities 1,505,980 917,308
---------- ----------
SHAREHOLDERS' EQUITY:
Common stock, $.01 par value; 50,000,000 shares
authorized; issued 26,884,990 shares
and 26,930,187 shares, respectively 268,850 269,302
Additional paid-in capital 8,616,253 8,683,681
Earnings accumulated during the development stage 2,860,604 2,477,285
Treasury stock 3,946,500 shares at cost - (394,650)
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 11,745,707 11,035,618
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 15,757,861 $ 12,752,362
========== ==========
See accompanying notes to financial statements.
<PAGE> 3
CISTRON BIOTECHNOLOGY, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<S> <C> <C> <C>
February 2, 1982
(commencement of
Three Months ended March 31, operations) to
---------------------------- ---------------
1997 1998 March 31, 1998
------------ ------------ ---------------
Sales...................................... $ 181,960 $ 160,175 $ 9,285,790
Cost of sales.............................. 72,002 86,484 4,041,895
---------- ---------- ----------
Gross profit........................ 109,958 73,691 5,243,895
Other revenues:
Litigation settlements................... 359,000 - 14,684,206
License fees and funded research......... 105,000 5,000 4,111,149
---------- ---------- ----------
Operating income before expenses.... 573,958 78,691 24,039,250
---------- ---------- ----------
Research and development................... 33,305 92,863 8,458,551
Administrative and marketing............... 256,579 237,229 11,001,188
Occupancy.................................. 54,022 52,787 2,419,115
---------- ---------- ----------
Total expenses............................. 343,906 382,879 21,878,854
---------- ---------- ----------
Operating income (loss)............. 230,052 (304,188) 2,160,396
Interest income - net...................... 91,059 149,177 742,059
Other expense.............................. - - 59,895
Amortization of deferred financing costs... - - 173,079
Acquisition expense........................ - - 429,620
Income (loss) before income taxes ---------- ---------- ----------
and extraordinary credit................. 321,111 (155,011) 2,239,861
Income tax provision (benefit)............. - (82,973) 1,524,891
---------- ---------- ----------
Income/(loss) before extraordinary credit.. 321,111 (72,038) 714,970
Extraordinary credit - benefit of tax loss ---------- ---------- ----------
carryforward......................... - - 262,838
---------- ---------- ----------
Net income/(loss)................... $ 321,111 $ (72,038) $ 977,808
========== ========== ==========
Net income (loss) per share................ $ 0.01 $ -
========== ==========
Weighted average shares outstanding........ 26,884,990 22,983,687
Net income (loss) per share - ========== ==========
assuming dilution........................ $ 0.01 $ -
Weighted average shares outstanding - ========== ==========
assuming dilution........................ 29,483,971 22,983,687
========== ==========
See accompanying notes to financial statements
<PAGE> 4
CISTRON BIOTECHNOLOGY, INC.
---------------------------
STATEMENTS OF OPERATIONS
------------------------
(UNAUDITED)
---------
<S> <C> <C> <C>
February 2, 1982
Nine Months ended March 31, (commencement of
--------------------------- operations to
1997 1998 March 31, 1998
---------- ---------- ---------------
Sales...................................... $ 484,245 $ 426,010 $ 9,285,790
Cost of sales.............................. 254,278 234,244 4,041,895
---------- ---------- ----------
Gross profit........................ 229,967 191,766 5,243,895
Other revenues:
Litigation settlement, net................ 15,216,523 - 14,684,206
License fees and funded research.......... 305,419 205,000 4,111,149
---------- ---------- ----------
Operating income before expenses.... 15,751,909 396,766 24,039,250
---------- ---------- ----------
Research and development................... 81,899 462,770 8,458,551
Administrative and marketing............... 875,810 839,946 11,001,188
Occupancy.................................. 145,869 146,665 2,419,115
---------- ---------- ----------
Total expenses............................. 1,103,578 1,449,381 21,878,854
---------- ---------- ----------
Operating income (loss)............. 14,648,331 (1,052,615) 2,160,396
Interest income - net...................... 144,804 434,360 742,059
Other expense.............................. - - 59,895
Amortization of deferred financing costs... - - 173,079
Acquisition expense........................ - - 429,620
Income (loss) before income taxes ---------- ---------- ----------
and extraordinary credit................. 14,793,135 (618,255) 2,239,861
Income tax provision (benefit)............. 2,573,000 (234,937) 1,524,891
---------- ---------- ----------
Income (loss) before extraordinary credit.. 12,220,135 (383,318) 714,970
Extraordinary credit - benefit of tax loss ---------- ---------- ----------
carryforward............................. - - 262,838
---------- ---------- ----------
Net income (loss)........................ $ 12,220,135 $ (383,318) $ 977,808
========== ========== ==========
Net income (loss) per share.............. $ 0.45 $ (0.01)
========== ==========
Weighted average shares outstanding........ 26,884,457 25,609,643
Net income (loss) per share - ========== ==========
assuming dilution........... $ 0.41 $ (0.01)
Weighted average shares outstanding - ========== ==========
assuming dilution........... 29,473,751 25,609,643
========== ==========
See accompanying notes to financial statements
<PAGE> 5
CISTRON BIOTECHNOLOGY, INC.
---------------------------
STATEMENTS OF CASH FLOWS
------------------------
(UNAUDITED)
---------
<S> <C> <C> <C>
February 2, 1982
Nine Months ended March 31, (commencement of
--------------------------- operations) to
1997 1998 March 31, 1998
CASH FLOWS FROM OPERATING ACTIVITIES: ----------- ----------- ----------------
Cash received from customers $ 412,571 $ 394,462 $ 11,128,199
Cash paid to suppliers and employees (5,715,815) (3,754,082) (30,705,838)
Interest received 144,804 228,479 536,183
Acquisition expenses paid - - (429,620)
Royalties, research funding, license fees received 305,419 205,000 2,677,987
Litigation settlement and other receipts 11,948,606 3,002,207 15,137,548
---------- ---------- ----------
Net cash provided by (used in) operating activities 7,095,585 76,066 (1,655,541)
CASH FLOWS FROM INVESTING ACTIVITIES: ---------- ---------- ----------
Collection of note receivable - - 15,097
Issuance of note receivable (230,000) - (230,000)
Purchase of property and equipment (15,554) (3,926) (762,472)
---------- ---------- ----------
Net cash (used in) investing activities (245,554) (3,926) (977,375)
CASH FLOWS FROM FINANCING ACTIVITIES: ---------- ---------- ----------
Proceeds from issuance of capital stock and
additional contributions 354 2,879 9,946,398
Principal payments on notes payable - - (870,238)
Purchase of treasury stock - (394,650) (394,650)
---------- ---------- ----------
Net cash provided by financing activities 354 (391,771) 8,681,510
---------- ---------- ----------
Net change in cash and cash equivalents 6,850,385 (319,631) 6,048,597
CASH AND CASH EQUIVALENTS, beginning of period 359,600 6,368,228 -
---------- ---------- ----------
CASH AND CASH EQUIVALENTS, end of period $ 7,209,985 $ 6,048,597 $ 6,048,597
RECONCILIATION OF NET INCOME (LOSS) TO NET CASH ========== =========== ==========
PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net income (loss) $ 12,220,135 $ (383,318) $ 977,808
Adjustments to reconcile net income (loss) to net
cash provided used in operating activities:
Depreciation and amortization 3,937 5,233 741,005
Issue of warrants - 65,000 65,000
Deferred income taxes - (885,090) -
Loss on disposal of property and equipment - 4,552 8,531
Increase in reserve for note receivable - - 230,000
Amortization of deferred financing costs - - 195,179
Decrease (increase) in asset
Accounts receivable (80,557) (40,680) (95,989)
Inventory 1,591 534 (3,744)
Prepaid expenses 500 (8,525) (9,000)
Notes and other receivables (7,407,581) 2,728,680 (6,536,150)
Security deposit (1,466) - (23,938)
Intangible assets - - (37,105)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses 2,359,026 (798,412) 1,233,790
Other current and non-current liabilities - (611,908) 1,599,072
---------- ---------- ----------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES $ 7,095,585 $ 76,066 $ (1,655,541)
========== ========== ==========
See accompanying notes to financial statements
<PAGE> 6
CISTRON BIOTECHNOLOGY, INC.
---------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(Unaudited)
----------
A. BASIS OF PRESENTATION
---------------------
The financial statements for the periods ended March 31, 1998 and 1997
have been prepared without audit and, in the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary
to fairly present the Company's financial position, results of
operations, and cash flows at March 31, 1998 and 1997 and for the
periods then ended have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been omitted. These financial statements
should be read in conjunction with the financial statements and notes
thereto included in the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1997. The results of operations for the
periods ended March 31, 1998 and 1997 are not necessarily indicative of
the operating results for the full year.
B. OTHER INCOME
------------
During the nine-month period ended March 31, 1998 and 1997, the Company
received non-refundable research and development funding of $200,000 and
$300,000 respectively, representing cumulatively, the tenth and seventh
of 10 consecutive quarterly research and development payments of
$100,000 which another company has agreed to make to Cistron.
Additionally, net litigation settlement income of $15.2 million was
recorded in the nine-month period ended March 31, 1997 representing the
amount the Company will receive during the period November 1996 to
November 2000 from the $21 million settlement agreement with Immunex
Corporation ("Immunex") and $359,000 from settlement of the PeproTech
litigation after deducting amounts to be paid to counsel and the
Institutions.
C. INCOME TAXES
------------
At March 31, 1998, the Company had investment and research and
development tax credits of $372,000. Tax benefits of $82,973 and
$234,937 were recorded in the three and nine-month periods ended March
31, 1998 against the net loss incurred.
The Company may be in an Alternative Minimum Tax (AMT) position for the
fiscal year principally due to the limitations placed on the utilization
of the Company's Federal Net Operating Loss (NOL) carryforwards; and,
will receive an AMT credit in future years for the amount of AMT paid.
<PAGE> 7
D. ACCOUNTS RECEIVABLE
-------------------
Accounts receivable - other consists of amounts due in November 1998
(current) and amounts due in November 1999 and 2000 (long term) pursuant
to a litigation settlement agreement entered into in 1996. Long term
amounts have been discounted to reflect their present value.
E. CHANGES IN SHAREHOLDERS' EQUITY
-------------------------------
During the three-month and nine-month periods ended March 31, 1998,
shareholders' equity decreased in the nine-month period due to net
losses of $72,038 and $383,318, respectively, and due to the repurchase
of approximately 4 million shares of the Corporation's common stock that
has been recorded as treasury stock.
F. EARNINGS PER SHARE CALCULATIONS
-------------------------------
In February 1997, The Financial Accounting Standards Board issued
Statement of Accounting Standards ("SFAS") No. 128, "Earnings Per
Share". SFAS No. 128 specifies the computation, presentation and
disclosure requirements for earnings per share ("EPS") and became
effective for both interim and annual periods ending after December 15,
1997. All prior period EPS data has been restated to conform with the
provisions of SFAS No. 128. The following is a reconciliation of the
numerators and denominators used to calculate Earnings per Share:
<S> <C> <C> <C> <C>
Three Months Ended Nine Months Ended
March 31, March 31,
1998 1997 1998 1997
--------------------------------------------------------
Earnings per common share:
- -------------------------
Net income (loss) (numerator) $ (72,038) $ 321,111 $ (383,318) $ 12,220,135
Weighted average shares (denominator) 22,983,687 26,884,990 25,609,643 26,884,457
Income (loss) per share $ - $ 0.01 $ (0.01) $ 0.45
========== ========== ========== ==========
Earnings per common share -
- ---------------------------
assuming dilution:
- -----------------
Net income (loss) (numerator) $ (72,038) $ 321,111 $ (383,318) $ 12,220,135
Weighted average shares 22,983,687 26,884,990 25,609,643 26,884,457
Effect of dilutive options - 2,598,981 - 2,589,294
---------- ---------- ---------- ----------
Weighted average shares -
assuming dilution (denominator) 22,983,687 29,483,971 25,609,643 29,473,751
Income (loss) per share $ - $ 0.01 $ (0.01) $ 0.41
========== ========== ========== ==========
<PAGE> 8
Item 2. Management's Discussion and Analysis of Results of
--------------------------------------------------
Operations and Financial Condition
----------------------------------
The following discussion should be read in conjunction with and is
qualified in its entirety by the accompanying financial information and
notes thereto, and the financial information, notes thereto and
management's discussion and analysis of results of operations and financial
condition contained in the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1997.
Certain statements in this discussion and analysis constitute forward-
looking statements, are not historical facts, and involve risks and
uncertainties that could cause actual results to differ from those expected
and projected. Such risks and uncertainties include but are not limited
to: (i) general economic conditions; (ii) conditions specific to the
biotechnology industry; (iii) the Company's ability to develop or acquire
new technology or products through licensing, merger or acquisition and to
obtain regulatory approval to commercialize diagnostic or therapeutic
products; (iv) the effectiveness and ultimate market acceptance of any
such products; (v) limitations on third party reimbursements with respect
to any such products; and (vi) competition. The Company does not undertake
to update or revise any forward-looking statements contained herein whether
as a result of new information, future events or otherwise.
Results of Operations
- ---------------------
The Company sells its products to the research market and has not
generated significant revenues therefrom. None of its products have been
submitted to or received approval from the Food and Drug Administration for
the sale of such products to the diagnostic or therapeutic markets.
Three Months Ended March 31, 1998 and Three Months Ended March 31, 1997
-----------------------------------------------------------------------
Sales decreased $21,785 (12.0%) in the quarter ended March 31, 1998
versus the same quarter of the prior year due to reduced sales of bulk cytokine
proteins and assay kits offset, in part, by increased sales of bulk
cytokine assays. This change in product mix resulted in higher
manufacturing material expense. Higher manufacturing salary expense and
equipment repairs were incurred in the quarter ended March 31, 1998 versus
the prior year.
During the period ended March 31, 1997 the Company received non-
refundable research and development funding of $100,000 representing the
seventh of 10 consecutive quarterly research and development payments of
$100,000 which another company had agreed to make to Cistron. Cistron also
received $359,000 in litigation settlements in the March 31, 1997 quarter.
Operating expenses increased $38,973 (11.3%) in the quarter ended
March 31, 1998 versus the same quarter of the prior year. Research and
development expenses increased $59,558 (178.8%) in the quarter due to the
hiring of additional scientists, funding university research on the use of
IL-1 as a vaccine adjuvant, and increased research consulting expenses.
Administrative and marketing expenses decreased $19,350 (7.5%) due to
lower legal expenses and due to not incurring expenses for an office in
Washington, D.C. which the Company maintained for a period in the prior
year. These reductions were partially offset by increased corporate
consulting expenses. Occupancy expenses were essentially unchanged.
<PAGE> 9
Interest income of $149,177 was comprised of $80,550 earned on the
investment of higher cash balances and net interest income recognized on
accounts receivable - other and other non-current liabilities to reflect
the increase in their present value.
Nine Months Ended March 31, 1998 and Nine Months Ended March 31, 1997
---------------------------------------------------------------------
Sales decreased $58,235 (12.0%) in the nine-month period ended March
31, 1998 versus the same period of the prior year due to reduced sales of bulk
cytokine proteins and cytokine assay kits offset, in part, by increased
sales of bulk cytokine assays. This change in product mix resulted in
higher manufacturing material expense in the nine month period ended March
31, 1998 offset by lower manufacturing salary expense and lower cost of
sales due to the lower sales volume.
During the nine-month periods ended March 31, 1998 and 1997,
respectively, the Company received non-refundable research and development
funding of $200,000 and $300,000, respectively, representing the tenth and
seventh of 10 consecutive quarterly research and development payments of
$100,000 which another company had agreed to make to Cistron. In the nine
months ended March 31, 1997, the Company also recorded a net litigation
settlement income of $15.2 million.
Operating expenses increased $345,803 (31.3%) in the nine-month period
ended March 31, 1998 versus the same period of the prior year. Research
and development expenses increased $380,871 or approximately 5.6 times from
the nine months ended March 31, 1997. The increased expense was due to
expenditures made on the pre-clinical periodontal disease study,
preparations for initiating a clinical trial related to periodontitis, the
funding of research in additional IL-1 vaccine adjuvant studies and wound
healing and due to the hiring of additional scientists.
Administrative and marketing expenses decreased $35,864 (4.1%) due
to lower legal and consulting expenses and due to not incurring costs for an
office in Washington, D.C. which the Company had maintained for a period in
the prior year. Partially offsetting the expense reductions were increases
in salary, advertising, and insurance expenses. Occupancy expenses were
essentially unchanged.
Interest income of $434,360 was comprised of $228,479 earned on the
investment of higher cash balances and $205,881 net interest income was
recognized on accounts receivable - other (current and non-current) and
other current and non-current liabilities to reflect the increase in their
present value.
The Company had an operating loss of $618,255 in the nine-month period
ended March 31, 1998 and expects research expenditures to increase. There
can be no assurance that its operations will reach profitability.
<PAGE> 10
Liquidity and Capital Resources
- -------------------------------
At March 31, 1998, the Company had current assets of $9,058,454
including cash and cash equivalents of $6,048,597 and had current liabilities
of $799,436. Cash used in the quarter ended March 31, 1998 was largely to pay
the deferred tax liability and for research and other operating expenses.
Management believes that it will have sufficient assets to fund the
Company's current programs through fiscal 1998 and fiscal 1999. Cistron's
current research interests include IL-1's role as a potential vaccine
adjuvant, its role in wound healing and in IL-1 inhibition.
In September 1997, the Company engaged the services of BlueStone
Capital Partners, LP to act as Cistron's financial advisor. The initial six-
month engagement was renewed for an additional six months. BlueStone Capital
Partners, LP has been assisting the Company in the areas of strategic
partnering for certain technologies and other strategic alternatives.
<PAGE> 11
PART II - OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings
-----------------
Not applicable.
Item 2. Changes in Securities
---------------------
a. Not applicable
b. Not applicable
c. Not applicable
Item 3. Defaults upon Senior Securities
-------------------------------
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
On January 7, 1998, the shareholders of the Company held their
annual meeting in New York, New York. The holders of 18,875,489
shares of Common Stock were present in person or represented by
proxy and, accordingly, a quorum was present and matters were
voted upon as follows:
a. The following persons were elected directors of the Company:
Votes For (1) Votes Withheld (1)
------------- ------------------
Bruce C. Galton 18,782,703 92,786
Isidore S. Edelman, M.D. 18,781,703 93,786
Thomas P. Carney, Ph.D. 18,782,703 92,786
Frank G. Stout 18,783,703 91,786
Robert W. Naismith, Ph.D. 18,782,703 92,786
b. The adoption of the Company's 1997 Incentive and Non-
Incentive Stock Option Plan, under which an aggregate of
1,200,000 shares of Common Stock of the Company will be
reserved for issuance upon exercise of options granted
thereunder was approved. Votes totaling 18,235,898 were in
favor of the plan, 253,480 were against, 88,713 abstained
and 297,398 broker non-votes.
c. The vote to approve an amendment to the Company's
Certificate of Incorporation authorizing 5,000,000 shares of
preferred stock was denied. Shareholders voted as follows:
11,391,726 in favor, 326,687 against, 77,017 abstained and
7,080,059 broker non-votes.
<PAGE> 12
d. The ratification of the appointment of Deloitte & Touche LLP
as independent auditors of the Company for the year ending
June 30, 1998 was approved. The proposal received
18,833,079 votes in favor, 14,425 against, 14,234 abstained,
and zero broker non-votes.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibit.
10.8c Third Amendment to Lease dated November 1, 1997, between
Registrant and Stanley Karcynski
10.17 1997 Incentive and Non-Incentive Stock Option Plan
27. Financial Data Schedule
b. Reports on Form 8-K. Not applicable.
<PAGE> 13
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: May 12, 1998 CISTRON BIOTECHNOLOGY, INC.
(Registrant)
BRUCE C. GALTON
-------------------------
Bruce C. Galton
Acting Chairman & CEO
President, Chief Operating
and Financial Officer,
Secretary and Treasurer
(Principal Financial and
Accounting Officer)
<PAGE> 14
</TABLE>
EXHIBIT 10.8c - THIRD AMENDMENT TO LEASE DATED NOVEMBER 1, 1997,
BETWEEN REGISTRANT AND STANLEY KARCYNSKI
THIRD AMENDMENT TO LEASE
BY AND BETWEEN:
STANLEY KARCZYNSKI,
"Landlord"
-and-
CISTRON BIOTECHNOLOGY, INC.,
a Delaware Corporation,
"Tenant"
- ----------------------------
DATED:
- ----------------------------
THIRD AMENDMENT TO LEASE dated this day of 1997,
by and between STANLEY KARCYNZKI, having an office at 180 Passaic Avenue,
Fairfield, New Jersey 07004, hereinafter called the "Landlord"; and CISTRON
BIOTECHNOLOGY, INC. a Delaware Corporation, having an address at 10
Bloomfield Avenue, Pine Brook, New Jersey 07058, hereinafter called the
"Tenant".
W I T N E S S E T H :-
- - - - - - - - - - - -
WHEREAS, the Landlord owns certain lands and premises known as Lot 10
Block 160-1, in the Township of Montville, County of Morris and State of New
Jersey, which lands and premises are commonly known as 10 Bloomfield Avenue,
Pine Brook, New Jersey 07058, upon which there has been erected two one-story
buildings, one of which will contain approximately 84,760 square feet, of
which the tenant will occupy approximately 12,236 square feet, hereinafter
called the "building"; and
WHEREAS, Landlaord and Cistron Technology Incorporated (Tenant's
predecessor-in-interest) have previously entered into a lease agreement dated
September 4, 1984, as amended by letter amendment dated February 10, 1989,
and further amended by second amendment to lease dated November 19, 1991,
hereinafter collectively called the "Lease", in connection with the leasing
of approximately 12,236 square feet in the building, hereinafter called the
"leased premises"; and
WHEREAS, the Landlord and Tenant have agreed to extend the Lease for a
further period of five (5) years, which extended term shall commence as of
November 1, 1997 and shall expire on October 31, 2002.
NOW THEREFORE, in consideration of the sum of one ($1.00) DOLLAR and
other good and valuable consideration, the parties hereto covenant and agree
as follows:
1. The Lease is hereby extended for a further period of five (5)
years, which Lease extension shall commence as of November 1, 1997, and shall
expire as of October 31, 2002, hereinafter called the "Extended Term".
2. Article 3 of the Lease is hereby amended to provided that the
Tenant shall pay Fixed Rent during the Extended Term in the amount of ONE
HUNDRED TWENTY SIX THOUSAND SEVEN HUNDRED SIXTY FOUR AND 96/100 ($126,764.96)
per annum, payable in equal installments of TEN THOUSAND FIVE HUNDRED SIXTY
THREE AND 75/100 ($10,563.75) DOLLARS per month in the same manner as
provided in Article 3.
3. It is expressly understood and agreed that the Tenant shall
accept the leased premises as of the commencement of the Extended Terms in an
"as is" condition.
4. Article 48 of the Lease entitled "Option to Renew" is hereby
deleted in its entirety.
5. Provided the Tenant is not in default pursuant to the terms and
conditions of the Lease, the Tenant is hereby given the right and privilege
to renew the Lease, for one (1) five (5) year period, to commence at the end
of the Extended Term of the Lease, which renewal shall be upon the same terms
and conditions as in the Lease contained, except as follows:
(1) Tenant shall pay during the five (5) year renewal terms
annual Fixed Rent based upon the prevailing fair market value per square foot
applicable to the leased premises.
(2) It is expressly understood and agreed that in any event the
Fixed Rent for the five (5) year renewal term shall not be less than the
annual Fixed Rent of ONE HUNDRED TWENTY SIX THOUSAND SEVEN HUNDRED SIXTY FOUR
AND 96/100 ($126,764.96) DOLLARS per annum.
(3) The right, option and privilege of the Tenant to renew the
Lease as hereinabove set forth is expressly conditioned upon the Tenant
delivering to the Landlord, in writing, by certified mail, return receipt
requested, nine months' prior notice of its intention to renew, which notice
shall be given to the Landlord by the Tenant no later than nine (9) months
prior to the date fixed for termination of the Extended Term of the Lease.
5. Except as hereinabove referred to, all other terms and conditions
of the Lease shall remain in full force and effect, unimpaired and
unmodified.
6. This agreement shall be binding upon the parties hereto, their
heirs, successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused these presents to
be executed by their proper corporate officers and caused their proper
corporate seals to be hereto affixed the day and year first above written.
WITNESS:
TED BUYER STANLEY KARCYNSZKI (L.S.)
- ------------------------ --------------------------
TED BUYER STANLEY KARCZYNSKI
ATTEST:
DORA CIOCE By: BRUCE C. GALTON
- ------------------------ ----------------------
DORA CIOCE BRUCE C. GALTON
PRESIDENT & COO
Exhibit 10.17 - 1997 INCENTIVE AND NON-INCENTIVE STOCK OPTION PLAN
OF CISTRON BIOTECHNOLOGY, INC.
1. Purpose of Plan. The purpose of this Incentive and Non-
Incentive Stock Option Plan ("Plan") is to further the growth
and development of Cistron Biotechnology, Inc. ("Company") and
any subsidiaries thereof by encouraging selected employees,
directors and other persons who contribute and are expected to
contribute materially to the Company's success to obtain a
proprietary interest in the Company through the ownership of
stock, thereby providing such persons with an added incentive to
promote the best interests of the Company and affording the
Company a means of attracting to its service persons of
outstanding ability.
2. Definition of "Outside Director". As defined in Regulation
Section 1.162-27(e)(3) of the Internal Revenue Code of 1986, as amended
(the "Code"), an "Outside Director" is a director of the Company
that: (a) is not a current employee of the Company; (b) is not a
former employee of the Company who receives compensation for
prior services (other than benefits under a tax-qualified
retirement plan) during the taxable year; (c) has not been an
officer of the Company; and (d) does not receive remuneration
(including any payment in exchange for goods or services, and
other than de minimis remuneration, as defined by such
Regulation) from the Company, either directly or indirectly, in
any capacity other than as a director. Notwithstanding anything
in this Plan to the contrary, the Committee (as hereinafter
defined) shall at all times be composed solely of two or more
Outside Directors.
3. Stock Subject to the Plan. An aggregate of 1,200,000
shares of the Company's Common Stock, $.01 par value ("Common Stock")
subject, however, to adjustment or change pursuant to paragraph
12 hereof, shall be reserved for issuance upon the exercise of
options which may be granted from time to time in accordance
with the Plan ("Options"). Such shares may be, in whole or in
part, as the Stock Option and Compensation Committee
("Committee") of the Board of Directors ("Board") shall from
time to time determine, authorized but unissued shares or issued
shares which have been reacquired by the Company. If, for any
reason, an Option shall lapse, expire or terminate without
having been exercised in full, the unpurchased shares covered
thereby shall again be available for purposes of the Plan.
4. Administration. The Plan shall be administered by the
Committee, which shall have sole authority in its discretion to
determine the persons to whom, and the time or times at which,
Options shall be granted; the number of shares to be subject to
each such Option; the provisions regarding exercisability of
each Option; the expiration date of each Option; whether all or
any portion of the Options shall be incentive stock options
("Incentive Options") qualifying under Section 422A of the Code
or stock options which do not so qualify ("Non-Incentive
Options"); whether each Option shall have a "cashless-exercise"
provision; whether a Non-Incentive Option shall have limited
transferability as permitted under the Plan; and whether a Non-
Incentive Option granted to a non-employee shall terminate
following the non-employee's termination of engagement in
performing services for the Company pursuant to Section 10 of
the Plan. Both Incentive Options and Non-Incentive Options may
be granted to the same person at the same time provided each
type of Option is clearly designated. In making such
determinations, the Committee may take into account the nature
of the services rendered by such persons, their present and
potential contribution to the Company's success and such other
factors as the Committee in its sole discretion may deem
relevant. Subject to the express provisions of the Plan, the
Committee shall also have authority to interpret the Plan; to
prescribe, amend and rescind rules and regulations relating
thereto; to determine the terms and provisions of the respective
Option Agreements, which shall be substantially in the forms
attached hereto as Exhibit A and Exhibit B; to amend the
provisions of outstanding Options to provide for accelerated
exercisability or the extension of the expiration date of such
Options; and to make all other determinations necessary or
advisable for the administration of the Plan, all of which
determinations shall be conclusive and not subject to review.
5. Eligibility for Receipt of Options.
(a) Incentive Options. Incentive Options may be
granted only to employees (including officers) of the Company
and/or any of its subsidiaries. A director of the Company or
any subsidiary who is not an employee of the Company or of one
of its subsidiaries is not eligible to receive Incentive Options
under the Plan. Further, Incentive Options may not be granted
to any person who, at the time the Incentive Option is granted,
owns (or is considered as owning within the meaning of Section
424(d) of the Code) stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or
any subsidiary (10% Owner), unless at the time the Incentive
Option is granted to the 10% Owner, the option price is at least
110% of the fair market value of the Common Stock subject
thereto and such Incentive Option by its terms is not
exercisable subsequent to five years from the date of grant.
The aggregate fair market value (determined as of the time an
Incentive Option is granted) of the shares of the Company's
Common Stock initially purchasable upon exercise of an Incentive
Option during any calendar year may not exceed $100,000.
(b) Non-Incentive Options. Non-Incentive Options may be
granted to any employees (including employees who have been
granted Incentive Options), directors, consultants, agents,
independent contractors and other persons whom the Committee
determines will contribute to the Company's success.
(c) The maximum number of shares that may be subject to
options under this Plan granted during any calendar year to any
employee of the Company is 400,000 shares.
(d) In the event an outstanding Incentive Option or a
portion thereof no longer qualifies as an incentive stock option
under Section 422A of the Code, such Option or portion thereof,
as applicable, thereafter shall be deemed a Non-Incentive Option
under the Plan.
6. Option Price. The purchase price of the shares of Common
Stock under each Option shall be determined by the Committee,
which determination shall be conclusive and not subject to
review, but in no event shall the purchase price be less than
100% of the fair market value of the Common Stock on the date of
grant in the case of Incentive Options (110% of fair market
value in the case of Incentive Options granted to a 10% Owner)
and 85% of the fair market value of the Common Stock on the date
of the grant in the case of Non-Incentive Options.
For purposes of the Plan, unless the Committee determines
otherwise, the "fair market value" of a share of Common Stock as
of a certain date shall be the closing sale price of the Common
Stock on The Nasdaq Stock Market (or the Nasdaq Electronic
Bulletin Board) or, if the Common Stock is not then traded on
The Nasdaq Stock Market (or quoted on the Nasdaq Electronic
Bulletin Board), such national securities exchange on which the
Common Stock is then traded, on the trading date immediately
preceding the date the fair market value is being determined.
The Committee may make such other determination of fair market
value, based on other factors, as it shall deem appropriate.
For purposes of the Plan, the date of grant of an Option
shall be the date on which the Committee shall by resolution
duly authorize such Option.
7. Term of Options. The term of each Option shall be such
number of years as the Committee shall determine, subject to earlier
termination as herein provided, but in no event more than ten
years from the date the Option is granted.
8. Exercise of Options. Each Option shall be exercisable
to the extent determined by the Committee, but in no event shall an
Option be exercisable until at least six months from the date of
grant.
(a) An Option may not be exercised for fractional shares
of the Company's Common Stock.
(b) Except as provided in paragraphs 9, 10 and 11 here-
of, and unless determined otherwise by the Committee with
respect to Non-Incentive Options granted to non-employees, no
Option shall be exercisable unless the holder thereof shall have
been an employee, director, consultant, agent, independent
contractor or other person employed by or engaged in performing
services for the Company and/or a subsidiary continuously from
the date of grant to the date of exercise.
(c) The exercise of an Option shall be contingent upon
receipt from the holder thereof of a written representation that
at the time of such exercise it is the optionee's then present
intention to acquire the Option shares for investment and not
with a view to the distribution or resale thereof (unless a
Registration Statement covering the shares purchasable upon
exercise of the Options shall have been declared effective by
the Securities and Exchange Commission) and upon receipt by the
Company of cash, or a check to its order, for the full purchase
price of such shares. The Committee may, in its discretion,
include a "cashless exercise" provision in the applicable Option
Agreement, in which event the optionee will be permitted to
deliver previously owned shares of Common Stock with a fair
market value equal to the exercise price in payment of the full
purchase price of such shares, provided such shares, if
purchased upon exercise of a stock option, shall have been held
for at least six months.
(d) The holder of an Option shall have none of the
rights of a stockholder with respect to the shares purchasable
upon exercise of the Option until a certificate for such shares
shall have been issued to the holder upon due exercise of the
Option.
(e) The proceeds received by the Company upon exercise
of an Option shall be added to the Company's working capital and
be available for general corporate purposes.
9. Transferability of Options. No Option granted pursuant
to the Plan shall be transferable otherwise than by will or the laws
of descent or distribution and an Option may be exercised during
the lifetime of the holder only by such holder, provided,
however, that the Committee may provide in the Option Agreement
for transferability of a Non-Incentive Option to an optionee's
family members or family trusts.
10. Termination of Employment or Engagement.
(a) Except as provided in paragraph (b) below, in the
event the employment of the holder of an Option shall be
terminated by the Company or a subsidiary for any reason other
than by reason of death or disability, or the engagement of a
non-employee holder of a Non-Incentive Option shall be
terminated by the Company or a subsidiary for any reason, such
holder may, within three months from the date of such
termination, exercise such Option to the extent such Option was
exercisable by such holder at the date of such termination.
Notwithstanding the foregoing, no Option may be exercised
subsequent to the date of its expiration. Absence on leave
approved by the employer corporation shall not be considered an
interruption of employment for any purpose under the Plan. In
addition, at the discretion of the Committee, the exercisability
of an outstanding Non-Incentive Option may be extended to a date
determined by the Committee but not beyond ten years from the
date of grant.
(b) The Committee may, in its discretion, at the time of
grant or by amending the applicable outstanding Non-Incentive
Option, delete the foregoing termination provision with respect
to a Non-Incentive Option granted to a non-employee of the
Company or its subsidiaries.
(c) Nothing in the Plan or in any Option Agreement
granted hereunder shall confer upon any Optionholder any right
to continue in the employ of the Company or any subsidiary or
obligate the Company or any subsidiary to continue the
engagement of any Optionholder or interfere in any way with the
right of the Company or any such subsidiary to terminate such
Optionholder's employment or engagement at any time.
11. Disability of Holder of Option. If the employment of
the holder of an Option shall be terminated by reason of such
holder's disability, such holder may, within twelve months from
the date of such termination, exercise such option to the extent
such Option was exercisable by such holder at the date of such
termination. Notwithstanding the foregoing, no Option may be
exercised subsequent to the date of its expiration.
12. Death of Holder of Option. If the holder of any Option
shall die while in the employ of, or while performing services
for, the Company or one or more of its subsidiaries (or within
six months following termination of employment due to
disability), the Option theretofore granted to such person may
be exercised, but only to the extent such Option was exercisable
by the holder at the date of death (or, with respect to
employees, the date of termination of employment due to
disability) by the legatee or legatees of such person under such
person's Last Will, or by such person's personal representative
or distributees, within twelve months from the date of death but
in no event subsequent to the expiration date of the Option.
13. Adjustments Upon Changes in Capitalization. If at any
time after the date of grant of an Option, the Company shall by stock
dividend, split-up, combination, reclassification or exchange,
or through merger or consolidation or other-wise, change its
shares of Common Stock into a different number or kind or class
of shares or other securities or property, then the number of
shares covered by such Option and the price per share thereof
shall be proportionately adjusted for any such change by the
Committee whose determination thereon shall be conclusive.
14. Acceleration of Exercisability Upon Change in Control.
Upon the occurrence of a "change in control" of the Company (as
defined below), all outstanding Options shall become immediately
fully exercisable. For purposes of the Plan, a "change in
control" of the Company shall mean (i) the acquisition at any
time by a "person" or "group" (as such terms are used Sections
13(d) and 14(d)(2) of the Exchange Act of beneficial ownership
(as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities representing 50% or more of the
combined voting power in the election of directors of the then
outstanding securities of the Company or any successor or the
Company; (ii) the termination of service of directors, for any
reason other than death, disability or retirement from the
Board, during any period of two consecutive years or less, of
individuals who at the beginning of such period constituted a
majority of the Board, unless the election of or nomination for
election of each new director during such period was approved by
a vote of at least two-thirds of the directors still in office
who were directors at the beginning of the period; (iii)
approval by the stockholders of the Company of any merger,
consolidation, or statutory share exchange as a result of which
the Common Stock shall be changed, converted or exchanged (other
than a merger, consolidation or share exchange with a wholly-
owned Subsidiary) or liquidation of the Company or any sale or
disposition of 80% or more of the assets or earning power or the
Company; or (iv) approval by the stockholders of the Company of
any merger, consolidation, or statutory share exchange to which
the Company is a party as a result of which the persons who
were stockholders immediately prior to the effective date of the
merger, consolidation or share exchange shall have beneficial
ownership of less than 50% of the combined voting power in the
election of directors of the surviving corporation; provided,
however, that no change in control shall be deemed to have
occurred if, prior to such time as a change in control would
otherwise be deemed to have occurred, the Committee deems
otherwise.
15. Vesting of Rights Under Options. Neither anything
contained in the Plan nor in any resolution adopted or to be
adopted by the Committee or the stockholders of the Company shall
constitute the vesting of any rights under any Option. The
vesting of such rights shall take place only when a written
Option Agreement, substantially in the form of the Incentive
Stock Option Agreement attached hereto as Exhibit A or the Non-
Incentive Stock Option Agreement attached hereto as Exhibit B,
shall be duly executed and delivered by and on behalf of the
Company and the person to whom the Option shall be granted.
16. Withholding Taxes. The Company shall have the right
to require the recipient to remit to the Company an amount
sufficient to satisfy any federal, state and local withholding
tax requirements in connection with any grant made hereunder.
17. Termination and Amendment. The Plan, which was adopted
by the Board on November 4, 1997 and is subject to stockholder
approval, shall terminate on November 3, 2007 and no Option
shall be granted under the Plan after such date. The Committee
may at any time prior to such date terminate the Plan or make
such modifications or amendments thereto as it shall deem
advisable; provided, however, that stockholder approval shall be
required if otherwise required to comply with the Code, the
listed company requirements of The Nasdaq Stock Market or of a
national securities exchange on which the Common Stock is then
traded, or other applicable provisions of state or federal law
or self-regulatory agencies; and provided, further, that no
modification or amendment shall adversely affect the rights of a
holder of an Option previously granted under the Plan without
such holder's written consent.
EXHIBIT A
CISTRON BIOTECHNOLOGY, INC.
INCENTIVE STOCK OPTION AGREEMENT
To:
We are pleased to notify you that by the determination of
the Stock Option and Compensation Committee (herein called the
"Committee") of the Board of Directors (herein called the
"Board") an incentive stock option to purchase _______ shares of
the Common Stock of Cistron Biotechnology, Inc. (herein called
the "Company") at a price of $______ per share has this __ day
of _______ been granted to you under the Company's 1997
Incentive and Non-Incentive Stock Option Plan (herein called the
"Plan"). This option may be exercised only upon the terms and
conditions set forth below.
1. Purpose of Option. The purpose of the Plan under which
this incentive stock option has been granted is to further the growth
and development of the Company and its subsidiaries by
encouraging key employees, directors, consultants, agents,
independent contractors and other persons who contribute and are
expected to contribute materially to the Company's success to
obtain a proprietary interest in the Company through the
ownership of stock, thereby providing such persons with an added
incentive to promote the best interests of the Company, and
affording the Company a means of attracting to its service
persons of outstanding ability.
2. Acceptance of Option Agreement. Your execution of this
incentive stock option agreement will indicate your acceptance
of and your willingness to be bound by its terms; it imposes no
obligation upon you to purchase any of the shares subject to
this option. Your obligation to purchase shares can arise only
upon your exercise of the option in the manner set forth in
paragraph 4 hereof.
3. When Option May Be Exercised.
(a) The option granted you hereunder may not be exercised
for a period of six months from the date of its grant by the
Committee as set forth above. Thereafter, this option shall be
exercisable as follows:
(b) [Insert exercisability provisions. A typical example,
although not required under the Plan, is as follows:]
[(i) at the end of one year from the date of grant, up
to 25% of the total shares subject to the option;
(ii) at the end of the second year from the date of
grant, up to 50%;
(iii) at the end of the third year from the date
of grant, up to 75%;
(iv) at the end of the fourth year from the date of
grant, up to 100%.]
This option may not be exercised for less than ten shares at any
one time (or the remaining shares then purchasable if less than
ten) and expires at the end of ________ years [insert number of
years; maximum - ten years] from the date of grant whether or
not it has been duly exercised (hereinafter, the "Option
Expiration Date"), unless sooner terminated as provided in
paragraphs 5, 6 or 7 hereof.
4. How Option May Be Exercised. This option is exercisable
by a written notice signed by you and delivered to the Company at
its executive offices, signifying your election to exercise the
option. The notice must state the number of shares of Common
Stock as to which your option is being exercised, must contain a
statement by you (in a form acceptable to the Company) that such
shares are being acquired by you for investment and not with a
view to their distribution or resale (unless a Registration
Statement covering the shares purchasable has been declared
effective by the Securities and Exchange Commission) and must be
accompanied by cash or a check to the order of the Company for
the full purchase price of the shares being purchased [if
"cashless exercise" is permitted, add the following phrase:] [,
unless exercised pursuant to the following "cashless exercise"
provision.]
[Insert the following "cashless exercise" provision, if
granted by the Committee:] [In lieu of paying for the shares
purchasable under this option by cash or check, you may deliver
previously owned shares of Common Stock with a fair market value
equal to the full purchase price of the shares being purchased
under this option, provided if such shares have been issued upon
exercise of an option, they have been held for at least six
months.]
If notice of the exercise of this option is given by a
person or persons other than you, the Company may require, as a
condition to the exercise of this option, the submission to the
Company of appropriate proof of the right of such person or
persons to exercise this option.
Certificates for shares of the Common Stock so purchased
will be issued as soon as practicable. The Company, however,
shall not be required to issue or deliver a certificate for any
shares until it has complied with all requirements of the
Securities Act of 1933, the Securities Exchange Act of 1934, any
stock exchange on which the Company's Common Stock may then be
listed and all applicable state laws in connection with the
issuance or sale of such shares or the listing of such shares on
said exchange. Until the issuance of the certification for such
shares, you or such other person as may be entitled to exercise
this option shall have none of the rights of a stockholder with
respect to shares subject to this option.
The Company shall have the right to require you, or such
other person as may be permitted to exercise this option, to
remit to the Company an amount sufficient to satisfy federal,
state and local withholding tax requirements prior to the
delivery of any certificate or certificates for shares of Common
Stock issuable upon exercise of this option.
5. Termination of Employment. If your employment with the
Company (or a subsidiary thereof) is terminated for any reason
other than by death or disability, you may exercise, within three
months from the date of such termination, that portion of the
option which was exercisable by you at the date of such
termination, provided, however, that such exercise occurs no
later than the Option Expiration Date.
6. Disability. If your employment with the Company (or
a subsidiary thereof) is terminated by reason of your disability,
you may exercise, within twelve months from the date of such
termination, that portion of this option which was exercisable
by you at the date of such termination, provided, however, that
such exercise occurs no later than the Option Expiration Date.
7. Death. If you die while employed by the Company (or
a subsidiary thereof) or within six months after termination of
your employment due to disability, that portion of this option
which was exercisable by you at the date of your death may be
exercised by your legatee or legatees under your Will, or by
your personal representatives or distributees, within twelve
months from the date of your death, but in no event after the
Option Expiration Date.
8. Non-Transferability of Option. This option shall not
be transferable except by Will or the laws of descent and
distribution, and may be exercised during your lifetime only by
you.
9. Adjustments upon Changes in Capitalization. If at any
time after the date of grant of this option, the Company shall,
by stock dividend, split-up, combination, reclassification or
exchange, or through merger or consolidation, or otherwise,
change its shares of Common Stock into a different number or
kind or class of shares or other securities or property, then
the number of shares covered by this option and the price of
each such share shall be proportionately adjusted for any such
change by the Committee, whose determination shall be
conclusive.
10. Acceleration of Exercisability Upon Change in Control.
Upon the occurrence of a "change in control" of the Company (as
defined below), this option shall become immediately fully
exercisable. For purposes of this option, a "change in control"
of the Company shall mean (i) the acquisition at any time by a
"person" or "group" (as such terms are used Sections 13(d) and
14(d)(2) of the Exchange Act of beneficial ownership (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities representing 50% or more of the combined voting
power in the election of directors of the then outstanding
securities of the Company or any successor or the Company; (ii)
the termination of service of directors, for any reason other
than death, disability or retirement from the Board, during any
period of two consecutive years or less, of individuals who at
the beginning of such period constituted a majority of the
Board, unless the election of or nomination for election of each
new director during such period was approved by a vote of at
least two-thirds of the directors still in office who were
directors at the beginning of the period; (iii) approval by the
stockholders of the Company of any merger, consolidation, or
statutory share exchange as a result of which the Common Stock
shall be changed, converted or exchanged (other than a merger,
consolidation or share exchange with a wholly-owned Subsidiary)
or liquidation of the Company or any sale or disposition of 80%
or more of the assets or earning power or the Company; or (iv)
approval by the stockholders of the Company of any merger,
consolidation, or statutory share exchange to which the Company
is a party as a result of which the persons who were
stockholders immediately prior to the effective date of the
merger, consolidation or share exchange shall have beneficial
ownership of less than 50% of the combined voting power in the
election of directors of the surviving corporation; provided,
however, that no change in control shall be deemed to have
occurred if, prior to such time as a change in control would
otherwise be deemed to have occurred, the Committee deems
otherwise.
11. Subject to Terms of the Plan. This incentive stock
option agreement shall be subject in all respects to the terms and
conditions of the Plan and in the event of any question or
controversy relating to the terms of the Plan, the decision of
the Committee shall be conclusive.
Sincerely yours,
CISTRON BIOTECHNOLOGY, INC.
By: __________________________
Name:
Title:
Agreed to and accepted this
__day of ______, 199_.
______________________
Signature of Optionee
EXHIBIT B
CISTRON BIOTECHNOLOGY, INC.
NON-INCENTIVE STOCK OPTION AGREEMENT
To:
We are pleased to notify you that by the determination
of the Stock Option and Compensation Committee (herein called
the "Committee") of the Board of Directors (herein called the
"Board") a non-incentive stock option to purchase ______ shares
of the Common Stock of Cistron Biotechnology, Inc. (herein
called the "Company") at a price of $______ per share has this
day of _________ been granted to you under the Company's 1997
Incentive and Non-Incentive Stock Option Plan (herein called the
"Plan"). This option may be exercised only upon the terms and
conditions set forth below.
1. Purpose of Option. The purpose of the Plan under which
this non-incentive stock option has been granted is to further the
growth and development of the Company and its subsidiaries by
encouraging key employees, directors, consultants, agents,
independent contractors and other persons who contribute and are
expected to contribute materially to the Company's success to
obtain a proprietary interest in the Company through the
ownership of stock, thereby providing such persons with an added
incentive to promote the best interests of the Company, and
affording the Company a means of attracting to its service
persons of outstanding ability.
2. Acceptance of Option Agreement. Your execution of this
non-incentive stock option agreement will indicate your acceptance
of and your willingness to be bound by its terms; it imposes no
obligation upon you to purchase any of the shares subject to
this option. Your obligation to purchase shares can arise only
upon your exercise of the option in the manner set forth in
paragraph 4 hereof.
3. When Option May Be Exercised. The option granted you
hereunder shall be exercisable as follows: [set forth terms and
expiration date of Option, but in no event shall the Option be
exercisable until at least six months from the date of grant].
This option may not be exercised for less than ten shares
at any one time (or the remaining shares then purchasable if
less than ten) and expires at the end of ________ years [insert
number of years; maximum - ten years] from the date of grant
whether or not it has been duly exercised (hereinafter, the
"Option Expiration Date"), unless sooner terminated as provided
in paragraphs 5, 6 or 7 hereof.
4. How Option May Be Exercised. This option is exercisable by
a written notice signed by you and delivered to the Company at
its executive offices, signifying your election to exercise the
option. The notice must state the number of shares of Common
Stock as to which your option is being exercised, must contain a
statement by you (in a form acceptable to the Company) that such
shares are being acquired by you for investment and not with a
view to their distribution or resale (unless a Registration
Statement covering the shares purchased has been declared
effective by the Securities and Exchange Commission) and must be
accompanied by cash or a check to the order of the Company for
the full purchase price of the shares being purchased, plus such
amount, if any, as is required for withholding taxes. [If
"cashless exercise" is permitted, add the following phrase:]
[Notwithstanding the foregoing, this option may also be
exercised pursuant to the following "cashless exercise"
provision.]
[Insert the following "cashless exercise" provision, if
granted by the Committee:] [In lieu of paying for the shares
purchasable under this option by cash or check, you may deliver
previously owned shares of Common Stock with a fair market value
equal to the full purchase price of the shares being purchased
under this option, provided if such shares have been issued upon
exercise of an option, you have held such shares for at least
six months.]
If notice of the exercise of this option is given by a
person or persons other than you, the Company may require, as a
condition to the exercise of this option, the submission to the
Company of appropriate proof of the right of such person or
persons to exercise this option.
Certificates for shares of the Common Stock so purchased
will be issued as soon as practicable. The Company, however,
shall not be required to issue or deliver a certificate for any
shares until it has complied with all requirements of the
Securities Act of 1933, the Securities Exchange Act of 1934, any
stock exchange on which the Company's Common Stock may then be
listed and all applicable state laws in connection with the
issuance or sale of such shares or the listing of such shares on
said exchange. Until the issuance of the certificate for such
shares, you or such other person as may be entitled to exercise
this option shall have none of the rights of a stockholder with
respect to shares subject to this option.
The Company shall have the right to require you, or such
other person as may be permitted to exercise this option, to
remit to the Company an amount sufficient to satisfy federal,
state and local withholding tax requirements prior to the
delivery of any certificate or certificates for shares of Common
Stock issuable upon exercise of this option.
5. Termination of Employment or Engagement. [The Committee may
determine to delete this provision, at the time of grant or by
amendment, to a non-employee, in which event the words
"Intentionally omitted" should be inserted.] If your employment
with the Company (or a subsidiary thereof) is terminated for any
reason other than by death or disability, or if a you are not an
employee of the Company and your engagement by the Company (or a
subsidiary) is terminated for any reason, you may exercise,
within three months from the date of such termination, that
portion of this option which was exercisable by you at the date
of such termination, provided, however, that such exercise
occurs prior to the Option Expiration Date.
6. Disability. If your employment with the Company (or a
subsidiary thereof) is terminated by reason of your disability,
you may exercise, within twelve months from the date of such
termination, that portion of this option which was exercisable
by you at the date of such termination, provided, however, that
such exercise occurs prior to the Option Expiration Date.
Death. If you die while employed by the Company (or a
subsidiary thereof) or within six months after termination of
your employment due to disability, that portion of this option
which was exercisable by you at the date of your death may be
exercised by your legatee or legatees under your Will, or by
your personal representatives or distributees, within twelve
months from the date of your death, but in no event after the
Option Expiration Date.
7. Non-Transferability of Option. This option shall not be
transferable except by Will or the laws of descent and
distribution, and may be exercised during your lifetime only by
you.
[Alternative Section 8, if provided for by the Committee:]
8. [Limited Transferability of Option. This option shall not be
transferable except to members of your family or to your family
trust(s), and by Will or the laws of descent and distribution.]
9. Adjustments upon Changes in Capitalization. If at any time
after the date of grant of this option, the Company shall, by
stock dividend, split-up, combination, reclassification or
exchange, or through merger or consolidation, or otherwise,
change its shares of Common Stock into a different number or
kind or class of shares or other securities or property, then
the number of shares covered by this option and the price of
each such share shall be proportionately adjusted for any such
change by the Committee, whose determination shall be
conclusive.
10. Acceleration of Exercisability Upon Change in Control. Upon
the occurrence of a "change in control" of the Company (as
defined below), this option shall become immediately fully
exercisable. For purposes of this option, a "change in control"
of the Company shall mean (i) the acquisition at any time by a
"person" or "group" (as such terms are used Sections 13(d) and
14(d)(2) of the Exchange Act of beneficial ownership (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities representing 50% or more of the combined voting
power in the election of directors of the then outstanding
securities of the Company or any successor or the Company; (ii)
the termination of service of directors, for any reason other
than death, disability or retirement from the Board, during any
period of two consecutive years or less, of individuals who at
the beginning of such period constituted a majority of the
Board, unless the election of or nomination for election of each
new director during such period was approved by a vote of at
least two-thirds of the directors still in office who were
directors at the beginning of the period; (iii) approval by the
stockholders of the Company of any merger, consolidation, or
statutory share exchange as a result of which the Common Stock
shall be changed, converted or exchanged (other than a merger,
consolidation or share exchange with a wholly-owned Subsidiary)
or liquidation of the Company or any sale or disposition of 80%
or more of the assets or earning power or the Company; or (iv)
approval by the stockholders of the Company of any merger,
consolidation, or statutory share exchange to which the Company
is a party as a result of which the persons who were
stockholders immediately prior to the effective date of the
merger, consolidation or share exchange shall have beneficial
ownership of less than 50% of the combined voting power in the
election of directors of the surviving corporation; provided,
however, that no change in control shall be deemed to have
occurred if, prior to such time as a change in control would
otherwise be deemed to have occurred, the Committee deems
otherwise.
11. Subject to Terms of the Plan. This non-incentive stock
option agreement shall be subject in all respects to the terms
and conditions of the Plan and in the event of any question or
controversy relating to the terms of the Plan, the decision of
the Committee shall be conclusive.
12. Tax Status. This option does not qualify as an "incentive
stock option" under the provisions of Section 422A of the
Internal Revenue Code of 1986, as amended, and the income tax
implications of your receipt of a non-incentive stock option and
your exercise of such an option should be discussed with your
tax counsel.
Sincerely yours,
CISTRON BIOTECHNOLOGY, INC.
By: _____________________________
Name:
Title:
Agreed to and accepted this
__ day of ______, 199_.
______________________
Signature of Optionee
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information taken from the balance
sheet as of March 31, 1998 (unaudited) and the statement of operations for
the nine-month period ended March 31, 1998 (unaudited) and is qualified in
its entirety by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 1997.
<S> <C>
<PERIOD-TYPE> 6-M0S
<FISCAL-YEAR-END> JUNE-30-1997
<PERIOD-END> MAR-31-1998
<CASH> 6,048,597
<SECURITIES> (0)
<RECEIVABLES> 2,997,113
<ALLOWANCES> (0)
<INVENTORY> 3,744
<CURRENT-ASSETS> 9,058,454
<PP&E> 727,695
<DEPRECIATION> 700,283
<TOTAL-ASSETS> 12,752,362
<CURRENT-LIABILITIES> 799,436
<BONDS> (0)
(0)
(0)
<COMMON> 8,952,983
<OTHER-SE> 2,082,635
<TOTAL-LIABILITY-AND-EQUITY> 12,752,362
<SALES> 426,010
<TOTAL-REVENUES> 1,065,370
<CGS> 234,244
<TOTAL-COSTS> 234,244
<OTHER-EXPENSES> 1,449,381
<LOSS-PROVISION> (0)
<INTEREST-EXPENSE> (0)
<INCOME-PRETAX> (618,255)
<INCOME-TAX> (234,937)
<INCOME-CONTINUING> (0)
<DISCONTINUED> (0)
<EXTRAORDINARY> (0)
<CHANGES> (0)
<NET-INCOME> (383,318)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> (0.01)
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