-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M2clqKhYAGxekvMLG/lQOMI0w3lHQ2qom7HYIGTMDa7lk4QElBgJJYogcF5/c7ua ulKnUgZ4ZzzfG+CDUhEL9w== 0000950134-99-007243.txt : 19990813 0000950134-99-007243.hdr.sgml : 19990813 ACCESSION NUMBER: 0000950134-99-007243 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990812 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMARILLO BIOSCIENCES INC CENTRAL INDEX KEY: 0001014763 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 751974352 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-20791 FILM NUMBER: 99685953 BUSINESS ADDRESS: STREET 1: 800 W 9TH AVE CITY: AMARILLO STATE: TX ZIP: 79101-3206 BUSINESS PHONE: 8063761741 MAIL ADDRESS: STREET 1: AMARILLO BIOSCIENCES INC STREET 2: 800 W 9TH AVE CITY: AMARILLO STATE: TX ZIP: 79101-3206 10QSB 1 FORM 10QSB FOR QUARTER ENDING JUNE 30, 1999 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB [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. - -------------------------------------------------------------------------------- (Exact name of small business issuer as specified in its charter) TEXAS 75-1974352 - -------------------------------------------------------------------------------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 800 West Ninth, Amarillo, TX 79101 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) 806-376-1741 FAX 806-376-9301 - -------------------------------------------------------------------------------- (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. 1 2 AMARILLO BIOSCIENCES, INC. INDEX
PAGE NO. -------- PART I: FINANCIAL INFORMATION 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 ITEM 2. Management's Plan of Operations............................................. 7 PART II: OTHER INFORMATION ITEM 2. Changes in Securities....................................................... 9 ITEM 4. Submission of Matters to a Vote of Securities Holders....................... 9 ITEM 5. Other Information........................................................... 9 ITEM 6. Exhibits and Reports on Form 8-K............................................ 10 Signatures ............................................................................ 13
2 3 AMARILLO BIOSCIENCES, INC. AND SUBSIDIARIES (COMPANIES IN THE DEVELOPMENT STAGE) CONSOLIDATED BALANCE SHEETS (unaudited)
December 31, June 30, 1998 1999 ------------- ------------- 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 ============= =============
See accompanying notes. 3 4 AMARILLO BIOSCIENCES, INC. AND SUBSIDIARIES (COMPANIES IN THE DEVELOPMENT STAGE) CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
Cumulative from June 25, 1984 Three months ended Six months ended (Inception) June 30, June 30, through -------------------------------- -------------------------------- June 30, 1998 1999 1998 1999 1999 ------------- ------------- ------------- ------------- ------------- 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 351,894 450,355 720,411 2,131,399 13,483,843 Selling, general, and administrative expenses 260,312 521,090 558,991 845,419 11,718,139 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 ============= ============= ============= =============
See accompanying notes. 4 5 AMARILLO BIOSCIENCES, INC. AND SUBSIDIARIES (COMPANIES IN THE DEVELOPMENT STAGE) CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Six months ended Cumulative from June 30, June 25, 1984 -------------------------------- (Inception) through 1998 1999 June 30, 1999 ------------- ------------- ------------- 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 ============= ============= =============
See accompanying notes. 5 6 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 7 ITEM 2. MANAGEMENT'S PLAN OF OPERATIONS Amarillo Biosciences, Inc. is a development stage company, which is conducting research and development activities focused on biologics for the treatment of human and animal diseases. The Company has not commenced any significant product commercialization and, until such time as it does, will not generate significant product revenues. The Company's accumulated deficit has continued to grow, from $11,378,216 at December 31, 1998 to $14,307,566 at June 30, 1999. Operating losses are expected to continue for the foreseeable future and until such time as the Company is able to attain sales levels sufficient to support its operations. During the next twelve months the Company will continue its research and development activities, as well as the activities necessary to develop commercial partnerships and licenses. The Company's expenditure of financial resources during this period will fall principally into six broad categories, as follows: Research and Development; Personnel; Consulting and Professional (other than legal and accounting); Legal; Public Relations, Investor Relations, and Shareholder Relations; and Liquidity Needs. The Company's expectations and goals with respect to these categories are addressed separately below, by category: RESEARCH AND DEVELOPMENT: Until it achieves commercial product sales, the Company's business is research and development, and this is the area where the Company's principal efforts will be expended during the next 12 months. The Company has budgeted approximately $4.2 million for expenditure during the next twelve months on research and development, inclusive of amounts to be expended on the Company's Phase III Sjogren's syndrome clinical trial. PERSONNEL: In addition to its intellectual property, the Company's principal assets are its personnel. The Company has been successful in controlling its personnel costs, both by maintaining its principal location in Amarillo, Texas, and by ensuring maximum efficiency and utilization of existing personnel. The Company has budgeted approximately $1 million for personnel expenses during the next twelve months, including salaries, payroll taxes, worker's compensation insurance, directors' and officers' general liability insurance, and group life, health, dental, and liability insurance. CONSULTING AND PROFESSIONAL (EXCEPT LEGAL AND ACCOUNTING): The Company has budgeted approximately $150,000 for expenditure on professional consultants in the next 12 months. Consulting fees are expected to be paid to the Company's scientific advisory board; to certain directors who perform specific consulting tasks at the Company's request; and to a number of independent consultants, in connection with the operation of the Company. The Company will continue to use the services of consultants to complement the Company's small full-time staff, where such is a more efficient utilization of the Company's resources. LEGAL AND ACCOUNTING: Although the Company is not involved in litigation, it has budgeted legal expenses of approximately $180,000 during the next 12 months. Almost 40% of the Company's legal expenditures will be for preparation and filing of patents and for maintenance of existing patents in a number of countries. Other legal expenses will be related to compliance with laws and regulations affecting public companies, licensing and contracting, and general corporate matters. The Company does not presently have an in-house legal staff, nor does it intend to put such a staff in place during the next 12 months. The Company will maintain Ernst & Young as its auditors. 7 8 PUBLIC RELATIONS, INVESTOR RELATIONS AND SHAREHOLDER RELATIONS: The Company recognizes that its ability to raise capital will depend, to some extent, upon its relations with both potential future investors and its existing shareholders. In turn, such relationships are built upon the foundation of adequate, timely, and comprehensible communications. Accordingly, the Company has budgeted approximately $125,000 for expenditure on these items during the next 12 months. The expenditures will include payments to the Company's public relations consultants, as well as the Company's expenses in attending a number of meetings with analysts and institutional investors. The Company has also budgeted sufficient amounts to maintain its comprehensive web site (www.amarbio.com). LIQUIDITY NEEDS: The principal budget items discussed above, along with other miscellaneous costs and expenses, will cause the Company to expend approximately $6.1 million during the next twelve months including the substantial expense of the Company's Phase III Sjogren's syndrome trial. At June 30, 1999, the Company had available cash of $1,869,062 and a $3 million loan commitment from Hayashibara Biochemical Laboratories, payable in $1 million increments on or before August 31, 1999; November 30, 1999; and February 29, 2000. The Company is currently seeking additional funding through strategic collaborations and public or private equity financing in an amount sufficient to support its operations through June 30, 2000, and in connection therewith, is in negotiations with several parties to obtain such financing. Should a commitment for additional funds not be obtained during the third quarter of 1999, the Company will take steps to curtail clinical trial expenditures and to reduce staff and administrative expenses. Management believes that based on the Company's ability to curtail clinical trial expense and to reduce staff and administration expenses, available funds are sufficient to meet its anticipated cash requirements for at least the next twelve months. 8 9 PART II - OTHER INFORMATION ITEM 2. CHANGES IN SECURITIES. The following information is provided with respect to unregistered securities issued by the Company, pursuant to conversion by Hayashibara Biochemical Laboratories ("HBL") of $2,837,526 of debt (including principal and accrued interest) held by it: (a) The conversion occurred effective April 2, 1999 and the securities of the Company issued to satisfy the conversion were 946,094 shares of the Company's common stock, $.01 par value. (b) No underwriters were employed. The securities were not offered publicly, and were issued in their entirety to Hayashibara Biochemical Laboratories, Inc., the principal shareholder of the Company. (c) The total consideration was conversion of debt held by HBL, aggregating $2,600,000 in principal, and $237,526 in accrued interest. There were no underwriting discounts or commissions. (d) The issuance was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, HBL being a sophisticated investor and major shareholder of the Company with a long association with the Company, and represented on the Company's Board of Directors. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. At the annual meeting of the stockholders of the Company, held on May 11, 1999, and adjourned to and continued on June 11, 1999, several matters were submitted to a vote of security holders. All management nominees for directors were elected to serve for the ensuing year. Each nominee received 4,149,995 affirmative votes, and there were withheld from voting for each nominee 11,700 shares ("broker non-votes"). The Company's Employee Stock Option Plan was amended, as recommended by Management, upon an affirmative vote of 2,982,298 shares, with 16,800 shares voting against, and 15,450 shares abstaining. The Company's Outside Director and Advisor Stock Option Plan was amended, as recommended by Management, upon an affirmative vote of 2,986,148 shares, with 13,200 shares voting against, and 15,200 shares abstaining. The Company's Articles of Incorporation were amended, as recommended by Management, upon an affirmative vote of 3,616,162 shares, with 24,300 shares voting against, and 10,600 shares abstaining. ITEM 5. OTHER INFORMATION. Effective July 22, 1999, the Company secured a $3 million loan from Hayashibara Biochemical Laboratories, its principal shareholder. The loan will provide $1 million per quarter starting in August, 1999, and will be repayable upon the earlier of July 22, 2004, or 1 year after FDA approval is obtained for the use of low dose oral interferon alpha for any indication. These funds will be used for the Company's ongoing clinical trial programs. Hayashibara Biochemical Laboratories owns 34.3% of Amarillo Biosciences, Inc. 9 10 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K EXHIBIT INDEX NUMBER DESCRIPTION ------ ----------- 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 11 NUMBER DESCRIPTION ------ ----------- 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. 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
*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. 11 12 EXHIBIT 27. Financial Data Schedule 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. 12 13 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: Aug. 11, 1999 By: /s/ JOSEPH M. CUMMINS ------------- ------------------------------------ Joseph M. Cummins President, Chief Executive Officer and Chief Financial Officer 13 14 INDEX TO EXHIBITS
NUMBER DESCRIPTION ------ ----------- 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.
15
NUMBER DESCRIPTION ------ ----------- 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. 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. 27. Financial Data Schedule
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
*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. EX-3.1 2 RESTATED ARTICLES OF INCORPORATION 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, -1- 2 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: -2- 3 "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
-3- 4 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. -4- 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 -5- 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
-6- 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: ------------ -7- EX-10.20 3 1996 EMPLOYEE STOCK OPTION PLAN 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; -1- 2 (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. -2- 3 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 -3- 4 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. -4- 5 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. -5- 6 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. -6- 7 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"). -7- 8 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. -8- 9 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. -9- 10 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. -10- 11 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. -11- 12 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. -12- 13 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. -13- EX-10.21 4 OUTSIDE DIRECTOR AND ADVISOR STOCK OPTION PLAN 1 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 -1- 2 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. -2- 3 (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 -3- 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 -4- 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. -5- 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, -6- 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; -7- 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. -8- 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. -9- 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. -10- 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. -11- EX-27 5 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 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 FINANCIAL STATEMENTS INCLUDED IN THIS FORM 10-QSB FOR PERIOD ENDED JUNE 30, 1999. 6-MOS DEC-31-1999 JAN-01-1999 JUN-30-1999 1,869,062 0 0 0 0 1,901,636 250,507 136,083 2,056,975 80,736 0 0 0 63,603 1,912,636 2,056,975 0 76,638 0 2,131,399 845,419 0 29,170 (2,929,350) 0 0 0 0 0 (2,929,350) (.50) (.50)
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