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                                                                   EXHIBIT 10.33

                               EMPLOYMENT CONTRACT

         This Employment Contract ("Contract") is entered into by and between
AMARILLO BIOSCIENCES, INC., a Texas corporation ("Employer"), and JOHN SMITH
("Employee"). ABI and its controlled subsidiaries shall be hereinafter
collectively referred to as "ABI Companies". Employer hereby employs Employee,
and Employee accepts employment, on the following terms and conditions.

                                    ARTICLE I

                               TERM OF EMPLOYMENT

         1.01.     By this Contract, Employer employs Employee and Employee 
accepts employment with Employer and with such ABI Companies as Employer shall
designate for a period of one (1) year from date of execution of this Contract;
however, this Contract may be terminated earlier by Employer for cause, at its
option, by giving written notice of termination to Employee, without prejudice
to any other remedy to which Employer may be entitled either at law, in equity
or under this Contract. "For cause," as used in this Section 1.01, shall mean
and include any of the following events:

                   (a)  Misappropriation or embezzlement by Employee involving 
Employer or an ABI Company;

                   (b)  The conviction in any jurisdiction of Employee for any 
crime involving an ABI Company which constitutes a felony;

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                   (c)  Employee's material violation of any of the material 
provisions of this Contract; provided, however, that Employer shall give written
notice of Employee's violation of such provisions and Employee shall have a
period of twenty (20) business days to cure such violation; or


                   (d)  Employee shall have become Disabled (as defined in 
Section 2.01, below), and said Disability shall have continued for a period of
six (6) consecutive months, or a period of six (6) months in any twelve (12)
month period. All determinations regarding the existence and continuation of a
Disability shall be made as provided in Section 2.01, below.

         Termination of this Contract for cause shall be effective upon written
notice thereof to Employee. Employee shall thereupon be entitled to compensation
earned prior to the date of termination, computed pro rata up to and including
the date of termination, shall be entitled to no further compensation, and will
be relieved of all duties and obligations under this Contract as of the date of
termination; provided, however, that the provisions of Articles VII, VIII, IX,
and X shall survive both the expiration of this Contract, or any earlier
termination.

         1.02.     Employer may terminate this Contract at any time upon two (2)
weeks prior written notice to Employee; however, in the event of such
termination by Employer without cause, Employer shall continue to pay to
Employee the monthly base salary set forth in Section 2.01, below, for a period
of one (1) year from the date Employee receives notice of termination. Employee
must seek alternative employment and show reasonable proof of this to Employer.
Compensation earned by Employee during this period will be deducted from
Employer's obligation under this Section 1.02. In the case of termination of the
Contract by Employer, Employer can at the time of termination





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release Employee in writing from the non-competition provisions contained in
Section 7.06, below. In such event, the salary continuation provided for in this
Section shall terminate.

         1.03.     Employee is not a U.S. citizen, but will apply for an 
immigration work visa so that he may lawfully reside in the United States during
the term of this Contract. If Employee should be required to terminate his
residence in the U. S. at any time during the term of this Contract due to
inability to obtain or extend a work visa, or for any other reason relating to
the immigration and naturalization laws of the United States, this Contract
shall thereupon immediately terminate, Employee shall be entitled to
compensation for any completed but uncompensated period of employment, and
Employer and Employee shall thereafter have no obligation one to the other
arising from this Contract, except that Articles VII, VIII, IX and X shall
survive such termination.

                                   ARTICLE II

                                  COMPENSATION

         2.01.     As compensation for all services rendered under this 
Contract, Employee shall be paid by Employer a salary of Eight Thousand Three
Hundred Thirty-Three and No/100 Dollars ($8,333.00) per month, payable at least
monthly during the term of this Contract. The amount paid is to be prorated for
any partial employment period. In the event Employee becomes Disabled (as
hereinafter defined), Employee shall continue to receive compensation from
employer as follows (but only until the expiration of one (1) year from date of
execution of this Contract):

                           (i)      during the first two (2) months following a
                                    determination of Disability, Employee shall
                                    receive compensation at the rate of one
                                    hundred percent (100%) of salary;






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                           (ii)     during the third and fourth months following
                                    a determination of Disability, Employee
                                    shall receive compensation at the rate of
                                    seventy-five percent (75%) of salary; and

                           (iii)    during the fifth and sixth months following
                                    a determination of Disability, Employee
                                    shall receive compensation at the rate of
                                    fifty percent (50%) of salary; and

                           (iv)     after six (6) months following a
                                    determination of disability, Employee's
                                    compensation and all fringe benefits shall
                                    terminate, but this Contract shall remain in
                                    force, and Employee shall remain an employee
                                    of Employer, until Employer shall
                                    have given notice of termination as provided
                                    in Section 1.01, above.

         For purposes of determining the percentage of salary and the duration
of payment thereof to which Employee is entitled following a determination of
Disability, if Employee resumes full-time employment hereunder after such
determination and thereafter becomes Disabled again, such succeeding period of
Disability shall be deemed a continuation of the prior period of Disability
unless a period of at least six continuous months of active full-time employment
has elapsed since the conclusion of the prior period of Disability.

         Notwithstanding anything to the contrary contained in this Section
2.01:

                           (i)      any and all amounts payable to Employee 
                                    hereunder during any period
                                    of Disability shall be reduced by any
                                    disability income insurance proceeds paid to
                                    Employee under any policies owned by and
                                    paid for by the Employer; and

                           (ii)     Employee shall be conclusively deemed to be
                                    Disabled for purposes of this Agreement
                                    during any period in which he receives
                                    disability insurance proceeds from an
                                    insurance carrier pursuant to clause (i).

         For all purposes of this Contract, "Disability" (including the
adjective "Disabled") shall mean Employee's inability by reason of physical or
mental incapacity to perform the customary duties of his employment for a period
of thirty (30) consecutive days or a period of thirty (30) days in any





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consecutive three (3) month period. If any dispute arises as to the existence of
Employee's Disability, such dispute shall be resolved by two licensed
physicians, one selected by the Board of Directors of Employer (other than
Employee) and one selected by Employee. If the two physicians so selected cannot
agree as to whether or not Employee is Disabled, the two physicians so selected
shall designate a third physician and the determination of two of the three
physicians so selected as to whether or not Employee is Disabled shall be final
and binding on the parties for all purposes.

         2.02.     Employer shall pay the cost of moving Employee's household 
goods, including furniture, furnishings and personal effects, from Pomona, New
York to Amarillo, Texas.

                                   ARTICLE III

                               DUTIES OF EMPLOYEE

         3.01.     Employee is employed as Director of Marketing and shall work
at 800 9th Street, Amarillo, the principal offices of Employer, and at such
other place(s) in the City of Amarillo as Employer may direct. Employee shall
perform the duties of Director of Marketing, as such duties may be further set
forth by resolution of the Board of Directors of Employer. The expected duties
are delineated in Appendix "A" to this Employment Contract; however, Employee
understands and agrees that Employer shall have the right to modify such duties
from time to time, consistent with the legitimate business needs of Employer.
Employee shall devote his entire productive time, ability, attention and
energies to the business of Employer during the term of this Contract and during
such time, Employee shall not directly or indirectly render any services of a
business, commercial or professional nature to any other person or organization,
whether or not for compensation, without the prior consent of the Board of
Directors of Employer.





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                                   ARTICLE IV

                     EMPLOYEE'S OBLIGATIONS AS TO INSURANCE

         4.01.     Employee agrees to submit to physical examination as may be
required for the obtaining by Employer of insurance on Employee's life, and
agrees to consent to the issuance of a policy or policies of insurance on his
life, such policies to be owned by Employer, and naming Employer as beneficiary.
Upon termination of Employee's employment for any reason, and if requested by
Employee, Employer shall assign any such policy to Employee, so that Employee
shall have the option of keeping the policy in force at Employee's expense. The
foregoing notwithstanding, Employer shall be entitled to retain the accumulated
cash value of any such policy.

                                    ARTICLE V

                                EMPLOYEE BENEFITS

         5.01.     If Employer provides hospital, surgical, medical, dental, 
group life insurance, or other fringe benefits to its employees, or any of them,
at any time during the term of this Contract, Employee shall be entitled to
participate in such benefits, on terms and conditions at least as favorable as
those accorded to other employees of Employer, subject to insurability;
provided, however, that Employee shall be entitled to four (4) weeks (20 work
days) paid vacation per year, irrespective of vacation benefits of other
employees. A maximum of one (1) week unused vacation may be carried forward to
the next year.






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                                   ARTICLE VI

                 REIMBURSEMENT OF EXPENSES INCURRED BY EMPLOYEE

         6.01.     Employee is authorized to incur reasonable business expenses 
for promoting the business of Employer, including expenditures for entertainment
and travel. Employer will reimburse Employee for all such expenses upon
Employee's presentation of written expense vouchers, itemizing such
expenditures.

                                   ARTICLE VII

                           PROPERTY RIGHTS OF PARTIES

         7.01.     Employee will have access to and become familiar with, during
the course of employment, various trade secrets, consisting of formulas,
devices, secret inventions, processes, compilations of information, records, and
specifications owned by ABI Companies and regularly used in the operation of ABI
Companies. Employee shall not disclose any such trade secrets directly or
indirectly nor use them in any way either during the term of this Contract or at
any time thereafter except as required in the course of his employment. All
files, records, documents, drawings, specifications, equipment and similar items
relating to the business of ABI Companies, whether or not prepared by Employee,
shall remain the exclusive property of ABI Companies and shall not be removed
from the premises of Employer under any circumstances, except in pursuit of the
trade and business of ABI Companies.

         7.02.     On the termination of employment or whenever requested by
Employer, Employee shall immediately deliver to Employer all property in
Employee's possession or under Employee's control belonging to ABI Companies,
including but not limited to all accounting records,





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computer terminals and tapes, disks, or other data storage mechanisms,
accounting machines, and all office furniture and fixtures, supplies and other
personal property in the possession or under the control of Employee, in good
condition, ordinary wear and tear excepted, and including without limitation all
correspondence files, research data, and patent information or data, of every
sort.

         7.03.     Employee does not claim any rights or interests in and to 
trade secrets, formulas, devices, inventions, processes, patents, applications,
continuations, copyrights, trademarks, compilations of information, records,
specifications, rights, interests and data of any other sort, affecting or
pertaining directly or indirectly to the business of ABI Companies as now
conducted, or to the patents, trade secrets, and other rights now owned by ABI
Companies.

         7.04.     Employee agrees that he will promptly and fully inform and
disclose to Employer all inventions, designs, improvements and discoveries that
Employee may have during the term of this Contract that pertain or relate to the
business of ABI Companies or to any experimental work carried on by ABI
Companies, whether conceived by Employee alone or with others and whether or not
conceived during regular working hours. All such inventions, designs,
improvements and discoveries shall be the exclusive property of Employer.
Employee shall assist ABI Companies in obtaining patents on all such inventions,
designs, improvements and discoveries deemed patentable by ABI Companies, and
shall execute all documents and do all things necessary to obtain such patents
for Employer or ABI Companies.

         7.05.     It is contemplated that Employee in the course of his 
employment will be engaged in work involving various patents and secret
processes owned by ABI Companies. All experiments, developments, formulas,
patterns, devices, secret inventions and compilations of





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information, records, and specifications regarding such matters are trade
secrets, which Employee shall not disclose directly or indirectly to anyone
other than ABI Companies or their agents, or use in any way, either during the
term of this Contract or at any time after the termination of this Contract,
except as required in the course and scope of his employment.

         7.06.     During the term of this Contract, Employee shall not directly
or indirectly either as an employee, employer, consultant, agent, principal,
partner, stock holder, corporate officer, director, or in any other individual
or representative capacity engage or participate in any business that is in
competition in any manner whatsoever with the business of ABI Companies;
provided, however, that Employee may without restriction invest in
professionally managed mutual funds, where the investment decision regarding
specific securities is made by the fund manager, and not by Employee; and
Employee may purchase, own and sell stock or other securities of pharmaceutical
companies, as long as Employee is not directly or indirectly through one or more
intermediaries in control of or controlled by or under common control with any
such company. Furthermore, upon the termination of this Contract, Employee
expressly agrees not to engage or participate directly or indirectly in any
business that is in competition with the business of ABI Companies, for a period
of one (1) year; and further provided, that no business will be considered to be
in competition with ABI Companies unless its business relates to the
manufacture, sale, testing or development of products containing interferon
alpha, interferon gamma, tumor necrosis factor alpha, lactosucrose, interleukin
18, or some other bioactive substance hereafter developed, or brought under
development, by an ABI Company. Employer and Employee recognize and agree that
ABI Companies may obtain or develop additional technologies from time to time,
and if that is the case, Employer may expand the terms of





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this non-competition provision by giving written notice to Employee of the
additional technologies that are to be protected.

         7.07.     In the event of a breach by Employee of any provisions of 
this Article VII, the parties hereto agree that Employer, in addition to any
other remedies to which Employer may be entitled at law, shall be entitled to
the remedy of specific performance, it being understood and agreed by the
parties hereto that damages may be difficult to ascertain, and that an award of
damages would in all probability not sufficiently compensate Employer for any
breach by Employee of such provisions. ABI Companies are intended third-party
beneficiaries of the provisions of this Article VII.

                                  ARTICLE VIII

                                  STOCK OPTIONS

         8.01.     Upon commencement of employment, Employee shall be awarded
options to purchase forty thousand (40,000) shares of common stock of ABI
pursuant to the Company's 1996 Employee Stock Option Plan, as amended and
restated as of May 13, 1997 (the "Plan"). A copy of said Plan is attached to
this Employment Contract at Appendix "B", and is hereby incorporated by
reference, as if fully herein set forth in its entirety. Reference is made to
such Plan for a full explanation of the terms and conditions of the Plan, and
options granted to Employee pursuant to this Section 8.01 shall be fully subject
to all of the terms, conditions and provisions of the Plan. Options granted
under this Section 8.01 to Employee shall also be subject to any future
amendments of the Plan, made pursuant to Section 4.10 of the Plan. The options
are "incentive stock options" within the meaning of Section 422 of the Internal
Revenue Code of 1986.





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         8.02.     The grant of options described in Section 8.01 above shall
include the award of "Limited Rights" within the meaning of Article III of the
Plan, relating to each option granted. Said Limited Rights shall be exercisable
subject to all of the terms and conditions of the Plan.

         8.03.     Employee agrees to execute and deliver to Employer an 
appropriate incentive stock option agreement, as required by the Internal
Revenue Code of 1986 and regulations promulgated thereunder, evidencing the
grant of options provided for in this Article VIII.

                                   ARTICLE IX

                             COMPULSORY ARBITRATION

         Employer and Employee desire to avoid and settle without litigation
future disputes which may arise between them relative to this Contract.
Accordingly, the parties agree to engage in good faith negotiations to resolve
any such dispute. In the event they are unable to resolve any such dispute by
negotiation, such dispute shall be submitted to arbitration to take place in
Dallas County in the State of Texas in compliance with the Commercial
Arbitration Rules of the American Arbitration Association. The arbitration award
shall be final and binding upon the parties hereto and may be filed with and
enforced by any court of competent jurisdiction.

                                    ARTICLE X

                   ENTIRETY OF AGREEMENT; AMENDMENTS; SURVIVAL

         10.01.    This Contract supersedes all other agreements, either oral or
in writing, between the parties to this Contract with respect to the employment
of Employee by Employer, and this Contract contains the entire understanding of
the parties and all of the covenants and agreements between the parties with
respect to such employment.





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         10.02.    This Contract may be amended only by an instrument signed in
writing by both parties; and provided further, that no amendment may be executed
on behalf of Employer, except pursuant to a resolution of the Board of Directors
of Employer.

         10.03.    The following provisions shall survive the expiration of this
Agreement: ARTICLES VII, VIII, IX and X.

                  IN WITNESS WHEREOF, this Contract is executed by the
undersigned as of this 14th day of September, 1998.


EMPLOYEE:                                       EMPLOYER:

                                                AMARILLO BIOSCIENCES, INC.

                                                By:
-----------------------------                      ----------------------------
JOHN SMITH                                         JOSEPH M. CUMMINS, President





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