EXHIBIT 10.9
STOCK RIGHTS AGREEMENT
This Stock Rights Agreement ("Agreement"), will be effective as of
March 10, 2000 (the "Effective Date") is between CytoGenix, Inc., a Nevada
corporation ("CytoGenix") and Argyll Scientific, L.L.C., a Texas limited
liability company ("Argyll").
WHEREAS, CytoGenix and Argyll are parties to a Research and Development
Agreement dated the date hereof ("Research and Development Agreement") pursuant
to which shares of common stock of CytoGenix, par value $0.001 per share, of
CytoGenix (the "CytoGenix Shares") may be delivered by CytoGenix to Argyll; and
WHEREAS, under the Research and Development Agreement, a joint venture
may be formed by CytoGenix and Argyll (the "Joint Venture") and in connection
therewith, Argyll may enter into a patent and trademark license agreement with
such Joint Venture in substantially the form attached to the Research and
Development Agreement ("Argyll License Agreement"); and
WHEREAS, pursuant to the Argyll License Agreement, the Joint Venture
may be required to deliver CytoGenix Shares to Argyll as set forth therein; and
WHEREAS, Argyll is relying upon the execution, delivery and performance
of this Agreement by CytoGenix in entering into the Research and Development
Agreement and the Joint Venture Agreement contemplated by the Research and
Development Agreement and the Argyll License Agreement;
NOW THEREFORE, in consideration of the mutual covenants herein set
forth, the parties hereto agree as follows:
1. DELIVERY OF CYTOGENIX SHARES. Contemporaneously herewith, CytoGenix
has delivered to Argyll certificates representing Sixteen thousand, six hundred
sixty-seven CytoGenix Shares, as required by Section 5.1(a) of the Research and
Development Agreement. CytoGenix has also agreed in the Research and Development
Agreement to deliver to Argyll additional cash payments or additional CytoGenix
Shares.
If the Joint Venture is formed and the Argyll License Agreement is
entered into by Argyll and the Joint Venture, CytoGenix hereby agrees to deliver
to the Joint Venture, for delivery to Argyll, in the amounts and at the times
required under the Argyll License Agreement, certificates representing that
number of CytoGenix Shares required to be delivered by the Joint Venture to
Argyll under the Argyll License Agreement.
2. Registration of CytoGenix Shares.
(a) CytoGenix shall file, within Thirty (30) days from the
Effective Date, with the Securities and Exchange Commission (the "Commission") a
registration statement under the Securities Act of 1933, as amended (the
"Securities Act") on Form S-1 or Form S-3, if available, for a public offering
of all the CytoGenix Shares delivered or to be delivered to Argyll under the
Research and Development Agreement or the Argyll License Agreement to be made on
a continuous
basis pursuant to Rule 415 of the Securities Act (the "Registration
Statement") and will use its best efforts to cause such Registration
Statement to become effective as soon as practicable and to remain
continuously effective until the earlier of (i) the date upon which Argyll
becomes eligible to sell CytoGenix Shares delivered or to be delivered to
Argyll under the Research and Development Agreement or the Argyll License
Agreement under Rule 144(k) of the Securities Act or (ii) the third
anniversary of each delivery of CytoGenix Shares to Argyll under the Research
and Development Agreement or the Argyll License Agreement.
(b) If and when CytoGenix is required by this Agreement to use
its best efforts to effect the registration of any CytoGenix Shares:
(i) CytoGenix shall, as soon as practicable:
(1) prepare and file with the Commission
under the Securities Act a registration statement with respect to such
CytoGenix Shares which shall state that the CytoGenix Shares are
covered thereby, and use its best efforts to cause such registration
statement to become effective and to remain effective as provided
herein;
(2) prepare and file with the Commission
such amendments and supplements, if any, to such registration statement
and the prospectus used in connection therewith as may be necessary to
keep such registration statement effective until the completion of the
distribution under such registration statement, and comply with the
provisions of the Securities Act applicable to it with respect to the
disposition of all securities covered by such registration statement
during such period in accordance with the intended methods of
disposition by Argyll set forth in such registration statement;
(3) furnish to Argyll such number of
copies of such registration statement (including exhibits), each
amendment and supplement thereto, the prospectus included in such
registration statement or filed with the Commission (including each
preliminary prospectus), and each amendment and supplement thereto as
Argyll may reasonably request to facilitate the disposition of the
CytoGenix Shares owned by Argyll and covered by such registration
statement;
(4) use its best efforts to (A) register
or qualify such CytoGenix Shares under the securities or "blue sky"
laws of such jurisdictions as Argyll or the managing underwriter (if
any) may reasonably request; (B) keep such registrations or
qualifications in effect for so long as such registration statement is
in effect; and (C) take any and all other reasonably actions that may
be necessary or appropriate to enable Argyll and each underwriter (if
any) to consummate the disposition in such jurisdictions of the
relevant CytoGenix Shares; provided, however, that CytoGenix shall not
be required to (x) qualify generally to transact business as a foreign
corporation in any jurisdiction where it would not otherwise be
required to qualify but for the requirements of this Section; (y)
subject itself to taxation in any such jurisdiction; or (z) consent to
general service of process in any such jurisdiction;
(5) (A) at any time when a prospectus
relating thereto is required to be delivered under the Securities Act,
notify Argyll when it becomes aware of the
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occurrence of any event as a result of which the prospectus (as
then amended or supplemented) contains any untrue statement of a
material fact or omits any fact necessary to make the statements
therein, in the light of the circumstances under which they were
made, not misleading; and (B) at the request of Argyll, as promptly
as practicable thereafter, prepare in sufficient quantities and
furnish to Argyll a reasonable number of copies of a prospectus
supplemented or amended so that, as thereafter delivered to the
offerees or purchasers of such CytoGenix Shares, such prospectus
will not contain any untrue statement of a material fact or omit to
state any fact necessary to make the statements therein, in the
light of the circumstances then existing, not misleading. Argyll
agrees, upon receipt of a notice of the foregoing it shall
forthwith cease making offers and sales of the CytoGenix Shares
pursuant to the registration statement or deliveries of the
prospectus contained therein and to return to CytoGenix for
modification and exchange, the copies of such prospectus not
theretofore delivered by Argyll.
(6) comply with all applicable rules and
regulations of the Commission;
(7) use its best efforts to cause all
such CytoGenix Shares covered by such registration statement to be
listed on any securities exchange or automated quotation system, if
any, on which similar securities of CytoGenix are then listed, if the
listing of such CytoGenix Shares is then permitted under the rules of
such exchange or automated quotation system;
(8) subject to the execution of
confidentiality agreements, in form and substance reasonably
satisfactory to CytoGenix, (A) make reasonably available for inspection
by Argyll, its legal counsel, and any accountant or other agent
retained by it, all financial and other records, relevant corporate
documents, and properties of CytoGenix, and (B) cause CytoGenix's
directors, officers, employees, counsel and independent public
accountants to supply all information reasonably requested by, and to
respond to inquiries from, Argyll, any such legal counsel, attorney,
accountant or agent in connection with such registration statement, in
each instance to the extent that such information is reasonably
necessary to satisfy any of its obligations under applicable law;
(9) provide (A) Argyll, (B) each
underwriter (which, for purposes of this Agreement, shall include any
person deemed to be an underwriter within the meaning of Section 2(11)
of the Securities Act), if any, of the securities being sold, (C)
counsel of such underwriters, and (D) the counsel of Argyll the
opportunity to participate in the preparation of such registration
statement, each amendment or supplement thereto, each prospectus
included therein or filed with the Commission, and each amendment or
supplement thereto;
(10) promptly notify Argyll and, upon
request by Argyll, confirm such advice in writing, (A) when such
registration statement, the prospectus or any prospectus supplement or
post-effective amendment has been filed, and, with respect to such
registration statement or any post-effective amendment thereto, when
the same has become effective, (B) of the issuance by the Commission of
any stop order suspending the effectiveness of such registration
statement or the initiation of any proceeding for such
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purpose, or (C) of the receipt by CytoGenix of any notification
with respect to the suspension of the registration or qualification
of such CytoGenix Shares for sale in any jurisdiction or the
initiation of any proceeding for such purpose; and
(11) use its best efforts to obtain the
withdrawal of any order suspending the effectiveness of such
registration statement or any post-effective amendment thereto.
(ii) The obligation of CytoGenix to effect the
registration of CytoGenix Shares pursuant to this Section 2 shall be subject to,
and conditioned upon, the obligation of Argyll to furnish CytoGenix, upon
CytoGenix's written request, with all information regarding Argyll and the
intended distribution of Argyll's CytoGenix Shares included in such registration
for the purpose of preparing the registration statement, to the extent that such
information is required to comply with applicable legal requirements. If any
such registration statement refers to Argyll by name or otherwise as the holder
of any securities of CytoGenix, then Argyll shall have the right to require (A)
the insertion therein of language, in form and substance satisfactory to Argyll,
to the effect that the holding by Argyll of such securities is not to be
construed as a recommendation by Argyll of the investment quality of the
securities thereby and that such holding does not imply that Argyll will assist
in meeting any future financial requirements of CytoGenix, or (B) the deletion
of such reference to Argyll if, in the judgment of CytoGenix, as advised by
counsel, such reference is not required by the Securities Act or any similar
federal statute or any state securities of blue sky law then in effect.
(iii) Argyll shall comply with the requirements of
delivering a current prospectus to the purchaser of CytoGenix Shares in any
sale, to the extent such requirement is applicable under federal and state
securities laws.
(c) The expenses of registration of CytoGenix Shares pursuant
to this Section will be paid by CytoGenix. For purposes of this Section, the
term "expenses" shall include federal, state and other registration and
qualification fees and legal fees and expenses for Argyll's counsel, auditing
and accounting expenses incurred by CytoGenix in connection with the
registration and printing and other related expenses including salary and
related overhead expenses of employees of CytoGenix for time expended by such
employees.
(d) To the extent permitted by law, CytoGenix will indemnify
and hold harmless Argyll, its members, managers and officers, and each person
who controls Argyll, against any losses, claims, damages or liabilities, joint
or several, to which any of them may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue or alleged untrue
statement or any material fact contained or expressly incorporated by reference
in any registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein, and will reimburse Argyll, its
members, managers and officers and controlling persons for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action, as such expenses
are incurred; provided, however, that the indemnity agreement contained in this
Section shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement
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is effected without CytoGenix's consent nor shall CytoGenix be liable in any
such case for any such loss, claim, damage, liability or action to the extent
that it arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in connection with any
registration statement, preliminary prospectus, final prospectus or amendment
or supplement thereto in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration
by Argyll, its members, managers and officers or, any controlling person of
Argyll.
3. Price Guarantee and Other Matters.
(a) The CytoGenix Shares delivered at any time to Argyll by
CytoGenix under the Research and Development Agreement or at any time delivered
to Argyll under the Argyll License Agreement are referred to in this Section as
the "Subject Shares." In the event Argyll makes one or more sales of any Subject
Shares (each such sale of Subject Shares, whether one or more Subject Shares, in
one transaction being referred to as a "Subject Shares Sale") and receives Net
Proceeds (as defined below) from such Subject Shares Sale of less than the Fair
Market Value (as determined in accordance with and for purposes of and as of the
date set forth in the Research and Development Agreement, as to Subject Shares
delivered to Argyll pursuant to the Research and Development Agreement, or as
determined in accordance with and for purposes of and as of the date set forth
in the Argyll License Agreement, as to Subject Shares delivered to Argyll
pursuant to the Argyll License Agreement) of all of the Subject Shares sold in
such Subject Shares Sale (the "Applicable Fair Market Value"), then Argyll may,
at any time within thirty (30) days after such Subject Shares Sale, give notice
to CytoGenix (accompanied by a sales confirmation or other evidence of such Net
Proceeds) that Argyll has elected to make a call upon CytoGenix's price
guarantee. Within ten (10) days following delivery of such notice by Argyll,
CytoGenix shall either (i) pay to Argyll, by wire transfer of immediately
available funds to an account designated by Argyll in such notice, the cash
amount equal to the difference between (i) the Applicable Fair Market Value of
the Subject Shares so sold in such Subject Shares Sale and such Net Proceeds
received by Argyll in such Subject Shares Sale (the "Make-Whole Amount"), or
(ii) deliver to Argyll an additional number of CytoGenix Shares ("Make-Whole
Shares") of an aggregate Fair Market Value (as defined in the Research and
Development Agreement, whether or not then in effect), as of the day immediately
prior to such delivery (or if the New York Stock Exchange was not open for
trading on such day, the immediately preceding day on which the New York Stock
Exchange was open for trading) equal to the Make-Whole Amount. If the Make-Whole
Net Proceeds (as defined below) received by Argyll from the sale of all of the
Make-Whole Shares do not equal or exceed the Make-Whole Amount, then Argyll may,
at any time within thirty (30) days after the sale of the last Make-Whole Share
by Argyll, give notice to CytoGenix (accompanied by a sales confirmation or
other evidence of such Make-Whole Net Proceeds) that Argyll has elected to make
a call upon CytoGenix's price guarantee. Within ten (10) days following delivery
of such notice by Argyll, CytoGenix shall pay to Argyll, by wire transfer of
immediately available funds to an account designated by Argyll in such notice,
the cash amount equal to the difference between the Make-Whole Amount and such
Make-Whole Net Proceeds. For purposes hereof, (A) the term "Net Proceeds" means
the aggregate net proceeds received by Argyll from the sale of Subject Shares in
any one Subject Shares Sale, less commissions and other selling expenses
incurred by Argyll in connection with such Subject Shares Sale, and (B) the term
"Make-Whole Net Proceeds" means the net proceeds received by Argyll from the
sale of all of the Make-Whole Shares, less commissions and other selling
expenses incurred by Argyll in connection therewith. This Section 3(a) shall
apply
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with respect to all Subject Shares Sales and all sales of Make-Whole Shares
by Argyll occurring prior to the fifth anniversary of the Effective Date.
(b) If for any reason a registration statement or
post-effective amendment thereto has not been declared effective or does not
remain effective in a manner which permits Argyll to publicly resell any Subject
Shares or Make-Whole Shares at any time after sixty (60) days from the date of
the receipt by Argyll of such shares, Argyll may, at any time within thirty (30)
days after the expiration of such sixty (60) day period, by written notice to
CytoGenix, require CytoGenix to repurchase such shares (the "Repurchase Shares")
for a cash amount equal to (i) the Fair Market Value of all of the Repurchase
Shares (as determined in accordance with and for the purpose of and as of the
date set forth in the Research and Development Agreement or the Argyll License
Agreement pursuant to which such Repurchase Shares were delivered to Argyll or,
as to Make-Whole Shares which are Repurchase Shares, as determined as set forth
in Section 3(a)), plus (ii) interest on such amount from the date of delivery of
the Repurchase Shares to Argyll to the date of payment at a rate per annum equal
to the lesser of 5% over the then current prime rate of interest announced by
Citibank, N.A. or the maximum rate permitted by law, and CytoGenix shall, within
ten (10) days after receipt of such notice, deliver to Argyll such cash amount
by wire transfer of immediately available funds to an account designated by
Argyll in such notice, and Argyll shall, immediately upon receipt of such funds,
deliver to CytoGenix certificate(s) representing the Repurchase Shares, duly
endorsed for transfer into the name of CytoGenix.
(c) Argyll represents and warrants that except for CytoGenix
Shares delivered to Argyll pursuant to a registration statement filed and
declared effective under the Securities Act, it is acquiring and will acquire
the Subject Shares and the Make-Whole Shares for investment and not with a view
to the distribution thereof in violation of applicable securities laws.
4. Miscellaneous.
(a) This Agreement shall be binding upon, and inure to the
benefit of, CytoGenix and Argyll and their respective successors and permitted
assigns. Except to a successor of substantially its entire business to which
this Agreement relates, neither party hereto may assign its rights and
obligations under this Agreement without the prior written consent of the other
party.
(b) Any notice or communication given pursuant to this
Agreement by either party to the other shall be in writing and delivered or
mailed by registered or certified mail, postage prepaid (mailed notices shall be
deemed given when duly mailed), as follows:
If to Argyll:
Xxxx X. Xxxxxx
Managing Director
Argyll Scientific, L.L.C..
0000 Xxxxxxxx Xxx 000
Xxxxxxx, XX 00000-0000
(000) 000-0000
Facsimile: (000) 000-0000
If to CytoGenix:
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Xxxxxxx Xxxxxxxx, PhD, JD, [With a copy to:
Dell Xxxxxx, Chairman]
President & CEO
CytoGenix, Inc.
0000 X. Xxxxxxxx
Xxxxxxx, XX 00000
(000) 000-0000
Facsimile: (000) 000-0000
(c) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement and the
other agreements, certificates, instruments and documents provided for or
contemplated by this Agreement contain the entire agreement between the parties
with respect to the subject matter of this Agreement and supersede all prior
agreements and understandings. The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
(d) If there is any change in the CytoGenix Shares by way of
stock split, reverse stock split, stock dividend, reclassification, merger,
consolidation, reorganization, re-capitalization, or any other means, then all
appropriate adjustments to the provisions hereof shall be made so that the
rights and obligations of the parties hereto under this Agreement shall continue
with respect to the CytoGenix Shares as so changed.
(e) If a court of competent jurisdiction declares that any
provision of this Agreement is illegal, invalid or unenforceable, then such
provision shall be modified automatically to the extent necessary to make such
provision fully legal, valid or enforceable. If such court does not modify any
such provision as contemplated herein, but instead declares it to be wholly
illegal, invalid or unenforceable, then such provision shall be severed from
this Agreement, this Agreement and the rights and obligations of the parties
hereto shall be construed as if this Agreement did not contain such severed
provision, and this Agreement otherwise shall remain in full force and effect.
No alteration, modification, amendment, change or waiver of any provision of
this Agreement shall be effective or binding on any party hereto unless the same
is in writing and is executed by the parties.
(f) Each party acknowledges that in the event of any breach of
this Agreement by such party, the other party hereto (i) would be irreparably
and immediately harmed by such breach, (ii) could not be made whole by monetary
damages, and (iii) shall be entitled to temporary and permanent injunctions (or
their functional equivalents) to prevent any such breach and/or to compel
specific performance with this Agreement, in addition to all other remedies to
which such party may be entitled at law or in equity.
(g) This Agreement shall be governed by, construed under, and
enforced in accordance with the laws of the State of Texas without reference to
the conflict-of-laws provisions thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
written above.
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CYTOGENIX, INC. ARGYLL SCIENTIFIC, L.L.C.
Name: /s/ Xxxxxxx Xxxxxxxx Name: /s/ Xxxx X. Xxxxxx
-------------------- ------------------
Xxxxxxx Xxxxxxxx Xxxx X. Xxxxxx
Title: President and CEO Title: Managing Director
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