EXHIBIT 10.8
RESEARCH AND DEVELOPMENT AGREEMENT
This Research and Development Agreement ("Agreement"), effective as of
March 10, 2000 ("Effective Date"), is between CytoGenix, Inc., a Nevada
corporation ("CytoGenix"), and Argyll Scientific, L.L.C., a Texas limited
liability company ("Argyll").
WHEREAS, CytoGenix has developed and owns proprietary technology
relating to a molecular biological cloning vector capable of being inserted into
a biological cell and causing the replication of a specific single strand of DNA
or ODNs (as defined below) ("CytoGenix Proprietary Technology");
WHEREAS, Argyll has developed and owns proprietary technology relating
to non-alcoholic mouthwash and a non-alcoholic delivery system for orally
ingestable active ingredients (the "Argyll Proprietary Technology");
WHEREAS, the parties are desirous of entering into a research and
development program (the "Program") in which work will be done by CytoGenix with
the objective of developing up to five (5) Commercial Formulations (as defined
below) using a combination of the CytoGenix Proprietary Technology and the
Argyll Proprietary Technology and, if such research and development results in
the successful development of one or more Commercial Formulations, to enter into
a joint venture to commercially exploit such Commercial Formulation(s).
NOW, THEREFORE, in consideration of the mutual covenants herein set
forth, the parties hereto agree as follows:
ARTICLE I: DEFINITIONS
For purposes of this Agreement, the following terms shall have the
following meanings:
1.1 "Formulation" means a formulation, composition of matter, or
ingredient or dosage form utilizing the CytoGenix Proprietary Technology and the
Argyll Proprietary Technology and proprietary technology which may be obtained
from third parties for the introduction of a molecular biological cloning vector
into human blood cells for the purpose of preventing or correcting a genetic
deficiency that causes a particular disease.
1.2 "Commercial Formulation" means a Formulation that, when made in
dosage form, is a commercially viable prescription drug product.
1.3 Oligodeoxynucleotide ("ODN") means specific sequences of the
nucleotides Adenine, Cytosine, Guanine, Thymine or Uracil.
1.4 "Fair Market Value" means (a) as to any securities which are
listed or admitted to trading on any national securities exchange on any
trading day, the amount equal to (i) the last sale price of such securities,
regular way, on such date or, if no such sale takes place on such date, the
average of the closing bid and asked prices thereof on such date, in each
case as officially reported on the principal national securities exchange on
which such securities are then listed or admitted to
trading, or (ii) if such securities are not then listed or admitted to
trading on any national securities exchange but are reported through the
automated quotation system of a registered securities association, the last
trading price of such securities on such date, or if there shall have been no
trading on such date, the average of the closing bid and asked prices of such
securities on such date as shown by such automated quotation system, and (b)
as to any other property on any date, the fair market value of such property
on such date as determined in good faith by the parties, PROVIDED that if
either party so requests in writing, the fair market value of such property
shall be determined by an independent, recognized investment banking firm, an
independent, nationally recognized accounting firm or an independent,
recognized appraisal firm selected by the parties.
ARTICLE II: THE PROGRAM
2.1 SCOPE. The Program shall consist of research and development
conducted by CytoGenix, subject to the terms and conditions of this Agreement,
with respect to the development and production of up to five (5) Commercial
Formulations.
2.2 DURATION. The Program shall remain in effect for a period from the
Effective Date to the fifth anniversary of the Effective Date, (the "Initial
Term"), subject to renewal for additional periods by agreement of the parties
(each a "Renewal Term"), unless earlier terminated in accordance with the terms
of this Agreement.
2.3 FUNDING. CytoGenix will provide funds as it deems necessary to
support the Program for its duration.
2.4 MANAGEMENT OF RESEARCH. CytoGenix shall be responsible for the
direct management and supervision of the research and development conducted in
the Program.
2.5 PARTIES TO MAKE TECHNOLOGY AVAILABLE. To the extent that they now
or hereafter have the legal right to do so, CytoGenix and Argyll hereby agree
that, for the duration of the Program, each will make available for purposes of
the Program such technology (including proprietary technology) relating to
Formulations as may be reasonably necessary to carry out the Program but for no
other purpose.
2.6 EARLY TERMINATION OF PROGRAM (a) Each party shall have the right
to terminate the Program at any time during the first twelve months after the
Effective Date upon ninety (90) days prior written notice to the other party.
After such twelve-month period, each party shall have the right to terminate the
Program in the event of a breach by the other party of a material obligation
hereunder by delivering ninety (90) days' prior written notice to the other
party, setting forth the cause and specifying the date of termination.
(b) The Program may also be terminated by the parties in writing
as provided in Section 3.2(a).
2.7 EFFECT OF TERMINATION OF PROGRAM. The termination of the Program
or the expiration of the Initial Term or any Renewal Term without renewal
shall not terminate or otherwise affect the obligations of the parties under
the other Articles of this Agreement; provided, that if no Determination of
Success (as defined below) has been made on or before the expiration
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of the Evaluation Period (as defined below), the obligations of the parties
under Article IV and Article V shall terminate.
ARTICLE III: REPORTING OTHER MATTERS
3.1 RECORDS AND REPORTS. For the duration of the Program, CytoGenix
will prepare and maintain records in accordance with its customary practices
relating to the progress and status of the Program. Such records shall be made
available at all reasonable times for inspection and review by Argyll and/or its
designees. Upon request of Argyll and upon the expiration or termination of the
Program, CytoGenix will prepare and deliver to Argyll within a reasonable time
after such request or expiration or termination reports setting forth summaries
of the status and progress of the Program.
3.2 SUCCESS OF PROGRAM.
(a) From time to time during the duration of the Program, at
the request of either party, and within thirty (30) days after the first to
occur of (i) the expiration of the Initial Term unless renewed, in which event
the expiration of the last unrenewed Renewal Term, or (ii) termination of the
Program under Section 2.1(a) (such thirty-day period, as it may be extended by
agreement of the parties, the "Evaluation Period"), CytoGenix and Argyll shall
determine in good faith whether the Program has resulted in any one or more
Commercial Formulations. In the event that the parties determine at any time
prior to the end of the Evaluation Period that the Program has resulted in one
or more Commercial Formulations (a "Determination of Success"), they shall
determine whether (i) to continue the Program to attempt to develop additional
Commercial Formulations or to terminate the Program under Section 2.6(b); and/or
(ii) to use their good faith efforts to enter into the Joint Venture (defined
below) as soon as practicable (the "Joint Venture Determination"); provided,
however, that if one or more Determinations of Success has been made with
respect to five (5) Commercial Formulations, the parties shall terminate the
Program under Section 2.6(b) and the Joint Venture Determination will be deemed
to have been made at the time of the Determination of Success with respect to
the fifth Commercial Formulation; and provided further, that if at least one
Determination of Success has been made prior to the end of the Evaluation Period
and no Joint Venture Determination has been made by the parties, the Joint
Venture Determination will be deemed to have been made at the end of the
Evaluation Period and the parties may terminate the Program at such time under
Section 2.6(b).
(b) If the parties do not make a Determination of Success on
or before the expiration of the Evaluation Period, or if for any reason the
parties fail to enter into a Joint Venture not later than sixty (60) days after
the Joint Venture Determination has been made or deemed made (such sixty-day
period, as it may be extended by agreement of the parties, the "Formation
Period"); then
(i) neither party shall have any further rights or
obligations pursuant to Articles IV and V hereof; and
(ii) all other provisions of this Agreement shall remain
in full force and effect.
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3.3 RIGHTS AND OBLIGATIONS AT CLOSE OF THE PROGRAM. At such time as
the Program comes to any end, whether by expiration or as a result of early
termination by CytoGenix or Argyll:
(a) neither party shall have any further obligations to make
technology available pursuant to Section 2.5;
(b) with respect to technology that either party has
previously made available for purposes of the Program pursuant to Section 2.5,
neither party shall have any license or right to use any patent rights or
other proprietary technology of the other, and each party's rights to use or
disclose Confidential Information of the other party shall be governed by the
provisions of Article VI; and
(c) except as provided in Section 3.4, neither party may use
any information in its possession that was generated in the course of the
Program.
3.4 INVENTIONS. With respect to any inventions, discoveries,
formulations, processes or procedures, trade secrets, or other technical
information or know-how (hereinafter collectively, "Inventions") conceived or
reduced to practice as a result of or otherwise in the course of the efforts
expended by CytoGenix and/or Argyll during the course of or as a consequence of
the Program:
(a) all such Inventions as they relate or arise from
Formulations or to both the CytoGenix Proprietary Technology and the Argyll
Proprietary Technology shall be owned jointly by the parties and the parties
will cooperate with each other with respect to the filing of patent applications
directed to such jointly owned Inventions and the enforcement of patent rights
with respect to jointly owned Inventions;
(b) all such Inventions as they relate to or arise from the
CytoGenix Proprietary Technology but not to Formulations or any of the Argyll
Proprietary Technology shall be owned by CytoGenix; and
(c) all such Inventions as they relate to or arise from the
Argyll Proprietary Technology but not to Formulations or any of the CytoGenix
Proprietary Technology shall be owned by Argyll.
ARTICLE IV: JOINT VENTURE
4.1 FORMATION. During the Formation Period, the parties shall
negotiate in good faith to form a jointly owned business entity (the "Joint
Venture") to commercially exploit Commercial Formulation(s).
4.2 AGREEMENT. The rights and obligations of the parties in and to
the Joint Venture will be set forth in one or more agreements acceptable to the
parties (the "Joint Venture Agreement") which the parties will execute and
deliver. It is agreed that the parties will seek to ensure that any Joint
Venture Agreement will incorporate and implement the following general
principles:
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(a) The business of the Joint Venture will be the commercial
exploitation of not more than five (5) Commercial Formulations through
manufacture and/or sale of products, sublicensing, or otherwise and all
activities related thereto;
(b) CytoGenix will license to the Joint Venture the CytoGenix
Proprietary Technology for use in such Commercial Formulation(s) pursuant to a
License Agreement substantially in the form attached hereto as Exhibit A and
incorporated herein by reference (the "CytoGenix License");
(c) Argyll will license to the Joint Venture the Argyll
Proprietary Technology for use in such Commercial Formulation(s) and the xxxx
"ZEFFR" pursuant to a Patent and Trademark License Agreement substantially in
the form attached hereto as Exhibit B and incorporated herein by reference (the
"Argyll License");
(d) The parties shall license to the Joint Venture any
Invention which is jointly owned by them as provided in Section 3.4 and which is
required for the production of Commercial Formulations, such license to be in
such form as is reasonably approved by the parties (the "Joint License");
(e) Initially, each of the parties will own a 50% interest in
the Joint Venture, provided, that the parties recognize that their equity
interests in the Joint Venture may be diluted on a pro-rata basis if the Joint
Venture obtains third party financing;
(f) Decision making for Joint Venture matters will be by a
Joint Venture management committee or board of directors (the "Governing
Board"), on which the representation and voting power will reflect the equity
interests of the Joint Venture equity owners;
(g) The Joint Venture will have the authority to produce and
sell Commercial Formulations in dosage form or otherwise or sublicense to others
the right to make, use and sell Commercial Formulations, all on terms approved
by the Governing Board, subject to the terms of the CytoGenix License, the
Argyll License and any Joint License;
(h) All Commercial Formulations sold by the Joint Venture or
any such sublicensee in any form shall comply with the Argyll License with
respect to the use of the trademark "ZEFFR"; and
(i) The Joint Venture shall be responsible for the payment of
all royalties due to the under the CytoGenix License, the Argyll License and any
Joint License; provided that CytoGenix shall be obligated to contribute to the
Joint Venture the CytoGenix Shares required to be delivered to Argyll pursuant
to the Argyll License.
4.3 INVENTIONS OF JOINT VENTURE. Unless otherwise agreed by the
parties or as necessary to obtain third party financing, any Inventions
conceived or reduced to practice in the course of work by or for the Joint
Venture shall be owned, and the parties shall have rights therein, as
provided in Section 3.4; provided that any such Invention jointly owned by
the parties pursuant to Section 3.4 shall be subject to the Joint License.
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ARTICLE V: DELIVERIES TO ARGYLL
5.1 CERTAIN DELIVERIES TO ARGYLL. (a) Contemporaneously with the
execution and delivery hereof, CytoGenix has delivered to Argyll the following:
(i) $25,000 in cash, and
(ii) Sixteen thousand, six hundred sixty-seven (16,667)
shares of common stock, par value $0.001 per share, of CytoGenix (the
"CytoGenix Shares") with a Fair Market Value as of the Effective Date
of $50,000; and
(b) Within ten (10) business days after [March 31, 2001] and
each June 30, September 30, December 31 and March 31 thereafter until the first
to occur of (i) the expiration of the Evaluation Period if no Joint Venture
Determination has been made or deemed made; (ii) the expiration of the Formation
Period, if a Joint Venture Determination has been made or deemed made and the
Joint Venture has not been formed, or (iii) the due date of the first payment of
minimum royalty by the Joint Venture to Argyll pursuant to the Argyll License,
CytoGenix shall deliver to Argyll, at the option of CytoGenix, either the cash
amount of $25,000 or that number of CytoGenix Shares having a Fair Market Value
on such March 31, June 30, September 30 or December 31 (or, if the New York
Stock Exchange is not open for trading on such day, the immediately succeeding
day on which the New York Stock Exchange is open for trading) of $25,000.
5.2 STOCK RIGHTS AGREEMENT. Contemporaneously herewith, CytoGenix and
Argyll are entering into a Stock Rights Agreement relating to CytoGenix Shares
delivered by CytoGenix pursuant to this Agreement or the Argyll License.
ARTICLE VI: CONFIDENTIALITY
6.1 CONFIDENTIAL INFORMATION. Except as otherwise provided in this
Section 6.1, the CytoGenix License, if effected, the Argyll License, if effected
or the Joint License, if effected, for the duration of the Program and for a
period of ten (10) years thereafter, each party (a "Receiving Party") shall, and
shall cause its Representatives to, retain in confidence, not to disclose and to
use only for purposes of the Program any information and data supplied by the
other party (the "Disclosing Party") or on behalf of the Disclosing Party to the
Receiving Party or any of its Representatives under this Agreement, including,
without limitation, any information obtained directly or indirectly from the
Disclosing Party in the course of communications and contacts related to this
Agreement, whether obtained or derived incidentally, such as by visits to plants
or office locations or from discussions about peripheral technologies or
business information. The term "Representative" means any consultant, employee,
outside contractor, investigator, agent or representative.
For purposes of this Section 6.1, all such information and data which
the Receiving Party is obligated to retain in confidence shall be called
"Confidential Information." At the Disclosing Party's request, the Receiving
Party shall, and shall cause its Representatives to, promptly return to the
Disclosing Party (if not already properly destroyed by the Receiving Party to
the satisfaction of the Disclosing Party), all Confidential Information and all
copies thereof, extracts therefrom and analyses or other materials based
thereon, except that the Receiving Party shall be permitted to disclose
Confidential Information (a) to such of its Representatives as need to know such
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Confidential Information in connection with the Program, each of whom shall be
informed by the Receiving Party of the confidential nature of the Confidential
Information (each of such Representatives shall, prior to disclosure, agree to
be bound by this Agreement); (b) to the extent required by applicable laws and
regulations or by any subpoena or similar legal process or requested by any
regulatory authority (provided that the Receiving Party shall give the
Disclosing Party prior notice of the disclosure unless such notice is prohibited
by law, subpoena or similar legal process); provided the Receiving Party will
use its best efforts to obtain confidential treatment of the Confidential
Information; (c) to the extent such Confidential Information (i) becomes
publicly available other than as a result of a breach of this Agreement, or (ii)
becomes available to the Receiving Party on a non-confidential basis from a
source other than the Disclosing Party and (iii) to the extent the Disclosing
Party shall have consented to such disclosure in writing. Specific information
shall not be deemed to fall within any of the exceptions enumerated in clause
(c) above merely because such information is embraced by more general
information in the public domain.
6.2 PROGRAM DATA. All information relating to Inventions, Formulations
and Commercial Formulations, including information included in Program reports
and technical data generated in the course of the Program shall be "Confidential
Information" subject to the obligations of Section 6.1; provided that any party
may release or disclose, use or otherwise deal in and with Inventions owned
solely by it as described in Section 3.4 and any Confidential Information
related solely thereto.
ARTICLE VII: MISCELLANEOUS
7.1 ASSIGNMENT: BENEFIT AND BINDING. This Agreement shall be binding
upon, and inure to the benefit of, CytoGenix and Argyll and their respective
successors and permitted assigns; provided, that 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.
7.2 EXPORT CONTROLS. It is understood that CytoGenix, Argyll and the
Joint Venture are (or will be) subject to United States laws and regulations
controlling the export of technical data, computer software, laboratory
prototypes and other commodities (including the Arms Export Control Act, as
amended, and the Export Administration Act of 1979), and that its obligations
hereunder are contingent on compliance with applicable United States export laws
and regulations. The transfer of certain technical data and commodities outside
the United States may be prohibited, and even if permitted may require a license
from the cognizant agency of the United States Government and/or written
assurances by CytoGenix, Argyll or the Joint Venture that CytoGenix, Argyll or
the Joint Venture shall not export data or commodities to certain foreign
countries without prior approval of such agency. Neither CytoGenix, nor Argyll,
nor the Joint Venture represent that a license shall not be required or that, if
required, it shall be issued.
7.3 NOTICES. 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:
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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:
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
Either party may change its address for purposes of this Section by written
notice to the other party.
7.4 APPLICABLE LAW; ENTIRE AGREEMENT; HEADINGS. This Agreement shall
be construed in accordance with the laws of Texas. 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.
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.
CYTOGENIX, INC. ARGYLL SCIENTIFIC, L.L.C.
Name: /s/ Xxxxxxx Xxxxxxxx Name: /s/ Xxxx X. Xxxxxx
---------------------------- -----------------------------
Xxxxxxx Xxxxxxxx Xxxx X. Xxxxxx
Title: President & CEO Title: Managing Director
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