SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
CYTOGENIX, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing is calculated
and state how it was determined):
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[ ] Fee paid previously with preliminary materials
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previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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7) Date Filed:
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CYTOGENIX, INC.
3100 Wilcrest, Suite 140
HOUSTON, TEXAS 77042
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 3, 2004
To our Shareholders:
The Annual Meeting of the Shareholders (the "Annual Meeting") of
CytoGenix, Inc., a Nevada corporation (the "Company"), will be held on February
3, 2004, at Adam's Mark Hotel, 2900 Briarpark Drive, Houston, Texas at 2:00
p.m., Houston time, for the purpose of considering and voting on the following
matters:
1. The ratification of an amendment to the Articles of Incorporation of
the Company filed on March 7, 2001 with the Secretary of State of the State of
Nevada for the purpose of increasing the number of shares of common stock the
Company has the authority to issue by 100,000,000 shares, from 50,000,000 to
150,000,000.
2. The election of seven directors to serve until the future Annual
Meeting at which their respective terms expire and until their successors are
elected and qualified.
3. The approval of an amendment to the Articles of Incorporation of the
Company to increase the number of shares of common stock the Company has the
authority to issue by 150,000,000 shares, from 150,000,000 shares to 300,000,000
shares.
4. The approval of an amendment to the Articles of Incorporation of the
Company to create and authorized class of 50,000,000 shares of preferred stock
available for future issuances with terms and preferences designated by the
board of directors of the Company.
5. The approval of the Stock Option Plan of the Company.
6. The approval of the selection of Malone & Bailey, PLLC as the
Company's independent auditors for the fiscal year ended December 31, 2003.
7. The transaction of such other business as may properly come before
the meeting and any adjournment thereof.
The Board of Directors has established the close of business on
December 12, 2003 as the record date for determining the shareholders entitled
to notice and to vote at the Annual Meeting and any adjournment thereof. The
Board of Directors has amended Article III, Section 1(c) of the Company's bylaws
to divide the members of the board into three classes. The Board of Directors
has also adopted a new Article X to the Company's bylaws, which provides for the
indemnification by the Company of directors, officers, employees and agents of
the Company. In accordance with Article IX, Section 2 of the Company's bylaws,
the shareholders are provided notice of the foregoing bylaw amendments, copies
of which are attached as Annex I to the accompanying proxy statement.
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. TO ASSURE YOUR
REPRESENTATION AT THE ANNUAL MEETING, EVEN IF YOU PLAN TO ATTEND, PLEASE
COMPLETE, SIGN AND MAIL THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE
ACCOMPANYING ENVELOPE.
Sincerely,
/s/ Lawrence Wunderlich
------------------------
Lawrence Wunderlich
Secretary
December 23, 2003
-----------------------------------------------
CYTOGENIX, INC.
3100 WILCREST, Suite 140
HOUSTON, TEXAS 77042
-----------------------------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 3, 2004
------------------------------------------
SOLICITATION OF PROXIES
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of the Company of proxies from the holders of record of the
common stock, par value $.001 per share ("Common Stock"), at the close of
business on December 12, 2003, for use at the Annual Meeting to be held at 2:00
p.m., Houston time, on February 3, 2004, and any adjournment thereof. This Proxy
Statement, the attached proxy and the Company's Annual Report for the fiscal
year ended December 31, 2002 are being mailed together on or about December 26,
2003, to shareholders entitled to notice of and to vote at the Annual Meeting.
The principal executive office of the Company is 3100 Wilcrest, Suite 140,
Houston, Texas 77042.
Properly executed proxies will be voted as directed. If no direction is
indicated therein, proxies received in response to this solicitation will be
voted FOR: (i) the ratification of an amendment to the Articles of Incorporation
of the Company dated March 2, 2001 filed with the Secretary of State of the
State of Nevada for the purpose of increasing the number of shares of Common
Stock the Company has the authority to issue by 100,000,000 shares, from
50,000,000 to 150,000,000; (ii) the election of the seven nominees for director;
(iii) the approval of an amendment to the Articles of Incorporation of the
Company to increase the number of shares of Common Stock the Company has the
authority to issue by 150,000,000 shares, from 150,000,000 shares to 300,000,000
shares; (iv) the approval of an amendment to the Articles of Incorporation of
the Company to create and authorized class of 50,000,000 shares of preferred
stock available for future issuances with terms and preferences designated by
the board of directors of the Company; (v) the approval of the Stock Option Plan
of the Company; (vi) the ratification of the indicated independent auditors; and
(vii) as recommended by the Board of Directors with regard to any other matters,
or if no recommendation is given, in their own discretion.
A proxy on the enclosed form may be revoked by the shareholder at any
time before it is voted by filing with the Secretary of the Company a written
revocation, by voting in person at the meeting, or by delivering a proxy bearing
a later date. Attendance at the Annual Meeting will not, in itself, constitute
revocation of the proxy.
The Company will bear all costs of this Proxy Statement and the proxy
and the cost of soliciting proxies relating to the Annual Meeting. It is
anticipated that the solicitation of proxies for the Annual Meeting will be made
only by use of the mails and will cost approximately $15,000.00. The Company
may, however, use the services of its directors, officers and employees to
solicit proxies personally or by telephone, without additional salary or
compensation to them. The Company will request that the brokerage houses,
custodians, nominees, and fiduciaries forward the proxy soliciting materials to
the beneficial owners of the Company's shares held of record for such persons,
and the Company will reimburse such persons for their related reasonable
out-of-pocket expenses.
VOTING OF SECURITIES
At the close of business on December 12, 2003, the record date for the
determination of shareholders entitled to notice of and to vote at the Annual
Meeting (the "Record Date"), there were 98,724,993 issued and outstanding shares
of Common Stock, each of which share is entitled to one vote. Common Stock is
the only class of outstanding securities of the Company entitled to notice of
and to vote at the Annual Meeting.
The Company's Bylaws provide that the presence, either in person or by
proxy, of the holders of a majority of the outstanding shares of Common Stock
entitled to vote at the Annual Meeting is necessary to constitute a quorum for
the transaction of business. Assuming such a majority is present, the election
of directors will require the affirmative vote by a plurality of the votes cast
at the Annual Meeting. The ratification of the 2001 amendment to the Articles of
Incorporation will require the affirmative vote of the holders of 73,724,994
shares of Common Stock, which equals a majority of 50,000,000 shares (or
25,000,001 shares) plus all shares issued by the Company in excess of 50,000,000
shares. The approval of the two proposals to amend the Articles of Incorporation
will require the affirmative vote of the holders of a majority of the
outstanding shares of Common Stock entitled to vote. The approval of the Stock
Option Plan of the Company and the ratification of the selected independent
auditors will require the affirmative vote of a majority of the shares entitled
to vote and that voted or abstained at the Annual Meeting. Abstentions from and
broker non-votes on the proposal to elect directors will be counted for purposes
of determining the presence of a quorum, but will not be included in the total
shares voted for or against any nominee. A broker non-vote occurs if a broker or
other nominee holding shares for a beneficial owner does not vote on a proposal
because he does not have discretionary authority to vote shares and has not
received instructions from the beneficial owner with respect to such proposal.
Thus, abstentions from the proposals will have the same legal effect as a vote
against the proposals, but a broker non-vote will not be counted for purposes of
determining whether a majority is achieved.
2
PRINCIPAL HOLDERS OF SECURITIES AND SECURITY OWNERSHIP
OF MANAGEMENT
PRINCIPAL HOLDERS OF SECURITIES. The following table sets forth the
beneficial ownership of Common Stock as of November 17, 2003, with respect to
each person known by the Company to be the beneficial owners of 5% or more of
the Company's shares of outstanding Common Stock. All persons listed have sole
disposition and voting power with respect to the indicated shares except as
otherwise noted.
NAME AND ADDRESS COMMON STOCK
OF BENEFICIAL OWNER BENEFICIALLY OWNED
---------------------------------------------------
NUMBER OF SHARES PERCENT OF CLASS
----------------------- ------------------------
Jett**..................................................... 8,270,000 8.6%
59-340 Diomana Road
Kamuela, Hawaii 96743
Roland L. Violette.........................................
70 Tolland St.
East Hartford, Connecticut 06108 8,886,420 9.2%
- -----------------------
**Jett is a natural person with only one legal name.
SECURITY OWNERSHIP OF MANAGEMENT. The following table sets forth the
beneficial ownership of Common Stock as of November 17, 2003, by (i) the
executive officers whose total annual salary and bonus exceeded $100,000 in the
fiscal year ended December 31, 2002 (the "Named Executives"); (ii) each director
and nominee; and (iii) all directors and executive officers as a group. All
persons listed have sole disposition and voting power with respect to the
indicated shares except as otherwise noted.
COMMON STOCK
BENEFICIALLY OWNED
---------------------------------------------------
NAME AND ADDRESS
OF BENEFICIAL OWNER NUMBER OF SHARES1 PERCENT OF CLASS
------------------------- ----------------------
Malcolm H. Skolnick Ph.D............................. 3,893,218 4.0%
Lawrence Wunderlich.................................. 2,096,549 2.2%
Frank Vazquez........................................ 1,488,375 1.5%
Scott E. Parazynski, M.D............................. 231,650 *
Cy Stein, Ph.D., M.D................................. 90,378 *
John J. Rossi, Ph.D.................................. 83,333 *
Raymond L. Ocampo, Jr. .............................. 83,333 *
All directors and executive officers as a group
(7 persons).......................................... 7,966,836 8.0%
- -----------------------
*Less than 1% of the 96,476,476 shares outstanding at November 17,
2003.
3
1. Includes shares underlying options that will become exercisable
within 60 days , assuming shareholders approve Proposal Five, to
purchase an aggregate of 3,733,330 shares of Common Stock as
follows: Dr. Skolnick (1,666,666 shares with a strike price of
$0.185 per share), Mr. Wunderlich (1,066,666 shares with a strike
price of $0.185 per share), Mr. Vazquez (666,666 shares with a
strike price of $0.185 per share), Dr. Parazynski (83,333 shares
with a strike price of $0.185 per share), Dr. Stein (83,333 shares
with a strike price of $0.185 per share), Dr. Rossi (83,333 shares
with a strike price of $0.83 per share) and Mr. Ocampo (83,333
shares with a strike price of $0.61 per share).
PROPOSAL 1. - RATIFICATION OF MARCH 7, 2001 AMENDMENT TO ARTICLES
OF INCORPORATION INCREASING AUTHORIZED NUMBER OF SHARES OF
COMMON STOCK
On March 7, 2001, the Company filed a certificate of change of
authorized shares to its articles of incorporation, a copy of which is attached
as Annex II (the "March 7, 2001 Amendment"), to increase the number of shares of
Common Stock the Company is authorized to issue from 50,000,000 to 150,000,000.
Management of the Company believed at the time that Nevada law did not require
shareholder approval of the March 7, 2001 Amendment. Subsequent to the filing of
the March 7, 2001 Amendment and to the issuance of shares by the Company in
excess of 50,000,000, the Company determined shareholder approval of the March
7, 2001 Amendment was required pursuant to applicable Nevada law. In order to
ensure the validity of the various issuances of Common Stock by the Company that
occurred after it had issued 50,000,000 shares of Common Stock, the Board of
Directors authorized management to seek shareholder ratification of the March 7,
2001 Amendment. The ratification of the March 7, 2001 Amendment will require the
affirmative vote of the holders of 71,476,477 shares of Common Stock in person
or by proxy, which equals a majority of 50,000,000 shares (or 25,000,001 shares)
plus all shares issued by the Company in excess of 50,000,000 shares. THE BOARD
OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE PROPOSAL TO RATIFY THE MARCH
7, 2001 AMENDMENT.
PROPOSAL 2. - ELECTION OF DIRECTORS
Seven directors will be elected at the Annual Meeting. Shares or
proxies may not be voted for more than seven nominees for directors. In
accordance with Article III, Section 1(c) of the bylaws of the Company, the
Board of Directors is divided into three classes serving staggered three-year
terms. The first class, whose term of office will expire at the 2004 annual
meeting of shareholders, is comprised of Messrs. Ocampo and Wunderlich and Dr.
Rossi ; the second class, whose term will expire at the 2005 annual meeting of
shareholders, is comprised of Mr. Vazquez and Dr. Stein; and the third class,
whose term will expire at the 2006 annual meeting of shareholders, is comprised
of Drs. Skolnick and Parazynski. Each director so elected will hold office until
annual meeting at which his term expires and until his successor is elected and
qualified. Drs. Skolnick, Parazynski, Rossi and Stein and Messrs. Ocampo,
Vazquez and Wunderlich are currently directors of the Company, each to serve as
a director until the annual meeting of shareholders at which his term will
expire.
The persons named as proxies in the proxy have been designated by the
Board of Directors and intend to vote such proxy "FOR" the persons named below
in the election of the Board of Directors, except to the extent authority to
vote is withheld from one or more nominees. If any such nominee is unable to
serve as a director, it is intended that the shares represented by proxies will
be voted in the absence of contrary indication for any substitute nominee that
the Board of Directors designates.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE SEVEN
NOMINEES NAMED BELOW.
4
INFORMATION ABOUT NOMINEES FOR DIRECTOR AND EXECUTIVE OFFICERS. The
following states each director nominee's and each named Named Executive
Officer's present position with the Company, principal occupation, age, and, for
the executive officers who are directors, the year in which he was first elected
a director (each serving continuously since first elected).
NAME PRINCIPAL OCCUPATION AGE DIRECTOR SINCE
Malcolm H. Skolnick Ph.D., JD Chairman of the Board of Directors, President and 68 1999
Chief Executive Officer. Dr. Skolnick has been the
Chief Executive Officer and President of the Company
since September 9, 1999. Prior to that time Dr.
Skolnick was a Professor in the University of Texas
Health Sciences Center at Houston serving in the
Medical School Graduate School of Biomedical Sciences
and the School of Public Health. Dr. Skolnick has been
principal investigator in five clinical trials and
holds four medical device patents. Dr. Skolnick
received a Ph.D. in physics from Cornell University
and a J.D. from the University of Houston. He is
licensed to practice law in Texas and is a registered
patent attorney. He has practiced intellectual
property law, been active in technology transfer and
licensing activities and serves on the boards of
Biodyne, Inc. and Resolution Forum, Inc.
Lawrence Wunderlich Chief Financial Officer and a director of the Company. 44 1999
Mr. Wunderlich has served as the Chief Financial
Officer since August 17, 1999. Mr. Wunderlich worked
as a financial consultant at the investment banking
firm of Josephthal and Company from October 1996 until
august 1998. Prior to his employment at Josephthal,
Mr. Wunderlich co-owned The Language Loop, a
translation service form 1991 to 1996 and held the
position of President.
Chief Operating Officer and a director of the Company
since July 2002. Mr. Vazquez was a consultant
Frank Vazquez specializing in life science start-up enterprises 63 2002
prior to joining the Company. He was President/CEO of
Lark Technologies, Inc. from 1989 to 1999 and Medical
Metrics, Inc. from 2000 to 2001. Mr. Vazquez has been
engaged by BCMT, Inc. the commercialization subsidiary
5
NAME PRINCIPAL OCCUPATION AGE DIRECTOR SINCE
of Baylor College of Medicine, the University of Texas
Health Science Center-Houston and individual clients
to organize and start new medical and biotechnology
companies. Mr. Vazquez previously held management
positions with CooperVision, Inc., Booz Allen and
Hamilton, ITT Corporation and IBM. He holds a B.S.
from Columbia University.
Scott E. Parazynski M.D. Dr. Parazynski is a graduate of Stanford University 43 2002
and Stanford Medical School and pursued clinical
training at the Brigham and Women's Hospital (Boston,
MA) and emergency medicine residency training in
Denver, CO. He has numerous publications in the field
of space physiology and has a expertise in human
adaptation to stressful environments. Dr. Parazynski
is a member of the Aerospace Medical Association, the
American Society for Gravitational and Space Biology
and has received numerous special honors, including
the National Institutes of Health Predoctoral Training
Award in Cancer Biology, NASA Graduate Student
Researcher's Award and Research Honors Award from
Stanford Medical School.
Scott E. Parazynski, M.D., has been an astronaut since
1992 and has logged over 262 hours in space. He first
flew in 1994 on the Atmospheric Laboratory for
Applications and Science (ATLAS-3) mission, which was
part of an on-going program to determine the Earth's
energy balance and atmospheric change over an 11-year
solar cycle. During this mission, he and his
crewmates also evaluated the Interlimb Resistance
Device, a free-floating exercise he developed to
prevent musculoskeletal atrophy in microgravity.
6
NAME PRINCIPAL OCCUPATION AGE DIRECTOR SINCE
Cy A. Stein, M.D., Ph.D. Dr. Stein is currently Professor of Medicine Urology 50 2002
and Pharmacology in the Oncology Department of Albert
Einstein College of Medicine, New York. In addition
to his clinical and faculty activities, he is
co-editor-in-chief of Antisense and Nucleic Acid Drug
Development, sits on seven editorial advisory boards,
including Nucleic Acids Research, serves on eight
scientific advisory boards, including Genta (Berkeley
Heights, NJ), Targent (New York, NY), A3D (Heidelberg,
Germany), and is an ad hoc reviewer for over 20 peer
reviewed journals. He has authored 97 peer reviewed
journal articles. He has written 56 book chapters,
reviews and editorials, and he holds six patents
issued and four patents pending. He attended Brown
University (BA), Stanford University (PhD in Organic
Chemistry), Albert Einstein College of Medicine (MD),
and New York Hospital-Cornell Medical Center
(Internship and Residency in Internal Medicine). Dr
Stein was a Clinical Associate and Senior Staff Fellow
at The National Cancer Institute, Bethesda, Maryland.
John J. Rossi, PhD Associate Director for Laboratory Research, City of 57 2003
Hope Comprehensive Cancer Center. John J. Rossi, PhD
began his employment with City of Hope (COH) in 1980
as an assistant research scientist in the Department
of Molecular Genetics. He was promoted to chairman of
the Division of Biology in 1992. In 1993, COH
bestowed its highest honor upon him by naming him to
its Gallery of Medical and Scientific Achievement for
his pioneering work at the molecular level in the
battle against AIDS and other major diseases. In
1998, Dr. Rossi was appointed as the Dean of the City
of Hope Graduate School of Biological Sciences.
7
NAME PRINCIPAL OCCUPATION AGE DIRECTOR SINCE
Dr. Rossi is an expert in ribozymes (molecular
scissors). One of his most notable projects is in
the area of ribozyme research in AIDS. He led the
research team that first suggested applying ribozymes
to treat HIV. His research in molecular genetics and
microbiology has resulted in eight patents being
granted and has served as the basis for more than 120
scientific papers.
Dr. Rossi received his bachelor's degree from the
University of New Hampshire and earned his doctorate at
the University of Connecticut. Prior to his working at
COH, Dr. Rossi completed four years of post Ph.D.
training at Brown University in Providence,
Rhode Island.
Raymond L. Ocampo, Jr. Raymond L. Ocampo Jr. is a lawyer, businessman. He 50 2003
currently serves on the boards of PMI Group, Inc.
(PMI) and Pinpoint Solutions Corporation. Mr. Campo
retired in November 1996 as Senior Vice President,
General Counsel & Secretary at Oracle Corporation, the
world's second largest software company, after serving
as its chief legal counsel for more than a decade.
Before joining Oracle Corporation in 1986, Mr. Ocampo
was engaged in the private practice of law in San
Francisco (1976-86) and was an adjunct professor at
Hastings College of the Law (1977-83). He received
his undergraduate degree form U.C.L.A. in 1973 and his
law degree from Boalt Hall School of Law at U.C.
Berkely in 1976. Mr. Ocampo authored Surfing the Law
and Technology Tsunami (American Bar Association
2001), a collection of keynote addresses about the
intersection of law and technology, and co- authored
Negotiating and Drafting Software Consulting
Agreements (Glasser LegalWorks 1996). Mr. Ocampo was
the 2001-02 Chair of the American Bar Association's
Section of Science & Technology law. He previously
8
NAME PRINCIPAL OCCUPATION AGE DIRECTOR SINCE
served as the chair of the Section's E-Commerce
Division (1998-99) and Internet & Cyberspace Committee
(1996-99) and served as co-chair of the Multimedia &
Interactive Technologies Committee (1995-96). He also
served as chair of the Computer Litigation Committee
(1992-94) of the ABA's Section of Litigation.
MEETINGS AND COMMITTEES OF THE BOARD
During the fiscal year ended December 31, 2002, the Board of Directors
of the Company held 12 meetings. The Board of Directors has no standing
committees (audit, compensation or nominating). Each director participated in at
least 75% of all meetings of the Board of Directors.
COMPENSATION OF DIRECTORS
The Company pays directors who are not employees of the Company $1,000
in restricted Common Stock per each attended Board meeting. The Board of
Directors may also make discretionary option grants to its non-employee
directors.
EXECUTIVE COMPENSATION
The following table shows all compensation earned for services rendered
to the Company during the fiscal years ended December 31, 2000, 2001 and 2002 by
the President and Chief Executive Officer of the Company (the "Named Executive
Officer").
ANNUAL COMPENSATION
----------------------------------------
YEAR RESTRICTED
NAME AND ENDED STOCK
PRINCIPAL POSITION DECEMBER 31, SALARY($) BONUS($) AWARD(S) ($)1
- ------------------- ------------ --------- -------- -------------
- ---------------------- --------------- ------------- ------------ --------------
Malcolm H. Skolnick 2002 120,000 -- 208,426
President and Chief 2001 120,000 -- 72,200
Executive Officer 2000 120,000 -- 30,000
- -----------------------
(1) Dr. Skolnick was issued shares of restricted Common Stock as
follows:
DATE $VALUE CLOSE NUMBER OF
SHARES
12/31/02 $ 1,250 $ 0.115 12,500
12/13/02 $ 1,250 $ 0.12 10,417
11/29/02 $ 1,250 $ 0.11 11,364
11/15/02 $ 1,250 $ 0.11 11,364
9
10/31/02 $ 1,250 $ 0.12 10,417
10/12/02 $ 1,250 $ 0.15 8,333
09/30/02 $ 1,250 $ 0.12 10,417
09/13/02 $ 1,250 $ 0.15 8,333
08/30/02 $ 1,250 $ 0.17 7,576
08/15/02 $ 1,250 $ 0.17 7,576
07/31/02 $ 1,250 $ 0.22 5,814
07/12/02 $ 1,250 $ 0.20 6,250
06/30/02 $ 1,250 $ 0.19 6,579
06/15/02 $ 1,250 $ 0.25 5,000
05/31/02 $ 1,250 $ 0.27 4,630
05/15/02 $ 1,250 $ 0.27 4,630
04/30/02 $ 1,250 $ 0.28 4,545
04/15/02 $ 1,250 $ 0.40 3,125
03/29/02 $ 1,250 $ 0.37 3,378
03/15/02 $ 1,250 $ 0.35 3,571
02/28/02 $ 1,250 $ 0.22 5,682
02/15/02 $ 1,250 $ 0.20 6,250
01/31/02 $ 1,250 $ 0.21 5,952
01/15/02 $ 1,250 $ 0.21 5,952
12/31/01 $ 1,250 $ 0.20 6,410
12/21/01 $ 22,500 $ 0.35 64,386 Bonus valued at August 28, 2001 share price.
12/14/01 $ 1,250 $ 0.21 5,952
11/30/01 $ 1,250 $ 0.17 7,576
11/14/01 $ 1,250 $ 0.19 6,579
10/31/01 $ 1,250 $ 0.20 6,250
10/12/01 $ 1,250 $ 0.23 5,435
09/28/01 $ 1,250 $ 0.22 5,682
09/10/01 $ 1,250 $ 0.28 4,464
08/31/01 $ 1,250 $ 0.35 3,571
08/14/01 $ 1,250 $ 0.26 4,808
07/31/01 $ 1,250 $ 0.16 7,813
07/13/01 $ 1,250 $ 0.21 5,952
06/29/01 $ 1,250 $ 0.13 10,000
06/15/01 $ 1,250 $ 0.24 5,208
05/31/01 $ 1,250 $ 0.25 5,000
05/15/01 $ 1,250 $ 0.30 4,167
04/30/01 $ 1,250 $ 0.25 5,000
04/12/01 $ 1,250 $ 0.25 5,000
03/30/01 $ 1,250 $ 0.50 2,500
03/15/01 $ 1,250 $ 0.19 6,579
02/28/01 $ 1,250 $ 0.25 5,000
02/15/01 $ 1,250 $ 0.49 2,551
01/31/01 $ 1,250 $ 0.31 4,032
01/13/01 $ 1,250 $ 0.06 20,833
01/19/01 $ 12,500 $ 0.25 50,000
01/15/01 $ 2,500 $ 0.35 7,143
01/13/01 $ 7,500 $ 0.086 86,667 Bonus based on average closing price for 12/15/00, 12/29/00 and 01/15/01
12/29/00 $ 2,500 $ 0.35 7,143
12/29/00 $ 1,250 $ 0.13 10,000
12/15/00 $ 2,500 $ 0.35 7,143
12/15/00 $ 1,250 $ 0.10 12,500
11/30/00 $ 1,250 $ 0.25 5,000
11/15/00 $ 1,250 $ 0.31 4,006
10/31/00 $ 1,250 $ 0.38 3,333
10/13/00 $ 1,250 $ 0.60 2,083
09/29/00 $ 1,250 $ 0.75 1,667
09/15/00 $ 1,250 $ 0.63 2,000
08/31/00 $ 1,250 $ 0.75 1,667
08/15/00 $ 1,250 $ 0.69 1,820
07/31/00 $ 1,250 $ 0.50 2,500
07/14/00 $ 1,250 $ 0.69 1,820
06/30/00 $ 1,250 $ 0.75 1,667
06/15/00 $ 1,250 $ 1.01 1,238
06/01/00 $ 1,250 $ 0.75 1,667
05/15/00 $ 1,250 $ 1.25 1,000
05/01/00 $ 1,250 $ 1.56 800
04/14/00 $ 1,250 $ 1.38 909
03/31/00 $ 1,250 $ 2.13 588
03/15/00 $ 1,250 $ 2.13 588
10
03/01/00 $ 1,250 $ 2.25 556
02/15/00 $ 1,250 $ 1.68 744
02/01/00 $ 1,250 $ 1.81 691
01/15/00 $ 1,250 $ 1.01 1,238
EMPLOYMENT AGREEMENT. The Company entered into an employment agreement
with Dr. Skolnick on August 1, 2003 with a five-year initial term. Dr.
Skolnick's base annual salary under the employment agreement is $144,000.
PROPOSAL 3. - APPROVAL OF AMENDMENT TO ARTICLES OF
INCORPORATION TO INCREASE NUMBER OF AUTHORIZED SHARES OF
COMMON STOCK
On August 28, 2003, the Board of Directors authorized an amendment to
our Articles of Incorporation to increase the number of our authorized shares.
Subject to shareholder approval, Article FOURTH would be amended to read as
follows and would be filed with the Nevada Secretary of State:
"FOURTH. The corporation is authorized to issue 300,000,000 shares of
Common Stock, par value $.001 share."
PURPOSE AND EFFECT OF THE AMENDMENT
Assuming the shareholders ratify proposal 2. above, as of the Record
Date, of the Company's 150,000,000 authorized shares of Common Stock, 98,724,993
shares were issued and outstanding, 1,885,714 shares were reserved for future
issuance upon exercise of the Company's outstanding warrants. If the
shareholders approve Proposal Five regarding the approval of the Stock Option
Plan, there will be an additional 18,000,000 shares of Common Stock reserved for
issuance thereunder. Based upon the number of outstanding and reserved shares of
Common Stock described above, the Company currently has approximately 31,389,293
shares remaining available for other purposes.
The Board of Directors believes that it is in the Company's best
interests to increase the number of authorized but unissued shares of Common
Stock in order to have additional shares available to meet the Company's future
business needs as they arise. The increase will provide shares to issue in
future financing transactions, which is consistent with the Company's growth
strategy. The additional shares of Common Stock will be available for various
equity compensation and other employee benefit plans, future stock dividends, to
acquire another company or its assets, to establish strategic relationships with
corporate partners, and for other corporate purposes. The additional shares of
Common Stock will also be available for issuance upon conversion of shares of
preferred stock in the event the shareholders approve Proposal Four. Other than
as specified in Proposal Five regarding the approval of the Stock Option Plan
and in connection with its financing objectives, the Company's management has no
present arrangements, agreements, commitments, understandings or plans to issue
any additional shares of Common Stock proposed to be authorized.
The availability of additional shares of Common Stock is particularly
important in the event that the Board of Directors needs to undertake any of the
foregoing actions on an expedited basis and thus avoid the time and expense of
seeking shareholder approval in connection with the stock issuance. If this
proposal is approved by the shareholders, other than the approval that the Board
of Directors is seeking in proposal Five, the Board of Directors does not intend
to solicit further shareholder approval before the issuance of additional
shares, unless required by law, regulation or stock exchange rule.
POTENTIAL ANTI-TAKEOVER EFFECT
11
The proposed amendment could, under certain circumstances, have an
anti-takeover effect, although this is not the intention of the proposal, nor is
it part of a plan to adopt a series of anti-takeover measures. The issuance of
Common Stock from the increased authorized shares if this proposal is approved
could cause dilution of the voting power of the existing shareholders. See
Proposal 4. - Approval of Amendment to Articles of Incorporation to Create
Preferred Stock for a broader discussion of potential anti-takeover effects.
EFFECTIVENESS OF THE INCREASE TO AUTHORIZED NUMBER OF SHARES OF COMMON STOCK
If approved by the Company's shareholders, the increase to the number
of authorized shares of Common Stock will become effective upon the filing of
the Articles of Amendment with the Secretary of State of the State of Nevada.
The Board of Directors intends to file the Articles of Amendment as soon as
practicable once shareholder approval is obtained.
NO APPRAISAL RIGHTS
Under Nevada law, the Company's shareholders are not entitled to
appraisal rights with respect to the increase to the number of authorized shares
of Common Stock.
VOTE REQUIRED FOR PROPOSAL THREE
Proposal Three will be approved if the holders of a majority of the
Company's outstanding shares of Common Stock affirm the proposal by votes cast
in person or proxy.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE PROPOSAL TO
AMEND THE COMPANY'S ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK.
PROPOSAL 4. - APPROVAL OF AMENDMENT TO ARTICLES OF
INCORPORATION TO CREATE PREFERRED STOCK
On August 28, 2003, the Board of Directors authorized an amendment to
our Articles of Incorporation to create a new class of 50,000,000 shares of
preferred stock. Subject to shareholder approval, Article FOURTH would be
amended to add the following sentences thereto and would be filed with the
Nevada Secretary of State:
"The corporation is also authorized to issue 50,000,000 shares of
preferred stock, par value $.001 share, for which the board of directors of the
corporation shall have the power to fix by resolution or resolutions the powers,
preferences and rights and the qualifications, limitations or restrictions,
including dividing the Preferred Stock into one or more classes or series having
the same or different powers, preferences and rights and qualifications,
limitations and restrictions as the board of directors shall fix by resolution
or resolutions."
PURPOSE AND EFFECT OF THE AMENDMENT
The Board of Directors has determined that it would be in the best
interests of the Company to amend its Articles of Incorporation to authorize a
class of preferred stock in order to facilitate corporate financing and other
12
plans of the Company, which are intended to foster its growth and flexibility.
The Board of Directors believes that the creation of the class of preferred
stock may assist the Company in achieving its business objectives by making
financing easier to obtain. The amendment to the articles of incorporation will
create a new class of 50,000,000 authorized shares of "blank check" preferred
stock. The term "blank check" refers to preferred stock, the creation and
issuance of which is authorized in advance by the shareholders and the terms,
rights and features of which are determined by the Board of Directors upon
issuance. The authorization of such blank check preferred stock would permit the
Board of Directors to authorize and issue preferred stock from time to time in
one or more series.
Subject to the provisions of the Company's amendment to the articles of
incorporation and the limitations prescribed by law, the Board of Directors
would be expressly authorized, at its discretion, to adopt resolutions to issue
preferred shares, to fix the number of preferred shares and to change the number
of preferred shares constituting any series and to provide for or change the
voting powers, designations, preferences and relative, participating, optional
or other annual rights, qualifications, limitations or restrictions thereof,
including dividend rights (including whether the dividends are cumulative),
dividend rates, terms of redemption (including sinking fund provisions),
redemption prices, conversion rights and liquidation preferences of the
preferred shares constituting any series of the preferred stock, in each case
without any further action or vote by the shareholders. The Board of Directors
would be required to make any determination to issue shares of preferred stock
based on its judgment as to the best interests of the Company and the
shareholders. The Board of Directors is seeking shareholder approval of an
amendment to the articles of incorporation that would give the Board of
Directors flexibility, without further shareholder action, unless otherwise
required by law, regulation or stock exchange rule, to issue preferred stock on
such terms and conditions as the Board of Directors deems to be in the best
interests of the Company and its shareholders. The Company has no immediate
definitive plans to issue any shares of preferred stock. Therefore, the terms,
rights and features of a series of preferred stock subject to this proposal
cannot be stated or predicted with certainty.
It is not possible to state the effects of the proposed amendment upon
the rights of holders of Common Stock until the Board of Directors determines
the respective rights of the holders of one or more series of preferred stock.
The issuance of shares of preferred stock pursuant to the Board of Director's
authority described above, however, may adversely affect the rights of the
holders of Common Stock. Specifically, the effects of such issuances of
preferred stock could include (i) reduction of the amount of cash otherwise
available for payment of dividends on Common Stock, if any, (ii) restrictions on
dividends on Common Stock, (iii) dilution of the voting power of Common Stock,
and (iv) restrictions on the rights of holders of Common Stock to share in the
Company's assets on liquidation until satisfaction of any liquidation preference
granted to the holders of such subsequently designated series of preferred
stock. For example, preferred stock issued by the Company may rank prior to the
Common Stock as to dividend rights, liquidation preferences or both, may have
full or limited voting rights, and may be convertible into shares of Common
Stock. Accordingly, the issuance of shares of preferred stock could decrease the
amount of earnings and assets allocable to or available for distribution to
holders of Common Stock and adversely affect the rights and powers, including
voting rights of the Common Stock, and may discourage bids for the Common Stock
or may otherwise adversely affect the market price of the Common Stock.
POTENTIAL ANTI-TAKEOVER EFFECT
The increased number of authorized shares could discourage, or be used
to impede, an attempt to acquire or otherwise change control of the Company. Any
issuance of preferred stock with voting rights could, under certain
circumstances, have the effect of delaying or preventing a change in control of
the Company by increasing the number of outstanding shares entitled to vote and
by increasing the number of votes required to approve a change in control of the
Company. Shares of voting or convertible preferred stock or Common Stock could
be issued, or rights to purchase such shares could be issued, to render more
13
difficult or discourage an attempt to obtain control of the Company by means of
a tender offer, proxy contest, merger or otherwise. The ability of the Board of
Directors to issue such additional shares of Common Stock and preferred stock,
with the rights and preferences it deems advisable, could discourage an attempt
by a party to acquire control of the Company by tender offer or other means.
Such issuances could therefore deprive shareholders of benefits that could
result from such an attempt, such as the realization of a premium over the
market price that such an attempt could cause. Moreover, the issuance of such
additional shares to persons friendly to the Board of Directors could make it
more difficult to remove incumbent managers and directors from office even if
such change were to be favorable to shareholders generally. Although the Company
has no present intent to use the additional authorized shares of Common Stock or
preferred stock for such purposes and this proposals two and three are not part
of a plan by management to adopt a series of anti-takeover provisions, if the
amendments are adopted, more capital stock of the Company would be available for
such purposes than is currently available. The Board of Directors does not
currently intend to propose other anti-takeover provisions. The Company is not
presently aware of any pending or proposed takeover attempt.
The Board of Directors has approved a staggered board with
approximately one-third of the directors elected every three years. The
staggered board effects every election and is not triggered by a particular
event such as a hostile takeover. The staggered board makes it more difficult
for shareholders to change a majority of directors even when the only reason for
change may be the performance of the present directors. Neither the Company's
bylaws or articles of incorporation provide for cumulative voting.
EFFECTIVENESS OF THE INCREASE TO AUTHORIZED NUMBER OF SHARES OF COMMON STOCK
If approved by the Company's shareholders, the creation of the
authorized class of preferred stock will become effective upon the filing of the
Articles of Amendment with the Secretary of State of the State of Nevada. The
Board of Directors intends to file the Articles of Amendment as soon as
practicable once shareholder approval is obtained.
NO APPRAISAL RIGHTS
Under Nevada law, the Company's shareholders are not entitled to
appraisal rights with respect to the creation of the new authorized class of
preferred stock.
VOTE REQUIRED FOR PROPOSAL FOUR
Proposal Four will be approved if the holders of a majority of the
Company's outstanding shares of Common Stock affirm the proposal by votes cast
in person or proxy.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE PROPOSAL TO
AMEND THE COMPANY'S ARTICLES OF INCORPORATION TO CREATE A NEW AUTHORIZED
CLASS OF PREFERRED STOCK.
14
PROPOSAL 5. - APPROVAL OF STOCK OPTION PLAN
The Company's shareholders are being asked to approve the adoption of
the Company's Stock Option Plan (the "Option Plan"). In the following discussion
of the Option Plan capitalized terms have the same meanings as defined in the
Option Plan, unless otherwise noted.
The purpose of the Option Plan is to promote the interest of the
Company and its shareholders and the Company's success by providing a method
whereby a variety of equity based incentives and other awards may be granted to
employees, directors of the Company, and to selected consultants. The Option
Plan is intended to enable the Company and its management team to attract and
retain the best available personnel for positions of substantial responsibility,
to provide additional incentive to employees, to promote the success of the
Company's business, and to increase shareholder value by further aligning the
interests of its employees with the interests of the Company's shareholders by
providing an opportunity to benefit from stock price appreciation that generally
accompanies improved financial performance. The Board of Directors believes that
the Company's long-term success is dependent upon the ability of the Company and
management team to attract and retain superior individuals who, by virtue of
their ability and qualifications, make important contributions to the Company.
Initially, a total of 18,000,000 shares of Common Stock (the "Shares")
have been reserved for issuance under the Option Plan. The Option Plan will
terminate on June 24, 2013.
The table below sets forth, as of the Record Date, the assumed amount and the
dollar value of awards that will be received by the Named Executive Officer (as
defined on page 10) and other groups, subject to obtaining shareholder approval:
15
- ----------------------------------------------- -------------------------
NUMBER OF SHARES UNDER
NAME AND POSITION THE STOCK OPTION PLAN1
- ----------------------------------------------- -------------------------
Malcolm H. Skolnick 5,000,000
- ----------------------------------------------- -------------------------
All executive officers as a group 10,200,000
- ----------------------------------------------- -------------------------
All current directors who are not executive
officers as a group 1,000,000
- ----------------------------------------------- -------------------------
All employees, including all current officers
who are not executive officers, as a group 3,000,000
- ----------------------------------------------- -------------------------
- ----------------------
1. Upon shareholder approval, 33.3% of each award will vest with 33.3% of each
award vesting on each of first and second anniversaries of the date of grant.
Awards granted under the Option Plan are to be determined from time to time by a
compensation committee to be constituted upon approval of the plan by the
shareholders (the "Compensation Committee"). It is impossible at this time to
indicate the precise number, name or positions of persons who will hereafter
receive Options under the Option Plan.
SUMMARY OF THE STOCK OPTION PLAN
A general description of the principal terms of the Option Plan as
proposed is set forth below. This description is qualified in its entirety by
the terms of the Option Plan, a copy of which is attached to this Proxy
Statement as Annex III and is incorporated by reference herein.
The purpose of the Option Plan is to promote the interests of the
Company and its shareholders and the Company's success by providing a method
whereby a variety of equity based incentives and other awards may be granted to
employees, directors of the Company and to selected consultants. The Option Plan
shall become effective upon the affirmative vote of a majority of the votes cast
by shareholders of the Company's Common Stock in person or by proxy at the
Annual Meeting.
Administration. The Compensation Committee of the Board will administer
the Option Plan. The Compensation Committee will have the authority to construe
and interpret the Option Plan; amend and rescind rules relating to the Option
Plan; make all necessary determinations for the administration of the Option
Plan; determine whether Options will be granted alone or in combination or in
tandem with other Options; and determine whether cash will be paid or Options
will be granted in replacement of, or as alternatives to, other incentives.
Furthermore, the Compensation Committee may correct any defect or inconsistency
in the Option Plan or in any Option and has the authority to take all other
actions it deems necessary or advisable for the proper administration of the
Option Plan.
Eligibility. Any employee in good standing is eligible to become a
participant in the Option Plan. A member of the Board of Directors of the
Company or a subsidiary who is not an employee of the Company or a subsidiary
shall be eligible to receive Options. Any individual who acts as an independent
contractor to the Company and who renders services directly for the Company or a
Subsidiary who is not a Director of the Company shall be eligible to receive
Options. As of November 21, 2003, approximately seven employees and four members
of the Board of Directors who are not employees are eligible to participate in
the Option Plan.
16
Options. The maximum number of shares of Common Stock issuable on
exercise of the Options granted under the Option Plan shall be approved by the
Shareholders. Initially, a total of 18,000,000 shares of Common Stock shall be
reserved for issuance under the Option Plan. No Option shall be granted pursuant
to the Option Plan on or after the tenth anniversary date of June 24, 2003, but
Options granted prior to such tenth anniversary may extend beyond that date to
the date(s) specified in the agreement(s) covering such Options.
If an Option expires or is terminated, surrendered or cancelled without
having been fully exercised, the unused shares covered by any such Option shall
again be available for grant under the Option Plan. However, if the expiration
of the termination date of an Option is beyond the term of the existence of the
Option Plan, then any shares covered by unexercised or terminated Options shall
not reactivate the existence of the Option Plan and therefore may not be
available for additional grants under the Option Plan.
The intent of the Option Plan is to qualify the Options granted to
employees as "incentive stock options" under the provisions of Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code"). Options shall
contain terms as may be necessary to qualify the Options granted therein as
incentive stock options pursuant to Section 422 of the Code, or any successor
statute, including that such incentive stock options shall be granted only to
employees, that such incentive stock options are non-transferable, and which
shall conform to all other requirements of the Code.
The exercise price of each incentive stock option shall not be less
than 100% of the Fair Market Value of the underlying shares of Common Stock on
the date of the grant. No incentive stock option shall be granted to any
employee who directly or indirectly owns stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company, unless at
the time of such grant the exercise price of the Option is at least 110% of the
Fair Market Value of the underlying shares of Common Stock subject to the Option
and such Option is not exercisable after the expiration of five years from the
date of the grant. No incentive stock option shall be granted to a person in his
capacity as an Employee of a subsidiary if the Company has less than 50 percent
ownership interest in such Subsidiary.
Options granted to employees, consultants and non-employee directors of
the Company may be exercised upon termination of such status with the Company
within the following periods, or such shorter periods as determined by the
Compensation Committee at the time of the grant:
o If on account of death, Options may be exercised any time during
the 12-month period following death unless by its terms it expires sooner;
o If on account of termination of employment by the Company for
Misconduct, no unexercised Option shall be exercisable to any extent after
termination;
o If on account of certified disability, Options may be exercised
any time during the 12-month period following disability unless by its terms it
expires sooner; and
o If for any reason other than those listed above, Options may be
exercised within 31 days of such termination.
Options granted to non-employee directors of the Company or a
subsidiary shall not be incentive stock options and shall have an exercise price
equal to the Fair Market Value of the underlying shares of Common Stock on the
date of the grant. The term of the Options shall be not more than ten years.
17
Options granted to consultants shall not be incentive stock options.
Grants of non-qualified stock options to Consultants shall have an exercise
price equal to the Fair Market Value of the underlying shares of Common Stock on
the date of the grant. The term of the Options shall be not more than ten years.
Amendment of Option Plan. The Board of Directors, upon recommendation
of the Compensation Committee, may amend or alter the Option Plan at any time
and from time to time without the approval of shareholders, unless shareholder
approval is required by federal or state law or regulation or the rules of any
stock exchange or automated quotation system on which the Common Stock may then
be listed or quoted. Rights and obligations under any Option granted before
amendment of the Option Plan shall not be materially altered or impaired
adversely by such amendment, except with consent of the person to whom the
Option was granted.
Assignability of Rights. The rights of a participant under the Option
Plan shall not be assignable by such participant, by operation of law or
otherwise. No participant may create a lien on any funds, securities, rights or
other property to which such Participant may have an interest under the Option
Plan.
Certain Federal Tax Consequences
The following is only a summary of the current effect of federal income
taxation upon the participant and the Company with respect to the shares
purchased under the Option Plan. Reference should be made to the applicable
provisions of the Code. In addition, the summary does not discuss the tax
consequences of a participant's death or the income tax laws of any
municipality, state or foreign country to which the participant may be subject.
Non-qualified Stock Option. The grant of a non-qualified stock Option
under the Option Plan will not result in any federal income tax consequences to
the participant or to the Company. Upon exercise of a non-qualified stock
option, the participant is subject to income taxes at the rate applicable to
ordinary compensation income on the difference between the Option exercise price
and the fair market value of the shares on the date of exercise. This income is
subject to withholding for federal income and employment tax purposes. The
Company is entitled to an income tax deduction in the amount of the income
recognized by the participant. Any gain or loss on the participant's subsequent
disposition of the shares of Common Stock will receive long or short-term
capital gain or loss treatment, depending on whether the shares are held for
more than one year following exercise. The Company does not receive a tax
deduction for any such gain. The maximum marginal rate at which ordinary income
is taxed to individuals is currently 39.6 percent. The maximum rate at which
long-term capital gains for most types of property are taxed is 20 percent.
Incentive Stock Option. The grant of an incentive stock option under
the Option Plan will not result in any federal income tax consequences to the
participant or to the Company. A participant recognizes no federal taxable
income upon exercising an incentive stock option ("ISO") (subject to the
alternative minimum tax rules discussed below), and the Company receives no
deduction at the time of exercise. In the event of a disposition of stock
acquired upon exercise of an ISO, the tax consequences depend upon how long the
participant has held the shares of Common Stock. If the participant does not
dispose of the shares within two years after the ISO was granted, nor within one
year after the ISO was exercised, the participant will recognize a long-term
capital gain (or loss) equal to the difference between the sale price of the
shares and the exercise price. The Company is not entitled to any deduction
under these circumstances.
If the participant fails to satisfy either of the foregoing holding
periods, he or she must recognize ordinary income in the year of the disposition
(referred to as a "disqualifying disposition"). The amount of such ordinary
18
income generally is the lesser of (i) the difference between the amount realized
on the disposition and the exercise price, or (ii) the difference between the
fair market value of the stock on the exercise date and the exercise price. Any
gain in excess of the amount taxed as ordinary income will be treated as a long
or short-term capital gain, depending on whether the stock was held for more
than one year. The Company, in the year of the disqualifying disposition, is
entitled to a deduction equal to the amount of ordinary income recognized by the
participant.
The "spread" under an ISO (i.e., the difference between the fair market
value of the shares at exercise and the exercise price) is classified as an item
of adjustment in the year of exercise for purposes of the alternative minimum
tax.
The foregoing is only a summary of the current effect of federal income
taxation upon the grantee and the Company with respect to the shares purchased
under the Option Plan. Reference should be made to the applicable provisions of
the Code. In addition, the summary does not discuss the tax consequences of a
grantee's death or the income tax laws of any municipality, state or foreign
country to which the grantee may be subject.
VOTE REQUIRED FOR PROPOSAL FIVE
If a quorum exists, Proposal Five will be approved if the votes cast in person
or proxy by holders of the Company's Common Stock favoring the proposal exceed
the votes cast by holders of the Company's Common Stock opposing the proposal.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED AND RECOMMENDS THAT
SHAREHOLDERS VOTE FOR APPROVAL OF THE STOCK OPTION PLAN AND 18,000,000 SHARES
INITIALLY RESERVED THEREUNDER
PROPOSAL 6. - RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Malone & Bailey, PLLC, which has
served as independent auditors of the Company since April 16, 2002, as
independent auditors to audit the books, records and accounts of the Company for
the fiscal year ended December 31, 2002. The Board of Directors recommends a
vote FOR approval of such selection. A representative of Malone & Bailey, PLLC
is expected to be present at the Annual Meeting and will have the opportunity to
make a statement, if such representative chooses to do so, and will be available
to respond to appropriate questions.
AUDIT FEES; CHANGES IN ACCOUNTANTS
Audit Fees. The aggregate fees for professional services rendered to us
by Thomas Leger & Co., L.L.P. of Houston, Texas ("TL&Co.") for the audit of our
annual financial statements for the fiscal year ended December 31, 2002, and for
the reviews of the financial statements included in our quarterly reports on
Form 10-Q filed during such fiscal year, were $24,463.
Financial Information Systems Design and Implementation Fees. During
the fiscal year ended December 31, 2002, TL&Co did not provide us with any
information technology services relating to financial information systems design
and implementation.
19
All Other Fees. During the fiscal year ended December 31, 2002, the
aggregate fees billed by TL&Co for services rendered to us, other than the
services described above under the caption Audit Fees, were $5,000, all of which
were incurred in connection with tax-related matters.
On January 24, 2002, Mann Frankfort Stein & Lipp CPA's, LLP of Houston,
Texas ("MFSL") advised the Company of its resignation and that it would no
longer serve as the Company's independent accountant. MSFL has issued no reports
on the financial statements of the Company for any period subsequent to December
31, 2000. The report of MFSL on the Company's financial statements for the
fiscal year ended December 31, 2000 contains a modification for a going concern
uncertainty. MFSL issued no reports on the financial statements of the Company
for any period prior to December 31, 2000. The decision to change independent
auditors was approved by the Board of Directors. The Company has not had any
disagreements with MFSL on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedures, which
disagreements, if not resolved to the satisfaction of MFSL, would have caused
them to make reference thereto in their report on the financial statements of
the Company. The Company has requested MFSL furnish it with a letter addressed
to the Securities and Exchange Commission stating whether it agrees with the
above statements.
On February 13, 2002, CytoGenix, Inc. (the "Company") engaged Thomas
Leger & Co., L.L.P. of Houston, Texas ("TL&Co.") as its principal independent
accountants to audit the Company's financial statements. The Company's Board of
Directors approved the engagement of TL&Co. February 12, 2002.
In April 2003 the Company advised TLCO of its termination as the
Company's independent accountant. TLCO has issued no reports on the financial
statements of the Company for any period subsequent to December 31, 2001. The
report of TLCO on the Company's financial statements for the fiscal year ended
December 31, 2001 contains a modification for a going concern uncertainty. TLCO
issued no reports on the financial statements of the Company for any period
prior to December 31, 2001. The decision to change independent auditors was
approved by the Board of Directors. The Company has not had any disagreements
with TLCO on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedures, which disagreements, if
not resolved to the satisfaction of TLCO, would have caused them to make
reference thereto in their report on the financial statements of the Company.
The Company has requested TLCO furnish it with a letter addressed to the
Securities and Exchange Commission stating whether it agrees with the above
statements.
On April 16, 2003, the Company engaged Malone & Bailey, PPLC, of
Houston, Texas as its principal independent accountants to audit the Company's
financial statements. The Company's Board of Directors approved the engagement
of Malone & Bailey, PLLC on April 15, 2003.
ANNUAL REPORT
The Company's Annual Report of Form 10-KSB covering the fiscal year
ended December 31, 2002 accompanies this Proxy Statement. Except for the
financial statements included in the Annual Report that are specifically
incorporated by reference herein, the Annual Report of Form 10-KSB is not
incorporated in this Proxy Statement and is not to be deemed part of this proxy
soliciting material. Additional copies of the Annual Report of Form 10-KSB are
available upon request.
OTHER MATTERS
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT. Section 16(a) of the
Exchange Act requires the Company's directors, executive officers and persons
who own more than 10% of a registered class of the Company's Common Stock to
file initial reports of ownership and changes in ownership with the SEC and to
20
furnish the Company with copies of all Section 16(a) forms they file. The
Company believes that all filings required to be made under Section 16(a) were
timely made.
OTHER MATTERS. At the date hereof, the Board of Directors does not know
of any other business to be presented at the Annual Meeting of Shareholders. If
any other matter properly comes before the meeting, however, it is intended that
the persons named in the accompanying proxy will vote such proxy in accordance
with the discretion and instructions of the Board of Directors.
SUBMISSION OF SHAREHOLDER PROPOSALS
Shareholders wishing to submit proposals for consideration by the
Company's Board of Directors at the Company's 2004 Annual Meeting of
Shareholders should submit them in writing to the attention of the Secretary of
the Company no later than January 26, 2004, so that it may be considered by the
Company for inclusion in its proxy statement and form of proxy for that meeting.
A shareholder who wishes to make a proposal at the 2004 Annual Meeting
of Shareholders without complying with the requirements of Rule 14a-8 (and
therefore without including the proposal in our proxy materials) must notify us
of the proposal by April 1, 2004. If a shareholder fails to timely give notice
of a potential proposal, then the persons named as proxies in the proxy cards
solicited by our Board of Directors for that meeting will be entitled to vote
the proxy cards held by them regarding that proposal, if properly raised at the
meeting, in their discretion or as directed by our management.
By Order of the Board of Directors,
/s/ Lawrence Wunderlich
-------------------------
Lawrence Wunderlich
Secretary
December 23, 2003
21
ANNEX I
-------
AMENDMENT TO THE BYLAWS
OF
CYTOGENIX, INC.
(f/k/a Cryogenic Solutions, Inc.)
THIS AMENDMENT (this "Amendment") TO THE BYLAWS OF CYTOGENIX, INC., a
Nevada corporation (the "Corporation"), dated August 28, 2003, was unanimously
approved by the Board of Directors of the Company (the "Board") at a Board
meeting occurring on that date, pursuant to the provisions of Article IX ,
Section 2 of the Bylaws of the Corporation (the "By-Laws").
W I T N E S S E T H:
-------------------
WHEREAS, the Board has determined it is advisable and in the best
interests of the Corporation and its shareholders to create classes of directors
with the members of the Board in each class ultimately serving a term of office
of three years;
WHEREAS the Board has also determined it is advisable and in the best
interests of the Corporation and its shareholders to indemnify directors,
officers, employees and agents of the Corporation;
WHEREAS, Article IX, Section 2 of the Bylaws authorizes the Board to
alter, amend or repeal the Bylaws by a majority vote of the Board;
NOW, THEREFORE, the Board hereby amends the Bylaws in accordance with
the provisions set forth below.
A. AMENDMENTS TO THE BYLAWS. THE BYLAWS ARE AMENDED AS FOLLOWS:
(1) Article III, Section 1(c) of the Bylaws is hereby
amended to read in its entirety as follows:
"The board of directors shall be divided into three classes as
designated by the members of the board of directors in office as of the date of
effectiveness of this provision. Each class shall be as nearly equal in number
as possible to the other classes so designated. The term of office of the first
class shall expire at the next annual meeting of stockholders; of the second
class one year thereafter; and of the third class two years thereafter. Each
subsequent class of directors shall be elected for a full term of office of
three years. At all subsequent annual meetings thereafter, the number of
directors equal to the number constituting the class whose term expires at the
time of such meeting shall be elected to hold office for the full term of office
of three years. Upon the creation of any new directorships resulting from any
increase in the authorized number of directors voted by the board of directors
between annual meetings, such new directors shall be assigned to one of the
aforementioned three classes by the vote of a majority of the directors then in
office, provided that after such appointment to a class, each class shall be as
nearly equal in number as possible to the other classes of the board of
directors.
The provisions of the foregoing paragraph of this Section 1(c) may not
be altered, amended or repealed except by the vote of the holders of a majority
of the voting power of the issued and outstanding stock of the Corporation at
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any annual, regular or special shareholders' meeting called for that purpose the
notice of which shall specify the subject matter of the proposed alteration,
amendment or repeal of this Section 1(c)."
(2) The Bylaws are hereby amended by including the following
Article X in its entirety as follows:
"ARTICLE X - INDEMNIFICATION
----------------------------
Section 1. - General. The Corporation will, to the fullest extent
applicable law as it presently exists permits, and to such greater extent as
applicable law hereafter may permit, indemnify and hold harmless each Indemnitee
(as defined in Article X, Section 9) from and against any and all judgments,
penalties, fines (including excise taxes), amounts paid in settlement and,
subject to Article X, Section 2, Expenses (as defined in Article X, Section 9)
whatsoever arising out of any event or occurrence by reason of the fact that
such Indemnitee is or was a director or an officer of the Corporation. The
Corporation may, but need not, indemnify and hold harmless any Indemnitee from
and against any and all judgments, penalties, fines (including excise taxes),
amounts paid in settlement and, subject to Article X, Section 2, Expenses
whatsoever arising out of any event or occurrence by reason of the fact that
such Indemnitee is or was an employee or agent of the Corporation or is or was
serving in another Corporate Status, as defined in Article X, Section 9 (other
than as a director or an officer of the Corporation), at the written request of
the Corporation.
Section 2. - Expenses. If any Indemnitee is, by reason of his serving
as a director, officer, employee or agent of the Corporation, a party to and is
successful, on the merits or otherwise, in any Proceeding (as defined in Article
X, Section 9), the Corporation will indemnify him against all his Expenses in
connection therewith. If that Indemnitee is not wholly successful in that
Proceeding but is successful, on the merits or otherwise, as to any Matter (as
defined in Article X, Section 9) in that Proceeding, the Corporation will
indemnify him against all his Expenses relating to that Matter. The termination
of any Matter against which any Indemnitee is defending himself by dismissal of
that Matter with or without prejudice will constitute success of that Indemnitee
with respect to that Matter. If any Indemnitee is, by reason of any Corporate
Status other than his serving as a director, officer, employee or agent of the
Corporation, a party to and is successful, on the merits or otherwise, in any
Proceeding, the Corporation, may, but need not, indemnify him against all his
Expenses in connection therewith. If any Indemnitee is, by reason of his
Corporate Status, a witness in any Proceeding, the Corporation may, but need
not, indemnify him against all his Expenses in connection therewith.
Section 3. - Advances. In the event of any threatened or pending
Proceeding in which any Indemnitee is a party or is involved and that may give
rise to a right of that Indemnitee to indemnification under this Article X,
following written request to the Corporation by that Indemnitee, the Corporation
promptly will pay to that Indemnitee amounts to cover his Expenses in connection
with that Proceeding in advance of its final disposition on the receipt by the
Corporation of (i) a written undertaking of that Indemnitee executed by or on
behalf of that Indemnitee to repay the advance if it ultimately is determined
pursuant to the provisions of this Article X or by final judgment or other final
adjudication under the provisions of any applicable law that the Indemnitee is
not entitled to be indemnified by the Corporation pursuant to these Bylaws and
(ii) satisfactory evidence as to the amount of those Expenses.
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Section 4. - Request for Indemnification. To request indemnification,
any Indemnitee must submit to the Secretary a written claim or request therefor
which contains sufficient information to reasonably inform the Corporation about
the nature and extent of the indemnification or advance sought by that
Indemnitee. The Secretary will promptly advise the Board of Directors of each
such request.
Section 5. - Nonexclusivity of Rights. The rights of indemnification
and advancement of Expenses this Article X provides are not exclusive of any
other rights to which any Indemnitee may at any time be entitled under
applicable law, the Articles of Incorporation, these Bylaws, any agreement, a
vote of shareholders or a resolution of directors, or otherwise. No amendment,
alteration or repeal of this Article X or any provision hereof will be effective
as to any Indemnitee for acts, events and circumstances that occurred, in whole
or in part, before that amendment, alteration or repeal. The provisions of this
Article X will continue as to any Indemnitee whose Corporate Status has ceased
for any reason and will inure to the benefit of his heirs, executors and
administrators. Neither the provisions of this Article X nor those of any
agreement to which the Corporation is a party will preclude the indemnification
of any person whom this Article X does not specify as having the right to
receive indemnification or is not a party to any such agreement, but whom the
Corporation has the power or obligation to indemnify under the provisions of the
Nevada General Corporation Law.
Section 6. - Insurance and Subrogation. The Corporation will not be
liable under this Article X to make any payment of amounts otherwise
indemnifiable hereunder to or for the benefit of any Indemnitee if, but only to
the extent that, that Indemnitee has otherwise actually received such payment
under any insurance policy, contract or agreement or otherwise. In the event of
any payment hereunder to or for the benefit of any Indemnitee, the Corporation
will be subrogated to the extent of that payment to all the rights of recovery
of that Indemnitee, who shall execute all papers required and take all action
the Corporation reasonably requests to secure those rights, including execution
of such documents as are necessary to enable the Corporation to bring suit to
enforce those rights.
Section 7. - Severability. If any provision or provisions of this
Article X shall be held to be invalid, illegal or unenforceable for any reason
whatsoever, the validity, legality and enforceability of the remaining
provisions will not in any way be affected or impaired thereby; and, to the
fullest extent possible, the provisions of this Article X will be construed so
as to give effect to the intent manifested by the provision held invalid,
illegal or unenforceable.
Section 8. - Certain Actions Where Indemnification Is Not Provided.
Notwithstanding any other provision of this Article X, no person will be
entitled to indemnification or advancement of Expenses under this Article X with
respect to any Proceeding, or any Matter therein, brought or made by that person
against the Corporation; provided, however, if any Indemnitee seeks a judicial
adjudication of or an award in arbitration to enforce his rights under, or to
recover damages for breach of, this Article X, that Indemnitee will be entitled
to recover from the Corporation, and will be indemnified by the Corporation
against, all his Expenses in that judicial adjudication or arbitration, but only
if he prevails therein; and if it is determined in that judicial adjudication or
arbitration that he is entitled to receive part of, but not all, the
indemnification or advancement of expenses sought, his Expenses in connection
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with that judicial adjudication or arbitration will be appropriately prorated
between those in respect of which this Section 8 entitles him to indemnification
and those he must bear.
Section 9. - Definitions. For purposes of this Article X:
"Corporate Status" describes the status of a person who is or
was a director, officer, employee or agent of the Corporation or of any
other corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise, provided that person is or was serving in
that capacity at the written request of the Corporation. For purposes
of these Bylaws, "serving at the written request of the Corporation"
includes any service by an Indemnitee (at the written request of the
Corporation) which imposes duties on or involves services by that
Indemnitee with respect to any employee benefit plan or its
participants or beneficiaries.
"Expenses" of any person include all the following that are
actually and reasonably incurred by or on behalf of that person: all
reasonable attorneys' fees, retainers, court costs, transcript costs,
fees of experts, witness fees, travel expenses, duplicating costs,
printing and binding costs, telephone charges, postage, delivery
service fees and all other disbursements or expenses of the types
customarily incurred in connection with prosecuting, defending,
preparing to prosecute or defend, investigating or being or preparing
to be a witness in a Proceeding.
"Indemnitee" includes any person who is, or is threatened to
be made, a witness in or a party to any Proceeding as described in
Section 1 or 2 of Article X by reason of his Corporate Status.
"Matter" is a claim, a material issue or a substantial request
for relief.
"Proceeding" includes any action, suit, alternate dispute
resolution mechanism, hearing or any other proceeding, whether civil,
criminal, administrative, arbitrative, investigative or mediative, any
appeal in any such action, suit, alternate dispute resolution
mechanism, hearing or other proceeding and any inquiry or investigation
that could lead to any such action, suit, alternate dispute resolution
mechanism, hearing or other proceeding, except one (i) initiated by an
Indemnitee to enforce his rights under this Article X or (ii) pending
on or before the date of adoption of these Bylaws.
Section 10. - Notices. Promptly after receipt by any Indemnitee of
notice of the commencement of a Proceeding in respect of which he contemplates
seeking any indemnification or advance or reimbursement of Expenses pursuant to
this Article X, that Indemnitee must notify the Corporation of the commencement
of that Proceeding; provided however that (i) any delay in so notifying the
Corporation will not constitute a waiver or release by that Indemnitee of any
rights hereunder and (ii) any omission by Indemnitee to so notify the
Corporation will not relieve the Corporation from any liability that it may have
to Indemnitee otherwise than under this Article X. Any communication required or
permitted to the Corporation must be addressed to the Secretary at the
Corporation's principal executive offices, and any such communication to any
Indemnitee must be addressed to that Indemnitee's address as shown in the
Corporation's records, unless he specifies otherwise, and must be personally
delivered or delivered by overnight mail delivery. Any such notice will be
effective upon receipt.
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Section 11. - Contractual Rights. The right to be indemnified or to the
advancement or reimbursement of Expenses (i) is a contract right based on good
and valuable consideration pursuant to which any Indemnitee may sue as if these
provisions were set forth in a separate written contract between that Indemnitee
and the Corporation, (ii) is and is intended to be retroactive and will be
available as to events occurring prior to the adoption of these provisions and
(iii) will continue after any rescission or restrictive modification of these
provisions as to events occurring prior thereto."
B. MISCELLANEOUS.
(1) This Amendment shall be governed by the laws of the State
of Nevada.
(2) Except as specifically provided herein, the Bylaws
shall remain in full force and effect.
C. CERTIFICATION. THE UNDERSIGNED HEREBY CERTIFIES THAT THIS
AMENDMENT WAS UNANIMOUSLY ADOPTED BY THE BOARD AS OF THE 28TH DAY OF AUGUST,
2003.
/s/ Malcolm H. Skolnick
----------------------------------
Malcolm H. Skolnick
Chairman of the Board, President
and Chief Executive Officer
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ANNEX II
FILED #C2325-95
MAR 07 2001
IN THE OFFICE OF
DEAN HELLER
Secretary of State NEVADA
CERTIFICATE OF CHANGE
OF AUTHORIZED SHARES OF
CYTOGENIX, INC
Pursuant to the provisions of the Nevada Revised Statutes, CYTOGENIX,
INC., a Nevada corporation, files the following certificate of Change of
Authorized Shares of the Corporation:
1. The undersigned hereby certify that on the 8th day of March, 2000
a Special Meeting of the Board of Directors was duly held and convened
at which there was present a quorum of the Board of Directors acting
throughout all proceedings, and at which time the following resolution
was duly adopted by the Board of Directors:
BE IT RESOVED:
That the corporation shall have the authority to issue an aggregate of ONE
HUNDRED FIFTY MILLION (150,000,000) shares of voting common stock, par value ONE
MILL ($0.001) per share, and no other class of stock shall be authorized.
IN WITNESS WHEREOF, the undersinged, being the President and Secretary of
CYTOGENIX, INC., a Nevada corporation, hereunto affixes his signature this 2nd
day of March, 2001.
CYTOGENIX, INC.
By /s/ Malcolm Skolnick
--------------------
Malcolm Skolnick
President & CEO
By /s/ Lawrence Wunderlich
-----------------------
Secretary
ANNEX III
CYTOGENIX, INC.
STOCK OPTION PLAN
ARTICLE I.
THE PLAN
1.1. NAME. This Plan shall be known as the "Cytogenix, Inc. Stock
Option Plan." Capitalized terms used herein are defined in Article VII hereof.
1.2. PURPOSE. The purpose of the Plan is to promote the growth and
general prosperity of the Company by permitting the Company to grant Options to
purchase Common Stock of the Company to key Employees, Nonemployee Directors,
and Advisors. The Plan is designed to help the Company and its subsidiaries and
affiliates attract and retain superior personnel for positions of substantial
responsibility and to provide key Employees, Nonemployee Directors, and Advisors
with an additional incentive to contribute to the success of the Company. The
Company intends that Incentive Stock Options granted pursuant to Article III
shall qualify as "incentive stock options" within the meaning of Section 422 of
the Code.
1.3. EFFECTIVE DATE. The Plan shall become effective upon the Effective
Date.
1.4. ELIGIBILITY TO PARTICIPATE. Any key Employee, Nonemployee
Director, or Advisor shall be eligible to participate in the Plan. Subject to
the following provisions, the Committee may grant Options in accordance with
such determinations as the Committee from time to time in its sole discretion
shall make; provided, however, that Incentive Stock Options may be granted only
to persons who are Employees.
1.5. SHARES SUBJECT TO THE PLAN. The shares of Common Stock to be
issued pursuant to the Plan shall be either authorized and unissued shares of
Common Stock or shares of Common Stock issued and thereafter acquired by the
Company.
1.6. MAXIMUM NUMBER OF PLAN SHARES. Subject to adjustment pursuant to
the provisions of Section 5.2, and subject to any additional restrictions
elsewhere in the Plan, the maximum aggregate number of shares of Common Stock
that may be issued and sold hereunder shall be 18,000,000. No more than
9,000,000 shares of Common Stock shall be available for Incentive Stock Options.
Subject to adjustment pursuant to the provisions of Section 5.2, and subject to
any additional restrictions elsewhere in the Plan, the maximum aggregate number
of shares of Common Stock with respect to which Options may be granted to any
Optionee during the term of the Plan shall not exceed 5,000,000 shares.
1.7. OPTIONS AND STOCK GRANTED UNDER PLAN. If an Option terminates
without being wholly exercised, new Options may be granted hereunder covering
the number of Plan Shares to which such Option termination relates. Moreover,
when an Option is exercised in whole or in part, the number of Plan Shares then
available for issuance hereunder shall be increased by a number of shares equal
to the number of Plan Shares to which the exercise relates.
1.8. CONDITIONS PRECEDENT. The Company shall not issue any certificate
for Plan Shares pursuant to the Plan prior to fulfillment of all of the
following conditions:
(a) The admission of the Plan Shares to listing on all stock
exchanges on which the Common Stock is then listed, unless the Committee
determines in its sole discretion that such listing is neither necessary nor
advisable;
(b) The completion of any registration or other qualification of
the offer or sale of the Plan Shares under any federal or state law or under the
rulings or regulations of the Securities and Exchange Commission or any other
governmental regulatory body that the Committee shall in its sole discretion
deem necessary or advisable; and
(c) The obtaining of any approval or other clearance from
stockholders of the Company and any federal or state governmental agency that
the Committee shall in its sole discretion determine to be necessary or
advisable.
1.9. RESERVATION OF SHARES OF COMMON STOCK. During the term of the
Plan, the Company shall at all times reserve and keep available such number of
shares of Common Stock as shall be necessary to satisfy the requirements of the
Plan as to the number of Plan Shares. In addition, the Company shall from time
to time, as is necessary to accomplish the purposes of the Plan, seek or obtain
from any regulatory agency having jurisdiction any requisite authority that is
necessary to issue Plan Shares hereunder. The inability of the Company to obtain
from any regulatory agency having jurisdiction the authority deemed by the
Company's counsel to be necessary to the lawful issuance of any Plan Shares
shall relieve the Company of any liability in respect of the nonissuance of Plan
Shares as to which the requisite authority shall not have been obtained.
1.10. TAX WITHHOLDING.
(a) CONDITION PRECEDENT. The issuance of Plan Shares is subject
to the condition that if at any time the Committee shall determine, in its
discretion, that the satisfaction of withholding tax or other withholding
liabilities under any federal, state or local law is necessary or desirable as a
condition of, or in connection with, such issuances, then the issuances shall
not be effective unless the withholding shall have been effected or obtained in
a manner acceptable to the Committee.
(b) MANNER OF SATISFYING WITHHOLDING OBLIGATION. When a
participant is required by the Committee to pay to the Company an amount
required to be withheld under applicable income tax laws in connection with the
exercise of an Option, such payment may be made (i) in cash, (ii) by check,
(iii) if permitted by the Committee, by delivery to the Company of shares of
Common Stock already owned by the participant having a Fair Market Value on the
Tax Date equal to the amount required to be withheld, (iv) if permitted by the
Committee, through the withholding by the Company of a portion of the Plan
Shares acquired upon the exercise of the Options (if applicable) having a Fair
Market Value on the Tax Date equal to the amount required to be withheld, or (v)
in any other form of valid consideration, as permitted by the Committee in its
discretion.
(c) NOTICE OF DISPOSITION OF STOCK ACQUIRED PURSUANT TO INCENTIVE
STOCK OPTIONS. The Company may require as a condition to the issuance of Plan
Shares covered by any Incentive Stock Option that the party exercising such
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Option give a written representation to the Company, which is satisfactory in
form and substance to its counsel and upon which the Company may reasonably
rely, that he or she shall report to the Company any disposition of such shares
prior to the expiration of the holding periods specified by Section 422(a)(1) of
the Code. If and to the extent that the realization of income in such a
disposition imposes upon the Company federal, state or local withholding tax
requirements, or any such withholding is required to secure for the Company an
otherwise available tax deduction, the Company shall have the right to require
that the recipient remit to the Company an amount sufficient to satisfy those
requirements; and the Company may require as a condition to the issuance of Plan
Shares covered by an Incentive Stock Option that the party exercising such
Option give a satisfactory written representation promising to make such a
remittance.
1.11. EXERCISE OF OPTIONS.
(a) METHOD OF EXERCISE. Each Option shall be exercisable in
accordance with the terms of the Option Agreement pursuant to which the Option
was granted. No Option may be exercised for a fraction of a Plan Share.
(b) PAYMENT OF PURCHASE PRICE. The purchase price of any Plan
Shares purchased shall be paid at the time of exercise of the Option either (i)
in cash, (ii) by certified or cashier's check, (iii) if permitted by the
Committee, by shares of Common Stock, (iv) if permitted by the Committee, by
cash or certified or cashier's check for the par value of the Plan Shares plus a
promissory note for the balance of the purchase price, which note shall provide
for full personal liability of the maker and shall contain such terms and
provisions as the Committee may determine, including without limitation the
right to repay the note partially or wholly with Common Stock, (v) by delivery
of a copy of irrevocable instructions from the Optionee to a broker or dealer,
reasonably acceptable to the Company, to sell certain of the Plan Shares
purchased upon exercise of the Option or to pledge them as collateral for a loan
and promptly deliver to the Company the amount of sale or loan proceeds
necessary to pay such purchase price, or (vi) in any other form of valid
consideration, as permitted by the Committee in its discretion. If any portion
of the purchase price or a note given at the time of exercise is paid in shares
of Common Stock, those shares shall be valued at the then Fair Market Value.
1.12. WRITTEN NOTICE REQUIRED. Any Option shall be deemed to be
exercised for purposes of the Plan when written notice of exercise has been
received by the Company at its principal office from the person entitled to
exercise the Option and payment for the Plan Shares with respect to which the
Option is exercised has been received by the Company in accordance with Section
1.11.
1.13. COMPLIANCE WITH SECURITIES LAWS. Plan Shares shall not be issued
with respect to any Option unless the issuance and delivery of the Plan Shares
and the exercise of an Option shall comply with all relevant provisions of state
and federal law (including without limitation (i) the Securities Act and the
rules and regulations promulgated thereunder, and (ii) the requirements of any
stock exchange upon which the Plan Shares may then be listed) and shall be
further subject to the approval of counsel for the Company with respect to such
compliance. The Committee may also require a participant to furnish evidence
satisfactory to the Company, including without limitation a written and signed
representation letter and consent to be bound by any transfer restrictions
imposed by law, legend, condition, or otherwise, that the Plan Shares are being
Pag3 3
acquired only for investment and without any present intention to sell or
distribute the shares in violation of any state or federal law, rule, or
regulation. Further, each participant shall consent to the imposition of a
legend on the certificate representing the Plan Shares issued pursuant to the
exercise of an Option restricting their transfer as required by law or this
section.
1.14. EMPLOYMENT OR SERVICE OF OPTIONEE. Nothing in the Plan or in any
Option granted hereunder shall confer upon any Employee any right to continued
employment by the Company or any of its subsidiaries or affiliates or limit in
any way the right of the Company or any of its subsidiaries or affiliates at any
time to terminate or alter the terms of that employment. Nothing in the Plan or
in any Option granted hereunder shall confer upon any Nonemployee Director or
Advisor any right to continued service as a Nonemployee Director or Advisor of
the Company or any of its subsidiaries or affiliates or limit in any way the
right of the Company or any of its subsidiaries or affiliates at any time to
terminate or alter the terms of that service.
1.15. RIGHTS OF OPTIONEES UPON TERMINATION OF EMPLOYMENT OR SERVICE. In
the event an Optionee ceases to be an Employee, Nonemployee Director, or Advisor
for any reason other than death, Permanent Disability or Misconduct, unless
provided in an Option Agreement or in Article VI hereof, then, the unvested
portion of the Optionee's Option shall terminate immediately and cease to remain
outstanding and the vested portion shall immediately terminate at the beginning
of the thirty-first (31st) day following termination of Optionee's service. In
the event an Optionee ceases to serve as an Employee, Nonemployee Director, or
Advisor due to death, Permanent Disability or Misconduct, the Optionee's Options
may be exercised as follows:
(a) DEATH. Except as otherwise limited by the Committee at the
time of the grant of an Option, if an Optionee dies while serving as an
Employee, Nonemployee Director, or Advisor or within three months after ceasing
to be an Employee, Nonemployee Director, Advisor, his or her Option shall become
fully exercisable on the date of his or her death and shall expire 12 months
thereafter, unless by its terms it expires sooner or unless, with respect to a
Nonqualified Stock Option, the Committee agrees, in its sole discretion, to
further extend the term of such Nonqualified Stock Option. During such period,
the Option may be fully exercised, to the extent that it remains unexercised on
the date of death, by the Optionee's personal representative or by the
distributees to whom the Optionee's rights under the Option shall pass by will
or by the laws of descent and distribution.
(b) DISABILITY. If an Optionee ceases to serve as an Employee,
Nonemployee Director, or Advisor as a result of Permanent Disability, the
Optionee's Option shall become fully exercisable and shall expire 12 months
thereafter, unless by its terms it expires sooner or, unless, with respect to a
Nonqualified Stock Option, the Committee agrees, in its sole discretion, to
extend the term of such Nonqualified Stock Option.
(c) MISCONDUCT. Should the Optionee cease to be an Employee,
Nonemployee Director or Advisor because of Misconduct, the Optionee's Option
shall terminate whether vested or unvested immediately.
1.16. TRANSFERABILITY OF OPTIONS. Except as the Committee may otherwise
provide, Options shall not be transferable other than by will or the laws of
descent and distribution or, with respect to Nonqualified Stock Options,
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pursuant to the terms of a qualified domestic relations order as defined by the
Code or Title I of ERISA, or the rules thereunder, and, with respect to
Incentive Stock Options, may be exercised during the lifetime of an Optionee
only by that Optionee or by his or her legally authorized representative. The
designation by an Optionee of a beneficiary shall not constitute a transfer of
the Option. The Committee may, in its discretion, provide in an Option Agreement
that Nonqualified Stock Options granted hereunder may be transferred by the
Optionee to members of his or her immediate family, trusts for the benefit of
such immediate family members and partnerships in which such immediate family
members are the only partners.
1.17. INFORMATION TO PARTICIPANTS. The Company shall furnish to each
participant a copy of the annual report, proxy statements and all other reports
(if any) sent to the Company's stockholders. Upon written request, the Company
shall furnish to each participant a copy of its most recent Form 10-K Annual
Report (if any) and each quarterly report to stockholders issued (if any) since
the end of the Company's most recent fiscal year.
ARTICLE II.
ADMINISTRATION
2.1. COMMITTEE. The Plan shall be administered by a Committee, which
shall be appointed by the Board. If the Board so elects, the Plan may be
administered by different Committees with respect to different groups of
participants. The Committee shall be constituted to satisfy applicable laws.
Subject to the provisions of the Plan, the Committee shall have the sole
discretion and authority to determine from time to time the Employees,
Non-Employee Directors, and Advisors to whom Options shall be granted and the
number of Plan Shares subject to each Option, to interpret the Plan, to
prescribe, amend and rescind any rules and regulations necessary or appropriate
for the administration of the Plan, to determine and interpret the details and
provisions of each Option Agreement, to modify or amend any Option Agreement or
waive any conditions or restrictions applicable to any Options (or the exercise
thereof), and to make all other determinations necessary or advisable for the
administration of the Plan. The Board may remove any member of the Committee,
with or without cause.
2.2. MAJORITY RULE; UNANIMOUS WRITTEN CONSENT. A majority of the
members of the Committee shall constitute a quorum, and any action taken by a
majority present at a meeting at which a quorum is present or any action taken
without a meeting evidenced by a writing executed by all members of the
Committee shall constitute the action of the Committee. Meetings of the
Committee may take place by telephone conference call. 2.3. COMPANY ASSISTANCE.
The Company shall supply full and timely information to the Committee on all
matters relating to Employees, Nonemployee Directors, and Advisors, their
employment, death, Permanent Disability, or other termination of employment or
other relationship with the Company, and such other pertinent facts as the
Committee may require. The Company shall furnish the Committee with such
clerical and other assistance as is necessary in the performance of its duties.
2.4. EXCULPATION OF COMMITTEE. No member of the Committee shall be
personally liable for, and the Company shall indemnify all members of the
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Committee and hold them harmless against, any claims resulting directly or
indirectly from any action or inaction by the Committee pursuant to the Plan.
ARTICLE III.
INCENTIVE STOCK OPTIONS
3.1. TERMS AND CONDITIONS. The terms and conditions of Options granted
under this Article may differ from one another as the Committee shall, in its
discretion, determine, as long as all Options granted under this Article satisfy
the requirements of this Article.
3.2. DURATION OF OPTIONS. Each Option granted pursuant to this Article
and all rights thereunder shall expire on the date determined by the Committee,
but in no event shall any Option granted under this Article expire earlier than
one year or later than 10 years after the date on which the Option is granted.
In addition, each Option shall be subject to early termination as provided
elsewhere in the Plan.
3.3. PURCHASE PRICE. The purchase price for Plan Shares acquired
pursuant to the exercise, in whole or in part, of any Option granted under this
Article shall not be less than the Fair Market Value of the Plan Shares at the
time of the grant of the Option; provided, however, in the event of the grant of
any Option to an individual who, at the time the Option is granted, owns shares
of stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company or any subsidiary or affiliate thereof within
the meaning of Section 422 of the Code, the purchase price for the Plan Shares
subject to that Option must be at least 110% of the Fair Market Value of those
Plan Shares at the time the Option is granted and the Option must not be
exercisable after the expiration of five years from the date of its grant.
3.4. MAXIMUM AMOUNT OF OPTIONS FIRST EXERCISABLE IN ANY CALENDAR YEAR.
The aggregate Fair Market Value of Plan Shares (determined at the time the
Option is granted) with respect to which Options issued under this Article are
exercisable for the first time by any Employee during any calendar year under
all incentive stock option plans of the Company and its Subsidiaries and
affiliates shall not exceed $100,000. Any portion of an Option granted under the
Plan in excess of the foregoing limit shall be considered granted pursuant to
Article IV.
3.5. INDIVIDUAL OPTION AGREEMENTS. Each Employee receiving Options
pursuant to this Article shall be required to enter into a written Option
Agreement with the Company. In such Option Agreement, the Employee shall agree
to be bound by the terms and conditions of the Plan, the Options made pursuant
hereto, and such other matters as the Committee deems appropriate.
ARTICLE IV.
NONQUALIFIED STOCK OPTIONS
4.1. OPTION TERMS AND CONDITIONS. The terms and conditions of Options
granted under this Article may differ from one another as the Committee shall,
in its discretion, determine as long as all Options granted under this Article
satisfy the requirements of this Article.
Page 6
4.2. DURATION OF OPTIONS. Each Option granted pursuant to this Article
and all rights thereunder shall expire on the date determined by the Committee.
In addition, each Option shall be subject to early termination as provided
elsewhere in the Plan.
4.3. PURCHASE PRICE. The purchase price for the Plan Shares acquired
pursuant to the exercise, in whole or in part, of any Option granted under this
Article shall not be less than the Fair Market Value of the Plan Shares at the
time of the grant of the Option.
4.4. INDIVIDUAL OPTION AGREEMENTS. Each Optionee receiving Options
pursuant to this Article shall be required to enter into a written Option
Agreement with the Company. In such Option Agreement, the Optionee shall agree
to be bound by the terms and conditions of the Plan, the Options made pursuant
hereto, and such other matters as the Committee deems appropriate.
ARTICLE V.
TERMINATION, AMENDMENT, AND ADJUSTMENT
5.1. TERMINATION AND AMENDMENT. The Plan shall terminate with respect
to Incentive Stock Options on the date that is ten years after the Effective
Date and with respect to Nonqualified Stock Options on the date that is fifty
years after the Effective Date. No Option shall be granted under the Plan after
the respective date of termination. Subject to the limitations contained in this
section, the Committee may at any time amend or revise the terms of the Plan,
including the form and substance of the Option Agreements to be used in
connection herewith; provided that no amendment or revision may be made without
the approval of the stockholders of the Company if such approval is required
under the Code, Rule 16b-3, or any other applicable law or rule. No amendment,
suspension, or termination of the Plan shall, without the consent of the
individual who has received an Option, alter or impair any of that individual's
rights or obligations under any Option granted under the Plan prior to that
amendment, suspension, or termination.
5.2. ADJUSTMENTS. If the outstanding Common Stock is increased,
decreased, changed into, or exchanged for a different number or kind of shares
or securities through merger, consolidation, combination, exchange of shares,
other reorganization, recapitalization, reclassification, stock dividend, stock
split, reverse stock split or any other increase, or decrease in the number of
issued shares of Common Stock effected without receipt of consideration by the
Company (but not including conversion of convertible securities issued by the
Company), an appropriate and proportionate adjustment shall be made in the
maximum number and kind of Plan Shares as to which Options may be granted under
the Plan. A corresponding adjustment changing the number or kind of shares
allocated to unexercised Options or portions thereof that shall have been
granted prior to any such change shall likewise be made. Any such adjustment in
outstanding Options shall be made without change in the aggregate purchase price
applicable to the unexercised portion of the Options, but with a corresponding
adjustment in the price for each share covered by the Options. The foregoing
adjustments and the manner of application of the foregoing provisions shall be
determined solely by the Committee, and any such adjustment may provide for the
elimination of fractional share interests.
Page 7
ARTICLE VI.
CORPORATE TRANSACTIONS;
CHANGES IN CAPITALIZATION; DISSOLUTION
6.1. CORPORATE TRANSACTIONS. In the event of any Corporate Transaction,
each outstanding option shall automatically accelerate so that each such option
shall, immediately prior to the effective date of Corporate Transaction, become
fully exercisable for all of the shares of Common Stock at the time subject to
such option and may be exercised for any or all of those shares as fully-vested
shares of Common Stock. However, an outstanding Option shall not so accelerate
if and to the extent: (i) such Option is, in connection with the Corporate
Transaction, either to be assumed by the successor corporation (or parent
thereof) or to be replaced with a comparable Option to purchase shares of the
capital stock of the successor corporation (or parent thereof), (ii) such Option
is to be replaced with a cash incentive program of the successor corporation
which preserves the spread existing on the unvested Option shares at the time of
the Corporate Transaction and provides for subsequent payout in accordance with
the same vesting schedule applicable to such option or (iii) the acceleration of
such Option is subject to other limitations imposed by the Committee at the time
of the option grant. The determination of option comparability under clause (i)
above shall be made by the Committee, and its determination shall be final,
binding and conclusive.
6.2. TERMINATION. Immediately following the consummation of the
Corporate Transaction, all outstanding Options shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation (or
parent thereof) as provided in this Section VI.
6.3. ASSUMPTION. Each Option which is assumed in connection with the
Corporate Transaction shall be appropriately adjusted, immediately after such
Corporate Transaction, to apply to the number and class of securities which
would have been issuable to the Optionee in consummation of such Corporate
Transaction had the option been exercised immediately prior to such Corporate
Transaction. Appropriate adjustments to reflect such Corporate Transaction shall
also be made to (i) the number and class of securities available for issuance
under the Plan following consummation of such Corporate Transaction and (ii) the
exercise price payable per share under each outstanding Option, provided the
aggregate exercise price payable for such securities shall remain the same.
6.4. SUBSEQUENT TERMINATION. The Committee shall have the discretion,
exercisable at the time the Option is granted or at any time while the Option
remains outstanding, to provide that any Options which are assumed or replaced
in the Corporate Transaction and do not otherwise accelerate at that time shall
automatically accelerate in the event the Optionee's Service should subsequently
terminate by reason of an involuntary termination within eighteen (18) months
following the effective date of such Corporate Transaction. Any Options so
accelerated shall remain exercisable for fully-vested shares until the earlier
of (i) the expiration of the option term or (ii) the expiration of the one
(1)-year period measured from the effective date of the involuntary termination.
6.5. AUTOMATIC ACCELERATION. The Committee shall have the discretion,
exercisable either at the time the Option is granted or at any time while the
option remains outstanding to provide for the automatic acceleration of one or
Page 8
more outstanding Options upon the occurrence of a Corporate Transaction, whether
or not those Options are to be assumed or replaced (or those repurchase rights
are to be assigned) in the Corporation Transaction.
6.6. ACCELERATION OF INCENTIVE OPTIONS. The portion of any Incentive
Option accelerated in connection with a Corporate Transaction shall remain
exercisable as an Incentive Option only to the extent the applicable One Hundred
Thousand Dollars ($100,000) limitation is not exceeded. To the extent such
dollar limitation is exceeded, the accelerated portion of such option shall be
exercisable as a Non-Statutory Option under the Federal tax laws.
6.7. NO LIMITATION ON ACTIONS. The grant of Options under the Plan
shall in no way affect the right of the Company to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.
6.8. DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for an Optionee to
have the right to exercise his or her Option until ten (10) days prior to such
transaction as to all of the Optioned Stock covered thereby, including Shares as
to which the Option would not otherwise be exercisable. In addition, the
Administrator may provide that any Company repurchase option applicable to any
Shares purchased upon exercise of an Option shall lapse as to all such Shares,
provided the proposed dissolution or liquidation takes place at the time and in
the manner contemplated. To the extent it has not been previously exercised, an
Option will terminate immediately prior to the consummation of such proposed
action.
ARTICLE VII.
MISCELLANEOUS
7.1. OTHER COMPENSATION PLANS. The adoption of the Plan shall not
affect any other stock option or incentive or other compensation plans in effect
for the Company or any subsidiary or affiliate of the Company, nor shall the
Plan preclude the Company or any subsidiary or affiliate thereof from
establishing any other forms of incentive or other compensation plans.
7.2. PLAN BINDING ON SUCCESSORS. The Plan shall be binding upon the
successors and assigns of the Company and any subsidiary or affiliate of the
Company that adopts the Plan.
7.3. NUMBER AND GENDER. Whenever used herein, nouns in the singular
shall include the plural where appropriate, and the masculine pronoun shall
include the feminine gender.
7.4. HEADINGS. Headings of articles and sections hereof are inserted
for convenience of reference and constitute no part of the Plan.
7.5. STOCKHOLDER RIGHTS. The holder of an option shall have no
stockholder rights with respect to the shares subject to the option until such
person shall have exercised the option, paid the exercise price and become a
holder of record of the purchased shares.
Page 9
7.6. MARKET STAND-OFF. In connection with any underwritten public
offering by the Corporation of its equity securities pursuant to an effective
registration statement filed under the Securities Act of 1933, the Optionee may
not sell, make any short sale of, loan, hypothecate, pledge, grant any option
for the purchase of, or otherwise dispose or transfer for value or otherwise
agree to engage in any of the foregoing transactions with respect to, any shares
of Common Stock acquired upon exercise of an option granted under the Plan
without the prior written consent of the Corporation or its underwriters. Such
restriction (the "Market Stand-Off") shall be in effect for such period of time
from and after the effective date of the final prospectus for the offering as
may be required to execute such agreements as the Corporation or the
underwriters request in connection with the Market Stand-Off.
ARTICLE VIII.
DEFINITIONS
As used herein with initial capital letters, the following terms have
the meanings hereinafter set forth unless the context clearly indicates to the
contrary:
8.1. "Advisor" means any individual performing substantial bona
fide services for the Company or any subsidiary or affiliate of the Company that
has adopted the Plan who is not an Employee or a Director.
8.2. "Applicable Laws" means the requirements relating to the
administration of stock option plans under U.S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options are, or will be, granted under
the Plan.
8.3. "Board" means the Board of Directors of the Company.
8.4. "Code" means the Internal Revenue Code of 1986, as amended.
8.5. "Committee" means the Committee appointed in accordance with
Section 2.1.
8.6. "Common Stock" means the Common Stock, par value $.001 per
share, of the Company or, in the event that the outstanding shares of such
Common Stock are hereafter changed into or exchanged for shares of a different
stock or security of the Company or some other corporation, such other stock or
security.
8.7. "Company" means Cytogenix, Inc., a Nevada corporation.
8.8. "Corporate Transaction" means either of the following
stockholder-approved transactions to which the Company is a party:
(i). a merger or consolidation in which securities possessing
more than fifty percent (50%) of the total combined voting power of the
Company's outstanding securities are transferred to a person or person
different from the persons holding those securities immediately prior
to such transaction, or
Page 10
(ii). the sale, transfer or other disposition of all or
substantially all of the Company's assets in complete liquidation or
dissolution of the Company.
8.9. "Director" means a member of the Board.
8.10. "Effective Date" means June 24, 2003.
8.11. "Employee" means an employee (as defined in Section 3401(c) of
the Code and the regulations thereunder) of the Company or of any subsidiary or
affiliate of the Company that adopts the Plan, including Officers.
8.12. "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
8.13. "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
8.14. "Fair Market Value" means such value as determined by the
Committee on the basis of such factors as it deems appropriate; provided that if
the Common Stock is traded on a national securities exchange or transactions in
the Common Stock are quoted on the Nasdaq National Market System, such value as
shall be determined by the Committee on the basis of the reported sales prices
for the Common Stock on the date for which such determination is relevant, as
reported on the national securities exchange or the Nasdaq National Market
System, as the case may be. If the Common Stock is not listed and traded upon a
recognized securities exchange or on the Nasdaq National Market System, the
Committee shall make a determination of Fair Market Value on a reasonable basis,
which may include the mean between the closing bid and asked quotations for such
stock on the date for which such determination is relevant (as reported by a
recognized stock quotation service) or, in the event that there shall be no bid
or asked quotations on the date for which such determination is relevant, then
on the basis of the mean between the closing bid and asked quotations on the
date nearest preceding the date for which such determination is relevant for
which such bid and asked quotations were available.
8.15. "Incentive Stock Option" means an Option granted pursuant to
Article III.
8.16. "Misconduct" means the commission of any act of fraud,
embezzlement or dishonesty by the Optionee, any unauthorized use or disclosure
by such person of confidential information or trade secrets of the Company, or
any other intentional misconduct or negligence by such person adversely
affecting the business or affairs of the Company in a material manner. The
foregoing definition shall not be deemed to be inclusive of all the acts or
omissions which the Company may consider as grounds for the dismissal or
discharge of any Optionee or other person in the service of the Company.
8.17. "Nonemployee Director" means a member of the Board who is not
an Officer or Employee; provided that, as used in Section 2.1, the term
"Non-Employee Director" shall have the meaning provided in that section.
8.18. "Nonqualified Stock Option" means an Option granted pursuant
to Article IV.
Page 11
8.19. "Officer" means an officer of the Company or of any subsidiary
or affiliate of the Company.
8.20. "Option" means an Incentive Stock Option or a Nonqualified
Stock Option.
8.21. "Optionee" means an Employee, Nonemployee Director, or Advisor
to whom an Option has been granted hereunder.
8.22. "Option Agreement" means an agreement between the Company and
an Optionee with respect to one or more Options.
8.23. "Permanent Disability" has the same meaning as that provided
in Section 22(e)(3) of the Code.
8.24. "Plan" means the Cytogenix Stock Option Plan, as amended from
time to time.
8.25. "Plan Shares" means shares of Common Stock issuable pursuant
to the Plan.
8.26. "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange
Act or any successor rule.
8.27. "Securities Act" means the Securities Act of 1933, as amended.
8.28. "Tax Date" means the date on which the amount of tax to be
withheld is determined.
Page 12
EXHIBIT A
CYTOGENIX, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING TO BE HELD FEBRUARY 3, 2003
P The proxies are directed to vote as specified below and in their
discretion on all other matters coming before the meeting. If no
direction is made, the proxy will vote FOR all nominees listed below
and the approval of independent auditors. This proxy is solicited by
the Board of Directors.
1. RATIFICATION OF AMENDMENT TO ARTICLES OF INCORPORATION FILED ON
MARCH 7, 2001 WITH THE SECRETARY OF STATE OF NEVADA TO INCREASE
AUTHORIZED SHARES OF COMMON STOCK FROM 50,000,000 TO 150,000,000
SHARES.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
R 2. ELECTION OF DIRECTORS - Malcolm H. Skolnick, Lawrence Wunderlich,
Frank Vazquez, Scott E. Parazynski, Cy A. Stein, John J. Rossi
and Raymond L. Ocampo.
[ ] Vote FOR from all nominees listed above, except vote
withheld from (to withhold authority to vote for any
individual nominee, write in the names on the line
below:)
O
-----------------------------------------------------------------
[ ] Vote WITHHELD from all nominees
X 3. APPROVAL OF AN AMENDMENT TO THE ARTICLES OF INCORPORATION TO
INCREASE THE NUMBER OF SHARES OF COMMON STOCK THE COMPANY HAS THE
AUTHORITY TO ISSUE BY 150,000,000, FROM 150,000,000 TO
300,000,000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. APPROVAL OF AN AMENDMENT TO THE ARTICLES OF INCORPORATION TO CREATE
AN AUTHORIZED CLASS OF 50,000,000 SHARES OF PREFERRED STOCK.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. APPROVAL OF THE COMPANY'S STOCK OPTION PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Y 6. APPROVAL OF INDEPENDENT AUDITORS.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
[ ] I plan to attend the meeting.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY, USING THE ENCLOSED ENVELOPE.
B-1
EXHIBIT A
CYTOGENIX, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING TO BE HELD FEBRUARY 3, 2003
The undersigned appoints Frank Vazquez and Lawrence Wunderlich, and each of
them, as attorneys and proxies of the undersigned, with power of substitution,
to represent the undersigned at the Annual Meeting of Shareholders of CytoGenix,
Inc. (the "Company") to be held February 3, 2004, and at any adjournment
thereof, and to vote all shares of Common Stock of the Company which the
undersigned is entitled to vote on all matters coming before said meeting.
Dated: , 2004
------------------
-----------------------------------
Signature
-----------------------------------
Signature if held jointly
THIS PROXY MUST BE SIGNED EXACTLY AS NAME APPEARS
HEREON. Executors, administrators, trustees, etc., should
give full title as such. If the signer is a corporation,
please sign full corporate name by duly authorized officer.
If signer is a partnership, please sign partnership name by
authorized person.
B-2