exhibit10one.htm


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    SETTLEMENT AGREEMENT AND
MUTUAL RELEASE

    


    This Settlement Agreement and Mutual
Release ("Agreement"), effective June 30, 2008,  is by and among Frank
Vazquez (“Vazquez”) and Lawrence Wunderlich (“Wunderlich”) (collectively,
“Claimants”), and CytoGenix, Inc. (“CytoGenix”).

    WHEREAS, on November 17, 2006,
Claimants resigned as officers, directors and employees of CytoGenix;
and

    WHEREAS, on December 4, 2006, Claimants
filed an arbitration against CytoGenix under No. 70 144 08333 06, styled Frank Vazquez and Lawrence
Wunderlich v. CytoGenix, Inc., before the American Arbitration
Association in Houston, Texas, alleging certain claims relating to Claimants’
employment with CytoGenix, including the Claimants’ rights and obligations under
their employment agreements with CytoGenix (the “Arbitration”); and

    WHEREAS, on January 24, 2007,
Wunderlich filed a complaint against CytoGenix with the Department of Labor,
Case No. 6-3280-07-905, alleging that CytoGenix retaliated against him in
violation of the Sarbanes-Oxley Act of 2002 (the “SOX Complaint”);
and

    WHEREAS, bona fide disputes and
controversies exist between the parties as to the claims asserted, or which
could have been asserted, in the Arbitration and the SOX Complaint, and because
liability and the extent of damages are uncertain, unliquidated, disputed and
denied, the parties hereto, in an effort to end these disputes and avoid further
controversy, expense and delay, desire to settle and compromise the claims
asserted, or that could have been asserted, in the Arbitration and the SOX
Complaint.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    NOW, THEREFORE, for and in
consideration of the mutual obligations and promises herein contained, and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:

    1. CytoGenix shall pay $150,000 each to
Vazquez and Wunderlich in equal monthly installments ($3,125 per month to each
Claimant) over a four year period commencing October 1, 2008.  Each
monthly payment shall be made by check payable to each Claimant in the amount of
$3,125 and mailed to Claimants at their home addresses and postmarked on or
before the first of each month.  CYTOGENIX HEREBY AFFIRMATIVELY STATES
THAT IT DOES NOT CURRENTLY POSSESS A SUFFICIENT AMOUNT OF CASH TO MAKE ALL SUCH
PAYMENTS.

    2. Within three (3) business days of the
execution and delivery of this Agreement by Claimants, CytoGenix shall issue
non-callable warrants to purchase 2,000,000 shares of CytoGenix Section 144
restricted common stock to Vazquez and non-callable warrants to purchase
3,200,000 shares of CytoGenix Section 144 restricted common stock to Wunderlich,
in substantially the form attached as Exhibit A hereto, in the following
amounts:

    
      	
               
      

            	
              a.

            	
              one-third
      of said warrants (666,666 warrants for Vazquez and 1,066,666 warrants for
      Wunderlich) shall be issued with an exercise price of $0.05 per
      share;

            


    

    


    
      	
               
      

            	
              b.

            	
              one-third
      of said warrants (666,667 warrants for Vazquez and 1,066,667 warrants for
      Wunderlich) shall be issued with an exercise price of $0.10 per share;
      and

            


    

    


    
      	
               
      

            	
              c.

            	
              one-third
      of said warrants (666,667 warrants for Vazquez and 1,066,667 warrants for
      Wunderlich) shall be issued with an exercise price of $0.15 per
      share.

            


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    CYTOGENIX
HEREBY AFFIRMATIVELY STATES THAT IT DOES NOT CURRENTLY POSSESS SUFFICIENT
WORKING CAPITAL TO SUPPORT THE VALUE OF THE WARRANTS TO BE ISSUED HEREUNDER AND
THE BUSINESS OPERATIONS OF CYTOGENIX THROUGH DECEMBER 31, 2008, AND THAT SUCH
WARRANTS MAY BE DEEMED WORTHLESS BOTH AS OF THE EFFECTIVE DATE OF THIS AGREEMENT
AND/OR AT SOME TIME IN THE FUTURE.

    3. In the event CytoGenix fails to timely
make any of the payments or issue the warrants as set forth above, CytoGenix
shall have fifteen (15) days to cure any alleged default.  If
CytoGenix fails to cure any defaults within the cure period, Claimants shall be
entitled to accelerate, at their discretion, the payment of all remaining
installments and demand payment in full, and may also submit an agreed
arbitration award to Judge Ruby Sondock, as arbitrator, in the form of Exhibit B
attached hereto (the “Agreed Arbitration Award”). CytoGenix shall cooperate and
not oppose any efforts by Claimants to enforce and execute upon the Agreed
Arbitration Award.  CytoGenix shall not withdraw its consent to the
Agreed Arbitration Award at any time.  To the extent permitted by law,
no final judgment of any court of law shall be required to execute upon the
Agreed Arbitration Award.  In the event that a court judgment is
necessary, CytoGenix agrees to cooperate and not oppose the entry of such
judgment.

    4. Upon execution of this Agreement by all
parties, the Arbitration shall be dismissed with prejudice.

    5. Upon execution of this Agreement by all
parties, if not sooner, the SOX Complaint shall be dismissed with
prejudice.  The parties acknowledge that this Agreement
must


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    be
submitted to and approved by the Department of Labor prior to its execution and
effectiveness.

    6.                                
CytoGenix and the Claimants shall each be responsible for their own attorneys’
fees and costs.

    7. Vazquez, his heirs, executors,
administrators, attorneys, successors and assigns, as well as any person or
entity claiming by, through or under any of the foregoing, hereby RELEASE,
ACQUIT AND FOREVER DISCHARGE CytoGenix, its current and former officers,
directors, employees, shareholders, agents, legal representatives, attorneys,
successors and assigns, from any and all claims, causes of action, suits,
damages (actual, compensatory, exemplary or punitive), debts, obligations,
benefits, wages, bonuses, compensation, back pay, front pay, vacation pay, sick
pay, medical bills and expenses, and demands, of any kind, nature or description
whatsoever, whether known or unknown, whether at law or in equity, in contract
or in tort (including but not limited to claims for wrongful discharge,
discrimination, retaliation, interference with protected rights, interference
with present or prospective contractual relations, breach of contract,
defamation, invasion of privacy, intentional or negligent infliction of
emotional distress, fraud, misrepresentation, personal injury, negligence,
intentional conduct, misconduct or interference with present or prospective
business relations or contracts), arising under federal or state statutory or
common law (including but not limited to the Sarbanes-Oxley Act of 2002, § 8307c
of the Texas Workers Compensation Act, Title VII of the Civil Rights Act of 1964
as amended, Civil Rights Act of 1866 and 1871, Employee Retirement Income
Security Act of 1974 as amended, Equal Pay Act of 1963, Age Discrimination in
Employment Act, Fair


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     Labor
Standards Act, Civil Rights Act of 1991, Americans with Disabilities Act,
Rehabilitation Act of 1974 as amended, and Texas Commission on Human Rights Act)
relating to or arising out of the employment relationship between the parties,
as well as the matters that were asserted, or could have been asserted, in the
Arbitration and the SOX Complaint.  This release applies to all claims
and causes of action that exist or could have been asserted on or before the
effective date of this Agreement.

    8. Wunderlich, his heirs, executors,
administrators, attorneys, successors and assigns, as well as any person or
entity claiming by, through or under any of the foregoing, hereby RELEASE,
ACQUIT AND FOREVER DISCHARGE CytoGenix, its current and former officers,
directors, employees, shareholders, agents, legal representatives, attorneys,
successors and assigns, from any and all claims, causes of action, suits,
damages (actual, compensatory, exemplary or punitive), debts, obligations,
benefits, wages, bonuses, compensation, back pay, front pay, vacation pay, sick
pay, medical bills and expenses, and demands, of any kind, nature or description
whatsoever, whether known or unknown, whether at law or in equity, in contract
or in tort (including but not limited to claims for wrongful discharge,
discrimination, retaliation, interference with protected rights, interference
with present or prospective contractual relations, breach of contract,
defamation, invasion of privacy, intentional or negligent infliction of
emotional distress, fraud, misrepresentation, personal injury, negligence,
intentional conduct, misconduct or interference with present or prospective
business relations or contracts), arising under federal or state statutory or
common law (including but not limited to the Sarbanes-Oxley Act of 2002, § 8307c
of the Texas Workers Compensation Act, Title VII of the Civil Rights
Act


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    of 1964
as amended, Civil Rights Act of 1866 and 1871, Employee Retirement Income
Security Act of 1974 as amended, Equal Pay Act of 1963, Age Discrimination in
Employment Act, Fair Labor Standards Act, Civil Rights Act of 1991, Americans
with Disabilities Act, Rehabilitation Act of 1974 as amended, and Texas
Commission on Human Rights Act) relating to or arising out of the employment
relationship between the parties, as well as the matters that were asserted, or
could have been asserted, in the Arbitration and the SOX
Complaint.  This release applies to all claims and causes of action
that exist or could have been asserted on or before the effective date of this
Agreement.

    9. CytoGenix, its current and former
officers, directors, employees, shareholders, agents, legal representatives,
attorneys, successors and assigns, as well as any person or entity claiming by,
through or under any of the foregoing, hereby RELEASE, ACQUIT AND FOREVER
DISCHARGE Vazquez and Wunderlich, their respective heirs, executors,
administrators, attorneys, successors and assigns, from any and all claims and
causes of action whatsoever, whether known or unknown, at law, in equity,
statutory or otherwise, including, without limitation, all claims and causes of
action relating to or arising out of the employment relationship between the
parties, as well as the matters that were asserted, or could have been asserted,
in the Arbitration and SOX Complaint.  This release applies to all
claims and causes of action that exist or could have been asserted on or before
the effective date of this Agreement.

    10. None of the releases set forth herein
are intended to release any of the rights and obligations established by this
Agreement.  The rights duties and obligations set forth
herein


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    shall
survive the dismissal of the Arbitration and SOX Complaint and survive the
release of claims set forth herein.

    11.                       The
parties hereto acknowledge that this Agreement is being made by each party of
its own free choice, without any inducement offered in any way other than the
express agreements contained in this Agreement.  Each party warrants
and represents that no promise, agreement, representation, inducement or
condition not set forth in this Agreement has been made or relied upon by said
party in executing this Agreement. The parties further state that in entering
into this Agreement, each party has been advised by an attorney of that party’s
choice and selection, and has had the opportunity to consult with such attorney
regarding the benefits and detriments of entering into this
Agreement.

    12. This Agreement contains the full and
complete agreement of the parties hereto, and all prior negotiations and
agreements pertaining to the subject matter hereof are merged into and
superseded by this Agreement.  No change, amendment, waiver or
discharge of any provision of all or any part of this Agreement shall be valid
unless such change, amendment, waiver or discharge is in writing and duly
executed by all parties to this Agreement, or their authorized
agents.

    13. The parties hereto warrant and
represent that none of them has sold, assigned, granted, or otherwise
transferred to anyone not a party hereto any right, privilege, claim or cause of
action,  or any part thereof, arising out of or otherwise connected
with the subject matter of this Agreement.

    14. This Agreement is entered into and is
performable in Harris County, Texas, and


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    shall be
governed by, construed, interpreted, and enforced in accordance with the laws of
the State of Texas.

    15. Any controversy or claim (whether such
claim arises in contract, tort, or otherwise) arising out of or relating to this
Agreement, or the breach thereof, or the commercial or economic relationship of
the parties hereto, shall be submitted to binding arbitration in accordance with
the rules and procedures of the American Arbitration
Association.  Notwithstanding the preceding sentence, Claimants shall
be entitled to submit and enforce the Agreed Arbitration Award in accordance
with paragraph 3 without complying with this paragraph 15.  The
arbitration shall be conducted by a single arbitrator and the place of
arbitration shall be in Houston, Texas.  A judgment upon the award
rendered by the arbitrator may be entered by any court having jurisdiction
thereof.  Unless the parties otherwise agree, the arbitration will be
governed by the Commercial Arbitration Rules of the American Arbitration
Association.

    16. The persons signing this Agreement on
behalf of any of the parties hereto hereby warrant and represent that they are
authorized to sign this Agreement on behalf of themselves or their respective
entities and that such persons have the power to bind themselves and/or their
respective entities.

    17. This Agreement is a result of
substantial negotiations between the parties and their
counsel.  Accordingly, the fact that counsel for one party or another
drafted this Agreement shall not be material to the interpretation of this
Agreement.

    18. All parties to this Agreement have read
the Agreement and fully understand and


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    comprehend
its meaning and binding effect.

    19. If any portion of this Agreement is
found to be null, void or unenforceable, the remainder of this Agreement shall
remain in full force and effect and be severable.

    20. This Agreement shall be effective upon
full execution and delivery of the Agreement by each of the parties
hereto.  This Agreement may be executed by fax, and in multiple
counterparts or copies, each of which shall be deemed to be an original for all
purposes.

     

     

                   
CYTOGENIX, INC.

    


    


    Date:
___________                                                                           By:_______________________________________

    Malcolm
Skolnick

    President
and CEO

    


    
      	
              Date:
      ___________

            	
              __________________________________________

            


    

                  
Frank Vazquez

    


    
      	
              Date:
      ___________

            	
              __________________________________________

            


    

    
      	
               
      

            	
              Lawrence
      Wunderlich

            


    

    


    


    


    


    


    


    
      	
              APPROVED:

            


    

    


    
      	
              THE
      UNITED STATES DEPARTMENT OF LABOR

            


    

    


    


    
      	
              By:__________________________________

            	
              Date:_______________________________

            


    

    


    
      	
              Title:_________________________________

            


    

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    CYTOGENIX,
INC.

     

    


     

    WARRANT TO PURCHASE COMMON
STOCK

     

    


     

    JUNE
_____, 2008

     

    FOR VALUE
RECEIVED, CYTOGENIX, INC., a Nevada corporation (the Company), hereby certifies
that ____________________________________ (the Holder), is entitled, subject to
the provisions of this warrant (the “Warrant”), to purchase from
the Company, at any time, or from time to time during the period commencing on
the day hereof and expiring at 5:00 p.m. Houston, Texas time on June ____, 2011
(the “Exercise Period”),
_____________ shares of common stock, par value $0.001 per share, of the Company
(the “Common Stock”), at
a price equal to $0.0___ per share (such exercise price per share, as it may be
adjusted as set out herein, being hereinafter referred to as the “Exercise Price”).

     

    The
number of shares of Common Stock that may be purchased upon the exercise of this
Warrant set forth above may be adjusted from time to time as hereinafter set
forth.  The shares of Common Stock purchasable upon such exercise, as
adjusted from time to time, are hereinafter sometimes referred to as the “Warrant Shares.”

     

    Upon
receipt by the Company of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of this Warrant, and (in the case of loss,
theft or destruction) of reasonably satisfactory indemnification, and upon
surrender and cancellation of this Warrant, if mutilated, the Company shall
execute and deliver a new Warrant of like tenor and date.

     

    The
Holder agrees with the Company that this Warrant is issued, and all the rights
hereunder shall be held, subject to all of the conditions, limitations and
provisions set forth herein.

     

    1.     
Exercise of
Warrant.  This Warrant may be exercised at any time, or from
time to time, during the Exercise Period, in whole or in part.  This
Warrant shall be exercised by presentation and surrender hereof to the Company
at its principal office with the Warrant Exercise Form attached hereto duly
executed and accompanied by payment (either in cash or by certified or official
bank check, payable to the order of the Company) of the Exercise Price for the
number of Warrant Shares specified in such Form and instruments of transfer, if
appropriate, duly executed by the Holder.  If this Warrant should be
exercised in part only, the Company shall, upon surrender of this Warrant for
cancellation, execute and deliver a new Warrant evidencing the rights of the
Holder thereof to purchase the balance of the Warrant Shares.  Upon
receipt by the Company of this Warrant, together with the Exercise Price, at its
office in proper form for exercise, the Holder shall be deemed to be the holder
of record of the Warrant Shares issuable upon such exercise, notwithstanding
that certificates representing such Warrant Shares, if any, shall not then be
actually delivered to the Holder.

     

    2.     
Reservation of
Shares.  The Company will at all times reserve for issuance and
delivery upon exercise of this Warrant all shares of Common Stock or other
shares of capital stock of the Company (and other securities) from time to time
receivable upon exercise of this Warrant.

     

    EXHIBIT
A

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    All such
shares (and other securities) shall be duly authorized and, when issued upon
such exercise, shall be validly issued, fully paid and nonassessable and free of
all taxes, liens and charges in respect thereof.  The Company shall
endeavor to comply with all securities laws regulating the offer and delivery of
Warrant Shares upon exercise of this Warrant.

     

    3.     
Absence of Registration
under Securities Act of 1933; Restrictions on Transferability. The shares
of Common Stock are not presently, and upon their issuance will not be,
registered under the Securities Act of 1933, as amended (the “Act”) or any state securities
laws.  The Holder acknowledges that this Warrant was issued in a
transaction that is intended to be exempt from the registration requirements of
the Act and applicable state securities laws and must be held by the Holder and
may not be resold unless subsequently registered under the Act and any
applicable state securities laws or an exemption from such registration is
available. The Holder, by its acceptance hereof, agrees to indemnify and hold
the Company harmless against loss or liability arising from the transfer of the
shares of Common Stock or this Warrant or any interest therein in violation of
the Act or any applicable state securities laws.

     

    4.     
Exchange, Transfers,
Assignment of Warrant.  Subject to Section 3, this Warrant may
be sold, exchanged, transferred, pledged or assigned, in whole or in
part.  Upon such event and upon surrender of this Warrant to the
Company or at the office of its stock transfer agent, if any, with the
Assignment Form annexed hereto duly executed and funds sufficient to pay any
transfer tax, the Company shall, without charge, execute and deliver a new
Warrant in the name of the assignee named in such instrument of assignment and
this Warrant shall promptly be canceled; provided, that, should this Warrant be
sold, exchanged, transferred, pledged or assigned in part, the Company shall
also execute and deliver a new Warrant in the name of the Holder representing
the part of this Warrant not sold, exchanged, transferred, pledged or
assigned.

     

    5.     
Rights of the
Holder.  The Holder shall not, by virtue hereof, be entitled to
any rights as a shareholder of the Company, either at law or in equity, and the
rights of the Holder are limited to those set forth in this
Warrant.

     

    6.     
Special Agreements of the
Company.  If the shares of Common Stock are listed on a stock
exchange, the Company covenants and agrees to use its commercially reasonable
efforts to procure at its sole expense the listing of all Warrant Shares
(subject to issuance or notice of issuance) on all stock exchanges on which the
Common Stock are then listed and maintain the listing of such shares and other
securities after issuance.

     

    7.     
Antidilution
Provisions.  As of June 30, 2008, the Company has ____________
fully diluted shares of Common Stock outstanding.  For purposes of the
preceding sentence, “fully diluted” equals the number of shares outstanding that
would be used to calculate fully diluted earnings (loss) per share pursuant to
generally accepted accounting principles.  The number and kind of
shares of Common Stock purchasable upon the exercise of this Warrant and the
Exercise Price shall be subject to adjustment from time to time as
follows:

     

    7.1     
Stock
Dividends.  If and whenever at any time the Company shall
declare a dividend or make any other distribution upon the shares of Common
Stock payable in shares of Common Stock or securities directly or indirectly
convertible into or exercisable for Common Stock, the number of shares of Common
Stock for which this Warrant is exercisable and the

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

     Exercise
Price shall be proportionately adjusted to reflect the issuance of any such
securities issuable in payment of such dividend or distribution.

     

    7.2     
Subdivision or Combination of Common
Stock.  If and whenever the Company shall at any time subdivide
its outstanding shares of Common Stock into a greater number of shares, the
Exercise Price in effect immediately prior to such subdivision shall be
proportionately reduced, and conversely, in case the outstanding shares of
Common Stock shall be combined into a smaller number of shares, the Exercise
Price in effect immediately prior to such combination shall be proportionately
increased.  Upon each adjustment of the Exercise Price, the holder of
this Warrant shall thereafter be entitled to purchase at the Exercise Price
resulting from such adjustment, the number of shares obtained by dividing (a)
the product of (y) the number of shares purchasable pursuant hereto immediately
prior to such adjustment and (z) the Exercise Price immediately preceding such
adjustment by (b) the Exercise Price resulting from such
adjustment.  Each such adjustment of the Exercise Price shall become
effective immediately after the opening of business on the day following the day
upon which such subdivision or combination becomes effective.

     

    7.3     
Distributions. In case the
Company shall, by dividend or otherwise, distribute to all holders of its Common
Stock (a) evidences of its indebtedness or (b) shares of any class of capital
stock, cash or other assets (excluding any dividend or distribution for which an
adjustment has been made under Sections 7.1 or 7.2 above), then in each case,
the Holder of this Warrant shall be entitled to receive upon exercise of this
Warrant for each Warrant Share for which this Warrant is exercised the evidence
of indebtedness or such shares of any class of capital stock, cash or other
assets to which a holder of Common Stock deliverable on exercise would have been
entitled had such exercise occurred immediately prior to the date fixed for the
determination of holders of Common Stock entitled to receive such
distribution.

     

    7.4     
Recapitalizations.  If
at any time or from time to time there shall be any capital reorganization or
reclassification of the capital stock of the Company, consolidation, share
exchange or merger of the Company into or with another corporation, or sale,
transfer or other disposition of all or substantially all of the Company’s
property to another corporation (any such event being referred to herein as a
“recapitalization”) provision shall be made so that the Holder shall thereafter
be entitled to receive upon exercise of this Warrant the number of shares of
stock or other securities or property of the Company or otherwise, to which a
holder of Common Stock deliverable upon exercise would have been entitled on
such recapitalization.  Appropriate adjustment shall be made in the
application of the provisions of this Section 7 with respect to the rights of
the Holder of this Warrant after the recapitalization to the end that the
provisions of this Section 7 (including adjustment of the Exercise Price then in
effect and the number of shares for which this Warrant may be exercised) shall
be applicable after that event in as nearly an equivalent manner as may be
applicable.

     

    7.5     
No Adjustments.  No
adjustment in the Exercise Price need be made until all cumulative adjustments
amount to 1% or more of the Exercise Price as last adjusted.  Any
adjustments that are not made shall be carried forward and taken into account in
any subsequent adjustment.  All calculations under this Section 7
shall be made to the nearest 1/1,000th of a cent or to the nearest 1/1,000th of
a share, as the case may be.

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    7.6    
 Equivalent
Distributions.  No adjustment in the Exercise Price need be
made under Sections 7.1 and 7.3 above if the Company issues or distributes to
the Holder the shares of Common Stock or evidences of indebtedness, assets,
cash, securities, rights, options or warrants referred to in those paragraphs
which the Holder would have been entitled to receive had this Warrant been
exercised prior to the happening of such event or the record date with respect
thereto.

     

    7.7    
Notices of Record Date,
Etc.  In the event:

     

    (a)   the
Company shall take a record of the holders of its Common Stock for the purpose
of entitling them to receive any dividend or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities, or to receive any other right; or

     

    (b)   of any
capital reorganization of the Company, any reclassification of the capital stock
of the Company, any consolidation, share exchange or merger of the Company with
or into another corporation or any conveyance of all or substantially all of the
assets of the Company to another corporation; or

     

    (c)   of any
voluntary or involuntary dissolution, liquidation or winding-up of the Company,
then, and in each such case, the Company shall deliver or cause to be delivered
to the Holder notice specifying, as the case may be, (i) the date on which a
record is to be taken for the purpose of such dividend, distribution or right,
and stating the amount and character of such dividend, distribution or right, or
(ii) the date on which such reorganization, reclassification, consolidation,
merger, conveyance, dissolution, liquidation or winding-up is to take place, and
the time, if any, is to be fixed, as to which the holders of record of Common
Stock shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
share exchange, merger, conveyance, dissolution, liquidation or
winding-up.  Such notice shall be delivered at least 10 days prior to
the date therein specified and this Warrant may be exercised, conditional upon
the occurrence of any such event, prior to said date during the term of this
Warrant no later than five days prior to said date.

     

    7.8   Notice of
Adjustment.  On the happening of an event requiring an
adjustment of the Exercise Price or the shares purchasable hereunder, the
Company shall forthwith give written notice to the Holder stating the adjusted
Exercise Price and the adjusted number and kind of securities or other property
purchasable hereunder resulting from the event and setting forth in reasonable
detail the method of calculation and the facts upon which the calculation is
based.

     

    8.     
Payment of
Taxes.  The Company will pay all documentary stamp taxes
attributable to the initial issuance of this Warrant and of the Warrant Shares
upon the exercise of this Warrant; provided, however, that the Company shall not
be required to pay any tax or taxes which may be payable in respect of any
transfer of all or any part of this Warrant or any certificates for Warrant
Shares in a name other than that of the Holder of this Warrant, and the Company
shall not be required to issue or deliver any Warrant to any transferee unless
or until the person or persons requesting the transfer thereof shall have paid
to the Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid.

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    9.     
Applicable
Law.  This Warrant shall be governed by and construed in
accordance with the laws of the State of Texas.

     

    10.     Notice. Any notice,
request, instruction, correspondence or other document to be given hereunder by
any party to another shall be in writing and delivered in person or by courier
service requiring acknowledgment of receipt of delivery or mailed by certified
mail, postage prepaid and return receipt requested, or by telecopier, as
follows:

     

    If to the
Company, addressed to:

     

    CytoGenix,
Inc.

    3100
Wilcrest, Suite 140

    Houston,
Texas 77042

    Attention:
President

    Telecopy:
(713) 789-0702

     

    


     

    If to
Holder, addressed to:

     

    


     

    


     

    


     

    Notice
given by personal delivery, courier service or mail shall be effective upon
actual receipt.  Notice given by telecopier shall be confirmed by
appropriate answer back and shall be effective upon actual receipt if received
during the recipient’s normal business hours, or at the beginning of the
recipient’s next business day after receipt if not received during the
recipient’s normal business hours. All notices by telecopier shall be confirmed
promptly after transmission in writing by certified mail or personal delivery.
Any party may change any address to which notice is to be given to it by giving
Notice as provided above of such change of address.

     

    IN
WITNESS WHEREOF, the Company has caused this Warrant to be signed on its behalf,
in its corporate name, by its duly authorized officer, all as of the day and
year first above written.

     

    CYTOGENIX,
INC.

    


    


    


    By:_____________________________________

         Malcolm
Skolnick

         Chief
Executive Officer and President

    


    


    


    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    WARRANT EXERCISE
FORM

     

    The
undersigned hereby irrevocably elects to exercise the within Warrant to the
extent of purchasing ____ shares of [description of Warrant Shares], and hereby
makes payment in full therefor of $_____________ in cash.

     

    


    


     

    
      	 	 


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    WARRANT
ASSIGNMENT FORM

     

    FOR VALUE
RECEIVED, ___________________________________________ hereby sells, assigns and
transfers unto ____________________________________________________

     

    Name (Please typewrite or print in
block letters)

     

    the right
to purchase [describe number of shares of Warrant Shares] of CytoGenix, Inc.
represented by this Warrant to the extent of shares as to which such right is
exercisable and does hereby irrevocably constitute and appoint
______________________________ Attorney, to transfer the same on the books of
CytoGenix, Inc. with full power of substitution in the premises.

     

    DATED:
______________

     

     

    
      	
               

            	 


    

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    BEFORE
THE AMERICAN ARBITRATION ASSOCIATION

    HOUSTON
REGION

    


    


      
        	
                FRANK
      VAZQUEZ and

              	
                '

              	 
      	 
      
	
                LAWRENCE
      WUNDERLICH,

              	
                '

              	 
      	 
      
	 
      	
                '

              	 
      	 
      
	 	
                Claimants,

              	
                '

              	 
      	 
      
	 
      	
                '

              	 
      	
                NO.
      70 166 00833 06

              
	
                v.

              	
                '

              	 
      	 
      
	 
      	
                '

              	 
      	 
      
	
                CYTOGENIX,
      INC.,

              	
                '

              	 
      	 
      
	 
      	
                '

              	 
      	 
      
	 	
                Respondent,

              	
                '

              	 
      	 
      
	 	
                Counter-Claimant.

              	
                '

              	 
      	 
      


      




    


    AGREED ARBITRATION
AWARD

    


    Claimants
Frank Vazquez (“Vazquez”) and Lawrence Wunderlich (“Wunderlich”) (collectively,
“Claimants”) filed this proceeding on November 17, 2006 against their former
employer, CytoGenix, Inc. (“CytoGenix”).  Claimants sought to recover
severance compensation allegedly owed under their respective employment
contracts with CytoGenix.

    A hearing
on the merits was held on May 12-13, 2008. At the request of the parties, an
award was not immediately issued so that the parties could attempt to reach a
settlement.

    The
parties subsequently entered into a Settlement Agreement and Mutual Release
effective June 30, 2008 (the “Settlement Agreement”).  Pursuant to the
Settlement Agreement, the parties agreed to the terms of this Agreed Arbitration
Award, to be entered only in the event of an uncured default by CytoGenix of its
obligations under paragraphs 1 and 2 of the Settlement Agreement.

    


    EXHIBIT
B


    
      
        
           

          


        

         


      

      
         


        
          

        

      

      
         


      

    


    I find
CytoGenix is in default of its obligations under paragraph 1 and/or paragraph 2
of the Settlement Agreement and has failed to cure said default(s) within the
allotted time.  Therefore, I hereby enter this Agreed Arbitration
Award in favor of Claimants as follows:

    1)           The
unpaid monthly installments due under paragraph 1 of the Settlement Agreement
are hereby accelerated.  The amount owed to each Claimant has been
established by a letter from Claimants’ counsel to the undersigned, with a copy
to CytoGenix’s counsel, setting forth the total unpaid installments due under
paragraph 1 of the Settlement Agreement to each Claimant.  Each of the
Claimants shall have and recover from CytoGenix the amount of $____________,
representing the accelerated total of the unpaid monthly installments due under
paragraph 1 of the Settlement Agreement.

    2)           If
not previously issued, pursuant to paragraph 2 of the Settlement Agreement,
CytoGenix is hereby ordered to issue, within ten (10) days from the date hereof,
the balance of any unissued non-callable warrants to purchase 2,000,000 shares
of CytoGenix Section 144 restricted common stock to Vazquez and non-callable
warrants to purchase 3,200,000 shares of CytoGenix Section 144 restricted common
stock to Wunderlich, in substantially the form of Exhibit A to the Settlement
Agreement, in the following amounts:

    
      	
               
      

            	
              a.

            	
              one-third
      of said warrants (666,666 warrants for Vazquez and 1,066,666 warrants for
      Wunderlich) shall be issued with an exercise price of $0.05 per
      share;

            


    

    


    
      	
               
      

            	
              b.

            	
              one-third
      of said warrants (666,667 warrants for Vazquez and 1,066,667 warrants for
      Wunderlich) shall be issued with an exercise price of $0.10 per
      share;

            


    

    


    
      	
               
      

            	
              c.

            	
              one-third
      of said warrants (666,667 warrants for Vazquez and 1,066,667 warrants for
      Wunderlich) shall be issued with an exercise price of $0.15 per
      share;

            


    


    
      
        
          


          - - 

          


        

         


      

      
         


        
          

        

      

      
         


      

    


                   
3)           All costs
and expenses, including attorneys’ fees, administrative fees and expenses of the
American Arbitration Association and compensation to the Arbitrator shall be
borne and paid by the party incurring such costs, fees and
expenses.  Notwithstanding the foregoing, Claimants shall be entitled
to recover their reasonable attorney’s fees and costs incurred in connection
with the enforcement and execution of this Agreed Arbitration Award, not to
exceed $10,000.

    4)           This
Award is intended to dispose of all claims and counterclaims asserted in this
Arbitration.  All claims and counterclaims not expressly granted
herein are hereby DENIED.

    So
entered this ____ day of ________________, 200____.

    


    _____________________________________________

    HONORABLE
RUBY K. SONDOCK, Arbitrator