EXHIBIT 10.01
THIS NOTE AND THE COMMON STOCK REFERENCED HEREIN HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR UNDER THE PROVISIONS
OF ANY APPLICABLE STATE SECURITIES LAWS, BUT HAS BEEN ACQUIRED BY THE REGISTERED
HOLDER HEREOF FOR PURPOSES OF INVESTMENT AND IN RELIANCE ON STATUTORY EXEMPTIONS
UNDER THE 1933 ACT, AND UNDER ANY APPLICABLE STATE SECURITIES LAWS. NEITHER THE
NOTE NOR THE COMMON STOCK MAY BE SOLD, PLEDGED, TRANSFERRED OR ASSIGNED EXCEPT
IN A TRANSACTION WHICH IS EXEMPT UNDER PROVISIONS OF THE 1933 ACT AND ANY
APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT; AND IN THE CASE OF AN EXEMPTION, ONLY IF THE COMPANY HAS RECEIVED AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH TRANSACTION DOES NOT
REQUIRE REGISTRATION OF THIS NOTE.
ZYMETX, INC.
___________, 2001 $_____,000
12% PROMISSORY NOTE
ZymeTx, Inc. (the "Company"), for value received, hereby promises to pay to
_____________________ or registered assigns (the "Holder") on the earliest of
(i) May 31, 2002, (ii) the consummation of the sale or exchange (including by
way of merger) of all or substantially all of the outstanding shares of common
stock of the Company, or (iii) the date of consummation of certain mergers or
consolidations of the Company, as described in Section 2(b) hereof (in any such
event, the "Maturity Date"), at the principal offices of the Holder, the
principal sum of _______________ DOLLARS ($____,000) in such coin or currency of
the United States of America as at the time of payment shall be legal tender for
the payment of public and private debts, and to pay interest on the outstanding
principal sum hereof at the rate of twelve percent (12%) per annum (the "Note").
Principal and accrued interest, if any, shall be payable on the Maturity Date in
like coin or currency to the Holder hereof at the offices of the Company,
provided that any payment otherwise due on a Saturday, Sunday or legal Bank
holiday may be paid on the following business day.
1. Transfers of Note to Comply with the 1933 Act
The Holder agrees that this Note may not be sold, transferred, pledged,
hypothecated or otherwise disposed of except as follows: (1) to a person whom
the Note may legally be transferred without registration and without delivery of
a current prospectus under the 1933 Act with respect thereto and then only
against receipt of an agreement of such person to comply with the provisions of
this Section 1 with respect to any resale or other disposition of the Note; or
(2) to any person upon delivery of a prospectus then meeting the requirements of
the 1933 Act relating to such securities and the offering thereof for such sale
or disposition, and thereafter to all successive assignees.
2. Prepayment; Repayment Upon Consolidation or Merger.
(a) The principal amount of this Note may be prepaid by the Company, in
whole or in part without premium or penalty, at any time. Upon any prepayment of
the entire principal amount of this Note, all accrued, but unpaid, interest
shall be paid to the Holder on the date of prepayment. The date upon which the
Company prepays the principal plus all accrued and unpaid interest due on this
Note shall be hereinafter referred to as the "Prepayment Date."
(b) This Note shall be paid in full, without premium, in the event the
Company consolidates or merges with another corporation, unless (i) the Company
shall be the surviving corporation in such consolidation or merger or (ii) the
other corporation controls, is under common control with or is controlled by the
Company immediately prior to the consolidation or merger whether or not the
Company shall be the surviving corporation in such consolidation or merger, in
which event this Note shall remain outstanding as an obligation of the
consolidated or surviving corporation.
3. Covenants of Company
The Company covenants and agrees that, so long as any principal of, or
interest on, this Note shall remain unpaid, unless the Holder shall otherwise
consent in writing, it will comply with the following terms:
(a) Reporting Requirements. The Company will furnish to the Holder:
(i) as soon as possible, and in any event within ten (10) days
after obtaining knowledge of the occurrence of (A) an Event of Default, as
hereinafter defined, (B) an event which, with the giving of notice or the lapse
of time or both, would constitute an Event of Default, or (C) a material adverse
change in the condition or operations, financial or otherwise, of the Company,
taken as whole, the written statement of the Chief Executive Officer or the
Chief Financial Officer of the Company, setting forth the details of such Event
of Default, event or material adverse change and the action which the Company
proposes to take with respect thereto;
(ii) promptly after the sending or filing thereof, copies of
all financial statements, reports, certificates of its Chief Executive Officer,
Chief Financial Officer or accountants and other information which the Company
or any subsidiary sends to any holders (other than the Notes) of its securities;
(iii) promptly after the commencement thereof, notice of each
action, suit or proceeding before any court or other governmental authority or
other regulatory body or any arbitrator as to which there is a reasonable
possibility of a determination that would (A) materially impact the ability of
the Company or any subsidiary to conduct its business, (B) materially and
adversely affect the business, operations or financial condition of the Company
taken as a whole, or (C) impair the validity or enforceability of the Notes or
the ability of the Company to perform its obligations under the Notes;
(iv) promptly upon request, such other information concerning
the condition or operations, financial or otherwise, of the Company as the
Holder from time to time may reasonably request.
(b) Taxes. The Company has filed or will file all federal, state and
local tax returns required to be filed or sent or has obtained extensions
thereof. Except as otherwise disclosed, the Company has timely paid or made
provision for all taxes shown as due and payable on its tax returns required to
be filed prior to the date hereof and all assessments received by the Company
and will timely pay all taxes that will be shown as due and payable on its tax
returns required to be filed after the date hereof, except to the extent that
the Company shall be contesting such taxes and assessments in good faith by
appropriate proceedings.
(c) Compliance with Laws. The Company will comply, in all material
respects with all applicable laws, rules, regulations and orders, except to the
extent that noncompliance would not have a material adverse effect upon the
business, operations or financial condition of the Company taken as a whole.
(d) Keeping of Records and Books of Account. The Company will keep
adequate records and books of account, with complete entries made in accordance
with generally accepted accounting principles, reflecting all of its financial
and other business transactions.
(e) Negative Covenants. The Company covenants and agrees that while
this Note is outstanding it will not directly or indirectly:
(i) Incur any indebtedness (other than in the ordinary course of its
business) or grant any liens with respect to any of its assets,
without the written consent of the Holder;
(ii) Guaranty or otherwise in any way become or be responsible for
indebtedness for borrowed money, or for obligations, in either
case of any of its officers, directors or principal stockholders
or any of their affiliates, contingently or otherwise, other than
such guaranties existing as of the date hereof;
(iii) Declare or pay cash dividends;
(iv) Sell, transfer or dispose of, any of its assets other than in the
ordinary course of its business and for fair value;
(v) Purchase, redeem, retire or otherwise acquire for value any of
its capital stock now or hereafter outstanding; or
(vi) Repay any indebtedness for borrowed funds or any related party
obligations (other than in the ordinary course of its business).
4. Events of Default and Remedies
(a) Any one or more of the following events which shall have occurred
and be continuing shall constitute an event of default (Event of Default):
(i) Default in the payment of the principal or accrued
interest on this Note or upon any indebtedness of the Company that is greater
than $100,000, as and when the same shall become due, whether by default or
otherwise, which Default shall have continued for a period of five (5) business
days; except for any pre-existing events of default under the $2,000,000
principal amount of 5% Senior Secured Convertible Debentures, due October 12,
2002, which were sold to Palladin Opportunity Fund, LLC and Halifax Fund, L.P.
pursuant to a Purchase Agreement dated October 13, 2000; or
(ii) Any representation or warranty made by the Company or any
officer of the Company in the Notes, or in any agreement, report, certificate or
other document delivered to the Holder pursuant to the Notes shall have been
incorrect in any material respect when made which shall not have been remedied
ten (10) days after written notice thereof shall have been given by the Holder;
or
(iii) The Company shall fail to perform or observe any
affirmative covenant contained in Section 3 of this Note or any of the Notes and
such Default, if capable of being remedied, shall not have been remedied ten
(10) days after written notice thereof shall have been given by the Holder; or
(iv) The Company or any subsidiary (A) shall institute any
proceeding or voluntary case seeking to adjudicate it bankrupt or insolvent, or
seeking dissolution, liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of any order for relief or the appointment of a receiver,
trustee, custodian or other similar official for such the Company or any
subsidiary or for any substantial part of its property, or shall consent to the
commencement against it of such a proceeding or case, or shall file an answer in
any such case or proceeding commenced against it consenting to or acquiescing in
the commencement of such case or proceeding, or shall consent to or acquiesce in
the appointment of such a receiver, trustee, custodian or similar official; (B)
shall be unable to pay its debts as such debts become due, or shall admit in
writing its inability to apply its debts generally; (C) shall make a general
assignment for the benefit of creditors; or (D) shall take any action to
authorize or effect any of the actions set forth above in this subsection
4(a)(iv); or
(v) Any proceeding shall be instituted against the Company
seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution,
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, custodian or other similar official for the
Company or for any substantial part of its property, and either such proceeding
shall not have been dismissed or shall not have been stayed for a period of
sixty (60) days or any of the actions sought in such proceeding (including,
without limitation, the entry of any order for relief against it or the
appointment of a receiver, trustee, custodian or other similar official for it
or for any substantial part of its property) shall occur; or
(vi) One or more final judgments, arbitration awards or orders
for the payment of money in excess of $100,000 in the aggregate shall be
rendered against the Company, which judgment remains unsatisfied for thirty (30)
days after the date of such entry.
(b) If an Event of Default described above has occurred, then the
Holder may, without further notice to the Company, declare the principal amount
of this Note at the time outstanding, together with accrued unpaid interest
thereon, and all other amounts payable under this Note to be forthwith due and
payable, whereupon such principal, interest and all such amounts shall become
and be forthwith due and payable.
(c) The Company covenants that in case the principal of, and accrued
interest on, the Note becomes due and payable by declaration or otherwise, then
the Company will pay in cash to the Holder of this Note, the whole amount that
then shall have become due and payable on this Note for principal or interest,
as the case may be, and in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including reasonable
fees and disbursements of the Holder's legal counsel. In case the Company shall
fail forthwith to pay such amount, the Holder may commence an action or
proceeding at law or in equity for the collection of the sums so due and unpaid,
and may prosecute any such action or proceeding to judgment or final decree
against Company or other obligor upon this Note, wherever situated, the monies
adjudicated or decreed to be payable.
(d) The Company agrees that it shall give notice to the Holder at its
registered address by facsimile, confirmed by certified mail, of the occurrence
of any Event of Default within ten (10) days after such Event of Default shall
have occurred.
5. Security Interest
As security for this Note, provided that a minimum of $500,000 is
raised in this Offering, the Company shall grant the Holder of this Note,
together with the Holders of like Notes aggregating a maximum of $1,000,000, a
pro-rata security interest in a maximum of $200,000 of the Company's assets.
Such security interest shall be on a pari passu basis with the security interest
held by Palladin Opportunity Fund, LLC and Halifax Fund, L.P., the holders of
$2,000,000 principal amount of 5% Senior Secured Convertible Debentures due
October 12, 2002.
6. Miscellaneous
(a) This Note has been issued by the Company pursuant to authorization
of the Board of Directors of the Company.
(b) The Company may consider and treat the entity in whose name this
Note shall be registered as the absolute owner thereof for all purposes
whatsoever (whether or not this Note shall be overdue) and the Company shall not
be affected by any notice to the contrary. Subject to the limitations herein
stated, the registered owner of this Note shall have the right to transfer this
Note by assignment, and the transferee thereof shall, upon his registration as
owner of this Note, become vested with all the powers and rights of the
transferor. Registration of any new owners shall take place upon presentation of
this Note to the Company at its principal offices, together with a duly
authenticated assignment. In case of transfer by operation of law, the
transferee agrees to notify the Company of such transfer and of his address, and
to submit appropriate evidence regarding the transfer so that this Note may be
registered in the name of the transferee. This Note is transferable only on the
books of the Company by the holder hereof, in person or by attorney, on the
surrender hereof, duly endorsed. Communications sent to any registered owner
shall be effective as against all holders or transferees of the Note not
registered at the time of sending the communication.
(c) Payments of principal and interest shall be made as specified above
to the registered owner of this Note. No interest shall be due on this Note for
such period of time that may elapse between the maturity of this Note and its
presentation for payment.
(d) The Holder shall not, by virtue, hereof, be entitled to any rights
of a shareholder in the Company, whether at law or in equity, and the rights of
the Holder are limited to those expressed in this Note.
(e) Upon receipt by the Company of evidence reasonably satisfactory to
it of the loss, theft, destruction or mutilation of this Note, and (in the case
of loss, theft or destruction) of reasonably satisfactory indemnification, and
upon surrender and cancellation of this Note, if mutilated, the Company shall
execute and deliver a new Note of like tenor and date.
(f) This Note shall be construed and enforced in accordance with the
laws of the State of New York, without giving effect to the conflicts of law
principles thereof or the actual domiciles of the parties. The Company and the
Holder hereby consent to the jurisdiction of the Courts of the State of New York
and the United States District Courts situated therein in connection with any
action concerning the provisions of this Note instituted by the Holder against
the Company.
(g) No recourse shall be had for the payment of the principal or
interest of this Note against any incorporator or any past, present or future
stockholder officer, director, agent or attorney of the Company, or of any
successor corporation, either directly or through the Company or any successor
corporation, otherwise, all such liability of the incorporators, stockholders,
officers, directors, attorneys and agents being waived, released and surrendered
by the Holder hereof by the acceptance of this Note.
[THIS SPACE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the undersigned has duly executed and delivered this Note as
of the day and year first above written.
ZYMETX, INC.
By: ________________________________
Name:
Title:
