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EXHIBIT 4.2
ZYMETX, INC.
WARRANT AGREEMENT
__________________, 1997
CAPITAL WEST SECURITIES, INC.
MILLENNIUM FINANCIAL GROUP, INC.
COMVEST PARTNERS, INC.
c/o Capital West Securities, Inc.
One Leadership Square
000 X. Xxxxxxxx, Xxxxx 0000
Xxxxxxxx Xxxx, XX 00000
Ladies and Gentlemen:
ZymeTx, Inc., a Delaware corporation (the "Company"), agrees
to issue and sell to you warrants (the "Warrants") to purchase the number of
shares of common stock, $0.001 par value per share (the "Common Stock"), of the
Company set forth herein, subject to the terms and conditions contained herein.
1. Issuance of Warrants; Exercise Price. The Warrants,
which shall be in the form attached hereto as Exhibit A, shall be issued to you
concurrently with the execution hereof in consideration of the payment by you
to the Company of the sum of $0.001 cash per share of Common Stock subject to
the Warrants, the receipt and sufficiency of which are hereby acknowledged.
The Warrants shall provide that you, or such other holder or holders of the
Warrants to whom transfer is authorized in accordance with the terms of this
Agreement, shall have the right to purchase an aggregate of two hundred thirty
thousand shares of Common Stock for an exercise price equal to $________ per
share (the "Exercise Price") or $___________________ in the aggregate. The
number, character and Exercise Price of such shares of Common Stock are subject
to adjustment as hereinafter provided, and the term "Common Stock" shall mean,
unless the context otherwise requires, the stock and other securities and
property receivable upon exercise of the Warrants. The term "Exercise Price"
shall mean, unless the context otherwise requires, the price per share of the
Common Stock purchasable under the Warrants as set forth in this Section 1, as
adjusted from time to time pursuant to Section 6.
2. Representations and Warranties. The Company
represents and warrants to you and to each subsequent holder of Warrants and
agrees that:
(a) This Agreement has been duly authorized,
executed and delivered by the Company and constitutes the
valid and binding obligation of the Company enforceable in
accordance with its terms; and neither the issuance of the
Warrants nor the issuance of the shares of Common Stock
issuable upon exercise of the Warrants will result in a breach
or violation of any terms or provisions of, or constitute a
default under, any contract, indenture, mortgage, deed of
trust, loan agreement or other
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agreement or instrument to which the Company is a party or by
which the Company is bound, the Certificate of Incorporation
or Bylaws of the Company, or any law, order, rule, regulation
or decree of any government, governmental instrumentality or
court, domestic or foreign, or result in the creation or
imposition of any lien, charge or encumbrance upon any
property or assets of the Company.
(b) No consent, approval, authorization or order
of any court or governmental agency or body is required for
the sale and issuance of the Warrants or the sale and issuance
of the shares of Common Stock issuable upon exercise of the
Warrants, except such as have been obtained or may be required
under the Securities Act of 1933, as amended (the "Act"), and
such as may be required under state securities or blue sky
laws in connection with the issuance of the Warrants and the
shares of Common Stock issuable upon exercise of the Warrants.
Upon exercise of the Warrants by the holder thereof, the
shares of Common Stock with respect to which the Warrants are
exercised will be validly issued, fully paid, and
nonassessable, and good and marketable title to such shares of
Common Stock shall be delivered to such holder free and clear
of all liens, encumbrances, equities, claims or preemptive or
similar rights.
(c) During the term of this Agreement, the
Company shall make timely filings of all periodic and other
reports and forms and other materials required (but only to
the extent required) to be filed with the Securities and
Exchange Commission (the "Commission") pursuant to the Act or
the Securities Exchange Act of 1934, as amended, and with any
national securities exchange or quotation system upon which
any of the securities of the Company may be listed.
3. Notices of Record Date; Etc.. In the event of (i)
any taking by the Company of a record date with respect to the holders of any
class of securities of the Company for purposes of determining which of such
holders are entitled to dividends or other distributions (other than regular
quarterly dividends), or any right to subscribe for, purchase or otherwise
acquire shares of stock of any class or any other securities or property, or to
receive any other right, (ii) any capital reorganization of the Company, or
reclassification or recapitalization of capital stock of the Company or any
transfer in one or more related transactions of all or a majority of the assets
or revenue or income generating capacity of the Company to, or consolidation or
merger of the Company with or into, any other entity or person, or (iii) any
voluntary or involuntary dissolution or winding up of the Company, then and in
each such event the Company will mail or cause to be mailed to each holder of a
Warrant at the time outstanding a notice specifying, as the case may be, (A)
the date on which any such 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 (B) the date on which any such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, conveyance, dissolution, liquidation or winding-up is to take place and
the time, if any is to be fixed, as of which the holders of record of Common
Stock (or any other class of stock or securities of the Company, or another
issuer pursuant to Section 6, receivable upon the exercise of the Warrants)
shall be entitled to exchange their shares of Common Stock (or such other stock
or securities) for securities or other property deliverable upon such event.
Any such notice shall be deposited in the United States mail,
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postage prepaid, at least ten (10) days prior to the date therein specified,
and the holder(s) of the Warrant(s) may exercise the Warrant(s) and participate
in such event as a registered holder of Common Stock, upon exercise of the
Warrant(s) so held, within the ten (10) day period from the date of mailing of
such notice.
4. No Impairment. The Company shall not, by amendment
of its organizational documents or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities, or any
other action, avoid or seek to avoid the observance or performance of any of
the terms of this Agreement or of the Warrants, but will at all times in good
faith take any and all action as may be necessary in order to protect the
rights of the holders of the Warrants against impairment. Without limiting the
generality of the foregoing, the Company (a) will at all times reserve and keep
available, solely for issuance and delivery upon exercise of the Warrants,
shares of Common Stock issuable from time to time upon exercise of the
Warrants, (b) will not increase the par value of any shares of stock receivable
upon exercise of the Warrants above the amount payable in respect thereof upon
such exercise, and (c) will take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and non-assessable stock upon the exercise of the Warrants, or any of them.
5. Exercise of Warrants. At any time and from time to
time on and after the first anniversary of the date hereof and expiring on the
fifth anniversary of the effective date of the public offering of the Common
Stock at 5:00 p.m., Oklahoma City, Oklahoma time, Warrants may be exercised as
to all or any portion of the whole number of shares of Common Stock covered by
the Warrants by the holder thereof by surrender of the Warrants, accompanied by
a subscription for shares to be purchased in the form attached hereto as
Exhibit B and by a check payable to the order of the Company in the amount
required for purchase of the shares as to which the Warrant is being exercised,
delivered to the Company at its principal office at 000 Xxxxxxxx Xxxxxxx, Xxxxx
000, Xxxxxxxx Xxxx, Xxxxxxxx 00000, Attention: President. Warrants may also
be exercised from time to time, without any payment required for the purchase
of the shares as to which the Warrant is being exercised, as to all or any
portion of the number of shares of Common Stock covered by the Warrant(s) by
the holder thereof by surrender of the Warrants, accompanied by a subscription
for shares in the form attached as Exhibit C, pursuant to which the holder
thereof will be entitled to receive upon such surrender of the Warrant(s) (and
without any further payment) that number of shares of Common Stock equal to the
product of the number of shares of Common Stock obtainable upon exercise of the
Warrant(s) (or the portion thereof as to which the exercise relates)
multiplied by a fraction: (i) the numerator of which shall be the difference
between the then Current Value (as defined in this Section 5 and Section 7(d)
of one full share of Common Stock on the date of exercise and the Exercise
Price, and (ii) the denominator of which shall be the Current Value of one full
share of Common Stock on the date of exercise. Upon the exercise of a Warrant
in whole or in part, the Company will within five (5) days thereafter, at its
expense (including the payment by the Company of any applicable issue or
transfer taxes), cause to be issued in the name of and delivered to the Warrant
holder a certificate or certificates for the number of fully paid and
non-assessable shares of Common Stock to which such holder is entitled upon
exercise of the Warrant. In the event such holder is entitled to a fractional
share, in lieu thereof such holder shall be paid a cash amount equal to such
fraction, multiplied by the Current Value of one full share of Common Stock on
the date of exercise. Certificates for shares of Common Stock issuable by
reason of the exercise of the Warrant or Warrants shall be dated and shall be
effective as of the date of the surrendering of the Warrant for exercise,
notwithstanding any delays in the actual execution, issuance or delivery of the
certificates for the shares so purchased. In the event a Warrant
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or Warrants is exercised as to less than the aggregate amount of all shares of
Common Stock issuable upon exercise of all Warrants held by such person, the
Company shall issue a new Warrant to the holder of the Warrant so exercised
covering the aggregate number of shares of Common Stock as to which Warrants
remain unexercised.
For purposes of this section, Current Value is
defined (i) in the case for which a public market exists for the Common Stock
at the time of such exercise, according to Section 7(d), and (ii) in the case
no public market exists at the time of such exercise, at the Appraised Value.
For the purposes of this Agreement, "Appraised Value" is the value determined
in accordance with the following procedures. For a period of five (5) days
after the date of an event (a "Valuation Event") requiring determination of
Current Value at a time when no public market exists for the Common Stock (the
"Negotiation Period"), each party to this Agreement agrees to negotiate in good
faith to reach agreement upon the Appraised Value of the securities or property
at issue, as of the date of the Valuation Event, which will be the fair market
value of such securities or property, without premium for control or discount
for minority interests, illiquidity or restrictions on transfer. In the event
that the parties are unable to agree upon the Appraised Value of such
securities or other property by the end of the Negotiation Period, then the
Appraised Value of such securities or property will be determined for purposes
of this Agreement by a recognized appraisal or investment banking firm mutually
agreeable to the holders of the Warrants and the Company (the "Appraiser"). If
the holders of the Warrants and the Company cannot agree on an Appraiser within
two (2) business days after the end of the Negotiation Period, the Company, on
the one hand, and the holders of the Warrants, on the other hand, will each
select an Appraiser within ten (10) business days after the end of the
Negotiation Period and those two Appraisers will select ten (10) days after the
end of the Negotiation Period an independent Appraiser to determine the fair
market value of such securities or property, without premium for control or
discount for minority interests. Such independent Appraiser will be directed
to determine fair market value of such securities or property as soon as
practicable, but in no event later than thirty (30) days from the date of its
selection. The determination by an Appraiser of the fair market value will be
conclusive and binding on all parties to this Agreement. Appraised Value of
each share of Common Stock at a time when (i) the Company is not a reporting
company under the Exchange Act and (ii) the Common Stock is not traded in the
organized securities markets, will, in all cases, be calculated by determining
the Appraised Value of the entire Company taken as a whole and dividing that
value by the number of shares of Common Stock then outstanding, without premium
for control or discount for minority interests, illiquidity or restrictions on
transfer. The costs of the Appraiser will be borne by the Company. In no
event will the Appraised Value of the Common Stock be less than the per share
consideration received or receivable with respect to the Common Stock or
securities or property of the same class in connection with a pending
transaction involving a sale, merger, recapitalization, reorganization,
consolidation, or share exchange, dissolution of the Company, sale or transfer
of all or a majority of its assets or revenue or income generating capacity, or
similar transaction.
6. Protection Against Dilution. The Exercise Price for
the shares of Common Stock and number of shares of Common Stock issuable upon
exercise of the Warrants is subject to adjustment from time to time as follows:
(a) Stock Dividends, Subdivisions,
Reclassifications, Etc.. In case at any time or from time to
time after the date of execution of this Agreement, the
Company shall (i) take a record of the holders of Common Stock
for the purpose of entitling them
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to receive a dividend or a distribution on shares of Common
Stock payable in shares of Common Stock or other class of
securities, (ii) subdivide or reclassify its outstanding
shares of Common Stock into a greater number of shares, or
(iii) combine or reclassify its outstanding Common Stock into
a smaller number of shares, then, and in each such case, the
Exercise Price in effect at the time of the record date for
such dividend or distribution or the effective date of such
subdivision, combination or reclassification shall be adjusted
in such a manner that the Exercise Price for the shares
issuable upon exercise of the Warrants immediately after such
event shall bear the same ratio to the Exercise Price in
effect immediately prior to any such event as the total number
of shares of Common Stock outstanding immediately prior to
such event shall bear to the total number of shares of Common
Stock outstanding immediately after such event.
(b) Adjustment of Number of Shares Purchasable.
When any adjustment is required to be made in the Exercise
Price under this Section 6, (i) the number of shares of Common
Stock issuable upon exercise of the Warrants shall be changed
(upward to the nearest full share) to the number of shares
determined by dividing (x) an amount equal to the number of
shares issuable pursuant to the exercise of the Warrants
immediately prior to the adjustment, multiplied by the
Exercise Price in effect immediately prior to the adjustment,
by (y) the Exercise Price in effect immediately after such
adjustment, and (ii) upon exercise of the Warrant, the holder
will be entitled to receive the number of shares of other
securities referred to in Section 6(a) that such holder would
have received had the Warrant been exercised prior to the
events referred to in Section 6(a).
(c) Adjustment for Reorganization, Consolidation,
Merger, Etc.. In case of any reorganization or consolidation
of the Company with, or any merger of the Company with or
into, another entity (other than a consolidation or merger in
which the Company is the surviving corporation) or in case of
any sale or transfer to another entity of the majority of
assets of the Company, the entity resulting from such
reorganization or consolidation or surviving such merger or to
which such sale or transfer shall be made, as the case may be,
shall make suitable provision (which shall be fair and
equitable to the holders of Warrants) and shall assume the
obligations of the Company hereunder (by written instrument
executed and mailed to each holder of the Warrants then
outstanding) pursuant to which, upon exercise of the Warrants,
at any time after the consummation of such reorganization,
consolidation, merger or conveyance, the holder shall be
entitled to receive the stock or other securities or property
that such holder would have been entitled to upon consummation
if such holder had exercised the Warrants immediately prior
thereto, all subject to further adjustment as provided in this
Section 6.
(d) Certificate as to Adjustments. In the event
of adjustment as herein provided in paragraphs of this Section
6, the Company shall promptly mail to each Warrant holder a
certificate setting forth the Exercise Price and number of
shares of Common Stock issuable upon exercise after such
adjustment and setting forth a brief statement of facts
requiring such adjustment. Such certificate shall also set
forth the
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kind and amount of stock or other securities or
property into which the Warrants shall be exercisable after
any adjustment of the Exercise Price as provided in this
Agreement.
(e) Minimum Adjustment. Notwithstanding the
foregoing, no certificate as to adjustment of the Exercise
Price hereunder shall be made if such adjustment results in a
change in the Exercise Price then in effect of less than five
cents ($0.05) and any adjustment of less than five cents
($0.05) of any Exercise Price shall be carried forward and
shall be made at the time of and together with any subsequent
adjustment that, together with the adjustment or adjustments
so carried forward, amounts to five cents ($0.05) or more;
provided however, that upon the exercise of a Warrant, the
Company shall have made all necessary adjustments (to the
nearest cent) not theretofore made to the Exercise Price up to
and including the date upon which such Warrant is exercised.
7. Registration Rights.
(a) The Company agrees that upon written notice
given to the Company at any time on or after the first
anniversary of the effective date of the public offering of
the Common Stock but before the fifth anniversary of the
effective date of the public offering, from the holder or
holders of not less than fifty one percent (51%) of the shares
issued and issuable upon exercise of the Warrants, of a
proposed distribution by such holder or holders of Common
Stock issued or issuable upon exercise of Warrants, the
Company will, within 45 days after receipt of such notice,
promptly prepare, file and diligently prosecute to
effectiveness, an appropriate filing with the Commission of a
registration statement covering the proposed sale or
distribution of all or any part of such shares under the
Securities Act of 1933, as amended (the "Act"), and the
appropriate registration statements or applications under the
securities laws of such states as such holders, in their
discretion, shall determine, and will use its reasonable best
efforts to have such registration and application (including
both the registration under the Act and the registration or
application made under the various state securities laws)
declared effective as soon as practicable after the filing
thereof and to remain effective for such period that may be
reasonably necessary to complete the distribution of
securities so registered or qualified. At least 15 days prior
to such filing, the Company shall give written notice of such
proposed filing to each registered holder of any Warrants at
the holders' addresses appearing on the records of the Company
and to each registered holder of Common Stock purchased from
the exercise of any Warrants at such holder's address
appearing on the Company records, and shall offer to include
in such registration statement any proposed distribution of
such Common Stock held or to be held by each such registered
holder; provided, however, that except as provided in Section
7(e), the Company need not effect the registration of the sale
or distribution of Common Stock purchased upon exercise of
Warrants more than once. All expenses, disbursements and fees
(including fees and expenses of counsel for the Company,
special auditing fees specifically attributable to the sale by
the selling holder or holders of Common Stock, printing
expenses (including all necessary copies of the registration
statement and prospectuses contained therein), registration
and filing fees and blue sky fees and expenses, and fees and
charges of the Company's transfer agent
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and registrar for services rendered in connection therewith)
shall be borne by the Company; provided, however, that the
Company shall not be required to pay for any expenses of any
registration proceeding begun (in which case holders shall
bear such expenses), if the registration request is
subsequently withdrawn at any time at the request of the
holder or holders of not less that 51% of the shares issued
and issuable upon exercise of the Warrants, unless such
withdrawal is due to the misconduct of the Company or due to
an unforeseen material adverse change in the business,
properties, prospects or financial condition of the Company
occurring prior to the effectiveness of the registration
statement, in which case the Company will continue to bear
such expenses.
(b) In connection with any registration under the
Act and specified state securities law pursuant to this
Agreement, the Company will, without charge, furnish each
holder whose shares are registered thereunder with copies of
the registration statement and all amendments thereto and
will, without charge, supply each such holder with copies of
any preliminary and final prospectus included therein in such
quantities as may be necessary for the purposes of such
proposed sale or distribution that the holder or holders may
reasonably request.
(c) In connection with any registration of shares
pursuant to this Section 7, the holders whose shares are being
registered shall furnish the Company with such information
concerning such holders and the proposed sale or distribution
as shall be required for use in the preparation of such
registration statement and applications.
(d) Notwithstanding the foregoing provisions of
this Section 7, upon receipt of such written notice from the
holder or holders of not less than fifty one percent (51%) of
the shares issued and issuable upon exercise of the Warrants
requesting that the Company effect registration of the sale or
distribution of Common Stock as provided in Section 7(a) or
upon election by holders of Warrants or Common Stock to
participate in a registration pursuant to Section 7(e), the
Company shall have the option, for a period of ten (10) days
thereafter, to purchase all or any such Warrants and all or
any such shares of Common Stock acquired pursuant to the
exercise of the Warrants and held by holders providing the
request for registration under Section 7(a) and/or 7(e) and
held by any other holder of Warrants or shares issued and will
exercise its option if it so elects as follows:
(i) as to such Warrants, at a price per
Warrant equal to the difference between (A) the
average of the means between the closing bid and
asked prices of the Common Stock in the
over-the-counter market for 20 consecutive business
days commencing 30 business days before the date of
receipt of such notice, (B) if the Common Stock is
quoted on the Nasdaq SmallCap Market, at the average
of the means of the daily closing bid and asked
prices of the Common Stock for 20 consecutive
business days commencing 30 business days before the
date of such notice, or (C) if the Common Stock is
listed on any national securities exchange or quoted
on the Nasdaq National Market, at the average of the
daily closing prices of the Common Stock for 20
consecutive business days commencing 30 business days
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before the date of such notice and the Exercise Price
of the Warrant at the time of receipt of such notice;
and
(ii) as to shares of Common Stock
previously purchased pursuant to the exercise of
Warrants, at a price per share equal to (A) the
average of the means between the closing bid and
asked prices of the Common Stock in the
over-the-counter market for 20 consecutive business
days commencing 30 business days before the date of
such notice, (B) if the Common Stock is quoted on the
Nasdaq SmallCap Market, at the average of the means
of the daily closing bid and asked prices of the
Common Stock for 20 consecutive business days
commencing 30 business days before the date of such
notice, or (C) if the Common Stock is listed on any
national securities exchange or the Nasdaq National
Market, at the average of the daily closing prices of
the Common Stock for 20 consecutive business days
commencing 30 business days before the date of such
notice (such value of shares so determined in this
Section 7(d)(ii), as the case may be, is referred to
herein as the "Current Value").
(e) If any time on or after the first anniversary
of the date hereof but before the fifth anniversary of the
date hereof the Company proposes to file a registration
statement under the Act covering a proposed sale of shares of
Common Stock (other than on Form X-0, X-0 or any other form
that does not provide for resales by selling security
holders), it shall give to each holder who then owns any
Warrants or any shares of Common Stock acquired pursuant to
the exercise of the Warrants notice of such proposed
registration at least 30 days prior to the filing of the
registration statement and shall afford each such holder who
then proposes to sell or distribute publicly any of the shares
subject to the Warrants upon giving not less than 10 days
notice prior to such filing, the opportunity to have such
shares included in the securities registered under the
registration statement. All expenses, disbursements and fees
(including, but without limitation, fees and expenses of
counsel, auditing fees, printing expenses, SEC filing fees and
blue sky fees and expenses, but excluding any underwriting
discounts or commissions) incurred in connection with the
registration by the Company of the sale of any shares for any
such holder under this Section 7(e) shall be borne by the
Company.
8. Indemnification; Contribution.
(a) The Company will indemnify and hold harmless
each holder and each affiliate thereof of Common Stock
registered pursuant to this Agreement with the Commission, or
under any blue sky law or regulation against any losses,
claims, damages or liabilities, joint or several, to which
such holder may become subject under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are
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based upon an untrue statement or alleged untrue statement of
a material fact contained in any preliminary prospectus,
registration statement, prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse each
such holder and affiliate for any legal or other expenses
reasonably incurred by such holder in connection with
investigating or defending any such action or claim regardless
of the negligence of any such holder or affiliate; provided,
however, that the Company shall not be liable in any such case
to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in any
preliminary prospectus, registration statement or prospectus,
or any such amendment or supplement thereto, in reliance upon
and in conformity with written information furnished to the
Company by any such holder expressly for use therein.
(b) Each holder of Common Stock registered
pursuant to this Agreement will indemnify and hold harmless
the Company against any losses, claims, damages or liabilities
to which the Company may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement
of a material fact contained in any preliminary prospectus,
registration statement or prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent,
but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in
any preliminary prospectus, registration statement or
prospectus, or any amendment or supplement thereto, in
reliance upon and in conformity with written information
furnished to the Company by such holder expressly for use
therein.
(c) Promptly after receipt by an indemnified
party under Sections 8(a) or (b) above of the commencement of
any action, such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party
under either such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to
notify the indemnifying party shall not relieve it from any
liability that it may otherwise have to any indemnified party.
In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party
of the commencement thereof the indemnifying party shall be
entitled to assume the defense thereof by notice in writing to
the indemnified party. After notice from the indemnifying
party to such indemnified party of its election to assume the
defense thereof, the indemnifying party shall not be liable to
such indemnified party under either of such subsections for
any legal expenses of other counsel or any other expense, in
each case subsequently incurred by such indemnified party, in
connection with the defense thereof other than reasonable
costs of investigation incurred prior to the assumption by the
indemnifying party, unless such expenses have been
specifically authorized in writing by the indemnifying party,
the indemnifying party has failed to assume the defense and
employ counsel, or the named parties to any such action
include both the indemnified party and the indemnifying party,
as appropriate, and such indemnified party has been advised by
counsel that the representation of such indemnified party and
the indemnifying party by the same counsel would be
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inappropriate due to actual or potential differing interests
between them, in each of which cases the fees of counsel for
the indemnified party will be paid by the indemnifying party.
(d) If the indemnification provided for in this
Section 8 is unavailable or insufficient to hold harmless an
indemnified party under Section 8(a) or 8(b) in respect of any
losses, claims, damages or liabilities (or action in respect
thereof) referred to therein, then each indemnifying party
shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages
or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative benefits
received by the Company and the holder or holders from this
Agreement and from the offering of the shares of Common Stock.
If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law, then
each indemnifying party shall contribute to such amount paid
or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but
also the relative fault of the Company and the holders in
connection with the statement or omissions that resulted in
such losses, claims, damages or liabilities (or actions in
respect thereof), as well as any other relevant equitable
considerations. The relative fault shall be determined by
reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to
information supplied by the Company or the holder and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company and the holders agree that it would not be just
and equitable if contribution pursuant to this Section 8(d)
were determined by pro rata allocation (even if the holders
were treated as one entity for such purpose) or by any other
method of allocation that does not take into account the
equitable considerations referred to above in this subsection
(d). Except as provided in Section 8(c), the amount paid or
payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof)
referred to above in this Section 8(d) shall be deemed to
include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigation or
defending any such action or claim. No person guilty of
fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent
misrepresentation. Notwithstanding any provision in this
Section 8(d) to the contrary, no holder shall be liable for
any amount, in the aggregate, in excess of the net proceeds to
such holder from the sale of such holder's shares (obtained
upon exercise of Warrants) giving rise to such losses, claims,
damages or liabilities.
(e) The obligations of the Company under this
Section 8 shall be in addition to any liability that the
Company may otherwise have and shall extend, upon the same
terms and conditions, to each person, if any, who controls any
holder of Warrants within the meaning of the Act. The
obligations of the holders of Common Stock under this Section
8 shall be in addition to any liability that such holders may
otherwise have and shall extend, upon the same terms and
conditions to each person, if any, who controls the Company
within the meaning of the Act.
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9. Stock Exchange Listing. In the event the Company
lists its Common Stock on any national securities exchange, the Company will,
at its expense, also list on such exchange, upon exercise of a Warrant, all
shares of Common Stock issuable pursuant to such Warrant.
10. Specific Performance. The Company stipulates that
remedies at law, in money damages, available to the holder of a Warrant, or of
a holder of Common Stock issued pursuant to exercise of a Warrant, in the event
of any default or threatened default by the Company in the performance of or
compliance with any of the terms of this Agreement are not and will not be
adequate. Therefore, the Company agrees that the terms of this Agreement may
be specifically enforced by a decree for the specific performance of any
agreement contained herein or by an injunction against a violation of any of
the terms hereof or otherwise.
11. Successors and Assigns; Binding Effect. This
Agreement shall be binding upon and inure to the benefit of you and the Company
and their respective successors and permitted assigns.
12. Notices. Any notice hereunder shall be given by
registered or certified mail, if to the Company, at its principal office
referred to in Section 5 and, if to the holders, to their respective addresses
shown in the Warrant ledger of the Company, provided that any holder may at any
time on three (3) days' written notice to the Company designate or substitute
another address where notice is to be given. Notice shall be deemed given and
received after a certified or registered letter, properly addressed with
postage prepaid, is deposited in the U.S. mail.
13. Severability. Every provision of this Agreement is
intended to be severable. If any term or provision hereof is illegal or
invalid for any reason whatsoever, such illegality or invalidity shall not
affect the remainder of this Agreement.
14. Assignment; Replacement of Warrants. If the Warrant
or Warrants are assigned, in whole or in part, the Warrants shall be
surrendered at the principal office of the Company, and thereupon, in the case
of a partial assignment, a new Warrant shall be issued to the holder thereof
covering the number of shares not assigned, and the assignee shall be entitled
to receive a new Warrant covering the number of shares so assigned. Upon
receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of any Warrant and appropriate bond or
indemnification protection, the Company shall issue a new Warrant of like
tenor. Except as contemplated by Section 7 of this Agreement, the Warrants
will not be transferred, sold, or otherwise hypothecated by you or any other
person and the Warrants will be nontransferable prior to the first anniversary
of the effective date of the public offering, except to (i) one or more
persons, each of whom on the date of transfer is an officer, shareholder or
employee of you; (ii) a partnership or partnerships, the partners of which are
you and one or more persons, each of whom on the date of transfer is an officer
to you; (iii) a successor to you in merger or consolidation; (iv) a purchaser
of all or substantially all of your assets; or (v) a person that receives a
Warrant upon death of a Holder pursuant to will, trust, or the laws of
intestate succession.
15. Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Oklahoma without giving
effect to the principles of choice of laws thereof.
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16. Definition. All references to the word "you", to
"Capital West Securities, Inc.", to "Millennium Financial Group, Inc." and to
"ComVest Partners, Inc." in this Agreement shall be deemed to apply with equal
effect to any persons or entities to whom Warrants have been transferred in
accordance with the terms hereof, and, where appropriate, to any persons or
entities holding shares of Common Stock issuable upon exercise of Warrants.
17. Headings. The headings herein are for purposes of
reference only and shall not limit or otherwise affect the meaning of any of
the provisions hereof.
Very truly yours,
ZYMETX, INC.
By:
-------------------------------------
President
Accepted as of the day of , 1997.
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CAPITAL WEST SECURITIES, INC.
By:
-------------------------------------
Authorized Signatory
MILLENNIUM FINANCIAL GROUP, INC.
By:
-------------------------------------
Authorized Signatory
COMVEST PARTNERS, INC.
By:
-------------------------------------
Authorized Signatory
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