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EXHIBIT 10.21
EXECUTION COPY
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER REGULATION D PROMULGATED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT") OR OTHERWISE. THIS WARRANT SHALL NOT
CONSTITUTE AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES
IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. THE
SECURITIES ARE "RESTRICTED" AND MAY NOT BE RESOLD OR TRANSFERRED EXCEPT AS
PERMITTED UNDER THE ACT PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
COMMON STOCK PURCHASE WARRANT
No. PW1
To Purchase Shares of $.001 Par Value Common Stock of
ZYMETX, INC.
THIS CERTIFIES that, for value received, Palladin Opportunity Fund, LLC
(the "INVESTOR") is entitled, upon the terms and subject to the conditions
hereinafter set forth, at any time on or after the date hereof and on or prior
to 5:00 p.m. New York City Time on October 12, 2005 (the "TERMINATION DATE"),
but not thereafter, to subscribe for and purchase from ZYMETX, INC., a Delaware
corporation (the "COMPANY"), 90,000 shares of Common Stock of the Company (the
"WARRANT SHARES"). The "EXERCISE PRICE" is $3.16875. The Exercise Price and the
number of shares for which the Warrant is exercisable shall be subject to
adjustment as provided herein. This Warrant is being issued in connection with
the Purchase Agreement dated October 13, 2000 (the "AGREEMENT") entered into
between the Company and the Investor.
1. Title of Warrant. Prior to the expiration hereof and subject to
compliance with applicable laws, this Warrant and all rights hereunder
are transferable, in whole or in respect of the right to purchase any
part of the Warrant Shares, at the office or agency of the Company by
the holder hereof in person or by duly authorized attorney, upon
surrender of this Warrant together with (a) the Assignment Form annexed
hereto properly endorsed, and (b) any other documentation reasonably
necessary to satisfy the Company that such transfer is in compliance
with all applicable securities laws.
2. Authorization of Shares. The Company covenants that all shares of
Common Stock which may be issued upon the exercise of rights
represented by this Warrant will, upon exercise of the rights
represented by this Warrant and payment of the Exercise Price as set
forth herein will be duly authorized, validly issued, fully paid and
nonassessable and free from all taxes, liens and charges in respect of
the issue thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issue or otherwise specified
herein).
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3. Exercise of Warrant.
(a) Exercise of the purchase rights represented by this Warrant may be made
at any time or times, in whole or in part before the close of business
on the Termination Date, or such earlier date on which this Warrant may
terminate as provided in paragraph 11 below, by the surrender on any
business day of this Warrant and the Notice of Exercise annexed hereto
duly completed and executed, at the principal office of the Company (or
such other office or agency of the Company as it may designate by
notice in writing to the registered holder hereof at the address of
such holder appearing on the books of the Company), together with
delivery to the Company by such holder of all certifications or
documentation reasonably necessary to establish, to the satisfaction of
the Company, that any such exercise has been undertaken in compliance
with all applicable federal and state securities laws, and upon payment
of the full Exercise Price of the shares thereby purchased; whereupon
the holder of this Warrant shall be entitled to receive a certificate
for the number of shares of Common Stock so purchased. Certificates for
shares purchased hereunder shall be delivered to the holder hereof
within three (3) Trading Days after the date on which this Warrant
shall have been exercised as aforesaid. Payment of the Exercise Price
of the shares shall be by certified check or cashier's check or by wire
transfer (of same day funds) to an account designated by the Company in
an amount equal to the Exercise Price multiplied by the number of
shares being purchased.
(b) Alternatively, the Warrant holder may exercise this Warrant, in whole
or in part in a "cashless" or "net-issue" exercise by delivering to the
offices of the Company or any transfer agent for the Common Stock this
Warrant, together with a Notice of Exercise specifying the number of
Warrant Shares to be delivered to such Warrant holder ("DELIVERABLE
SHARES") and the number of Warrant Shares with respect to which this
Warrant is being exercised ("EXERCISED SHARES").
The number of Deliverable Shares shall be calculated as follows:
# of Deliverable Shares = # of Exercised Shares
x Fair Market Value of Common Stock less Exercise Price
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Fair Market Value of Common Stock
"FAIR MARKET VALUE" shall have the meaning specified in Section 13(c)
In the event that the Warrant is not exercised in full, the number of
Warrant Shares shall be reduced by the number of such Warrant Shares
for which this Warrant is exercised and/or surrendered, and the
Company, at its expense, shall within three (3) Trading Days issue and
deliver to or upon the order of the Warrant holder a new Warrant of
like tenor in the name of Warrant holder or such other name as Warrant
holder (upon payment by Warrant holder of any applicable transfer
taxes) may request, reflecting such adjusted Warrant Shares.
All exercises will be deemed to occur as of the date of the Notice of
Exercise, and certificates for shares of Common Stock purchased
hereunder shall be delivered to the holder hereof within three (3)
Trading Days after the date on which this Warrant shall
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have been exercised as aforesaid. The Warrant holder may withdraw its
Notice of Exercise under Section 3(a) or 3(b) at any time thereafter if
the Company fails to timely deliver the applicable certificates to the
Warrant holder as provided in this Agreement.
(c) In lieu of delivering physical certificates representing the Common
Stock issuable upon exercise, provided the Company's transfer agent is
participating in the Depository Trust Company ("DTC") Fast Automated
Securities Transfer ("FAST") program, upon request of the Warrant
holder, the Company shall use its best efforts to cause its transfer
agent to electronically transmit the Common Stock issuable upon
exercise to the Warrant holder by crediting the account of Warrant
holder's prime broker with DTC through its Deposit Withdrawal Agent
Commission ("DWAC") system. The time periods for delivery described in
the immediately preceding paragraph shall apply to the electronic
transmittals described herein.
The term "TRADING DAY" means (x) if the Common Stock is listed on the
New York Stock Exchange or the American Stock Exchange, a day on which
there is trading on such stock exchange, or (y) if the Common Stock is
not listed on either of such stock exchanges but sale prices of the
Common Stock are reported on an automated quotation system, a day on
which trading is reported on the principal automated quotation system
on which sales of the Common Stock are reported, or (z) if the
foregoing provisions are inapplicable, a day on which quotations are
reported by National Quotation Bureau Incorporated.
4. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of
this Warrant.
5. Charges, Taxes and Expenses. Issuance of certificates for shares of
Common Stock upon the exercise of this Warrant shall be made without
charge to the holder hereof for any issue or transfer tax or other
incidental expense in respect of the issuance of such certificate, all
of which taxes and expenses shall be paid by the Company, and such
certificates shall be issued in the name of the holder of this Warrant
or in such name or names as may be directed by the holder of this
Warrant; provided, however, that in the event certificates for shares
of Common Stock are to be issued in a name other than the name of the
holder of this Warrant, this Warrant when surrendered for exercise
shall be accompanied by the Assignment Form attached hereto duly
executed by the holder hereof; and provided further, that the Company
shall not be required to pay any tax or taxes which may be payable in
respect of any transfer involved in the issuance of any Warrant
certificates or any certificates for the Warrant Shares other than the
issuance of a Warrant Certificate to the Investor in connection with
the Investor's surrender of a Warrant Certificate upon the exercise of
less than all of the Warrants evidenced thereby, and the Company shall
not be required to issue or deliver such certificates unless or until
the person or persons requesting the issuance 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.
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6. Closing of Books. The Company will at no time close its stockholder
books or records in any manner which interferes with the timely
exercise of this Warrant.
7. No Rights as Stockholder until Exercise. Subject to Section 12 of this
Warrant and the provisions of any other written agreement between the
Company and the Investor, the Investor shall not be entitled to vote or
receive dividends or be deemed the holder of Warrant Shares or any
other securities of the Company that may at any time be issuable on the
exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the Investor, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any corporate action
(whether upon any recapitalization, issuance of stock, reclassification
of stock, change of par value, or change of stock to no par value,
consolidation, merger, conveyance or otherwise) or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise
until the Warrant shall have been exercised as provided herein.
However, at the time of the exercise of this Warrant pursuant to
Section 3 hereof, the Warrant Shares so purchased hereunder shall be
deemed to be issued to such holder as the record owner of such shares
as of the close of business on the date on which this Warrant shall
have been exercised.
8. Assignment and Transfer of Warrant. This Warrant may be assigned in
whole or in part by the surrender of this Warrant and the Assignment
Form annexed hereto duly executed at the office of the Company (or such
other office or agency of the Company as it may designate by notice in
writing to the registered holder hereof at the address of such holder
appearing on the books of the Company); provided, however, that this
Warrant may not be resold or otherwise transferred except (i) in a
transaction registered under the Securities Act of 1933, as amended
(the "ACT"), or (ii) in a transaction pursuant to an exemption, if
available, from registration under the Act and whereby, if requested by
the Company, an opinion of counsel reasonably satisfactory to the
Company is obtained by the holder of this Warrant to the effect that
the transaction is so exempt.
9. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of any Warrant or stock certificate
representing the Warrant Shares, and in case of loss, theft or
destruction, of indemnity reasonably satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental
thereto (and upon surrender and cancellation of such Warrant or stock
certificate, if mutilated), the Company will make and deliver a new
Warrant or stock certificate of like tenor and dated as of such receipt
or cancellation, in lieu of this Warrant or such stock certificate.
10. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or a legal holiday, then such action
may be taken or such right may be exercised on the next succeeding day
not a legal holiday.
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11. Change in Control Transaction.
(a) If at any time there occurs any Change in Control Transaction, the
holder of this Warrant shall be entitled, at its sole option, to have
the Company redeem this Warrant in whole or in part at the applicable
Premium Redemption Price (as defined in the Registration Rights
Agreement). Such holder shall be entitled to make such election at any
time upon a Public Announcement of a pending, and up to ten (10) days
after the effective date of a, Change in Control Transaction.
"CHANGE IN CONTROL TRANSACTION" shall mean the occurrence of
(i) any consolidation or merger of the Company with or into any other
corporation or other entity or person (whether or not the Company is
the surviving corporation), or any other corporate reorganization or
transaction or series of related transactions in which in excess of 50%
of the Company's voting power is transferred through a merger,
consolidation, tender offer or similar transaction; or (ii) any person
(as defined in Section 13(d) of the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT")), together with its affiliates and
associates (as such terms are defined in Rule 405 under the Act),
beneficially owns or is deemed to beneficially own (as described in
Rule 13d-3 under the Exchange Act without regard to the 60-day exercise
period) in excess of 50% of the Company's voting power; (iii) there is
a replacement of more than one-half of the members of the Company's
Board of Directors which is not approved by those individuals who are
members of the Company's Board of Directors on the date thereof; or
(iv) in one or a series of related transactions there is a sale or
transfer of all or substantially all of the assets of the Company,
determined on a consolidated basis.
"PUBLIC ANNOUNCEMENT" shall mean any public filing with the
Securities and Exchange Commission, any press release by either the
Company or a third party or any other public statement, that announces
a proposed transaction which, if consummated, would constitute a Change
in Control Transaction.
(b) If at any time there occurs a Public Announcement of a pending Change
in Control Transaction in which the public stockholders of the Company
are to receive consideration, a portion of which is capital stock or
any security convertible into capital stock of another entity in
exchange for shares of Common Stock ("CHANGE IN CONTROL
CONSIDERATION"), then prompt provision shall be made in a manner
reasonably acceptable to the holders so that each holder shall have the
right (in addition to its other rights under this Warrant and the other
Transaction Documents) following such Public Announcement to:
(i) convert its Warrants into the Change in Control Consideration that
such holder would have been or would be entitled to receive had it exercised all
of its Warrants into Common Stock (notwithstanding any restrictions imposed upon
the holder pursuant to this Warrant, the Debenture or the Purchase Agreement in
its ability to do so) immediately prior to the Change in Control Transaction at
the Change in Control Exercise Price (as defined below), and acquired the Change
in Control Consideration as a stockholder of the Company; or
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(ii) exercise its Warrants into Common Stock at the Change in Control
Exercise Price (as defined below).
The "CHANGE IN CONTROL EXERCISE PRICE" shall mean a price,
subject to adjustments in the same manner as adjustments to the
Exercise Price, equal to the lesser of: (i) the then existing Exercise
Price; (ii) 100% of the lowest Market Price for Shares of Common Stock
for any of the four (4) Trading Days immediately preceding the Public
Announcement of the Change in Control Transaction; and (iii) 85% of the
lowest Market Price for Shares of Common Stock on (A) the Trading Day
on which there was a Public Announcement of the Change in Control
Transaction and the two (2) Trading Days thereafter or (B) in the event
that the Public Announcement did not occur on a Trading Day, the three
(3) Trading Days immediately following the Public Announcement. The
Market Price for Shares of Common Stock shall be appropriately adjusted
for stock splits, reverse splits, stock dividends and other dilutive
events, including those events occurring in connection with the Change
in Control Transaction, that occur during the Trading Days referred to
above.
12. Effect of Certain Events. If at any time while this Warrant or any
portion thereof is outstanding and unexpired there shall be (i) a sale
or conveyance of all or substantially all of the Company's assets or
(ii) a transaction (by merger or otherwise) in which more than 50% of
the voting power of the Company is disposed of (collectively, a "SALE
OR MERGER TRANSACTION"), in which the consideration to be received by
the Company or its stockholders consists solely of cash, and in case
the Company shall at any time effect a Sale or Merger Transaction in
which the consideration to be received by the Company or its
stockholders consists in part of consideration other than cash, the
holder of this Warrant shall have the right thereafter to purchase, by
exercise of this Warrant and payment of the aggregate Exercise Price in
effect immediately prior to such action, the kind and amount of shares
and other securities and property which it would have owned or have
been entitled to receive after the happening of such transaction had
this Warrant been exercised immediately prior thereto, subject to
further adjustment as provided in Section 13. Notwithstanding the
above, a Sale or Merger Transaction shall not be deemed to occur in the
event the Company is the acquiring entity in connection with an
acquisition by the Company.
13. Adjustments of Exercise Price and Number of Warrant Shares.
The number of and kind of securities purchasable upon exercise of this
Warrant and the Exercise Price shall be subject to adjustment from time
to time as follows:
(a) Subdivisions, Combinations and other Issuances. If the Company shall at
any time after the date hereof but prior to the expiration of this
Warrant subdivide its outstanding securities as to which purchase
rights under this Warrant exist, by split-up, spin-off, or otherwise,
or combine its outstanding securities as to which purchase rights under
this Warrant exist, the number of Warrant Shares as to which this
Warrant is exercisable as of the date of such subdivision, split-up,
spin-off or combination shall forthwith be
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proportionately increased in the case of a subdivision, or
proportionately decreased in the case of a combination. Appropriate
proportional adjustments (decrease in the case of subdivision, increase
in the case of combination) shall also be made to the Exercise Price
payable per share, so that the aggregate Exercise Price payable for the
total number of Warrant Shares purchasable under this Warrant as of
such date shall remain the same as it would have been before such
subdivision or combination.
(b) Stock Dividend. If at any time after the date hereof the Company
declares a dividend or other distribution on Common Stock payable in
Common Stock or other securities or rights convertible into Common
Stock ("COMMON STOCK EQUIVALENTS") without payment of any consideration
by holders of Common Stock for the additional shares of Common Stock or
the Common Stock Equivalents (including the additional shares of Common
Stock issuable upon exercise or conversion thereof), then the number of
shares of Common Stock for which this Warrant may be exercised shall be
increased as of the record date (or the date of such dividend
distribution if no record date is set) for determining which holders of
Common Stock shall be entitled to receive such dividends, in proportion
to the increase in the number of outstanding shares (and shares of
Common Stock issuable upon conversion of all such securities
convertible into Common Stock) of Common Stock as a result of such
dividend, and the Exercise Price shall be proportionately reduced so
that the aggregate Exercise Price for all the Warrant Shares issuable
hereunder immediately after the record date (or on the date of such
distribution, if applicable), for such dividend shall equal the
aggregate Exercise Price so payable immediately before such record date
(or on the date of such distribution, if applicable).
(c) Other Distributions. If at any time after the date hereof the Company
distributes to holders of its Common Stock, other than as part of its
dissolution, liquidation or the winding up of its affairs, any shares
of its capital stock, any evidence of indebtedness or any of its assets
(other than Common Stock), then the number of Warrant Shares for which
this Warrant is exercisable shall be increased to equal: (i) the number
of Warrant Shares for which this Warrant is exercisable immediately
prior to such event, (ii) multiplied by a fraction, (A) the numerator
of which shall be the Fair Market Value (as defined below) per share of
Common Stock on the record date for the dividend or distribution, and
(B) the denominator of which shall be the Fair Market Value price per
share of Common Stock on the record date for the dividend or
distribution minus the amount allocable to one share of Common Stock of
the value (as jointly determined in good faith by the Board of
Directors of the Company and the Warrant holder) of any and all such
evidences of indebtedness, shares of capital stock, other securities or
property, so distributed. For purposes of this Warrant, "FAIR MARKET
VALUE" shall equal the ten (10) Trading Day average closing trading
price of the Common Stock on the Principal Market for the ten (10)
Trading Days preceding the date of determination or, if the Common
Stock is not listed or admitted to trading on any Principal Market, the
average of the closing bid and asked prices on the over-the-counter
market as furnished by any New York Stock Exchange member firm
reasonably selected from time to time by the Company for that purpose
and reasonably acceptable to the Holder, or, if the Common Stock is not
listed or admitted to trading on the Principal Market or traded
over-the-
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counter and the average price cannot be determined as contemplated
above, the Fair Market Value of the Common Stock shall be as reasonably
determined in good faith by the Company's Board of Directors with the
concurrence of the Holder. The Exercise Price shall be reduced to
equal: (i) the Exercise Price in effect immediately before the
occurrence of any event (ii) multiplied by a fraction, (A) the
numerator of which is the number of Warrant Shares for which this
Warrant is exercisable immediately before the adjustment, and (B) the
denominator of which is the number of Warrant Shares for which this
Warrant is exercisable immediately after the adjustment.
(d) Merger, etc. If at any time after the date hereof there shall be a
merger or consolidation of the Company with or into or a transfer of
all or substantially all of the assets of the Company to another
entity, then the Warrant holder shall be entitled to receive upon or
after such transfer, merger or consolidation becoming effective, and
upon payment of the Exercise Price then in effect, the number of shares
or other securities or property of the Company or of the successor
corporation resulting from such merger or consolidation, which would
have been received by Warrant holder for the shares of stock subject to
this Warrant had this Warrant been exercised just prior to such
transfer, merger or consolidation becoming effective or to the
applicable record date thereof, as the case may be. The Company will
not merge or consolidate with or into any other corporation, or sell or
otherwise transfer its property, assets and business substantially as
an entirety to another corporation, unless the corporation resulting
from such merger or consolidation (if not the Company), or such
transferee corporation, as the case may be, shall expressly assume in
writing the due and punctual performance and observance of each and
every covenant and condition of this Warrant to be performed and
observed by the Company.
(e) Reclassification, etc. If at any time after the date hereof there shall
be a reorganization or reclassification of the securities as to which
purchase rights under this Warrant exist into the same or a different
number of securities of any other class or classes, then the Warrant
holder shall thereafter be entitled to receive upon exercise of this
Warrant, during the period specified herein and upon payment of the
Exercise Price then in effect, the number of shares or other securities
or property resulting from such reorganization or reclassification,
which would have been received by the Warrant holder for the shares of
stock subject to this Warrant had this Warrant at such time been
exercised.
(f) Exercise Price Adjustment. In the event that the Company issues or
sells any Common Stock or securities which are convertible into or
exchangeable for its Common Stock or any convertible securities, or any
warrants or other rights to subscribe for or to purchase or any options
for the purchase of its Common Stock or any such convertible securities
(other than shares or options issued or which may be issued pursuant to
(i) the Company's current or future employee, director or bona fide
consultant option plans or (ii) arrangements with the Investor) (an
"INDICATED ISSUANCE"), at an effective issuance or exercise price per
share which is less than the Fair Market Value, then the Exercise Price
in effect immediately prior to such issue or sale shall be reduced
effective concurrently with such issue or sale to an amount determined
by multiplying the Exercise Price then in effect by a fraction, (x) the
numerator of which shall be the sum of (1) the number of shares of
Common Stock
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outstanding immediately prior to such issue or sale, plus (2) the
number of shares of Common Stock which the aggregate consideration
received by the Company for such additional shares would purchase at
such Exercise Price then in effect; and (y) the denominator of which
shall be the number of shares of Common Stock of the Company
outstanding immediately after such issue or sale. In the event the
Company makes an Indicated Issuance at an effective issuance or
exercise price which is less than the Exercise Price then in effect,
then the Exercise Price shall be adjusted downward to equal such lower
issuance or exercise price concurrently with such Indicated Issuance.
For the purposes of the foregoing adjustment, in the case of the
issuance of any convertible securities, warrants, options or other
rights to subscribe for or to purchase or exchange for, shares of
Common Stock ("CONVERTIBLE SECURITIES"), the maximum number of shares
of Common Stock issuable upon exercise, exchange or conversion of such
Convertible Securities shall be deemed to be outstanding, provided that
no further adjustment shall be made upon the actual issuance of Common
Stock upon exercise, exchange or conversion of such Convertible
Securities.
The number of shares which may be purchased hereunder shall be
increased proportionately to any reduction in Exercise Price pursuant
to this paragraph 13(f), so that after such adjustments the aggregate
Exercise Price payable hereunder for the increased number of shares
shall be the same as the aggregate Exercise Price in effect just prior
to such adjustments.
14. Voluntary Adjustment by the Company. The Company may at its option, at
any time during the term of this Warrant, reduce but not increase the
then current Exercise Price to any amount and for any period of time
deemed appropriate by the Board of Directors of the Company.
15. Notice of Adjustment. Whenever the number of Warrant Shares or number
or kind of securities or other property purchasable upon the exercise
of this Warrant or the Exercise Price is adjusted, the Company shall
promptly mail to the holder of this Warrant a notice setting forth the
number of Warrant Shares (and other securities or property) purchasable
upon the exercise of this Warrant and the Exercise Price of such
Warrant Shares after such adjustment and setting forth a brief
statement of the facts requiring such adjustment.
16. Authorized Shares. The Company covenants that during the period the
Warrant is outstanding and exercisable, it will reserve from its
authorized and unissued Common Stock a sufficient number of shares to
provide for the issuance of the Warrant Shares upon the exercise of any
purchase rights under this Warrant. The Company further covenants that
its issuance of this Warrant shall constitute full authority to its
officers who are charged with the duty of executing stock certificates
to execute and issue the necessary certificates for the Warrant Shares
upon the exercise of the purchase rights under this Warrant. The
Company will take all such reasonable action as may be necessary to
assure that such Warrant Shares may be issued as provided herein
without violation of any applicable law or regulation, or of any
requirements of the American
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Stock Exchange or any domestic securities exchange upon which the
Common Stock may be listed.
17. 9.9% Limitation.
(a) Notwithstanding anything to the contrary contained herein, the number
of shares of Common Stock that may be acquired by the Investor upon
exercise pursuant to the terms hereof shall not exceed a number that,
when added to the total number of shares of Common Stock deemed
beneficially owned by such holder (other than by virtue of the
ownership of securities or rights to acquire securities (including the
Warrant) that have limitations on the Investor's right to convert,
exercise or purchase similar to the limitation set forth herein),
together with all shares of Common Stock deemed beneficially owned
(other than by virtue of the ownership of securities or rights to
acquire securities (including the Warrant) that have limitations on the
right to convert, exercise or purchase similar to the limitation set
forth herein) by the holder's "affiliates" (as defined Rule 144 of the
Act) ("AGGREGATION PARTIES") that would be aggregated for purposes of
determining whether a group under Section 13(d) of the Securities
Exchange Act of 1934, as amended, exists, would exceed 9.99% of the
total issued and outstanding shares of the Company's Common Stock (the
"RESTRICTED OWNERSHIP PERCENTAGE"). Each Holder shall have the right
(w) at any time and from time to time to reduce its Restricted
Ownership Percentage immediately upon notice to the Company and (x) at
any time and from time to time, to increase its Restricted Ownership
Percentage immediately in the event of the announcement as pending or
planned of an event of:
(i) any consolidation or merger of the Company with or into any
other corporation or other entity or person (whether or not
the Company is the surviving corporation), or any other
corporate reorganization or transaction or series of related
transactions in which in excess of 50% of the Company's voting
power is transferred through a merger, consolidation, tender
offer or similar transaction,
(ii) any person (as defined in Section 13(d) of the Exchange Act),
together with its affiliates and associates (as such terms are
defined in Rule 405 under the 1933 Act), beneficially owns or
is deemed to beneficially own (as described in Rule 13d-3
under the Exchange Act without regard to the 60-day exercise
period) in excess of 50% of the Company's voting power,
(iii) there is a replacement of more than one-half of the members of
the Company's Board of Directors which is not approved by
those individuals who are members of the Company's Board of
Directors on the date thereof, in one or a series of related
transactions, or
(iv) a sale or transfer of all or substantially all of the assets
of the Company, determined on a consolidated basis.
(b) The Investor covenants at all times on each day (each such day being
referred to as a "COVENANT DAY") as follows: During the balance of such
Covenant Day and the
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succeeding sixty-one (61) days (the balance of such Covenant Day and
the succeeding sixty-one (61) days being referred to as the "COVENANT
PERIOD") such Investor will not acquire shares of Common Stock pursuant
to any right (including the exercise of the Warrant) existing at the
commencement of the Covenant Period to the extent the number of shares
so acquired by such holder and its Aggregation Parties (ignoring all
dispositions) would exceed:
(x) the Restricted Ownership Percentage of the total number of
shares of Common Stock outstanding at the commencement of the
Covenant Period,
minus
(y) the number of shares of Common Stock owned by such holder and
its Aggregation Parties at the commencement of the Covenant
Period.
A new and independent covenant will be deemed to be given by
the holder as of each moment of each Covenant Day. No covenant will
terminate, diminish or modify any other covenant. The holder agrees to
comply with each such covenant. This Section 17 controls in the case of
any conflict with any other provision of the Transaction Documents.
The Company's obligation to issue shares of Common Stock which
would exceed such limits referred to in this Section 17 shall be
suspended to the extent necessary until such time, if any, as shares of
Common Stock may be issued in compliance with such restrictions.
18. Compliance with Securities Laws.
(a) The holder hereof acknowledges that the Warrant Shares acquired upon
the exercise of this Warrant, if not registered (or if no exemption
from registration exists), will have restrictions upon resale imposed
by state and federal securities laws. Each certificate representing the
Warrant Shares issued to the Holder upon exercise (if not registered or
if no exemption from registration exists) will bear the following
legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED, TRANSFERRED, SOLD OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR
IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS,
BASED ON AN OPINION LETTER OF COUNSEL
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SATISFACTORY TO THE COMPANY OR A NO-ACTION LETTER FROM THE SECURITIES
AND EXCHANGE COMMISSION.
(b) Without limiting the Investor's right to transfer, assign or otherwise
convey the Warrant or Warrant Shares in compliance with all applicable
securities laws, the Investor of this Warrant, by acceptance hereof,
acknowledges that this Warrant and the Warrant Shares to be issued upon
exercise hereof are being acquired solely for the Investor's own
account and not as a nominee for any other party, and that the Investor
will not offer, sell or otherwise dispose of this Warrant or any
Warrant Shares to be issued upon exercise hereof except under
circumstances that will not result in a violation of applicable federal
and state securities laws. Upon exercise of this Warrant, the Investor
shall, if requested by the Company, confirm in writing, in a form
satisfactory to the Company, that the Warrant Shares of Common Stock so
purchased are being acquired solely for the Investor's own account and
not as a nominee for any other party, for investment, and not with a
view toward distribution or resale.
(c) Neither this Warrant nor any share of Common Stock issued upon exercise
of this Warrant may be offered for sale or sold, or otherwise
transferred or sold in any transaction which would constitute a sale
thereof within the meaning of the Act, unless (i) such security has
been registered for sale under the Act and registered or qualified
under applicable state securities laws relating to the offer an sale of
securities, or (ii) exemptions from the registration requirements of
the Act and the registration or qualification requirements of all such
state securities laws are available and the Company shall have received
an opinion of counsel that the proposed sale or other disposition of
such securities may be effected without registration under the Act,
such counsel and such opinion to be satisfactory to the Company.
(d) Investor recognizes that investing in the Warrant and the Warrant
Shares involves a high degree of risk, and Investor is in a financial
position to hold the Warrant and the Warrant Shares indefinitely and is
able to bear the economic risk and withstand a complete loss of its
investment in the Warrant and the Warrant Shares. The Investor is a
sophisticated investor and is capable of evaluating the merits and
risks of investing in the Company. The Investor has had an opportunity
to discuss the Company's business, management and financial affairs
with the Company's management, has been given full and complete access
to information concerning the Company, and has utilized such access to
its satisfaction for the purpose of obtaining information or verifying
information and has had the opportunity to inspect the Company's
operation. Investor has had the opportunity to ask questions of, and
receive answers from, the management of the Company (and any person
acting on its behalf) concerning the Warrant and the Warrant Shares and
the agreements and transactions contemplated hereby, and to obtain any
additional information as Investor may have requested in making its
investment decision. The initial Investor in this Warrant is an
"accredited investor", as defined by Regulation D promulgated under the
Act.
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19. Miscellaneous.
(a) Issue Date; Choice Of Law; Venue; Jurisdiction. The provisions of this
Warrant shall be construed and shall be given effect in all respects as
if it had been issued and delivered by the Company on the date hereof.
This Warrant shall be binding upon any successors or assigns of the
Company. This Warrant will be construed and enforced in accordance with
and governed by the laws of the State of New York, except for matters
arising under the Act, without reference to principles of conflicts of
law. Each of the parties consents to the exclusive jurisdiction of the
U.S. District Court sitting in the State of City of New York in the
State of New York in connection with any dispute arising under this
Warrant and hereby waives, to the maximum extent permitted by law, any
objection, including any objection based on forum non conveniens, to
the bringing of any such proceeding in such jurisdiction. Each party
hereby agrees that if the other party to this Warrant obtains a
judgment against it in such a proceeding, the party which obtained such
judgment may enforce same by summary judgment in the courts of any
country having jurisdiction over the party against whom such judgment
was obtained, and each party hereby waives any defenses available to it
under local law and agrees to the enforcement of such a judgment. Each
party to this Warrant irrevocably consents to the service of process in
any such proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to such party at its address in
accordance with Section 18(c). Nothing herein shall affect the right of
any party to serve process in any other manner permitted by law. Each
party waives its right to a trial by jury.
(b) Modification and Waiver. This Warrant and any provisions hereof may be
changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of the same is
sought. Any amendment effected in accordance with this paragraph shall
be binding upon the Investor, each future holder of this Warrant and
the Company. No waivers of, or exceptions to, any term, condition or
provision of this Warrant, in any one or more instances, shall be
deemed to be, or construed as, a further or continuing waiver of any
such term, condition or provision.
(c) Notices. Any notice, request or other document required or permitted to
be given or delivered to the Investor or future holders hereof or the
Company shall be personally delivered or shall be sent by certified or
registered mail, postage prepaid, to the Investor or each such holder
at its address as shown on the books of the Company or to the
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Company at the address set forth in the Agreement. All notices under
this Warrant shall be deemed to have been given when received.
A party may from time to time change the address to which notices to it
are to be delivered or mailed hereunder by notice in accordance with
the provisions of this Section 19(c).
(d) Severability. Whenever possible, each provision of this Warrant shall
be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant is held to be
invalid, illegal or unenforceable in any respect under any applicable
law or rule in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect the validity, legality or
enforceability of any other provision of this Warrant in such
jurisdiction or affect the validity, legality or enforceability of any
provision in any other jurisdiction, but this Warrant shall be
reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained
herein.
(e) No Impairment. The Company will not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times
in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order
to protect the rights of the Warrant holder against impairment. Without
limiting the generality of the foregoing, the Company (a) will not
increase the par value of any Warrant Shares above the amount payable
therefor on such exercise, and (b) will take all such action as may be
reasonably necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable Warrant Shares
on the exercise of this Warrant.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officers thereunto duly authorized.
Dated: October 13, 2000
ZYMETX, INC.
By:
--------------------------
Xxxxxx X. Xxxxxx
Chief Executive Officer
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NOTICE OF EXERCISE
To: ZYMETX, INC.
(1) The undersigned hereby elects:
(A) to purchase ________ shares of Common Stock of ZymeTx, Inc.
pursuant to the terms of the attached Warrant, and tenders herewith payment of
the Exercise Price in full, together with all applicable transfer taxes, if any.
(B) in a "cashless" or "net-issue exercise" for, and to purchase
thereunder, ______ shares of Common Stock, and herewith makes payment therefor
with _______ Exercised Shares.
(2) Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:
-------------------------------
(Name)
-------------------------------
(Address)
-------------------------------
(3) Please issue a new Warrant for the unexercised portion of the attached
Warrant in the name of the undersigned or in such other name as is specified
below:
Other Name:
---------------------
-----------------------------------
(Name)
-------------------- -----------------------------------
(Date) (Signature)
-----------------------------------
(Address)
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ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, the foregoing Warrant of ZymeTx, Inc. and all
rights evidenced thereby are hereby assigned to
whose address is
--------------------------------------------
---------------------------------------------------------------.
---------------------------------------------------------------
Dated: ,
------------------
Holder's Signature:
---------------------------
Holder's Address:
---------------------------
---------------------------
Signature Guaranteed:
-------------------------------------------------
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in an fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.
