EXHIBIT 10.04
AGREEMENT
AGREEMENT(the "Agreement"), between ZymeTx, Inc. (the "Company") and
the investors identified on the signature pages hereto (the "Investors").
WHEREAS, on October 13, 2000, the Company and the Investors entered
into a certain Registration Rights Agreement (the "RRA"); and
WHEREAS, on October 13, 2000, the Company issued to the Investors $2
million in aggregate principal amount of the Company's 5% Senior Convertible
Debentures Due October 12, 2002 (the "Debentures"); and
WHEREAS, the Investors agree with effect as of August 21, 2001 not to
enforce certain rights of redemption under the RRA and the Debentures; and
WHEREAS, the Company wishes to issue to the Investors, and the
Investors wish to accept, as an exchange pursuant to Section 3(a)(9) of the
Securities Act of 1933, as amended (the "Act"), certain warrants, exercisable in
whole or in part for an aggregate of 500,000 shares of the Company's Common
Stock, in the form of Exhibit A attached hereto (the "New Warrants").
THEREFORE, in consideration of the premises and mutual agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby duly acknowledged, the Company and the Investors
agree as follows:
ARTICLE I
DEFINITIONS
Definitions. Capitalized terms used but not described herein shall have
the meanings specified in the RRA.
ARTICLE II
AGREEMENTS AND REPRESENTATIONS
Section 2.1 Conditional Deferral. The Investors agree, with effect as of August
21, 2001 ("Effective Date"), not to enforce (i) on or before February 28, 2002
their rights as a result of Section 2(b)(ii)(B) and the final sentence of
Section 2(f) of the RRA, and defaults existing as of the Effective Date under
Sections 19(d)(1) and 19(i) of the Debentures only (the "Specified Defaults") to
cause the Company to redeem securities, regardless of price, and (ii) after
February 28, 2002 their rights as a result of the Specified Defaults to cause
the Company to redeem securities at a Premium Redemption Price equal to the
Conversion Value. Each Investor's right to redeem securities as a result of any
other applicable default or Interfering Event under the RRA or the Debentures is
specifically reserved, and the Investors' forbearance from enforcing their
rights on the terms identified in the first sentence of this Section 2.1
automatically shall expire and terminate if any other such default or
Interfering Event occurs.
Section 2.2 Amendment to RRA. Section 1 of the RRA is amended by
deleting subpart (ii) of the definition of Conversion Value the words "greater
of the" replacing them with the word "greatest".
Section 2.3 Amendments to Debentures.
(a) Section 19 of the Debentures is amended by adding, after
subsection (k) and before the word "then", the following language:
"(l) the combination of cash and cash equivalents, plus current
accounts receivable (i.e. not aged more than 30 days), of the Company
shall at any time on or after November 30, 2001 fall below $250,000;"
(b) Each Investor shall have the right, but not the
obligation, to extend the Maturity Date (as defined in the Debentures) of all or
a portion of the outstanding amount of its Debentures for up to four (4)
consecutive periods of three (3) months each. By way of example only, an
Investor could so extend the Maturity Date from October 12, 2002 to first
January 12, 2003, then April 12, 2003, then July 12, 2003 and then finally
October 12, 2003, respectively and in order. An Investor may elect in writing to
exercise its extension option until the business day immediately preceding the
otherwise applicable Maturity Date.
Section 2.4 New Registration Statement. ZymeTx shall prepare and file
by December 17, 2001 a registration statement covering an additional 5,000,000
shares of Common Stock underlying the Debentures and the New Warrants. Any
failure of the Company to do so shall be deemed an Interfering Event for
purposes of the RRA. After filing, the Company shall use its best efforts to
have that registration statement declared effective by the Securities and
Exchange Commission as soon as possible.
Section 2.5 New Warrants. On or before November 30, 2001, the Company
shall issue the New Warrants.
Section 2.6 Company Action. The Company will take no action
inconsistent with the characterization of the issuance of the New Warrants as an
exchange for purposes of Section 3(a)(9) of the Act. The Company further agrees,
if requested by the Investors, to issue replacement Debentures, and/or sign an
amendment to the RRA, reflecting the terms of this Agreement.
Section 2.7 Covenant Not to Prepay Other Debt. The Company hereby
covenants and agrees not to prepay any current or future debt, in whole or in
part, without the prior written consent of the Investors.
Section 2.8 Other Financing. The Company represents that since November
5, 2001 it has received into escrow an aggregate of $704,750 of financing. Of
this amount, $287,500 has been received by the Company, $225,000 is in escrow
pending only the execution of this Agreement, and the balance is in escrow
pending the receipt of certain supplemental signatures and/or bank confirmation
of clearance of funds. The effectiveness of Section 2.1 of this Agreement is
conditional upon the accuracy of this representation.
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ARTICLE III
TERMINATION
Section 3.1 Voluntary Termination. This Agreement may be terminated at
any time upon the mutual written consent of the Company and each of the
Investors.
ARTICLE IV
MISCELLANEOUS
Section 4.1 Counterparts. This Agreement may be executed by one or more
of the parties to this Agreement on any number of separate counterparts
(including by facsimile transmission), and all of said counterparts taken
together shall be deemed to constitute one and the same instrument.
Section 4.2 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK AS APPLIED TO
AGREEMENTS EXECUTED AND TO BE PERFORMED EXCLUSIVELY WITHIN SUCH STATE, WITHOUT
REGARD TO CHOICE OF LAW PRINCIPLES. THE UNDERSIGNED AGREE THAT ANY DISPUTE
BETWEEN THE UNDERSIGNED WILL BE RESOLVED EXCLUSIVELY IN A COURT OF COMPETENT
JURISDICTION LOCATED IN THE STATE OF NEW YORK AND COUNTY OF NEW YORK. THE
COMPANY AND EACH INVESTOR FURTHER CONSENTS TO THE PERSONAL JURISDICTION AND
VENUE OF ANY COURT IN WHICH ANY ACTION MAY BE BROUGHT AGAINST IT BY LIBERTY AND
TO SERVICE OF PROCESS IN ANY SUCH ACTION BY CERTIFIED MAIL, RETURN RECEIPT
REQUESTED OR BY ANY MEANS GIVING ACTUAL NOTICE OF SUCH PROCESS. THE COMPANY AND
EACH INVESTOR HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY SUCH ACTION.
Section 4.3 No Waiver. No waiver by an Investor of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any other
provision, condition or requirement hereof, nor shall any delay or omission of
an Investor to exercise any right hereunder in any manner impair the exercise of
any such right accruing to it thereafter.
Section 4.4 Amendment. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and permitted assigns. This
Agreement may not be amended except by a writing signed the Company and each
Investor.
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Section 4.5 No Third Party Beneficiaries. This Agreement is intended
for the benefit of the parties hereto and their respective permitted successors
and assigns and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.
Section 4.6 Specific Enforcement. The Company acknowledges and agrees
that irreparable damage to the Investor would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that each
Investor shall be entitled to an injunction or injunctions to prevent or cure
breaches of the provisions of this Agreement and to enforce specifically the
terms and provisions hereof, this being in addition to any other remedy to which
the Investors may be entitled by law or equity.
Section 4.7 Notices. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement must be in writing, must be delivered by (i) courier, mail or hand
delivery or (ii) facsimile, and will be deemed to have been delivered upon
receipt. The addresses and facsimile numbers for such communications shall be:
If to the Company:
ZymeTx, Inc.
000 Xxxxxxxx Xxxxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xx. Xxxxxx Xxxxxx
With a copy to:
Sichenzia, Ross, Xxxxxxxx & Xxxxxxx, LLP.
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
If to the Investors:
Halifax Fund, L.P. and
Palladin Opportunity Fund, LLC
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xx. Xxxxxx Xxxxxxx
With a copy to:
Kleinberg, Kaplan, Xxxxx & Xxxxx, P.C.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxxxxxx X. Xxxxx, Esq.
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Section 4.8 Limited Amendments. Except as specifically amended by
this Agreement, the terms and provisions of the RRA and the Debentures remain
unchanged, and are in full force and effect.
IN WITNESS WHEREOF, this Agreement is hereby executed and delivered by
the duly authorized officers of the parties signing below.
ZYMETX, INC.
By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
Chief Executive Officer
Date: 11/19/01
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PALLADIN OPPORTUNITY FUND, LLC.
By: Palladin Asset Management, L.L.C.
Managing Member
By: /s/ Xxxxxx Xxxxxxx
-------------------------------------
Xxxxxx Xxxxxxx
Managing Member
Date: 11/19/01
-----------------------------------
HALIFAX FUND, L.P.
By: The Palladin Group, L.P.
Attorney-in-Fact
By: Palladin Capital Management, LLC
General Partner
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By: /s/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx
Managing Member
Date: 11/19/01
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