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Exhibit 10.17
PLACEMENT AGENT WARRANT AGREEMENT
WARRANT AGREEMENT dated as of August 5, 1997, between ZYMETX,
INC., a Delaware corporation (the "Company"), and ▇▇▇▇▇▇▇ ▇▇▇▇▇ SECURITIES
INCORPORATED (the "Agent").
W I T N E S S E T H
WHEREAS, the Agent has agreed pursuant to the Placement Agency
Agreement dated as of July 2, 1997, between the Agent and the Company (the
"Placement Agency Agreement") to act as the placement agent in connection with
the Company's proposed private placement of up to 35 units ("Units") (plus up
to an additional 22.5 Units solely to cover over-subscriptions, if any) each
Unit consisting of 25,000 shares of the Company's Series C Convertible
Preferred Stock ("Preferred Stock") (the "Offering"); and
WHEREAS, the Company proposes to issue to the Agent warrants
("Warrants") to purchase a number of shares of common stock, par value $.001
per share, of the Company ("Common Stock") equal to fifteen percent (15%) of
the number of shares of Preferred Stock contained in the Units sold in the
Offering; and
WHEREAS, the Warrants to be issued pursuant to this Agreement
will be issued at each Closing (as such term is defined in the Placement Agency
Agreement) by the Company to the Agent in consideration for, and as part of the
Agent's compensation in connection with, the Agent acting as the placement
agent pursuant to the Placement Agency Agreement;
NOW, THEREFORE, in consideration of the premises, the payment
by the Agent to the Company of ONE DOLLAR, the agreements herein set forth and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. Grant. The Holders (as defined in Section 3.1
hereof) are hereby granted the right to purchase, at any time from the date
hereof until 5:30 p.m., New York time, on the later of (a) the seventh
anniversary of the date of the Final Closing (as defined in the Placement
Agency Agreement) or (b) the date which is three years after the closing date
of an initial public offering of the Company's securities (the "Warrant
Exercise Term"), a number of shares of Common Stock equal to fifteen (15%)
percent of the number of shares of Preferred Stock contained in the Units sold
in the Offering at an initial exercise price (subject to adjustment as
provided in Section 8 hereof) of $4.00 per share of Common Stock, subject to
the terms and conditions of this Agreement.
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2. Warrant Certificates. The warrant certificates (the
"Warrant Certificates") delivered and to be delivered pursuant to this
Agreement shall be in the form set forth in Exhibit A, attached hereto and made
a part hereof, with such appropriate insertions, omissions, substitutions and
other variations as required or permitted by this Agreement.
3. Exercise of Warrant.
3.1 Method of Exercise. The Warrants initially are
exercisable at an initial exercise price (subject to adjustment as provided in
Section 8 hereof) per share of Common Stock set forth in Section 6 hereof
payable by certified or official bank check in New York Clearing House funds.
The Exercise Price (as defined in Section 6.2 hereof) for shares of Common
Stock covered by the Warrants may also be paid in shares of Common Stock owned
by the Holder having a Fair Market Value (as defined in Section 3.3 hereof) on
the date preceding exercise equal to the aggregate Exercise Price, or in a
combination of cash and Common Stock. In addition, the Warrants may be
exercised in full or in part by surrendering the Warrant Certificate in the
manner specified in this Section 3.1 together with irrevocable instructions to
the Company to issue in exchange for the Warrant Certificate the number of
shares of Common Stock equal to the product of (x) the number of shares as to
which the Warrants are being exercised multiplied by (y) a fraction the
numerator of which is the Fair Market Value of the Common Stock less the
Exercise Price and the denominator of which is such Fair Market Value. Upon
surrender of a Warrant Certificate with the annexed Form of Election to
Purchase duly executed, together with payment of the Exercise Price for the
shares of Common Stock issuable upon exercise of the Warrants (the "Warrant
Shares") at the Company's principal offices, registered holder of a Warrant
Certificate ("Holder" or "Holders") shall be entitled to receive a certificate
or certificates for the shares of Common Stock so purchased. The purchase
rights represented by each Warrant Certificate are exercisable at the option of
the Holder thereof, in whole or in part (but not as to fractional shares of the
Common Stock underlying the Warrants). Warrants may be exercised to purchase
all or part of the shares of Common Stock represented thereby. In the case of
the purchase of less than all the shares of Common Stock purchasable under any
Warrant Certificate, the Company shall cancel said Warrant Certificate upon the
surrender thereof and shall execute and deliver a new Warrant Certificate of
like tenor for the balance of the shares of Common Stock.
3.2 Securities Law Exemption. Notwithstanding any other
provision of this Agreement or the Warrants, a Warrant may be exercised only if
the issuance and sale of the shares of Common Stock to the Holder upon such
exercise is exempt from the registration requirements of the Securities Act of
1933 (the "Act"), and any applicable state securities laws. The Company may
request evidence reasonably satisfactory to it of such exemption (which may
include an opinion of counsel).
3.3 Fair Market Value. As is used herein, the "Fair
Market Value" of a share of Common Stock on any day means: (i) if the principal
market for the Common Stock is The New York Stock Exchange, any other national
securities exchange or the Nasdaq National Market, the closing sales price of
the Common Stock on such day as reported by such exchange or market, or on a
consolidated tape reflecting transactions on such exchange or market, or (ii)
if the principal market for the Common Stock is not a
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national securities exchange or the Nasdaq National Market and the Common Stock
is quoted on the National Association of Securities Dealers Automated
Quotations System, the mean between the closing bid and the closing asked
prices for the Common Stock on such day as quoted on such System, or (iii) if
the Common Stock is not quoted on the National Association of Securities
Dealers Automated Quotations System, the mean between the highest bid and
lowest asked prices for the Common Stock on such day as reported by the
National Quotation Bureau, Inc.; provided that if clauses (i), (ii) and (iii)
of this paragraph are all inapplicable, or if no trades have been made or no
quotes are available for such day, the Fair Market Value of the Common Stock
shall be determined, in good faith, by the Board of Directors of the Company by
any method which it deems to be appropriate. The determination of the Company
shall be conclusive as to the Fair Market Value of the Common Stock.
4. Issuance of Certificates. Upon the exercise of the
Warrants, the issuance of certificates for shares of Common Stock or other
securities, properties or rights underlying such Warrants, shall be made
forthwith (and in any event such issuance shall be made within ten business
days thereafter) without charge to the Holder thereof including, without
limitation, any tax which may be payable in respect of the issuance thereof,
and such certificates shall (subject to the provisions of Sections 5 and 7
hereof) be issued in the name of, or in such names as may be directed by, the
Holder thereof; provided, however, that the Company shall not be required to
pay any tax which may be payable in respect of any transfer involved in the
issuance and delivery of any such certificates in a name other than that of the
Holder 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.
The Warrant Certificates and the certificates representing the
shares of Common Stock (and/or other securities, property or rights issuable
upon exercise of the Warrants) shall be executed on behalf of the Company by
the manual or facsimile signature of the then present Chairman or Vice Chairman
of the Board of Directors or President or Vice President of the Company under
its corporate seal reproduced thereon, attested to be the manual or facsimile
signature of the then present Secretary or Assistant Secretary of the Company.
Warrant Certificates shall be dated the date of execution by the Company upon
initial issuance, division, exchange, substitution or transfer.
5. Transfer of Securities. The Agent does, and the
Holders will, at the time of their acquisition of their Warrants, covenant and
agree that they are acquiring the Warrants as an investment and not with a view
to distribution thereof. Holders of the Warrants or Warrant Shares may
transfer such Warrants or Warrant Shares only pursuant to applicable federal
and state laws. No transfer of any Warrant or Warrant Shares shall be
permitted unless the Company has received notice of such transfer, at the
address provided in Section 3.1 above, in the form of assignment attached
hereto, accompanied by an opinion of counsel reasonably satisfactory to the
Company that an exemption from registration of such Warrants or Warrant Shares
under the Act is available for such transfer. Any transferee must also
covenant and agree that it is acquiring such Warrants or Warrant Shares as an
investment and not with a view to distribution thereof.
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6. Exercise Price.
6.1 Initial and Adjusted Exercise Price. Except as
otherwise provided in Section 8 hereof, the Warrants shall be exercisable to
purchase Common Stock at a price of $4.00 per share. The adjusted exercise
price shall be the price which shall result from time to time from any and all
adjustments of the initial exercise price in accordance with the provisions of
Section 8 hereof.
6.2 Exercise Price. The term "Exercise Price" herein
shall mean the initial exercise price or the adjusted exercise price, depending
upon the context.
7. Registration Rights.
7.1 Registration Under the Securities Act of 1933. The
Warrants and the Warrant Shares (collectively, the "Warrant Securities") have
not been registered under the Act for public resale. Upon exercise, in part or
in whole, of the Warrants, certificates representing the shares of Common Stock
and any of the other securities issuable upon exercise of the Warrants shall
bear the following legend:
The securities represented by this certificate have not been
registered under the Securities Act of 1933 ("Act") for public resale,
and may not be offered or sold except pursuant to (i) an effective
registration statement under the Act, (ii) to the extent applicable,
Rule 144 under the Act (or any similar rule under such Act relating to
the disposition of securities), or (iii) an opinion of counsel, if
such opinion shall be reasonably satisfactory to the issuer, that an
exemption from registration under such Act is available.
7.2 Piggyback Registration. If, at any time commencing
after the date hereof until the later of (a) nine years from the First Closing
(as defined in the Placement Agency Agreement) or (b) the expiration of the
Warrant Exercise Term, the Company proposes to register any of its securities
under the Act (other than in connection with a merger or pursuant to Form ▇-▇,
▇-▇ or comparable registration statement) it will give written notice by
registered mail, at least thirty days prior to the filing of each such
registration statement, to the Agent and to all other Holders of the Warrant
Securities of its intention to do so. If the Agent or other Holders of the
Warrant Securities notify the Company within twenty days after receipt of any
such notice of its or their desire to include any Warrant Shares in such
proposed registration statement, the Company shall afford the Agent and such
Holders of the Warrant Securities the opportunity to have any such Warrant
Shares registered under such registration statement, subject to such cutback or
allocation as the lead underwriter of the offering shall determine in its
discretion, and subject to the prior inclusion of all shares otherwise
includable that are owned by a party to the Registration Rights Agreement dated
August 5, 1997.
Notwithstanding the provisions of this Section 7.2, the
Company shall have the right at any time after it shall have given written
notice pursuant to this Section 7.2 (irrespective of whether a written request
for inclusion of any such securities shall have been made) to elect to postpone
or not to file any such proposed registration statement, or to withdraw the
same after filing but prior to the effective date thereof.
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7.3 Demand Registration.
(a) So long as the Company shall have had any of its
securities registered under the Act or the Exchange Act, then, until the
expiration of the Warrant Exercise Term, the Holders of the Warrant Securities
representing a "Majority" (as hereinafter defined) of such securities (assuming
the exercise of all of the then outstanding Warrants) shall have the right on
two separate occasions (which right is in addition to the registration rights
under Section 7.2 hereof), exercisable by written notice to the Company, to
have the Company prepare and file with the Securities and Exchange Commission
(the "Commission"), on two occasions, a registration statement and such other
documents, including a prospectus, as may be necessary in the opinion of both
counsel for the Company and counsel for the Agent and Holders in order to
comply with the provisions of the Act, so as to permit a public offering and
sale of their respective Warrant Shares for 120 days by such Holder and any
other Holders of the Warrants and/or Warrant Shares who notify the Company
within ten days after receiving notice from the Company of such request.
(b) The Company covenants and agrees to give written
notice of any registration request under this Section 7.3 by any Holder or
Holders to all other registered Holders of the Warrants and the Warrant Shares
within ten days from the date of the receipt of any such registration request.
(c) All expenses (other than underwriting discounts and
commissions) incurred in connection with registration, filings or qualification
pursuant to the first registration request made pursuant to subsection (a) of
this Section 7.3, including, without limitation, all registration, listing,
filing and qualification fees, printers and accounting fees and the fees and
disbursements of counsel for the Holders participating in such shall be borne
by the Company. Upon a second registration request pursuant to subsection (a)
of this Section 7.3, the Holders requesting registration shall bear such costs
on a pro-rata basis with respect to the Agent's securities in respect of which
they are requesting registration.
7.4 Covenants of the Company With Respect to
Registration. In connection with any registration under Sections 7.2 or 7.3
hereof, the Company covenants and agrees as follows:
(a) The Company shall use its best efforts to file a
registration statement promptly after receipt of any demand therefor, shall use
its best efforts to have any registration statement declared effective at the
earliest possible time, and shall furnish each Holder desiring to sell Warrant
Shares such number of prospectuses as shall reasonably be requested.
(b) The Company will take all necessary action which may
be required in qualifying or registering the Warrant Shares included in a
registration statement for offering and sale under the securities or blue sky
laws of such states as reasonably are requested by the Holder(s), provided that
the Company shall not be obligated to execute or file any general consent to
service of process or to qualify as a foreign corporation to do business under
the laws of any such jurisdiction.
(c) The Company shall indemnify the Holder(s) of the
Warrant
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Shares to be sold pursuant to any registration statement and each person, if
any, who controls such Holders within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, against all loss, claim, damage, expense or
liability (including all expenses reasonably incurred in investigating,
preparing or defending against any claim whatsoever) to which any of them may
become subject under the Act or otherwise, in connection with the offer and
sale of the Warrant Shares; provided, however, that the Company will not be
liable in any such case to the extent that any such claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or an omission or alleged omission made in such registration statement in
reliance upon and in conformity with written information furnished to the
Company by the Holder(s) or any such controlling persons specifically for use
in the preparation thereof.
(d) The Holder(s) of the Warrant Shares to be sold
pursuant to a registration statement, and their successors and assigns, shall
severally, and not jointly, indemnify the Company, its officers and directors
and each person, if any, who controls the Company within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act, against all loss, claim,
damage or expense or liability (including all expenses reasonably incurred in
investigating, preparing or defending against any claim whatsoever) to which
they may become subject under the Act, the Exchange Act or otherwise, arising
from written information furnished by or on behalf of such Holders, or their
successors or assigns, for specific inclusion in such registration statement;
provided, however, that the indemnity of such Holders will apply in each case
if and to the extent, but only if and to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in such
registration statement in reliance upon and in conformity with written
information furnished to the Company by such Holders, specifically for use in
the preparation thereof.
(e) Nothing contained in this Agreement shall be
construed as requiring the Holder(s) to exercise their Warrants prior to the
initial filing of any registration statement or the effectiveness thereof.
(f) The Company shall not permit any securities other
than the Warrant Shares to be included in any registration statement filed
pursuant to Section 7.3 hereof, or permit any other registration statement to
be or remain effective during the effectiveness of a registration statement
(except any registration statement filed in accordance with Section 7.2 hereof)
filed pursuant to Section 7.3 hereof, without the prior written consent of the
Holders of the Warrant Shares representing a Majority of such securities then
outstanding (assuming an exercise of all of the then outstanding Warrants).
(g) The Company shall furnish to each underwriter (or if
there is none, to each Holder) participating in an offering including Warrant
Shares pursuant to Sections 7.2 or 7.3 hereof, a signed counterpart, addressed
to such underwriter or Holder (i) an opinion of counsel to the Company, dated
the effective date of such registration statement (and, if such registration
includes an underwritten public offering, an opinion dated the date of the
closing under the underwriting agreement), and (ii) a "cold comfort" letter
dated the effective date of such registration statement (and, if such
registration includes an underwritten public offering, a letter dated the date
of the closing under the underwriting agreement) signed by the independent
public accountants who have issued a report on the Company's financial
statements included in such
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registration statement, in each case covering substantially the same matters
with respect to such registration statement (and the prospectus included
therein) and, in the case of such accountants' letter, with respect to events
subsequent to the date of such financial statements, as are customarily covered
in opinions of issuer's counsel and in accountants' letters delivered to
underwriters in underwritten public offerings of securities.
(h) The Company shall as soon as practicable after the
effective date of a registration statement relating to any Warrant Shares
pursuant to Sections 7.2 or 7.3 hereof, and in any event within 15 months
thereafter, make "generally available to its security holders" (within the
meaning of Rule 158 under the Act) an earnings statement (which need not be
audited) complying with Section 11(a) of the Act and covering a period of at
least 12 consecutive months beginning after the effective date of the
registration statement.
(i) The Company shall deliver promptly to each Holder
participating in an offering including any Warrant Shares pursuant to Sections
7.2 or 7.3 hereof, who so requests and to the managing underwriter copies of
all correspondence between the Commission and the Company, its counsel or
auditors and all memoranda relating to discussions with the Commission or its
staff with respect to the registration statement and permit each Holder and
underwriter to do such investigation, upon reasonable advance notice, with
respect to information contained in or omitted from the registration statement
as it deems reasonably necessary to comply with applicable securities laws or
rules of the National Association of Securities Dealers, Inc. ("NASD"). Such
investigation shall include access to books, records and properties and
opportunities to discuss the business of the Company with its officers and
independent auditors, all to such reasonable extent and at such reasonable
times and as often as any such Holder shall reasonably request as it deems
necessary to comply with applicable securities laws or NASD rules.
(j) With respect to a registration pursuant to Section
7.3 hereof, the Company shall enter into an underwriting agreement with the
managing underwriter selected for such underwriting by Holders holding a
Majority of the Warrant Shares requested to be included in such underwriting.
Such managing underwriter(s) shall be satisfactory to the Company and each
Holder and such agreement shall be satisfactory in form and substance to the
Company, each Holder and such managing underwriters, and shall contain such
representations, warranties and covenants by the Company and such other terms
as are customarily contained in agreements of that type used by the managing
underwriter. The Holders shall be parties to any underwriting agreement
relating to an underwritten sale of their Warrant Shares and may, at their
option, require that any or all the representations, warranties and covenants
of the Company to or for the benefit of such underwriters shall also be made to
and for the benefit of such Holders. Such Holders shall not be required to
make any representations or warranties to or agreements with the Company or the
underwriters except as they may relate to such Holders and their intended
methods of distribution.
(k) In addition to the Warrant Shares, subject to the
second sentence of Section 7.2, upon the written request therefor by any
Holder(s), the Company shall include in the registration statement any other
shares of Common Stock of the Company held by such Holder(s) as of the date of
filing of such registration statement.
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(l) For purposes of this Agreement, the term "Majority"
in reference to the Holders of Warrants or Warrant Shares, shall mean in excess
of fifty (50%) percent of the then outstanding Warrants or Warrant Shares that
(i) are not held by the Company, an affiliate (excluding the Agent and any
affiliate of the Agent), officer, creditor, employee or agent thereof or any of
their respective affiliates, members of their family, persons acting as
nominees or in conjunction therewith or (ii) have not been resold to the public
pursuant to a registration statement filed with the Commission under the Act.
8. Adjustments to Exercise Price and Number of
Securities.
8.1 Computation of Adjusted Exercise Price. Except as
hereinafter provided, in case the Company shall at any time after the date
hereof issue or sell any shares of Common Stock (other than the issuances or
sales referred to in Section 8.7 hereof or issuance or sales upon the exercise
of Stock Options issued pursuant to the Stock Plan (each as defined in Section
8.2 hereof)), including shares held in the Company's treasury and shares of
Common Stock issued upon the exercise of any options, rights or warrants to
subscribe for shares of Common Stock and shares of Common Stock issued upon the
direct or indirect conversion or exchange of securities for shares of Common
Stock, for a consideration per share less than the Exercise Price in effect
immediately prior to the issuance or sale of such shares or the "Fair Market
Value" (as defined in Section 3.3 hereof) per share of Common Stock on the date
immediately prior to the issuance or sale of such shares, or without
consideration, then forthwith upon such issuance or sale, the Exercise Price
shall (until another such issuance or sale) be reduced to the lower of the
prices (calculated to the nearest full cent) determined as follows:
(1) by dividing (i) an amount equal to the sum of (a) the number
of shares of Common Stock outstanding immediately prior to such issuance or
sale multiplied by the then existing Exercise Price, and (b) the aggregate
amount of the consideration, if any, received by the Company upon such issuance
or sale, by (ii) the total number of shares of Common Stock outstanding
immediately after such issuance or sale; and
(2) by multiplying the Exercise Price in effect immediately prior
to the time of such issuance or sale by a fraction, the numerator of which
shall be the sum of (a) the number of shares of Common Stock outstanding
immediately prior to such issuance or sale multiplied by the Fair Market Value
immediately prior to such issuance or sale, plus (b) the aggregate amount of
the consideration received by the Company upon such issuance or sale, and the
denominator of which shall be the product of (x) the total number of shares of
Common Stock outstanding immediately after such issuance or sale, multiplied by
(y) the Fair Market Value immediately prior to such issuance or sale; provided,
however, that in no event shall the Exercise Price be adjusted pursuant to the
computations in this Section 8.1 to an amount in excess of the Exercise Price
in effect immediately prior to such computation, except in the case of a
combination of outstanding shares of Common Stock, as provided by Section 8.3
hereof.
For the purposes of this Section 8 the term Exercise Price
shall mean the Exercise Price per share of Common Stock set forth in Section 6
hereof, as adjusted from time to time pursuant to the provisions of this
Section 8.
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For the purposes of any computation to be made in accordance
with this Section 8.1, the following provisions shall be applicable:
(i) In case of the issuance or sale of shares of Common
Stock for a consideration part or all of which shall be cash, the amount of the
cash consideration therefor shall be deemed to be the amount of cash received
by the Company for such shares (or, if shares of Common Stock are offered by
the Company for subscription, the subscription price, or, if shares of Common
Stock are sold to underwriters or dealers for public offering without a
subscription offering, the public offering price, before deducting therefrom
any compensation paid or discount allowed in the sale, underwriting or purchase
thereof by underwriters or dealers or others performing similar services, or
any expenses incurred in connection therewith and less any amounts payable to
security holders or any affiliate thereof, including without limitation, any
employment agreement, royalty, consulting agreement, covenant not to compete,
earnout or contingent payment right or similar arrangement, agreement or
understanding, whether oral or written; all such amounts shall be valued at the
aggregate amount payable thereunder whether such payments are absolute or
contingent and irrespective of the period or uncertainty of payment, the rate
of interest, if any, or the contingent nature thereof except if the payment of
such amounts has, pursuant to this paragraph (i), has been approved by the
Agent.
(ii) In case of the issuance or sale (otherwise than as a
dividend or other distribution on any stock of the Company) of shares of Common
Stock for a consideration part or all of which shall be other than cash, the
amount of the consideration therefor other than cash shall be deemed to be the
value of such consideration as determined in good faith by the Board of
Directors of the Company.
(iii) Shares of Common Stock issuable by way of dividend or
other distribution on any stock of the Company shall be deemed to have been
issued immediately after the opening of business on the day following the
record date for the determination of stockholders entitled to receive such
dividend or other distribution and shall be deemed to have been issued without
consideration.
(iv) The reclassification of securities of the Company
other than shares of Common Stock into securities including shares of Common
Stock shall be deemed to involve the issuance of such shares of Common Stock
for a consideration other than cash immediately prior to the close of business
on the date fixed for the determination of security holders entitled to receive
such shares, and the value of the consideration allocable to such shares of
Common Stock shall be determined as provided in subsection (ii) of this Section
8.1.
(v) The number of shares of Common Stock at any one time
outstanding shall include the aggregate number of shares issued or issuable
(subject to readjustment upon the actual issuance thereof) upon the exercise
of then outstanding options, rights, warrants and upon the conversion or
exchange of then outstanding convertible or exchangeable securities.
(vi) No adjustment shall be made to the Exercise Price
then in effect upon the exercise of Stock Options issued pursuant to the Stock
Plan (as hereinafter
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defined), the Warrants or the conversion or exchange of convertible or
exchangeable securities outstanding as of the date hereof.
8.2 Options, Rights, Warrants and Convertible and
Exchangeable Securities.
In case the Company shall at any time after the date hereof
grant or issue options, rights or warrants to subscribe for shares of Common
Stock, or issue any securities convertible into or exchangeable for shares of
Common Stock, where the aggregate consideration per share is less than the
Exercise Price in effect immediately prior to the issuance of such options,
rights or warrants, or such convertible or exchangeable securities, other than
stock options granted to directors, officers or employees of, or consultants to
the Company or any of its subsidiaries ("Stock Options") pursuant to the
Company's Incentive Stock Option Plan or the Directors Stock Option Plan
(collectively referred to herein as the "Stock Plan"), the Exercise Price in
effect immediately prior to the issuance of such options, rights or warrants,
or such convertible or exchangeable securities, as the case may be, shall be
reduced to a price determined by making a computation in accordance with the
provisions of Section 8.1 hereof, provided that:
(a) The aggregate maximum number of shares of Common
Stock, as the case may be, issuable under such options, rights or warrants
shall be deemed to be issued and outstanding at the time such options, rights
or warrants were issued.
(b) The aggregate consideration for any such options,
rights or warrants shall be equal to the minimum purchase price per share
provided for in such options, rights or warrants at the time of issuance, plus
the consideration, if any, received by the Company for such options, rights or
warrants.
(c) The aggregate maximum number of shares of Common
Stock issuable upon conversion or exchange of any convertible or exchangeable
securities shall be deemed to be issued and outstanding at the time of issuance
of such securities.
(d) The aggregate consideration for any such convertible
or exchangeable securities shall be equal to the consideration received by the
Company for such securities, plus the minimum consideration, if any, receivable
by the Company upon the conversion or exchange thereof.
(e) If any change shall occur in the exercise price per
share provided for in any of the options, rights or warrants or in the price
per share at which convertible or exchangeable securities referred to in
subsection (b) of this Section 8.2 are convertible or exchangeable, such
options, rights or warrants or convertible or exchangeable securities, as the
case may be, shall be deemed to have expired or terminated on the date when
such price change became effective in respect of shares not theretofore issued
pursuant to the exercise or conversion or exchange thereof, and the Company
shall be deemed to have issued upon such date new options, rights or warrants
or convertible or exchangeable securities at the new price in respect of the
number of shares issuable upon the exercise of such options, rights or warrants
or the conversion or exchange of such convertible or exchangeable securities.
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(f) In case there has been any adjustment hereunder in
the Exercise Price by reason of the offer, issue or sale of any subscription or
purchase rights or options or any convertible or exchangeable securities or
obligations and the purchase, conversion or exchange privilege so created
thereafter terminates unexercised or changes, such Exercise Price shall as of
the date of such termination or change be adjusted to reflect such termination
or change.
8.3 Subdivision and Combination. In case the Company
shall at any time subdivide or combine the outstanding shares of Common Stock,
the Exercise Price shall forthwith be proportionately decreased in the case of
subdivision or increased in the case of combination.
8.4 Adjustment in Number of Securities. Upon each
adjustment of the Exercise Price pursuant to the provisions of this Section 8,
the number of securities issuable upon the exercise of each Warrant shall be
adjusted to the nearest full amount by multiplying a number equal to the
Exercise Price in effect immediately prior to such adjustment by the number of
Warrant Shares issuable upon exercise of the Warrants immediately prior to such
adjustment and dividing the product so obtained by the adjusted Exercise Price.
8.5 Definition of Common Stock. For the purpose of this
Agreement, the term "Common Stock" shall mean (i) the class of stock designated
as Common Stock in the Certificate of Incorporation of the Company as may be
amended as of the date hereof, or (ii) any other class of stock resulting from
successive changes or reclassifications of such Common Stock consisting solely
of changes in par value, or from par value to no par value, or from no par
value to par value.
8.6 Merger or Consolidation. In the event there is
proposed any consolidation of the Company with, or merger of the Company with
or into, another corporation, other than a merger or consolidation in which the
Company is the surviving corporation and after which at least 50% of the
outstanding voting securities of the Company are owned by the stockholders of
the Company immediately prior to such merger or consolidation, the Company
shall provide the Holder with not less than 20 days' prior written notice of
the proposed effective date of such merger or consolidation (the "Effective
Date"). The Holder shall be entitled to exercise its Warrants at any time up
to the third business day prior to the Effective Date, and this Agreement and
any unexercised Warrants shall terminate and be of no further force and effect
on the Effective Date (or such later date on which the merger or consolidation
becomes effective). Any such exercise by the Holder may be conditioned upon
and made subject to the consummation of the merger or consolidation.
8.7 No Adjustment of Exercise Price in Certain Cases. No
adjustment of the Exercise Price shall be made:
(a) Upon the issuance or sale of the Warrants or the
shares of Common Stock issuable upon the exercise of the Warrants.
(b) If the amount of said adjustment shall be less than 2
cents (2c.) per security issuable upon exercise of the Warrants; provided,
however, that in such case any adjustment that would otherwise be required then
to be made shall be carried
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forward and shall be made at the time of and together with the next subsequent
adjustment which, together with any adjustment so carried forward, shall amount
to at least 2 cents (2c.) per security issuable upon exercise of the Warrants.
(c) Upon the issuance of Stock Options (as defined in
Section 8.2 hereof), or any shares of Common Stock upon the exercise of Stock
Options issued pursuant to the Stock Plan.
8.8 Dividends and Other Distributions. In the event that
the Company shall at any time prior to the exercise of all Warrants declare a
dividend (other than a dividend consisting solely of shares of Common Stock) or
otherwise distribute to its stockholders any assets, property, rights, evidence
of indebtedness, securities (other than shares of Common Stock), whether issued
by the Company or by another, or any other thing of value, the Holders of the
unexercised Warrants shall thereafter be entitled, in addition to the shares of
Common Stock or other securities and property receivable upon the exercise
thereof, to receive, upon the exercise of such Warrants, the same property,
assets, rights, evidences of indebtedness, securities or any other thing of
value that they would have been entitled to receive at the time of such
dividend or distribution as if the Warrants had been exercised immediately
prior to such dividend or distribution. At the time of any such dividend or
distribution, the Company shall make appropriate reserves to ensure the timely
performance of the provisions of this Subsection 8.8.
9. Exchange and Replacement of Warrant Certificates.
Each Warrant Certificate is exchangeable without expense, upon the surrender
thereof by the registered Holder at the principal office of the Company, for a
new Warrant Certificate of like tenor and date representing in the aggregate
the right to purchase the same number of securities in such denominations as
shall be designated by the Holder thereof at the time of such surrender.
Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of any Warrant
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it, and reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
the Warrants, if mutilated, the Company will make and deliver a new Warrant
Certificate of like tenor, in lieu thereof.
10. Elimination of Fractional Interests. The Company
shall not be required to issue certificates representing fractions of shares of
Common Stock upon the exercise of the Warrants, but instead shall pay cash in
lieu of such fractional interests to the Holders entitled thereto based on the
Fair Market Value of the Common Stock as determined in good faith by the Board
of Directors of the Company.
11. Reservation and Listing of Securities. The Company
shall at all times reserve and keep available out of its authorized shares of
Common Stock, solely for the purpose of issuance upon the exercise of the
Warrants, such number of shares of Common Stock or other securities, properties
or rights as shall be issuable upon the exercise thereof. The Company
covenants and agrees that, upon exercise of the Warrants and payment of the
Exercise Price therefor, all shares of Common Stock and other securities
issuable upon such exercise shall be duly and validly issued, full paid,
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non-assessable and not subject to the preemptive rights of any stockholder.
12. Notices to Warrant Holders. Nothing contained in
this Agreement shall be construed as conferring upon the Holders the right to
vote or to consent or to receive notice as a stockholder in respect of any
meetings of stockholders for the election of directors or any other matter, or
as having any rights whatsoever as a stockholder of the Company. If, however,
at any time prior to the expiration of the Warrants and their exercise, any of
the following events shall occur:
(a) the Company shall take a record of the holders of its
shares of Common Stock for the purpose of entitling them to receive a
dividend or distribution payable otherwise than in cash, or a cash
dividend or distribution payable otherwise than out of current or
retained earnings, as indicated by the accounting treatment of such
dividend or distribution on the books of the Company; or
(b) the Company shall offer to all the holders of its
Common Stock any additional shares of capital stock of the Company or
securities convertible into or exchangeable for shares of capital
stock of the Company, or any option right or warrant to subscribe
therefor; or
(c) a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation or merger) or a
sale of all or substantially all of its property, assets and business
as an entirety shall be proposed;
then, in any one or more of said events, the Company shall give written notice
of such event at least fifteen days prior to the date fixed as a record date or
the date of closing the transfer books for the determination of the
stockholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, or entitled to vote on such
proposed dissolution, liquidation, winding up or sale. Such notice shall
specify such record date or the date of closing the transfer books, as the case
may be. Failure to give such notice or any defect therein shall not affect the
validity of any action taken in connection with the declaration or payment of
any such dividend, or the issuance of any convertible or exchangeable
securities, or subscription rights, options or warrants, or any proposed
dissolution, liquidation, winding up or sale.
13. Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed to have been
duly made when delivered, or mailed by registered or certified mail, return
receipt requested:
(a) If to the registered Holder of the Warrants, to the
address of such Holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth in
Section 3.1 hereof or to such other address as the Company may
designate by notice to the Holders.
14. Supplements and Amendments. The Company and the
Agent may from time to time supplement or amend this Agreement without the
approval of any Holders of Warrant Certificates (other than the Agent) in order
to cure any ambiguity, to
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Page 14
correct or supplement any provision contained herein which may be defective or
inconsistent with any provision herein, or to make any other provisions in
regard to matters or questions arising hereunder which the Company and the
Agent may deem necessary or desirable and which the Company and the Agent deem
shall not adversely affect the interests of any other Holders of Warrant
Certificates. Other amendments to this Agreement may be made only with the
written consent of the Holders of a Majority of the outstanding Warrant Shares
and the unexercised Warrants.
15. Successors. All the covenants and provisions of this
Agreement shall be binding upon and inure to the benefit of the Company, the
Holders and their respective successors and assigns hereunder.
16. Termination. This Agreement shall terminate at the
close of business on the seventh anniversary of the date hereof.
Notwithstanding the foregoing, the indemnification provisions of Section 7
hereof shall survive such termination until the close of business on the
fourteenth anniversary of the date hereof.
17. Governing Law: Submission to Jurisdiction. This
Agreement and each Warrant Certificate issued hereunder shall be deemed to be a
contract made under the laws of the State of New York and for all purposes
shall be construed in accordance with the laws of said State without giving
effect to the rules of said State governing the conflicts of laws.
The Company, the Agent and the Holders hereby agree that any
action, proceeding or claim against it arising out of, or relating in any way
to, this Agreement shall be brought and enforced in the courts of the State of
New York, and irrevocably submits to such jurisdiction, which jurisdiction
shall be exclusive. The Company, the Agent and the Holders hereby irrevocably
waive any objection to such exclusive jurisdiction or inconvenient forum. Any
such process or summons to be served upon any of the Company, the Agent and the
Holders (at the option of the party bringing such action, proceeding or claim)
may be served by transmitting a copy thereof, by registered or certified mail,
return receipt requested, postage prepaid, addressed to it at the address as
set forth in Section 13 hereof. Such mailing shall be deemed personal service
and shall be legal and binding upon the party so served in any action,
proceeding or claim. The Company, the Agent and the Holders agree that the
prevailing party(ies) in any such action or proceeding shall be entitled to
recover from the other party(ies) all of its/their reasonable legal costs and
expenses relating to such action or proceeding and/or incurred in connection
with the preparation therefor.
18. Entire Agreement. This Agreement (including the
Placement Agency Agreement to the extent portions thereof are referred to
herein) contains the entire understanding between the parties hereto and
supersedes all prior agreements and understandings, written or oral, with
respect to the subject matter hereof.
19. Severability. If any provision of this Agreement
shall be held to be invalid and unenforceable, such invalidity or
unenforceability shall not affect any other provision of this Agreement.
20. Captions. The caption headings of the Sections of
this Agreement are for convenience of reference only and are not intended, nor
should they
15
Page 15
be construed as, a part of this Agreement and shall be given no substantive
effect.
21. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any person or corporation other than
the Company and the Agent and any other registered Holder(s) of the Warrant
Certificates or Warrant Shares any legal or equitable right, remedy or claim
under this Agreement; and this Agreement shall be for the sole and exclusive
benefit of the Company and the Agent and any other Holder(s) of the Warrant
Certificates or Warrant Shares.
22. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and such counterparts shall together constitute but
one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, as of the day and year first above written.
[SEAL] ZYMETX, INC.
By
------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
President
Attest:
--------------------------
Secretary
▇▇▇▇▇▇▇ ▇▇▇▇▇ SECURITIES
INCORPORATED
By
------------------------
Name:
Title:
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Page 17
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, (ii) TO THE
EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT
RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF
SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO THE ISSUER, THAT AN EXEMPTION
FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
No. W- _________ Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that __________________, or
its registered assigns, is the registered holder of ______________ Warrants to
purchase initially, at any time after the date hereof until 5:30 p.m. New York
time on the last day of the Warrant Exercise Term ("Expiration Date"), up to
____________ fully paid and non- assessable shares of common stock, $.001 par
value ("Common Stock"), of ZYMETX, INC., a Delaware corporation (the
"Company"), (shares of Common Stock are referred to herein individually as a
"Security" and collectively as the "Securities"), at the initial exercise
price, subject to adjustment in certain events (the "Exercise Price"), of $4.00
upon surrender of this Warrant Certificate and payment of the Exercise Price at
an office or agency of the Company, but subject to the conditions set forth
herein and in the Warrant Agreement dated as of August 5, 1997 between the
Company and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Securities Incorporated (the "Warrant Agreement").
Capitalized terms used herein and not defined herein shall have the meanings
ascribed to such terms by the Warrant Agreement. Payment of the Exercise Price
shall be made by certified or official bank check in New York Clearing House
funds payable to the order of the Company or by any other method permitted by
the Warrant Agreement.
No Warrant may be exercised after 5:30 p.m., New York, time,
on the Expiration Date, at which time all Warrants evidenced hereby, unless
exercised prior thereto, hereby shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of
a duly authorized issue of Warrants issued pursuant to the Warrant Agreement,
which Warrant Agreement is hereby incorporated by reference in and made a part
of this instrument and is hereby referred to for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Company and the holders (the words "holders" or "holder" meaning the registered
holder or registered holders) of the Warrants.
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Page 18
The Warrant Agreement provides that upon the occurrence of
certain events the Exercise Price and the type and/or number of the Company's
securities issuable thereupon may, subject to certain conditions, be adjusted.
In such event, the Company will, at the request of the holder, issue a new
Warrant Certificate evidencing the adjustment in the Exercise Price and the
number and/or type of securities issuable upon the exercise of the Warrants;
provided, however, that the failure of the Company to issue such new Warrant
Certificates shall not in any way change, alter, or otherwise impair, the
rights of the holder as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this
Warrant Certificate and executed form of assignment as attached hereto at an
office or agency of the Company, a new Warrant Certificate or Warrant
Certificates of like tenor and evidencing in the aggregate a like number of
Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the Warrant
Agreement, without any charge except for any tax or other governmental charge
imposed in connection with such transfer.
Upon the exercise of less than all of the Warrants evidenced
by this Certificate, the Company shall forthwith issue to the holder hereof a
new Warrant Certificate representing such numbered unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof
as the absolute owner(s) of this Warrant Certificate (notwithstanding any
notation of ownership or other writing hereon made by anyone), for the purpose
of any exercise hereof, and of any distribution to the holder(s) hereof, and
for all other purposes, and the Company shall not be affected by any notice to
the contrary.
All terms used in this Warrant Certificate which are defined
in the Warrant Agreement shall have the meanings assigned to them in the
Warrant Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed under its corporate seal.
Dated as of _____ __, 1997
ZYMETX, INC.
[SEAL] By
-----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
President
Attest:
--------------------------
Secretary
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[FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 3.1]
The undersigned hereby irrevocably elects to exercise the
right, represented by this Warrant Certificate, to purchase _______________
shares of Common Stock.
In accordance with the terms of Section 3.1 of the Warrant
Agreement dated as of ________ __, 1997 between ZymeTx, Inc., and ▇▇▇▇▇▇▇
▇▇▇▇▇ Securities Incorporated, the undersigned requests that a certificate for
such securities be registered in the name of ______________ whose address is
______________ ________________________ and that such Certificate be delivered
to ____________________ whose address is _________________________
___________________.
Dated: ,
------
Signature:
-------------------------------
(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant Certificate.)
-------------------------------
(Insert Social Security or
Other Identifying Number of
Holder)
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[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED ______________________ here sells, assigns
and transfers unto _______________________
________________________________________________________________________________
________
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _________________ Attorney,
to transfer the within Warrant Certificate on the books of the within-named
Company, with full power of substitution.
Dated:
Signature:
-------------------------------
(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant Certificate.)
-------------------------------
(Insert Social Security or
Other Identifying Number of
Holder)
