<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14a INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
ZYMETX, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
-----------------------------------------------------------------------
<PAGE> 2
ZYMETX, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 17, 1999
To the stockholders of ZymeTx, Inc.
Date: Wednesday, November 17, 1999
Time: 9:00 a.m.
Place: Wileman Learning Center/Lytle Foyer
Oklahoma Medical Research Foundation
825 N.E. 13th Street
Oklahoma City, Oklahoma 73104
We will hold our Annual Meeting of Stockholders on November 17, 1999
at 9:00 a.m, Central Standard Time at the Wileman Learning Center/Lytle Foyer,
at the Oklahoma Medical Research Foundation. During the meeting, we will
consider and take action on the following items:
(1) To elect two Class II directors, each for a term of three
years;
(2) To ratify the selection of Ernst & Young LLP as our
independent auditors for the fiscal year ending June 30,
2000; and
(3) To transact any other business properly brought before the
meeting or any adjournment thereof.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ G. CARL GIBSON
G. Carl Gibson, Secretary
Oklahoma City, Oklahoma
October 21, 1999
<PAGE> 3
ZYMETX, INC.
800 Research Parkway, Suite 100
Oklahoma City, Oklahoma 73104
PROXY STATEMENT
FOR THE
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 17, 1999
This proxy statement and the accompanying proxy are first being mailed
on or about October 21, 1999, to owners of shares of common stock of ZymeTx,
Inc. in connection with the solicitation of proxies by the Board of Directors
for the 1999 Annual Meeting of Stockholders. The meeting will be held on
Wednesday, November 17, 1999, at 9:00 a.m. Central Standard Time, at the
Wileman Learning Center/Lytle Foyer, at the Oklahoma Medical Research
Foundation, 825 N.E. 13th Street, Oklahoma City, Oklahoma 73104.
GENERAL
OUTSTANDING SHARES AND VOTING RIGHTS; VOTING PROCEDURES
At October 13, 1999, ZymeTx had outstanding 6,699,695 shares of common
stock, $.001 par value. Common stockholders of record at the close of business
on October 13, 1999 may vote at the meeting. At least a majority of the
outstanding shares of common stock is necessary to constitute a quorum. The
affirmative vote of a majority of the outstanding shares of common stock
present at the meeting, in person or by proxy, is required for each of the
matters being voted on. Stockholders do not have cumulative voting rights.
A proxy is a person you appoint to vote on your behalf. If you are
unable to attend the meeting, we encourage you to appoint a proxy so that your
shares of common stock may be voted. You may vote on the matters at the meeting
by marking your preferences on the enclosed proxy card and by dating, signing,
and returning the proxy card in the enclosed envelope. If you attend the
meeting you may revoke your proxy and vote in person, even if you signed and
mailed the enclosed proxy card.
By signing the enclosed proxy card you will be designating James R.
Tolbert III, our Chairman and G. Carl Gibson, our Vice President, Controller,
and Secretary, as your proxies. They may act together or individually on your
behalf, and will have authority to appoint a substitute to act as proxy. Your
proxy will vote according to the instructions on your proxy card. If you do not
indicate a preference on the proxy card, the proxy will vote (i) "FOR" the
nominees to serve as Class II Directors; and (ii) "FOR" the ratification and
selection of Ernst & Young LLP as independent auditors.
You may revoke your proxy at any time before the shares are voted by
either:
o notifying the Secretary, G. Carl Gibson, in writing, at 800
Research Parkway, Suite 100, Oklahoma City, Oklahoma 73104, that
you are revoking your proxy;
o attending the meeting and voting by ballot; or
o submitting a new proxy card.
We do not anticipate that matters other than those described above
will be submitted for a vote at the meeting. The proxies are authorized,
however, to vote on your behalf using their best judgement on any other
business that properly comes before the meeting.
If you abstain from voting we will treat it as if you were present or
represented at the meeting. However, if you do not vote we will treat it as if
you were not present or represented at the meeting.
<PAGE> 4
RECORD DATE
All common stockholders at the close of business on October 13, 1999
are entitled to receive notice of and to vote at the annual meeting. Each
outstanding share of common stock is entitled to one vote on all matters
submitted at the meeting. You do not have cumulative voting rights.
EXPENSES OF SOLICITATION AND REIMBURSEMENT OF NOMINEES
ZymeTx will be responsible for the expenses of this solicitation of
proxies, which include expenses incurred in connection with the preparation and
mailing of the proxy statement and all accompanying and supplemental documents.
We will primarily solicit proxies by mail. However, our officers and regular
employees may solicit proxies by telephone, facsimile transmission or personal
calls. We will reimburse brokerage houses, custodians, nominees and fiduciaries
for their reasonable expenses for forwarding proxy and solicitation material to
the owners of common stock.
STOCKHOLDER PROPOSALS
Stockholder proposals to be presented at our year 2000 Annual Meeting
must be submitted in writing by June 17, 2000 to G. Carl Gibson, Secretary, at
800 Research Parkway, Suite 100, Oklahoma City, Oklahoma 73104. You should
submit any proposal by a method that permits you to prove the date of delivery
to us.
2
<PAGE> 5
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table shows information regarding the beneficial
ownership of our common stock as of October 13, 1999, by:
o each person we know to be the beneficial owner of at least 5% of
our common stock;
o each executive officer and director; and
o all directors and executive officers as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT
BENEFICIALLY OF
NAME AND ADDRESS OWNED(1) CLASS(1)
---------------- ---------------- --------
<S> <C> <C>
Kevin Kimberlin (2)
c/o Spencer Trask Securities
Incorporated
535 Madison Avenue
New York, New York 10022 610,248 8.8%
OMRF (3)
825 N.E. 15th Street
Oklahoma City, Oklahoma 73105 321,291 4.8%
US Ventech, Inc.
c/o Friedli Corporate Finance
AG Freigustrasse 5
Zurich, Switzerland 8002 456,250 6.8%
Peter G. Livingston (4)(5) 212,335 3.1%
Norman R. Proulx -0- *
James R. Tolbert III -0- *
William I. Bergman (6) 16,667 *
Christopher M. Salyer (6) 8,333 *
David L. Rainbolt (7) 16,146 *
Gilbert M. Schiff, M.D. (6) 25,000 *
J. Vernon Knight, M.D. (6) 16,667 *
William G. Thurman, M.D.(8) 14,583 *
Craig D. Shimasaki, Ph.D. (9) 30,646 *
Charles E. Seeney (6)(10) 11,866 *
Gary W. Pedersen (6) (11) 10,000 *
Robert J. Hudson, M.D. (12) 15,580 *
All Directors and Executive Officers
as a Group (14 persons)(13) 408,450 5.8%
</TABLE>
- --------------------------
* Represents less than 1%.
(1) The persons named in this table have sole voting and investment power
with respect to all of the securities shown as beneficially owned by
them, except as indicated in the other footnotes to this table.
Beneficial ownership is determined in accordance with the rules and
regulations of the SEC. Shares of common stock subject to options
currently exercisable or exercisable on or before December 12, 1999,
are referred to herein as "currently exerciseable options", and are
deemed outstanding for purposes of computing the percentage of
ownership for such person but are not deemed outstanding in computing
the percentage of ownership of any other person.
(2) The shares beneficially owned by Mr. Kimberlin include shares held by
Oshkim Limited Partners, L.P., and 257,688 shares of common stock
subject to warrants held by Oshkim and Spencer Trask Holdings, Inc.
3
<PAGE> 6
(3) Includes 27,542 shares of common stock subject to warrants held by
OMRF.
(4) Includes 211,835 shares subject to currently exercisable options.
(5) On August 9, 1999, Mr. Livingston was terminated as an officer and
director of ZymeTx, Inc.
(6) Represents shares subject to currently exercisable options.
(7) Includes 8,333 shares subject to currently exercisable options and
includes 7,813 shares beneficially owned by Trend Venture Corp.
(8) Includes 8,333 shares subject to currently exercisable options and
includes 6,250 shares beneficially owned by the William G. and
Gabrielle Thurman Living Trust (12/96).
(9) Includes 25,889 shares subject to currently exercisable options..
(10) On September 1, 1999, Mr. Seeney resigned.
(11) On June 30, 1999, Mr. Pedersen resigned.
(12) Includes 11,922 shares subject to currently exercisable options.
(13) Includes 366,620 shares subject to currently exercisable options.
PROPOSAL ONE
ELECTION OF DIRECTORS
GENERAL
The Board of Directors has set the number of directors at eight
members. The directors are divided into three classes. Each class consists (as
nearly as possible) of an equal number of members. At each annual meeting, the
term of one class expires. Directors in each class serve three-year terms. The
Board may fix the total number of directors that constitutes the whole Board of
Directors.
The Board proposes the election of two Class II directors. The Class
II nominees will serve until the annual meeting of stockholders in the year
2002. If any nominee is unable or unwilling to stand for election or to serve
as a director, which we do not contemplate, the Board may designate a
substitute. In this event, shares represented by proxies may be voted for a
substitute nominee.
NOMINEES
The following table sets forth the name, principal occupation, age,
year in which the individual first became a director, and year in which the
director's term will expire (if elected) for each nominee for election as a
director.
<TABLE>
<CAPTION>
IF ELECTED,
NAME CLASS FIRST ELECTED TERM WILL EXPIRE AGE
---- ----- ------------- ---------------- ---
<S> <C> <C> <C> <C>
J. Vernon Knight, M.D. II 1996 2002 82
William G. Thurman, M.D. II 1997 2002 71
</TABLE>
J. Vernon Knight, M.D. has served as a director since May 1996, and
since 1966 has held a variety of positions at Baylor College of Medicine,
including Professor and Chairman of the Department of Microbiology and
Immunology, Director of the Center for Biotechnology, and Professor and Acting
Chairman of the Department of Molecular Physiology and Biophysics. Dr. Knight
has also served as Clinical Director of the National Institute of Allergy and
Infectious Disease at the National Institutes of Health from 1959 until 1966.
4
<PAGE> 7
William G. Thurman, M.D. has served as a director since August 1997,
and is currently President Emeritus of OMRF. He received his M.D. from the
McGill School of Medicine at Montreal, Quebec and later served as professor at
various Schools of Medicine including Tulane University, Emory University,
Cornell University and the University of Virginia. He served as Dean at Tulane
University School of Medicine from 1973 until 1975. From 1975 to 1979 Dr.
Thurman served as Provost and Vice President for Medical Affairs at the
University of Oklahoma Health Sciences Center. From 1979 until his retirement
in 1997, Dr. Thurman served as President and Scientific Director of OMRF. Dr.
Thurman continues to practice medicine as a Pediatric Hematologist/Oncologist.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES
AND PROXIES SOLICITED BY THE BOARD, IF PROPERLY SIGNED AND RETURNED, WILL BE
VOTED "FOR" THE ELECTION OF EACH SUCH NOMINEE.
OTHER DIRECTORS
The following sets forth the name, principal occupation, year in which
the individual first became a director, and the year in which the director's
term will expire:
<TABLE>
<CAPTION>
FIRST BECAME TERM
NAME A DIRECTOR EXPIRES AGE
---- ----------- ------- ---
<S> <C> <C> <C>
James R. Tolbert III (1) 1999 2001 64
Norman R. Proulx (2) 1999 2000 52
William I. Bergman (3) 1996 2000 68
David E. Rainbolt (4) 1996 2000 43
Christopher M. Salyer (5) 1998 2001 47
Gilbert M. Schiff, M.D. (6) 1994 2001 68
</TABLE>
--------------------
(1) James R. Tolbert III, Class I director, has served as Chairman of
the ZymeTx Board of Directors since June 1999. Mr.Tolbert is Chairman
and President of First Oklahoma Corporation, a company that manages a
diversified real estate portfolio and distributes insurance and
investment products through regional banks. Mr. Tolbert is a member of
the Board of Trustees of the Presbyterian Health Foundation and
Chairman of the Dean A. McGee Eye Institute, both in Oklahoma City. He
is also a member of the Board of Directors of Sun Healthcare Group,
Inc.
(2) Norman R. Proulx, Class III director, has served as the President
and Chief Executive Officer of ZymeTx since August 1999. Mr. Proulx
previously served as the Managing Director of Cortec Group, a private
equity investment firm, from 1997 to 1999. From 1990 to 1996, he
served as President and Chief Executive Officer of Seymour Housewares
Corporation. Mr. Proulx served as President of Wilkinson Sword Limited
from 1984 to 1990. From 1978 to 1984 he served first as the Chief
Financial Officer, then as General Manager for Scripto/Wilkinson
Sword.
(3) William I. Bergman, Class III director, has served as President of
the Council on Family Health since 1990. Mr. Bergman served in various
positions with Richardson-Vicks, Inc., a health and personal care
products company, until he retired in 1990. From 1985 to 1990 he
served as President of Richardson-Vicks USA and from 1988 to 1990 as
Vice President of its parent, the Proctor & Gamble Company.
(4) David E. Rainbolt, Class III director, has served as a director of
BancFirst Corporation since July 1984. He has also served as President
and Chief Executive Officer of BancFirst since January 1992 and as
Executive Vice President and Chief Financial Officer from July 1984 to
December 1991. Mr. Rainbolt was President of Trencor, Inc. from
January 1982 to January 1984.
(5) Christopher M. Salyer, Class I director, has served as Chairman
and Chief Executive Officer of Southwest Medical Holdings, Inc., a
medical reference laboratory company since 1998. Since 1994, he has
served as the Chairman of Accounting Principals, Inc., a company
specializing
5
<PAGE> 8
in the placement of accounting personnel. From 1984 through 1994, Mr.
Salyer served as the Chairman and Chief Executive Officer of National
Check Cashers Corporation, a retail financial services company. Mr.
Salyer serves as a director of CD Warehouse, Inc., a publicly-held
retailer of recorded music. He is also a certified public accountant.
(6) Gilbert M. Schiff, M.D., Class I director, served as President of
the Gamble Institute of Medical Research in Cincinnati, Ohio, from
1974 to 1995, and from 1974 to 1992 he was director of the Division of
Clinical Research at that institution. From 1974 to 1995 Dr Schiff was
a director when the Gamble Institute merged with the Childrens
Hospital Research Foundation in October 1995 and became the Gamble
Program for Clinical Studies.
EXECUTIVE OFFICERS
Each year the Board of Directors elects the executive officers to
serve until the next annual meeting of the Board and until their respective
successors are chosen and qualified. Set forth below are the name, age and
description of the background and principal occupation of each executive
officer who is not a director.
Craig D. Shimasaki, Ph.D., 43, has served as Vice President of
Research of ZymeTx since 1996. From 1993 to 1996 he was employed by OMRF as
Visiting Research Scientist. From 1987 until 1993, he served as Executive
Director of Research and Department Head of Biochemistry of Symex. From 1983 to
1987 he worked at Genentech, Inc. as a research associate on the purification,
characterization and epitope mapping of its gp120 AIDS vaccine. Dr. Shimasaki
established the ZymeTx Biochemistry Department and co-developed and implemented
a GMP manufacturing documentation system and manufacturing area. He has
developed and optimized fluorescent antibody coupling procedures which have
resulted in the investigational ViraSTAT parainfluenza MAb kit. His work
includes the co-development of the format of the ViraZyme assay. He is a
co-inventor of the patent for the method of the ViraZyme influenza viral
detection in clinical specimens. Dr. Shimasaki received his B.S. in
Biochemistry from the University of California at Davis and his Ph.D. in
Molecular Biology and Biotechnology from the University of Tulsa.
G. Carl Gibson, 40, has served as ZymeTx's Vice President, Controller,
Treasurer and Secretary since 1997. From 1989 to 1997, he was the Chief
Operating Officer of First Commercial Bank, Oklahoma. From 1985 to 1989 he was
the Chief Financial Officer at Citizens Bank, Oklahoma. Mr. Gibson received his
B.A. in Accounting from the University of Oklahoma and is a certified public
accountant.
Robert J. Hudson, M.D., 60, has served as Medical Director of ZymeTx
since 1997 and was elected as Vice President of Medical and Marketing in
October 1999. Dr. Hudson trained in Pediatrics with a focus on infectious
disease at the University of Texas Southwestern Medical School. He had a
clinical practice and teaching appointments for 20 years. In 1989 Dr. Hudson
entered the Managed Care arena full-time and most recently as the Chief Medical
Officer of MetraHealth/United Healthcare. Prior to joining ZymeTx, Dr. Hudson
operated a healthcare consulting firm.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board has an Audit Committee, a Compensation Committee, a Finance
Committee, a Mergers and Acquisitions Committee and a Nominating Committee.
Audit Committee. The Audit Committee's functions include:
o reviewing and recommending to the Board (subject to stockholder
approval) the independent auditors selected to audit our
financial statements, including the review and approval of the
fees charged for all services by the independent auditors;
o reviewing the scope of the annual audit plan;
6
<PAGE> 9
o reviewing our audited financial statements;
o reviewing the management letter comments from our independent
auditors, including management's responses and plans of action;
o reviewing the proposed annual audit plan and objectives,
quarterly reports of audit activity and adequacy of staff;
o reviewing from time to time our general policies and procedures
with respect to auditing, accounting and the application of
resources;
o reviewing any other matters and making special inquiries and
investigations referred to it by the Board; and
o making other recommendations to the Board as the committee may
deem appropriate.
The voting members of the Audit Committee are Mr. Rainbolt and Mr.
Salyer, whose terms will expire at the annual meeting. Mr. Gibson serves as a
non-voting member of the Audit Committee. The Audit Committee met three times
during fiscal 1999.
Compensation Committee. The Compensation Committee's functions include:
o determining base salaries, annual incentive bonus awards and
other compensation awards to our executive officers; and
o administering the ZymeTx Stock Option Plan and ZymeTx Directors
Stock Option Plan.
The members of the Compensation Committee are Mr. Bergman and Dr.
Thurman, whose terms will expire at the annual meeting. The Compensation
Committee met two times during fiscal 1999.
Finance Committee. The Finance Committee generally evaluates and makes
recommendations concerning our financing activities to the Board. The members
of the Finance Committee are Mr. Rainbolt and Mr. Salyer, whose terms will
expire at the annual meeting. The Finance Committee met three times during
fiscal 1999.
Mergers and Acquisitions Committee. In February 1999 the Board
established a Mergers and Acquisitions Committee. The Mergers and Acquisitions
Committee's functions include:
o evaluating, considering and recommending to the Board the
advisability of undertaking acquisitions of other companies;
o recommending the purchase price payable in acquisitions; and
o considering and making recommendations with respect to other
aspects of such transactions.
The members of the Mergers and Acquisitions Committee are Dr. Thurman
and Mr. Rainbolt. The Mergers and Acquisitions Committee met two times during
fiscal 1999.
Nominating Committee. The Nominating Committee's function is to make
recommendations to the Board concerning all facets of the director selection
process. Our bylaws include additional information for nominating director
candidates. If you wish to propose director candidates for the Nominating
Committee to consider, you may do so by writing to G. Carl Gibson, Secretary,
at 800 Research Parkway, Suite 100, Oklahoma City, Oklahoma 73104 and must
provide the information specified in our bylaws, which includes:
o the candidate's name;
o biographical data; and
o qualifications.
The written notice must be received at least 40 days prior to the
stockholders' meeting. The members of the Nominating Committee are Dr. Thurman
and Mr. Rainbolt. The Nominating Committee met one time during fiscal 1999.
7
<PAGE> 10
MEETINGS OF THE BOARD OF DIRECTORS.
The Board held seven meetings during fiscal 1999. Each director
attended at least 75% of the Board meetings and at least 75% of his respective
committee meetings.
EXECUTIVE COMPENSATION AND OTHER MATTERS
SUMMARY COMPENSATION TABLE. The following information summarizes the
annual and long-term compensation of the President and Chief Executive Officer
of ZymeTx and the other three most highly compensated executive officers for
fiscal years 1997, 1998 and 1999:
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------- -----------
SECURITIES
OTHER ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION ($) OPTIONS (#)
- --------------------------- ---- ----------- --------- ---------------- -----------
<S> <C> <C> <C> <C> <C>
Peter G. Livingston (1)(2) 1999 $ 145,000 $ 18,125 B B
President and Chief Executive Officer 1998 146,260 18,125 B 33,669
1997 120,000 25,000 $48,000(1) B
Craig D. Shimasaki, Ph.D. 1999 104,583 5,200 B B
Vice President of Research 1998 99,167 5,200 B 13,553
1997 (3) B B B
Charles E. Seeney (4) 1999 108,250 6,000 B B
Vice President of Operations and 1998 99,167 6,000 B 7,465
Strategic Development 1997 7,500 B B 20,000
Gary W. Pedersen (5) 1999 107,750 4,200 B B
Vice President of Marketing and Sales 1998 105,000 4,200 B 3,350
1997 13,979 B B 20,000
</TABLE>
- ----------------------
(1) Includes compensation unpaid in prior years which was contingent upon
successful financial arrangements which were accomplished in 1997.
(2) On August 9, 1999, Mr. Livingston's employment was terminated.
(3) OMRF, through an administrative service agreement, leased employees to
ZymeTx on a marginal cost basis.
(4) On September 1, 1999, Mr. Seeney resigned.
(5) On June 30, 1999, Mr. Pedersen resigned.
8
<PAGE> 11
STOCK OPTIONS. The following table provides information about grants
of stock options made during fiscal 1999 to each of the named executive
officers.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES % OF TOTAL OPTIONS EXERCISE OR
UNDERLYING OPTIONS GRANTED TO EMPLOYEES BASE PRICE
GRANTED (1) IN FISCAL YEAR (2) ($/SH.) (3) EXPIRATION DATE
----------- --------------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
Peter G. Livingston (4) 33,669 17.02% $4.94 8/18/08
Craig D. Shimasaki, Ph.D. 13,553 6.85% $4.94 8/18/08
Charles E. Seeney (5) 7,465 3.77% $4.94 8/18/08
Gary W. Pedersen (6) 3,350 1.69% $4.94 8/18/08
</TABLE>
- ------------------------
(1) Each option has a term of four years from the date of the grant and
vests at a rate of 25% per year over a four-year period beginning on
the first anniversary of the date of grant.
(2) We granted employees options to acquire 197,824 shares of our common
stock in fiscal 1999.
(3) The exercise price of each option was equal to 100% of the fair market
value of the common stock on the date of grant, as determined by the
Compensation Committee of the Board of Directors.
(4) On August 9, 1999, Mr. Livingston's employment was terminated and
16,835 shares of this stock option grant are exercisable until
October, 23, 1999.
(5) On September 1, 1999, Mr. Seeney resigned. These options were
cancelled September 1, 1999.
(6) On June 30, 1999, Mr. Pedersen resigned. These options were cancelled
June 30, 1999.
OPTION EXERCISES AND YEAR END VALUE TABLE. The following table shows
information about the number and estimated value of the unexercised options for
the named executive officers at June 30, 1999.
<TABLE>
<CAPTION>
SHARE VALUE NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-THE-
ACQUIRED ON RECEIVED UNDERLYING UNEXERCISED MONEY
EXERCISE (#) ($) OPTIONS AT FISCAL YEAR-END (#) OPTIONS AT FISCAL YEAR-END ($)(1)
------------ -------- ------------------------------ ---------------------------------
NAME EXERCISABLE UNEXERCISEABLE EXERCISABLE UNEXERCISEABLE
- ---- ----------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Peter G. Livingston - 0 - - 0 - 146,250 82,419 $146,250 $48,750
(2)
Craig D. Shimasaki, - 0 - - 0 - 22,500 26,053 22,500 12,500
Ph.D.
Charles E. Seeney (3) - 0 - - 0 - 10,000 17,465 5,000 5,000
Gary W. Pedersen (4) - 0 - - 0 - 10,000 13,350 - 0 - - 0 -
</TABLE>
- -------------------
(1) Calculated on the basis of the fair market value of the underlying
securities at June 30, 1999 ($2.00) minus the exercise price.
(2) On August 9, 1999, Mr. Livingston's employment was terminated and
211,835 options held by Mr. Livingston are exercisable until October
23, 1999.
(3) On September 1, 1999, Mr. Seeney resigned and 11,866 options held by
Mr. Seeney are exercisable until November 28, 1999.
(4) On June 30, 1999, Mr. Pedersen resigned and 10,000 options held by Mr.
Pedersen are exercisable until November 28, 1999.
9
<PAGE> 12
AGREEMENTS WITH OFFICERS
ZymeTx entered into an Executive Services Agreement with Peter G.
Livingston, the former President and CEO of ZymeTx, effective July 1, 1997. The
agreement provided for an annual salary of $145,000, and an annual bonus of up
to 50% of his annual salary, if and to the extent awarded. The agreement was
terminable by either party at any time upon 30 days notice.
On July 15, 1999 the term of Mr. Livingston's Executive Services
Agreement was extended until July 1, 2000. However, on August 23, 1999 ZymeTx
gave notice to Mr. Livingston that his employment was terminated. Under the
Executive Service Agreement ZymeTx must pay Mr. Livingston his monthly salary
for 12 months starting on September 23, 1999 totaling $145,000, and 50% of his
previous bonus totaling $9,062.50. Additionally, 57,167 stock options held by
Mr. Livingston at the time his employment was terminated became vested and
exercisable. Mr. Livingston also is entitled to purchase an aggregate of
211,835 shares of common stock, including those that immediately vested upon
notice of his termination. All of the referenced stock options expire on
October 23, 1999.
On July 29, 1996 ZymeTx entered into a Noncompetition Agreement with
Craig D. Shimasaki, Ph.D. This agreement provides that in the event Dr.
Shimasaki's employment is terminated without cause, ZymeTx will pay Dr.
Shimasaki as severance an amount equal to his annual salary at the time of his
termination.
On April 14, 1999, ZymeTx entered into Severance Compensation
Agreements with Mr. Gibson, Dr. Hudson, Mr. Livingston, Dr. Shimasaki, Mr.
Seeney, and Mr. Pedersen. Thereafter, Mr. Seeney and Mr. Pedersen resigned as
executive officers and Mr. Livingston was terminated. Each of the agreements
provides that if the respective officer is terminated following a change in
control, ZymeTx will pay the officer either:
o an amount equal to the officer's annual salary; or
o two times the amount of the officer's annual salary.
The amount payable depends on the conditions involved in the change in control.
This Severance Compensation Agreement does not apply if the officer is
terminated due to disability, retirement, for cause or if such officer resigns.
EMPLOYEE STOCK PURCHASE PLAN
We adopted the ZymeTx Employee Stock Purchase Plan effective
January 1, 1999. The plan provides that each eligible employee may elect to
have up to 10% of their compensation deducted from their pay during any
quarter. An employee must have completed at least three months of service with
ZymeTx before being eligible to participate in the plan. The option price under
the plan is the lesser of 85% of the price of the stock on the first day of
such quarter or 85% of the price of the stock on the last day of such quarter.
The options will be continually granted and automatically exercised each
quarter in which the plan is in effect. The Board has authorized 50,000 shares
for issuance under the plan. For the year ended June 30, 1999, 4,692 shares of
stock were purchased though the plan for a total of $8,974, or $1.91 per share.
COMPENSATION OF DIRECTORS
Non-employee directors are paid $1,000 per quarter, plus $500 for each
telephonic meeting, for serving as directors and are granted options to
purchase shares of ZymeTx common stock.
CHANGES IN CONTROL
We do not know of any arrangements (including any pledge by a person
of our securities) which would result in a change in control.
10
<PAGE> 13
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
No report required by Section 16(a) of the Exchange Act was filed late
by any officer, director or beneficial owner of more than 10% of the ZymeTx
common stock nor has there been any other known failure to file a required
form.
PROPOSAL TWO
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has selected Ernst & Young LLP as independent
certified public accountants to audit our consolidated financial statements for
the fiscal year ending June 30, 2000. We ask that you ratify such selection. We
must have an affirmative vote by a majority of the outstanding shares of common
stock present at the meeting in person or by proxy to ratify the appointment of
Ernst & Young LLP as independent certified public accountants. Ernst & Young
LLP served as our independent certified public accountants and reported on our
consolidated financial statements for the fiscal 1999. We expect
representatives of Ernst & Young LLP to attend the annual meeting, respond to
appropriate questions and be given the opportunity to speak.
Your ratification is not required for the selection of Ernst & Young
LLP since the Board is responsible for selecting our independent certified
public accountants. However, the selection is submitted for ratification so we
can have your opinion, which the Board will take into consideration in future
deliberations.
THE BOARD RECOMMENDS A VOTE "FOR" THE RATIFICATION OF ERNST & YOUNG
LLP AS THE INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS FOR ZYMETX FOR FISCAL YEAR
ENDING JUNE 30, 2000.
ANNUAL REPORT ON FORM 10-KSB
YOU MAY REQUEST A COPY OF THE ZYMETX, INC. ANNUAL REPORT ON FORM
10-KSB FOR THE FISCAL YEAR ENDED JUNE 30, 1999, BY WRITING G. CARL GIBSON,
SECRETARY, ZYMETX, INC., 800 RESEARCH PARKWAY, SUITE 100, OKLAHOMA CITY,
OKLAHOMA 73104.
11
<PAGE> 14
OTHER MATTERS
At the date of this proxy statement, management was not aware of any
matters not referred to herein that would be presented for action at the annual
meeting. If any other matters should come before the annual meeting, the
persons named in the accompanying form of proxy will have discretionary
authority to vote all proxies in accordance with their best judgment, unless
otherwise restricted by law.
By Order of the Board of Directors
G. CARL GIBSON
/s/ G. CARL GIBSON
SECRETARY
Dated: October 21, 1999
12
<PAGE> 15
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
ZYMETX, INC.
NOVEMBER 17, 1999
Please Detach and Mail in the Envelope Provided
Please mark your
[X] votes as in this
example.
<TABLE>
<CAPTION>
FOR all nominees WITHHOLD
listed at right (except AUTHORITY
as marked to the to vote for all nominees
contrary below) listed at right
<S> <C> <C> <C>
1. ELECTION
OF CLASS II [ ] [ ] NOMINEES:
DIRECTORS J. Vernon Knight, M.D.
(INSTRUCTION): To withhold authority to vote for William G. Thurman, M.D.
any individual nominee, write that nominee's name
in the space provided below).
</TABLE>
- -------------------------------------
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
2. PROPOSAL to ratify the selection of Ernst &
Young LLP as ZymeTx's independent auditors for [ ] [ ] [ ]
the fiscal year ending June 30, 2000.
</TABLE>
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, DATED AND DELIVERED, WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2, AND 3.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
(Signature) Dated 1999
----------------------------------- ----------
NOTE: Pleas sign exactly as name appears above. When shares are held by joint
tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign full corporate name by president or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
<PAGE> 16
ZYMETX, INC.
800 RESEARCH PARKWAY, SUITE 100
OKLAHOMA CITY, OKLAHOMA 73104
THE UNDERSIGNED STOCKHOLDER OF ZYMETX, INC. HEREBY APPOINTS JAMES R. TOLBERT
III AND G. CARL GIBSON AS PROXIES, EACH OF THEM WITH THE POWER TO APPOINT HIS
SUBSTITUTE, AND HEREBY APPOINTS AND AUTHORIZES THEM TO REPRESENT AND VOTE AS
DESIGNATED ON THE REVERSE SIDE, ALL OF THE SHARES OF COMMON STOCK OF THE
COMPANY HELD OF RECORD BY THE UNDERSIGNED ON OCTOBER 13, 1999, AT THE ANNUAL
MEETING OF STOCKHOLDERS TO BE HELD ON NOVEMBER 17, 1999, OR ANY ADJOURNMENT
THEREOF.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
