<PAGE> 1
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:
[ ] 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 Section 240.14a-12
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 DECEMBER 13, 2000
To the stockholders of ZymeTx, Inc.
Date: Tuesday, December 13, 2000
Time: 10:00 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 Tuesday, December
13, 2000 at 10:00 a.m., Central Standard Time, at the Wileman Learning
Center/Lytle Foyer, at the Oklahoma Medical Research Foundation. During the
meeting, you will be asked to consider and take action on the following items:
(1) To elect three Class III directors, each for a term of three
years;
(2) To approve an increase in the shares of common stock, $.001
par value, subject to the ZymeTx, Inc. Stock Option Plan and
the ZymeTx, Inc. Directors Stock Option Plan from 1,000,000
shares to 1,250,000 shares under both stock option plans
collectively;
(3) To approve and ratify a proposal to adopt the ZymeTx, Inc.
Consultants Stock Option Plan covering an aggregate of 100,000
options to purchase shares of our common stock;
(4) To ratify the selection of Ernst & Young LLP as our
independent auditors for the fiscal year ending June 30, 2001;
and
(5) To transact any other business properly brought before the
meeting or any adjournment thereof.
Stockholders of record at the close of business on November 14, 2000,
will be entitled to vote at the meeting or any adjournment thereof.
To ensure the presence of a quorum at the meeting, please sign and
promptly return the enclosed proxy in the accompanying self-addressed envelope,
which requires no postage if mailed in the United Sates. You may revoke your
proxy at any time before the shares to which it relates are voted at the annual
meeting.
BY ORDER OF THE BOARD OF DIRECTORS,
G. Carl Gibson, Secretary
Oklahoma City, Oklahoma
November 14, 2000
<PAGE> 3
ZYMETX, INC.
800 Research Parkway, Suite 100
Oklahoma City, Oklahoma 73104
PROXY STATEMENT
FOR THE
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 13, 2000
This proxy statement and the accompanying proxy are first being mailed
on or about November 14, 2000, to owners of shares of ZymeTx, Inc. common stock
in connection with the solicitation of proxies by the Board of Directors for the
2000 Annual Meeting of Stockholders. The meeting will be held on Wednesday,
December 13, 2000, at 10:00 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 November 10, 2000, we had outstanding 6,845,394 shares of common
stock, $.001 par value. Holders of record of our common stock at the close of
business on November 14, 2000 may vote at the meeting. 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.
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 to vote your
shares of common stock. You may vote on the matters to be presented 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 designate 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 III Directors; (ii) "FOR" an increase in the number
of shares of common stock subject to the ZymeTx, Inc. Stock Option Plan and the
ZymeTx, Inc. Directors Stock Option Plan from 1,000,000 shares to 1,250,000
shares under both stock option plans collectively; (iii) "FOR" the adoption of
the ZymeTx, Inc. Consultants Stock Option Plan; and (iv) "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 our 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.
<PAGE> 4
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 judgment 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.
RECORD DATE
All holders of common stock at the close of business on November 14,
2000 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
We will bear all costs incurred in preparing, printing, assembling and
mailing the proxy statement and all accompanying and supplemental documents, and
all costs of soliciting the proxies. We will primarily solicit proxies by mail.
However, our officers and regular employees may solicit proxies by telephone,
facsimile transmission, e-mail 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 next annual meeting of
stockholders must be delivered by July 18, 2001 to G. Carl Gibson, 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, DIRECTORS AND MANAGEMENT
The following table shows information regarding the beneficial
ownership of our common stock as of November 10, 2000, by:
o each person we know to be the beneficial owner of at least 5% of
our common stock;
o each named executive officer;
o each director; and
o all directors and executive officers as a group.
Unless otherwise indicated, all stockholders set forth below have the
same principal business address as the company.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF
NAME AND ADDRESS BENEFICIALLY OWNED(1) CLASS(1)
---------------- --------------------- ----------
<S> <C> <C>
US Ventech, Inc.
c/o Friedli Corporate Finance
AG Freigustrasse 5
Zurich, Switzerland 8002 456,250 6.67%
Kevin Kimberlin (2)
c/o Spencer Trask Securities
Incorporated
535 Madison Avenue
New York, New York 10022 416,248 5.88%
Peter G. Livingston (3) -0- -0-
Norman R. Proulx(4) 175,000 2.51%
James R. Tolbert III(5) 16,667 *
William I. Bergman (5) 25,000 *
Robert J. Hudson, M.D. (6) 51,584 *
J. Vernon Knight, M.D. 25,000 *
Rand Mulford(5) 25,000 *
David L. Rainbolt (7) 24,480 *
Christopher M. Salyer (5) 16,667 *
Gilbert M. Schiff, M.D. (5) 25,000 *
Craig D. Shimasaki, Ph.D. (8) 42,598 *
William G. Thurman, M.D.(9) 22,917 *
All Directors and Executive Officers as a
Group (12 persons)(10) 473,109 6.55%
</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 January 13, 2001, are referred to herein as
"currently exercisable 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.
3
<PAGE> 6
(2) The shares beneficially owned by Mr. Kimberlin include shares held by
Oshkim Limited Partners, L.P., and 233,500 shares of common stock subject
to warrants held by Oshkim and Spencer Trask Holdings, Inc.
(3) On August 9, 1999, Mr. Livingston was terminated as an officer and director
of ZymeTx, Inc., and all options held by him expired unexercised on
November 28, 1999.
(4) Includes 125,000 shares subject to currently exercisable options.
(5) Represents shares subject to currently exercisable options.
(6) Includes 46,313 shares subject to currently exercisable options.
(7) Includes 16,667 shares subject to currently exercisable options and
includes 7,813 shares beneficially owned by Trend Venture Corp.
(8) Includes 37,141 shares subject to currently exercisable options.
(9) Includes 16,667 shares subject to currently exercisable options and
includes 6,250 shares beneficially owned by the William G. and Gabrielle
Thurman Living Trust (12/96).
(10) Includes 373,318 shares subject to currently exercisable options.
PROPOSAL ONE
ELECTION OF DIRECTORS
GENERAL
Our bylaws authorize the Board of Directors to set the number of
directors, which currently stands at nine members. Our certificate of
incorporation and bylaws further provide that the Board of Directors will be
divided into three classes, with each class consisting (as nearly as possible)
of an equal number of members. At each annual meeting, the term of one class of
directors expires. Directors in each class serve three-year terms.
The Board proposes the election of three Class III directors. The Class
III nominees will serve until the annual meeting of stockholders in the year
2003. 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.
BACKGROUND OF NOMINEES FOR DIRECTOR
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>
Norman R. Proulx III 1999 2003 53
William L. Bergman III 1996 2003 69
David E. Rainbolt III 1996 2003 44
</TABLE>
Norman R. Proulx has served as the President and Chief Executive
Officer of ZymeTx since August 1999. Mr. Proulx has also served as President,
Chief Executive Officer and Director of Gynetics, Inc., a privately held women's
healthcare company since January 2000. He has served as a
4
<PAGE> 7
director of Talisman Enterprises, Inc., a publicly held company since 1998, and
he currently serves as Chairman of the Board. 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.
William I. Bergman 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, from 1952
until he retired in 1990. From 1985 to 1990 he served as President of
Richardson-Vicks USA and, during the same period from 1988 to 1990, he served as
Vice President of its parent, the Proctor & Gamble Company.
David E. Rainbolt, 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.
REQUIRED VOTE AND RECOMMENDATION
The election of directors requires the affirmative vote of a plurality
of the shares of common stock present or represented in proxy and entitled to
vote at the annual meeting. Accordingly, under Delaware law, the company's
certificate of incorporation and bylaws, abstentions and broker non-votes will
not have any effect on the election of a particular director.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES AND
UNLESS OTHERWISE DIRECTED, PROXIES SOLICITED BY THE BOARD, IF PROPERLY SIGNED
AND RETURNED, WILL BE VOTED "FOR" THE ELECTION OF EACH SUCH NOMINEE.
BACKGROUND OF 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 1999 2001 65
J. Vernon Knight, M.D. 1996 2002 83
Rand P. Mulford 2000 2002 57
William G. Thurman, M.D. 1997 2002 72
Christopher M. Salyer 1998 2001 48
Gilbert M. Schiff, M.D. 1994 2001 69
</TABLE>
James R. Tolbert III, Class I director, has served as our Chairman of
the Board since June 1999. Mr.Tolbert has served as 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, since 1986. Mr. Tolbert also serves as Chairman of the Dean A. McGee Eye
Institute in Oklahoma City, and is the owner of the Full Circle Bookstore, the
largest independently-owned bookstore in Oklahoma City.
5
<PAGE> 8
J. Vernon Knight, M.D., Class II director, has served as a professor at
Baylor College of Medicine since 1966, and during such time has held a number of
positions 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
served as Clinical Director of the National Institute of Allergy and Infectious
Disease at the National Institutes of Health from 1959 until 1966.
Rand P. Mulford, Class II director, has served as a managing director
of Spencer Trask Holdings, Inc. since July 1999. From March 1999 to June 1999 he
served as Senior Vice President of The Immune Response Corporation, and from
March 1997 until February 1999 he served as President and Chief Executive
Officer of World Blood, Inc. From September 1994 to May 1995, Mr. Mulford served
as the President and Chief Operating Officer of Xytronyx, Inc.
William G. Thurman, M.D., Class II director, is currently President
Emeritus of the Oklahoma Medical Research Foundation. From 1979 until his
retirement in 1997, Dr. Thurman served as President and Scientific Director of
OMRF. 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. Dr.
Thurman continues to practice medicine as a pediatric hematologist/oncologist.
Christopher M. Salyer, Class I director, has served as President, Chief
Executive Officer and Chairman of the Board of Directors of CD Warehouse, Inc.,
a publicly-held retailer of recorded music, since August 30, 2000. From December
1997 to August 2000, Mr. Salyer served as the Chairman of the Board of Medical
Arts Laboratory, Inc., the nation's oldest independent medical laboratory. On
November 3, 2000, Medical Arts Laboratory, Inc. filed for reorganization under
Chapter 11 of the bankruptcy code. He currently serves as the Chairman of the
Board of Accel Financial Staffing, Inc., a temporary services company formed by
Mr. Salyer in April 1995.
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. The Gamble Institute merged with the Children's Hospital Research
Foundation in October 1995 and became the Gamble Program for Clinical Studies,
and Dr. Schiff has served as the Program's Director since such time.
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., 44, has served as our Vice President of
Research 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 that have
resulted in the investigational ViraSTAT parainfluenza MAb kit. His work
includes the co-development of the format of
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<PAGE> 9
the ViraZyme assay. He is a co-inventor of the patent for the method of the
ViraZyme influenza viral detection in clinical specimens.
G. Carl Gibson, 41, has served as our 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.
Robert J. Hudson, M.D., 61, has served as our Medical Director since
1997 and was elected as Vice President of Medical and Marketing in October 1999.
From 1996 to 1997 Dr. Hudson operated The Hudson Group, a healthcare consulting
firm, and from 1995 to 1996 he served as Senior Vice President and Chief Medical
Officer of MetraHealth. He served in various positions at Metropolitan Life
Insurance Company from 1989 to 1994, including National Director of Managed
Indemnity and PPO, Oklahoma Network Director and Medical Director Tulsa National
Medical Management Center. Dr. Hudson was a pediatrician from 1970 to 1989.
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETING ATTENDANCE
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;
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. Mr. Gibson serves as a non-voting member of the audit committee. The
audit committee met five times during fiscal 2000.
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 company's stock option plans.
The current members of the compensation committee are Mr. Bergman, Dr.
Thurman and Mr. Tolbert. The compensation committee met once during fiscal 2000.
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<PAGE> 10
Finance Committee. The finance committee generally evaluates and makes
recommendations concerning our financing activities to the Board. The finance
committee did not meet during fiscal 2000.
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 did not meet during
fiscal 2000.
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 did not meet during fiscal 2000.
MEETINGS OF THE BOARD OF DIRECTORS.
The Board held nine meetings during fiscal 2000. Each director attended
at least 75% of the Board meetings and at least 75% of his respective committee
meetings.
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<PAGE> 11
EXECUTIVE COMPENSATION AND OTHER MATTERS
Summary Compensation Table. The following information summarizes the
annual and long-term compensation of our President and Chief Executive Officer
and the other three most highly compensated executive officers, for fiscal years
1998, 1999 and 2000.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION AWARDS
-------------------
SECURITIES
RESTRICTED STOCK UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS($) AWARD(S) ($) OPTIONS(#)
--------------------------- ---- ---------- -------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Norman R. Proulx(1) 2000 $143,602 $50,000 $198,063 250,000
President and Chief Executive Officer 1999 -- -- -- --
1998 -- -- -- --
Peter G. Livingston(2) 2000 157,083 18,125 -- --
President and Chief Executive Officer 1999 145,000 18,125 -- --
1998 146,260 18,125 -- 33,669
Craig D. Shimasaki, Ph.D. 2000 121,667 4,200 -- 50,647
Vice President of Research 1999 104,583 5,200 -- 13,553
1998 99,167 5,200 -- --
Robert J. Hudson, M.D.(3) 2000 159,167 13,660 -- 54,940
Vice President of Medical and Marketing 1999 153,750 -- -- 7,687
1998 125,000 -- -- 20,000
</TABLE>
----------
(1) Mr. Proulx was named President of ZymeTx on August 9, 1999.
(2) On August 9, 1999, Mr. Livingston's employment was terminated and his
options expired November 28, 1999.
(3) Dr. Hudson was named Vice President of Medical and Marketing on October 1,
1999.
Stock Options. The following table provides information about grants of
stock options made during fiscal 2000 to each of the named executive officers.
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS GRANTED EXERCISE OR
UNDERLYING OPTIONS TO EMPLOYEES IN BASE PRICE
GRANTED FISCAL YEAR (1) ($/SH.) (2) EXPIRATION DATE
------------------ --------------- ----------- ---------------
<S> <C> <C> <C> <C>
Norman R. Proulx 50,000(3) 9.01% $ 2.00 9/10/09
200,000(4) 36.08% 2.625 2/1/10
Peter G. Livingston (5) -0- -- -- --
Craig D. Shimasaki, Ph.D. 50,647(6) 9.14% 2.25 10/1/09
Robert J. Hudson, M.D. 54,940(6) 9.91% 2.25 10/1/09
</TABLE>
----------
(1) We granted employees options to acquire 554,387 shares of our common stock
in fiscal 2000.
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<PAGE> 12
(2) 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.
(3) Vests at a rate of 50% on each of September 22, 2000 and September 22,
2001.
(4) Vests at a rate of 50% on each of December 31, 2000 and December 31, 2001.
(5) On August 9, 1999, Mr. Livingston's employment was terminated and 228,669
stock options previously granted to him were cancelled on November 28,
1999.
(6) Vests at a rate of 50% on each of October 1, 2000 and October 1, 2001.
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, 2000.
<TABLE>
<CAPTION>
SHARES VALUE NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED ON RECEIVED UNDERLYING UNEXERCISED IN-THE-MONEY
EXERCISE (#) ($) OPTIONS AT FISCAL YEAR-END (#) OPTIONS AT FISCAL YEAR-END ($)(1)
------------ -------- ------------------------------ ---------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Norman R. Proulx -0- -0- -0- 50,000 -0- $6,250.00
-0- 200,000 -0- -0-
Peter G. Livingston (2) -0- -0- -0- -0- -0- -0-
Craig D. Shimasaki, Ph.D. -0- -0- 8,430 60,810 5,672.25 -0-
Robert J. Hudson, M.D. -0- -0- 11,921 70,705 -0- -0-
</TABLE>
----------
(1) Calculated on the basis of the fair market value of the underlying
securities at June 30, 2000 ($2.125) minus the exercise price.
(2) On August 9, 1999, Mr. Livingston's employment was terminated and on
November 28, 1999 all options held by Mr. Livingston expired.
AGREEMENTS WITH OFFICERS
We entered into an Executive Services Agreement with Norman R. Proulx,
our President and CEO, effective January 1, 2000. The agreement provides for an
annual salary of $125,000 and bonuses payable as follows:
o for each fiscal year commencing with fiscal year ending June 30,
2001, a bonus equal to 50% of his annual salary for each fiscal year
in which we achieve our budgeted cash flow, sales volumes or other
relevant objectives for such fiscal year; and
o in the event the per share closing price of our common stock exceeds
$4.00 during any period of 20 consecutive trading days, a bonus
ranging from $50,000 for a price per share of $4.00 to $325,000 for
a price per share of $8.00, and increasing for any per share price
over $8.00.
As additional consideration under the agreement we granted Mr. Proulx 200,000
qualified stock options. Either party may terminate the agreement at any time
upon 30 days notice.
We entered into an Executive Services Agreement with Peter G.
Livingston, our former President and CEO, 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 we extended the term of Mr. Livingston's Executive
Services Agreement until July 1, 2000. However, on August 9, 1999
Mr. Livingston's employment was terminated and on August 23, 1999 we gave
Mr. Livingston notice of such termination for purposes of the Executive Services
Agreement. Under the Executive Services Agreement we are obligated to pay
Mr. Livingston his monthly salary for 12 months totaling $145,000 starting on
September 23, 1999, 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 was
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 expired on unexercised November 28, 1999.
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On July 29, 1996 we 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, we will pay Dr. Shimasaki as severance
an amount equal to his annual salary at the time of his termination.
On April 14, 1999, we entered into Severance Compensation Agreements
with Mr. Gibson, Dr. Hudson, Mr. Livingston, Dr. Shimasaki and Charles E.
Seeney. Thereafter, Mr. Seeney resigned and Mr. Livingston was terminated. Each
of the agreements provides that if the respective officer is terminated
following a change in control, we 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 permits each eligible employee to have up to 10% of their
compensation deducted from their pay during any quarter for the purpose of
exercising options to purchase shares of our common stock. An employee must have
completed at least three months of service with our company 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. 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, 2000, 15,652 shares of stock were purchased
through the plan for a total of $26,159, or $1.67 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 our 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.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based upon a review of the original and amended Forms 3 and 4 furnished
to us during fiscal 2000, we know of the following failures to file reports
required by Section 16(a) of the Exchange Act on a timely basis: Mr. Pederson
failed to timely file a Form 4 for the sale of common stock during July 1999;
Mr. Proulx failed to timely file a Form 4 for the grant of stock options in
September 1999; and Mr. Tolbert failed to timely file a Form 4 for the grant of
stock options in March 1999.
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<PAGE> 14
PROPOSAL TWO
AMENDMENTS TO
STOCK OPTION PLANS
GENERAL
On September 7, 2000, our Board of Directors approved amendments to our
employee stock option plan and our director's stock option plan, to increase the
aggregate number of shares of common stock reserved for issuance pursuant to
both plans by 250,000 shares, to a total of 1,250,000 shares. The Board
expressly provided that these amendments were subject to approval by our
stockholders.
REASONS FOR THE AMENDMENTS
The Board of Directors believes that it is in our best interest to
encourage ownership of our stock by the company's employees and directors.
Providing an opportunity to hold an equity interest in our company helps us
attract and retain key employees and directors, which is critical to our
long-term success. We anticipate that the aggregate number of shares of common
stock available under the ZymeTx, Inc. Stock Option Plan and the ZymeTx, Inc.
Directors Stock Option Plan will be depleted by December, 2000, and our Board of
Directors has determined that, to continue to provide performance-based
incentive to our management and key employees, it is in our best interest to
increase the number of shares of common stock available for grant of options
under each of these plans.
To provide additional shares of common stock for which options may be
granted under the employees and directors plans, the Board of Directors has
approved the amendments attached to this proxy statement as Annexes A and B, and
has directed that these amendments be submitted to the stockholders for their
approval.
CERTAIN CONSIDERATIONS
Stockholders should note that certain disadvantages may result from
approval of the amendment of the employees and directors stock option plans,
including a reduction in their interest of the company with respect to earnings
per share, voting, liquidation value and book and market value per share if
options to acquire shares of common stock are granted and subsequently
exercised.
REQUIRED VOTE AND RECOMMENDATION
The affirmative vote of the holders of a majority of the outstanding
shares of common stock, present and voting at the meeting in person or by proxy,
is required to approve the amendments to the stock option plans.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO APPROVE
THE AMENDMENTS TO THE STOCK OPTION PLANS, AND THE PROXY, UNLESS OTHERWISE
INDICATED THEREON, WILL BE VOTED "FOR" THE PROPOSAL. BECAUSE OUR EXECUTIVE
OFFICERS AND DIRECTORS MAY BE GRANTED OPTIONS UNDER ONE OR BOTH OF THESE PLANS,
EACH OF THE EXECUTIVE OFFICERS AND DIRECTORS OF THE COMPANY HAS AN INTEREST IN,
AND MAY BENEFIT FROM, THE APPROVAL OF THE AMENDMENTS TO THESE PLANS.
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<PAGE> 15
PROPOSAL THREE
APPROVAL AND ADOPTION OF A CONSULTANTS STOCK OPTION PLAN
GENERAL
On November 17, 1999, the Board of Directors adopted the ZymeTx, Inc.
Consultants Stock Option Plan, subject to stockholder approval, and reserved
100,000 shares of common stock for issuance upon exercise of options under such
plan. The Board of Directors is requesting that the stockholders approve and
ratify the adoption of the consultants stock option plan.
A copy of the consultants stock option plan is appended as Annex C to
this proxy statement.
PURPOSE OF THE CONSULTANTS STOCK OPTION PLAN
The Board of Directors adopted the consultants stock option plan to
enable us to offer additional incentives to consultants performing services for
the company and to motivate such consultants to exert their best efforts on
behalf of our company by enlarging their personal stake in our company's
success.
ADMINISTRATION
The consultants stock option plan will be administered by a committee
consisting of not less than three directors appointed by the Board of Directors.
The Board of Directors has appointed the compensation committee to administer
the plan. The members of the compensation committee are Mr. Bergman, Dr. Thurman
and Mr. Tolbert. The committee will have sole and final authority to interpret
the provisions of the consultants stock option plan and the terms of any option
issued under such plan, and to promulgate and interpret the rules and
regulations relating to the consultants stock option plan and options that it
deems necessary or desirable. Members of the compensation committee will not
receive any additional compensation for their services in connection with their
administration of the consultants stock option plan.
ELIGIBILITY AND PARTICIPATION
The consultants stock option plan provides for the granting of options
to any person engaged by the company or its subsidiaries to perform consulting
services as of the date of adoption of the plan or as of any date thereafter and
prior to the expiration or termination of the plan who, in the opinion of the
committee, has a capacity for contributing in substantial measure to the success
of the company and its subsidiaries.
TERMS AND CONDITIONS OF OPTIONS
An option agreement in the form adopted by the compensation committee,
will evidence each option granted under the consultants stock option plan. Such
agreement will set forth the terms and conditions governing the option,
including the number of shares of common stock to which it relates, the price at
which the participant may purchase the underlying shares of common stock, when
the participant may exercise the option, and when the option expires. We do not
receive any consideration for granting options under the consultants stock
option plan, although participants may be required to satisfy eligibility
requirements and vesting requirements for the exercise of options granted
thereunder.
Number of Shares.The compensation committee determines the number of
shares covered by each option granted under the consultants stock option plan.
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<PAGE> 16
Exercise of Options. A participant in the consultants stock option plan
may exercise an option by delivering to the company of a written notice signed
by the participant, which specifies the number of shares of common stock as to
which the participant is exercising the option and the date of the proposed
exercise. A participant may pay for the shares of common stock being purchased
in cash (by certified check or bank cashier's check), in shares of common stock
owned by the participant and valued at their fair market value on the date of
exercise, or in a combination of cash and shares of common stock.
Participants may not exercise any options unless we have registered the
shares of common stock underlying the options under the Securities Act, and any
applicable state securities laws or unless, in the opinion of counsel to the
company, the exercise qualifies for an exemption from registration. Prior to a
change in control, as defined under "Vesting and Termination of Options" below,
we will not have any obligation to register the shares of common stock
underlying the options or to comply with an appropriate exemption from
registration in order to permit the exercise of an option. If we choose to
comply with an exemption from registration, the shares of common stock issued
under the consultants stock option plan, at the direction of the compensation
committee, may bear an appropriate restrictive legend. In the event of a change
in control, as defined below, we will be obligated to register the shares of
common stock underlying the options or to comply with an appropriate exemption
from registration.
The holder of an option under the consultants stock option plan will
not have any rights with respect to the shares of common stock underlying the
option until:
o the option is exercised in the manner provided by the plan; and
o we actually issue the shares of common stock to the participant.
Accordingly, we will not make any adjustment for dividends or other
rights for which the record date precedes the date of issuance of shares of
common stock under the option. However, we will adjust the number of shares of
common stock underlying an option under certain other circumstances. See
"Adjustments Upon Changes in Capitalization" below.
Exercise Price of Options. The exercise price of the options under the
consultants stock option plan will equal the fair market value of our common
stock on the date of the grant of the options. "Fair market value" is the
average of the closing bid and asked prices for our common stock. On November 8,
2000, the average of the closing bid and asked prices for our common stock was
$2.66 per share.
Vesting and Termination of the Options. Except as provided in the
option agreement, an option may be exercised in whole or in part at any time
during its term. An option granted under the consultants stock option plan will
expire one year after the date of its grant. At the end of such one-year term or
any extension to such term, the term of such option may be extended for an
additional year if the participant is serving as a consultant to the company at
such time and the committee determines in its sole discretion that the
participant will likely continue in such capacity and notifies the participant
of such determination. In no event, however, will any option be exercisable
after the expiration of five years from the date such option was granted.
Non-Transferability of the Options. The holder of an option granted
under the consultants stock option plan will not have the right to transfer the
option, except by will or the laws of descent and distribution. Only the holder
of an option may exercise the option during his lifetime.
Other Provisions. Nothing in the consultants stock option plan will
confer upon any participant any right with regard to the retainer of a
participant's services as a consultant, or interfere in any way with
14
<PAGE> 17
the right of our stockholders or the Board of Directors, at any time, to
terminate the services of a participant.
OPTIONS GRANTED
Rand P. Mulford, one of our directors who also serves as a consultant
to the company, was granted 25,000 options under the consultants stock option
plan. Such options are exercisable at a price of $2.063 per share and expire
November 17, 2009. An additional 25,000 options having an exercise price of
$2.970 per share and 5,000 options having an exercise price of $2.063 per share
have been granted to consultants who are not officers or directors of the
company. All options previously granted under the consultants stock option plan
are subject to the approval of the plan by our stockholders at the annual
meeting.
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
If we subdivide or combine our common stock, whether by
reclassification, stock dividend, stock split, reverse stock split, or other
similar transaction, the number of shares of common stock authorized under the
consultants stock option plan, the number of shares of common stock then subject
or relating to unexercised options granted under the consultants stock option
plan, and the exercise price per share will adjust proportionately. In the event
of any capital reorganization or reclassification of our common stock other than
as described above, the compensation committee may make an appropriate
adjustment in the number and class of shares of capital stock authorized under
the consultants stock option plan and the number of shares of common stock then
subject or relating to unexercised options granted under the consultants stock
option plan.
AMENDMENT OR TERMINATION
The Board of Directors, at any time and from time to time, may suspend,
discontinue, modify or amend the consultants stock option plan in any respect.
However, the Board of Directors may not suspend, discontinue, modify or amend
the consultants stock option plan to affect adversely the rights of a
participant with regard to any grants previously made, without the participant's
approval. No amendment or modification which increases the number of shares of
common stock authorized by the consultants stock option plan (except as set
forth under "Adjustments Upon Changes in Capitalization" above, will become
effective without shareholder approval.
The consultants stock option plan will continue in effect for 10 years
after the original date of their adoption.
FEDERAL TAX ASPECTS
Non-Qualified Options. Options granted under the consultants stock
option plan are nonqualified options under Section 422A of the Internal Revenue
Code. A participant under the consultants stock option plan will not recognize
federal taxable income upon the grant of a nonqualified option; however, in the
year in which the participant exercises the option, ordinary income will be
recognized equal to the amount by which the fair market value of the purchased
shares of common stock exceeds the option exercise price.
The fair market value of the shares of common stock will constitute the
tax basis of the common stock for computing gain or loss on any subsequent sale.
We will have the right to a business expense deduction for our taxable year that
includes the last day of the participant's taxable year in which the participant
recognizes income as a result of the exercise of the nonqualified option. We
will treat the income recognized by our deduction on its fulfilling the employee
withholding requirements with regard
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<PAGE> 18
to the recognition of income by the participant. The participant must recognize
income even if the participant continues to hold the shares of common stock
until a later date. The participant will recognize additional gain or loss upon
the subsequent disposition of the shares of the common stock.
If the participant pays the exercise price under an option in the form
of shares of our common stock, the participant will not recognize any taxable
income to the extent that the shares of common stock received upon the exercise
of the nonqualified option equal the number of shares of common stock delivered
in payment of the option exercise price. For federal income tax purposes, those
newly acquired shares of common stock will have the same basis and holding
period as the delivered shares of common stock. The participant generally will
have to report all additional shares of common stock received upon the exercise
as ordinary income for the year of exercise in an amount equal to the fair
market value of the additional shares of common stock as of the date of the
exercise. Those additional shares of common stock will have a tax basis equal to
their fair market value and their holding period for tax purposes will begin on
the date of their transfer to the participant.
Withholding Taxes. We will have the right to require a participant to
remit to us in cash an amount sufficient to satisfy federal, state and local
withholding requirements, if any, prior to the delivery of any certificate for
shares of common stock acquired pursuant to the exercise of the options.
Notwithstanding the foregoing but subject to the approval of the compensation
committee, a participant may tender to us a number of shares of common stock or
we may withhold a number of shares of common stock the fair market value of
which will satisfy the federal, state and local tax requirements.
CERTAIN CONSIDERATIONS
Stockholders should note that certain disadvantages may result from the
adoption of the consultants stock options plan, including a reduction in their
interest of the company with respect to earnings per share, voting, liquidation
value and book and market value per share if options to acquire shares of common
stock are granted and subsequently exercised.
REQUIRED VOTE AND RECOMMENDATION
The affirmative vote of the holders of a majority of the outstanding
shares of common stock, present and voting at the meeting in person or by proxy,
is required to approve the consultants stock option plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO APPROVE
THE CONSULTANTS STOCK OPTION PLAN, AND THE PROXY, UNLESS OTHERWISE INDICATED
THEREON, WILL BE VOTED "FOR" THE PROPOSALS. RAND P. MULFORD, ONE OF OUR
DIRECTORS, IS A CONSULTANT TO THE COMPANY AND HAS BEEN GRANTED OPTIONS UNDER THE
CONSULTANTS PLAN, SUBJECT TO THE PLAN'S APPROVAL. IF THE PLAN IS APPROVED, MR.
MULFORD AND ANY OTHER DIRECTOR WHO SERVES AS A CONSULTANT TO THE COMPANY MAY
BENEFIT FROM THE PLAN.
PROPOSAL FOUR
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, 2001. We ask that you ratify such selection. We
must have an affirmative vote by a majority of the outstanding
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<PAGE> 19
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 fiscal
2000. 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, 2001.
ANNUAL REPORT ON FORM 10-KSB
YOU MAY REQUEST A COPY OF OUR ANNUAL REPORT ON FORM 10-KSB FOR THE
FISCAL YEAR ENDED JUNE 30, 2000, BY WRITING G. CARL GIBSON, SECRETARY, ZYMETX,
INC., 800 RESEARCH PARKWAY, SUITE 100, OKLAHOMA CITY, OKLAHOMA 73104.
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
SECRETARY
Dated: November 14, 2000
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<PAGE> 20
ANNEX A
FIRST AMENDMENT
TO
ZYMETX, INC. STOCK OPTION PLAN
1. Paragraph 6 of the ZymeTx, Inc. Stock Option Plan is hereby deleted
in its entirety and replaced by the following:
6. Stock Subject to the Plan. Subject to adjustment as
provided in Section 13 hereof, Options may be granted pursuant to the
Plan with respect to a number of Shares that, in the aggregate, does
not exceed One Million Two Hundred Fifty Thousand (1,250,000) Shares,
less, at the time of such grant, the sum of: (i) any Shares subject to
outstanding options under the "ZymeTx, Inc. Directors Stock Option
Plan" (the "Directors Plan") and (ii) any Shares previously issued upon
the exercise of options granted under the Directors Plan.
2. Except as expressly amended by this First Amendment, the ZymeTx,
Inc. Stock Option Plan shall continue in full force and effect in accordance
with its terms.
<PAGE> 21
ANNEX B
FIRST AMENDMENT
TO
ZYMETX, INC. DIRECTORS STOCK OPTION PLAN
1. Paragraph 6 of the ZymeTx, Inc. Directors Stock Option Plan is
hereby deleted in its entirety and replaced by the following:
6. Stock Subject to the Plan. Subject to adjustment as
provided in Section 12 hereof, Options may be granted pursuant to the
Plan with respect to a number of Shares that, in the aggregate, does
not exceed One Million Two Hundred Fifty Thousand (1,250,000) Shares,
less, at the time of such grant, the sum of: (i) any Shares subject to
outstanding options under the "ZymeTx, Inc. Stock Option Plan" (the
"Stock Option Plan") and (ii) any Shares previously issued upon the
exercise of options granted under the Stock Option Plan.
2. Except as expressly amended by this First Amendment, the ZymeTx,
Inc. Directors Stock Option Plan shall continue in full force and effect in
accordance with its terms.
<PAGE> 22
ANNEX C
CONSULTANTS STOCK OPTION PLAN
ZYMETX, INC.
CONSULTANT STOCK OPTION PLAN
1. Purpose. The purposes of the Plan are to enable the Company to offer
additional incentives to consultants performing services for the Company and to
motivate such consultants to exert their best efforts on behalf of the Company
by enlarging their personal stake in the Company's success.
2. Definitions. As used in the Plan, the following definitions apply to
the terms indicated below:
"BOARD" means the Board of Directors of the Company.
"COMMITTEE" means the committee appointed by the Board from
time to time to administer the Plan pursuant to Section 4 hereof.
"COMPANY" means ZymeTx, Inc.
"FAIR MARKET VALUE" of a Share on a given day means, if Shares
are listed on an established stock exchange or exchanges, or the Nasdaq National
Market, the highest closing sales price of a Share as reported thereon; or if
not so reported, the average of the bid and asked prices, as reported on the
Nasdaq Small Cap Market or the Nasdaq OTC Bulletin Board. If the price of a
Share shall not be so quoted, the Fair Market Value shall be determined by the
Committee taking into account all relevant facts and circumstances.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"OPTION" means a right to purchase Shares under the terms and
conditions of the Plan as evidenced by an option certificate in such form not
inconsistent with the Plan, as the Committee may adopt for general use or for
specific cases from time to time.
<PAGE> 23
"NONQUALIFIED STOCK OPTION" means an Option that is not an
Incentive Stock Option under Section 422 of the Code and which is identified as
a Nonqualified Stock Option in the agreement by which it is evidenced.
"PARTICIPANT" means any consultant engaged by the Company to
perform services and eligible to participate in the Plan under Section 5 hereof
to whom an Option is granted under the Plan.
"PLAN" means the ZymeTx, Inc. Consultant Stock Option Plan,
including any amendments to the Plan.
"SHARES" means shares of the Company's Common Stock, $.001 par
value, now or hereafter owned by the Company as treasury stock or authorized but
unissued shares of the Company's Common Stock, subject to adjustment as provided
in the Plan.
"SUBSIDIARY" means any corporation, now or hereafter existent,
in which the Company owns, directly or indirectly, stock comprising fifty
percent or more of the total combined voting power of all classes of stock of
such corporation.
3. Plan Adoption and Term.
A. The Plan shall become effective upon its adoption by the
Board, and Options may be issued upon such adoption and from time to time
thereafter.
B. Subject to the provisions hereinafter contained relating to
amendment or discontinuance, the Plan shall continue in effect for ten years
from the date of its adoption by the Board. No option may be granted hereunder
after such ten-year period.
4. Administration of the Plan. The Plan shall be administered by the
Committee, consisting of not less than three persons, who shall be directors of
the Company, who shall not be employees of the Company, and who shall be
appointed by the Board to serve at the pleasure of the Board. Except as
otherwise expressly provided in the Plan, the Committee shall have sole and
final authority to interpret the provisions of the Plan and the terms of any
Option issued under it and to promulgate and interpret such rules and
regulations relating to the Plan and Options as it may deem necessary or
desirable for the administration of the Plan. Without limiting the foregoing,
the Committee shall, subject to Section 6 and
<PAGE> 24
to the extent and in the manner contemplated herein, determine who shall receive
Options under the Plan and how many Shares shall be subject to each such Option.
The Committee shall report to the Board the names of those granted Options and
the terms and conditions of each Option granted by it. The Committee may correct
any defect in the Plan or any Option in the manner and to the extent it shall
deem expedient to carry the Plan into effect and shall be the sole and final
judge of such expediency.
No member of the Committee shall be liable for any action
taken or omitted or any determination made by him in good faith relating to the
Plan, and the Company shall indemnify and hold harmless each member of the
Committee and each other director or employee of the Company to whom any duty or
power relating to the administration or interpretation of the Plan has been
delegated against any cost or expense (including counsel fees) or liability
(including any sum paid in settlement of a claim with the approval of the
Committee) arising out of any act or omission in connection with the Plan,
unless arising out of such person's own fraud or bad faith.
5. Eligibility. Persons engaged by the Company or its Subsidiaries to
perform consulting services, who, in the opinion of the Committee, have a
capacity for contributing in a substantial measure to the success of the Company
and its Subsidiaries, shall be eligible to participate in the Plan.
6. Stock Subject to the Plan. Subject to adjustment as provided in
Section 13 hereof, Options may be granted pursuant to the Plan with respect to a
number of Shares that, in the aggregate, does not exceed One Hundred Thousand
(100,000) Shares. If, prior to the termination of the Plan, an Option shall
expire or terminate for any reason without having been exercised in full, the
unpurchased Shares subject thereto shall again be available for the purposes of
the Plan.
<PAGE> 25
7. Options. All Options granted under the Plan shall be Nonqualified
Stock Options and shall be clearly identified as such. All Options granted under
the Plan shall be evidenced by agreements in such form, not inconsistent with
the Plan, as the Committee may adopt for general use or for specific use from
time to time. An Option shall be deemed "granted" under the Plan on the date on
which the Committee, by appropriate action, awards the Option to a Participant,
or on such subsequent date as the Committee may designate.
8. Option Price. The price per share at which Shares may be purchased
pursuant to any Option granted under the Plan shall be not less than 100% of the
Fair Market Value of a Share on the date the Option is granted.
9. Duration of Options. Each Option granted hereunder shall be
exercisable for a period of one year from the date of grant; however, at the end
of such term (or at the end of any extension to such term) the term of such
Option may be extended for an additional year if the Participant is serving as a
consultant to the Company at such time and the Committee determines in its sole
discretion that the Participant will likely continue in such capacity and
notifies the Participant of such determination. In no event, however, shall any
Option granted hereunder be exercisable after the expiration of five years from
the date such Option was granted. All Options shall be subject to earlier
termination as provided elsewhere in the Plan.
10. Conditions Relating to Exercise of Options.
A. The Board may, at its discretion, provide that an Option
may not be exercised in whole or in part for any period or periods of time
specified in the Option agreement. Except as provided in the Option agreement,
an Option may be exercised in whole or in part at any time during its term. No
Option may be exercised for a fractional share of stock.
B. No Option shall be transferable by a Participant otherwise
than by will or the laws of descent and distribution and Options shall be
exercisable during the lifetime of a Participant only by such Participant. If a
Participant dies while an Option is currently exercisable, the Option may be
exercised within such exercise period on the date of death (but in no event
later than the expiration of
<PAGE> 26
the term of such Option) by the Participant's estate or by a person who acquires
the right to exercise the Option by bequest or inheritance.
C. An Option shall be exercised by the delivery to the Company
of a written notice signed by the Participant, which specifies the number of
Shares with respect to which the Option is being exercised and the date of the
proposed exercise. Such notice shall be delivered to the Company's principal
office, to the attention of its Secretary, no less than three business days in
advance of the date of the proposed exercise and shall be accompanied by the
applicable option certificate evidencing the Option. A Participant may withdraw
such notice at any time prior to the close of business on the proposed date of
exercise, in which case the option certificate evidencing the Option shall be
returned to the Participant.
D. Payment for Shares purchased upon exercise of an Option
shall be made at the time of exercise either in cash, by certified check or bank
cashier's check or in Shares owned by the Participant and valued at their Fair
Market Value on the date of exercise, or partly in Shares with the balance in
cash or by certified check or bank cashier's check. Any payment in Shares shall
be effected by their delivery to the Secretary of the Company, endorsed in blank
or accompanied by stock powers executed in blank.
E. Certificates for Shares purchased upon exercise of Options
shall be issued and delivered as soon as practicable following the date the
Option is exercised. Certificates for Shares purchased upon exercise of Options
shall be issued in the name of the Participant.
F. Notwithstanding any other provision in the Plan, no Option
may be exercised unless and until the Shares to be issued upon the exercise
thereof have been registered under the Securities Act of 1933 and applicable
state securities laws, or are, in the opinion of counsel to the Company, exempt
from such registration.
G. Any person exercising an Option or transferring or
receiving Shares shall comply with all regulations and requirements of any
governmental authority having jurisdiction over the issuance,
<PAGE> 27
transfer, or sale of capital stock of the Company, and as a condition to
receiving any Shares, shall execute all such instruments as the Company in its
sole discretion may deem necessary or advisable.
11. No Employment Rights. Nothing contained in the Plan or any Option
shall confer upon any Participant any right with respect to the continuation of
the consulting services to be rendered by the Participant to the Company or
interfere in any way with the right of the Company, subject to the terms of any
separate agreement to the contrary, at any time to terminate such services or to
increase or decrease the compensation of the Participant from the rate in
existence at the time of the grant of an Option.
12. Rights of a Stockholder. No person shall have any rights with
respect to any Shares covered by or relating to any grant hereunder of an Option
until the date of issuance of a certificate to him evidencing such Shares.
Except as otherwise expressly provided in the Plan, no adjustment to any Option
shall be made for dividends or other rights for which the record date occurs
prior to the date such certificate is issued.
13. Adjustment Upon Changes in Capital Stock.
A. If the capital stock of the Company shall be subdivided or
combined, whether by reclassification, stock dividend, stock split, reverse
stock split or other similar transaction, then the number of Shares authorized
under the Plan, the number of Shares then subject to or relating to unexercised
Options granted hereunder and the exercise price per Share will be adjusted
proportionately. A stock dividend shall be treated as a subdivision of the whole
number of Shares equal to such whole number of Shares so outstanding plus the
number of Shares issued as a stock dividend.
B. In the case of any capital reorganization or any
reclassification of the capital stock of the Company (except pursuant to a
transaction described in Paragraph A of this Section 13) (a "Reorganization"),
appropriate adjustment may be made by the Committee in the number and class of
shares authorized to be issued under the Plan and the number and class of shares
subject to or relating to Options awarded under the Plan and outstanding at the
time of such Reorganization.
C. Each Participant will be notified of any adjustment made
pursuant to this Section 13 and any such adjustment, or the failure to make such
adjustment, shall be binding on the Participant.
<PAGE> 28
D. Except as expressly set forth herein, the number and kind
of Shares subject to Options, shall not be affected by any transaction
(including, without limitation, any merger, recapitalization, stock split, stock
dividend, issuance of stock or similar transaction) affecting the capital stock
of the Company and no Participant shall be entitled to any additional Options on
account thereof.
14. Amendment of the Plan.
A. The Board may at any time and from time to time suspend,
discontinue, modify or amend the Plan in any respect whatsoever except that the
Board may not suspend, discontinue, modify or amend the Plan so as to adversely
affect the rights of a Participant with respect to any grants that have
theretofore been made to such Participant without such Participant's approval.
B. No amendment to or modification of the Plan which, except
as provided in Sections 6 and 13 hereof, increases the number of Shares that may
be issued under the Plan, shall be effective without stockholder approval.
15. Miscellaneous.
A. It is expressly understood that the Plan grants powers to
the Committee but does not require their exercise; nor shall any person, by
reason of the adoption of the Plan, be deemed to be entitled to the grant of any
Option; nor shall any rights be deemed to accrue under the Plan except as
Options may be granted hereunder.
B. All rights hereunder shall be governed by and construed in
accordance with the laws of Oklahoma.
C. All expenses of the Plan, including the cost of maintaining
records, shall be borne by the Company.
Adopted November 17, 1999.
<PAGE> 29
ANNEX D
FORM OF PROXY
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 BELOW, ALL OF THE SHARES OF COMMON STOCK OF THE COMPANY HELD OF
RECORD BY THE UNDERSIGNED ON NOVEMBER 14, 2000, AT THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON DECEMBER 13, 2000, OR ANY ADJOURNMENT THEREOF.
1. ELECTION OF CLASS III DIRECTORS
<TABLE>
<S> <C> <C>
_______FOR all nominees listed below _______ WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees listed below
Norman R. Proulx William I. Bergman David E. Rainbolt
</TABLE>
(INSTRUCTION): TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW).
--------------------------------------------------------------------------------
2. PROPOSAL to approve an increase in the shares of common stock, par value
$.001, subject to the ZymeTx, Inc. Stock Option Plan and the ZymeTx, Inc.
Directors Stock Option Plan from 1,000,000 shares to 1,250,000 shares under
both stock option plans collectively.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL to approve and ratify a proposal to adopt the ZymeTx, Inc.
Consultants Stock Option Plan covering an aggregate of 100,000 options to
purchase shares of ZymeTx, Inc. common stock.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. PROPOSAL to ratify the selection of Ernst & Young LLP as ZymeTx's
independent auditors for the fiscal year ending June 30, 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. 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, 3 and 4.
Dated: , 2000 Please sign exactly as name appears below.
----------------- When shares are held by joint tenants, both
should sign. When signing as attorney or as
executor, administrator, trustee or
guardian, please give full title as such. If
a corporation, please sign in full corporate
name by president or other authorized
officer. If a partnership, please sign in
partnership name by authorized person.
Dated: , 2000
--------------------------------
x
-------------------------------------------
(Signature)
x
-------------------------------------------
(Signature, if held jointly)
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
