<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:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] 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: Common
Stock
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 SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 9, 2001
To the stockholders of ZymeTx, Inc.
Date: Monday, April 9, 2001
Time: 10:00 a.m.
Place: ZymeTx, Inc.
800 Research Parkway, Suite 100
Oklahoma City, Oklahoma 73104
We will hold a Special Meeting of Stockholders on Monday, April 9, 2001
at 10:00 a.m., Central Standard Time, in the conference room of our executive
offices located at 800 Research Parkway, Suite 100, Oklahoma City, Oklahoma.
During the meeting, you will be asked to consider and take action on the
following items:
(1) To approve the possible issuance of shares equal to more than 20%
of the company's common stock upon the conversion of certain
outstanding 5% Senior Secured Convertible Debentures and the
exercise of certain common stock purchase warrants issued in
connection with the sale of the debentures; and
(2) To transact any other business properly brought before the
meeting or any adjournment thereof.
Stockholders of record at the close of business on February 9, 2001,
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 States. 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
February 12, 2001
<PAGE> 3
ZYMETX, INC.
800 Research Parkway, Suite 100
Oklahoma City, Oklahoma 73104
PROXY STATEMENT
FOR THE
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 9, 2001
This proxy statement relates to a special meeting of the stockholders
of ZymeTx, Inc. to be held on Monday, April 9, 2001, at 10:00 a.m. local time,
in the conference room of our executive offices located at 800 Research Parkway,
Suite 100, Oklahoma City, Oklahoma 73104.
We will begin sending this proxy statement, the attached notice of
special meeting and the accompanying proxy card on or about February 12, 2001,
to stockholders entitled to vote. Common stock is the only class of voting
stock. Stockholders who owned common stock at the close of business on the
record date of February 9, 2001 are entitled to vote.
WHY WAS THIS PROXY STATEMENT SENT?
This proxy statement and the enclosed proxy card were sent to you
because the company's Board of Directors is soliciting proxies from stockholders
to vote at a special meeting. This proxy statement summarizes the information
you need to know to vote at the special meeting. However, you do not need to
attend the special meeting to vote your shares. Instead, you may simply
complete, date, sign and return the enclosed proxy card.
WHAT IS BEING VOTED ON?
The Board of Directors is asking you to approve:
o the possible issuance of more than 20% of the
company's common stock to Palladin Opportunity Fund,
LLP and Halifax Fund L.P. upon (i) the conversion
of the 5% Senior Secured Convertible Debentures; and
(ii) the exercise of common stock purchase warrants,
both issued in connection with the company's sale of
the debentures to Palladin and Halifax in October
2000; and
o any other business that may properly be presented at
the special meeting or any adjournments or
postponements of the special meeting.
WHO MAY VOTE?
Stockholders who owned common stock at the close of business on the
record date of February 9, 2001 are entitled to vote at the special meeting. On
January 5, 2001, we had outstanding 6,871,798 shares of common stock, $.001 par
value. Common stock is the only class of voting stock. You do not have
cumulative voting rights.
HOW MANY VOTES DO I HAVE?
Each share of common stock that you own entitles you to one vote.
<PAGE> 4
HOW MANY VOTES ARE NEEDED FOR A QUORUM?
A majority of the shares of common stock outstanding on the record date
is necessary to constitute a quorum. This means that 3,435,900 shares are
required for a quorum. If you return your proxy card or attend the meeting in
person, your common stock will be counted for the purpose of determining whether
a quorum exists even if you wish to abstain from voting on any or all of the
matters presented at the meeting. "Broker non-votes" also count for quorum
purposes. If you hold your common stock through a broker, bank or other nominee,
generally the nominee may only vote the common stock which it holds for you in
accordance with your instructions. We do not count abstentions or "broker
non-votes" as votes for or against any proposal.
If a quorum is not present or represented at the meeting, the
stockholders who do attend the meeting in person or who are represented by proxy
may adjourn the meeting until a quorum is present or represented. At any
adjournment of a meeting at which a quorum is present or represented, any
business may be transacted that might have been transacted at the original
meeting.
HOW DO I VOTE BY PROXY?
A proxy is a person you appoint to vote on your behalf. If you are
unable to attend the meeting, we strongly 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 signed proxy card, the proxy will vote FOR
approving the possible issuance of more than 20% of the company's common stock
to Palladin and Halifax upon the conversion of debentures and warrants held by
them. If any other matter is presented at the meeting, your proxy will vote in
accordance with his best judgment. We do not currently know of any other matter
which will be acted on at the special meeting.
MAY I REVOKE MY PROXY?
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.
If you abstain from voting on your proxy card we will treat it as if
you were present or represented at the meeting. However, if you do not vote on
your proxy card we will treat it as if you were not present or represented at
the meeting.
HOW MANY SHARES MUST VOTE IN FAVOR OF THE PROPOSAL FOR IT TO BE APPROVED?
The affirmative vote of a majority of the votes cast at the special
meeting is required to approve the possible issuance of more than 20% of the
company's common stock to Palladin or Halifax. If you
2
<PAGE> 5
abstain from voting, it has the same effect as if you voted against this
proposal. Broker non-votes have no effect on the vote.
IS VOTING CONFIDENTIAL?
Yes. Proxy cards, ballots and voting tabulations that identify
individual stockholders are confidential. Only the inspectors of election and
certain ZymeTx employees associated with processing proxy cards and counting
votes have access to your card. Additionally, all comments directed to ZymeTx
management (whether written on the proxy card or elsewhere) remain confidential,
unless you ask that your name be disclosed.
WHO PAYS THE COST OF SOLICITING THE PROXIES?
ZymeTx will pay the cost of this proxy solicitation, which includes
preparing, printing, assembling and mailing the notice and proxy statement and
the proxy card, 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.
3
<PAGE> 6
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS, DIRECTORS AND MANAGEMENT
The following table shows information regarding the beneficial
ownership of our common stock as of January 5, 2001, 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 BENEFICIALLY PERCENT 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 8.88%
US Ventech, Inc.
c/o Friedli Corporate Finance
AG Freigustrasse 5
Zurich, Switzerland 8002 456,250 6.64%
Peter G. Livingston (3) -0- -0-
Norman R. Proulx (4) 175,000 2.50%
James R. Tolbert III (5) 16,667 *
William I. Bergman (5) 25,000 *
Robert J. Hudson, M.D. (6) 51,824 *
J. Vernon Knight, M.D. 25,000 *
Rand Mulford (7) 32,653 *
David L. Rainbolt (8) 24,480 *
Christopher M. Salyer (5) 16,667 *
Gilbert M. Schiff, M.D. (5) 25,000 *
Craig D. Shimasaki, Ph.D. (9) 42,878 *
William G. Thurman, M.D. (10) 22,917 *
All Directors and Executive Officers as a
Group (12 persons)(11) 486,663 6.62%
</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
4
<PAGE> 7
common stock subject to options currently exercisable or exercisable on or
before April 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.
(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) 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 25,000 shares subject to currently exercisable warrants and 4,320
shares of common stock subject to warrants beneficially owned by Paula M.
Mulford and Associates.
(8) Includes 16,667 shares subject to currently exercisable options and includes
7,813 shares beneficially owned by Trend Venture Corp.
(9) Includes 37,141 shares subject to currently exercisable options.
(10) 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).
(11) Includes 484,475 shares subject to currently exercisable options and
warrants.
PROPOSAL ONE
APPROVAL OF THE POTENTIAL ISSUANCE TO PALLADIN OPPORTUNITY FUND, LLP AND HALIFAX
FUND L.P. OF SHARES EQUAL TO MORE THAN 20% OF THE COMPANY'S COMMON STOCK
BACKGROUND
Nasdaq Marketplace Rule 4350(i)(1)(D) requires shareholder approval of
a transaction other than a public offering involving the sale, issuance or
potential issuance by an issuer of common stock (or securities convertible into
or exercisable for common stock) either:
o at a price less than the greater of book or market value which
together with sales by officers, directors or substantial
shareholders of the company equals 20% or more of the common
stock or 20% or more of the voting power outstanding before
the issuance; or
o the number of shares of common stock to be issued is or may
equal to 20% or more of the common stock or 20% or more of the
voting power outstanding before the issuance for less than the
greater of book or market value of the stock.
On October 13, 2000, ZymeTx sold to Palladin Opportunity Fund, LLP and
its affiliate, Halifax Fund L.P., an aggregate $2 million of 5% Senior Secured
Convertible Debentures at an initial conversion price of $3.124836, and in
connection with the sale of the debentures issued to Palladin and Halifax an
5
<PAGE> 8
aggregate 180,000 common stock purchase warrants at an initial exercise price of
$3.16875. The terms of the debentures and the warrants are summarized below.
Just prior to issuing the debentures and warrants there were 6,840,430
shares of common stock outstanding, of which approximately 1,368,086 shares
represented 20% of the number of shares of common stock then outstanding. As
part of the Purchase Agreement entered into by and among ZymeTx, Palladin and
Halifax, the company agreed to seek stockholder approval of the potential
issuance to Palladin and/or Halifax of shares in excess of the Nasdaq 20%
limitation.
As of the record date for this meeting, none of the debentures had been
converted into common stock and none of the warrants issued to Palladin or
Halifax had been exercised. If the stockholders do not approve this proposal,
the conversion or exercise of the securities described in the proposal shall be
subject to the 20% share limitation.
However, until stockholder approval is obtained, or in the event
stockholder approval is not obtained, Palladin and/or Halifax may redeem for
cash any debentures in excess of the 20% limitation at a "premium redemption
price" equal to the greater of 120% of the outstanding principal amount of, the
accrued but unpaid interest on, and the accrued but unpaid delay or forbearance
payments, if any, on the debentures, and may require the company to repurchase
any warrants in excess of the 20% limitation at a price equal to 120% of the
current exercise price. Payment of any cash redemption could materially and
adversely affect the Company's cash flow.
TERMS OF THE 5% SENIOR SECURED CONVERTIBLE DEBENTURES AND THE WARRANTS
The terms of the debentures and the warrants are complex. Any summary
of the terms will be general in nature and must be qualified by reference to the
actual agreements attached as exhibits to the company's filings with the SEC.
Stockholders desiring a more complete understanding of the debentures are urged
to refer to such exhibits.
THE DEBENTURES
<TABLE>
<S> <C>
Aggregate Cash Value $2,000,000
Interest Five percent (5%) per annum, compounded
semi-annually and accruing daily. Dividends
are payable in arrears on November 1 and May
1 of each year, and are payable at the
company's option
-- in cash;
-- in shares of common stock; or
-- by adding the interest amount owing to
the outstanding principal amount due
under the debenture.
Outstanding principal and interest due bear
interest at the per annum rate equal to the
lower of the Citibank Prime Rate plus 6% or
the highest rate permitted by law.
Conversion Rate The debentures are convertible at any time
prior to the maturity date described below
into shares of common stock in an amount
equal to the outstanding principal amount to
be converted plus accrued but unpaid
interest and any monthly delay payments
divided by the conversion price
</TABLE>
6
<PAGE> 9
<TABLE>
<S> <C>
in effect at the time of the conversion. In
no event may any holder convert debentures
if that holder (together with its
affiliates) would beneficially own,
immediately after and giving effect to the
conversion, more than 4.99% of the then
outstanding shares of common stock. However,
this prohibition may be waived if the holder
gives the company at least 61 days prior
notice of its intent to waive the 4.99%
limitation.
Conversion Price The initial conversion price of $3.124836 is
equal to 110% of the volume weighted average
prices as reporting by Bloomberg Financial
Markets for shares of the common stock for
each of the 10 consecutive trading days
immediately prior to October 13, 2000.
Reset The conversion price automatically resets on
April 13, 2001, July 13, 2001 and October
13, 2001 if the average closing bids for the
15 consecutive trading day period
immediately preceding the applicable reset
date is less than the initial conversion
price or the otherwise applicable conversion
price. In such event, the reset price shall
equal the average closing bids for the 15
consecutive trading day period immediately
preceding the reset date, subject to further
adjustment.
Ranking and Security The debentures are secured by a perfected
first priority security interest in all of
the company's property and assets, including
all of the company's intellectual property.
This security interest is senior to all
other creditors of the company except for a
$1,000,000 credit line the company is
allowed to enter into with a U.S. commercial
bank or other recognized lender primarily in
the business of entering into such
agreements. In the event of a default under
the debenture transaction documents or the
insolvency of the company, or as otherwise
provided in the security agreement, Palladin
and Halifax may declare the entire amount
owed under the debentures or other
transaction documents immediately due and
payable, and may, among other things,
foreclose on and sell, lease, transfer or
otherwise deal with the collateral or
proceeds thereof.
Change in Control If at any time any of the following events
occur, Palladin or Halifax may require the
company to redeem the debentures at a cash
redemption price equal to 120% of the sum of
(i) the outstanding principal amount of the
debenture plus (ii) accrued but unpaid
interest and monthly delay payments:
-- any consolidation or merger of the
company with or into any other corporation
or any other entity or person (whether or
not the company is the surviving
corporation), or any other corporate
reorganization or transaction or series of
related transactions in which in excess of
40% of the company's voting power is
transferred through a merger,
consolidation, tender offer or similar
transaction;
-- any person together with its affiliates
and associates beneficially owns or is
deemed to beneficially own in excess of
50% of the company's voting power;
</TABLE>
7
<PAGE> 10
<TABLE>
<S> <C>
-- there is a replacement of more than
one-half of the members of the company's
board of directors which is not approved
by those individuals who are members of
the company's board of directors on the
date thereof; or
-- in one or a series of related
transactions there is a sale or transfer
of all or substantially all of the
company's assets, determined on a
consolidated basis.
Adjustments The conversion price is subject to
adjustment in the event of:
-- any issuances of securities at a per
share selling price less than the
conversion price, as adjusted, or the
market price (with certain exceptions);
-- a forward or reverse stock split;
-- a stock dividend;
-- a merger, consolidation or transfer or
sale of all or substantially all of the
company's assets;
-- a reorganization or reclassification of
the common stock;
-- certain common stock issuances or any
securities convertible or exchangeable
into common stock; or
-- any other similar action of the type
described or contemplated above.
Maturity Date If any debentures are not converted by
October 12, 2002, they will automatically
convert (unless otherwise prohibited by
applicable Nasdaq rules such as Rule
4350(i)) into common stock.
</TABLE>
8
<PAGE> 11
<TABLE>
<S> <C>
Company Option
to Redeem and
Force Conversion The company may redeem the debentures for
cash at a price equal to 112% of the
outstanding principal plus all accrued but
unpaid interest and monthly delay payments
so long as there is an effective
registration statement covering the shares
of common stock underlying the debentures
and the reset average is less than
$3.124836.
The company may force the conversion of the
debentures at a price equal to the
conversion price in effect as of the forced
conversion date so long as there is an
effective registration statement covering
the shares of common stock underlying the
debentures and the closing bid of the common
stock exceeds $4.687254 for each of 15
consecutive trading days.
The company may not redeem or force a
conversion of the debentures unless:
-- the shares of common stock underlying the
debentures were subject to an effective
registration statement during the time
redemption/forced conversion is permitted
and at all times thereafter up to and
including the redemption dates or the
forced conversion date, as applicable;
-- no interfering event or material default
or breach exists, and no event shall have
occurred which constitutes (or would
constitute with notice or the passage of
time or both) an interfering event or
material default or breach of the
transaction documents; or
-- the conversion will not exceed the
applicable limits on a holder's right
to convert.
If the conversion would exceed applicable
limits, the holder may require the company
to pay cash for the portion of the
outstanding principal amount that may not be
converted, or the redemption of the
debenture must be deferred until such time
as the conversion does not exceed such
limits.
Palladin and Halifax may convert their
debentures after receiving notice of the
company's intention to redeem or force
conversion but before the actual redemption
or forced conversion.
Right to Purchase
Additional Debentures Palladin and Halifax have the
right to purchase an aggregate $1,000,000
additional debentures on or before July 10,
2001. If this right is not exercised at or
before the time the company converts the
debentures, such right will be automatically
lost.
Registration Rights A registration statement registering
the underlying common stock was declared
effective by the SEC on December 5, 2000.
Voting Rights Holders of the debentures have no voting
rights.
Default If the company is in default under the
debentures which includes, among other
things, the failure to pay interest and
principal within the prescribed times, the
company's bankruptcy or insolvency or the
company's failure to materially perform all
material covenants and agreements in the
documents relating to the sale of the
debentures, then Palladin and/or Halifax may
consider the debentures immediately due and
payable and enforce all available rights and
remedies.
</TABLE>
9
<PAGE> 12
THE WARRANTS
<TABLE>
<S> <C>
Number Issued Initially 180,000 warrants were issued, with
an option to purchase an aggregate 90,000
additional warrants on or before July 10,
2001, but in no event shall the number of
shares of common stock that may be acquired
by Palladin or Halifax and their respective
affiliates exceed 4.99% of the total issued
and outstanding shares of the company's
common stock except to the extent that:
-- the holder gives the company 61 days
notice of its intent to reduce such
restricted ownership percentage;
-- more than 50% of the company's voting
power is transferred to or acquired
by any other corporation, entity or
person;
-- there is a replacement of more than
one-half the company's board of directors
which is not approved by the members of
the board on that date; or
-- there is a sale or transfer of all or
substantially all the company's assets.
Exercise Period On or before October 12, 2005, subject to
certain adjustments.
Exercise Price $3.16875 per share; the exercise price
and the number of shares of common stock
that may be purchased upon exercise of the
warrants are also subject to certain
adjustments, including, among others, in the
event:
-- at any time prior to October 12, 2005,
the company issues or sells any common
stock or convertible securities, (other
than previously issued securities or those
which may be issued pursuant to the
company's current or future employee,
director or bona fide consultant option
plans or arrangements) at a purchase price
per share less than the greater of the (A)
the Exercise Price or (B) the fair market
value of the Common Stock on the trading
day next preceding such issue or sale;
-- of a forward or reverse stock split;
-- of a stock dividend;
-- of a merger, consolidation or transfer or
sale of all or substantially all of ZymeTx's
assets,of a reorganization or
reclassification of the common stock;
-- of certain common stock issuances or any
securities convertible or exchangeable into
common stock; or
-- of any other similar action of the type
described or contemplated above.
</TABLE>
10
<PAGE> 13
<TABLE>
<S> <C>
Voluntary Adjustment The company may reduce but not increase the
warrant exercise price at any time during
the term of the warrants.
Cashless Exercise The warrants may be exercised, in whole or
in part, on a "cashless" basis.
Change in Control
Transaction See discussion under Debentures, above.
Voting Rights Holders of the warrants have no voting
rights.
</TABLE>
EFFECT OF RULE 4350(i) ON THE DEBENTURES AND WARRANTS
Since the number of shares of common stock into which the debentures
are convertible depends, in part, on the market price of the common stock at the
time of conversion or exercise, it is possible that based upon the total number
of shares of debentures and warrants initially issued in connection with the
sale of the debentures, the debentures could ultimately be convertible into or
the warrants could ultimately be exercised for a number of shares of common
stock that could exceed the 20% share limitation, depending on the conversion or
exercise prices.
Additionally, the debentures may be convertible into common stock at a
discount from the market price of the common stock at the time of conversion.
Rule 4350(i)(1)(D), among other things, requires shareholder approval in
connection with a transaction involving the sale or issuance of common stock (or
securities convertible into or exercisable for common stock) equal to 20% or
more of the common stock outstanding before the issuance for less than the
greater of book or market value of the common stock. Because the conversion rate
may be discounted from the market price of the common stock, Rule 4350(i)(1)(D)
may apply to the conversion of the debentures and the exercise of the warrants,
in the event that the exercise price of the warrants is less than the book or
market value of the common stock.
BOARD RECOMMENDATION; REASONS
The Board of Directors believes that it is in the company's best
interest for Palladin and Halifax to be able to convert their debentures and
exercise their warrants into an amount of common stock that exceeds the Nasdaq
20% share limitation. Approval of the proposal by the stockholders would satisfy
the shareholder approval requirements of Nasdaq Rule 4350(i)(1)(D).
If stockholder approval is not obtained, Palladin and Halifax may each
require the company to redeem for cash any debentures or warrants in excess of
the 20% limit at a premium redemption price of 120% of the outstanding principal
plus unpaid interest and accrued but unpaid monetary penalties. Payment of any
cash redemption could materially and adversely affect the company's cash flow.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" APPROVING THE POSSIBLE
ISSUANCE OF MORE THAN 1,368,086 SHARES OF COMMON STOCK UPON THE CONVERSION OF
THE SHARES OF DEBENTURES AND THE EXERCISE OF CERTAIN WARRANTS ISSUED IN
CONNECTION WITH THE SALE OF THE DEBENTURES.
OTHER INFORMATION
The company's Annual Report on Form 10-KSB, as amended, for fiscal year
2000 and all subsequent Quarterly Reports on Form 10-QSB filed before the date
of this meeting are incorporated by reference in this proxy statement. The
company will provide to any stockholder, upon written request and without
charge, a copy (without exhibits) of all information incorporated by reference
in this proxy
11
<PAGE> 14
statement. Requests should be addressed to G. Carl Gibson, Secretary, 800
Research Parkway, Suite 100, Oklahoma City, Oklahoma 73104.
By Order Of The Board of Directors
G. CARL GIBSON
SECRETARY
Oklahoma City, Oklahoma
February 12, 2001
12
<PAGE> 15
ANNEX A 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 FEBRUARY 9, 2001, AT THE SPECIAL MEETING OF
STOCKHOLDERS TO BE HELD ON APRIL 9,2001, OR ANY ADJOURNMENT THEREOF.
1. Proposal to approve the possible issuance of shares equal to more than 20%
of the ZymeTx, Inc. common stock upon the conversion of certain outstanding
5% Senior Secured Convertible Debentures and the exercise of certain common
stock purchase warrants issued in connection with the sale of the
debentures.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. 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 Proposal 1.
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: , 2001
-----------------------------
x
-----------------------------------------
(Signature)
x
-----------------------------------------
(Signature, if held jointly)
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
