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SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
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 Rule 14a-11(c) or Rule 14a-12
SALIVA DIAGNOSTIC SYSTEMS, INC.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed per Exchange Act Rules 14a-6(i)(1) and 0-11.
[ ] 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.
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PRELIMINARY COPY
SALIVA DIAGNOSTIC SYSTEMS, INC.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 21, 1997
A Special Meeting of Shareholders of Saliva Diagnostic Systems, Inc.,
a Delaware Corporation (the "Company"), will be held on Friday, November 21,
1997 at 10:00 a.m., Eastern time, at ____________________________________,
Washington, D.C., for the following purposes:
1. INCREASE AUTHORIZED NUMBER OF SHARES OF COMMON STOCK. To
approve an amendment to the Company's Certificate of
Incorporation increasing the number of authorized shares of
the Company's Common Stock, par value $.01 per share, from
33,000,000 to 50,000,000;
2. AUTHORIZE PREFERRED STOCK. To approve an amendment to the
Company's Certificate of Incorporation authorizing the
creation of a new class of stock, designated "Preferred
Stock;" and
3. OTHER BUSINESS. To consider and act upon such other business
as may properly come before the meeting or any adjournments
thereof.
Only shareholders of record at the close of business on October 10,
1997 are entitled to notice of and to vote at the meeting. A list of such
shareholders will be available for inspection by shareholders at the Company's
principal office for a period of ten days prior to the meeting date and at the
meeting on the meeting date.
You are requested to date and sign the enclosed proxy and return it in
the postage-prepaid envelope enclosed for that purpose whether or not you
expect to attend the meeting. You may attend the meeting in person even though
you send in your proxy; retention of the proxy is not necessary for admission
to or identification at the meeting.
By Order of the Board of Directors:
Kenneth J. McLachlan
President and Chief Executive Officer
Vancouver, Washington
October 14, 1997
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PRELIMINARY COPY
SALIVA DIAGNOSTIC SYSTEMS, INC.
PROXY STATEMENT FOR SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 21, 1997
SOLICITATION AND REVOCABILITY OF PROXY
The enclosed Proxy is solicited on behalf of the Board of Directors of
Saliva Diagnostic Systems, Inc., a Delaware corporation (the "Company"), for
use at the Special Meeting of Shareholders to be held on Friday, November 21,
1997, at 10:00 a.m., Eastern time, or at any adjournment thereof, at
______________________________, Washington, D.C., for the purposes set
forth herein and in the accompanying notice of Special Meeting of Shareholders.
All expenses associated with this solicitation will be borne by the Company.
The solicitation of proxies by mail may be followed by personal solicitation of
certain shareholders by officers or regular employees of the Company. In
addition, the Company intends to hire Beacon Hill Partners to aid in the
solicitation of proxies, for whose services the Company will pay a fee
estimated at [$3,000] plus expenses. Copies of solicitation materials will be
furnished to fiduciaries, custodians and brokerage houses for forwarding to
beneficial owners of the shares of the Company's Common Stock, par value $.01
per share (the "Common Stock"), held in their names.
All properly executed proxies will be voted (except to the extent that
authority to vote has been withheld), and where a choice has been specified by
the shareholder as provided in the proxy card, such proxies will be voted in
accordance with the specification so made. Proxies submitted without
specification will be voted FOR Proposal No. 1 to approve an amendment to the
Company's Certificate of Incorporation increasing the number of authorized
shares of the Company's Common Stock, and FOR Proposal No. 2 to approve an
amendment to the Company's Certificate of Incorporation authorizing the
creation of a new class of stock, designated "Preferred Stock." If any other
business is properly presented at the Special Meeting, the proxies will be
voted by the named proxies in their best judgment.
A proxy may be revoked by a shareholder prior to its exercise by
written notice to the Company, by submission of another proxy prior to the
meeting bearing a later date or by voting in person at the Special Meeting of
Shareholders. The mailing address of the principal executive offices of the
Company is 11719 NE 95th Street, Vancouver, Washington 98682.
This Proxy Statement, the accompanying Notice of Special Meeting and
the Proxy Card are first being mailed on or about October 14, 1997.
VOTING AT THE MEETING
The Board of Directors has fixed October 10, 1997 as the record date
for determination of shareholders entitled to notice of and to vote at the
Special Meeting. The Company has one class of voting securities outstanding,
designated Common Stock. At the record date, __________ shares of the Common
Stock were outstanding and entitled to vote. The Common Stock does not have
cumulative voting rights.
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Each share of Common Stock outstanding on the record date is entitled
to one vote per share at the Special Meeting. If a quorum is present at the
Special Meeting, each of (i) Proposal No. 1 to approve an amendment to the
Company's Certificate of Incorporation increasing the number of authorized
shares of the Company's Common Stock, and (ii) Proposal No. 2 to approve an
amendment to the Company's Certificate of Incorporation authorizing the
creation of a new class of stock, designated "Preferred Stock," will be
approved if it receives the affirmative vote of the holders of at least a
majority of the shares of Common Stock entitled to vote, present in person or
represented by proxy, at the Special Meeting. Abstention from voting will have
the same effect as voting against the proposals.
A broker "non-vote" occurs when a nominee holding shares for a
beneficial owner does not vote upon a particular proposal because the nominee
does not have discretionary voting power with respect to that proposal and has
not received instructions from the beneficial owner. Broker non-votes are
counted for purposes of determining whether a quorum exists at the Special
Meeting but are not counted and have no effect on the results of the vote on
the proposals.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of Common Stock of the Company as of September 15, 1997,
except where otherwise noted, as to (i) each person who is known by the Company
to own beneficially more than 5% of the outstanding shares of Common Stock,
(ii) each director of the Company, (iii) each of the executive officers whose
total annual salary and bonus exceeded $100,000 for the fiscal year ended
December 31, 1996, and (iv) all directors and executive officers as a group.
Except as otherwise noted, the Company believes the persons listed below have
sole investment and voting power with respect to the Common Stock owned by
them.
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<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
COMMON STOCK
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NUMBER OF SHARES % SHARES BENEFICIALLY OWNED
NAME AND ADDRESS BENEFICIALLY OWNED(1)
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<S> <C> <C>
Kenneth J. McLachlan 700,000(2) 2.50%
c/o SDS International Ltd. (UK)
11 Sovereign Close
Sovereign Court
London, England E1 9HW, UK
Hans R. Vauthier -- --
Steinengraben 28
Ch-4051
Basle, Switzerland
David Barnes, M.D. 470,000(3) 1.66%
c/o SDS International Ltd. (UK)
11 Sovereign Close
Sovereign Court
London, England E1 9HW, UK
Willfried Schramm, Ph.D. 125,000(4) 0.45%
23000 Schauer Road
Battleground, WA 98604
Ronald L. Lealos 831,912(5) 2.93%
1477 SE Columbia Shores
Vancouver, WA 98662
Eric F. Stoer -- --
700 Thirteenth Street, N.W.
Washington, D.C. 20005
The Tail Wind Fund Ltd. 1,514,516(6) 5.42%
Windermere House
404 East Bay Street
PO Box SS-5539
Nassau, Bahamas
- ---------------------------------------------------------------------------------------------------------------
All Executive Officers and Directors as a
group (6 persons)(7) 1,090,466(8) 3.85%
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</TABLE>
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission, and includes voting power and
investment power with respect to shares. Shares of Common Stock
issuable upon the exercise of outstanding stock options that are
currently exercisable or become exercisable within 60 days from
September 15, 1997 are
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considered outstanding for the purpose of calculating the percentage
of Common Stock owned by such person but not for the purpose of
calculating the percentage of Common Stock owned by any other person.
(2) Includes 200,000 shares registered in the name of Bank of Bermuda
Trust Company, trustee for the Morar Trust, an irrevocable trust
established for the benefit of Mr. McLachlan's children. Also
includes 500,000 shares registered in the name of Reads Trust Company
Limited, trustee of an irrevocable trust established for the benefit
of Mr. McLachlan's children. Mr. McLachlan has no power to vote or
dispose of these shares pursuant to the terms of the trusts.
(3) Includes options to purchase 283,000 shares of the Common Stock.
(4) Includes options to purchase 125,000 shares of the Common Stock.
(5) Includes options to purchase 400,000 shares of the Common Stock which
were granted to Mr. Lealos, and options to purchase 10,000 shares of
the Company's Common Stock which were granted to Mr. Lealos' wife.
(6) Also includes an estimated 87,905 shares which may be issued in
accordance with the terms of a common stock subscription agreement
between the Company and The Tail Wind Fund Ltd.
(7) Includes Kenneth J. McLachlan, Hans R. Vauthier, Eric F. Stoer, Paul
D. Slowey, Michael Grant and David Barnes, the current directors and
executive officers of the Company.
(8) Includes options to purchase an aggregate of 382,166 shares of the
Common Stock.
APPROVAL OF AMENDMENT INCREASING THE
NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
(PROPOSAL NO. 1)
On September 30, 1997 the Board of Directors approved, and recommends
that the shareholders of the Company approve, an amendment to the Company's
Certificate of Incorporation providing for an increase in the maximum number of
shares of Common Stock which the Company shall have authority to issue to
50,000,000.
The Company is presently authorized to issue a maximum of 33,000,000
shares of Common Stock. As of September 15, 1997, the Company has issued and
outstanding 27,950,368 shares of Common Stock, and has obligations to set aside
approximately 3,566,683 shares for the exercise of outstanding warrants and
options and approximately 500,000 shares for the exercise of other contractual
commitments.
The Board of Directors believes that an increase in the number of
authorized shares to 50,000,000 is essential to the Company's ability to raise
additional capital and raising additional capital will be critical to the
Company's ability to continue its operations. The
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Board of Directors also believes it desirable for the Company to have shares
available for such other future issuances as the Board of Directors may deem
advisable, such as acquisitions, stock options and employee benefit plans,
without the necessity of future shareholder action. Although the Company is
not currently in negotiations to issue any such shares, its is likely that it
will be necessary to issue shares of Common Stock to fund the Company's
operations.
The additional shares of Common Stock for which authorization is
sought would be identical to the shares of Common Stock now authorized and
outstanding. No stockholder will have any statutory preemptive rights to
purchase or subscribe for any shares of Common Stock that may be issued.
Although the proposal to authorize additional shares of Common Stock
is made for the reasons stated above, the newly authorized shares would be
available for issuance by the Board of Directors without further stockholder
approval in response to an actual or threatened takeover bid. The issuance of
such shares could have the effect of diluting the stock ownership of persons
seeking to obtain control of the Company and, therefore, the proposed amendment
may have the effect of discouraging efforts to gain control of the Company in a
manner not approved by the Board. The Board is not aware of any pending or
threatened takeover bid for the Company, and the proposed amendment was not
designed or intended by the Board to discourage takeover efforts. Because of
the holdings of the Company's Common Stock, the Board regards any takeover bid
as unlikely.
Because the proposed amendment may discourage some takeover attempts,
stockholders could be deprived of opportunities to sell their shares at an
increased price that might result from a takeover attempt. On the other hand,
because the proposed amendment would permit the Company to satisfy existing
obligations and to have shares available for future financings and acquisitions,
the Board believes that passage of such amendment would have a tendency to
improve the overall market for the Common Stock.
There are no provisions in the Company's Certificate of Incorporation
or Bylaws that may be viewed as having anti-takeover effects. Management has no
intention of proposing any amendments to either with such effect.
If Proposal No. 1 is approved by the Company's shareholders and
Proposal No. 2 is not so approved, the Board of Directors expects to file a
Certificate of Amendment to the Company's Certificate of Incorporation
increasing the number of authorized shares of Common Stock as soon as
practicable after the date of the Special Meeting. The Certificate of
Amendment would amend and restate Article Fourth of the Company's Certificate
of Incorporation to read as follows:
The aggregate number of shares of all classes of
stock which the corporation shall have authority to
issue is Fifty Million (50,000,000), all of which
50,000,000 shall be Common Stock, par value $.01 per
share.
In order for the shareholders of the Company to authorize the increase
in the number of authorized shares of Common Stock by adoption of the
aforementioned amendment, a majority of the shares of outstanding Common Stock
entitled to vote, present in person or represented by proxy, at the Special
Meeting, must vote in favor of this proposal.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR PROPOSAL
NO. 1 TO AUTHORIZE AN AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION
INCREASING THE NUMBER OF AUTHORIZED SHARES OF THE COMPANY'S COMMON STOCK.
APPROVAL OF AMENDMENT AUTHORIZING
PREFERRED STOCK
(PROPOSAL NO. 2)
On September 30, 1997 the Board of Directors approved, and recommends
that the shareholders of the Company approve, an amendment to the Company's
Certificate of Incorporation authorizing the creation of a new class of stock,
designated "Preferred Stock."
The Board of Directors believes that it is in the best interests of
the shareholders to provide the Company with the flexibility to consider
opportunities to raise additional capital. The authorization of the Preferred
Stock will enable the Company to act promptly and without additional expense if
appropriate circumstances arise which require the issuance of shares. Although
the Company is not presently in active negotiations to issue any such
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shares, it is likely that it will be necessary for the Company to issue shares
of Preferred Stock in the future to fund the Company's operations.
The Preferred Stock shall be issuable in one or more series on terms
and conditions to be established by the Board of Directors from time to time,
and commonly known as "blank check" Preferred Stock. The term "blank check"
Preferred Stock refers to stock for which the designations, preferences,
conversion rights, cumulative rights, and relative, participating, optional and
other rights, including voting rights, qualifications, limitations or
restrictions thereof, are determined by the Board of Directors. The additional
authorized shares of Preferred Stock that would be available for issuance, if
the proposed amendment to the Company's Certificate of Incorporation is
approved, may be issued for any proper corporate purpose at any time without
further shareholder approval. Each series of Preferred Stock may rank senior
to the Common Stock with respect to dividends and liquidation rights.
As with the proposal to increase the number of authorized shares of
Common Stock, this proposal is not designed or intended by the Board to
discourage takeover effects. Because the newly authorized Preferred Stock would
be available for issuance by the Board without further stockholder approval in
response to an actual or threatened takeover bid, however, it could have the
effect of discouraging hostile takeover efforts. As with the Common Stock
proposal, the Board believes that passage of this amendment would have a
tendency to improve the overall market for the Company's Common Stock.
If Proposal No. 1 and Proposal No. 2 are both approved by the
Company's shareholders, the Board of Directors expects to file a Certificate of
Amendment to the Company's Certificate of Incorporation authorizing the
creation of the Preferred Stock as soon as practicable after the date of the
Special Meeting. The Certificate of Amendment would amend and restate Article
Fourth of the Company's Certificate of Incorporation to read as follows:
The aggregate number of shares of all classes of stock which
the corporation shall have authority to issue is Fifty One
Million (51,000,000), of which 50,000,000 shall be Common
Stock, par value $.01 per share, and 1,000,000 shall be
Preferred Stock.
The Preferred Stock may be issued from time to time by the
Board of Directors as shares of one or more series. The
description of shares of each series of Preferred Stock,
including any preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption shall
be set forth in resolutions adopted by the Board of Directors.
The Board of Directors is expressly authorized at any time to
adopt resolutions providing for the issuance of, or providing
for a change in the number of, shares of any series of
Preferred Stock and, if and to the extent from time to time
required by law, and to set or change in any one or more
respects the designations, preferences, conversion or other
rights, voting powers, restrictions, limitations as to
dividends, qualifications, or terms and conditions of
redemption relating to the shares of such series.
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If Proposal No. 2 is approved by the Company's shareholders and
Proposal No. 1 is not so approved, the Certificate of Amendment to the
Company's Certificate of Incorporation would amend and restate Article Fourth
of the Company's Certificate of Incorporation as set forth above, except that
the following would replace the first paragraph:
The aggregate number of shares of all classes of stock which
the corporation shall have authority to issue is Thirty Four
Million (34,000,000), of which 33,000,000 shall be Common
Stock, par value $.01 per share, and 1,000,000 shall be
Preferred Stock.
Until the Board of Directors determines the respective rights of the
holders of one or more series of Preferred Stock, the effects of the creation
of Preferred Stock upon the rights of holders of Common Stock can not be known.
The effects of such issuance could, however, include dilution of the voting
power of Common Stock if the Preferred Stock has voting rights, and restriction
of the rights of holders of Common Stock to share in the Company's assets upon
liquidation until the satisfaction of any liquidation preference which the
holders of Preferred Stock may have.
In order for the shareholders of the Company to authorize the creation
of the Preferred Stock by adoption of the aforementioned amendment, a majority
of the shares of outstanding Common Stock entitled to vote, present in person
or by proxy, at the Special Meeting, must vote in favor of this proposal.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR PROPOSAL
NO. 2 TO AUTHORIZE AN AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION
AUTHORIZING THE CREATION OF A NEW CLASS OF STOCK, DESIGNATED "PREFERRED STOCK."
SHAREHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Proposals of shareholders intended to be presented at the Company's
1998 Annual Meeting of Shareholders should be received by the Company at its
principal office no later than December 29, 1997 in order that they may be
considered for inclusion in the proxy statement and form of proxy relating to
that meeting. Upon receipt of any such proposal, the Company will determine
whether or not to include such proposal in the proxy statement and proxy in
accordance with regulations governing the solicitation of proxies.
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OTHER MATTERS
The Company knows of no other matters to be submitted at the meeting.
If any other matters properly come before the meeting, the persons named in the
enclosed Proxy Card will have the discretionary authority to vote in accordance
with their best judgment.
By Order of the Board of Directors:
Kenneth J. McLachlan
Dated: October 14, 1997 President and Chief Executive Officer
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PRELIMINARY COPY
SALIVA DIAGNOSTIC SYSTEMS, INC.
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON NOVEMBER 21, 1997
The undersigned hereby names, constitutes and appoints Kenneth J.
McLachlan and Eric F. Stoer, and each of them with full powers of substitution
to act as true and lawful attorneys and proxies for the undersigned, and in the
place and stead of the undersigned to attend the Special Meeting of the
Shareholders of Saliva Diagnostic Systems, Inc. (the "Company") to be held at
10:00 a.m. on Friday, November 21, 1997, and at any adjournment thereof, and to
vote all the shares of Common Stock held of record in the name of the
undersigned on October 10, 1997, with all the powers that the undersigned would
possess if he or she were personally present.
PLEASE DATE, SIGN AND MAIL THIS PROXY PROMPTLY
IN THE ENCLOSED REPLY ENVELOPE
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
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1. To authorize FOR AGAINST ABSTAIN
the increase in
authorized number
of shares of
Common Stock.
THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS A VOTE
FOR THE APPROVAL OF PROPOSAL 1.
Should the undersigned be present and elect to vote at the Special Meeting or
at any adjournment thereof and after notification to the Company at the
Special Meeting of the stockholder's decision to terminate this proxy, then the
power of said attorneys and proxies shall be deemed terminated and of no further
force and effect.
2. To authorize the creation of the Preferred Stock.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF
PROPOSAL 2.
3. The transaction of such other business as may properly come before the
meeting and any and all adjournments thereof.
IF NO SPECIFIC DIRECTION IS GIVEN AS TO ANY OF THE ABOVE ITEMS, THIS PROXY WILL
BE VOTED FOR PROPOSAL 1 AND FOR PROPOSAL 2. IF ANY OTHER BUSINESS IS PRESENTED
AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THE NAMED PROXIES IN THEIR BEST
JUDGMENT. AT PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS
TO BE PRESENTED AT THE SPECIAL MEETING.
The undersigned acknowledges receipt from the Company prior to the
execution of this proxy of the Notice of Special Meeting of Shareholders and a
Proxy Statement.
<TABLE>
<S> <C>
I do [ ] do not [ ]
plan to attend the
DATED SHAREHOLDER (print name) SHAREHOLDER (sign name) meeting.
--------- ------------------ -------------------------- (Please check)
</TABLE>
NOTE: Please sign exactly as your name appears on the enclosed card. When
signing as attorney, executor, administrator, trustee or guardian, please
give your full title. If shares are held jointly, each holder should
sign.
43396v6
