SECURITIES EXCHANGE COMMISSION
WASHINGTON, D.C. 20552
-------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
----------
Date of Report (Date of earliest event reported):
June 5, 1997
SALIVA DIAGNOSTIC SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction or incorporation)
0-21284
(Commission File Number)
91-1549305
(IRS Employer Identification no.)
11719 N.E. 95TH STREET
VANCOUVER, WA 98682
(360) 696-4800
(Address, including zip code, and telephone number
of principal executive offices)
Not Applicable
(Former name or former address, if changed since last report)
<PAGE>
ITEM 5. OTHER
On June 30, 1997, Saliva Diagnostic Systems, Inc., a Delaware
corporation (the "Company"), entered into two separate common stock subscription
agreements for an offering of its common stock, par value $.01 per share (the
"Common Stock"), pursuant to Regulation D, promulgated under the Securities Act
of 1933, as amended. On June 5, 1997 and June 30, 1997, holders converted
$800,000 and $700,000 aggregate principal amount, respectively, of the Company's
7.5% Convertible Debentures due February 28, 1999 (the "Debentures").
The following summary of these transactions is qualified in its
entirety by the terms of the related agreements, filed herewith as exhibits to
this Form 8-K. Also filed as exhibits to this Form 8-K are the Company's
unaudited consolidated balance sheets for June 30, 1997 and the Company's
unaudited consolidated statements of operations for the three and six month
periods ended June 30, 1997.
THE OFFERING
On June 30, 1997, the Company entered into two separate common stock
subscription agreements for the issuance and sale of shares of the Company's
Common Stock pursuant to Regulation D (the "Offering"). Pursuant to a Common
Stock Purchase Agreement between the Company and certain investors named therein
(the "Investors"), the Company sold a total of 2,420,000 shares of Common Stock
to the Investors for an aggregate purchase price of $1,210,000, $612,500 of
which was subscribed for by investors as of June 30, 1997. Pursuant to a Common
Stock Purchase Agreement between the Company and The Tail Wind Fund Ltd. ("Tail
Wind"), the Company sold a total of 412,905 shares of Common Stock to Tail Wind
for an aggregate purchase price of $300,000. Tail Wind is entitled to receive
additional shares of Common Stock under its agreement if the average of the
market price of the Common Stock on a designated five-day trading period for the
150-day period following effectiveness of a related registration statement is
less than 133.33% of the original per share purchase price paid by Tail Wind.
The closing on $337,500 principal amount of the Offering to the Investors and
$300,000 principal amount of the Offering to Tail Wind took place on July 14,
1997; the closing of $547,500 principal amount of the Offering to the Investors
took place on July 17, 1997; and the closing of the remaining $325,000 principal
amount of the Offering to the Investors took place on July 22, 1997. The Company
may enter into an additional common stock subscription agreement with an
additional investor for an aggregate purchase price of $500,000, the closing for
which is anticipated to take place on or before August 31, 1997. The final terms
of such agreement have not been agreed upon as of the date hereof and there can
be no assurance that a definitive agreement will be reached with this investor.
The Common Stock purchased in the Offering is subject to certain resale
restrictions. An Investor may not sell his shares of Common Stock for 180 days
following the date on which the closing of the sale of such shares occurred.
Tail Wind may not sell any of its shares of Common Stock purchased in the
2
<PAGE>
Offering prior to October 12, 1997. Tail Wind may sell up to (i) 33-1/3% of its
shares purchased in the Offering at any time from and after October 12, 1997;
(ii) an aggregate of 66-2/3% of the number of shares purchased in the Offering
at any time from and after November 11, 1997; and (iii) an aggregate of 100% of
the number of shares purchased in the Offering at any time from and after
December 11, 1997.
In connection with the Offering, the Company also entered into two
separate registration rights agreements with the Investors and Tail Wind,
respectively, under each of which the Company is required to file a registration
statement covering resales of shares of the Common Stock sold in the Offering
within 30 days after the date on which the closing relating to those shares
occurred. Under each of such agreements, the Company may be required to make
certain payments to the Investors and Tail Wind as damages if the registration
statement is not declared effective by the Securities and Exchange Commission by
October 12, 1997.
The net proceeds to the Company after payment of miscellaneous fees,
legal and accounting expenses is estimated to be $1,836,700. The Company has
also agreed to pay Grayson & Associates, Inc. ("Grayson") a cash fee of 8% of
the gross proceeds of the Offering, to reimburse Grayson for its attorney's fees
in connection with the Offering up to $15,000, and to issue to Grayson warrants
to purchase up to 226,632 shares of Common Stock which expire on June 30, 2002
(the "Grayson Warrants"). Prior to September 1, 1997, the Company intends to
issue to Tail Wind warrants to purchase up to 100,000 shares of Common Stock,
exercisable at any time from January 1, 1998 to January 1, 2003, for an exercise
price of $1.00 per share. Grayson has and Tail Wind will have certain demand
piggyback registration rights with respect to the shares of Common Stock that
may be issued upon exercise of their respective warrants.
USE OF PROCEEDS
The Company intends to use the net proceeds from the Offering for
working capital purposes.
THE CONVERSION
The Company issued to Tail Wind $1,500,000 in principal amount of the
Debentures in a private placement completed in March 1997. Tail Wind
subsequently sold and transferred $400,000 principal amount of the Debentures to
Joseph Kaufman. Pursuant to the original terms of the Debentures, the holder of
the Debentures had the right, exercisable at one or more times, at its option,
to convert up to (i) 33-1/3% of the Debentures at any time on or after June 10,
1997, (ii) up to an aggregate of 66-2/3% of the Debentures at any time on or
after July 9, 1997, and (iii) 100% of the Debentures on or after August 8, 1997.
The Company filed a registration statement on Form SB-2 covering resales of the
Common Stock underlying the Debentures which was declared effective by the
Securities and Exchange Commission on June 13, 1997.
Pursuant to two subsequent agreements among the Company, Tail Wind and
Kaufman, the parties agreed to an acceleration of conversion. Specifically, Tail
Wind and Kaufman agreed to convert an aggregate of $800,000 of Debentures on or
prior to June 5, 1997, and an aggregate of $700,000 of Debentures on or prior to
June 30, 1997, and to hold
3
<PAGE>
the Common Stock issued pursuant to such conversions (the "Early Conversion
Shares") in accordance generally with the original conversion schedule (i.e.,
selling or transferring no more than one-third of the Early Conversion Shares
from June 12, 1997 to July 12, 1997; no more than an aggregate of two-thirds of
the Early Conversion Shares from July 12, 1997 to August 12, 1997; and then all
of the Early Conversion Shares at any time after August 12, 1997). Neither Tail
Wind nor Kaufman are required to sell any of the Early Conversion Shares. In
addition, the Company agreed to certain conversion reset provisions, pursuant to
which Tail Wind and Kaufman may receive additional shares of Common Stock if,
(i) in the case of the conversion on or prior to June 5, 1997, at any time
during the 120-day period (and only one time for each of Tail Wind and Kaufman)
following effectiveness of the registration statement covering such shares, the
Conversion Price at that time is less than the early Conversion Price; and (ii)
in the case of the conversion on or prior to June 30, 1997, during any monthly
period prior to January 1, 1998, the average daily bid price for each day during
such period is less than the early Conversion Price. The number of shares of
Common Stock issuable upon the conversion of the Debentures was determined by
dividing the principal amount of the Debentures converted by the Conversion
Price (as defined below) in effect on the conversion date. The "Conversion
Price" is the lesser of (i) $1.9191, and (ii) 80% of the Current Market Price
(as defined below) on the applicable conversion date. The "Current Market Price"
per share of Common Stock on any date is the average of the closing bid prices
of the Common Stock for the five consecutive trading days ending on the trading
day immediately prior to the date in question, as reported by the Nasdaq Small
Cap Market.
On June 5, 1997, TailWind converted $600,000 in principal amount of the
Debentures for a total of 631,578 shares of Common Stock and Joseph Kaufman
converted $200,000 in principal amount of the Debentures for a total of 202,020
shares of Common Stock. On June 30, 1997, TailWind converted its remaining
$500,000 in principal amount of the Debentures for a total of 645,161 shares of
Common Stock and Joseph Kaufman converted his remaining $200,000 in principal
amount of the Debentures for a total of 258,065 shares of Common Stock.
Interest on the Debentures converted on June 5, 1997 was $10,375 to
Tail Wind and $3,416 to Kaufman. Interest on the Debentures converted on
June 30, 1997 was $11,146 to Tail Wind and $4,458 to Kaufman. On July 14, the
Company issued to each of Tail Wind and Kaufman 20,242 and 7,362 shares of
Common Stock, respectively, in payment of such interest.
OUTSTANDING SECURITIES OF THE COMPANY
There were issued and outstanding on June 5, 1997 approximately
22,090,785 shares of Common Stock. On June 5, 1997 and June 30, 1997, Tail Wind
and Kaufman converted Debentures for an aggregate of 1,736,824 shares of Common
Stock. A total of 27,604 shares of Common Stock were issued to Tail Wind and
Kaufman on July 14, 1997 in payment of interest on the Debentures, which
interest was payable as of June 30, 1997. The Company issued a total of
2,832,905 shares of Common Stock to the Investors and Tail Wind in the Offering,
and Tail Wind may receive additional shares provided certain conditions are
4
<PAGE>
met. As of June 30, 1997, there were issued and outstanding 23,855,963 shares of
Common Stock, and as of July 30, 1997, there were issued and outstanding
26,688,868 shares of Common Stock.
As of June 30, 1997, there were outstanding (i) stock options to
purchase an aggregate of 1,558,249 shares of Common Stock at exercise prices
ranging from $0.43 to $5.50 per share; (ii) warrants to purchase 1,380,000
shares of Common Stock which were issued in the Company's initial public
offering, are exercisable at $3.00 per share and expire December 31, 1997 unless
extended by the Company; and (iii) warrants to purchase 533,104 shares of Common
Stock which are exercisable at prices ranging from $1.00 to $4.00 per share
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits
Number Description
- ------ ------------------------------------------------------------------------
4.1 Form of Warrant to be issued to each of Grayson & Associates, Inc. and
The Tail Wind Fund, Ltd.
4.2 Common Stock Subscription Agreement dated as of June 30, 1997 between
the Company and The Tail Wind Fund Ltd.
4.3 Form of Common Stock Subscription Agreement dated as of June 30, 1997 by
and between the Company and the investors set forth on Schedule A
thereto.
4.4 Registration Rights Agreement dated as of June 30, 1997 between the
Company and The Tail Wind Fund Ltd.
4.5 Form of Registration Rights Agreement dated as of June 30, 1997 between
the Company and each of the investors set forth on Schedule A to the
Common Stock Subscription Agreement dated as of June 30, 1997 by and
between the Company and the investors set forth on Schedule A thereto.
4.6 7.5% Convertible Debenture due February 28, 1999, issued by the Company
to The Tail Wind Fund, Ltd. on March 11, 1997, incorporated by reference
to Exhibit 4 to the Company's Quarterly Report on Form 10-QSB for its
fiscal quarter ended March 31, 1997.
4.7 Convertible Securities Subscription Agreement dated as of March 11, 1997
between the Company and The Tail Wind Fund Ltd., incorporated by
reference to Exhibit 10.13 to the Company's Amendment No. 1 to
Registration Statement on Form SB-2 (Registration No. 333-26795), filed
with the Securities and Exchange Commission on June 13, 1997.
5
<PAGE>
4.8 Registration Rights Agreement dated as of March 11, 1997 between the
Company and The Tail Wind Fund Ltd., incorporated by reference to
Exhibit 10.14 to the Company's Amendment No. 1 to Registration Statement
on Form SB-2 (Registration No. 333-26795), filed with the Securities and
Exchange Commission on June 13, 1997.
4.9 Letter Agreement dated May 28, 1997 between the Company and The Tail
Wind Fund Ltd.
4.10 Letter Agreement dated June 27, 1997 between the Company and The Tail
Wind Fund Ltd.
99.1 Company's Unaudited Consolidated Balance Sheets for June 30, 1997 and
Unaudited Statements of Operations for the three and six month periods
ended June 30, 1997.
6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Saliva Diagnostic Systems, Inc.
DATE: July 30, 1997 By: /s/ Paul D. Slowey
------------------------------------
Paul D. Slowey
Chief Operating Officer
7
<PAGE>
SALIVA DIAGNOSTIC SYSTEMS, INC.
EXHIBIT INDEX
Number Description
- ------ ------------------------------------------------------------------------
4.1 Form of Warrant to be issued to each of Grayson & Associates, Inc. and
The Tail Wind Fund, Ltd.
4.2 Common Stock Subscription Agreement dated as of June 30, 1997 between
the Company and The Tail Wind Fund Ltd.
4.3 Form of Common Stock Subscription Agreement dated as of June 30, 1997 by
and between the Company and the investors set forth on Schedule A
thereto.
4.4 Registration Rights Agreement dated as of June 30, 1997 between the
Company and The Tail Wind Fund Ltd.
4.5 Form of Registration Rights Agreement dated as of June 30, 1997 between
the Company and each of the investors set forth on Schedule A to the
Common Stock Subscription Agreement dated as of June 30, 1997 by and
between the Company and the investors set forth on Schedule A thereto.
4.6 7.5% Convertible Debenture due February 28, 1999, issued by the Company
to The Tail Wind Fund, Ltd. on March 11, 1997, incorporated by reference
to Exhibit 4 to the Company's Quarterly Report on Form 10-QSB for its
fiscal quarter ended March 31, 1997.
4.7 Convertible Securities Subscription Agreement dated as of March 11, 1997
between the Company and The Tail Wind Fund Ltd., incorporated by
reference to Exhibit 10.13 to the Company's Amendment No. 1 to
Registration Statement on Form SB-2 (Registration No. 333-26795), filed
with the Securities and Exchange Commission on June 13, 1997.
4.8 Registration Rights Agreement dated as of March 11, 1997 between the
Company and The Tail Wind Fund Ltd., incorporated by reference to
Exhibit 10.14 to the Company's Amendment No. 1 to Registration Statement
on Form SB-2 (Registration No. 333-26795), filed with the Securities and
Exchange Commission on June 13, 1997.
4.9 Letter Agreement dated May 28, 1997 between the Company and The Tail
Wind Fund Ltd.
4.10 Letter Agreement dated June 27, 1997 between the Company and The Tail
Wind Fund Ltd.
8
<PAGE>
99.1 Company's Unaudited Consolidated Balance Sheets for June 30, 1997 and
Unaudited Statements of Operations for the three and six month periods
ended June 30, 1997.
9
EXHIBIT 4.1
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUED UPON THE
EXERCISE ARE SUBJECT TO THE RESTRICTIONS ON
TRANSFER SET FORTH IN SECTION 4 OF THIS WARRANT
Warrant No. __ Number of Shares: ______
(subject to adjustment)
Date of Issuance: ________________, 1997
SALIVA DIAGNOSTIC SYSTEMS, INC.
Common Stock Purchase Warrant
(Void after June 30, 2002)
Saliva Diagnostic Systems, Inc., a Delaware corporation (the
"Company"), for value received, hereby certifies that___________________. or its
registered assigns (the "Registered Holder"), is entitled, subject to the terms
set forth below, to purchase from the Company, at any time or from time to time
on or after the date of issuance and on or before June 30, 2002 (at not later
than 5:00 p.m. Vancouver, Washington time), _______ shares of Common Stock, $.01
par value per share (the "Common Stock"), of the Company. The shares purchasable
upon exercise of this Warrant, and the Purchase Price per share (defined below),
each as adjusted from time to time pursuant to the provisions of this Warrant,
are hereinafter referred to as the "Warrant Shares" and the "Purchase Price,"
respectively.
1. Exercise.
a. This Warrant may be exercised on or before the expiration
date of June 30, 2002 by the Registered Holder, in whole or in part, by
surrendering this Warrant, with the purchase form appended hereto as Exhibit I
duly executed by such Registered Holder or by such Registered Holder's duly
authorized attorney, at the principal office of the Company, or at such other
office or agency as the Company may designate, accompanied by payment in full,
in lawful money of the United States, of the Purchase Price payable in respect
of the number of Warrant Shares purchased upon such exercise. For purposes
hereof, the Purchase Price shall be equal to $______ per share.
b. Notwithstanding any provisions herein to the contrary, if
the Fair Market Value (as defined below) of one share of Common Stock is greater
than the Purchase Price (at the date of calculation as set forth below), in lieu
of exercising this Warrant for cash, the Registered Holder may elect to receive
shares equal to the value (as determined below) of this Warrant (or the portion
thereof being canceled) by surrender of this Warrant at the principal office of
the Company together with the properly endorsed Notice of Exercise and notice of
such election in which event the Company shall issue to the Registered Holder
the number of shares of Common Stock computed using the following formula:
Y (A-B)
X = -----------
A
1
<PAGE>
Where X = the number of shares of Common Stock to be issued to
the Registered Holder
Y = the number of shares of Common Stock purchasable
under the Warrant or, if only a portion of the Warrant is being
exercised, the portion of the Warrant being canceled (at the date of
such calculation)
A = the Fair Market Value of one share of the Company's
Common Stock (at the date of such calculation)
B = Purchase Price (as adjusted to the date of such
calculation)
For purposes of the above calculation, if the Common Stock is
listed or quoted on a national securities exchange, the Nasdaq Stock Market, or
another nationally recognized exchange or trading system as of the Exercise
Date, the Fair Market Value per share of the Common Stock shall be deemed to be
the average of the last reported sales price per share of Common Stock thereon
for the five trading days immediately preceding the Exercise Date; provided,
however, that if no such price is reported during such five-day period, or if
the Common Stock is not listed or quoted on a national securities exchange, the
Nasdaq Stock Market, or another nationally recognized exchange or trading system
as of the Exercise Date, the Fair Market Value per share of Common Stock shall
be deemed to be the amount most recently determined by the Board of Directors to
represent the fair market value per share of the Common Stock (including without
limitation a determination for purposes of granting Common Stock options or
issuing Common Stock under an employee benefit plan of the Company); and upon
request of the Registered Holder, the Board of Directors (or a representative
thereof) shall promptly notify the Registered Holder of the Fair Market Value
per share of Common Stock. Notwithstanding the foregoing, if the Board of
Directors has not made such a determination within the three-month period prior
to the Exercise Date, then (A) the Fair Market Value per share of Common Stock
shall be the amount next determined by the Board of Directors to represent the
fair market value per share of the Common Stock (including without limitation a
determination for purposes of granting Common Stock options or issuing Common
Stock under an employee benefit plan of the Company), (B) the Board of Directors
shall make such a determination within 10 days of a request by the Registered
Holder that it do so, and (C) the exercise of this Warrant pursuant to
subsection 1.b. shall be delayed until such determination is made.
c. Each exercise of this Warrant shall be deemed to have been
effected immediately prior to the close of business on the day on which this
Warrant shall have been surrendered to the Company as provided in subsections
1.a. and 1.b. above. At such time, the person or persons in whose name or names
any certificates for Warrant Shares shall be issuable upon such exercise as
provided in subsection 1.d. below shall be deemed to have become the holder or
holders of record of the Warrant Shares represented by such certificates.
d. As soon as practicable after the exercise of this Warrant
in full or in part, and in any event within 10 days thereafter, the Company, at
its expense, will cause to be issued
2
<PAGE>
in the name of, and delivered to, the Registered Holder, or as such Holder (upon
payment by such Holder of any applicable transfer taxes) may direct:
(i) a certificate or certificates for the number of
full Warrant Shares to which such Registered Holder shall be entitled upon such
exercise plus, in lieu of any fractional share to which such Registered Holder
would otherwise be entitled, cash in an amount determined pursuant to Section 3
hereof; and
(ii) in case such exercise is in part only, a new
warrant or warrants (dated the date hereof) of like tenor, calling in the
aggregate on the face or faces thereof for the number of Warrant Shares equal
(without giving effect to any adjustment therein) to the number of such shares
called for on the face of this Warrant minus the number of such shares purchased
by the Registered Holder upon such exercise (and in the case of exercise under
the net exercise provision of Subsection 1.b., minus the number of shares
underlying the Warrant which were surrendered in accordance therewith).
2. Adjustments.
a. If outstanding shares of the Company's Common Stock shall
be subdivided into a greater number of shares or a dividend in Common Stock
shall be paid in respect of Common Stock, the Purchase Price in effect
immediately prior to such subdivision or at the record date of such dividend
shall simultaneously with the effectiveness of such subdivision or immediately
after the record date of such dividend be proportionately reduced. If
outstanding shares of Common Stock shall be combined into a smaller number of
shares, the Purchase Price in effect immediately prior to such combination
shall, simultaneously with the effectiveness of such combination, be
proportionately increased. When any adjustment is required to be made in the
Purchase Price, the number of Warrant Shares purchasable upon the exercise of
this Warrant shall be changed to the number determined by dividing (i) an amount
equal to the number of shares issuable upon the exercise of this Warrant
immediately prior to such adjustment, multiplied by the Purchase Price in effect
immediately prior to such adjustment, by (ii) the Purchase Price in effect
immediately after such adjustment.
b. If there shall occur any capital reorganization or
reclassification of the Company's Common Stock (other than a change in par value
or a subdivision or combination as provided for in subsection 2.a. above), or
any consolidation or merger of the Company with or into another corporation, or
a transfer of all or substantially all of the assets of the Company, then, as
part of any such reorganization, reclassification, consolidation, merger or
sale, as the case may be, lawful provision shall be made so that the Registered
Holder of this Warrant shall have the right thereafter to receive upon the
exercise hereof the kind and amount of shares of stock or other securities or
property which such Registered Holder would have been entitled to receive if,
immediately prior to any such reorganization, reclassification, consolidation,
merger or sale, as the case may be, such Registered Holder had held the number
of shares of Common Stock which were then purchasable upon the exercise of this
Warrant. In any such case, appropriate adjustment (as reasonably determined in
good faith by the Board of Directors of the Company) shall be made in the
application of the provisions set forth herein with respect to the rights and
interest thereafter of the Registered Holder of this Warrant, such that the
provisions set forth in this Section 2 (including provisions with respect to
adjustment of the Purchase Price) shall thereafter be applicable, as nearly as
is reasonably practicable, in relation to any shares of stock or other
securities or property thereafter deliverable upon the exercise of this Warrant.
3
<PAGE>
c. When any adjustment is required to be made in the Purchase
Price, the Company shall promptly mail to the Registered Holder a certificate
setting forth the Purchase Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment. Such certificate shall also
set forth the kind and amount of stock or other securities or property into
which this Warrant shall be exercisable following the occurrence of any of the
events specified in subsection 2.a. or b. above.
d. In the event that the Company shall make any distribution
of its assets upon or with respect to its Common Stock, as a liquidating or
partial liquidating dividend, or other than as a dividend payable out of
earnings or any surplus legally available for dividends under the laws of the
state of incorporation of the Company, the Registered Holder shall be entitled
to receive upon exercise of this Warrant the amount of such assets (or, at the
option of the Company, an amount equal to the value thereof at the time of
distribution, as determined by the Company's board of directors in its sole
discretion) which would have been distributed to such Registered Holder if it
had exercised its right to exercise immediately prior to the record date for
such distribution or, in the absence of a record date, immediately prior to the
date of such distribution.
3. Fractional Shares. The Company shall not be required upon the
exercise of this Warrant to issue any fractional shares, but shall make an
adjustment therefor in cash on the basis of the Fair Market Value per share of
Common Stock. For purposes hereof, Fair Market Value shall be determined as set
forth in subsection 1.b. above.
4. Requirements for Transfer.
a. This Warrant and the Warrant Shares shall not be sold or
transferred unless either (i) they first shall have been registered under the
Securities Act of 1933, as amended (the "Act"), or (ii) the Company first shall
have been furnished with an opinion of legal counsel, reasonably satisfactory to
the Company, to the effect that such sale or transfer is exempt from the
registration requirements of the Act.
b. Notwithstanding the foregoing, no registration or opinion
of counsel shall be required for (i) a transfer by a Registered Holder which is
a partnership to a partner of such partnership or a retired partner of such
partnership who retires after the date hereof, or to the estate of any such
partner or retired partner, if the transferee agrees in writing to be subject to
the terms of this Section 4, or (ii) a transfer made in accordance with Rule 144
under the Act.
c. Each certificate representing Warrant Shares shall bear a
legend substantially in the following form:
The securities represented by this certificate have
not been registered under the Securities Act of 1933,
as amended, and may not be offered, sold or otherwise
transferred, pledged or hypothecated unless and until
such securities are registered under such Act or an
exemption is available therefrom and established
satisfactory to the Company.
4
<PAGE>
The foregoing legend shall be removed from the certificates representing any
Warrant Shares, at the request of the holder thereof, at such time as they
become eligible for resale pursuant to Rule 144(k) under the Act.
5. Demand Registration.
a. Subject to the terms and conditions hereof, within thirty
(30) days after the written request of the holders of a majority of Warrant
Shares plus Warrant Shares issuable upon conversion of then outstanding
Warrants, the Company shall, at the Company's cost and expense (other than the
fees and disbursements of counsel for the Registered Holder and the underwriting
discounts and brokerage commissions, if any, payable in respect of the Warrant
Shares sold by the Registered Holder) prepare and file with the Securities and
Exchange Commission (the "Commission") a registration statement on Form S-3 (if
the same is available), with respect to all of the Warrant Shares and will use
all reasonable efforts to cause such registration statement to become effective
promptly. If Form S-3 is not available to the Company for such registration
statement, the Company shall use such form of registration statement that is
available and appropriate.
b. Except as set forth below, the Company shall keep effective
the registration statement contemplated by this Section 5 and shall from time to
time amend or supplement such registration statement, for a period of not less
than five (5) years, as extended by any period of time during which the
registration statement is not effective pursuant to Section 5.c. below, unless
all of the Warrant Shares set forth in such registration statement have
theretofore been sold or unless all of the Warrant Shares may be sold at any one
time under Rule 144(k) of the Act.
c. The Company may terminate or suspend the effectiveness of
any registration statement to be filed pursuant to Section 5.a. one time for a
period of not more than 30 days if the Company shall deliver to the Registered
Holder a certificate signed by the President or Chief Financial Officer of the
Company stating that in the good faith judgment of the Board of Directors of the
Company it would (i) be seriously detrimental to the Company's business for such
registration statement to be effected or remain effective at such time, (ii)
interfere with any proposed or pending material corporate transaction involving
the Company or any of its subsidiaries or (iii) result in any premature
disclosure thereof.
d. The Company shall not be obligated to file more than one
(1) registration statement under this Section 5.
e. The Company shall furnish to the Registered Holders such
number of copies of a prospectus in conformity with the requirements of the
Securities Act, and such other documents as may reasonably be requested in order
to facilitate the disposition of the Warrant Shares owned by the Registered
Holder.
6. Company Registration.
a. If the Company shall determine to register any of its
securities either for its own account or the account of a security holder or
holders (including The Tail Wind Fund Ltd. and any of its affiliates and
transferees) exercising their respective demand registration rights, other than
a registration relating solely to employee benefit plans, or a registration
relating to a corporate reorganization or other transaction under Rule 145, or a
registration on any registration form that does not permit secondary sales, the
Company will:
5
<PAGE>
(i) promptly give to each Registered Holder written
notice thereof; and
(ii) use its best efforts to include in such
registration (and any related qualification under blue sky laws or other
compliance), except as set forth in Section 6.b. below, and in any underwriting
involved therein, all the Warrant Shares specified in a written request or
requests, made by any Registered Holder and received by the Company within
twenty (20) days after the written notice from the Company described in clause
(i) above is received by the Registered Holder. Such written request may specify
all or a part of a Holder's Warrant Shares.
b. If the registration of which the Company gives notice is
for a registered public offering involving an underwriting, the Company shall so
advise the Registered Holders as a part of the written notice given pursuant to
Section 6.a. In such event, the right of any Registered Holder to registration
pursuant to this Section 6 shall be conditioned upon such Registered Holder's
participation in such underwriting and the inclusion of such Registered Holder's
Warrant Shares in the underwriting to the extent provided herein. All Registered
Holders proposing to distribute their securities through such underwriting shall
(together with the Company and the other holders of securities of the Company
with registration rights to participate therein distributing their securities
through such underwriting) enter into an underwriting agreement in customary
form with the representative of the underwriter or underwriters selected by the
Company.
Notwithstanding any other provision of this Section 6, if the
representative of the underwriters advises the Company in writing that marketing
factors require a limitation on the number of shares to be underwritten, the
representative may (subject to the limitations set forth below) exclude all
Warrant Shares from, or limit the number of Warrant Shares to be included in,
the registration and underwriting. The Company shall so advise all holders of
securities requesting registration, and the number of shares of securities that
are entitled to be included in the registration and underwriting shall be
allocated first to the Company for securities being sold for its own account. If
any person does not agree to the terms of any such underwriting, such person
shall be excluded therefrom by written notice from the Company or the
underwriter. Any Warrant Shares or other securities excluded or withdrawn from
such underwriting shall be withdrawn from such registration.
7. The Company Covenants.
a. In the event of a registration pursuant to the provisions
of Sections 5 or 6, the Company shall use all reasonable efforts to cause the
Warrant Shares so registered to be registered or qualified for sale under the
securities or blue sky laws of such jurisdictions as the Registered Holder may
reasonably request; provided, however, that the Company shall not be required to
qualify to do business in any state by reason of this Section 7.a. in which it
is not otherwise required to qualify to do business.
b. The Company shall notify the Registered Holder promptly
when such registration statement has become effective or a supplement to any
prospectus forming a part of such registration statement has been filed.
6
<PAGE>
c. The Company shall advise the Registered Holder, promptly
after it shall receive notice or obtain knowledge of the issuance of any stop
order by the Commission suspending the effectiveness of such registration
statement, or the initiation or threatening of any proceeding for that purpose,
and promptly use all reasonable efforts to prevent the issuance of any stop
order or to obtain its withdrawal if such stop order should be issued.
d. The Company shall promptly notify the Registered Holder, at
any time when a prospectus relating thereto is required to be delivered under
the Securities Act, of the happening of any event of which it has knowledge as a
result of which the prospectus included in such registration statement, as then
in effect, would include an untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing, and at the reasonable request of each Registered Holder prepare and
furnish to them such number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Warrant Shares or securities, such prospectus shall not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances under which they were made.
e. If requested by the underwriter for any underwritten
offering of Warrant Shares on behalf of the Registered Holder pursuant to a
registration requested under Sections 5 or 6, the Company and the Registered
Holder will enter into an underwriting agreement with such underwriter for such
offering, which shall be reasonably satisfactory in substance and form to the
Company, the Registered Holder, and the underwriter, and such agreement shall
contain such representations and warranties by the Company and each Registered
Holder and such other terms and provisions as are customarily contained in an
underwriting agreement with respect to secondary distributions solely by selling
stockholders, including, without limitation, indemnities substantially to the
effect and to the extent provided in Section 8.
To the extent requested by the underwriter, the Registered
Holder agrees not to sell or otherwise transfer or dispose of any Warrant Shares
held by it during the period commencing on its receipt of written notice from
the Company of such underwritten public offering and ending 180 days following
the effective date of a registration statement of the Company filed under the
Act in connection with such firmly underwritten public offering of the Company's
Common Stock, provided that all executive officers and directors of the Company
enter into similar agreements.
7
<PAGE>
8. Indemnification; Miscellaneous Operative Provisions.
a. Subject to the conditions set forth below, the Company
agrees to indemnify and hold harmless the Registered Holder, its respective
officers, directors, partners, employees, agents, shareholders and counsel, and
each person, if any, who controls any such person within the meaning of Section
15 of the Securities Act or Section 20(a) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") from and against any and all loss,
liability, charge, claim, damage, and expense whatsoever (which shall include,
for all purposes of this Section 8, but not be limited to, reasonable attorneys'
fees and any and all reasonable expenses whatsoever incurred in investigating,
preparing, or defending against any litigation, commenced or threatened, or any
claim whatsoever), arising out of, based upon, or in connection with any untrue
statement or alleged untrue statement of a material fact contained (A) in any
registration statement, preliminary prospectus, or final prospectus (as from
time to time amended and supplemented) or any amendment or supplement thereto,
relating to the sale of any of the Warrant Shares, or (B) in any application or
other document or communication (in this Section 8 collectively called an
"application") executed by or on behalf of the Company or based upon written
information furnished by or on behalf of the Company filed in any jurisdiction
in order to register or qualify any of the Warrant Shares under the securities
or blue sky laws thereof or filed with the Commission, the Nasdaq Stock Market
or any securities exchange, or (C) in any reports or documents filed under the
Exchange Act; or any omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statements made therein
not misleading, unless (x) such statement or omission was made in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of such Registered Holder for inclusion in any registration statement,
preliminary prospectus, or final prospectus, or any amendment or supplement
thereto, or in any application, as the case may be, or (y) such loss, liability,
charge, claim, damage or expense arises out of the Registered Holder's failure
to comply with the terms and provisions of this Agreement. The foregoing
agreement to indemnify shall be in addition to any liability the Company may
otherwise have, including liabilities arising under this Agreement.
If any action is brought against the Registered Holders or any
of their respective officers, directors, partners, employees, agents,
shareholders, or counsel, or any controlling persons of such person (an
"indemnified party") in respect of which indemnity may be sought against the
Company pursuant to the foregoing paragraph, such indemnified party or parties
shall promptly notify the Company in writing of the institution of such action
(but the failure so to notify shall not relieve the Company from any liability
other than pursuant to this Section 8.a. unless, the failure to so notify shall
prejudice any rights or defenses with respect to such claim) and the Company
shall promptly assume the defense of such action, including the employment of
counsel (reasonably satisfactory to such indemnified party or parties) provided
that the indemnified party shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless:
(i) the employment of such counsel shall have been
authorized in writing by the Company in connection with the defense of such
action; or
(ii) such indemnified party or parties shall have
reasonably concluded, based on an opinion of counsel, that there may be one or
more legal defenses available to it or them or to other indemnified parties
which are different from or additional to those available to the Company, in any
material respect, and that as a result thereof a conflict of interest would
arise absent separate representation of the parties.
8
<PAGE>
In the event of clauses (i) or (ii) above, such fees and expenses shall be born
by the Company and the Company shall not have the right to direct the defense of
such action on behalf of the indemnified party or parties. Anything in this
Section 8 to the contrary notwithstanding, the Company shall not be liable for
any settlement of any such claim or action affected without its written consent,
which shall not be unreasonably withheld. The Company shall not, without the
prior written consent of each indemnified party that is not released as
described in this sentence, settle or compromise any action, or permit a default
or consent to the entry of judgment in or otherwise seek to terminate any
pending or threatened action, in respect of which indemnity may be sought
hereunder (whether or not any indemnified party is a party thereto) unless such
settlement, compromise, consent, or termination includes an unconditional
release of each indemnified party from all liability in respect of such action.
The Company agrees promptly to notify each Registered Holder of the commencement
of any litigation or proceedings against the Company or any of its officers or
directors in connection with the sale of any Warrant Shares or any preliminary
prospectus, prospectus, registration statement, or amendment or supplement
thereto, or any application relating to any sale of any Warrant Shares.
b. Each Registered Holder agrees to indemnify and hold
harmless the Company, each director of the Company, each officer of the Company
who shall have signed any registration statement covering Warrant Shares by the
Registered Holder, each other person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act, and its or their respective counsel, to the same extent as the foregoing
indemnity from the Company to the Registered Holder in Section 8.a. but only
with respect to statements or omissions, if any, made in any registration
statement, preliminary prospectus, or final prospectus (as from time to time
amended and supplemented) or any amendment or supplement thereto, or in any
application, in reliance upon and in conformity with written information
furnished to the Company with respect to the Registered Holder by or on behalf
of the Registered Holder, expressly for inclusion in any registration statement,
preliminary or final prospectus, or application, as the case may be. If any
action shall be brought against the Company or any other person so indemnified
based on any such registration statement, preliminary prospectus, or final
prospectus, or any amendment or supplement thereto, or in any application, and
in respect of which indemnity may be sought against the Registered Holder
pursuant to this Section 8.b., the Registered Holder shall have the rights and
duties given to the Company, and the Company and each other person so
indemnified shall have the rights and duties given to the indemnified parties,
by the provisions of Section 8.a.
c. If the indemnification provided for in this Section 8 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage, or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage, or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
9
<PAGE>
d. In the event of a breach by any party of its obligations
under this Warrant, the other party, in addition to being entitled to exercise
all rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Warrant. Such rights shall be in
addition to, and not in lieu of, the Registered Holder's right to receive
monetary damages.
e. The provisions of this Warrant, including the provisions of
this sentence, may not be amended, modified or supplemented, unless such
amendment, modification or supplement is in writing and signed by the parties
hereto.
f. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, reputable
overnight courier, registered first-class mail, telex, or telecopied, initially
to the address set forth below, and thereafter at such other address, notice of
which is given in accordance with the provisions of this Section 8.f.
(i) if to the Company:
Saliva Diagnostic Systems, Inc.
11719 NE 95th Street
Vancouver, Washington 98682
Attention: President
Telephone: (360) 696-4800
Facsimile: (360) 254-7942
(ii) if to the Registered Holder at the address
specified from time to time by the Company.
All such notices and communications shall be deemed to have been duly given:
when delivered by hand, if personally delivered or by reputable overnight
courier; three business days after being deposited in the mail, postage prepaid,
if mailed; when answered back, if telexed; and when receipt is acknowledged, if
telecopied.
g. The Registered Holder shall cooperate in all reasonable
respects with the filing of the registration statement contemplated hereby.
Without limiting the foregoing, the Registered Holder shall furnish to the
Company (or any regulatory authority) such written information and
representations that the Company may reasonably request in order to facilitate
any registration of the Warrant Shares hereunder.
9. No Impairment. The Company will not, by amendment of its
charter documents or through reorganization, consolidation, merger, dissolution,
sale of assets or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, and will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the holder of this Warrant against impairment.
10. Notices of Record Date, Etc. In case:
a. the Company shall take a record of the holders of its
Common Stock (or other stock or securities at the time deliverable upon the
exercise of this Warrant) for the purpose of entitling or enabling them to
receive any dividend or other distribution, or to receive any right
10
<PAGE>
to subscribe for or purchase any shares of stock of any class or any other
securities, or to receive any other right; or
b. of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation or
merger of the Company with or into another corporation (other than a
consolidation or merger in which the Company is the surviving entity), or any
transfer or series of transfers of at least 30% of the assets of the Company; or
c. of the voluntary or involuntary dissolution, spin-off,
liquidation or winding-up of the Company,
then, and in each such case, the Company will mail or cause to be mailed to the
Registered Holder of this Warrant a notice specifying, as the case may be, (i)
the date on which a record is to be taken for the purpose of such dividend,
distribution or right, and stating the amount and character of such dividend,
distribution or right, or (ii) the effective date on which such reorganization,
reclassification, consolidation, merger, transfer, dissolution, liquidation or
winding-up is to take place, and the time, if any is to be fixed, as of which
the holders of record of Common Stock (or such other stock or securities at the
time deliverable upon the exercise of this Warrant) shall be entitled to
exchange their shares of Common Stock (or such other stock or securities) for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, transfer, dissolution, liquidation or
winding-up. Such notice shall be mailed at least twenty (20) days prior to the
record date or effective date for the event specified in such notice.
11. Reservation of Shares. The Company will at all times reserve
and keep available, solely for issuance and delivery upon the exercise of this
Warrant, such number of Warrant Shares and other stock, securities and property,
as from time to time shall be issuable upon the exercise of this Warrant.
12. Exchange of Warrants. Upon the surrender by the Registered
Holder of any Warrant or Warrants, properly endorsed, to the Company at the
principal office of the Company, the Company will, subject to the provisions of
Section 4 hereof, issue and deliver to or upon the order of such Registered
Holder, at the Company's expense, a new Warrant or Warrants of like tenor, in
the name of such Registered Holder or as such Registered Holder (upon payment by
such Registered Holder of any applicable transfer taxes) may direct,
representing in the aggregate on the face or faces thereof for the number of
shares of Common Stock represented for on the face or faces of the Warrant or
Warrants so surrendered.
13. Replacement of Warrants. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and (in the case of loss, theft or destruction) upon delivery of an
unsecured indemnity agreement in an amount reasonably satisfactory to the
Company, or (in the case of mutilation) upon surrender and cancellation of this
Warrant, the Company will issue, in lieu thereof, a new Warrant of like tenor.
14. Transfers, etc.
a. The Company will maintain a register containing the names
and addresses of the Registered Holders of this Warrant. Any Registered Holder
may change its or his address as shown on the warrant register by written notice
to the Company requesting such change.
11
<PAGE>
b. Subject to the provisions of Section 4 hereof, this Warrant
and all rights hereunder are transferable, in whole or in part, upon surrender
of this Warrant with a properly executed assignment (in the form of Exhibit II
hereto) at the principal office of the Company.
c. Until any transfer of this Warrant is made in the warrant
register, the Company may treat the Registered Holder of this Warrant as the
absolute owner hereof for all purposes; provided, however, that if and when this
Warrant is properly assigned in blank, the Company may (but shall not be
obligated to) treat the bearer hereof as the absolute owner hereof for all
purposes, notwithstanding any notice to the contrary.
15. No Rights as Stockholder. Until the exercise of this Warrant,
the Registered Holder of this Warrant shall not have or exercise any rights by
virtue hereof as a stockholder of the Company.
16. Change or Waiver. Any term of this Warrant may be changed or
waived only by an instrument in writing signed by the party against which
enforcement of the change or waiver is sought.
17. Headings. The headings in this Warrant are for purposes of
reference only and shall not limit or otherwise affect the meaning of any
provision of this Warrant.
12
<PAGE>
18. Governing Law. This Warrant will be governed by and construed
in accordance with the laws of the State of Delaware.
Saliva Diagnostic Systems, Inc.
By:
-----------------------------------
Kenneth McLachlan, President
[Corporate Seal]
ATTEST:
- --------------------------------------
13
<PAGE>
EXHIBIT I
PURCHASE FORM
To: Dated:________________
The undersigned, pursuant to the provisions set forth in the attached
Warrant (No. ____), hereby irrevocably elects to purchase __________ shares of
Common Stock covered by such Warrant. The undersigned herewith makes payment of
$_______________, representing the full purchase price for such shares at the
price per share provided for in such Warrant. Such payment takes the form of
$_______________ in lawful money of the United States.
Signature:
Address:
<PAGE>
EXHIBIT II
ASSIGNMENT FORM
FOR VALUE RECEIVED,____________________________________________________
hereby sells, assigns and transfers all of the rights of the undersigned under
the attached Warrant (No. _____) with respect to the number of shares of Common
Stock covered thereby set forth below, unto:
Name of Assignee Address No. of Shares
- --------------------------------------------------------------------------------
Dated: Signature:
Dated: Signature:
EXHIBIT 4.2
COMMON STOCK SUBSCRIPTION AGREEMENT
OF SALIVA DIAGNOSTIC SYSTEMS, INC.
THIS COMMON STOCK SUBSCRIPTION AGREEMENT (the "Agreement") is made and
entered into as of this 30th day of June, 1997 by and between SALIVA DIAGNOSTIC
SYSTEMS, INC., a Delaware corporation (the "Company"), and the individuals and
entities listed on Schedule A to this Agreement (individually, an "Investor" and
collectively, the "Investors") providing for the purchase and sale of shares of
common stock, par value $.01 per share (the "Shares"), of the Company. Each of
the parties represents, warrants, covenants and agrees as follows:
1. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE.
(i) Investor hereby subscribes for the number of Shares as set
forth on Schedule A attached hereto at a purchase price per share of $0.72656.
(ii) Investor shall pay the purchase price for the Shares
subscribed for by it by delivering same-day funds in United States dollars
against counter-delivery of certificates (the "Certificates") representing the
Shares by the Company, each in accordance with the terms of the Escrow Agreement
of even date herewith and substantially in the form attached as Exhibit A to
this Agreement. The closing of the purchase and sale of the Shares (the
"Closing") shall take place promptly following the deposit into escrow of the
Shares subscribed for and the purchase price therefor and the satisfaction of
all of the conditions set forth in Section 5 hereof. The Parties anticipate that
the date of the Closing (the "Closing Date") shall be June 30, 1997.
2. INVESTOR'S REPRESENTATIONS AND COVENENANTS
Each Investor represents, warrants and covenants, severally
and not jointly, to the Company as follows:
(i) This Agreement has been duly authorized, validly executed
and delivered on behalf of Investor and is a valid and binding agreement of
Investor in accordance with its terms, subject to general principles of equity
and of bankruptcy or other laws affecting the enforcement of creditor's rights;
(ii) Investor is purchasing the Shares for its own account for
investment purposes and not with a view towards distribution. Investor
understands and agrees that it must bear the economic risks of its investment
for an indefinite period of time. Investor has received and carefully reviewed
copies of the Public Documents (as defined below), the press release issued by
the Company on June 25, 1997 and the Supplemental Disclosure Memorandum dated
June 30, 1997. Investor understands that the offer and sale of the Shares are
being made only by means of this Agreement. No representations or warranties
have been made to Investor by the Company, the officers or directors of the
Company, or any agent, employee or affiliate of any of them except as set forth
herein. Investor is aware that the purchase of the Shares involves a high degree
of risk and that it may sustain, and has the financial ability to sustain, the
loss of its entire investment. Investor has had the opportunity to ask questions
of, and receive answers satisfactory to it from, the Company's management
regarding the Company. Investor understands that no federal or state
governmental authority has made any finding or determination relating to the
fairness of an investment in the Shares and that no federal or state
governmental authority has recommended or endorsed, or will recommend or
endorse, the investment herein. Investor, in making the decision to purchase the
Shares subscribed for, has relied upon independent investigations
1
<PAGE>
made by it and has not relied on any information or representations made by
third parties. Investor has significant assets, and upon consummation of the
purchase of the Shares, will continue to have significant assets exclusive of
the Shares. Investor has not been organized for the purpose of acquiring the
Shares;
(iii) Investor is an "accredited investor" within the meaning
of Rule 501, promulgated under the Securities Act of 1933, as amended (the
"Securities Act");
(iv) Investor understands that the Shares are being offered
and sold to it in reliance on specific provisions of federal and state
securities laws and that the Company is relying upon the truth and accuracy of
the representations, warranties, agreements, acknowledgments and understandings
of Investor set forth herein in order to determine the applicability of such
provisions; and
(v) Investor understands that the Shares have not been
registered under the Securities Act and therefore it cannot dispose of any or
all of the Shares until such Shares are subsequently registered under the
Securities Act or exemptions from such registration are available. Investor
acknowledges that, until an effective registration statement relating to the
Shares is effective or until the Shares are eligible for sale pursuant to Rule
144(k), promulgated under the Securities Act, a legend substantially as follows
will be placed on the Certificates representing the Shares:
THE SECURITIES REPRESENTED HEREBY ARE RESTRICTED SECURITIES WITHIN THE MEANING
OF THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED,
TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH SUCH ACT AND THE
RULES AND REGULATIONS THEREUNDER AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS. THE ISSUER OF THESE SECURITIES WILL NOT RECOGNIZE A TRANSFER OF
SUCH SECURITIES EXCEPT UPON RECEIPT OF EVIDENCE SATISFACTORY TO THE ISSUER THAT
THE REGISTRATION PROVISIONS OF SUCH ACT HAVE BEEN COMPLIED WITH OR THAT SUCH
REGISTRATION IS NOT REQUIRED AND THAT SUCH TRANSFER WILL NOT VIOLATE ANY
APPLICABLE STATE SECURITIES LAWS.
3. THE COMPANY'S REPRESENTATIONS AND COVENANTS.
(a) The Company represents and warrants to each of the Investors
as follows:
(i) The Company has been duly incorporated and is validly
existing and in good standing under the laws of the state of Delaware, with full
corporate power and authority to own, lease and operate its properties and to
conduct its business as currently conducted, and is duly registered and
qualified to conduct its business and is in good standing in each jurisdiction
or place where the nature of its properties or the conduct of its business
requires such registration or qualification, except where the failure so to
register or qualify does not have a material adverse effect on the condition
(financial or other), business, properties, net worth or operations of the
Company.
(ii) The Company has registered its common stock pursuant to
Section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), is in full compliance with all reporting requirements of the Exchange
Act, and the Company's common stock is quoted on the Nasdaq SmallCap Market
(trading symbol SALV). The Company has been subject to the requirements of
Section 12 of the Exchange Act for at least 12 months, and except as disclosed
on Schedule 3(ii) hereto, has filed in a timely manner all reports required to
be filed during the preceding 12 months;
2
<PAGE>
(iii) The Company has furnished Investor with copies of the
Company's most recent Annual Report on Form 10-K filed with the U.S. Securities
and Exchange Commission ("SEC"), all Forms 10-Q and 8-K filed thereafter and all
other filings required under the Exchange Act made with the SEC after the filing
of the most recent Form 10-K and the registration statement on Form SB-2 filed
under the Securities Act and declared effective June 13, 1997 (collectively, the
"Public Documents"), the press release issued by the Company on June 25, 1997
and the Supplemental Disclosure Memorandum dated June 30, 1997. The Public
Documents at the time of their filing did not include any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading;
(iv) The authorized capital stock of the Company solely
consists of 33,000,000 shares of common stock, par value $.01 per share. The
Company currently has 22,925,133 shares of common stock issued and outstanding.
(v) Upon issuance and delivery and payment therefor in
accordance with the terms hereof, the Shares shall be duly authorized, validly
issued, fully paid and nonassessable, and the Additional Shares (as defined
below), if and when issued and delivered, will be duly authorized, validly
issued, fully paid and nonassessable, free from all encumbrances and
restrictions other than restrictions on transfer imposed by applicable
securities laws and/or this Agreement, and will not subject the holders thereof
to personal liability by reason of being such holders. The Additional Shares
have been duly reserved for issuance. There are no preemptive rights of any
stockholder of the Company with respect to the Shares of the Additional Shares;
(vi) This Agreement has been duly authorized, validly executed
and delivered on behalf of the Company and is a valid and binding agreement of
the Company enforceable in accordance with its terms, subject to general
principles of equity and to bankruptcy or other laws affecting the enforcement
of creditors' rights generally, and the Company has full corporate power and
authority to execute and deliver this Agreement and the other agreements and
documents contemplated hereby and to perform its obligations hereunder and
thereunder;
(vii) The Company is not and, upon the execution and delivery
of this Agreement, the issuance of the Shares, the issuance of the Additional
Shares, and the transactions contemplated by this Agreement, will not be in
conflict with or in breach of any of the terms of provisions of, or in default
under, the Company's Certificate of Incorporation or Bylaws, or any indenture,
mortgage, deed of trust or other material agreement or instrument to which the
Company is a party or by which it or any of its properties or assets are bound,
any law, statute, rule, regulation, or any existing applicable decree, judgment
or order of any court, federal or state regulatory body, administrative agency
or other governmental body having jurisdiction over the Company or any of its
properties, or assets or will result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to the terms of any agreement or instrument to which any
of them is a party or by which any of them may be bound or to which any of the
property or assets of any of them is subject;
(viii) No authorization, approval, filing with or consent of
any governmental body is required for the issuance and sale of the Shares or the
Additional Shares, as contemplated by this Agreement;
(ix) [Intentionally omitted];
3
<PAGE>
(x) Subject in part to the truth and accuracy of the
Investors' representations and warranties in Section 2, the offer, sale and
issuance of the Shares are exempt from the registration requirements of the
Securities Act and applicable state securities laws;
(xi) Except as disclosed on Schedule 3(xi) hereto, there is no
action, suit or proceeding before or by any court or governmental agency or
body, domestic or foreign, now pending or, to the knowledge of the Company,
threatened, against or affecting the Company, or any of its properties, which
could be reasonably expected to result in any material adverse change in the
condition (financial or otherwise) or in the earnings, revenues, business
affairs or business prospects of the Company, or which could be reasonably
expected to materially and adversely affect its properties or assets;
(xii) To the best knowledge of the Company, the Company is not
in default in the performance or observance of any material obligation,
agreement, covenant or condition contained in any indenture, mortgage, deed of
trust or other instrument or agreement to which it is a party or by which it or
its property is bound; and
(xiii) To the best knowledge of the Company, there is no fact
known to the Company (other than general economic conditions known to the public
generally) that has not been disclosed in writing to the Investor that (i) could
reasonably be expected to have a material adverse effect on the condition
(financial or otherwise) or in the earnings, revenues, business affairs,
business prospects, properties or assets of the Company, or (ii) could
reasonably be expected to materially and adversely affect the ability of the
Company to perform its obligations pursuant to this Agreement.
(b) The Company covenants to each of the Investors as follows:
(i) The Company will comply with all applicable securities
laws and regulations with respect to the sale and issuance of the Shares and
Additional Shares to the Investor, including but not limited to the timely
filing of all reports required to be filed in connection therewith with the SEC
or Nasdaq or any other regulatory authority, and shall remain in full compliance
with all of the requirements (including reporting) of the Exchange Act;
(ii) The Company shall: (i) use all reasonable efforts to
maintain the inclusion of the Shares and Additional Shares on the Nasdaq Stock
Market; and (ii) reserve immediately prior to the Closing and shall continue to
reserve from its authorized common stock a sufficient number of shares of common
stock to permit the issuance of the Additional Shares; and
(iii) The Company agrees that it will not issue a press
release to the public containing an Investor's name or other identifying
information without the Investor's prior written consent except as may be
necessary in connection with the Company's fulfilling its obligations under the
Registration Rights Agreement (as defined in Section 4). Investor acknowledges
that this Agreement and the related documents may be filed with the SEC.
4. REGISTRATION.
Within 30 days following the Closing, the Company shall, at the
Company's expense, file a registration statement to effect the registration of
all of the Shares and Additional Shares held by or to be issued to the Investor
under the Securities Act, and relevant Blue Sky laws. Such registration shall be
effected in accordance with the terms of the Registration Rights Agreement
attached hereto as Exhibit B
4
<PAGE>
(the "Registration Rights Agreement"). In the event the registration of the
Shares and Additional Shares is not declared effective by the SEC within 90 days
of the Closing Date (the "Registration Date"), then such failure shall
constitute a breach of this Agreement entitling each Investor to be paid by the
Company such Investor's pro rata portion of the "Damage Amount," as liquidated
damages and not as a penalty. The Damage Amount shall mean $1 for each $1,000 of
Shares purchased hereunder for each calendar day following the Registration Date
by which the registration of the Shares (and the Additional Shares) is not
effective with the SEC. The Damage Amount shall be payable in cash as of the end
of each calendar week following the Registration Date.
5. CONDITIONS TO CLOSING.
(i) The Company shall furnish to the Investors a legal opinion
addressed to the Investors and dated as of the Closing Date from Bryan
Cave LLP substantially in the form of Exhibit C attached hereto.
(ii) The Company shall have delivered a certificate executed
by its President, dated the Closing Date, and certifying that all of
the Company's representations and warranties made in this Agreement are
true and correct as of the date of this Agreement and as of the Closing
Date.
6. CERTAIN AGREEMENTS.
[INTENTIONALLY OMITTED.]
7. RESTRICTIONS ON SALES OF SHARES.
The Investors shall not sell any of the Shares purchased hereunder
during the 90-day period immediately following the Closing Date; however, each
Investor may sell, at its option, up to (i) Thirty-Three and One-Third percent
(33 A%) of the number of Shares purchased hereunder at any time from and after
the ninetieth (90th) day following the Closing Date, (ii) an aggregate of
Sixty-Six and Two-Thirds percent (66 B%) of the Shares purchased hereunder at
any time from and after the one hundred twentieth (120th) day following the
Closing Date, and (iii) One Hundred percent (100%) of the Shares purchased
hereunder at any time from and after the one hundred fiftieth (150th) day
following the Closing Date.
8. ISSUANCE OF ADDITIONAL SHARES BASED UPON PRICE RESET.
(i) In the event that the Current Market Price (as defined below) as of
any single five-day period designated by the Investor (no more than one time) in
a written notice to the Company during the 150-day period succeeding the date of
effectiveness of a Registration Statement covering resales of the Shares ("Reset
Market Price") is less than 133.33% of the purchase price per share (the
"Purchase Price Per Share") for the Shares paid by the Investor hereunder, then
the Company shall issue to the Investor giving such notice additional shares of
Common Stock (the "Additional Shares") determined as follows: the difference
between (I) the number of Shares which the Investor would have acquired for its
aggregate investment hereunder if calculated at a purchase price equal to 75% of
the Reset Market Price, and (II) the number of Shares purchased hereunder by
such Investor. By way of illustration, assuming an aggregate purchase price
hereunder of $300,000 (and thus the acquisition of a total of 412,905 Shares),
if the Reset Market Price is $.9375, the number of Additional Shares would equal
$300,000 divided by the
5
<PAGE>
product of $.9375 and .75 (i.e., $.703125), or 426,667, less 412,905, resulting
in a total of 13,762 Additional Shares.
(ii) The Company shall not issue any fractional shares of Common Stock
as a result of this Section 8. Instead, the Company shall pay in lieu of any
fractional shares the cash value thereof at the then Current Market Price of the
Common Stock as determined under subparagraph (v) below.
(iii) The Company shall pay any documentary, stamp or similar issue or
transfer tax due on the issue of Additional Shares. However, the Holder shall
pay any such tax which is due because such shares are issued in a name other
than its name.
(iv) The Company shall reserve out of its authorized but unissued
Common Stock enough shares of Common Stock to permit the issuance of all of the
Additional Shares required to be issued hereunder. All Additional Shares shall
be, when issued in accordance herewith, duly authorized, validly issued,
fully-paid and nonassessable.
(v) As used herein, the "Current Market Price" per share of Common
Stock on any date is the average of the quoted bid prices of the Common Stock
for the five (5) consecutive trading days ending on the trading day immediately
prior to the date in question. As used in this subparagraph (v), the term
"quoted bid price" shall mean the closing bid price thereof on any such trading
date, as reported by the Nasdaq Stock Market.
9. MISCELLANEOUS.
(i) This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Delaware.
(ii) This Agreement may be executed by facsimile signature and
in counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. Facsimile
signatures of this Agreement shall be binding on all parties hereto.
(iii) Each of the Parties agrees to pay its own expenses
incident to this Agreement and the performance of its obligations
hereunder, including, but not limited to, the fees and expenses of each
Party's legal counsel.
(iv) All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, express
overnight courier, registered first class mail, overnight courier, or
telecopied, initially to the address set forth below, and thereafter at
such other address, notice of which is given in accordance with the
provisions of this Section 9.
if to the Company:
Saliva Diagnostic Systems, Inc.
11719 NE 95th Street
Vancouver, WA 98682
Attention: Chief Executive Officer
Telephone: (360) 696-4800
Facsimile: (360) 254-7942
6
<PAGE>
if to the Investor, at such address as is listed for such
Investor on the signature page hereto.
All such notice and communications shall be deemed to have been duly given: when
delivered by hand, if personally delivered; three (3) business days after being
deposited in the mail, postage prepaid, if mailed; the next business day after
being deposited with an overnight courier, if deposited with an overnight
courier service; when receipt is acknowledged, if telecopied.
(v) This Agreement constitutes the entire agreement of the
Parties with respect to the subject matter hereof and supersedes all prior oral
or written proposals or agreements relating thereto. This Agreement may not be
amended or any provision hereof waived, in whole or in part, except by a written
amendment signed by both of the Parties.
IN WITNESS WHEREOF, this Agreement was duly executed on the date first
written above.
Official Signatory of Company:
SALIVA DIAGNOSTIC SYSTEMS, INC.
By: /s/ Kenneth J. McLachlan
-------------------------------------
President and Chief Executive Officer
-----------------------------------------
Print Name and Title
INVESTOR:
By: /s/ The Tail Wind Fund, Ltd.
-------------------------------------
Name: /s/ Sherrill Pletscher
Title: Authorized Signatory
Name: /s/Steven E. Carey
Title: Director
Address: MessPierson (Bahamas) Ltd.
Attn: Sherrill Pletscher
Windermere House
404 East Bay St.
PO Box SS 5539
Nassau, Bahamas
Telephone:
Fax:
Amount Invested: $300,000
7
<PAGE>
SCHEDULE A
SCHEDULE OF INVESTORS
- --------------------------------------------------------------------------------
NAME AND ADDRESS AMOUNT INVESTED NUMBER OF SHARES
- --------------------------------------------------------------------------------
The Tail Wind Fund Ltd. $300,000 412,905
MessPierson (Bahamas) Ltd.
Attn: Sherrill Pletscher
Windermere House
404 East Bay St.
PO Box SS 5539
Nassau, Bahamas
- --------------------------------------------------------------------------------
8
<PAGE>
SCHEDULE 3(II)
LATE FILING PURSUANT TO SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
None
<PAGE>
SCHEDULE 3(XI)
PENDING OR THREATENED ACTIONS, SUITS OR PROCEEDINGS
1. Hardy v. Saliva Diagnostic Systems, Inc., Ronald L. Lealos, Eugene Seymour
and Richard S. Kalin was filed in United States District Court, District of
Connecticut.
2. Merrixell Ltd. v. Saliva Diagnostic Systems, Inc. was filed in United States
District Court for the Southern District of New York.
3. Lealos v. Saliva Diagnostic Systems, Inc. was filed in Superior Court in
Clark County in the State of Washington. This suit was dismissed without
prejudice as a prerequisite to a settlement agreement currently in the
process of being documented.
See pages 25 and 26 of the Prospectus dated June 13, 1997 for complete
description.
EXHIBIT 4.3
FORM OF COMMON STOCK SUBSCRIPTION AGREEMENT
OF SALIVA DIAGNOSTIC SYSTEMS, INC.
THIS COMMON STOCK SUBSCRIPTION AGREEMENT (the "Agreement") is made and
entered into as of this 30th day of June, 1997 by and between SALIVA DIAGNOSTIC
SYSTEMS, INC., a Delaware corporation (the "Company"), and the individuals and
entities listed on Schedule A to this Agreement (individually, an "Investor" and
collectively, the "Investors") providing for the purchase and sale of shares of
common stock, par value $.01 per share (the "Shares"), of the Company. Each of
the parties represents, warrants, covenants and agrees as follows:
1. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE.
(i) Investor hereby subscribes for the number of Shares as set
forth on Schedule A attached hereto at a purchase price per share of
$0.50.
(ii) Investor shall pay the purchase price for the Shares
subscribed for by it by delivering same-day funds in United States
dollars against counter-delivery of certificates (the "Certificates")
representing the Shares by the Company, each in accordance with the
terms of the Escrow Agreement of even date herewith and substantially
in the form attached as Exhibit A to this Agreement. The closing of the
purchase and sale of the Shares (the "Closing") shall take place
promptly following the deposit into escrow of the Shares subscribed for
and the purchase price therefor and the satisfaction of all of the
conditions set forth in Section 5 hereof. The Parties anticipate that
the date of the Closing (the "Closing Date") shall be June 30, 1997.
2. INVESTOR'S REPRESENTATIONS AND COVENANTS.
Each Investor represents, warrants and covenants, severally
and not jointly, to the Company as follows:
(i) This Agreement has been duly authorized, validly executed
and delivered on behalf of Investor and is a valid and binding
agreement of Investor in accordance with its terms, subject to general
principles of equity and of bankruptcy or other laws affecting the
enforcement of creditors' rights;
(ii) Investor is purchasing the Shares for its own account for
investment purposes and not with a view towards distribution. Investor
understands and agrees that it must bear the economic risks of its
investment for an indefinite period of time. Investor has received and
carefully reviewed copies of the Public Documents (as defined below),
the press release issued by the Company on June 25, 1997 and the
Supplemental Disclosure Memorandum dated June 30, 1997. Investor
understands that the offer and sale of the Shares are being made only
by means of this Agreement. No representations or warranties have been
made to Investor by the Company, the officers or directors of the
Company, or any agent, employee
1
<PAGE>
or affiliate of any of them except as set forth herein. Investor is
aware that the purchase of the Shares involves a high degree of risk
and that it may sustain, and has the financial ability to sustain, the
loss of its entire investment. Investor has had the opportunity to ask
questions of, and receive answers satisfactory to it from, the
Company's management regarding the Company. Investor understands that
no federal or state governmental authority has made any finding or
determination relating to the fairness of an investment in the Shares
and that no federal or state governmental authority has recommended or
endorsed, or will recommend or endorse, the investment herein.
Investor, in making the decision to purchase the Shares subscribed for,
has relied upon independent investigations made by it and has not
relied on any information or representations made by third parties.
Investor has significant assets, and upon consummation of the purchase
of the Shares, will continue to have significant assets exclusive of
the Shares. Investor has not been organized for the purpose of
acquiring the Shares;
(iii) Investor is an "accredited investor" within the meaning
of Rule 501, promulgated under the Securities Act of 1933, as amended
(the "Securities Act");
(iv) Investor understands that the Shares are being offered
and sold to it in reliance on specific provisions of federal and state
securities laws and that the Company is relying upon the truth and
accuracy of the representations, warranties, agreements,
acknowledgments and understandings of Investor set forth herein in
order to determine the applicability of such provisions; and
(v) Investor understands that the Shares have not been
registered under the Securities Act and therefore it cannot dispose of
any or all of the Shares until such Shares are subsequently registered
under the Securities Act or exemptions from such registration are
available. Investor acknowledges that, until an effective registration
statement relating to the Shares is effective or until the Shares are
eligible for sale pursuant to Rule 144(k), promulgated under the
Securities Act, a legend substantially as follows will be placed on the
Certificates representing the Shares:
THE SECURITIES REPRESENTED HEREBY ARE RESTRICTED SECURITIES WITHIN THE MEANING
OF THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED,
TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH SUCH ACT AND THE
RULES AND REGULATIONS THEREUNDER AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS. THE ISSUER OF THESE SECURITIES WILL NOT RECOGNIZE A TRANSFER OF
SUCH SECURITIES EXCEPT UPON RECEIPT OF EVIDENCE SATISFACTORY TO THE ISSUER THAT
THE REGISTRATION PROVISIONS OF SUCH ACT HAVE BEEN COMPLIED WITH OR THAT SUCH
REGISTRATION IS NOT REQUIRED AND THAT SUCH TRANSFER WILL NOT VIOLATE ANY
APPLICABLE STATE SECURITIES LAWS.
3. THE COMPANY'S REPRESENTATIONS AND COVENANTS.
2
<PAGE>
(a) The Company represents and warrants to each of the Investors as
follows:
(i) The Company has been duly incorporated and is validly
existing and in good standing under the laws of the state of Delaware,
with full corporate power and authority to own, lease and operate its
properties and to conduct its business as currently conducted, and is
duly registered and qualified to conduct its business and is in good
standing in each jurisdiction or place where the nature of its
properties or the conduct of its business requires such registration or
qualification, except where the failure so to register or qualify does
not have a material adverse effect on the condition (financial or
other), business, properties, net worth or operations of the Company.
(ii) The Company has registered its common stock pursuant to
Section 12 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), is in full compliance with all reporting requirements
of the Exchange Act, and the Company's common stock is quoted on the
Nasdaq SmallCap Market (trading symbol SALV). The Company has been
subject to the requirements of Section 12 of the Exchange Act for at
least 12 months, and except as disclosed on Schedule 3(ii) hereto, has
filed in a timely manner all reports required to be filed during the
preceding 12 months;
(iii) The Company has furnished Investor with copies of the
Company's most recent Annual Report on Form 10-K filed with the U.S.
Securities and Exchange Commission ("SEC"), all Forms 10-Q and 8-K
filed thereafter and all other filings required under the Exchange Act
made with the SEC after the filing of the most recent Form 10-K and the
registration statement on Form SB-2 filed under the Securities Act and
declared effective June 13, 1997 (collectively, the "Public
Documents"), the press release issued by the Company on June 25, 1997
and the Supplemental Disclosure Memorandum dated June 30, 1997. The
Public Documents at the time of their filing did not include any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements contained therein, in light
of the circumstances under which they were made, not misleading;
(iv) The authorized capital stock of the Company solely
consists of 33,000,000 shares of common stock, par value $.01 per
share. The Company currently has 22,925,133 shares of common stock
issued and outstanding;
(v) Upon issuance and delivery and payment therefor in
accordance with the terms hereof, the Shares shall be duly authorized,
validly issued, fully paid and nonassessable, and the Additional Shares
(as defined below), if and when issued and delivered, will be duly
authorized, validly issued, fully paid and nonassessable, free from all
encumbrances and restrictions other than restrictions on transfer
imposed by applicable securities laws and/or this Agreement, and will
not subject the holders thereof to personal liability by reason of
being such holders. The Additional Shares have been duly reserved for
issuance. There are no preemptive rights of any stockholder of the
Company with respect to the Shares or the Additional Shares;
3
<PAGE>
(vi) This Agreement has been duly authorized, validly executed
and delivered on behalf of the Company and is a valid and binding
agreement of the Company enforceable in accordance with its terms,
subject to general principles of equity and to bankruptcy or other laws
affecting the enforcement of creditors' rights generally, and the
Company has full corporate power and authority to execute and deliver
this Agreement and the other agreements and documents contemplated
hereby and to perform its obligations hereunder and thereunder;
(vii) The Company is not and, upon the execution and delivery
of this Agreement, the issuance of the Shares, the issuance of the
Additional Shares, and the transactions contemplated by this Agreement,
will not be in conflict with or in breach of any of the terms or
provisions of, or in default under, the Company's Certificate of
Incorporation or Bylaws, or any indenture, mortgage, deed of trust or
other material agreement or instrument to which the Company is a party
or by which it or any of its properties or assets are bound, any law,
statute, rule, regulation, or any existing applicable decree, judgment
or order of any court, federal or state regulatory body, administrative
agency or other governmental body having jurisdiction over the Company
or any of its properties, or assets or will result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any of its subsidiaries pursuant to the terms
of any agreement or instrument to which any of them is a party or by
which any of them may be bound or to which any of the property or
assets of any of them is subject;
(viii) No authorization, approval, filing with or consent of
any governmental body is required for the issuance and sale of the
Shares or the Additional Shares, as contemplated by this Agreement;
(ix) [Intentionally omitted];
(x) Subject in part to the truth and accuracy of the
Investors' representations and warranties in Section 2, the offer, sale
and issuance of the Shares are exempt from the registration
requirements of the Securities Act and applicable state securities
laws;
(xi) Except as disclosed on Schedule 3(xi) hereto, there is no
action, suit or proceeding before or by any court or governmental
agency or body, domestic or foreign, now pending or, to the knowledge
of the Company, threatened, against or affecting the Company, or any of
its properties, which could be reasonably expected to result in any
material adverse change in the condition (financial or otherwise) or in
the earnings, revenues, business affairs or business prospects of the
Company, or which could be reasonably expected to materially and
adversely affect its properties or assets;
(xii) To the best knowledge of the Company, the Company is not
in default in the performance or observance of any material obligation,
agreement, covenant or condition contained in any indenture, mortgage,
deed of trust or other instrument or agreement to which it is a party
or by which it or its property is bound; and
4
<PAGE>
(xiii) To the best knowledge of the Company, there is no fact
known to the Company (other than general economic conditions known to
the public generally) that has not been disclosed in writing to the
Investor that (i) could reasonably be expected to have a material
adverse effect on the condition (financial or otherwise) or in the
earnings, revenues, business affairs, business prospects, properties or
assets of the Company, or (ii) could reasonably be expected to
materially and adversely affect the ability of the Company to perform
its obligations pursuant to this Agreement.
(b) The Company covenants to each of the Investors as follows:
(i) The Company will comply with all applicable securities
laws and regulations with respect to the sale and issuance of the
Shares and Additional Shares to the Investor, including but not limited
to the timely filing of all reports required to be filed in connection
therewith with the SEC or Nasdaq or any other regulatory authority, and
shall remain in full compliance with all of the requirements (including
reporting) of the Exchange Act;
(ii) The Company shall: (i) use all reasonable efforts to
maintain the inclusion of the Shares and Additional Shares on the
Nasdaq Stock Market; and (ii) reserve immediately prior to the Closing
and shall continue to reserve from its authorized common stock a
sufficient number of shares of common stock to permit the issuance of
the Additional Shares; and
(iii) The Company agrees that it will not issue a press
release to the public containing an Investor's name or other
identifying information without the Investor's prior written consent
except as may be necessary in connection with the Company's fulfilling
its obligations under the Registration Rights Agreement (as defined in
Section 4). Investor acknowledges that this Agreement and the related
documents may be filed with the SEC.
4. REGISTRATION.
Within 30 days following the Closing, the Company shall, at the
Company's expense, file a registration statement to effect the registration of
all of the Shares and Additional Shares held by or to be issued to the Investor
under the Securities Act, and relevant Blue Sky laws. Such registration shall be
effected in accordance with the terms of the Registration Rights Agreement
attached hereto as Exhibit B (the "Registration Rights Agreement"). In the event
the registration of the Shares and Additional Shares is not declared effective
by the SEC within 90 days of the Closing Date (the "Registration Date"), then
such failure shall constitute a breach of this Agreement entitling each Investor
to be paid by the Company such Investor's pro rata portion of the "Damage
Amount," as liquidated damages and not as a penalty. The Damage Amount shall
mean $1 for each $1,000 of Shares purchased hereunder for each calendar day
following the Registration Date by which the registration of the Shares (and the
Additional Shares) is not effective with the SEC. The Damage Amount shall be
payable in cash as of the end of each calendar week following the Registration
Date.
5
<PAGE>
5. CONDITIONS TO CLOSING.
(i) The Company shall furnish to the Investors a legal opinion
addressed to the Investors and dated as of the Closing Date from Bryan
Cave LLP substantially in the form of Exhibit C attached hereto.
(ii) The Company shall have delivered a certificate executed
by its President, dated the Closing Date, and certifying that all of
the Company's representations and warranties made in this Agreement are
true and correct as of the date of this Agreement and as of the Closing
Date.
6. CERTAIN AGREEMENTS.
[INTENTIONALLY OMITTED.]
7. RESTRICTIONS ON SALES OF SHARES.
The Investors shall not sell any of the Shares purchased hereunder
during the 90-day period immediately following the Closing Date; however, each
Investor may sell, at its option, up to (i) Thirty-Three and One-Third percent
(33 %) of the number of Shares purchased hereunder at any time from and after
the ninetieth (90th) day following the Closing Date, (ii) an aggregate of
Sixty-Six and Two-Thirds percent (66 %) of the Shares purchased hereunder at any
time from and after the one hundred twentieth (120th) day following the Closing
Date, and (iii) One Hundred percent (100%) of the Shares purchased hereunder at
any time from and after the one hundred fiftieth (150th) day following the
Closing Date.
8. ISSUANCE OF ADDITIONAL SHARES BASED UPON PRICE RESET.
(i) In the event that the Current Market Price (as defined below) of
the Shares as of any or all of the ninetieth (90th), one hundred twentieth
(120th) and one hundred fiftieth (150th) days immediately following the Closing
Date is less than 133.33% of the purchase price per share (the "Purchase Price
Per Share") of the Shares paid by the Investors hereunder, then the Company
shall issue to the Investors on any or all of those dates, as the case may be,
the following number of shares of Common Stock (the "Additional Shares"): the
difference between (I) [the purchase price per Share, multiplied by a fraction,
the numerator of which is one-third (1/3) of the number of Shares purchased
hereunder by such Investor and the denominator of which is the product of the
Current Market Price, multiplied by .75], and (II) one-third (1/3) of the number
of Shares purchased hereunder by such Investor.
(ii) The Company shall not issue any fractional shares of Common Stock
as a result of this Section 8. Instead, the Company shall pay in lieu of any
fractional shares the cash value thereof at the then Current Market Price of the
Common Stock as determined under subparagraph (v) below.
6
<PAGE>
(iii) The Company shall pay any documentary, stamp or similar issue or
transfer tax due on the issue of Additional Shares. However, the Holder shall
pay any such tax which is due because such shares are issued in a name other
than its name.
(iv) The Company shall reserve out of its authorized but unissued
Common Stock enough shares of Common Stock to permit the issuance of all of the
Additional Shares required to be issued hereunder. All Additional Shares shall
be, when issued in accordance herewith, duly authorized, validly issued,
fully-paid and nonassessable.
(v) As used herein, the "Current Market Price" per share of Common
Stock on any date is the average of the quoted bid prices of the Common Stock
for the five (5) consecutive trading days ending on the trading day immediately
prior to the date in question. As used in this subparagraph (v), the term
"quoted bid price" shall mean the closing bid price thereof on any such trading
date, as reported by the Nasdaq Stock Market.
9. MISCELLANEOUS.
(i) This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Delaware.
(ii) This Agreement may be executed by facsimile signature and
in counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. Facsimile
signatures of this Agreement shall be binding on all parties hereto.
(iii) Each of the Parties agrees to pay its own expenses
incident to this Agreement and the performance of its obligations
hereunder, including, but not limited to, the fees and expenses of each
Party's legal counsel.
(iv) All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, express
overnight courier, registered first class mail, overnight courier, or
telecopied, initially to the address set forth below, and thereafter at
such other address, notice of which is given in accordance with the
provisions of this Section 9.
if to the Company:
Saliva Diagnostic Systems, Inc.
11719 NE 95th Street
Vancouver, WA 96682
Attention: Chief Executive Officer
Telephone: (360) 696-4800
Facsimile: (360)254-7942
7
<PAGE>
if to the Investor, at such address as is listed for
such Investor on the signature page hereto.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; three (3)
business days after being deposited in the mail, postage prepaid, if
mailed; the next business day after being deposited with an overnight
courier, if deposited with an overnight courier service; when receipt
is acknowledged, if telecopied.
(v) This Agreement constitutes the entire agreement of the
Parties with respect to the subject matter hereof and supersedes all
prior oral or written proposals or agreements relating thereto. This
Agreement may not be amended or any provision hereof waived, in whole
or in part, except by a written amendment signed by both of the
Parties.
breach thereof, shall be settled by arbitration in accordance with the
commercial rules of arbitration of the American Arbitration Association
(the "AAA") and this subparagraph (vi). Both parties shall endeavor to
select by mutual agreement an arbitrator qualified and approved by the
AAA. If the parties shall fail to agree on an arbitrator, then the AAA
shall be requested to submit a list of five qualified and approved
arbitrators. The arbitrator shall then be selected by each party
alternately striking one name at a time from the list until only one
name remains. That person shall be the arbitrator and it shall be his
or her duty promptly to issue a written decision confined to the issues
presented, which shall be final and binding on all parties to the
dispute; provided, however, that the arbitrator shall have no authority
to alter the terms of this Agreement. The arbitration shall take place
in New York, New York. Judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof. In
any such arbitration, the prevailing party shall be entitled to recover
all reasonable costs, including reasonable attorneys' fees, incurred in
pursuing or defending any claim in arbitration.
(vi) Any controversy or claim arising out of or relating to
this Agreement, or the
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURE PAGES FOLLOW]
8
<PAGE>
IN WITNESS WHEREOF, this Agreement was duly executed on the date first
written above.
Official Signatory of Company:
SALIVA DIAGNOSTIC SYSTEMS, INC.
By:
-----------------------------------
Kenneth J. McLachlan, President
INVESTOR:
By:
-----------------------------------
Name:
Title:
Address:
Telephone:
Fax:
Amount Invested:
9
<PAGE>
SCHEDULE "A"
SCHEDULE OF INVESTORS
- --------------------------------------------------------------------------------
NAME AND ADDRESS AMOUNT INVESTED NUMBER OF
SHARES
- --------------------------------------------------------------------------------
Mark Alt $50,000 100,000
10120 Cumberland Rd.
Fishers, IN 46038
- --------------------------------------------------------------------------------
Sterling E. Baker $50,000 100,000
19 West Lake Dr.
Medford, NJ 08055
- --------------------------------------------------------------------------------
Linda Bidell $100,000 200,000
309 K AABc
Aspen, CO 81611
- --------------------------------------------------------------------------------
Collin Bingham Trust $25,000 50,000
242 W. Waltann
Phoenix, AZ 85023
- --------------------------------------------------------------------------------
Tanner Payne Boyer Trust $25,000 50,000
242 W. Waltann
Phoenix, AZ 85023
- --------------------------------------------------------------------------------
Brian Bramell $50,000 100,000
PO Box 5858
Breckenridge, CO 80424
- --------------------------------------------------------------------------------
Paul Brodsky, CPA, IRA $12,500 25,000
2710 W. Burbank Blvd.
Burbank, CA 91505
- --------------------------------------------------------------------------------
Mary L. Brodsky, IRA $12,500 25,000
2710 W. Burbank Blvd.
Burbank, CA 91505
- --------------------------------------------------------------------------------
Carol Bruckner $37,500 75,000
7404 E. Camino Santo
Scottsdale, AZ 85260
- --------------------------------------------------------------------------------
Center for Aids Research and $50,000 100,000
Training Inc.
c/o Paul Brodsky
2710 W. Burbank Blvd.
Burbank, CA 91505
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
The Covette Community $50,000 100,000
Property Trust, Peter Covette &
Linda M. Covette, trustees
407 Robinwood Drive
Los Angeles, CA 90049
- --------------------------------------------------------------------------------
David Fitzpatrick $25,000 50,000
3776 Kalispell
Sierra Vista, AZ 85635
- --------------------------------------------------------------------------------
Gerald Grayson $100,000 200,000
370 17th Street
Suite 5200
Denver, CO 80202
- --------------------------------------------------------------------------------
Dean Greenberg $25,000 50,000
c/o Newport St. Paul Cold
Storage Co.
PO Box 129
2233 Maxwell Avenue
Newport, MN 55055
- --------------------------------------------------------------------------------
Harvey Katzman $50,000 100,000
12734 Discovery Way
Nevada City, CA 95959
- --------------------------------------------------------------------------------
Hollywood Pins Co. $100,000 200,000
A Defined Benefit Pension
Plan
Barry Coe, Trustee
654 North Sepuveda Blvd.
Suite 10
Los Angeles, CA 90049
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Alan Lerner $10,000 20,000
7404 E. Camino Santo
Scottsdale, AZ 85260
- --------------------------------------------------------------------------------
Michael Lipkin $50,000 100,000
PO Box 3004
Aspen, CO 81611
- --------------------------------------------------------------------------------
Sandy K. Linka $15,000 30,000
13317 Village 13
Camarillo, CA 93012
- --------------------------------------------------------------------------------
Kenneth J. McLachlan $100,000 200,000
403 Collingwood House
London, England SWIV3NP2
- --------------------------------------------------------------------------------
Gary Nathanson $50,000 100,000
1271 Ute Ave.
Aspen, CO 81611
- --------------------------------------------------------------------------------
Lisa Neuhof $12,500 25,000
8888 Emigration Canyon Rd.
Salt Lake City, UT 84108
- --------------------------------------------------------------------------------
Jack P. Slovak $25,000 50,000
570 Tyner Way
Incline Village, NV 89451
- --------------------------------------------------------------------------------
Robert A. Slovak $25,000 50,000
570 Tyner Way
Incline Village, NV 89451
- --------------------------------------------------------------------------------
Stanton Law Corporation $25,000 50,000
Profit Sharing Plan
1999 Avenue of the Stars
Suite 1850
Los Angeles, CA 90067
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
George L. Stanton $50,000 100,000
2131 Century Park Lane
Los Angeles, CA 90067
- --------------------------------------------------------------------------------
Linda Trester $10,000 20,000
1404 Exeter Ave.
Ventura, CA 93004
- --------------------------------------------------------------------------------
WCGMG, Inc., DBPP $50,000 100,000
c/o Paul Brodsky
2710 W. Burbank Blvd.
Burbank, CA 91505
- --------------------------------------------------------------------------------
Jacob Zamstein, MD $25,000 50,000
701 Cottage Grove Road-C-
Bloomfield, CT 06002
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 3(II)
LATE FILING PURSUANT TO SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
None
<PAGE>
SCHEDULE 3(XI)
PENDING OR THREATENED ACTIONS, SUITS OR PROCEEDINGS
1. Hardy v. Saliva Diagnostic Systems, Inc., Ronald L. Lealos, Eugene Seymour
and Richard S. Kalin was filed in United States District Court, District of
Connecticut.
2. Merrixell Ltd. v. Saliva Diagnostic Systems, Inc. was filed in United States
District Court for the Southern District of New York.
3. Lealos v. Saliva Diagnostic Systems, Inc. was filed in Superior Court in
Clark County in the State of Washington. This suit was dismissed without
prejudice as a prerequisite to a settlement agreement currently in the
process of being documented.
See pages 25 and 26 of the Prospectus dated June 13, 1997 for complete
description
EXHIBIT 4.4
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into as of June 30, 1997 between and among SALIVA DIAGNOSTIC SYSTEMS,
INC., a Delaware corporation (the "Company"), and each of the investors
(collectively, the "Investors") listed on Schedule A to the Subscription
Agreement (as defined below).
W I T N E S S E T H:
WHEREAS, pursuant to that certain Common Stock Subscription Agreement
dated the date hereof (the "Subscription Agreement"), the Investors acquired
shares of Common Stock of the Company, par value $.01 per share (the "Common
Stock" or the "Shares"); and
WHEREAS, the Company has agreed to register the Shares; and
WHEREAS, as used herein, "Registrable Securities" shall mean the shares
of Common Stock (including the Additional Shares, as defined in the Subscription
Agreement) issued or issuable by the Company under the Subscription Agreement or
issuable upon any stock split, stock dividend, recapitalization or the like,
which have not been previously sold pursuant to a registration statement or Rule
144 promulgated under the Securities Act of 1933, as amended (the "Securities
Act").
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the parties agree as follows:
1. REGISTRATION UPON CLOSING.
(a) Subject to the terms and conditions hereof, within thirty (30) days
after the closing of the transactions contemplated by the Subscription Agreement
(the "Closing Date"), the Company shall, at the Company's cost and expense
(other than the underwriting discounts and brokerage commissions, if any,
payable in respect of the Registrable Securities sold by the Investors), prepare
and file with the Securities and Exchange Commission (the "Commission") a
registration statement on Form S-3 (if the same is available), with respect to
all of the Registrable Securities and will use its best efforts to cause such
registration statement to become effective as soon as possible. If Form S-3 is
not available to the Company for such registration statement, the Company shall
file the registration statement on an appropriate alternative form.
(b) Except as set forth below, the Company shall keep effective the
registration statement contemplated by this Section 1 and shall from time to
time amend or supplement such registration statement, for a period of not less
than two (2) years (although such period may be reduced to one year provided
that all of the Shares may be sold at one time under rule 144(k) under the
Exchange Act), as extended by any period of time during which the registration
1
<PAGE>
statement is not effective pursuant to Section 1(c) below, unless all of the
Registrable Securities set forth in such registration statement have theretofore
been sold.
(c) The Company may terminate or suspend the effectiveness of any
registration statement to be filed pursuant to Section 1(a) one time for a
period of not more than 30 days if the Company shall deliver to each Investor a
certificate signed by the President or Chief Financial Officer of the Company
stating that in the good faith judgment of the Board of Directors of the Company
it would (i) be seriously detrimental to the business of the Company for such
registration statement to be effected or remain effective at such time, (ii)
interfere with any proposed or pending material corporate transaction involving
the Company or any of its subsidiaries, or (iii) result in any premature
disclosure thereof.
2. THE COMPANY COVENANTS.
(a) The Company shall furnish to the Investors such number of copies of
a prospectus in conformity with the requirements of the Securities Act, and such
other documents as may reasonably be requested in order to facilitate the
disposition of the Registrable Securities owned by the Investors.
(b) The Company shall use all reasonable efforts to cause the
Registrable Securities so registered to be registered or qualified for sale
under the securities or blue sky laws of such jurisdictions as the Investors may
reasonably request; provided, however, that the Company shall not be required to
qualify to do business in any state by reason of this Section 2(b) in which it
is not otherwise required to qualify to do business.
(c) The Company shall notify the Investors promptly when such
registration statement has become effective or a supplement to any prospectus
forming a part of such registration statement has been filed.
(d) The Company shall advise the Investors, promptly after it shall
receive notice or obtain knowledge, of the issuance of any stop order by the
Commission suspending the effectiveness of such registration statement or the
initiation or threatening of any proceeding for that purpose, and promptly use
all reasonable efforts to prevent the issuance of any stop order or to obtain
its withdrawal if such stop order shall be issued.
(e) The Company shall promptly notify each Investor, at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect,
would include an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing, and at
the reasonable request of each Investor prepare and furnish to them such number
of copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the offerees and purchasers of
such Registrable Securities or securities, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or
2
<PAGE>
necessary to make the statements therein not misleading in the light of the
circumstances under which they were made.
(f) The Company shall pay all expenses incurred by the Company in
complying with Section 1 hereof, including, without limitation, all
registration, qualification and filing fees, printing expenses, escrow fees,
fees and disbursements of counsel for the Company and one counsel for the
Investors (the amount of counsel fees for the Investors (as selected by The Tail
Wind Fund) relating to such registration shall be up to $10,000), blue sky fees
and expenses, and the expense of any special audits incident to or required by
any such registration, but excluding all underwriting discounts and brokerage
commissions, if any, payable in respect of the Registrable Securities sold by
the Investors.
3. INDEMNIFICATION.
(a) Subject to the conditions set forth below, the Company agrees to
indemnify and hold harmless all of the Investors, their respective officers,
directors, partners, employees, agents, and counsel, and each person, if any,
who controls any such person within the meaning of Section 15 of the Securities
Act or Section 20(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") from and against any and all loss, liability, charge, claim,
damage, and expense whatsoever (which shall include, for all purposes of this
Section 3, but not be limited to, reasonable attorneys' fees and any and all
reasonable expenses whatsoever incurred in investigating, preparing, or
defending against any litigation, commenced or threatened, or any claim
whatsoever), arising out of, based upon, or in connection with any untrue
statement or alleged untrue statement of a material fact contained (A) in any
registration statement, preliminary prospectus, or final prospectus (as from
time to time amended and supplemented) or any amendment or supplement thereto,
relating to the sale of any of the Registrable Securities or (B) in any
application or other document or communication (in this Section 3 collectively
called an "application") executed by or on behalf of the Company or based upon
written information furnished by or on behalf of the Company filed in any
jurisdiction in order to register or qualify any of the Registrable Securities
under the securities or blue sky laws thereof or filed with the Commission or
any securities exchange or the Nasdaq Stock Market; or any omission or alleged
omission to state a material fact required to be stated therein or necessary to
make the statements made therein not misleading, unless (x) such statement or
omission was made in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any of the Investors for inclusion
in any registration statement, preliminary prospectus, or final prospectus, or
any amendment or supplement thereto, or in any application, as the case may be,
or (y) such loss, liability, charge, claim, damage or expense arises out of any
Investor's failure to comply with the terms and provisions of this Agreement.
The foregoing agreement to indemnify shall be in addition to any liability the
Company may otherwise have, including liabilities arising under this Agreement.
If any action is brought against the Investors or any of their
respective officers, directors, partners, employees, agents, or counsel, or any
controlling persons or such person (an "indemnified party") in respect of which
indemnity may be sought against the Company pursuant to the foregoing paragraph,
such indemnified party or parties shall promptly notify the Company
3
<PAGE>
in writing of the institution of such action (but the failure so to notify shall
not relieve the Company from any liability other than pursuant to this Section
3(a) unless, the failure to so notify shall materially and adversely prejudice
any rights or defenses with respect to such claim) and the Company shall
promptly assume the defense of such action, including the employment of counsel
(reasonably satisfactory to such indemnified party or parties) provided that the
indemnified party shall have the right to employ its or their own counsel in any
such case, but the fees and expenses of such counsel shall be at the expense of
such indemnified party or parties unless:
(i) the employment of such counsel shall have been authorized
in writing by the Company in connection with the defense of such action; or
(ii) such indemnified party or parties shall have reasonably
concluded, based on an opinion of counsel, that there may be one or more legal
defenses available to it or them or to other indemnified parties which are
different from or additional to those available to the Company, in any material
respect, and that as a result thereof a conflict of interest would arise absent
separate representation of the parties.
In the event of clauses (i) or (ii) above, such fees and expenses as are
reasonable shall be borne by the Company and the Company shall not have the
right to direct the defense of such action on behalf of the indemnified party or
parties. Anything in this Section 3 to the contrary notwithstanding, the Company
shall not be liable for any settlement of any such claim or action effected
without its written consent, which shall not be unreasonably withheld. The
Company shall not, without the prior written consent of each indemnified party
that is not released as described in this sentence, settle or compromise any
action, or permit a default or consent to the entry of judgment in or otherwise
seek to terminate any pending or threatened action, in respect of which
indemnity may be sought hereunder (whether or not any indemnified party is a
party thereto) unless such settlement, compromise, consent, or termination
includes an unconditional release of each indemnified party from all liability
in respect of such action. The Company agrees promptly to notify the Investor of
the commencement of any litigation or proceedings against the Company or any of
its officers or directors in connection with the sale of any Registrable
Securities or any preliminary prospectus, final prospectus, registration
statement, or amendment or supplement thereto, or any application relating to
any sale of any Registrable Securities.
(b) Each Investor agrees to indemnify and hold harmless the Company,
each director of the Company, each officer of the Company who shall have signed
any registration statement covering Registrable Securities held by the Investor,
each other person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20(a) of the Exchange Act, and its
or their respective counsel, to the same extent as the foregoing indemnity from
the Company to the Investors in Section 3(a) but only with respect to statements
or omissions, if any, made in any registration statement, preliminary
prospectus, or final prospectus or any amendment or supplement thereto, or in
any application, in reliance upon and in conformity with written information
furnished to the Company with respect to the Investors by or on behalf of the
Investors, expressly for inclusion in any such registration statement,
4
<PAGE>
preliminary prospectus, or final prospectus, or any amendment or supplement
thereto, or in any application, as the case may be. If any action shall be
brought against the Company or any other person so indemnified based on any such
registration statement, preliminary prospectus, or final prospectus, or any
amendment or supplement thereto, or in any application, and in respect of which
indemnity may be sought against the Investor pursuant to this Section 3(b) the
Investors shall have the rights and duties given to the Company, and the Company
and each other person so indemnified shall have the rights and duties given to
the indemnified parties, by the provisions of Section 3(a).
(c) To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to Section 3(a) or
3(b) (subject to the limitations thereof) but it is found in a final judicial
determination, not subject to further appeal, that such indemnification may not
be enforced in such case, even though this Agreement expressly provides for
indemnification in such case, or (ii) any indemnified or indemnifying party
seeks contribution under the Securities Act, the Exchange Act or otherwise, then
the Company (including for this purpose any contribution made by or on behalf of
any director of the Company, any officer of the Company who signed any such
registration statement and any controlling person of the Company) as one entity,
and the Investors included in such registration in the aggregate (including for
this purpose any contribution by or on behalf of an indemnified party) as a
second entity, shall contribute to the losses, liabilities, claims, damages, and
expenses whatsoever to which any of them may be subject, on the basis of
relevant equitable considerations such as the relative fault of the Company and
the Investors in connection with the facts which resulted in such losses,
liabilities, claims, damages, and expenses. The relative fault, in the case of
an untrue statement, alleged untrue statement, omission, or alleged omission
shall be determined by, among other things, whether such statement, alleged
statement, omission or alleged omission relates to information supplied by the
Company or by the Investors, and the parties' relative intent, knowledge, access
to information, and opportunity to correct or prevent such statement, alleged
statement, omission, or alleged omission. The Company and the Investors agree
that it would be unjust and inequitable if the respective obligations of the
Company and the Investors for contribution were determined by pro rata or per
capita allocation of the aggregate losses, liabilities, claims, damages, and
expenses (even if the Investors and the other indemnified parties were treated
as one entity for such purpose) or by any other method of allocation that does
not reflect the equitable considerations referred to in this Section 3(c). In no
case shall any Investor be responsible for a portion of the contribution
obligation imposed on all of the Investors in excess of each Investor's pro rata
share based on the number of Registrable Securities owned by each Investor and
included in such registration as compared to the total number of Registrable
Securities owned by all of the Investors and included in such registration. No
person guilty of a fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who is not guilty of such fraudulent misrepresentation. For purposes of this
Section 3(c), each person, if any, who controls any Investor within the meaning
of Section 15 of the Securities Act or Section 20(a) of the Exchange Act and
each officer, director, partner, employee, agent, and counsel for any Investor
or control person shall have the same rights to contribution as the Investor or
control person and each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act of Section 20(a) of the Exchange
Act, each officer of the Company who shall have
5
<PAGE>
signed any such registration statement, each director of the Company, and its or
their respective counsel shall have the same rights to contribution as the
Company, subject to each case to the provisions of this Section 3(c). Anything
in this Section 3(c) to the contrary notwithstanding, no party shall be liable
for contribution with respect to the settlement of any claim or action effected
without its written consent. This Section 3(c) is intended to supersede any
right to contribution under the Securities Act, the Exchange Act or otherwise.
4. MISCELLANEOUS.
(a) REMEDIES. In the event of a breach by any party of its obligations
under this Agreement, the other parties, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of their respective rights under this
Agreement. Such rights shall be in addition to, and not in lieu of, the
Investors' rights to receive the Damage Payment as specified in the Subscription
Agreement.
(b) AGREEMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, unless such amendment, modification or supplement is in writing
and signed by all of the parties hereto.
(c) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, express overnight
courier, registered first class mail, overnight courier, or telecopied,
initially to the address set forth below, and thereafter at such other address,
notice of which is given in accordance with the provisions of this Section 4(c).
if to the Company:
Saliva Diagnostic Systems, Inc.
11719 NE 95th Street
Vancouver, WA 98682
Attention: Chief Executive Officer
Telephone: (360) 696-4800
Facsimile: (360) 254-7942
if to the Investor, to each investor and at such address as is
listed on Schedule A to the Subscription Agreement.
All such notices and communications shall be deemed to have been duly given:
when delivered by hand, if personally delivered; three (3) business days after
being deposited in the mail, postage prepaid, if mailed; the next business day
after being deposited with an overnight courier, if deposited with an overnight
courier service; when receipt is acknowledged, if telecopied.
(d) REASONABLE COOPERATION OF THE INVESTOR. The Investors shall
cooperate in all reasonable respects with the filing of the registration
statement(s) contemplated hereby. Without
6
<PAGE>
limiting the foregoing, each Investor shall furnish to the Company (or any
regulatory authority) such written information and representations that the
Company may reasonably request in order to facilitate any registration of the
Registrable Securities hereunder.
(e) SUCCESSORS AND ASSIGNS. This Agreement may be assigned by an
Investor to any purchaser or transferee of the Shares.
(f) COUNTERPARTS. This Agreement may be executed by facsimile signature
and in any number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
(g) HEADINGS. The headings in this Agreement are for convenience of
references only and shall not limit or otherwise affect the meaning hereof.
(h) GOVERNING LAW. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of Delaware without reference to its
conflict of laws provisions.
(i) SEVERABILITY. In the event that any one or more of the provisions
contained herein, or the application hereof in any circumstance is held invalid,
illegal or unenforceable, the validity, legality and enforceability of any such
provisions in every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby.
(j) ENTIRE AGREEMENT. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of this agreement and understanding of the parties hereto in respect
of the subject matter contained herein. There are not any restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein, concerning the registration rights granted by the Company pursuant to
this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURE PAGES FOLLOW]
7
<PAGE>
IN WITNESS WHEREOF, this Agreement was duly executed on the date first
written above.
SALIVA DIAGNOSTIC SYSTEMS, INC.
By: /s/ Kenneth McLachlan
----------------------------------------
Kenneth McLachlan, President
INVESTORS:
By: /s/ The Tail Wind Fund, Ltd.
----------------------------------------
Name: /s/ Sherrill Pletscher
Title: Authorized Signatory
Name: /s/Steven E. Carey
Title: Director
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
8
EXHIBIT 4.5
FORM OF REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into as of June 30, 1997 between and among SALIVA DIAGNOSTIC SYSTEMS,
INC., a Delaware corporation (the "Company"), and each of the investors
(collectively, the "Investors") listed on Schedule A to the Subscription
Agreement (as defined below).
W I T N E S S E T H:
WHEREAS, pursuant to that certain Common Stock Subscription Agreement
dated the date hereof (the "Subscription Agreement"), the Investors acquired
shares of Common Stock of the Company, par value $.01 per share (the "Common
Stock" or the "Shares"); and
WHEREAS, the Company has agreed to register the Shares; and
WHEREAS, as used herein, "Registrable Securities" shall mean the shares
of Common Stock issued or issuable by the Company under the Subscription
Agreement or issuable upon any stock split, stock dividend, recapitalization or
the like, which have not been previously sold pursuant to a registration
statement or Rule 144 promulgated under the Securities Act of 1933, as amended
(the "Securities Act").
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the parties agree as follows:
1. REGISTRATION UPON CLOSING.
(a) Subject to the terms and conditions hereof, within thirty (30) days
after the closing of the transactions contemplated by the Subscription Agreement
(the "Closing Date"), the Company shall, at the Company's cost and expense
(other than the underwriting discounts and brokerage commissions, if any,
payable in respect of the Registrable Securities sold by the Investors), prepare
and file with the Securities and Exchange Commission (the "Commission") a
registration statement on Form S-3 (if the same is available), with respect to
all of the Registrable Securities and will use its best efforts to cause such
registration statement to become effective as soon as possible. If Form S-3 is
not available to the Company for such registration statement, the Company shall
file the registration statement on an appropriate alternative form.
(b) Except as set forth below, the Company shall keep effective the
registration statement contemplated by this Section 1 and shall from time to
time amend or supplement such registration statement, for a period of not less
than two (2) years (although such period may be reduced to one year provided
that all of the Shares may be sold at one time under Rule 144(k) under the
Exchange Act), as extended by any period of time during which the registration
statement is not effective pursuant to Section 1(c) below, unless all of the
Registrable Securities set forth in such registration statement have theretofore
been sold.
(c) The Company may terminate or suspend the effectiveness of any
registration statement
<PAGE>
to be filed pursuant to Section 1(a) one time for a period of not more than 30
days if the Company shall deliver to each Investor a certificate signed by the
President or Chief Financial Officer of the Company stating that in the good
faith judgment of the Board of Directors of the Company it would (i) be
seriously detrimental to the business of the Company for such registration
statement to be effected or remain effective at such time, (ii) interfere with
any proposed or pending material corporate transaction involving the Company or
any of its subsidiaries, or (iii) result in any premature disclosure thereof.
2. THE COMPANY COVENANTS.
(a) The Company shall furnish to the Investors such number of copies of
a prospectus in conformity with the requirements of the Securities Act, and such
other documents as may reasonably be requested in order to facilitate the
disposition of the Registrable Securities owned by the Investors.
(b) The Company shall use all reasonable efforts to cause the
Registrable Securities so registered to be registered or qualified for sale
under the securities or blue sky laws of such jurisdictions as the Investors may
reasonably request; provided, however, that the Company shall not be required to
qualify to do business in any state by reason of this Section 2(b) in which it
is not otherwise required to qualify to do business.
(c) The Company shall notify the Investors promptly when such
registration statement has become effective or a supplement to any prospectus
forming a part of such registration statement has been filed.
(d) The Company shall advise the Investors, promptly after it shall
receive notice or obtain knowledge, of the issuance of any stop order by the
Commission suspending the effectiveness of such registration statement or the
initiation or threatening of any proceeding for that purpose, and promptly use
all reasonable efforts to prevent the issuance of any stop order or to obtain
its withdrawal if such stop order should be issued.
(e) The Company shall promptly notify each Investor, at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in such registration statement, as then in effect,
would include an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing, and at
the reasonable request of each Investor prepare and furnish to them such number
of copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the offerees and purchasers of
such Registrable Securities or securities, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading in
the light of the circumstances under which they were made.
(f) The Company shall pay all expenses incurred by the Company in
complying with Section 1 hereof, including, without limitation, all
registration, qualification and filing fees, printing expenses, escrow fees,
fees and disbursements of counsel for the Company and one counsel for the
Investors (the amount of counsel fees for the Investors relating to such
2
<PAGE>
registration shall be up to $10,000), blue sky fees and expenses, and the
expense of any special audits incident to or required by any such registration,
but excluding all underwriting discounts and brokerage commissions, if any,
payable in respect of the Registrable Securities sold by the Investors.
3. INDEMNIFICATION
(a) Subject to the conditions set forth below, the Company agrees to
indemnify and hold harmless all of the Investors, their respective officers,
directors, partners, employees, agents, and counsel, and each person, if any,
who controls any such person within the meaning of Section 15 of the Securities
Act or Section 20(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") from and against any and all loss, liability, charge, claim,
damage, and expense whatsoever (which shall include, for all purposes of this
Section 3, but not be limited to, reasonable attorneys' fees and any and all
reasonable expenses whatsoever incurred in investigating, preparing, or
defending against any litigation, commenced or threatened, or any claim
whatsoever), arising out of, based upon, or in connection with any untrue
statement or alleged untrue statement of a material fact contained (A) in any
registration statement, preliminary prospectus, or final prospectus (as from
time to time amended and supplemented) or any amendment or supplement thereto,
relating to the sale of any of the Registrable Securities or (B) in any
application or other document or communication (in this Section 3 collectively
called an "application") executed by or on behalf of the Company or based upon
written information furnished by or on behalf of the Company filed in any
jurisdiction in order to register or qualify any of the Registrable Securities
under the securities or blue sky laws thereof or filed with the Commission or
any securities exchange or the Nasdaq Stock Market; or any omission or alleged
omission to state a material fact required to be stated therein or necessary to
make the statements made therein not misleading, unless (x) such statement or
omission was made in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any of the Investors for inclusion
in any registration statement, preliminary prospectus, or final prospectus, or
any amendment or supplement thereto, or in any application, as the case may be,
or (y) such loss, liability, charge, claim, damage or expense arises out of any
Investor's failure to comply with the terms and provisions of this Agreement.
The foregoing agreement to indemnify shall be in addition to any liability the
Company may otherwise have, including liabilities arising under this Agreement.
If any action is brought against the Investors or any of their
respective officers, directors, partners, employees, agents, or counsel, or any
controlling persons or such person (an "indemnified party") in respect of which
indemnity may be sought against the Company pursuant to the foregoing paragraph,
such indemnified party or parties shall promptly notify the Company in writing
of the institution of such action (but the failure so to notify shall not
relieve the Company from any liability other than pursuant to this Section 3(a)
unless, the failure to so notify shall materially and adversely prejudice any
rights or defenses with respect to such claim) and the Company shall promptly
assume the defense of such action, including the employment of counsel
(reasonably satisfactory to such indemnified party or parties) provided that the
indemnified party shall have the right to employ its or their own counsel in any
such case, but the fees and expenses of such counsel shall be at the expense of
such indemnified party or parties unless:
3
<PAGE>
(i) the employment of such counsel shall have been authorized
in writing by the Company in connection with the defense of such action; or
(ii) such indemnified party or parties shall have reasonably
concluded, based on an opinion of counsel, that there may be one or more legal
defenses available to it or them or to other indemnified parties which are
different from or additional to those available to the Company, in any material
respect, and that as a result thereof a conflict of interest would arise absent
separate representation of the parties.
In the event of clauses (i) or (ii) above, such fees and expenses as are
reasonable shall be borne by the Company and the Company shall not have the
right to direct the defense of such action on behalf of the indemnified party or
parties. Anything in this Section 3 to the contrary notwithstanding, the Company
shall not be liable for any settlement of any such claim or action effected
without its written consent, which shall not be unreasonably withheld. The
Company shall not, without the prior written consent of each indemnified party
that is not released as described in this sentence, settle or compromise any
action, or permit a default or consent to the entry of judgment in or otherwise
seek to terminate any pending or threatened action, in respect of which
indemnity may be sought hereunder (whether or not any indemnified party is a
party thereto) unless such settlement, compromise, consent, or termination
includes an unconditional release of each indemnified party from all liability
in respect of such action. The Company agrees promptly to notify the Investor of
the commencement of any litigation or proceedings against the Company or any of
its officers or directors in connection with the sale of any Registrable
Securities or any preliminary prospectus, final prospectus, registration
statement, or amendment or supplement thereto, or any application relating to
any sale of any Registrable Securities.
(b) Each Investor agrees to indemnify and hold harmless the Company,
each director of the Company, each officer of the Company who shall have signed
any registration statement covering Registrable Securities held by the Investor,
each other person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20(a) of the Exchange Act, and its
or their respective counsel, to the same extent as the foregoing indemnity from
the Company to the Investors in Section 3(a) but only with respect to statements
or omissions, if any, made in any registration statement, preliminary
prospectus, or final prospectus or any amendment or supplement thereto, or in
any application, in reliance upon and in conformity with written information
furnished to the Company with respect to the Investors by or on behalf of the
Investors, expressly for inclusion in any such registration statement,
preliminary prospectus, or final prospectus, or any amendment or supplement
thereto, or in any application, as the case may be. If any action shall be
brought against the Company or any other person so indemnified based on any such
registration statement, preliminary prospectus, or final prospectus, or any
amendment or supplement thereto, or in any application, and in respect of which
indemnity may be sought against the Investor pursuant to this Section 3(b) the
Investors shall have the rights and duties given to the Company, and the Company
and each other person so indemnified shall have the rights and duties given to
the indemnified parties, by the provisions of Section 3(a).
(c) To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to Section 3(a) or
3(b) (subject to the limitations
4
<PAGE>
thereof) but it is found in a final judicial determination, not subject to
further appeal, that such indemnification may not be enforced in such case, even
though this Agreement expressly provides for indemnification in such case, or
(ii) any indemnified or indemnifying party seeks contribution under the
Securities Act, the Exchange Act or otherwise, then the Company (including for
this purpose any contribution made by or on behalf of any director of the
Company, any officer of the Company who signed any such registration statement
and any controlling person of the Company) as one entity, and the Investors
included in such registration in the aggregate (including for this purpose any
contribution by or on behalf of an indemnified party) as a second entity, shall
contribute to the losses, liabilities, claims, damages, and expenses whatsoever
to which any of them may be subject, on the basis of relevant equitable
considerations such as the relative fault of the Company and the Investors in
connection with the facts which resulted in such losses, liabilities, claims,
damages, and expenses. The relative fault, in the case of an untrue statement,
alleged untrue statement, omission, or alleged omission shall be determined by,
among other things, whether such statement, alleged statement, omission or
alleged omission relates to information supplied by the Company or by the
Investors, and the parties' relative intent, knowledge, access to information,
and opportunity to correct or prevent such statement, alleged statement,
omission, or alleged omission. The Company and the Investors agree that it would
be unjust and inequitable if the respective obligations of the Company and the
Investors for contribution were determined by pro rata or per capita allocation
of the aggregate losses, liabilities, claims, damages, and expenses (even if the
Investors and the other indemnified parties were treated as one entity for such
purpose) or by any other method of allocation that does not reflect the
equitable considerations referred to in this Section 3(c). In no case shall any
Investor be responsible for a portion of the contribution obligation imposed on
all of the Investors in excess of each Investor's pro rata share based on the
number of Registrable Securities owned by each Investor and included in such
registration as compared to the total number of Registrable Securities owned by
all of the Investors and included in such registration. No person guilty of a
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who is not
guilty of such fraudulent misrepresentation. For purposes of this Section 3(c),
each person, if any, who controls any Investor within the meaning of Section 15
of the Securities Act or Section 20(a) of the Exchange Act and each officer,
director, partner, employee, agent, and counsel for any Investor or control
person shall have the same rights to contribution as the Investor or control
person and each person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act of Section 20(a) of the Exchange Act, each
officer of the Company who shall have signed any such registration statement,
each director of the Company, and its or their respective counsel shall have the
same rights to contribution as the Company, subject to each case to the
provisions of this Section 3(c). Anything in this Section 3(c) to the contrary
notwithstanding, no party shall be liable for contribution with respect to the
settlement of any claim or action effected without its written consent. This
Section 3(c) is intended to supersede any right to contribution under the
Securities Act, the Exchange Act or otherwise.
4. MISCELLANEOUS.
(a) REMEDIES. In the event of a breach by any party of its obligations
under this Agreement, the other parties, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of their
5
<PAGE>
respective rights under this Agreement. Such rights shall be in addition to, and
not in lieu of, the Investors' rights to receive the Damage Payment as specified
in the Subscription Agreement.
(b) AGREEMENTS AND WAIVERS. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
unless such amendment, modification or supplement is in writing and signed by
all of the parties hereto.
(c) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing and sent by hand delivery,
registered first class mail, overnight courier, or telecopied, initially to the
address set forth below, and thereafter at such other address, notice of which
is given in accordance with the provisions of this Section 4(c).
if to the Company:
Saliva Diagnostic Systems, Inc.
11719 NE 95th Street
Vancouver, Washington 98682
Attention: Chief Executive Officer
Telephone: (360) 696-4800
Facsimile: (360) 254-7942
if to the Investors, to each investor and at such
address as is listed on Schedule A to the Subscription Agreement.
All such notices and communications shall be deemed to have been duly given:
when delivered by hand, if personally delivered; three (3) business days after
being deposited in the mail, postage prepaid, if mailed; the next business day
after being deposited with an overnight courier, if deposited with an overnight
courier service; and when receipt is confirmed, if telecopied.
(d) REASONABLE COOPERATION OF THE INVESTOR. The Investors shall
cooperate in all reasonable respects with the filing of the registration
statement(s) contemplated hereby. Without limiting the foregoing, each Investor
shall furnish to the Company (or any regulatory authority) such written
information and representations that the Company may reasonably request in order
to facilitate any registration of the Registrable Securities hereunder.
(e) SUCCESSORS AND ASSIGNS. This Agreement may be assigned by an
Investor to any purchaser or transferee of the Shares.
(f) COUNTERPARTS. This Agreement may be executed by facsimile signature
and in any number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
(g) HEADINGS. The headings in this Agreement are for convenience of
references only and shall not limit or otherwise affect the meaning hereof.
6
<PAGE>
(h) GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without reference to its
conflict of laws provisions.
(i) SEVERABILITY. In the event that any one or more of the provisions
contained herein, or the application hereof in any circumstance is held invalid,
illegal or unenforceable, the validity, legality and enforceability of any such
provisions in every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby.
(j) ENTIRE AGREEMENT. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of this agreement and understanding of the parties hereto in respect
of the subject matter contained herein. There are not any restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein, concerning the registration rights granted by the Company pursuant to
this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURE PAGES FOLLOW]
7
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first written above.
SALIVA DIAGNOSTIC SYSTEMS, INC.
By:
-----------------------------------
Kenneth McLachlan, President
INVESTORS
By:
-----------------------------------
Name:
Title:
By:
-----------------------------------
Name:
Title:
By:
-----------------------------------
Name:
Title:
By:
-----------------------------------
Name:
Title:
8
EXHIBIT 4.9
SALIVA DIAGNOSTICS SYSTEMS, INC.
11719 NE 95TH STREET
VANCOUVER, WA 98682
TEL: 360/696-4800
FAX: 360/254-7942
May 28, 1997
Tail Wind Fund Ltd.
Joseph Kaufman
c/o Richard L. Stone
919 Third Avenue, 11th Floor
New York, New York 10022
Gentlemen:
This letter will confirm that, notwithstanding anything to the
contrary contained in that certain Convertible Securities Subscription Agreement
dated as of March 12, 1997 (the "Subscription Agreement") and that certain 7.5%
Convertible Debenture referenced in the Subscription Agreement (the "Debenture")
the Tail Wind Fund Ltd. and Joseph Kaufman, on or prior to June 5, 1997 shall
convert to common stock in one or more transactions a minimum of $800,000 of
principal amount of Debentures pursuant to the conversion terms and conditions
set forth in the Subscription Agreement and the Debenture (the "Early
Conversions"). The shares received upon the Early Conversions shall be defined
as the Early Conversion Shares. Each of you shall further be entitled to shares
of common stock of the Company in addition to the Early Conversion Shares if,
during any single five day period designated by each of you (no more than one
time) in writing to us, during the 120 day period succeeding the later of (a)
the last date of the Early Conversions, or (b) the date upon which the
Registration Statement referenced in the Subscription Agreement is declared
effective, the Conversion Price as defined in the Debenture, on the day after
the end of such designated five-day period (the "Additional Share Conversion
Price") would be less than the Conversion Price attributable to such Early
Conversions. The number of such additional shares to be issued to you shall be
the difference between (i) the number of shares which would have been issued
upon conversion of the Early Conversion amount at the Additional Share
Conversion Price, and (ii) the number of Early Conversion Shares. All such
additional shares shall be subject to the registration rights provided in the
Registration Rights Agreement described in the Subscription Agreement.
In consideration of the Company's agreement to issue the
additional shares as herein provided, each of you agrees not to sell, commit to
sell or otherwise transfer any of the Early Conversion Shares and additional
shares (collectively the "Early Conversion Shares") except as follows: (a) up to
one-third of the Early Conversion Shares at any time from and after
<PAGE>
Tail Wind Fund Ltd.
May 28, 1997
Page 2
June 12, 1997; (b) up to an aggregate of two-thirds of the Early Conversion
Shares at any time from and after July 12, 1997; and (c) up to an aggregate of
100% of the Early Conversion Shares at any time from and after August 12, 1997.
Section 3.1(a) of the Debentures is hereby amended to provide
that 100% of the Debentures are convertible immediately. Except as otherwise
herein provided, all of the other terms and provisions of the Subscription
Agreement and all documents referenced therein shall remain in full force and
effect (including, without limitation, any penalties which may result from
failure to register the shares receivable upon conversion of the Debenture
within the time frames set forth in the documents).
If the foregoing correctly sets forth our understanding,
please execute this agreement in the lower left hand side whereupon it shall
become a binding agreement.
Sincerely,
Saliva Diagnostic Systems, Inc.
By: /s/ Kenneth J. McLachlan
-----------------------------------
Kenneth J. McLachlan, President
Agreed and accepted:
The Tail Wind Fund Ltd.
By: /s/ Sherrill Pletcher
---------------------------------
Name: Sherrill Pletcher
/s/ Joseph Kaufman
- --------------------------------------
Joseph Kaufman
EXHIBIT 4.10
SALIVA DIAGNOSTICS SYSTEMS, INC.
11719 NE 95TH STREET
VANCOUVER, WA 98682
TEL: 360/696-4800
FAX: 360/254-7942
June 27, 1997
Tail Wind Fund Ltd.
Joseph Kaufman
c/o Richard L. Stone
919 Third Avenue, 11th Floor
New York, New York 10022
Gentlemen:
This letter will confirm that, notwithstanding anything to the
contrary contained in that certain Convertible Securities Subscription Agreement
dated as of March 12, 1997 (the "Subscription Agreement") and that certain 7.5%
Convertible Debenture referenced in the Subscription Agreement (the
"Debenture"), the Tail Wind Fund Ltd. and Joseph Kaufman, on or prior to June
30, 1997, shall convert to common stock in one or more transactions a minimum of
$700,000 of principal amount of Debentures pursuant to the conversion terms and
conditions set forth in the Subscription Agreement and the Debenture (the "Early
Conversions"). The shares received upon the Early Conversions shall be defined
as the Early Conversion Shares. Each of you shall further be entitled to shares
of common stock of the Company in addition to the Early Conversion Shares if,
during any monthly period prior to January 1, 1998 designated in writing to us
(the "Designation Period"), the average daily low bid price for each day during
the Designation Period as reported by the Nasdaq Stock Market (the "Additional
Share Conversion Price") would be less than the Conversion Price, as defined in
the Debenture, attributable to such Early Conversions. The number of such
additional shares to be issued to you shall be the difference between (i) the
number of shares which would have been issued upon conversion of the Early
Conversion amount at the Additional Share Conversion Price, and (ii) the number
of Early Conversion Shares. All such additional shares have been registered as
provided in the Registration Rights Agreement described in the Subscription
Agreement, and the Company shall promptly file a post-effective amendment to its
Registration Statement (No. 333-26795) filed with the Securities and Exchange
Commission and declared effective on June 13, 1997, to reflect the Early
Conversions.
In consideration of the Company's agreement to issue the
additional shares as herein provided, each of you agrees not to sell, commit to
sell or otherwise transfer any of the Early Conversion Shares and additional
shares (collectively the "Early Conversion Shares")
<PAGE>
Tail Wind Fund Ltd.
June 27, 1997
Page 2
except as follows: (a) up to one-third of the Early Conversion Shares at any
time from and after June 12, 1997; (b) up to an aggregate of two-thirds of the
Early Conversion Shares at any time from and after July 12, 1997, and (c) up to
an aggregate of 100% of the Early Conversion Shares at any time from and after
August 12, 1997; provided, however, that you may not sell, commit to sell or
otherwise transfer any Early Conversion Shares prior to the date on which the
post-effective amendment to the registration statement under which such shares
were registered has been declared effective by the Securities and Exchange
Commission.
The Company shall not, unless required by law, make any public
announcement of any 13D or similar filing made by the Tail Wind Fund Ltd.
Except as otherwise herein provided, all of the other terms
and provisions of the Letter Agreement, the Subscription Agreement and all
documents referenced therein shall remain in full force and effect.
If the foregoing correctly sets forth our understanding,
please execute this agreement in the lower left hand side whereupon it shall
become a binding agreement.
Sincerely,
Saliva Diagnostic Systems, Inc.
By: /s/ Kenneth J. McLachlan
-----------------------------------
Kenneth J. McLachlan, President
Agreed and accepted:
The Tail Wind Fund Ltd.
By: /s/ Sherrill Pletcher
------------------------------------
Name: Sherrill Pletcher
/s/ Joseph Kaufman
- -----------------------------------------
Joseph Kaufman
EXHIBIT 99.1
SALIVA DIAGNOSTIC SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
UNAUDITED
June 30, December 31,
1997 1996
------------ ------------
ASSETS
Current assets:
Cash .......................................... $ 360,125 $ 776,380
Accounts receivable ........................... 227,705 178,436
Inventories ................................... 433,944 268,431
Prepaid expenses .............................. 47,092 34,425
Stock subscriptions receivable ................ 912,500 --
------------ ------------
Total current assets ....................... 1,981,366 1,257,672
Property and equipment, less accumulated
depreciation of $912,859 and $792,309 ...... 430,202 493,649
Deposits ...................................... 197,738 188,647
Restricted cash ............................... 120,500 120,500
Patents and trademarks, less accumulated
amortization of $43,779 and $39,183 ......... 113,137 117,733
------------ ------------
$ 2,842,943 $ 2,178,201
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses ......... $ 1,324,040 $ 818,073
Accrued interest payable ...................... 68,239 68,240
Current portion of long-term debt and
obligations under capital leases ............ 30,000 35,057
------------ ------------
Total current liabilities ................. 1,422,279 921,370
Long-term debt and obligations under capital
leases, net of current portion ................. 83,493 96,199
------------ ------------
Total liabilities ......................... 1,505,772 1,017,569
Stockholders' equity:
Common stock , $.01 par value, 33,000,000
shares authorized, issued and
outstanding:
23,855,963 in 1997 and 22,090,785 in
1996 ................................... 238,560 220,908
Additional paid-in capital .................... 25,697,948 22,998,052
Note receivable from shareholder for stock .... (83,825) (83,825)
Cumulative foreign translation adjustment ..... (70,716) (60,257)
Accumulated deficit ........................... (24,444,796) (21,914,246)
------------ ------------
Total stockholders' equity ................. 1,337,171 1,160,632
------------ ------------
$ 2,842,943 $ 2,178,201
============ ============
<PAGE>
<TABLE>
SALIVA DIAGNOSTIC SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
<CAPTION>
Three months ended Six months ended
June 30, June 30,
--------------------------- ---------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues:
Product sales ............................. $ 484,869 $ 124,937 $ 711,903 $ 296,316
Technology license income ................. -- 12,342 -- 12,342
------------ ------------ ------------ ------------
484,869 137,279 711,903 308,658
Costs and expenses:
Cost of products sold ..................... 464,219 66,753 723,860 187,263
Research and development expense .......... 156,124 91,843 350,836 195,838
Selling, general and administrative
expense ................................. 826,715 1,075,132 1,780,628 1,979,916
------------ ------------ ------------ ------------
Loss from operations .................. (962,189) (1,096,449) (2,143,421) (2,054,359)
Interest income ............................. 8,447 17,395 14,126 39,737
Interest expense ............................ (400,705) (645) (409,284) (69,668)
Other income (expense) ...................... (1,200) -- 8,030 --
------------ ------------ ------------ ------------
Net loss ................................. $ (1,355,647) $ (1,079,699) (2,530,549) (2,084,290)
============ ============ ============ ============
Net loss per share ........................ $ (.06) $ (.05) $ (.11) $ (0.11)
============ ============ ============ ============
Shares used in per share calculations ..... 22,322,340 20,992,000 22,206,563 18,760,000
============ ============ ============ ============
</TABLE>
