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EXHIBIT 4.24
Saliva Diagnostic Systems, Inc.
00000 XX 00xx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Gentlemen:
This letter will confirm our mutual agreement to modify the terms of
our engagement as exclusive placement agent to act on behalf of Saliva
Diagnostic Systems, Inc. (the "Company") in connection with the offer and sale
of up to $3,000,000 aggregate principal amount of the Company's Convertible
Preferred Stock, Series 1998-A and 1998-B. Reference is made to the letter dated
January 26, 1998 from Xxxxx Trading, Inc. ("Placement Agent") and agreed and
accepted by the Company (the "Original Agreement").
We hereby agree that the following modifications to the Original
Agreement be made, and that that the terms of this letter supersede the terms of
the Original Agreement to the extent set forth below:
1. All of the terms relating to the Second Offering set forth in
Paragraph 2(a) of the Original Agreement (i.e., all of Paragraph 2(a) except the
first two sentences) are replaced with the following terms: Each of the three
closings for the Second Offering will be held on an "Additional Closing Date,"
as defined in the Amendment to the Securities Purchase Agreement by and between
the Company and the Buyer.
2. The Fees described in Paragraph 2(b) of the Original Agreement shall
apply solely to the First Offering. In respect of the Second Offering, the
Company will receive net proceeds of the sale of the 1998-B Preferred Stock
after deducting the Placement Agent's cash fee of 6% of the aggregate principal
amount of 1998-B Preferred Stock.
3. Paragraph 2(c)(ii) of the Original Agreement shall not apply. Shares
of the 1998-B Preferred Stock issued in the Second Offering shall be convertible
into Common Stock at the lesser of (I) 80% of the average closing bid price of
the Common Stock for the five trading days prior to conversion, and (ii) 100% of
the average closing bid price of the Common Stock for the five trading days
prior to the Additional Closing Date with respect to such shares, the price as
reported by the OTC Bulletin Board or other principal securities exchange or
market on which the Common Stock is or may be traded.
4. Exhibit A attached to the Original Agreement shall be replaced with
Exhibit A attached to this letter.
In addition, we agree that the Company shall grant to the Placement
Agent, for a period of ninety (90) days following the execution of this letter,
a right of first refusal with respect to the issuance of securities by the
Company as follows. In the event the Company proposes to undertake an issuance
of any securities which are or are convertible into Common Stock, the Company
shall give notice thereof to the Placement Agent, which notice shall specify in
detail the type of issuance, the price at and the general terms and conditions
upon which the
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Company proposes to issue the securities. The Placement Agent shall have the
right, for a period ending at 11:00 p.m. on the fifth business day after the
Company's notice, to purchase or place the securities for the same price and
upon the same general terms and conditions specified in the Company's notice.
The Placement Agent may exercise such right by giving written notice of such
exercise to the Company. In the event the Placement Agent fails to give written
notice of the exercise of its right of first refusal to the Company within the
five day period, the Company may issue the new securities to a third party and
the Placement Agent shall have no rights with respect thereto; provided,
however, that if the price or general terms and conditions of the proposed
issuance change materially from those specified in the Company's notice, the
Company shall give notice thereof to the Placement Agent and the Placement Agent
shall again have a right of first refusal as described above.
Dated: July 30, 1998
XXXXX TRADING, INC.
By: /s/ Xxxxxx Xxxxxx
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Name: Xxxxxx Xxxxxx
Title: President
Xxxxxx and Accepted:
SALIVA DIAGNOSTIC SYSTEMS, INC.
By: /s/ Xxxxxxx X. XxXxxxxxx
---------------------------
Name: Xxxxxxx X. XxXxxxxxx
Title: President and CEO
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EXHIBIT A
CONVERSION TERMS: The two offerings of Preferred Stock are convertible into
shares of Common Stock according on the following schedule:
a. For the First Offering:
--25% of the Preferred Stock is convertible beginning 90
days after issuance;
--an additional 25% of the Preferred Stock
(cumulative 50%) is convertible beginning 120 days after
issuance;
--an additional 25% of the Preferred Stock
(cumulative 75%) is convertible beginning 150 days after
issuance; and
--100% of the Preferred Stock is convertible beginning
180 days after issuance.
b. For the Second Offering:
--100% of the Preferred Stock is convertible beginning 90
days after issuance.
The securities of each offering are convertible up to two
(2) years from such offering's Closing Date. In the event
that any securities remain outstanding on the second
anniversary of the relevant Closing Date, all remaining
securities must be converted.
WARRANTS: The Buyer or its designee shall be issued transferable
divisible warrants to purchase an aggregate 1,000,000 shares of Common
Stock with an exercise price equal to the average closing bid price of the
common stock for five (5) trading days ending on the trading day prior to
the First Closing Date. Warrants for 750,000 of these shares will be issued
on the First Closing Date and will be exercisable immediately; the warrants
for the remaining 250,000 shares will be issued on the First Additional
Closing Date and will be exercisable commencing no earlier than 10 days
after such Closing Date. No additional warrants will be issued to the Buyer
in connection with closings of the Second Offering. The common stock
underlying the Warrants will be registered pursuant to a registration
rights agreement. The Warrants will have a term of five (5) years from the
First Closing Date.
REGISTRATION
RIGHTS: The Company will agree to file one or more registration
statements or amendments to an existing registration statement covering the
Common Stock underlying the Preferred Stock of each Offering within thirty
(30) days after (i) the First Closing Date with respect to the First
Offering and (ii) the First Additional Closing Date with respect to the
Second Offering, and will cause such registration statement to become
effective no later than the "Required Effective Date," which is ninety (90)
days from the applicable Closing Date.
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LATE FILING OR
EFFECTIVENESS: If the Company does not file the registration statement
with SEC on timely basis, or if the registration statement is not declared
effective by the Required Effective Date, the Company will compensate the
Buyer in an amount equal to 2% per month of the principal amount of the
Preferred Stock acquired. Such payment will be made in cash on demand and
will continue to accrue until the registration statement is declared
effective.
AVAILABLE SHARES: The Company will have reserved for issuance, or will have
taken steps to ensure there will be available for issuance at the time of
conversion, to the Buyer at least 150% of the shares then anticipated to be
necessary for issuance upon conversion of all outstanding Preferred Stock
and all Warrants.
DELIVERY OF
CERTIFICATES: On conversion, the Company will direct the transfer agent
to deliver certificates for shares to Buyer within 3 business days. If such
direction is made more than 5 days late, the Company will compensate Buyer
at rate of $100/day for first 10 days and $200/day thereafter for each
$10,000 of purchase price. Buyer will also have right to rescind conversion
notice. In addition, if, after 3rd business day, the Company has not made
its request of transfer agent, if Xxxxx has sold shares of Common Stock,
the Company will compensate Buyer for extra costs incurred to cover sale.
LIMITATIONS ON
COMPANY'S ISSUANCE: If the Company does not have sufficient authorized but
unissed shares of Common Stock at any time a holder submits a notice of
conversion, the Company shall use its best efforts to take all necessary
action to obtain shareholder approval, as promptly as possible, to
authorize the issuance of sufficient shares of Common Stock to effect the
conversion. In the event that the Company's common stock becomes traded on
The Nasdaq SmallCap Market, the parties will agree to amend the
Certificates of Designations, Preferences and Rights for the Preferred
Stock to provide for automatic redemption of the common stock issuable upon
conversion in excess of the 19.99% exchange cap.
ADJUSTMENTS: Under certain circumstances (including, but not
necessarily limited to, recapitalizations, stock splits, reverse stock
splits) the conversion price and the warrant exercise price will be
adjusted. In the event the Company does a "spin off" transaction prior to
conversion or warrant exercise, additional provisions relating to
adjustment in price and shares of spun off entity will apply.
DILUTIVE EFFECT: The Company will acknowledge possible dilutive effect of
conversion and exercise terms, including possible price adjustment.
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HEDGE FUND: The Company will acknowledge that Buyer may be "hedge"
fund and may engage in certain hedging transactions.
NO UNDISCLOSED LIABILITIES
OR EVENTS REQUIRING
DISCLOSURE: The Company will represent that (i) it has no undisclosed
liabilities other than in the ordinary course of business (which
individually or in the aggregate do not have a material adverse effect on
the condition of the Company) and (ii) there are no events or circumstances
requiring public disclosure which have not been disclosed.
REGULATION D: The Company will represent that neither it nor its
affiliates have engaged in any sales or offers which would eliminate the
Regulation D exemption for this transaction.
TRANSFER AGENT
AUTHORIZATION: The Company will authorize the transfer agent to give
public information relating to the Company directly to Buyer or
representatives.
OPINION: The Company counsel will provide an opinion to Buyer
substantially in form attached to Securities Purchase Agreement.
