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SECURITIES PURCHASE AGREEMENT EXHIBIT #4.27
THIS SECURITIES PURCHASE AGREEMENT, dated as of the date of acceptance set
forth below, is entered into by and between SALIVA DIAGNOSTICS SYSTEMS, INC., a
Delaware corporation, with headquarters located at 0000 Xxxxxxxx Xxxxxx,
Xxxxxxxx, XX 00000 (the "Company"), and ____________________________, and each
individual or entity (other than the Company) named on a signature page hereto
(as used herein, each such signatory is referred to as the "Lender" or a
"Lender") (each agreement with a Lender being deemed a separate and independent
agreement between the Company and such Lender, except that each Lender
acknowledges and consents to the rights granted to each other Lender [each, an
"Other Lender"] under such agreement and the Transaction Agreements, as defined
below, referred to therein).
W I T N E S S E T H:
WHEREAS, the Company and the Lender are executing and delivering this
Agreement in accordance with and in reliance upon the exemption from securities
registration for offers and sales to accredited investors afforded, inter alia,
by Rule 506 under Regulation D ("Regulation D") as promulgated by the United
States Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "1933 Act"), and/or Section 4(2) of the 1933 Act; and
WHEREAS, the Lender wishes to lend funds to the Company, subject to and
upon the terms and conditions of this Agreement and acceptance of this Agreement
by the Company, the repayment of which will be represented by 9% Secured
Convertible Debentures of the Company (the "Convertible Debentures"), which
Convertible Debentures will be convertible into shares of Common Stock, $.001
par value per share, of the Company (the "Common Stock"), upon the terms and
subject to the conditions of such Convertible Debentures;
NOW THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. AGREEMENT TO PURCHASE; PURCHASE PRICE.
a. Purchase.
(i) Subject to the terms and conditions of this Agreement and the other
Transaction Agreements, the undersigned hereby agrees to loan to the Company the
principal amount set forth on the Lender's signature page of this Agreement (the
"Purchase Price"), out of the aggregate amount being loaned by all Lenders to a
maximum of $3,000,000.00 (the "Maximum Purchase Price"). The Lender understands
the Company may borrow an aggregate amount from all lenders that is less than
the Maximum Purchase Price. Additionally, the Company may enter into Transaction
Agreements with a strategic partner for an investment in the Company in the
amount of up to $400,000.00 on substantially the same terms, excepting the
conversion price. The obligation to repay the loan from the Lender shall be
evidenced by the Company's issuance of one or more Convertible Debentures to the
Lender in such principal amount (the Convertible Debentures issued to the
Lender, the "Debentures"). Each Debenture (i) shall provide for a conversion
price (the "Conversion Price") , and (ii) shall have the terms and conditions
of, and be substantially in the form attached hereto as, Annex I. The loan to be
made by the Lender and the issuance of the Debentures to the Lender are
sometimes referred to herein and in the other Transaction Agreements as the
purchase and sale of the Debentures.
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(ii) The Purchase Price to be paid by the Lender shall be equal to the
face amount of the Debentures being purchased on the Closing Date (as defined
below) and shall be payable in United States Dollars.
(iii) The actual total Purchase Price of all Lenders, which shall not be
more than the Maximum Purchase Price, is hereinafter referred to as the
"Aggregate Purchase Price."
b. Certain Definitions. As used herein, each of the following terms has
the meaning set forth below, unless the context otherwise requires:
(i) "Affiliate" means, with respect to a specific Person referred to in
the relevant provision, another Person who or which controls or is controlled by
or is under common control with such specified Person.
(ii) "Certificates" means the Debentures duly executed by the Company and
issued on the Closing Date in the name of the Lender.
(iii) "Closing Date" means the date of the closing of the purchase and
sale of the Debentures, as provided herein; provided, however, that at the
option of the Company and the Finder, once subscriptions have been received and
accepted and the Purchase Price for the Lenders whose subscriptions have been
accepted have been received in escrow as provided herein, there may be an
Initial Closing Date followed by one or more additional Closing Dates, as
provided in Section 6 hereof.
(iv) "Closing Price" means the closing bid price during regular trading
hours of the Common Stock (in U.S. Dollars) on the Principal Trading Market, as
reported by the Reporting Service.
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(v) "Company Control Person" means each director, executive officer,
promoter, and such other Persons as may be deemed in control of the Company
pursuant to Rule 405 under the 1933 Act or Section 20 of the 1934 Act (as
defined below).
(vi) "Conversion Shares" means the shares of Common Stock issuable upon
conversion of the Debentures (including, if relevant, accrued interest on the
Debentures so converted).
(vii) "Effective Date" means the effective date of the Registration
Statement covering the Registrable Securities.
(viii) "Escrow Agent" means the escrow agent identified in the Joint
Escrow Instructions attached hereto as Annex II (the "Joint Escrow
Instructions").
(ix) "Escrow Funds" means the Purchase Price delivered to the Escrow Agent
as contemplated by Sections 1(c) and (d) hereof.
(x) "Escrow Property" means the Escrow Funds and the Certificates
delivered to the Escrow Agent as contemplated by Section 1(c) hereof.
(xi) "Holder" means the Person holding the relevant Securities at the
relevant time.
(xii) "Last Audited Date" means December 31, 2004.
(xiii) "Material Adverse Effect" means an event or combination of events,
which individually or in the aggregate, would reasonably be expected to (w)
adversely affect the legality, validity or enforceability of the Securities or
any of the Transaction Agreements, (x) have or result in a material adverse
effect on the results of operations, assets, prospects, or condition (financial
or otherwise) of the Company and the it subsidiaries, taken as a whole, (y)
adversely impair the Company's ability to perform fully on a timely basis its
obligations under any of the Transaction Agreements or the transactions
contemplated thereby, or (z) materially and adversely affect the value of the
rights granted to the Lender in the Transaction Agreements.
(xiv) "Person" means any living person or any entity, such as, but not
necessarily limited to, a corporation, partnership or trust.
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(xv) "Principal Trading Market" means The Over the Counter Bulletin Board.
(xvi) "Registrable Securities" has the meaning set forth in the
Registration Rights Agreement.
(xvii) "Registration Rights Agreement" means the Registration Rights
Agreement in the form annexed hereto as Annex IV, as executed by the Lender and
the Company simultaneously with the execution of this Agreement.
(xxviii) "Registration Statement" has the meaning set forth in the
Registration Rights Agreement.
(xxix) "Reporting Service" means Bloomberg LP or if that service is not
then reporting the relevant information regarding the Common Stock, a comparable
reporting service of national reputation selected by the Holders of the
Debentures and reasonably acceptable to the Company.
(xx) "Securities" means the Debentures and the Shares.
(xxi) "Shares" means the shares of Common Stock representing any or all of
the Conversion Shares.
(xxii) "State of Incorporation" means Delaware.
(xxiii) "Trading Day" means any day during which the Principal Trading
Market shall be open for business.
(xxiv) "Transaction Agreements" means the Securities Purchase Agreement,
the Debentures, the Joint Escrow Instructions, and the Registration Rights
Agreement, and includes all ancillary documents referred to in those agreements.
c. Form of Payment; Delivery of Certificates.
(i) The Lender shall pay the Purchase Price by delivering immediately
available good funds in United States Dollars to the Escrow Agent no later than
the date prior to the Closing Date.
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(ii) No later than the Closing Date, but in any event promptly following
payment by the Lender to the Escrow Agent of the Purchase Price, the Company
shall deliver the Certificates, each duly executed on behalf of the Company and
issued in the name of the Lender, to the Escrow Agent.
(iii) By signing this Agreement, each of the Lender and the Company,
subject to acceptance by the Escrow Agent, agrees to all of the terms and
conditions of, and becomes a party to, the Joint Escrow Instructions, all of the
provisions of which are incorporated herein by this reference as if set forth in
full.
d. Method of Payment. Payment into escrow of the Purchase Price shall be
made by wire transfer of funds to:
Bank of New York
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
ABA# 000000000
For credit to the account of Xxxxxxx & Xxxxxx LLP
Account No.: 630-0000000
Re: SVAD Transaction
2. LENDER REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO INFORMATION;
INDEPENDENT INVESTIGATION.
The Lender represents and warrants to, and covenants and agrees with, the
Company as follows:
a. Without limiting Lender's right to sell the Shares pursuant to the
Registration Statement or otherwise to sell any of the Securities in compliance
with the 1933 Act, the Lender is purchasing the Securities and will be acquiring
the Shares for its own account for investment only and not with a view towards
the public sale or distribution thereof and not with a view to or for sale in
connection with any distribution thereof.
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b. The Lender is (i) an "accredited investor" as that term is defined in
Rule 501 of the General Rules and Regulations under the 1933 Act by reason of
Rule 501(a)(3), (ii) experienced in making investments of the kind described in
this Agreement and the related documents, (iii) able, by reason of the business
and financial experience of its officers (if an entity) and professional
advisors (who are not affiliated with or compensated in any way by the Company
or any of its Affiliates or selling agents), to protect its own interests in
connection with the transactions described in this Agreement, and the related
documents, and (iv) able to afford the loss of the entire Purchase Price.
c. All subsequent offers and sales of the Securities by the Lender shall
be made pursuant to registration of the Shares under the 1933 Act or pursuant to
an exemption from registration.
d. The Lender understands that the Securities are being offered and sold
to it in reliance on specific exemptions from the registration requirements of
the 1933 Act and state securities laws and that the Company is relying upon the
truth and accuracy of, and the Lender's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of the Lender set
forth herein in order to determine the availability of such exemptions and the
eligibility of the Lender to acquire the Securities.
e. The Lender and its advisors, if any, have been furnished with all
materials relating to the business, finances and operations of the Company and
materials relating to the offer and sale of the Securities and the offer of the
Shares which have been requested by the Lender, including those set forth on
Annex V hereto. The Lender and its advisors, if any, have been afforded the
opportunity to ask questions of the Company and have received complete and
satisfactory answers to any such inquiries. Without limiting the generality of
the foregoing, the Lender has also had the opportunity to obtain and to review
the Company's filings on XXXXX listed on Annex VII hereto (the documents listed
on such Annex VII, to the extent available on XXXXX or otherwise provided to the
Lender as indicated on said Annex VII, collectively, the "Company's SEC
Documents").
f. The Lender understands that its investment in the Securities involves a
high degree of risk.
g. The Lender hereby represents that, in connection with its purchase of
the Securities, it has not relied on any statement or representation by the
Company or any of its rofficers, directors and employees or any of its attorneys
or agents, except as specifically set forth herein. .
h. The Lender understands that no United States federal or state agency or
any other government or governmental agency has passed on or made any
recommendation or endorsement of the Securities.
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i. This Agreement and the other Transaction Agreements to which the Lender
is a party, and the transactions contemplated thereby, have been duly and
validly authorized, executed and delivered on behalf of the Lender and are valid
and binding agreements of the Lender enforceable in accordance with their
respective terms, subject as to enforceability to general principles of equity
and to bankruptcy, insolvency, moratorium and other similar laws affecting the
enforcement of creditors' rights generally.
j. Except with respect to HB Investments, the Lender has taken no action
which would give rise to any claim by any Person for brokerage commission,
finder's fees or similar payments by the Company relating to this Agreement or
the transactions contemplated hereby. The Company shall have no obligation with
respect to such fees or with respect to any claims made by or on behalf of other
Persons for fees of a type contemplated in this paragraph that may be due in
connection with the transactions contemplated hereby. The Lender shall indemnify
and hold harmless each of the Company, its employees, officers, directors,
agents, and partners, and their respective Affiliates, from and against all
claims, losses, damages, costs (including the costs of preparation and
attorney's fees) and expenses suffered in respect of any such claimed or
existing fees, as and when incurred.
3. COMPANY REPRESENTATIONS, ETC. The Company represents and warrants to
the Lender as of the date hereof and as of the Closing Date that, except as
otherwise provided in the Annex IV hereto or as disclosed in the Company's SEC
Documents:
a. Rights of Others Affecting the Transactions. There are no preemptive
rights of any shareholder of the Company, as such, to acquire the Debentures or
the Shares. No party other than a Lender or an Other Lender has a currently
exercisable right of first refusal which would be applicable to any or all of
the transactions contemplated by the Transaction Agreements.
b. Status. The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Incorporation and has the
requisite corporate power to own its properties and to carry on its business as
now being conducted. The Company is duly qualified as a foreign corporation to
do business and is in good standing in each jurisdiction where the nature of the
business conducted or property owned by it makes such qualification necessary,
other than those jurisdictions in which the failure to so qualify would not have
or result in a Material Adverse Effect. The Company has registered its stock and
is obligated to file reports pursuant to Section 12 or Section 15(d) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"). The Common Stock
is listed and quoted on the Principal Trading Market. The Company has received
no notice, either oral or written, with respect to the continued eligibility of
the Common Stock for such listing and quotation on the Principal Trading Market,
and the Company has maintained all requirements on its part for the continuation
of such listing and quotation.
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c. Authorized Shares. The authorized capital stock of the Company consists
of 50,000,000 shares of Common Stock, $.001 par value per share, of which
approximately 30,509,491 shares are outstanding as of the date hereof. All
issued and outstanding shares of Common Stock have been duly authorized and
validly issued and are fully paid. The Company has sufficient authorized and
unissued shares of Common Stock as may be necessary to effect the issuance of
the Shares. The Shares have been duly authorized and, when issued upon
conversion of, or as interest on, the Debentures, each in accordance with its
respective terms, will be duly and validly issued, fully paid and non-assessable
and, except to the extent, if any, provided by the law of the State of
Incorporation, will not subject the Holder thereof to personal liability by
reason of being such Holder.
d. Transaction Agreements and Stock. This Agreement and each of the other
Transaction Agreements, and the transactions contemplated thereby, have been
duly and validly authorized by the Company, this Agreement has been duly
executed and delivered by the Company and this Agreement is, and the Debentures
and each of the other Transaction Agreements, when executed and delivered by the
Company, will be, valid and binding agreements of the Company enforceable in
accordance with their respective terms, subject as to enforceability to general
principles of equity and to bankruptcy, insolvency, moratorium, and other
similar laws affecting the enforcement of creditors' rights generally.
e. Non-contravention. The execution and delivery of this Agreement and
each of the other Transaction Agreements by the Company, the issuance of the
Securities, and the consummation by the Company of the other transactions
contemplated by this Agreement, the Debentures and the other Transaction
Agreements do not and will not conflict with or result in a breach by the
Company of any of the terms or provisions of, or constitute a default under (i)
the certificate of incorporation or by-laws of the Company, each as currently in
effect, (ii) 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, including any listing agreement for the Common
Stock except as herein set forth, or (iii) to its knowledge, any existing
applicable law, rule, or regulation or any applicable decree, judgment, or order
of any court, United States federal or state regulatory body, administrative
agency, or other governmental body having jurisdiction over the Company or any
of its properties or assets, except such conflict, breach or default which would
not have or result in a Material Adverse Effect.
f. Approvals. No authorization, approval or consent of any court,
governmental body, regulatory agency, self-regulatory organization, or stock
exchange or market or the shareholders of the Company is required to be obtained
by the Company for the issuance and sale of the Securities to the Lender as
contemplated by this Agreement, except such authorizations, approvals and
consents that have been obtained.
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g. Filings. None of the Company's SEC Documents contained, at the time
they were filed, any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
made therein in light of the circumstances under which they were made, not
misleading. Since September 30, 2004 the Company has timely filed all requisite
forms, reports and exhibits thereto required to be filed by the Company with the
SEC.
h. Absence of Certain Changes. Since the November 12, 2004, there has been
no material adverse change and no Material Adverse Effect, except as disclosed
in the Company's SEC Documents. Since the Last Audited Date, except as provided
in the Company's SEC Documents, the Company has not (i) incurred or become
subject to any material liabilities (absolute or contingent) except liabilities
incurred in the ordinary course of business consistent with past practices; (ii)
discharged or satisfied any material lien or encumbrance or paid any material
obligation or liability (absolute or contingent), other than current liabilities
paid in the ordinary course of business consistent with past practices; (iii)
declared or made any payment or distribution of cash or other property to
shareholders with respect to its capital stock, or purchased or redeemed, or
made any agreements to purchase or redeem, any shares of its capital stock; (iv)
sold, assigned or transferred any other tangible assets, or canceled any debts
or claims, except in the ordinary course of business consistent with past
practices; (v) suffered any substantial losses or waived any rights of material
value, whether or not in the ordinary course of business, or suffered the loss
of any material amount of existing business; (vi) made any changes in employee
compensation, except in the ordinary course of business consistent with past
practices; or (vii) experienced any material problems with labor or management
in connection with the terms and conditions of their employment.
i. Full Disclosure. There is no fact known to the Company (other than
general economic conditions known to the public generally or as disclosed in the
Company's SEC Documents) that has not been disclosed in writing to the Lender
that would reasonably be expected to have or result in a Material Adverse
Effect.
j. Absence of Litigation. Except as disclosed in the Company's SEC
Documents, there is no action, suit, proceeding, inquiry or investigation before
or by any court, public board or body pending or, to the knowledge of the
Company, threatened against or affecting the Company before or by any
governmental authority or nongovernmental department, commission, board, bureau,
agency or instrumentality or any other person, wherein an unfavorable decision,
ruling or finding would have a Material Adverse Effect or which would adversely
affect the validity or enforceability of, or the authority or ability of the
Company to perform its obligations under, any of the Transaction Agreements. The
Company is not aware of any valid basis for any such claim that (either
individually or in the aggregate with all other such events and circumstances)
could reasonably be expected to have a Material Adverse Effect. There are no
outstanding or unsatisfied judgments, orders, decrees, writs, injunctions or
stipulations to which the Company is a party or by which it or any of its
properties is bound, that involve the transaction contemplated herein or that,
alone or in the aggregate, could reasonably be expect to have a Material Adverse
Effect.
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k. Absence of Events of Default. Except as set forth in Section 3(e)
hereof, no Event of Default (or its equivalent term), as defined in the
respective agreement to which the Company is a party, and no event which, with
the giving of notice or the passage of time or both, would become an Event of
Default (or its equivalent term) (as so defined in such agreement), has occurred
and is continuing, which would have a Material Adverse Effect.
l. Prior Issues. During the twelve (12) months preceding the date hereof,
the Company has not issued any stock option grants, convertible securities or
any shares of its Common Stock.
m. No Undisclosed Liabilities or Events. The Company has no liabilities or
obligations other than those disclosed in the Transaction Agreements or the
Company's SEC Documents or those incurred in the ordinary course of the
Company's business since the Last Audited Date, or which individually or in the
aggregate, do not or would not have a Material Adverse Effect. No event or
circumstances has occurred or exists with respect to the Company or its
properties, business, operations, condition (financial or otherwise), or results
of operations, which, under applicable law, rule or regulation, requires public
disclosure or announcement prior to the date hereof by the Company but which has
not been so publicly announced or disclosed. There are no proposals currently
under consideration or currently anticipated to be under consideration by the
Board of Directors or the executive officers of the Company which proposal would
(X) change the certificate of incorporation or other charter document or by-laws
of the Company, each as currently in effect, with or without shareholder
approval, which change would reduce or otherwise adversely affect the rights and
powers of the shareholders of the Common Stock or (Y) materially or
substantially change the business, assets or capital of the Company, including
its interests in subsidiaries.
n. No Default. Neither the Company nor any of its subsidiaries is in
default in the performance or observance of any material obligation, agreement,
covenant or condition contained in any material indenture, mortgage, deed of
trust or other material instrument or agreement to which it is a party or by
which it or its property is bound.
o. No Integrated Offering. Neither the Company nor any of its Affiliates
nor any person acting on its or their behalf has, directly or indirectly, at any
time since July 1, 2004, made any offer or sales of any security or solicited
any offers to buy any security under circumstances that would eliminate the
availability of the exemption from registration under Regulation D in connection
with the offer and sale of the Securities as contemplated hereby.
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p. Dilution. The number of Shares issuable upon conversion of the
Debentures may have a dilutive effect on the ownership interests of the other
shareholders (and Persons having the right to become shareholders) of the
Company. The Company's executive officers and directors have studied and fully
understand the nature of the Securities being sold hereby and recognize that
they have such a potential dilutive effect. The board of directors of the
Company has concluded, in its good faith business judgment, that such issuance
is in the best interests of the Company. The Company specifically acknowledges
that its obligation to issue the Shares upon conversion of the Debentures is
binding upon the Company and enforceable regardless of the dilution such
issuance may have on the ownership interests of other shareholders of the
Company, and the Company will honor every Notice of Conversion (as defined in
the Debentures) relating to the conversion of the Debentures, unless the Company
is subject to an injunction (which injunction was not sought by the Company)
prohibiting the Company from doing so.
q. Fees to Brokers, Finders and Others. Except for HB Investments, the
Company has taken no action which would give rise to any claim by any Person for
brokerage commission, finder's fees or similar payments by Lender relating to
this Agreement or the transactions contemplated hereby. Lender shall have no
obligation with respect to such fees or with respect to any claims made by or on
behalf of other Persons for fees of a type contemplated in this paragraph that
may be due in connection with the transactions contemplated hereby. The Company
shall indemnify and hold harmless each of Lender, its employees, officers,
directors, agents, and partners, and their respective Affiliates, from and
against all claims, losses, damages, costs (including the costs of preparation
and attorney's fees) and expenses suffered in respect of any such claimed or
existing fees, as and when incurred.
4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
a. Transfer Restrictions. The Lender acknowledges that (1) the Securities
have not been and are not being registered under the provisions of the 1933 Act
and, except as provided in the Registration Rights Agreement or otherwise
included in an effective registration statement, the Shares have not been and
are not being registered under the 1933 Act, and may not be transferred unless
(A) subsequently registered thereunder or (B) the Lender shall have delivered to
the Company an opinion of counsel, reasonably satisfactory in form, scope and
substance to the Company, to the effect that the Securities to be sold or
transferred may be sold or transferred pursuant to an exemption from such
registration; (2) any sale of the Securities made in reliance on Rule 144
promulgated under the 1933 Act may be made only in accordance with the terms of
said Rule and further, if said Rule is not applicable, any resale of such
Securities under circumstances in which the seller, or the Person through whom
the sale is made, may be deemed to be an underwriter, as that term is used in
the 1933 Act, may require compliance with some other exemption under the 1933
Act or the rules and regulations of the SEC thereunder; and (3) neither the
Company nor any other Person is under any obligation to register the Securities
(other than pursuant to the Registration Rights Agreement) under the 1933 Act or
to comply with the terms and conditions of any exemption thereunder.
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b. Restrictive Legend. The Lender acknowledges and agrees that, until such
time as the Common Stock has been registered under the 1933 Act as contemplated
by the Registration Rights Agreement and sold in accordance with an effective
Registration Statement or otherwise in accordance with another effective
registration statement, the certificates and other instruments representing any
of the Securities (including the Shares) shall bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of any such Securities):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT
BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL
OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED.
c. Filings. The Company undertakes and agrees to make all necessary
filings in connection with the sale of the Securities to the Lender under any
United States laws and regulations applicable to the Company, or by any domestic
securities exchange or trading market, and to provide a copy thereof to the
Lender promptly after such filing.
d. Reporting Status. So long as the Lender beneficially owns any of the
Securities, the Company shall file all reports required to be filed with the SEC
pursuant to Section 13 or 15(d) of the 1934 Act, shall take all reasonable
action under its control to ensure that adequate current public information with
respect to the Company, as required in accordance with Rule 144(c)(2) of the
1933 Act, is publicly available, and shall not terminate its status as an issuer
required to file reports under the 1934 Act even if the 1934 Act or the rules
and regulations thereunder would permit such termination. The Company will take
all reasonable action under its control to maintain the continued listing and
quotation and trading of its Common Stock (including, without limitation, all
Registrable Securities) on the Principal Trading Market or a listing on the
NASDAQ/Small Cap or National Markets and, to the extent applicable to it, will
comply in all material respects with the Company's reporting, filing and other
obligations under the by-laws or rules of the Principal Trading Market and/or
the National Association of Securities Dealers, Inc., as the case may be, at
least through the date which is thirty (30) days after the later of the date on
which all of the Debentures have been converted.
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e. Use of Proceeds. The Company will use the proceeds received hereunder
(excluding amounts paid by the Company for legal fees, finder's fees and escrow
fees in connection with the sale of the Securities) for general corporate
purposes.
f. Available Shares. The Company shall have at all times authorized and
reserved for issuance, free from preemptive rights, a number of shares (the
"Minimum Available Shares") at least equal to the sum of one hundred fifty
percent (150%) of the number of shares of Common Stock issuable as may be
required to satisfy the conversion rights of the Holders of all outstanding
Convertible Debentures (whether such Convertible Debentures were originally
issued to the Holder, the Lender or to any other Holder or Lender). For the
purposes of such calculations, the Company should assume that all such
Debentures were then convertible without regard to any restrictions which might
limit any Lender's right to convert any of the Convertible Debentures.
g. Publicity, Filings, Releases, Etc. Each of the parties agrees that it
will not disseminate any information relating to the Transaction Agreements or
the transactions contemplated thereby, including issuing any press releases,
holding any press conferences or other forums, or filing any reports
(collectively, "Publicity"), without giving the other party reasonable advance
notice and an opportunity to comment on the contents thereof. Neither party will
include in any such Publicity any statement or statements or other material to
which the other party reasonably objects. In furtherance of the foregoing, the
Company will provide to the Lender drafts of the applicable text of any filing
intended to be made with the SEC which refers to the Transaction Agreements or
the transactions contemplated thereby as soon as practible (but at least three
(3) business days before such filing will be made and will not include in such
filing any statement or statements or other material to which the other party
reasonably objects. Notwithstanding the foregoing, each of the parties hereby
consents to the inclusion of the text of the Transaction Agreements in filings
made with the SEC (but any descriptive text accompanying or part of such filing
shall be subject to the other provisions of this paragraph).
5. TRANSFER AGENT INSTRUCTIONS.
a. The Company warrants that, with respect to the Securities, other than
the stop transfer instructions to give effect to Section 4(a) hereof, it will
give its transfer agent no instructions inconsistent with instructions to issue
Common Stock from time to time upon conversion of the Debentures in such amounts
as specified from time to time by the Company to the transfer agent, bearing the
restrictive legend specified in Section 4(b) of this Agreement prior to
registration of the Shares under the 1933 Act, registered in the name of the
Lender or its nominee and in such denominations to be specified by the Lender in
connection with each conversion of the Debentures. Except as so provided, the
Shares shall otherwise be freely transferable on the books and records of the
Company as and to the extent provided in this Agreement and the Registration
Rights Agreement. Nothing in this Section shall affect in any way the Lender's
obligations and agreement to comply with all applicable securities laws upon
resale of the Securities. If the Lender provides the Company with an opinion of
counsel reasonably satisfactory to the Company that registration of a resale by
the Lender of any of the Securities in accordance with clause (1)(B) of Section
4(a) of this Agreement is not required under the 1933 Act, the Company shall
(except as provided in clause (2) of Section 4(a) of this Agreement) permit the
transfer of the Securities and, in the case of the Conversion Shares, promptly
instruct the Company's transfer agent to issue one or more certificates for
Common Stock without legend in such name and in such denominations as specified
by the Lender.
14
b. In lieu of delivering physical certificates representing the Common
Stock issuable upon conversion, provided the Company's transfer agent is
participating in the Depository Trust Company ("DTC") Fast Automated Securities
Transfer program, upon request of the Holder and its compliance with the
provisions contained in this paragraph, so long as the certificates therefor do
not bear a legend and the Holder thereof is not obligated to return such
certificate for the placement of a legend thereon, the Company shall use its
best efforts to cause its transfer agent to electronically transmit the Common
Stock issuable upon conversion to the Holder by crediting the account of
Holder's Prime Broker with DTC through its Deposit Withdrawal Agent Commission
system.
c. The holder of any Debentures shall be entitled to exercise its
conversion privilege with respect to the Debentures notwithstanding the
commencement of any case under 11 U.S.C. ss.101 et seq. (the "Bankruptcy Code").
In the event the Company is a debtor under the Bankruptcy Code, the Company
hereby waives, to the fullest extent permitted, any rights to relief it may have
under 11 U.S.C. ss.362 in respect of such holder's conversion privilege. The
Company hereby waives, to the fullest extent permitted, any rights to relief it
may have under 11 U.S.C. ss.362 in respect of the conversion of the Debentures.
The Company agrees, without cost or expense to such holder, to take or to
consent to any and all action reasonably necessary to effectuate relief under 11
U.S.C. ss.362.
d. The Company will authorize its transfer agent to give information
relating to the Company directly to the Lender or the Lender's representatives
upon the request of the Lender or any such representative, to the extent such
information relates to (i) the status of shares of Common Stock issued or
claimed to be issued to the Lender in connection with a Notice of Conversion, or
(ii) the number of outstanding shares of Common Stock of all shareholders as of
a current or other specified date. On the Closing Date, the Company will provide
the Lender with a copy of the authorization so given to the transfer agent.
15
6. CLOSING DATE.
a. The Closing Date shall occur on the date which is the first Trading Day
after each of the conditions contemplated by Sections 7 and 8 hereof shall have
either been satisfied or been waived by the party in whose favor such conditions
run; provided, however, that, at the option of the Company, the Closing Date may
be deferred to allow for additional subscriptions (up to the Maximum Purchase
Price) to be included in the transactions effected on the Closing Date. If
additional subscriptions and the related Purchase Price are received after the
Closing Date, one or more additional Closing Dates may be held by the Company.
b. Each closing of the purchase and issuance of Debentures shall occur on
the Closing Date at the offices of the Escrow Agent and shall take place no
later than 3:00 P.M., New York time, on such day or such other time as is
mutually agreed upon by the Company and the Finder.
c. Notwithstanding anything to the contrary contained herein, the Escrow
Agent will be authorized to release the Escrow Funds to the Company and to
others and to release the other Escrow Property on the Closing Date upon
satisfaction of the conditions set forth in Sections 7 and 8 hereof and as
provided in the Joint Escrow Instructions.
7. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The Lender understands that the Company's obligation to sell the
Debentures and the Warrants to the Lender pursuant to this Agreement on the
relevant Closing Date is conditioned upon: a. The execution and delivery of this
Agreement, the Registration Rights Agreement, and an Investor Questionnaire in
the form of Annex VIII attached hereto, by the Lender;
b. Delivery by the Lender to the Escrow Agent of good funds as payment in
full of an amount equal to the Purchase Price for the Securities in accordance
with this Agreement;
c. The accuracy on such Closing Date of the representations and warranties
of the Lender contained in this Agreement, each as if made on such date, and the
performance by the Lender on or before such date of all covenants and agreements
of the Lender required to be performed on or before such date; and
16
d. There shall not be in effect any law, rule or regulation prohibiting or
restricting the transactions contemplated hereby, or requiring any consent or
approval which shall not have been obtained.
8. CONDITIONS TO THE LENDER'S OBLIGATION TO PURCHASE.
The Company understands that the Lender's obligation to purchase the
Debentures on the relevant Closing Date is conditioned upon:
a. The execution and delivery of this Agreement and the other Transaction
Agreements by the Company;
b. Delivery by the Company to the Escrow Agent of the Certificates in
accordance with this Agreement;
c. The accuracy in all material respects on such Closing Date of the
representations and warranties of the Company contained in this Agreement, each
as if made on such date, and the performance by the Company on or before such
date of all covenants and agreements of the Company required to be performed on
or before such date;
d. On such Closing Date, the Registration Rights Agreement shall be in
full force and effect and the Company shall not be in default thereunder;
e. On such Closing Date, the Lender shall have received an opinion of
counsel for the Company, dated the Initial Closing Date (provided, however, that
such counsel shall advise the Escrow Agent in writing after the Initial Closing
Date if the opinion issued on the Initial Closing Date would not be issued on
any subsequent Closing Date), in form, scope and substance reasonably
satisfactory to the Lender, substantially to the effect set forth in Annex III
attached hereto;
f. There shall not be in effect any law, rule or regulation prohibiting or
restricting the transactions contemplated hereby, or requiring any consent or
approval which shall not have been obtained; and
g. From and after the date hereof to and including such Closing Date, each
of the following conditions will remain in effect: (i) the trading of the Common
Stock shall not have been suspended by the SEC or on the Principal Trading
Market; (ii) trading in securities generally on the Principal Trading Market
shall not have been suspended or limited; (iii), no minimum prices shall been
established for securities traded on the Principal Trading Market; and (iv)
there shall not have been any material adverse change in any financial market
that, in the reasonable judgment of the Lender, makes it impracticable or
inadvisable to purchase the Debentures.
17
9. INDEMNIFICATION.
a. The Company agrees to indemnify and hold harmless Lender and its
officers, directors, employees, and agents, and each Lender Control Person from
and against any losses, claims, damages, liabilities or expenses incurred
(collectively, "Damages"), joint or several, and any action in respect thereof
to which Lender, its partners, Affiliates, officers, directors, employees, and
duly authorized agents, and any such Lender Control Person becomes subject to,
resulting from, arising out of or relating to any misrepresentation, breach of
warranty or nonfulfillment of or failure to perform any covenant or agreement on
the part of Company contained in this Agreement, as such Damages are incurred,
except to the extent such Damages result primarily from Lender's failure to
perform any covenant or agreement contained in this Agreement or Lender's or its
officers, directors, employees, agents or Lender Control Persons negligence,
recklessness or bad faith in performing its obligations under this Agreement.
b. All claims for indemnification by any Indemnified Party (as defined
below) under this Section 9 shall be asserted and resolved as follows:
(i) In the event any claim or demand in respect of which any Person
claiming indemnification under any provision of this Section 9 (an "Indemnified
Party") might seek indemnity under Section 9(a) is asserted against or sought to
be collected from such Indemnified Party by a Person other than a party hereto
or an Affiliate thereof (a "Third Party Claim"), the Indemnified Party shall
deliver a written notification, enclosing a copy of all papers served, if any,
and specifying the nature of and basis for such Third Party Claim and for the
Indemnified Party's claim for indemnification that is being asserted under any
provision of this Section 9 against any Person (the "Indemnifying Party"),
together with the amount or, if not then reasonably ascertainable, the estimated
amount, determined in good faith, of such Third Party Claim (a "Claim Notice")
with reasonable promptness to the Indemnifying Party. If the Indemnified Party
fails to provide the Claim Notice with reasonable promptness after the
Indemnified Party receives notice of such Third Party Claim, the Indemnifying
Party shall not be obligated to indemnify the Indemnified Party with respect to
such Third Party Claim to the extent that the Indemnifying Party's ability to
defend has been prejudiced by such failure of the Indemnified Party. The
Indemnifying Party shall notify the Indemnified Party as soon as practicable
within the period ending thirty (30) calendar days following receipt by the
Indemnifying Party of either a Claim Notice or an Indemnity Notice (as defined
below) (the "Dispute Period") whether the Indemnifying Party disputes its
liability or the amount of its liability to the Indemnified Party under this
Section 9 and whether the Indemnifying Party desires, at its sole cost and
expense, to defend the Indemnified Party against such Third Party Claim. The
following provisions shall also apply.
18
(x) If the Indemnifying Party notifies the Indemnified Party
within the Dispute Period that the Indemnifying Party desires
to defend the Indemnified Party with respect to the Third
Party Claim pursuant to this Section 9(b), then the
Indemnifying Party shall have the right to defend, with
counsel reasonably satisfactory to the Indemnified Party, at
the sole cost and expense of the Indemnifying Party, such
Third Party Claim by all appropriate proceedings, which
proceedings shall be vigorously and diligently prosecuted by
the Indemnifying Party to a final conclusion or will be
settled at the discretion of the Indemnifying Party (but only
with the consent of the Indemnified Party in the case of any
settlement that provides for any relief other than the payment
of monetary damages or that provides for the payment of
monetary damages as to which the Indemnified Party shall not
be indemnified in full pursuant to Section 9(a)). The
Indemnifying Party shall have full control of such defense and
proceedings, including any compromise or settlement thereof;
provided, however, that the Indemnified Party may, at the sole
cost and expense of the Indemnified Party, at any time prior
to the Indemnifying Party's delivery of the notice referred to
in the first sentence of this subparagraph (x), file any
motion, answer or other pleadings or take any other action
that the Indemnified Party reasonably believes to be necessary
or appropriate protect its interests; and provided further,
that if requested by the Indemnifying Party, the Indemnified
Party will, at the sole cost and expense of the Indemnifying
Party, provide reasonable cooperation to the Indemnifying
Party in contesting any Third Party Claim that the
Indemnifying Party elects to contest. The Indemnified Party
may participate in, but not control, any defense or settlement
of any Third Party Claim controlled by the Indemnifying Party
pursuant to this subparagraph (x), and except as provided in
the preceding sentence, the Indemnified Party shall bear its
own costs and expenses with respect to such participation.
Notwithstanding the foregoing, the Indemnified Party may take
over the control of the defense or settlement of a Third Party
Claim at any time if it irrevocably waives its right to
indemnity under Section 9(a) with respect to such Third Party
Claim.
(y) If the Indemnifying Party fails to notify the Indemnified
Party within the Dispute Period that the Indemnifying Party
desires to defend the Third Party Claim pursuant to Section
9(b), or if the Indemnifying Party gives such notice but fails
to prosecute vigorously and diligently or settle the Third
Party Claim, or if the Indemnifying Party fails to give any
notice whatsoever within the Dispute Period, then the
Indemnified Party shall have the right to defend, at the sole
cost and expense of the Indemnifying Party, the Third Party
Claim by all appropriate proceedings, which proceedings shall
be prosecuted by the Indemnified Party in a reasonable manner
and in good faith or will be settled at the discretion of the
Indemnified Party (with the consent of the Indemnifying Party,
which consent will not be unreasonably withheld). The
Indemnified Party will have full control of such defense and
proceedings, including any compromise or settlement thereof;
provided, however, that if requested by the Indemnified Party,
the Indemnifying Party will, at the sole cost and expense of
the Indemnifying Party, provide reasonable cooperation to the
Indemnified Party and its counsel in contesting any Third
Party Claim which the Indemnified Party is contesting.
Notwithstanding the foregoing provisions of this subparagraph
(y), if the Indemnifying Party has notified the Indemnified
Party within the Dispute Period that the Indemnifying Party
disputes its liability or the amount of its liability
hereunder to the Indemnified Party with respect to such Third
Party Claim and if such dispute is resolved in favor of the
Indemnifying Party in the manner provided in subparagraph(z)
below, the Indemnifying Party will not be required to bear the
costs and expenses of the Indemnified Party's defense pursuant
to this subparagraph (y) or of the Indemnifying Party's
participation therein at the Indemnified Party's request, and
the Indemnified Party shall reimburse the Indemnifying Party
in full for all reasonable costs and expenses incurred by the
Indemnifying Party in connection with such litigation. The
Indemnifying Party may participate in, but not control, any
defense or settlement controlled by the Indemnified Party
pursuant to this subparagraph (y), and the Indemnifying Party
shall bear its own costs and expenses with respect to such
participation.
19
(z) If the Indemnifying Party notifies the Indemnified Party
that it does not dispute its liability or the amount of its
liability to the Indemnified Party with respect to the Third
Party Claim under Section 9(a) or fails to notify the
Indemnified Party within the Dispute Period whether the
Indemnifying Party disputes its liability or the amount of its
liability to the Indemnified Party with respect to such Third
Party Claim, the amount of Damages specified in the Claim
Notice shall be conclusively deemed a liability of the
Indemnifying Party under Section 9(a) and the Indemnifying
Party shall pay the amount of such Damages to the Indemnified
Party on demand. If the Indemnifying Party has timely disputed
its liability or the amount of its liability with respect to
such claim, the Indemnifying Party and the Indemnified Party
shall proceed in good faith to negotiate a resolution of such
dispute; provided, however, that it the dispute is not
resolved within thirty (30) days after the Claim Notice, the
Indemnifying Party shall be enlisted to institute such legal
action as it deems appropriate.
(ii) In the event any Indemnified Party should have a claim under Section
9(a) against the Indemnifying Party that does not involve a Third Party Claim,
the Indemnified Party shall deliver a written notification of a claim for
indemnity under Section 9(a) specifying the nature of and basis for such claim,
together with the amount or, if not then reasonably ascertainable, the estimated
amount, determined in good faith, of such claim (an "Indemnity Notice") with
reasonable promptness to the Indemnifying Party. The failure by any Indemnified
Party to give the Indemnity Notice shall not impair such party's rights
hereunder except to the extent that the Indemnifying Party demonstrates that it
has been irreparably prejudiced thereby. If the Indemnifying Party notifies the
Indemnified Party that it does not dispute the claim or the amount of the claim
described in such Indemnity Notice or fails to notify the Indemnified Party
within the Dispute Period whether the Indemnifying Party disputes the claim or
the amount of the claim described in such Indemnity Notice, the amount of
Damages specified in the Indemnity Notice will be conclusively deemed a
liability of the Indemnifying Party under Section 9(a) and the Indemnifying
Party shall pay the amount of such Damages to the Indemnified Party on demand.
If the Indemnifying Party has timely disputed its liability or the amount of its
liability with respect to such claim, the Indemnifying Party and the Indemnified
Party shall proceed in good faith to negotiate a resolution of such dispute;
provided, however, that it the dispute is not resolved within thirty (30) days
after the Claim Notice, the Indemnifying Party shall be enlisted to institute
such legal action as it deems appropriate.
20
c. The indemnity agreements contained herein shall be in addition to (i)
any cause of action or similar rights of the indemnified party against the
indemnifying party or others, and (ii) any liabilities the indemnifying party
may be subject to.
10. JURY TRIAL WAIVER. The Company and the Lender hereby waive a trial by
jury in any action, proceeding or counterclaim brought by either of the Parties
hereto against the other in respect of any matter arising out or in connection
with the Transaction Agreements.
11. GOVERNING LAW: MISCELLANEOUS.
a. This Agreement shall be governed by and interpreted in accordance with
the laws of the State of New York for contracts to be wholly performed in such
state and without giving effect to the principles thereof regarding the conflict
of laws. Each of the parties consents to the exclusive jurisdiction of the
federal courts whose districts encompass any part of the City of New York or the
state courts of the State of New York sitting in the City of New York in
connection with any dispute arising under this Agreement or any of the other
Transaction Agreements and hereby waives, to the maximum extent permitted by
law, any objection, including any objection based on forum non conveniens, to
the bringing of any such proceeding in such jurisdictions. To the extent
determined by such court, the Company shall reimburse the Lender for any
reasonable legal fees and disbursements incurred by the Lender in enforcement of
or protection of any of its rights under any of the Transaction Agreements.
b. Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
21
c. This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties hereto.
d. All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the context may require.
e. A facsimile transmission of this signed Agreement shall be legal and
binding on all parties hereto.
f. This Agreement may be signed in one or more counterparts, each of which
shall be deemed an original.
g. The headings of this Agreement are for convenience of reference and
shall not form part of, or affect the interpretation of, this Agreement.
h. If any provision of this Agreement shall be invalid or unenforceable in
any jurisdiction, such invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of this Agreement or the validity or
enforceability of this Agreement in any other jurisdiction.
i. This Agreement may be amended only by an instrument in writing signed
by the party to be charged with enforcement thereof.
k. This Agreement supersedes all prior agreements and understandings among
the parties hereto with respect to the subject matter hereof.
12. NOTICES. Any notice required or permitted hereunder shall be given in
writing (unless otherwise specified herein) and shall be deemed effectively
given on the earliest of
(a) the date delivered, if delivered by personal delivery as against
written receipt therefor or by confirmed facsimile transmission,
(b) the seventh business day after deposit, postage prepaid, in the
United States Postal Service by registered or certified mail, or
22
(c) the third business day after mailing by domestic or
international express courier, with delivery costs and fees prepaid,
in each case, addressed to each of the other parties thereunto entitled at the
following addresses (or at such other addresses as such party may designate by
ten (10) days' advance written notice similarly given to each of the other
parties hereto):
Company: SALIVA DIAGNOSTIC SYSTEMS, INC.
at its address at the head of this Agreement
Attn: Xxx Xxxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
with a copy to:
Xxxxxxx & Prager LLP, Esqs.
00 Xxxxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopier No. (000) 000-0000
Lender: At the address set forth on the signature page of this Agreement.
23
with a copy to:
Escrow Agent: Xxxxxxx & Prager LLP
00 Xxxxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxxx, Xxx.
Xxx Xxxx, Xxx Xxxx 00000
Telephone No.: (000) 000-0000
Telecopier No. (000) 000-0000
13. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The Company's and the
Lender's representations and warranties herein shall survive the execution and
delivery of this Agreement and the delivery of the Certificates and the payment
of the Purchase Price, and shall inure to the benefit of the Lender and the
Company and their respective successors and assigns.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK.]
24
IN WITNESS WHEREOF, this Agreement has been duly executed by the Lender
(if an entity, by one of its officers thereunto duly authorized) as of the date
set forth below.
PURCHASE PRICE: $ _______________________
SIGNATURES FOR LENDERS
IN WITNESS WHEREOF, the undersigned represents that the foregoing
statements are true and correct and that it has caused this Securities Purchase
Agreement to be duly executed on its behalf this day of January , 2005.
------------------------------ -------------------------
Name of Lender (Address)
--------------------------
By:______________________________
(Signature of Authorized Person)
Name and Title: _________________________
-----------------------------------
Jurisdiction of Incorporation or Organization
As of the date set forth below, the undersigned hereby accepts this Agreement
and represents that the foregoing statements are true and correct and that it
has caused this Securities Purchase Agreement to be duly executed on its behalf.
SALIVA DIAGNOSTIC SYSTEMS, INC.
By: __________________________
Title: ________________________
Date:________________________ , 2005