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                                                                    EXHIBIT 4.16


                          CERTIFICATE OF DESIGNATIONS,
                             PREFERENCES AND RIGHTS

                                       OF

                       1998-B CONVERTIBLE PREFERRED STOCK

                                       OF

                         SALIVA DIAGNOSTIC SYSTEMS, INC.

                         (Pursuant to Section 151 of the
                        Delaware General Corporation Law)




           Saliva Diagnostic Systems, Inc., a corporation organized and existing
under the General Corporation Law of the State of Delaware (the "Corporation"),
hereby certifies that the following resolutions were adopted by the Board of
Directors of the Corporation pursuant to authority of the Board of Directors as
required by Section 151 of the Delaware General Corporation Law:

           RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of this Corporation (the "Board of Directors" or the "Board")
in accordance with the provisions of its Certificate of Incorporation, as
amended, the Board of Directors hereby authorizes a series of the Corporation's
previously authorized Preferred Stock, par value $0.01 per share (the "Preferred
Stock"), and hereby states the designation and number of shares, and fixes the
relative rights, preferences, privileges, powers and restrictions thereof as
follows:

           1998-B Convertible Preferred Stock:

                            I. Designation and Amount

           The designation of this series, which consists of One Thousand Five
Hundred (1,500) shares of Preferred Stock, is 1998-B Convertible Preferred Stock
(the "1998-B Preferred Stock") and the stated value shall be One Thousand
Dollars ($1,000) per share (the "Stated Value").

                                    II. Rank

           All 1998-B Preferred Stock shall rank (i) prior to the Corporation's
Common Stock, par value $.01 per share (the "Common Stock"); (ii) pari passu
with the Corporation's 1998-A Convertible Preferred Stock; (iii) prior to any
class or series of capital stock of the Corporation hereafter created (unless,
with the consent of the holders of the 1998-B Preferred Stock obtained in
accordance with Article IX hereof, such class or series of capital stock
specifically ranks, by its terms, pari passu with the 1998-B Preferred Stock
(together with the 1998-A Convertible Preferred Stock, the "Pari Passu
Securities")); and (iv) junior to any class or series of capital stock of the



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Corporation hereafter created (with the consent of the holders of the 1998-B
Preferred Stock obtained in accordance with Article IX hereof) that specifically
ranks, by its terms, senior to the 1998-B Preferred Stock (collectively, the
"Senior Securities"), in each case as to distribution of assets upon
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary.

                                  III. Dividend

           The holder of the 1998-B Preferred Stock shall be entitled to receive
when, as and if declared by the Board of Directors out of funds legally
available for such purpose, cumulative dividends at an annual rate of six
percent (6%) per annum (the "Dividend"), commencing on the date of issuance. The
Dividend shall be payable simultaneously with any conversion of the 1998-B
Preferred Stock and as set forth in Articles IV through VII hereof.

                                 IV. Liquidation

                A.      If the Corporation shall commence a voluntary case under
the Federal bankruptcy laws or any other applicable Federal or State bankruptcy,
insolvency or similar law, or consent to the entry of an order for relief in an
involuntary case under any law or to the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or other similar official) of the
Corporation or of any substantial part of its property, or make an assignment
for the benefit of its creditors, or admit in writing its inability to pay its
debts generally as they become due, or if a decree or order for relief in
respect of the Corporation shall be entered by a court having jurisdiction in
the premises in an involuntary case under the Federal bankruptcy laws or any
other applicable Federal or State bankruptcy, insolvency or similar law
resulting in the appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or other similar official) of the Corporation or of any
substantial part of its property, or ordering the winding up or liquidation of
its affairs, and any such decree or order shall be unstayed and in effect for a
period of ninety (90) consecutive days and, on account of any such event (a
"Liquidation Event"), the Corporation shall liquidate, dissolve or wind up, or
if the Corporation shall otherwise liquidate, dissolve or wind up, no
distribution shall be made to the holders of any shares of capital stock of the
Corporation (other than Senior Securities) upon liquidation, dissolution or
winding up unless prior thereto, the holders of shares of 1998-B Preferred Stock
shall have received the Stated Value, plus the Dividend for the period ending on
the date of the Liquidation Event, with respect to each share. If upon the
occurrence of a Liquidation Event, the assets and funds available for
distribution among the holders of the 1998-B Preferred Stock and holders of Pari
Passu Securities shall be insufficient to permit the payment to such holders of
the preferential amounts payable thereon, then the entire assets and funds of
the Corporation legally available for distribution to the 1998-B Preferred Stock
and the Pari Passu Securities shall be distributed ratably among such shares in
proportion to the ratio that the Stated Value of each such share bears to the
aggregate Stated Value of all such shares.



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                   V. Cash Payment of Dividend by Corporation

           The Corporation shall have the right, in its sole discretion, upon
receipt of a Notice of Conversion pursuant to Article VI.D or in the event of a
Mandatory Conversion effected in accordance with Article VII hereof, to pay any
portion of the Dividend payable upon such conversion for cash. All cash payments
hereunder shall be paid in lawful money of the United States of America at such
address for the holder as appears on the record books of the Corporation (or at
such other address as such holder shall hereafter give to the Corporation by
written notice).

                   VI. Conversion at the Option of the Holder

           A.   Each holder of shares of 1998-B Preferred Stock may, at its
option, convert its shares of 1998-B Preferred Stock into Common Stock in the
following amounts and at the following times (an "Optional Conversion").

                (a)   Each share of 1998-B Preferred Stock shall be convertible
into such number of fully paid and nonassessable shares of Common Stock as is
determined by one of the following formulas, as applicable:

                      (1)   if the Dividend has been paid in cash by the Company
in accordance with Article V hereof,

                                      1,000
                                 ---------------
                                       CP

                      where: CP = Conversion Price (as defined in Article VI.B);
                             or

                      (2) if the Dividend has not been paid in cash by the
                          Company,

                            (.06)(N/365)(1,000) + 1,000
                            ---------------------------
                                        CP

                      where: CP= Conversion Price (as defined in Article VI.B), 
                             and

                             N= the number of days between the date of issuance 
                             of the 1998-B Preferred Stock to the holder and the
                             Conversion Date (as defined in Article VI.D(d)).

                (b) A holder of shares of 1998-B Preferred Stock shall have the 
right to effect an Optional Conversion of the shares of 1998-B Preferred Stock
originally issued to the holder at any time from and after ninetieth (90th) day
following the date of issuance.

           B.   The "Conversion Price" shall be the lesser of (I) 100% of the
Market Price on the date a share of 1998-B Preferred Stock is initially issued
to the holder, and (ii) 80% of the Market Price on the Conversion Date (as
defined in paragraph D(d) of this Article VI). For the purposes hereof, "Market
Price" shall mean the average of the closing bid prices of the Common 


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Stock, as reported by the OTC Bulletin Board or any principal securities
exchange or market upon which the Common Stock is or becomes traded, over a
period of five consecutive trading days ending on the day immediately preceding
the date in question.

           C.   The Conversion Price shall be subject to adjustment from time to
time as follows:

                (a)   Adjustment to Conversion Price Due to Stock Split, Stock 
Dividend, Etc. If at any time when the 1998-B Preferred Stock is issued and
outstanding, the number of outstanding shares of Common Stock is increased by a
stock split, stock dividend, or other similar event, the Conversion Price shall
be proportionately reduced, or if the number of outstanding shares of Common
Stock is decreased by a reverse stock split, combination or reclassification of
shares, or other similar event, the Conversion Price shall be proportionately
increased. In such event the Corporation shall notify the Transfer Agent of such
change on or before the effective date thereof.

                (b)   Adjustment Due to Merger, Consolidation, Etc. If, at any 
time when 1998-B Preferred Stock is issued and outstanding and prior to the
conversion of all 1998-B Preferred Stock, there shall be (i) any
reclassification or change of the outstanding shares of Common Stock (other than
a change in par value, or from par value to no par value, or from no par value
to par value, or as a result of a subdivision or combination), (ii) any
consolidation or merger of the Corporation with any other corporation (other
than a merger in which the Corporation is the surviving or continuing
corporation and its capital stock is unchanged), (iii) any sale or transfer of
all or substantially all of the assets of the Corporation or (iv) any share
exchange pursuant to which all of the outstanding shares of Common Stock are
converted into other securities or property, then the holders of 1998-B
Preferred Stock shall, upon being given at least thirty (30) days prior written
notice of such transaction, thereafter have the right to purchase and receive
upon conversion of 1998-B Preferred Stock, upon the basis and upon the terms and
conditions specified herein and in lieu of the shares of Common Stock
immediately theretofore issuable upon conversion, such shares of stock and/or
securities or other property as may be issued or payable with respect to or in
exchange for the number of shares of Common Stock immediately theretofore
receivable upon the conversion of 1998-B Preferred Stock held by such holders
had such merger, consolidation, exchange of shares, recapitalization,
reorganization or other similar event not taken place, and in any such case
appropriate provisions shall be made with respect to the rights and interests of
the holders of the 1998-B Preferred Stock to the end that the provisions hereof
(including, without limitation, provisions for adjustment of the Conversion
Price and of the number of shares issuable upon conversion of the 1998-B
Preferred Stock) shall thereafter be applicable, as nearly as may be practicable
in relation to any shares of stock or securities thereafter deliverable upon the
conversion thereof. The above provisions shall similarly apply to successive
reclassifications, consolidations, mergers, sales, transfers or share exchanges.

                (c)   No Fractional Shares. If any adjustment under this Article
VI.C would create a fractional share of Common Stock or a right to acquire a
fractional share of Common Stock, such fractional share shall be disregarded and
the number of shares of Common Stock issuable upon conversion shall be the next
higher number of shares.


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           D.   In order to convert 1998-B Preferred Stock into full shares of
Common Stock, a holder shall: (i) fax a copy of the fully executed notice of
conversion in the form attached hereto ("Notice of Conversion") to the
Corporation at the office of the Corporation (fax number 360-254-7942), with a
copy to the Corporation's Transfer Agent (fax number 718-921-8327 or such other
number as the Corporation shall specify in a notice to the holder) for the
1998-B Preferred Stock that the holder elects to convert the same, which notice
shall specify the number of shares of 1998-B Preferred Stock to be converted,
the applicable Conversion Price and a calculation of the number of shares of
Common Stock issuable upon such conversion (together with a copy of the first
page of each certificate to be converted) prior to 6:00 p.m. New York City time
(the "Conversion Notice Deadline") on the date of conversion specified on the
Notice of Conversion; and (ii) surrender the original certificates representing
the 1998-B Preferred Stock being converted (the "Preferred Stock Certificates"),
duly endorsed, along with a copy of the Notice of Conversion within two (2)
business days thereafter to the office of the Corporation; provided, however,
that the Corporation shall not be obligated to issue certificates evidencing the
shares of Common Stock issuable upon such conversion unless either the Preferred
Stock Certificates are delivered to the Corporation as provided above, or the
holder notifies the Corporation that such certificates have been lost, stolen or
destroyed (subject to the requirements of subparagraph (a) below). In the case
of a dispute as to the calculation of the Conversion Price, the Corporation
shall promptly issue such number of shares of Common Stock to purchase shares of
Common Stock that are n disputed in accordance with subparagraph (b) below. The
Corporation shall submit the disputed calculations to its outside accountant via
facsimile within five (5) business days of receipt of the Notice of Conversion.
The accountant shall audit the calculations and notify the Corporation and the
holder of the results no later than three (3) business days from the time it
receives the disputed calculations. The accountant's calculation shall be deemed
conclusive absent manifest error.

                (a)   Lost or Stolen Certificates. Upon receipt by the 
Corporation of evidence of the loss, theft, destruction or mutilation of any
Preferred Stock Certificates representing shares of 1998-B Preferred Stock, and
(in the case of loss, theft or destruction) of indemnity or security reasonably
satisfactory to the Corporation, and upon surrender and cancellation of the
Preferred Stock Certificate(s), if mutilated, the Corporation shall execute and
deliver new Preferred Stock Certificate(s) of like tenor and date. However, the
Corporation shall not be obligated to reissue such lost or stolen Preferred
Stock Certificate(s) if the holder contemporaneously requests the Corporation to
convert such 1998-B Preferred Stock.

                (b)   Delivery of Common Stock Upon Conversion. Upon the 
surrender of certificates as described above from a holder of 1998-B Preferred
Stock accompanied by a Notice of Conversion, the Corporation shall issue and,
within two (2) business days (the "Delivery Period") after such surrender (or,
in the case of lost, stolen or destroyed certificates, after provision of
agreement and indemnification pursuant to subparagraph (a) above), request that
its Transfer Agent deliver to or upon the order of the holder (i) that number of
shares of Common Stock for the portion of the shares of 1998-B Preferred Stock
converted as shall be determined in accordance herewith and (ii) a certificate
representing the balance of the shares of 1998-B Preferred Stock not converted,
if any.

                (c)   No Fractional Shares. If any conversion of 1998-B 
Preferred Stock would result in a fractional share of 



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Common Stock or the right to acquire a fractional share of Common Stock, such
fractional share shall be disregarded and the number of shares of Common Stock
issuable upon conversion of the 1998-B Preferred Stock shall be the next higher
number of shares.

                (d)   Conversion Date. The "Conversion Date" shall be the date
specified in the Notice of Conversion, provided (i) that the advance copy of the
Notice of Conversion is faxed to the Corporation before 6:00 p.m., New York City
time, on the Conversion Date, and (ii) that the original Preferred Stock
Certificate(s), duly endorsed, are surrendered along with a copy of the Notice
of Conversion within two (2) business days thereafter to the office of the
Corporation. The person or persons entitled to receive the shares of Common
Stock issuable upon conversion shall be treated for all purposes as the record
holder or holders of such securities as of the Conversion Date and all rights
with respect to the shares of 1998-B Preferred Stock surrendered shall forthwith
terminate except the right to receive the shares of Common Stock or other
securities or property issuable on such conversion.

           E.   The Corporation shall at all times have authorized and reserved
for issuance, or shall have taken steps to ensure there will be available for
issuance at the time of conversion, a number of shares equal to 150% of the
authorized but unissued Common Stock to provide for the conversion of the 1998-B
Preferred Stock outstanding at the then current Conversion Price in accordance
with the provisions of the Securities Purchase Agreement. Notwithstanding
anything to the contrary herein, shares of Common Stock so reserved shall be
allocated for issuance upon conversion of the 1998-B Preferred Stock pro rata
among the holders of 1998-B Preferred Stock based on the number of shares of
1998-B Preferred Stock held by each such holder relative to the total number of
authorized shares of 1998-B Preferred Stock. If the Corporation shall issue any
securities or make any change in its capital structure which would change the
number of shares of Common Stock into which each share of the 1998-B Preferred
Stock shall be convertible at the then current Conversion Price, the Corporation
shall at the same time also make proper provision so that thereafter there shall
be a sufficient number of shares of Common Stock authorized and reserved, free
from preemptive rights, for conversion of the outstanding 1998-B Preferred Stock
on the new basis. If at any time a holder of shares of 1998-B Preferred Stock
submits a Conversion Notice the Corporation does not have sufficient authorized
but unissued shares of Common Stock available to effect such conversion in
accordance with the provisions of this Article VI, the Corporation shall issue
to each holder such holder's pro rata share of all of the shares of Common Stock
which are available to effect such conversion and shall thereafter use its best
efforts and take all necessary action to obtain, as promptly as practicable,
shareholder approval to authorize the issuance of sufficient shares of Common
Stock to effect conversion of the 1998-B Preferred Stock then outstanding. The
number of shares of 1998-B Preferred Stock included in the Notice of Conversion
which exceeds the amount which is then convertible into available shares of
Common Stock shall, notwithstanding anything to the contrary contained herein,
not be convertible into Common Stock in accordance with the terms hereof until
(and at the holder's option at any time after) the date additional shares of
Common Stock are authorized by the Corporation to permit such conversion.

           F.   Upon the occurrence of each adjustment or readjustment of the
Conversion Price pursuant to this Article VI, the Corporation, at its expense,
shall promptly compute such adjustment or readjustment in accordance with the
terms hereof and prepare and furnish to each holder of 1998-B Preferred Stock a
certificate setting forth such adjustment or readjustment and



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showing in detail the facts upon which such adjustment or readjustment is based.
The Corporation shall, upon the written request at any time of any holder of
1998-B Preferred Stock, furnish or cause to be furnished to such holder a like
certificate setting forth (i) such adjustment or readjustment, (ii) the
Conversion Price and (iii) the number of shares of Common Stock and the amount,
if any, of other securities or property which at the time would be received upon
conversion of a share of 1998-B Preferred Stock.

                            VII. Mandatory Conversion

           Each share of 1998-B Preferred Stock issued and outstanding on that
date which is two years from the issuance date of that share of 1998-B Preferred
Stock, automatically shall be converted into shares of Common Stock on such date
at the Conversion Price plus a Dividend for the period ending on such date;
provided, however, that the Corporation may not automatically convert any shares
of 1998-B Preferred Stock pursuant to this Article VII which are the subject of
a Notice of Conversion which was faxed to the Corporation before 4:00 p.m., New
York City time, on such date or before such date.

                               VIII. Voting Rights

           The holders of the 1998-B Preferred Stock have no voting power
whatsoever, except as otherwise provided by the Delaware General Corporation Law
("DGCL"), and in this Article VIII, and in Article IX below.

           To the extent that under the DGCL the vote of the holders of the
1998-B Preferred Stock, voting separately as a class or series as applicable, is
required to authorize a given action of the Corporation, the affirmative vote or
consent of the holders of at least a majority of the shares of the 1998-B
Preferred Stock represented at a duly held meeting at which a quorum is present
or by written consent of a majority of the shares of 1998-B Preferred Stock
(except as otherwise may be required under the DGCL) shall constitute the
approval of such action by the class. To the extent that under the DGCL holders
of the 1998-B Preferred Stock are entitled to vote on a matter with holders of
Common Stock, voting together as one class, each share of 1998-B Preferred Stock
shall be entitled to a number of votes equal to the number of shares of Common
Stock into which it is then convertible using the record date for the taking of
such vote of shareholders as the date as of which the Conversion Price is
calculated. Holders of the 1998-B Preferred Stock shall be entitled to notice of
(and copies of proxy materials and other information sent to shareholders) all
shareholder meetings or written consents with respect to which they would be
entitled to vote, which notice would be provided pursuant to the Corporation's
by-laws and the DGCL.

                            IX. Protective Provision

           So long as shares of 1998-B Preferred Stock are outstanding, the
Corporation shall not, without first obtaining the approval (by vote or written
consent, as provided by the DGCL) of the holders of at least a majority of the
then outstanding shares of 1998-B Preferred Stock:

                (a)   alter or change the rights, preferences or privileges of 
the 1998-B Preferred Stock;




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                (b)   increase the authorized number of shares of 1998-B 
Preferred Stock;

                (c)   create any new class or series of capital stock having a
preference over the 1998-B Preferred stock as to dividends and as to
distribution of assets upon liquidation, dissolution or winding up of the
Corporation (as previously defined herein, "Senior Securities"); or

                (d)   create any new class or series of capital stock ranking 
pari passu with the 1998-B Preferred Stock (except for the 1998-A Convertible
Preferred Stock, for which no approval shall be required) as to dividends and as
to distribution of assets upon liquidation, dissolution or winding up of the
Corporation (as previously defined herein, "Pari Passu Securities").

           In the event holders of at least a majority of the then outstanding
shares of 1998-B Preferred Stock (voting together as a single class) agree to
allow the Corporation to alter or change the rights, preferences or privileges
of the shares of 1998-B Preferred Stock, pursuant to subsection (a) above, so as
to affect the 1998-B Preferred Stock, then the Corporation will deliver notice
of such approved change to the holders of the 1998-B Preferred Stock that did
not agree to such alteration or change (the "Dissenting Holders") and Dissenting
Holders shall have the right for a period of thirty (30) days to convert
pursuant to the terms of this Certificate of Designation as they exist prior to
such alteration or change or continue to hold their shares of 1998-B Preferred
Stock as altered or changed.

           IN WITNESS WHEREOF, this Certificate of Designation is executed on
behalf of the Corporation this 31st day of July, 1998.


                                   SALIVA DIAGNOSTIC SYSTEMS, INC.




                                   By: /s/ Kenneth J. McLachlan
                                           ---------------------------------
                                       Kenneth J. McLachlan
                                       President and Chief Executive Officer


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                              NOTICE OF CONVERSION

                    (To be Executed by the Registered Holder
                 in order to Convert the 1998-B Preferred Stock)

The undersigned hereby irrevocably elects to convert shares of 1998-B Preferred
Stock, represented by stock certificate no(s). ___________ (the "Preferred Stock
Certificates") into shares of common stock, par value $.01 per share ("Common
Stock"), of Saliva Diagnostic Systems, Inc. (the "Corporation") according to the
conditions of the Certificate of Designations, Preferences and Rights of 1998-B
Preferred Stock, as of the date written below. If securities are to be issued in
the name of a person other than the undersigned, the undersigned will pay all
transfer taxes payable with respect thereto and is delivering herewith such
certificates. No fee will be charged to the Holder for any conversion, except
for transfer taxes, if any. A copy of each Preferred Stock Certificate is
attached hereto (or evidence of loss, theft or destruction thereof).

The undersigned represents and warrants that all offers and sales by the
undersigned of the securities issuable to the undersigned upon conversion of the
1998-B Preferred Stock shall be made pursuant to registration of the securities
under the Securities Act of 1933, as amended (the "Act"), or pursuant to an
exemption from registration under the Act.

                             Date of Conversion:
                                                ---------------------------


                             Applicable Conversion Price:
                                                         ------------------


                             Number of Shares of
                             Common Stock to be Issued:
                                                       --------------------

                             Signature:
                                       ------------------------------------


                             Name:
                                  -----------------------------------------


                             Address:
                                     --------------------------------------

*The Corporation is not required to issue shares of Common Stock until the
original 1998-B Preferred Stock Certificate(s) (or evidence of loss, theft or
destruction thereof) to be converted are received by the Corporation.


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