<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1995
-----------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------- ----------------
Commission file number 0-10252
-------
VIRAGEN, INC.
----------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 59-2101668
- ------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S.Employer Identification No.)
incorporation or organization)
2343 West 76th Street, Hialeah, Florida 33016
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(305) 557-6000
--------------------------------------------------
(Registrant's telephone number, including area code)
NOT APPLICABLE
-------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
Common Stock Outstanding:
Common Stock, $.01 par value -
35,546,382 as of January 29, 1996.
<PAGE> 2
VIRAGEN, INC. AND SUBSIDIARIES
INDEX
PART I - FINANCIAL INFORMATION
The Consolidated Condensed Statements of Operations (Unaudited) for
the three months and six months ended December 31, 1995 and December
31, 1994 include the accounts of the Registrant and its subsidiaries.
Item 1. Financial Statements
1) Consolidated Condensed Statements of Operations for the three months
ended and six months ended December 31, 1995 and December 31, 1994.
2) Consolidated Condensed Balance Sheets as of December 31, 1995 and June
30, 1995.
3) Consolidated Condensed Statements of Cash Flows for the six months
ended December 31, 1995 and December 31, 1994.
4) Notes to Consolidated Condensed Financial Statements as of December
31, 1995.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
PART II - OTHER INFORMATION
Item 4. Results to Votes of Security Holders
Item 6. Exhibits and Reports on Form 8-K
2
<PAGE> 3
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VIRAGEN, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
INCOME
Revenues $ 98,092 $ 183,174 $ 202,317 $ 333,352
Interest and other income 15,874 29,515 42,065 43,381
---------- ----------- ----------- -----------
113,966 212,689 244,382 376,733
COSTS AND EXPENSES
Cost of goods sold 76,992 109,357 160,800 199,073
Inventory valuation adjustment 788,000 788,000
Depreciation and amortization 49,329 15,167 97,538 30,335
Research and development costs 270,096 55,620 557,380 106,544
Selling, general and
administrative expenses 537,784 435,330 978,344 716,359
Contract termination fee 525,000
Directors & Officers options granted 183,144
Interest expense 24,265 22,652 47,225 48,394
---------- ----------- ----------- -----------
958,466 1,426,126 2,024,431 2,413,705
---------- ----------- ----------- -----------
NET LOSS (844,500) (1,213,437) (1,780,049) (2,036,972)
Deduct required dividends on
convertible preferred stock 863 863 1,725 1,725
---------- ----------- ----------- -----------
LOSS ATTRIBUTABLE TO COMMON STOCK $ (845,363) $(1,214,300) $(1,781,774) $(2,038,697)
========== =========== =========== ===========
LOSS PER COMMON SHARE,
after deduction for required
dividends on convertible
preferred stock $ (.02) $ (.04) $ (.05) $ (.07)
========== =========== =========== ===========
Weighted average shares outstanding 35,555,096 31,739,414 35,482,257 28,879,146
========== =========== =========== ===========
</TABLE>
See notes to consolidated condensed financial statements.
3
<PAGE> 4
VIRAGEN, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, June 30,
1995 1995 (A)
------------ ----------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $1,139,543 $1,904,687
Accounts and notes receivable,
less allowance of $69,590
at December 31, 1995 and
$19,039 June 30, 1995 51,271 52,884
Inventory 17,568 211,200
Prepaid expenses 113,571 104,525
Other current assets 8,065 7,928
---------- ----------
TOTAL CURRENT ASSETS 1,330,018 2,281,224
PROPERTY, PLANT AND EQUIPMENT
Land, building and improvements 1,193,402 1,191,183
Equipment and furniture 1,410,842 1,353,068
---------- ----------
2,604,244 2,544,251
Less accumulated depreciation (1,608,749) (1,512,069)
---------- ----------
995,495 1,032,182
DEPOSITS AND OTHER ASSETS 14,672 16,300
---------- ----------
$2,340,185 $3,329,706
========== ==========
</TABLE>
4
<PAGE> 5
VIRAGEN, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS - Continued
<TABLE>
<CAPTION>
December 31, June 30,
1995 1995 (A)
------------ -----------
(Unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 68,626 $ 205,543
Accrued expenses and other
liabilities 321,746 399,190
Current portion of long-term debt 854,165 62,728
----------- -----------
TOTAL CURRENT LIABILITIES 1,244,537 667,461
ROYALTIES PAYABLE, less current portion 107,866 107,866
OTHER NOTES PAYABLE 10,173
LONG-TERM DEBT, less current portion 35,578 856,593
Minority Interest in Subsidiary 48,000
STOCKHOLDERS' EQUITY
Convertible 10% Series A cumulative
preferred stock, $1.00 par value
Authorized 375,000 shares; issued
and outstanding 3,450 shares.
Liquidation preference value: $10
per share, aggregating $34,500 3,450 3,450
Common stock, $.01 par value.
Authorized 50,000,000 shares; issued
and outstanding 35,546,382 shares
at December 31, 1995 and
35,355,532 at June 30, 1995 355,464 353,555
Capital in excess of par value 19,425,767 18,406,086
Common stock subscribed 45,296
Deficit (18,890,650) (17,110,601)
----------- -----------
TOTAL STOCKHOLDERS EQUITY 894,031 1,697,786
----------- -----------
$ 2,340,185 $ 3,329,706
=========== ===========
</TABLE>
(A) Reference is made to the Company's Annual Report on Form 10-KSB for
the year ended June 30, 1995 filed with the Securities and Exchange
Commission.
See notes to consolidated condensed financial statements.
5
<PAGE> 6
VIRAGEN, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
December 31,
1995 1994
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $(1,780,049) $(2,036,972)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 97,538 30,335
Contract termination fee paid in stock 525,000
Compensation Expense on options 183,144
Bad Debt Expense 50,551
Increase (decrease) relating to
operating activities from:
Accounts receivable (48,938) (46,890)
Notes Receivable 7,863
Interferon inventory 193,632 426,153
Prepaid exp & other current assets (9,183) (34,639)
Deferred expenses and other assets 1,628 859
Accounts payable (136,917) (134,509)
Accounts payable to Medicore, Inc. (16,554)
Accrued expenses and other
liabilities (77,444) (185,747)
----------- -----------
Net cash used in operating
activities (1,526,038) (1,465,101)
INVESTING ACTIVITIES:
Additions to property, plant and
equipment, net of minor disposals (60,851) (174,431)
----------- -----------
Net cash used in investing
activities (60,851) (174,431)
----------- -----------
FINANCING ACTIVITIES:
Proceeds from exercise of Common
Stock Warrants 40,750
Proceeds from Sector Associates 800,000
Proceeds from sale of common stock
net of related expenses 4,252,621
Contribution from Officers 400
Payments/reclassifications on
long-term debt (19,405) (15,000)
----------- -----------
Payments to Medicore (10,735)
Net cash provided by (used)
in financing activities 821,745 4,226,886
----------- -----------
Increase(decr)in cash & cash equivalents (765,144) 2,587,354
Cash and cash equivalents
at beginning of period 1,904,687 878,926
----------- -----------
Cash and cash equivalents
at end of period $ 1,139,543 $ 3,467,280
=========== ===========
Non-cash items:Maturities-long term debt $ 804,453
</TABLE>
See notes to consolidated condensed financial statements.
6
<PAGE> 7
VIRAGEN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS--Continued
December 31, 1995
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Consolidation: Viragen, Inc. and subsidiaries have been
engaged in the research, development and manufacture of certain immunological
products for commercial application. The consolidated financial statements
include the accounts of Viragen, Inc. and its wholly-owned subsidiaries,
Vira-Tech, Inc., Viragen Technology, Inc. and majority owned subsidiary Sector
Associates, Ltd. All material intercompany accounts and transactions have been
eliminated in consolidation.
Inventory: The Company has capitalized the human leukocyte interferon
manufactured in its laboratories at the lower of average cost or market. At
December 31, 1995 and June 30, 1995, the interferon inventory is comprised of
finished goods.
Reclassifications: Certain reclassifications have been made to the fiscal 1995
Financial Statements to conform to the December 31, 1995 interim presentations.
NOTE B--INTERIM ADJUSTMENTS
The financial summaries for the three months ended and six months ended
December 31, 1995 and December 31, 1994 include, in the opinion of management
of the Company, all adjustments, consisting of normal recurring accruals,
considered necessary for a fair presentation of the financial position and the
results of operations for these periods.
Operating results for the three months ended and six months ended December 31,
1995 are not necessarily indicative of the results that may be expected for the
entire year ending June 30, 1996.
While the Company believes that the disclosures presented are adequate to make
the information not misleading, it is suggested that these Consolidated
Condensed Financial Statements be read in conjunction with the financial
statements and notes included in the Company's latest annual report on Form
10-KSB for the year ended June 30, 1995.
7
<PAGE> 8
VIRAGEN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS--Continued
December 31, 1995
NOTE C--CAPITAL STOCK
Shares of the Company's common stock reserved at December 31, 1995 for possible
future issuance are as follows:
<TABLE>
<S> <C>
Warrants - consultants 707,840
Convertible preferred stock 14,697
Option plans - employees, officers & directors 6,048,000
Warrants - private placement 759,400
---------
7,529,937
=========
</TABLE>
On May 15, 1995, as amended in September 1995, the Company adopted its 1995
Stock Option Plan under which 4,000,000 shares of Common Stock were reserved
for issuance to officers, directors, employees and consultants of the Company
for stock options designated as "incentive stock options" within the meaning of
Section 422 of the Internal Revenue Code. During Fiscal 1995, 33,000 options
were granted at the market price at the respective date of grant. In September
1995, the Board of Directors granted 2,935,000 non-statutory options to
directors, officers and key employees of the Company under the provision of the
1995 Stock Option Plan. The options granted have an exercise price of $.50 per
share and are exercisable for a period of five years. During September 1995,
the Company recognized compensation expense of $183,144 as a result of these
grants.
During September 1995, 75,000 warrants issued to a financial consultant having
an exercise price of $.30 per share and 6,250 warrants issued in connection
with the Company's August 1994 Private Placement offering with an exercise
price of $.52 per share were exercised into common stock of the Company. In
December 1995, a Director of the Company exercised 50,000 options with an
exercise price of $.30 per share.
8
<PAGE> 9
VIRAGEN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS--Continued
December 31, 1995
NOTE D-LONG TERM DEBT
Long-term debt at December 31, 1995 is as follows:
<TABLE>
<S> <C>
Mortgage note secured by land, building and
equipment with a new book value of $995,495
at December 31, 1995.
Monthly principal payments of $2,500 plus
interest at prime plus 2% with the
unpaid balance due August 1, 1996.................... $468,439
Second mortgage secured by land, building,
equipment and accounts receivable.
Monthly principal payments of $1,789
plus interest at prime plus 1% with the
unpaid balance due August 1, 1996.................... 373,936
Capital lease obligations resulting from
acquisition of equipment, with a cost of
$54,200, capitalized at 10% over the term
of the lease ranging from three to five years........... 47,368
--------
889,743
Less current portion of Capital lease obligations....... 854,165
--------
$ 35,578
========
</TABLE>
The prime rate was 8.75% at December 31, 1995 and 9.00% at June 30, 1995.
At June 30, 1995, the Company was in default of certain non financial covenants
on its mortgage note. The lender waived these defaults and waived compliance
with these covenants through July 1, 1996.
Interest payments on debt totaled $22,450 and $21,235 for the three month
periods ended December 31, 1995 and 1994, respectively, and $44,217 and $41,896
for the six month periods ended December 31, 1995 and 1994.
During fiscal 1995, the Company acquired equipment under capital lease
agreements at a cost of $54,200 with a carrying value of $42,177 net of related
depreciation at December 31, 1995. Depreciation expense for this equipment
totaled $3,147 for the three months ended December 31, 1995. The aggregate
lease commitments at December 31, 1995 are: 1996-$15,719; 1997-$15,719;
1998-$10,456; 1999-$10,456 and 2000-$4,357.
9
<PAGE> 10
VIRAGEN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS--Continued
December 31, 1995
NOTE E--SUBSEQUENT EVENT
On December 8, 1995, the Company finalized an agreement and Plan Reorganization
("Agreement") with Sector Associates, Ltd. ("Sector"), a Delaware corporation.
Under the terms of the Agreement, the Company acquired a 94% interest in Sector
in exchange of it's 100% interest in Viragen (Scotland) Limited in a reverse
acquisition transaction. Sector is a publicly traded corporation which
contained net cash assets of $800,000 at the transaction closing date.
On November 7, 1995, the Agreement was amended to provide for an interim loan
of $500,000 by Sector to Viragen (Scotland) Limited, the filing of certain
financial reports by Sector prior to closing, an additional $300,000 capital
contribution into Sector within thirty days, and the modification of a related
investment banking agreement. The loan was funded November 9, 1995, bearing
interest at 4% per annum, secured by a 3.77% equity interest in Viragen
(Scotland) Limited and is guaranteed by Viragen, Inc. Upon the closing of the
Agreement on December 8, 1995, the principal amount of the note was deemed
contributed capital to Sector.
The Company, through Sector, is currently undertaking private placement
financing transactions to raise up to a maximum of $4,400,000 to underwrite
domestic and European research and clinical trial activities including the
construction of a laboratory and manufacturing facility in Scotland. As of
February 13, 1996, the Company through Sector, has received gross proceeds of
$1,002,000 from the Private Placement Offering.
10
<PAGE> 11
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
The Company has incurred operational losses and operated with a negative cash
flow since its inception in December 1980. Losses have totaled $844,500 and
$1,780,049 for the three months ended and six months ended December 31, 1995
and $1,214,300 and $2,038,697 for the three month and six month period ended
December 31, 1994, respectively. See "Results of Operations" below.
LIQUIDITY AND CAPITAL RESOURCES
Working capital totaled approximately $85,000 at December 31, 1995, a decrease
of $1,529,000 from the year end balance. This decrease was attributable to
operational losses of $844,500 during the period and the reclassification as
current of two mortgages due August 1, 1996 totaling $842,000 previously
carried as long term liabilities.
While subject to significant limitations, the Company has available net tax
operating loss carryforwards of approximately $15,000,000 expiring between 1996
and 2010, which may be used to offset taxable income, if any, during those
periods.
On September 20, 1995, the Company entered into an Agreement and Plan
Reorganization ("Agreement") with Sector Associates, Ltd. ("Sector"), a
Delaware corporation. Under the terms of the Agreement, the Company acquired a
94% interest in Sector in a reverse acquisition transaction. Sector is a
publicly traded corporation which contained net cash assets of $800,000 at the
transaction closing date.
On November 7, 1995, the Agreement was amended to provide for an interim loan
of $500,000 by Sector to Viragen (Scotland) Limited, the filing of certain
financial reports by Sector prior to closing, the contribution of an additional
$300,000 capital contribution to Sector within thirty days, and the
modification of a related investment banking agreement. The loan was funded
November 9, 1995, bearing interest at 4% per annum, secured by a 3.77% equity
interest in Viragen (Scotland) Limited and is guaranteed by Viragen, Inc. Upon
the closing of the Agreement on December 8, 1995, the principal amount of the
note was deemed contributed capital to Sector.
The Company, through Sector, is currently undertaking private placement
financing transactions to raise up to a maximum of $4,400,000 to underwrite
domestic and European research and clinical trial activities including the
construction of a laboratory and manufacturing facility in Scotland. Proceeds
of approximately $2,000,000 will be utilized by the Parent for ongoing research
projects and general working capital purposes. As of February 13, 1996, the
Company through Sector, has received gross proceeds of $1,002,000 from the
Private Placement Offering.
Management believes that the Company's Omniferon(TM) product can be
manufactured in sufficient quantity and will be priced at a level to offer
patients an attractive alternative treatment to the Synthetic Interferons.
Management further believes that working capital currently on-hand, as well as
the
11
<PAGE> 12
continued limited distribution of its Alpha Leukoferon(TM) under the 499
Program through March 1996 to existing patients and the funding received and
anticipated under the Company's pending Private Placement Offering will provide
the Company with the funds necessary to continue its current level of
operations, focused on current research projects, at least through December 31,
1996.
RESULTS OF OPERATIONS
For the past several years, the Company's limited revenues have been derived
from sales of the Company's Alpha Leukoferon(TM) product ("Product") through
Florida physicians (primarily Neurologists) for the treatment of Multiple
Sclerosis. Distribution of the Company's Product is limited to the State of
Florida and is sanctioned by, and subject to, the provisions of Florida Statute
499.018. This statute permits controlled distribution of the Product in a
clinical trial environment only within the State. Commercialization of
products under this statute is not permitted. In an Agreement reached with the
State of Florida, the Company discontinued enrollment of new patients in its
499 Program and all revenues under this program will cease in March 1996.
Following the final shipments of Product under 499 Program in March 1996, the
Company will have no approved source of sales revenue until it receives the
necessary regulatory approvals from the U.S. Food and Drug Administration
and/or comparable European Union authorities. Such approvals cannot be assured
and are subject to the successful completion of lengthy clinical trials and the
Company's ability to raise significant additional investment capital to fund
such trials.
Losses from operations have been incurred since inception and totaled $844,500
and $1,780,049 for the three months ended and six months ended December 31,
1995 respectively; and $1,214,300 and $2,038,697 for the three months and six
months period ended December 31, 1994 and 1994, respectively.
Sales for the quarter ended and six months ended December 31, 1995 totaled
$98,000 and $202,000, respectively, and were derived almost entirely from
distribution of the Company's Alpha Leukoferon(TM) product for the clinical
study treatment of multiple sclerosis. Sales during the comparable periods of
the preceding year totaled $183,000 and $333,000. These declines were due to
patients previously enrolled under the 499 Program completing their course of
treatment coupled with the discontinuance of new enrollments as discussed
above.
Cost of sales as a percentage of sales revenues totaled 78% and 79%
respectively, for the three months and six months ended December 31, 1995
compared to 60% for the comparable periods of the preceding year. This
increase was due to a significant (44%) drop in the selling price of the
Company's Alpha Leukoferon(TM) product during fiscal 1994. This sharp price
reduction reflects the Company's efforts to make the Product more price
competitive with the synthetic interferons, and accordingly, a more viable
alternative patient treatment.
12
<PAGE> 13
Research and development costs totalled $270,000 and $557,000 respectively, for
the three months ended and six months ended December 31, 1995 compared to
$56,000 and $107,000 for the same periods of the preceding year. These sharp
increases were attributable to expanded research efforts associated with the
Company's newly developed Natural Interferon (alpha) product Omniferon(TM).
These costs are expected to continue to increase for at least the next two
quarters, as the Company works towards regulatory approval submissions in the
EU for Omniferon(TM), currently planned for 1996. The expanded research
efforts are focused on improved methods of manufacturing aimed at maintaining
or improving product quality and manufacturing efficiencies. Components of the
overall increases of approximately $157,157 and $501,183 for the three months
ended and six months ended December 31, 1995 include the hiring of additional
research personnel with salaries and related taxes and benefits totaling
approximately $46,769 and $250,794 or 30% and 50%, respectively, of the overall
increases. Additionally, research laboratory supplies expense increased
approximately $39,776 and $178,884 for the three months and six months ended
December 31, 1995 over the comparable periods of the preceding year. The
increases also reflect an increase in consulting fees, travel and equipment
rentals associated with the overall increase in the level of research
activities.
Selling general and administrative expenses were $538,000 and $978,000 for the
three months and six months ended December 31, 1995 compared to $435,000 and
$716,000 for the same periods of the preceding year. Components of this
increase included an increase in administrative salaries with related taxes and
benefits of approximately $36,625 and $231,543, respectively. Additionally,
the six months period ended December 31, 1995 reflected an increase in travel
related expense of approximately $26,000 and legal fees of $19,000, a
significant portion of which was attributed to European travel associated with
the establishment of a European production facility and related fact-finding
and marketing efforts.
In September 1995, the Board of Directors granted 2,935,000 non-statutory
options to directors, officers and key employees of the Company under the
provision of the 1995 Stock Option Plan. The options granted have an exercise
price of $.50 per share and are exercisable for a period of five years. During
September 1995, the Company recognized compensation expense of $183,144 as a
result of these options.
13
<PAGE> 14
PART II- OTHER INFORMATION
Item 3. Defaults Upon Senior Securities
The Company has outstanding at December 31, 1995 and June 30, 1995, 3,450
shares of its preferred stock which provides for cumulative dividends at an
annual interest rate of 10% per share, when and as declared by the Board of
Directors, payable at the option of the Board, in common stock or cash. A
common stock dividend was paid to preferred shareholders of record in 1989 for
an aggregate dividend issuance of 36,579 shares of common stock. If at any
time dividends payable on the preferred stock are in arrears for five annual
dividend periods (which occurred in August 1994), the holders of the
outstanding shares of preferred stock, have the exclusive right, voting as a
class, to elect two directors of the Company, which right will continue until
all accumulated dividends have been paid in full.
Item 4. Results of Votes of Security Holders
On December 15, 1995, the Company held a shareholders meeting in Miami Lakes,
Florida to vote on: (i) the election of directors, (ii) the proposal to adopt
the 1995 Amended Stock Option Plan and (iii) the proposal to ratify the
appointment of independent auditors. With 70% of the outstanding shares voting
either by proxy or in person, the nominated directors were elected and
proposals were passed with the following votes:
<TABLE>
<CAPTION>
Name of Director For Against Abstain No Votes
- --------------- --- ------- ------- --------
<S> <C> <C> <C> <C>
Gerald Smith 24,549,475 145,097
Robert H. Zeiger 24,551,475 143,097
Dennis W. Healey 24,547,789 146,783
Peter D. Fischbein 24,548,822 145,750
Sidney Dworkin Ph.D. 24,549,815 144,757
Jay M. Haft 24,551,475 143,097
William B. Seager 24,551,125 143,447
Proposed to adopt
the 1995 Amended
Stock Option Plan 15,485,042 751,827 153,996 8,303,707
Propel to ratify
the Appointment of
Independent Auditors 24,615,678 37,650 41,244
</TABLE>
14
<PAGE> 15
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Part I Exhibits
(11) Statement re: computation
of per share earnings
Part II Exhibits
(10) Material Contracts
(i) Amended Viragen, Inc. 1995 Stock
Option Plan dated September 22,
1995.
(ii) Employment Agreement between the
Company and Gerald Smith dated
October 6, 1995.
(iii) Employment Agreement between the
Company and Dennis W. Healey dated
October 6, 1995.
(iv) Form of Stock Option Agreement dated
October 6, 1995.
(v) Consulting Agreement between the
Company and Girmon Investment Co.
dated October 13, 1995.
(vi) Consulting Agreement between the
Company and Chesterbrook Partners,
Inc. dated October 13, 1995.
(vii) Engagement to Perform Certain
Investment Banking Services between
the Company and FAC Enterprises,
Inc. dated November 7, 1995.
(27) Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K
None
15
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
VIRAGEN, INC.
By: /s/ Dennis W. Healey
-----------------------------
DENNIS W. HEALEY, Executive
Vice President, Treasurer and
Principal Financial Officer
Dated: February 13, 1996
16
<PAGE> 1
EXHIBIT 10(i)
(i) Amended Viragen, Inc. 1995 Stock Option Plan
dated September 22, 1995.
AMENDED
VIRAGEN, INC.
1995 STOCK OPTION PLAN
1. Grant of Options; Generally. In accordance with the provisions
hereinafter set forth in this stock option plan, the name of which is the
VIRAGEN, INC. 1995 STOCK OPTION PLAN (the "Plan"), the Board of Directors (the
"Board") or, the Compensation Committee (the "Stock Option Committee") of
Viragen, Inc. (the "Corporation") is hereby authorized to issue from time to
time on the Corporation's behalf to any one or more Eligible Persons, as
hereinafter defined, options to acquire shares of the Corporation's $.01 par
value common stock (the "Stock").
2. Type of Options. The Board or the Stock Option Committee is
authorized to issue Incentive Stock Options ("ISOs") which meet the
requirements of Section Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), which options are hereinafter referred to collectively as
ISOs, or singularly as an ISO. The Board or the Stock Option Committee is
also, in its discretion, authorized to issue options which are not ISOs, which
options are hereinafter referred to collectively as Non Statutory Options
("NSOs"), or singularly as an NSO. The Board or the Stock Option Committee is
also authorized to issue "Reload Options" in accordance with Paragraph 8
herein, which options are hereinafter referred to collectively as Reload
Options, or singularly as a Reload Option. Except where the context indicates
to the contrary, the term "Option" or "Options" means ISOs, NSOs and Reload
Options.
3. Amount of Stock. The aggregate number of shares of Stock which may be
purchased pursuant to the exercise of Options shall be 4,000,000 shares. Of
this amount, the Board or the Stock Option Committee shall have the power and
authority to designate whether any Options so issued shall be ISOs or NSOs,
subject to the restrictions on ISOs contained elsewhere herein. If an Option
ceases to be exercisable, in whole or in part, the shares of Stock underlying
such Option shall continue to be available under this Plan. Further, if shares
of Stock are delivered to the
<PAGE> 2
Corporation as payment for shares of Stock purchased by the exercise of an
Option granted under this Plan, such shares of Stock shall also be available
under this Plan. If there is any change in the number of shares of Stock on
account of the declaration of stock dividends, recapitalization resulting in
stock split-ups, or combinations or exchanges of shares of Stock, or otherwise,
the number of shares of Stock available for purchase upon the exercise of
Options, the shares of Stock subject to any Option and the exercise price of
any outstanding Option shall be appropriately adjusted by the Board or the
Stock Option Committee. The Board or the Stock Option Committee shall give
notice of any adjustments to each Eligible Person granted an Option under this
Plan, and such adjustments shall be effective and binding on all Eligible
Persons. If because of one or more recapitalizations, reorganizations or other
corporate events, the holders of outstanding Stock receive something other than
shares of Stock then, upon exercise of an Option, the Eligible Person will
receive what the holder would have owned if the holder had exercised the Option
immediately before the first such corporate event and not disposed of anything
the holder received as a result of the corporate event.
4. Eligible Persons.
(a) With respect to ISOs, an Eligible Person means any individual
who has been employed by the Corporation or by any subsidiary of the
Corporation, for a continuous period of at least sixty (60) days.
(b) With respect to NSOs, an Eligible Person means (i) any
individual who has been employed by the Corporation or by any subsidiary of the
Corporation, for a continuous period of at least sixty (60) days, (ii) any
director of the Corporation or by any subsidiary of the Corporation or (iii)
any consultant of the Corporation or by any subsidiary of the Corporation.
5. Grant of Options. The Board or the Stock Option Committee has the
right to issue the Options established by this Plan to Eligible Persons. The
Board or the Stock Option Committee shall follow the procedures prescribed for
it elsewhere in this Plan. A grant of Options shall be set forth in a writing
signed on behalf of the Corporation or by a majority of the members of the
Stock Option Committee. The writing shall identify whether
2
<PAGE> 3
the Option being granted is an ISO or an NSO and shall set forth the terms
which govern the Option. The terms shall be determined by the Board or the
Stock Option Committee, and may include, among other terms, the number of
shares of Stock that may be acquired pursuant to the exercise of the Options,
when the Options may be exercised, the period for which the Option is granted
and including the expiration date, the effect on the Options if the Eligible
Person terminates employment and whether the Eligible Person may deliver shares
of Stock to pay for the shares of Stock to be purchased by the exercise of the
Option. However, no term shall be set forth in the writing which is
inconsistent with any of the terms of this Plan. The terms of an Option
granted to an Eligible Person may differ from the terms of an Option granted to
another Eligible Person, and may differ from the terms of an earlier Option
granted to the same Eligible Person.
6. Option Price. The option price per share shall be determined
by the Board or the Stock Option Committee at the time any Option is granted,
and shall be not less than (i) in the case of an ISO, the fair market value,
(ii) in the case of an ISO granted to a ten percent or greater stockholder, 110
percent of the fair market value, or (iii) in the case of an NSO, not less than
55% of the fair market value (but in no event less than the par value) of one
share of Stock on the date the Option is granted, as determined by the Board or
the Stock Option Committee. Fair market value as used herein shall be:
(a) If shares of Stock shall be traded on an exchange or
over-the-counter market, the mean between the high and low sales prices of
Stock on such exchange or over-the-counter market on which such shares shall be
traded on that date, or if such exchange or over-the-counter market is closed
or if no shares shall have traded on such date, on the last preceding date on
which such shares shall have traded.
(b) If shares of Stock shall not be traded on an exchange or
over-the-counter market, the value as determined by a recognized appraiser as
selected by the Board or the Stock Option Committee.
3
<PAGE> 4
7. Purchase of Shares. An Option shall be exercised by the tender to the
Corporation of the full purchase price of the Stock with respect to which the
Option is exercised and written notice of the exercise. The purchase price of
the Stock shall be in United States dollars, payable in cash, check, Promissory
Note secured by the Shares issued through exercise of the related Options, or
in property or Corporation stock, if so permitted by the Board or the Stock
Option Committee in accordance with the discretion granted in Paragraph 5
hereof, having a value equal to such purchase price. The Corporation shall not
be required to issue or deliver any certificates for shares of Stock purchased
upon the exercise of an Option prior to (i) if requested by the Corporation,
the filing with the Corporation by the Eligible Person of a representation in
writing that it is the Eligible Person's then present intention to acquire the
Stock being purchased for investment and not for resale, and/or (ii) the
completion of any registration or other qualification of such shares under any
government regulatory body, which the Corporation shall determine to be
necessary or advisable.
8. Grant of Reload Options. In granting an Option under this Plan, the
Board or the Stock Option Committee may include a Reload Option provision
therein, subject to the provisions set forth in Paragraphs 20 and 21 herein. A
Reload Option provision provides that if the Eligible Person pays the exercise
price of shares of Stock to be purchased by the exercise of an ISO, NSO or
another Reload Option (the "Original Option") by delivering to the Corporation
shares of Stock already owned by the Eligible Person (the "Tendered Shares"),
the Eligible Person shall receive a Reload Option which shall be a new Option
to purchase shares of Stock equal in number to the tendered shares. The terms
of any Reload Option shall be determined by the Board or the Stock Option
Committee consistent with the provisions of this Plan.
9. Stock Option Committee. The Stock Option Committee may be appointed
from time to time by the Corporation's Board of Directors. The Board may from
time to time remove members from or add members to the Stock Option Committee.
The Stock Option Committee shall be constituted so as to permit the Plan to
comply in all respects with the provisions set forth in Paragraph 20 herein.
The members of the Stock Option Committee may elect one of its members as its
chairman. The Stock Option Committee shall hold its meetings at such times and
places as its chairman shall
4
<PAGE> 5
determine. A majority of the Stock Option Committee's members present in
person shall constitute a quorum for the transaction of business. All
determinations of the Stock Option Committee will be made by the majority vote
of the members constituting the quorum. The members may participate in a
meeting of the Stock Option Committee by conference telephone or similar
communications equipment by means of which all members participating in the
meeting can hear each other. Participation in a meeting in that manner will
constitute presence in person at the meeting. Any decision or determination
reduced to writing and signed by all members of the Stock Option Committee will
be effective as if it had been made by a majority vote of all members of the
Stock Option Committee at a meeting which is duly called and held.
10. Administration of Plan. In addition to granting Options and
to exercising the authority granted to it elsewhere in this Plan, the Board or
the Stock Option Committee is granted the full right and authority to interpret
and construe the provisions of this Plan, promulgate, amend and rescind rules
and procedures relating to the implementation of the Plan and to make all other
determinations necessary or advisable for the administration of the Plan,
consistent, however, with the intent of the Corporation that Options granted or
awarded pursuant to the Plan comply with the provisions of Paragraph 20 and 21
herein. All determinations made by the Board or the Stock Option Committee
shall be final, binding and conclusive on all persons including the Eligible
Person, the Corporation and its stockholders, employees, officers and directors
and consultants. No member of the Board or the Stock Option Committee will be
liable for any act or omission in connection with the administration of this
Plan unless it is attributable to that member's willful misconduct.
11. Provisions Applicable to ISOs. The following provisions shall
apply to all ISOs granted by the Board or the Stock Option Committee and are
incorporated by reference into any writing granting an ISO:
(a) An ISO may only be granted within ten (10) years from
May 15, 1995, the date that this Plan was originally adopted by the
Corporation's Board of Directors.
5
<PAGE> 6
(b) An ISO may not be exercised after the expiration of
ten (10) years from the date the ISO is granted.
(c) The option price may not be less than the fair market
value of the Stock at the time the ISO is granted.
(d) An ISO is not transferrable by the Eligible Person to
whom it is granted except by will, or the laws of descent and distribution, and
is exercisable during his or her lifetime only by the Eligible Person.
(e) If the Eligible Person receiving the ISO owns at the
time of the grant stock possessing more than ten (10%) percent of the total
combined voting power of all classes of stock of the employer corporation or of
its parent or subsidiary corporation (as those terms are defined in the Code),
then the option price shall be at least 110% of the fair market value of the
Stock, and the ISO shall not be exercisable after the expiration of five (5)
years from the date the ISO is granted.
(f) The aggregate fair market value (determined at the
time the ISO is granted) of the Stock with respect to which the ISO is first
exercisable by the Eligible Person during any calendar year (under this Plan
and any other incentive stock option plan of the Corporation) shall not exceed
$100,000.
(g) Even if the shares of Stock which are issued upon
exercise of an ISO are sold within one year following the exercise of such ISO
so that the sale constitutes a disqualifying disposition for ISO treatment
under the Code, no provision of this Plan shall be construed as prohibiting
such a sale.
(h) This Plan was adopted by the Corporation on May 15,
1995, by virtue of its approval by the Corporation's Board of Directors.
Approval by the stockholders of the Corporation is to occur prior to May 15,
1996.
12. Determination of Fair Market Value. In granting ISOs under
this Plan, the Board or the Stock Option Committee shall make a good faith
determination as to the fair market value of the Stock at the time of granting
the ISO.
6
<PAGE> 7
13. Restrictions on Issuance of Stock. The Corporation shall not
be obligated to sell or issue any shares of Stock pursuant to the exercise of
an Option unless the Stock with respect to which the Option is being exercised
is at that time effectively registered or exempt from registration under the
Securities Act of 1933, as amended, and any other applicable laws, rules and
regulations. The Corporation may condition the exercise of an Option granted
in accordance herewith upon receipt from the Eligible Person, or any other
purchaser thereof, of a written representation that at the time of such
exercise it is his or her then present intention to acquire the shares of Stock
for investment and not with a view to, or for sale in connection with, any
distribution thereof; except that, in the case of a legal representative of an
Eligible Person, "distribution" shall be defined to exclude distribution by
will or under the laws of descent and distribution. Prior to issuing any
shares of Stock pursuant to the exercise of an Option, the Corporation shall
take such steps as it deems necessary to satisfy any withholding tax
obligations imposed upon it by any level of government.
14. Exercise in the Event of Death of Termination or Employment.
(a) If an optionee shall die (i) while an employee of the
Corporation or a Subsidiary or (ii) within three months after termination of
his employment with the Corporation or a Subsidiary because of his disability,
or retirement or otherwise, his Options may be exercised, to the extent that
the optionee shall have been entitled to do so on the date of his death or such
termination of employment, by the person or persons to whom the optionee's
right under the Option pass by will or applicable law, or if no such person has
such right, by his executors or administrators, at any time, or from time to
time. In the event of termination of employment because of his death while an
employee or because of disability, his Options may be exercised not later than
the expiration date specified in Paragraph 5 or one year after the optionee's
death, whichever date is earlier, or in the event of termination of employment
because of retirement or otherwise, not later than the expiration date
specified in Paragraph 5 hereof or one year after the optionee's death,
whichever date is earlier.
(b) If an optionee's employment by the Corporation or a
Subsidiary shall terminate because of his disability and such
7
<PAGE> 8
optionee has not died within the following three months, he may exercise his
Options, to the extent that he shall have been entitled to do so at the date of
the termination of his employment, at any time, or from time to time, but not
later than the expiration date specified in Paragraph 5 hereof or one year
after termination of employment, whichever date is earlier.
(c) If an optionee's employment shall terminate by reason
of his retirement in accordance with the terms of the Corporation's
tax-qualified retirement plans or with the consent of the Board or the Stock
Option Committee or involuntarily other than by termination for cause, and such
optionee has not died within the following three months, he may exercise his
Option to the extent he shall have been entitled to do so at the date of the
termination of his employment, at any time and from to time, but not later than
the expiration date specified in Paragraph 5 hereof or thirty (30) days after
termination of employment, whichever date is earlier. For purposes of this
Paragraph 14, termination for cause shall mean termination of employment by
reason of the optionee's commission of a felony, fraud or willful misconduct
which has resulted, or is likely to result, in substantial and material damage
to the Corporation or a Subsidiary, all as the Board or the Stock Option
Committee in its sole discretion may determine.
(d) If an optionee's employment shall terminate for any
reason other than death, disability, retirement or otherwise, all right to
exercise his Option shall terminate at the date of such termination of
employment.
15. Corporate Events. In the event of the proposed dissolution or
liquidation of the Corporation, a proposed sale of all or substantially all of
the assets of the Corporation, a merger or tender for the Corporation's shares
of Common Stock the Board of Directors may declare that each Option granted
under this Plan shall terminate as of a date to be fixed by the Board of
Directors; provided that not less than thirty (30) days written notice of the
date so fixed shall be given to each Eligible Person holding an Option, and
each such Eligible Person shall have the right, during the period of thirty
(30) days preceding such termination, to exercise his Option as to all or any
part of the shares of Stock covered thereby, including shares of Stock as to
which such Option would not otherwise be exercisable. Nothing set
8
<PAGE> 9
forth herein shall extend the term set for purchasing the shares of Stock set
forth in the Option.
16. No Guarantee of Employment. Nothing in this Plan or in any
writing granting an Option will confer upon any Eligible Person the right to
continue in the employ of the Eligible Person's employer, or will interfere
with or restrict in any way the right of the Eligible Person's employer to
discharge such Eligible Person at any time for any reason whatsoever, with or
without cause.
17. Nontransferability. No Option granted under the Plan shall be
transferable other than by will or by the laws of descent and distribution.
During the lifetime of the optionee, an Option shall be exercisable only by
him.
18. No Rights as Stockholder. No optionee shall have any rights
as a stockholder with respect to any shares subject to his Option prior to the
date of issuance to him of a certificate or certificates for such shares.
19. Amendment and Discontinuance of Plan. The Corporation's Board
of Directors may amend, suspend or discontinue this Plan at any time. However,
no such action may prejudice the rights of any Eligible Person who has prior
thereto been granted Options under this Plan. Further, no amendment to this
Plan which has the effect of (a) increasing the aggregate number of shares of
Stock subject to this Plan (except for adjustments pursuant to Paragraph 3
herein), or (b) changing the definition of Eligible Person under this Plan, may
be effective unless and until approval of the stockholders of the Corporation
is obtained in the same manner as approval of this Plan is required. The
Corporation's Board of Directors is authorized to seek the approval of the
Corporation's stockholders for any other changes it proposes to make to this
Plan which require such approval, however, the Board of Directors may modify
the Plan, as necessary, to effectuate the intent of the Plan as a result of any
changes in the tax, accounting or securities laws treatment of Eligible Persons
and the Plan, subject to the provisions set forth in this Paragraph 19, and
Paragraphs 20 and 21.
20. Compliance with Rule 16b-3. This Plan is intended to comply
in all respects with Rule 16b-3 ("Rule 16b-3") promulgated
9
<PAGE> 10
by the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), with respect to participants who are
subject to Section 16 of the Exchange Act, and any provision(s) herein that
is/are contrary to Rule 16b-3 shall be deemed null and void to the extent
appropriate by either the Stock Option Committee or the Corporation's Board of
Directors.
21. Compliance with Code. The aspects of this Plan on ISOs is
intended to comply in every respect with Section 422 of the Code and the
regulations promulgated thereunder. In the event any future statute or
regulation shall modify the existing statute, the aspects of this Plan on ISOs
shall be deemed to incorporate by reference such modification. Any stock
option agreement relating to any Option granted pursuant to this Plan
outstanding and unexercised at the time any modifying statute or regulation
becomes effective shall also be deemed to incorporate by reference such
modification and no notice of such modification need be given to optionee.
If any provision of the aspects of this Plan on ISOs is
determined to disqualify the shares purchasable pursuant to the Options granted
under this Plan from the special tax treatment provided by Code Section 422,
such provision shall be deemed null and void and to incorporate by reference
the modification required to qualify the shares for said tax treatment.
1. Compliance With Other Laws and Regulations. The Plan, the
grant and exercise of Options thereunder, and the obligation of the Corporation
to sell and deliver Stock under such options, shall be subject to all
applicable federal and state laws, rules, and regulations and to such approvals
by any government or regulatory agency as may be required. The Corporation
shall not be required to issue or deliver any certificates for shares of Stock
prior to (a) the listing of such shares on any stock exchange or
over-the-counter market on which the Stock may then be listed and (b) the
completion of any registration or qualification of such shares under any
federal or state law, or any ruling or regulation of any government body which
the Corporation shall, in its sole discretion, determine to be necessary or
advisable. Moreover, no Option may be exercised if its exercise or the receipt
of Stock pursuant thereto would be contrary to applicable laws.
10
<PAGE> 11
2. Disposition of Shares. In the event any share of Stock
acquired by an exercise of an Option granted under the Plan shall be
transferable other than by will or by the laws of descent and distribution
within two years of the date such Option was granted or within one year after
the transfer of such Stock pursuant to such exercise, the optionee shall give
prompt written notice thereof to the Corporation or the Stock Option Committee.
3. Name. The Plan shall be known as the "Viragen, Inc. 1995
Stock Option Plan."
4. Notices. Any notice hereunder shall be in writing and sent by
certified mail, return receipt requested or by facsimile transmission (with
electronic or written confirmation of receipt) and when addressed to the
Corporation shall be sent to it at its office, 2343 West 76th Street, Hialeah,
Florida 33016, and when addressed to the Committee shall be sent to it at 2343
West 76th Street, Hialeah, Florida 33016, subject to the right of either party
to designate at any time hereafter in writing some other address, facsimile
number or person to whose attention such notice shall be sent.
5. Headings. The headings preceding the text of Sections and
subparagraphs hereof are inserted solely for convenience of reference, and
shall not constitute a part of this Plan nor shall they affect its meaning,
construction or effect.
6. Effective Date. This Plan, the Viragen, Inc. 1995 Stock
Option Plan, was adopted by the Board of Directors of the Corporation on May
15, 1995. The effective date of the Plan shall be the same date.
Dated as of September 22, 1995.
VIRAGEN, INC.
By:
-------------------------------------
Its: President
11
<PAGE> 12
[NSO GRANT FORM]
VIRAGEN, INC.
2343 West 76th Street
Hialeah, Florida 33016
Date: ___________
________________
________________
________________
Dear __________:
The Board of Directors of Viragen, Inc. (the "Corporation") is pleased
to award you an Option pursuant to the provisions of the 1995 Stock Option Plan
(the "Plan"). This letter will describe the Option granted to you. Attached
to this letter is a copy of the Plan. The terms of the Plan also set forth
provisions governing the Option granted to you. Therefore, in addition to
reading this letter you should also read the Plan. Your signature on this
letter is an acknowledgement to us that you have read and understand the Plan
and that you agree to abide by its terms. All terms not defined in this letter
shall have the same meaning as in the Plan.
1. Type of Option. You are granted an NSO. Please see in
particular Section 11 of the Plan.
2. Rights and Privileges. Subject to the conditions hereinafter
set forth, we grant you the right to purchase __________ shares of Stock at
$__________ per share, the current fair market value of a share of Stock. The
right to purchase the shares of Stock accrues in __________ installments over
the time periods described below:
The right to acquire __________ shares accrues on __________.
The right to acquire __________ shares accrues on __________.
12
<PAGE> 13
3. Time of Exercise. The Option may be exercised at any time and
from time to time beginning when the right to purchase the shares of Stock
accrues and ending when they terminate as provided in Section 5 of this letter.
4. Method of Exercise. The Options shall be exercised by written
notice to the Chairman of the Board of Directors at the Corporation's principal
place of business. The notice shall set forth the number of shares of Stock to
be acquired and shall contain a check payable to the Corporation in full
payment for the Stock or that number of already owned shares of Stock equal in
value to the total Exercise Price of the Option. We shall make delivery of the
shares of Stock subject to the conditions described in Section 13 of the Plan.
5. Termination of Option. To the extent not exercised, the
Option shall terminate upon the first to occur of the following dates:
(a) __________, 199_, being __________ years from the
date of grant pursuant to the provisions of Section 2 of this Agreement; or
(b) The expiration of three months following the date
your employment terminates with the Corporation and any of its subsidiaries
included in the Plan for any reason, other than by reason of death or permanent
disability. As used herein, "permanent disability" means your inability to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period of
not less than 12 months; or
(c) The expiration of 12 months following the date your
employment terminates with the Corporation and any of its subsidiaries included
in the Plan, if such employment termination occurs by reason of your death or
by reason of your permanent disability (as defined above).
6. Securities Laws.
The Option and the shares of Stock underlying the Option have
not been registered under the Securities Act of 1933,
13
<PAGE> 14
as amended (the "Act"). The Corporation has no obligations to ever register
the Option or the shares of Stock underlying the Option. All shares of Stock
acquired upon the exercise of the Option shall be "restricted securities" as
that term is defined in Rule 144 promulgated under the Act. The certificate
representing the shares shall bear an appropriate legend restricting their
transfer. Such shares cannot be sold, transferred, assigned or otherwise
hypothecated without registration under the Act or unless a valid exemption
from registration is then available under applicable federal and state
securities laws and the Corporation has been furnished with an opinion of
counsel satisfactory in form and substance to the Corporation that such
registration is not required.
7. Binding Effect. The rights and obligations described in this
letter shall inure to the benefit of and be binding upon both of us, and our
respective heirs, personal representatives, successors and assigns.
8. Date of Grant. The Option shall be treated as having been
granted to you on the date of this letter even though you may sign it at a
later date.
Very truly yours,
By:
---------------------------------------
President
AGREED AND ACCEPTED:
- ---------------------------------
- ---------------------------------
14
<PAGE> 15
Date: ________________
VIRAGEN, INC.
2343 West 76th Street
Hialeah, Florida 33016
__________________________
__________________________
__________________________
Dear _______________:
The Board of Directors of Viragen, Inc. (the "Corporation") is pleased
to award you an Option pursuant to the provisions of the 1995 Stock Option Plan
(the "Plan"). This letter will describe the Option granted to you. Attached
to this letter is a copy of the Plan. The terms of the Plan also set forth
provisions governing the Option granted to you. Therefore, in addition to
reading this letter you should also read the Plan. Your signature on this
letter is an acknowledgement to us that you have read and understand the Plan
and that you agree to abide by its terms. All terms not defined in this letter
shall have the same meaning as in the Plan.
1. Type of Option. You are granted an ISO. Please see in
particular Section 11 of the Plan.
2. Rights and Privileges. Subject to the conditions hereinafter
set forth, we grant you the right to purchase __________ shares of Stock at
$__________ per share, the current fair market value of a share of Stock. The
right to purchase the shares of Stock accrues in __________ installments over
the time periods described below:
The right to acquire __________ shares accrues on __________.
The right to acquire __________ shares accrues on __________.
The right to acquire __________ shares accrues on __________.
The right to acquire __________ shares accrues on __________.
The right to acquire __________ shares accrues on __________.
15
<PAGE> 16
The right to acquire __________ shares accrues on __________.
3. Time of Exercise. The Option may be exercised at any time and
from time to time beginning when the right to purchase the shares of Stock
accrues and ending when they terminate as provided in Section 5 of this letter.
4. Method of Exercise. The Options shall be exercised by written
notice to the Chairman of the Board of Directors at the Corporation's principal
place of business. The notice shall set forth the number of shares of Stock to
be acquired and shall contain a check payable to the Corporation in full
payment for the Stock or that number of already owned shares of Stock equal in
value to the total Exercise Price of the Option. We shall make delivery of the
shares of Stock subject to the conditions described in Section 13 of the Plan.
5. Termination of Option. To the extent not exercised, the
Option shall terminate upon the first to occur of the following dates:
(a) _____________, 199___, being __________ years from
the date of grant pursuant to the provisions of Section 2 of this Agreement; or
(b) The expiration of thirty (30) days following the date
your employment terminates with the Corporation and any of its subsidiaries
included in the Plan for any reason, other than by reason of death or permanent
disability. As used herein, "permanent disability" means your inability to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period of
not less than 12 months; or
(c) The expiration of 12 months following the date your
employment terminates with the Corporation and any of its subsidiaries included
in the Plan, if such employment termination occurs by reason of your death or
by reason of your permanent disability (as defined above).
6. Securities Laws.
The Option and the shares of Stock underlying the Option have
not been registered under the Securities Act of 1933, as amended (the "Act").
The Corporation has no obligations to ever register the Option or the shares of
Stock underlying the Option. All shares of Stock acquired upon the exercise of
the Option shall be "restricted securities" as that term is defined in Rule 144
promulgated under the Act. The certificate representing
16
<PAGE> 17
the shares shall bear an appropriate legend restricting their transfer. Such
shares cannot be sold, transferred, assigned or otherwise hypothecated without
registration under the Act or unless a valid exemption from registration is
then available under applicable federal and state securities laws and the
Corporation has been furnished with an opinion of counsel satisfactory in form
and substance to the Corporation that such registration is not required.
7. Binding Effect. The rights and obligations described in this
letter shall inure to the benefit of and be binding upon both of us, and our
respective heirs, personal representatives, successors and assigns.
8. Date of Grant. The Option shall be treated as having been
granted to you on the date of this letter even though you may sign it at a
later date.
Very truly yours,
By:
---------------------------------------
President
AGREED AND ACCEPTED:
- ----------------------------
- ----------------------------
17
<PAGE> 18
[NSO GRANT FORM
WITH RELOAD OPTIONS]
VIRAGEN, INC.
2343 West 76th Street
Hialeah, Florida 33016
Date: __________
________________
________________
________________
Dear __________:
The Board of Directors of Viragen, Inc. (the "Corporation") is pleased
to award you an Option pursuant to the provisions of the 1993 Stock Option Plan
(the "Plan"). This letter will describe the Option granted to you. Attached
to this letter is a copy of the Plan. The terms of the Plan also set forth
provisions governing the Option granted to you. Therefore, in addition to
reading this letter you should also read the Plan. Your signature on this
letter is an acknowledgement to us that you have read and understand the Plan
and that you agree to abide by its terms. All terms not defined in this letter
shall have the same meaning as in the Plan.
1. Type of Option. You are granted an NSO. Please see in
particular Section 11 of the Plan.
2. Rights and Privileges.
(a) Subject to the conditions hereinafter set forth, we
grant you the right to purchase __________ shares of Stock at $__________ per
share, the current fair market value of a share of Stock. The right to
purchase the shares of Stock accrues in __________ installments over the time
periods described below:
The right to acquire __________ shares accrues on __________.
The right to acquire __________ shares accrues on __________.
(b) In addition to the Option granted hereby (the
"Underlying Option"), the Corporation will grant you a reload option (the
"Reload
18
<PAGE> 19
Option") as hereinafter provided. A Reload Option is hereby granted to you if
you acquire shares of Stock pursuant to the exercise of the Underlying Option
and pay for such shares of Stock with shares of Common Stock already owned by
you (the "Tendered Shares"). The Reload Option grants you the right to
purchase shares of Stock equal in number to the number of Tendered Shares. The
date on which the Tendered Shares are tendered to the Corporation in full or
partial payment of the purchase price for the shares of Stock acquired pursuant
to the exercise of the Underlying Option is the Reload Grant Date. The
exercise price of the Reload Option is the fair market value of the Tendered
Shares on the Reload Grant Date. The fair market value of the Tendered Shares
shall be the low bid price per share of the Corporation's Common Stock on the
Reload Grant Date. The Reload Option shall vest equally over a period of
__________ (___) years, commencing on the first anniversary of the Reload Grant
Date, and on each anniversary of the Reload Grant Date thereafter; however, no
Reload Option shall vest in any calendar year if it would allow you to purchase
for the first time in that calendar year shares of Stock with a fair market
value in excess of $100,000, taking into account ISOs previously granted to
you. The Reload Option shall expire on the earlier of (i) __________ (___)
years from the Reload Grant Date, or (ii) in accordance with Paragraph 5(b), or
(iii) in accordance with Paragraph 5(c) as set forth herein. If vesting of the
Reload Option is deferred, then the Reload Option shall vest in the next
calendar year, subject, however, to the deferral of vesting previously
provided. Except as provided herein the Reload Option is subject to all of the
other terms and provisions of this Agreement governing Options.
3. Time of Exercise. The Option may be exercised at any time and
from time to time beginning when the right to purchase the shares of Stock
accrues and ending when they terminate as provided in Section 5 of this letter.
4. Method of Exercise. The Options shall be exercised by written
notice to the Chairman of the Board of Directors at the Corporation's principal
place of business. The notice shall set forth the number of shares of Stock to
be acquired and shall contain a check payable to the Corporation in full
payment for the Stock or that number of already owned shares of Stock equal in
value to the total Exercise Price of the Option. We shall make delivery of the
shares of Stock subject to the conditions described in Section 13 of the Plan.
5. Termination of Option. To the extent not exercised, the
Option shall terminate upon the first to occur of the following dates:
(a) __________, 199_, being __________ years from the
date of grant pursuant to the provisions of Section 2 of this Agreement; or
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(b) The expiration of three months following the date
your employment terminates with the Corporation and any of its subsidiaries
included in the Plan for any reason, other than by reason of death or permanent
disability. As used herein, "permanent disability" means your inability to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period of
not less than 12 months; or
(c) The expiration of 12 months following the date your
employment terminates with the Corporation and any of its subsidiaries included
in the Plan, if such employment termination occurs by reason of your death or
by reason of your permanent disability (as defined above).
6. Securities Laws.
The Option and the shares of Stock underlying the Option have
not been registered under the Securities Act of 1933, as amended (the "Act").
The Corporation has no obligations to ever register the Option or the shares of
Stock underlying the Option. All shares of Stock acquired upon the exercise of
the Option shall be "restricted securities" as that term is defined in Rule 144
promulgated under the Act. The certificate representing the shares shall bear
an appropriate legend restricting their transfer. Such shares cannot be sold,
transferred, assigned or otherwise hypothecated without registration under the
Act or unless a valid exemption from registration is then available under
applicable federal and state securities laws and the Corporation has been
furnished with an opinion of counsel satisfactory in form and substance to the
Corporation that such registration is not required.
7. Binding Effect. The rights and obligations described in this
letter shall inure to the benefit of and be binding upon both of us, and our
respective heirs, personal representatives, successors and assigns.
8. Date of Grant. The Option shall be treated as having been
granted to you on the date of this letter even though you may sign it at a
later date.
Very truly yours,
By:
-------------------------------------------
President
AGREED AND ACCEPTED:
- ----------------------------
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EXHIBIT 10(ii)
(ii) Employment Agreement between the Company and
Gerald Smith dated October 6, 1995.
EMPLOYMENT AGREEMENT
AGREEMENT dated October ___, 1995 (the "Effective Date") by and
between VIRAGEN, INC., a Delaware corporation ("Employer or the "Company"), and
GERALD SMITH ("Employee").
W I T N E S S E T H:
WHEREAS, Employer desires to employ Employee upon the terms and
conditions hereinafter set forth and Employee desires to accept employment upon
such terms and conditions; and
WHEREAS, Employer and Employee desire to set forth in writing the
terms and conditions of their agreements and understandings with respect to
Employee's employment by Employer.
NOW, THEREFORE, Employer hereby employs Employee and Employee hereby
accepts employment under the following terms and conditions:
1. EMPLOYMENT
Employer hereby employs Employee, and Employee hereby accepts
employment by Employer, upon all the terms and conditions hereinafter set forth.
2. TERM
Subject to the provisions for earlier termination set forth in
Section 9 hereof, this Agreement shall commence on the Effective Date and shall
end as of the close of business of the day immediately preceding the second
anniversary of the Effective Date (the "Employment Term"). The term "first
year", as used herein, means the period commencing on the Effective Date and
ending as of the close of business of the day immediately preceding the first
anniversary of the Effective Date, the term "second year," as used herein,
means the period commencing on the first anniversary of the Effective Date and
ending as of the close of business of the day immediately preceding the second
anniversary of the Effective Date, and the term "year," as used herein, means,
as the context requires, the first year or the second year. Notwithstanding
any of the foregoing to the contrary, if this Employment Agreement is
terminated prior to the expiration of the Employment Term, a year shall mean,
with respect to the year during which termination occurs, the period commencing
on the first day of such year and
<PAGE> 2
ending as of the close of business of the day of termination of Employee's
employment, and "Employment Term" shall mean the period commencing on the
Effective Date and ending as of the close of business of the day of termination
of Employee's employment.
3. EMPLOYEE'S REPRESENTATIONS AND WARRANTIES
Employee represents and warrants to Employer that he is free
to accept employment with Employer as contemplated herein and has no other
written or oral obligations or commitments of any kind or nature which would in
any way interfere with his acceptance of employment pursuant to the terms
hereof or the full performance of his obligations hereunder or the exercise of
his best efforts in his employment hereunder.
4. DUTIES AND EXTENT OF SERVICES
Employee shall be employed as Employer's President and, as
such, shall, subject to the direction of Employer's Board of Directors,
supervise the conduct of all of Employer's operations and affairs, and perform
such other duties and responsibilities as may be assigned to Employee from time
to time consistent with such title by Employer's Board of Directors. Employee
agrees to devote sufficient time, skill, attention and energy diligently and
competently to perform the duties and responsibilities reasonably assigned to
him hereunder or pursuant hereto to the best of his abilities. Employee shall
use his best efforts to be loyal and faithful at all times and constantly
endeavor to improve his ability and his knowledge of the business of Employer
in an effort to increase the value of his services for the mutual benefit of
Employer and Employee. Employer acknowledges that Employee is a director and
President of Cytoferon Corp., and Employer consents to Employee continuing to
act as a director and President of Cytoferon Corp. Employer further
acknowledges that Employee acts as President and as a director for
International Data Base Service, Inc. and Cinescopic Corp., but has been
informed by Employee that Employee's duties for such companies are minimal.
Employee represents and warrants that his duties for Cytoferon Corp.,
International Data Base Service, Inc. and Cinescopic Corp. will not interfere
with the satisfactory performance of his obligations under this Agreement.
Employee agrees not to enter into any other employment agreement, other than
with subsidiaries and/or affiliates of the Company as may be approved by
Employer's Board of Directors, during the term hereof.
5. COMPENSATION
Employee shall receive an annual salary of $160,000 from the
date of this Agreement through the end of the first year of the Employment Term
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and $170,000 during the second year of the Employment term, payable in
accordance with the Company's normal payroll process, currently bi-weekly.
Additional consideration payable to Employee hereunder consists of (a) the
grant to Employee of options to acquire an 1,500,000 shares of common stock of
Employer (as further described below), and (b) the fringe benefits, if any,
that shall be made available to Employee described in this Agreement.
6. FRINGE BENEFITS AND EXPENSES
A. Employee Plans. Employee shall be eligible, from the date of this
Agreement, (subject to the terms and conditions of particular plans and
programs) to participate in such medical, hospitalization, group health,
accident, disability and life insurance programs and plans, such pension,
profit sharing, stock option, incentive compensation and stock purchase plans
and such other employee benefit programs to the same extent such plans and
programs are made generally available from time to time by Employer to all of
its other similarly-situated employees; provided, however, Employer shall be
under no obligation to make any of such plans or programs available to its
employees or continue any which currently or in the future exist, except as
otherwise required by law.
B. Automobile. From the date of this Agreement, Employer shall provide
to Employee an automobile, with related gas, maintenance and insurance
expenses, for the performance of Employee's duties on behalf of Employer as
specified herein.
C. Other Expenses. Employer shall promptly pay directly or reimburse
Employee for his reasonable out-of-pocket costs and expenses incurred in
connection with the performance of his duties and responsibilities hereunder
subject to the submission by Employee of appropriate invoices, receipts and
other supporting documentation, consistent with Employer's customary
reimbursement policies and procedures.
7. VACATIONS
Employee shall be entitled to normal vacation (of not less
than two weeks) taken by other members of senior management during each
twelve-month period of the Employment Term. Employee shall not be entitled to
be compensated for any unused vacation upon termination of this Agreement. The
periods during which Employee will be absent from work shall be determined by
Employee taking into account the needs of Employer's business and shall be
subject to the approval of the Board of Directors of Employer (which shall not
be unreasonably withheld).
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<PAGE> 4
8. FACILITIES
Employer shall provide and maintain (or cause to be provided
and maintained) such facilities, equipment, supplies and personnel as it
reasonably determines is adequate for Employee's performance of his duties and
responsibilities under this Agreement.
9. TERMINATION OF EMPLOYMENT
A. Termination Events. Notwithstanding any provisions
of this Agreement to the contrary, Employee's employment may be terminated by
Employer with Cause (as hereinafter defined) effective upon the delivery of
written notice to Employee. In addition, Employee's employment shall terminate
(i) upon Employee's death or (ii) upon Employee becoming Disabled (as
hereinafter defined).
B. Definition of Disabled. For purposes of this
Agreement, Employee shall be deemed to be "Disabled" when, by reason of
physical or mental illness or of injury, he is unable to perform substantially
all of the duties and responsibilities required of him in connection with his
employment hereunder. No disability shall be deemed to exist until after
Employee shall be unable to perform his duties hereunder for ninety (90)
consecutive days (the "Disability Period"). If Employee shall have been under
a disability but shall have returned to work prior to the end of the Disability
Period, any new disability commencing within thirty (30) days of the
termination of the prior disability shall be a continuation of the prior
disability, and the period of all such disabilities shall be added together to
determine whether, or how much of, the Disability Period has elapsed.
C. Definition of Cause. For purposes of this Agreement, "Cause" shall
be: (a) conviction for fraud or criminal conduct (other than conviction of, or
a plea of guilty to, a traffic violation), from which no appeal can be taken;
(b) habitual drunkenness or drug addiction; (c) embezzlement; (d) material
sanctions against Employee in his capacity as an employee of Employer by
regulatory agencies governing Employer or against Employer because of wrongful
acts or conduct of Employee which have a material adverse affect upon the
Employer and its business; (e) material breach or default by Employee of any of
the material terms or conditions of this Agreement, and the continuation of
such material breach or default by Employee for a period of seven (7) days
following the date of receipt of written notice from Employer specifying the
breach or default of Employee; or (f) the resignation or quitting of Employee
prior to the end of the Employment Term (in this last event, Employee's
employment shall be deemed terminated with Cause on the date that he resigns or
quits).
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<PAGE> 5
If Employee's employment is terminated by Employer without
Cause as defined in this Section, Employee shall be given sixty (60) days
written notice of termination by Employer and be entitled to receive the
greater of (i) two years compensation and fringe benefits/expenses as provided
for in Sections 5 & 6 hereof or (ii) compensation and fringe benefits/expenses
as provided for in sections 5 & 6 payable through the remainder of the
Employment Term as provided for in Section 2 hereof. Additionally, in the
event of termination without Cause, any outstanding but unexercised stock
options or warrants granted to Employee shall immediately vest and become fully
exercisable through their stated respective Exercise Period(s).
10. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION
A. Confidential Information. Employee acknowledges that
Employee has been informed that it is the policy of Employer to maintain as
secret and confidential all information relating to (i) the financial
condition, businesses and interests of Employer and its affiliates, (ii) the
systems, know-how, products, services, costs, inventions, patents, patent
applications, formulae, research and development procedures, notes and results,
computer software programs, marketing and sales techniques and/or programs,
methods, methodologies, manuals, lists and other trade secrets heretofore or
hereafter acquired, sold, developed and/or used by Employer and its affiliates
and (iii) the nature and terms of Employer's and its affiliates' relationships
with their respective customers, clients, suppliers, lenders, vendors,
consultants, independent contractors and employees (all such information being
hereinafter collectively referred to as "Confidential Information"), and
Employee further acknowledges that such Confidential Information is of great
value to Employer and its affiliates and, in and by reason and as a result of
Employee's employment by Employer, Employee will be making use of, acquiring
and/or adding to such Confidential Information. Therefore, Employee
understands that it is reasonably necessary to protect Employer's and its
affiliates' trade secrets, good will and business interests that Employee agree
and, accordingly, Employee does hereby agree, that Employee will not directly
or indirectly (except where authorized by the Board of Directors of Employer
for the benefit of Employer and/or its affiliate(s) and/or as required in the
course of his employment) at any time hereafter divulge or disclose for any
purpose whatsoever to any persons, firms, corporations or other entities other
than Employer or its affiliates (hereinafter referred to collectively as "Third
Parties"), or use or cause or authorize any Third Parties to use, any such
Confidential Information, except as otherwise required by law.
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<PAGE> 6
B. Employer's Materials. In accordance with the
foregoing, Employee furthermore agrees that (i) Employee will at no time retain
or remove from the premises of Employer or its affiliates any research and
development materials, drawings, notebooks, notes, reports, formulae, software
programs or discs or other containers of software, manuals, data, books,
records, materials or documents of any kind or description for any purpose
unconnected with the strict performance of Employee's duties with Employer and
(ii) upon the cessation or termination of Employee's employment with Employer
for any reason, Employee shall forthwith deliver or cause to be delivered up to
Employer any and all research and development materials, drawings, notebooks,
notes, reports, formulae, software programs or discs or other containers of
software, manuals, data, books, records, materials and other documents and
materials in Employee's possession or under Employee's control relating to any
Confidential Information or any property or information which is otherwise the
property of Employer or its affiliates.
11. COVENANT-NOT-TO-COMPETE
In view of the Confidential Information to be obtained by or
disclosed to Employee, because of the know-how acquired and to be acquired by
Employee, and as a material inducement to Employer to enter into this
Agreement, issue the Stock Options (as defined below) and continue to employ
Employee, Employee covenants and agrees that, so long as Employee is employed
by Employer and for a period of two (2) years after Employee ceases for any
reason to be employed by Employer, Employee shall not, directly or indirectly,
(i) divert business from, (ii) solicit or transact any business competitive
with Employer or its affiliates with, or (iii) sell any products or services
sold or offered by Employer or its affiliates to, any customer or former
customer of Employer or its affiliates. In addition, Employee covenants and
agrees that, so long as Employee is employed by Employer and for a period of
two (2) years after Employee ceases for any reason to be employed by Employer,
Employee hereby agrees to refrain from, anywhere in the world (the
"Geographical Area"), directly or indirectly owning, managing, operating,
controlling or financing, or participating in the ownership, management,
control or financing of, or being connected with or having an interest in, or
otherwise taking any part as a stockholder, director, officer, employee, agent,
consultant, partner or otherwise in, any business competitive with that engaged
in or being developed by Employer or its affiliates during Employee's term of
employment. Without limitation of the foregoing, Employer's business is
acknowledged to include the development, manufacture and sale of human
leukocyte interferon therapy and products and other natural or recombinant
technologies aimed at enhancing the human immune system. Employee acknowledges
that Employer's business is anticipated to be international in
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<PAGE> 7
scope, that a similar business could effectively compete with Employer's and
its affiliates businesses from any location in the world, and that, therefore,
the restricted Geographical Area is reasonable in scope to protect Employer's
and its affiliates' trade secrets and legitimate business interests.
12. EMPLOYER'S REMEDIES FOR BREACH OF SECTIONS 10 & 11
Employee covenants and agrees that if Employee shall violate
or breach any of Employee's covenants or agreements provided for in Sections 10
or 11 hereof, Employer and/or its affiliates shall be entitled to an accounting
and repayment of all profits, compensation, commissions, remunerations or
benefits which Employee directly or indirectly has realized or realizes as a
result of, growing out of or in connection with any such violation or breach.
In addition, in the event of a breach or violation or threatened or imminent
breach or violation of any provisions of Sections 10 or 11 hereof, Employer
and/or its affiliates shall be entitled to a temporary and permanent injunction
or any other appropriate decree of specific performance or equitable relief,
without posting of bond, from a court of competent jurisdiction in order to
prevent, prohibit or restrain any such breach or violation or threatened or
imminent breach or violation by Employee, by Employee's partners, agents,
representatives, servants, employers or employees and/or by any third parties.
Employer shall be entitled to such injunctive or other equitable relief in
addition to any damages which are suffered, and the prevailing party shall be
entitled to reasonable attorneys' and paralegals' fees and costs and other
costs incurred in connection with any such litigation, both before and at trial
and at all tribunal levels. Resort by Employer and/or its affiliates to such
injunctive or other equitable relief shall not be deemed to waive or to limit
in any respect any other rights or remedies which Employer or its affiliates
may have with respect to such breach or violation.
13. REASONABLENESS OF RESTRICTIONS
A. Reasonableness. Employee acknowledges that any
breach or violation of Sections 10 or 11 hereof will cause irreparable injury
and damage and incalculable harm to Employer and its affiliates and that it
would be very difficult or impossible to measure the damages resulting from any
such breach or violation. Employee further acknowledges that Employee has
carefully read and considered the provisions of Sections 10, 11 and 12 hereof
and, having done so, agrees that the restrictions and remedies set forth in
such Sections (including, but not limited to, the time period, geographical and
types of restrictions imposed) are fair and reasonable and are reasonably
required for the protection of the business, trade secrets, interests and good
will of Employer and its affiliates.
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<PAGE> 8
B. Severability. Employee understands and intends that
each provision and restriction agreed to by Employee in Sections 10, 11 and 12
hereof shall be construed as separate and divisible from every other provision
and restriction and that, in the event that any one of the provisions of, or
restrictions in, Sections 10, 11 and/or 12 hereof shall be held to be invalid
or unenforceable, the remaining provisions thereof and restrictions therein
shall nevertheless continue to be valid and enforceable as though the invalid
or unenforceable provisions or restrictions had not been included therein, and
any one or more of such valid provisions and restrictions may be enforced in
whole or in part as the circumstances warrant. In the event that any such
provision relating to time period and/or geographical and/or type of
restriction shall be declared by a court of competent jurisdiction to exceed
the maximum or permissible time period, geographical area or type of
restriction such court deems reasonable and enforceable, said time period
and/or geographical and/or type of restriction shall be deemed to become and
shall thereafter be the maximum time period and/or geographical restriction
and/or type of restriction which such court deems reasonable and enforceable.
C. Survivability. The restrictions, acknowledgments,
covenants and agreements of Employee set forth in Sections 10, 11, 12 and 13 of
this Agreement shall survive any termination of this Agreement or of Employee's
employment (for any reason, including expiration of the Employment Term). D.
Comparable Restrictions. Employer agrees that it will use its best efforts to
have other senior executives execute and observe agreements containing similar
provisions as are contained in Sections 10, 11 and 12 hereof.
14. STOCK OPTIONS
Effective the Effective Date, Employer hereby grants to
Employee options to acquire up to 1,500,000 shares of Common Stock (the
"Options"), subject to and upon the following terms and conditions:
(a) The Options shall be exercisable by Employee
for the period commencing from the Effective date and ending on the last day of
the 60th month following the Effective Date ("the Exercise Period").
(b) In the event Employee's employment is
terminated with Cause, all unexercised Options, and all Options which have been
exercised but which exercise has not been consummated by tender of payment for
the purchase of Common Stock, shall automatically terminate 90 days from the
date of Termination with Cause.
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(c) In the event of Employee's termination
without Cause, all outstanding but unexercised Options shall remain exercisable
in accordance with the provisions of this Section 14. In the event this
Agreement is not renewed at the end of the Employment Term, then the Options
shall continue to be exercisable in accordance with the provisions of this
Section 14.
(d) All outstanding but unexercised Options shall
remain fully exercisable in accordance with the provisions of this Section 14:
(i) if there occurs any corporate
transaction (which shall include a series of corporate transactions occurring
within 60 days or occurring pursuant to a plan), that has the result that
shareholders of the Employer immediately before such transaction cease to own
at least 66 2/3 percent of the voting stock of the Employer in a (a)
reorganization, (b) consolidation, (c) merger, (d) liquidation or (e) a similar
of corporate transaction;
(ii) if the shareholders of the Employer
shall approve a plan of merger, consolidation, reorganization, liquidation or
dissolution in which the Employer does not survive (unless the approved merger,
consolidation, reorganization, liquidation or dissolution is subsequently
abandoned); or
(iii) if the shareholders of the Employer
shall approve a plan for the sale, lease, exchange or other disposition of all
or substantially all the property and assets of the Employer (unless such plan
is subsequently abandoned).
(e) In the event Employee dies or becomes
Disabled, Employee or his personal representative shall have a period of twelve
(12) months following the date of Employee's death or the last day of the
Disability Period (as the case may be) to exercise all Options which were
exercisable on the date of Employee's death or that he became Disabled (as the
case may be).
(f) The purchase price payable for the Common
Stock pursuant to the Options shall be (i) as to 750,000 Options, $.50 per
share of Common stock and (ii) as to 750,000 Options, the price determined by
the Viragen, Inc., 1995 Stock Option Plan as of the Effective Date. At the
Employee's option, the payment for the shares of Common Stock may be made
either by check payable to the Employer or by execution and delivery by the
Employee to Employer of a Note(s) dated as of each Exercise Notice. The
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manner in which shares are pledged as collateral (if a Note or Notes are used)
shall be identical to those shares described in Section 14 herein.
(g) The closing of the purchase of shares of
Common Stock pursuant to the exercise of Options, an "Option Closing"), shall
occur on the tenth (10th) business day following the date the applicable
Exercise Notice was given. At the Option Closing (or at each Option Closing,
if more than one), Employer shall issue to Employee a stock certificate
evidencing the Option Purchased Stock.
(h) At Employee's request, subject to the
provisions of Sections 16 and 17 below and any applicable securities laws,
Employee may designate his spouse, children, siblings, nieces or nephews or a
trust for their benefit of which Employee is sole trustee to own and hold
record or beneficial title to all or portions of the Option Purchased Stock.
(i) The Options granted hereunder are personal to
Employee, and, except as permitted by subsection (h) above, may not be sold,
assigned, devised, transferred, pledged, hypothecated or in any way disposed
of, by operation of law or otherwise, at any time. Any purported sale,
assignment, devise, transfer, pledge, hypothecation or disposition shall be
utterly void and of no force or effect.
(j) If at any time while unexercised Options are
outstanding, there shall be any increase or decrease in the number of issued
and outstanding Shares through the declaration of a stock dividend or through
any recapitalization resulting in a stock split-up, combination or exchange of
Shares, then and in such event:
(i) appropriate adjustment shall be made
in the maximum number of Shares available for grant, so that the same
percentage of the Employers issued and outstanding Shares shall continue to be
subject to being so optioned; and
(ii) appropriate adjustment shall be made
in the number of Shares and the exercise price per Share thereof then subject
to any outstanding Option, so that the same percentage of the Employers issued
and outstanding shares shall remain subject to purchase at the same aggregate
exercise price.
15. REGISTRATION OF OPTION PURCHASED SHARES
Employer represents that all Option Purchased Shares will be issued
from shares authorized by and subject to the provisions of the Viragen, Inc.,
1995 Stock option Plan ("Option Plan"). Employer further represents
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such Option Plan and the underlying Option Purchased Shares have been
registered under the applicable regulations of the Securities and Exchange
Commission on Form S-8 and such registration is effective as of the Effective
Date. Employer warrants that such registration covering the Option Purchased
Shares will be maintained as effective for the longer of (i) the Employment
Term or (ii) the Exercise Period.
16. PLEDGE OF STOCK
Effective upon Employee's purchase(s) of the Stock and the
delivery of the Note(s), if same occurs, in order to secure Employee's
obligations under the Note(s), Employee hereby pledges, assigns and sets over
to Employer, and grants to Employer a security interest in, the Stock. The
Stock pledged pursuant hereto shall be maintained in escrow with Atlas,
Pearlman, Trop & Borkson, P.A. pursuant to the terms of a Pledge and Escrow
Agreement attached hereto as Exhibit B. As long as any shares of Stock remain
subject to the lien of the Pledge, such shares of Stock may not be further
pledged or encumbered in any manner, and shall not be sold, transferred or
otherwise disposed of, or attempted so to be, except pursuant to the
registration of the Stock pursuant to Section 15 above. The Escrow Agent shall
not be required to relinquish the Pledge or the Escrow Agent's possession of
the certificates evidencing the Stock, unless no later than concurrently with
the sale of the Stock pursuant to the registration on Form S-8 all Employee
Notes which are secured by such Stock are paid in full. In the event any of
the Stock is to be titled in the name of an immediate family member of Employee
or a trust pursuant to Sections ___ or 14(j), as a condition thereto the
designated title holder(s) of such Stock shall execute and deliver to Employer
a pledge and escrow agreement, in form and content reasonably satisfactory to
Employer and its counsel, consistent with the terms of this Section 16. No
transfer of Stock to, or designation by Employee of (for the purposes of owning
Stock) any person or entity shall relieve Employee of any of his obligations
under the Employee Note(s) or this Agreement. With respect to each Employee
Note under which a voluntary prepayment is made by Employee, provided that
interest payments on such Employee Note are current through the date of
prepayment and such Employee Note is not in default and has not been
accelerated, for each $3,000 of principal paid by Employee under such Employee
Note, an equivalent number of shares of the Stock pledged to secure such
Employee Note shall be released from the lien of the Pledge. As long as no
event of default has occurred with respect to an Employee Note and no event
giving right to accelerate such Employee Note has occurred, Employee shall
retain all voting rights with respect to all Stock securing such Employee Note.
Following an event of default or an acceleration event, Employer shall have and
may exercise all voting rights with respect to such Stock. Employee hereby
irrevocably appoints Employer
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Employee's attorney-in-fact for such purpose, it being acknowledged that such
appointment is coupled with an interest. Any dividends or distributions
payable in respect of any Stock subject to the Pledge shall automatically be
applied to pay down the Employee Note(s) in inverse order of their respective
maturity date(s). In the event of a default under any Employee Note, in
addition to and not in limitation or lieu of any other rights or remedies
Employer may have against Employee as a result of such default, Employer may
exercise all of its rights at law and in equity as a secured party, including
without limitation under the Uniform Commercial Code, with respect to all Stock
then securing the Employee Note with respect to which the default has occurred.
Upon a default, without limiting any of Employer's other rights and remedies,
Employer may conduct a public or private foreclosure sale of the Stock securing
the Employee Note with respect to which the default has occurred. Employee
agrees that 10 days notice to him of any private sale is fair and reasonable.
Employer may be the purchaser at any public foreclosure sale, and may bid any
commercially reasonable amount at such sale. In all events, in the event of a
public or private foreclosure sale, Employee shall be liable for any
deficiency. All of Employer's rights and remedies under the Employee Note(s),
the Pledge and this Agreement, and at law or in equity, are cumulative, and
none is intended to be in substitution or in lieu of, nor is the exercise of
one intended to be a waiver of, any other. Employer shall have no obligation
to proceed against the Stock before proceeding against Employee with respect to
any default under any of the Employee Notes.
17. EMPLOYEE'S DISCLOSURES & REPRESENTATIONS & WARRANTIES.
Employee hereby acknowledges, represents and warrants to,
and/or agrees with, Employer as follows:
(a) That Employee and his representatives and
agents (i) have received and read and are familiar with this Agreement and the
exhibit annexed hereto, (ii) are familiar with the business and operations
conducted and to be conducted by Employer and the risks attendant thereto,
(iii) have been given access to and have examined or have had an opportunity to
examine before the date hereof all applicable agreements, documents, records
and books and such other applicable information as are available and relevant
to such business and operations and to enable them to verify the accuracy of
any information, agreements, documents, records or books provided to them; and
that as a director and President of Employer, Employee is very familiar with
Employer's business, operations, properties and prospects, and the significant
risks attendant to any investment in Employer.
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(b) That no assurances, representations,
warranties or guarantees of any kind or nature whatsoever relating to the
profits, losses, appreciation, distributions and/or cash flow that are to be
realized, if any, by Employee as a result of this transaction or the investment
in Employer have been made to Employee or his tax, financial, legal or other
advisors or agents by Employer or any agent, employee or affiliate of Employer
and that, with respect to the tax aspects, treatments and benefits (if any) of
this transaction and the profits or losses of Employer, Employee is relying
solely upon the advice of his own tax advisors and upon his knowledge with
respect thereto in determining the availability of any tax advantages,
treatments or benefits to him.
(c) That Employee and/or his representatives and
agents have had an opportunity to ask questions of and receive satisfactory
answers from Employer and/or a person or persons authorized to act on
Employer's behalf concerning the terms and conditions of this Agreement, this
transaction and Employer and its currently contemplated business and
operations.
(d) That Employee has sufficient knowledge and
experience in financial and business matters to evaluate the merits and risks
of an investment in Employer and to make an informed decision with respect
thereto without the services of a purchaser representative.
(e) Subject to Employee's right to designate
family members to own the Stock, that Employee is or will be acquiring the
Options and the Optioned Purchased Stock for his own account, for investment
purposes only, and not with a view to the public sale or distribution thereof,
in whole or in part or directly or indirectly, and is able to bear the economic
and financial risk of an investment in Employer for an indefinite period of
time.
(f) That Employee has been represented by such
legal and/or tax counsel and other professional advisors (if any), each of whom
has been personally selected by Employee, as Employee has found necessary to
consult concerning the transactions contemplated in or by this Agreement.
(g) That Employee has full right, power and
authority to perform all obligations under this Agreement.
(h) That Employee understands that the Options
are nonassignable, and that the Optioned Purchased Stock may be sold or
transferred only pursuant to appropriate registration and qualification thereof
with appropriate federal and state agencies, unless an opinion of counsel
reasonably acceptable to Employer and Employer's counsel is
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provided to the effect that the proposed sale or transfer is exempt from
registration and qualification.
(i) All certificates evidencing the Stock shall
be legended, such legends to be in form and content reasonably determined by
Employer, restricting transfer of the Stock unless in compliance with
applicable securities laws and with respect to the Pledge.
Employee hereby agrees to indemnify and hold harmless Employer
and its shareholders, directors, officers, employees and agents from and
against any and all loss, damage, liability, cost or expense (including
reasonable attorneys' and paralegals' fees and costs before and at trial and at
all appellate levels) due to or arising out of any inaccuracy in, or breach of,
any representation, warranty or covenant of Employee contained in this Section
17.
18. INDEPENDENT COUNSEL
Employer and Employee agree that each of them have been, or
were advised and fully understand that they are entitled to be, represented by
independent legal counsel with respect to all matters contemplated herein, from
the commencement of negotiations at all times through the execution hereof.
19. LAW APPLICABLE
This Agreement shall be governed by and construed pursuant to
the laws of the State of Florida, without giving effect to conflicts of laws
principles.
20. NOTICES
Any notices required or permitted to be given pursuant to this
Agreement shall be sufficient, if in writing, and if personally delivered or
sent by certified or registered mail, return receipt requested, to his
residence, in the case of Employee, or to its then principal office, in the
case of Employer.
21. SUCCESSION
This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective legal representatives, heirs,
assignees and/or successors in interest of any kind whatsoever; provided,
however, that Employee acknowledges and agrees that he cannot assign or
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delegate any of his rights, duties, responsibilities or obligations hereunder
to any other person or entity.
22. ENTIRE AGREEMENT
This Agreement constitutes the entire final agreement between
the parties with respect to, and supersedes any and all prior agreements
between the parties hereto both oral and written concerning, the subject matter
hereof and may not be amended, modified or terminated except by a writing
signed by the parties hereto.
23. SEVERABILITY
If any provision of this Agreement shall be held to be invalid
or unenforceable, and is not reformed by a court of competent jurisdiction,
such invalidity or unenforceability shall attach only to such provision and
shall not in any way affect or render invalid or unenforceable any other
provision of this Agreement, and this Agreement shall be carried out as if such
invalid or unenforceable provision were not contained herein.
24. NO WAIVER
A waiver of any breach or violation of any term, provision or
covenant contained herein shall not be deemed a continuing waiver or a waiver
of any future or past breach or violation. No oral waiver shall be binding.
25. ATTORNEYS' FEES
In the event that either of the parties to this Agreement
institutes suit against the other party to this Agreement to enforce any of his
or its rights hereunder, the prevailing party in such action shall be entitled
to recover from the other party all reasonable costs thereof, including
reasonable attorneys' and paralegals' fees and costs incurred before and at
trial and at all tribunal levels.
26. COUNTERPARTS
This Agreement may be executed in counterparts, each of which
shall be an original, but both of which together shall constitute one and the
same instrument.
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27. INDEMNITY OF EMPLOYEE
Employer shall indemnify and hold harmless Employee from and
against any and all claims, judgments, fines, penalties, liabilities, losses,
costs and expenses (including reasonable attorneys' fees and costs) asserted
against or incurred by Employee as a result of acts or omissions of Employee
taken or made in the course of performing his duties for Employer or by reason
of Employee acting or having acted as a director or officer of Employer, to the
maximum extend permitted by law, including Section 607.0850, Florida Statutes
(including the advancement of expense provisions thereof); provided, however,
that such indemnity shall not apply to acts or omissions of Employee which
constitute misconduct, gross negligence or which were intended by Employee to
personally benefit Employee, directly or indirectly, at the expense of
Employer, unless the matter which benefits Employee was first fully disclosed
to the Board of Directors of Employer and approved by said Board.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands on
the day and year first above written.
VIRAGEN, INC.
By:
-------------------------
DENNIS W. HEALEY
Executive Vice President
-------------------------
GERALD SMITH
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<PAGE> 1
EXHIBIT 10(iii)
(iii) Employment Agreement between the Company and
Dennis W. Healey dated October 6, 1995.
EMPLOYMENT AGREEMENT
AGREEMENT dated as of October 6, 1995 (the "Effective Date") by and
between VIRAGEN, INC., a Delaware corporation ("Employer or the "Company"), and
DENNIS W. HEALEY ("Employee").
W I T N E S S E T H:
WHEREAS, Employer desires to employ the Employee upon the terms and
conditions hereinafter set forth and Employee desires to accept employment upon
such terms and conditions; and
WHEREAS, Employer and Employee desire to set forth in writing the
terms and conditions of their agreements and understandings with respect to
Employee's employment by Employer.
NOW, THEREFORE, Employer hereby employs Employee and Employee hereby
accepts employment under the following terms and conditions:
1. EMPLOYMENT
Employer hereby employs Employee, and Employee hereby accepts
employment by Employer, upon all the terms and conditions hereinafter set
forth.
2. TERM
Subject to the provisions for earlier termination set forth in
Section 9 hereof, this Agreement shall commence on the Effective Date and shall
end as of the close of business on September 30, 1997 (the "Employment Term").
The term "first year", as used herein, means the period commencing on the
Effective Date and ending as of the close of business on September 30, 1996,
the term "second year", as used herein, means the period commencing on October
1, 1996 and ending as of the close of business on September 30, 1997, and the
term "year", as used herein, means, as the context requires, the first year or
the second year. Notwithstanding any of the foregoing to the contrary, if this
Employment Agreement is terminated prior to the expiration of the Employment
Term, a year shall mean, with
<PAGE> 2
respect to the year during which termination occurs, the period commencing on
the first day of such year and ending as of the close of business of the day of
termination of Employee's employment, and "Employment Term" shall mean the
period commencing on the Effective Date and ending as of the close of business
of the day of termination of Employee's employment.
3. EMPLOYEE'S REPRESENTATIONS AND WARRANTIES
Employee represents and warrants to Employer that he is free
to accept employment with Employer as contemplated herein and has no other
written or oral obligations or commitments of any kind or nature which would in
any way interfere with his acceptance of employment pursuant to the terms
hereof or the full performance of his obligations hereunder or the exercise of
his best efforts in his employment hereunder.
4. DUTIES AND EXTENT OF SERVICES
Employee shall be employed as Employer's Executive Vice
President and Chief Financial Officer and, as such, shall, subject to the
direction of Employer's President, supervise the conduct the Employer's
operations and affairs as assigned by the President, and perform such other
duties and responsibilities as may be assigned to Employee from time to time
consistent with such title by Employer's President. Employee agrees to devote
sufficient time, skill, attention and energy diligently and competently to
perform the duties and responsibilities reasonably assigned to him hereunder or
pursuant hereto to the best of his abilities. Employee shall use his best
efforts to be loyal and faithful at all times and constantly endeavor to
improve his ability and his knowledge of the business of Employer in an effort
to increase the value of his services for the mutual benefit of Employer and
Employee. Employer acknowledges that Employee is also employed by Medicore,
Inc. and its subsidiaries. Employee represents and warrants that his duties
for Medicore, Inc. and its subsidiaries will not interfere with the
satisfactory performance of his obligations under this Agreement. Employee
agrees not to enter into any other employment agreement, other than with
subsidiaries and/or affiliates of the Company as may be approved by the
Company's Board of Directors, during the term hereof.
5. COMPENSATION
Employee shall receive an annual salary during the Employment
Term as follows: $80,000 for the period October 1, 1995 to September 30, 1996,
and $85,000 for the period October 1, 1996 to September 30, 1997. Employee's
salary shall be payable in accordance with the Company's normal payroll
process, currently bi-weekly. Additional consideration payable to Employee
hereunder consists of (a) the grant to Employee of options to
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<PAGE> 3
acquire 400,000 shares of common stock of Employer (as further described
herein), and (b) fringe benefits, if any, that shall be made available to
Employee further described herein.
6. FRINGE BENEFITS AND EXPENSES
A. Employee Plans. Employee shall be eligible (subject
to the terms and conditions of particular plans and programs) to participate in
such medical, hospitalization, group health, accident, disability and life
insurance programs and plans, such pension, profit sharing, stock option,
incentive compensation and stock purchase plans and such other employee benefit
programs to the same extent such plans and programs are made generally
available from time to time by Employer to all of its other similarly-situated
employees; provided, however, Employer shall be under no obligation to make any
of such plans or programs available to its employees or continue any which
currently or in the future exist, except as otherwise required by law.
B. Automobile. For the term of this Agreement, Employer
shall provide to Employee an automobile, acceptable to the Employer's
President, and shall pay all gas, maintenance, insurance and other expenses
related thereto, for performance of Employee's duties on behalf of Employer as
specified herein.
C. Other Expenses. Employer shall promptly pay directly
or reimburse Employee for his reasonable out-of-pocket costs and expenses
incurred in connection with the performance of his duties and responsibilities
hereunder subject to the submission by Employee of appropriate invoices,
receipts and other supporting documentation, consistent with Employer's
customary reimbursement policies and procedures.
7. VACATIONS
Employee shall be entitled to normal vacation (of not less
than two weeks) taken by other members of senior management during each
twelve-month period of the Employment Term. Employee shall not be entitled to
be compensated for any unused vacation upon termination of this Agreement. The
periods during which Employee will be absent from work shall be determined by
Employee taking into account the needs of Employer's business.
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<PAGE> 4
8. FACILITIES
Employer shall provide and maintain (or cause to be provided
and maintained) such facilities, equipment, supplies and personnel as it
reasonably determines is adequate for Employee's performance of his duties and
responsibilities under this Agreement.
9. TERMINATION OF EMPLOYMENT
A. Termination Events. Notwithstanding any provisions
of this Agreement to the contrary, Employee's employment may be terminated by
Employer with Cause (as hereinafter defined) effective upon the delivery of
written notice to Employee. In addition, Employee's employment shall terminate
(i) upon Employee's death or (ii) upon Employee becoming Disabled (as
hereinafter defined).
B. Definition of Disabled. For purposes of this
Agreement, Employee shall be deemed to be "Disabled" when, by reason of
physical or mental illness or of injury, he is unable to perform substantially
all of the duties and responsibilities required of him in connection with his
employment hereunder. No disability shall be deemed to exist until after
Employee shall be unable to perform his duties hereunder for ninety (90)
consecutive days (the "Disability Period"). If Employee shall have been under
a disability but shall have returned to work prior to the end of the Disability
Period, any new disability commencing within thirty (30) days of the
termination of the prior disability shall be a continuation of the prior
disability, and the period of all such disabilities shall be added together to
determine whether, or how much of, the Disability Period has elapsed.
4
<PAGE> 5
C. Definition of Cause. For purposes of this Agreement,
"Cause" shall be: include, but not be limited to: (a) conviction for fraud or
criminal conduct (other than conviction of, or a plea of guilty to, a traffic
violation), from which no appeal can be taken; (b) habitual drunkenness or drug
addiction; (c) embezzlement; (d) material sanctions against Employee in his
capacity as an employee of Employer by regulatory agencies governing Employer
or against Employer because of wrongful acts or conduct of Employee which have
a material adverse affect upon the Employer and its business; (e) material
breach or default by Employee of any of the material terms or conditions of
this Agreement, and the continuation of such material breach or default by
Employee for a period of seven (7) days following the date of receipt of
written notice from Employer specifying the breach or default of Employee; or
(f) the resignation or quitting of Employee prior to the end of the Employment
Term (in this last event, Employee's employment shall be deemed terminated with
Cause on the date that he resigns or quits).
If Employee's employment is terminated by Employer without
Cause as defined in this Section, Employee shall be given sixty (60) days
written notice of termination by Employer and be entitled to receive the
greater of (i) two years compensation and fringe benefits/expenses as provided
for in Sections 5 & 6 hereof or (ii) compensation and fringe benefits/expenses
as provided for in sections 5 & 6 payable through the remainder of the
Employment Term as provided for in Section 2 hereof. Additionally, in the
event of termination without Cause, or non-renewal of this Agreement at the end
of the Employment Term, any outstanding but unexercised stock options or
warrants granted to Employee shall continue to be fully exercisable through
their stated respective Exercise Period(s).
10. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION
A. Confidential Information. Employee acknowledges that
Employee has been informed that it is the policy of Employer to maintain as
secret and confidential all information relating to (i) the financial
condition, businesses and interests of Employer and its affiliates, (ii) the
systems, know-how, products, services, costs, inventions, patents, patent
applications, formulae, research and development procedures, notes and results,
computer software programs, marketing and sales techniques and/or programs,
methods, methodologies, manuals, lists and other trade secrets heretofore or
hereafter acquired, sold, developed and/or used by Employer and its affiliates
and (iii) the nature and terms of Employer's and its affiliates' relationships
with their respective customers, clients, suppliers, lenders, vendors,
consultants, independent contractors and employees (all such information being
hereinafter collectively referred to
5
<PAGE> 6
as "Confidential Information"), and Employee further acknowledges that such
Confidential Information is of great value to Employer and its affiliates and,
in and by reason and as a result of Employee's employment by Employer, Employee
will be making use of, acquiring and/or adding to such Confidential
Information. Therefore, Employee understands that it is reasonably necessary
to protect Employer's and its affiliates' trade secrets, good will and business
interests that Employee agree and, accordingly, Employee does hereby agree,
that Employee will not directly or indirectly (except where authorized by the
Board of Directors of Employer for the benefit of Employer and/or its
affiliate(s) and/or as required in the course of his employment) at any time
hereafter divulge or disclose for any purpose whatsoever to any persons, firms,
corporations or other entities other than Employer or its affiliates
(hereinafter referred to collectively as "Third Parties"), or use or cause or
authorize any Third Parties to use, any such Confidential Information, except
as otherwise required by law.
B. Employer's Materials. In accordance with the
foregoing, Employee furthermore agrees that (i) Employee will at no time retain
or remove from the premises of Employer or its affiliates any research and
development materials, drawings, notebooks, notes, reports, formulae, software
programs or discs or other containers of software, manuals, data, books,
records, materials or documents of any kind or description for any purpose
unconnected with the strict performance of Employee's duties with Employer and
(ii) upon the cessation or termination of Employee's employment with Employer
for any reason, Employee shall forthwith deliver or cause to be delivered up to
Employer any and all research and development materials, drawings, notebooks,
notes, reports, formulae, software programs or discs or other containers of
software, manuals, data, books, records, materials and other documents and
materials in Employee's possession or under Employee's control relating to any
Confidential Information or any property or information which is otherwise the
property of Employer or its affiliates.
11. COVENANT-NOT-TO-COMPETE
In view of the Confidential Information to be obtained by or
disclosed to Employee, because of the know-how acquired and to be acquired by
Employee, and as a material inducement to Employer to enter into this
Agreement, issue the Options (as defined below) and continue to employ
Employee, Employee covenants and agrees that, so long as Employee is employed
by Employer and for a period of two (2) years after Employee ceases for any
reason to be employed by Employer, Employee shall not, directly or indirectly,
(i) divert business from, (ii) solicit or transact any business competitive
with Employer or its affiliates with, or (iii) sell any products
6
<PAGE> 7
or services sold or offered by Employer or its affiliates to, any customer or
former customer of Employer or its affiliates. In addition, Employee covenants
and agrees that, so long as Employee is employed by Employer and for a period
of two (2) years after Employee ceases for any reason to be employed by
Employer, Employee hereby agrees to refrain from, anywhere in the world (the
"Geographical Area"), directly or indirectly owning, managing, operating,
controlling or financing, or participating in the ownership, management,
control or financing of, or being connected with or having an interest in, or
otherwise taking any part as a stockholder, director, officer, employee, agent,
consultant, partner or otherwise in, any business competitive with that engaged
in or being developed by Employer or its affiliates during Employee's term of
employment. Without limitation of the foregoing, Employer's business is
acknowledged to include the development, manufacture and sale of human
leukocyte interferon therapy and products and other natural or recombinant
technologies aimed at enhancing the human immune system. Employee acknowledges
that Employer's business is anticipated to be international in scope, that a
similar business could effectively compete with Employer's and its affiliates
businesses from any location in the world, and that, therefore, the restricted
Geographical Area is reasonable in scope to protect Employer's and its
affiliates' trade secrets and legitimate business interests.
12. EMPLOYER'S REMEDIES FOR BREACH OF SECTIONS 10 & 11
Employee covenants and agrees that if Employee shall violate
or breach any of Employee's covenants or agreements provided for in Sections 10
or 11 hereof, Employer and/or its affiliates shall be entitled to an accounting
and repayment of all profits, compensation, commissions, remunerations or
benefits which Employee directly or indirectly has realized or realizes as a
result of, growing out of or in connection with any such violation or breach.
In addition, in the event of a breach or violation or threatened or imminent
breach or violation of any provisions of Sections 10 or 11 hereof, Employer
and/or its affiliates shall be entitled to a temporary and permanent injunction
or any other appropriate decree of specific performance or equitable relief,
without posting of bond, from a court of competent jurisdiction in order to
prevent, prohibit or restrain any such breach or violation or threatened or
imminent breach or violation by Employee, by Employee's partners, agents,
representatives, servants, employers or employees and/or by any third parties.
Employer shall be entitled to such injunctive or other equitable relief in
addition to any damages which are suffered, and the prevailing party shall be
entitled to reasonable attorneys' and paralegals' fees and costs and other
costs incurred in connection with any such litigation, both before and at trial
and at all tribunal levels. Resort by Employer and/or its affiliates to such
injunctive or other equitable relief shall not be deemed to waive or to
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<PAGE> 8
limit in any respect any other rights or remedies which Employer or its
affiliates may have with respect to such breach or violation.
13. REASONABLENESS OF RESTRICTIONS
A. Reasonableness. Employee acknowledges that any
breach or violation of Sections 10 or 11 hereof will cause irreparable injury
and damage and incalculable harm to Employer and its affiliates and that it
would be very difficult or impossible to measure the damages resulting from any
such breach or violation. Employee further acknowledges that Employee has
carefully read and considered the provisions of Sections 10, 11 and 12 hereof
and, having done so, agrees that the restrictions and remedies set forth in
such Sections (including, but not limited to, the time period, geographical and
types of restrictions imposed) are fair and reasonable and are reasonably
required for the protection of the business, trade secrets, interests and
goodwill of Employer and its affiliates.
B. Severability. Employee understands and intends that
each provision and restriction agreed to by Employee in Sections 10, 11 and 12
hereof shall be construed as separate and divisible from every other provision
and restriction and that, in the event that any one of the provisions of, or
restrictions in, Sections 10, 11 and/or 12 hereof shall be held to be invalid
or unenforceable, the remaining provisions thereof and restrictions therein
shall nevertheless continue to be valid and enforceable as though the invalid
or unenforceable provisions or restrictions had not been included therein, and
any one or more of such valid provisions and restrictions may be enforced in
whole or in part as the circumstances warrant. In the event that any such
provision relating to time period and/or geographical and/or type of
restriction shall be declared by a court of competent jurisdiction to exceed
the maximum or permissible time period, geographical area or type of
restriction such court deems reasonable and enforceable, said time period
and/or geographical and/or type of restriction shall be deemed to become and
shall thereafter be the maximum time period and/or geographical restriction
and/or type of restriction which such court deems reasonable and enforceable.
C. Survivability. The restrictions, acknowledgments,
covenants and agreements of Employee set forth in Sections 10, 11, 12 and 13 of
this Agreement shall survive any termination of this Agreement or of Employee's
employment (for any reason, including expiration of the Employment Term).
D. Comparable Restrictions. Employer agrees that it
will use its best efforts to have other senior executives execute and observe
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agreements containing similar provisions as are contained in Sections 10, 11
and 12 hereof.
14. STOCK OPTIONS
Effective the Effective Date, Employer hereby grants to
Employee, pursuant to Employer's 1995 Stock Option Plan (the "Plan"), options
to acquire up to 400,000 shares of the Company's Common Stock (the "Options"),
for a period of five (5) years from the date hereof, in accordance with the
Stock Option Agreement attached hereto (Exhibit A) and made a part hereof.
Such Options shall vest in full upon execution of this Employment Agreement.
Employer represents and warrants that (i) all shares
underlying the Options will be issued from shares authorized by and subject to
the provisions of the Plan (ii) the Plan and the shares underlying the Options
have been registered under the applicable regulations of the Securities and
Exchange Commission on Form S-8 (iii) such registration is effective as of the
Effective Date, and (iv) such registration covering the shares underlying the
Options will be maintained as effective for the longer of (a) the Employment
Term or (b) the Exercise Period of the Options as defined in Exhibit A.
15. EMPLOYEE'S DISCLOSURES & REPRESENTATIONS & WARRANTIES.
Employee hereby acknowledges, represents and warrants to,
and/or agrees with, Employer as follows:
(a) Subject to Employee's right to designate
family members to own the stock acquired through exercise of the Options, that
Employee is acquiring the Options for his own account, for investment purposes
only, and not with a view to the public sale or distribution thereof, except as
applicable under the Form S-8 Registration filed by the Company covering the
Shares underlying the Options.
(b) That Employee has full right, power and
authority to perform all obligations under this Agreement.
(c) That Employee understands that the Options
are nonassignable, and that the Shares acquired through exercise of the Options
may be sold or transferred only pursuant to the Form S-8 Registration filed by
the Company covering the Shares underlying the Options.
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<PAGE> 10
Employee hereby agrees to indemnify and hold harmless Employer
and its shareholders, directors, officers, employees and agents from and
against any and all loss, damage, liability, cost or expense (including
reasonable attorneys' and paralegals' fees and costs before and at trial and at
all appellate levels) due to or arising out of any material inaccuracy in, or
material breach of, any material representation, warranty or covenant of
Employee contained herein.
16. INDEPENDENT COUNSEL
Employer and Employee agree that each of them have been, or
were advised and fully understand that they are entitled to be represented by
independent legal counsel with respect to all matters contemplated herein from
the commencement of negotiations at all times through the execution hereof.
17. LAW APPLICABLE
This Agreement shall be governed by and construed pursuant to
the laws of the State of Florida, without giving effect to conflicts of laws
principles.
18. NOTICES
Any notices required or permitted to be given pursuant to this
Agreement shall be sufficient, if in writing, and if personally delivered or
sent by certified or registered mail, return receipt requested, to his
residence, in the case of Employee, or to its then principal office, in the
case of Employer.
19. SUCCESSION
This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective legal representatives, heirs,
assignees and/or successors in interest of any kind whatsoever; provided,
however, that Employee acknowledges and agrees that he cannot assign or
delegate any of his rights, duties, responsibilities or obligations hereunder
to any other person or entity.
20. ENTIRE AGREEMENT
This Agreement constitutes the entire final agreement between
the parties with respect to, and supersedes any and all prior agreements, both
oral and written, between the parties hereto, except as related to rights of
the Employee and obligations related thereto of Employer regarding
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previously granted stock options and previously purchased stock, as may have
been modified from time to time. The subject matter hereof may not be amended,
modified or terminated except by a writing signed by the parties hereto.
21. SEVERABILITY
If any provision of this Agreement shall be held to be invalid
or unenforceable, and is not reformed by a court of competent jurisdiction,
such invalidity or unenforceability shall attach only to such provision and
shall not in any way affect or render invalid or unenforceable any other
provision of this Agreement, and this Agreement shall be carried out as if such
invalid or unenforceable provision were not contained herein.
22. NO WAIVER
A waiver of any breach or violation of any term, provision or
covenant contained herein shall not be deemed a continuing waiver or a waiver
of any future or past breach or violation. No oral waiver shall be binding.
23. ATTORNEYS' FEES
In the event that either of the parties to this Agreement
institutes suit against the other party to this Agreement to enforce any of his
or its rights hereunder, the prevailing party in such action shall be entitled
to recover from the other party all reasonable costs thereof, including
reasonable attorneys' and paralegals' fees and costs incurred before and at
trial and at all tribunal levels.
24. COUNTERPARTS
This Agreement may be executed in counterparts, each of which
shall be an original, but both of which together shall constitute one and the
same instrument.
25. INDEMNITY OF EMPLOYEE
Employer shall indemnify and hold harmless Employee from and
against any and all claims, judgments, fines, penalties, liabilities, losses,
costs and expenses (including reasonable attorneys' fees and costs) asserted
against or incurred by Employee as a result of acts or omissions of Employee
taken or made in the course of performing his duties for Employer or by reason
of Employee acting or having acted as a director or officer of Employer, to the
maximum extent permitted by law, including Section
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607.0850, Florida Statutes (including the advancement of expense provisions
thereof); provided, however, that such indemnity shall not apply to acts or
omissions of Employee which constitute misconduct, gross negligence or which
were intended by Employee to personally benefit Employee, directly or
indirectly, at the expense of Employer, unless the matter which benefits
Employee was first fully disclosed to the Board of Directors of Employer and
approved by said Board.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands on
the day and year first above written.
VIRAGEN, INC.
By:
----------------------------
GERALD SMITH
President
EMPLOYEE
----------------------------
DENNIS W. HEALEY
12
<PAGE> 1
EXHIBIT 10(iv)
(iv) Form of Stock Option Agreement dated October 6, 1995.
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, DATED AS OF ___________, between Viragen, Inc. a
Delaware Corporation (the "Company") and _______ ("Optionee").
In consideration for services rendered to the Company as a director, the
Company hereby grants to Optionee the option to acquire Common Stock, par value
$.01 per share, of the Company (the "Common Stock"), upon the following terms
and conditions:
1. Grant of Option. The Company hereby grants to Optionee the
right and option (the "Option") to purchase up to 50,000 shares of Common Stock
(the "Shares"), to be transferred upon the exercise thereof, fully paid and
nonassessable.
2. Exercise Price. The exercise price of the Shares subject to
the Option shall be $1.00 per share. The Company shall pay all original issue
or transfer taxes on the exercise of the Option.
3. Exercisability of Option. Subject to the provisions of
Paragraph 6 hereof, the Option shall be exercisable by Optionee in whole or in
part, at any time and from time to time, commencing on August 15, 1994 and
ending on August 14, 1999.
4. Non-Assignability of Option. The Option shall not be given,
granted, sold, exchanged, transferred, pledged, encumbered, assigned or
otherwise disposed of by Optionee, other than by will or the laws of descent
and distribution, and during the lifetime of Optionee, shall not be exercisable
by any other person, but only by him.
5. Method of Exercise of Option. Optionee shall notify the
Company by written notice, in the form of the Notice of Exercise attached
hereto (attachment A), delivered to the Company's principal office, attention:
Chief Executive Officer, accompanied by Optionee's cashier's check payable to
the order to the Company for the full exercise price of the Shares purchased.
As soon as practicable after the receipt of such Notice of Exercise, the
Company shall, at its principal office, tender to Optionee a certificate or
certificates issued in Optionee's name evidencing the Shares purchased by
Optionee hereunder.
<PAGE> 2
6. Termination of Service; Death.
(a) In the event Optionee ceases to be a director of the Company at
any time prior to expiration of the Option, for any reason other than his
death, the unexercised portion of the Option may be exercised by Optionee for a
period of ninety (90) days from the date of such cessation.
(b) In the event of Optionee's death at any time prior to the
expiration of the Option, the Unexercised portion of the Option may be
exercised by the estate of Optionee, or by the person who acquired the right to
exercise the Option by bequest or inheritance or by reason of the death of
Optionee, at any time within twelve (12) months after the date of Optionee's
death.
7. Shares of Common Stock as Investment. By accepting the
Option, Optionee agrees that nay and all Shares purchased upon the exercise
thereof, unless registered at the time of purchase under the Securities Act of
1933, as amended (the "Securities Act"), shall be acquired for investment and
not for distribution, and upon the issuance of any or all of the Shares subject
to the Option, Optionee shall deliver to the Company a representation in
writing that such Shares are being acquired in good faith for investment and
not with a view to resale or distribution. The Company may place an
appropriate restrictive legend on the certificate or certificates evidencing
such Shares.
8. Adjustment of Shares.
(a) If at any time prior to the expiration or exercise in full of
the Option, there shall be any increase or decrease in the number of issued and
outstanding shares of the Common Stock through the declaration of a stock
dividend or through any recapitalization resulting in a stock split-up,
combination or exchange of the Common Stock, then and in such event,
appropriate adjustment shall be made in the number of Shares, and the exercise
price per Share thereof, that remain unexercised under the Option, so that the
same percentage of the Company's issued and outstanding shares of Common Stock
shall remain subject to purchase at the same aggregate exercise price.
(b) Except as otherwise expressly provided herein, the issuance by
the Company of shares of its capital stock of any class, or securities
convertible into shares of capital stock of any class, either in connection
with a direct sale of upon the exercise of rights or warrants to subscribe
therefore, or upon conversions of shares or obligations the Company convertible
into such shares or other securities, shall not affect, and no adjustment by
reason thereof shall be made with respect to, the number of exercise price of
the Shares that remain unexercised under the Option.
2
<PAGE> 3
(c) Without limiting the generality of the foregoing, the
existence of unexercised Shares under the Option shall not affect in any manner
the right or power of the Company to make, authorize or consummate (i) any or
all adjustments, recapitalizations, reorganizations or other change sin the
Company's capital structure or its business; (ii) any merger or consolidation
of the Company; (iii) any issue by the Company of debt securities, or preferred
or preference stock that would rank above the Shares issuable upon exercise of
the Option; (iv) the dissolution or liquidation of the Company; (v) any sale,
transfer or assignment of all or any part of the assets or business of the
Company; or (vi) any other corporate act or proceeding, whether of a similar
character or otherwise.
9. No Rights as Stockholder. Optionee shall have no rights as a
stockholder of the Company in respect of the Shares as to which the Option
shall not have been exercised and payments made therefore as herein provided.
10. Binding Effect. Except as otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of the parties hereto,
their heirs, legal representatives, successors and permitted assigns.
11. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without giving
effect to the conflict of laws principles thereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
VIRAGEN, INC.
By:
--------------------------
OPTIONEE
--------------------------
3
<PAGE> 4
ATTACHMENT A
NOTICE OF EXERCISE
The undersigned hereby irrevocably elects to exercise the within Option to the
extent of purchasing __________ shares of Common Stock of Viragen, Inc., a
Delaware Corporation, and hereby makes payments of $________ in payment
thereof.
----------------------------------
Signature
----------------------------------
Date
INSTRUCTIONS FOR ISSUANCE OF STOCK
Name:
-------------------------------------------------
(Please type or print in block letters)
Address:
---------------------------------------------
---------------------------------------------
Soc Sec No:
-----------------------------------------
4
<PAGE> 1
EXHIBIT 10(v)
(v) Consulting Agreement between the Company and
Girmon Investment Co. dated October 13, 1995.
CONSULTING AGREEMENT
THIS AGREEMENT entered into as of October 13, 1995 (the "Agreement") by and
between Viragen, Inc. (the "Company") and Girmon Investment Co., Limited, a
company incorporated in Ireland, Company No. 233671 ("Girmon"), acting solely
by and through its Chairman of the Board and Chief Executive Officer, Mr. Moty
Hermon ("Hermon") (collectively the "Consultant"), hereby agree to the
following:
1. Appointment of Consultant. The Company hereby engages
Consultant, on a non-exclusive basis, and Consultant hereby agrees to render
services to the Company through Hermon as an international financial and
business development consultant on a worldwide basis.
2. Duties. During the term of this Agreement, Consultant, solely
by and through Hermon, shall provide advice to, undertake for and consult with
the Company concerning international, financial and business development
matters, including but not limited to, financial and investor relations,
international marketing, strategic planning, and corporate organization and
structure. Hermon shall devote and spend a minimum of 50% of his business time
and effort, representing not less than eighty (80) hours per calendar month,
exclusively to perform services for the Company in accordance with this
Agreement, subject to an appropriate and proportional reduction for U.S. legal
holidays and equivalent of three (3) vacation weeks per twelve (12) month
period. Consultant shall use its best efforts to at all times promote the best
interests of the Company.
3. Term. Subject to the provisions of paragraph 8 herein, the
term of this Agreement shall be for a two (2) year period commencing on the
date hereof.
4. Compensation. For the services described herein, Consultant
shall receive as sole and aggregate compensation from the Company, including
its subsidiaries and affiliates, for all services rendered to and on behalf of
the Company, a Warrant, attached hereto as Exhibit A and made a part hereof,
for the purchase of up to 250,000 shares of the Company's Common Stock,
irrevocably exercisable for a period of five (5) years following the dates of
vesting as described herein. The purchase price of the shares underlying the
Warrant shall be $1.00 per share. The Warrant shall vest and become exercisable
by Consultant (a) as to 83,334 shares on the date hereof, (b) as to 83,333
shares on April 13, 1996, and (c) as to 83,333
<PAGE> 2
shares on October 13, 1996. The Company acknowledges that this compensation
shall be in addition to any compensation, including warrants, previously
received by Hermon for prior services performed for the Company.
5. Expenses. Consultant shall be promptly reimbursed by the
Company for reasonable, documented, out-of- pocket expenses it shall incur in
performing its services under this Agreement up to an aggregate of $20,000 per
12- month period of this Agreement. Travel and related expenses shall be
limited to those incurred by Hermon. Receipts for reimbursable expenses shall
be provided by Consultant in accordance with Company policy.
6. Registration. The Company agrees to provide Consultant with
certain registration rights as defined in Exhibit A attached hereto.
7. Confidentiality. Consultant agrees to execute the Company's
Confidentiality Agreement attached hereto as Exhibit B and made a part hereof.
In view of the Confidential Information to be obtained by or disclosed to
Consultant, because of the know-how acquired and to be acquired by Consultant,
and as a material inducement to the Company to enter into this Agreement and
continue to engage Consultant, Consultant covenants and agrees that, so long as
Consultant is engaged by the Company and for a period of two (2) years after
Consultant ceases for any reason to be engaged by the Company, Consultant shall
not, directly or indirectly (i) divert business from, (ii) solicit or transact
any business competitive with the Company or its affiliates with, or (iii) sell
any products or services sold or offered by the Company or its affiliates to,
any customer or former customer of the Company or its affiliates. In addition,
Consultant covenants and agrees that, so long as Consultant is engaged by the
Company and for a period of two (2) years after Consultant ceases for any
reason to be engaged by the Company, Consultant hereby agrees to refrain from,
anywhere in the world (the "Geographical Area"), directly or indirectly owning,
managing, operating, controlling or financing, or participating in the
ownership, management, control or financing, or participating in the ownership,
management, control or financing of, or being connected with or having an
interest in, or otherwise taking any part as a stockholder, director, officer,
employee, agent, consultant, partner or otherwise in, any business competitive
with that engaged in or being developed by the Company or its affiliates during
Consultant's term of engagement. The Company's business is acknowledged to
include, but not be limited to, the development, manufacture and distribution
of human leukocyte-derived interferon therapy products and other derivative
natural or recombinant technologies aimed at enhancing the human immune system,
including cosmetic applications. Consultant acknowledges that the Company's
business is international in scope, that a similar business could effectively
compete with the Company and its affiliates' businesses from any location in
the world, and that,
2
<PAGE> 3
therefore, the restricted Geographical Area is reasonable in scope to protect
the Company and its affiliates' trade secrets and legitimate business
interests. Any advice rendered by Consultant pursuant to this Agreement may
not be disclosed publicly in any manner without the prior written approval of
the Company. The provisions of this paragraph 7 shall survive the termination
and expiration of this Consulting Agreement.
8. Termination.
A. Events. Notwithstanding any provisions of this
Agreement (and its Exhibits) to the contrary, Consultant's engagement may be
terminated by the Company with Cause (as hereinafter defined), effective upon
the delivery of written notice to Consultant. In addition, Consultant's
engagement shall automatically terminate (i) upon Consultant filing for
protection of any kind under bankruptcy law in any jurisdiction (ii) upon
Hermon leaving the post of Chairman or CEO of Girmon, leaving the employ of
Girmon or directly or indirectly disassociating himself in any way with Girmon
(iii) upon a change of control of Girmon from Hermon to any other person or
entity (iv) upon Hermon's death or (v) upon Hermon becoming Disabled (as
hereinafter defined).
B. Definition of Cause. For purposes of this Agreement,
"Cause" shall include, but not be limited to: (a) conviction for fraud or
criminal conduct (other than conviction of, or a plea of guilty to, a non-DUI
related traffic violation) (b) habitual drunkenness or drug addiction; (c)
embezzlement; (d) sanctions against Consultant in its capacity as a advisor to
the Company by regulatory agencies governing the Company or against Consultant
because of wrongful acts or misconduct of Consultant (e) breach or default by
Consultant of any of the terms or conditions of Section 7 of this Agreement,
(f) material breach or default by Consultant of any of the terms or conditions
of the Confidentiality Agreement attached as Exhibit B hereto or (g)
resignation by Consultant prior to the end of the term of this Agreement (in
this last event, Consultant's engagement is deemed terminated with Cause on the
date that it resigns).
C. Definition of Disabled. For purposes of this
Agreement, Hermon shall be deemed to be "Disabled" when, by reason of physical
or mental illness or of injury, he is unable to perform substantially all of
the duties and responsibilities required of him in connection with his
employment hereunder. No disability shall be deemed to exist until after
Hermon shall be unable to perform his duties hereunder for ninety (90)
consecutive days (the "Disability Period"). If Hermon shall have been under a
disability but shall have returned to work prior to the end of the Disability
Period, any new disability commencing within thirty (30) days of the
termination of the prior disability shall be a continuation of the prior
3
<PAGE> 4
disability, and the period of all such disabilities shall be added together to
determine whether, or how much of, the Disability Period has elapsed.
9. Irrevocability of Warrants Following Vesting. Consultant and
the Company agree that, subject to termination pursuant to Section 8 of the
Warrant attached as Exhibit A hereto, upon the vesting of the Warrant pursuant
to its terms, such Warrant shall be irrevocable for a period of five (5) years.
10. Independent Contractor. Consultant and the Company hereby
acknowledge that Consultant is an independent contractor. Unless directed by
the Company in writing, Consultant shall not hold itself out as, nor shall it
take any action from which others might infer, that it is an agent of or a
joint venture of the Company. Consultant and the Company hereby acknowledge
that Consultant is acting solely as an independent contractor and as an
independent advisor.
11. Miscellaneous. This Agreement sets forth the entire
understanding of the parties relating to the subject matter hereof, and
supersedes and cancels any prior communications, understandings and agreements
between the parties, except for any warrant agreements existing prior to the
date hereof between Hermon and the Company. This Agreement cannot be modified
or changed, nor can any of its provisions be waived, except by written
agreement signed by all parties. This Agreement shall be governed by the laws
of the State of Florida. In the event of any dispute as to the terms of this
Agreement, the prevailing party in any litigation shall be entitled to
reasonable attorney's fees.
4
<PAGE> 5
12. Notices. Any notices or communications with respect to this
Agreement shall be delivered to the following addresses:
As to the Company: Viragen, Inc.
Attn: Gerald Smith, President
2343 West 76th Street
Hialeah, Florida 33016
As to Consultant: Girmon Investment Co., Limited
Attn: Moty Hermon, Chairman of the Board
and Chief Executive Officer
c/o Mr. Alan Gainsford
Gainsford, Elliott & Co.
Chartered Accountants
4 Brook Street, Hanover Square
London WI, United Kingdom
IN WITNESS WHEREOF, the parties and their duly authorized representatives have
executed this Agreement as of the day and year first above written.
VIRAGEN, INC.
By:
---------------------------------------
Gerald Smith, President
GIRMON INVESTMENT CO., LIMITED,
a company incorporated in Ireland
By:
---------------------------------------
Moty Hermon, Individually and as
Chairman of the Board and Chief
Executive Officer
5
<PAGE> 1
EXHIBIT 10(vi)
(vi) Consulting Agreement between the Company and
Chesterbrook Partners, Inc. dated October 13, 1995.
CONFIDENTIALITY AGREEMENT
BETWEEN: VIRAGEN, INC.
2343 WEST 76TH STREET
HIALEAH, FLORIDA 33016
(HEREIN REFERRED TO AS THE "COMPANY")
and
NED H. ELGART
PRESIDENT
CHESTERBROOK PARTNERS INC.
1499 W. PALMETTO PARK ROAD
SUITE 171
BOCA RATON, FL 33486
(HEREIN REFERRED TO AS "RECIPIENT")
WHEREAS, the Company is engaged in the business of researching,
developing, manufacturing, and marketing commercial applications of
biotechnology and genetically engineered systems and/or products, including
human leukocyte interferon; and
WHEREAS, Recipient and the Company propose to engage in discussions
regarding the Company's business activities and other issues under an
consulting arrangement; and
WHEREAS, it is desirable that the parties set forth their
understanding as to any information of a confidential nature which may be
disclosed by the Company to Recipient during the course of the proposed
discussions, and for any agreement or arrangement that develops therefrom;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, each party to the other and other good and valuable consideration, the
Company and Recipient hereby covenant and agree as follows:
1. Recipient acknowledges that the proposed discussions and any
agreement or arrangement that develops therefrom with the Company may involve
disclosure by the Company to Recipient of confidential or secret information
belonging to the Company and relating to its business, finances, operations,
manufacturing, production, processes, marketing or to other
<PAGE> 2
matters (including, for example, scientific principles, ideas, inventions,
trade-secrets, know-how, and business plans or other commercial information),
whether or not written, in verbal form or otherwise, all of which would be of
interest and of value to Recipient or third parties (the "Confidential
Information").
2. Recipient shall treat as confidential and, for greater
certainty, but not so as to restrict the generality of the foregoing, shall not
disclose or cause to be disclosed or publish or cause to be published, any of
the Confidential Information and Recipient agrees to use the same degree of
care to protect the Confidential Information he would employ with respect to
his own information of like importance which it does not desire to have
published or disseminated. Notwithstanding any of the foregoing, no
restrictions shall be afforded to the Confidential Information if the
Confidential Information:
(a) Is, at the time of disclosure to Recipient, known to
him as evidenced by written documentation dated prior
to such disclosure in the records of Recipient and
Recipient promptly notifies the Company in writing of
such written documented knowledge;
(b) Is or becomes publicly available through no wrongful
or negligent act of Recipient;
(c) Is approved for release by prior written
authorization of the Company.
(d) Is required to be disclosed by a United States or
Federal or State Regulatory agency or by court order.
If in the event Confidential Information is required to be disclosed
under Section 2(d) of this Agreement, then the Recipient shall be obligated to
give the Company the greater of 30 days (or the maximum allowable time as
deemed by the agency or court) prior written notice of such disclosure
requirement prior to the disclosure of any of the Confidential Information. If
it is determined that one of the exceptions is available to certain of the
Confidential Information, nevertheless the remainder of the Confidential
Information shall continue to be subject to the requirements of this Agreement
If Recipient believes that any portion of any Confidential Information
falls within any of the above exceptions, Recipient will immediately give the
Company written notice of such belief with substantiating evidence, at such
time as it becomes known to Recipient. If it is determined that one
2
<PAGE> 3
of the exceptions is available to certain of the Confidential Information,
nevertheless the remainder of the Confidential Information shall continue to be
subject to the requirements of this Agreement.
3. Recipient hereby acknowledges and agrees (i) that all
Confidential Information contemplated by this Agreement is and shall remain
notwithstanding its disclosure to Recipient the sole and exclusive property of
the Company, and (ii) that the Company is disclosing the Confidential
Information to Recipient SOLELY for the purpose of and with respect to the
consulting arrangement described above. For greater certainty, in
consideration of the disclosure to him of the Confidential Information,
Recipient hereby agrees on his own behalf and on behalf of all other persons
who may gain access through Recipient to such Confidential Information, not to
make any use whatsoever of the Confidential Information except as stated in the
immediately preceding sentence.
With respect to all Confidential Information, and all prototypes, samples,
written materials, drawings and descriptions received by Recipient from the
Company, at the discretion of the Company, Recipient agrees to (i) return all
such Confidential Information promptly upon request from the Company or (ii)
properly destroy the same at the request of the Company, together with all
copies made thereof by Recipient. Upon request, Recipient shall send the
Company a destruction certificate.
4. No license under any patents or otherwise is granted or
conveyed by the Company transmitting Confidential Information or other
information to Recipient; nor shall such transmission constitute any
representation, warranty, assurance, guaranty or inducement by the Company to
Recipient with respect to infringement of patents or other rights of others.
In addition, Recipient agrees on his own behalf and that of those persons
described in Section 3 of this Agreement, that he will promptly disclose in
writing to the Company any and all inventions, discoveries, and improvements
conceived or made by Recipient or other such persons stated above developed as
a result of Recipient's receipt of Confidential Information or while providing
his services and agrees to assign all interests therein to the Company whenever
requested to do so by the Company and will execute or cause to be executed any
and all applications, assignments, or other instruments and give testimony
which the Company shall deem necessary to apply for and obtain copyrights
and/or Letters of Patent of the United States or of any foreign country or to
otherwise protect the Company's interests therein.
5. Recipient covenants and agrees to indemnify the Company, its
successors and assigns, from and against any and all losses, damages and
expenses, including attorney's fees, which the Company may sustain or suffer
3
<PAGE> 4
by reason of the failure of Recipient to perform and observe the terms and
provisions of this Agreement.
6. The restriction contained in this Agreement shall continue for
a period of ten (10) years from the date of the disclosure of the Confidential
Information by the Company to Recipient.
7. Any provision of either paragraph 2 or 3 hereof which is
determined to be void and unenforceable shall be severable from all other
provisions thereof and shall not be deemed to affect or impair the
enforceability of any such other provisions.
8. Recipient hereby agrees that all covenants contained herein on
his part to be complied with are reasonable and valid and waives all defenses
to the strict enforcement thereof by the Company.
9. Recipient acknowledges that any violation of any of the
provisions hereof may result in immediate and irreparable damage to the Company
and agrees that in the event of such violation the Company shall, in addition
to any other right, relief or remedy available at law, be entitled to any
equitable relief including injunction that any court of competent jurisdiction
may deem just and proper. Resort to such equitable remedies are cumulative to
other remedies that may be sought.
10. The provisions hereof shall inure to the benefit of the
successors of the parties hereto. This Agreement shall not be assignable, in
whole or in part, by Recipient.
11. Recipient hereby acknowledges having read and understood the
foregoing and the implications thereof and agrees to indemnify and hold the
Company harmless for any liability or claim imposed upon or made against the
Company arising from or out of Recipient's failure to comply with the terms and
conditions of the Agreement. Recipient acknowledges receipt of a duly executed
copy of this Agreement.
12. All notices herein shall be deemed to have been duly given
upon the certified or registered mailing thereof, post-paid, to the party
entitled thereto at the following addresses, unless such addresses are changed
by written notice.
VIRAGEN, INC.
2343 West 76th Street
Hialeah, Florida 33016
Attention: Gerald Smith, President
4
<PAGE> 5
Copy to:
James Schneider, Esq.
ATLAS, PEARLMAN, TROP AND BORKSON P.A.
2650 North Military Trail, Suite 230
Boca Raton, Florida 33431
Copy to:
Ned H. Elgart
President
Chesterbrook Partners Inc.
1499 W. Palmetto Park Road
Suite 171
Boca Raton, FL 33486
13. This Agreement shall be a continuing agreement between the
parties with respect to any particular item of Confidential Information.
5
<PAGE> 6
14. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Florida.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of this 13th day of October, 1995.
VIRAGEN, INC.
By:
---------------------------------------------
GERALD SMITH
President
CHESTERBROOK PARTNERS INC.
By:
---------------------------------------------
NED H. ELGART
Individually, and as President
6
<PAGE> 1
EXHIBIT 10(vii)
(vii) Engagement to perform certain investment banking
services between the Company and FAC Enterprises,
Inc. dated November 7, 1995.
November 7, 1995
FAC Enterprises, Inc.
2715 Meadowood Drive
Ft. Lauderdale, FL 33332
RE: ENGAGEMENT TO PERFORM CERTAIN
INVESTMENT BANKING SERVICES
Gentlemen:
This correspondence will confirm our agreement to engage FAC
Enterprises, Inc. (the "Advisor") in order to perform certain services on
behalf of Viragen, Inc. (the "Company") in the manner and upon the terms and
conditions hereinafter set forth.
1. Background. As we have discussed, the Company has since
inception been engaged in the research, development and manufacture of certain
proprietary products and technologies that relate to the therapeutic
application of human leukocyte interferon to various diseases that affect the
human immune system. The Company has recently, through license and other
assignments, created a wholly-owned subsidiary, Viragen (Scotland) Ltd. (the
"Subsidiary") to which certain of the Company's proprietary rights and
technologies have been assigned and/or licensed. The Subsidiary has, in turn,
secured an agreement from an agency associated with the Scottish National Blood
Transfusion Service ("SNBTS") pursuant to which the SNBTS has agreed to, among
other things, continue the development and manufacturing of certain of the
Company's proprietary technologies on behalf of the Subsidiary, under and
subject to the terms of a license and manufacturing agreement.
2. Scope of the Engagement. The Board of Directors of the
Company believes that it is in the Company's best interest that the operations
of the Subsidiary be separate and independent, to the best extent possible,
from the Company and in that regard, this correspondence will confirm that
<PAGE> 2
we have engaged the Advisor to identify a public corporation which will acquire
the Subsidiary in a reverse acquisition pursuant to which the Company would
remain the majority stockholder of the newly combined corporations. The
proposed acquiring corporation ("Acquiror") must either acquire by merger, or
retain the operations of the Subsidiary as an wholly-owned subsidiary in a
stock-for-stock transaction.
3. Compensation. If, as a result of your efforts, the Company
locates a suitable Acquiror and a business combination is consummated pursuant
to which the resulting corporation remains a public corporation with the
Company remaining as its principal stockholder, then, and in that event, upon
the closing date of such transaction (the "Closing Date") the Advisor will be
entitled to receive 4.425% of the securities received by the Company from the
Acquiror in such transaction.
4. Registration Rights.
4.1 The Company will cause the preparation and filing by
the Acquiror within ninety (90) days following the Closing Date, at the
Acquiror's sole cost and expense of a Registration Statement with the SEC, the
purpose of which is to register the resale of any shares of common stock issued
to the Advisor pursuant to Paragraph 3 above (the "Restricted Stock"). The
Acquiror shall not, without the written consent of the Advisor, register with
the SEC, the public sale or resale of any further securities other than the
Restricted Stock until at least ninety (90) days after the effectiveness of the
Registration Statement referred to above. The Registration Statement to be
filed by the Acquiror pursuant to the terms of this Paragraph 4, shall adhere
to and follow those registration procedures established and set forth
hereafter.
4.2 Registration Procedures. If and whenever the
Acquiror is required by the provisions of sub- paragraph 4.1 of this Agreement
to effect the registration of any of the Restricted Stock under the Securities
Act of 1933, as amended (the "Securities Act"), the Company will cause the
Acquiror to use its best efforts to:
(a) prepare and file with the Securities and Exchange
Commission (the "Commission") a Registration Statement with respect to such
Restricted Stock and use its best efforts to cause such Registration Statement
to become and remain effective for the period of the distribution contemplated
thereby or as required under the Securities Act;
(b) prepare and file with the Commission such amendments and
supplements to such Registration Statement and the prospectus used in
connection therewith as may be necessary to keep such Registration Statement
2
<PAGE> 3
effective for the period specified in Subparagraph 4.2(a) above and as
necessary to comply with the provisions of the Securities Act with respect to
the disposition of all Restricted Stock covered by such Registration Statement
in accordance with the Holders' intended method of disposition set forth in
such Registration Statement for such period;
(c) furnish to each Holder and to each underwriter such
number of copies of the Registration Statement and the prospectus included
therein (including each preliminary prospectus), as such persons may reasonably
request in order to facilitate the public sale or other disposition of the
Restricted Stock covered by such Registration Statement;
(d) cause the Acquiror to use its best efforts to register or
qualify the Restricted Stock covered by such Registration Statement under the
securities or blue sky laws of such jurisdictions as the Holders, or, in the
case of an underwritten public offering, the managing underwriter shall
reasonably request; provided, however, that the Acquiror shall not for any such
purpose be required to qualify generally to transact business as a foreign
corporation in any jurisdiction where it is not so qualified or to consent to
general service of process in any such jurisdiction;
(e) immediately notify each Holder under such Registration
Statement and each underwriter, at any time when a prospectus relating thereto
is required to be delivered under the Securities Act, of the happening of any
event as a result of which the prospectus contained in such Registration
Statement, as then in effect, includes an untrue statement of a material fact
or omits to state any material fact required or necessary to be stated therein
in order to make the statements contained therein not misleading in light of
the circumstances then existing;
(f) make available for inspection by each Holder, any
underwriter participating in any disposition pursuant to such Registration
Statement, and any attorney, accountant or other agent retained by any such
Holder or underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Acquiror's officers,
directors and employees to supply all information reasonably requested by any
such Holder, underwriter, attorney, accountant or agent in connection with such
Registration Statement;
(g) For purposes of Subparagraphs 4.2(a) and 4.2(b) above,
the period of distribution of Restricted Stock shall be deemed to extend for
nine months or such earlier date as (A) in an underwritten public offering,
each underwriter has completed the distribution of all securities purchased by
it; and (B) in any other registration, all shares of Restricted Stock covered
thereby shall have been sold; and
3
<PAGE> 4
(h) if the Common Stock of the Acquiror is listed on any
securities exchange or automated quotation system, the Company shall cause the
Acquiror to use its best efforts to list (with the listing application being
made at the time of the filing of such Registration Statement or as soon
thereafter as is reasonably practicable) the Restricted Stock covered by such
Registration Statement on such exchange or automated quotation system.
4.3. Expenses.
(a) For the purposes of this sub-paragraph 4.3, the term
"Registration Expenses" shall mean: all expenses incurred by the Acquiror and
Company in complying with this Paragraph 4 of this Agreement, including,
without limitation, all registration and filing fees, printing expenses, fees
and disbursements of counsel and independent public accountants for the
Acquiror, fees of the National Association of Securities Dealers, Inc.
("NASD"), fees and expenses of listing shares of Restricted Stock on any
securities exchange or automated quotation system on which the Acquiror's
shares are listed and fees of transfer agents and registrars. The term
"Selling Expenses" shall mean: all underwriting discounts and selling
commissions applicable to the sale of Restricted Stock and all accountable or
non-accountable expenses paid to any underwriter in respect of the sale of
Restricted Stock.
(b) The Acquiror will pay all Registration Expenses in
connection with the Registration Statement filed pursuant to this Paragraph 4
hereof. All Selling Expenses in connection with any Registration Statement
hereof shall be borne by the participating sellers in proportion to the number
of shares sold by each, or by such persons other than the Acquiror (except to
the extent the Acquiror shall be a seller) as they may agree.
4.4 Obligations of Holder.
(a) In connection with each registration hereunder, each
selling Holder will furnish to the Acquiror in writing such information with
respect to such seller and the securities held by such seller, and the proposed
distribution by them as shall be reasonably requested by the Acquiror in order
to assure compliance with federal and applicable state securities laws, as a
condition precedent to including such seller's Restricted Stock in the
Registration Statement. Each selling Holder also shall agree to promptly
notify the Acquiror of any changes in such information included in the
Registration Statement or prospectus as a result of which there is an untrue
statement of material fact or an omission to state any material fact required
or necessary to be stated therein in order to make the statements
4
<PAGE> 5
contained therein not misleading in light of the circumstances then existing.
(b) In connection with each registration, the Holders
included therein will not effect sales thereof until notified by the Acquiror
of the effectiveness of the Registration Statement, and thereafter will suspend
such sales after receipt of telegraphic or written notice from the Acquiror to
suspend sales to permit the Acquiror to correct or update a Registration
Statement or prospectus. At the end of any period during which the Acquiror is
obligated to keep a Registration Statement current, the Holders included in
said Registration Statement shall discontinue sales of shares pursuant to such
Registration Statement upon receipt of notice from the Acquiror of its
intention to remove from registration the shares covered by such Registration
Statement which remain unsold, and such Holders shall notify the Acquiror of
the number of shares registered which remain unsold immediately upon receipt of
such notice from the Acquiror.
4.5 Obligations of Company.
(a) The Company agrees to indemnify and hold harmless
each Holder of Restricted Stock, its officers, directors and agents, and each
person, if any, who controls such Holder within the meaning of Section 15 of
the Securities Act or Section 20 of the Securities Exchange Act of 1934, from
and against any and all losses, claims, damages and liabilities caused by any
untrue statement or alleged untrue statement of a material fact contained in
any Registration Statement or prospectus relating to the Restricted Stock (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) or any preliminary prospectus, or caused by any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages or liabilities are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
information furnished in writing to the Company by such Holder or on such
Holder's behalf expressly for use therein. The Company also agrees to provide
any underwriters engaged in connection with resale or sale of the Restricted
Stock, their officers and directors and each person who controls such
underwriters with substantially the same indemnification as that provided to
the Holders in this sub-paragraph 4.5.
4.6. Conduct of Indemnification Proceedings. In case any proceeding
(including any governmental investigation) shall be instituted involving any
person in respect of which indemnity may be sought pursuant to sub- paragraphs
4.4 or 4.5 above, such person (an
5
<PAGE> 6
"Indemnified Party") shall promptly notify the person against whom such
indemnity may be sought (an "Indemnifying Party") in writing and the
Indemnifying Party shall assume the defense thereof, including the employment
of counsel reasonably satisfactory to such Indemnified Party, and shall assume
the payment of all fees and expenses of such counsel in connection with such
proceeding. In any such proceeding, any Indemnified Party shall have the right
to retain its own separate counsel, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party unless (i) the Indemnifying
Party and the Indemnified Party shall have mutually agreed to the retention of
such separate counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the Indemnified Party and the
Indemnifying Party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them.
It is understood that the Indemnifying Party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) at any time for all such Indemnified Parties.
In the case of any such separate firm for the Indemnified Parties, such firm
shall be designated in writing by the Indemnified Parties. The Indemnifying
Party shall not be liable for any settlement of any proceeding effected without
its consent, but if settled with its consent, or if there be a final judgment
for the plaintiff, the Indemnifying Party shall indemnify and hold harmless
such Indemnified Parties from and against any loss or liability (to the extent
stated above) by reason of such settlement or judgement. No Indemnifying Party
shall, without the prior written consent of the Indemnified Party, effect any
settlement of any pending or threatened proceeding in respect of which any
Indemnified Party is or could have been a party and indemnity could have been
sought hereunder by such Indemnified Party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability arising out
of such proceeding.
1. Protection Against Dilution. The relative interests as of the
Closing Date of the Advisor in the common stock of the Acquiror as an aggregate
percentage of shall be preserved and protected against dilution in accordance
with the following provisions. The Advisor shall retain this percentage
interest (the "Protected Interest") in the outstanding common stock of the
Acquiror following the Closing Date and shall be preserved and protected
against further dilution or reduction of its Protected Interest ownership until
after that period in which Acquiror has secured net equity capital of
$4,000,000 (the "Restricted Period") following the Closing Date (including for
this purpose, any net equity funding that was available upon the Closing Date).
To the extent that during the Restricted Period the Company issues any
"Securities" (as hereafter defined), it shall in conjunction therewith
immediately issue to the Advisor that number of shares of common stock that
shall be equal to the product of the Protected Interest
6
<PAGE> 7
and the aggregate number of Securities issued. For this purpose, the term
"Securities" shall include shares of common stock issued, as well as that
number of shares of common stock that may be issued upon the exercise of
warrants or options or upon the conversion of convertible preferred stock,
convertible debt instruments or any other derivative- based securities.
2. Right of First Refusal On Subsequent Financings. For the
period of twenty-four (24) months following the Closing Date the Company shall
cause the Advisor to have a preferential right of refusal to secure any future
debt or equity financings on behalf of the Acquiror, any successor-in-interest,
subsidiary or affiliate thereof. This shall also include any funding
undertaken by Partnerships to be formed by the Subsidiary (or any affiliate) to
fund clinical trials in the European Union.
Should the Acquiror seek to undertake any debt or equity
financings during the period covered by this subparagraph, then the Acquiror
must first provide the Advisor with written notification to that effect, which
notification must specify the proposed terms of the debt or equity financings
desired. The Advisor shall then have ninety (90) days in which to secure such
debt or equity financings on terms acceptable to the Acquiror. If Advisor is
unable to do so, then the Acquiror shall have the right to secure the debt or
equity financings from any other third party. In the event, however, that the
debt or equity financings to be secured from a third party are on terms
materially different than those proposed in writing to the Advisor, then, and
in that event, the Acquiror shall, prior to securing any such debt or equity
financings from such third party, provide a written explanation of the terms
thereof to the Advisor and provide the Advisor with an additional period of
sixty (60) days in which to secure debt or equity financings on those terms.
If the Advisor is unable to do so within said sixty day period, then the
Acquiror is free of any restrictions of this subparagraph to pursue the debt or
equity financings proposed accordingly. To the extent that Advisor is able to
secure for the Acquiror any such debt or equity financings, the Advisor shall
receive the compensation otherwise anticipated to be provided to investment
bankers, brokers, finders or others in connection with such financing, however,
in no event to be less than 10% of the proceeds secured, plus warrants which
for a period of three years permit the purchase of additional shares of common
stock of the Acquiror to the extent of 10% of the securities sold by Acquiror
in such financing transaction at a purchase price of 110% of the price sold in
the financing.
1. Expenses. The Company shall reimburse the Advisor for all
reasonable out-of-pocket expenses, including but not limited to printing,
travel, long distance telephone charges, postage and photocopying. The Company
shall cause the Acquiror to reimburse the Advisor within 30 days
7
<PAGE> 8
from the date the Advisor presents the Company with any expense invoice and
supporting documentation.
2. Independent Contractor. The Advisor is acting hereunder as an
independent contractor to the Company and shall not be considered an agent of
the Company for any purposes other than those expressly set forth in this
Agreement. Neither party to this Agreement is granted any right or authority
to assume or create any obligation or liability, expressed or implied, on
behalf of the other or to bind the other in any manner whatsoever.
3. Indemnification.
The Company shall:
(a) indemnify the Advisor and hold it harmless against any
losses, claims, damages or liabilities to which the Advisor may become subject
arising in any manner out of or in connection with the rendering of services by
its hereunder, unless it is finally judicially determined that such losses,
claims, damages or liabilities arose out of the negligence or bad faith of the
Advisor;
(b) indemnify Advisor and hold it harmless against any losses,
claims, damages, liabilities to which Advisor may become subject arising in any
manner out of or in connection with any misrepresentation or error contained in
any documents, schedules or other information provided by the Company to
Advisor for use in any transactions contemplated herein. The Advisor shall not
be liable for the verification and shall not verify any such information
provided by the Company hereunder; and
(c) reimburse the Advisor within a reasonable period of time
for any legal or other expenses reasonably incurred by it in connection with
investigating, preparing to defend or defending any lawsuits, claims or other
proceedings arising in any manner out of or in connection with the rendering of
services by the Advisor hereunder; provided, however, that in the event a final
judicial determination is made to the effect specified in subparagraph (a)
above, the Advisor will remit to the Company any amounts reimbursed under this
subparagraph 9(c).
8
<PAGE> 9
(d) The Company agrees that the indemnification and
reimbursement commitments set forth in this paragraph shall apply whether or
not the Advisor is a formal party to any such lawsuits, claims or other
proceedings, that the Advisor is entitled to retain separate counsel of its
choice in connection with any of the matters to which such commitments relate
and that such commitments shall extend upon the terms set forth in this
paragraph to any controlling person, director, officer, employee or agent of
Patton.
1. Assignment. Neither party may assign its rights or
obligations hereunder without the written consent of the other party.
2. Entire Agreement. This Agreement contains the entire
agreement of the parties as to the subject matter hereof. This Agreement may
be amended only in writing signed by the party against whom enforcement of any
waiver, change, modification, extension or discharge is sought.
9
<PAGE> 10
3. Notices. All notices, requests, demands, consents or other
communications under this Agreement shall be in writing and sent by registered
or certified mail, return receipt requested, or by personal delivery (including
delivery by a nationally recognized courier service) as follows:
Company:
Viragen, Inc.
2343 West 76th Street
Hialeah, FL 33016
Attention: President
FAC Enterprises, Inc.
2715 Meadowood Drive
Ft. Lauderdale, FL 33332
or to such other addresses as may be specified by notice given in accordance
with this Section.
If you agree to be bound by the terms hereof, would you kindly place
your signature on the line provided below.
Very truly yours,
VIRAGEN, INC.
BY:
-----------------------------------
Agreed and Accepted
FAC ENTERPRISES, INC.
BY:
--------------------------------
10
<PAGE> 1
VIRAGEN, INC. AND SUBSIDIARIES
EXHIBIT 11 COMPUTATION OF LOSS PER COMMON SHARE
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
PRIMARY AND FULLY DILUTED
Weighted average shares
outstanding 35,555,096 31,739,414 35,482,257 28,879,146
========== =========== =========== ===========
Net loss $ (844,500) $(1,213,437) $(1,780,049) $(2,036,972)
Deduct required
dividends on convertible
preferred stock 863 863 1,725 1,725
---------- ----------- ----------- -----------
Loss attributable to
common stock $ (845,363) $(1,214,300) $(1,781,774) $(2,036,697)
========== =========== =========== ===========
Net loss per common share
after deduction for
required dividends on
convertible preferred
stock $ (.02) $ (.04) $ (0.05) $ (0.07)
========== =========== =========== ===========
</TABLE>
11
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-01-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 1,139,543
<SECURITIES> 0
<RECEIVABLES> 51,271
<ALLOWANCES> 0
<INVENTORY> 17,568
<CURRENT-ASSETS> 1,330,018
<PP&E> 2,604,244
<DEPRECIATION> 1,608,749
<TOTAL-ASSETS> 2,340,185
<CURRENT-LIABILITIES> 1,244,537
<BONDS> 0
0
0
<COMMON> 355,464
<OTHER-SE> 538,567
<TOTAL-LIABILITY-AND-EQUITY> 2,340,185
<SALES> 98,092
<TOTAL-REVENUES> 113,966
<CGS> 76,992
<TOTAL-COSTS> 76,992
<OTHER-EXPENSES> 857,209
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24,265
<INCOME-PRETAX> (844,500)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (844,500)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> 0
</TABLE>
