VIRAGEN INC
8-K, 1997-03-07
BIOLOGICAL PRODUCTS, (NO DIAGNOSTIC SUBSTANCES)
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                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549


                                    FORM 8-K


                                 CURRENT REPORT


                     Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934






Date of Report (Date of earliest event reported)     February 21, 1997
                                                --------------------------------

                                  VIRAGEN, INC.
- --------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


       Delaware                     0-10252                   59-2101668
- --------------------------------------------------------------------------------
(State or other jurisdiction    (Commission File           (IRS Employer
 or incorporation)                   Number)               Identification No.)



                  2343 West 76th Street, Hialeah, Florida 33016
         --------------------------------------------------------------
          (Address of principal executive offices, including zip code)



Registrant's telephone number, including area code    (305) 557-6000
                                                   -----------------------------


                                       N/A
- --------------------------------------------------------------------------------
          (Former name or former address, if changed since last report)






<PAGE>



ITEM 5 - OTHER EVENTS

      On February  21,  1997,  the Company  issued  5,000 shares of its Series E
Convertible Preferred Stock to State Capital Market Group, Ltd. in consideration
for  $5,000,000.  The Series E Preferred Stock provides for a dividend of 5% per
annum of the stated value of the Series E Preferred Stock on a cumulative basis.
Dividends accrue from the date of issuance and are payable quarterly  commencing
April 1, 1997.  Dividends  may be paid in cash or, at the  Company's  option and
subject to certain other  conditions,  in shares of Common Stock of the Company.
Except as otherwise  provided by law, the holders of Series E Preferred Stock do
not have voting  rights.  Upon  liquidation,  dissolution  or  winding-up of the
Company,  no distribution  may be made to the holders of shares of capital stock
ranking  junior to the Series E  Preferred  Stock  unless,  prior  thereto,  the
holders of the Series E  Preferred  Stock shall have  received  $1,000 per share
plus an amount  equal to declared  and unpaid  dividends  thereon to the date of
such payment.  A vote of not less than two-thirds of the then outstanding shares
of Series E Preferred  Stock is  required  prior to any  amendment,  alteration,
change or repeal of any of the designations of the Series E Preferred Stock.

      The Series E  Preferred  Stock (as  represented  by the  stated  value) is
convertible into shares of Common Stock of the Company commencing May 8, 1997 by
dividing the stated value of the Series E Preferred Stock to be converted by the
conversion price in effect at the time of conversion. The conversion price shall
be (i) the lesser of the market price for the Common  Stock of the  Company,  as
defined  in the  Certificate  of  Designations,  multiplied  by 85%,  subject to
adjustment, or (ii) $7.00, subject to adjustment. The Company also has the right
to compel  conversion of the Series E Preferred  Stock at any time subsequent to
270 days after February 21, 1997. The conversion price of the Series E Preferred
Stock is subject to adjustment under certain conditions  including the time when
the Company  completes the registration  process for the resale of the shares of
Common Stock  underlying  the Series E Preferred  Stock and the obtaining of any
required  stockholder  approval  relevant to the transaction.  The holder of the
Series E Preferred  Stock may not convert the shares of Series E Preferred Stock
if, as a result thereof,  the shares of Common Stock  beneficially  owned by the
holder  would  exceed  4.9% of the  outstanding  shares of  Common  Stock of the
Company.  The Company has agreed to register the shares of Common Stock issuable
upon conversion of the Series E Preferred Stock with the Securities and Exchange
Commission.

      The proceeds from the sale of the Series E Preferred Stock are expected to
be used for the  continued  development  of the  Company's  OmniferonTM  product
including  the funding of European  Union  clinical  trials,  completion  of the
Scottish production facility, pre-clinical Phase I and Phase II trials and Phase
III  studies,  the  establishment  of  domestic  manufacturing  capacity,  joint
research and  development  projects,  product  development  research and general
working capital purposes. Placement fees of $300,000 were paid.







                                      2


<PAGE>



ITEM 7 - FINANCIAL STATEMENTS, PROFORMA FINANCIAL INFORMATION AND EXHIBITS

      EXHIBITS:

      1.    Certificate of Designation Preferences and Rights for Series E
            Convertible Preferred Stock.

      2.    Securities Purchase Agreement dated as of December 31, 1996 and
            related Registration Rights Agreement.










































                                        3


<PAGE>



                                   SIGNATURES


      Pursuant to the  requirements  of the Securities and Exchange Act of 1934,
the  Registrant  has duly  caused  this Report to be signed on its behalf by the
undersigned hereunto duly authorized.

                                       VIRAGEN, INC.



                                     By: /s/ Dennis W. Healey
                                         ---------------------------------------
                                       Dennis W. Healey, Executive Vice
                                       President and Principal Financial Officer



DATED:  March 6, 1997.































                                      4


- --------------------------------------------------------------------------------
                                  EXHIBIT (1)
                    Certificate of Designation Preferences
             and Rights for Series E Convertible Preferred Stock
- --------------------------------------------------------------------------------

                                VIRAGEN, INC.

            CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF
             5% CUMULATIVE CONVERTIBLE PREFERRED STOCK, SERIES E


            VIRAGEN, INC. (the "Company"),  a corporation organized and existing
under the General Corporation Law of the State of Delaware,  does hereby certify
that, pursuant to authority conferred upon the Board of Directors of the Company
by the Certificate of Incorporation, as amended, of the Company, and pursuant to
Section 151 of the General  Corporation Law of the State of Delaware,  the Board
of  Directors  of the Company at a meeting  duly called and held on February 11,
1997,  adopted  resolutions  providing  for the  designations,  preferences  and
relative,  participating,  optional  or other  rights,  and the  qualifications,
limitations  or  restrictions  thereof,  of Five Thousand  (5,000)  shares of 5%
Cumulative Convertible Preferred Stock, Series E of the Company, as follows:

            RESOLVED, that the Company is authorized to issue 5,000 shares of 5%
Cumulative   Convertible  Preferred  Stock,  Series  E,  $1.00  par  value  (the
"Preferred  Shares"),  which  shall  have the  following  powers,  designations,
preferences and other special rights:

            (1) DIVIDENDS. The holders of the Preferred Shares shall be entitled
to  cumulative  dividends of five percent (5%) per annum of the Stated Value (as
defined below) of each Preferred Share.  Dividends shall accrue from the date of
issuance of the  Preferred  Shares and shall be payable on each January 1, April
1, July 1 and October 1 commencing  April 1, 1997, and in the case of conversion
of a Preferred  Share shall be paid on the date of such  conversion  through and
including the date on which the Preferred Shares are converted.  Dividends shall
be calculated on the basis of a year of 360 days consisting of 12 30-day months.
Dividends shall be paid in cash or, at the Company's  option,  in fully paid and
nonassessable  shares of Common Stock  valued based on the Average  Market Price
(as defined  herein) of the Common Stock for the period of five (5)  consecutive
trading days ending on the trading day before the  dividend  payment date or the
date of  conversion,  as the case may be;  PROVIDED,  HOWEVER,  that in no event
shall  accrued  dividends  be paid in shares of  Common  Stock to any  holder of
Preferred  Shares if, after giving  effect to such  distribution,  the number of
shares of Common Stock  beneficially  owned by such holder and all other persons
whose  beneficial  ownership of shares of Common Stock would be aggregated  with
such  holder's  beneficial  ownership  of shares of Common Stock for purposes of
calculating beneficial ownership in accordance with Sections 13(d) and 16 of the
Securities  Exchange Act of 1934,  as amended,  and the  regulations  thereunder
(collectively,  "Sections  13(d) and  16")(each  such  other  person a  "Related
Person" of such holder)  (other than shares of Common Stock deemed  beneficially
owned  through the  ownership of  unconverted  Preferred  Shares or  unconverted
shares of the Company's 5% Convertible Cumulative Preferred Stock, Series B (the
"Series B Preferred  Shares")) would exceed four and nine-tenths  percent (4.9%)




<PAGE>




of the outstanding  shares of Common Stock and cash shall be paid in lieu of any
shares  which  cannot be issued  pursuant to this  proviso.  For purposes of the
proviso to the immediately  preceding  sentence,  beneficial  ownership shall be
determined  in  accordance  with  Sections  13(d) and 16,  except  as  otherwise
provided  with respect to  unconverted  Preferred  Shares and Series B Preferred
Shares in the parenthetical  clause of the proviso to the immediately  preceding
sentence.  Notwithstanding the foregoing, in no event shall accrued dividends be
paid in shares of Common Stock if, on the dividend  payment date, such shares of
Common Stock would not be freely  tradable  because the  registration  statement
(the  "Registration  Statement")  covering the shares of Common  Stock  issuable
hereunder and required to be filed by the Company  pursuant to the  Registration
Rights  Agreement  between the Company and the initial  holder of the  Preferred
Shares (the "Registration  Rights Agreement") has not been declared effective by
the U.S.  Securities  and  Exchange  Commission  ("SEC")  (the date on which the
Registration  Statement  is  declared  effective  by the SEC  being  hereinafter
referred to as the "Effective  Date"), or if, after the Effective Date, sales of
shares of Common Stock cannot be made pursuant to the Registration  Statement by
reason  of a stop  order,  the  Company's  failure  to update  the  Registration
Statement in accordance  with the rules and regulations of the SEC or otherwise,
or if the Common  Stock is not then  listed or  included  for  quotation  on the
National  Market of the National  Association  of Securities  Dealers  Automated
Quotation  System (the  "NASDAQ-NM"),  the New York Stock Exchange (the "NYSE"),
the American  Stock  Exchange  (the  "AMEX"),  the NASDAQ  SmallCap  Market (the
"NASDAQ  SmallCap") or the NASDAQ Bulletin Board ("NASDAQ Bulletin Board").  The
Company  shall not issue any fraction of a share of Common Stock in payment of a
dividend,  but shall pay cash therefor. The Company shall, so long as any of the
Preferred  Shares  are  outstanding,  reserve  and  keep  available  out  of its
authorized and unissued  Common Stock,  such number of shares of Common Stock as
shall  from  time  to time  be  sufficient  to pay  dividends  hereunder.  Every
reference  herein  to the  Common  Stock  of the  Company  (unless  a  different
intention  is  expressed)  shall be to the  shares  of the  Common  Stock of the
Company,  $.01 par value, as such stock exists immediately after the issuance of
the Preferred Shares provided for hereunder,  or to stock into which such Common
Stock may be changed from time to time thereafter.

            "Average  Market  Price" of any  security  for any  period  shall be
computed as the  arithmetic  average of the closing bid prices for such security
for each  trading day in such period on the  principal  trading  market for such
security  (all as  appropriately  adjusted for any stock  dividend,  stock split
recapitalization, reorganization or other similar transaction during such period
or between  the end of such  period and the date of a  conversion  of  Preferred
Shares or any dividend payment in shares of Common Stock, as applicable.)

            (2)  CONVERSION  OF PREFERRED  SHARES.  The holders of the Preferred
Shares shall have the right,  at their option,  to convert the Preferred  Shares
into shares of Common Stock on the following terms and conditions:

            (A) CONVERSION  RIGHT.  Each Preferred Share shall be convertible at
any time after the  seventy-fifth  (75th)  day  following  the date of  original


                                      2


<PAGE>




issuance of the  Preferred  Shares (or,  if such  Preferred  Share is called for
conversion  pursuant to Section 3 hereof,  at any time up to and including,  but
not after,  the close of business  on the fifth (5th) full  trading day prior to
the date fixed for the  conversion)  into fully  paid and  nonassessable  shares
(calculated to the nearest whole share) of Common Stock, at the conversion price
in effect at the time of  conversion  determined  as  hereinafter  provided (the
"Conversion Price");  PROVIDED,  HOWEVER,  that in no event shall any Restricted
Person be entitled to convert  Preferred  Shares if, after giving effect to such
conversion,  the  number of shares of Common  Stock  beneficially  owned by such
Restricted  Person and all  Restricted  Persons  whose  beneficial  ownership of
Common  Stock  would be  aggregated  with such  Restricted  Person's  beneficial
ownership of Common Stock (other than shares of Common Stock deemed beneficially
owned  through the  ownership of  unconverted  Preferred  Shares or  unconverted
Series B Preferred Shares),  would exceed four and nine-tenths percent (4.9%) of
the outstanding  shares of Common Stock  (calculated in accordance with Sections
13(d)  and  16).  For  purposes  of the  proviso  to the  immediately  preceding
sentence,  beneficial  ownership shall be determined in accordance with Sections
13(d) and 16, except as otherwise provided with respect to unconverted Preferred
Shares and Series B Preferred Shares in the parenthetical  clause of the proviso
to the immediately  preceding sentence.  Each Preferred Share shall have a value
of One Thousand  Dollars  ($1,000) (the "Stated  Value") for the purpose of such
conversion and the number of shares of Common Stock issuable upon  conversion of
each Preferred Share shall be determined by dividing the Stated Value thereof by
the Conversion Price then in effect.

            (B) CONVERSION  PRICE.  The Conversion  Price shall be the lesser of
(i) an amount  equal to the Average  Market  Price for the Common  Stock for the
five (5)  consecutive  trading  days ending one trading day prior to the date of
the Conversion  Notice (as defined below)  multiplied by (A) eighty five percent
(85%),  subject  to  adjustment  as  provided  herein,  if on  the  date  of the
Conversion  Notice  shares of Common  Stock are  traded on  NASDAQ-NM  or NASDAQ
SmallCap or (B) eighty percent (80%),  subject to adjustment as provided herein,
if on the date of the Conversion Notice shares of Common Stock are traded on the
NASDAQ  Bulletin Board (the percentage then in effect is referred to hereinafter
as the "Conversion  Percentage"),  or (ii) $7.00 (the "Fixed Conversion Price"),
subject to adjustment as provided herein.

            (C) ADJUSTMENT TO CONVERSION  PERCENTAGE AND FIXED CONVERSION PRICE.
If the Effective Date has not occurred within ninety (90) days after the date of
issuance of the  Preferred  Shares (which period shall be extended to the extent
that any delay in the  occurrence of the Effective Date is  attributable  to the
action or  inaction of the  holders or their  counsel in breach of the  holders'
obligations to the Company),  or if, after the Effective  Date,  sales cannot be
made pursuant to the Registration  Statement by reason of an SEC stop order, the
Company's  failure to update the  Registration  Statement in accordance with the
rules and  regulations  of the SEC or  otherwise,  or if the Common Stock is not
listed or included for quotation on the NASDAQ-NM,  NYSE, AMEX,  NASDAQ SmallCap
or NASDAQ Bulletin Board,  then, as partial relief for the damages to the holder
by  reason  of any  such  delay in or  restriction  of its  ability  to sell the
underlying  shares of Common Stock  (which  remedy shall not be exclusive of any
other remedies available at law or in equity):


                                      3


<PAGE>






            (i) The  Conversion  Percentage  shall be  reduced  by a  number  of
percentage  points equal to two (2)  multiplied by the sum of: (i) the number of
periods of 30 consecutive days (prorated for periods of less than 30 consecutive
days) after the end of such 90-day period and prior to the Effective  Date; (ii)
the number of periods of 30 consecutive  days (prorated for periods of less than
30  consecutive  days ) that sales cannot be made  pursuant to the  Registration
Statement (by reason of an SEC stop order,  the Company's  failure to update the
Registration or otherwise) or Rule 144  promulgated  under the Securities Act of
1933,  as amended  (or  successor  rule or  regulation,  "Rule  144")  after the
Effective Date; and (iii) the number of periods of 30 consecutive days (prorated
for  periods of less than 30  consecutive  days)  that the  Common  Stock is not
listed or included for quotation on the NASDAQ-NM,  NYSE, AMEX,  NASDAQ SmallCap
or NASDAQ  Bulletin  Board  after  the  Effective  Date.  (For  example,  if the
Effective  Date  occurs  45  days  after  the  end of such  90-day  period,  the
Conversion Percentage would be 82% (under the circumstances set forth in Section
2(b)(i)(A))  or 77% (under  the  circumstances  set forth in Section  2(b)(i)(B)
until any subsequent adjustment;  if thereafter sales could not be made pursuant
to the Registration Statement for a period of 60 additional days, the Conversion
Percentage  would  then be 78%  (under  the  circumstances  set forth in Section
2(b)(i)(A)) or 73% (under the circumstances  set forth in Section  2(b)(i)(B))).
If a holder converts Preferred Shares into Common Stock and an adjustment to the
Conversion  Percentage is required  subsequent to such conversion,  but prior to
the sale of such Common  Stock by such  holder,  the  Company  shall pay to such
holder,  within  five (5) days  after  receipt  of a notice  of the sale of such
Common  Stock from such holder,  an amount equal to the Average  Market Price of
the Common Stock obtained upon conversion of such Preferred  Shares for the five
(5) trading  days  ending one (1)  trading  day prior to the date of  conversion
multiplied by two-hundredths (.02) times the number of periods of 30 consecutive
days  (prorated  for  periods  of less  than 30  consecutive  days) for which an
adjustment was required. Such amount may be paid at the Company's option in cash
or Common  Stock the value of which is based on the Average  Market Price of the
Common Stock for the period of five (5)  consecutive  trading days ending on the
date of the sale of such Common Stock;  PROVIDED,  HOWEVER, that any amounts due
as to that  period  during  which the  shares  are not  traded or  included  for
quotation on the NASDAQ-NM,  NYSE,  AMEX,  NASDAQ  SmallCap,  or NASDAQ Bulletin
Board shall be paid in cash only; PROVIDED,  FURTHER,  HOWEVER, that in no event
shall shares be issued  hereunder if, after giving effect to such issuance,  the
number of  shares of Common  Stock  beneficially  owned by such  holder  and all
Related  Persons  of such  holder  (other  than  shares of Common  Stock  deemed
beneficially  owned through the  ownership of  unconverted  Preferred  Shares or
unconverted Series B Preferred Shares) would exceed four and nine tenths percent
(4.9%) of the outstanding  shares of Common Stock; cash shall be paid in lieu of
any shares which cannot be issued pursuant to this second proviso.  For purposes
of  the  second  proviso  to  the  immediately  preceding  sentence,  beneficial
ownership  shall be determined in accordance  with Sections 13(d) and 16, except
as otherwise provided with respect to unconverted  Preferred Shares and Series B
Preferred  Shares in the  parenthetical  clause  of the  second  proviso  to the
immediately  preceding sentence.  (For example, if the Conversion Percentage was
82% at the time of conversion of $1,000,000 in Stated Value of Preferred  Shares
(such that such  Preferred  Shares were  converted  into Common  Stock having an

                                      4


<PAGE>




Average  Market Price for the applicable  period in aggregate of  $1,219,512.10)
and  subsequent  to  conversion  there  was a  further  delay  of 60 days in the
Registration  Statement's  being declared  effective,  and such Common Stock was
sold at the end of such  60-day  period,  the  Company  would pay to the  holder
$48,780.48 in cash or Common Stock) and

            (ii) The Fixed Conversion Price as in effect from time to time shall
be  reduced  by two (2)  percent  multiplied  by the sum of:  (i) the  number of
periods of 30 consecutive days (prorated for periods of less than 30 consecutive
days) after the end of such 90-day period and prior to the Effective  Date; (ii)
the number of periods of 30 consecutive  days (prorated for periods of less than
30  consecutive  days) that sales  cannot be made  pursuant to the  Registration
Statement (by reason of an SEC stop order,  the Company's  failure to update the
Registration  or otherwise) or Rule 144 after the Effective  Date; and (iii) the
number of periods of 30  consecutive  days (prorated for periods of less than 30
consecutive  days) that the Common Stock is not listed or included for quotation
on the NASDAQ-NM, NYSE, AMEX, NASDAQ SmallCap or NASDAQ Bulletin Board after the
Effective Date. (For example, if the Effective Date occurs 45 days after the end
of such  90-day  period,  the Fixed  Conversion  Price  would be $6.79 until any
subsequent  adjustment;  if  thereafter  sales could not be made pursuant to the
Registration  Statement for a period of 60 additional days, the Fixed Conversion
Price would then be $6.52.) If a holder  converts  Preferred  Shares into Common
Stock and an adjustment to the Fixed Conversion Price is required  subsequent to
such conversion,  but prior to the sale of such Common Stock by such holder, the
Company shall pay to such holder, within five (5) days after receipt of a notice
of the sale of such Common Stock from such holder,  an amount equal to the Fixed
Conversion  Price then in effect  multiplied by  two-hundredths  (.02) times the
number of periods of 30  consecutive  days (prorated for periods of less than 30
consecutive days) for which an adjustment was required.  Such amount may be paid
at the  Company's  option in cash or Common  Stock  whose  value is based on the
Average Market Price of the Common Stock for the period of five (5)  consecutive
trading  days  ending on the date of the sale of such  Common  Stock;  PROVIDED,
HOWEVER,  that any amounts due as to that period during which the shares are not
traded or included for quotation on the NASDAQ-NM,  NYSE, AMEX,  NASDAQ SmallCap
or NASDAQ Bulletin Board shall be paid in cash only; PROVIDED, FURTHER, HOWEVER,
that in no event shall shares be issued  hereunder  if,  after giving  effect to
such issuance,  the number of shares of Common Stock  beneficially owned by such
holder and all Related  Persons of such holder would exceed four and nine tenths
percent (4.9%) of the outstanding  shares of Common Stock (than shares of Common
Stock deemed  beneficially owned through the ownership of unconverted  Preferred
Shares or unconverted Series B Preferred Shares);  cash shall be paid in lieu of
any shares which cannot be issued pursuant to this second proviso.  For purposes
of  the  second  proviso  to  the  immediately  preceding  sentence,  beneficial
ownership  shall be determined in accordance  with Sections 13(d) and 16, except
as otherwise provided with respect to unconverted  Preferred Shares and Series B
Preferred  Shares in the  parenthetical  clause  of the  second  proviso  to the
immediately preceding sentence.



                                      5


<PAGE>





            (D)  ADJUSTMENT TO CONVERSION  PRICE.  In case the Company shall (i)
declare a  dividend  or make a  distribution  on the  outstanding  shares of its
Common  Stock in shares of its Common  Stock,  (ii)  subdivide  its  outstanding
shares of Common  Stock into a greater  number of shares,  or (iii)  combine its
outstanding  shares  of  Common  Stock  into a smaller  number  of  shares,  the
Conversion  Price in effect at the time of the record date for such  dividend or
distribution or the effective date of such  subdivision or combination  shall be
proportionately  adjusted so that the holder of any Preferred  Shares  converted
after such time shall be entitled to receive the  aggregate  number of shares of
Common Stock which the holder  would have owned or been  entitled to receive had
such Preferred  Shares been converted  immediately  prior to such record date or
effective date and the resulting Common Stock had been subject to such dividend,
distribution,   subdivision  or  combination.  Such  adjustment  shall  be  made
successively whenever any event specified above shall occur.

            (E) CONVERSION NOTICE. (1) The right of the holders of the Preferred
Shares to convert  Preferred  Shares  shall be exercised  by  delivering  to the
Company a notice  stating  the number of  Preferred  Shares to be  converted  (a
"Conversion Notice"). On presentation to the Company (or at any office or agency
maintained  for the transfer of the Common  Stock) of a Conversion  Notice,  the
holder of such Preferred  Shares shall be entitled,  subject to the  limitations
herein  contained,  to receive a certificate or certificates  for fully paid and
nonassessable  shares  of  Common  Stock  in  accordance  herewith  and cash for
fractional  shares, of Common Stock on the foregoing basis. The Preferred Shares
shall be deemed to have been  converted,  and the person  converting the same to
have  become the holder of record of Common  Stock,  for all  purposes as of the
close of business on the date of delivery of the Conversion Notice.

            (2) If a holder of Preferred  Shares elects to convert any Preferred
Shares in  accordance  with this Section 2, such holder shall not be required to
physically  surrender the certificate  for such Preferred  Shares to the Company
unless all of the Preferred Shares  represented by such certificate are being so
converted.  Each  holder of  Preferred  Shares and the  Company  shall  maintain
records showing the number of Preferred  Shares  represented by each certificate
for Preferred Shares so converted and the dates of such conversions or shall use
such other method, reasonably satisfactory to the holder of such certificate and
the Company,  so as not to require  physical  surrender of such certificate upon
each such conversion.  In the event of any dispute or discrepancy,  such records
of the Company shall be controlling and determinative in the absence of manifest
error.  Notwithstanding  the foregoing,  if any portion of the Preferred  Shares
represented by a certificate  therefor is converted as aforesaid,  the holder of
such  certificate  may not transfer the  remaining  shares  represented  by such
certificate  unless such holder first physically  surrenders such certificate to
the Company,  whereupon  the Company will  forthwith  issue and deliver upon the
order of such holder a new certificate,  registered as such holder (upon payment
by such holder of any applicable  transfer  taxes) may request,  representing in
the aggregate the remaining  Preferred Shares  represented by such certificates.
Each  holder  of  Preferred  Shares  and any  assignee,  by  acceptance  of such
certificate,  acknowledges  and agrees that, by reason of the provisions of this


                                        6


<PAGE>




paragraph, following conversion of a portion of the Preferred Shares represented
by  such  certificate,  the  number  of  Preferred  Shares  represented  by such
certificate  may be less  than the  number  stated on the face  thereof  and the
Company may place a legend to that effect on the  certificates for the Preferred
Shares.

            (3) Upon receipt by the Company from the Holder of a telephone  line
facsimile  transmission  of a Conversion  Notice  meeting the  requirements  for
conversion as provided in Section  2(e)(1),  the Company shall issue and deliver
or  cause  to be  issued  and  delivered  to or upon  the  order  of the  holder
submitting such  Conversion  Notice  certificates  for the Common Stock issuable
upon such conversion within three business days after such receipt and otherwise
in accordance herewith and the Securities Purchase Agreement (including, without
limitation,  in  accordance  with the  requirement  of the  Securities  Purchase
Agreement  that  certificates  for shares of Common Stock issued on or after the
Effective  Date  upon  conversion  of  Preferred   Shares  shall  not  bear  any
restrictive  legend).  If a  holder  of  Preferred  Shares  shall  have  given a
Conversion  Notice as provided  herein,  the  Company's  obligation to issue and
deliver the certificates  for Common Stock shall be absolute and  unconditional,
irrespective of the absence of any action by the holder to enforce the same, any
waiver or consent with  respect to any  provision  thereof,  the recovery of any
judgment  against any person or any action to enforce  the same,  any failure or
delay in the enforcement of any other  obligation of the Company to such holder,
or any setoff,  counterclaim,  recoupment,  limitation  or  termination,  or any
breach or alleged  breach by such holder of any  obligation to the Company,  and
irrespective  of  any  other  circumstance  which  might  otherwise  limit  such
obligation of the Company to the Holder in connection with such  conversion.  If
the Company  shall fail to issue and deliver or cause to be issued and delivered
the certificates for shares of Common Stock upon any such conversion as and when
required by the first sentence of this Section 2(e)(3), then, in addition to any
other  liability  which  the  Company  may have to the  holder,  the  Conversion
Percentage  used  to  calculate  the  Conversion  Price  with  respect  to  such
conversion shall be reduced by one percentage point for each day after the third
trading day following the date such Conversion Notice is received by the Company
to the date of delivery of such shares of Common Stock to such holder.

            (F) MAJOR  TRANSACTIONS.  If the Company shall  consolidate  with or
merge into any corporation or reclassify its outstanding  shares of Common Stock
(other than by way of  subdivision  or reduction of such shares),  or in case of
any sale or transfer of all or  substantially  all of the assets of the Company,
or in the case of any share  exchange  pursuant to which all of the  outstanding
shares of Common Stock are converted into other securities or property,  (each a
"Major Transaction"), then the Company shall make appropriate provision or cause
appropriate  provision to be made so that each holder of Preferred  Shares shall
have the right thereafter to convert Preferred Shares into the kind of shares of
stock and other  securities  and property  receivable  upon such  consolidation,
merger,  sale,  transfer or share  exchange  by the persons who were  holders of
Common Stock  immediately  prior to the  effective  date of such  consolidation,
merger,  sale,  transfer or share  exchange and on a basis which  preserves  the
economic  benefits of the conversion rights of the holder of Preferred Shares on
a  basis  as  nearly  as  practical  as  such  rights   existed  prior  to  such


                                        7


<PAGE>




consolidation,  merger, sale, transfer or share exchange. If, in connection with
any such consolidation,  merger, sale, transfer or share exchange each holder of
shares of Common Stock is entitled to elect to receive either  securities,  cash
or other assets upon completion of such  transaction,  the Company shall provide
or cause to be  provided to holders of  Preferred  Shares the right to elect the
securities,   cash  or  other  assets  into  which  Preferred  Shares  shall  be
convertible  after  completion  of any such  transaction  on the same  terms and
subject  to the same  conditions  applicable  to  holders  of the  Common  Stock
(including, without limitation, notice of the right to elect, limitations on the
period in which  such  election  shall be made,  and the  effect of  failing  to
exercise the election). The Company shall not effect any such transaction unless
the provisions of this  paragraph have been complied with. The above  provisions
shall similarly apply to successive consolidations, mergers, sales, transfers or
share  exchanges.  The Company  shall give the holders of the  Preferred  Shares
written  notice of any Major  Transaction  promptly  upon the  execution  of any
agreement  whether or not binding in  connection  therewith  (including  without
limitation a letter of intent or agreement in principle) and in no event shall a
Major  Transaction  be  consummated  prior to  forty-five  (45) days  after such
notice. Such notice shall specify the action proposed to be taken by the Company
and the date as of which holders of record of the Common Stock shall participate
in any such actions or be entitled to exchange their Common Stock for securities
or other property, as the case may be.

            (G) RESERVATION OF SHARES.  The Company shall, so long as any of the
Preferred  Shares  are  outstanding,  reserve  and  keep  available  out  of its
authorized  and unissued  Common Stock,  solely for the purpose of effecting the
conversion  of the  Preferred  Shares,  such number of shares of Common Stock as
shall  from time to time be  sufficient  to  effect  the  conversion  of all the
Preferred Shares then outstanding.

            (H) FRACTIONAL SHARES. The Company shall not issue any fraction of a
share of Common Stock upon any conversion, but shall pay in cash therefor at the
Average  Market Price then in effect  multiplied by such  fraction.  If a holder
converts more than one Preferred  Share on the same date, any  fractional  share
otherwise  issuable upon such conversion  shall be determined by aggregating all
Preferred Shares converted by such holder on such date.

            (I)  TAXES.  The  Company  shall pay any and all taxes  which may be
imposed  upon it with  respect to the issuance and delivery of Common Stock upon
conversion  of Preferred  Shares as herein  provided.  The Company  shall not be
required  in any  event to pay any  transfer  or other  taxes by  reason  of the
issuance of such Common  Stock in names other than those in which the  Preferred
Shares surrendered for conversion are registered on the Company's  records,  and
no such  conversion  or issuance of Common  Stock shall be made unless and until
the person  requesting  such  issuance has paid to the Company the amount of any
such tax, or has established to the satisfaction of the Company and its transfer
agent, if any, that such tax has been paid.

            (J)  CONVERSION  UPON  FAILURE  TO  OBTAIN   STOCKHOLDER   APPROVAL.
Notwithstanding the applicable Conversion Price pursuant to this Section (2), in
the event any holder of  Preferred  Shares is unable to convert  into  shares of


                                        8


<PAGE>




Common  Stock the full  amount of  Preferred  Shares  held by such holder at the
Conversion  Price by  reason of the  Company's  failure  to  obtain  Stockholder
Approval (as defined  herein) or a waiver thereof from the National  Association
of  Securities  Dealers,  Inc.  (the  "NASD") as required by Rule 4460(i) of the
NASD,  then the holder shall be entitled to convert any or all of its  Preferred
Shares at a  conversion  price  equal to the lesser of (i) the Fixed  Conversion
Price,  subject to  adjustment  as provided  herein and (ii) the Average  Market
Price for the Common Stock for the five (5) consecutive  trading days ending one
trading day prior to the date of the Conversion  Notice. As used in this Section
(2)(j),  "Stockholder  Approval"  means the  approval by a majority of the votes
cast by the  holders  of  shares of  Common  Stock (in  person or by proxy) at a
meeting of the  stockholders of the Company (duly convened at which a quorum was
present),  or a written consent of holders of shares of Common Stock entitled to
such number of votes given without a meeting,  of the issuance by the Company of
20% or more of the  outstanding  Common  Stock of the  Company for less than the
greater of the book or market  value of such Common Stock on  conversion  of the
Preferred Shares,  as and to the extent required under Section  4460(i)(1)(D) of
the rules of the NASD (or any successor or replacement provision thereof).

            (3) CONVERSION AT THE COMPANY'S  OPTION.  So long as at the time the
Company is in compliance in all material  respects  with its  obligations  under
this Certificate,  the Registration Rights Agreement and the Securities Purchase
Agreement  between the Company and the original  holder of the Preferred  Shares
pursuant to which the Company issued the Preferred  Shares,  the Company may, at
any time  subsequent to two hundred seventy (270) days after the Effective Date,
require the holders of the then outstanding Preferred Shares to convert all, but
not less than all, of such  Preferred  Shares into  Common  Stock by  delivering
written notice to such holders (the "Mandatory Conversion Notice") in accordance
with the terms hereof; PROVIDED,  HOWEVER, that in no event shall the Company be
entitled to require any holder to convert its  Preferred  Shares if, and no such
conversion  shall be effective to the extent that,  after giving  effect to such
conversion,  the number of shares of Common Stock issued in such  conversion and
otherwise  beneficially  owned by such  holder and all  Related  Persons of such
holder,  would exceed four and  nine-tenths  percent  (4.9%) of the  outstanding
shares of Common Stock  (other than shares of Common  Stock deemed  beneficially
owned  through the  ownership of  unconverted  Preferred  Shares or  unconverted
shares of Series B Preferred  Stock) and that as to those Preferred Shares which
the Company is prohibited  from  converting  by operation of this  proviso,  the
Company's  obligation to pay dividends thereon shall terminate as of the date of
the Mandatory  Conversion Notice. For purposes of the proviso to the immediately
preceding sentence,  beneficial ownership shall be determined in accordance with
Sections 13(d) and 16, except as otherwise  provided with respect to unconverted
Preferred  Shares and Series B Preferred Shares in the  parenthetical  clause of
the proviso to the immediately preceding sentence.  The Conversion Price for the
purposes of this  Section 3 shall be the lesser of (i) the  product  obtained by
multiplying  the  Average  Market  Price for the  Common  Stock for the five (5)
consecutive  trading  days ending one trading day prior to the  conversion  date
specified in the Mandatory  Conversion Notice by the Conversion  Percentage then
in effect,  or (ii) the Fixed  Conversion  Price then in effect.  Any  Mandatory
Conversion  Notice shall be given by telephone line facsimile  transmission  and



                                        9


<PAGE>




U.S.  mail to the  holders  of the then  outstanding  Preferred  Shares at least
fifteen (15) trading days prior to the date fixed as the date for the conversion
thereof at their telephone line facsimile numbers and addresses  provided to the
Company for such  purpose and shall  state that the then  outstanding  Preferred
Shares shall be converted  at the  Conversion  Price in effect on the date fixed
for the conversion, upon the surrender, at the time and place designated in such
notice,  of the certificates  therefor.  Within four (4) business days after the
date fixed for  conversion,  the Company  shall  deliver to the holders (i) that
number of shares of Common Stock for the Preferred  Shares converted as shall be
determined  in accordance  herewith,  and (ii) payment of the accrued and unpaid
dividends  thereon  (which  payment of dividends may be made in shares of Common
Stock in  accordance  with  Section 1 hereof  if the  requirements  thereof  are
satisfied).  Notwithstanding  the  foregoing,  if,  at the time  fixed  for such
conversion,  the  Common  Stock to be issued  pursuant  thereto is not listed or
included for quotation on the NASDAQ-NM,  NYSE, AMEX,  NASDAQ SmallCap or NASDAQ
Bulletin Board, then the Mandatory Conversion Notice shall be null and void.

            (4) VOTING RIGHTS.  Holders of Preferred Shares shall have no voting
rights, except as required by law and by Section 7 hereof.

            (5)  LIQUIDATION,  DISSOLUTION,  WINDING  UP.  In the  event  of any
voluntary or involuntary liquidation,  dissolution or winding up of the Company,
the holders of the Preferred  Shares shall be entitled to receive in cash out of
the assets of the Company,  whether from capital or from earnings  available for
distribution  to its  stockholders  (the "Preferred  Funds"),  before any amount
shall be paid to the holders of the Common Stock,  an amount equal to the Stated
Value per Preferred Share plus any accrued and unpaid dividends,  provided that,
if the  Preferred  Funds  are  insufficient  to pay the full  amount  due to the
holders of Preferred  Shares and holders of shares of other classes or series of
preferred stock of the Company that are of equal rank with the Preferred  Shares
as to payments of Preferred Funds (the "Pari Passu Shares"), then each holder of
Preferred  Shares  and Pari  Passu  Shares  shall  receive a  percentage  of the
Preferred  Funds equal to the full  amount of  Preferred  Funds  payable to such
holder as a  percentage  of the full amount of  Preferred  Funds  payable to all
holders of Preferred Shares and Pari Passu Shares. The purchase or redemption by
the Company of stock of any class,  in any manner  permitted by law,  shall not,
for the purposes hereof, be regarded as a liquidation, dissolution or winding up
of the Company. Neither the consolidation nor merger of the Company with or into
any other  corporation or corporations,  nor the sale or transfer by the Company
of less than substantially all of its assets, shall, for the purposes hereof, be
deemed to be a liquidation,  dissolution or winding up of the Company. No holder
of  Preferred  Shares  shall be entitled to receive  any  amounts  with  respect
thereto upon any  liquidation,  dissolution  or winding up of the Company  other
than the amounts provided for herein.

            (6)  PREFERRED  RANK.  All shares of Common Stock shall be of junior
rank to all Preferred  Shares in respect to the preferences as to  distributions
and payments upon the liquidation, dissolution or winding up of the Company. The



                                       10


<PAGE>




rights of the shares of Common  Stock  shall be subject to the  preferences  and
relative  rights of the  Preferred  Shares.  The Company may only  authorize and
issue  additional  or other  preferred  stock  which is of junior  rank with the
Preferred Shares in respect of the preferences as to distributions  and payments
upon the liquidation,  dissolution or winding up of the Company. Notwithstanding
the  foregoing,  the Company may issue to the original  holders of the Preferred
Shares or  affiliates  thereof  preferred  stock which is of equal rank with the
Preferred Shares in respect of the preferences as to distributions  and payments
upon the liquidation,  dissolution or winding up of the Company. In the event of
the merger or consolidation of the Company with or into another corporation, the
Preferred  Shares  shall  maintain  their  relative  powers,   designations  and
preferences provided for herein.

            (7) VOTE TO CHANGE THE TERMS OF  PREFERRED  SHARES.  The approval of
the Board of Directors and the affirmative  vote at a meeting duly called by the
Board of Directors for such purpose or the written  consent without a meeting of
the holders of not less than two-thirds (2/3) of the then outstanding  Preferred
Shares  shall be required to amend,  alter,  change or repeal any of the powers,
designations, preferences and rights of the Preferred Shares.

            (8)  REDEMPTION  AT OPTION OF HOLDERS.  (i) Each holder of Preferred
Shares  shall be entitled,  at such  holder's  option,  by notice to the Company
given within 20 days after the occurrence of an Optional  Redemption  Event,  to
require  the  Company to redeem all or a portion of such shares (but in no event
less than ten shares,  unless such holder  holds less than ten shares,  in which
case the Company must redeem all of such holder's shares) upon the occurrence of
an Optional  Redemption  Event. An Optional  Redemption Event means,  during any
consecutive two month period, a change in a majority of either (a) the executive
officers or (b) the members of the Board of  Directors of the Company from those
persons serving in such capacities at the beginning of such period.  The Company
shall notify each holder of Preferred  Shares  within three (3) business days of
the occurrence of an Optional Redemption Event.

            (ii)  To  exercise  the  optional  redemption  right,  a  holder  of
Preferred  Shares  shall  deliver  to the  Company  a notice of  redemption  (an
"Optional Redemption Notice"),  accompanied by the certificate for the Preferred
Shares to be redeemed.  Any Optional  Redemption Notice shall state (1) that the
holder  delivering  such  notice is  thereby  requiring  the  Company  to redeem
Preferred  Shares  pursuant to this  Section (8) and (2) the number of Preferred
Shares held by such holder which are to be redeemed. In no event later than five
business days following receipt of such notice by the Company, the Company shall
make payment in immediately  available funds of the applicable  Redemption Price
with respect to the Preferred Shares to be redeemed to or upon the order of such
holder as  specified  by such holder in the  Optional  Redemption  Notice.  Upon
redemption  of less than all of the Preferred  Shares  evidenced by a particular
certificate,  promptly,  but in no event  later  than five  business  days after
surrender  of  such  certificate  to the  Company,  the  Company  shall  issue a
replacement  certificate for the Preferred  Shares which have not been redeemed.
Only whole shares of Preferred Stock may be redeemed.



                                      11


<PAGE>





            (iii) For  purposes of this  Section  (8),  "Redemption  Price" with
respect to each Preferred Share to be redeemed shall mean an amount equal to the
sum of (A) $1,000  divided by the applicable  Conversion  Percentage and (B) all
dividends accrued and unpaid thereon to the applicable redemption date.













































                                      12


<PAGE>




            IN WITNESS  WHEREOF,  the Company has caused this  certificate to be
signed by Dennis W. Healey, its Executive Vice President, as of the _____ day of
February, 1997.

                                          VIRAGEN, INC.



                                          By:
                                                   Executive Vice President







































                                      13

- --------------------------------------------------------------------------------
                                   EXHIBIT (2)
           Securities Purchase Agreement dated as of December 31, 1996
                        and Registration Rights Agreement
- --------------------------------------------------------------------------------

                          SECURITIES PURCHASE AGREEMENT

            SECURITIES  PURCHASE  AGREEMENT  (this  "Agreement"),  dated  as  of
December 31, 1996, by and between VIRAGEN,  INC., a Delaware  corporation,  with
headquarters  located  at  2343  West  76th  Street,   Hialeah,  FL  33016  (the
"Company"), and the undersigned (the "Buyer").

            WHEREAS:

            A. The  Company  and the Buyer are  executing  and  delivering  this
Agreement in reliance upon the exemption from securities  registration  afforded
by Rule 506 under  Regulation D  ("Regulation  D") as  promulgated by the United
States  Securities and Exchange  Commission (the "SEC") under the Securities Act
of 1933, as amended (the "1933 Act");

            B. The Buyer wishes to  purchase,  in the amounts and upon the terms
and conditions stated in this Agreement,  shares (the "Preferred Shares") of the
Company's 5% Cumulative  Convertible  Preferred Stock, Series E, $1.00 par value
(the "Preferred Stock"), which shall be convertible into shares (the "Conversion
Shares") of the Company's Common Stock, $.01 par value (the "Common Stock"), and
pursuant to which  certain  shares of Common Stock may be issued to the Buyer in
payment of dividends (the "Dividend Shares") and in accordance with Section 2(c)
of  the  Certificate  of  Designation,  Preferences  and  Rights  therefor  (the
"Additional Shares"); and

            C.  Contemporaneously  with  the  execution  and  delivery  of  this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement,  dated as of the date hereof (the "Registration  Rights  Agreement"),
pursuant to which the Company has agreed to provide certain  registration rights
under the 1933 Act and the rules and  regulations  promulgated  thereunder,  and
applicable state securities laws;

            NOW THEREFORE, the Company and the Buyer hereby agrees as follows:

            1.    PURCHASE AND SALE OF PREFERRED SHARES.
                  -------------------------------------

            A. PURCHASE OF PREFERRED SHARES. The Company shall issue and sell to
the Buyer and the Buyer shall  purchase  5,000  Preferred  Shares which shall be
convertible  into  Conversion  Shares  in  accordance  with  the  terms  of  the
Certificate of Designations, Preferences and Rights of 5% Cumulative Convertible
Preferred  Stock,  Series  E in the  form  attached  hereto  as  EXHIBIT  A (the
"Certificate of Designation").  Terms used herein without  definition shall have
the  meanings  given  them in the  Certificate  of  Designation.  The per  share
purchase price of the Preferred Shares shall be One Thousand Dollars ($1,000).

            B. FORM OF  PAYMENT.  Not later  than the date which is two New York
Stock Exchange  trading days after the date the Company and the Buyer shall have
executed  and  delivered,  one to the other,  this  Agreement,  the Buyer  shall
deposit the purchase price for the Preferred  Shares (the  "Purchase  Price") by


<PAGE>


delivering  good funds in United States Dollars to the escrow agent (the "Escrow
Agent") identified in the Joint Escrow Instructions attached hereto as EXHIBIT B
(the "Joint Escrow  Instructions").  Deposit of the Purchase  Price by the Buyer
with the Escrow Agent shall be made by wire transfer of funds to:

            Citibank, N.A.
            153 East 53rd Street
            New York, New York 10043
            ABA#021000089

            For Further Credit to A/C No. 37179446
            For the account of Brian W. Pusch Attorney Escrow Account
            Reference:  Advantage/Viragen

Not later than the date which is two New York Stock Exchange  trading days after
the date the Company and the Buyer shall have executed and delivered, one to the
other,  this  Agreement,  the Company  shall  deliver to the Escrow  Agent stock
certificates, duly executed on behalf of the Company, representing the Preferred
Shares (the "Stock Certificates").  By signing this Agreement, the Buyer and the
Company each agrees to all of the terms and  conditions  of, and becomes a party
to,  the  Joint  Escrow  Instructions,  all  of  the  provisions  of  which  are
incorporated herein by this reference as if set forth herein in full.

            C. CLOSING  DATE.  The date and time of the issuance and sale of the
Preferred  Shares (the "Closing Date") shall be 12 noon,  Eastern Standard Time,
on the date which is two New York Stock Exchange  trading days after the date on
which the Buyer shall have  deposited  the Purchase  Price with the Escrow Agent
under the Joint Escrow  Instructions in accordance with Section 1(b) hereof,  or
such other mutually  agreed to time. The closing shall occur on the Closing Date
at the offices of the Escrow Agent.

            2.    REPRESENTATIONS, WARRANTIES, ETC. OF BUYER.
                  ------------------------------------------

            The Buyer represents and warrants to, and covenants and agrees with,
the Company as follows:

            A. INVESTMENT PURPOSE.  The Buyer is purchasing the Preferred Shares
for its own  account  or as  fiduciary  or agent for the  account of one or more
institutional  investors for investment only and not with a view towards, or for
resale in  connection  with,  the public  sale or  distribution  thereof  except
pursuant to sales registered under the 1933 Act.

            B.  ACCREDITED  INVESTOR  STATUS.  The Buyer and such  institutional
account are "accredited  investors" as that term is defined in Rule 501(a)(3) or
501(a)(8) of Regulation D.

            C. RELIANCE ON EXEMPTIONS.  The Buyer understands that the Preferred
Shares are being  offered  and sold to the Buyer or such  account in reliance on
specific exemptions from the registration  requirements of United States federal
and state  securities  laws and that the  Company  is  relying  on the truth and



                                        2


<PAGE>


accuracy  of,  and  the  Buyer's  and  such  account's   compliance   with,  the
representations,  warranties, agreements,  acknowledgments and understandings of
the  Buyer  and  such  account  set  forth  herein  in order  to  determine  the
availability  of such  exemptions  and the  eligibility  of the  Buyer  and such
account to acquire the Preferred Shares.

            D.  INFORMATION.  The Buyer and such  account  and their  respective
advisors,  if any,  have  been  furnished  with all  materials  relating  to the
business,  finances and operations of the Company and materials  relating to the
offer and sale of the  Preferred  Shares which have been  requested by the Buyer
and such account. The Buyer and such account and their respective  advisors,  if
any, have been afforded the opportunity to ask questions of the Company and have
received complete and satisfactory answers to any such inquiries.  The Buyer and
such account  understand that the investment in the Preferred  Shares involves a
high degree of risk.  The Buyer and such  account  have sought such  accounting,
legal and tax advice as they have considered necessary to an informed investment
decision with respect to the acquisition of the Preferred Shares.

            E. GOVERNMENTAL  REVIEW.  The Buyer and such account understand that
no United States federal or state agency or any other government or governmental
agency has passed on or made any  recommendation or endorsement of the Preferred
Shares or the fairness or suitability of the investment in the Preferred Shares,
nor have such authorities  passed upon or endorsed the merits of the offering of
the Preferred Shares.

            F. TRANSFER OR RESALE.  The Buyer and such account  understand  that
(i) except as provided  in the  Registration  Rights  Agreement,  the  Preferred
Shares,  the Conversion  Shares,  the Dividend Shares and the Additional  Shares
have not been  and are not  being  registered  under  the 1933 Act or any  state
securities laws, and may not be transferred  unless (a) subsequently  registered
thereunder,  or (b) the holder  thereof  shall have  delivered to the Company an
opinion of counsel,  reasonably satisfactory in form, scope and substance to the
Company,  to the effect that the  securities  to be sold or  transferred  may be
transferred  pursuant to an exemption from such  registration;  (ii) any sale of
such securities made in reliance on Rule 144 promulgated  under the 1933 Act may
be made only in accordance with the terms of said Rule and further, if said Rule
is not applicable,  any resale of such securities  under  circumstances in which
the seller (or the person  through whom the sale is made) may be deemed to be an
underwriter  (as that term is  defined in the 1933 Act) may  require  compliance
with some other exemption under the 1933 Act or the rules and regulations of the
SEC thereunder;  and (iii) neither the Company nor any other person is under any
obligation to register such securities  (other than pursuant to the Registration
Rights  Agreement)  under the 1933 Act or any state securities laws or to comply
with the terms and conditions of any exemption thereunder.

            G. LEGEND.  The Buyer and such account understand that the Preferred
Shares and, until such time as the Conversion  Shares,  the Dividend  Shares and
the  Additional  Shares (the  Conversion  Shares,  the  Dividend  Shares and the
Additional Shares are collectively referred to as the "Registrable  Securities")
have  been  registered  for  resale  under the 1933 Act as  contemplated  by the
Registration   Rights  Agreement,   the  stock  certificates   representing  the
Registrable  Securities  shall bear a restrictive  legend in  substantially  the
following form (and a stop-transfer order may be placed against transfer of such
stock certificates):


                                        3

<PAGE>




THE SECURITIES  REPRESENTED BY THIS  CERTIFICATE  HAVE NOT BEEN REGISTERED UNDER
THE  SECURITIES  ACT OF  1933,  AS  AMENDED  (THE  "ACT")  OR  APPLICABLE  STATE
SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE
SOLD,  TRANSFERRED  OR  ASSIGNED  IN THE  ABSENCE OF AN  EFFECTIVE  REGISTRATION
STATEMENT FOR THE SECURITIES  UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS,
OR AN OPINION OF COUNSEL IN FORM,  SUBSTANCE AND SCOPE REASONABLY  ACCEPTABLE TO
THE  COMPANY  THAT  REGISTRATION  IS NOT  REQUIRED  UNDER THE ACT OR UNLESS SOLD
PURSUANT TO RULE 144 UNDER THE ACT. ANY SUCH SALE,  ASSIGNMENT  OR TRANSFER MUST
ALSO COMPLY WITH APPLICABLE STATE SECURITIES LAWS.

The legend  set forth  above  shall be removed  and the  Company  shall  issue a
certificate without such legend to the holder of the Preferred Shares upon which
it is stamped,  if, unless otherwise  required by state securities laws, (a) the
sale of such Preferred  Shares is registered and effected under the 1933 Act, or
(b) in connection with a sale transaction, such holder provides the Company with
an opinion of counsel, in form, substance and scope reasonably acceptable to the
Company,  to the effect that a public sale or transfer of the  Preferred  Shares
may be made without registration under the 1933 Act, or (c) such holder provides
the Company with  reasonable  assurances  that the Preferred  Shares can be sold
pursuant to Rule 144 under the 1933 Act (or a successor  rule  thereto)  without
any restriction as to the number of securities  acquired as of a particular date
that can then be immediately sold. Once the Registration  Statement contemplated
by Section 2(a) of the  Registration  Rights  Agreement shall have been declared
effective  by the SEC,  (1) the  Company  shall,  upon  request  of the  holder,
immediately  remove any  restrictive  legend  and  terminate  any  stop-transfer
restriction   for  Registrable   Securities   issued  prior  to  the  date  such
Registration  Statement  is  declared  effective  by the SEC and (2) the Company
shall not place any restrictive  legend or impose any stop-transfer  restriction
on Registrable Securities issued thereafter.

            H.  AUTHORIZATION;  ENFORCEMENT.  This  Agreement  has been duly and
validly authorized, executed and delivered on behalf of the Buyer and is a valid
and binding  agreement of the Buyer  enforceable  in accordance  with its terms,
subject as to enforceability to general  principles of equity and to bankruptcy,
insolvency,  moratorium,  and other similar laws  affecting the  enforcement  of
creditors' rights generally.

            I. RESIDENCY.  The Buyer is a resident of that country  specified in
its address on the signature page hereof.

            3.    REPRESENTATIONS, WARRANTIES ETC. OF THE COMPANY.
                  -----------------------------------------------
 
            The Company  represents  and warrants to, and  covenants  and agrees
with, the Buyer as follows:

            A. ORGANIZATION AND QUALIFICATION.  The Company and its subsidiaries
are  corporations  duly organized,  validly  existing in good standing under the



                                        4


<PAGE>


laws of the jurisdiction in which they are incorporated,  except, in the case of
any such  subsidiaries,  as would not have a Material Adverse Effect (as defined
below),  and have the requisite  corporate power to own their  properties and to
carry on their  business  as now being  conducted.  Each of the  Company and its
subsidiaries is duly qualified as a foreign corporation to do business and is in
good  standing  in  every  jurisdiction  in which  the  nature  of the  business
conducted by it makes such  qualification  necessary and where the failure so to
qualify would have a Material  Adverse Effect.  "Material  Adverse Effect" means
any material adverse effect on the business, operations,  properties,  condition
(financial or other),  results of operations or prospects of the Company and its
subsidiaries taken as a whole.

            B.  AUTHORIZATION;  ENFORCEMENT.  (i) The Company has the  requisite
corporate  power and authority to enter into and perform this  Agreement and the
Registration  Rights  Agreement,  and to  issue  the  Preferred  Shares  and the
Registrable Securities in accordance with the terms hereof and thereof, (ii) the
execution and delivery of this Agreement and the  Registration  Rights Agreement
by the  Company  and the  consummation  by it of the  transactions  contemplated
hereby and thereby have been duly authorized by the Company's Board of Directors
and no further consent or authorization of the Company,  its Board of Directors,
or its  stockholders  is required,  (iii) this  Agreement  and the  Registration
Rights Agreement have been duly executed and delivered by the Company,  and (iv)
this Agreement and the Registration  Rights  Agreement  constitute the valid and
binding obligations of the Company enforceable against the Company in accordance
with their terms,  except as such  enforceability  may be limited by  applicable
bankruptcy, insolvency, reorganization,  moratorium, liquidation or similar laws
relating to, or affecting  generally,  the enforcement of creditors'  rights and
remedies or by other equitable principles of general application.

            C.  CAPITALIZATION.  As of December 31, 1996, the authorized capital
stock of the Company consists of (i) 50,000,000  shares of Common Stock of which
38,629,091  shares were issued and  outstanding,  and (ii)  1,000,000  shares of
preferred stock,  $1.00 par value (the "Preferred  Stock") of which 2,650 shares
were issued and  outstanding  and designated  Series A Preferred  Stock;  13,864
shares were issued and outstanding and designated  Series B Preferred Stock; and
5,000  shares  were issued and  outstanding  and  designated  Series C Preferred
Stock; and on the Closing Date there will be no material  increase in the number
of shares of Common  Stock or  Preferred  Stock  outstanding  other than  15,000
shares of Series D Convertible  Preferred  Stock issued in February 1997. All of
such  outstanding  shares  have  been  validly  issued  and are  fully  paid and
nonassessable.  No shares of Common  Stock or  Preferred  Stock are  subject  to
preemptive rights or any other similar rights of the stockholders of the Company
or any liens or  encumbrances.  Except as disclosed in SCHEDULE  3(C), (i) there
are no outstanding  options,  warrants,  scrip, rights to subscribe to, calls or
commitments  of any  character  whatsoever  relating to, or securities or rights
convertible  into,  any  shares of  capital  stock in the  Company or any of its
subsidiaries, or arrangements by which the Company or any of its subsidiaries is
or may become bound to issue  additional  shares of capital stock of the Company
or any of its subsidiaries,  (ii) there are no outstanding debt securities,  and
(iii) there are no agreements or arrangements  under which the Company or any of
its  subsidiaries  is obligated to register the sale of its or their  securities



                                      5


<PAGE>


under the 1933 Act  (except  the  Registration  Rights  Agreement,  the  several
Registration  Rights  Agreements,  dated as of June 7, 1996,  by and between the
Company and GFL Performance Fund Limited,  GFL Advantage Fund Limited and Proton
Global Asset Management,  LDC, the several  Registration Rights Agreements dated
as of  November  27,  1996 with the  holders of Series C  Convertible  Preferred
Stock,  the  Registration  Rights Agreement dated as of December 31, 1996 by and
between the Company and P.R.I.F.,  L.P. and the registration rights as described
in the final  prospectus  of Viragen  (Europe) Ltd.  dated July 12,  1996).  The
Company  has  furnished  to the Buyer true and correct  copies of the  Company's
Certificate  of  Incorporation,  as  amended,  as in effect  on the date  hereof
("Certificate of  Incorporation")  and the Company's Bylaws, as in effect on the
date hereof (the  "Bylaws").  The Company shall provide the Buyer with a written
update of this  representation  signed by the Company's Chief Executive or Chief
Financial Officer on behalf of the Company as of the Closing Date.

            D. ISSUANCE OF SECURITIES.  The Registrable Securities and Preferred
Shares are duly  authorized  and,  upon  issuance in  accordance  with the terms
hereof and thereof, shall be validly issued, fully paid and non-assessable,  and
free from all taxes, liens and charges with respect to the issue thereof.

            E. NO CONFLICTS.  The  execution,  delivery and  performance of this
Agreement,  the Registration Rights Agreement and the Certificate of Designation
by  the  Company  and  the  consummation  by  the  Company  of  the  transaction
contemplated  hereby  and  thereby  will not (i)  result in a  violation  of the
Certificate  of  Incorporation  or Bylaws or (ii) conflict with, or constitute a
default (or an event  which with notice or lapse of time or both would  become a
default)  under,  or  give to  others  any  rights  of  termination,  amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
the Company or any of its  subsidiaries  is a party, or result in a violation of
any law, rule,  regulation,  order,  judgment,  or decree (including federal and
state securities laws and  regulations)  applicable to the Company or any of its
subsidiaries  or by which any  property  or asset of the  Company  or any of its
subsidiaries  is  bound  or  affected  (except  for  such  conflicts,  defaults,
terminations,  amendments, accelerations,  cancellations and violations as would
not,  individually or in the aggregate,  have a Material  Adverse  Effect).  The
business of the Company and its subsidiaries is not being  conducted,  and shall
not be  conducted  through  the  Registration  Period (as  defined  herein),  in
violation of any law, ordinance,  regulation of any governmental entity,  except
for possible  violations  which either  singly or in the aggregate do not have a
Material  Adverse  Effect.  Except  as  required  under  the  1933  Act  and any
applicable  state  securities  laws,  the Company is not  required to obtain any
consent, authorization or order of, or make any filing or registration with, any
court or governmental agency in order for it to execute,  deliver or perform any
of its obligations under this Agreement,  the Registration  Rights Agreement and
the Certificate of Designation in accordance with the terms hereof and thereof.

            F. SEC  DOCUMENTS,  FINANCIAL  STATEMENTS.  Since June 30, 1992, the
Company has filed all reports,  schedules, forms, statements and other documents
required to be filed by it with the SEC pursuant to the  reporting  requirements
of the Securities  Exchange Act of 1934, as amended (the "1934 Act") (all of the
foregoing filed prior to the date hereof and all exhibits  included  therein and



                                      6


<PAGE>


financial  statements and schedules  thereto and documents (other than exhibits)
incorporated by reference therein,  being hereinafter  referred to herein as the
"SEC  Documents").  The Company  has  delivered  to the Buyer true and  complete
copies  of  the  SEC  Documents,   except  for  such  exhibits,   schedules  and
incorporated documents. As of their respective dates, the SEC Documents complied
in all material respects with the requirements of the 1934 Act and the rules and
regulations promulgated thereunder applicable to the SEC Documents,  and none of
the SEC  Documents,  at the time they were  filed  with the SEC,  contained  any
untrue statement of a material fact or omitted to state a material fact required
to be stated  therein or necessary in order to make the statements  therein,  in
light of the  circumstances  under which they were made, not  misleading.  As of
their respective dates, the financial  statements of the Company included in the
SEC  Documents  complied as to form in all  material  respects  with  applicable
accounting  requirements and the published rules and regulations of the SEC with
respect thereto. Such financial statements have been prepared in accordance with
generally  accepted  accounting  principles,  consistently  applied,  during the
periods  involved  (except (i) as may be otherwise  indicated in such  financial
statements  or the  notes  thereto,  or (ii) in the  case of  unaudited  interim
statements,  to the extent they may exclude  footnotes  or may be  condensed  or
summary  statements)  and fairly present in all material  respects the financial
position  of  the  Company  as of the  dates  thereof  and  the  results  of its
operations  and cash flows for the periods then ended  (subject,  in the case of
unaudited  statements,  to normal  year-end audit  adjustments).  No information
provided by or on behalf of the Company to the Buyer and  referred to in Section
2(d) of this Agreement contains any untrue statement of a material fact or omits
to state any material fact necessary in order to make the statements therein, in
light of the circumstance under which they were made, not misleading.

            G. ABSENCE OF CERTAIN  CHANGES.  Since June 30, 1996, there has been
no material adverse change and no material adverse  development in the business,
properties, operations, condition (financial or other), results of operations or
prospects of the Company and its subsidiaries taken as a whole.

            H. ABSENCE OF  LITIGATION.  Except as set forth in its Form 10-K for
the year ended June 30, 1996 and in subsequent reports on Form 10-Q, there is no
action suit, proceeding, inquiry or investigation before or by any court, public
board or body pending or, to the knowledge of the Company, threatened against or
affecting the Company, wherein an unfavorable decision,  ruling or finding would
have a Material  Adverse Effect or which would adversely  affect the validity or
enforceability  of, or the  authority  or ability of the  Company to perform its
obligations under, this Agreement or any of the documents contemplated herein.

            I.  LISTING.  The Common  Stock is listed for  trading on the Nasdaq
National Market  ("Nasdaq"),  the Company and the Common Stock meet the criteria
for continued  listing and trading on Nasdaq and no suspension of trading in the
Common Stock is in effect and its subsidiaries taken as a whole.

            J. APPROVALS.  No  authorization,  approval or consent of, or filing
with,  any  court,   governmental  body,   regulatory  agency,   self-regulatory
organization,  or stock exchange or market or the stockholders of the Company is
required to be obtained or made by the Company for (x) the  issuance and sale of



                                        7


<PAGE>


the Preferred  Shares as  contemplated by this Agreement and (y) the issuance of
the Registrable Securities in accordance with the terms of the Preferred Shares,
other than (1) listing of the  Registrable  Securities on Nasdaq,  (2) filing of
the  Certificate  of  Designation  with the  Secretary  of State of the State of
Delaware,  (3) filing of the Form D with the SEC and (4) the requirements of any
applicable blue sky laws.

            4.    CERTAIN COVENANTS.
                  -----------------

            A. BEST  EFFORTS.  Each of the  parties  shall use its best  efforts
timely to satisfy each of the  conditions  to the other party's  obligations  to
sell and purchase the Preferred  Shares  described in Section 6 or Section 7, as
the case may be, of this Agreement.

            B. FORM D. The Company  agrees to file a Form D with  respect to the
Preferred Shares as required under Regulation D and to provide a copy thereof to
the Buyer promptly after such filing.

            C. REPORTING  STATUS.  Until the earlier of (i) the date as of which
the Investors (as that term is defined in the Registration Rights Agreement) may
sell all of the  Registrable  Securities  without  restriction  pursuant to Rule
144(k) promulgated under the 1933 Act (or successor  thereto),  or (ii) the date
on which (A) the Investors have sold all the Registrable Securities and (B) none
of the Preferred Shares is outstanding (the "Registration  Period"), the Company
shall file all reports  required  to be filed with the SEC  pursuant to the 1934
Act, and the Company  shall not  terminate  its status as an issuer  required to
file  reports  under  the  1934  Act  even  if the  1934  Act or the  rules  and
regulations thereunder would permit such termination.

            D. USE OF PROCEEDS.  The Company will use the proceeds from the sale
of the Preferred  Shares for the Company's  working  capital  purposes and shall
not, directly or indirectly,  use such proceeds for any loan to or investment in
any other corporation,  partnership, enterprise or other person unrelated to the
business and direct  operations  of the Company or for repayment of any existing
debt obligations.

            E. FINANCIAL  INFORMATION.  The Company agrees to send the following
reports to the Buyer during the  Registration  Period:  (i) within five (5) days
after the filing thereof with the SEC, a copy of its Annual Report on Form 10-K,
its Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K; and (ii)
within one day after release thereof, copies of all press releases issued by the
Company or any of its subsidiaries.

            F.  RESERVATION  OF  SHARES.  The  Company  shall at all times  have
authorized,  and reserved for the purpose of  issuance,  a sufficient  number of
shares of Common Stock to provide for the  issuance of  Conversion  Shares,  the
Dividend  Shares and the Additional  Shares.  The Company  acknowledges  that it
currently  has an  insufficient  number of  authorized  shares  of Common  Stock
available for such issuances and agrees to take all steps  reasonably  necessary
to gain  approval  by its  stockholders  of an  increase  in the  number  of its
authorized shares of Common Stock, from 50,000,000 to 75,000,000  shares, at its
Annual Meeting of Stockholders to be held on February 28, 1997.



                                        8

<PAGE>



            G.  LISTING.  The Company shall  promptly  secure the listing of the
Registrable  Securities  upon each  national  securities  exchange or  automated
quotation  system,  if any,  upon which  shares of Common  Stock are then listed
(subject to official  notice of  issuance)  and shall  maintain,  so long as any
other shares of Common  Stock shall be so listed,  such listing of all shares of
Registrable  Securities  from  time to time  issuable  under  the  terms of this
Agreement and the Registration Rights Agreement.

            H.  PRE-CLOSING  ACTIVITY.  The Buyer  shall not trade in the Common
Stock for the period of five (5) trading days immediately  preceding the Closing
Date.

            I. STOCKHOLDER  APPROVAL.  (i) The Company covenants and agrees that
it shall  promptly  seek and use its best  efforts  to  obtain,  within  75 days
following the date of original issuance of the Preferred Shares, approval by its
stockholders  of the specific  transactions  contemplated by this Agreement (the
"Transactions")  in  accordance  with  Delaware  law. The Company  shall provide
copies of its  preliminary  proxy  materials  to Buyer  and its legal  counsel a
reasonable  period of time prior to their filing with the SEC. The Company shall
promptly  furnish  Buyer and its  counsel  with a copy of its  definitive  proxy
materials  and any  amendments  or  supplements  thereto.  If for any reason the
Company fails to obtain such stockholder approval of the Transactions within the
75-day period  specified  above, the Buyer shall be entitled to receive the cash
amount of liquidated damages specified in Section 4(i)(iii) below in addition to
its other applicable rights and remedies, subject to Section 4(i)(iv) below.

            (ii) Unless the Company  obtains  Stockholder  Approval  (as defined
herein) or a waiver thereof from the National Association of Securities Dealers,
Inc. ("Nasdaq"), the Company will not issue any shares of Common Stock or shares
of any other series of preferred  stock or other  securities  convertible  into,
exchangeable for, or otherwise entitling the holder to acquire, shares of Common
Stock  which  would be subject to Rule  4460(i) of Nasdaq (or any  successor  or
replacement  provision  thereof) and which would be integrated  with the sale of
the  Preferred  Shares  to the  Buyer  or the  issuance  of  Common  Stock  upon
conversion  thereof for purposes of Rule 4460(i) of Nasdaq (or any  successor or
replacement provision thereof). The Company agrees that it will not exercise its
right to permit  conversion of Preferred  Shares  pursuant to Sections 2 or 3 of
the Certificate of Designations if such conversions  would result in issuance of
a number of shares of Common  Stock in excess of that  permitted by Rule 4460(i)
of Nasdaq without obtaining  Stockholder Approval. As used in this Section 4(i),
"Stockholder Approval" means the approval by a majority of the votes cast by the
holders  of shares of Common  Stock (in  person or by proxy) at a meeting of the
stockholders of the Company (duly convened at which a quorum was present),  or a
written  consent of holders of shares of Common Stock entitled to such number of
votes given without a meeting,  of the issuance by the Company of 20% or more of
the  outstanding  Common  Stock of the  Company for less than the greater of the
book or market value of such Common Stock on conversion of the Preferred Shares,
as and to the extent required under Section 4460(i)(1)(D) of the rules of Nasdaq
(or any successor or replacement provision thereof).

            (iii) If at any time the  Company is  obligated  by Rule  4460(i) of
Nasdaq to obtain Stockholder Approval,  and Stockholder Approval is not obtained



                                        9

<PAGE>


or the Company abandons its efforts to obtain Stockholder Approval such that the
Buyer is prevented from converting  Preferred Shares at the Conversion Price, or
if the Company is obligated to pay the following cash amount pursuant to Section
4(i)(i) above,  then the Company shall be obligated to pay the Buyer within five
business days of such occurrence,  as liquidated damages and not as a penalty, a
cash amount equal to the greater of the following:

            (A)  the   product   obtained  by   multiplying  (1)  the   quotient
            obtained by dividing (x) the amount  determined by subtracting  from
            100% the applicable  Conversion Percentage on the date of payment by
            (y) the applicable  Conversion  Percentage in effect on such payment
            date times (2) $5,000,000; or

            (B)  the   product  obtained   by   multiplying  (1)  the   quotient
            obtained by dividing (x) the amount  determined by subtracting  from
            the Average Market Price on the date of payment the then  applicable
            Fixed  Conversion Price by (y) the applicable Fixed Conversion Price
            in effect on such payment date times (2) $5,000,000.

            (iv) Following the Buyer's receipt of the cash amount referred to in
Section 4(i)(iii), notwithstanding anything to the contrary in this Agreement or
in the Certificate of Designation, the Buyer shall thereafter be able to convert
any or all of its Preferred  Shares only at the conversion price provided in the
first sentence of Section 2(j) of the Certificate of Designation.

            J. BLUE SKY. On or before the Closing  Date,  the Company shall take
such action as shall be necessary to qualify, or to obtain an exemption for, the
Securities  for issuance and sale to the Buyer pursuant to this Agreement and in
accordance with the  Certificate of Designation  under such of the securities or
"blue sky" laws of  jurisdictions  in the United  States as shall be  applicable
thereto. The Company shall furnish copies of all filings,  applications,  orders
and grants or confirmations  of exemptions  relating to such securities or "blue
sky" laws on or before the Closing Date.

            K. CERTAIN TRADING  RESTRICTIONS.  The Buyer agrees that, during the
period from the date the Registration  Statement is first declared  effective by
the SEC to the date of conversion in full or redemption of all Preferred  Shares
owned by the Buyer,  the Buyer shall not engage in short sales or other  hedging
transactions with respect to the Common Stock; provided, however, that the Buyer
may enter into such  transactions  involving a number of shares of Common  Stock
not to exceed the number of Conversion  Shares for which a Conversion Notice has
been submitted to the Company.

            5.    TRANSFER AGENT INSTRUCTIONS.
                  ---------------------------
 
            Prior to the Closing Date,  the Company shall  irrevocably  instruct
its transfer agent to issue certificates, registered in the name of the Buyer or
its nominee,  for the Conversion Shares and Additional Shares in such amounts as
specified from time to time by the Buyer to the Company.  Prior to  registration
of the Registrable Securities pursuant to an effective  registration  statement,
all such  certificates  shall bear the restrictive  legend  specified in Section



                                      10


<PAGE>


2(g) of this Agreement.  The Company shall provide  instructions and opinions of
counsel  to  its  transfer  agent  in  accordance   with  Section  3(n)  of  the
Registration  Rights  Agreement.  The Company warrants that no instruction other
than  such  instructions  referred  to in  this  Section  5,  and  stop-transfer
instructions  to  give  effect  to  Section  2(f)  hereof,  in the  case  of the
Registrable  Securities,  prior to registration  of the  Registrable  Securities
under the 1933 Act, will be given by the Company to its transfer  agent and that
the Preferred  Shares and the Registrable  Securities  shall otherwise be freely
transferable  on the books  and  records  of the  Company  as and to the  extent
provided in this Agreement and the  Registration  Rights  Agreement.  Nothing in
this Section shall affect in any way the Buyer's  obligations  and agreements to
comply  with all  applicable  securities  laws upon  resale  of the  Registrable
Securities.  If the Buyer  provides  the  Company  with an opinion  of  counsel,
reasonably  satisfactory  in form,  scope and  substance  to the  Company,  that
registration  of a resale  by the  Buyer of any of the  Preferred  Shares or the
Registrable  Securities  is not required  under the 1933 Act, the Company  shall
permit the transfer,  and promptly  instruct its transfer  agent to issue one or
more  certificates  in such name and in such  denominations  as specified by the
Buyer.

            6.    CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
                  ----------------------------------------------
 
            The obligation of the Company hereunder to sell the Preferred Shares
is subject to the  satisfaction,  at or before the Closing  Date, of each of the
following conditions,  provided that these conditions are for the Company's sole
benefit and may be waived by the Company at any time in its sole discretion:

            a. The  Certificate  of  Designation  shall have been filed with the
Secretary of State of the State of Delaware.

            b. The Buyer shall have  delivered the Purchase  Price to the Escrow
Agent by wire transfer of  immediately  available  funds  pursuant to the wiring
instructions provided by the Escrow Agent.

            c. The representations and warranties of the Buyer shall be true and
correct in all material  respects as of the date when made and as of the Closing
Date as though made at that time (except for representations and warranties that
speak as of a specific date), and the Buyer shall have performed,  satisfied and
complied in all material respects with the covenants,  agreements and conditions
required by this  Agreement to be  performed,  satisfied or complied with by the
Buyer at or prior to the Closing Date.

            7.    CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
                  ------------------------------------------------
  
            The  obligation  of the Buyer to purchase  the  Preferred  Shares is
subject to the  satisfaction,  at or before  the  Closing  Date,  of each of the
following  conditions,  provided that these conditions are for each Buyer's sole
benefit and may be waived by such Buyer at any time in its sole discretion:

            a. The Registration  Rights Agreement shall remain in full force and
effect.
 

                                       11


<PAGE>




            b. The  Certificate  of  Designation  shall have been filed with the
Secretary  of State of the State of Delaware,  and a copy  thereof  certified by
such Secretary of State shall have been delivered to the Buyer.

            c. The  representations  and warranties of the Company shall be true
and  correct  in all  material  respects  as of the date when made and as of the
Closing  Date as  though  made at that  time  (except  for  representations  and
warranties  that  speak  as of a  specific  date)  and the  Company  shall  have
performed,  satisfied and complied in all material  respects with the covenants,
agreements and conditions required by this Agreement to be performed,  satisfied
or complied with by the Company at or prior to the Closing Date. The Buyer shall
have  received a  certificate,  executed by the Chief  Financial  Officer of the
Company,  dated the Closing Date,  to the foregoing  effect and as to such other
matters as may be reasonably requested by the Buyer.

            d. The Buyer  shall  have  received  the  opinion  of the  Company's
counsel dated as of the Closing Date,  in form,  scope and substance  reasonably
satisfactory to the Buyer and in substantially the form of EXHIBIT C.

            e. The Buyer shall have received the officer's certificate described
in Section 3(c) above, dated as of the Closing Date.

            g.  The  Company   shall  have  executed  and  delivered  the  Stock
Certificates to the Escrow Agent.

            8.    MISCELLANEOUS.
                  -------------
 
            A.  GOVERNING   LAW.  This  Agreement   shall  be  governed  by  and
interpreted in accordance  with the laws of the State of Florida  without regard
to the principles of conflict of laws.

            B.  COUNTERPARTS.  This  Agreement  may be  executed  in two or more
identical  counterparts,  all of  which  shall  be  considered  one and the same
agreement and shall become effective when  counterparts have been signed by each
party and  delivered  to the  other  party.  A  facsimile  transmission  of this
Agreement  bearing a signature  on behalf of a party  hereto  shall be legal and
binding on such party.

            C. HEADINGS.  The headings in this Agreement are for  convenience of
reference  and shall not form part of, or affect  the  interpretation  of,  this
Agreement.

            D. SEVERABILITY. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction,  such invalidity or unenforceability shall
not affect the validity or  enforceability of the remainder of this Agreement or
the validity or enforceability of this Agreement in any other jurisdiction.

            E. ENTIRE AGREEMENT;  AMENDMENTS. This Agreement and the instruments
referenced  herein contain the entire  understanding of the parties with respect
to the matters covered herein and therein and, except as specifically  set forth

                                       12


<PAGE>


herein or therein,  neither the Company nor the Buyer makes any  representation,
warranty,  covenant or undertaking with respect to such matters. No provision of
this  Agreement  may be waived or amended other than by an instrument in writing
signed by the party to be charged with enforcement.

            F. NOTICES.  Any notices required or permitted to be given under the
terms  of this  Agreement  shall  be sent by mail or  delivered  personally,  by
courier or by telephone line facsimile  transmission and shall be effective five
days after  being  placed in the mail,  if  mailed,  certified,  return  receipt
requested, or upon receipt, if delivered personally,  by courier or by telephone
line facsimile  transmission,  in each case addressed to a party.  The addresses
for such communications shall be:

            If to the Company:

            2343 West 76th Street
            Hialeah, FL  33016
            Telephone:  (305) 557-6000
            Facsimile:  (305) 557-6931
            Attention:  Mr. Gerald Smith or Mr. Dennis W. Healey

            With copy to:

            Atlas, Pearlman, Trop & Borkson, P.A.
            New River Center
            200 East Las Olas Blvd.
            Fort Lauderdale, FL  33331
            Telephone:  (954) 763-1200
            Facsimile:  (954) 766-7800

            Attention:  James Schneider, Esq.

            If to the Buyer, at the address on the signature page.

            With copy to:

            Law Offices of Brian W Pusch
            Penthouse Suite
            29 West 57th Street
            New York, New York  10019
            Telephone:  (212) 980-0408
            Facsimile:  (212) 980-7055

            Attention:  Brian W. Pusch, Esq.

Each party shall  provide  five days' notice to the other party of any change in
address.






                                       13


<PAGE>



            G. SUCCESSORS AND ASSIGNS.  This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns.
The  Company  shall not  assign  this  Agreement  or any  rights or  obligations
hereunder.  The Buyer shall have the right,  prior to or after the Closing Date,
to assign it rights and  obligations  under this  Agreement  with respect to the
purchase of all or any portion of the Preferred  Shares or the transfer  thereof
to an  investment  fund,  provided  such  assignee  or  transferee,  by  written
instrument duly executed by such assignee or transferee, assumes all obligations
of the Buyer  hereunder  with  respect  to the  purchase  of the  portion of the
Preferred  Shares  so  assigned  or the  transfer  thereof  and  makes  the same
representations  and warranties  with respect thereto as the Buyer makes in this
Agreement,  whereupon  the Buyer shall be  relieved of any further  obligations,
responsibilities  and  liabilities  with  respect  to the  Preferred  Shares  so
transferred or the obligation for the purchase of which has been so assigned. In
the case of any such transfer or assignment,  the Company shall agree in writing
with such  transferee  or  assignee  to make  available  to such  transferee  or
assignee the benefits of the  Registration  Rights Agreement with respect to the
Registrable  Securities issuable in respect of the Preferred Shares with respect
to which the obligations under this Agreement have been so assigned.

            H. THIRD PARTY  BENEFICIARIES.  This  Agreement  is intended for the
benefit of the parties  hereto and their  respective  permitted  successors  and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.

            I. SURVIVAL.  The  representations and warranties of the Company and
the Buyer  contained in Sections 2 and 3 and the  agreements  and  covenants set
forth herein shall survive the closing.

            J.  PUBLICITY.  The  Company  and the Buyer  shall have the right to
approve before  issuance any press releases or any other public  statements with
respect to the transactions  contemplated hereby;  PROVIDED,  HOWEVER,  that the
Company shall be entitled,  without the prior approval of the Buyer, to make any
press release with respect to such transactions as is required by applicable law
and  regulations  (although  the Buyer  shall be  consulted  by the  Company  in
connection  with any  such  press  release  prior to its  release  and  shall be
provided with a copy thereof).

            L. FURTHER ASSURANCES.  Each party shall do and perform, or cause to
be done and performed,  all such further acts and things,  and shall execute and
deliver all such other agreements,  certificates,  instruments and documents, as
the other  party may  reasonably  request  in order to carry out the  intent and
accomplish  the  purposes  of  this  Agreement  and  the   consummation  of  the
transactions contemplated hereby.

            M.  TERMINATION.  In the  event  that  the  closing  shall  not have
occurred on or before five (5) days after the date scheduled in accordance  with
Section  1(c),  the Buyer shall have the right to  terminate  this  Agreement by
notice  to the  Company,  whereupon  the  Registration  Rights  Agreement  shall
terminate  and the Company and the Buyer  shall have no further  obligations  or
liabilities,  one to the other, under this Agreement or the Registration  Rights
Agreement or in connection with the transactions  contemplated hereby or thereby



                                      14


<PAGE>


except for  liabilities or obligations  relating to any breach of this Agreement
or the Registration Rights Agreement which occurred prior to such termination.



















































                                      15


<PAGE>


            IN WITNESS  WHEREOF,  the Buyer and the  Company  have  caused  this
Securities  Purchase Agreement to be duly executed by their respective  officers
thereunder duly authorized as of the date first written above.

                                       VIRAGEN, INC.



                                       By:
                                       Name:
                                       Title:


                                       STATE CAPITAL MARKET GROUP,
                                          LTD.



                                       By:
                                       Name:
                                       Title:

                                       Address:   545 Madison Avenue
                                                  16th Floor
                                                  New York, New York  10022

                                       Facsimile No.:  (212) 888-7054

                                       Preferred Shares:  5,000 Preferred Shares




















                                      16


<PAGE>
                          REGISTRATION RIGHTS AGREEMENT

            THIS REGISTRATION RIGHTS AGREEMENT, dated as of December 31,
1996 (this  "Agreement"),  by and among VIRAGEN,  INC., a Delaware  corporation,
with  headquarters  located  at 2343 West 76th  Street,  Hialeah,  FL 33016 (the
"Company"), and the undersigned (the "Buyer").

            WHEREAS:

            A. In connection with the Securities Purchase Agreement, dated as of
the  date  hereof,  by  and  between  the  parties  (the  "Securities   Purchase
Agreement"),  the  Company  has  agreed,  upon  the  terms  and  subject  to the
conditions of the Securities  Purchase  Agreement to issue and sell to the Buyer
shares (the  "Preferred  Shares") of the  Company's  5%  Cumulative  Convertible
Preferred  Stock,  Series E, $1.00 par value,  which  will be  convertible  into
shares (the "Conversion  Shares") of the Company's Common Stock,  $.01 par value
(the "Common  Stock"),  and pursuant to which certain shares of Common Stock may
be issued to the Buyer in payment of dividends  (the  "Dividend  Shares") and in
accordance with the Certificate of Designation (the "Additional Shares"); and

            B. To  induce  the  Buyer to  execute  and  deliver  the  Securities
Purchase  Agreement,  the  Company  has agreed to provide  certain  registration
rights  under  the  Securities  Act of  1933,  as  amended,  and the  rules  and
regulations  thereunder,  or any similar  successor statute  (collectively,  the
"1933 Act"), and applicable state securities laws;

            NOW,  THEREFORE,  in  consideration  of the  premises and the mutual
covenants  contained  herein  and other  good and  valuable  consideration,  the
receipt and  sufficiency  of which is hereby  acknowledged,  the Company and the
Buyer hereby agree as follows:

            1.    DEFINITIONS.
                  -----------

            a. As used in this  Agreement,  the  following  terms shall have the
following meanings:

            (i)  "Investor"  means  the  Buyer and any  transferee  or  assignee
thereof  who  agrees  to  become  bound in  writing  by the  provisions  of this
Agreement in accordance with Section 9 hereof.

            (ii)  "register,"   "registered,"  and  "registration"  refer  to  a
registration  effected  by  preparing  and filing a  Registration  Statement  or
Statements  in  compliance  with the 1933 Act and pursuant to Rule 415 under the
1933 Act or any successor rule providing for offering securities on a continuous
basis ("Rule 415"),  and the  declaration or ordering of  effectiveness  of such
Registration  Statement by the United States Securities and Exchange  Commission
(the "SEC").

            (iii)  "Registrable  Securities"  means the Conversion  Shares,  the
Dividend Shares and the Additional Shares.




<PAGE>



            (iv) "Registration  Statement" means a registration statement of the
Company under the 1933 Act.

            b.  Capitalized  terms used herein and not otherwise  defined herein
shall  have  the  respective  meanings  set  forth  in the  Securities  Purchase
Agreement.

            2.    REGISTRATION.
                  ------------

            A. MANDATORY  REGISTRATION.  The Company shall  prepare,  and, on or
before  the date which is 30 days after the  Closing  Date,  file with the SEC a
Registration  Statement on Form S-3  covering  the resale of at least  3,000,000
shares of Common Stock as Registrable  Securities,  which Registration Statement
shall state that, in accordance  with Rule 416  promulgated  under the 1933 Act,
such Registration  Statement also covers such indeterminate number of additional
shares of Common Stock as may become  issuable upon  conversion of the Preferred
Shares to prevent  dilution  resulting  from stock  splits,  stock  dividends or
similar transactions.  No securities other than the Registrable Securities shall
be registered for sale on such Registration Statement.

            B. PIGGY-BACK REGISTRATIONS.  If at any time prior to the expiration
of the Registration Period (as hereinafter  defined) the Company shall file with
the SEC a Registration  Statement relating to an offering for its own account or
the account of others under the 1933 Act of any of its equity  securities (other
than on Form  S-4 or Form S-8 or  their  then  equivalents  relating  to  equity
securities to be issued solely in connection  with any acquisition of any entity
or business or equity  securities  issuable in  connection  with stock option or
other  employee  benefit  plans) the Company  shall send to each Investor who is
entitled to  registration  rights under this Section 2(b) written notice of such
determination and, if within twenty (20) days after receipt of such notice, such
Investor  shall so  request  in  writing,  the  Company  shall  include  in such
Registration  Statement  all or any  part  of the  Registrable  Securities  such
Investor  requests  to be  registered,  except that if, in  connection  with any
underwritten  public  offering  for the  account  of the  Company  the  managing
underwriter(s)  thereof  shall  impose a  limitation  on the number of shares of
Common Stock which may be included in the  Registration  Statement  because,  in
such underwriter(s)' reasonable good faith judgment,  marketing or other factors
dictate such limitation is necessary to facilitate public distribution, then the
Company shall be obligated to include in such  Registration  Statement only such
limited  portion  of the  Registrable  Securities  with  respect  to which  such
Investor has  requested  inclusion  hereunder;  provided  that no portion of the
equity  securities  which the Company is offering  for its own account  shall be
excluded;  PROVIDED,  FURTHER  that the  Company  shall be  entitled  to exclude
Registrable  Securities to the extent  necessary to avoid breaching  obligations
existing  prior to the date hereof to other  stockholders  of the  Company.  Any
exclusion of Registrable  Securities  shall be made pro rata among the Investors
seeking  to  include  Registrable  Securities,  in  proportion  to the number of
Registrable  Securities  sought  to be  included  by such  Investors;  PROVIDED,
HOWEVER,  that the Company shall not exclude any Registrable  Securities  unless
the Company has first excluded all outstanding securities,  the holders of which
are not entitled to inclusion of such securities in such Registration  Statement
or are not entitled to pro rata inclusion with the Registrable  Securities;  and
PROVIDED,  FURTHER,  HOWEVER,  that,  after  giving  effect  to the  immediately

                                        2

<PAGE>


preceding  proviso,  any exclusion of Registrable  Securities  shall be made pro
rata  with  holders  of  other  securities  having  the  right to  include  such
securities  in the  Registration  Statement  other than  holders  of  securities
entitled to  inclusion of their  securities  in such  Registration  Statement by
reason of demand  registration  rights.  No right to registration of Registrable
Securities  under this Section 2(c) shall be construed to limit any registration
required by Section  2(a)  hereof.  The  obligations  of the Company  under this
Section  2(c) may be waived by  Investors  holding a majority in interest of the
Registrable  Securities.  If an offering in connection with which an Investor is
entitled to registration  under this Section 2(c) is an  underwritten  offering,
then  each  Investor   whose   Registrable   Securities  are  included  in  such
Registration  Statement shall, unless otherwise agreed by the Company, offer and
sell such  Registrable  Securities in an  underwritten  offering  using the same
underwriter or underwriters and, subject to the provisions of this Agreement, on
the same terms and  conditions as other shares of Common Stock  included in such
underwritten offering.

            C.  ELIGIBILITY  FOR FORM S-3. The Company  represents  and warrants
that it meets the  requirements  for the use of Form S-3 for registration of the
sale by the Buyer and any other Investor of the  Registrable  Securities and the
Company covenants and agrees that it shall file all reports required to be filed
by  the  Company  with  the  SEC  in a  timely  manner  so as to  maintain  such
eligibility for the use of Form S-3. In the event that Form S-3 is not available
for sale by the  Investors  of the  Registrable  Securities,  the Company  shall
register the sale on another appropriate form.

            3.    OBLIGATIONS OF THE COMPANY.
                  --------------------------

            In connection with the  registration of the Registrable  Securities,
the Company shall have the following obligations:

            a. The Company  shall  prepare  promptly,  and file with the SEC not
later than 30 days after the Closing Date, a Registration Statement with respect
to the number of Registrable Securities provided in Section 2(a), and thereafter
use  its  best  efforts  to  cause  such  Registration   Statement  relating  to
Registrable  Securities  to become  effective  as soon as  possible  after  such
filing, and shall keep the Registration Statement effective pursuant to Rule 415
and available for use at all times until the earlier of (i) the date as of which
the Investors may sell all of the  Registrable  Securities  without  restriction
pursuant to Rule 144(k)  promulgated under the 1933 Act (or successor  thereto),
or (ii)  the date on  which  (A) the  Investors  have  sold all the  Registrable
Securities and (B) none of the Preferred Shares is outstanding (the period until
such earlier date being referred to herein as the "Registration Period"),  which
Registration  Statement  (including any  amendments or  supplements  thereto and
prospectuses  contained  therein)  shall not contain any untrue  statement  of a
material fact or omit to state a material fact required to be stated therein, or
necessary to make statements  therein,  in light of the  circumstances  in which
they were made, not misleading.

            b. The Company shall  prepare and file with the SEC such  amendments
(including  post-effective  amendments)  and  supplements  to  the  Registration
Statement and the prospectus used in connection with the Registration  Statement
as may be necessary to keep the  Registration  Statement  effective at all times


                                        3

<PAGE>


during the  Registration  Period,  and,  during  such  period,  comply  with the
provisions of the 1933 Act with respect to the  disposition  of all  Registrable
Securities of the Company covered by the Registration  Statement until such time
as all of such  Registrable  Securities have been disposed of in accordance with
the  intended  methods of  disposition  by the seller or sellers  thereof as set
forth in the Registration Statement.

            c. The Company  shall  furnish to each  Investor  whose  Registrable
Securities are included in the Registration  Statement and its legal counsel (i)
promptly  after the same is prepared  and publicly  distributed,  filed with the
SEC, or received by the Company, one copy of the Registration  Statement and any
amendment thereto, each preliminary prospectus and prospectus and each amendment
or supplement thereto, and (ii) such number of copies of a prospectus, including
a preliminary  prospectus,  and all amendments and supplements  thereto and such
other  documents as such Investor may reasonably  request in order to facilitate
the disposition of the Registrable Securities owned by such Investor.

            d. In the case of the Registration  Statement referred to in Section
2(a),  the Company  shall  furnish to the counsel of each  Investor  each letter
written by or on behalf of the  Company to the SEC or the staff of the SEC,  and
each item of  correspondence  from the SEC or the staff of the SEC, in each case
relating to such  Registration  Statement (other than any portion of any thereof
which  contains  information  for  which the  Company  has  sought  confidential
treatment).

            e. The Company  shall use  reasonable  efforts to (i)  register  and
qualify the Registrable  Securities covered by the Registration  Statement under
such other  securities  or "blue sky" laws of such  jurisdictions  in the United
States as the  Investors  who hold a majority  in  interest  of the  Registrable
Securities  being  offered  reasonably  request,  (ii) prepare and file in those
jurisdictions  such  amendments   (including   post-effective   amendments)  and
supplements  to such  registrations  and  qualifications  as may be necessary to
maintain the effectiveness  thereof during the Registration  Period,  (iii) take
such other actions as may be reasonably necessary to maintain such registrations
and  qualifications in effect at all times during the Registration  Period,  and
(iv) take all other  actions  reasonably  necessary  or advisable to qualify the
Registrable Securities for sale in such jurisdictions;  PROVIDED,  HOWEVER, that
the  Company  shall not be required in  connection  therewith  or as a condition
thereto to (a)  qualify to do business  in any  jurisdiction  where it would not
otherwise be required to qualify but for this Section 3(e),  (b) subject  itself
to general  taxation  in any such  jurisdiction,  (c) file a general  consent to
service of process in any such  jurisdiction,  (d) provide any undertakings that
cause more than nominal expense or burden to the Company, or (e) make any change
in its  charter  or  bylaws,  which in each case the Board of  Directors  of the
Company  determines to be contrary to the best  interests of the Company and its
stockholders.

            f. As promptly as  practicable  after  becoming aware of such event,
the Company shall notify each  Investor of the happening of any event,  of which
the Company has knowledge,  as a result of which the prospectus  included in the
Registration  Statement,  as then in effect,  includes an untrue  statement of a
material fact or omission to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which  they  were  made,  not  misleading,  and use its best efforts promptly to


                                        4

<PAGE>



prepare a supplement or amendment to the Registration  Statement to correct such
untrue  statement  or  omission,  and  deliver  such  number  of  copies of such
supplement  or  amendment  to each  Investor  as such  Investor  may  reasonably
request.

            g. The Company shall use its best efforts to prevent the issuance of
any stop order or other suspension of effectiveness of a Registration Statement,
and, if such an order is issued,  to obtain the  withdrawal of such order at the
earliest  possible  moment and to notify  each  Investor  who holds  Registrable
Securities  being  sold  (or,  in the  event of an  underwritten  offering,  the
managing underwriters) of the issuance of such order and the resolution thereof.

            h. The Company shall permit a single firm of counsel,  designated as
selling  stockholders'  counsel by the Investors who hold a majority in interest
of the  Registrable  Securities  being  sold,  to review  and  comment  upon the
Registration   Statement,   all  amendments  and  supplements  thereto  and  any
acceleration request relating thereto a reasonable period of time prior to their
filing with or  submission to the SEC, and shall not file any such document in a
form to which  such  counsel  reasonably  objects,  in each case so long as such
counsel responds to the Company or its counsel within 72 hours after delivery of
such item to them by the Company.

            i. The  Company  shall  make  generally  available  to its  security
holders as soon as  practicable,  but not later than  ninety (90) days after the
close of the period covered  thereby,  an earnings  statement (in form complying
with the  provisions  of Rule 158 under the 1933 Act)  covering  a  twelve-month
period  beginning not later than the first day of the Company's  fiscal  quarter
next following the effective date of the Registration Statement.

            j. The  Company  shall  make  available  for  inspection  by (i) any
Investor and (ii) one firm of  attorneys  and one firm of  accountants  or other
agents retained by the Investors (collectively,  the "Inspectors") all pertinent
financial and other records, and pertinent corporate documents and properties of
the  Company  (collectively,  the  "Records"),  as  shall be  reasonably  deemed
necessary  by each  Inspector  to enable  each  Inspector  to  exercise  its due
diligence  responsibility,  and  cause the  Company's  officers,  directors  and
employees to supply all information  which any Inspector may reasonably  request
for purposes of due diligence; PROVIDED, HOWEVER, that each Inspector shall hold
in confidence and shall not make any  disclosure  (except to an Investor) of any
Record or other  information  which the Company  determines  in good faith to be
confidential,  and of which determination the Inspectors are so notified, unless
(a)  the  disclosure  of such  Records  is  necessary  to  avoid  or  correct  a
misstatement or omission in any Registration Statement,  (b) the release of such
Records is ordered pursuant to a subpoena or other final,  non-appealable  order
from  a  court  or  government  body  of  competent  jurisdiction,  or  (c)  the
information  in such  Records has been made  generally  available  to the public
other  than by  disclosure  in  violation  of this or any other  agreement.  The
Company shall not be required to disclose any  confidential  information in such
Records to any Inspector until and unless such Inspector shall have entered into
confidentiality  agreements (in form and substance  satisfactory to the Company)
with the Company with respect thereto, substantially in the form of this Section
3(j). Each Investor agrees that it shall,  upon learning that disclosure of such
Records  is  sought  in  or  by  a  court  or  governmental  body  of  competent
jurisdiction or through other means, give prompt notice to the Company and allow

                                        5

<PAGE>


the  Company,  at its  expense,  to  undertake  appropriate  action  to  prevent
disclosure  of,  or to  obtain  a  protective  order  for,  the  Records  deemed
confidential.

            k. The Company shall hold in confidence  and not make any disclosure
of  information  concerning  an  Investor  provided  to the  Company  unless (i)
disclosure  of such  information  is  necessary  to comply with federal or state
securities  laws, (ii) the disclosure of such  information is necessary to avoid
or correct a misstatement or omission in any Registration  Statement,  (iii) the
release of such  information  is ordered  pursuant to a subpoena or other final,
non-appealable   order  from  a  court  or   governmental   body  of   competent
jurisdiction,  or (iv) such information has been made generally available to the
public other than by disclosure in violation of this or any other agreement. The
Company agrees that it shall,  upon learning that disclosure of such information
concerning  an  Investor  is  sought  in or by a court or  governmental  body of
competent  jurisdiction  or through  other  means,  give  prompt  notice to such
Investor  and allow such  Investor,  at the  Investor's  expense,  to  undertake
appropriate  action to prevent  disclosure  of, or to obtain a protective  order
for, such information.

            l. The Company  shall use its best  efforts  either to (i) cause all
the Registrable Securities covered by the Registration Statement to be listed on
a  national  securities  exchange  and on each  additional  national  securities
exchange on which  securities  of the same class or series issued by the Company
are then listed,  if any, if the listing of such Registrable  Securities is then
permitted  under the rules of such  exchange,  or (ii)  secure  designation  and
quotation  of  all  the  Registrable  Securities  covered  by  the  Registration
Statement  on the  National  Market of the National  Association  of  Securities
Dealers Automated Quotation ("NASDAQ") System or, if, despite the Company's best
efforts to satisfy the preceding clause (i) or (ii), the Company is unsuccessful
in  satisfying  the  preceding  clause (i) or (ii),  to secure the inclusion for
quotation on the NASDAQ  SmallCap  Market for such  Registrable  Securities and,
without  limiting the generality of the  foregoing,  to arrange for at least two
market makers to register with the National  Association of Securities  Dealers,
Inc. ("NASD") as such with respect to such Registrable Securities.

            m. The Company shall provide a transfer agent and  registrar,  which
may be a single entity, for the Registrable Securities,  and shall provide CUSIP
numbers for the Registrable Securities, not later than the effective date of the
Registration Statement.

            n.  The  Company  shall   cooperate  with  the  Investors  who  hold
Registrable   Securities   being  offered  and  the  managing   underwriter   or
underwriters,  if any, to  facilitate  the timely  preparation  and  delivery of
certificates  (not bearing any  restrictive  legends)  representing  Registrable
Securities to be offered pursuant to the Registration  Statement and enable such
certificates to be in such  denominations  or amounts as the case may be, as the
Investors may  reasonably  request and registered in such names as the Investors
may request;  and,  within three  business days after a  Registration  Statement
which  includes  Registrable  Securities  is ordered  effective  by the SEC, the
Company shall deliver,  and shall cause legal counsel selected by the Company to
deliver,  to the transfer agent for the Registrable  Securities  (with copies to
the Investors  whose  Registrable  Securities are included in such  Registration



                                        6

<PAGE>


Statement) an instruction substantially in the form attached hereto as EXHIBIT 1
and an opinion of such counsel in the form attached hereto as EXHIBIT 2.

            o. During the Registration  Period, the Company shall not bid for or
purchase  any Common  Stock or any right to purchase  Common Stock or attempt to
induce any person to purchase any such  security or right if such bid,  purchase
or attempt would in any way limit the right of the Investors to sell Registrable
Securities  by reason of the  limitations  in Rule  10b-6  under the  Securities
Exchange Act of 1934, as amended (the "1934 Act"),  so long as such rule remains
in effect,  or  Regulation M under the 1934 Act once such  regulation  goes into
effect.

            p. The Company shall take all other actions reasonably  necessary to
expedite  and  facilitate  the  disposition  by  the  Investors  of  Registrable
Securities pursuant to the Registration Statement.

            4.    OBLIGATIONS OF THE INVESTORS.
                  ----------------------------
  
            In connection with the  registration of the Registrable  Securities,
the Investors shall have the following obligations:

            a. It shall  be a  condition  precedent  to the  obligations  of the
Company to complete the registration  pursuant to this Agreement with respect to
the  Registrable  Securities of a particular  Investor that such Investor  shall
furnish to the  Company  such  information  regarding  itself,  the  Registrable
Securities  held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect the registration
of such  Registrable  Securities  and shall execute such documents in connection
with such registration as the Company may reasonably  request. At least five (5)
days prior to the first anticipated  filing date of the Registration  Statement,
the Company shall notify each Investor of the information  the Company  requires
from each such Investor if such Investor  elects to have any of such  Investor's
Registrable Securities included in the Registration Statement.

            b. Each Investor by such  Investor's  acceptance of the  Registrable
Securities  agrees to cooperate with the Company as reasonably  requested by the
Company  in  connection  with the  preparation  and  filing of the  Registration
Statement hereunder, unless such Investor has notified the Company in writing of
such  Investor's  election  to  exclude  all  of  such  Investor's   Registrable
Securities from the Registration Statement.

            c. In the event  Investors  holding a majority  in  interest  of the
Registrable  Securities being registered  determine to engage the services of an
underwriter,  each  Investor  agrees to enter into and perform  such  Investor's
obligations  under an  underwriting  agreement,  in usual  and  customary  form,
including,  without  limitation,   customary  indemnification  and  contribution
obligations,  with the managing underwriter of such offering and take such other
actions as are  reasonably  required  in order to  expedite  or  facilitate  the
disposition of the Registrable Securities, unless such Investor has notified the
Company in writing of such Investor's election to exclude all of such Investor's
Registrable Securities from the Registration Statement.


                                        7


<PAGE>




            d. Each  Investor  agrees that,  upon receipt of any notice from the
Company of the  happening of any event of the kind  described in Section 3(f) or
3(g),  such Investor will  immediately  discontinue  disposition  of Registrable
Securities  pursuant to the  Registration  Statement  covering such  Registrable
Securities  until such Investor's  receipt of the copies of the  supplemented or
amended  prospectus  contemplated by Section 3(f) or 3(g) and, if so directed by
the Company,  such Investor  shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a  certificate  of  destruction)
all  copies in such  Investor's  possession,  of the  prospectus  covering  such
Registrable Securities current at the time of receipt of such notice.

            e. No Investor  may  participate  in any  underwritten  registration
hereunder  unless such Investor (i) agrees to sell such  Investor's  Registrable
Securities on the basis provided in any  underwriting  arrangements  approved by
the Investors entitled  hereunder to approve such  arrangements,  (ii) completes
and executes all questionnaires,  powers of attorney, indemnities,  underwriting
agreements  and  other  documents  reasonably  required  under the terms of such
underwriting  arrangements,  and (iii)  agrees to pay its pro rata  share of all
underwriting discounts and commissions.

            5.    EXPENSES OF REGISTRATION.
                  ------------------------

            All  reasonable  expenses,  other than  underwriting  discounts  and
commissions  and other fees and  expenses  of  investment  bankers  and  counsel
retained by any Investor and other than brokerage  commissions of the Investors,
incurred in connection with registrations, filings or qualifications pursuant to
Section  3,  including,  without  limitation,  all  registration,   listing  and
qualifications fees, printers and accounting fees and the fees and disbursements
of counsel for the Company, shall be borne by the Company.

            6.    INDEMNIFICATION.
                  ---------------

            In  the  event  any   Registrable   Securities  are  included  in  a
Registration Statement under this Agreement:

            a. To the extent permitted by law, the Company will indemnify,  hold
harmless and defend (i) each Investor who holds such Registrable  Securities and
(ii) the  directors,  officers and each person who controls any Investor  within
the  meaning of the 1933 Act or the 1934 Act,  if any,  (each,  an  "Indemnified
Person"), against any losses, claims, damages, liabilities or expenses (joint or
several)  (collectively,  "Claims")  to  which  any of them may  become  subject
insofar  as such  Claims  (or  actions  or  proceedings,  whether  commenced  or
threatened,  in respect  thereof) arise out of or are based upon: (i) any untrue
statement  or alleged  untrue  statement  of a material  fact in a  Registration
Statement or the omission or alleged  omission to state a material  fact therein
required  to  be  stated  or  necessary  to  make  the  statements  therein  not
misleading,  (ii) any untrue statement or alleged untrue statement of a material
fact contained in any preliminary prospectus if used prior to the effective date
of such Registration Statement, or contained in the final prospectus (as amended
or  supplemented,  if the  Company  files any  amendment  thereof or  supplement
thereto with the SEC)  or the  omission or alleged omission to state therein any

                                        8

<PAGE>



material fact  necessary to make the  statements  made therein,  in light of the
circumstances  under which the statements therein were made, not misleading,  or
(iii) any  violation  or alleged  violation  by the Company of the 1933 Act, the
1934 Act, any other law,  including,  without  limitation,  any state securities
law, or any rule or regulation  thereunder  relating to the offer or sale of the
Registrable  Securities pursuant to a Registration Statement (the matters in the
foregoing clauses (i) through (iii) being, collectively,  "Violations"). Subject
to the  restrictions  set forth in  Section  6(d) with  respect to the number of
legal  counsel,  the  Company  shall  reimburse  the  Investors  and  each  such
underwriter  or controlling  person,  promptly as such expenses are incurred and
are due and payable, for any legal fees or other reasonable expenses incurred by
them  in   connection   with   investigating   or  defending   any  such  Claim.
Notwithstanding  anything to the contrary contained herein, the  indemnification
agreement contained in this Section 6(a): (i) shall not apply to a Claim arising
out of or based upon a Violation which occurs in reliance upon and in conformity
with information  furnished in writing to the Company by any Indemnified  Person
or underwriter for such Indemnified  Person expressly for use in connection with
the preparation of the Registration  Statement or any such amendment  thereof or
supplement  thereto, if such prospectus was timely made available by the Company
pursuant  to  Section  3(c)  hereof;   (ii)  with  respect  to  any  preliminary
prospectus,  shall not inure to the  benefit  of any such  person  from whom the
person  asserting any such Claim purchased the  Registrable  Securities that are
the subject thereof (or to the benefit of any person controlling such person) if
the untrue  statement or omission of material fact contained in the  preliminary
prospectus was corrected in the prospectus, as then amended or supplemented,  if
such  prospectus  was timely made  available by the Company  pursuant to Section
3(c) hereof; (iii) shall not be available to the extent such Claim is based on a
failure of the  Investor to deliver or to cause to be delivered  the  prospectus
made  available  by the  Company;  and (iv) shall not apply to  amounts  paid in
settlement of any Claim if such settlement is effected without the prior written
consent of the Company, which consent shall not be unreasonably  withheld.  Such
indemnity shall remain in full force and effect  regardless of any investigation
made by or on behalf of the Indemnified Person and shall survive the transfer of
the Registrable Securities by the Investors pursuant to Section 9.

            b. In  connection  with  any  Registration  Statement  in  which  an
Investor is participating, each such Investor agrees to indemnify, hold harmless
and defend, to the same extent and in the same manner set forth in Section 6(a),
the  Company,  each  of its  directors,  each  of its  officers  who  signs  the
Registration Statement, each person, if any, who controls the Company within the
meaning  of the  1933  Act or the  1934  Act,  any  underwriter  and  any  other
stockholder selling securities pursuant to the Registration  Statement or any of
its  directors  or  officers  or any person who  controls  such  stockholder  or
underwriter within the meaning of the 1933 Act or the 1934 Act (collectively and
together with an Indemnified Person, an "Indemnified Party"),  against any Claim
to which any of them may  become  subject,  under the 1933 Act,  the 1934 Act or
otherwise,  insofar as such Claim arises out of or is based upon any  Violation,
in each case to the extent (and only to the extent) that such  violation  occurs
in reliance upon and in  conformity  with written  information  furnished to the
Company by such Investor  expressly for use in connection with such Registration
Statement  or to the extent  such Claim is based upon any  violation  or alleged
violation by the  Investor of the 1933 Act,  1934 Act or any other law; and such
Investor will reimburse any legal or other expenses  reasonably incurred by them


                                        9

<PAGE>



in connection with investigating or defending any such Claim; PROVIDED, HOWEVER,
that the indemnity  agreement  contained in this Section 6(b) shall not apply to
amounts paid in settlement of any Claim if such  settlement is effected  without
the  prior  written  consent  of  such  Investor,  which  consent  shall  not be
unreasonably withheld;  PROVIDED,  FURTHER,  HOWEVER, that the Investor shall be
liable  under  this  Section  6(b) for only  that  amount of a Claim as does not
exceed the net proceeds to such Investor as a result of the sale of  Registrable
Securities pursuant to such Registration Statement.  Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf of
such  Indemnified  Party and  shall  survive  the  transfer  of the  Registrable
Securities by the Investors pursuant to Section 9.  Notwithstanding  anything to
the contrary contained herein, the  indemnification  agreement contained in this
section 6(b) with respect to any preliminary  prospectus  shall not inure to the
benefit of any Indemnified Party if the untrue statement or omission of material
fact contained in the preliminary  prospectus was corrected on a timely basis in
the prospectus, as then amended or supplemented.

            c. The  Company  shall  be  entitled  to  receive  indemnities  from
underwriters,  selling brokers,  dealer managers and similar securities industry
professionals participating in any distribution,  to the same extent as provided
above,  with respect to information  such person so furnished in writing by such
persons expressly for inclusion in the Registration Statement.

            d. Promptly  after receipt by an  Indemnified  Person or Indemnified
Party  under  this  Section  6 of  notice  of the  commencement  of  any  action
(including any  governmental  action),  such  Indemnified  Person or Indemnified
Party  shall,  if a Claim in respect  thereof is made  against any  indemnifying
party under this Section 6, deliver to the  indemnifying  party a written notice
of the commencement  thereof, and the indemnifying party shall have the right to
participate in, and, to the extent the  indemnifying  party so desires,  jointly
with any other indemnifying  party similarly  noticed,  to assume control of the
defense thereof with counsel mutually satisfactory to the indemnifying party and
the Indemnified  Person or the Indemnified  Party, as the case may be; PROVIDED,
HOWEVER, that an Indemnified Person or Indemnified Party shall have the right to
retain its own counsel with the fees and expenses to be paid by the indemnifying
party,  if, in the reasonable  opinion of counsel  retained by the  indemnifying
party,  the  representation  by  such  counsel  of  the  Indemnified  Person  or
Indemnified  Party and the  indemnifying  party  would be  inappropriate  due to
actual or  potential  differing  interests  between such  Indemnified  Person or
Indemnified  Party and any  other  party  represented  by such  counsel  in such
proceeding.  The Company shall pay  reasonable  fees for only one separate legal
counsel  for the  Investors,  and such legal  counsel  shall be  selected by the
Investors holding a majority in interest of the Registrable  Securities included
in the Registration Statement to which the Claim relates;  provided,  that legal
fees of such firm shall be reasonable.  The failure to deliver written notice to
the indemnifying  party within a reasonable time of the commencement of any such
action  shall  not  relieve  such  indemnifying  party of any  liability  to the
Indemnified  Person or  Indemnified  Party  under this  Section 6, except to the
extent that the  indemnifying  party is prejudiced in its ability to defend such
action. The indemnification required by this Section 6 shall be made by periodic
payments  of the  amount  thereof  during  the  course of the  investigation  or
defense,  as such expense,  loss, damage or liability is incurred and is due and
payable.


                                       10

<PAGE>

            7.    CONTRIBUTION.
                  ------------

            To the  extent  any  indemnification  by an  indemnifying  party  is
prohibited or limited by law, the indemnifying  party agrees to make the maximum
contribution  with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; PROVIDED,  HOWEVER, that
(i) no contribution shall be made under  circumstances where the maker would not
have been  liable for  indemnification  under the fault  standards  set forth in
Section  6, (ii) no  seller  of  Registrable  Securities  guilty  of  fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution  from any seller of Registrable  Securities who was not
guilty  of such  fraudulent  misrepresentation,  and (iii)  contribution  by any
seller of Registrable Securities shall be limited in amount to the net amount of
proceeds received by such seller from the sale of such Registrable Securities.

            8.    REPORTS UNDER THE 1934 ACT.
                  --------------------------

            With a view to making  available  to the  Investors  the benefits of
Rule 144 promulgated  under the 1933 Act or any other similar rule or regulation
of the SEC that may at any time permit the  investors to sell  securities of the
Company to the public without registration ("Rule 144"), the Company agrees to:

            a. make and keep public  information  available,  as those terms are
understood and defined in Rule 144;

            b.  file  with the SEC in a timely  manner  all  reports  and  other
documents required of the Company under the 1933 Act and the 1934 Act so long as
the Company  remains  subject to such  requirements  (it being  understood  that
nothing herein shall limit the Company's  obligations  under Section 4(c) of the
Securities  Purchase  Agreement)  and the  filing  of  such  reports  and  other
documents is required for the applicable provisions of Rule 144; and

            c.  furnish  to  each   Investor  so  long  as  such  Investor  owns
Registrable  Securities,  promptly upon request,  (i) a written statement by the
Company that it has complied  with the reporting  requirements  of Rule 144, the
1933 Act and the 1934 Act,  (ii) a copy of the most recent  annual or  quarterly
report of the  Company  and such other  reports  and  documents  so filed by the
Company  and (iii) such other  information  as may be  reasonably  requested  to
permit  the  investors  to sell such  securities  pursuant  to Rule 144  without
registration.

            9.    ASSIGNMENT OF REGISTRATION RIGHTS.
                  ---------------------------------

            The  rights  to have the  Company  register  Registrable  Securities
pursuant to this Agreement shall be automatically assignable by the Investors to
any transferee of all or any portion of the Preferred  Shares or the Registrable
Securities  if:  (i) the  Investor  agrees in  writing  with the  transferee  or
assignee to assign such rights, and a copy of such agreement is furnished to the
Company  within a reasonable  time after such  assignment,  (ii) the Company is,
within a  reasonable  time after such  transfer or  assignment,  furnished  with
written notice of (a) the name and address of such  transferee or assignee,  and
(b) the  securities  with  respect to which such  registration  rights are being
transferred or assigned, (iii) immediately following such transfer or assignment
the further  disposition  of such  securities  by the  transferee or assignee is

                                       11

<PAGE>


restricted  under the 1933 Act and applicable  state securities laws, (iv) at or
before the time the Company  receives the written notice  contemplated by clause
(ii) of this  sentence  the  transferee  or assignee  agrees in writing with the
Company to be bound by all of the provisions contained herein, (v) such transfer
shall  have been made in  accordance  with the  applicable  requirements  of the
Securities  Purchase  Agreement,  (vi) such  transferee  shall be an "accredited
investor" as that term is defined in Rule 501 of Regulation D promulgated  under
the 1933 Act and (vii) in the event the assignment occurs subsequent to the date
of effectiveness of the Registration  Statement required to be filed pursuant to
Section 2(a), the Company agrees to pay all its reasonable  expenses of amending
or supplementing such Registration Statement to reflect such assignment.

            10.   AMENDMENT OF REGISTRATION RIGHTS.
                  --------------------------------
     
            Provisions  of this  Agreement  may be  amended  and the  observance
thereof may be waived (either  generally or in a particular  instance and either
retroactively  or  prospectively),  only with the written consent of the Company
and Investors who hold a majority in interest of the Registrable Securities. Any
amendment or waiver effected in accordance with this Section 10 shall be binding
upon each Investor and the Company.

            11.   MISCELLANEOUS.
                  -------------
 
            a. A person  or  entity  is  deemed  to be a holder  of  Registrable
Securities  whenever  such  person or entity  owns of  record  such  Registrable
Securities.  If  the  Company  receives  conflicting  instructions,  notices  or
elections  from  two or more  persons  or  entities  with  respect  to the  same
Registrable  Securities,  the  Company  shall act on the basis of  instructions,
notice  or  election  received  from the  registered  owner of such  Registrable
Securities.

            b. Any notices  required or permitted to be given under the terms of
this Agreement shall be sent by certified  mail,  return receipt  requested,  or
delivered personally, by courier or by telephone line facsimile transmission and
shall be effective five days after being placed in the mail, if mailed,  or upon
receipt,  if delivered  personally,  by courier or by telephone  line  facsimile
transmission,  in each  case  addressed  to a  party.  The  addresses  for  such
communications shall be:

            If to the Company:

            2343 West 76th Street
            Hialeah, FL  33016
            Telephone:  (305) 557-6000
            Facsimile:  (305) 557-6931
            Attention:  Mr. Gerald Smith or Mr. Dennis W. Healey

 

                                       12


<PAGE>

           With copy to:

            Atlas, Pearlman, Trop & Borkson, P.A.
            New River Center
            200 East Las Olas Blvd.
            Fort Lauderdale, FL  33331
            Telephone:  (954) 763-1200
            Facsimile:  (954) 766-7800
            Attention:  James Schneider, Esq.

            If to the Buyer, at the addresses on the signature page.

            With copy to:

            Law Offices of Brian W Pusch
            29 West 57th Street
            Penthouse Suite
            New York, New York  10019
            Telephone:  980-0408
            Facsimile:  980-7055
            Attention:  Brian W. Pusch

Each party shall  provide  five days' notice to the other party of any change in
address.

            c.  Failure of any party to exercise  any right or remedy under this
Agreement or otherwise,  or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.

            d. This  Agreement  shall be enforced,  governed by and construed in
accordance  with the laws of the State of Florida  applicable to agreements made
and to be performed  entirely within such State. In the event that any provision
of this Agreement is invalid or  unenforceable  under any applicable  statute or
rule of law, then such provision shall be deemed  inoperative to the extent that
it may  conflict  therewith  and shall be deemed  modified to conform  with such
statute  or rule of law.  Any  provision  hereof  which  may  prove  invalid  or
unenforceable  under any law shall not affect the validity or  enforceability of
any other provision hereof.

            e. This Agreement and the Securities  Purchase Agreement  constitute
the entire agreement among the parties hereto with respect to the subject matter
hereof  and  thereof.  There  are  no  restrictions,   promises,  warranties  or
undertakings, other than those set forth or referred to herein and therein. This
Agreement and the Securities  Purchase Agreement  supersede all prior agreements
and  understandings  among the parties hereto with respect to the subject matter
hereof and thereof.

            f. Subject to the  requirements of Section 9 hereof,  this Agreement
shall inure to the benefit of and be binding upon the  successors and assigns of
each of the parties hereto.

            g. The headings in this  Agreement are for  convenience of reference
only and shall not limit or otherwise affect the meaning hereof.


                                       13


<PAGE>



            h. This Agreement may be executed in two or more counterparts,  each
of which shall be deemed an original but all of which shall  constitute  one and
the same agreement.  This Agreement,  once executed by a party, may be delivered
to the other party hereto by facsimile  transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.

            i.  Each  party  shall  do and  perform,  or  cause  to be done  and
performed,  all such further acts and things,  and shall execute and deliver all
such other  agreements,  certificates,  instruments and documents,  as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.








































                                      14


<PAGE>



            IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of day and year first above written.

                                       VIRAGEN, INC.



                                       By:
                                       Name:
                                       Title:


                                       STATE CAPITAL MARKET GROUP,  LTD.



                                       By:
                                       Name:
                                       Title:

                                       Address:   545 Madison Avenue
                                                  16th Floor
                                                  New York, New York 10022

                                       Facsimile No.: (212) 888-7054



























                                       15


<PAGE>



                                                                    EXHIBIT 1
                                                                       TO
                                                                  REGISTRATION
                                                                RIGHTS AGREEMENT


                              [Company Letterhead]


                                     [Date]

[Name and address of Transfer Agent]


Ladies and Gentlemen:

            This  letter  shall  serve  as  our  irrevocable  authorization  and
direction to you [(1) to transfer or re-register the certificates for the shares
of Common  Stock,  $.01 par value (the  "Common  Stock"),  of Viragen,  Inc.,  a
Delaware corporation (the "Company"), represented by certificate numbers _______
and _______ for an aggregate  of _______  shares (the  "Outstanding  Shares") of
Common  Stock  presently  registered  in the  name of [Name  of  Investor]  upon
surrender of such  certificate to you,  notwithstanding  the legend appearing on
such  certificates,  and (2)][1] to issue  shares (the  "Conversion  Shares") of
Common Stock to or upon the order of the holder from time to time on  conversion
of the shares of 5% Cumulative  Convertible Preferred Stock, Series E, $1.00 par
value, of the Company upon surrender to you by such registered holder a properly
completed and duly  executed  Conversion  Notice in the form enclosed  herewith.
[The transfer or  re-registration of the certificates for the Outstanding Shares
by you should be made at such time as you are  requested  to do so by the record
holder of the Outstanding  Shares.  The certificate issued upon such transfer or
re-registration  should be registered in such name as requested by the holder of
record of the  certificate  surrendered  to you and  should  not bear any legend
which  would  restrict  the  transfer  of the  shares  represented  thereby.  In
addition,  you are  hereby  directed  to remove  any  stop-transfer  instruction
relating to the Outstanding  Shares.]*  Certificates  for the Conversion  Shares
should  not bear  any  restrictive  legend  and  should  not be  subject  to any
stop-transfer restriction.

            Contemporaneous  with the  delivery of this  letter,  the Company is
delivering to you an opinion of  ____________________ as to registration of [the
Outstanding  Shares,]* and the  Conversion  Shares under the  Securities  Act of
1933, as amended.


________________________________________
[1]
Omit  if  no  conversion  of  the  preferred  shares  has  occurred  before  SEC
registration is declared effective.


42.28.04.03-6                         1-16


                                       16

<PAGE>




        Should you have any questions concerning this matter, please contact me.

                                       Very truly yours,

                                       VIRAGEN, INC.


                                       By__________________________
                                          Name:
                                          Title:

Enclosure
cc:   [Name of Investor]





































42.28.04.03-6                         1-17


                                       17


<PAGE>


 
                                                                   EXHIBIT 2
                                                                      TO
                                                                 REGISTRATION
                                                               RIGHTS AGREEMENT


                                     [Date]

[Name and address
of transfer agent]


                                  VIRAGEN, INC.
                             Shares of Common Stock
                             ----------------------

Ladies and Gentlemen:

            We are  counsel  to  Viragen,  Inc.,  a  Delaware  corporation  (the
"Company"),  and we  understand  that  [Name of  Investor]  (the  "Holder")  has
acquired  from the Company  [(1) an  aggregate  of shares (the  "Shares") of the
Company's  Common Stock,  $.01 par value (the "Common  Stock"),  represented  by
Certificate  No.___  and  (2)][2]______shares  (the  "Preferred  Shares"  of  5%
Cumulative Convertible Preferred Stock, Series E, $1.00 par value, issued by the
Company.  The  Preferred  Shares  were  purchased  by the Holder  pursuant  to a
Securities Purchase Agreement, dated as of December 31, 1996, between the Holder
and  the  Company  (the  "Securities   Purchase   Agreement").   Pursuant  to  a
Registration  Rights  Agreement,  dated as of  December  31,  1996,  between the
Company and the Holder (the  "Registration  Rights  Agreement")  entered into in
connection with the purchase by the Holder of the Preferred Shares,  the Company
agreed with the Holder,  among other things,  to register for resale the [Shares
and any  additional]*  shares of Common Stock  issuable  upon  conversion of the
Preferred  Shares (the  "Conversion  Shares"),  in payment of  dividends  on the
Preferred  Shares (the  "Dividend  Shares") or  otherwise  as  permitted  by the
Certificate of  Designations,  Rights and Preferences  for the Preferred  Shares
(the  "Additional  Shares")  under the  Securities  Act of 1933, as amended (the
"Securities Act"), upon the terms provided in the Registration Rights Agreement.
Pursuant to the Registration Rights Agreement, on __________,  the Company filed
a   Registration   Statement  on  Form  S-3  (File  No.   333-__________)   (the
"Registration  Statement")  with the  Securities  and Exchange  Commission  (the
"SEC") relating to [the Shares,]3 the Conversion Shares, the Dividend Shares and
the  Additional  Shares,  which  names  the  Holder  as  a  selling  stockholder
thereunder.

           [Other introductory and scope of examination language to be inserted]


_______________________________________
[2]
Omit  if  no  conversion  of  the  preferred  shares  has  occurred  before  SEC
registration is declared effective.


42.28.04.03-6                         2-18

                                       18

<PAGE>





            Based on the  foregoing,  we are of the opinion that [the  Shares,]*
the Conversion  Shares,  the Dividend Shares and the Additional Shares have been
registered under the Securities Act.

            This opinion may be relied upon by the Holder as if addressed to the
Holder. [Other appropriate language to be included.]




                                       Very truly yours,





cc:   [Name of Investor]



























42.28.04.03-6                         2-19


                                       19




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