<PAGE> 1
As Filed with the Securities and Exchange Commission on
November 3, 1998.
Registration No. 333-65119
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
AMENDMENT NO. 1
to
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
---------------
VIRAGEN, INC.
(Exact name of registrant as specified in its charter)
Delaware 59-2101668
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
865 S.W. 78th Avenue
Suite 100
Plantation, FL 33324
Telephone (954) 233-8746
--------------------------------------------
(Address, including zip code, and telephone
number, including area code, of registrant's
principal executive offices)
Copies to:
Gerald Smith James Schneider, Esq.
Chairman of the Board Atlas, Pearlman, Trop & Borkson, P.A.
Viragen, Inc. Suite 1900
865 S.W. 78th Avenue, Suite 100 200 East Las Olas Boulevard
Plantation, Florida 33324 Fort Lauderdale, Florida 33301
(954) 233-8746 (954) 763-1200
--------------------------------------------
Name, address, including zip code, and telephone number, including
area code, of agent for service)
Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Maximum Maximum
Title of Amount Offering Aggregate Amount of
Shares to be to be Price Per Offering Registration
Registered Registered Share (1) Price (1) Fee
- ------------- ---------- ---------- ------------ --------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par
value per share 12,000,000(2) $1.44 $ 17,280,000 $5,098.00
Common Stock reserved
for issuance upon
exercise of Common Stock
Purchase Warrants 1,200,000(3) $1.44 $ 1,728,000 $ 510.00
Common Stock reserved
for issuance upon the exercise
of Placement Agent Warrants 1,000,000(4) $1.44 $ 424,800 $ 425.00
Common Stock 800,000(5) $1.44 $ 1,152,000 $ 340.00
---------- ------------- ---------
Total 15,000,000 $ 20,584,000 $6,373.00
========== ============= =========
</TABLE>
- -----------------
(1) Estimated solely for the purpose of computing the amount of the
registration fee in accordance with Rule 457(c) under the Securities
Act of 1933, as amended (the "Securities Act"), based on the average
of the high and low sale price for the Common Stock, $.01 par value
per share (the "Common Stock"), as reported on the Nasdaq National
Market System at September 24, 1998.
(2) To be offered and sold by Swartz Private Equity, LLC ("Swartz") upon
the exercise of one or more puts by the Company of shares of its
Common Stock to the Selling Security Holder at a price equal to the
lesser of (i) 87.5% of the market price at the time of such put or
(ii) the difference of such market price minus $0.225.
(3) To be offered and sold by Swartz upon the exercise of Common Stock
Purchase Warrants issued in connection with the acquisition of the
Common Stock pursuant to such put exercise by the Company.
(4) To be offered and sold by Swartz Investments, LLC, the placement agent
for the above transaction upon the exercise of Common Stock Purchase
Warrants issued to the Placement Agent.
(5) To be offered and sold by Swartz as a result of adjustment of the
number of shares of Common Stock to be issued as additional shares as
a result of certain events which
ii
<PAGE> 3
may cause a delay or suspension of the sales of shares of Common Stock
by the Selling Security Holder.
Pursuant to Rule 416 under the Securities Act of 1933, there are also
being registered such additional number of shares as may be issuable as a
result of the anti-dilution provisions of the Warrants and the Placement Agent
Warrants.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until this Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
iii
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SUBJECT TO COMPLETION
November ___, 1998
Selling Security Holder Offering Prospectus
VIRAGEN, INC.
15,000,000 Shares of Common Stock
offered at market price
Viragen, Inc. has the right to sell to selling
security holders at various times and prices up to
12,000,000 shares of Common Stock.
Viragen, Inc. is researching and developing
products which help the human immune system
resist viral infections.
NASDAQ National Market Symbol: VRGN
Recent Price: $1.06 at October 30, 1998
The selling security holders may then sell
the following securities:
12,000,000 shares from the above sale
2,200,000 shares from warrant exercises;
800,000 shares if penalties occur
---------------------------
THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD PURCHASE
SHARES ONLY IF YOU CAN AFFORD A COMPLETE LOSS. SEE "RISK FACTORS" BEGINNING ON
PAGE 5.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR
DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
-------------------------------
____________, 1998
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SOME TERMS OF THE SALE
We can sell these shares to the selling security holders at the lower
of
o 87.5% of the market price at the time of sale; or
o such market price less $0.225.
There are also various warrants that may be issued to the selling
security holders.
o The exercise price for warrants to purchase up to 1,200,000
shares is equal to 108% of the market price of the shares
during certain time periods prior to the time the warrants
are issued.
o There are also warrants that may be issued to the placement
agent for the offering to purchase up to 1,000,000 shares.
The exercise price for these warrants will vary depending on
the market price for the shares as well as the price at which
shares are issued to the other selling security holders.
As a result, the actual number of shares to be issued to the selling
security holders and sold by this prospectus will depend upon the market price
of our Common Stock at various times. You should look at the discussion under
"Selling Security Holders" for more details as to these terms.
In any event, the number of shares which this prospectus covers will
be the maximum number of shares that may be issued to the selling security
holders and sold by this prospectus.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further
information on public reference rooms. Our SEC filings are also available to
the public from our web site at www.viragen.com or at the SEC's web site at
http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we
file with them, which means that we can disclose important information to you
by referring you to those documents. The information incorporated by reference
is considered to be part of this prospectus, and later information that we file
with the SEC will automatically update and replace this information. We
incorporate by reference the documents listed below and any future filings made
with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities
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Exchange Act of 1934 until the selling security holder sells all the shares.
This prospectus is part of a registration statement we filed with the SEC
(Registration No. 333-65199).
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
-- Annual Report on Form 10-K for the year ended June 30, 1998.
-- Future Filings
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Corporate Secretary
Viragen, Inc.
865 S.W. 78th Avenue, Suite 100
Plantation, FL 33324
Telephone No.: (954) 233-8746
You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement. We have not authorized anyone
else to provide you with different information. The selling security holders
will not make any offer of these shares in any state where the offer is not
permitted. You should not assume that the information in this prospectus or any
supplement is accurate as of any date other than the date on the front of those
documents.
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TABLE OF CONTENTS
Where You Can Find More Information.......................................... 2
Incorporation of Certain Information by Reference............................ 3
High Risk Factors............................................................ 5
The Company.................................................................. 9
Selling Security Holders.....................................................10
Plan of Distribution.........................................................14
Description of Securities....................................................15
Legal Matters................................................................19
Experts......................................................................19
Indemnification..............................................................19
Viragen, Inc. will not receive any proceeds from the sale of Common
Stock from the accounts of the selling security holders.
Viragen, Inc. has informed the selling security holders that the
anti-manipulative rules under the Exchange Act of 1934, including Regulation M,
may apply to their sales in the market. We have furnished the selling security
holders with a copy of these rules. We have also informed the selling security
holders that they must deliver a copy of this Prospectus with any sale of their
shares.
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HIGH RISK FACTORS
An investment in our Common Stock is very risky. You should be aware
you could lose the entire amount of your investment. Prior to making an
investment decision, you should carefully read this entire prospectus and
consider the following risk factors:
HISTORY OF LOSSES DUE TO LACK OF SALES AND REGULATORY APPROVAL
Since the organization of Viragen Inc. (the "Company" or "Viragen"),
we have incurred operating losses. The net loss for our fiscal year ended June
30, 1998 was $7,856,136. At June 30, 1998, we had a total deficit since
organization of $39,624,889.
We presently produce a single product known as natural human leukocyte
derived alpha interferon. However, because the Food and Drug Administration
(for United States distribution) and the European Union (for European
distribution) have not yet approved our natural interferon product, we cannot
sell this product and, therefore, have no current source of income from
operations.
We will not be able to reduce such losses or operate profitably until
we obtain the necessary approvals to sell natural interferon. While we currently
have a 10% interest in a separate product for the treatment of rheumatoid
arthritis, sales of natural interferon is expected to be our primary source of
income. Investors must understand that natural interferon may never receive the
necessary approvals from regulatory authorities. In addition, even if approval
is received, we may not be able to recover sufficient profit from the sale of
natural interferon. If we do not obtain the required approvals nor profit from
the sale of natural interferon or other products, Viragen most likely will be
forced to terminate its operations. In that case, those who have invested in our
Company will likely lose their entire investment.
ADDITIONAL FUNDING NEEDED
As explained in the previous paragraph, we have no source of income and
may not have a source of income for a significant period of time, if ever. Funds
are needed to conduct clinical trials so we can receive regulatory approvals. We
must obtain funding from outside sources to conduct these trials. In the event
we are unable to locate funding or obtain funding on reasonable terms, we will
most likely be required to terminate operations. In that case, any investment in
our Company would be lost.
DIFFICULTY TESTING PRODUCT
Our ability to receive the approval of either the Food and Drug
Administration ("FDA") or the European Union ("EU") is, in part, dependent on
our ability to test natural interferon on human patients. In the past, we had
certain problems with our testing
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programs in Florida. We cannot assure you that our current production technology
or new facilities in Florida or Scotland will meet FDA or EU standards.
COMPETITION
Competition in the immunological and pharmaceutical products industry
is intense. Our competitors, which include major pharmaceutical companies, have
more experience in research, development and clinical testing of pharmaceutical
and biomedical products. They also have greater financial, marketing and human
resources than our Company. Some of our competitors already have approvals for
and are already marketing synthetic products similar to our product. Competition
is only expected to increase in the future. If we are unable to compete with
larger, more experienced competitors, we may be forced to terminate operations.
RISK OF TECHNOLOGICAL OBSOLESCENCE
The research and development of natural interferon and other related
products involves rapid technological change. This change can severely affect
the production methods, costs, marketing and acceptance of biomedical products.
We cannot guarantee that we will have the resources to keep pace with
technological changes or that products developed by our competitors will not
make it difficult or impossible to market our product.
GOVERNMENT REGULATION MAY AFFECT DEVELOPMENT AND DISTRIBUTION OF NATURAL
INTERFERON
All pharmaceutical manufacturers are subject to various state and
federal rules and regulations. In particular, we must comply with FDA
guidelines known as current Good Manufacturing Practices. EU regulatory
authorities also impose regulations. These rules and regulations are constantly
changing and may restrict our ability to produce and distribute our natural
interferon product.
UNCERTAINTY OF HEALTH CARE REFORM MEASURES AND THIRD PARTY REIMBURSEMENT
Our ability to successfully market our products may depend on the
receipt of reimbursements from government health administration authorities,
private health coverage insurers and other organizations. In September 1993,
President Clinton announced a series of legislative and regulatory proposals
aimed at reforming the health care system. Although many of the proposals have
been not yet been put into effect, these proposals may hurt our ability to
raise capital. If these proposals become law, the pricing of products similar
to those we produce or the amount of reimbursement available from U.S.
governmental agencies or third party insurers may affect our ability to market
our product.
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RISK THAT PATENTS AND PROPRIETARY TECHNOLOGY MAY NOT PROVIDE PROTECTION
We intend to rely, in part, on certain proprietary technology in the
production of natural interferon. However, we cannot assure you that such
proprietary technology will enable us to either manufacture natural interferon
more efficiently or enable us to compete effectively with our competitors. In
addition, we may be damaged if we are accused of misappropriating a
competitor's proprietary technology even if these claims are untrue. We cannot
assure you that our future patent applications will be approved, and if
granted, that these patents will provide necessary protection to us.
RISKS OF TECHNOLOGY TRANSFERS
One of our proposed marketing strategies is to sell the right to use
our technology and product manufacturing techniques to third parties, who will
in turn use them to produce natural human leukocyte alpha interferon outside
the United States. We cannot guarantee that we will be able to successfully
market the product or receive revenue from such third parties.
PRODUCT LIABILITY AND LIMITATIONS OF PRODUCT LIABILITY INSURANCE
We may be subject to claims for personal injuries or other damages
resulting from the use of natural interferon. In order to protect our Company
against such claims, we maintain product liability insurance in the amount of
$1,000,000 per occurrence and $2,000,000 in total. We cannot be sure that this
insurance will be adequate to cover any liabilities that may result from the
use of natural interferon or that we will be able to afford such insurance in
the future.
RELIANCE ON FOREIGN THIRD PARTY MANUFACTURER MAY DISRUPT OPERATIONS
Viragen (Scotland) Ltd. ("VSL"), a wholly-owned subsidiary of Viragen
(Europe) Ltd., our majority-owned subsidiary, has entered into a manufacturing
agreement with The Common Services Agency of Scotland. Our decision to use an
offshore manufacturer could expose VSL to certain risks involved with
fluctuations in exchange rates of foreign currencies. In addition, relying on
foreign manufacturers exposes us to all the risks of dealing with a foreign
manufacturing source. These include governmental regulations, tariffs, import
and export restrictions, transportation, taxes and local health and safety
regulations. Any such foreign manufacturing arrangements limit our control and
may lead to the disruption of our operations.
RISK OF DEPENDENCE ON KEY PERSONNEL
Our day-to-day operations are managed by Mr. Gerald Smith, our
Chairman of the Board and President, Dr. Jay Sawardeker, our Executive Vice
President and Chief Operating Officer, Mr. Dennis W. Healey, our Executive Vice
President, Treasurer and Chief Financial Officer and Dr. Joseph Morris, our
Director of Research and Development.
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We have employment agreements with Messrs. Smith, Sawardeker, Healey and
Morris which restrict competitive activities by them during the term of their
agreements and for a two-year period thereafter. However, the loss of their
services would have a negative effect on our ability to conduct business. Our
future success will greatly depend on our ability to attract and retain
additional skilled personnel in various phases of our operations.
NO DIVIDENDS ANTICIPATED TO BE PAID
We have never paid cash dividends on our Common Stock and do not
expect to pay cash dividends on our Common Stock any time in the near future.
The future payment of dividends directly depends upon our future earnings,
capital requirements, financial requirements and other factors to be determined
by our Board of Directors. For the foreseeable future, we anticipate that any
earnings from operations will be used to finance our growth and will not be
paid to our common stockholders in the form of dividends.
POSSIBLE RESALES OF SECURITIES BY CURRENT STOCKHOLDERS AND DEPRESSIVE EFFECT ON
MARKET
As of September 18, 1998, we had 4,795,882 shares of Common Stock
outstanding which were "restricted securities" as that term is defined by Rule
144 under the Securities Act of 1933 (the "Securities Act"). The shares of
Common Stock outstanding do not include shares of common stock that may be
issued on conversion of the Company's Preferred Stock and upon exercise of
various options and warrants. Under Rule 144, a person who holds restricted
securities for a period of one year may sell a limited number of shares to the
public in ordinary brokerage transactions. Sales under Rule 144 and sales of
Common Stock covered by registration statements filed by us may reduce the
market price of our Common Stock and increase the number of our publicly held
securities.
USE OF PREFERRED STOCK TO RESIST TAKEOVERS; POTENTIAL ADDITIONAL DILUTION
Our Certificate of Incorporation authorizes 1,000,000 shares of
preferred stock, of which at September 21, 1998, 2,650 shares of Series A
Preferred Stock, 419 shares of Series H Preferred Stock and 177 shares of Series
I Preferred Stock were issued and outstanding. Our Certificate of Incorporation
gives our Board of Directors the authority to issue preferred stock without
approval of our stockholders. We may issue additional shares of preferred stock
to raise money to finance our operations. We may authorize issuance of the
preferred stock in one or more series. In addition, we may set the dividend and
liquidation preferences, voting rights, conversion privileges, redemption terms
and other privileges and rights of the shares of each authorized series. While
we include preferred stock in our capitalization to improve our financial
flexibility, we could possibly use such preferred stock to preserve control by
present management in the event we become subject to a potential hostile
takeover. In addition, the issuance of large blocks of preferred stock could
possibly have a dilutive effect to our existing stockholders.
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THE COMPANY
Viragen, Inc. was organized in 1980 and is in the business of
researching and developing products which help the human immune system resist
viral infections. Our primary product is a natural interferon product named
OmniferonTM which is produced from human white blood cells. Natural interferon
stimulates and controls the human immune system. In addition, interferon may
stem the growth of various viruses including those involved with diseases such
as hepatitis, multiple sclerosis, cancer and HIV/AIDS.
Our product has not been approved by the U.S. Food and Drug
Administration or the European Union regulatory authorities. Viragen will seek
FDA and EU approval for various uses of its Omniferon product in the future.
This approval requires several years of clinical trials and substantial
additional funds. Until 1993, we did not operate actively because of limited
funds. As a result of funds previously raised by us as well as funds from the
current transaction, we are concentrating our efforts in obtaining approval for
our Omniferon product from the FDA and EU.
Our affiliate, Viragen (Scotland) Ltd., entered into a license and
manufacturing agreement with the Common Services Agency of Scotland, an agent
for the Scottish National Blood Transfusion Service. As a result of this
agreement, the Scottish Service will help in the manufacture of Viragen
(Scotland)'s product for exclusive distribution in the EU and on a
non-exclusive basis worldwide. The Scottish Service will receive royalties and
special access to our Omniferon product. We have also recently entered into
agreements with the American Red Cross, America's Blood Centers and the German
Red Cross for supplies of white blood cells. These sources of white blood cells
enable us to conduct FDA and EU trials and will also be used for commercial
manufacturing in the future.
Our executive offices are at 865 S.W. 78th Avenue, Suite 100,
Plantation, FL 33324. Our telephone number is (954) 233-8746; our facsimile
number is (954) 233-1414.
---------------
EXCEPT FOR HISTORICAL INFORMATION CONTAINED HEREIN, THE MATTERS SET
FORTH IN THIS PROSPECTUS ARE FORWARD LOOKING AND INVOLVE A NUMBER OF RISKS AND
UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
DESCRIBED FOR A VARIETY OF FACTORS. SUCH FACTORS COULD INCLUDE, BUT ARE NOT
LIMITED TO, THOSE DISCUSSED IN "RISK FACTORS" AND "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" IN THE COMPANY'S FORM
10-K ANNUAL REPORT FILED FOR THE FISCAL YEAR ENDED JUNE 30, 1998, AS WELL AS
THOSE DISCUSSED ELSEWHERE IN OTHER PUBLIC FILINGS MADE BY THE COMPANY WITH THE
SECURITIES AND EXCHANGE COMMISSION. FORWARD LOOKING STATEMENTS INCLUDE THE
COMPANY'S STATEMENTS REGARDING LIQUIDITY, ANTICIPATED CASH NEEDS AND
AVAILABILITY, AND ANTICIPATED EXPENSE LEVELS IN "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" INCLUDING EXPECTED
PRODUCT CLINICAL TRIAL INTRODUCTIONS, EXPECTED RESEARCH AND DEVELOPMENT
EXPENDITURES, AND RELATED ANTICIPATED COSTS. ALL FORWARD LOOKING STATEMENTS
INCLUDED IN THIS
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DOCUMENT ARE BASED ON INFORMATION AVAILABLE TO THE COMPANY ON THE DATE HEREOF,
AND THE COMPANY ASSUMES NO OBLIGATION TO UPDATE ANY SUCH FORWARD LOOKING
STATEMENTS. IT IS IMPORTANT TO NOTE THAT THE COMPANY'S ACTUAL RESULTS COULD
DIFFER MATERIALLY FROM THOSE IN SUCH FORWARD LOOKING STATEMENTS.
SELLING SECURITY HOLDERS
REGULATION D COMMON STOCK PRIVATE EQUITY LINE SUBSCRIPTION AGREEMENT
OVERVIEW
On September 22, 1998 (the "Subscription Date"), the Company entered
into a Regulation D Common Stock Private Equity Line Subscription Agreement
(the "Subscription Agreement") with Swartz Private Equity, LLC (the
"Subscriber"). The Subscription Agreement entitles the Company to require the
Subscriber to purchase up to $15,000,000 of the Company's Common Stock (the
"Put" or "Put Right") from time to time during a three-year period beginning on
the Subscription Date.
PUT RIGHTS
In order to exercise a Put Right, the Company must have an effective
and current registration statement (the "Registration Statement"), registering
the shares of Common Stock for the Put Shares, Warrants Shares and any
Additional Shares (all as defined below) (the "Effective Period"). During any
Effective Period, the Company may give 10 trading days (or in certain cases 20
trading days) advance notice to the Subscriber ("Advance Put Notice") of the
date on which the Company intends to exercise a particular Put Right ("Put
Date"). The Advance Put Notice must indicate:
(1) the number of Put Shares the Subscriber will be required to
purchase (the "Put Share Amount");
(2) the minimum period of consecutive trading days for the purpose of
determining the requisite reported trading volume (the "Volume Evaluation
Period"); and
(3) the corresponding pricing period (the "Pricing Period") for
determining the price of the Common Stock subject to the Advance Put Notice.
The Put Share Amount may not exceed a number of shares of Common Stock
equal to one-half of the total daily reported trading volume of Viragen's
Common Stock (the "Trading Volume") during the ten consecutive trading days
ending on the trading day immediately preceding the Put Date.
For each Put Share, the Subscriber will pay us (the "Put Share Price")
the lesser of:
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(1) 87.5% of the lowest closing bid price of the Company's Common
Stock during the Pricing Period; or
(2) the lowest closing bid price of Viragen's Common Stock during the
number of trading days immediately following the Put Date equal to twice the
number of trading days in the Volume Evaluation Period (the "Pricing Period")
minus $0.225.
WARRANTS
On each six month anniversary of the Subscription Date (each "Six Month
Anniversary"), the Company will issue Warrants to purchase a number of shares of
Common Stock (the "Warrant Shares") equal to 10% of the number of shares issued
to the Subscriber for all Puts exercised in the six month period ("Six Month
Period") preceding such Six Month Anniversary.
The Warrants will be exercisable for a five year period beginning on
the date the Warrants are issued. The Warrants are exercisable at a price equal
to 108% of the lowest closing bid price of the Company's Common Stock during
the ten trading days immediately preceding the applicable Six Month
Anniversary.
LIMITATIONS AND CONDITIONS TO COMPANY'S PUT RIGHTS
The Subscriber is not required to acquire any Put Shares for any
particular Put for which between the Advance Put and the date the particular
Put closes Viragen: (1) has announced or implemented a stock split of its
Common Stock; (2) has paid a common stock dividend; (3) has made a distribution
of its Common Stock or of any portion of its assets; (4) has completed a major
transaction (including a transaction which is a change of control); or (5) has
not satisfied certain due diligence requirements of the Subscriber.
The Subscriber is not required to purchase any number of Put Shares
(the "20% Excess"), which when added to the total number of Put Shares, Warrant
Shares and Additional Shares acquired by the Subscriber, exceeds 20% of
Viragen's Common Stock ("20% Issuance"). This limitation does not apply if the
Company receives stockholder approval under Nasdaq Rule 4460(I)(l)(d)(ii) to
complete the 20% Issuance. In the event the Company does not get stockholder
approval for any 20% Issuance, the Company will pay the Subscriber a cash
amount equal to the number of shares equal to the 20% Excess multiplied by the
lowest closing bid price of Viragen's Common Stock during the applicable
period.
TERMINATION OF OBLIGATIONS TO PURCHASE PUT SHARES AND DAMAGES
The Subscriber can terminate ("Termination Rights") its obligations to
purchase Put Shares if:
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(1) the Company's Common Stock is de-listed from the Nasdaq National
or SmallCap Market System for a period of greater than four consecutive months
(the "Delisting Event");
(2) the Registration Statement remains ineffective for a period of
four consecutive months (the "Ineffective Period"); or
(3) any Delisting Events and Ineffective Periods continue for a
combined cumulative four month period.
SHORT SALES
The Subscriber and its affiliates may not make short sales of the
Company's Common Stock unless the Subscriber has received an Advance Put Notice
and the amount of shares involved in the short sales is not more than the Put
Share Amount stated in the Advance Put Notice.
COMPANY'S OPTION TO CANCEL PUTS
The Company may cancel a particular Put (the "Put Cancellation")
between the date of the Put Notice and the last day of the Pricing Period if
(1) the Company discovers a material misrepresentation relative to the
Subscriber's investment decision or an Ineffective Period occurs after a Put
Date but before a Put closing; or (2) the closing bid price of Virgen's Common
Stock on the date the Subscriber receives notice of the Company's intent to
cancel a Put is less than 80% of the closing bid price of Viragen's Common
Stock on the date the most recent Advance Put Notice was delivered.
Even in the event of a Put Cancellation, the Company must issue the
Subscriber the number of shares sold by the Subscriber between the date of the
most recent Advance Put Notice and the applicable Put Cancellation date.
Viragen may also terminate all further Puts by providing the Subscriber
with notice of termination. However, any such termination does not affect any
other rights or obligations of the Company under the Subscription Agreement, the
Warrants or the Registration Rights Agreement. However, the Company may be
obligated to pay the Placement Agent up to $200,000 less amounts previously
paid.
RESTRICTIVE COVENANTS
During the term of the Agreement, Viragen must not issue any debt or
equity securities in a private transaction which are convertible or exercisable
into Common Stock with a conversion or exercise price which may be adjusted
based on the occurrence of certain events ("Variable Priced Securities").
Viragen may also not enter into any private equity line type agreements similar
to the Subscription Agreement without obtaining the
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Subscriber's prior written approval. In addition, Viragen may not transfer any
of its material assets to any subsidiary of the Company (except for cash
transactions) or sell any of its material assets to any owner of 20% or more of
Viragen's Common Stock.
RIGHT OF FIRST REFUSAL
The Subscriber has the right of first refusal to purchase any Variable
Priced Securities offered by the Company in any private transaction which
closes on or prior to six months after the termination of the Subscription
Agreement.
PLACEMENT AGENT
Swartz Investments, LLC, d/b/a Swartz Institutional Finance (the
"Placement Agent") is acting as placement agent for this transaction and is
related to the Subscriber. In consideration for its services, the Placement
Agent is entitled to receive a cash fee of up to 7% for the first $5,000,000
received by Viragen from exercising Put Rights, 6% for the amounts between
$5,000,000 and $10,000,000 received by Viragen from exercising Put Rights and
3.5% for any amounts raised over $10,000,000 received by Viragen from
exercising Put Rights. Even if no Put Rights are exercised, Viragen must pay
the Placement Agent $100,000 during any Six Month Period. These amounts exclude
any proceeds received from the exercise of the Warrants.
The Placement Agent is also entitled to receive two separate warrants.
The first warrant entitles the Placement Agent to purchase a number of shares
of Common Stock equal to the number of Put Shares purchased by the Subscriber
in any Six Month Period at an exercise price of 125% of the Put Share Price for
the Put Shares purchased in the applicable Six Month Period. The second warrant
entitles the Placement Agent to purchase a number of shares of Common Stock
equal to the number of shares of Common Stock underlying the Put Share Warrants
issued to the Subscriber on any Six Month Period at an exercise price of 108%
of the lowest closing bid price of the Common Stock for the ten trading days
immediately preceding the applicable Six Month Period. The Placement Agent
Warrants are exercisable for a period of five years from the date of issuance.
SUBSCRIBERS RIGHT OF INDEMNIFICATION
The Company is obligated to indemnify the Subscriber from all
liability and losses resulting from any misrepresentations or breaches by the
Company of the Subscription Agreement (including the Registration Rights
Agreement and other related agreements), or the Registration Statement.
STOCK OWNERSHIP
The following table sets forth as of September 21, 1998 (1) the name
of the selling security holder, (2) the amount of Common Stock held directly or
indirectly or underlying
13
<PAGE> 17
the Warrants and the Placement Agent Warrants to be offered by the selling
security holders and (3) the amount to be owned by the selling security holders
following sale of such shares.
As of September 21, 1998, there were outstanding 54,425,121 shares of Common
Stock of the Company.
<TABLE>
<CAPTION>
Shares to be
Name of Selling Number of Shares to Owned After
Security Holders Shares Owned(3) Be Offered Offering
- ---------------- --------------- ---------- ------------
<S> <C> <C> <C>
Swartz Private Equity, LLC(1) 0 0 0
Swartz Investments, LLC(2) 0 0 0
</TABLE>
- ----------------------
(1) Does not include up to (i) 12,000,000 shares of Common Stock that could
be issued in connection with the exercise of Put Rights under to the
Subscription Agreement; (ii) 1,200,000 shares of Common Stock that
could be issued upon the conversion of the Warrants exercisable for a
five year period at a price equal to 108% of the lowest closing bid
price of the Company's Common Stock during the ten trading days
preceding the applicable Six Month Period; and (iii) 800,000 Shares of
Common Stock that could be issued to the Subscriber as a result of
adjustment in the number of shares to be issued as additional shares in
certain events which may cause a delay or suspension of the sales of
shares. Address is 200 Roswell Summit, Suite 285, 1080 Holcomb Bridge
Road, Roswell, Georgia 30076.
(2) Does not include up to 1,000,000 shares of Common Stock that could be
issued upon exercise of the Placement Agent Warrants. Address is 200
Roswell Summit, Suite 285, 1080 Holcomb Bridge Road, Roswell, Georgia
30076.
The Company has agreed to pay for all costs and expenses in the
issuance, offer, sale and delivery of the Shares. These include, all expenses
and fees of preparing, filing and printing the Registration Statement and
mailing of these items. The Company will not pay selling commissions and
expenses for any sales by the selling security holders. The Company will
indemnify the selling security holders against civil liabilities including
liabilities under the Securities Act of 1933.
PLAN OF DISTRIBUTION
These Shares may be sold by the selling security holders, or by other
successors in interest. The sales may be made on one or more exchanges or in
the over-the-counter market (including the Nasdaq National Market of The Nasdaq
Stock Market), or at prices related to the then current market price, or in
negotiated transactions.
14
<PAGE> 18
The Shares may be sold by one or more of the following methods,
including, without limitation:
(1) a block trade in which the broker-dealer so engaged will attempt
to sell the Shares as agent, but may position and resell a portion of the block
as principal;
(2) purchases by a broker or dealer as principal and resale by such
broker or dealer;
(3) ordinary brokerage transactions and transactions in which the
broker solicits purchasers; and
(4) face-to-face or other direct transactions between the selling
security holders and purchasers without a broker-dealer or other intermediary.
In addition, the selling security holders may, subject to the
restrictions described below and previously under "Selling Security Holders",
sell short the Common Stock of the Company. In these instances, this Prospectus
may be delivered in connection with such short sale and the Shares offered may
be used to cover such short sale. Swartz Private Equity, LLC is an underwriter
within the meaning of the Act in connection with the sale of the shares offered
hereby. In making sales, broker-dealers, or agents engaged by the selling
security holders may arrange for other broker-dealers or agents to participate.
Such broker-dealers may receive commissions or discounts from the selling
security holders in amounts to be negotiated immediately prior to the sale.
These broker-dealers and agents and any other participating broker-dealers or
agents, as well as the selling security holders and the placement agent, may be
considered to be "underwriters" within the meaning of the Act. In addition, any
securities covered by this Prospectus that qualify for sale under Rule 144 may
be sold under Rule 144 rather than by this Prospectus.
DESCRIPTION OF SECURITIES
The Company is currently authorized to issue up to 75,000,000 shares
of Common Stock, par value $.01 per share, of which 54,425,121 shares were
outstanding as of September 21, 1998. The Company is also authorized to issue
up to 1,000,000 shares of preferred stock, par value $1.00 per share, of which
2,650 shares of Series A Preferred Stock, 419 shares of Series H Preferred
Stock and 177 shares of Series I Preferred Stock were outstanding as of
September 21, 1998.
COMMON STOCK
Subject to the dividend rights of the holders of Preferred Stock,
holders of shares of Common Stock are entitled to share, on a proportionate
basis, such dividends as may be declared by the Board of Directors. Upon
liquidation, dissolution or winding up of the Company, after payment to
creditors and holders of Preferred Stock that may be outstanding,
15
<PAGE> 19
the assets of the Company will be divided proportionately on a per share basis
among the holders of the Common Stock.
Each share of Common Stock has one vote. Holders of Common Stock do
not have cumulative voting rights, which means that the holders of a plurality
of the shares voting for the election of Directors can elect all of the
Directors. In that event, the holders of the remaining shares will not be able
to elect any Directors. The By-Laws of the Company provide that a majority of
the issued and outstanding shares of Common Stock are a quorum to transact
business at a stockholders' meeting. The Common Stock has no preemptive,
subscription or conversion rights and is not redeemable by the Company.
PREFERRED STOCK
The Company is authorized to issue a total of 1,000,000 shares of
preferred stock, par value $1.00 per share. The preferred stock may be issued
by resolutions of the Company's Board of Directors without any action of the
stockholders. However, any issuance of 20% of Viragen's Common Stock will
require stockholder approval under Nasdaq Rule 4460(I)(1)(d)(ii). These
resolutions may authorize issuances of such preferred stock in one or more
series. In addition, they may fix and determine dividend and liquidation
preferences, voting rights, conversion privileges, redemption terms and other
privileges and rights of the shares of each authorized series.
While the Company includes preferred stock in its capitalization to
improve its financial flexibility, preferred stock could possibly be used by
the Company to preserve control by present management in the event of a
potential hostile takeover of the Company. In addition, the issuance of large
blocks of preferred stock could also have a dilutive effect to existing holders
of Common Stock of the Company.
Viragen has authorized 375,000 shares of Series A Preferred Stock of
which 2,650 shares are outstanding. Viragen has authorized 500 shares of Series
H Preferred Stock of which 419 shares are outstanding, Viragen has also
authorized 200 shares of Series I Preferred Stock, of which 177 shares are
outstanding. The Company had also previously authorized the issuance of 15,000
shares of 5% Cumulative Convertible, Series B Preferred Stock, 5,000 shares of
Series C Preferred Stock, 15,000 shares of Series D Preferred Stock, 5,000
shares of Cumulative Convertible Preferred Stock, Series E; 15,000 shares of
Convertible Preferred Stock Series F and 4,000 shares of Series G Preferred
Stock, no shares of which are outstanding.
SERIES A PREFERRED STOCK
Viragen established the Series A Preferred Stock in January 1984. Each
share of Series A Preferred Stock is immediately convertible into 4.26 shares
of Common Stock. Dividends on the Series A Preferred Stock are cumulative, have
priority to the Common Stock and are payable in either cash or Common Stock, at
the option of the Company.
16
<PAGE> 20
The Series A Preferred Stock has voting rights only if dividends are in
arrears for five annual dividends. Upon such occurrence, the voting is limited
to the election of two directors. Voting rights terminate upon payment of the
cumulative dividends. The Series A Preferred Stock is redeemable at the option
of the Company at any time after expiration of ten consecutive business days
during which the bid or last sale price for the Common Stock is $6.00 per share
or higher. There is no mandatory redemption or sinking fund obligation for the
Series A Preferred Stock.
Owners of the Series A Preferred Stock will be entitled to receive
$10.00 per share (plus accrued and unpaid dividends) upon liquidation,
dissolution or winding up of the Company. This is before any distribution or
payment is made to holders of the Common Stock or other stock of the Company
junior to the Series A Preferred Stock.
SERIES H AND SERIES I PREFERRED STOCK
The Series H Preferred Stock and the Series I Preferred Stock
(sometimes collectively referred to in this section as the "Preferred Stock")
have no dividends, although an 8% accretion factor has been included for
purposes of determining the liquidation and conversion amounts. The Preferred
Stock carries no voting rights. The stated value of the Preferred Stock is
$10,000 per share.
The Preferred Stock, including the 8% accretion factor, is
convertible into shares of Common Stock of the Company at the lower of
(1) the Fixed Conversion Price of $1.59; or
(2) the Variable Conversion Price which will equal 82% of the Market
Price on the date of conversion (the "Conversion Price").
The amount of the shares a holder of the Preferred Shares may convert
into is limited to a maximum of 15% of the aggregate principal amount of the
Series H Preferred Stock or the Series I Preferred Stock issued to a holder for
each monthly period. This is subject to a maximum of 25% per monthly period if
the holder has not elected to convert the permitted 15% amount for the series
during any previous monthly conversion period. In addition, this conversion
quota will not be applicable in the event the Company completes certain
offerings of its securities.
At the option of the Company, any shares of Preferred Stock which are
outstanding on August 19, 2000 will either be (1) automatically converted at
the Conversion Rate in effect at that time or (2) automatically redeemed at the
Stated Value plus any liquidated damages and any other cash payments then due
from the Company ("Total Value").
The Company also has the right to redeem ("Right to Redeem") all or
any part of the Preferred Stock submitted for conversion if on the date of
conversion the Conversion Price
17
<PAGE> 21
of the Company's Common Stock is less than the Fixed Conversion Price. Under
the Right to Redeem option, if the closing bid price of the Common Stock on the
date of conversion ("Closing Bid Price") is less than $1.50, the redemption
price paid by the Company to the Holder will be $11,200 per share of Preferred
Stock. On the other hand, if the Closing Bid Price is greater than $1.50, the
redemption price paid by the Company to the Holder will be $11,750 per share of
Preferred Stock.
In addition, at any time commencing February 20, 1999, the Company has
the Right to Redeem the Preferred Stock. However, the Company is only entitled
to redeem Preferred Stock having an aggregate Stated Value of at least
$1,000,000. The redemption price is equal to 120% of the Total Value of the
Preferred Stock through August 19, 1999,and is equal to 115% of the Total Value
of the Preferred Stock through August 19, 2000.
A holder may not convert Preferred Stock if, as a result of
conversion, the shares of Common Stock beneficially owned by the holder would
exceed 4.9% of the outstanding shares of the Company. However, the converting
holder or holders may waive the 4.9% Restriction by providing notice to the
Company of the intent to waive this restriction. In no event may holders
convert Preferred Stock if the total number of shares issuable upon conversion
would exceed the maximum number of shares of Common Stock that the Company
could, without stockholder approval, issue under Nasdaq Rule 4460(i)(l)(d)(ii).
The Company has agreed that through February 19, 1999, it will not,
without the prior written consent of each holder, issue or sell, any equity or
debt securities of the Company (not including securities sold in underwritten
public offerings or mergers, acquisitions or similar transactions) or any of its
subsidiaries. An exception is if the Company has first delivered to each holder
a written notice describing such future offering and providing each holder and
its affiliates an option to purchase up to the full amount of the securities
being offered in the future offering on the same terms as in the future
offering. However, if any holder chooses not to participate in any future
offering, then any debt or equity security issued in that offering will be
ineligible for resale and/or conversion, until November 19, 1999.
OVER-THE-COUNTER MARKET
The Company's Common Stock is traded in the Nasdaq National Market
under the symbol "VRGN." If for any reason the Common Stock does not remain
accepted for inclusion on Nasdaq, then the Company's Common Stock would
continue to be traded in the over-the-counter markets through the "pink sheets"
or the NASD's OTC Bulletin Board. In the event the Common Stock were not
included on Nasdaq, the Company's Common Stock would be covered by a Securities
and Exchange Commission rule that imposes additional sales practice
requirements on broker-dealers who sell such securities to persons other than
established customers and accredited investors (generally institutions with
assets in excess of $5,000,000 or individuals with net worth in excess of
$1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their
spouse).
18
<PAGE> 22
For transactions covered by the rule, the broker-dealer must make a
special suitability determination for the purchaser and receive the purchaser's
written agreement to the transaction prior to the sale. Consequently, the rule
may affect the ability of broker-dealers to sell the Company's securities. It
also may affect the ability of purchasers in this offering to sell their shares
in the secondary market.
TRANSFER AGENT
The Transfer Agent for the shares of Common Stock is Chase Mellon
Shareholders Services, Overpeck Centre, 85 Challenger Road, Ridgefield Park,
New Jersey 07660-2108.
LEGAL MATTERS
Certain legal matters in connection with the Shares being offered
hereby will be passed upon by Atlas, Pearlman, Trop & Borkson, P.A., 200 East
Las Olas Boulevard, Suite 1900, Fort Lauderdale, Florida 33301. Members of that
firm or members of their family own a total of 37,000 shares of Common Stock of
the Company.
EXPERTS
The consolidated financial statements of Viragen, Inc. appearing in
Viragen, Inc.'s Annual Report (Form 10-K) for the year ended June 30, 1998,
have been audited by Ernst & Young LLP, independent certified public
accountants, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
INDEMNIFICATION
Section 145 of the General Corporation Law of Delaware allows a
corporation to indemnify any person who was or is threatened to be made a party
to any threatened, pending or completed suit or proceeding. This applies
whether the matter is civil, criminal, administrative or investigative because
he or she is or was a director, officer, employee or agent of the corporation.
A corporation may indemnify against expenses (including attorney's
fees) and, except for an action by or in the name of the corporation, against
judgments, fines and amounts paid in settlement as part of such suit or
proceeding. This applies only if the person indemnified acted in good faith and
in a manner he or she reasonably believed to be in the best interest of the
corporation. In addition, with respect to any criminal action or proceeding,
the person had no reasonable cause to believe his or her conduct was unlawful.
In the case of an action by or in the name of the corporation, no
indemnification of expenses may be made for any claim, as to which the person
has been found to be liable to
19
<PAGE> 23
the corporation. The exception is if the court
in which such action was brought determines that the person is reasonably
entitled to indemnity for expenses.
Section 145 of the General Corporation Law of Delaware further
provides that if a director, officer, employee or agent of the corporation has
been successful in the defense of any suit, claim or proceeding described
above, he or she will be indemnified for expenses (including attorneys' fees)
actually and reasonably incurred by him or her.
Insofar as indemnification for liabilities arising under the Act is
permitted as to directors, officers and controlling persons of the Company, in
the opinion of the Securities and Exchange Commission, such indemnification is
against public policy and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Company in the successful defense of any action, suit or proceeding) is
asserted, the Company will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy. The Company will be governed by the final adjudication of such issue.
20
<PAGE> 24
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the estimated expenses, all of which
are being paid by the Company, in connection with this offering.
Registration fee.............................................$ 6,373
Legal fees and expenses...................................... 5,000*
Blue sky qualification fees and expenses .................... 1,000*
Accounting fees and expenses................................. 10,000*
Printing expenses............................................ 5,000*
Miscellaneous................................................ 1,627*
-------
Total .......................................................$29,000*
=======
- ----------------------
*Estimated
Item 15. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of Delaware allows a
corporation to indemnify any person who was or is,or is threatened to be made a
party to any threatened, pending or completed suit or proceeding. This applies
whether the matter is civil, criminal, administrative or investigative because
he or she is or was a director, officer, employee or agent of the corporation.
A corporation may indemnify against expenses (including attorney's
fees) and, except for an action by or in the name of the corporation, against
judgments, fines and amounts paid in settlement as part of such suit or
proceeding. This applies only if the person indemnified acted in good faith and
in a manner he or she reasonably believed to be in the best interest of the
corporation. In addition, with respect to any criminal action or proceeding,
the person had no reasonable cause to believe his or her conduct was unlawful.
In the case of an action by or in the name of the corporation, no
indemnification of expenses may be made for any claim, as to which the person
has been found to be liable to the corporation. The exception is if the court
in which such action was brought determines that the person is reasonably
entitled to indemnity for expenses.
Section 145 of the General Corporation Law of Delaware further
provides that if a director, officer, employee or agent of the corporation has
been successful in the defense of any suit, claim or proceeding described
above, he or she will be indemnified for expenses (including attorneys' fees)
actually and reasonably incurred by him or her.
II-1
<PAGE> 25
Insofar as indemnification for liabilities arising under the Act is
permitted as to directors, officers and controlling persons of the Company, in
the opinion of the Securities and Exchange Commission, such indemnification is
against public policy and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Company in the successful defense of any action, suit or proceeding) is
asserted, the Company will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy. The Company will be governed by the final adjudication of such issue.
Item 16. Exhibits.
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<C> <S>
(2) Plan of acquisition, reorganization, arrangement, liquidation or succession
(incorporated by reference to the Company's registration statement on
Form S-3 dated April 15, 1997, as amended, File No. 333-25187, Part II,
Item 16, (2)("April 1997 Form S-3)).
(2)(i) Plan of Merger between Florida Immunological Institute, Inc. and Vira-
Tech, Inc., dated September 30, 1986 (incorporated by reference to the
Company's registration statement on Form S-2, dated October 24, 1986,
as amended File No. 33-9714 ("1986 Form S-2"), Part II, Item 16, 2.1)
(2)(ii) Articles of Merger of Florida Immunological Institute into Vira-Tech,
Inc., dated September 30, 1986 (incorporated by reference to 1986 Form
S-2, Part II, Item 16, 2.2)
(3)(i) Articles of Incorporation and By-Laws (incorporated by reference to the
Company's registration statement on Form S-1, dated June 8, 1981, as
amended, File No. 2-72691, "Form S-1", Part II, Item 30(b) 3.1 and 3.2)
(3)(ii) Amended Certificate of Incorporation (incorporated by reference to
1986 Form S-2, Part II, Item 16, 4.2)
(4) Instruments defining the rights of security holders, including indentures
(incorporated by reference to April 1997 Form S-3, Item 16, (4))
(4)(i) Certificate of Designation for Series A Preferred Stock, as amended
(incorporated by reference to 1986 Form S-2, Part II, Item 16, 4.4)
(4)(ii) Specimen Certificate for Unit (Series A Preferred Stock and Class A
Warrant) (incorporated by reference to 1986 Form S-2, Part II, Item 16,
4.5)
</TABLE>
II-2
<PAGE> 26
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<C> <S>
(4)(iii) Omitted
(4)(iv) Omitted
(4)(v) Omitted
(4)(vi) Omitted
(4)(vii) Omitted
(4)(viii) Form of three year 8.5% Convertible Subordinated Debenture
(incorporated by reference to the Company's Current Report on Form 8-
K dated November 17, 1993)
(4)(ix) Form of Stock Option Agreement dated November 19, 1993, issued to
Messrs. Dennis W. Healey and Peter D. Fischbein (incorporated by
reference to the Company's Current Report on Form 8-K dated November
17, 1993)
(4)(x) 1995 Stock Option Plan
(4)(xi) Certificate of Designation for Series B Preferred Stock, (incorporated
by reference to the Company's Current Report on Form 8-K dated June
7, 1996)
(4)(xii) Omitted
(4)(xiii) Certificate of Designations Preferences and Rights for Series C Preferred
Stock (incorporated by reference to the Company's Current Report on
Form 8-K dated February 14, 1997)
(4)(xiv) Certificate of Designations Preferences and Rights for Series D Preferred
Stock (incorporated by reference to the Company's Current Report on
Form 8-K dated February 14, 1997)
(4)(xv) Certificate of Designations, Preferences and Rights for Series E Preferred
Stock (incorporated by reference to the Company's Current Report on
Form 8-K dated March 6, 1997)
</TABLE>
II-3
<PAGE> 27
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<C> <S>
(4)(xvi) Certificate of Designations, Preferences and Rights for Series F Preferred
Stock (incorporated by reference to the Company's Current Report on
Form 8-K dated September 22, 1997)
(4)(xvii) Certificate of Designations, Preferences and Rights for Series G 10%
Cumulative Convertible Preferred Stock (incorporated by reference to the
Company's Current Report on Form 8-K dated September 22, 1997)
(4)(xvii) Certificate of Designations, Preferences and Rights for Series H Preferred
Stock (incorporated by reference to the Company's Registration Statement
on Form S-3 (File No. 333-65199))
(4)(xviii) Certificate of Designations, Preferences and Rights of Series I Preferred
Stock (incorporated by reference to the Company's Registration Statement
on Form S-3 (File No. 333-65199))
(5) Opinion of Atlas, Pearlman, Trop & Borkson, P.A. as to the validity
of the securities being registered (previously filed)
(10) Material contracts
(10)(i) Research Agreement between the Registrant and Viragen Research
Associates Limited Partnership dated December 29, 1983
(incorporated by reference to Medicore S-1, File No. 2-89390, dated
February 10, 1984 ("Medicore S-1"), Part II, Item 16(a)(10)(xxxiii))
(10)(ii) License Agreement between the Registrant and Viragen Research
Associates Limited Partnership dated December 29, 1983
(incorporated by reference to Medicore S-1, Part II, Item 16
(a)(10)(xxxiv))
(10)(iii) Omitted
(10)(iv) Royalty Agreement between the Company and Medicore, Inc. dated
November 7, 1986 (incorporated by reference to the November 1986
Form 8-K, Item 7(c)(i))
(10)(v) Amendment to Royalty Agreement between the Company and
Medicore, Inc. dated November 21, 1989 (incorporated by reference
to the Company's Current Report on Form 8-K dated December 6,
1989, Item 7 (c)(i))
</TABLE>
II-4
<PAGE> 28
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<C> <S>
(10)(vi) Promissory Note from the Company to Medicore, Inc. dated August
6, 1991 (incorporated by reference to the Company's 1991 Form 10-K,
Part IV, Item 10(a)(10)(xx))
(10)(vii) Loan Agreement between the Company and Medicore, Inc. dated
January 31, 1991 (incorporated by reference to the Company's Current
Report on Form 8-K dated February 26, 1991, Item 7(c)(ii))
(10)(viii) Amendment to Loan Agreement between the Company and Medicore,
Inc. dated August 6, 1991 (incorporated by reference to the Company's
1991 Form 10-K, Part IV, Item 14(a)(10)(xxi))
(10)(ix) Florida Real Estate Mortgage and Security Agreement from the
Company to Medicore, Inc. dated August 6, 1991 (incorporated by
reference to the Company's 1991 Form 10-K, Part IV, Item
14(a)(10)(xxii))
(10)(x) Omitted
(10)(xi) Omitted
(10)(xii) Promissory Note to Equitable Bank dated August 2, 1991
(incorporated by reference to the Company's Quarterly Report on Form
10-Q for the second quarter ended June 30, 1991 ("June, 1991 Form
10-Q"), Part II, Item 6(a)(28)(i))
(10)(xiii) Mortgage and Security Agreement issued to the Equitable Bank dated
August 2, 1991 (incorporated by reference to the Company's June,
1991 Form 10-Q, Part II, Item 6(a)(28)(ii))
(10)(xiv) Acquisition Agreement between the Company and Medicore, Inc. dated
August 2, 1991 (incorporated by reference to the Company's 1991
Form 10-K, Part IV, Item 14(a)(10)(xxiii))
(10)(xv) Lease between the Company and Medicore, Inc. dated December 8, 1992
(incorporated by reference to the Company's Current Report on Form
8-K, dated January 21, 1993 ("January 1993 Form 8-K"), Item
7(c)(10)(i))
</TABLE>
II-5
<PAGE> 29
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<C> <S>
(10)(xvi) Addendum to Lease between the Company and Medicore, Inc. dated
January 15, 1993 (incorporated by reference to the Company's January
1993 Form 8-K, Item 7(c)(10)(ii))
(10)(xvii) Agreement for Sale of Stock between the Company and Cytoferon Corp.
dated February 5, 1993 (incorporated by reference to the Company's
Current Report on Form 8-K, dated February 11, 1993, Item 7(c)(28))
(10)(xviii) Addendum to Agreement for Sale of Stock between the Company and
Cytoferon Corp. dated May 4, 1993 (incorporated by reference to
the Company's Current Report on Form 8-K dated May 5, 1993, Item
7(c)(28)(i))
(10)(xix) Amendment No. 2 to the Royalty Agreement between the Company and
Medicore, Inc. dated May 11, 1993 (incorporated by reference to
the Company's June 30, 1993 Form 10-K, Part IV, Item 14(a)(10)(xix))
(10)(xx) Note and Mortgage Modification Agreement between the Company and
Medicore, Inc. dated August 18, 1993 (incorporated by reference to
the Company's June 30, 1993 Form 10-K, Part IV, Item 14(a)(10)(xx))
(10)(xxi) Amendment No. 2 to the Loan Agreement between the Company and
Medicore, Inc. dated August 18, 1993 (incorporated by reference to
the Company's June 30, 1993 Form 10-K, Part IV, Item 14(a)(10)(xxi))
(10)(xxii) Amendment to Acquisition Agreement between the Company and
Medicore, Inc. dated August 18, 1993 (incorporated by reference
to the Company's June 30, 1993 Form 10-K, Part IV, Item
14(a)(10)(xxii))
(10)(xxiii) Marketing and Management Services Agreement between the
Company and Cytoferon Corp. dated August 18, 1993
(incorporated by reference to the Company's June 30, 1993 Form 10-K,
Part IV, Item 14(a)(10)(xxiii))
(10)(xxiv) Agreement for Sale of Stock between Cytoferon and the Company dated
November 19, 1993 (incorporated by reference to the Company's
current report on Form 8-K, dated November 12, 1993)
(10)(xxv) Employment Agreement between Gerald Smith and the Company
dated November 19, 1993 (incorporated by reference to
the Company's current report on Form 8-K, dated
November 12, 1993) as amended by Modified Employment
Agreement dated December 15, 1994
</TABLE>
II-6
<PAGE> 30
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<C> <S>
(10)(xxvi) Common Stock Purchase Warrant Agreement between Northlea
Partners Ltd. and the Company dated January 6, 1994
(incorporated by reference to the Company's Current Report on Form 8-
K, dated November 17, 1993)
(10)(xxvii) Management Consulting Agreement between the Company, Medvest, Inc.
and Dr. John Abeles dated January 6, 1994 (incorporated by reference
to the Company's Current Report on Form 8-K, dated November 17,
1993)
(10)(xxviii) Employment Agreement between Dennis W. Healey and the Company
dated April 8, 1994 (incorporated by reference to the Company's
Annual Report on Form 10-K for the year ended June 30, 1994) as
amended by Modified Employment Agreement dated December 15,
1994
(10)(xxix) Promissory Note between the Company and Gerald Smith dated April 18,
1994 (incorporated by reference to the Company's June 30, 1994 Form 10-K,
Part IV, Item 14(a) (10)(xxviii))
(10)(xxx) Employment Agreement between Charles F. Fistel and the Company dated
July 1, 1994 (incorporated by reference to the Company's Annual
Report on Form 10-K for the year ended June 30, 1994) as amended by
Modified Employment Agreement dated December 15, 1994
(10)(xxxi) Placement Agent Agreement and Common Stock Purchase Warrant
issued to Laidlaw Equities, Inc. and designees (incorporated by reference
to the April 1997 Form S-3, Part II, Item 16, 10(xxxi)).
(10)(xxxii) Amendment No. 1 to Agreement for Sale of Stock with Cytoferon
(10)(xxxiii) Modified Sale of Stock and Stock Option Agreement with Peter D.
Fischbein(1)incorporated by reference to the Company's 1995 Form SB-2,
Part II, Item 27(10)(xxxiii))
(10)(xxxiv) Agreement with Moty Hermon (incorporated by reference to the
Company's 1995 Form SB-2, Part II, Item 27(10)(xxxiv))
(10)(xxxv) Agreement with University of Nebraska Medical Center
(incorporated by reference to the Company's 1995 Form SB-2, Part II,
Item 27(10)(xxxv))
</TABLE>
II-7
<PAGE> 31
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<C> <S>
(10)(xxxvi) License and Manufacturing Agreement with Common Services
Agency (incorporated by reference to the Company's 1995 Form SB-2,
Part II, Item 27(10)(xxxiv))
(10)(xxxvii) Agreed Motion for Consent Final Order and Settlement Agreement dated
August 29, 1995 (incorporated by reference to the Company's June
30, 1995 Form 10-KSB)
(10)(xxxviii) Agreement and Plan of Reorganization dated November 8, 1995 and
Amendment thereto (incorporated by reference to the Company's
Post-Effective Amendment No. 1 to Registration Statement on Form
SB-2)
(10)(xxxix) Private Securities Subscription Agreement dated June 7, 1996, and
Registration Rights Agreement (incorporated by reference to the
Company's Current Report on Form 8-K dated June 7, 1996)
(10)(xl) Employment Agreement between Charles F. Fistel and the Company dated
July 1, 1996 (incorporated by reference to the Company's Annual Report
on Form 10-K for the year ended June 30, 1996)
(10)(xli) Stock Option Agreement between the Company and Fred D. Hirt dated
August 2, 1996 (incorporated by reference to the Company's
Annual Report on Form 10-K for the year ended June 30, 1996)
(10)(xlii) Form of Private Securities Subscription Agreement dated November
27, 1996 and related Registration Rights Agreement and Common Stock
Purchase Warrant (incorporated by reference to the Company's Current
Report on Form 8-K dated February 14, 1997)
(10)(xliii) Private Securities Subscription Agreement dated February 3, 1997
and related Regulation Rights Agreement, Common Stock Purchase
Warrant and related agreements (incorporated by reference to the
Company's Current Report on Form 8-K dated February 14, 1997)
(10)(xliv) Securities Purchase Agreement dated as of December 31, 1996 and
related Registration Rights Agreement (incorporated by reference to the
Company's Current Report on Form 8-K dated March 6, 1997)
</TABLE>
II-8
<PAGE> 32
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<C> <S>
(10)(xlv) Employment Agreement between Gerald Smith and the Company
dated March 1, 1997 (incorporated by reference to the Company's
Annual Report on Form 10-K, dated June 30, 1997)
(10)(xlvi) Employment Agreement between Dennis W. Healey and the Company
dated March 1, 1997 (incorporated by reference to the Company's
Annual Report on Form 10-K for the year ended June 30, 1997)
(10)(xlvii) Employment Agreement between Robert C. Reeh and the Company dated
May 19, 1997 (incorporated by reference to the Company's Annual
Report on Form 10-K for the year ended June 30, 1997)
(10)(xlviii) 11 month 10% Promissory Note dated July 1, 1997 (incorporated by
reference to the Company's Current Report on Form 8-K dated August
28, 1997)
(10)(xlix) Employment Agreement between Robert H. Zeiger and the Company
dated August 1, 1997 (incorporated by reference to the Company's Annual
Report on Form 10-K for the year ended June 30, 1997)
(10)(l) Omitted
(10)(li) Omitted
(10)(lii) Stock Exchange Agreement (Series F Convertible Preferred Stock
Exchange Agreement) (incorporated by reference to the Company's
Current Report on Form 8-K dated September 22, 1997, Item 7(c)4)
(10)(liii) Stock Exchange Agreement (Series G Convertible Preferred Stock
Exchange Agreement) (incorporated by reference to the Company's
Current Report on Form 8-K dated September 22, 1997, Item 7(c)5)
(10)(liv) 10% Promissory Note to Clearwater Fund IV, LTD. (incorporated by
reference to the Company's Current Report on Form 8-K dated September
22, 1997, Item 7(c)1)
(10)(lv) Cooperation and Supply Agreement between the Company and the
German Red Cross dated May 19, 1998 (incorporated by reference to the
Company's Annual Report on Form 10-K for the year ended June 30,
1998)
</TABLE>
II-9
<PAGE> 33
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<C> <S>
(10)(lvi) Series H Convertible Preferred Stock, Form of Subscription Agreement
dated February 17, 1998 and related Registration Rights Agreement and
Common Stock Purchase Warrants (incorporated by reference to the
Company's Registration Statement on Form S-3 dated April 17, 1998)
(10)(lvii) Series I Convertible Preferred Stock, Form of Subscription Agreement
dated April 2, 1998 and related Registration Rights Agreement and
Common Stock Purchase Warrants (incorporated by reference to the
Company's Registration Statement on Form S-3 dated April 17, 1998)
(10)(lviii) Cooperation and Supply Agreement between the Company, Viragen
Deutschland GmbH and German Red Cross dated March 19, 1998
(Certain portions of this exhibit have been redacted pursuant to a
Confidentiality request submitted to the Securities and Exchange
Commission (incorporated by reference to the Company's Annual Report
on Form 10-K for the year ended June 30, 1998)
(10)(lix) Buffycoat Supply Agreement between American's Blood Centers and the
Company dated July 15, 1998 (Certain portions of this exhibit have been
redacted pursuant to a Confidentiality Request submitted to the Securities
and Exchange Commission) (incorporated by reference to the Company's
Annual Report on Form 10-K for the year ended June 30, 1998)
(10)(lx) Agreement between the Company the American Red Cross dated August
18, 1998 (incorporated by reference o the Company's Annual Report on
Form 10-K for the year ended June 30, 1998)
(10)(lxi) Placement Agreement, Placement Agent Warrant and Investor Warrant
dated September 22, 1998 (incorporated by reference to
the Company's Annual Report on Form 10-K for the year
ended June 30, 1998)
(11) Computation of Per Share Earnings (incorporated by reference to the
Company's Quarterly Report on Form 10-Q dated February 10, 1998,
Part II, Item 6 (11))
(21) Subsidiaries of the Registrant (incorporated by reference to the
Company's June 30, 1996 Form 10-KA/1)
(23)(i) Consent of Ernst & Young LLP*
</TABLE>
II-10
<PAGE> 34
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<C> <S>
(23)(ii) Consent of Atlas, Pearlman, Trop & Borkson, P.A. (included as part of
Exhibit (5))
</TABLE>
- -----------------------
* Filed herewith.
Item 17. UNDERTAKINGS.
(a) The undersigned Company hereby undertakes:
(i) to file, during any period in which it offers or
sells securities, a post-effective amendment to this
Registration Statement to include any additional or changed
material information on the plan of distribution;
(ii) that, for determining any liability under the
Securities Act, treat each such post-effective amendment as a
new Registration Statement of the securities offered at that
time shall be deemed to be the initial bona fide offering
thereof;
(iii) to file a post-effective amendment to remove
from registration any of the securities that remain unsold at
the end of the offering; and
(iv) to include any material information with respect
to the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.
(b) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of the Registrant's Annual Report pursuant to Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-11
<PAGE> 35
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Company certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly caused
this Amendment to its Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Plantation and the State
of Florida, on the 2nd day of November,1998.
VIRAGEN, INC.
By: /s/ GERALD SMITH
----------------
Gerald Smith
Chairman of the Board of Directors
and President
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ GERALD SMITH Chairman of the November 2, 1998
- ---------------------- Board of Directors,
Gerald Smith President and Principal
Executive Officer
/s/ DENNIS W. HEALEY Executive Vice President November 2, 1998
- ---------------------- Treasurer, Principal
Dennis W. Healey Financial Officer
Director and Secretary
</TABLE>
II-12
<PAGE> 36
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ JOSE I. ORTEGA Controller and Principal November 2, 1998
- ---------------------- Accounting Officer
Jose I. Ortega
/s/ SIDNEY DWORKIN November 2, 1998
- ----------------------
Sidney Dworkin Director
/s/ PETER D. FISCHBEIN November 2, 1998
- ----------------------
Peter D. Fischbein Director
/s/ CARL N. SINGER November 2, 1998
- ----------------------
Carl N. Singer Director
/s/ CHARLES J. SIMONS November 2, 1998
- ----------------------
Charles J. Simons Director
/s/ ROBERT H. ZEIGER November 2, 1998
- ----------------------
Robert H. Zeiger Director
</TABLE>
II-13
<PAGE> 1
EXHIBIT 23(i)
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" in Amendment
No. 1 to the Registration Statement (Form S-3 No. 333-65199) and related
Prospectus of Viragen, Inc. for the registration of 15,000,000 shares of its
common stock and to the incorporation by reference therein of our report dated
September 18, 1998, with respect to the consolidated financial statements of
Viragen, Inc. included in its Annual Report (Form 10-K) for the year ended June
30, 1998, filed with the Securities and Exchange Commission.
/s/ Ernst & Young, LLP
Miami, Florida
October 29, 1998
