<PAGE> 1
As Filed with the Securities and Exchange Commission on April 17, 1998.
Registration No. 333-_____
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
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 reserved
for issuance upon
conversion of Series
H Preferred Stock 4,000,000(2) $2.19 $ 8,760,000 $2,655
Common Stock reserved
for issuance upon
exercise of Common Stock
Purchase Warrants 1,500,000(3) 2.19 3,285,000 995
Common Stock, reserved
for issuance upon
conversion of Series
I Preferred Stock 1,600,000(4) 2.19 3,504,000 1,062
Common Stock reserved for
issuance upon exercise of
Common Stock Purchase
Warrants 600,000(5) 2.19 1,314,000 398
Common Stock reserved
for issuance upon the exercise
of Placement Agent
Warrants 402,052(6) 2.19 880,494 267
Common Stock 2,300,000(7) 2.19 5,037,000 1,526
---------- ----------- ------
Total 10,402,052 $22,780,494 $6,903
========== =========== ======
</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 April 14, 1998.
(2) To be offered and sold by Selling Security Holders upon conversion
of 500 outstanding shares of Series H Preferred Stock (the "Series H Preferred
Stock"). The conversion price for the Series H Preferred Stock will be the lower
of (i) the fixed conversion price, which will be equal to the lower of $2.15 per
share or the market price of the Common Stock on August 19, 1998, or (ii) the
variable conversion price
ii
<PAGE> 3
which will be equal to 82% of the market price at the date of conversion (the
"Conversion Price"). For purposes of this Registration Statement, the Common
Stock reserved for issuance upon conversion of the Series H Preferred Stock was
determined on the basis of a Conversion Price of $1.50 per share inasmuch as the
Company intends to redeem all or portions of the Series H Preferred Stock at
such time as the Market Price is $1.83 or lower.
(3) To be offered and sold by Selling Security Holders upon the
exercise of Common Stock Purchase Warrants issued in connection with the
acquisition of the Series H Preferred Stock (the "H Warrants").
(4) To be offered and sold by Selling Security Holders upon conversion
of 200 outstanding shares of Series I Preferred Stock (the "Series I Preferred
Stock"). The conversion price for the Series I Preferred Stock will be the lower
of (i) the fixed conversion price, which will be equal to the lower of $2.15 per
share or the market price of the Common Stock on August 19, 1998, and (ii) the
variable conversion price which will be equal to 82% of the market price at the
date of conversion. For purposes of this Registration Statement, the Common
Stock reserved for issuance upon conversion of the Series I Preferred Stock was
determined on the basis of a Conversion Price of $1.50 per share inasmuch as the
Company intends to redeem all or portions of the Series I Preferred Stock at
such time as the Market Price is $1.83 or lower.
(5) To be offered and sold by Selling Security Holders upon the
exercise of Common Stock Purchase Warrants issued in connection with the
acquisition of the Series I Preferred Stock (the "I Warrants").
(6) To be offered and sold by Selling Security Holders upon the
exercise of Common Stock Purchase Warrants issued to the Placement Agent for the
Series H Preferred Stock and H Warrants and the Series I Preferred Stock and I
Warrants (the "Placement Agent Warrants") and subsequently transferred to
affiliates and employees of the Placement Agent.
(7) To be offered and sold by Selling Security Holders as a result of
adjustment of the conversion and exercise prices of the Series H Preferred Stock
and H Warrants and the Series I Preferred Stock and I Warrants.
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 Series H Preferred Stock and H Warrants,
the Series I Preferred Stock and I 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, Dated April 17, 1998
10,402,052 Shares
VIRAGEN, INC.
COMMON STOCK, PAR VALUE $.01 PER SHARE
This Prospectus (the "Prospectus") relates to the offer and sale of up
to 10,402,052 shares (the "Shares") of Common Stock, $.01 par value (the "Common
Stock"), of Viragen, Inc. (the "Company" or "Viragen") by certain selling
stockholders (the "Selling Security Holders"). Of the shares offered hereby, (i)
4,000,000 Shares are issuable upon conversion of 500 shares of the Company's
Series H Preferred Stock (the "Series H Preferred Stock") held by Selling
Security Holders; (ii) 1,500,000 Shares are issuable upon the exercise of Common
Stock Purchase Warrants ("H Warrants") issued to the holders of the Company's
Series H Preferred Stock and subject to certain cashless exercise provisions;
(iii) 1,600,000 Shares are issuable upon conversion of 200 shares of the
Company's Series I Preferred Stock (the "Series I Preferred Stock") held by
Selling Security Holders (the "Series H Preferred Stock and the Series I
Preferred Stock are sometimes hereinafter collectively referred to as the
"Preferred Stock"); (iv) 600,000 Shares are issuable upon the exercise of Common
Stock Purchase Warrants (the "I Warrants") issued to the holders of the
Company's Series I Preferred Stock and subject to certain cashless exercise
provisions (the H Warrants and the I Warrants are hereinafter collectively
referred to as the "Warrants"); (v) 402,052 Shares are issuable upon the
exercise of the Common Stock Purchase Warrants issued to the Placement Agent for
the Preferred Stock and the Warrants (the "Placement Agent Warrants") and
subsequently transferred to affiliates and employees of the Placement Agent,
subject to certain cashless exercise provisions; and (vi) 2,300,000 Shares as
may be issuable as a result of adjustments of the conversion and exercise prices
of the Preferred Stock and the Warrants.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
THE SECURITIES OFFERED HEREBY INVOLVE A SIGNIFICANT DEGREE OF RISK. SEE
"HIGH RISK FACTORS" COMMENCING ON PAGE 6.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is __________________________, 1998
<PAGE> 5
The conversion price for both the Series H Preferred Stock and the
Series I Preferred Stock is equal to the lower of (i) the "Fixed Conversion
Price" which will be equal the lower of (a) $2.15 or (b) the market price of the
Common Stock of the Company on August 19, 1998, or (ii) the "Variable Conversion
Price," which shall equal 82% of the market price at the date of conversion.
The exercise price for Warrants to purchase 466,667 shares of Common
Stock of the Company will be equal to the average of the lowest two closing bid
prices for the Common Stock of the Company during the 20 days prior to November
19, 1998. The exercise price for Warrants to purchase 700,000 shares of Common
Stock of the Company will be equal to the average of the lowest two closing bid
prices for the Common Stock of the Company during the 20 days prior to February
19, 1999. The exercise price for Warrants to purchase 933,333 shares of Common
Stock of the Company will be equal to the average of the lowest two closing bid
prices for the Common Stock of the Company during the 20 days prior to May 19,
1999. The exercise price of the Placement Agent Warrants will be equal to
$1.684, but if the date of exercise is February 19, 1999 or later, the exercise
price will be the lesser of $1.684 or the lowest price for any anniversary date
after February 19, 1998, which will be equal to the average of the lowest two
closing bid prices of the Company's Common Stock during the 20 trading days
prior to such anniversary date.
Accordingly, the actual number of shares of Common Stock issued to the
Selling Security Holders and sold hereby will depend upon the market price of
the Common Stock at the time of conversion of the Preferred Stock or exercise
of the Warrants or the Placement Agent Warrants. Accordingly, this Prospectus
covers the resale in accordance with Rule 416 under the Securities Act of 1933
(the "Act") of such presently indeterminate number of additional shares as may
be issuable upon conversion of the Preferred Stock or exercise of the Warrants
and the Placement Agent Warrants based on fluctuations in the conversion price
or exercise price of such securities.
The Company believes that the number of shares of Common Stock to which
this Prospectus relates should be the maximum number of shares of Common Stock
that are likely to be issued to the Selling Security Holders and sold hereby.
The Selling Security Holders has advised the Company that they propose
to sell the Shares, from time to time, publicly through broker-dealers acting as
agents for others, or in private sales. See "Selling Security Holders" and "Plan
of Distribution." The Company will not receive any of the proceeds from the sale
of the Shares offered hereby by the Selling Security Holders.
The Company will pay all offering expenses for the offering, estimated
at approximately $20,000, including (i) the SEC registration fee ($6,903); (ii)
legal fees and expenses ($5,000); (iii) blue sky fees ($1,000); (iv) accounting
fees and expenses ($5,000); (v) printing expenses ($500); and (vi) miscellaneous
expenses ($1,597), but will not pay any discounts or commissions incurred by the
Selling Security Holders in connection with the sale of their shares of Common
Stock.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended, and in accordance therewith files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information filed by the Company may be inspected and copied at the public
reference facilities
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<PAGE> 6
maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's Regional Offices at Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511
and 7 World Trade Center, New York, New York 10048. Copies of such material may
be obtained from the Public Reference Section of the Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The
Commission also maintains a web site on the internet that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission at http://www.sec.gov.
This Prospectus, which constitutes part of a Registration Statement
filed by the Company with the Commission under the Securities Act of 1933, as
amended (the "Act"), omits certain information contained in the Registration
Statement in accordance with the rules and regulations of the Commission.
Reference is hereby made to the Registration Statement and to the exhibits
relating thereto for further information with respect to the Company and the
securities offered hereby.
3
<PAGE> 7
TABLE OF CONTENTS
<TABLE>
<S> <C>
AVAILABLE INFORMATION.................................................................................. 2
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE...................................................... 5
HIGH RISK FACTORS...................................................................................... 6
THE COMPANY............................................................................................ 10
SELLING SECURITY HOLDERS............................................................................... 11
PLAN OF DISTRIBUTION................................................................................... 16
DESCRIPTION OF SECURITIES.............................................................................. 17
LEGAL MATTERS.......................................................................................... 19
EXPERTS................................................................................................ 19
INDEMNIFICATION........................................................................................ 19
</TABLE>
The Common Stock of the Company is traded in the over-the-counter
market, and prices are quoted in the Nasdaq National Market under the symbol
"VRGN." The last sale price of the Common Stock as reported by NASDAQ on April
14, 1998 was approximately $2.19 per share.
No person has been authorized to give any information or to make any
representations not contained in this Prospectus in connection with the offer
contained in this Prospectus, and if given or made, such information or
representations must not be relied upon as having been authorized by the Company
or the Selling Security Holders. This Prospectus does not constitute an offer to
sell or a solicitation of an offer to buy the Shares offered hereby in any
jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction. Neither the delivery of this Prospectus nor
any sale hereunder shall under any circumstances create any implication that
there has been no change in the affairs of the Company since the date hereof.
The Company will not receive any proceeds from the sale of Common Stock
from the accounts of the Selling Security Holders. The Company has informed the
Selling Security Holders that the anti-manipulative rules under the Exchange Act
of 1934, including Regulation M thereunder, may apply to their sales in the
market, and has furnished the Selling Security Holders with a copy of these
rules. The Company has also informed the Selling Security Holders of the need
for delivery of copies of this Prospectus in connection with any sale of
securities registered hereunder.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER
THAN THOSE TO WHICH IT RELATES OR AN OFFER TO SELL, OR A SOLICITATION OF AN
OFFER TO BUY, IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE
SUCH AN OFFER IN SUCH JURISDICTION. THE DELIVERY OF THIS PROSPECTUS AT ANY TIME
DOES NOT IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT
TO ITS DATE.
4
<PAGE> 8
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 and, in accordance therewith, files reports and
other information with the Securities and Exchange Commission.
The Company has previously and intends to furnish its stockholders with
annual reports containing audited financial statements and may distribute
quarterly reports containing unaudited summary financial information for each of
the first three quarters of each fiscal year.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed with the Commission are incorporated
herein by reference:
(a) Annual Report of the Company on Form 10-K for the fiscal year ended
June 30, 1997 filed October 2, 1997.
(b) The Company's Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 1997 filed November 14, 1997.
(c) The Company's Quarterly Report on Form 10-Q for the quarterly
period ended December 31, 1997 filed February 13, 1998.
(d) The Company's Current Report on Form 8-K dated July 1, 1997 and
filed September 24, 1997.
(e) The description of the Company's Common Stock contained in a
Registration Statement on Form 8-A filed under the Securities Exchange Act of
1934, as amended, including any amendment or report filed for the purpose of
updating such description.
(f) All reports and documents filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act shall be deemed to be incorporated
by reference herein and to be a part hereof from the respective date of filing
of such documents.
Any statement incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document, which
also is or is deemed to be incorporated by reference herein, modifies or
supersedes such statement. Any statement modified or superseded shall not be
deemed, except as so modified or superseded, to constitute part of this
Prospectus.
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a copy of the Prospectus has been
delivered, on the written or oral request of any such person, a copy of any or
all of the documents referred to above which have been or may be incorporated by
reference in this Prospectus, other than exhibits to such documents. Written
requests for such copies should be directed to Corporate Secretary, Viragen,
Inc. at the Company's principal executive office, 865 S.W. 78th Avenue, Suite
100, Plantation, FL 33324, Telephone (954) 233-8746.
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<PAGE> 9
HIGH RISK FACTORS
The securities offered hereby involve a high degree of risk.
Prospective investors, prior to making an investment decision, should carefully
consider the following risk factors:
HISTORY OF LOSSES AND RISKS OF NEWLY DEVELOPED BUSINESS
From its inception through December 31, 1997, the Company has incurred
operating losses. The net loss for the fiscal year ended June 30, 1997 was
$4,775,245 and for the six months ended December 31, 1997 was $3,772,546. At
December 31, 1997, the Company had an accumulated deficit of $34,675,732.
Although the Company has begun to expand its operations and has undertaken
financings for its working capital and investing needs, there can be no
assurance that the Company will be able to obtain regulatory approvals necessary
for the commercialization of its natural human leukocyte derived alpha
interferon product (the "Product") or be able to produce and market its Product
on a profitable basis in the future. Results of operations in the future will be
influenced by numerous factors including technological developments, regulatory
costs and impediments, increases in expenses associated with sales growth,
market acceptance of the Company's Product, the capacity of the Company to
expand and maintain the quality of its Product, competition and the ability of
the Company to control costs. There can be no assurance that revenue growth or
profitability on a quarterly or annual basis can be obtained. Additionally, the
Company will be subject to all the risks incident to a rapidly developing
business with only a limited history of active operations, including unforeseen
expenses, organizational difficulties, complications and delays, as well as
other factors such as the possibility of competition with larger companies.
LACK OF FDA AND EU APPROVAL; ADDITIONAL FUNDING NEEDED; RISK OF SOLE PRODUCT
The Product has not been approved by the U.S. Food and Drug
Administration ("FDA") or by European Union ("EU") regulatory authorities for
use in the treatment of patients. The Company intends to seek FDA and EU
approval of the Product for use in treating certain diseases. The Company will
require extensive clinical trials in order to obtain FDA and EU approvals. The
FDA and EU approval processes are unpredictable, and the process may take
several years to obtain either FDA or EU approval. There is, however, no
assurance that any FDA or EU approvals will be received at any time in the
future. Further trials will also require significant additional funding in
addition to the proceeds obtained from the financings previously undertaken.
There is no assurance that such funding can be obtained on a cost feasible basis
to the Company.
Commencing in December 1994, the Company received notifications from
the Florida Department of Health and Rehabilitative Services ("HRS") (i) to
postpone enrollment of new patients under Viragen's Florida Statute 499 Program
until such time as the Company provided certain administrative reports to HRS
and satisfied certain FDA inspection-related comments concerning the Company's
manufacturing processes and facilities; and (ii) that the Company demonstrate
that its previous production technology complied with FDA current Good
Manufacturing Practices ("cGMP"). As a result of such notifications, and changes
in the Company's production technology related to the development of Viragen's
OmniferonTM product, and determination by the Company to establish new
facilities in Scotland and elsewhere in the United States, the Company entered
into a settlement with HRS which resulted in the discontinuation of Viragen's
statutory 499 Program with the exception of the Company's limited HRS sanctioned
HIV/AIDs program in Florida, which has since been terminated. There can be no
assurances
6
<PAGE> 10
that the Company's current production technology and new facilities will comply
with FDA mandated cGMP standards.
Additionally, the Product is the Company's sole product and until such
time as the Product achieves FDA and/or EU approval, the Company has no other
sources of revenues. To the extent that the Product is the Company's only
potential source of revenues, the failure to attain approval by the FDA and/or
the EU would eventually result in the Company having to discontinue its
operations.
COMPETITION
Competition in the immunological and pharmaceutical products industry
is intense. Competitors include major pharmaceutical, chemical, energy and food
companies, some of which are already marketing genetically engineered alpha and
beta interferon products for Multiple Sclerosis ("MS"), cancer and viral
treatments, and many of which are expanding into modern biotechnology.
Competition is expected to increase in the future based upon the perceived
potential commercial applications for such products. Various of Viragen's
competitors have existing programs, FDA approved and commercially marketed
products or products in the FDA clinical trial process, more experience in
research, development and clinical testing of pharmaceutical and biomedical
products, and substantially greater financial, marketing and human resources
than the Company.
RISK OF TECHNOLOGICAL OBSOLESCENCE
The research and development of new biomedical products is
characterized by rapid technological change, which can severely alter the
production methods, cost, marketing and acceptance of biomedical products. There
is no assurance that the Company will have the resources to keep pace with
technological changes or that products developed by others will not adversely
affect the commercial feasibility of products that Viragen may distribute.
GOVERNMENT REGULATION MAY AFFECT DEVELOPMENT AND DISTRIBUTION OF PRODUCT
All pharmaceutical manufacturers are subject to extensive state and
federal rules and regulations, and are required to maintain current Good
Manufacturing Practices as promulgated under FDA guidelines. Additional rules
and regulations are imposed by the EU. These rules and regulations are
constantly changing and may serve to restrict in whole or in part the ability of
the Company to produce and distribute its Product. If Viragen were not
ultimately to achieve compliance with these rules and regulations, it would
likely have a material adverse effect on the Company's activities and delay or
preclude the development of commercially viable operations.
UNCERTAINTY OF HEALTH CARE REFORM MEASURES AND THIRD PARTY REIMBURSEMENT
In both domestic and foreign markets, sales of the Company's Product
will depend in part on the availability of reimbursement from third-party payors
such as government health administration authorities, private health insurers
and other organizations. Third-party payors are increasingly challenging the
price and cost effectiveness of medical products and services. Significant
uncertainty exists as to the reimbursement status of newly approved health care
products. There can be no assurance that the Company's Product will be
considered cost effective or that adequate third-party reimbursement will be
available to enable the Company to maintain price levels sufficient to realize
an appropriate return on its investment in product development. Legislation and
regulations affecting the pricing of
7
<PAGE> 11
pharmaceuticals may change before the Company's Product is approved for
marketing. Adoption of such legislation or regulations could further limit
reimbursement for medical products and services.
RISK THAT PATENTS AND PROPRIETARY TECHNOLOGY MAY NOT PROVIDE PROPRIETARY
PROTECTION
Viragen intends to rely in part on certain proprietary technology in
the production of the Product. There can be no assurances that such proprietary
technology will enable the Company to manufacture its Product more efficiently
and with greater efficacy so as to enable Viragen to compete effectively with
other manufacturers of competitive immunological and pharmaceutical products. In
addition, there is no assurance that others may not independently develop the
same or superior technology to Viragen's technology. Furthermore, to the extent
that Viragen's production of the Product is alleged to breach a third party's
patents or proprietary technology, it could have an adverse impact on the
Company, even if the Company were ultimately determined not to have breached
such party's patents or proprietary technology. There can be no assurance that
Viragen's future patent applications will be approved, and if granted, whether
such patents will provide substantial protection to the Company.
RISKS OF TECHNOLOGY TRANSFERS
One of the Company's proposed marketing strategies is to sell the right
to use Viragen's technology and manufacturing protocols to third parties who
will use them to produce the Product outside the United States. There can be no
assurance that the Company's marketing program or the efforts of any brokers
engaged to assist the Company will be commercially successful.
PRODUCT LIABILITY AND LIMITATIONS OF PRODUCT LIABILITY INSURANCE
The Company may be subject to claims for personal injuries or other
damages resulting from use of the Product. A successful claim could have a
materially adverse effect on the Company. The Company maintains product
liability insurance in the amount of $1,000,000 per occurrence and $2,000,000 in
the aggregate, but there can be no assurance that such insurance will be
available in the future at commercially acceptable rates or that such coverage
will be adequate for the Company's purposes.
RELIANCE ON FOREIGN THIRD PARTY MANUFACTURER MAY DISRUPT OPERATIONS
Viragen (Scotland) Ltd. ("VSL"), a wholly-owned subsidiary of Viragen
(Europe) Ltd., a consolidated majority-owned subsidiary of the Company, has
entered into a License and Manufacturing Agreement with The Common Services
Agency of Scotland, an agency acting on behalf of the Scottish National Blood
Transfusion Service ("SNBTS"). Use of an offshore manufacturer will not provide
for fixed price U.S. denominated pricing, which could expose VSL to the risk of
fluctuations in exchange rates of foreign currencies. In addition, reliance on
such foreign manufacturer is subject to all the risks of dealing with a foreign
manufacturing facility including governmental regulations, tariffs, import and
export restrictions, transportation and taxes and local health and safety
regulations. Consummation of such foreign manufacturing arrangements could lead
to disruption of the operations of the Company, product and service
deficiencies, unanticipated and fluctuating expenses and revenues and sales and
marketing dislocations that are beyond the Company's ability to control, and
which may have a material adverse effect on the Company's business and
operations.
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<PAGE> 12
RISK OF DEPENDENCE ON KEY PERSONNEL
The Company's day-to-day operations are managed by its Chairman of the
Board and President, Mr. Gerald Smith, its Chief Executive Officer, Robert H.
Zeiger, its Chief Operating Officer, Dr. Jay Sawardecker, its Executive Vice
President and Chief Financial Officer, Mr. Dennis W. Healey, and its Vice
President of Research and Development, Dr. Joseph Morris. The Company has
entered into employment agreements with Messrs. Smith, Zeiger, Sawardecker,
Healey and Morris which restrict competitive activities by them during the term
of their agreements and for a two-year period thereafter. The loss of any of
their services could adversely affect the conduct of the Company's business. The
Company's future success will depend in significant part on its ability to
attract and retain additional skilled personnel in various phases of its
operations.
NO DIVIDENDS ANTICIPATED TO BE PAID
The Company has not paid any cash dividends on its Common Stock since
its inception and does not anticipate paying cash dividends on its Common Stock
in the foreseeable future. The future payment of dividends is directly dependent
upon future earnings of the Company, the capital requirements of the Company,
its financial requirements and other factors to be determined by the Company's
Board of Directors. For the foreseeable future, it is anticipated that earnings,
if any, which may be generated from the Company's operations will be used to
finance the growth of the Company, and that cash dividends will not be paid to
common stockholders.
POSSIBLE RESALES OF SECURITIES BY CURRENT STOCKHOLDERS AND DEPRESSIVE EFFECT ON
MARKET
As of December 31, 1997, there were 5,772,365 shares of the Company's
Common Stock outstanding which were "restricted securities" as that term is
defined by Rule 144 under the Securities Act of 1933 (the "Securities Act").
Such shares will be eligible for public sale only if registered under the
Securities Act or if sold in accordance with Rule 144. Under Rule 144, a person
who has held 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 may have a depressive effect on the market price of the Company's
Common Stock due to the potential increased number of publicly held securities.
The timing and amount of sales of Common Stock covered by the Registration
Statement of which this Prospectus is a part, as well as sales pursuant to other
filed registration statements, could also have a depressive effect on the market
price of the Company's Common Stock.
USE OF PREFERRED STOCK TO RESIST TAKEOVERS; POTENTIAL ADDITIONAL DILUTION
The Company's Certificate of Incorporation authorizes 1,000,000 shares
of preferred stock, of which at April 14, 1998, 2,650 shares of Series A
Preferred Stock, 500 shares of Series H Preferred Stock and 200 shares of
Series I Preferred Stock were issued and outstanding. As provided in the
Company's Certificate of Incorporation, preferred stock may be issued by
resolutions of the Company's Board of Directors from time to time without any
action of the stockholders. The Company anticipates issuing additional shares of
preferred stock as part of its financing program. Such resolutions may authorize
issuance of the preferred stock in one or more series and 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 such preferred stock in its
capitalization in order to enhance its financial flexibility, such preferred
stock could possibly be used by the Company as a means to preserve control by
present management in the event of a potential hostile
9
<PAGE> 13
takeover of the Company. In addition, the issuance of large blocks of preferred
stock could possibly have a dilutive effect with respect to existing holders of
Common Stock of the Company.
THE COMPANY
Viragen, Inc. was organized in December 1980 to engage in research,
development and manufacture of certain immunological products for commercial
application, particularly human leukocyte derived alpha interferon, for
antiviral and therapeutic applications and as anticancer agents. Viragen's
primary product (the "Product") is a natural human leukocyte derived alpha
interferon ("Natural Interferon"). Natural Interferon is a protein substance
that inhibits malignant cell growth without materially interfering with normal
cells. Natural Interferon stimulates and modulates the human immune system and,
in addition, impedes the growth and propagation of various viruses. The Product
is a natural product produced from human white blood cells. Alpha Leukoferon(TM)
(now discontinued) and Omniferon(TM) are the trade names for Viragen's Product
in injectable form. The Company's Product has not been approved by the United
States Food and Drug Administration ("FDA") or the European Union ("EU")
regulatory authorities, and there can be no assurances that approval of the
Product will be obtained at any time in the future.
The Company intends to seek to obtain FDA and EU approvals for various
uses of its Omniferon product in the future. Such approval is expected to
require several years of clinical trials and substantial additional funding. To
date, Viragen has not distributed the Product other than for research and
pursuant to its investigatory license from the Florida Department of Health and
Rehabilitative Services and until May 1993, Viragen had not actively operated
due to insufficient funds. Viragen expects to concentrate its efforts in
preparing, filing and processing its applications and obtaining approvals for
its Product from the FDA and the EU. The Company has assembled an advisory
committee consisting of scientists, medical researchers and clinicians to assist
the Company in its applications to the FDA and the EU.
The Company's majority owned subsidiary, Viragen (Europe) Ltd., acting
through its wholly-owned subsidiary Viragen (Scotland) Ltd., entered into a
License and Manufacturing Agreement with The Common Services Agency of Scotland
(the "Agency") an agent acting on behalf of the Scottish National Blood
Transfusion Service ("SNBTS"). Pursuant to such Licensing and Manufacturing
Agreement, SNBTS on behalf of VSL, will assist in the manufacture of VSL's
Omniferon product for exclusive distribution within the EU and non-exclusively
worldwide in return for certain royalties and preferential access to the Product
for Agency patients at preferential prices. The Agency has committed to assist
in the manufacture of Omniferon in sufficient scale to accommodate the EU
Clinical Trials and, subsequently, for limited commercial sales in amounts to be
agreed upon by the parties. The Agency will also work with the Company in
conducting studies relevant to Omniferon and cooperate with the Company to
enable it to comply with the laws and regulations of the EU in connection with
production, clinical trials and distribution of Omniferon.
Viragen's executive office is located at 865 S.W. 78th Avenue, Suite
100, Plantation, FL 33324 Telephone (954) 233-8746; Facsimile No. (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
10
<PAGE> 14
"MANAGEMENT'S DISCUSSION AND ANALYSIS" IN THE COMPANY'S FORM 10K ANNUAL REPORT
FILED FOR THE FISCAL YEAR ENDING JUNE 30, 1997, 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 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
SECURITIES PURCHASE AGREEMENT
The Series H Preferred Stock and related Warrants were acquired by
Selling Security Holders pursuant to the terms of separate Regulation D
Subscription Agreements dated February 19, 1998, and the Series I Preferred
Stock and related Warrants were acquired by Selling Security Holders also
pursuant to the terms of separate Regulation D Subscription Agreements dated
April 2, 1998 (the "Selling Security Holders may sometimes hereinafter be
collectively referred to as the "Holders" and the Separate Regulation D
Subscription Agreements are hereinafter referred to collectively as the
"Subscription Agreements"). The Preferred Stock bears no dividends, although an
8% accretion factor has been included in the calculation for purposes of
determining the liquidation and conversion amounts. The Preferred Stock is
convertible into the Company's Common Stock beginning August 19, 1998. The
Preferred Stock carries no voting rights. The stated value of the Preferred
Stock is $10,000 per share.
The Preferred Stock, inclusive of the 8% accretion factor, is
convertible commencing August 19, 1998, subject to adjustment, into shares of
Common Stock of the Company at the lower of (i) the Fixed Conversion Price which
will equal the lower of (a) $2.15 or (b) the average of the lowest two closing
bid prices of the Company's Common Stock on the NASDAQ National Market System
(or on the principal securities exchange on which the Company's Common Stock is
then traded) during the 20 trading days prior to August 19, 1998, (the "Market
Price") subject to a minimum Fixed Conversion Price, equal to a Market Price of
$0.85; or (ii) 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 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, as the case may be, issued to such Holder for each monthly period,
subject to a maximum of 25% per monthly period for each series of Preferred
Stock if the Holder has not elected to convert the permitted 15% amount for such
series during any previous monthly conversion period. In addition, such
conversion quota will not be applicable in the event Viragen 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 (i) automatically converted at the
Conversion Rate (which is calculated by dividing
11
<PAGE> 15
the sum of the product of (a) .08; (b) by the quotient of the number of days
between the date the Holder fully paid for the Preferred Stock and the date of
conversion and (c) the Stated Value plus 10,000, and divided by the Conversion
Price) or (ii) automatically redeemed at the Stated Value plus any liquidated
damages, conversion failure payments, late registration payments and any other
cash payments then due from the Company and then unpaid ("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 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, and 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 from time to time any and all the Preferred Stock, provided,
however, that 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.
The Company intends to redeem the Preferred Stock at such time as the Market
Price is $1.83 or lower.
Pursuant to the terms of the Subscription Agreements, the Holders also
received Nine Month Warrants ("Nine Month Warrants"), Twelve Month Warrants
("Twelve Month Warrants") and Fifteen Month Warrants ("Fifteen Month Warrants")
to purchase shares of Common Stock of the Company.
The Nine Month Warrants are exercisable between November 19, 1998
("Nine Month Warrant Date of Issuance") and February 19, 2003. The Nine Month
Warrants entitle the Holders to purchase Common Stock at an exercise price
calculated by averaging the 2 lowest closing bid prices during the 20 trading
days of the Common Stock prior to November 19, 1998 (the "Nine Month Market
Price"). The number of Shares the Nine Month Warrants may be converted into
will be calculated at 10% of the quotient obtained by dividing the stated amount
of Preferred Stock purchased by the exercising Holder less any Preferred Stock
of that series transferred or converted by the Holder by the Nine Month Market
Price.
The Nine Month Warrants also include a cashless exercise option ("Nine
Month Cashless Exercise Option") as a result of which the Holders thereof will
be entitled to receive a number of shares of Common Stock calculated by
multiplying the number of shares of Common Stock for which the Nine Month
Warrant is being exercised by the difference between the average closing bid
price of the Common Stock for 5 trading days prior to the date of exercise
("Average Price") and the Nine Month Market Price and dividing the total thereof
by the Average Price. The Nine Month Cashless Exercise Option is not available
if the shares issuable upon exercise of the Nine Month Warrant would be free of
any restrictive legends, including Rule 144 limitations or are registered under
the Securities Act of 1933 (the "Restrictions").
The Twelve Month Warrants and the Fifteen Month Warrants are identical
in all respects to the Nine Month Warrants with the exception of the calculation
of exercise prices, and the Twelve Months Warrants and the Fifteen Months
Warrants may not be exercisable prior to February 19, 1999 and May 19, 1999,
respectively. The Twelve Month Warrants entitle the Holders to purchase Common
Stock at
12
<PAGE> 16
an exercise price calculated by averaging the 2 lowest closing bid prices during
the 20 trading days of the Common Stock prior to February 19, 1999 ("Twelve
Month Market Price"). The number of shares the Twelve Month Warrants may be
converted into will be calculated at 15% of the quotient obtained by dividing
the stated amount of Preferred Stock purchase by the exercising Holder less any
Preferred Stock of that series transferred or converted by the Holder by the
Twelve Month Market Price. The Fifteen Month Warrants entitle the Holders to
purchase Common Stock at an exercise price calculated by averaging the 2 lowest
closing bid prices during the twenty (20) trading days of the Common Stock prior
to May 19, 1999 ("Fifteen Month Market Price"). The number of shares the
Fifteen Month Warrants may be converted into will be calculated as 20% of the
quotient obtained by dividing the principal amount of Preferred Stock purchased
by the exercising Holder less any Preferred Stock of that series transferred or
converted by the Holder by the Fifteen Month Market Price.
Pursuant to the terms of the Subscription Agreements, a Holder may not
convert Preferred Stock if, as a result of such conversion, the shares of Common
Stock beneficially owned by the Holder would exceed 4.9% (the "Percentage") of
the outstanding shares of Common Stock of the Company (the " 4.9% Restriction").
Notwithstanding, the converting Holder or Holders may waive the applicability of
the 4.9% Restriction (the "Waiver") by providing notice to the Company of such
Holder or Holders intent to waive such restriction. In no event may the holders
convert Preferred Stock if the total number of shares of Common Stock issuable
upon conversion would exceed the maximum number of shares of Common Stock that
the Company could, without stockholder approval, issue pursuant to Nasdaq Rule
4460(i)(l)(d)(ii).
The Company has agreed not to issue any debt or equity securities for
cash in private capital raising transactions through August 18, 1998 without
obtaining the prior written approval of Holders holding a majority of the
purchase price of the Series H Preferred Stock and the Series I Preferred Stock
then outstanding. In addition, the Company has agreed that through February 19,
1999, the Company will not, without the prior written consent of each Holder,
issue or sell, or agree to issue or sell, any equity or debt securities of the
Company or any of its subsidiaries (or any security convertible into or
exercisable or exchangeable, directly or indirectly, for equity or debt
securities of the Company or any of its subsidiaries) unless the Company shall
have first delivered to each Holder at least 30 days prior to the closing of
such future offerings a written notice describing such future offering and
providing each Holder and its affiliates an option during the 20-day period
following delivery of such notice to purchase up to the full amount of the
securities being offered in the future offering on such terms as contemplated by
such future offering. However, if any Holder chooses not to participate in any
such future offering, then any debt or equity security issued as a result of
such future offering will be ineligible for resale and/or conversion, as the
case may be, until November 19, 1998. Such restrictions on capital raising
activities of the Company do not apply to any transaction involving issuances of
securities in connection with a merger, consolidation, acquisition or sale of
assets, in connection with any strategic partnership or joint venture, the
disposition or acquisition of a business, product or license by the Company or
exercise of options by employees, consultants or directors of the Company. In
addition, these capital raising limitations will not apply to underwritten
public offerings, the exercise or conversion of existing options, warrants or
convertible securities, the grant of options or warrants under any stock option
or restricted stock plan for the benefit of the Company's employees, directors
or consultants, the grant of options or warrants or the issuance of securities
relating to any research and development partnership with Viragen U.S.A., Inc.
or the grant of options or warrants relating to blood collection and processing
organizations in exchange for blood products.
13
<PAGE> 17
In connection with distributions of the Shares, the Holders have agreed
that during the period from the date hereof to the date that all shares of
Preferred Stock owned by such Holder are either converted in full or redeemed by
the Company or otherwise disposed of by the Holder, the Holder shall not engage
in short sales or other hedging transactions with respect to the Common Stock.
However, a Holder may enter into such transactions involving a number of shares
of Common Stock not to exceed the number of Shares for which a Conversion Notice
has been submitted to the Company.
Pursuant to separate Placement Agent Agreements between the Company and
the Placement Agent, the Placement Agent received a commission of 7% of the
gross proceeds received from the sale of the Series H Preferred Stock and H
Warrants and Series I Preferred Stock and I Warrants. In addition, the Placement
Agent received the Placement Agent Warrants to purchase an aggregate of 402,052
shares of Common Stock of the Company, which were subsequently transferred to
affiliates and employees of the Placement Agent. The Placement Agent Warrants
entitle the holders thereof to exercise the Placement Agent Warrants at an
exercise price of $1.684 per share ("Initial Exercise Price") at any time
between the date of their respective issuances ("Date of Issuance") and February
19, 2003 ("the "Warrant Term"); provided that if the date of exercise occurs
after February 19, 1999, the exercise price of the Placement Agent Warrants will
be the lesser of the Initial Exercise Price or the lowest reset price as
calculated on each one year anniversary of the Date of Issuance during the
Warrant Term. The Placement Agent Warrants have a cashless exercise option which
allow the holders thereof to receive a number of shares of Common Stock
calculated by multiplying the number of shares of Common Stock for which the
Placement Agent Warrant is being exercised by the difference between the average
closing price of the Common Stock for five trading days prior to the date of
exercise less the exercise price, divided by the average of the lowest two
closing bid prices of the Common Stock for the 20 trading days prior to such
anniversary date of the Date of Issuance. The Placement Agent Warrants cashless
exercise option does not contain the restrictions applicable to the Warrants.
Pursuant to the Registration Rights Agreement and the Placement Agent
Agreement, the Company agreed to file a Registration Statement registering the
resale by the Selling Security Holders of the Shares underlying the Preferred
Stock, the Warrants and the Placement Agent Warrants. The Registration Statement
has been filed by the Company to fulfill these obligations to the Selling
Security Holders under the Registration Rights Agreement and the Placement Agent
Agreement. The Company is required to maintain the effectiveness of the
Registration Statement covering the resale of the Shares of the Selling Security
Holders until the earlier of (i) the date on which the Selling Security Holders
may sell all of their Shares without restriction pursuant to Rule 144(k)
promulgated under the Securities Act of 1933, or (ii) the date on which the
Selling Security Holders has sold all of their Shares included in the Prospectus
and none of the shares of the Preferred Stock, the Warrants, or the Placement
Agent Warrants remain outstanding.
The Company has agreed to indemnify the Selling Security Holders
against any liabilities under the Securities Act of 1933 or otherwise, arising
out of or based upon any untrue or alleged untrue statement of a material fact
in the Registration Statement or this Prospectus or by any omission of a
material fact required to be stated therein except to the extent that such
liabilities arise out of or are based upon any untrue or alleged untrue
statement or omission in any information furnished in writing to the Company by
the Selling Security Holders expressly for use in the Registration Statement.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers or persons controlling the Company pursuant
to its Certificate of Incorporation and By-laws, the Company has been informed
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
14
<PAGE> 18
In connection with the registration of the resale of the Shares offered
hereby, the Company will supply Prospectuses to the Selling Security Holders and
use its best efforts to qualify the Shares for sale in states reasonably
designated by the Selling Security Holders.
STOCK OWNERSHIP
The following table sets forth the name of the Selling Security
Holders, the amount of shares of Common Stock held directly or indirectly or
underlying the Preferred Stock, the Warrants and the Placement Agent Warrants as
of April 14, 1998 to be offered by the Selling Security Holders and the amount
to be owned by the Selling Security Holders following sale of such shares of
Common Stock. As of April 14, 1998, there were 52,710,635 outstanding 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(7) be Offered Offering
- ---------------- --------------- ---------- -----------
<S> <C> <C> <C>
The Tail Wind Fund Ltd.(1) 2,805,000 2,805,000 0
Lakeshore International, Ltd.(2) 2,310,000 2,310,000 0
LaRouque Trading Group, LLC(3) 1,650,000 1,650,000 0
Global Bermuda Limited
Partnership(4) 825,000 825,000 0
Chelverton Fund (5) 110,000 110,000 0
Eric S. Swartz(6) 144,654 144,654 0
Kendrick Family Partnership, LP(6) 144,654 144,654 0
Michael E. Stough(6) 28,613 28,613 0
Charles B. Krusen(6) 17,231 17,231 0
Carlton M. Johnson, Jr.(6) 16,500 16,500 0
Glenn R. Archer(6) 15,500 15,500 0
Davis C. Holden(6) 12,000 12,000 0
P. Bradford Hathorn(6) 11,000 11,000 0
Frank G. Mauro(6) 3,000 3,000 0
James David Mills(6) 2,500 2,500 0
Kelley E. Smith(6) 2,000 2,000 0
Gerald David Harris(6) 1,900 1,900 0
N. Nelson Logan 1,000 1,000 0
Dwight B. Bronnum(6) 750 750 0
Robert L. Hopkins(6) 750 750 0
</TABLE>
- ----------------------
(1) Includes 2,040,000 shares of Common Stock issuable upon the conversion
of 255 shares of Preferred Stock and 765,000 shares of Common Stock
issuable upon the exercise of the Warrants. Address is 1 Regent Street,
4th Floor, London, England SW1 Y4NS.
15
<PAGE> 19
(2) Includes 1,680,000 shares of Common Stock issuable upon the conversion
of 210 shares of Preferred Stock and 630,000 shares of Common Stock
issuable upon the exercise of the Warrants. Address is 601 Carlson
Parkway, Suite 200 Minnetonka, Minnesota 55305.
(3) Includes 1,200,000 shares of Common Stock issuable upon the conversion
of 150 shares of Preferred Stock and 450,000 shares of Common Stock
issuable upon the exercise of the Warrants. Address is 440 S. LaSalle
Street, Suite 700, Chicago, Illinois 60605.
(4) Includes 600,000 shares of Common Stock issuable upon the conversion of
75 shares of Preferred Stock and 225,000 shares of Common Stock
issuable upon the exercise of the Warrants. Address is 601 Carlson
Parkway, Suite 200, Minnetonka, Minnesota 55305.
(5) Includes 80,000 shares of Common Stock issuable upon the conversion of
10 shares of Preferred Stock and 30,000 shares of Common Stock issuable
upon exercise of the Warrants. Address is 1 Regent Street, 4th Floor,
London, England SW1 Y4NS.
(6) Represent shares of Common Stock issuable upon exercise of the
Placement Agent Warrants. Address is 1080 Holcomb Bridge Road, 200
Roswell Summit, Suite 285, Roswell, Georgia 30076.
(7) This Prospectus also covers the resale of such presently indeterminate
number of additional Shares as may be issuable upon conversion of the
Preferred Stock based upon such fluctuations in the conversion price.
As of April 14, 1998, there were outstanding 500 shares of Series H
Preferred Stock and 200 shares of Series I Preferred Stock. Pursuant to
the terms of the Certificate of Designations pertaining to the
Preferred Stock, the Securities Purchase Agreements and related
agreements, a Holder of the Preferred Stock may not convert the
Preferred Stock and the Company may not require the conversion of
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 pay for all costs and expenses incident to
the issuance, offer, sale and delivery of the Shares, including, but not limited
to, all expenses and fees of preparing, filing and printing the Registration
Statement and Prospectus and related exhibits, amendments and supplements
thereto and mailing of such items. The Company will not pay selling commissions
and expenses associated with any such sales by the Selling Security Holders. The
Company has agreed to indemnify the Selling Security Holders against civil
liabilities including liabilities under the Securities Act of 1933.
PLAN OF DISTRIBUTION
The Shares offered hereby by the Selling Security Holders may be sold
from time to time by the Selling Security Holders, or by pledgees, donees,
transferees or other successors in interest. Such 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 otherwise at prices and at terms then
prevailing or at prices related to the then current market price, or in
negotiated transactions. The Shares may be sold by one or more of the following
methods, including, without limitation: (a) 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 to facilitate the
transaction; (b) purchases by a broker or dealer as principal and resale
16
<PAGE> 20
by such broker or dealer for its account pursuant to this Prospectus; (c)
ordinary brokerage transactions and transactions in which the broker solicits
purchasers; and (d) 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 from time to time,
subject to the restrictions described below and previously under "Selling
Security Holders", sell short the Common Stock of the Company, and in such
instances, this Prospectus may be delivered in connection with such short sale
and the Shares offered hereby may be used to cover such short sale. In effecting
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. Such broker-dealers and
agents and any other participating broker-dealers, or agents may be deemed to be
"underwriters" within the meaning of the Act, in connection with such sales. In
addition, any securities covered by this Prospectus that qualify for sale
pursuant to Rule 144 might be sold under Rule 144 rather than pursuant to this
Prospectus.
Upon the Company being notified by the Selling Security Holders that
any material arrangement has been entered into with a broker-dealer, agent or
underwriter for the sale of shares through a block trade, special offering,
exchange distribution or secondary distribution or a purchase by a
broker-dealer, agent or underwriter, a supplemented Prospectus will be filed, if
required, pursuant to Rule 424(c) under the Act, disclosing (a) the name of each
such broker-dealer, agent or underwriter (b) the number of Shares involved, (c)
the price at which such Shares were sold, (d) the commissions paid or discounts
or concessions allowed to such broker-dealer(s), agent(s) or underwriter(s) or
other items constituting compensation or indemnification arrangements with
respect to particular offerings, where applicable, (e) that such
broker-dealer(s), agent(s) or underwriter(s) did not conduct any investigation
to verify the information set out or incorporated by reference in this
Prospectus, as supplemented, and (f) other facts material to the transaction.
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 52,710,635 shares were
outstanding as of April 14, 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, 500 shares of Series H Preferred Stock and
200 shares of Series I Preferred Stock were outstanding as of April 14, 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 ratable basis,
such dividends as may be declared by the Board of Directors out of funds,
legally available therefor. Upon liquidation, dissolution or winding up of the
Company, after payment to creditors and holders of Preferred Stock that may be
outstanding, the assets of the Company will be divided pro rata on a per share
basis among the holders of the Common Stock.
Each share of Common Stock entitles the holders thereof to 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 at
any Special or Annual Meeting of Stockholders can elect all of the Directors if
they choose to do so, and, in such event, the holders of the remaining shares
will not be able to elect any Directors. The By-Laws of the Company require that
only a majority of the issued and outstanding
17
<PAGE> 21
shares of Common Stock of the Company need be represented to constitute a quorum
and 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 from time to time without any
action of the stockholders. Such resolutions may authorize issuances of such
preferred stock in one or more series and 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 such preferred stock in its capitalization in order to
enhance its financial flexibility, such preferred stock could possibly be used
by the Company as a means 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 possibly have a dilutive effect with
respect to the existing holders of Common Stock of the Company.
The Company has authorized 375,000 shares of Series A Preferred Stock
of which 2,650 shares are issued and outstanding, and has authorized 500 shares
of Series H Preferred Stock and 200 shares of Series I Preferred Stock, all of
which shares are outstanding. The Company has also 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. The Company is in the process of
eliminating the authorizations for such previously issued preferred series whose
shares are no longer outstanding.
Series A Preferred Stock
Series A Preferred Stock was established by the Board of Directors 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.
The Series A Preferred Stock has voting rights only if dividends are in
arrears for five annual dividends. Upon such occurrence, the voting would be
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
with respect to the Series A Preferred Stock.
Owners of the Series A Preferred Stock, of which there are eight record
holders, will be entitled to receive $10.00 per share (plus accrued and unpaid
dividends) 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 upon
liquidation, dissolution or winding up of the Company. If in any such event the
assets of the Company distributable among the holders of Series A Preferred
Stock or any stock of the Company ranking on a par with the Series A Preferred
Stock upon liquidation, dissolution or winding up are insufficient to permit
such payment, the holders of the Series A Preferred Stock and of such other
stock
18
<PAGE> 22
will be entitled to ratable distribution of the available assets in accordance
with the respective amounts that would be payable on such shares if all amounts
payable thereon were paid in full.
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 in such case the Company's Common Stock
would be expected to 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). 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 and also may affect the ability of purchasers in this
offering to sell their shares in the secondary market. The ability of the
Company to secure a symbol on NASDAQ does not imply that a meaningful trading
market in its Common Stock will ever develop.
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 for the Company 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 an aggregate 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, 1997, 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, under which
jurisdiction the Company is incorporated, empowers a corporation to indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative by reason of the fact that he or she
is or was a director, officer, employee or agent of the corporation or is or was
serving at the request of the corporation as a director,
19
<PAGE> 23
officer, employee or agent of another corporation or enterprise. A corporation
may indemnify against expenses (including attorneys' fees) and, other than in
respect of an action by or in the right of the corporation, against judgments,
fines and amounts paid in settlement actually and reasonably incurred in
connection with such action, suit or proceeding if the person indemnified acted
in good faith and in a manner he or she reasonably believed to be in or not
opposed to the best interests of the corporation, and with respect to any
criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful. In the case of an action by or in the right of the
corporation, no indemnification of expenses may be made in respect to any claim,
issue or matter as to which such person shall have been adjudged to be liable to
the corporation unless and only to the extent that the Court of Chancery or the
court in which such action was brought shall determine that, despite the
adjudication of liability, such person is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper. Section 145 of
the General Corporation Law of Delaware further provides that to the extent a
director, officer, employee or agent of the corporation has been successful in
the defense of any action, suit or proceeding referred to above or in the
defense of any claim, issue or matter therein, he or she shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
him or her in connection therewith.
Article VII of the By-Laws of the Company require the Company to
indemnify its Directors and officers as follows:
"The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (including any action or suit by or in the right of the
corporation) by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such suit, action or proceeding if
he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause
to believe his conduct was unlawful, provided, however, that in the
case of an action or suit by or in the right of the corporation, (a)
such person shall be indemnified only to the extent of his expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement thereof and not for any
judgments, fines or amounts paid in settlement and (b) no
indemnification shall be made in respect of any claim, issue or matter
as to which such person shall have been adjudged to be liable for
negligence or misconduct in the performance of his duty to the
corporation unless, and only to the extent that, the Court of Chancery
of the State of Delaware or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication
of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
Any indemnification hereunder (unless required by law or ordered by a
court) shall be made by the corporation only as authorized in the specific case
upon a determination that indemnification of the director, officer, employee or
agent is proper in the circumstances because he has met the applicable standard
of conduct set forth in this Article. Such determination shall be made (1) by
the Board of Directors by a majority vote of a quorum consisting of directors
who were not parties to such action, suit or proceeding, or (2) if such a quorum
is not obtainable, or, even if obtainable a quorum of disinterested
20
<PAGE> 24
directors so directs, by independent legal counsel in a written opinion, or (3)
by the stockholders of the corporation.
The indemnification provided herein shall not be deemed exclusive of
any other rights to which those indemnified may be entitled under any statute,
by-law, agreement, vote of stockholders or disinterested directors or otherwise,
both as to action in his official capacity and as to action in another capacity
while holding such office, and shall continue as to a person who has ceased to
be a director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
The corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him and incurred by him
in any such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability under
the provisions of the General Corporation Law of the State of Delaware or of
these By-Laws.
The corporation's indemnity of any person who is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall be
reduced by any amounts such person may collect as indemnification (i) under any
policy of insurance purchased and maintained on his behalf by the corporation or
(ii) from such other corporation, partnership, joint venture, trust or other
enterprise.
Nothing contained in this Article VII, or elsewhere in these By-Laws,
shall operate to indemnify any director or officer of such indemnification is
for any reason contrary to law, either as a matter of public policy, or under
the provisions of the Federal Securities Act of 1933, the Securities Exchange
Act of 1934, or any other applicable state or federal law.
For the purposes of this Article, references to "the corporation"
include all constituent corporations absorbed in a consolidation or merger as
well as the resulting or surviving corporations so that any person who is or was
a director, officer, employee or agent of such a constituent corporation or is
or was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise shall stand in the same position under the provisions
of this Article with respect to the resulting or surviving corporation as he
would if he had served the resulting or surviving corporation in the same
capacity.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Company pursuant
to the foregoing provisions, or otherwise, the Company has been advised that in
the opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Company of expenses incurred or paid by a director,
officer or controlling person of the Company in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, 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 as expressed in the Act and
will be governed by the final adjudication of such issue.
21
<PAGE> 25
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.
<TABLE>
<S> <C>
Registration fee................................................. $ 6,903
Legal fees and expenses.......................................... 5,000*
Blue sky qualification fees and expenses ........................ 1,000*
Accounting fees and expenses..................................... 5,000*
Printing expenses................................................ 500*
Miscellaneous.................................................... 1,597*
Total ........................................................... $20,000*
</TABLE>
*Estimated
Item 15. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of Delaware, under
which jurisdiction the Company is incorporated, empowers a corporation to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative by reason of the fact that he
or she is or was a director, officer, employee or agent of the corporation or is
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation or enterprise. A corporation may
indemnify against expenses (including attorneys' fees) and, other than in
respect of an action by or in the right of the corporation, against judgments,
fines and amounts paid in settlement actually and reasonably incurred in
connection with such action, suit or proceeding if the person indemnified acted
in good faith and in a manner he or she reasonably believed to be in or not
opposed to the best interests of the corporation, and with respect to any
criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful. In the case of an action by or in the right of the
corporation, no indemnification of expenses may be made in respect to any claim,
issue or matter as to which such person shall have been adjudged to be liable to
the corporation unless and only to the extent that the Court of Chancery or the
court in which such action was brought shall determine that, despite the
adjudication of liability, such person is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper. Section 145 of
the General Corporation Law of Delaware further provides that to the extent a
director, officer, employee or agent of the corporation has been successful in
the defense of any action, suit or proceeding referred to above or in the
defense of any claim, issue or matter therein, he or she shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
him or her in connection therewith.
Article VII of the By-Laws of the Company require the Company to
indemnify its Directors and officers as follows:
22
<PAGE> 26
"The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(including any action or suit by or in the right of the corporation) by reason
of the fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such suit, action or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful,
provided, however, that in the case of an action or suit by or in the right of
the corporation, (a) such person shall be indemnified only to the extent of his
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement thereof and not for any judgments,
fines or amounts paid in settlement and (b) no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable for negligence or misconduct in the performance of his
duty to the corporation unless, and only to the extent that, the Court of
Chancery of the State of Delaware or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Court of
Chancery or such other court shall deem proper.
Any indemnification hereunder (unless required by law or ordered by a
court) shall be made by the corporation only as authorized in the specific case
upon a determination that indemnification of the director, officer, employee or
agent is proper in the circumstances because he has met the applicable standard
of conduct set forth in this Article. Such determination shall be made (1) by
the Board of Directors by a majority vote of a quorum consisting of directors
who were not parties to such action, suit or proceeding, or (2) if such a quorum
is not obtainable, or, even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (3) by the
stockholders of the corporation.
The indemnification provided herein shall not be deemed exclusive of
any other rights to which those indemnified may be entitled under any statute,
by-law, agreement, vote of stockholders or disinterested directors or otherwise,
both as to action in his official capacity and as to action in another capacity
while holding such office, and shall continue as to a person who has ceased to
be a director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
The corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him and incurred by him
in any such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability under
the provisions of the General Corporation Law of the State of Delaware or of
these By-Laws.
The corporation's indemnity of any person who is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise,
23
<PAGE> 27
shall be reduced by any amounts such person may collect as indemnification (i)
under any policy of insurance purchased and maintained on his behalf by the
corporation or (ii) from such other corporation, partnership, joint venture,
trust or other enterprise.
Nothing contained in Article VII of the By-Laws, or elsewhere in the
By-Laws, shall operate to indemnify any director or officer of such
indemnification if for any reason contrary to law, either as a matter of public
policy, or under the provisions of the Federal Securities Act of 1933, the
Securities Exchange Act of 1934, or any other applicable state or federal law.
For the purposes of this Article, references to "the corporation"
include all constituent corporations absorbed in a consolidation or merger as
well as the resulting or surviving corporations so that any person who is or was
a director, officer, employee or agent of such a constituent corporation or is
or was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise shall stand in the same position under the provisions
of this Article with respect to the resulting or surviving corporation as he
would if he had served the resulting or surviving corporation in the same
capacity."
Item 16. Exhibits.
<TABLE>
<CAPTION>
Exhibit Description
- ------- -----------
<S> <C>
(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)
</TABLE>
24
<PAGE> 28
<TABLE>
<CAPTION>
Exhibit Description
- ------- -----------
<S> <C>
(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)
(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)
(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)
</TABLE>
25
<PAGE> 29
<TABLE>
<CAPTION>
Exhibit Description
- ------- -----------
<S> <C>
(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*
(4)(xviii) Certificate of Designations, Preferences and Rights
of Series I Preferred Stock*
(5) Opinion of Atlas, Pearlman, Trop & Borkson, P.A. as
to the validity of the securities being registered*
(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))
(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))
</TABLE>
26
<PAGE> 30
<TABLE>
<CAPTION>
Exhibit Description
- ------- -----------
<S> <C>
(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))
(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))
</TABLE>
27
<PAGE> 31
<TABLE>
<CAPTION>
Exhibit Description
- ------- -----------
<S> <C>
(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
(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)(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
</TABLE>
28
<PAGE> 32
<TABLE>
<CAPTION>
Exhibit Description
- ------- -----------
<S> <C>
(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))
(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)(xxxx) 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)(xxxxi) 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)(xxxxii) 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)(xxxxiii) 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)
</TABLE>
29
<PAGE> 33
<TABLE>
<CAPTION>
Exhibit Description
- ------- -----------
<S> <C>
(10)(xxxxiv) 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)
(10)(xxxxv) 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)(xxxxvi) 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)(xxxxvii) 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)(xxxxviii) Form of Subscription Agreement dated February 17,
1998 and related Registration Rights Agreement and
Common Stock Purchase Warrants*
(10)(xxxxix) Omitted
(10)(l) Form of Subscription Agreement dated April 2, 1998
and related Registration Rights Agreement and Common
Stock Purchase Warrants*
(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*
(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;
30
<PAGE> 34
(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.
31
<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 Miami and the State of
Florida, on the 15th day of April 1998.
VIRAGEN, INC.
By: /s/Gerald Smith
----------------------------
Gerald Smith
Chairman of the Board Principal
Executive Officer and President
POWER OF ATTORNEY
Know all men by these presents, that each person whose signature
appears below constitutes and appoints Gerald Smith and Dennis W. Healey or
either of them, such person's true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for such person and in such
person's name, place and stead, in any and all capacities (including such
persons' capacity as a director and/or officer of Viragen, Inc.) to sign any and
all amendments (including post-effective amendments pursuant to Rule 462(b) or
otherwise) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto each said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that each said attorney-in-fact and agent, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act of 1993, this
Amendment to its Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/Gerald Smith Chairman of the
- --------------------------- Board of Directors,
Gerald Smith Principal Executive April 15, 1998
Officer and President
/s/Robert H. Zeiger Chief Executive Officer
- --------------------------- and Director April 16, 1998
Robert H. Zeiger
</TABLE>
32
<PAGE> 36
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/Dennis W. Healey Executive Vice President, Treasurer,
- --------------------------- Principal Financial
Dennis W. Healey Officer and Director April 15, 1998
/s/Charles F. Fistel Executive Vice-President
- --------------------------- and Director April 15, 1998
Charles F. Fistel
/s/Jose I. Ortega Controller and Principal
- --------------------------- Accounting Officer April 15, 1998
Jose I. Ortega
/s/Sidney Dworkin Director April 16, 1998
- ---------------------------
Sidney Dworkin
/s/Peter D. Fischbein Director April 16, 1998
- ---------------------------
Peter D. Fischbein
Director
- ---------------------------
Jay M. Haft
Director
- ---------------------------
Fred D. Hirt
Director
- ---------------------------
William B. Saeger
/s/Carl N. Singer Director April 16, 1998
- ---------------------------
Carl N. Singer
</TABLE>
33
<PAGE> 1
Exhibit 4(xvii)
CERTIFICATE OF DESIGNATION OF
SERIES H PREFERRED STOCK
OF
VIRAGEN, INC.
It is hereby certified that:
1. The name of the Company (hereinafter called the "Company") is
Viragen, Inc., a Delaware corporation.
2. The certificate of incorporation of the Company authorizes the
issuance of one million (1,000,000) shares of preferred stock, $1.00 par value
per share, and expressly vests in the Board of Directors of the Company the
authority provided therein to issue any or all of said shares in one (1) or more
series and by resolution or resolutions to establish the designation and number
and to fix the relative rights and preferences of each series to be issued.
3. The Board of Directors of the Company, pursuant to the authority
expressly vested in it as aforesaid, has adopted the following resolutions
creating a Series H issue of Preferred Stock:
RESOLVED, that five hundred (500) of the one million (1,000,000)
authorized shares of Preferred Stock of the Company shall be designated Series H
Preferred Stock, $1.00 par value per share, and shall possess the rights and
preferences set forth below:
Section 1. Designation and Amount. The shares of such series shall have
a par value of $1.00 per share and shall be designated as Series H Preferred
Stock (the "Series H Preferred Stock") and the number of shares constituting the
Series H Preferred Stock shall be Five Hundred (500). The Series H Preferred
Stock shall be offered at a purchase price of Ten Thousand Dollars ($10,000) per
share (the "Original Series H Issue Price"), with a eight percent (8%) per annum
accretion rate as set forth herein.
Section 2. Rank. The Series H Preferred Stock shall rank: (i) junior to
the Company Series F Preferred Stock and any other class or series of capital
stock of the Company hereafter created specifically ranking by its terms senior
to the Series H Preferred Stock (collectively, the "Senior Securities"); (ii)
prior to all of the Company's Common Stock, $0.01 par value per share ("Common
Stock"); (iii) prior to any class or series of capital stock of the Company
hereafter created not specifically ranking by its terms senior to or on parity
with any Series H Preferred Stock of whatever subdivision (collectively, with
the Common Stock, "Junior Securities"); and (iv) on parity with any class or
series of capital stock of the Company hereafter created specifically ranking by
its terms on parity with the Series H Preferred Stock ("Parity Securities") in
each case as to distributions of assets upon liquidation, dissolution or winding
up of the Company, whether voluntary or involuntary (all such distributions
being referred to collectively as "Distributions").
Section 3. Dividends. The Series H Preferred Stock will bear no
dividends, and the holders of the Series H Preferred Stock ("Holders") shall not
be entitled to receive dividends on the Series H Preferred Stock.
Section 4. Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up
of the Company ("Liquidation Event"), either voluntary or involuntary, the then
Holders of shares of Series H Preferred Stock shall be entitled to receive,
immediately after any distributions to Senior Securities required by the
Company's Certificate of Incorporation or any certificate of designation, and
prior in preference to any distribution to Junior Securities but in parity with
any distribution to Parity Securities, an amount per share equal to the sum of
(i) the Original Series H Issue Price for each outstanding share of Series H
Preferred Stock and (ii) an amount equal to eight percent (8%) of the Original
Series H Issue Price, per annum, accruing daily, for the period that has passed
since the date that, in connection with the consummation of the purchase by
Holder of shares of Series H Preferred
<PAGE> 2
Stock from the Company, the escrow agent first had in its possession funds
representing full payment for the shares of Series H Preferred Stock (such
amount being referred to herein as the "Premium"). If upon the occurrence of
such event, and after payment in full of the preferential amounts with respect
to the Senior Securities, the assets and funds available to be distributed among
the Holders of the Series H Preferred Stock and Parity Securities shall be
insufficient to permit the payment to such Holders of the full preferential
amounts due to the Holders of the Series H Preferred Stock and the Parity
Securities, respectively, then the entire assets and funds of the Company
legally available for distribution shall be distributed among the Holders of the
Series H Preferred Stock and the Parity Securities, pro rata, based on the
respective liquidation amounts to which each such series of stock is entitled by
the Company's Certificate of Incorporation and any certificate(s) of designation
relating thereto.
(b) Upon the completion of the distribution required by
subsection 4(a), if assets remain in this Company, they shall be distributed to
holders of Junior Securities in accordance with the Company's Certificate of
Incorporation including any duly adopted certificate(s) of designation.
(c) At each Holder's option, a sale, conveyance or disposition
of all or substantially all of the assets of the Company or the effectuation by
the Company of a transaction or series of related transactions in which more
than fifty percent (50%) of the voting power of the Company is disposed of shall
be deemed to be a Liquidation Event as defined in Section 4(a); provided further
that (i) a consolidation, merger, acquisition, or other business combination of
the Company with or into any other publicly traded company or companies shall
not be treated as a Liquidation Event as defined in Section 4(a) but instead
shall be treated pursuant to Section 5(d) hereof, and (ii) a consolidation,
merger, acquisition, or other business combination of the Company with or into
any other non-publicly traded company or companies shall be treated as a
Liquidation Event as defined in Section 4(a). The Company shall not effect any
transaction described in subsection 4(c)(ii) unless it first gives thirty (30)
business days prior notice of such transaction (during which time the Holder
shall be entitled to immediately convert any or all of its shares of Series H
Preferred Stock into Common Stock at the Conversion Price, as defined below,
then in effect, which conversion shall not be subject to the conversion
restrictions set forth in Section 5(a); provided however, that, if such
conversion takes place prior to the end of the six (6) month holding period set
forth in Section 5(a), the Variable Conversion Price (as defined in Section
5(a)), shall equal eighty-two percent (82%)).
(d) In the event that, immediately prior to the closing of a
transaction described in Section 4(c) which would constitute a Liquidation
Event, the cash distributions required by Section 4(a) or Section 6 have not
been made, the Company shall either: (i) cause such closing to be postponed
until such cash distributions have been made, or (ii) cancel such transaction,
in which event the rights of the Holders of Series H Preferred Stock shall be
the same as existing immediately prior to such proposed transaction.
Section 5. Conversion. Subject to Section 4(c) herein, the record
Holders of this Series H Preferred Stock shall have conversion rights as follows
(the "Conversion Rights"):
(a) Right to Convert. The record Holder of the Series H
Preferred Stock shall be entitled to convert, subject to the Company's right of
Redemption Upon Receipt of Notice of Conversion set forth in Section 6(a) and
the conversion restrictions herein below, any or all the shares of the Series H
Preferred Stock on or after the date that is six (6) months after the Last
Closing Date, as defined below, at the office of the Company or its designated
transfer agent (the "Transfer Agent"), into that number of fully-paid and
non-assessable shares of Common Stock calculated in accordance with the
following formula (the "Conversion Rate"):
Number of shares of Common Stock issued upon conversion of one (1)
share of Series H Preferred Stock =
(.08) (N/365) (10,000) + 10,000
-------------------------------
Conversion Price
2
<PAGE> 3
where,
- N= the number of days between (i) the date that, in connection with
the consummation of the initial purchase by Holder of shares of Series
H Preferred Stock from the Company, the escrow agent first had in its
possession funds representing full payment for the shares of Series H
Preferred Stock for which conversion is being elected, and (ii) the
applicable Date of Conversion (as defined in Section 5(b)(iv) below)
for the shares of Series H Preferred Stock for which conversion is
being elected;
- Conversion Price = the lower of (i) the "Fixed Conversion Price,"
which shall equal the lower of (a) $2.15 or (b) the Market Price, as
defined below, on the date that is six (6) months after the Last
Closing Date, subject to a minimum Fixed Conversion Price equal to a
Market Price of eighty five cents ($0.85); and (ii) the "Variable
Conversion Price," which shall equal 82% of the Market Price, as
defined below, on the Date of Conversion, as defined below; and
provided, however, that, unless otherwise indicated herein, beginning on the
date that is six (6) months following the Last Closing Date, as defined below,
the right of the Holder to convert into Common Stock shall be limited to a
maximum of fifteen percent (15%) of the aggregate principal amount of the Series
H Preferred Stock issued to such Holder, and for each one (1) month period which
expires thereafter, the Holder shall have the right to convert into Common Stock
fifteen percent (15%) of the aggregate principal amount of the Series H
Preferred Stock issued to such Holder, (the number of shares that may be
converted at any given time, in the aggregate, is referred to hereinafter as the
"Conversion Quota");and provided, further, in the event that the Holder elects
not to convert its full Conversion Quota during any one (1) month period, the
unconverted amount shall be carried forward and added to the Conversion Quota
and thereafter the Holder may, from time to time, convert any portion of the
Conversion Quota, subject to a maximum of twenty-five percent (25%) of the
aggregate principal amount of the Series H Preferred Stock issued to such Holder
(the "Conversion Collar") per month. In the event that the Company closes an
offering of debt or equity securities for cash in a private capital raising
transaction while the Conversion Quota is in effect, the Conversion Quota shall
no longer apply after the closing date of such offering.
As used herein, "Last Closing Date" shall mean the date of the last
closing of a purchase and sale of the Series H Preferred Stock that occurs
pursuant to the offering of the Series H Preferred Stock by the Company.
For purposes hereof, any Holder which acquires shares of Series H
Preferred Stock from another Holder (the "Transferor") and not upon original
issuance from the Company shall be entitled to exercise its conversion right as
to the percentages of such shares specified under Section 5(a) in such amounts
and at such times such that the number of shares eligible for conversion by such
Holder at any time shall be in the same proportion that the number of shares of
Series H Preferred Stock acquired by such Holder from its Transferor bears to
the total number of shares of Series H Preferred Stock originally issued by the
Company to such Transferor (or its predecessor Transferor).
For purposes hereof, the term "Closing Bid Price" shall mean the
closing bid price of the Company's Common Stock on the Nasdaq National Market
System ("NMS"); or if no longer traded on the Nasdaq National Market System, the
closing bid price on the principal national securities exchange or the
over-the-counter market on which the Common Stock is so traded and if not
available, the mean of the high and low prices on the principal national
securities exchange or the over-the counter market on which the Common Stock is
so traded.
For purposes hereof, the term "Market Price" shall mean the average of
the lowest two (2) Closing Bid Prices of the Company's Common Stock during the
twenty (20) trading days immediately preceding the date in question.
(b) Mechanics of Conversion. In order to convert Series H
Preferred Stock into full shares of Common Stock, the Holder shall (i) send via
facsimile, on or prior to 11:59 p.m., New York City time (the "Conversion Notice
Deadline") on the Date of Conversion, a copy of the fully executed notice of
conversion ("Notice of Conversion") to the Company at the office of the Company
3
<PAGE> 4
and to its designated transfer agent (the "Transfer Agent") for the Series H
Preferred Stock stating that the Holder elects to convert, which notice shall
specify the Date of Conversion, the number of shares of Series H Preferred Stock
to be converted, the applicable Conversion Price and a calculation of the number
of shares of Common Stock issuable upon such conversion (together with a copy of
the front page of each certificate to be converted) and (ii) surrender to a
common courier for delivery to the office of the Company or the Transfer Agent,
the original certificates representing the Series H Preferred Stock being
converted (the "Preferred Stock Certificates"), duly endorsed for transfer;
provided, however, that the Company shall not be obligated to issue certificates
evidencing the shares of Common Stock issuable upon such conversion unless
either the Preferred Stock Certificates are delivered to the Company or its
Transfer Agent as provided above, or the Holder notifies the Company or its
Transfer Agent that such certificates have been lost, stolen or destroyed
(subject to the requirements of subparagraph (i) below). Upon receipt by the
Company of a facsimile copy of a Notice of Conversion, the Company shall
immediately send, via facsimile, a confirmation of receipt of the Notice of
Conversion to Holder which shall specify that the Notice of Conversion has been
received and the name and telephone number of a contact person at the Company
whom the Holder should contact regarding information related to the Conversion.
In the case of a dispute as to the calculation of the Conversion Rate, the
Company shall promptly issue to the Holder the number of Shares that are not
disputed and shall submit the disputed calculations to its outside accountant
via facsimile within three (3) days of receipt of Holder's Notice of Conversion.
The Company shall cause the accountant to perform the calculations and notify
the Company and Holder of the results no later than two business days from the
time it receives the disputed calculations.
Accountant's calculation shall be deemed conclusive absent manifest error.
(i) Lost or Stolen Certificates. Upon receipt by the
Company of evidence of the loss, theft, destruction or mutilation of any
Preferred Stock Certificates representing shares of Series H Preferred Stock,
and (in the case of loss, theft or destruction) of indemnity or security
reasonably satisfactory to the Company, and upon surrender and cancellation of
the Preferred Stock Certificate(s), if mutilated, the Company shall execute and
deliver new Preferred Stock Certificate(s) of like tenor and date. However, the
Company shall not be obligated to re-issue such lost or stolen Preferred Stock
Certificates if Holder contemporaneously requests the Company to convert such
Series H Preferred Stock into Common Stock.
(ii) Delivery of Common Stock Upon Conversion. The
Company shall or shall cause the Transfer Agent to, no later than the close of
business on the third (3rd) business day (the "Deadline") after receipt by the
Company or the Transfer Agent of a facsimile copy of a Notice of Conversion and
receipt by Company or the Transfer Agent of all necessary documentation duly
executed and in proper form required for conversion, including the original
Preferred Stock Certificates to be converted (or after provision for security or
indemnification in the case of lost or destroyed certificates, if required),
issue and surrender to a common courier for either overnight or (if delivery is
outside the United States) two (2) day delivery to the Holder at the address of
the Holder as shown on the stock records of the Company a certificate for the
number of shares of Common Stock to which the Holder shall be entitled as
aforesaid.
(iii) No Fractional Shares. If any conversion of the
Series H Preferred Stock would create a fractional share of Common Stock or a
right to acquire a fractional share of Common Stock, such fractional share shall
be disregarded and the number of shares of Common Stock issuable upon
conversion, in the aggregate, shall be the next higher number of shares.
(iv) Date of Conversion. The date on which conversion
occurs (the "Date of Conversion") shall be deemed to be the date set forth in
such Notice of Conversion, provided (i) that the advance copy of the Notice of
Conversion is sent via facsimile to the Company before 11:59 p.m., New York City
time, on the Date of Conversion, and (ii) that the original Preferred Stock
Certificates representing the shares of Series H Preferred Stock to be converted
are surrendered by depositing such certificates with a common courier, for
delivery to the Company or the Transfer Agent as provided above, as soon as
practicable after the Date of Conversion. The person or persons entitled to
receive the shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record Holder or Holders of such shares of
Common Stock on the Date of Conversion.
4
<PAGE> 5
(c) Automatic Conversion or Redemption. Each share of Series
H Preferred Stock outstanding on the date which is two (2) years and six (6)
months after the Last Closing Date or, if not a business day, the first
business day thereafter ("Termination Date") automatically shall, at the option
of the Company, either (i) be converted ("Automatic Conversion") into Common
Stock on such date at the Conversion Rate then in effect (calculated in
accordance with the formula in Section 5(a) above), and the Termination Date
shall be deemed the Date of Conversion with respect to such conversion for
purposes of this Certificate of Designation, or (ii) be redeemed ("Automatic
Redemption") by the Company for cash in an amount equal to the Total Value (as
defined in Section 6(b)(i) below) of the shares of Series H Preferred Stock
being redeemed. If the Company elects to redeem, on the Termination Date, the
Company shall send to the Holders of outstanding Series H Preferred Stock
notice (the "Automatic Redemption Notice") via facsimile of its intent to
effect an Automatic Redemption of the outstanding Series H Preferred Stock. If
the Company does not send such notice to Holder on such date, an Automatic
Conversion shall be deemed to have occurred. If an Automatic Conversion occurs,
the Company and the Holders shall follow the applicable conversion procedures
set forth in this Certificate of Designation; provided, however, that the
Holders are not required to send the Notice of Conversion contemplated by
Section 5(b). If the Company elects to redeem, each Holder of outstanding
Series H Preferred Stock shall send their certificates representing the Series
H Preferred Stock to the Company within five (5) days of the date of receipt of
the Automatic Redemption Notice from the Company, and the Company shall pay the
applicable redemption price to each respective Holder within five (5) days of
the receipt of such certificates. The Company shall not be obligated to deliver
the redemption price unless the certificates representing the Series H
Preferred Stock are delivered to the Company, or, in the event one or more
certificates have been lost, stolen, mutilated or destroyed, unless the Holder
has complied with Section 5(b)(i). If the Company elects to redeem under this
Section 5(c) and the Company fails to pay the Holders the redemption price
within five (5) business days of its receipt of the certificates representing
the shares of Series H Preferred Stock to be redeemed as required by this
Section 5(c), then an Automatic Conversion shall be deemed to have occurred
and, upon receipt of the Preferred Stock certificates, the Company shall
immediately deliver to the Holders the certificates representing the number of
shares of Common Stock to which the Holders would have been entitled upon
Automatic Conversion using the lowest Conversion Price (as defined in Section 5
hereof) in effect during the period beginning on the Termination Date and
ending on the date the Transfer Agent issues Common Stock pursuant to this
Section 5(c). Nothing in this Section 5(c) shall be construed to limit Holder's
ability to pursue Holder's rights under Section 13 hereof.
(d) Adjustment to Conversion Rate.
(i) Adjustment to Fixed Conversion Price Due to Stock
Split, Stock Dividend, Etc. If, prior to the conversion of all of the Series H
Preferred Stock, the number of outstanding shares of Common Stock is increased
by a stock split, stock dividend to all of the Holders of its Common Stock, or
other similar event, the Fixed Conversion Price shall be proportionately
reduced, or if the number of outstanding shares of Common Stock is decreased by
a combination or reclassification of shares, or other similar event, the Fixed
Conversion Price shall be proportionately increased.
(ii) Adjustment to Variable Conversion Price. If, at
any time when any shares of the Series H Preferred Stock are issued and
outstanding, the number of outstanding shares of Common Stock is increased or
decreased by a stock split, stock dividend, or other similar event, which event
shall have taken place during the reference period for determination of the
Conversion Price for any conversion of the Series H Preferred Stock, then the
Variable Conversion Price shall be calculated giving appropriate effect to the
stock split, stock dividend, combination, reclassification or other similar
event for all twenty (20) trading days immediately preceding the Date of
Conversion.
(iii) Adjustments.
(A) Adjustment Due to Merger, Consolidation, Etc.
If, prior to the conversion of all Series H Preferred Stock, there shall be any
merger, consolidation, exchange of shares, recapitalization, reorganization, or
other similar event, as a result of which shares of Common Stock of the Company
shall be changed into (or the shares of Common Stock become entitled to receive)
the same or a different number of shares of the same or another class or classes
of stock or
5
<PAGE> 6
securities of the Company or another entity or there is a sale of all or
substantially all the Company's assets or there is a change of control
transaction not deemed to be a liquidation pursuant to Section 4(c), then the
Holders of Series H Preferred Stock shall thereafter have the right to receive
upon conversion of Series H Preferred Stock, upon the basis and upon the terms
and conditions specified herein and in lieu of the shares of Common Stock
immediately theretofore issuable upon conversion, such stock, securities and/or
other assets which the Holder would have been entitled to receive in such
transaction had the Series H Preferred Stock been converted immediately prior to
such transaction, and in any such case appropriate provisions shall be made with
respect to the rights and interests of the Holders of the Series H Preferred
Stock to the end that the provisions hereof (including, without limitation,
provisions for the adjustment of the Conversion Price and of the number of
shares issuable upon conversion of the Series H Preferred Stock) shall
thereafter be applicable, as nearly as may be practicable in relation to any
securities thereafter deliverable upon the exercise hereof. The Company shall
not effect any transaction described in this subsection 5(d)(iii) unless (a) it
first gives at least thirty (30) business days prior notice of such merger,
consolidation, exchange of shares, recapitalization, reorganization, or other
similar event (during which time the Holder shall be entitled to convert its
shares of Series H Preferred Stock into Common Stock, which conversions shall
not be subject to the conversion restrictions set forth in Section 5(a)); and
(b) the resulting successor or acquiring entity (if not the Company) assumes by
written instrument the obligations of the Company under this Certificate of
Designation including this subsection 5(d)(iii).
(B) Adjustment Due to Distribution. If at any time
after the Last Closing Date, the Company shall declare or make any distribution
of its assets (or rights to acquire its assets) to Holders of Common Stock as a
partial liquidating dividend, by way of return of capital or otherwise
(including any dividend or distribution to the Company's shareholders in cash or
shares (or rights to acquire shares) of capital stock of any other public or
private company, including but not limited to a subsidiary or spin-off of the
Company (a "Distribution"), then the Holders of Series H Preferred Stock shall
be entitled, upon any conversion of shares of Series H Preferred Stock after the
date of record for determining shareholders entitled to such Distribution, to
receive the amount of such assets which would have been payable to the Holder
with respect to the shares of Common Stock issuable upon such conversion had
such Holder been the holder of such shares of Common Stock on the record date
for determination of shareholders entitled to such Distribution.
(iv) Issuance of Other Securities. If, at any time after
the Last Closing Date the Company shall issue any securities which are
convertible into or exchangeable for Common Stock ("Convertible Securities")
either (i) at a conversion or exchange rate based on a discount from the market
price of the Common Stock at the time of conversion or exercise, or (ii) with a
fixed conversion or exercise price less than the Fixed Conversion Price, then,
at the Holder's option: (x) in the case of clause (i) the Variable Conversion
Price in respect of any conversion of Series H Preferred Stock after such
issuance shall be calculated utilizing the greatest discount applicable to any
such Convertible Securities, and (y) in the case of clause (ii) the Fixed
Conversion Price in respect of any conversion of Series H Preferred Stock after
such issuance shall be reduced to such lesser conversion or exercise price
applicable to any such Convertible Securities.
(v) No Fractional Shares. If any adjustment under this
Section 5(d) would create a fractional share of Common Stock or a right to
acquire a fractional share of Common Stock, such fractional share shall be
disregarded and the number of shares of Common Stock issuable upon conversion
shall be the next higher number of shares.
Section 6. Redemption by Company.
(a) Company's Right to Redeem Upon Receipt of Notice of
Conversion. If the Conversion Price of the Company's Common Stock is less than
the Fixed Conversion Price (as defined in Section 5(a)), at the time of receipt
of a Notice of Conversion pursuant to Section 5(b), the Company shall have the
right, in its sole discretion, to redeem in whole or in part any Series H
Preferred Stock submitted for conversion at the Redemption Rate (as defined
below), immediately prior to and in lieu of conversion ("Redemption Upon Receipt
of Notice of Conversion"). If the Company elects to redeem some, but not all, of
the Series H Preferred Stock submitted for conversion, the Company shall redeem
from among the Series H Preferred Stock submitted by the
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<PAGE> 7
various shareholders for conversion on the applicable date, a pro-rata amount
from each such Holder so submitting Series H Preferred Stock for conversion.
(i) Redemption Price Upon Receipt of a Notice of
Conversion. The redemption price of Series H Preferred Stock under this Section
6(a) shall be calculated as follows ("Redemption Rate"):
<TABLE>
<CAPTION>
Closing Bid Price of the Common Stock on the Date of
Conversion for the Conversion Being Redeemed Redemption Rate
- ------------------------------------------------------------------------------------
<S> <C>
Less than $1.50 Total Value x 1.12
$1.50 or Greater Total Value X 1.175
</TABLE>
where,
"Total Value" shall mean the Stated Value of the Series H Preferred
Stock being redeemed, plus liquidated damages, Conversion Failure Payments, Late
Registration Payments and any other cash payments then due from the Company and
then unpaid, where "Stated Value" shall mean the Original Series H Issue Price
(as defined in Section 1) of each share of Series H Preferred Stock, together
with the accreted but unpaid Premium (as defined in Section 4(a)).
(ii) Mechanics of Redemption Upon Receipt of Notice of
Conversion. The Company shall effect each such redemption by giving notice of
its election to redeem, by facsimile, by 5:00 p.m. New York City time the next
business day following receipt of a Notice of Conversion from a Holder, and the
Company shall provide a copy of such redemption notice by overnight or two (2)
day courier, to (A) the Holder of the Series H Preferred Stock submitted for
conversion at the address and facsimile number of such Holder appearing in the
Company's register for the Series H Preferred Stock and (B) the Company's
Transfer Agent. Such redemption notice shall indicate whether the Company will
redeem all or part of the Series H Preferred Stock submitted for conversion and
the applicable redemption price.
(iii) [Intentionally Omitted].
(iv) Advance Notice of Redemption.
(A) Holder's Right to Elect to Receive Notice of
Cash Redemption by the Company. Holder shall have the right to require Company
to provide advance notice stating whether the Company will elect to redeem
Holder's shares of Series H Preferred Stock in cash, pursuant to the Company's
redemption rights discussed in Section 6(a).
(B) Mechanics of Holder's Election Notice. Holder
shall send notice ("Election Notice") to the Company and such other person(s) as
the Company may designate, (1) via facsimile and (2) via overnight courier
stating Holder's intention to require Company to disclose that if Holder were to
exercise his, her or its right of conversion (pursuant to Section 5) whether
Company would elect to redeem a specific number of shares of Holder's Series H
Preferred Stock for cash in lieu of issuing Common Stock. Company is required to
disclose to Holder what action Company would take over the five (5) business day
period subsequent to the date of Company's response to such Election Notice, as
further discussed in subsection 6(a)(iv)(C).
(C) Company's Response. Company must respond by the
close of business on the next business day following receipt of Holder's
Election Notice ("Company's Response Date"). The Company's response must state
whether it would redeem the shares, in whole or in part, or allow conversion
into shares without redemption. If Company does not respond to Holder by the
Company's Response Date, Company shall be required to issue to Holder Common
Stock upon Holder's conversion within the five (5) business day period
subsequent to the Company's Response Date.
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<PAGE> 8
(b) Company's Right to Redeem at its Election. At any time,
commencing twelve (12) months and one (1) day after the Last Closing Date,
provided that such date shall be extended for each day during which there is
continuing an Event of Default,, the Company shall have the right, in its sole
discretion, to redeem ("Redemption at Company's Election"), from time to time,
any or all of the Series H Preferred Stock; provided (i) the Company shall first
provide thirty (30) business days advance written notice as provided in
subparagraph 6(b)(ii) below (which can be given beginning thirty (30) business
days prior to the date which is twelve (12) months and one (1) day after the
Last Closing Date), and (ii) that the Company shall only be entitled to redeem
Series H Preferred Stock having an aggregate Stated Value (as defined below) of
at least One Million Dollars ($1,000,000). If the Company elects to redeem some,
but not all, of the Series H Preferred Stock, the Company shall redeem a
pro-rata amount from each Holder of the Series H Preferred Stock.
(i) Redemption Price At Company's Election. The
"Redemption Price At Company's Election" shall be calculated as a percentage of
Total Value, as that term is defined above, of the Series H Preferred Stock
redeemed pursuant to this Section 6(b), which percentage shall vary depending on
the date of Redemption at Company's Election (as defined below), and shall be
determined as follows:
<TABLE>
<CAPTION>
Date of Notice of Redemption at Company's Election % of Total Value
-------------------------------------------------- ----------------
<S> <C>
12 months and 1 day to 18 months following Last Closing Date 120%
18 months and 1 day to 30 months following Last Closing Date 115%
</TABLE>
(ii) Mechanics of Redemption at Company's Election. The
Company shall effect each such redemption by giving at least thirty (30)
business days prior written notice ("Notice of Redemption At Company's
Election") to (A) the Holders of the Series H Preferred Stock selected for
redemption, at the address and facsimile number of such Holder appearing in the
Company's Series H Preferred Stock register and (B) the Transfer Agent, which
Notice of Redemption At Company's Election shall be deemed to have been
delivered three (3) business days after the Company's mailing (by overnight or
two (2) day courier, with a copy by facsimile) of such Notice of Redemption At
Company's Election. Such Notice of Redemption At Company's Election shall
indicate (i) the number of shares of Series H Preferred Stock that have been
selected for redemption, (ii) the date which such redemption is to become
effective (the "Date of Redemption At Company's Election") and (iii) the
applicable Redemption Price At Company's Election, as defined in subsection
(b)(i) above. Notwithstanding the above, Holder may convert into Common Stock
pursuant to Section 5, prior to the close of business on the Date of Redemption
at Company's Election, any Series H Preferred Stock which it is otherwise
entitled to convert, which conversions shall not be subject to the conversion
restrictions set forth in Section 5(a), including Series H Preferred Stock that
has been selected for redemption at the Company's election pursuant to this
subsection 6(b); provided, however, that the Company shall still be entitled to
exercise its right to redeem upon receipt of a Notice of Conversion pursuant to
Section 6(a).
(c) Company Must Have Immediately Available Funds or Credit
Facilities. The Company shall not be entitled to send any Redemption Notice and
begin the redemption procedure under Sections 6(a) and 6(b) unless it has:
(i) the full amount of the redemption price in cash,
available in a demand or other immediately available account in a bank or
similar financial institution; or
(ii) immediately available credit facilities, in the full
amount of the redemption price with a bank or similar financial institution; or
(iii) an agreement with a standby underwriter willing to
purchase from the Company a sufficient number of shares of stock to provide
proceeds necessary to redeem any stock that is not converted prior to
redemption; or
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<PAGE> 9
(iv) a combination of the items set forth in (i), (ii) and
(iii) above, aggregating the full amount of the redemption price.
If the foregoing conditions of this Section 6(c) are satisfied and the
Company complies with Section 6(d) hereof, then any shares of Series H Preferred
Stock called for by a Redemption at Company's Election shall cease to be
outstanding for all purposes hereunder (including the right to convert or to
accrete additional Premium or to exercise any other right or privilege
hereunder) on the Date of Redemption at Company's Election and shall instead
represent the right to receive the Redemption Price at Company's Election
without interest from and after the Date of Redemption at Company's Election.
(d) Payment of Redemption Price.
(i) Each Holder submitting Preferred Stock being
redeemed under this Section 6 shall send their Series H Preferred Stock
Certificates so redeemed to the Company or its Transfer Agent, and the Company
shall pay the applicable redemption price to that Holder within five (5)
business days of the Date of Redemption at Company's Election. The Company shall
not be obligated to deliver the redemption price unless the Preferred Stock
Certificates so redeemed are delivered to the Company or its Transfer Agent, or,
in the event one (1) or more certificates have been lost, stolen, mutilated or
destroyed, unless the Holder has complied with Section 5(b)(i).
(ii) If the Company elects to redeem pursuant to Section
6(a) hereof, and the Company fails to pay Holder the redemption price within the
time frame as required by this Section 6(d), then the Company shall issue shares
of Common Stock to any such Holder who has submitted a Notice of Conversion in
compliance with Section 5(b) hereof. The shares to be issued to Holder pursuant
to this provision shall be the number of shares determined using the lowest
Conversion Price (as defined in Section 5 hereof) in effect during the period
beginning on the date Holder sends its Notice of Conversion to Company or
Transfer Agent via facsimile and ending on the date the Transfer Agent issues
Common Stock pursuant to this Section 6(d)(ii). Nothing in this Section 6(d)
shall be construed to limit Holder's ability to pursue Holder's rights under
Section 13 hereof.
(e) Blackout Period. Notwithstanding the foregoing, the
Company may not either send out a redemption notice or effect a redemption
pursuant to Section 6(b) above during a Blackout Period (defined as a period
during which the Company's officers or directors would be prohibited from buying
or selling stock pursuant to the Securities Exchange Act of 1934, as amended,
because of their holding of material non-public information), unless the Company
shall first disclose the non-public information that resulted in the Blackout
Period; provided, however, that no redemption shall be effected until at least
ten (10) days after the Company shall have given the Holder written notice that
the Blackout Period has been lifted.
Section 7. Voting Rights. The Holders of the Series H Preferred Stock
shall have no voting power whatsoever, except as otherwise provided by the
General Corporation Law of the State of Delaware ("Delaware Law"), and no Holder
of Series H Preferred Stock shall vote or otherwise participate in any
proceeding in which actions shall be taken by the Company or the shareholders
thereof or be entitled to notification as to any meeting of the shareholders.
Notwithstanding the above, the Company shall provide Holder with
notification of any meeting of the shareholders regarding any major corporate
events affecting the Company. In the event of any taking by the Company of a
record of its shareholders for the purpose of determining shareholders who are
entitled to receive payment of any dividend or other distribution, any right to
subscribe for, purchase or otherwise acquire any share of any class or any other
securities or property (including by way of merger, consolidation or
reorganization), or to receive any other right, or for the purpose of
determining shareholders who are entitled to vote in connection with any
proposed sale, lease or conveyance of all or substantially all of the assets of
the Company, or any proposed liquidation, dissolution or winding up of the
Company, the Company shall mail a notice to Holder, at least ten (10) days prior
to the record date specified therein, of the date on which any such record is to
be taken for the purpose of such dividend, distribution, right or other event,
and a brief statement
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<PAGE> 10
regarding the amount and character of such dividend, distribution, right or
other event to the extent known at such time.
To the extent that under Delaware Law the vote of the Holders of the
Series H Preferred Stock, voting separately as a class, is required to authorize
a given action of the Company, the affirmative vote or consent of the Holders of
at least a majority of the shares of the Series H Preferred Stock represented at
a duly held meeting at which a quorum is present or by written consent of a
majority of the shares of Series H Preferred Stock (except as otherwise may be
required under Delaware Law) shall constitute the approval of such action by the
class. To the extent that under Delaware Law the Holders of the Series H
Preferred Stock are entitled to vote on a matter with holders of Common Stock,
voting together as one (1) class, each share of Series H Preferred Stock shall
be entitled to a number of votes equal to the number of shares of Common Stock
into which it is then convertible using the record date for the taking of such
vote of stockholders as the date as of which the Conversion Price is calculated.
Holders of the Series H Preferred Stock also shall be entitled to notice of all
shareholder meetings or written consents with respect to which they would be
entitled to vote, which notice would be provided pursuant to the Company's
by-laws and applicable statutes.
Section 8. Protective Provision. So long as shares of Series H
Preferred Stock are outstanding, the Company shall not without first obtaining
the approval (by vote or written consent, as provided by Delaware Law) of the
Holders of at least seventy-five percent (75%) of the then outstanding shares of
Series H Preferred Stock, and at least seventy-five percent (75%) of the then
outstanding Holders:
(a) alter or change the rights, preferences or privileges of
the Series H Preferred Stock or any securities so as to affect adversely the
Series H Preferred Stock;
(b) create any new class or series of stock on parity with or
having a preference over the Series H Preferred Stock with respect to
Distributions (as defined in Section 2 above) or increase the size of the
authorized number of Series H Preferred; or
(c) do any act or thing not authorized or contemplated by this
Designation which would result in taxation of the holders of shares of the
Series H Preferred Stock under Section 305 of the Internal Revenue Code of 1986,
as amended (or any comparable provision of the Internal Revenue Code as
hereafter from time to time amended).
In the event Holders of at least seventy-five percent (75%) of the then
outstanding shares of Series H Preferred Stock and at least seventy-five percent
(75%) of the then outstanding Holders agree to allow the Company to alter or
change the rights, preferences or privileges of the shares of Series H Preferred
Stock, pursuant to subsection (a) above, so as to affect the Series H Preferred
Stock, then the Company will deliver notice of such approved change to the
Holders of the Series H Preferred Stock that did not agree to such alteration or
change (the "Dissenting Holders") and Dissenting Holders shall have the right
for a period of thirty (30) business days to convert pursuant to the terms of
this Certificate of Designation as they exist prior to such alteration or change
(provided further that the holding requirements set forth in Section 5(a) hereof
shall not apply), or continue to hold their shares of Series H Preferred Stock,
as amended.
Section 9. Status of Converted or Redeemed Stock. In the event any
shares of Series H Preferred Stock shall be converted or redeemed pursuant to
Section 5 or Section 6 hereof, the shares so converted or redeemed shall be
canceled, shall return to the status of authorized but unissued Preferred Stock
of no designated series, and shall not be issuable by the Company as Series H
Preferred Stock.
Section 10. Preference Rights. Nothing contained herein shall be
construed to prevent the Board of Directors of the Company from issuing one (1)
or more series of Preferred Stock with dividend and/or liquidation preferences
junior to the dividend and liquidation preferences of the Series H Preferred
Stock.
10
<PAGE> 11
Section 11. Authorization and Reservation of Shares of Common Stock.
(a) Authorized and Reserved Amount. The Company shall have
authorized and reserved and keep available for issuance seven million two
hundred thousand (7,200,000) shares of Common Stock (the "Reserved Amount")
solely for the purpose of effecting the conversion of the Series H Preferred
Stock, and exercise of the warrants to acquire Common Stock (the "Common
Warrants") issued or to be issued to the Holders, which number shall not be
reduced. The Company shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock a sufficient number of shares of
Common Stock to provide for the full conversion of all outstanding Series H
Preferred Stock, and issuance of the shares of Common Stock in connection
therewith and the full exercise of the Common Warrants and issuance of the
shares of Common Stock in connection therewith.
(b) Increases to Reserved Amount. Without limiting any other
provision of this Section 11, if the Reserved Amount for any three (3)
consecutive trading days (the last of such three (3) trading days being the
"Reservation Trigger Date") shall be less than one hundred percent (100%) of the
number of shares of Common Stock (the "Minimum Required Reserved Amount")
issuable upon conversion of this Series H Preferred Stock, and exercise of the
Common Warrants on such trading days (a "Share Authorization Failure"), the
Company shall immediately notify all Holders of such occurrence and shall take
action as soon as possible, but in any event within sixty (60) days after a
Reservation Trigger Date (including, if necessary, seeking shareholder approval
to authorize the issuance of additional shares of Common Stock) to increase the
Reserved Amount to one hundred fifty percent (150%) of the number of shares of
Common Stock then issuable upon conversion of the Series H Preferred Stock, and
exercise of the Common Warrants.
(c) Reduction of Reserved Amount Under Certain Circumstances.
Prior to complete conversion of all Series H Preferred Stock the Company shall
not reduce the number of shares required to be reserved for issuance under this
Section 11 without the written consent of all Holders except as follows: (i) the
Company may, following a conversion by a Holder, reduce the number of shares of
Common Stock reserved for issuance to such Holder under this Section 11 to not
less than 125% of the Minimum Required Reserved Amount, or (ii) the Company may
reduce the number of shares of Common Stock reserved for issuance to a Holder
under this Section 11 where such reduction is proportionate to a reverse stock
split effected for a business purpose other than affecting the obligations of
Company under this Section 11, which reverse stock split affects all shares of
Common Stock equally. Following complete conversion of all the Series H
Preferred Stock, the Company may, with fifteen (15) days prior written notice to
Holder, reduce the Reserved Amount to one hundred percent (100%) of the number
of shares of Common Stock issuable upon the full exercise of the Common
Warrants; provided, however, that the Reserved Amount shall continue to be
subject to increase pursuant to Section 11 hereof.
(d) Cap Amount. Unless otherwise permitted by Nasdaq, in no
event shall the total number of shares of Common Stock issued upon conversion of
the Series H Preferred Stock exceed the maximum number of shares of Common Stock
(the "Cap Amount") that the Company can, without shareholder approval, so issue
pursuant to Nasdaq Rule 4460(i)(1)(d)(ii) (or any other applicable Nasdaq Rules
or any successor rule) (the "Nasdaq 20% Rule"). The Cap Amount shall be
allocated pro-rata to the holders of Series H Preferred Stock as provided in
subsection (f) below. In the event the Company is prohibited from issuing shares
of Common Stock as a result of the operation of this subsection (d), the Company
shall comply with subsection (f) below.
(e) Allocations of Cap Amount and Reserved Amount. The initial
Cap Amount and Reserved Amount shall be allocated pro rata among the Holders of
Series H Preferred Stock based on the number of the shares of Series H Preferred
Stock initially issued to each Holder. Each increase to the Cap Amount and
Reserved Amount shall be allocated pro rata among the Holders of Series H
Preferred Stock based on the number of the shares of Series H Preferred Stock
held by each Holder at the time of the increase in the Cap Amount or Reserved
Amount, as the case may be. In the event a holder shall sell or otherwise
transfer any of such Holder's shares of Series H Preferred Stock, each
transferee shall be allocated a pro rata portion of such transferor's Cap amount
and Reserved Amount. Any portion of the Cap Amount or Reserved Amount which
remains allocated to any person or entity which does not hold any Series H
Preferred Stock shall be allocated to the remaining
11
<PAGE> 12
holders of shares of Series H Preferred Stock, pro rata based on the number of
shares of Series H Preferred Stock then held by such Holders.
(f) Inability to Convert due to Cap Amount.
Obligation to Cure. If at any time the then unissued
portion of any Holder's Cap Amount is less than 125% of the number of shares of
Common Stock then issuable upon conversion of such Holder's shares of Series H
Preferred Stock (a "Trading Market Trigger Event"), the Company shall
immediately notify the Holders of Series H Preferred Stock of such occurrence
and shall immediately take all necessary action (including, if necessary,
approval of its shareholders to authorize the issuance of the full number of
shares of Common Stock which would be issuable upon the conversion of Series H
Preferred Stock but for the Cap Amount) to eliminate any prohibitions under
applicable law or the rules or regulations of any stock exchange, interdealer
quotation system or other self-regulatory organization with jurisdiction over
the Company or any of its securities on the Company's ability to issue shares of
Common Stock in excess of the Cap Amount. In the event the Company fails to
eliminate all such prohibitions within one hundred twenty (120) days after the
Trading Market Trigger Event (provided, however, that (A) the Company must file
preliminary proxy materials with the SEC within thirty (30) days of the Trading
Market Trigger Event and (B) officers and directors of the Company shall
promptly upon the occasion of any such Trading Market Trigger event enter into
irrevocable agreements to vote all of their shares in favor of eliminating such
prohibitions), each Holder of Series H Preferred Stock shall thereafter have the
option, exercisable in whole or in part at any time and from time to time by
delivery of written notice ("Cap Redemption Notice") to the Company, to require
the Company, to purchase for cash, at an amount per share equal to the
Redemption Rate in effect on the date of the Cap Redemption Notice, a portion of
the Holder's Series H Preferred Stock , which, if converted would require the
issuance of Common stock in excess of the holder's allocated portion of the Cap
Amount. If the Company fails to redeem any such shares within five (5) business
days after its receipt of a Cap Redemption Notice, then such Holder shall be
entitled to the remedies provided in Section 13 below.
Section 12. Failure to Satisfy Conversions.
(a) Conversion Failure Payments. If, subject to the Company's
right of Redemption Upon Receipt of Notice of Conversion set forth in Section
6(a), at any time a Holder is so entitled, (x) a Holder submits a Notice of
Conversion (or is deemed to submit such notice pursuant to Section 5(c) hereof),
and the Company fails for any reason to deliver, on or prior to the third (3rd)
business day following the Deadline ("Delivery Period") for such conversion,
such number of shares of Common Stock to which such Converting Holder is
entitled upon such conversion (which shares shall be listed, authorized,
reserved, registered, and freely tradable to the extent required in this Series
H Certificate of Designation, the Registration Rights Agreement between the
Company and the Holder(s) and the Subscription Agreement between the Company and
the Holder(s), collectively referred to as the "Governing Agreements"), or (y)
the Company provides notice to Holder at any time of its intention not to issue
shares of Common Stock upon exercise by Holder of its conversion rights in
accordance with the terms of this Certificate of Designation (each of (x) and
(y) being a "Conversion Failure"), then the Company shall pay to such Holder
cash damages in an amount equal to the lower of:
(i) "Damages Amount" X "D" X .005, and
(ii) the highest interest rate permitted by applicable
law, where:
"D" means the number of days beginning the date of the Conversion
Failure through and including the Cure Date with respect to such Conversion
Failure;
"Damages Amount" means the Original Series H Issue Price for each share
of Series H Preferred Stock subject to conversion plus all accrued and unpaid
Premium thereon as of the first day of the Conversion Failure, plus all damage
payments previously owed and unpaid.
"Cure Date" means (i) with respect to a Conversion Failure described in
clause (x) of its definition, the date the Company effects the conversion of the
shares of Series H Preferred Stock submitted for conversion and (ii) with
respect to a Conversion Failure described in clause (y) of its
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<PAGE> 13
definition, the date the Company undertakes in writing to timely issue Common
Stock in satisfaction of all conversions of Series H Preferred Stock in
accordance with the terms of this Certificate of Designation.
The payments to which a Holder shall be entitled pursuant to this
Section are referred to herein as "Conversion Failure Payments" and shall be
paid monthly on a current basis. The parties agree that the damages caused by a
breach hereof would be difficult or impossible to estimate accurately. A Holder
may elect to receive accrued Conversion Failure Payments in cash or to convert
all or any portion of such accrued Conversion Failure Payments, at any time,
into Common Stock at the lowest Conversion Price in effect during the period
beginning on the date of the Conversion Failure through the Cure Date for such
Conversion Failure. In the event a Holder elects to receive any Conversion
Failure Payments in cash, it shall so notify the Company in writing. In the
event a Holder elects to convert all or any portion of the Conversion Failure
Payments, such Holder shall indicate on a Notice of Conversion such portion of
the Conversion Failure Payments which such Holder elects to so convert and such
conversion shall otherwise be effected in accordance with provisions of Section
5.
(b) Buy-In Cure. Unless a Conversion Failure described in
clause (y) of Section 12(a) hereof has occurred with respect to such a Holder,
if (i) the Company fails for any reason to deliver during the Delivery Period
shares of Common Stock to a Holder upon a conversion of the Series H Preferred
Stock and (ii) after the applicable Delivery Period with respect to such
conversion, a Holder purchases (in an open market transaction or otherwise)
shares of Common Stock to make delivery upon a sale by a Holder of the shares of
Common Stock (the "Sold Shares") which such Holder anticipated receiving upon
such conversion (a "Buy-In"), the Company shall pay such Holder within two (2)
business days following receipt of written notice of a claim pursuant to Section
12(b) (in addition to any other remedies available to Holder) the amount by
which (x) such Holder's total purchase price (including brokerage commission, if
any) for the shares of Common Stock so purchased exceeds (y) the net proceeds
received by such Holder from the sale of the Sold Shares. For example, if a
Holder purchases shares of Common Stock having a total purchase price of $11,000
to cover a Buy-In with respect to shares of Common Stock sold for $10,000, the
Company will be required to pay such Holder $1,000. A Holder shall provide the
Company written notification indicating any amounts payable to Holder pursuant
to this Section 12.
(c) Adjustment to Conversion Price. If a Holder has not
received certificates for all shares of Common Stock within three (3) business
days following the expiration of the Delivery Period with respect to a
conversion of any portion of any of such Holder's Series H Preferred Stock for
any reason, then the Conversion Price applicable upon conversion of such portion
of the Series H Preferred Stock shall thereafter be the lowest Conversion Price
in effect during the period beginning on, and including, such Conversion Date
through and including the Cure Date. If there shall occur a Conversion Failure
of the type described in clause (y) of Section 12(a), then the Fixed Conversion
Price with respect to any conversion of Series H Preferred Stock thereafter
shall be the lowest Conversion Price in effect at any time during the period
beginning on, and including, the date of the occurrence of such Conversion
Failure through and including the Cure Date. The Conversion Price shall
thereafter be subject to further adjustment for any events described in Section
5(d).
Section 13. Events of Default.
(a) Holder's Option to Demand Prepayment. Upon the occurrence
of an Event of Default (as herein defined), each Holder shall have the right to
elect at any time and from time to time prior to the cure by Company of such
Event of Default to have all or any portion of such Holder's then outstanding
Series H Preferred Stock prepaid by the Company for an amount equal to the
Holder Demand Prepayment Amount (as herein defined).
(i) The right of a Holder to elect prepayment shall be
exercisable upon the occurrence of an Event of Default by such Holder in its
sole discretion by delivery of a Demand Prepayment Notice (as herein defined) in
accordance with the procedures set forth in this Section 13. Notwithstanding the
exercise of such right, the Holder shall be entitled to exercise all other
rights and remedies available under the provisions of this Certificate of
Designation and at law or in equity.
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<PAGE> 14
(ii) A Holder shall effect each demand for prepayment
under this Section 13 by giving at least two (2) business days prior to written
notice (the "Demand Prepayment Notice") of the date which such prepayment is to
become effective (the "Effective Date of Demand of Prepayment"), the Series H
Preferred Stock selected for prepayment and the Holder Demand Prepayment Amount
to the Company at the address and facsimile number provided in the stock records
of the Company, which Demand Prepayment Notice shall be deemed to have been
delivered on the business day after the date of transmission of Holder's
facsimile (with a copy sent by overnight courier to the Company) of such notice.
(iii) The Holder Demand Prepayment Amount shall be paid to
a Holder whose Series H Preferred Stock are being prepaid within one (1)
business day following the Effective Date of Demand of Prepayment; provided,
however, that the Company shall not be obligated to deliver any portion of the
Holder Demand Prepayment Amount until one (1) business day following either the
date on which the Series H Preferred Stock being prepaid are delivered to the
office of the Company or the Transfer Agent, or the date on which the Holder
notifies the Company or the Transfer Agent that such Series H Preferred Stock
have been lost, stolen or destroyed and delivers the documentation required in
accordance with Section 5(b)(i) hereof.
(b) Holder Demand Prepayment Amount. The "Holder Demand
Prepayment Amount" means the greater of: (a) 1.3 times the Total Value of the
Series H Preferred Stock for which demand is being made, through the date of
prepayment or (b) the product of (1) the highest price at which the Common Stock
is traded on the date of the Event of Default (or on the most recent trading
date for the Common Stock if the Common Stock is not traded on such date)
divided by the Conversion Price in effect as of the date of the Event of
Default, and (2) the Total Value through the date of prepayment.
(c) Events of Default. An "Event of Default" means any one of
the following:
(i) a Conversion Failure described in Section 12(a)
hereof;
(ii) a Share Authorization Failure described in Section
11(b) hereof, if such Share Authorization Failure continues uncured for ninety
(90) days after the Reservation Trigger Date;
(iii) the Company fails, and such failure continues
uncured for three (3) business days after the Company has been notified thereof
in writing by a Holder, to satisfy the share reservation requirements of Section
11 hereof;
(iv) the Company fails to maintain an effective
registration statement as required by the Registration Rights Agreement between
the Company and the Holder(s) (the "Registration Rights Agreement") except where
such failure lasts no longer than three (3) consecutive trading days and is
caused solely by failure of the Securities and Exchange Commission to timely
review the customary submission of or respond to the customary requests of the
Company;
(v) for three (3) consecutive trading days or for an
aggregate of ten (10) trading days in any nine (9) month period, the Common
Stock (including any of the shares of Common Stock issuable upon conversion of
the Series H Preferred Stock, and exercise of the Common Warrants) is (i)
suspended from trading on any of Nasdaq SmallCap, NMS, NYSE, AMEX or the OTC
Bulletin Board, or (ii) is not qualified for trading on at least one of Nasdaq
SmallCap, NMS, NYSE, AMEX or the OTC Bulletin Board;
(vi) the Company fails, and such failure continues
uncured for three (3) business days after the Company has been notified thereof
in writing by a Holder, to remove any restrictive legend on any certificate for
any shares of Common Stock issued to a Holder upon conversion of any Series H
Preferred Stock, or exercise of any Common Warrant as and when required by this
Certificate of Designation, the Common Warrants, the Subscription Agreement,
between the Company and the Holder(s) (the "Subscription Agreement") or the
Registration Rights Agreement;
14
<PAGE> 15
(vii) the Company breaches, and such breach continues
uncured for three (3) business days after the Company has been notified thereof
in writing by a Holder, any significant covenant or other material term or
condition of this Certificate of Designation, the Subscription Agreement, the
Common Warrants or the Registration Rights Agreement;
(viii) any representation or warranty of the Company made
herein or in any agreement, statement or certificate given in writing pursuant
hereto or in connection herewith (including, without limitation, the
Subscription Agreement and Registration Rights Agreement), shall be false or
misleading in any material respect when made;
(ix) the Company or any subsidiary of the Company shall
make an assignment for the benefit of its creditors, or apply for or consent to
the appointment of a receiver or trustee for it or for a substantial part of its
property or business, or such receiver or trustee shall otherwise be appointed;
or
(x) bankruptcy, insolvency, reorganization or
liquidation proceedings or other proceedings for relief under any bankruptcy law
or any law for the relief of debtors shall be instituted by or against the
Company or any subsidiary of the Company (and such proceedings shall continue
unstayed for thirty (30) days).
(d) Failure to Pay Damages Amount. If the Company fails to pay
the Holder Demand Prepayment Amount within five (5) business days of its receipt
of a Demand Prepayment Notice, then such Holder shall have the right, at any
time and from time to time prior to the payment of the Holder Demand Prepayment
Amount, to require the Company, upon written notice, to immediately convert (in
accordance with the terms of Section 5) all or any portion of the Holder Demand
Prepayment Amount, into shares of Common Stock at the then current Conversion
Price, provided that if the Company has not delivered the full number of shares
of Common Stock issuable upon such conversion within three (3) business days
after the Company receives written notice of such conversion, the Conversion
Price with respect to such Holder Demand Prepayment Amount shall thereafter be
deemed to be the lowest Conversion Price in effect during the period beginning
on the date of the Event of Default through the date on which the Company
delivers to the Holder the full number of freely tradable shares of Common Stock
issuable upon such conversion. In the event the Company is not able to pay all
amounts due and payable with respect to all Series H Preferred Stock subject to
Holder Demand Prepayment Notices, the Company shall pay the Holders such amounts
pro rata, based on the total amounts payable to such Holder relative to the
total amounts payable to all Holders.
[INTENTIONALLY LEFT BLANK]
15
<PAGE> 16
Section 14. Remedies, Other Obligations, Breaches and Injunctive
Relief. The remedies provided in this Certificate of Designation shall be
cumulative and in addition to all other remedies available under the Certificate
of Designation at law or in equity (including a decree of specific performance
and/or other injunctive relief), no remedy contained herein shall be deemed a
waiver of compliance with the provision giving rise to such remedy and nothing
herein shall limit a holder's right to pursue actual damages for any failure by
the Company to comply with the terms of this Certificate of Designation. Amounts
set forth or provided for herein with respect to payments, conversion and the
like (and the computation thereof) shall be the amounts to be received by the
holder hereof and shall not, except as expressly provided herein, be subject to
any other obligation of the Company (or the performance thereof). The Company
acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the holders of Series H Preferred Stock and that the remedy
at law for any such breach may be inadequate. The Company therefore agrees, in
the event of any such breach or threatened breach, the holders of Series H
Preferred Stock shall be entitled, in addition to all other available remedies,
to an injunction restraining any breach, without the necessity of showing
economic loss and without any bond or other security being required.
Signed on February ____, 1998
------------------------------------------
Dennis W. Healey, Exec. Vice President/CFO
16
<PAGE> 1
Exhibit 4(xviii)
CERTIFICATE OF DESIGNATION OF
SERIES I PREFERRED STOCK
OF
VIRAGEN, INC.
It is hereby certified that:
1. The name of the Company (hereinafter called the "Company") is
Viragen, Inc., a Delaware corporation.
2. The certificate of incorporation of the Company authorizes the
issuance of one million (1,000,000) shares of preferred stock, $1.00 par value
per share, and expressly vests in the Board of Directors of the Company the
authority provided therein to issue any or all of said shares in one (1) or more
series and by resolution or resolutions to establish the designation and number
and to fix the relative rights and preferences of each series to be issued.
3. The Board of Directors of the Company, pursuant to the authority
expressly vested in it as aforesaid, has adopted the following resolutions
creating a Series I issue of Preferred Stock:
RESOLVED, that two hundred (200) of the one million (1,000,000)
authorized shares of Preferred Stock of the Company shall be designated Series I
Preferred Stock, $1.00 par value per share, and shall possess the rights and
preferences set forth below:
Section 1. Designation and Amount. The shares of such series shall have
a par value of $1.00 per share and shall be designated as Series I Preferred
Stock (the "Series I Preferred Stock") and the number of shares constituting the
Series I Preferred Stock shall be Two Hundred (200). The Series I Preferred
Stock shall be offered at a purchase price of Ten Thousand Dollars ($10,000) per
share (the "Original Series I Issue Price"), with a eight percent (8%) per annum
accretion rate as set forth herein.
Section 2. Rank. The Series I Preferred Stock shall rank: (i) junior to
any class or series of capital stock of the Company hereafter created
specifically ranking by its terms senior to the Series I Preferred Stock
(collectively, the "Senior Securities"); (ii) prior to all of the Company's
Common Stock, $0.01 par value per share ("Common Stock"); (iii) prior to any
class or series of capital stock of the Company hereafter created not
specifically ranking by its terms senior to or on parity with any Series I
Preferred Stock of whatever subdivision (collectively, with the Common Stock,
"Junior Securities"); and (iv) on parity with the Series H Preferred Stock and
any class or series of capital stock of the Company hereafter created
specifically ranking by its terms on parity with the Series I Preferred Stock
("Parity Securities") in each case as to distributions of assets upon
liquidation, dissolution or winding up of the Company, whether voluntary or
involuntary (all such distributions being referred to collectively as
"Distributions").
Section 3. Dividends. The Series I Preferred Stock will bear no
dividends, and the holders of the Series I Preferred Stock ("Holders") shall not
be entitled to receive dividends on the Series I Preferred Stock.
Section 4. Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up
of the Company ("Liquidation Event"), either voluntary or involuntary, the then
Holders of shares of Series I Preferred Stock shall be entitled to receive,
immediately after any distributions to Senior Securities required by the
Company's Certificate of Incorporation or any certificate of designation, and
prior in preference to any distribution to Junior Securities but in parity with
any distribution to Parity Securities, an amount per share equal to the sum of
(i) the Original Series I Issue Price for each outstanding share of Series I
Preferred Stock and (ii) an amount equal to eight percent (8%) of the Original
Series I Issue Price, per annum, accruing daily, for the period that has passed
since the date that, in connection with the consummation of the purchase by
Holder of shares of Series I Preferred
<PAGE> 2
Stock from the Company, the escrow agent first had in its possession funds
representing full payment for the shares of Series I Preferred Stock (such
amount being referred to herein as the "Premium"). If upon the occurrence of
such event, and after payment in full of the preferential amounts with respect
to the Senior Securities, the assets and funds available to be distributed among
the Holders of the Series I Preferred Stock and Parity Securities shall be
insufficient to permit the payment to such Holders of the full preferential
amounts due to the Holders of the Series I Preferred Stock and the Parity
Securities, respectively, then the entire assets and funds of the Company
legally available for distribution shall be distributed among the Holders of the
Series I Preferred Stock and the Parity Securities, pro rata, based on the
respective liquidation amounts to which each such series of stock is entitled by
the Company's Certificate of Incorporation and any certificate(s) of designation
relating thereto.
(b) Upon the completion of the distribution required by
subsection 4(a), if assets remain in this Company, they shall be distributed to
holders of Junior Securities in accordance with the Company's Certificate of
Incorporation including any duly adopted certificate(s) of designation.
(c) At each Holder's option, a sale, conveyance or disposition
of all or substantially all of the assets of the Company or the effectuation by
the Company of a transaction or series of related transactions in which more
than fifty percent (50%) of the voting power of the Company is disposed of shall
be deemed to be a Liquidation Event as defined in Section 4(a); provided further
that (i) a consolidation, merger, acquisition, or other business combination of
the Company with or into any other publicly traded company or companies shall
not be treated as a Liquidation Event as defined in Section 4(a) but instead
shall be treated pursuant to Section 5(d) hereof, and (ii) a consolidation,
merger, acquisition, or other business combination of the Company with or into
any other non-publicly traded company or companies shall be treated as a
Liquidation Event as defined in Section 4(a). The Company shall not effect any
transaction described in subsection 4(c)(ii) unless it first gives thirty (30)
business days prior notice of such transaction (during which time the Holder
shall be entitled to immediately convert any or all of its shares of Series I
Preferred Stock into Common Stock at the Conversion Price, as defined below,
then in effect, which conversion shall not be subject to the conversion
restrictions set forth in Section 5(a); provided however, that, if such
conversion takes place prior to the end of the holding period set forth in
Section 5(a), the Variable Conversion Price (as defined in Section 5(a)), shall
equal eighty-two percent (82%)).
(d) In the event that, immediately prior to the closing of a
transaction described in Section 4(c) which would constitute a Liquidation
Event, the cash distributions required by Section 4(a) or Section 6 have not
been made, the Company shall either: (i) cause such closing to be postponed
until such cash distributions have been made, or (ii) cancel such transaction,
in which event the rights of the Holders of Series I Preferred Stock shall be
the same as existing immediately prior to such proposed transaction.
Section 5. Conversion. Subject to Section 4(c) herein, the record
Holders of this Series I Preferred Stock shall have conversion rights as follows
(the "Conversion Rights"):
(a) Right to Convert. The record Holder of the Series I
Preferred Stock shall be entitled to convert, subject to the Company's right of
Redemption Upon Receipt of Notice of Conversion set forth in Section 6(a) and
the conversion restrictions herein below, any or all the shares of the Series I
Preferred Stock on or after August 19, 1998, at the office of the Company or its
designated transfer agent (the "Transfer Agent"), into that number of fully-paid
and non-assessable shares of Common Stock calculated in accordance with the
following formula (the "Conversion Rate"):
Number of shares of Common Stock issued upon conversion of one (1)
share of Series I Preferred Stock =
(.08) (N/365) (10,000) + 10,000
-------------------------------
Conversion Price
where,
2
<PAGE> 3
- N= the number of days between (i) the date that, in connection with
the consummation of the initial purchase by Holder of shares of Series
I Preferred Stock from the Company, the escrow agent first had in its
possession funds representing full payment for the shares of Series I
Preferred Stock for which conversion is being elected, and (ii) the
applicable Date of Conversion (as defined in Section 5(b)(iv) below)
for the shares of Series I Preferred Stock for which conversion is
being elected;
- Conversion Price = the lower of (i) the "Fixed Conversion Price,"
which shall equal the lower of (a) $2.15 or (b) the Market Price, as
defined below, on August 19, 1998, subject to a minimum Fixed
Conversion Price equal to a Market Price of eighty five cents ($0.85);
and (ii) the "Variable Conversion Price," which shall equal 82% of the
Market Price, as defined below, on the Date of Conversion, as defined
below; and
provided, however, that, unless otherwise indicated herein, beginning on August
19, 1998, the right of the Holder to convert into Common Stock shall be limited
to a maximum of fifteen percent (15%) of the aggregate principal amount of the
Series I Preferred Stock issued to such Holder, and for each one (1) month
period which expires thereafter, the Holder shall have the right to convert into
Common Stock fifteen percent (15%) of the aggregate principal amount of the
Series I Preferred Stock issued to such Holder, (the number of shares that may
be converted at any given time, in the aggregate, is referred to hereinafter as
the "Conversion Quota");and provided, further, in the event that the Holder
elects not to convert its full Conversion Quota during any one (1) month period,
the unconverted amount shall be carried forward and added to the Conversion
Quota and thereafter the Holder may, from time to time, convert any portion of
the Conversion Quota, subject to a maximum of twenty-five percent (25%) of the
aggregate principal amount of the Series I Preferred Stock issued to such Holder
(the "Conversion Collar") per month. In the event that the Company closes an
offering of debt or equity securities for cash in a private capital raising
transaction while the Conversion Quota is in effect, the Conversion Quota shall
no longer apply after the closing date of such offering.
As used herein, "Last Closing Date" shall mean February 19, 1998, which
was the date of the last closing of a purchase and sale of the Series H
Preferred Stock that occurred pursuant to the offering of the Series H Preferred
Stock by the Company.
For purposes hereof, any Holder which acquires shares of Series I
Preferred Stock from another Holder (the "Transferor") and not upon original
issuance from the Company shall be entitled to exercise its conversion right as
to the percentages of such shares specified under Section 5(a) in such amounts
and at such times such that the number of shares eligible for conversion by such
Holder at any time shall be in the same proportion that the number of shares of
Series I Preferred Stock acquired by such Holder from its Transferor bears to
the total number of shares of Series I Preferred Stock originally issued by the
Company to such Transferor (or its predecessor Transferor).
For purposes hereof, the term "Closing Bid Price" shall mean the
closing bid price of the Company's Common Stock on the Nasdaq National Market
System ("NMS"); or if no longer traded on the Nasdaq National Market System, the
closing bid price on the principal national securities exchange or the
over-the-counter market on which the Common Stock is so traded and if not
available, the mean of the high and low prices on the principal national
securities exchange or the over-the counter market on which the Common Stock is
so traded.
For purposes hereof, the term "Market Price" shall mean the average of
the lowest two (2) Closing Bid Prices of the Company's Common Stock during the
twenty (20) trading days immediately preceding the date in question.
(b) Mechanics of Conversion. In order to convert Series I
Preferred Stock into full shares of Common Stock, the Holder shall (i) send via
facsimile, on or prior to 11:59 p.m., New York City time (the "Conversion Notice
Deadline") on the Date of Conversion, a copy of the fully executed notice of
conversion ("Notice of Conversion") to the Company at the office of the Company
3
<PAGE> 4
and to its designated transfer agent (the "Transfer Agent") for the Series I
Preferred Stock stating that the Holder elects to convert, which notice shall
specify the Date of Conversion, the number of shares of Series I Preferred Stock
to be converted, the applicable Conversion Price and a calculation of the number
of shares of Common Stock issuable upon such conversion (together with a copy of
the front page of each certificate to be converted) and (ii) surrender to a
common courier for delivery to the office of the Company or the Transfer Agent,
the original certificates representing the Series I Preferred Stock being
converted (the "Preferred Stock Certificates"), duly endorsed for transfer;
provided, however, that the Company shall not be obligated to issue certificates
evidencing the shares of Common Stock issuable upon such conversion unless
either the Preferred Stock Certificates are delivered to the Company or its
Transfer Agent as provided above, or the Holder notifies the Company or its
Transfer Agent that such certificates have been lost, stolen or destroyed
(subject to the requirements of subparagraph (i) below). Upon receipt by the
Company of a facsimile copy of a Notice of Conversion, the Company shall
immediately send, via facsimile, a confirmation of receipt of the Notice of
Conversion to Holder which shall specify that the Notice of Conversion has been
received and the name and telephone number of a contact person at the Company
whom the Holder should contact regarding information related to the Conversion.
In the case of a dispute as to the calculation of the Conversion Rate, the
Company shall promptly issue to the Holder the number of Shares that are not
disputed and shall submit the disputed calculations to its outside accountant
via facsimile within three (3) days of receipt of Holder's Notice of Conversion.
The Company shall cause the accountant to perform the calculations and notify
the Company and Holder of the results no later than two business days from the
time it receives the disputed calculations.
Accountant's calculation shall be deemed conclusive absent manifest error.
(i) Lost or Stolen Certificates. Upon receipt by the Company
of evidence of the loss, theft, destruction or mutilation of any Preferred Stock
Certificates representing shares of Series I Preferred Stock, and (in the case
of loss, theft or destruction) of indemnity or security reasonably satisfactory
to the Company, and upon surrender and cancellation of the Preferred Stock
Certificate(s), if mutilated, the Company shall execute and deliver new
Preferred Stock Certificate(s) of like tenor and date. However, the Company
shall not be obligated to re-issue such lost or stolen Preferred Stock
Certificates if Holder contemporaneously requests the Company to convert such
Series I Preferred Stock into Common Stock.
(ii) Delivery of Common Stock Upon Conversion. The Company
shall or shall cause the Transfer Agent to, no later than the close of business
on the third (3rd) business day (the "Deadline") after receipt by the Company or
the Transfer Agent of a facsimile copy of a Notice of Conversion and receipt by
Company or the Transfer Agent of all necessary documentation duly executed and
in proper form required for conversion, including the original Preferred Stock
Certificates to be converted (or after provision for security or indemnification
in the case of lost or destroyed certificates, if required), issue and surrender
to a common courier for either overnight or (if delivery is outside the United
States) two (2) day delivery to the Holder at the address of the Holder as shown
on the stock records of the Company a certificate for the number of shares of
Common Stock to which the Holder shall be entitled as aforesaid.
(iii) No Fractional Shares. If any conversion of the Series I
Preferred Stock would create a fractional share of Common Stock or a right to
acquire a fractional share of Common Stock, such fractional share shall be
disregarded and the number of shares of Common Stock issuable upon conversion,
in the aggregate, shall be the next higher number of shares.
(iv) Date of Conversion. The date on which conversion occurs
(the "Date of Conversion") shall be deemed to be the date set forth in such
Notice of Conversion, provided (i) that the advance copy of the Notice of
Conversion is sent via facsimile to the Company before 11:59 p.m., New York City
time, on the Date of Conversion, and (ii) that the original Preferred Stock
Certificates representing the shares of Series I Preferred Stock to be converted
are surrendered by depositing such certificates with a common courier, for
delivery to the Company or the Transfer Agent as provided above, as soon as
practicable after the Date of Conversion. The person or persons entitled to
receive the shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record Holder or Holders of such shares of
Common Stock on the Date of Conversion.
4
<PAGE> 5
(c) Automatic Conversion or Redemption. Each share of Series I
Preferred Stock outstanding on August 19, 2000 or, if not a business day, the
first business day thereafter ("Termination Date") automatically shall, at the
option of the Company, either (i) be converted ("Automatic Conversion") into
Common Stock on such date at the Conversion Rate then in effect (calculated in
accordance with the formula in Section 5(a) above), and the Termination Date
shall be deemed the Date of Conversion with respect to such conversion for
purposes of this Certificate of Designation, or (ii) be redeemed ("Automatic
Redemption") by the Company for cash in an amount equal to the Total Value (as
defined in Section 6(b)(i) below) of the shares of Series I Preferred Stock
being redeemed. If the Company elects to redeem, on the Termination Date, the
Company shall send to the Holders of outstanding Series I Preferred Stock notice
(the "Automatic Redemption Notice") via facsimile of its intent to effect an
Automatic Redemption of the outstanding Series I Preferred Stock. If the Company
does not send such notice to Holder on such date, an Automatic Conversion shall
be deemed to have occurred. If an Automatic Conversion occurs, the Company and
the Holders shall follow the applicable conversion procedures set forth in this
Certificate of Designation; provided, however, that the Holders are not required
to send the Notice of Conversion contemplated by Section 5(b). If the Company
elects to redeem, each Holder of outstanding Series I Preferred Stock shall send
their certificates representing the Series I Preferred Stock to the Company
within five (5) days of the date of receipt of the Automatic Redemption Notice
from the Company, and the Company shall pay the applicable redemption price to
each respective Holder within five (5) days of the receipt of such certificates.
The Company shall not be obligated to deliver the redemption price unless the
certificates representing the Series I Preferred Stock are delivered to the
Company, or, in the event one or more certificates have been lost, stolen,
mutilated or destroyed, unless the Holder has complied with Section 5(b)(i). If
the Company elects to redeem under this Section 5(c) and the Company fails to
pay the Holders the redemption price within five (5) business days of its
receipt of the certificates representing the shares of Series I Preferred Stock
to be redeemed as required by this Section 5(c), then an Automatic Conversion
shall be deemed to have occurred and, upon receipt of the Preferred Stock
certificates, the Company shall immediately deliver to the Holders the
certificates representing the number of shares of Common Stock to which the
Holders would have been entitled upon Automatic Conversion using the lowest
Conversion Price (as defined in Section 5 hereof) in effect during the period
beginning on the Termination Date and ending on the date the Transfer Agent
issues Common Stock pursuant to this Section 5(c). Nothing in this Section 5(c)
shall be construed to limit Holder's ability to pursue Holder's rights under
Section 13 hereof.
(d) Adjustment to Conversion Rate.
(i) Adjustment to Fixed Conversion Price Due to
Stock Split, Stock Dividend, Etc. If, prior to the conversion of all of the
Series I Preferred Stock, the number of outstanding shares of Common Stock is
increased by a stock split, stock dividend to all of the Holders of its Common
Stock, or other similar event, the Fixed Conversion Price shall be
proportionately reduced, or if the number of outstanding shares of Common Stock
is decreased by a combination or reclassification of shares, or other similar
event, the Fixed Conversion Price shall be proportionately increased.
(ii) Adjustment to Variable Conversion Price. If, at
any time when any shares of the Series I Preferred Stock are issued and
outstanding, the number of outstanding shares of Common Stock is increased or
decreased by a stock split, stock dividend, or other similar event, which event
shall have taken place during the reference period for determination of the
Conversion Price for any conversion of the Series I Preferred Stock, then the
Variable Conversion Price shall be calculated giving appropriate effect to the
stock split, stock dividend, combination, reclassification or other similar
event for all twenty (20) trading days immediately preceding the Date of
Conversion.
(iii) Adjustments.
(A) Adjustment Due to Merger, Consolidation,
Etc. If, prior to the conversion of all Series I Preferred Stock, there shall be
any merger, consolidation, exchange of shares, recapitalization, reorganization,
or other similar event, as a result of which shares of Common Stock of the
Company shall be changed into (or the shares of Common Stock become entitled to
receive) the same or a different number of shares of the same or another class
or classes of stock or securities of the Company or another entity or there is a
sale of all or substantially all the Company's
5
<PAGE> 6
assets or there is a change of control transaction not deemed to be a
liquidation pursuant to Section 4(c), then the Holders of Series I Preferred
Stock shall thereafter have the right to receive upon conversion of Series I
Preferred Stock, upon the basis and upon the terms and conditions specified
herein and in lieu of the shares of Common Stock immediately theretofore
issuable upon conversion, such stock, securities and/or other assets which the
Holder would have been entitled to receive in such transaction had the Series I
Preferred Stock been converted immediately prior to such transaction, and in any
such case appropriate provisions shall be made with respect to the rights and
interests of the Holders of the Series I Preferred Stock to the end that the
provisions hereof (including, without limitation, provisions for the adjustment
of the Conversion Price and of the number of shares issuable upon conversion of
the Series I Preferred Stock) shall thereafter be applicable, as nearly as may
be practicable in relation to any securities thereafter deliverable upon the
exercise hereof. The Company shall not effect any transaction described in this
subsection 5(d)(iii) unless (a) it first gives at least thirty (30) business
days prior notice of such merger, consolidation, exchange of shares,
recapitalization, reorganization, or other similar event (during which time the
Holder shall be entitled to convert its shares of Series I Preferred Stock into
Common Stock, which conversions shall not be subject to the conversion
restrictions set forth in Section 5(a)); and (b) the resulting successor or
acquiring entity (if not the Company) assumes by written instrument the
obligations of the Company under this Certificate of Designation including this
subsection 5(d)(iii).
(B) Adjustment Due to Distribution. If at
any time after the Last Closing Date, the Company shall declare or make any
distribution of its assets (or rights to acquire its assets) to Holders of
Common Stock as a partial liquidating dividend, by way of return of capital or
otherwise (including any dividend or distribution to the Company's shareholders
in cash or shares (or rights to acquire shares) of capital stock of any other
public or private company, including but not limited to a subsidiary or spin-off
of the Company (a "Distribution"), then the Holders of Series I Preferred Stock
shall be entitled, upon any conversion of shares of Series I Preferred Stock
after the date of record for determining shareholders entitled to such
Distribution, to receive the amount of such assets which would have been payable
to the Holder with respect to the shares of Common Stock issuable upon such
conversion had such Holder been the holder of such shares of Common Stock on the
record date for determination of shareholders entitled to such Distribution.
(iv) Issuance of Other Securities. If, at any time
after the Last Closing Date the Company shall issue any securities which are
convertible into or exchangeable for Common Stock ("Convertible Securities")
either (i) at a conversion or exchange rate based on a discount from the market
price of the Common Stock at the time of conversion or exercise, or (ii) with a
fixed conversion or exercise price less than the Fixed Conversion Price, then,
at the Holder's option: (x) in the case of clause (i) the Variable Conversion
Price in respect of any conversion of Series I Preferred Stock after such
issuance shall be calculated utilizing the greatest discount applicable to any
such Convertible Securities, and (y) in the case of clause (ii) the Fixed
Conversion Price in respect of any conversion of Series I Preferred Stock after
such issuance shall be reduced to such lesser conversion or exercise price
applicable to any such Convertible Securities.
(v) No Fractional Shares. If any adjustment under
this Section 5(d) would create a fractional share of Common Stock or a right to
acquire a fractional share of Common Stock, such fractional share shall be
disregarded and the number of shares of Common Stock issuable upon conversion
shall be the next higher number of shares.
Section 6. Redemption by Company.
(a) Company's Right to Redeem Upon Receipt of Notice of
Conversion. If the Conversion Price of the Company's Common Stock is less than
the Fixed Conversion Price (as defined in Section 5(a)), at the time of receipt
of a Notice of Conversion pursuant to Section 5(b), the Company shall have the
right, in its sole discretion, to redeem in whole or in part any Series I
Preferred Stock submitted for conversion at the Redemption Rate (as defined
below), immediately prior to and in lieu of conversion ("Redemption Upon Receipt
of Notice of Conversion"). If the Company elects to redeem some, but not all, of
the Series I Preferred Stock submitted for conversion, the Company shall redeem
from among the Series I Preferred Stock submitted by the various shareholders
for conversion on the applicable date, a pro-rata amount from each such Holder
so submitting Series I Preferred Stock for conversion.
6
<PAGE> 7
(i) Redemption Price Upon Receipt of a Notice of
Conversion. The redemption price of Series I Preferred Stock under this Section
6(a) shall be calculated as follows ("Redemption Rate"):
<TABLE>
<CAPTION>
Closing Bid Price of the Common Stock on the Date of
Conversion for the Conversion Being Redeemed Redemption Rate
- ---------------------------------------------------- -----------------------------------------
<S> <C>
Less than $1.50 Total Value x 1.12
$1.50 or Greater Total Value X 1.175
</TABLE>
where,
"Total Value" shall mean the Stated Value of the Series I Preferred
Stock being redeemed, plus liquidated damages, Conversion Failure Payments, Late
Registration Payments and any other cash payments then due from the Company and
then unpaid, where "Stated Value" shall mean the Original Series I Issue Price
(as defined in Section 1) of each share of Series I Preferred Stock, together
with the accreted but unpaid Premium (as defined in Section 4(a)).
(ii) Mechanics of Redemption Upon Receipt of Notice
of Conversion. The Company shall effect each such redemption by giving notice of
its election to redeem, by facsimile, by 5:00 p.m. New York City time the next
business day following receipt of a Notice of Conversion from a Holder, and the
Company shall provide a copy of such redemption notice by overnight or two (2)
day courier, to (A) the Holder of the Series I Preferred Stock submitted for
conversion at the address and facsimile number of such Holder appearing in the
Company's register for the Series I Preferred Stock and (B) the Company's
Transfer Agent. Such redemption notice shall indicate whether the Company will
redeem all or part of the Series I Preferred Stock submitted for conversion and
the applicable redemption price.
(iii) [Intentionally Omitted].
(iv) Advance Notice of Redemption.
(A) Holder's Right to Elect to Receive
Notice of Cash Redemption by the Company. Holder shall have the right to require
Company to provide advance notice stating whether the Company will elect to
redeem Holder's shares of Series I Preferred Stock in cash, pursuant to the
Company's redemption rights discussed in Section 6(a).
(B) Mechanics of Holder's Election Notice.
Holder shall send notice ("Election Notice") to the Company and such other
person(s) as the Company may designate, (1) via facsimile and (2) via overnight
courier stating Holder's intention to require Company to disclose that if Holder
were to exercise his, her or its right of conversion (pursuant to Section 5)
whether Company would elect to redeem a specific number of shares of Holder's
Series I Preferred Stock for cash in lieu of issuing Common Stock. Company is
required to disclose to Holder what action Company would take over the five (5)
business day period subsequent to the date of Company's response to such
Election Notice, as further discussed in subsection 6(a)(iv)(C).
(C) Company's Response. Company must respond
by the close of business on the next business day following receipt of Holder's
Election Notice ("Company's Response Date"). The Company's response must state
whether it would redeem the shares, in whole or in part, or allow conversion
into shares without redemption. If Company does not respond to Holder by the
Company's Response Date, Company shall be required to issue to Holder Common
Stock upon Holder's conversion within the five (5) business day period
subsequent to the Company's Response Date.
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<PAGE> 8
(b) Company's Right to Redeem at its Election. At any time,
commencing on February 20, 1999, provided that such date shall be extended for
each day during which there is continuing an Event of Default,, the Company
shall have the right, in its sole discretion, to redeem ("Redemption at
Company's Election"), from time to time, any or all of the Series I Preferred
Stock; provided (i) the Company shall first provide thirty (30) business days
advance written notice as provided in subparagraph 6(b)(ii) below (which can be
given beginning thirty (30) business days prior to February 20, 1999), and (ii)
that the Company shall only be entitled to redeem Series I Preferred Stock
having an aggregate Stated Value (as defined below) of at least One Million
Dollars ($1,000,000). If the Company elects to redeem some, but not all, of the
Series I Preferred Stock, the Company shall redeem a pro-rata amount from each
Holder of the Series I Preferred Stock.
(i) Redemption Price At Company's Election. The
"Redemption Price At Company's Election" shall be calculated as a percentage of
Total Value, as that term is defined above, of the Series I Preferred Stock
redeemed pursuant to this Section 6(b), which percentage shall vary depending on
the date of Redemption at Company's Election (as defined below), and shall be
determined as follows:
<TABLE>
<CAPTION>
Date of Notice of Redemption at Company's Election % of Total Value
-------------------------------------------------- ----------------
<S> <C>
12 months and 1 day to 18 months following Last Closing Date 120%
18 months and 1 day to 30 months following Last Closing Date 115%
</TABLE>
(ii) Mechanics of Redemption at Company's Election.
The Company shall effect each such redemption by giving at least thirty (30)
business days prior written notice ("Notice of Redemption At Company's
Election") to (A) the Holders of the Series I Preferred Stock selected for
redemption, at the address and facsimile number of such Holder appearing in the
Company's Series I Preferred Stock register and (B) the Transfer Agent, which
Notice of Redemption At Company's Election shall be deemed to have been
delivered three (3) business days after the Company's mailing (by overnight or
two (2) day courier, with a copy by facsimile) of such Notice of Redemption At
Company's Election. Such Notice of Redemption At Company's Election shall
indicate (i) the number of shares of Series I Preferred Stock that have been
selected for redemption, (ii) the date which such redemption is to become
effective (the "Date of Redemption At Company's Election") and (iii) the
applicable Redemption Price At Company's Election, as defined in subsection
(b)(i) above. Notwithstanding the above, Holder may convert into Common Stock
pursuant to Section 5, prior to the close of business on the Date of Redemption
at Company's Election, any Series I Preferred Stock which it is otherwise
entitled to convert, which conversions shall not be subject to the conversion
restrictions set forth in Section 5(a), including Series I Preferred Stock that
has been selected for redemption at the Company's election pursuant to this
subsection 6(b); provided, however, that the Company shall still be entitled to
exercise its right to redeem upon receipt of a Notice of Conversion pursuant to
Section 6(a).
(c) Company Must Have Immediately Available Funds or Credit
Facilities. The Company shall not be entitled to send any Redemption Notice and
begin the redemption procedure under Sections 6(a) and 6(b) unless it has:
(i) the full amount of the redemption price in
cash, available in a demand or other immediately available account in a bank or
similar financial institution; or
(ii) immediately available credit facilities, in the
full amount of the redemption price with a bank or similar financial
institution; or
(iii) an agreement with a standby underwriter willing
to purchase from the Company a sufficient number of shares of stock to provide
proceeds necessary to redeem any stock that is not converted prior to
redemption; or
(iv) a combination of the items set forth in (i),
(ii) and (iii) above, aggregating the full amount of the redemption price.
8
<PAGE> 9
If the foregoing conditions of this Section 6(c) are satisfied and the
Company complies with Section 6(d) hereof, then any shares of Series I Preferred
Stock called for by a Redemption at Company's Election shall cease to be
outstanding for all purposes hereunder (including the right to convert or to
accrete additional Premium or to exercise any other right or privilege
hereunder) on the Date of Redemption at Company's Election and shall instead
represent the right to receive the Redemption Price at Company's Election
without interest from and after the Date of Redemption at Company's Election.
(d) Payment of Redemption Price.
(i) Each Holder submitting Preferred Stock being
redeemed under this Section 6 shall send their Series I Preferred Stock
Certificates so redeemed to the Company or its Transfer Agent, and the Company
shall pay the applicable redemption price to that Holder within five (5)
business days of the Date of Redemption at Company's Election. The Company shall
not be obligated to deliver the redemption price unless the Preferred Stock
Certificates so redeemed are delivered to the Company or its Transfer Agent, or,
in the event one (1) or more certificates have been lost, stolen, mutilated or
destroyed, unless the Holder has complied with Section 5(b)(i).
(ii) If the Company elects to redeem pursuant to
Section 6(a) hereof, and the Company fails to pay Holder the redemption price
within the time frame as required by this Section 6(d), then the Company shall
issue shares of Common Stock to any such Holder who has submitted a Notice of
Conversion in compliance with Section 5(b) hereof. The shares to be issued to
Holder pursuant to this provision shall be the number of shares determined using
the lowest Conversion Price (as defined in Section 5 hereof) in effect during
the period beginning on the date Holder sends its Notice of Conversion to
Company or Transfer Agent via facsimile and ending on the date the Transfer
Agent issues Common Stock pursuant to this Section 6(d)(ii). Nothing in this
Section 6(d) shall be construed to limit Holder's ability to pursue Holder's
rights under Section 13 hereof.
(e) Blackout Period. Notwithstanding the foregoing, the
Company may not either send out a redemption notice or effect a redemption
pursuant to Section 6(b) above during a Blackout Period (defined as a period
during which the Company's officers or directors would be prohibited from buying
or selling stock pursuant to the Securities Exchange Act of 1934, as amended,
because of their holding of material non-public information), unless the Company
shall first disclose the non-public information that resulted in the Blackout
Period; provided, however, that no redemption shall be effected until at least
ten (10) days after the Company shall have given the Holder written notice that
the Blackout Period has been lifted.
Section 7. Voting Rights. The Holders of the Series I Preferred Stock
shall have no voting power whatsoever, except as otherwise provided by the
General Corporation Law of the State of Delaware ("Delaware Law"), and no Holder
of Series I Preferred Stock shall vote or otherwise participate in any
proceeding in which actions shall be taken by the Company or the shareholders
thereof or be entitled to notification as to any meeting of the shareholders.
Notwithstanding the above, the Company shall provide Holder with
notification of any meeting of the shareholders regarding any major corporate
events affecting the Company. In the event of any taking by the Company of a
record of its shareholders for the purpose of determining shareholders who are
entitled to receive payment of any dividend or other distribution, any right to
subscribe for, purchase or otherwise acquire any share of any class or any other
securities or property (including by way of merger, consolidation or
reorganization), or to receive any other right, or for the purpose of
determining shareholders who are entitled to vote in connection with any
proposed sale, lease or conveyance of all or substantially all of the assets of
the Company, or any proposed liquidation, dissolution or winding up of the
Company, the Company shall mail a notice to Holder, at least ten (10) days prior
to the record date specified therein, of the date on which any such record is to
be taken for the purpose of such dividend, distribution, right or other event,
and a brief statement regarding the amount and character of such dividend,
distribution, right or other event to the extent known at such time.
9
<PAGE> 10
To the extent that under Delaware Law the vote of the Holders of the
Series I Preferred Stock, voting separately as a class, is required to authorize
a given action of the Company, the affirmative vote or consent of the Holders of
at least a majority of the shares of the Series I Preferred Stock represented at
a duly held meeting at which a quorum is present or by written consent of a
majority of the shares of Series I Preferred Stock (except as otherwise may be
required under Delaware Law) shall constitute the approval of such action by the
class. To the extent that under Delaware Law the Holders of the Series I
Preferred Stock are entitled to vote on a matter with holders of Common Stock,
voting together as one (1) class, each share of Series I Preferred Stock shall
be entitled to a number of votes equal to the number of shares of Common Stock
into which it is then convertible using the record date for the taking of such
vote of stockholders as the date as of which the Conversion Price is calculated.
Holders of the Series I Preferred Stock also shall be entitled to notice of all
shareholder meetings or written consents with respect to which they would be
entitled to vote, which notice would be provided pursuant to the Company's
by-laws and applicable statutes.
Section 8. Protective Provision. So long as shares of Series I
Preferred Stock are outstanding, the Company shall not without first obtaining
the approval (by vote or written consent, as provided by Delaware Law) of the
Holders of at least seventy-five percent (75%) of the then outstanding shares of
Series I Preferred Stock, and at least seventy-five percent (75%) of the then
outstanding Holders:
(a) alter or change the rights, preferences or privileges of
the Series I Preferred Stock or any securities so as to affect adversely the
Series I Preferred Stock;
(b) create any new class or series of stock on parity with or
having a preference over the Series I Preferred Stock with respect to
Distributions (as defined in Section 2 above) or increase the size of the
authorized number of Series I Preferred; or
(c) do any act or thing not authorized or contemplated by this
Designation which would result in taxation of the holders of shares of the
Series I Preferred Stock under Section 305 of the Internal Revenue Code of 1986,
as amended (or any comparable provision of the Internal Revenue Code as
hereafter from time to time amended).
In the event Holders of at least seventy-five percent (75%) of the then
outstanding shares of Series I Preferred Stock and at least seventy-five percent
(75%) of the then outstanding Holders agree to allow the Company to alter or
change the rights, preferences or privileges of the shares of Series I Preferred
Stock, pursuant to subsection (a) above, so as to affect the Series I Preferred
Stock, then the Company will deliver notice of such approved change to the
Holders of the Series I Preferred Stock that did not agree to such alteration or
change (the "Dissenting Holders") and Dissenting Holders shall have the right
for a period of thirty (30) business days to convert pursuant to the terms of
this Certificate of Designation as they exist prior to such alteration or change
(provided further that the holding requirements set forth in Section 5(a) hereof
shall not apply), or continue to hold their shares of Series I Preferred Stock,
as amended.
Section 9. Status of Converted or Redeemed Stock. In the event any
shares of Series I Preferred Stock shall be converted or redeemed pursuant to
Section 5 or Section 6 hereof, the shares so converted or redeemed shall be
canceled, shall return to the status of authorized but unissued Preferred Stock
of no designated series, and shall not be issuable by the Company as Series I
Preferred Stock.
Section 10. Preference Rights. Nothing contained herein shall be
construed to prevent the Board of Directors of the Company from issuing one (1)
or more series of Preferred Stock with dividend and/or liquidation preferences
junior to the dividend and liquidation preferences of the Series I Preferred
Stock.
Section 11. Authorization and Reservation of Shares of Common Stock.
(a) Authorized and Reserved Amount. The Company shall have
authorized and reserved and keep available for issuance two million eight
hundred thousand (2,800,000) shares of Common Stock (the "Reserved Amount")
solely for the purpose of effecting the conversion of the
10
<PAGE> 11
Series I Preferred Stock, and exercise of the warrants to acquire Common Stock
(the "Common Warrants") issued or to be issued to the Holders, which number
shall not be reduced. The Company shall at all times reserve and keep available
out of its authorized but unissued shares of Common Stock a sufficient number of
shares of Common Stock to provide for the full conversion of all outstanding
Series I Preferred Stock, and issuance of the shares of Common Stock in
connection therewith and the full exercise of the Common Warrants and issuance
of the shares of Common Stock in connection therewith.
(b) Increases to Reserved Amount. Without limiting any other
provision of this Section 11, if the Reserved Amount for any three (3)
consecutive trading days (the last of such three (3) trading days being the
"Reservation Trigger Date") shall be less than one hundred percent (100%) of the
number of shares of Common Stock (the "Minimum Required Reserved Amount")
issuable upon conversion of this Series I Preferred Stock, and exercise of the
Common Warrants on such trading days (a "Share Authorization Failure"), the
Company shall immediately notify all Holders of such occurrence and shall take
action as soon as possible, but in any event within sixty (60) days after a
Reservation Trigger Date (including, if necessary, seeking shareholder approval
to authorize the issuance of additional shares of Common Stock) to increase the
Reserved Amount to one hundred fifty percent (150%) of the number of shares of
Common Stock then issuable upon conversion of the Series I Preferred Stock, and
exercise of the Common Warrants.
(c) Reduction of Reserved Amount Under Certain Circumstances.
Prior to complete conversion of all Series I Preferred Stock the Company shall
not reduce the number of shares required to be reserved for issuance under this
Section 11 without the written consent of all Holders except as follows: (i) the
Company may, following a conversion by a Holder, reduce the number of shares of
Common Stock reserved for issuance to such Holder under this Section 11 to not
less than 125% of the Minimum Required Reserved Amount, or (ii) the Company may
reduce the number of shares of Common Stock reserved for issuance to a Holder
under this Section 11 where such reduction is proportionate to a reverse stock
split effected for a business purpose other than affecting the obligations of
Company under this Section 11, which reverse stock split affects all shares of
Common Stock equally. Following complete conversion of all the Series I
Preferred Stock, the Company may, with fifteen (15) days prior written notice to
Holder, reduce the Reserved Amount to one hundred percent (100%) of the number
of shares of Common Stock issuable upon the full exercise of the Common
Warrants; provided, however, that the Reserved Amount shall continue to be
subject to increase pursuant to Section 11 hereof.
(d) Cap Amount. Unless otherwise permitted by Nasdaq, in no
event shall the total number of shares of Common Stock issued upon conversion of
the Series I Preferred Stock exceed the maximum number of shares of Common Stock
(the "Cap Amount") that the Company can, without shareholder approval, so issue
pursuant to Nasdaq Rule 4460(i)(1)(d)(ii) (or any other applicable Nasdaq Rules
or any successor rule) (the "Nasdaq 20% Rule"). The Cap Amount shall be
allocated pro-rata to the holders of Series I Preferred Stock as provided in
subsection (f) below. In the event the Company is prohibited from issuing shares
of Common Stock as a result of the operation of this subsection (d), the Company
shall comply with subsection (f) below.
(e) Allocations of Cap Amount and Reserved Amount. The initial
Cap Amount and Reserved Amount shall be allocated pro rata among the Holders of
Series I Preferred Stock based on the number of the shares of Series I Preferred
Stock initially issued to each Holder. Each increase to the Cap Amount and
Reserved Amount shall be allocated pro rata among the Holders of Series I
Preferred Stock based on the number of the shares of Series I Preferred Stock
held by each Holder at the time of the increase in the Cap Amount or Reserved
Amount, as the case may be. In the event a holder shall sell or otherwise
transfer any of such Holder's shares of Series I Preferred Stock, each
transferee shall be allocated a pro rata portion of such transferor's Cap amount
and Reserved Amount. Any portion of the Cap Amount or Reserved Amount which
remains allocated to any person or entity which does not hold any Series I
Preferred Stock shall be allocated to the remaining holders of shares of Series
I Preferred Stock, pro rata based on the number of shares of Series I Preferred
Stock then held by such Holders.
11
<PAGE> 12
(f) Inability to Convert due to Cap Amount.
Obligation to Cure. If at any time the then unissued
portion of any Holder's Cap Amount is less than 125% of the number of shares of
Common Stock then issuable upon conversion of such Holder's shares of Series I
Preferred Stock (a "Trading Market Trigger Event"), the Company shall
immediately notify the Holders of Series I Preferred Stock of such occurrence
and shall immediately take all necessary action (including, if necessary,
approval of its shareholders to authorize the issuance of the full number of
shares of Common Stock which would be issuable upon the conversion of Series I
Preferred Stock but for the Cap Amount) to eliminate any prohibitions under
applicable law or the rules or regulations of any stock exchange, interdealer
quotation system or other self-regulatory organization with jurisdiction over
the Company or any of its securities on the Company's ability to issue shares of
Common Stock in excess of the Cap Amount. In the event the Company fails to
eliminate all such prohibitions within one hundred twenty (120) days after the
Trading Market Trigger Event (provided, however, that (A) the Company must file
preliminary proxy materials with the SEC within thirty (30) days of the Trading
Market Trigger Event and (B) officers and directors of the Company shall
promptly upon the occasion of any such Trading Market Trigger event enter into
irrevocable agreements to vote all of their shares in favor of eliminating such
prohibitions), each Holder of Series I Preferred Stock shall thereafter have the
option, exercisable in whole or in part at any time and from time to time by
delivery of written notice ("Cap Redemption Notice") to the Company, to require
the Company, to purchase for cash, at an amount per share equal to the
Redemption Rate in effect on the date of the Cap Redemption Notice, a portion of
the Holder's Series I Preferred Stock , which, if converted would require the
issuance of Common stock in excess of the holder's allocated portion of the Cap
Amount. If the Company fails to redeem any such shares within five (5) business
days after its receipt of a Cap Redemption Notice, then such Holder shall be
entitled to the remedies provided in Section 13 below.
Section 12. Failure to Satisfy Conversions.
(a) Conversion Failure Payments. If, subject to the Company's
right of Redemption Upon Receipt of Notice of Conversion set forth in Section
6(a), at any time a Holder is so entitled, (x) a Holder submits a Notice of
Conversion (or is deemed to submit such notice pursuant to Section 5(c) hereof),
and the Company fails for any reason to deliver, on or prior to the third (3rd)
business day following the Deadline ("Delivery Period") for such conversion,
such number of shares of Common Stock to which such Converting Holder is
entitled upon such conversion (which shares shall be listed, authorized,
reserved, registered, and freely tradable to the extent required in this Series
I Certificate of Designation, the Registration Rights Agreement between the
Company and the Holder(s) and the Subscription Agreement between the Company and
the Holder(s), collectively referred to as the "Governing Agreements"), or (y)
the Company provides notice to Holder at any time of its intention not to issue
shares of Common Stock upon exercise by Holder of its conversion rights in
accordance with the terms of this Certificate of Designation (each of (x) and
(y) being a "Conversion Failure"), then the Company shall pay to such Holder
cash damages in an amount equal to the lower of:
(i) "Damages Amount" X "D" X .005, and
(ii) the highest interest rate permitted by
applicable law, where:
"D" means the number of days beginning the date of the Conversion
Failure through and including the Cure Date with respect to such Conversion
Failure;
"Damages Amount" means the Original Series I Issue Price for each share
of Series I Preferred Stock subject to conversion plus all accrued and unpaid
Premium thereon as of the first day of the Conversion Failure, plus all damage
payments previously owed and unpaid.
"Cure Date" means (i) with respect to a Conversion Failure described in
clause (x) of its definition, the date the Company effects the conversion of the
shares of Series I Preferred Stock submitted for conversion and (ii) with
respect to a Conversion Failure described in clause (y) of its definition, the
date the Company undertakes in writing to timely issue Common Stock in
satisfaction of all conversions of Series I Preferred Stock in accordance with
the terms of this Certificate of Designation.
12
<PAGE> 13
The payments to which a Holder shall be entitled pursuant to this
Section are referred to herein as "Conversion Failure Payments" and shall be
paid monthly on a current basis. The parties agree that the damages caused by a
breach hereof would be difficult or impossible to estimate accurately. A Holder
may elect to receive accrued Conversion Failure Payments in cash or to convert
all or any portion of such accrued Conversion Failure Payments, at any time,
into Common Stock at the lowest Conversion Price in effect during the period
beginning on the date of the Conversion Failure through the Cure Date for such
Conversion Failure. In the event a Holder elects to receive any Conversion
Failure Payments in cash, it shall so notify the Company in writing. In the
event a Holder elects to convert all or any portion of the Conversion Failure
Payments, such Holder shall indicate on a Notice of Conversion such portion of
the Conversion Failure Payments which such Holder elects to so convert and such
conversion shall otherwise be effected in accordance with provisions of Section
5.
(b) Buy-In Cure. Unless a Conversion Failure described in
clause (y) of Section 12(a) hereof has occurred with respect to such a Holder,
if (i) the Company fails for any reason to deliver during the Delivery Period
shares of Common Stock to a Holder upon a conversion of the Series I Preferred
Stock and (ii) after the applicable Delivery Period with respect to such
conversion, a Holder purchases (in an open market transaction or otherwise)
shares of Common Stock to make delivery upon a sale by a Holder of the shares of
Common Stock (the "Sold Shares") which such Holder anticipated receiving upon
such conversion (a "Buy-In"), the Company shall pay such Holder within two (2)
business days following receipt of written notice of a claim pursuant to Section
12(b) (in addition to any other remedies available to Holder) the amount by
which (x) such Holder's total purchase price (including brokerage commission, if
any) for the shares of Common Stock so purchased exceeds (y) the net proceeds
received by such Holder from the sale of the Sold Shares. For example, if a
Holder purchases shares of Common Stock having a total purchase price of $11,000
to cover a Buy-In with respect to shares of Common Stock sold for $10,000, the
Company will be required to pay such Holder $1,000. A Holder shall provide the
Company written notification indicating any amounts payable to Holder pursuant
to this Section 12.
(c) Adjustment to Conversion Price. If a Holder has not
received certificates for all shares of Common Stock within three (3) business
days following the expiration of the Delivery Period with respect to a
conversion of any portion of any of such Holder's Series I Preferred Stock for
any reason, then the Conversion Price applicable upon conversion of such portion
of the Series I Preferred Stock shall thereafter be the lowest Conversion Price
in effect during the period beginning on, and including, such Conversion Date
through and including the Cure Date. If there shall occur a Conversion Failure
of the type described in clause (y) of Section 12(a), then the Fixed Conversion
Price with respect to any conversion of Series I Preferred Stock thereafter
shall be the lowest Conversion Price in effect at any time during the period
beginning on, and including, the date of the occurrence of such Conversion
Failure through and including the Cure Date. The Conversion Price shall
thereafter be subject to further adjustment for any events described in Section
5(d).
Section 13. Events of Default.
(a) Holder's Option to Demand Prepayment. Upon the occurrence
of an Event of Default (as herein defined), each Holder shall have the right to
elect at any time and from time to time prior to the cure by Company of such
Event of Default to have all or any portion of such Holder's then outstanding
Series I Preferred Stock prepaid by the Company for an amount equal to the
Holder Demand Prepayment Amount (as herein defined).
(i) The right of a Holder to elect prepayment shall
be exercisable upon the occurrence of an Event of Default by such Holder in its
sole discretion by delivery of a Demand Prepayment Notice (as herein defined) in
accordance with the procedures set forth in this Section 13. Notwithstanding the
exercise of such right, the Holder shall be entitled to exercise all other
rights and remedies available under the provisions of this Certificate of
Designation and at law or in equity.
(ii) A Holder shall effect each demand for prepayment
under this Section 13 by giving at least two (2) business days prior to written
notice (the "Demand Prepayment Notice") of the date which such prepayment is to
become effective (the "Effective Date of Demand
13
<PAGE> 14
of Prepayment"), the Series I Preferred Stock selected for prepayment and the
Holder Demand Prepayment Amount to the Company at the address and facsimile
number provided in the stock records of the Company, which Demand Prepayment
Notice shall be deemed to have been delivered on the business day after the date
of transmission of Holder's facsimile (with a copy sent by overnight courier to
the Company) of such notice.
(iii) The Holder Demand Prepayment Amount shall be
paid to a Holder whose Series I Preferred Stock are being prepaid within one (1)
business day following the Effective Date of Demand of Prepayment; provided,
however, that the Company shall not be obligated to deliver any portion of the
Holder Demand Prepayment Amount until one (1) business day following either the
date on which the Series I Preferred Stock being prepaid are delivered to the
office of the Company or the Transfer Agent, or the date on which the Holder
notifies the Company or the Transfer Agent that such Series I Preferred Stock
have been lost, stolen or destroyed and delivers the documentation required in
accordance with Section 5(b)(i) hereof.
(b) Holder Demand Prepayment Amount. The "Holder Demand
Prepayment Amount" means the greater of: (a) 1.3 times the Total Value of the
Series I Preferred Stock for which demand is being made, through the date of
prepayment or (b) the product of (1) the highest price at which the Common Stock
is traded on the date of the Event of Default (or on the most recent trading
date for the Common Stock if the Common Stock is not traded on such date)
divided by the Conversion Price in effect as of the date of the Event of
Default, and (2) the Total Value through the date of prepayment.
(c) Events of Default. An "Event of Default" means any one of
the following:
(i) a Conversion Failure described in Section 12(a)
hereof;
(ii) a Share Authorization Failure described in
Section 11(b) hereof, if such Share Authorization Failure continues uncured for
ninety (90) days after the Reservation Trigger Date;
(iii) the Company fails, and such failure continues
uncured for three (3) business days after the Company has been notified thereof
in writing by a Holder, to satisfy the share reservation requirements of Section
11 hereof;
(iv) the Company fails to maintain an effective
registration statement as required by the Registration Rights Agreement between
the Company and the Holder(s) (the "Registration Rights Agreement") except where
such failure lasts no longer than three (3) consecutive trading days and is
caused solely by failure of the Securities and Exchange Commission to timely
review the customary submission of or respond to the customary requests of the
Company;
(v) for three (3) consecutive trading days or for
an aggregate of ten (10) trading days in any nine (9) month period, the Common
Stock (including any of the shares of Common Stock issuable upon conversion of
the Series I Preferred Stock, and exercise of the Common Warrants) is (i)
suspended from trading on any of Nasdaq SmallCap, NMS, NYSE, AMEX or the OTC
Bulletin Board, or (ii) is not qualified for trading on at least one of Nasdaq
SmallCap, NMS, NYSE, AMEX or the OTC Bulletin Board;
(vi) the Company fails, and such failure continues
uncured for three (3) business days after the Company has been notified thereof
in writing by a Holder, to remove any restrictive legend on any certificate for
any shares of Common Stock issued to a Holder upon conversion of any Series I
Preferred Stock, or exercise of any Common Warrant as and when required by this
Certificate of Designation, the Common Warrants, the Subscription Agreement,
between the Company and the Holder(s) (the "Subscription Agreement") or the
Registration Rights Agreement;
(vii) the Company breaches, and such breach continues
uncured for three (3) business days after the Company has been notified thereof
in writing by a Holder, any significant
14
<PAGE> 15
covenant or other material term or condition of this Certificate of Designation,
the Subscription Agreement, the Common Warrants or the Registration Rights
Agreement;
(viii) any representation or warranty of the Company
made herein or in any agreement, statement or certificate given in writing
pursuant hereto or in connection herewith (including, without limitation, the
Subscription Agreement and Registration Rights Agreement), shall be false or
misleading in any material respect when made;
(ix) the Company or any subsidiary of the Company
shall make an assignment for the benefit of its creditors, or apply for or
consent to the appointment of a receiver or trustee for it or for a substantial
part of its property or business, or such receiver or trustee shall otherwise be
appointed; or
(x) bankruptcy, insolvency, reorganization or
liquidation proceedings or other proceedings for relief under any bankruptcy law
or any law for the relief of debtors shall be instituted by or against the
Company or any subsidiary of the Company (and such proceedings shall continue
unstayed for thirty (30) days).
(d) Failure to Pay Damages Amount. If the Company fails to pay
the Holder Demand Prepayment Amount within five (5) business days of its receipt
of a Demand Prepayment Notice, then such Holder shall have the right, at any
time and from time to time prior to the payment of the Holder Demand Prepayment
Amount, to require the Company, upon written notice, to immediately convert (in
accordance with the terms of Section 5) all or any portion of the Holder Demand
Prepayment Amount, into shares of Common Stock at the then current Conversion
Price, provided that if the Company has not delivered the full number of shares
of Common Stock issuable upon such conversion within three (3) business days
after the Company receives written notice of such conversion, the Conversion
Price with respect to such Holder Demand Prepayment Amount shall thereafter be
deemed to be the lowest Conversion Price in effect during the period beginning
on the date of the Event of Default through the date on which the Company
delivers to the Holder the full number of freely tradable shares of Common Stock
issuable upon such conversion. In the event the Company is not able to pay all
amounts due and payable with respect to all Series I Preferred Stock subject to
Holder Demand Prepayment Notices, the Company shall pay the Holders such amounts
pro rata, based on the total amounts payable to such Holder relative to the
total amounts payable to all Holders.
[INTENTIONALLY LEFT BLANK]
15
<PAGE> 16
Section 14. Remedies, Other Obligations, Breaches and Injunctive
Relief. The remedies provided in this Certificate of Designation shall be
cumulative and in addition to all other remedies available under the Certificate
of Designation at law or in equity (including a decree of specific performance
and/or other injunctive relief), no remedy contained herein shall be deemed a
waiver of compliance with the provision giving rise to such remedy and nothing
herein shall limit a holder's right to pursue actual damages for any failure by
the Company to comply with the terms of this Certificate of Designation. Amounts
set forth or provided for herein with respect to payments, conversion and the
like (and the computation thereof) shall be the amounts to be received by the
holder hereof and shall not, except as expressly provided herein, be subject to
any other obligation of the Company (or the performance thereof). The Company
acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the holders of Series I Preferred Stock and that the remedy
at law for any such breach may be inadequate. The Company therefore agrees, in
the event of any such breach or threatened breach, the holders of Series I
Preferred Stock shall be entitled, in addition to all other available remedies,
to an injunction restraining any breach, without the necessity of showing
economic loss and without any bond or other security being required.
Signed on April ____, 1998
------------------------------------------
Dennis W. Healey, Exec. Vice President/CFO
16
<PAGE> 1
EXHIBIT 5
[ATLAS PEARLMAN TROP & BORKSON LETTERHEAD]
April 17, 1998
Viragen, Inc.
865 S.W. 78th Avenue, Suite 100
Plantation, Florida 33324
RE: REGISTRATION STATEMENT ON FORM S-3; VIRAGEN, INC. (THE
"COMPANY"), 10,402,052 SHARES OF COMMON STOCK
Gentlemen:
This opinion is submitted pursuant to the applicable rules of the
Securities and Exchange Commission with respect to the registration by the
Company of 10,402,052 shares of Common Stock, par value $.01 per share (the
"Common Stock"), to be sold by the Selling Security Holders designated in the
Registration Statement. The shares of Common Stock to be sold consist of up to
5,600,000 shares of Common Stock issuable on conversion of the Company's
Preferred Stock, up to 2,100,000 shares of Common Stock issuable upon exercise
of Warrants issued to the holders of the Preferred Stock, up to 402,052 shares
issuable upon exercise of certain Placement Agent Warrants and 2,300,000 shares,
as required, to be issued as a result of the adjustment of conversion and
exercise prices of such securities.
In our capacity as counsel to the Company, we have examined the
original, certified, conformed, photostat or other copies of the Company's
Certificate of Incorporation (as Amended), By-Laws, instruments pertaining to
the Preferred Stock and related subscription agreements, exhibits and corporate
minutes provided to us by the Company. In all such examinations, we have assumed
the genuineness of all signatures on original documents, and the conformity to
originals or certified documents of all copies submitted to us as conformed,
photostat or other copies. In passing upon certain corporate records and
documents of the Company, we have necessarily assumed the correctness and
completeness of the statements made or included therein by the Company, and we
express no opinion thereon.
Based upon and in reliance of the foregoing, we are of the opinion that
the Common Stock to be issued upon conversion or exercise of or in connection
with the Preferred Stock,
<PAGE> 2
Viragen, Inc.
April 17, 1998
Page 2
Warrants and Placement Warrants (assuming payment of the respective exercise
prices therefor), when issued in accordance with the terms of the Preferred
Stock, Warrants and Placement Agent Warrants, will be validly issued, fully paid
and non-assessable.
We hereby consent to the use of this opinion in the Registration
Statement on Form S-3 to be filed with the Commission.
Very truly yours,
ATLAS, PEARLMAN, TROP & BORKSON, P.A.
<PAGE> 1
VIRAGEN, INC.
REGULATION D SUBSCRIPTION AGREEMENT
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE OR OTHER SECURITIES
AUTHORITIES. THEY MAY NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THOSE SECURITIES LAWS.
THIS SUBSCRIPTION AGREEMENT DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO PURCHASE, ANY OF THE SECURITIES DESCRIBED
HEREIN BY OR TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION WOULD BE UNLAWFUL. THESE SECURITIES HAVE NOT BEEN
RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES AUTHORITIES, NOR HAVE
SUCH AUTHORITIES REVIEWED OR DETERMINED THE ACCURACY OF THIS DOCUMENT.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK.
SUBSCRIBERS MUST RELY ON THEIR OWN ANALYSIS OF THE INVESTMENT AND
ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET FORTH IN THE
ATTACHED DISCLOSURE DOCUMENTS AS EXHIBIT H.
SEE ADDITIONAL LEGENDS AT SECTIONS 3.7 and 9.
THIS REGULATION D SUBSCRIPTION AGREEMENT (this "Agreement") is made as
of the _____ day of February, 1998, by and between Viragen, Inc., a corporation
duly organized and existing under the laws of the State of Delaware (the
"Company"), and the undersigned subscriber executing this Agreement
("Subscriber").
THE PARTIES HEREBY AGREE AS FOLLOWS:
This Agreement is executed by Subscriber in connection with the offer
by the Company and the purchase by Subscriber of Series H Preferred Stock, $.01
par value (the "Preferred Stock"), of the Company. The Preferred Stock is being
offered at a purchase price of Ten Thousand Dollars ($10,000), U.S., per share,
in minimum subscription amounts of at least twenty five(25) shares ($250,000),
and increments of five (5) shares ($50,000) in excess thereof, with an aggregate
offering amount of Five Hundred (500) shares of Preferred Stock, or Five Million
Dollars ($5,000,000) (the "Offering Amount"), (collectively, the "Offering").
The terms of the Preferred Stock, including the terms on which the Preferred
Stock may be converted into common stock, $.01 par value, of the Company (the
"Common Stock"), are set forth in the Certificate of Designation of Series H
Preferred Stock (the "Certificate of Designation"), substantially in the form
attached hereto as Exhibit A. The Preferred Stock is accompanied by (i) a
warrant or warrants to purchase a number of shares of Common Stock of the
Company equal to ten percent (10%) multiplied by the aggregate purchase price of
the Subscriber's Preferred Stock outstanding on the date which is nine (9)
months following the closing hereunder (the "Nine Month Date") divided by the
Market Price of the Common Stock on the Nine Month Date (the "Nine Month
Warrants"); (ii) a warrant or warrants to purchase a number of shares of Common
Stock of the Company equal to fifteen percent (15%) multiplied by the aggregate
purchase price of the Subscriber's Preferred
<PAGE> 2
Stock outstanding on the date which is twelve (12) months following the closing
hereunder (the "Twelve Month Date") divided by the Market Price of the Common
Stock on the Twelve Month Date (the "Twelve Month Warrants"); and (iii) a
warrant or warrants to purchase a number of shares of Common Stock of the
Company equal to twenty percent (20%) multiplied by the aggregate purchase price
of the Subscriber's Preferred Stock outstanding on the date which is fifteen
(15) months following the closing hereunder (the "Fifteen Month Date") divided
by the Market Price of the Common Stock on the Fifteen Month Date (the "Fifteen
Month Warrants", together with the Nine Month Warrants and the Twelve Month
Warrants, collectively referred to as the "Conversion Warrants"). The terms of
the Warrants are set forth in the form of the Nine Month, Twelve Month and
Fifteen Month Warrants attached hereto as Exhibit B, Exhibit C, and Exhibit D,
respectively. For purposes hereof, "Market Price" shall equal the average of the
two (2) lowest Closing Bid Prices (as that term is defined in the Certificate of
Designation) for the twenty (20) trading days immediately preceding the date in
question. The solicitation of this subscription and, if accepted by the Company,
the offer and sale of the Preferred Stock are being made in reliance upon the
provisions of Regulation D ("Regulation D") promulgated under the Securities Act
of 1933, as amended ("the Act"). The Preferred Stock and the Common Stock
issuable upon conversion thereof (the "Conversion Shares"), together with the
Conversion Warrants and the Common Stock issuable upon exercise thereof (the
"Warrant Shares") are sometimes referred to herein singularly as "Security" and
collectively as the "Securities."
It is agreed as follows:
1. Offering
1.1 Offer to Subscribe; Purchase Price and Closing; and
Placement Fees.
Subject to satisfaction of the conditions to closing set forth in Section 1.2
below, Subscriber hereby offers to subscribe for and purchase Preferred Stock
and accompanying Conversion Warrants, for the aggregate purchase price in the
amount set forth in Section 10 of this Agreement, in accordance with the terms
and conditions of this Agreement. Assuming that the Offering Amount and
corresponding subscription agreements accepted by the Company are received into
the Company's designated escrow account for this Offering established pursuant
to the Escrow Agreement and Instructions (the "Escrow Agreement") by and among
the Company, First Union National Bank of Georgia (the "Escrow Agent") and the
Placement Agent (as defined below) (the "Escrow Account"), the closing of a sale
and purchase of Preferred Stock as to each Subscriber (the "Closing") shall be
deemed to occur when this Agreement has been executed by both Subscriber and the
Company and full payment shall have been made by Subscriber, by wire transfer to
the Escrow Account as set forth in Section 7.1(a) for payment in consideration
for the Company's delivery of certificates representing the Preferred Stock
subscribed for.
The parties hereto acknowledge that Swartz Investments, LLC is acting as
placement agent (the "Placement Agent") for this Offering and will be
compensated by the Company in cash and warrants to purchase Common Stock. The
Placement Agent has acted solely as placement agent in connection with the
Offering by the Company of the Preferred Stock pursuant to this Agreement. The
information and data contained in the Disclosure Documents (as defined in
Section 2.2.4) have not been subjected to independent verification by the
Placement Agent, and no representation or warranty is made by the Placement
Agent as to the accuracy or completeness of the information contained in the
Disclosure Documents.
1.2 Conditions to Subscriber's Obligations. Subscriber's
obligations hereunder are conditioned upon all of the following:
(a) the following documents shall have been deposited
with the Escrow Agent: the Registration Rights
Agreement, substantially in the form attached hereto
2
<PAGE> 3
as Exhibit E (the "Registration Rights Agreement")
(executed by the Company), an opinion of counsel,
substantially in the form attached hereto as Exhibit
F (the "Opinion of Counsel") (signed by the Company's
counsel), the Irrevocable Instructions to Transfer
Agent, substantially in the form attached hereto as
Exhibit G (the "Irrevocable Instructions to Transfer
Agent")(executed by the Company and the Company's
transfer agent, the "Transfer Agent"), and the
Certificate of Designation, substantially in the form
attached hereto as Exhibit A (together with evidence
showing that it has been filed with the Secretary of
State of Delaware); certificates representing the
Preferred Stock issued in the name of the Subscriber;
the Conversion Warrants issued in the name of the
Subscriber;
(b) the Company's Common Stock shall be listed for and
actively trading on the Nasdaq National Market
System;
(c) other than losses described in the Risk Factors as
set forth in Section 2.2.4 below there have been no
material adverse changes in the Company's business
prospects or financial condition since the date of
the last balance sheet included in the Disclosure
Documents (defined below in Section 2.2.4), including
but not limited to incurring material liabilities;
(d) the representations and warranties of the Company are
true and correct in all material respects at the
Closing as if made on such date, and the Company
shall deliver a certificate, signed by an officer of
the Company, to such effect to the Escrow Agent;
(e) the Offering Amount and corresponding subscription
agreements accepted by the Company shall have been
received by the Escrow Agent; and
(f) the Company shall have reserved for issuance a
sufficient number of shares of Common Stock to effect
conversions of the Preferred Stock and exercise of
the Conversion Warrants, which number of shares shall
initially be equal to Seven Million Two Hundred
Thousand (7,200,000) shares.
2. Representations and Warranties of Subscriber. Subscriber hereby
represents and warrants to the Company as follows:
2.1 Accredited Investor. Subscriber is an accredited investor, as
defined in Rule 501 of Regulation D, and has checked the applicable box set
forth in Section 10 of this Agreement.
2.2 Investment Experience; Access to Information; Independent
Investigation.
2.2.1 Access to Information. Subscriber or Subscriber's
professional advisor has been granted the opportunity to ask questions of and
receive answers from representatives of the Company, its officers, directors,
employees and agents concerning the terms and conditions of this Offering, the
Company and its business and prospects, and to obtain any additional information
which Subscriber or Subscriber's professional advisor deems necessary to verify
the accuracy and completeness of the information received.
2.2.2 Reliance on Own Advisors. Subscriber has relied completely
on the advice of, or has consulted with, Subscriber's own personal tax,
investment, legal or other advisors and has not relied on the Company or any of
its affiliates, officers, directors, attorneys, accountants or any affiliates of
any thereof and each other person, if any, who controls any thereof, within the
meaning of Section 15 of the Act for any tax or legal advice (other than
reliance
3
<PAGE> 4
on information in the Disclosure Documents as defined in Section 2.2.4
below and on the Opinion of Counsel). The foregoing, however, does not limit or
modify Subscriber's right to rely upon representations and warranties of the
Company in Section 4 of this Agreement.
2.2.3 Capability to Evaluate. Subscriber has such knowledge and
experience in financial and business matters so as to enable such Subscriber to
utilize the information made available to it in connection with the Offering in
order to evaluate the merits and risks of the prospective investment, which are
substantial, including without limitation those set forth in the Disclosure
Documents (as defined in Section 2.2.4 below).
2.2.4 Disclosure Documents. Subscriber, in making Subscriber's
investment decision to subscribe for the Securities hereunder, represents that
(a) Subscriber has received and had an opportunity to review (i) the Company's
Annual Report on Form 10-K for the year ended June 30, 1997 (ii) the Company's
quarterly report on Form 10-Q for the quarter ended December 31, 1997, (iii) the
Risk Factors, attached as Exhibit H, (iv) the Capitalization Schedule, attached
as Exhibit I, (the "Capitalization Schedule") and (v) the Use of Proceeds
Schedule, attached as Exhibit J, (the "Use of Proceeds Schedule") (b) Subscriber
has read, reviewed, and relied solely on the documents described in (a) above,
the Company's representations and warranties and other information in this
Agreement, including the exhibits, any other written information prepared by the
Company which has been specifically provided to Subscriber in connection with
this Offering (the documents described in Section 2.2.4 (a) and (b) are
collectively referred to as the "Disclosure Documents"), and an independent
investigation made by Subscriber and Subscriber's representatives, if any; (c)
Subscriber has, prior to the date of this Agreement, been given an opportunity
to review material contracts and documents of the Company which have been filed
as exhibits to the Company's filings under the Act and the Securities Exchange
Act of 1934, as amended (the "Exchange Act") and has had an opportunity to ask
questions of and receive answers from the Company's officers and directors; and
(d) is not relying on any oral representation of the Company or any other
person, nor any written representation or assurance from the Company other than
those referred to in Section 4 or otherwise contained in the Disclosure
Documents or incorporated herein or therein. The foregoing, however, does not
limit or modify Subscriber's right to rely upon representations and warranties
of the Company in Section 4 of this Agreement. Subscriber acknowledges and
agrees that the Company has no responsibility for, does not ratify, and is under
no responsibility whatsoever to comment upon or correct any reports, analyses or
other comments made about the Company by any third parties, including, but not
limited to, analysts' research reports or comments (collectively, "Third Party
Reports"), and Subscriber has not relied upon any Third Party Reports, including
any provided by the Placement Agent, in making the decision to invest.
2.2.5 Investment Experience; Fend for Self. Subscriber has
substantial experience in investing in securities and he, she or it has made
investments in securities other than those of the Company. Subscriber
acknowledges that Subscriber is able to fend for Subscriber's self in the
transaction contemplated by this Agreement, that Subscriber has the ability to
bear the economic risk of Subscriber's investment pursuant to this Agreement and
that Subscriber is an "Accredited Investor" by virtue of the fact that
Subscriber meets the investor qualification standards set forth in Section 2.1
above. Subscriber has not been organized for the purpose of investing in
securities of the Company, although such investment is consistent with
Subscriber's purposes.
2.3 Exempt Offering Under Regulation D.
2.3.1 Investment; No Distribution. Subscriber is acquiring the
Securities to be issued and sold hereunder for his, her or its own account (or a
trust account if such Subscriber is a trustee) for investment and not as a
nominee and not with a present view to the distribution thereof. Subscriber is
aware that there are legal and practical limits on Subscriber's ability to sell
or dispose of the Securities and, therefore, that Subscriber must bear the
economic
4
<PAGE> 5
risk of the investment for an indefinite period of time and has adequate means
of providing for Subscriber's current needs and possible personal contingencies
and has need for only limited liquidity of this investment. Subscriber's
commitment to illiquid investments is reasonable in relation to Subscriber's net
worth. By making the representations in this Section 2.3.1, the Subscriber does
not agree to hold the Securities for any minimum or other specific term and
reserves the right to dispose of the Securities at any time in accordance with
or pursuant to a registration statement or an exemption from registration under
the Act, except as otherwise required in this Agreement or in the Registration
Rights Agreement. Subscriber has reached the age of majority (if an individual)
according to the laws of the state in which he resides.
2.3.2 No General Solicitation. The Securities were not offered
to Subscriber through, and Subscriber is not aware of, any form of general
solicitation or general advertising, including, without limitation, (i) any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio, and
(ii) any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising.
2.3.3 Restricted Securities. Subscriber understands that the
Preferred Stock and the Conversion Warrants issued at Closing are, and the
Conversion Shares and the Warrant Shares will be, characterized as "restricted
securities" under the federal securities laws inasmuch as they are being
acquired from the Company in a transaction not involving a public offering and
that under such laws and applicable regulations such securities may not be
transferred or resold without registration under the Act or pursuant to an
exemption therefrom. In this connection, Subscriber represents that Subscriber
is familiar with Rule 144 under the Act, as presently in effect, and understands
the resale limitations imposed thereby and by the Act.
2.3.4 Disposition. Without in any way limiting the
representations set forth above, Subscriber further agrees not to make any
disposition of all or any portion of the Securities unless and until:
(a) There is then in effect a registration statement under
the Act covering such proposed disposition and such disposition is made in
accordance with such registration statement; or
(b) (i) Subscriber shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (ii) if
reasonably requested by the Company, Subscriber shall have furnished the Company
with an opinion of counsel, reasonably satisfactory to the Company, that such
disposition will not require registration of the Securities under the Act. It is
agreed that the Company will not require opinions of counsel for transactions
made pursuant to Rule 144 except in unusual circumstances.
2.4 Due Authorization.
2.4.1 Authority. Subscriber, if executing this Agreement in a
representative or fiduciary capacity, has full power and authority to execute
and deliver this Agreement and each other document included herein for which a
signature is required in such capacity and on behalf of the subscribing
individual, partnership, trust, estate, corporation or other entity for whom or
which Subscriber is executing this Agreement.
2.4.2 Due Authorization. If Subscriber is a corporation,
Subscriber is duly and validly organized, validly existing and in good tax and
corporate standing as a corporation under the laws of the jurisdiction of its
incorporation with full power and authority to purchase the Securities to be
purchased by Subscriber and to execute and deliver this Agreement.
5
<PAGE> 6
2.4.3 Partnerships. If Subscriber is a partnership, the
representations, warranties, agreements and understandings set forth above are
true with respect to all partners of Subscriber (and if any such partner is
itself a partnership, all persons holding an interest in such partnership,
directly or indirectly, including through one or more partnerships), and the
person executing this Agreement has made due inquiry to determine the
truthfulness of the representations and warranties made hereby.
2.4.4 Representatives. If Subscriber is purchasing in a
representative or fiduciary capacity, the representations and warranties shall
be deemed to have been made on behalf of the person or persons for whom
Subscriber is so purchasing.
2.4 Subscriber's Broker/Dealer Status. Subscriber is not a
licensed NASD broker-dealer and does not engage in the business of a
broker-dealer.
3. Acknowledgments Subscriber is aware that:
3.1 Risks of Investment. Subscriber recognizes that an investment in
the Company involves substantial risks, including the potential loss of
Subscriber's entire investment herein. Subscriber recognizes that this Agreement
and the exhibits hereto do not purport to contain all the information which
would be contained in a registration statement under the Act;
3.2 No Government Approval. No federal or state agency has passed
upon the Securities, recommended or endorsed the Offering, or made any finding
or determination as to the fairness of this transaction;
3.3 No Registration. The Securities and any component thereof have
not been registered under the Act or any applicable state securities laws by
reason of exemptions from the registration requirements of the Act and such
laws, and may not be sold, pledged, assigned or otherwise disposed of in the
absence of an effective registration of the Securities and any component thereof
under the Act or unless an exemption from such registration is available;
3.4 Restrictions on Transfer. Subscriber may not attempt to sell,
transfer, assign, pledge or otherwise dispose of all or any portion of the
Securities or any component thereof in the absence of either an effective
registration statement or an exemption from the registration requirements of the
Act and applicable state securities laws;
3.5 No Assurances of Registration. There can be no assurance that any
registration statement will become effective at the scheduled time. Therefore,
Subscriber may bear the economic risk of Subscriber's investment for an
indefinite period of time;
3.6 Exempt Transaction. Subscriber understands that the Securities
are being offered and sold in reliance on specific exemptions from the
registration requirements of federal and state law and that the representations,
warranties, agreements, acknowledgments and understandings set forth herein are
being relied upon by the Company in determining the applicability of such
exemptions and the suitability of Subscriber to acquire such Securities;
3.7 Legends. It is understood that the certificates evidencing the
Preferred Stock, the Conversion Warrants, the Conversion Shares and the Warrant
Shares shall bear the following legend (the "Legend") (prior to registration as
provided in Section 5.3):
"The securities represented hereby have not been registered
under the Securities Act of 1933, as amended, or applicable
state securities laws, nor the securities laws of any other
jurisdiction. They may not be sold or transferred in the
absence of an
6
<PAGE> 7
effective registration statement under those securities laws
or pursuant to an exemption therefrom."
4. Representations and Warranties of the Company . The Company hereby
makes the following representations and warranties to Subscriber (which shall be
true at the signing of this Agreement, as of Closing, and as of any such later
date as contemplated hereunder) and agrees with Subscriber that:
4.1 Organization, Good Standing, and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware USA and has all requisite corporate power and authority
to carry on its business as now conducted and as proposed to be conducted. The
Company is duly qualified to transact business and is in good standing in each
jurisdiction in which the failure to so qualify would have a material adverse
effect on the business or properties of the Company and its subsidiaries taken
as a whole. The Company is not the subject of any pending, threatened or, to its
knowledge, contemplated investigation or administrative or legal proceeding by
the Internal Revenue Service, the taxing authorities of any state or local
jurisdiction, or the Securities and Exchange Commission ("SEC"), or any state
securities commission, or any other governmental entity, which have not been
disclosed in the Disclosure Documents.
4.2 Corporate Condition. The Company's condition is, in all material
respects, as described in the Disclosure Documents, except for changes in the
ordinary course of business and normal year-end adjustments that are not, in the
aggregate, materially adverse to the Company. There have been no material
adverse changes to the Company's business, financial condition, or prospects
since the date of such Disclosure Documents. The financial statements contained
in the Disclosure Documents have been prepared in accordance with generally
accepted accounting principles, consistently applied (except as otherwise
permitted by Regulation S-X of the Exchange Act), and fairly present the
consolidated financial condition of the Company as of the dates of the balance
sheets included therein and the consolidated results of its operations and cash
flows for the periods then ended. Without limiting the foregoing, there are no
material liabilities, contingent or actual, that are not disclosed in the
Disclosure Documents (other than liabilities incurred by the Company in the
ordinary course of its business, consistent with its past practice, after the
period covered by the Disclosure Documents). The Company has paid all material
taxes which are due, except for taxes which it reasonably disputes. There is no
material claim, litigation, or administrative proceeding pending, or, to the
best of the Company's knowledge, threatened against the Company, except as
disclosed in the Disclosure Documents. This Agreement and the Disclosure
Documents do not contain any untrue statement of a material fact and do not omit
to state any material fact required to be stated therein or herein necessary to
make the statements contained therein or herein not misleading in the light of
the circumstances under which they were made. No event or circumstance exists
relating to the Company which, under applicable law, requires public disclosure
but which has not been so publicly announced or disclosed.
4.3 Authorization. Except for the filing of the Certificate of
Designation, all corporate action on the part of the Company by its officers,
directors and shareholders necessary for the authorization, execution and
delivery of this Agreement, the performance of all obligations of the Company
hereunder and the authorization, issuance and delivery of the Preferred Stock
being sold hereunder and the issuance (and/or the reservation for issuance) of
the Conversion Shares, the Conversion Warrants and the Warrant Shares have been
taken, and this Agreement, the Certificate of Designation, the Irrevocable
Instructions to Transfer Agent, the Escrow Agreement and the Registration Rights
Agreement constitute valid and legally binding obligations of the Company,
enforceable in accordance with their terms, except insofar as the enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, or other
similar laws affecting creditors' rights generally or by principles governing
the availability of equitable remedies. The
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Company has obtained all consents and approvals required for it to execute,
deliver and perform each agreement referenced in the previous sentence.
4.4 Valid Issuance of Preferred Stock and Common Stock. The
Preferred Stock and the Conversion Warrants are duly authorized and, when
issued, sold and delivered in accordance with the terms hereof, for the
consideration expressed herein, will be validly issued, fully paid and
nonassessable and, based in part upon the representations of Subscriber in this
Agreement, will be issued in compliance with all applicable U.S. federal and
state securities laws. The Conversion Shares and the Warrant Shares are duly
authorized and, when issued in accordance with the terms of the Certificate of
Designation or the Conversion Warrants, as applicable, shall be duly and validly
issued and outstanding, fully paid and nonassessable, and based in part on the
representations and warranties of Subscriber of the Preferred Stock, will be
issued in compliance with all applicable U.S. federal and state securities laws.
The Preferred Stock, the Conversion Shares, the Conversion Warrants and the
Warrant Shares will be issued free of any preemptive rights. The Company
currently has Seven Million Two Hundred Thousand (7,200,000) Conversion Shares
reserved for issuance upon conversion of the Preferred Stock, and upon exercise
of the Conversion Warrants.
4.5 Compliance with Other Instruments. The Company is not in
violation or default of any provisions of its Certificate of Incorporation or
Bylaws each as amended, and in effect on and as of the date of the Agreement or
of any material provision of any material instrument or material contract to
which it is a party or by which it is bound or, to its knowledge, of any
provision of any federal or state judgment, writ, decree, order, statute, rule
or governmental regulation applicable to the Company, which would have a
material adverse affect on the Company's business or prospects, except as
described in the Disclosure Documents. The execution, delivery and performance
of this Agreement and the other agreements entered into in conjunction with the
Offering and the consummation of the transactions contemplated hereby will not
result in any such violation or be in conflict with or constitute, with or
without the passage of time and giving of notice, either a default under any
such provision, instrument or contract or an event which results in the creation
of any lien, charge or encumbrance upon any assets of the Company.
4.6 Reporting Company. The Company is subject to the reporting
requirements of the Exchange Act, has a class of securities registered under
Section 12 of the Exchange Act, and has filed all reports required by the
Exchange Act since 1990. The Company undertakes to furnish Subscriber with
copies of such reports as may be reasonably requested by Subscriber prior to
consummation of this Offering and thereafter, to make such reports available, as
long as Subscriber holds the Securities. The Company is not in violation of the
listing requirements of the Nasdaq National Market System and does not
reasonably anticipate that the Common Stock will be delisted by the Nasdaq
National Market System for the foreseeable future. The Company has filed all
reports required under the Exchange Act. The Company has not furnished to the
Subscriber any material nonpublic information concerning the Company
4.7 Capitalization. The capitalization of the Company as of December
31, 1997, is, and the capitalization as of the Closing, after taking into
account the offering of the Securities contemplated by this Agreement and all
other share issuances occurring prior to this Offering, will be, as set forth in
the Capitalization Schedule as set forth in Exhibit I. Except as disclosed in
the Capitalization Schedule and in the Company's Annual Report on Form 10-K for
the year ended June 30, 1997, as of the date of this Agreement, (i) there are no
outstanding options, warrants, scrip, rights to subscribe for, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exercisable or exchangeable for, any shares of capital stock
of 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, and (ii) other than the
current Registration Statement for the Company's
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Series F Preferred Stock and for certain Selling Security Holders underlying
warrants issued prior to 1996 or for shares of Common Stock underlying warrants
issued in connection with the Company's Preferred Stock Series as described in
the Company's Form 10-K Annual Report for the year ended June 30, 1997, there
are no agreements or arrangements under which the Company or any of its
subsidiaries is obligated to register the sale of any of its or their securities
under the Act (except the Registration Rights Agreement).
4.8 Intellectual Property. The Company has valid, unrestricted and
exclusive patents, trademarks, trademark registrations, trade names, copyrights,
know-how, technology and other intellectual property necessary to the conduct of
its business as set forth on Exhibit K-1. The Company has granted such licenses
or has assigned or otherwise transferred a portion of (or all of) such valid,
unrestricted and exclusive patents, trademarks, trademark registrations, trade
names, copyrights, know-how, technology and other intellectual property
necessary to the conduct of its business as set forth on Exhibit K-2. The
Company has been granted licenses, know-how, technology and/or other
intellectual property necessary to the conduct of its business as set forth on
Exhibit K-3. To the best of the Company's knowledge, the Company is not
infringing on the intellectual property rights of any third party, nor is any
third party infringing on the Company's intellectual property rights. There are
no restrictions in any agreements, licenses, franchises, or other instruments
which preclude the Company from engaging in its business as presently conducted.
4.9 Use of Proceeds. As of the date hereof, the Company expects to
use the proceeds from this Offering (less fees and expenses) for the purposes
and in the approximate amounts set forth on the Use of Proceeds Schedule set
forth as Exhibit J hereto. These purposes and amounts are estimates and are
subject to change without notice to any Subscriber.
4.10 No Rights of Participation. No person or entity, including, but
not limited to, current or former shareholders of the Company, underwriters,
brokers, agents or other third parties, has any right of first refusal,
preemptive right, right of participation, or any similar right to participate in
the financing contemplated by this Agreement which has not been waived.
4.11 Company Acknowledgment. The Company hereby acknowledges that
Subscriber may elect to hold the Securities for various periods of time, as
permitted by the terms of this Agreement, the Certificate of Designation, the
Conversion Warrants, and other agreements contemplated hereby, and the Company
further acknowledges that Subscriber and the Placement Agent have made no
representations or warranties, either written or oral, as to how long the
Securities will be held by Subscriber or regarding Subscriber's trading history
or investment strategies.
4.12 Termination Date of Offering. In no event shall the last
Closing ("Last Closing") of a sale and purchase of the Preferred Stock and
accompanying Conversion Warrants occur later than February 28, 1998, which date
can be extended by up to ten (10) days upon written approval by the Company and
the Placement Agent.
4.13 Underwriter's Fees and Rights of First Refusal. The Company is
not obligated to pay any compensation or other fees, costs or related
expenditures in cash or securities to any underwriter, broker, agent or other
representative other than the Placement Agent in connection with this Offering.
4.14 Current Public Information. The Company is currently eligible
to register the resale of its Common Stock on a registration statement on Form
S-3 under the Act.
4.15 No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any of
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the Company's securities or solicited any offers to buy any security under
circumstances that would prevent the parties hereto from consummating the
transactions contemplated hereby pursuant to an exemption from registration
under the Act pursuant to the provisions of Regulation D. The Company has not
engaged in any form of general solicitation or advertising in connection with
the offering of Series H Preferred Stock.
4.16 Acknowledgment of Dilution. The number of Conversion Shares
issuable upon conversion of the Preferred Stock may increase substantially in
certain circumstances, including the circumstance wherein the trading price of
the Common Stock declines. The Company's executive officers and directors have
studied and fully understand the nature of the Securities being sold hereunder
and recognize that they have a potential dilutive effect. The board of directors
of the Company has concluded in its good faith business judgment that such
issuance is in the best interests of the Company. The Company acknowledges that
its obligation to issue Conversion Shares upon conversion of the Preferred Stock
is binding upon it and enforceable regardless of the dilution that such issuance
may have on the ownership interests of the other stockholders.
4.17 Foreign Corrupt Practices. Neither the Company, nor any of its
subsidiaries, nor any director, officer, agent, employee or other person acting
on behalf of the Company or any subsidiary has, in the course of its actions
for, or on behalf of, the Company, used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; made any direct or indirect unlawful payment to any foreign
or domestic government official or employee from corporate funds; violated or is
in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977,
as amended; or made any bribe, rebate, payoff, influence payment, kickback or
other unlawful payment to any foreign or domestic government official or
employee.
4.18 Key Employees. Each Key Employee (as defined below) is
currently serving the Company in the capacity disclosed in Exhibit M. No Key
Employee, to the best knowledge of the Company and its subsidiaries, is, or is
now expected to be, in violation of any material term of any employment
contract, confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract or agreement or any restrictive
covenant, and the continued employment of each Key Employee does not subject the
Company or any of its subsidiaries to any liability with respect to any of the
foregoing matters. No Key Employee has, to the best knowledge of the Company and
its subsidiaries, any intention to terminate his employment with, or services
to, the Company or any of its subsidiaries. "Key Employee" means each of Gerald
Smith, Chairman & President, Robert H. Zeiger, CEO, Dr. Jay Sawardeker, COO,
Dennis H. Healey, CFO and Joseph P. Morris, Vice President of Research &
Development.
4.19 Representations Correct. The foregoing representations,
warranties and agreements are true, correct and complete in all material
respects, and shall survive the Closing and the issuance of the shares of
Preferred Stock.
4.20 Press Release Approval. Any press release or other publicity
concerning this transaction (not including the registration statement that is
required to be filed under the Registration Rights Agreement) and the
Subscribers shall be submitted to the Subscriber for comment and prior approval
at least one (1) business day prior to publishing.
5. Covenants of the Company
5.1 Independent Auditors. The Company shall, until at least three
(3) years after the date of the Last Closing, maintain as its independent
auditors an accounting firm authorized to practice before the SEC.
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5.2 Corporate Existence and Taxes. The Company shall, until at least
the later of (i) the date that is three (3) years after the date of the Last
Closing or (ii) the conversion or redemption of all of the Preferred Stock
purchased pursuant to this Agreement, and the exercise of the Conversion
Warrants, maintain its corporate existence in good standing and remain a
Reporting Company (provided, however, that the foregoing covenant shall not
prevent the Company from entering into any merger or corporate reorganization as
long as the surviving entity in such transaction, if not the Company, assumes
the Company's obligations with respect to the Preferred Stock and has Common
Stock listed for trading on a stock exchange or on Nasdaq and is a "Reporting
Issuer") and shall pay all its taxes when due except for taxes which the Company
disputes.
5.3 Registration Rights. The Company will enter into a registration
rights agreement covering the resale of the Conversion Shares and the Warrant
Shares substantially in the form of the Registration Rights Agreement attached
as Exhibit E.
5.4 Notification of Final Closing Date by Company. Within five (5)
business days after the Last Closing, the Company shall notify Subscriber in
writing that the Last Closing has occurred, the date of the Last Closing, the
dates that Subscriber is entitled to convert Subscriber's Preferred Stock, and
the name and telephone number of an administrative contact person at the Company
whom Subscriber may contact regarding information related to conversion of the
Preferred Stock as contemplated by the Certificate of Designation.
5.5 Asset Transfers. The Company shall not transfer, sell, convey or
otherwise dispose of any of its material assets to any Subsidiary or affiliate
except for a cash or cash equivalent consideration and for a proper business
purpose, while any of the Series H Preferred Stock are outstanding, except for
(i) transfers or other dispositions to the Company's subsidiary, Viragen USA,
Inc., relating to research and development partnerships, and (ii) licensing
agreements in the ordinary course of business.
5.6 Capital Raising Limitations; Rights of First Refusal.
5.6.1 Capital Raising Limitations. The Company shall not issue
any debt or equity securities for cash in private capital raising transactions
("Future Offerings") for a period beginning on the date hereof and ending One
Hundred and Eighty (180) days after the Last Closing without obtaining the prior
written approval of Subscribers holding a majority of the purchase price of
Preferred Stock then outstanding.
5.6.2 Right of First Offer. The Company agrees that, during the
period beginning on the date hereof and terminating on the date that is twelve
(12) months after the date of the Last Closing, the Company will not, without
the prior written consent of each Subscriber (which shall be deemed given for
the warrants to purchase Common Stock issued or to be issued to the Placement
Agent in consideration of its services in connection with this Agreement and the
transactions contemplated hereby) issue or sell, or agree to issue or sell any
equity or debt securities of the Company or any of its subsidiaries (or any
security convertible into or exercisable or exchangeable, directly or
indirectly, for equity or debt securities of the Company or any of its
subsidiaries) ("Future Offerings") unless the Company shall have first delivered
to each Subscriber at least thirty (30) days prior to the closing of such Future
Offering, written notice describing the proposed Future Offering, including the
terms and conditions thereof, and providing each Subscriber and its affiliates
an option during the twenty (20) day period following delivery of such notice to
purchase up to the full amount of the securities being offered in the Future
Offering on the same terms as contemplated by such Future Offering (the
limitations referred to in this sentence are collectively referred to as the
"Capital Raising Limitations"). Notwithstanding the foregoing, if any Subscriber
chooses not to participate in any Future Offering, then any debt or equity
security
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issued as a result of said Future Offering will be ineligible for resale and/or
conversion, as the case may be, until the date which is nine (9) months after
the Last Closing.
5.6.3 Amount of Subscriber's Right of First Refusal. The amount
of securities which a Subscriber is entitled to purchase in such a Future
Offering shall be a number obtained by multiplying the aggregate amount of
securities being offered in the Future Offering by a fraction, the numerator of
which is the purchase price of the Preferred Stock purchased by the Subscriber
pursuant to this Agreement and the denominator of which is the aggregate dollar
amount of Preferred Stock placed in this Offering.
5.6.4 Exceptions to the Capital Raising Limitation. The Capital
Raising Limitations shall not apply to any transaction involving issuances of
securities in connection with a merger, consolidation, acquisition or sale of
assets, or in connection with any strategic partnership or joint venture (the
primary purpose of which is not to raise equity capital), or in connection with
the disposition or acquisition of a business, product or license by the Company
or exercise of options by employees, consultants or directors. The Capital
Raising Limitations also shall not apply to (a) the issuance of securities
pursuant to an underwritten public offering, (b) the issuance of securities upon
exercise or conversion of the Company's options, warrants or other convertible
securities outstanding as of the date hereof, (c) the grant of additional
options or warrants, or the issuance of additional securities, under any Company
stock option or restricted stock plan for the benefit of the Company's
employees, directors or consultants, (d) the grant of options or warrants, or
the issuance of securities relating to any research and development partnership
with the Company's Subsidiary, Viragen USA, Inc., or (e) the grant of options or
warrants relating to any agreement with the American Red Cross and similar blood
collection and processing organizations in exchange for blood products.
5.7 Financial 10-K Statements, Etc. and Current Reports on Form 8-K.
The Company shall make available to the Subscriber copies of its annual reports
on Form 10-K, quarterly reports on Form 10-Q and current reports on form 8-K for
as long as the Preferred Stock may remain outstanding.
5.8 Opinion of Counsel. Subscribers shall, upon purchase of the
Preferred Stock and accompanying Conversion Warrants pursuant to this Agreement,
receive an opinion letter from Atlas, Pearlman, Trop & Borkson, PA, New River
Center, Suite 1900, 200 East Las Olas Blvd., Ft. Lauderdale, FL 33301
("Counsel"), counsel to the Company, in the form attached as Exhibit F.
5.9 Removal of Legend Upon Conversion. As contemplated by the
Certificate of Designation, upon conversion of the Preferred Stock, Subscriber
shall submit a Notice of Conversion and Resale, substantially in the form
attached hereto as Exhibit L. The Legend shall be removed and the Company shall
issue a certificate without such Legend to the holder of any Security upon which
it is stamped, and a certificate for a security shall be originally issued
without the Legend, if, unless otherwise required by state securities laws, (a)
the resale of such Security is registered under the Act, or (b) such holder
provides the Company with an opinion of counsel, in form, substance and scope
customary for opinions of counsel in comparable transactions (the reasonable
cost of which shall be borne by the Company), to the effect that a public sale
or transfer of such Security may be made without registration under the Act, or
(c) such holder provides the Company with reasonable assurances that such
Security can be sold pursuant to Rule 144. Each Subscriber agrees to sell all
Securities, including those represented by a certificate(s) from which the
Legend has been removed, or which were originally issued without the Legend,
pursuant to an effective registration statement and to deliver a prospectus in
connection with such sale or in compliance with an exemption from the
registration requirements of the Act. In the event the Legend is removed from
any Security or any Security is issued without the Legend and thereafter the
effectiveness of a registration statement covering the resale of such Security
is suspended or the Company determines that a supplement or amendment thereto is
required by applicable securities
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laws, then upon reasonable advance notice to Subscriber holding such Security,
the Company may require that the Legend be placed on any such Security that
cannot then be sold pursuant to an effective registration statement or Rule 144
or with respect to which the opinion referred to in clause (b) next above has
not been rendered, which Legend shall be removed when such Security may be sold
pursuant to an effective registration statement or Rule 144 or such holder
provides the opinion with respect thereto described in clause (b) next above.
5.10 Listing. Subject to the remainder of this Section 5.10, the
Company shall ensure that its shares of Common Stock (including all Conversion
Shares and Warrant Shares) are listed and available for trading on the Nasdaq
National Market ("NMS"). Thereafter, the Company shall (i) use its best efforts
to continue the listing and trading of its Common Stock on the NMS, or on the
Nasdaq Small Cap Market ("NASDAQ"), the New York Stock Exchange ("NYSE"), or the
American Stock Exchange ("AMEX") or any other national exchange or
over-the-counter market system; (ii) take all action necessary to cause and
maintain the listing and trading of its Common Stock on the OTC Bulletin Board
at any time the Common Stock is not listed and traded on NASDAQ, NMS, NYSE or
AMEX; and (iii) comply in all respects with the Company's reporting, filing and
other obligations under the by-laws or rules of the National Association of
Securities Dealers ("NASD") and such exchanges, as applicable.
5.11 The Company's Instructions to Transfer Agent. The Company will
issue to its Transfer Agent the Irrevocable Instructions to Transfer Agent
substantially in the form of Exhibit G instructing the Transfer Agent to issue
certificates, registered in the name of each Subscriber or its nominee, for the
Conversion Shares and Warrant Shares in such amounts as specified from time to
time by such Subscriber to the Company upon conversion of the Preferred Stock
and exercise of the Conversion Warrants. Such certificates shall bear a Legend
only to the extent permitted by Section 5.9 hereof. The Company warrants that no
instruction, other than such instructions referred to in Section 5.9 hereof or
in this Section 5.11 and stop transfer instructions to give effect to Section
3.7 hereof in the case of Conversion Shares and Warrant Shares prior to
registration of the Conversion Shares and Warrant Shares under the Act, will be
given by the Company to its Transfer Agent and that the 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 each Subscriber's obligations
and agreement set forth in Sections 2.3.3 or 2.3.4 hereof to resell the
Securities pursuant to an effective registration statement and to deliver a
prospectus in connection with such sale or in compliance with an exemption from
the registration requirements of applicable securities laws. If (a) a Subscriber
provides the Company with an opinion of counsel, which opinion of counsel shall
be in form, substance and scope customary for opinions of counsel in comparable
transactions (the reasonable cost of which shall be borne by the Company), to
the effect that the Securities to be sold or transferred may be sold or
transferred pursuant to an exemption from registration or (b) a Subscriber
transfers Securities to an affiliate which is an accredited investor pursuant to
Rule 144, the Company shall permit the transfer, and, in the case of Conversion
Shares and Warrant Shares, promptly instruct its transfer agent to issue one or
more certificates in such name and in such denomination as specified by such
Subscriber. The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to a Subscriber by vitiating the intent
and purpose of the transaction contemplated hereby. Accordingly, the Company
acknowledges that the remedy at law for a breach of its obligations under this
Section 5.11 will be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this Section 5.11, that a
Subscriber shall be entitled, in addition to all other available remedies, to an
injunction restraining any breach and requiring immediate issuance and transfer,
without the necessity of showing economic loss and without any bond or other
security being required. The Company hereby agrees that it will not unilaterally
terminate its relationship with the Transfer Agent for any reason prior to the
date which is three (3) years after the Last Closing or one (1) month after the
first date that no Preferred Stock and no Conversion Warrants are outstanding,
whichever is earlier (the "Ending Date") or until such time
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that a successor transfer agent (i) is appointed by the Company, and (ii)
executes and agrees to be bound by the terms of the Irrevocable Instructions to
Transfer Agent.
6. Subscriber Covenant/Miscellaneous
6.1 Representations and Warranties Survive the Closing;
Severability. Subscriber's and the Company's representations and warranties
shall survive the Closing of the transactions contemplated by this Agreement
notwithstanding any due diligence investigation made by or on behalf of the
party seeking to rely thereon. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective if
it materially changes the economic benefit of this Agreement to any party.
6.2 Successors and Assigns. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement. Subscriber may assign Subscriber's rights hereunder, in
connection with any private sale of the Preferred Stock of such Subscriber, so
long as, as a condition precedent to such transfer, the transferee executes an
acknowledgment agreeing to be bound by the applicable provisions of this
Agreement.
6.3 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of Delaware without respect to conflict of
laws principles.
6.4 Execution in Counterparts Permitted. This Agreement may be
executed in any number of counterparts, each of which shall be enforceable
against the parties actually executing such counterparts, and all of which
together shall constitute one (1) instrument.
6.5 Titles and Subtitles; Gender. The titles and subtitles
used in this Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement. The use in this
Agreement of a masculine, feminine or neither pronoun shall be deemed to include
a reference to the others.
6.6 Written Notices, Etc. Any notice, demand or request
required or permitted to be given by the Company or Subscriber pursuant to the
terms of this Agreement shall be in writing and shall be deemed given when
delivered personally, or by facsimile (with a hard copy to follow by two (2) day
courier), addressed to the parties at the addresses and/or facsimile telephone
number of the parties set forth at the end of this Agreement or such other
address as a party may request by notifying the other in writing.
6.7 Expenses. Each of the Company and Subscriber shall pay all
costs and expenses that it respectively incurs, with respect to the negotiation,
execution, delivery and performance of this Agreement.
6.8 Entire Agreement; Written Amendments Required. This
Agreement, including the Exhibits attached hereto, the Certificate of
Designation, the Preferred Stock certificates, the Conversion Warrants, the
Registration Rights Agreement, the Escrow Agreement, the Irrevocable
Instructions to Transfer Agent and the other documents delivered pursuant hereto
constitute the full and entire understanding and agreement between the parties
with regard to the subjects hereof and thereof, and no party shall be liable or
bound to any other party in any manner by any warranties, representations or
covenants except as specifically set forth herein or therein. Except as
expressly
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provided herein, neither this Agreement nor any term hereof may be amended,
waived, discharged or terminated other than by a written instrument signed by
the party against whom enforcement of any such amendment, waiver, discharge or
termination is sought.
6.9 No Five Percent Holders. Notwithstanding anything to the
contrary contained herein, the Series H Preferred Stock shall not be convertible
by a Holder or at the Termination Date to the extent (but only to the extent)
that, if converted by such Holder or at the Termination Date, the Holder would
beneficially own in excess of 4.9% of the then outstanding shares of Common
Stock of the Company. To the extent this limitation applies, the determination
of whether Series H Preferred Stock shall be convertible (vis-a vis other
securities owned by such Holder) and of which Series H Preferred Stock shall be
converted shall be in the sole discretion of the Holder and submission of the
Series H Preferred Stock for conversion shall be deemed to be the Holder's
determination of whether such Series H Preferred Stock is convertible, subject
to such aggregate percentage limitations. No prior inability to convert Series H
Preferred Stock pursuant to this subparagraph shall have any effect on the
applicability of its provisions with respect to any subsequent determination of
convertibility. For the purposes of this subparagraph, beneficial ownership and
all calculations, including without limitation, with respect to calculations of
percentage ownership shall be determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended, and the Regulations thereunder.
Notwithstanding the foregoing, each Holder shall have the right to waive such
restriction or increase such percentage upon sixty one (61) days' prior notice
to the Company and to decrease any such percentage immediately upon written
notice to the Company. No transferee of Series H Preferred Stock shall be bound
by such restriction unless the transferee expressly so agrees. The provisions of
this subparagraph may be waived and/or implemented in a manner otherwise than in
strict conformity with the terms hereof with the approval of the Board of
Directors of the Company and the Holders of a majority in interest in the then
outstanding Series H Preferred Stock: (i) with respect to any matter to cure any
ambiguity herein, to correct this subparagraph (or any portion thereof) which
may be defective or inconsistent with the intended 4.9% beneficial ownership
limitation herein contained or to make changes or supplements necessary or
desirable to properly give effect to such 4.9% limitation; and (ii) with respect
to any other matter, with the further consent of the Holders of majority of the
then outstanding shares of Common Stock. The limitations contained in this
subparagraph shall apply to a successor Holder of Series H Preferred Stock if,
and to the extent, elected by such successor Holder concurrently with its
acquisition of such Series H Preferred Stock, such election to be promptly
confirmed in writing to the Company (provided no transfer or series of transfers
to a successor Holder or Holders shall be used by a Holder to evade the
limitations contained herein).
6.10 Arbitration. Any controversy or claim arising out of or
related to this Agreement or the breach thereof, shall be settled by binding
arbitration in Wilmington, Delaware in accordance with the Expedited Procedures
(Rules 53-57) of the Commercial Arbitration Rules of the American Arbitration
Association ("AAA"). A proceeding shall be commenced upon written demand by
Company or any Subscriber to the other. The arbitrator(s) shall enter a judgment
by default against any party which fails or refuses to appear in any properly
noticed arbitration proceeding. The proceeding shall be conducted by one (1)
arbitrator, unless the amount alleged to be in dispute exceeds two hundred fifty
thousand dollars ($250,000), in which case three (3) arbitrators shall preside.
The arbitrator(s) will be chosen by the parties from a list provided by the AAA,
and if they are unable to agree within ten (10) days, the AAA shall select the
arbitrator(s). The arbitrators must be experts in securities law and financial
transactions. The arbitrators shall assess costs and expenses of the
arbitration, including all attorneys' and experts' fees, as the arbitrators
believe is appropriate in light of the merits of the parties' respective
positions in the issues in dispute. Each party submits irrevocably to the
jurisdiction of any state court sitting in Wilmington, Delaware or to the United
States District Court sitting in Delaware for purposes of enforcement of any
discovery order, judgment or award in connection with such arbitration. The
award of the arbitrator(s) shall be final and binding upon the parties and may
be enforced in any
15
<PAGE> 16
court having jurisdiction. The arbitration shall be held in such place as set by
the arbitrator(s) in accordance with Rule 55.
6.11 Certain Trading Restrictions. The Subscriber agrees that
during the period from the date the Registration Statement is first declared
effective by the SEC to the date that all shares of Series H Preferred Stock
owned by the Subscriber are either converted in full or redeemed by the Company
or otherwise disposed of by the Subscriber, the Subscriber shall not engage in
short sales or other hedging transactions with respect to the Common Stock;
provided, however, that the Subscriber 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.
7. Subscription and Wiring Instructions; Irrevocability.
7.1 Subscription
(a) Wire transfer of Subscription Funds. Subscriber shall
send this signed Agreement by facsimile to the
Placement Agent at (770) 640-7150, and send the
subscription funds by wire transfer, to the Escrow
Agent as follows:
First Union National Bank
ABA # 053000219
Account # 465946
Account Name: Trust Ledger
Attn: Eddie Blee 404-827-7326
Reference: Viragen #3072237305
SWIFT Code: FUNBUS33
(b) Irrevocable Subscription. Subscriber hereby
acknowledges and agrees, subject to the provisions of
any applicable laws providing for the refund of
subscription amounts submitted by Subscriber, that
this Agreement is irrevocable and that Subscriber is
not entitled to cancel, terminate or revoke this
Agreement or any other agreements executed by such
Subscriber and delivered pursuant hereto, and that
this Agreement and such other agreements shall
survive the death or disability of such Subscriber
and shall be binding upon and inure to the benefit of
the parties and their heirs, executors,
administrators, successors, legal representatives and
assigns. If the Securities subscribed for are to be
owned by more than one person, the obligations of all
such owners under this Agreement shall be joint and
several, and the agreements, representations,
warranties and acknowledgments herein contained shall
be deemed to be made by and be binding upon each such
person and his heirs, executors, administrators,
successors, legal representatives and assigns.
Notwithstanding the foregoing, (i) if the conditions
to Closing are not satisfied or (ii) if the
Disclosure Documents are discovered prior to Closing
to contain statements which are materially
inaccurate, or omit statements of material fact,
Subscriber may revoke or cancel this Agreement.
(c) Company's Right to Reject Subscription. Subscriber
understands that this Agreement is not binding on the
Company until the Company accepts it. This Agreement
shall be accepted by the Company when the Company
16
<PAGE> 17
countersigns this Agreement. Subscriber hereby
confirms that the Company has full right in its sole
discretion to accept or reject the subscription of
Subscriber, in whole or in part, provided that, if
the Company decides to reject such subscription, the
Company must do so promptly and in writing. In the
case of rejection, the Company will promptly return
any rejected payments and (if rejected in whole)
copies of all executed subscription documents
(including without limitation this Agreement) to
Subscriber. In the event of rejection, no interest
will be payable by the Company to Subscriber on any
return of payment, provided however, that any such
interest accrued on such funds in the Escrow Account
shall be returned to the Subscriber by the Escrow
Agent.
7.2 Acceptance of Subscription. In the case of acceptance of
Subscriber's subscription, ownership of the number of securities being purchased
hereby will pass to Subscriber upon the Closing.
7.3 Subscriber to Forward Original Signed Subscription
Agreement to Company. Subscriber agrees to courier to Company his, her or its
original inked signed Subscription Agreement within two (2) days after faxing
said signed agreement to Placement Agent.
8. Indemnification.
The Company agrees to indemnify and hold harmless Subscriber and the
Placement Agent and each of their respective officers, directors, employees and
agents, and each person who controls Subscriber or the Placement Agent within
the meaning of the Act or the Exchange Act (each, a "Subscriber Indemnified
Party") against any losses, claims, damages or liabilities, joint or several, to
which it, they or any of them, may become subject and not otherwise reimbursed
arising from or due to any untrue statement of a material fact or the omission
to state any material fact required to be stated in order to make the statements
not misleading in any representation or warranty made by the Company contained
in this Agreement or in any statements contained in the Disclosure Documents.
Subscriber agrees to indemnify and hold harmless the Company and the
Placement Agent and each of their respective officers, directors, employees and
agents, and each person who controls Company or the Placement Agent within the
meaning of the Act or the Exchange Act (each, a "Company Indemnified Party") (a
Subscriber Indemnified Party or a Company Indemnified Party may be hereinafter
referred to singularly as "Indemnified Party") against any losses, claims,
damages or liabilities, joint or several, to which it, they or any of them, may
become subject and not otherwise reimbursed arising from or due to any untrue
statement of a material fact or the omission to state any material fact required
to be stated in order to make the statements not misleading in any
representation or warranty made by Subscriber contained in this Agreement.
Promptly after receipt by an Indemnified Party of notice of the
commencement of any action pursuant to which indemnification may be sought, such
Indemnified Party will, if a claim in respect thereof is to be made against the
other party (hereinafter "Indemnitor") under this Section 8, deliver to the
Indemnitor a written notice of the commencement thereof and the Indemnitor shall
have the right to participate in and to assume the defense thereof with counsel
reasonably selected by the Indemnitor, provided, however, that an Indemnified
Party shall have the right to retain its own counsel, with the reasonably
incurred fees and expenses of such counsel to be paid by the Indemnitor, if
representation of such Indemnified Party by the counsel retained by the
Indemnitor would be inappropriate due to actual or potential conflicts of
interest between such Indemnified Party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
Indemnitor within a reasonable time of the commencement of any such action, if
prejudicial to the Indemnitor's ability to defend such action, shall relieve the
Indemnitor of any liability to the Indemnified Party under this Section 8, but
the omission to so deliver
17
<PAGE> 18
written notice to the Indemnitor will not relieve it of any liability that it
may have to any Indemnified Party other than under this Section 8 to the extent
it is prejudicial.
9. Certain Additional Legends and Information.
FOR FLORIDA RESIDENTS:
THE SECURITIES REFERRED TO HEREIN WILL BE SOLD TO, AND
ACQUIRED BY, THE HOLDER IN A TRANSACTION EXEMPT UNDER SECTION 517.061 OF THE
FLORIDA SECURITIES ACT. THE SECURITIES HAVE NOT BEEN REGISTERED UNDER SAID ACT
IN THE STATE OF FLORIDA. IN ADDITION, ALL FLORIDA RESIDENTS SHALL HAVE THE
PRIVILEGE OF VOIDING THE PURCHASE WITHIN THREE (3) DAYS AFTER THE FIRST TENDER
OF CONSIDERATION IS MADE BY SUCH SUBSCRIBER TO THE ISSUER, AN AGENT OF THE
ISSUER, OR AN ESCROW AGENT OR WITHIN THREE DAYS AFTER THE AVAILABILITY OF THAT
PRIVILEGE IS COMMUNICATED TO SUCH SUBSCRIBER, WHICHEVER OCCURS LATER.
FOR MAINE RESIDENTS:
THESE SECURITIES ARE BEING SOLD PURSUANT TO AN EXEMPTION FROM
REGISTRATION WITH THE BANK SUPERINTENDENT OF THE STATE OF MAINE UNDER SECTION
10502(2)(R) OF TITLE 32 OF THE MAINE REVISED STATUTES. THESE SECURITIES MAY BE
DEEMED RESTRICTED SECURITIES AND AS SUCH THE HOLDER MAY NOT BE ABLE TO RESELL
THE SECURITIES UNLESS PURSUANT TO REGISTRATION UNDER STATE OR FEDERAL SECURITIES
LAWS OR UNLESS AN EXEMPTION UNDER SUCH LAWS EXISTS.
FOR PENNSYLVANIA RESIDENTS:
EACH PENNSYLVANIA RESIDENT WHO SUBSCRIBES FOR THE SECURITIES
BEING OFFERED HEREBY AGREES NOT TO SELL THESE SECURITIES FOR A PERIOD OF TWELVE
MONTHS AFTER THE DATE OF PURCHASE UNLESS SUCH SECURITIES HAVE BEEN REGISTERED
FOR SALE. UNDER PROVISION OF THE PENNSYLVANIA SECURITIES ACT OF 1972 (THE "1972
ACT"), EACH PENNSYLVANIA RESIDENT SHALL HAVE THE RIGHT TO WITHDRAW HIS
ACCEPTANCE WITHOUT INCURRING ANY LIABILITY, TO THE SELLER, UNDERWRITER (IF ANY)
OR ANY PERSON, WITHIN TWO (2) BUSINESS DAYS FROM THE DATE OF RECEIPT BY THE
ISSUER OF HIS WRITTEN BINDING CONTRACT OF PURCHASE OR IN THE CASE OF A
TRANSACTION IN WHICH THERE IS NO WRITTEN BINDING CONTRACT OF PURCHASE, WITHIN
TWO BUSINESS DAYS AFTER HE MAKES THE INITIAL PAYMENT FOR THE SECURITIES BEING
OFFERED. TO ACCOMPLISH THIS WITHDRAWAL, A SUBSCRIBER NEED ONLY SEND A LETTER OR
TELEGRAM TO THE SELLING AGENT AT THE ADDRESS SET FORTH IN THE TEXT OF THE
MEMORANDUM, INDICATING HIS OR HER INTENTION TO WITHDRAW. SUCH LETTER OR TELEGRAM
SHOULD BE SENT AND POSTMARKED PRIOR TO THE END OF THE AFOREMENTIONED SECOND
BUSINESS DAY. IT IS PRUDENT TO SEND SUCH LETTER BY CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, TO ENSURE THAT IT IS RECEIVED AND ALSO TO EVIDENCE THE TIME
WHEN IT WAS MAILED. IF THE REQUEST IS MADE ORALLY (IN PERSON OR BY TELEPHONE, TO
THE SELLING AGENT AT THE NUMBER LISTED IN THE TEXT OF THE MEMORANDUM) A WRITTEN
CONFIRMATION THAT THE REQUEST HAS BEEN RECEIVED SHOULD BE REQUESTED.
FOR NEW HAMPSHIRE RESIDENTS:
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN
APPLICATION FOR A LICENSE HAS BEEN FILED WITH THE STATE OF NEW HAMPSHIRE
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<PAGE> 19
NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED
IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE
THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING.
NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE
FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN
ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL
TO, ANY PERSON, SECURITY, OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE
MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANY REPRESENTATION
INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.
[INTENTIONALLY LEFT BLANK]
19
<PAGE> 20
10. Number of Shares and Purchase Price. Subscriber subscribes for
_________ shares of Preferred Stock (in the amount of $10,000 per Share) and the
accompanying Conversion Warrants against payment by wire transfer in the amount
of $___________________ ("Purchase Price").
11. Accredited Investor. Subscriber is an "accredited investor" because
(check all applicable boxes):
(a) [ ] it is an organization described in Section 501(c)(3) of the
Internal Revenue Code, or a corporation, business trust, or
partnership not formed for the specific purpose of acquiring
the securities offered, with total assets in excess of
$5,000,000.
(b) [ ] any trust, with total assets in excess of $5,000,000, not
formed fo r the specific purpose of acquiring the securities
offered, whose purchase is directed by a sophisticated person
who has such knowledge and experience in financial and
business matters that he is capable of evaluating the merits
and risks of the prospective investment.
(c) [ ] a natural person, who
[ ] is a director, executive officer or general partner of the
issuer of the securities being offered or sold or a director,
executive officer or general partner of a general partner of
that issuer.
[ ] has an individual net worth, or joint net worth with that
person's spouse, at the time of his purchase exceeding
$1,000,000.
[ ] had an individual income in excess of $200,000 in
each of the two most recent years or joint income with that
person's spouse in excess of $300,000 in each of those years
and has a reasonable expectation of reaching the same income
level in the current year.
(d) [ ] an entity each equity owner of which is an entity
described in a - b above or is an individual who could check
one (1) of the last three (3) boxes under subparagraph (c)
above.
(e) [ ] other [specify] ___________________________________________
The undersigned acknowledges that this Agreement and the subscription
represented hereby shall not be effective unless accepted by the Company as
indicated below.
IN WITNESS WHEREOF, the undersigned Subscriber does represent and
certify under penalty of perjury that the foregoing statements are true and
correct and that Subscriber by the following signature(s) executed this
Agreement.
Dated this _____ day of February, 1998.
<TABLE>
<S> <C>
- ------------------------------------ ---------------------------------------------------------
Your Signature PRINT EXACT NAME IN WHICH YOU WANT
THE SECURITIES TO BE REGISTERED
- ------------------------------------- DELIVERY INSTRUCTIONS:
Name: Please Print Please type or print address where your security is to
be delivered
- ----------------------------------------------- ATTN.:
Title/Representative Capacity (if applicable) ---------------------------------------------------
- ----------------------------------------------- ---------------------------------------------------------
Name of Company You Represent (if applicable) Street Address
- ----------------------------------------------- ---------------------------------------------------------
Place of Execution of this Agreement City, State or Province, Country, Offshore Postal Code
---------------------------------------------------------
Phone Number (For Federal Express) and Fax Number
(re: Notice)
</TABLE>
THIS AGREEMENT IS ACCEPTED BY THE COMPANY IN THE AMOUNT OF $
_________________ ON THE ____ DAY OF FEBRUARY, 1998.
Viragen, Inc.
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
20
<PAGE> 21
NOTICE OF CONVERSION [AND RESALE]
(To be Executed by the Registered Holder
in order to Convert the Preferred Stock)
The undersigned hereby irrevocably elects to convert _____________ shares of
Series H Preferred Stock, represented by stock certificate No(s).
________________ (the "Preferred Stock Certificates") into shares of common
stock ("Common Stock") of Viragen, Inc. (the "Company") according to the
conditions of the Certificate of Designation of Series H Preferred Stock, as of
the date written below [in connection with the resale of the underlying Common
Stock unless otherwise indicated below]. If shares are to be issued in the name
of a person other than the undersigned, the undersigned will pay all transfer
taxes payable with respect thereto and is delivering herewith such certificates.
No fee will be charged to the Holder for any conversion, except for transfer
taxes, if any. A copy of each of the Preferred Stock Certificates being
converted is attached hereto. The undersigned agrees to deliver a Prospectus in
connection with any sale made pursuant to the Registration Statement, as
provided in Section 5.10 of the Subscription Agreement.
____ Check here if this conversion is not being made in
connection with the resale of the Common Stock.
Date of Conversion:
----------------
Applicable Conversion Price:
-------
Number of Shares of
Common Stock to be Issued:_________
Signature:
-------------------------
Name:
------------------------------
Address:
--------------------------
* No shares of Common Stock will be issued until the original Series H Preferred
Stock Certificate(s) to be converted and the Notice of Conversion are received
by the Company or its Transfer Agent. The Holder shall (i) send via facsimile,
on or prior to 11:59 p.m., New York City time, on the date of conversion, a copy
of this completed and fully executed Notice of Conversion to the Company at the
office of the Company and its designated Transfer Agent for the Series H
Preferred Stock that the Holder elects to convert and (ii) surrender, to a
common courier for either overnight or two (2) day delivery to the office of the
Company or the Transfer Agent, the original Series H Preferred Stock
Certificate(s) representing the Series H Preferred Stock being converted, duly
endorsed for transfer. The Company or its Transfer Agent shall issue shares of
Common Stock and surrender them to a common courier for delivery to the
shareholder within two (2) business days following receipt of a facsimile of
this Notice of Conversion and receipt by the Company or its Transfer Agent of
the original Series H Preferred Stock Certificate(s) to be converted, all in
accordance with the terms of the Certificate of Designation and the Subscription
Agreement, and shall make payments for the number of business days such issuance
and delivery is late, pursuant to the terms of the Certificate of Designation.
21
<PAGE> 22
EXHIBIT L
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES H PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
"N" shares
"9 MONTH" WARRANT TO PURCHASE COMMON STOCK
OF
VIRAGEN, INC.
THIS CERTIFIES that ________________ or any subsequent holder hereof
("Holder"), has the right to purchase from VIRAGEN, INC., a Delaware corporation
(the "Company"), up to "N" fully paid and nonassessable shares, wherein "N" is
defined below, of the Company's common stock, $.01 par value per share ("Common
Stock"), subject to adjustment as provided herein, at a price equal to the
Exercise Price as defined in Section 3 below, at any time beginning on the Date
of Issuance (as defined below) and ending at 5:00 p.m., New York, New York time,
on February 17, 2003 (the "Exercise Period"); provided, that "N" shall equal ten
percent (10%) of the quotient obtained when (i) the principal amount of the
Series H Preferred Stock purchased by Holder minus the principal amount of any
Series H Share Disposition, as defined below, that occurs prior to the
expiration of the date which is nine (9) months from the Date of Issuance (the
"9 Month Date"), is divided by (ii) the "9 Month Market Price", as defined
below. For purposes hereof, "Series H Share Disposition" shall mean a
transaction whereby the Holder either (i) transfers shares of the Series H
Preferred Stock; or (ii) converts shares of the Series H Preferred Stock
pursuant to the terms of the Company's Certificate of Designation of Series H
Preferred Stock and "9 Month Market Price" shall mean the average of the lowest
two (2) closing bid prices during the twenty (20) trading days for the Common
Stock prior to the 9 Month Date. Within ten (10) days of the 9 Month Date, the
Company shall provide written confirmation to the Holder of the number of shares
of Common Stock, as adjusted if applicable, which the Holder has the right to
purchase hereunder.
Holder agrees with the Company that this Warrant to Purchase Common
Stock of Viragen, Inc. (this "Warrant") is issued and all rights hereunder shall
be held subject to all of the conditions, limitations and provisions set forth
herein.
<PAGE> 23
EXHIBIT B
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES H PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
"N" shares
"9 MONTH" WARRANT TO PURCHASE COMMON STOCK
OF
VIRAGEN, INC.
THIS CERTIFIES that Global Bermuda Limited Partnership or any
subsequent holder hereof ("Holder"), has the right to purchase from VIRAGEN,
INC., a Delaware corporation (the "Company"), up to "N" fully paid and
nonassessable shares, wherein "N" is defined below, of the Company's common
stock, $.01 par value per share ("Common Stock"), subject to adjustment as
provided herein, at a price equal to the Exercise Price as defined in Section 3
below, at any time beginning on the Date of Issuance (as defined below) and
ending at 5:00 p.m., New York, New York time, on February 17, 2003 (the
"Exercise Period"); provided, that "N" shall equal ten percent (10%) of the
quotient obtained when (i) the principal amount of the Series H Preferred Stock
purchased by Holder minus the principal amount of any Series H Share
Disposition, as defined below, that occurs prior to the expiration of the date
which is nine (9) months from the Date of Issuance (the "9 Month Date"), is
divided by (ii) the "9 Month Market Price", as defined below. For purposes
hereof, "Series H Share Disposition" shall mean a transaction whereby the Holder
either (i) transfers shares of the Series H Preferred Stock; or (ii) converts
shares of the Series H Preferred Stock pursuant to the terms of the Company's
Certificate of Designation of Series H Preferred Stock and "9 Month Market
Price" shall mean the average of the lowest two (2) closing bid prices during
the twenty (20) trading days for the Common Stock prior to the 9 Month Date.
Within ten (10) days of the 9 Month Date, the Company shall provide written
confirmation to the Holder of the number of shares of Common Stock, as adjusted
if applicable, which the Holder has the right to purchase hereunder.
Holder agrees with the Company that this Warrant to Purchase Common
Stock of Viragen, Inc. (this "Warrant") is issued and all rights hereunder shall
be held subject to all of the conditions, limitations and provisions set forth
herein.
<PAGE> 24
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES H PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
"N" shares
"9 MONTH" WARRANT TO PURCHASE COMMON STOCK
OF
VIRAGEN, INC.
THIS CERTIFIES that Lakeshore International, Ltd. or any subsequent
holder hereof ("Holder"), has the right to purchase from VIRAGEN, INC., a
Delaware corporation (the "Company"), up to "N" fully paid and nonassessable
shares, wherein "N" is defined below, of the Company's common stock, $.01 par
value per share ("Common Stock"), subject to adjustment as provided herein, at a
price equal to the Exercise Price as defined in Section 3 below, at any time
beginning on the Date of Issuance (as defined below) and ending at 5:00 p.m.,
New York, New York time, on February 17, 2003 (the "Exercise Period"); provided,
that "N" shall equal ten percent (10%) of the quotient obtained when (i) the
principal amount of the Series H Preferred Stock purchased by Holder minus the
principal amount of any Series H Share Disposition, as defined below, that
occurs prior to the expiration of the date which is nine (9) months from the
Date of Issuance (the "9 Month Date"), is divided by (ii) the "9 Month Market
Price", as defined below. For purposes hereof, "Series H Share Disposition"
shall mean a transaction whereby the Holder either (i) transfers shares of the
Series H Preferred Stock; or (ii) converts shares of the Series H Preferred
Stock pursuant to the terms of the Company's Certificate of Designation of
Series H Preferred Stock and "9 Month Market Price" shall mean the average of
the lowest two (2) closing bid prices during the twenty (20) trading days for
the Common Stock prior to the 9 Month Date. Within ten (10) days of the 9 Month
Date, the Company shall provide written confirmation to the Holder of the number
of shares of Common Stock, as adjusted if applicable, which the Holder has the
right to purchase hereunder.
Holder agrees with the Company that this Warrant to Purchase Common
Stock of Viragen, Inc. (this "Warrant") is issued and all rights hereunder shall
be held subject to all of the conditions, limitations and provisions set forth
herein.
<PAGE> 25
EXHIBIT B
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES H PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
"N" shares
"9 MONTH" WARRANT TO PURCHASE COMMON STOCK
OF
VIRAGEN, INC.
THIS CERTIFIES that LaRocque Trading Group, LLC or any subsequent
holder hereof ("Holder"), has the right to purchase from VIRAGEN, INC., a
Delaware corporation (the "Company"), up to "N" fully paid and nonassessable
shares, wherein "N" is defined below, of the Company's common stock, $.01 par
value per share ("Common Stock"), subject to adjustment as provided herein, at a
price equal to the Exercise Price as defined in Section 3 below, at any time
beginning on the Date of Issuance (as defined below) and ending at 5:00 p.m.,
New York, New York time, on February 17, 2003 (the "Exercise Period"); provided,
that "N" shall equal ten percent (10%) of the quotient obtained when (i) the
principal amount of the Series H Preferred Stock purchased by Holder minus the
principal amount of any Series H Share Disposition, as defined below, that
occurs prior to the expiration of the date which is nine (9) months from the
Date of Issuance (the "9 Month Date"), is divided by (ii) the "9 Month Market
Price", as defined below. For purposes hereof, "Series H Share Disposition"
shall mean a transaction whereby the Holder either (i) transfers shares of the
Series H Preferred Stock; or (ii) converts shares of the Series H Preferred
Stock pursuant to the terms of the Company's Certificate of Designation of
Series H Preferred Stock and "9 Month Market Price" shall mean the average of
the lowest two (2) closing bid prices during the twenty (20) trading days for
the Common Stock prior to the 9 Month Date. Within ten (10) days of the 9 Month
Date, the Company shall provide written confirmation to the Holder of the number
of shares of Common Stock, as adjusted if applicable, which the Holder has the
right to purchase hereunder.
Holder agrees with the Company that this Warrant to Purchase Common
Stock of Viragen, Inc. (this "Warrant") is issued and all rights hereunder shall
be held subject to all of the conditions, limitations and provisions set forth
herein.
<PAGE> 26
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES H PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
"N" shares
"9 MONTH" WARRANT TO PURCHASE COMMON STOCK
OF
VIRAGEN, INC.
THIS CERTIFIES that The Tail Wind Fund Ltd. or any subsequent holder
hereof ("Holder"), has the right to purchase from VIRAGEN, INC., a Delaware
corporation (the "Company"), up to "N" fully paid and nonassessable shares,
wherein "N" is defined below, of the Company's common stock, $.01 par value per
share ("Common Stock"), subject to adjustment as provided herein, at a price
equal to the Exercise Price as defined in Section 3 below, at any time beginning
on the Date of Issuance (as defined below) and ending at 5:00 p.m., New York,
New York time, on February 17, 2003 (the "Exercise Period"); provided, that "N"
shall equal ten percent (10%) of the quotient obtained when (i) the principal
amount of the Series H Preferred Stock purchased by Holder minus the principal
amount of any Series H Share Disposition, as defined below, that occurs prior to
the expiration of the date which is nine (9) months from the Date of Issuance
(the "9 Month Date"), is divided by (ii) the "9 Month Market Price", as defined
below. For purposes hereof, "Series H Share Disposition" shall mean a
transaction whereby the Holder either (i) transfers shares of the Series H
Preferred Stock; or (ii) converts shares of the Series H Preferred Stock
pursuant to the terms of the Company's Certificate of Designation of Series H
Preferred Stock and "9 Month Market Price" shall mean the average of the lowest
two (2) closing bid prices during the twenty (20) trading days for the Common
Stock prior to the 9 Month Date. Within ten (10) days of the 9 Month Date, the
Company shall provide written confirmation to the Holder of the number of shares
of Common Stock, as adjusted if applicable, which the Holder has the right to
purchase hereunder.
Holder agrees with the Company that this Warrant to Purchase Common
Stock of Viragen, Inc. (this "Warrant") is issued and all rights hereunder shall
be held subject to all of the conditions, limitations and provisions set forth
herein.
<PAGE> 27
1. Date of Issuance.
This Warrant shall be deemed to be issued on February 17, 1998 ("Date
of Issuance").
2. Exercise.
(a) Manner of Exercise. During the Exercise Period, this Warrant may be
exercised as to all or any lesser number of full shares of Common Stock covered
hereby upon surrender of this Warrant, with the Exercise Form attached hereto as
Exhibit A (the "Exercise Form") duly completed and executed, together with the
full Exercise Price (as defined below) for each share of Common Stock as to
which this Warrant is exercised, at the office of the Company, 865 SW 78th
Avenue, Suite 100, Plantation, Florida, 33324 Telephone No. (954) 233-8746,
Facsimile No. (954) 233-1414 , or at such other office or agency as the Company
may designate in writing, by overnight mail, with an advance copy of the
Exercise Form sent to the Company and its Transfer Agent by facsimile (such
surrender and payment of the Exercise Price hereinafter called the "Exercise of
this Warrant").
(b) Date of Exercise. The "Date of Exercise" of the Warrant shall be
defined as the date that the advance copy of the completed and executed Exercise
Form is sent by facsimile to the Company, provided that the original Warrant and
Exercise Form are received by the Company as soon as practicable thereafter.
Alternatively, the Date of Exercise shall be defined as the date the original
Exercise Form is received by the Company, if Holder has not sent advance notice
by facsimile.
(c) Cancellation of Warrant. This Warrant shall be canceled upon the
Exercise of this Warrant, and, as soon as practical after the Date of Exercise,
Holder shall be entitled to receive Common Stock for the number of shares
purchased upon such Exercise of this Warrant, and if this Warrant is not
exercised in full, Holder shall be entitled to receive a new Warrant (containing
terms identical to this Warrant) representing any unexercised portion of this
Warrant in addition to such Common Stock.
(d) Holder of Record. Each person in whose name any Warrant for shares
of Common Stock is issued shall, for all purposes, be deemed to be the Holder of
record of such shares on the Date of Exercise of this Warrant, irrespective of
the date of delivery of the Common Stock purchased upon the Exercise of this
Warrant. Nothing in this Warrant shall be construed as conferring upon Holder
any rights as a stockholder of the Company.
3. Payment of Warrant Exercise Price.
The Exercise Price shall equal the 9 Month Market Price per share
("Exercise Price").
Payment of the Exercise Price may be made by either of the following,
or a combination thereof, at the election of Holder:
(a) Cash Exercise: cash, bank or cashiers check or wire transfer;
or
2
<PAGE> 28
(b) Cashless Exercise: subject to the last sentence of this
Section 3, surrender of this Warrant at the principal office of the Company
together with notice of cashless election, in which event the Company shall
issue Holder a number of shares of Common Stock computed using the following
formula:
X = Y (A-B)/A
where: X = the number of shares of Common Stock to be issued to Holder.
Y = the number of shares of Common Stock for which this Warrant
is being exercised.
A = the Market Price of one (1) share of Common Stock (for purposes of
this Section 3(b), the "Market Price" shall be defined as the average
closing bid price of the Common Stock for the five (5) trading days
prior to the Date of Exercise of this Warrant (the "Average Closing
Price"), as reported by the National Association of Securities Dealers
Automated Quotation System ("Nasdaq") National Market System, or if the
Common Stock is not traded on the Nasdaq National Market System, the
Average Closing Price on the Nasdaq Small Cap Market or in any other
over-the-counter market on which the Common Stock is traded. If the
Common Stock is/was not traded during the five (5) trading days prior
to the Date of Exercise, then the closing price for the last publicly
traded day shall be deemed to be the closing price for any and all (if
applicable) days during such five (5) trading day period.
B = the Exercise Price.
For purposes of Rule 144 and sub-section (d)(3)(ii) thereof, it is intended,
understood and acknowledged that the Common Stock issuable upon exercise of this
Warrant in a cashless exercise transaction shall be deemed to have been acquired
at the time this Warrant was issued. Moreover, it is intended, understood and
acknowledged that the holding period for the Common Stock issuable upon exercise
of this Warrant in a cashless exercise transaction shall be deemed to have
commenced on the date this Warrant was issued.
Notwithstanding anything to the contrary contained herein, this Warrant may not
be exercised in a cashless exercise transaction if, on the Date of Exercise, the
shares of Common Stock to be issued upon exercise of this Warrant would upon
such issuance (x) be immediately transferable in the United States free of any
restrictive legend, including without limitation under Rule 144; (y) be then
registered pursuant to an effective registration statement filed pursuant to
that certain Registration Rights Agreement dated on or about February 17, 1998
by and among the Company and certain investors; or (z) otherwise be registered
under the Securities Act of 1933, as amended.
4. Transfer and Registration.
(a) Transfer Rights. Subject to the provisions of Section 8 of this
Warrant, this Warrant may be transferred on the books of the Company, in whole
or in part, in person or by attorney, upon surrender of this Warrant properly
completed and endorsed. This Warrant shall be canceled upon such surrender and,
as soon as practicable thereafter, the person to whom such transfer is made
shall be entitled to receive a new Warrant or Warrants as to the portion of this
Warrant transferred, and Holder shall be entitled to receive a new Warrant as to
the portion hereof retained.
(b) Registrable Securities. The Common Stock issuable upon the exercise
of this Warrant constitutes "Registrable Securities" under that certain
Registration Rights Agreement dated on or about February 17, 1998 between the
Company and certain
3
<PAGE> 29
investors and, accordingly, has the benefit of the registration rights pursuant
to that agreement.
5. Anti-Dilution Adjustments.
(a) Stock Dividend. If the Company shall at any time declare a
dividend payable in shares of Common Stock, then Holder, upon Exercise of this
Warrant after the record date for the determination of holders of Common Stock
entitled to receive such dividend, shall be entitled to receive upon Exercise of
this Warrant, in addition to the number of shares of Common Stock as to which
this Warrant is exercised, such additional shares of Common Stock as such Holder
would have received had this Warrant been exercised immediately prior to such
record date and the Exercise Price will be proportionately adjusted.
(b) Recapitalization or Reclassification. If the Company shall at
any time effect a recapitalization, reclassification or other similar
transaction of such character that the shares of Common Stock shall be changed
into or become exchangeable for a larger or smaller number of shares, then upon
the effective date thereof, the number of shares of Common Stock which Holder
shall be entitled to purchase upon Exercise of this Warrant shall be increased
or decreased, as the case may be, in direct proportion to the increase or
decrease in the number of shares of Common Stock by reason of such
recapitalization, reclassification or similar transaction, and the Exercise
Price shall be, in the case of an increase in the number of shares,
proportionally decreased and, in the case of decrease in the number of shares,
proportionally increased. The Company shall give Holder the same notice it
provides to holders of Common Stock of any transaction described in this Section
5(b).
(c) Distributions. If the Company shall at any time distribute
for no consideration to holders of Common Stock cash, evidences of indebtedness
or other securities or assets (other than cash dividends or distributions
payable out of earned surplus or net profits for the current or preceding year)
then, in any such case, Holder shall be entitled to receive, upon Exercise of
this Warrant, with respect to each share of Common Stock issuable upon such
exercise, the amount of cash or evidences of indebtedness or other securities or
assets which Holder would have been entitled to receive with respect to each
such share of Common Stock as a result of the happening of such event had this
Warrant been exercised immediately prior to the record date or other date fixing
shareholders to be affected by such event (the "Determination Date") or, in lieu
thereof, if the Board of Directors of the Company should so determine at the
time of such distribution, a reduced Exercise Price determined by multiplying
the Exercise Price on the Determination Date by a fraction, the numerator of
which is the result of such Exercise Price reduced by the value of such
distribution applicable to one share of Common Stock (such value to be
determined by the Board of Directors of the Company in its discretion) and the
denominator of which is such Exercise Price.
(d) Notice of Consolidation or Merger. In the event of a merger,
consolidation, exchange of shares, recapitalization, reorganization, or other
similar event, as a result of which shares of Common Stock shall be changed into
the same or a different number of shares of the same or another class or classes
of stock or securities or other assets of the Company or another entity or there
is a sale of all or substantially all the Company's assets (a "Corporate
Change"), then this Warrant shall be exerciseable into such class and type of
securities or other assets as Holder would have received had Holder exercised
this Warrant immediately prior to such Corporate Change; provided, however, that
Company may not affect any Corporate Change unless it first shall have given
thirty (30) days notice to Holder hereof of any Corporate Change.
4
<PAGE> 30
(e) Exercise Price Adjusted. As used in this Warrant, the term
"Exercise Price" shall mean the purchase price per share specified in Section 3
of this Warrant, until the occurrence of an event stated in subsection (a), (b)
or (c) of this Section 5, and thereafter shall mean said price as adjusted from
time to time in accordance with the provisions of said subsection. No such
adjustment under this Section 5 shall be made unless such adjustment would
change the Exercise Price at the time by $.01 or more; provided, however, that
all adjustments not so made shall be deferred and made when the aggregate
thereof would change the Exercise Price at the time by $.01 or more. No
adjustment made pursuant to any provision of this Section 5 shall have the net
effect of increasing the Exercise Price. The number of shares of Common Stock
subject hereto shall increase proportionately with each decrease in the Exercise
Price.
(f) Adjustments: Additional Shares, Securities or Assets. In the
event that at any time, as a result of an adjustment made pursuant to this
Section 5, Holder shall, upon Exercise of this Warrant, become entitled to
receive shares and/or other securities or assets (other than Common Stock) then,
wherever appropriate, all references herein to shares of Common Stock shall be
deemed to refer to and include such shares and/or other securities or assets;
and thereafter the number of such shares and/or other securities or assets shall
be subject to adjustment from time to time in a manner and upon terms as nearly
equivalent as practicable to the provisions of this Section 5.
6. Fractional Interests.
No fractional shares or scrip representing fractional shares
shall be issuable upon the Exercise of this Warrant, but on Exercise of this
Warrant, Holder may purchase only a whole number of shares of Common Stock. If,
on Exercise of this Warrant, Holder would be entitled to a fractional share of
Common Stock or a right to acquire a fractional share of Common Stock, such
fractional share shall be disregarded and the number of shares of Common Stock
issuable upon exercise shall be the next higher number of shares.
7. Reservation of Shares.
The Company shall at all times reserve for issuance such
number of authorized and unissued shares of Common Stock (or other securities
substituted therefor as herein above provided) as shall be sufficient for the
Exercise of this Warrant and payment of the Exercise Price. The Company
covenants and agrees that upon the Exercise of this Warrant, all shares of
Common Stock issuable upon such exercise shall be duly and validly issued, fully
paid, nonassessable and not subject to preemptive rights, rights of first
refusal or similar rights of any person or entity.
8. Restrictions on Transfer.
(a) Registration or Exemption Required. This Warrant has been
issued in a transaction exempt from the registration requirements of the Act by
virtue of Regulation D and exempt from state registration under applicable state
laws. The Warrant and the Common Stock issuable upon the Exercise of this
Warrant may not be pledged, transferred, sold or assigned except pursuant to an
effective registration statement or an exemption to the registration
requirements of the Act and applicable state laws.
(b) Assignment. If Holder can provide the Company with
reasonably satisfactory evidence that the conditions of (a) above regarding
registration or exemption have been satisfied, Holder may sell, transfer,
assign, pledge or otherwise dispose of this Warrant, in whole or in part. Holder
shall deliver a written notice to Company, substantially in the form of the
Assignment attached hereto as Exhibit B, indicating the person or persons to
whom the Warrant shall be assigned and the respective number of
5
<PAGE> 31
warrants to be assigned to each assignee. The Company shall effect the
assignment within ten (10) days, and shall deliver to the assignee(s) designated
by Holder a Warrant or Warrants of like tenor and terms for the appropriate
number of shares.
9. Benefits of this Warrant.
Nothing in this Warrant shall be construed to confer upon any
person other than the Company and Holder any legal or equitable right, remedy or
claim under this Warrant and this Warrant shall be for the sole and exclusive
benefit of the Company and Holder.
10. Applicable Law.
This Warrant is issued under and shall for all purposes be
governed by and construed in accordance with the laws of the state of Delaware,
without giving effect to conflict of law provisions thereof.
11. Loss of Warrant.
Upon receipt by the Company of evidence of the loss, theft,
destruction or mutilation of this Warrant, and (in the case of loss, theft or
destruction) of indemnity or security reasonably satisfactory to the Company,
and upon surrender and cancellation of this Warrant, if mutilated, the Company
shall execute and deliver a new Warrant of like tenor and date.
12. Notice or Demands.
Notices or demands pursuant to this Warrant to be given or made by Holder to or
on the Company shall be sufficiently given or made if sent by certified or
registered mail, return receipt requested, postage prepaid, and addressed, until
another address is designated in writing by the Company, to Attention:
President, 865 SW 78th Avenue, Suite 100, Plantation, Florida, 33324 Telephone
No. (954) 233-8746, Facsimile No. (954) 233-1414 . Notices or demands pursuant
to this Warrant to be given or made by the Company to or on Holder shall be
sufficiently given or made if sent by certified or registered mail, return
receipt requested, postage prepaid, and addressed, to the address of Holder set
forth in the Company's records, until another address is designated in writing
by Holder.
IN WITNESS WHEREOF, the undersigned has executed this Warrant as of
the ______ day of February, 1998.
VIRAGEN, INC.
By:
-------------------------------
Dennis W. Healey
Title: Exec. Vice President/CFO
6
<PAGE> 32
EXHIBIT A
EXERCISE FORM
TO: VIRAGEN, INC.
The undersigned hereby irrevocably exercises the right to purchase
____________ of the shares of Common Stock (the "Common Stock") of VIRAGEN,
INC., a Delaware corporation (the "Company"), evidenced by the attached warrant
(the "Warrant"), and herewith makes payment of the exercise price with respect
to such shares in full, all in accordance with the conditions and provisions of
said Warrant.
1. The undersigned agrees not to offer, sell, transfer or otherwise dispose of
any of the Common Stock obtained on exercise of the Warrant, except in
accordance with the provisions of Section 8(a) of the Warrant.
2. The undersigned requests that stock certificates for such shares be issued
free of any restrictive legend, if appropriate, and a warrant representing any
unexercised portion hereof be issued, pursuant to the Warrant in the name of the
undersigned and delivered to the undersigned at the address set forth below:
Dated:
- ------------------------------------------------------------------------
Signature
- -----------------------------------------------------------------------
Print Name
- ------------------------------------------------------------------------
Address
- -----------------------------------------------------------------------
NOTICE
The signature to the foregoing Exercise Form must correspond to the name as
written upon the face of the attached Warrant in every particular, without
alteration or enlargement or any change whatsoever.
- ------------------------------------------------------------------------
7
<PAGE> 33
EXHIBIT B
ASSIGNMENT
(To be executed by the registered holder
desiring to transfer the Warrant)
FOR VALUE RECEIVED, the undersigned holder of the attached warrant (the
"Warrant") hereby sells, assigns and transfers unto the person or persons below
named the right to purchase _______ shares of the Common Stock of VIRAGEN, INC.,
evidenced by the attached Warrant and does hereby irrevocably constitute and
appoint _______________________ attorney to transfer the said Warrant on the
books of the Company, with full power of substitution in the premises.
Dated: ------------------------------
Signature
Fill in for new registration of Warrant:
-----------------------------------
Name
- -----------------------------------
Address
- -----------------------------------
Please print name and address of assignee
(including zip code number)
- ------------------------------------------------------------------------
NOTICE
The signature to the foregoing Assignment must correspond to the name as written
upon the face of the attached Warrant in every particular, without alteration or
enlargement or any change whatsoever.
- ------------------------------------------------------------------------
<PAGE> 34
EXHIBIT B
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES H PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
"N" shares
"12 MONTH" WARRANT TO PURCHASE COMMON STOCK
OF
VIRAGEN, INC.
THIS CERTIFIES that ________________ or any subsequent holder hereof
("Holder"), has the right to purchase from VIRAGEN, INC., a Delaware corporation
(the "Company"), up to "N" fully paid and nonassessable shares, wherein "N" is
defined below, of the Company's common stock, $.01 par value per share ("Common
Stock"), subject to adjustment as provided herein, at a price equal to the
Exercise Price as defined in Section 3 below, at any time beginning on the Date
of Issuance (as defined below) and ending at 5:00 p.m., New York, New York time,
on February 17, 2003 (the "Exercise Period"); provided, that "N" shall equal
fifteen percent (15%) of the quotient obtained when (i) the principal amount of
the Series H Preferred Stock purchased by Holder minus the principal amount of
any Series H Share Disposition, as defined below, that occurs prior to the
expiration of the date which is nine (12) months from the Date of Issuance (the
"12 Month Date"), is divided by (ii) the "12 Month Market Price", as defined
below. For purposes hereof, "Series H Share Disposition" shall mean a
transaction whereby the Holder either (i) transfers shares of the Series H
Preferred Stock; or (ii) converts shares of the Series H Preferred Stock
pursuant to the terms of the Company's Certificate of Designation of Series H
Preferred Stock and "12 Month Market Price" shall mean the average of the lowest
two (2) closing bid prices during the twenty (20) trading days for the Common
Stock prior to the 12 Month Date. Within ten (10) days of the 12 Month Date, the
Company shall provide written confirmation to the Holder of the number of shares
of Common Stock, as adjusted if applicable, which the Holder has the right to
purchase hereunder.
Holder agrees with the Company that this Warrant to Purchase Common
Stock of Viragen, Inc. (this "Warrant") is issued and all rights hereunder shall
be held subject to all of the conditions, limitations and provisions set forth
herein.
<PAGE> 35
EXHIBIT C
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES H PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
"N" shares
"12 MONTH" WARRANT TO PURCHASE COMMON STOCK
OF
VIRAGEN, INC.
THIS CERTIFIES that Global Bermuda Limited Partnership or any
subsequent holder hereof ("Holder"), has the right to purchase from VIRAGEN,
INC., a Delaware corporation (the "Company"), up to "N" fully paid and
nonassessable shares, wherein "N" is defined below, of the Company's common
stock, $.01 par value per share ("Common Stock"), subject to adjustment as
provided herein, at a price equal to the Exercise Price as defined in Section 3
below, at any time beginning on the Date of Issuance (as defined below) and
ending at 5:00 p.m., New York, New York time, on February 17, 2003 (the
"Exercise Period"); provided, that "N" shall equal fifteen percent (15%) of the
quotient obtained when (i) the principal amount of the Series H Preferred Stock
purchased by Holder minus the principal amount of any Series H Share
Disposition, as defined below, that occurs prior to the expiration of the date
which is nine (12) months from the Date of Issuance (the "12 Month Date"), is
divided by (ii) the "12 Month Market Price", as defined below. For purposes
hereof, "Series H Share Disposition" shall mean a transaction whereby the Holder
either (i) transfers shares of the Series H Preferred Stock; or (ii) converts
shares of the Series H Preferred Stock pursuant to the terms of the Company's
Certificate of Designation of Series H Preferred Stock and "12 Month Market
Price" shall mean the average of the lowest two (2) closing bid prices during
the twenty (20) trading days for the Common Stock prior to the 12 Month Date.
Within ten (10) days of the 12 Month Date, the Company shall provide written
confirmation to the Holder of the number of shares of Common Stock, as adjusted
if applicable, which the Holder has the right to purchase hereunder.
Holder agrees with the Company that this Warrant to Purchase Common
Stock of Viragen, Inc. (this "Warrant") is issued and all rights hereunder shall
be held subject to all of the conditions, limitations and provisions set forth
herein.
<PAGE> 36
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES H PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
"N" shares
"12 MONTH" WARRANT TO PURCHASE COMMON STOCK
OF
VIRAGEN, INC.
THIS CERTIFIES that Lakeshore International, Ltd. or any subsequent
holder hereof ("Holder"), has the right to purchase from VIRAGEN, INC., a
Delaware corporation (the "Company"), up to "N" fully paid and nonassessable
shares, wherein "N" is defined below, of the Company's common stock, $.01 par
value per share ("Common Stock"), subject to adjustment as provided herein, at a
price equal to the Exercise Price as defined in Section 3 below, at any time
beginning on the Date of Issuance (as defined below) and ending at 5:00 p.m.,
New York, New York time, on February 17, 2003 (the "Exercise Period"); provided,
that "N" shall equal fifteen percent (15%) of the quotient obtained when (i) the
principal amount of the Series H Preferred Stock purchased by Holder minus the
principal amount of any Series H Share Disposition, as defined below, that
occurs prior to the expiration of the date which is nine (12) months from the
Date of Issuance (the "12 Month Date"), is divided by (ii) the "12 Month Market
Price", as defined below. For purposes hereof, "Series H Share Disposition"
shall mean a transaction whereby the Holder either (i) transfers shares of the
Series H Preferred Stock; or (ii) converts shares of the Series H Preferred
Stock pursuant to the terms of the Company's Certificate of Designation of
Series H Preferred Stock and "12 Month Market Price" shall mean the average of
the lowest two (2) closing bid prices during the twenty (20) trading days for
the Common Stock prior to the 12 Month Date. Within ten (10) days of the 12
Month Date, the Company shall provide written confirmation to the Holder of the
number of shares of Common Stock, as adjusted if applicable, which the Holder
has the right to purchase hereunder.
Holder agrees with the Company that this Warrant to Purchase Common
Stock of Viragen, Inc. (this "Warrant") is issued and all rights hereunder shall
be held subject to all of the conditions, limitations and provisions set forth
herein.
<PAGE> 37
EXHIBIT C
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES H PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
"N" shares
"12 MONTH" WARRANT TO PURCHASE COMMON STOCK
OF
VIRAGEN, INC.
THIS CERTIFIES that LaRocque Trading Group, LLC or any subsequent
holder hereof ("Holder"), has the right to purchase from VIRAGEN, INC., a
Delaware corporation (the "Company"), up to "N" fully paid and nonassessable
shares, wherein "N" is defined below, of the Company's common stock, $.01 par
value per share ("Common Stock"), subject to adjustment as provided herein, at a
price equal to the Exercise Price as defined in Section 3 below, at any time
beginning on the Date of Issuance (as defined below) and ending at 5:00 p.m.,
New York, New York time, on February 17, 2003 (the "Exercise Period"); provided,
that "N" shall equal fifteen percent (15%) of the quotient obtained when (i) the
principal amount of the Series H Preferred Stock purchased by Holder minus the
principal amount of any Series H Share Disposition, as defined below, that
occurs prior to the expiration of the date which is nine (12) months from the
Date of Issuance (the "12 Month Date"), is divided by (ii) the "12 Month Market
Price", as defined below. For purposes hereof, "Series H Share Disposition"
shall mean a transaction whereby the Holder either (i) transfers shares of the
Series H Preferred Stock; or (ii) converts shares of the Series H Preferred
Stock pursuant to the terms of the Company's Certificate of Designation of
Series H Preferred Stock and "12 Month Market Price" shall mean the average of
the lowest two (2) closing bid prices during the twenty (20) trading days for
the Common Stock prior to the 12 Month Date. Within ten (10) days of the 12
Month Date, the Company shall provide written confirmation to the Holder of the
number of shares of Common Stock, as adjusted if applicable, which the Holder
has the right to purchase hereunder.
Holder agrees with the Company that this Warrant to Purchase Common
Stock of Viragen, Inc. (this "Warrant") is issued and all rights hereunder shall
be held subject to all of the conditions, limitations and provisions set forth
herein.
<PAGE> 38
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES H PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
"N" shares
"12 MONTH" WARRANT TO PURCHASE COMMON STOCK
OF
VIRAGEN, INC.
THIS CERTIFIES that The Tail Wind Fund Ltd. or any subsequent holder
hereof ("Holder"), has the right to purchase from VIRAGEN, INC., a Delaware
corporation (the "Company"), up to "N" fully paid and nonassessable shares,
wherein "N" is defined below, of the Company's common stock, $.01 par value per
share ("Common Stock"), subject to adjustment as provided herein, at a price
equal to the Exercise Price as defined in Section 3 below, at any time beginning
on the Date of Issuance (as defined below) and ending at 5:00 p.m., New York,
New York time, on February 17, 2003 (the "Exercise Period"); provided, that "N"
shall equal fifteen percent (15%) of the quotient obtained when (i) the
principal amount of the Series H Preferred Stock purchased by Holder minus the
principal amount of any Series H Share Disposition, as defined below, that
occurs prior to the expiration of the date which is nine (12) months from the
Date of Issuance (the "12 Month Date"), is divided by (ii) the "12 Month Market
Price", as defined below. For purposes hereof, "Series H Share Disposition"
shall mean a transaction whereby the Holder either (i) transfers shares of the
Series H Preferred Stock; or (ii) converts shares of the Series H Preferred
Stock pursuant to the terms of the Company's Certificate of Designation of
Series H Preferred Stock and "12 Month Market Price" shall mean the average of
the lowest two (2) closing bid prices during the twenty (20) trading days for
the Common Stock prior to the 12 Month Date. Within ten (10) days of the 12
Month Date, the Company shall provide written confirmation to the Holder of the
number of shares of Common Stock, as adjusted if applicable, which the Holder
has the right to purchase hereunder.
Holder agrees with the Company that this Warrant to Purchase Common
Stock of Viragen, Inc. (this "Warrant") is issued and all rights hereunder shall
be held subject to all of the conditions, limitations and provisions set forth
herein.
<PAGE> 39
1. Date of Issuance.
This Warrant shall be deemed to be issued on February 17, 1998 ("Date
of Issuance").
2. Exercise.
(a) Manner of Exercise. During the Exercise Period, this Warrant may be
exercised as to all or any lesser number of full shares of Common Stock covered
hereby upon surrender of this Warrant, with the Exercise Form attached hereto as
Exhibit A (the "Exercise Form") duly completed and executed, together with the
full Exercise Price (as defined below) for each share of Common Stock as to
which this Warrant is exercised, at the office of the Company, 865 SW 78th
Avenue, Suite 100, Plantation, Florida, 33324 Telephone No. (954) 233-8746,
Facsimile No. (954) 233-1414, or at such other office or agency as the Company
may designate in writing, by overnight mail, with an advance copy of the
Exercise Form sent to the Company and its Transfer Agent by facsimile (such
surrender and payment of the Exercise Price hereinafter called the "Exercise of
this Warrant").
(b) Date of Exercise. The "Date of Exercise" of the Warrant shall be
defined as the date that the advance copy of the completed and executed Exercise
Form is sent by facsimile to the Company, provided that the original Warrant and
Exercise Form are received by the Company as soon as practicable thereafter.
Alternatively, the Date of Exercise shall be defined as the date the original
Exercise Form is received by the Company, if Holder has not sent advance notice
by facsimile.
(c) Cancellation of Warrant. This Warrant shall be canceled upon the
Exercise of this Warrant, and, as soon as practical after the Date of Exercise,
Holder shall be entitled to receive Common Stock for the number of shares
purchased upon such Exercise of this Warrant, and if this Warrant is not
exercised in full, Holder shall be entitled to receive a new Warrant (containing
terms identical to this Warrant) representing any unexercised portion of this
Warrant in addition to such Common Stock.
(d) Holder of Record. Each person in whose name any Warrant for shares
of Common Stock is issued shall, for all purposes, be deemed to be the Holder of
record of such shares on the Date of Exercise of this Warrant, irrespective of
the date of delivery of the Common Stock purchased upon the Exercise of this
Warrant. Nothing in this Warrant shall be construed as conferring upon Holder
any rights as a stockholder of the Company.
3. Payment of Warrant Exercise Price.
The Exercise Price shall equal the 12 Month Market Price per share
("Exercise Price").
Payment of the Exercise Price may be made by either of the following,
or a combination thereof, at the election of Holder:
(a) Cash Exercise: cash, bank or cashiers check or wire transfer;
or
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<PAGE> 40
(b) Cashless Exercise: subject to the last sentence of this
Section 3, surrender of this Warrant at the principal office of the Company
together with notice of cashless election, in which event the Company shall
issue Holder a number of shares of Common Stock computed using the following
formula:
X = Y (A-B)/A
where: X = the number of shares of Common Stock to be issued to Holder.
Y = the number of shares of Common Stock for which this Warrant
is being exercised.
A = the Market Price of one (1) share of Common Stock (for purposes of
this Section 3(b), the "Market Price" shall be defined as the average
closing bid price of the Common Stock for the five (5) trading days
prior to the Date of Exercise of this Warrant (the "Average Closing
Price"), as reported by the National Association of Securities Dealers
Automated Quotation System ("Nasdaq") National Market System, or if the
Common Stock is not traded on the Nasdaq National Market System, the
Average Closing Price on the Nasdaq Small Cap Market or in any other
over-the-counter market on which the Common Stock is traded. If the
Common Stock is/was not traded during the five (5) trading days prior
to the Date of Exercise, then the closing price for the last publicly
traded day shall be deemed to be the closing price for any and all (if
applicable) days during such five (5) trading day period).
B = the Exercise Price.
For purposes of Rule 144 and sub-section (d)(3)(ii) thereof, it is intended,
understood and acknowledged that the Common Stock issuable upon exercise of this
Warrant in a cashless exercise transaction shall be deemed to have been acquired
at the time this Warrant was issued. Moreover, it is intended, understood and
acknowledged that the holding period for the Common Stock issuable upon exercise
of this Warrant in a cashless exercise transaction shall be deemed to have
commenced on the date this Warrant was issued.
Notwithstanding anything to the contrary contained herein, this Warrant may not
be exercised in a cashless exercise transaction if, on the Date of Exercise, the
shares of Common Stock to be issued upon exercise of this Warrant would upon
such issuance (x) be immediately transferable in the United States free of any
restrictive legend, including without limitation under Rule 144; (y) be then
registered pursuant to an effective registration statement filed pursuant to
that certain Registration Rights Agreement dated on or about February 17, 1998
by and among the Company and certain investors; or (z) otherwise be registered
under the Securities Act of 1933, as amended.
4. Transfer and Registration.
(a) Transfer Rights. Subject to the provisions of Section 8 of this
Warrant, this Warrant may be transferred on the books of the Company, in whole
or in part, in person or by attorney, upon surrender of this Warrant properly
completed and endorsed. This Warrant shall be canceled upon such surrender and,
as soon as practicable thereafter, the person to whom such transfer is made
shall be entitled to receive a new Warrant or Warrants as to the portion of this
Warrant transferred, and Holder shall be entitled to receive a new Warrant as to
the portion hereof retained.
3
<PAGE> 41
(b) Registrable Securities. The Common Stock issuable upon the exercise
of this Warrant constitutes "Registrable Securities" under that certain
Registration Rights Agreement dated on or about February 17, 1998 between the
Company and certain investors and, accordingly, has the benefit of the
registration rights pursuant to that agreement.
5. Anti-Dilution Adjustments.
(a) Stock Dividend. If the Company shall at any time declare a
dividend payable in shares of Common Stock, then Holder, upon Exercise of this
Warrant after the record date for the determination of holders of Common Stock
entitled to receive such dividend, shall be entitled to receive upon Exercise of
this Warrant, in addition to the number of shares of Common Stock as to which
this Warrant is exercised, such additional shares of Common Stock as such Holder
would have received had this Warrant been exercised immediately prior to such
record date and the Exercise Price will be proportionately adjusted.
(b) Recapitalization or Reclassification. If the Company shall at
any time effect a recapitalization, reclassification or other similar
transaction of such character that the shares of Common Stock shall be changed
into or become exchangeable for a larger or smaller number of shares, then upon
the effective date thereof, the number of shares of Common Stock which Holder
shall be entitled to purchase upon Exercise of this Warrant shall be increased
or decreased, as the case may be, in direct proportion to the increase or
decrease in the number of shares of Common Stock by reason of such
recapitalization, reclassification or similar transaction, and the Exercise
Price shall be, in the case of an increase in the number of shares,
proportionally decreased and, in the case of decrease in the number of shares,
proportionally increased. The Company shall give Holder the same notice it
provides to holders of Common Stock of any transaction described in this Section
5(b).
(c) Distributions. If the Company shall at any time distribute
for no consideration to holders of Common Stock cash, evidences of indebtedness
or other securities or assets (other than cash dividends or distributions
payable out of earned surplus or net profits for the current or preceding year)
then, in any such case, Holder shall be entitled to receive, upon Exercise of
this Warrant, with respect to each share of Common Stock issuable upon such
exercise, the amount of cash or evidences of indebtedness or other securities
or assets which Holder would have been entitled to receive with respect to each
such share of Common Stock as a result of the happening of such event had this
Warrant been exercised immediately prior to the record date or other date
fixing shareholders to be affected by such event (the "Determination Date") or,
in lieu thereof, if the Board of Directors of the Company should so determine
at the time of such distribution, a reduced Exercise Price determined by
multiplying the Exercise Price on the Determination Date by a fraction, the
numerator of which is the result of such Exercise Price reduced by the value of
such distribution applicable to one share of Common Stock (such value to be
determined by the Board of Directors of the Company in its discretion) and the
denominator of which is such Exercise Price.
(d) Notice of Consolidation or Merger. In the event of a merger,
consolidation, exchange of shares, recapitalization, reorganization, or other
similar event, as a result of which shares of Common Stock shall be changed into
the same or a different number of shares of the same or another class or classes
of stock or securities or other assets of the Company or another entity or there
is a sale of all or substantially all the Company's assets (a "Corporate
Change"), then this Warrant shall be exerciseable into such class and type of
securities or other assets as Holder would have received had Holder exercised
this Warrant immediately prior to such Corporate Change; provided, however, that
Company may not
4
<PAGE> 42
affect any Corporate Change unless it first shall have given thirty (30) days
notice to Holder hereof of any Corporate Change.
(e) Exercise Price Adjusted. As used in this Warrant, the term
"Exercise Price" shall mean the purchase price per share specified in Section 3
of this Warrant, until the occurrence of an event stated in subsection (a), (b)
or (c) of this Section 5, and thereafter shall mean said price as adjusted from
time to time in accordance with the provisions of said subsection. No such
adjustment under this Section 5 shall be made unless such adjustment would
change the Exercise Price at the time by $.01 or more; provided, however, that
all adjustments not so made shall be deferred and made when the aggregate
thereof would change the Exercise Price at the time by $.01 or more. No
adjustment made pursuant to any provision of this Section 5 shall have the net
effect of increasing the Exercise Price. The number of shares of Common Stock
subject hereto shall increase proportionately with each decrease in the Exercise
Price.
(f) Adjustments: Additional Shares, Securities or Assets. In the
event that at any time, as a result of an adjustment made pursuant to this
Section 5, Holder shall, upon Exercise of this Warrant, become entitled to
receive shares and/or other securities or assets (other than Common Stock) then,
wherever appropriate, all references herein to shares of Common Stock shall be
deemed to refer to and include such shares and/or other securities or assets;
and thereafter the number of such shares and/or other securities or assets shall
be subject to adjustment from time to time in a manner and upon terms as nearly
equivalent as practicable to the provisions of this Section 5.
6. Fractional Interests.
No fractional shares or scrip representing fractional shares
shall be issuable upon the Exercise of this Warrant, but on Exercise of this
Warrant, Holder may purchase only a whole number of shares of Common Stock. If,
on Exercise of this Warrant, Holder would be entitled to a fractional share of
Common Stock or a right to acquire a fractional share of Common Stock, such
fractional share shall be disregarded and the number of shares of Common Stock
issuable upon exercise shall be the next higher number of shares.
7. Reservation of Shares.
The Company shall at all times reserve for issuance such
number of authorized and unissued shares of Common Stock (or other securities
substituted therefor as herein above provided) as shall be sufficient for the
Exercise of this Warrant and payment of the Exercise Price. The Company
covenants and agrees that upon the Exercise of this Warrant, all shares of
Common Stock issuable upon such exercise shall be duly and validly issued, fully
paid, nonassessable and not subject to preemptive rights, rights of first
refusal or similar rights of any person or entity.
8. Restrictions on Transfer.
(a) Registration or Exemption Required. This Warrant has been
issued in a transaction exempt from the registration requirements of the Act by
virtue of Regulation D and exempt from state registration under applicable state
laws. The Warrant and the Common Stock issuable upon the Exercise of this
Warrant may not be pledged, transferred, sold or assigned except pursuant to an
effective registration statement or an exemption to the registration
requirements of the Act and applicable state laws.
(b) Assignment. If Holder can provide the Company with
reasonably satisfactory evidence that the conditions of (a) above regarding
registration or exemption have been satisfied, Holder may sell, transfer,
assign, pledge or otherwise dispose of this
5
<PAGE> 43
Warrant, in whole or in part. Holder shall deliver a written notice to Company,
substantially in the form of the Assignment attached hereto as Exhibit B,
indicating the person or persons to whom the Warrant shall be assigned and the
respective number of warrants to be assigned to each assignee. The Company shall
effect the assignment within ten (10) days, and shall deliver to the assignee(s)
designated by Holder a Warrant or Warrants of like tenor and terms for the
appropriate number of shares.
9. Benefits of this Warrant.
Nothing in this Warrant shall be construed to confer upon any
person other than the Company and Holder any legal or equitable right, remedy or
claim under this Warrant and this Warrant shall be for the sole and exclusive
benefit of the Company and Holder.
10. Applicable Law.
This Warrant is issued under and shall for all purposes be
governed by and construed in accordance with the laws of the state of Delaware,
without giving effect to conflict of law provisions thereof.
11. Loss of Warrant.
Upon receipt by the Company of evidence of the loss, theft,
destruction or mutilation of this Warrant, and (in the case of loss, theft or
destruction) of indemnity or security reasonably satisfactory to the Company,
and upon surrender and cancellation of this Warrant, if mutilated, the Company
shall execute and deliver a new Warrant of like tenor and date.
12. Notice or Demands.
Notices or demands pursuant to this Warrant to be given or made by Holder to or
on the Company shall be sufficiently given or made if sent by certified or
registered mail, return receipt requested, postage prepaid, and addressed, until
another address is designated in writing by the Company, to Attention:
President, 865 SW 78th Avenue, Suite 100, Plantation, Florida, 33324 Telephone
No. (954) 233-8746, Facsimile No. (954) 233-1414 . Notices or demands pursuant
to this Warrant to be given or made by the Company to or on Holder shall be
sufficiently given or made if sent by certified or registered mail, return
receipt requested, postage prepaid, and addressed, to the address of Holder set
forth in the Company's records, until another address is designated in writing
by Holder.
IN WITNESS WHEREOF, the undersigned has executed this Warrant as of the
______ day of February, 1998.
VIRAGEN, INC.
By:
--------------------------------
Dennis W. Healey
Title: Exec. Vice President/CFO
6
<PAGE> 44
EXHIBIT A
EXERCISE FORM
TO: VIRAGEN, INC.
The undersigned hereby irrevocably exercises the right to purchase
____________ of the shares of Common Stock (the "Common Stock") of VIRAGEN,
INC., a Delaware corporation (the "Company"), evidenced by the attached warrant
(the "Warrant"), and herewith makes payment of the exercise price with respect
to such shares in full, all in accordance with the conditions and provisions of
said Warrant.
1. The undersigned agrees not to offer, sell, transfer or otherwise dispose of
any of the Common Stock obtained on exercise of the Warrant, except in
accordance with the provisions of Section 8(a) of the Warrant.
2. The undersigned requests that stock certificates for such shares be issued
free of any restrictive legend, if appropriate, and a warrant representing any
unexercised portion hereof be issued, pursuant to the Warrant in the name of the
undersigned and delivered to the undersigned at the address set forth below:
Dated:
- ------------------------------------------------------------------------
Signature
- -----------------------------------------------------------------------
Print Name
- ------------------------------------------------------------------------
Address
- -----------------------------------------------------------------------
NOTICE
The signature to the foregoing Exercise Form must correspond to the name as
written upon the face of the attached Warrant in every particular, without
alteration or enlargement or any change whatsoever.
- ------------------------------------------------------------------------
7
<PAGE> 45
EXHIBIT B
ASSIGNMENT
(To be executed by the registered holder
desiring to transfer the Warrant)
FOR VALUE RECEIVED, the undersigned holder of the attached warrant (the
"Warrant") hereby sells, assigns and transfers unto the person or persons below
named the right to purchase _______ shares of the Common Stock of VIRAGEN, INC.,
evidenced by the attached Warrant and does hereby irrevocably constitute and
appoint _______________________ attorney to transfer the said Warrant on the
books of the Company, with full power of substitution in the premises.
Dated: ------------------------------
Signature
Fill in for new registration of Warrant:
-----------------------------------
Name
- -----------------------------------
Address
- -----------------------------------
Please print name and address of assignee
(including zip code number)
- ------------------------------------------------------------------------
NOTICE
The signature to the foregoing Assignment must correspond to the name as written
upon the face of the attached Warrant in every particular, without alteration or
enlargement or any change whatsoever.
- ------------------------------------------------------------------------
<PAGE> 46
EXHIBIT C
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES H PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
"N" shares
"15 Month" Warrant to Purchase Common Stock
of
VIRAGEN, INC.
THIS CERTIFIES that ________________ or any subsequent holder hereof
("Holder"), has the right to purchase from VIRAGEN, INC., a Delaware corporation
(the "Company"), up to "N" fully paid and nonassessable shares, wherein "N" is
defined below, of the Company's common stock, $.01 par value per share ("Common
Stock"), subject to adjustment as provided herein, at a price equal to the
Exercise Price as defined in Section 3 below, at any time beginning on the Date
of Issuance (as defined below) and ending at 5:00 p.m., New York, New York time,
on February 17, 2003 (the "Exercise Period"); provided, that "N" shall equal
twenty percent (20%) of the quotient obtained when (i) the principal amount of
the Series H Preferred Stock purchased by Holder minus the principal amount of
any Series H Share Disposition, as defined below, that occurs prior to the
expiration of the date which is nine (15) months from the Date of Issuance (the
"15 Month Date"), is divided by (ii) the "15 Month Market Price", as defined
below. For purposes hereof, "Series H Share Disposition" shall mean a
transaction whereby the Holder either (i) transfers shares of the Series H
Preferred Stock; or (ii) converts shares of the Series H Preferred Stock
pursuant to the terms of the Company's Certificate of Designation of Series H
Preferred Stock and "15 Month Market Price" shall mean the average of the lowest
two (2) closing bid prices for the Common Stock during the twenty (20) trading
days prior to the 15 Month Date. Within ten (10) days of the 15 Month Date, the
Company shall provide written confirmation to the Holder of the number of shares
of Common Stock, as adjusted if applicable, which the Holder has the right to
purchase hereunder.
Holder agrees with the Company that this Warrant to Purchase Common
Stock of Viragen, Inc. (this "Warrant") is issued and all rights hereunder shall
be held subject to all of the conditions, limitations and provisions set forth
herein.
<PAGE> 47
EXHIBIT D
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES H PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
"N" shares
"15 Month" Warrant to Purchase Common Stock
of
VIRAGEN, INC.
THIS CERTIFIES that Global Bermuda Limited Partnership or any
subsequent holder hereof ("Holder"), has the right to purchase from VIRAGEN,
INC., a Delaware corporation (the "Company"), up to "N" fully paid and
nonassessable shares, wherein "N" is defined below, of the Company's common
stock, $.01 par value per share ("Common Stock"), subject to adjustment as
provided herein, at a price equal to the Exercise Price as defined in Section 3
below, at any time beginning on the Date of Issuance (as defined below) and
ending at 5:00 p.m., New York, New York time, on February 17, 2003 (the
"Exercise Period"); provided, that "N" shall equal twenty percent (20%) of the
quotient obtained when (i) the principal amount of the Series H Preferred Stock
purchased by Holder minus the principal amount of any Series H Share
Disposition, as defined below, that occurs prior to the expiration of the date
which is nine (15) months from the Date of Issuance (the "15 Month Date"), is
divided by (ii) the "15 Month Market Price", as defined below. For purposes
hereof, "Series H Share Disposition" shall mean a transaction whereby the Holder
either (i) transfers shares of the Series H Preferred Stock; or (ii) converts
shares of the Series H Preferred Stock pursuant to the terms of the Company's
Certificate of Designation of Series H Preferred Stock and "15 Month Market
Price" shall mean the average of the lowest two (2) closing bid prices for the
Common Stock during the twenty (20) trading days prior to the 15 Month Date.
Within ten (10) days of the 15 Month Date, the Company shall provide written
confirmation to the Holder of the number of shares of Common Stock, as adjusted
if applicable, which the Holder has the right to purchase hereunder.
Holder agrees with the Company that this Warrant to Purchase Common
Stock of Viragen, Inc. (this "Warrant") is issued and all rights hereunder shall
be held subject to all of the conditions, limitations and provisions set forth
herein.
<PAGE> 48
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES H PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
"N" shares
"15 Month" Warrant to Purchase Common Stock
of
VIRAGEN, INC.
THIS CERTIFIES that Lakeshore International, Ltd. or any subsequent
holder hereof ("Holder"), has the right to purchase from VIRAGEN, INC., a
Delaware corporation (the "Company"), up to "N" fully paid and nonassessable
shares, wherein "N" is defined below, of the Company's common stock, $.01 par
value per share ("Common Stock"), subject to adjustment as provided herein, at a
price equal to the Exercise Price as defined in Section 3 below, at any time
beginning on the Date of Issuance (as defined below) and ending at 5:00 p.m.,
New York, New York time, on February 17, 2003 (the "Exercise Period"); provided,
that "N" shall equal twenty percent (20%) of the quotient obtained when (i) the
principal amount of the Series H Preferred Stock purchased by Holder minus the
principal amount of any Series H Share Disposition, as defined below, that
occurs prior to the expiration of the date which is nine (15) months from the
Date of Issuance (the "15 Month Date"), is divided by (ii) the "15 Month Market
Price", as defined below. For purposes hereof, "Series H Share Disposition"
shall mean a transaction whereby the Holder either (i) transfers shares of the
Series H Preferred Stock; or (ii) converts shares of the Series H Preferred
Stock pursuant to the terms of the Company's Certificate of Designation of
Series H Preferred Stock and "15 Month Market Price" shall mean the average of
the lowest two (2) closing bid prices for the Common Stock during the twenty
(20) trading days prior to the 15 Month Date. Within ten (10) days of the 15
Month Date, the Company shall provide written confirmation to the Holder of the
number of shares of Common Stock, as adjusted if applicable, which the Holder
has the right to purchase hereunder.
Holder agrees with the Company that this Warrant to Purchase Common
Stock of Viragen, Inc. (this "Warrant") is issued and all rights hereunder shall
be held subject to all of the conditions, limitations and provisions set forth
herein.
<PAGE> 49
EXHIBIT D
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES H PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
"N" shares
"15 Month" Warrant to Purchase Common Stock
of
VIRAGEN, INC.
THIS CERTIFIES that LaRocque Trading Group, LLC or any subsequent
holder hereof ("Holder"), has the right to purchase from VIRAGEN, INC., a
Delaware corporation (the "Company"), up to "N" fully paid and nonassessable
shares, wherein "N" is defined below, of the Company's common stock, $.01 par
value per share ("Common Stock"), subject to adjustment as provided herein, at a
price equal to the Exercise Price as defined in Section 3 below, at any time
beginning on the Date of Issuance (as defined below) and ending at 5:00 p.m.,
New York, New York time, on February 17, 2003 (the "Exercise Period"); provided,
that "N" shall equal twenty percent (20%) of the quotient obtained when (i) the
principal amount of the Series H Preferred Stock purchased by Holder minus the
principal amount of any Series H Share Disposition, as defined below, that
occurs prior to the expiration of the date which is nine (15) months from the
Date of Issuance (the "15 Month Date"), is divided by (ii) the "15 Month Market
Price", as defined below. For purposes hereof, "Series H Share Disposition"
shall mean a transaction whereby the Holder either (i) transfers shares of the
Series H Preferred Stock; or (ii) converts shares of the Series H Preferred
Stock pursuant to the terms of the Company's Certificate of Designation of
Series H Preferred Stock and "15 Month Market Price" shall mean the average of
the lowest two (2) closing bid prices for the Common Stock during the twenty
(20) trading days prior to the 15 Month Date. Within ten (10) days of the 15
Month Date, the Company shall provide written confirmation to the Holder of the
number of shares of Common Stock, as adjusted if applicable, which the Holder
has the right to purchase hereunder.
Holder agrees with the Company that this Warrant to Purchase Common
Stock of Viragen, Inc. (this "Warrant") is issued and all rights hereunder shall
be held subject to all of the conditions, limitations and provisions set forth
herein.
<PAGE> 50
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES H PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
"N" shares
"15 Month" Warrant to Purchase Common Stock
of
VIRAGEN, INC.
THIS CERTIFIES that The Tail Wind Fund Ltd. or any subsequent holder
hereof ("Holder"), has the right to purchase from VIRAGEN, INC., a Delaware
corporation (the "Company"), up to "N" fully paid and nonassessable shares,
wherein "N" is defined below, of the Company's common stock, $.01 par value per
share ("Common Stock"), subject to adjustment as provided herein, at a price
equal to the Exercise Price as defined in Section 3 below, at any time beginning
on the Date of Issuance (as defined below) and ending at 5:00 p.m., New York,
New York time, on February 17, 2003 (the "Exercise Period"); provided, that "N"
shall equal twenty percent (20%) of the quotient obtained when (i) the principal
amount of the Series H Preferred Stock purchased by Holder minus the principal
amount of any Series H Share Disposition, as defined below, that occurs prior to
the expiration of the date which is nine (15) months from the Date of Issuance
(the "15 Month Date"), is divided by (ii) the "15 Month Market Price", as
defined below. For purposes hereof, "Series H Share Disposition" shall mean a
transaction whereby the Holder either (i) transfers shares of the Series H
Preferred Stock; or (ii) converts shares of the Series H Preferred Stock
pursuant to the terms of the Company's Certificate of Designation of Series H
Preferred Stock and "15 Month Market Price" shall mean the average of the lowest
two (2) closing bid prices for the Common Stock during the twenty (20) trading
days prior to the 15 Month Date. Within ten (10) days of the 15 Month Date, the
Company shall provide written confirmation to the Holder of the number of shares
of Common Stock, as adjusted if applicable, which the Holder has the right to
purchase hereunder.
Holder agrees with the Company that this Warrant to Purchase Common
Stock of Viragen, Inc. (this "Warrant") is issued and all rights hereunder shall
be held subject to all of the conditions, limitations and provisions set forth
herein.
<PAGE> 51
1. Date of Issuance.
This Warrant shall be deemed to be issued on February 17, 1998 ("Date
of Issuance").
2. Exercise.
(a) Manner of Exercise. During the Exercise Period, this Warrant may be
exercised as to all or any lesser number of full shares of Common Stock covered
hereby upon surrender of this Warrant, with the Exercise Form attached hereto as
Exhibit A (the "Exercise Form") duly completed and executed, together with the
full Exercise Price (as defined below) for each share of Common Stock as to
which this Warrant is exercised, at the office of the Company, 865 SW 78th
Avenue, Suite 100, Plantation, Florida, 33324 Telephone No. (954) 233-8746,
Facsimile No. (954) 233-1414 , or at such other office or agency as the Company
may designate in writing, by overnight mail, with an advance copy of the
Exercise Form sent to the Company and its Transfer Agent by facsimile (such
surrender and payment of the Exercise Price hereinafter called the "Exercise of
this Warrant").
(b) Date of Exercise. The "Date of Exercise" of the Warrant shall be
defined as the date that the advance copy of the completed and executed Exercise
Form is sent by facsimile to the Company, provided that the original Warrant and
Exercise Form are received by the Company as soon as practicable thereafter.
Alternatively, the Date of Exercise shall be defined as the date the original
Exercise Form is received by the Company, if Holder has not sent advance notice
by facsimile.
(c) Cancellation of Warrant. This Warrant shall be canceled upon the
Exercise of this Warrant, and, as soon as practical after the Date of Exercise,
Holder shall be entitled to receive Common Stock for the number of shares
purchased upon such Exercise of this Warrant, and if this Warrant is not
exercised in full, Holder shall be entitled to receive a new Warrant (containing
terms identical to this Warrant) representing any unexercised portion of this
Warrant in addition to such Common Stock.
(d) Holder of Record. Each person in whose name any Warrant for shares
of Common Stock is issued shall, for all purposes, be deemed to be the Holder of
record of such shares on the Date of Exercise of this Warrant, irrespective of
the date of delivery of the Common Stock purchased upon the Exercise of this
Warrant. Nothing in this Warrant shall be construed as conferring upon Holder
any rights as a stockholder of the Company.
3. Payment of Warrant Exercise Price.
The Exercise Price shall equal the 15 Month Market Price per share
("Exercise Price").
Payment of the Exercise Price may be made by either of the following,
or a combination thereof, at the election of Holder:
(a) Cash Exercise: cash, bank or cashiers check or wire transfer;
or
2
<PAGE> 52
(b) Cashless Exercise: subject to the last sentence of this Section 3,
surrender of this Warrant at the principal office of the Company together with
notice of cashless election, in which event the Company shall issue Holder a
number of shares of Common Stock computed using the following formula:
X = Y (A-B)/A
where: X = the number of shares of Common Stock to be issued to Holder.
Y = the number of shares of Common Stock for which this Warrant
is being exercised.
A = the Market Price of one (1) share of Common Stock (for purposes of
this Section 3(b), the "Market Price" shall be defined as the average
closing bid price of the Common Stock for the five (5) trading days
prior to the Date of Exercise of this Warrant (the "Average Closing
Price"), as reported by the National Association of Securities Dealers
Automated Quotation System ("Nasdaq") National Market System, or if the
Common Stock is not traded on the Nasdaq National Market System, the
Average Closing Price on the Nasdaq Small Cap Market or in any other
over-the-counter market on which the Common Stock is traded. If the
Common Stock is/was not traded during the five (5) trading days prior to
the Date of Exercise, then the closing price for the last publicly
traded day shall be deemed to be the closing price for any and all (if
applicable) days during such five (5) trading day period).
B = the Exercise Price.
For purposes of Rule 144 and sub-section (d)(3)(ii) thereof, it is intended,
understood and acknowledged that the Common Stock issuable upon exercise of this
Warrant in a cashless exercise transaction shall be deemed to have been acquired
at the time this Warrant was issued. Moreover, it is intended, understood and
acknowledged that the holding period for the Common Stock issuable upon exercise
of this Warrant in a cashless exercise transaction shall be deemed to have
commenced on the date this Warrant was issued.
Notwithstanding anything to the contrary contained herein, this Warrant may not
be exercised in a cashless exercise transaction if, on the Date of Exercise, the
shares of Common Stock to be issued upon exercise of this Warrant would upon
such issuance (x) be immediately transferable in the United States free of any
restrictive legend, including without limitation under Rule 144; (y) be then
registered pursuant to an effective registration statement filed pursuant to
that certain Registration Rights Agreement dated on or about February 17, 1998
by and among the Company and certain investors; or (z) otherwise be registered
under the Securities Act of 1933, as amended.
4. Transfer and Registration.
(a) Transfer Rights. Subject to the provisions of Section 8 of this
Warrant, this Warrant may be transferred on the books of the Company, in whole
or in part, in person or by attorney, upon surrender of this Warrant properly
completed and endorsed. This Warrant shall be canceled upon such surrender and,
as soon as practicable thereafter, the person to whom such transfer is made
shall be entitled to receive a new Warrant or Warrants as to the portion of this
Warrant transferred, and Holder shall be entitled to receive a new Warrant as to
the portion hereof retained.
(b) Registrable Securities. The Common Stock issuable upon the exercise
of this Warrant constitutes "Registrable Securities" under that certain
Registration Rights
3
<PAGE> 53
Agreement dated on or about February 17, 1998 between the Company and certain
investors and, accordingly, has the benefit of the registration rights pursuant
to that agreement.
5. Anti-Dilution Adjustments.
(a) Stock Dividend. If the Company shall at any time declare a dividend
payable in shares of Common Stock, then Holder, upon Exercise of this Warrant
after the record date for the determination of holders of Common Stock entitled
to receive such dividend, shall be entitled to receive upon Exercise of this
Warrant, in addition to the number of shares of Common Stock as to which this
Warrant is exercised, such additional shares of Common Stock as such Holder
would have received had this Warrant been exercised immediately prior to such
record date and the Exercise Price will be proportionately adjusted.
(b) Recapitalization or Reclassification. If the Company shall at any
time effect a recapitalization, reclassification or other similar transaction of
such character that the shares of Common Stock shall be changed into or become
exchangeable for a larger or smaller number of shares, then upon the effective
date thereof, the number of shares of Common Stock which Holder shall be
entitled to purchase upon Exercise of this Warrant shall be increased or
decreased, as the case may be, in direct proportion to the increase or decrease
in the number of shares of Common Stock by reason of such recapitalization,
reclassification or similar transaction, and the Exercise Price shall be, in the
case of an increase in the number of shares, proportionally decreased and, in
the case of decrease in the number of shares, proportionally increased. The
Company shall give Holder the same notice it provides to holders of Common Stock
of any transaction described in this Section 5(b).
(c) Distributions. If the Company shall at any time distribute for no
consideration to holders of Common Stock cash, evidences of indebtedness or
other securities or assets (other than cash dividends or distributions payable
out of earned surplus or net profits for the current or preceding year) then, in
any such case, Holder shall be entitled to receive, upon Exercise of this
Warrant, with respect to each share of Common Stock issuable upon such exercise,
the amount of cash or evidences of indebtedness or other securities or assets
which Holder would have been entitled to receive with respect to each such share
of Common Stock as a result of the happening of such event had this Warrant been
exercised immediately prior to the record date or other date fixing shareholders
to be affected by such event (the "Determination Date") or, in lieu thereof, if
the Board of Directors of the Company should so determine at the time of such
distribution, a reduced Exercise Price determined by multiplying the Exercise
Price on the Determination Date by a fraction, the numerator of which is the
result of such Exercise Price reduced by the value of such distribution
applicable to one share of Common Stock (such value to be determined by the
Board of Directors of the Company in its discretion) and the denominator of
which is such Exercise Price.
(d) Notice of Consolidation or Merger. In the event of a merger,
consolidation, exchange of shares, recapitalization, reorganization, or other
similar event, as a result of which shares of Common Stock shall be changed into
the same or a different number of shares of the same or another class or classes
of stock or securities or other assets of the Company or another entity or there
is a sale of all or substantially all the Company's assets (a "Corporate
Change"), then this Warrant shall be exerciseable into such class and type of
securities or other assets as Holder would have received had Holder exercised
this Warrant immediately prior to such Corporate Change; provided, however, that
Company may not affect any Corporate Change unless it first shall have given
thirty (30) days notice to Holder hereof of any Corporate Change.
4
<PAGE> 54
(e) Exercise Price Adjusted. As used in this Warrant, the term
"Exercise Price" shall mean the purchase price per share specified in Section 3
of this Warrant, until the occurrence of an event stated in subsection (a), (b)
or (c) of this Section 5, and thereafter shall mean said price as adjusted from
time to time in accordance with the provisions of said subsection. No such
adjustment under this Section 5 shall be made unless such adjustment would
change the Exercise Price at the time by $.01 or more; provided, however, that
all adjustments not so made shall be deferred and made when the aggregate
thereof would change the Exercise Price at the time by $.01 or more. No
adjustment made pursuant to any provision of this Section 5 shall have the net
effect of increasing the Exercise Price. The number of shares of Common Stock
subject hereto shall increase proportionately with each decrease in the Exercise
Price.
(f) Adjustments: Additional Shares, Securities or Assets. In the
event that at any time, as a result of an adjustment made pursuant to this
Section 5, Holder shall, upon Exercise of this Warrant, become entitled to
receive shares and/or other securities or assets (other than Common Stock) then,
wherever appropriate, all references herein to shares of Common Stock shall be
deemed to refer to and include such shares and/or other securities or assets;
and thereafter the number of such shares and/or other securities or assets shall
be subject to adjustment from time to time in a manner and upon terms as nearly
equivalent as practicable to the provisions of this Section 5.
6. Fractional Interests.
No fractional shares or scrip representing fractional shares
shall be issuable upon the Exercise of this Warrant, but on Exercise of this
Warrant, Holder may purchase only a whole number of shares of Common Stock. If,
on Exercise of this Warrant, Holder would be entitled to a fractional share of
Common Stock or a right to acquire a fractional share of Common Stock, such
fractional share shall be disregarded and the number of shares of Common Stock
issuable upon exercise shall be the next higher number of shares.
7. Reservation of Shares.
The Company shall at all times reserve for issuance such
number of authorized and unissued shares of Common Stock (or other securities
substituted therefor as herein above provided) as shall be sufficient for the
Exercise of this Warrant and payment of the Exercise Price. The Company
covenants and agrees that upon the Exercise of this Warrant, all shares of
Common Stock issuable upon such exercise shall be duly and validly issued, fully
paid, nonassessable and not subject to preemptive rights, rights of first
refusal or similar rights of any person or entity.
8. Restrictions on Transfer.
(a) Registration or Exemption Required. This Warrant has been
issued in a transaction exempt from the registration requirements of the Act by
virtue of Regulation D and exempt from state registration under applicable state
laws. The Warrant and the Common Stock issuable upon the Exercise of this
Warrant may not be pledged, transferred, sold or assigned except pursuant to an
effective registration statement or an exemption to the registration
requirements of the Act and applicable state laws.
(b) Assignment. If Holder can provide the Company with
reasonably satisfactory evidence that the conditions of (a) above regarding
registration or exemption have been satisfied, Holder may sell, transfer,
assign, pledge or otherwise dispose of this Warrant, in whole or in part. Holder
shall deliver a written notice to Company, substantially in the form of the
Assignment attached hereto as Exhibit B, indicating the
5
<PAGE> 55
person or persons to whom the Warrant shall be assigned and the respective
number of warrants to be assigned to each assignee. The Company shall effect the
assignment within ten (10) days, and shall deliver to the assignee(s) designated
by Holder a Warrant or Warrants of like tenor and terms for the appropriate
number of shares.
9. Benefits of this Warrant.
Nothing in this Warrant shall be construed to confer upon any
person other than the Company and Holder any legal or equitable right, remedy or
claim under this Warrant and this Warrant shall be for the sole and exclusive
benefit of the Company and Holder.
10. Applicable Law.
This Warrant is issued under and shall for all purposes be
governed by and construed in accordance with the laws of the state of Delaware,
without giving effect to conflict of law provisions thereof.
11. Loss of Warrant.
Upon receipt by the Company of evidence of the loss, theft,
destruction or mutilation of this Warrant, and (in the case of loss, theft or
destruction) of indemnity or security reasonably satisfactory to the Company,
and upon surrender and cancellation of this Warrant, if mutilated, the Company
shall execute and deliver a new Warrant of like tenor and date.
12. Notice or Demands.
Notices or demands pursuant to this Warrant to be given or made by Holder to or
on the Company shall be sufficiently given or made if sent by certified or
registered mail, return receipt requested, postage prepaid, and addressed, until
another address is designated in writing by the Company, to Attention:
President, 865 SW 78th Avenue, Suite 100, Plantation, Florida, 33324 Telephone
No. (954) 233-8746, Facsimile No. (954) 233-1414 . Notices or demands pursuant
to this Warrant to be given or made by the Company to or on Holder shall be
sufficiently given or made if sent by certified or registered mail, return
receipt requested, postage prepaid, and addressed, to the address of Holder set
forth in the Company's records, until another address is designated in writing
by Holder.
IN WITNESS WHEREOF, the undersigned has executed this Warrant as of the
______ day of February, 1998.
VIRAGEN, INC.
By:
-----------------------------------
Dennis W. Healey
Title: Exec. Vice President/CFO
6
<PAGE> 56
EXHIBIT A
EXERCISE FORM
TO: VIRAGEN, INC.
The undersigned hereby irrevocably exercises the right to purchase
____________ of the shares of Common Stock (the "Common Stock") of VIRAGEN,
INC., a Delaware corporation (the "Company"), evidenced by the attached warrant
(the "Warrant"), and herewith makes payment of the exercise price with respect
to such shares in full, all in accordance with the conditions and provisions of
said Warrant.
1. The undersigned agrees not to offer, sell, transfer or otherwise dispose of
any of the Common Stock obtained on exercise of the Warrant, except in
accordance with the provisions of Section 8(a) of the Warrant.
2. The undersigned requests that stock certificates for such shares be issued
free of any restrictive legend, if appropriate, and a warrant representing any
unexercised portion hereof be issued, pursuant to the Warrant in the name of the
undersigned and delivered to the undersigned at the address set forth below:
Dated:
- -----------------------------------------------------------------------------
Signature
- -----------------------------------------------------------------------------
Print Name
- -----------------------------------------------------------------------------
Address
- -----------------------------------------------------------------------------
NOTICE
The signature to the foregoing Exercise Form must correspond to the name as
written upon the face of the attached Warrant in every particular, without
alteration or enlargement or any change whatsoever.
- -----------------------------------------------------------------------------
7
<PAGE> 57
EXHIBIT B
ASSIGNMENT
(To be executed by the registered holder
desiring to transfer the Warrant)
FOR VALUE RECEIVED, the undersigned holder of the attached warrant (the
"Warrant") hereby sells, assigns and transfers unto the person or persons below
named the right to purchase _______ shares of the Common Stock of VIRAGEN, INC.,
evidenced by the attached Warrant and does hereby irrevocably constitute and
appoint _______________________ attorney to transfer the said Warrant on the
books of the Company, with full power of substitution in the premises.
Dated: -------------------
Signature
Fill in for new registration of Warrant:
----------------------------------------
Name
- -----------------------------------------
Address
- -----------------------------------------
Please print name and address of assignee
(including zip code number)
- -------------------------------------------------------------------------------
NOTICE
The signature to the foregoing Assignment must correspond to the name as written
upon the face of the attached Warrant in every particular, without alteration or
enlargement or any change whatsoever.
- -------------------------------------------------------------------------------
<PAGE> 58
EXHIBIT D
THIS WARRANT AND THE SECURITIES RECEIVABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (i) A REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME
EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION
WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES H PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
2,500 shares
WARRANT TO PURCHASE COMMON STOCK
OF
VIRAGEN, INC.
THIS CERTIFIES that James David Mills or any subsequent ("Holder")
hereof, has the right to purchase from VIRAGEN, INC., a Delaware corporation
(the "Company"), not more than 2,500 fully paid and nonassessable shares of the
Company's Common Stock, $.01 par value ("Common Stock"), at a price equal to the
Exercise Price as defined in Section 3 below, subject to adjustment as provided
herein, at any time on or before 5:00 p.m., Atlanta, Georgia time, on February
17, 2003.
The Holder of this Warrant agrees with the Company that this Warrant is
issued and all rights hereunder shall be held subject to all of the conditions,
limitations and provisions set forth herein.
1. Date of Issuance.
This Warrant shall be deemed to be issued on February 17, 1998 ("Date
of Issuance").
2. Exercise.
(a) Manner of Exercise. This Warrant may be exercised as to all or any
lesser number of full shares of Common Stock covered hereby upon surrender of
this Warrant, with the Exercise Form attached hereto duly completed and
executed, together with the full Exercise Price (as defined in Section 3) for
each share of Common Stock as to which this Warrant is exercised, at the office
of the Company, Viragen, Inc., 865 SW 78th Avenue, Suite 100, Plantation, FL
33324, Attention: Dennis W. Healey, Executive Vice President/CFO, Telephone No.
(954) 233-8746, Telecopy No. (954) 233-1416, or at such other office or agency
as the Company may designate in writing, by overnight mail, with
<PAGE> 59
THIS WARRANT AND THE SECURITIES RECEIVABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (i) A REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME
EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION
WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES H PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
2,000 shares
WARRANT TO PURCHASE COMMON STOCK
OF
VIRAGEN, INC.
THIS CERTIFIES that Kelley E. Smith or any subsequent ("Holder")
hereof, has the right to purchase from VIRAGEN, INC., a Delaware corporation
(the "Company"), not more than 2,000 fully paid and nonassessable shares of the
Company's Common Stock, $.01 par value ("Common Stock"), at a price equal to the
Exercise Price as defined in Section 3 below, subject to adjustment as provided
herein, at any time on or before 5:00 p.m., Atlanta, Georgia time, on February
17, 2003.
The Holder of this Warrant agrees with the Company that this Warrant is
issued and all rights hereunder shall be held subject to all of the conditions,
limitations and provisions set forth herein.
1. Date of Issuance.
This Warrant shall be deemed to be issued on February 17, 1998 ("Date
of Issuance").
2. Exercise.
(a) Manner of Exercise. This Warrant may be exercised as to all or any
lesser number of full shares of Common Stock covered hereby upon surrender of
this Warrant, with the Exercise Form attached hereto duly completed and
executed, together with the full Exercise Price (as defined in Section 3) for
each share of Common Stock as to which this Warrant is exercised, at the office
of the Company, Viragen, Inc., 865 SW 78th Avenue, Suite 100, Plantation, FL
33324, Attention: Dennis W. Healey, Executive Vice President/CFO, Telephone No.
(954) 233-8746, Telecopy No. (954) 233-1416, or at such other office or agency
as the Company may designate in writing, by overnight mail, with
<PAGE> 60
THIS WARRANT AND THE SECURITIES RECEIVABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (i) A REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME
EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION
WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES H PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
1,900 shares
WARRANT TO PURCHASE COMMON STOCK
OF
VIRAGEN, INC.
THIS CERTIFIES that Gerald David Harris or any subsequent ("Holder")
hereof, has the right to purchase from VIRAGEN, INC., a Delaware corporation
(the "Company"), not more than 1,900 fully paid and nonassessable shares of the
Company's Common Stock, $.01 par value ("Common Stock"), at a price equal to the
Exercise Price as defined in Section 3 below, subject to adjustment as provided
herein, at any time on or before 5:00 p.m., Atlanta, Georgia time, on February
17, 2003.
The Holder of this Warrant agrees with the Company that this Warrant is
issued and all rights hereunder shall be held subject to all of the conditions,
limitations and provisions set forth herein.
1. Date of Issuance.
This Warrant shall be deemed to be issued on February 17, 1998 ("Date
of Issuance").
2. Exercise.
(a) Manner of Exercise. This Warrant may be exercised as to all or any
lesser number of full shares of Common Stock covered hereby upon surrender of
this Warrant, with the Exercise Form attached hereto duly completed and
executed, together with the full Exercise Price (as defined in Section 3) for
each share of Common Stock as to which this Warrant is exercised, at the office
of the Company, Viragen, Inc., 865 SW 78th Avenue, Suite 100, Plantation, FL
33324, Attention: Dennis W. Healey, Executive Vice President/CFO, Telephone No.
(954) 233-8746, Telecopy No. (954) 233-1416, or at such other office or agency
as the Company may designate in writing, by overnight mail, with
<PAGE> 61
THIS WARRANT AND THE SECURITIES RECEIVABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (i) A REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME
EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION
WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES H PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
20,057 shares
WARRANT TO PURCHASE COMMON STOCK
OF
VIRAGEN, INC.
THIS CERTIFIES that Michael E. Stough or any subsequent ("Holder")
hereof, has the right to purchase from VIRAGEN, INC., a Delaware corporation
(the "Company"), not more than 20,057 fully paid and nonassessable shares of the
Company's Common Stock, $.01 par value ("Common Stock"), at a price equal to the
Exercise Price as defined in Section 3 below, subject to adjustment as provided
herein, at any time on or before 5:00 p.m., Atlanta, Georgia time, on February
17, 2003.
The Holder of this Warrant agrees with the Company that this Warrant is
issued and all rights hereunder shall be held subject to all of the conditions,
limitations and provisions set forth herein.
1. Date of Issuance.
This Warrant shall be deemed to be issued on February 17, 1998 ("Date
of Issuance").
2. Exercise.
(a) Manner of Exercise. This Warrant may be exercised as to all or any
lesser number of full shares of Common Stock covered hereby upon surrender of
this Warrant, with the Exercise Form attached hereto duly completed and
executed, together with the full Exercise Price (as defined in Section 3) for
each share of Common Stock as to which this Warrant is exercised, at the office
of the Company, Viragen, Inc., 865 SW 78th Avenue, Suite 100, Plantation, FL
33324, Attention: Dennis W. Healey, Executive Vice President/CFO, Telephone No.
(954) 233-8746, Telecopy No. (954) 233-1416, or at such other office or agency
as the Company may designate in writing, by overnight mail, with
<PAGE> 62
THIS WARRANT AND THE SECURITIES RECEIVABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (i) A REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME
EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION
WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES H PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
12,923 shares
WARRANT TO PURCHASE COMMON STOCK
OF
VIRAGEN, INC.
THIS CERTIFIES that Charles B. Krusen or any subsequent ("Holder")
hereof, has the right to purchase from VIRAGEN, INC., a Delaware corporation
(the "Company"), not more than 12,923 fully paid and nonassessable shares of the
Company's Common Stock, $.01 par value ("Common Stock"), at a price equal to the
Exercise Price as defined in Section 3 below, subject to adjustment as provided
herein, at any time on or before 5:00 p.m., Atlanta, Georgia time, on February
17, 2003.
The Holder of this Warrant agrees with the Company that this Warrant is
issued and all rights hereunder shall be held subject to all of the conditions,
limitations and provisions set forth herein.
1. Date of Issuance.
This Warrant shall be deemed to be issued on February 17, 1998 ("Date
of Issuance").
2. Exercise.
(a) Manner of Exercise. This Warrant may be exercised as to all or any
lesser number of full shares of Common Stock covered hereby upon surrender of
this Warrant, with the Exercise Form attached hereto duly completed and
executed, together with the full Exercise Price (as defined in Section 3) for
each share of Common Stock as to which this Warrant is exercised, at the office
of the Company, Viragen, Inc., 865 SW 78th Avenue, Suite 100, Plantation, FL
33324, Attention: Dennis W. Healey, Executive Vice President/CFO, Telephone No.
(954) 233-8746, Telecopy No. (954) 233-1416, or at such other office or agency
as the Company may designate in writing, by overnight mail, with
<PAGE> 63
THIS WARRANT AND THE SECURITIES RECEIVABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (i) A REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME
EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION
WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES H PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
3,000 shares
WARRANT TO PURCHASE COMMON STOCK
OF
VIRAGEN, INC.
THIS CERTIFIES that Frank G. Mauro or any subsequent ("Holder") hereof,
has the right to purchase from VIRAGEN, INC., a Delaware corporation (the
"Company"), not more than 3,000 fully paid and nonassessable shares of the
Company's Common Stock, $.01 par value ("Common Stock"), at a price equal to the
Exercise Price as defined in Section 3 below, subject to adjustment as provided
herein, at any time on or before 5:00 p.m., Atlanta, Georgia time, on February
17, 2003.
The Holder of this Warrant agrees with the Company that this Warrant is
issued and all rights hereunder shall be held subject to all of the conditions,
limitations and provisions set forth herein.
1. Date of Issuance.
This Warrant shall be deemed to be issued on February 17, 1998 ("Date
of Issuance").
2. Exercise.
(a) Manner of Exercise. This Warrant may be exercised as to all or any
lesser number of full shares of Common Stock covered hereby upon surrender of
this Warrant, with the Exercise Form attached hereto duly completed and
executed, together with the full Exercise Price (as defined in Section 3) for
each share of Common Stock as to which this Warrant is exercised, at the office
of the Company, Viragen, Inc., 865 SW 78th Avenue, Suite 100, Plantation, FL
33324, Attention: Dennis W. Healey, Executive Vice President/CFO, Telephone No.
(954) 233-8746, Telecopy No. (954) 233-1416, or at such other office or agency
as the Company may designate in writing, by overnight mail, with
<PAGE> 64
THIS WARRANT AND THE SECURITIES RECEIVABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (i) A REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME
EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION
WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES H PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
500 shares
WARRANT TO PURCHASE COMMON STOCK
OF
VIRAGEN, INC.
THIS CERTIFIES that Dwight B. Bronnum or any subsequent ("Holder")
hereof, has the right to purchase from VIRAGEN, INC., a Delaware corporation
(the "Company"), not more than 500 fully paid and nonassessable shares of the
Company's Common Stock, $.01 par value ("Common Stock"), at a price equal to the
Exercise Price as defined in Section 3 below, subject to adjustment as provided
herein, at any time on or before 5:00 p.m., Atlanta, Georgia time, on February
17, 2003.
The Holder of this Warrant agrees with the Company that this Warrant is
issued and all rights hereunder shall be held subject to all of the conditions,
limitations and provisions set forth herein.
1. Date of Issuance.
This Warrant shall be deemed to be issued on February 17, 1998 ("Date
of Issuance").
2. Exercise.
(a) Manner of Exercise. This Warrant may be exercised as to all or any
lesser number of full shares of Common Stock covered hereby upon surrender of
this Warrant, with the Exercise Form attached hereto duly completed and
executed, together with the full Exercise Price (as defined in Section 3) for
each share of Common Stock as to which this Warrant is exercised, at the office
of the Company, Viragen, Inc., 865 SW 78th Avenue, Suite 100, Plantation, FL
33324, Attention: Dennis W. Healey, Executive Vice President/CFO, Telephone No.
(954) 233-8746, Telecopy No. (954) 233-1416, or at such other office or agency
as the Company may designate in writing, by overnight mail, with
<PAGE> 65
THIS WARRANT AND THE SECURITIES RECEIVABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (i) A REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME
EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION
WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES H PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
500 shares
WARRANT TO PURCHASE COMMON STOCK
OF
VIRAGEN, INC.
THIS CERTIFIES that Robert L. Hopkins or any subsequent ("Holder")
hereof, has the right to purchase from VIRAGEN, INC., a Delaware corporation
(the "Company"), not more than 500 fully paid and nonassessable shares of the
Company's Common Stock, $.01 par value ("Common Stock"), at a price equal to the
Exercise Price as defined in Section 3 below, subject to adjustment as provided
herein, at any time on or before 5:00 p.m., Atlanta, Georgia time, on February
17, 2003.
The Holder of this Warrant agrees with the Company that this Warrant is
issued and all rights hereunder shall be held subject to all of the conditions,
limitations and provisions set forth herein.
1. Date of Issuance.
This Warrant shall be deemed to be issued on February 17, 1998 ("Date
of Issuance").
2. Exercise.
(a) Manner of Exercise. This Warrant may be exercised as to all or any
lesser number of full shares of Common Stock covered hereby upon surrender of
this Warrant, with the Exercise Form attached hereto duly completed and
executed, together with the full Exercise Price (as defined in Section 3) for
each share of Common Stock as to which this Warrant is exercised, at the office
of the Company, Viragen, Inc., 865 SW 78th Avenue, Suite 100, Plantation, FL
33324, Attention: Dennis W. Healey, Executive Vice President/CFO, Telephone No.
(954) 233-8746, Telecopy No. (954) 233-1416, or at such other office or agency
as the Company may designate in writing, by overnight mail, with
<PAGE> 66
THIS WARRANT AND THE SECURITIES RECEIVABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (i) A REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME
EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION
WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES H PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
12,500 shares
WARRANT TO PURCHASE COMMON STOCK
OF
VIRAGEN, INC.
THIS CERTIFIES that Carlton M. Johnson, Jr. or any subsequent
("Holder") hereof, has the right to purchase from VIRAGEN, INC., a Delaware
corporation (the "Company"), not more than 12,500 fully paid and nonassessable
shares of the Company's Common Stock, $.01 par value ("Common Stock"), at a
price equal to the Exercise Price as defined in Section 3 below, subject to
adjustment as provided herein, at any time on or before 5:00 p.m., Atlanta,
Georgia time, on February 17, 2003.
The Holder of this Warrant agrees with the Company that this Warrant is
issued and all rights hereunder shall be held subject to all of the conditions,
limitations and provisions set forth herein.
1. Date of Issuance.
This Warrant shall be deemed to be issued on February 17, 1998 ("Date
of Issuance").
2. Exercise.
(a) Manner of Exercise. This Warrant may be exercised as to all or any
lesser number of full shares of Common Stock covered hereby upon surrender of
this Warrant, with the Exercise Form attached hereto duly completed and
executed, together with the full Exercise Price (as defined in Section 3) for
each share of Common Stock as to which this Warrant is exercised, at the office
of the Company, Viragen, Inc., 865 SW 78th Avenue, Suite 100, Plantation, FL
33324, Attention: Dennis W. Healey, Executive Vice President/CFO, Telephone No.
(954) 233-8746, Telecopy No. (954) 233-1416, or at such other office or agency
as the Company may designate in writing, by overnight mail, with
<PAGE> 67
THIS WARRANT AND THE SECURITIES RECEIVABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (i) A REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME
EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION
WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES H PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
12,500 shares
WARRANT TO PURCHASE COMMON STOCK
OF
VIRAGEN, INC.
THIS CERTIFIES that Glenn R. Archer or any subsequent ("Holder")
hereof, has the right to purchase from VIRAGEN, INC., a Delaware corporation
(the "Company"), not more than 12,500 fully paid and nonassessable shares of the
Company's Common Stock, $.01 par value ("Common Stock"), at a price equal to the
Exercise Price as defined in Section 3 below, subject to adjustment as provided
herein, at any time on or before 5:00 p.m., Atlanta, Georgia time, on February
17, 2003.
The Holder of this Warrant agrees with the Company that this Warrant is
issued and all rights hereunder shall be held subject to all of the conditions,
limitations and provisions set forth herein.
1. Date of Issuance.
This Warrant shall be deemed to be issued on February 17, 1998 ("Date
of Issuance").
2. Exercise.
(a) Manner of Exercise. This Warrant may be exercised as to all or any
lesser number of full shares of Common Stock covered hereby upon surrender of
this Warrant, with the Exercise Form attached hereto duly completed and
executed, together with the full Exercise Price (as defined in Section 3) for
each share of Common Stock as to which this Warrant is exercised, at the office
of the Company, Viragen, Inc., 865 SW 78th Avenue, Suite 100, Plantation, FL
33324, Attention: Dennis W. Healey, Executive Vice President/CFO, Telephone No.
(954) 233-8746, Telecopy No. (954) 233-1416, or at such other office or agency
as the Company may designate in writing, by overnight mail, with
<PAGE> 68
THIS WARRANT AND THE SECURITIES RECEIVABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (i) A REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME
EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION
WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES H PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
8,000 shares
WARRANT TO PURCHASE COMMON STOCK
OF
VIRAGEN, INC.
THIS CERTIFIES that Davis C. Holden or any subsequent ("Holder")
hereof, has the right to purchase from VIRAGEN, INC., a Delaware corporation
(the "Company"), not more than 8,000 fully paid and nonassessable shares of the
Company's Common Stock, $.01 par value ("Common Stock"), at a price equal to the
Exercise Price as defined in Section 3 below, subject to adjustment as provided
herein, at any time on or before 5:00 p.m., Atlanta, Georgia time, on February
17, 2003.
The Holder of this Warrant agrees with the Company that this Warrant is
issued and all rights hereunder shall be held subject to all of the conditions,
limitations and provisions set forth herein.
1. Date of Issuance.
This Warrant shall be deemed to be issued on February 17, 1998 ("Date
of Issuance").
2. Exercise.
(a) Manner of Exercise. This Warrant may be exercised as to all or any
lesser number of full shares of Common Stock covered hereby upon surrender of
this Warrant, with the Exercise Form attached hereto duly completed and
executed, together with the full Exercise Price (as defined in Section 3) for
each share of Common Stock as to which this Warrant is exercised, at the office
of the Company, Viragen, Inc., 865 SW 78th Avenue, Suite 100, Plantation, FL
33324, Attention: Dennis W. Healey, Executive Vice President/CFO, Telephone No.
(954) 233-8746, Telecopy No. (954) 233-1416, or at such other office or agency
as the Company may designate in writing, by overnight mail, with
<PAGE> 69
THIS WARRANT AND THE SECURITIES RECEIVABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (i) A REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME
EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION
WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES H PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
8,000 shares
WARRANT TO PURCHASE COMMON STOCK
OF
VIRAGEN, INC.
THIS CERTIFIES that P. Bradford Hathorn or any subsequent ("Holder")
hereof, has the right to purchase from VIRAGEN, INC., a Delaware corporation
(the "Company"), not more than 8,000 fully paid and nonassessable shares of the
Company's Common Stock, $.01 par value ("Common Stock"), at a price equal to the
Exercise Price as defined in Section 3 below, subject to adjustment as provided
herein, at any time on or before 5:00 p.m., Atlanta, Georgia time, on February
17, 2003.
The Holder of this Warrant agrees with the Company that this Warrant is
issued and all rights hereunder shall be held subject to all of the conditions,
limitations and provisions set forth herein.
1. Date of Issuance.
This Warrant shall be deemed to be issued on February 17, 1998 ("Date
of Issuance").
2. Exercise.
(a) Manner of Exercise. This Warrant may be exercised as to all or any
lesser number of full shares of Common Stock covered hereby upon surrender of
this Warrant, with the Exercise Form attached hereto duly completed and
executed, together with the full Exercise Price (as defined in Section 3) for
each share of Common Stock as to which this Warrant is exercised, at the office
of the Company, Viragen, Inc., 865 SW 78th Avenue, Suite 100, Plantation, FL
33324, Attention: Dennis W. Healey, Executive Vice President/CFO, Telephone No.
(954) 233-8746, Telecopy No. (954) 233-1416, or at such other office or agency
as the Company may designate in writing, by overnight mail, with
<PAGE> 70
THIS WARRANT AND THE SECURITIES RECEIVABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (i) A REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME
EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION
WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES H PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
101,400 shares
WARRANT TO PURCHASE COMMON STOCK
OF
VIRAGEN, INC.
THIS CERTIFIES that Kendrick Family Partnership, LP or any subsequent
("Holder") hereof, has the right to purchase from VIRAGEN, INC., a Delaware
corporation (the "Company"), not more than 101,400 fully paid and nonassessable
shares of the Company's Common Stock, $.01 par value ("Common Stock"), at a
price equal to the Exercise Price as defined in Section 3 below, subject to
adjustment as provided herein, at any time on or before 5:00 p.m., Atlanta,
Georgia time, on February 17, 2003.
The Holder of this Warrant agrees with the Company that this Warrant is
issued and all rights hereunder shall be held subject to all of the conditions,
limitations and provisions set forth herein.
1. Date of Issuance.
This Warrant shall be deemed to be issued on February 17, 1998 ("Date
of Issuance").
2. Exercise.
(a) Manner of Exercise. This Warrant may be exercised as to all or any
lesser number of full shares of Common Stock covered hereby upon surrender of
this Warrant, with the Exercise Form attached hereto duly completed and
executed, together with the full Exercise Price (as defined in Section 3) for
each share of Common Stock as to which this Warrant is exercised, at the office
of the Company, Viragen, Inc., 865 SW 78th Avenue, Suite 100, Plantation, FL
33324, Attention: Dennis W. Healey, Executive Vice President/CFO, Telephone No.
(954) 233-8746, Telecopy No. (954) 233-1416, or at such other office or agency
as the Company may designate in writing, by overnight mail, with
<PAGE> 71
THIS WARRANT AND THE SECURITIES RECEIVABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (i) A REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME
EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION
WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES H PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
101,400 shares
WARRANT TO PURCHASE COMMON STOCK
OF
VIRAGEN, INC.
THIS CERTIFIES that Eric S. Swartz or any subsequent ("Holder") hereof,
has the right to purchase from VIRAGEN, INC., a Delaware corporation (the
"Company"), not more than 101,400 fully paid and nonassessable shares of the
Company's Common Stock, $.01 par value ("Common Stock"), at a price equal to the
Exercise Price as defined in Section 3 below, subject to adjustment as provided
herein, at any time on or before 5:00 p.m., Atlanta, Georgia time, on February
17, 2003.
The Holder of this Warrant agrees with the Company that this Warrant is
issued and all rights hereunder shall be held subject to all of the conditions,
limitations and provisions set forth herein.
1. Date of Issuance.
This Warrant shall be deemed to be issued on February 17, 1998 ("Date
of Issuance").
2. Exercise.
(a) Manner of Exercise. This Warrant may be exercised as to all or any
lesser number of full shares of Common Stock covered hereby upon surrender of
this Warrant, with the Exercise Form attached hereto duly completed and
executed, together with the full Exercise Price (as defined in Section 3) for
each share of Common Stock as to which this Warrant is exercised, at the office
of the Company, Viragen, Inc., 865 SW 78th Avenue, Suite 100, Plantation, FL
33324, Attention: Dennis W. Healey, Executive Vice President/CFO, Telephone No.
(954) 233-8746, Telecopy No. (954) 233-1416, or at such other office or agency
as the Company may designate in writing, by overnight mail, with
<PAGE> 72
THIS WARRANT AND THE SECURITIES RECEIVABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (i) A REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME
EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION
WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES H PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
_________ shares
Warrant to Purchase Common Stock
of
VIRAGEN, INC.
THIS CERTIFIES that Swartz Investments, LLC or any subsequent
("Holder") hereof, has the right to purchase from VIRAGEN, INC., a Delaware
corporation (the "Company"), not more than fully paid and nonassessable shares
of the Company's Common Stock, $.01 par value ("Common Stock"), at a price equal
to the Exercise Price as defined in Section 3 below, subject to adjustment as
provided herein, at any time on or before 5:00 p.m., Atlanta, Georgia time, on
February 17, 2003.
The Holder of this Warrant agrees with the Company that this Warrant is
issued and all rights hereunder shall be held subject to all of the conditions,
limitations and provisions set forth herein.
1. Date of Issuance.
This Warrant shall be deemed to be issued on February 17, 1998 ("Date
of Issuance").
2. Exercise.
(a) Manner of Exercise. This Warrant may be exercised as to all or any
lesser number of full shares of Common Stock covered hereby upon surrender of
this Warrant, with the Exercise Form attached hereto duly completed and
executed, together with the full Exercise Price (as defined in Section 3) for
each share of Common Stock as to which this Warrant is exercised, at the office
of the Company, Viragen, Inc., 865 SW 78th Avenue, Suite 100, Plantation, FL
33324, Attention: Dennis W. Healey, Executive Vice President/CFO, Telephone No.
(954) 233-8746, Telecopy No. (954) 233-1416, or at such other office or agency
as the Company may designate in writing, by overnight mail, with
12
<PAGE> 73
an advance copy of the Exercise Form attached as Exhibit A ("Exercise Form")
sent by facsimile to the Company and its Transfer Agent (such surrender and
payment of the Exercise Price hereinafter called the "Exercise of this
Warrant").
(b) Date of Exercise. The "Date of Exercise" of the Warrant shall be
defined as the date that the advance copy of the completed and executed Exercise
Form is sent by facsimile to the Company and its Transfer Agent, provided that
the original Warrant and Exercise Form are received by the Company within five
(5) business days thereafter. The original Warrant and Exercise Form must be
received within five (5) business days of the Date of Exercise, or the exercise
may, at the Company's option, be considered void. Alternatively, the Date of
Exercise shall be defined as the date the original Exercise Form is received by
the Company, if Holder has not sent advance notice by facsimile.
(c) Cancellation of Warrant. This Warrant shall be canceled upon its
Exercise, and, as soon as practical after the Date of Exercise, the Holder
hereof shall be entitled to receive Common Stock for the number of shares
purchased upon such Exercise, and if this Warrant is not exercised in full, the
Holder shall be entitled to receive a new Warrant or Warrants (containing terms
identical to this Warrant) representing any unexercised portion of this Warrant
in addition to such Common Stock.
(d) Holder of Record. Each person in whose name any Warrant for shares
of Common Stock is issued shall, for all purposes, be deemed to have become the
Holder of record of such shares on the Date of Exercise of this Warrant,
irrespective of the date of delivery of such shares of Common Stock. Nothing in
this Warrant shall be construed as conferring upon the Holder hereof any rights
as a shareholder of the Company.
3. Payment of Warrant Exercise Price.
The Exercise Price ("Exercise Price") shall equal $1.684 ("Initial
Exercise Price") or, if the Date of Exercise is more than one (1) year after the
Date of Issuance, the lesser of (i) the Initial Exercise Price or (ii) the
"Lowest Reset Price", as that term is defined below. The Company shall calculate
a "Reset Price" on each anniversary date of the Date of Issuance which shall
equal one hundred percent (100%) of the average of the lowest two (2) Closing
Bid Prices of the Company's Common Stock for the twenty (20) trading days ending
on such anniversary date of the Date of Issuance. The "Lowest Reset Price" shall
equal the lowest Reset Price determined on an anniversary date of the Date of
Issuance preceding the Date of Exercise, taking into account, as appropriate,
any adjustments made pursuant to Section 5 hereof.
For purposes hereof, the term "Closing Bid Price" shall mean the
closing bid price on the National Association of Securities Dealers Automated
Quotation System ("Nasdaq") Small Cap Market or OTC Bulletin Board, or if no
longer traded on the Nasdaq Small Cap Market or OTC Bulletin Board, the closing
price on the principal national securities exchange or the over-the-counter
system on which the Common Stock is so traded and, if not available, the mean of
the high and low prices on the principal national securities exchange or the
National Securities Exchange on which the Common Stock is so traded.
Payment of the Exercise Price may be made by either of the following,
or a combination thereof, at the election of Holder:
(a) Cash Exercise: cash, bank or cashiers check or wire transfer; or
2
<PAGE> 74
(b) Cashless Exercise: surrender of this Warrant at the principal
office of the Company together with notice of cashless election, in which event
the Company shall issue Holder a number of shares of Common Stock computed using
the following formula:
X = Y (A-B)/A
where: X = the number of shares of Common Stock to be issued to Holder.
Y = the number of shares of Common Stock for which this Warrant
is being exercised.
A = the Market Price of one (1) share of Common Stock (for purposes of
this Section 3(b), the "Market Price" shall be defined as the average
closing price of the Common Stock for the five (5) trading days prior
to the Date of Exercise of this Warrant (the "Average Closing Price"),
as reported by Nasdaq or if the Common Stock is not traded on Nasdaq,
the Average Closing Price in the over-the-counter market on which the
Common Stock is traded. If the Common Stock is/was not traded during
the five (5) trading days prior to the Date of Exercise, then the
closing price for the last publicly traded day shall be deemed to be
the closing price for any and all (if applicable) days during such five
(5) trading day period.
B = the Exercise Price.
For purposes of Rule 144 and sub-section (d)(3)(ii) thereof, it is intended,
understood and acknowledged that the Common Stock issuable upon exercise of this
Warrant in a cashless exercise transaction shall be deemed to have been acquired
at the time this Warrant was issued. Moreover, it is intended, understood and
acknowledged that the holding period for the Common Stock issuable upon exercise
of this Warrant in a cashless exercise transaction shall be deemed to have
commenced on the date this Warrant was issued.
4. Transfer and Registration.
(a) Transfer Rights. Subject to the provisions of Section 8 of this
Warrant, this Warrant may be transferred on the books of the Company, in whole
or in part, in person or by attorney, upon surrender of this Warrant properly
completed and endorsed. This Warrant shall be canceled upon such surrender and,
as soon as practicable thereafter, the person to whom such transfer is made
shall be entitled to receive a new Warrant or Warrants as to the portion of this
Warrant transferred, and the Holder of this Warrant shall be entitled to receive
a new Warrant or Warrants as to the portion hereof retained.
(b) Registrable Securities. The Common Stock issuable upon the exercise
of this Warrant constitute "Registrable Securities" under that certain
Registration Rights Agreement dated on or about February 17, 1998 by and between
the Company and Swartz Investments, LLC and, accordingly, has the benefit of the
registration rights pursuant to that agreement.
5. Anti-Dilution Adjustments.
(a) Stock Dividend. If the Company shall at any time declare a dividend
payable in shares of Common Stock, then the Holder hereof, upon Exercise of this
Warrant after the record date for the determination of Holders of Common Stock
entitled to receive such dividend, shall be entitled to receive upon Exercise of
this Warrant, in addition to the number of shares of Common Stock as to which
this Warrant is Exercised, such additional
3
<PAGE> 75
shares of Common Stock as such Holder would have received had this Warrant been
Exercised immediately prior to such record date and the Exercise Price will be
proportionately adjusted.
(b) Recapitalization or Reclassification. If the Company shall at any
time effect a recapitalization, reclassification or other similar transaction of
such character that the shares of Common Stock shall be changed into or become
exchangeable for a larger or smaller number of shares, then upon the effective
date thereof, the number of shares of Common Stock which the Holder hereof shall
be entitled to purchase upon Exercise of this Warrant shall be increased or
decreased, as the case may be, in direct proportion to the increase or decrease
in the number of shares of Common Stock by reason of such recapitalization,
reclassification or similar transaction, and the Exercise Price shall be, in the
case of an increase in the number of shares, proportionally decreased and, in
the case of decrease in the number of shares, proportionally increased. The
Company shall give the Warrant Holder the same notice it provides to holders of
Common Stock of any transaction described in this Section 5(b).
(c) Distributions. If the Company shall at any time distribute to
Holders of Common Stock cash, evidences of indebtedness or other securities or
assets (other than cash dividends or distributions payable out of earned surplus
or net profits for the current or preceding year) then, in any such case, the
Holder of this Warrant shall be entitled to receive, upon exercise of this
Warrant, with respect to each share of Common Stock issuable upon such Exercise,
the amount of cash or evidences of indebtedness or other securities or assets
which such Holder would have been entitled to receive with respect to each such
share of Common Stock as a result of the happening of such event had this
Warrant been Exercised immediately prior to the record date or other date fixing
shareholders to be affected by such event (the "Determination Date") or, in lieu
thereof, if the Board of Directors of the Company should so determine at the
time of such distribution, a reduced Exercise Price determined by multiplying
the Exercise Price on the Determination Date by a fraction, the numerator of
which is the result of such Exercise Price reduced by the value of such
distribution applicable to one share of Common Stock (such value to be
determined by the Board in its discretion) and the denominator of which is such
Exercise Price.
(d) Notice of Consolidation or Merger. In the event of a merger,
consolidation, exchange of shares, recapitalization, reorganization, or other
similar event, as a result of which shares of Common Stock of the Company shall
be changed into the same or a different number of shares of the same or another
class or classes of stock or securities or other assets of the Company or
another entity or there is a sale of all or substantially all the Company's
assets (a "Corporate Change"), then this Warrant shall be assumed by the
acquiring entity or any affiliate thereof and thereafter this Warrant shall be
exerciseable into such class and type of securities or other assets as the
Holder would have received had the Holder exercised this Warrant immediately
prior to such Corporate Change; provided, however, that Company may not affect
any Corporate Change unless it first shall have given thirty (30) days notice to
the Holder hereof of any Corporate Change.
(e) Exercise Price Adjusted. As used in this Warrant, the term
"Exercise Price" shall mean the purchase price per share specified in Section 3
of this Warrant, as it may be reset from time to time, until the occurrence of
an event stated in subsection (a), (b) or (c) of this Section 5 and thereafter
shall mean said price as adjusted from time to time in accordance with the
provisions of said subsection. No such adjustment under this Section 5 shall be
made unless such adjustment would change the Exercise Price at the time by $.01
or more; provided, however, that all adjustments not so made shall be deferred
and made when the aggregate thereof would change the Exercise Price at the time
by $.01 or more.
4
<PAGE> 76
No adjustment made pursuant to any provision of this Section 5 shall have the
effect of increasing the total consideration payable upon Exercise of this
Warrant in respect of all the Common Stock as to which this Warrant may be
exercised. Notwithstanding anything to the contrary contained herein, the
Exercise Price shall not be reduced to an amount below the par value of the
Common Stock.
(f) Adjustments: Additional Shares, Securities or Assets. In the
event that at any time, as a result of an adjustment made pursuant to this
Section 5, the Holder of this Warrant shall, upon Exercise of this Warrant,
become entitled to receive shares and/or other securities or assets (other than
Common Stock) then, wherever appropriate, all references herein to shares of
Common Stock shall be deemed to refer to and include such shares and/or other
securities or assets; and thereafter the number of such shares and/or other
securities or assets shall be subject to adjustment from time to time in a
manner and upon terms as nearly equivalent as practicable to the provisions of
this Section 5.
6. Fractional Interests.
No fractional shares or scrip representing fractional shares
shall be issuable upon the Exercise of this Warrant, but on Exercise of this
Warrant, the Holder hereof may purchase only a whole number of shares of Common
Stock. If, on Exercise of this Warrant, the Holder hereof would be entitled to a
fractional share of Common Stock or a right to acquire a fractional share of
Common Stock, such fractional share shall be disregarded and the number of
shares of Common Stock issuable upon conversion shall be the next higher number
of shares.
7. Reservation of Shares.
The Company shall at all times reserve for issuance such
number of authorized and unissued shares of Common Stock (or other securities
substituted therefor as herein above provided) as shall be sufficient for
Exercise and payment of the Exercise Price of this Warrant. The Company
covenants and agrees that upon Exercise of this Warrant, all shares of Common
Stock issuable upon such Exercise shall be duly and validly issued, fully paid,
nonassessable and not subject to preemptive rights, rights of first refusal or
similar rights of any person or entity.
8. Restrictions on Transfer.
(a) Registration or Exemption Required. This Warrant and the
Common Stock issuable on Exercise hereof have not been registered under the
Securities Act of 1933, as amended, and may not be sold, assigned, transferred,
pledged, hypothecated or otherwise disposed of in the absence of registration or
the availability of an exemption from registration under said Act. All shares of
Common Stock issued upon Exercise of this Warrant shall bear an appropriate
legend to such effect, if applicable.
(b) Assignment. Assuming the conditions of (a) above regarding
registration or exemption have been satisfied, the Holder may sell, transfer,
assign, pledge or otherwise dispose of this Warrant, in whole or in part. Holder
shall deliver a written notice to Company, substantially in the form of the
Assignment attached hereto as Exhibit B, indicating the person or persons to
whom the Warrant shall be assigned and the respective number of warrants to be
assigned to each assignee. The Company shall effect the assignment within ten
days, and shall deliver to the assignee(s) designated by Holder a Warrant or
Warrants of like tenor and terms for the appropriate number of shares.
5
<PAGE> 77
(c) Investment Intent. The Warrant and Common Stock issuable upon
conversion are intended to be held for investment purposes and not with an
intent to distribution, as defined in the Act.
9. Benefits of this Warrant.
Nothing in this Warrant shall be construed to confer upon any
person other than the Company and the Holder of this Warrant any legal or
equitable right, remedy or claim under this Warrant and this Warrant shall be
for the sole and exclusive benefit of the Company and the Holder of this
Warrant.
10. Applicable Law.
This Warrant is issued under and shall for all purposes be governed
by and construed in accordance with the laws of the state of Georgia, without
giving effect to conflict of law provisions thereof.
11. Loss of Warrant.
Upon receipt by the Company of evidence of the loss, theft,
destruction or mutilation of this Warrant, and (in the case of loss, theft or
destruction) of indemnity or security reasonably satisfactory to the Company,
and upon surrender and cancellation of this Warrant, if mutilated, the Company
shall execute and deliver a new Warrant of like tenor and date.
12. Notice or Demands.
Notices or demands pursuant to this Warrant to be given or made by the Holder of
this Warrant to or on the Company shall be sufficiently given or made if sent by
certified or registered mail, return receipt requested, postage prepaid, and
addressed, until another address is designated in writing by the Company,
Viragen, Inc., 865 SW 78th Avenue, Suite 100, Plantation, FL 33324, Attention:
Dennis W. Healey, Executive Vice President/CFO, Telephone No. (954) 233-8746,
Telecopy No. (954) 233-1416. Notices or demands pursuant to this Warrant to be
given or made by the Company to or on the Holder of this Warrant shall be
sufficiently given or made if sent by certified or registered mail, return
receipt requested, postage prepaid, and addressed, Attn: Holder, address: c/o
Swartz Investments, LLC, 200 Roswell Summit, Suite 285, 1080 Holcomb Bridge
Road, Roswell, Georgia 30076, until another address is designated in writing by
Holder.
IN WITNESS WHEREOF, the undersigned has executed this Warrant as of
the ____ day of February, ____ 1998.
VIRAGEN, INC.
By:
----------------------------------
Print Name:
--------------------------------
Title:
--------------------------------
6
<PAGE> 78
EXHIBIT A
EXERCISE FORM
TO: ___________________.
The undersigned hereby irrevocably exercises the right to purchase
____________ of the shares of Common Stock of VIRAGEN, INC., a Delaware
corporation, evidenced by the attached Warrant, and herewith makes payment of
the Exercise Price with respect to such shares in full, all in accordance with
the conditions and provisions of said Warrant.
The undersigned agrees not to offer, sell, transfer or otherwise
dispose of any of such Common Stock, except in accordance with the provisions of
Section 8 of the Warrant, and consents that the following legend may be affixed
to the stock certificates for the Common Stock hereby subscribed for, if such
legend is applicable:
"The securities represented hereby have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), or any
provincial or state securities law, and may not be sold, transferred,
pledged, hypothecated or otherwise disposed of until either (i) a
registration statement under the Securities Act and applicable
provincial or state securities laws shall have become effective with
regard thereto, or (ii) an exemption from registration under the
Securities Act or applicable provincial or state securities laws is
available in connection with such offer, sale or transfer."
The undersigned requests that stock certificates for such shares be
issued, and a warrant representing any unexercised portion hereof be issued,
pursuant to the Warrant in the name of the Registered Holder and delivered to
the undersigned at the address set forth below:
Dated:
- -------------------------------------------------------------------------------
Signature of Registered Holder
- -------------------------------------------------------------------------------
Name of Registered Holder (Print)
- -------------------------------------------------------------------------------
Address
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
7
<PAGE> 79
EXHIBIT B
ASSIGNMENT
(To be executed by the registered Holder
desiring to transfer the Warrant)
FOR VALUE RECEIVED, the undersigned Holder of the attached Warrant hereby sells,
assigns and transfers unto the person or persons below named the right to
purchase _______ shares of the Common Stock of VIRAGEN, INC. evidenced by the
attached Warrant and does hereby irrevocably constitute and appoint
_______________________ attorney to transfer the said Warrant on the books of
the Company, with full power of substitution in the premises.
Dated:
--------------------------------
Signature
Fill in for new Registration of Warrant:
- ------------------------------------------
Name
- ------------------------------------------
Address
- ------------------------------------------
Please print name and address of assignee
(including zip code number)
- -------------------------------------------------------------------------------
NOTICE
The signature to the foregoing Exercise Form or Assignment must correspond to
the name as written upon the face of the attached Warrant in every particular,
without alteration or enlargement or any change whatsoever.
- -------------------------------------------------------------------------------
8
<PAGE> 80
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") is entered into as of
February __, 1998, by and among Viragen, Inc., a corporation duly incorporated
and existing under the laws of the State of Delaware ("Company"), Swartz
Investments, LLC ("Swartz"), a Georgia limited liability company, and the
subscribers (hereinafter referred to as "Subscribers") to the Company's Offering
("Offering") of up to Five Million Dollars ($5,000,000) of Preferred Stock (the
"Preferred Stock") pursuant to the Regulation D Subscription Agreement between
the Company and each of the Subscribers ("Subscription Agreement").
1. DEFINITIONS. For purposes of this Agreement:
(a) The terms "register," "registered," and "registration"
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Securities Act of 1933 (the
"Act"), and pursuant to Rule 415 under the Act or any successor rule, and the
declaration or ordering of effectiveness of such registration statement or
document;
(b) For purposes hereof, the term "Registrable Securities"
means the shares of the Company's Common Stock together with any capital stock
issued in replacement of, in exchange for or otherwise in respect of such Common
Stock (the "Common Stock"), issuable or issued upon (i) conversion of the
Preferred Stock, (ii) exercise of the warrants to purchase Common Stock to be
issued to the Subscribers in connection with the Offering (the "Subscriber
Warrants") and (iii) exercise of the Warrant to purchase Common stock issued to
Swartz or to persons designated by Swartz in connection with the Offering (the
"Placement Agent Warrant", together with the Subscriber Warrants, collectively
referred to as the "Warrants"), by Swartz, its designees or any subsequent
Holder of the Warrant or portion thereof.
Notwithstanding the above:
1. Common Stock which would otherwise be deemed to be
Registrable Securities shall not constitute Registrable
Securities if and to the extent that those shares of Common
Stock may be resold in a public transaction without volume
limitations or other material restrictions without
registration under the Act, including without limitation,
pursuant to Rule 144 under the Act; and
2. any Registrable Securities resold in a public transaction
shall cease to constitute Registrable Securities.
(c) The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of shares of Common Stock which
have been issued or are issuable upon conversion of the Preferred Stock and
exercise of the then outstanding Warrants at the time of such determination;
(d) The term "Holder" means any person owning or having the
right to acquire Registrable Securities or any permitted assignee thereof;
(e) The term "Initiating Holders" means (i) one or more
holders of Registrable Securities obtained or obtainable upon conversion of at
least Fifty (50) shares of Preferred Stock; and
(f) The term "Filing Date" means the date which is two (2)
months after the Last Closing Date (as defined in the Certificate of Designation
of the Series H Preferred Stock) and the term "Due Date" means the date which is
four (4) months after the Last Closing Date of the Offering.
EXHIBIT E
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2. REQUIRED REGISTRATION.
(a) The Company shall file, by the Filing Date, a registration
statement ("Registration Statement") on Form S-3 (or other suitable form, at the
Company's discretion, but subject to the reasonable approval of Subscribers),
covering the resale of all shares of Registrable Securities then outstanding or
issuable upon conversion of all then outstanding Preferred Stock or upon
exercise of the Warrants. Such Registration Statement shall initially cover the
number of shares issuable upon exercise of the Placement Agent Warrant plus at
least Seven Million Two Hundred Thousand (7,200,000) shares of Common Stock and
(including SEC Rule 416), shall state such Registration Statement also covers
such indeterminate number of additional shares of Common Stock as may become
issuable upon conversion of the Preferred Stock and the exercise of the Warrants
(i) to prevent dilution resulting from stock splits, stock dividends or similar
transactions or (ii) by reason of changes in the Conversion Price of the
Preferred Stock or the Exercise Price of the Warrants in accordance with the
terms thereof, as the case may be. The Company shall use its best efforts to
have the Registration Statement declared effective as soon as possible. In the
event that the Company determines, which determination shall be made by the
Company within five (5) business days after the last business day of each month
after the Due Date or is notified at any time by a Holder, that the Registration
Statement does not cover a sufficient number of shares of Common Stock to effect
the resales of a number of shares of Common Stock equal to one hundred twenty
five percent (125%) of the number of shares of Common Stock issuable to each
Subscriber upon conversion of all outstanding Preferred Stock then eligible for
conversion, at the Conversion Price (as defined in the Certificate of
Designation of the Series A Preferred Stock) in effect on the last business day
of such month (the "Assumed Conversion Price"), and upon exercise of all the
outstanding Warrants (a "Registration Shortfall"), the Company shall, within
five (5) business days, amend the Registration Statement or file a new
Registration Statement (an "Amended" or "New" Registration Statement,
respectively), as appropriate, to add such number of additional shares as would
be necessary to effect the resales of a number of shares of Common Stock equal
to at least one hundred fifty percent (150%) of the number of shares of Common
Stock issuable to each Subscriber upon conversion of all outstanding Preferred
Stock then eligible for conversion, at the Assumed Conversion Price then in
effect and upon exercise of all the outstanding Warrants. If the Registration
Statement is not filed by the Filing Date, Company shall pay the Subscribers an
amount equal to two percent (2%) per month of the aggregate amount of
outstanding Preferred Stock held by Subscriber, accruing daily until the
Registration Statement is filed, payable in cash or Common Stock, at the
Subscriber's option, as set forth below ("Late Filing Payment"). If the
Registration Statement is not declared effective by the Due Date, or if any
Amended or New Registration Statement required to be filed hereunder is not
declared effective within two (2) calendar months of the date it is required to
be filed, the Company shall pay the Subscribers an amount equal to two percent
(2%) per month of the aggregate amount of outstanding Preferred Stock held by
Subscriber, accruing daily until the Registration Statement or a registration
statement filed pursuant to Section 3 of this Agreement is declared effective
(the "Late Registration Payment"). Any Late Filing Payment or Late Registration
Payment shall be payable in cash or Common Stock, at the Subscriber's option, as
follows: If Subscriber elects to be paid in cash, such late Filing Payment or
Late Registration Payment shall be paid to such Subscriber within five (5)
business days following the end of the month in which such Late Registration
Payment was accrued. If Subscriber elects to be paid in Common Stock, such
number of shares shall be determined as follows:
Upon conversion of each share of Preferred Stock, the Company shall
issue to the Subscriber the number of shares of Common Stock determined
as set forth in Section 5(a) of the Certificate of Designation, plus an
additional number of shares of Common Stock attributable to such share
of Preferred Stock (the "Additional Shares") determined as set forth
below:
Additional Shares = Late Registration Payment + Late Filing Payment
-----------------------------------------------
Conversion Price
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With respect to the Preferred Stock, "Conversion Price" has the definition
ascribed to it in the Certificate of Designation.
Such Additional Shares shall also be deemed "Registrable Securities" as defined
herein. The Company covenants to use its best efforts to use Form S-3 (or other
suitable form, at the Company's discretion, but subject to the reasonable
approval of the Subscribers) for the registration required by this Section
during all applicable times contemplated by this Agreement.
(b) The Registration Statement shall be prepared as a "shelf"
registration statement under Rule 415, and shall be maintained effective until
all Registrable Securities cease to exist.
(c) The Company represents that it is presently eligible to
effect the registration contemplated hereby on Form S-3 and will use its best
efforts to continue to take such actions as are necessary to maintain such
eligibility.
3. PIGGYBACK REGISTRATION. If the Registration Statement
described in Section 2 is not effective by the Due Date, and if (but without any
obligation to do so) the Company proposes to register (including for this
purpose a registration effected by the Company for shareholders other than the
Holders) any of its Common Stock under the Act in connection with the public
offering of such securities solely for cash (other than a registration relating
solely for the sale of securities to participants in a Company stock plan or a
registration on Form S-4 promulgated under the Act or any successor or similar
form registering stock issuable upon a reclassification, upon a business
combination involving an exchange of securities or upon an exchange offer for
securities of the issuer or another entity), the Company shall, at such time,
promptly give each Holder written notice of such registration (a "Piggyback
Registration Statement"). Upon the written request of each Holder given by fax
within ten (10) days after mailing of such notice by the Company, the Company
shall cause to be included in such registration statement under the Act all of
the Registrable Securities that each such Holder has requested to be registered
("Piggyback Registration") to the extent such inclusion does not violate the
registration rights of any other security holder of the company granted prior to
the date hereof; nothing herein shall prevent the Company from withdrawing or
abandoning the registration statement prior to its effectiveness. The election
of initiating Holders to participate in a Piggyback Registration Statement shall
not impact the amount payable to investors pursuant to Section 2(a) herein
except that the Late Registration Payment shall cease to accrue, as of the date
of effectiveness of the Piggyback Registration Statement, on a percentage of the
initiating Holders' Preferred Stock equal to the number of shares of Common
Stock included in the Piggyback Registration Statement divided by 7,200,000.
4. LIMITATION ON OBLIGATIONS TO REGISTER.
(a) In the case of a Piggyback Registration on an underwritten
public offering by the Company, if the managing underwriter determines and
advises in writing that the inclusion in the registration statement of all
Registrable Securities proposed to be included would interfere with the
successful marketing of the securities proposed to be registered by the Company,
then the number of such Registrable Securities to be included in the
registration statement, to the extent such Registrable Securities may be
included in such Piggyback Registration Statement shall be allocated among all
Holders who had requested Piggyback Registration pursuant to the terms hereof,
in the proportion that the number of Registrable Securities which each such
Holder, including Swartz, seeks to register bears to the total number of
Registrable Securities sought to be included by all Holders, including Swartz.
If required by the managing underwriter of such an underwritten public offering,
the Holders shall enter into a reasonable agreement limiting the
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<PAGE> 83
number of Registrable Securities to be included in such Piggyback Registration
Statement and the terms, if any, regarding the future sale of such Registrable
Securities.
(b) In the event the Company believes that shares sought to be
registered under Section 2 or Section 3 by Holders do not constitute
"Registrable Securities" by virtue of Section 1(b) of this Agreement, and the
status of those shares as Registrable Securities is disputed, the Company shall
provide, at its expense, an Opinion of Counsel, reasonably acceptable to the
Holders of the Securities at issue (and satisfactory to the Company's transfer
agent to permit the sale and transfer) that those securities may be sold
immediately, without volume limitation or other material restrictions, without
registration under the Act, by virtue of Rule 144 or similar provisions.
5. OBLIGATIONS OF THE COMPANY. Whenever required under this
Agreement to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:
(a) Prepare and file with the Securities and Exchange
Commission ("SEC") a registration statement with respect to such Registrable
Securities and use its best efforts to cause such registration statement to
become effective and to remain effective for the applicable period.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities covered
by such registration statement.
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders of the Registrable Securities covered by such registration statement,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) As promptly as practicable after becoming aware of such
event, notify each Holder of Registrable Securities 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 omits 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 subject to Section
6 use its best efforts promptly to prepare a supplement or amendment to the
registration statement to correct such untrue statement or omission, and deliver
a number of copies of such supplement or amendment to each Holder as such Holder
may reasonably request.
(g) Provide Holders with written notice of the date that a
registration statement registering the resale of the Registrable Securities is
declared effective by the SEC, and the date or dates when the Registration
Statement is no longer effective.
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(h) Provide Holders and their representatives the opportunity
to conduct a reasonable due diligence inquiry of Company's pertinent financial
and other records and make available its officers, directors and employees for
questions regarding such information as it relates to information contained in
the registration statement.
(i) Provide Holders and their representatives the opportunity
to review the registration statement and all amendments thereto a reasonable
period of time prior to their filing with the SEC if so requested by Holder in
writing and to consider reasonable comments from the Holders given within five
(5) business days of the date such statement was received by the Holder.
(j) Provide each Holder with prompt notice of the assurance by
the SEC or any state securities commission or agency of any stop order
suspending the effectiveness of the registration statement or the initiation of
any proceeding for such purpose. The Company shall use its best efforts to
prevent the issuance of any stop order, and, if any is issued to obtain the
removal thereof at the earliest possible date.
(k) Use its best efforts to list the Registrable Securities
covered by the registration statement with all securities exchanges or markets
on which the Common Stock is then listed and prepare and file any required
filing with the NASD or any such exchange or market.
6. BLACK OUT. In the event that, during the time that the
Registration Statement is effective, the Company reasonably determines, based
upon advice of counsel, that due to the existence of material non-public
information, disclosure of such material non-public information would be
required to make the statements contained in the Registration Statement not
misleading, and the Company has a bona fide business purpose for preserving as
confidential such material non-public information, the Company shall have the
right to suspend the effectiveness of the Registration Statement, and no Holder
shall be permitted to sell any Registrable Securities pursuant thereto, until
such time as such suspension is no longer advisable; provided, however, that
such time shall not exceed a period of sixty (60) days. If the Company attempts
to exceed such sixty (60) day limit, the Late Registration Payments shall
accrue. As soon as such suspension is no longer advisable, the Company shall, if
required, promptly, but in no event later than the date the Company files any
documents with the Securities and Exchange Commission ("SEC") referencing such
material information, file with the SEC an amendment to the Registration
Statement disclosing such information and use its best efforts to have such
amendment declared effective as soon as possible.
In the event the effectiveness of the Registration
Statement is suspended by the Company pursuant hereto, the Company shall
promptly notify all Holders whose securities are covered by the Registration
Statement of such suspension, and shall promptly notify each such Holder as soon
as the effectiveness of the Registration Statement has been resumed. The Company
shall be entitled to effect no more than one such suspension during the one (1)
year period following the Last Closing.
7. FURNISH INFORMATION. It shall be a condition precedent to
the obligations of the Company to take any action pursuant to this Agreement
with regard to each selling Holder that such selling Holder shall furnish to the
Company such information regarding Holder, the Registrable Securities held by
it, and the intended method of disposition of such securities as shall be
required to effect the registration of its Registrable Securities or to
determine that registration is not required pursuant to Rule 144 or other
applicable provision of the Act.
8. EXPENSES. All expenses other than underwriting discounts
and commissions and fees and expenses of counsel to the selling Holders incurred
in connection with registrations, filings or qualifications pursuant hereto,
including (without limitation) all
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registration, filing and qualification fees, printers' and accounting fees, fees
and disbursements of counsel for the Company, shall be borne by the Company.
9. INDEMNIFICATION. In the event any Registrable Securities
are included in a Registration Statement or a Piggyback Registration Statement
under this Agreement:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, the officers and directors of each Holder, any
underwriter (as defined in the Act) for such Holder and each person, if any, who
controls such Holder or underwriter within the meaning of the Act or the
Securities Exchange Act of 1934, as amended (the "1934 Act"), against any
losses, claims, damages, or liabilities (joint or several) to which they may
become subject under the Act, the 1934 Act or other federal or state law,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereof) arise out of or are based upon any of the following statements or
omissions: (i) any untrue statement or alleged untrue statement of a material
fact contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, or (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading, and the Company will reimburse each such Holder, officer
or director, underwriter or controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this subsection 9(a) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable in any such case
for any such loss, claim, damage, liability, or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by any such Holder, officer, director, underwriter or
controlling person.
(b) To the extent permitted by law, each selling Holder,
severally and not jointly, will indemnify and hold harmless the Company, each of
its directors, each of its officers who have signed the registration statement,
each person, if any, who controls the Company within the meaning of the Act, any
underwriter and any other Holder selling securities in such registration
statement or any of its directors or officers or any person who controls such
Holder, against any losses, claims, damages, or liabilities (joint or several)
to which the Company or any such director, officer, controlling person, or
underwriter or controlling person, or other such Holder or director, officer or
controlling person may become subject, under the Act, the 1934 Act or other
federal or state law, insofar as such losses, claims, damages, or liabilities
(or actions in respect thereto) arise out of or are based upon any statement or
omission in each case to the extent (and only to the extent) that such statement
or omission is made in reliance upon and in conformity with written information
furnished by such Holder expressly for use in connection with such registration
statement; and each such Holder will reimburse any legal or other expenses
reasonably incurred by the Company and any such director, officer, controlling
person, underwriter or controlling person, other Holder, officer, director, or
controlling person in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this subsection 9(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent shall
not be unreasonably withheld.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 9, 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 the defense
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thereof with counsel mutually satisfactory to the parties; provided, however,
that an indemnified party shall have the right to retain its own counsel, with
the reasonably incurred fees and expenses of one such counsel to be paid by the
indemnifying party, if representation of such indemnified party by the counsel
retained by the indemnifying party would be inappropriate due to actual or
potential conflicting interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 9, but the omission so to deliver written
notice to the indemnifying party will not relieve it of any liability that it
may have to any indemnified party otherwise than under this Section 9.
(d) In the event that the indemnity provided in paragraph (a)
or (b) of this Section 9 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and each Holder agree to
contribute to the aggregate claims, losses, damages and liabilities (including
legal or other expenses reasonably incurred in connection with investigating or
defending same) (collectively "Losses") to which the Company and one or more of
the Holder may be subject in such proportion as is appropriate to reflect the
relative fault of the Company and the Holders in connection with the statements
or omissions which resulted in such Losses. Relative fault shall be determined
by reference to whether any alleged untrue statement or omission relates to
information provided by the Company or by the Holders. The Company and the
Holders agree that it would not be just and equitable if contribution were
determined by pro rata allocation or any other method of allocation which does
not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this paragraph (d), no person guilty of
fraudulent misrepresentation (within the meaning of Section 10(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section 9,
each person who controls a Holder of Registrable Securities within the meaning
of either the Securities Act or the Exchange Act and each director, officer,
partner, employee and agent of a Holder shall have the same rights to
contribution as such holder, and each person who controls the Company within the
meaning of either the Act or the Exchange Act and each director of the Company,
and each officer of the Company who has signed the registration statement, shall
have the same rights to contribution as the Company, subject in each case to the
applicable terms and conditions of this paragraph (d).
(e) The obligations of the Company and Holders under this
Section 9 shall survive the redemption and conversion, if any, of the Preferred
Stock, the completion of any offering of Registrable Securities in a
Registration Statement under this Agreement, and otherwise.
(f) If the Registration Statement or any Piggyback
Registration involves an underwritten offering, the Company shall enter into
such customary agreements for secondary offerings (including a customary
underwriting agreement with the underwriter or underwriters) and take all such
other reasonable actions reasonably requested by the Holders in connection
therewith in order to expedite or facilitate the disposition of such Registrable
Securities and in such connection:
(i) make such representations and warranties to the
Holders and the underwriter or underwriters in form, substance and scope as are
customarily made by issuers to underwriters in secondary offerings;
(ii) cause to be delivered to the sellers of Registrable
Securities and the underwriter or underwriters opinions of independent counsel
to Company on and dated as of the date of delivery of any Registrable Securities
sold pursuant to the Registration Statement, which counsel and opinions (in
form, scope and substance) shall be reasonably satisfactory to the Holders and
the underwriter(s) and their counsel and covering, without limitation, such
matters as the due authorization and issuance of the securities being registered
and compliance with securities
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<PAGE> 87
laws by Company in connection with the authorization, issuance and registration
thereof and other matters that are customarily given to underwriters in
underwritten offerings, addressed to the Holders and each underwriter;
(iii) if required by the underwriters, cause to be
delivered, immediately prior to the effectiveness of the Registration Statement
and at the time of delivery of any Registrable Securities sold pursuant
thereto, a "comfort" letter from Company's independent certified public
accountants addressed to the Holders and each underwriter stating that such
accountants are independent public accountants within the meaning of the
Securities Act and the applicable published rules and regulations thereunder,
and otherwise in customary form and covering such financial and accounting
matters as are customarily covered by letters of the independent certified
public accountants delivered in connection with secondary offerings;
(iv) the underwriting agreement shall include customary
indemnification and contribution provisions to and from the underwriters and
procedures for secondary underwritten offerings; and
(v) deliver such documents and certificates as may be
reasonably requested by the Holders of the Registrable Securities being sold or
the managing underwriter or underwriters to evidence compliance with clause (i)
above and with any customary conditions contained in the underwriting agreement.
10. REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a view to
making available to the Holders the benefits of Rule 144 promulgated under the
Act and any other rule or regulation of the SEC that may at any time permit a
Holder to sell securities of the Company to the public without registration, the
Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144;
(b) use its best efforts to file with the SEC in a timely manner
all reports and other documents required of the Company under the Act and the
1934 Act; and
11. AMENDMENT OF REGISTRATION RIGHTS. Any provision 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 the Holders of
a majority of the Registrable Securities provided that the amendment treats all
Holders equally. Any amendment or waiver effected in accordance with this
paragraph shall be binding upon each Holder, each future Holder, and the
Company.
12. NOTICES. All notices required or permitted under this Agreement
shall be made in writing signed by the party making the same, shall specify the
section under this Agreement pursuant to which it is given, and shall be
addressed if to (i) the Company at: Viragen, Inc., 865 SW 78th Avenue, Suite
100, Plantation, Florida, 33324 Telephone No. (954) 233-8746, Facsimile No.
(954) 233-1414 and (ii) the Holders at their respective last address as the
party as shown on the records of the Company. Any notice, except as otherwise
provided in this Agreement, shall be made by fax and shall be deemed given at
the time of transmission of the fax.
13. TERMINATION. This Agreement shall terminate on the date all
Registrable Securities cease to exist; but without prejudice to (i) the parties'
rights and obligations arising from breaches of this Agreement occurring prior
to such termination (ii) other indemnification obligations under this Agreement.
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14. ASSIGNMENT. No assignment, transfer or delegation, whether
by operation of law or otherwise, of any rights or obligations under this
Agreement by the Company or any Holder, respectively, shall be made without the
prior written consent of the majority in interest of the Holders or the Company,
respectively; provided that the rights of a Holder may be transferred to a
subsequent holder of the Holder's Registrable Securities (provided such
transferee shall provide to the Company, together with or prior to such
transferee's request to have such Registrable Securities included in a Piggyback
Registration, a writing executed by such transferee agreeing to be bound as a
Holder by the terms of this Agreement), and the Company hereby agrees to file a
new registration statement or an amended registration statement including such
transferee or a selling security holder thereunder; and provided further that
the Company may transfer its rights and obligations under this Agreement to a
purchaser of all or a substantial portion of its business if the obligations of
the Company under this Agreement are assumed in connection with such transfer,
either by merger or other operation of law (which may include without limitation
a transaction whereby the Registrable Securities are converted into securities
of the successor in interest) or by specific assumption executed by the
transferee.
15. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
agreements made in and wholly to be performed in that jurisdiction, except for
matters arising under the Act or the Securities Exchange Act of 1934, which
matters shall be construed and interpreted in accordance with such laws.
16. EXECUTION IN COUNTERPARTS PERMITTED. This Agreement may be
executed in any number of counterparts, each of which shall be enforceable
against the parties actually executing such counterparts, and all of which
together shall constitute one (1) instrument.
17. SPECIFIC PERFORMANCE. The Holder shall be entitled to the
remedy of specific performance in the event of the Company's breach of this
Agreement, the parties agreeing that a remedy at law would be inadequate.
18. INDEMNITY. Each party shall indemnify each other party
against any and all claims, damages (including reasonable attorney's fees), and
expenses arising out of the first party's breach of any of the terms of this
Agreement.
19. ENTIRE AGREEMENT; Written Amendments Required. This
Agreement, including the Exhibits attached hereto, the Subscription Agreements,
the Certificates of Designation, the Preferred Stock certificates, the Escrow
Agreement, and the other documents delivered pursuant hereto constitute the full
and entire understanding and agreement between the parties with regard to the
subjects hereof and thereof, and no party shall be liable or bound to any other
party in any manner by any warranties, representations or covenants except as
specifically set forth herein or therein. Except as expressly provided herein,
neither this Agreement nor any
[INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of this ____ day of February, 1998.
VIRAGEN, INC.
By:
--------------------------------
Dennis W. Healey, Executive Vice
President/CFO
Address: Viragen, Inc.
865 SW 78th Avenue, Suite 100
Plantation, Florida 33324
Telephone No. (954) 233-8746
Facsimile No. (954) 233-1416
SWARTZ INVESTMENTS, LLC
By:
--------------------------------
Eric S. Swartz, President
Address: 1080 Holcomb Bridge Road
Bldg. 200, Suite 285
Roswell, GA 30076
Telephone: (770) 640-8130
Facsimile: (770) 640-7150
INVESTOR(S)
------------------------------------
Investor's Name
By:
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(Signature)
Address:
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VIRAGEN, INC.
REGULATION D SUBSCRIPTION AGREEMENT
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE OR OTHER SECURITIES
AUTHORITIES. THEY MAY NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THOSE SECURITIES LAWS.
THIS SUBSCRIPTION AGREEMENT DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO PURCHASE, ANY OF THE SECURITIES DESCRIBED
HEREIN BY OR TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION WOULD BE UNLAWFUL. THESE SECURITIES HAVE NOT BEEN
RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES AUTHORITIES, NOR HAVE
SUCH AUTHORITIES REVIEWED OR DETERMINED THE ACCURACY OF THIS DOCUMENT.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK.
SUBSCRIBERS MUST RELY ON THEIR OWN ANALYSIS OF THE INVESTMENT AND
ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET FORTH IN THE
ATTACHED DISCLOSURE DOCUMENTS AS EXHIBIT H.
SEE ADDITIONAL LEGENDS AT SECTIONS 3.7 and 9.
THIS REGULATION D SUBSCRIPTION AGREEMENT (this "Agreement") is
made as of the _____ day of April, 1998, by and between Viragen, Inc., a
corporation duly organized and existing under the laws of the State of Delaware
(the "Company"), and the undersigned subscriber executing this Agreement
("Subscriber").
THE PARTIES HEREBY AGREE AS FOLLOWS:
This Agreement is executed by Subscriber in connection with the offer
by the Company and the purchase by Subscriber of Series I Preferred Stock, $.01
par value (the "Preferred Stock"), of the Company. The Preferred Stock is being
offered at a purchase price of Ten Thousand Dollars ($10,000), U.S., per share,
in minimum subscription amounts of at least twenty five (25) shares ($250,000),
and increments of five (5) shares ($50,000) in excess thereof, with an aggregate
offering amount of Two Hundred (200) shares of Preferred Stock, or Two Million
Dollars ($2,000,000) (the "Offering Amount"), (collectively, the "Offering").
The terms of the Preferred Stock, including the terms on which the Preferred
Stock may be converted into common stock, $.01 par value, of the Company (the
"Common Stock"), are set forth in the Certificate of Designation of Series I
Preferred Stock (the "Certificate of Designation"), substantially in the form
attached hereto as Exhibit A. The Preferred Stock is accompanied by (i) a
warrant or warrants to purchase a number of shares of Common Stock of the
Company equal to ten percent (10%) multiplied by the aggregate purchase price of
the Subscriber's Preferred Stock outstanding on the date which is nine (9)
months following February 17, 1998 (the "Nine Month Date") divided by the Market
Price of the Common Stock on the Nine Month Date (the "Nine Month Warrants");
(ii) a warrant or warrants to purchase a number of shares of Common Stock of the
Company equal to fifteen percent (15%) multiplied by the aggregate purchase
price of the Subscriber's Preferred
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Stock outstanding on the date which is twelve (12) months following February 17,
1998 (the "Twelve Month Date") divided by the Market Price of the Common Stock
on the Twelve Month Date (the "Twelve Month Warrants"); and (iii) a warrant or
warrants to purchase a number of shares of Common Stock of the Company equal to
twenty percent (20%) multiplied by the aggregate purchase price of the
Subscriber's Preferred Stock outstanding on the date which is fifteen (15)
months following February 17, 1998 (the "Fifteen Month Date") divided by the
Market Price of the Common Stock on the Fifteen Month Date (the "Fifteen Month
Warrants", together with the Nine Month Warrants and the Twelve Month Warrants,
collectively referred to as the "Conversion Warrants"). The terms of the
Warrants are set forth in the form of the Nine Month, Twelve Month and Fifteen
Month Warrants attached hereto as Exhibit B, Exhibit C, and Exhibit D,
respectively. For purposes hereof, "Market Price" shall equal the average of the
two (2) lowest Closing Bid Prices (as that term is defined in the Certificate of
Designation) for the twenty (20) trading days immediately preceding the date in
question. The solicitation of this subscription and, if accepted by the Company,
the offer and sale of the Preferred Stock are being made in reliance upon the
provisions of Regulation D ("Regulation D") promulgated under the Securities Act
of 1933, as amended ("the Act"). The Preferred Stock and the Common Stock
issuable upon conversion thereof (the "Conversion Shares"), together with the
Conversion Warrants and the Common Stock issuable upon exercise thereof (the
"Warrant Shares") are sometimes referred to herein singularly as "Security" and
collectively as the "Securities."
It is agreed as follows:
1. Offering
1.1 Offer to Subscribe; Purchase Price and Closing; and
Placement Fees.
Subject to satisfaction of the conditions to closing set forth in Section 1.2
below, Subscriber hereby offers to subscribe for and purchase Preferred Stock
and accompanying Conversion Warrants, for the aggregate purchase price in the
amount set forth in Section 10 of this Agreement, in accordance with the terms
and conditions of this Agreement. Assuming that the Offering Amount and
corresponding subscription agreements accepted by the Company are received into
the Company's designated escrow account for this Offering established pursuant
to the Escrow Agreement and Instructions (the "Escrow Agreement") by and among
the Company, First Union National Bank of Georgia (the "Escrow Agent") and the
Placement Agent (as defined below) (the "Escrow Account"), the closing of a sale
and purchase of Preferred Stock as to each Subscriber (the "Closing") shall be
deemed to occur when this Agreement has been executed by both Subscriber and the
Company and full payment shall have been made by Subscriber, by wire transfer to
the Escrow Account as set forth in Section 7.1(a) for payment in consideration
for the Company's delivery of certificates representing the Preferred Stock
subscribed for.
The parties hereto acknowledge that Swartz Investments, LLC is acting as
placement agent (the "Placement Agent") for this Offering and will be
compensated by the Company in cash and warrants to purchase Common Stock. The
Placement Agent has acted solely as placement agent in connection with the
Offering by the Company of the Preferred Stock pursuant to this Agreement. The
information and data contained in the Disclosure Documents (as defined in
Section 2.2.4) have not been subjected to independent verification by the
Placement Agent, and no representation or warranty is made by the Placement
Agent as to the accuracy or completeness of the information contained in the
Disclosure Documents.
1.2 Conditions to Subscriber's Obligations. Subscriber's
obligations hereunder are conditioned upon all of the following:
(a) the following documents shall have been deposited
with the Escrow Agent: the Registration Rights
Agreement, substantially in the form attached hereto
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as Exhibit E (the "Registration Rights Agreement")
(executed by the Company), an opinion of counsel,
substantially in the form attached hereto as Exhibit
F (the "Opinion of Counsel") (signed by the Company's
counsel), the Irrevocable Instructions to Transfer
Agent, substantially in the form attached hereto as
Exhibit G (the "Irrevocable Instructions to Transfer
Agent")(executed by the Company and the Company's
transfer agent, the "Transfer Agent"), and the
Certificate of Designation, substantially in the form
attached hereto as Exhibit A (together with evidence
showing that it has been filed with the Secretary of
State of Delaware); certificates representing the
Preferred Stock issued in the name of the Subscriber;
the Conversion Warrants issued in the name of the
Subscriber;
(b) the Company's Common Stock shall be listed for and
actively trading on the Nasdaq National Market
System;
(c) other than losses described in the Risk Factors as
set forth in Section 2.2.4 below there have been no
material adverse changes in the Company's business
prospects or financial condition since the date of
the last balance sheet included in the Disclosure
Documents (defined below in Section 2.2.4), including
but not limited to incurring material liabilities;
(d) the representations and warranties of the Company are
true and correct in all material respects at the
Closing as if made on such date, and the Company
shall deliver a certificate, signed by an officer of
the Company, to such effect to the Escrow Agent;
(e) the Offering Amount and corresponding subscription
agreements accepted by the Company shall have been
received by the Escrow Agent; and
(f) the Company shall have reserved for issuance a
sufficient number of shares of Common Stock to effect
conversions of the Preferred Stock and exercise of
the Conversion Warrants, which number of shares shall
initially be equal to Two Million Eight Hundred
Thousand (2,800,000) shares.
2. Representations and Warranties of Subscriber. Subscriber hereby
represents and warrants to the Company as follows:
2.1 Accredited Investor. Subscriber is an accredited investor,
as defined in Rule 501 of Regulation D, and has checked the applicable box set
forth in Section 10 of this Agreement.
2.2 Investment Experience; Access to Information; Independent
Investigation.
2.2.1 Access to Information. Subscriber or
Subscriber's professional advisor has been granted the opportunity to ask
questions of and receive answers from representatives of the Company, its
officers, directors, employees and agents concerning the terms and conditions of
this Offering, the Company and its business and prospects, and to obtain any
additional information which Subscriber or Subscriber's professional advisor
deems necessary to verify the accuracy and completeness of the information
received.
2.2.2 Reliance on Own Advisors. Subscriber has relied
completely on the advice of, or has consulted with, Subscriber's own personal
tax, investment, legal or other advisors and has not relied on the Company or
any of its affiliates, officers, directors, attorneys, accountants or any
affiliates of any thereof and each other person, if any, who controls any
thereof, within the meaning of Section 15 of the Act for any tax or legal advice
(other than reliance
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on information in the Disclosure Documents as defined in Section 2.2.4 below and
on the Opinion of Counsel). The foregoing, however, does not limit or modify
Subscriber's right to rely upon representations and warranties of the Company in
Section 4 of this Agreement.
2.2.3 Capability to Evaluate. Subscriber has such
knowledge and experience in financial and business matters so as to enable such
Subscriber to utilize the information made available to it in connection with
the Offering in order to evaluate the merits and risks of the prospective
investment, which are substantial, including without limitation those set forth
in the Disclosure Documents (as defined in Section 2.2.4 below).
2.2.4 Disclosure Documents. Subscriber, in making
Subscriber's investment decision to subscribe for the Securities hereunder,
represents that (a) Subscriber has received and had an opportunity to review (i)
the Company's Annual Report on Form 10-K for the year ended June 30, 1997 (ii)
the Company's quarterly report on Form 10-Q for the quarter ended December 31,
1997, (iii) the Risk Factors, attached as Exhibit H, (iv) the Capitalization
Schedule, attached as Exhibit I, (the "Capitalization Schedule") and (v) the Use
of Proceeds Schedule, attached as Exhibit J, (the "Use of Proceeds Schedule")
(b) Subscriber has read, reviewed, and relied solely on the documents described
in (a) above, the Company's representations and warranties and other information
in this Agreement, including the exhibits, any other written information
prepared by the Company which has been specifically provided to Subscriber in
connection with this Offering (the documents described in Section 2.2.4 (a) and
(b) are collectively referred to as the "Disclosure Documents"), and an
independent investigation made by Subscriber and Subscriber's representatives,
if any; (c) Subscriber has, prior to the date of this Agreement, been given an
opportunity to review material contracts and documents of the Company which have
been filed as exhibits to the Company's filings under the Act and the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and has had an opportunity
to ask questions of and receive answers from the Company's officers and
directors; and (d) is not relying on any oral representation of the Company or
any other person, nor any written representation or assurance from the Company
other than those referred to in Section 4 or otherwise contained in the
Disclosure Documents or incorporated herein or therein. The foregoing, however,
does not limit or modify Subscriber's right to rely upon representations and
warranties of the Company in Section 4 of this Agreement. Subscriber
acknowledges and agrees that the Company has no responsibility for, does not
ratify, and is under no responsibility whatsoever to comment upon or correct any
reports, analyses or other comments made about the Company by any third parties,
including, but not limited to, analysts' research reports or comments
(collectively, "Third Party Reports"), and Subscriber has not relied upon any
Third Party Reports, including any provided by the Placement Agent, in making
the decision to invest.
2.2.5 Investment Experience; Fend for Self.
Subscriber has substantial experience in investing in securities and he, she or
it has made investments in securities other than those of the Company.
Subscriber acknowledges that Subscriber is able to fend for Subscriber's self in
the transaction contemplated by this Agreement, that Subscriber has the ability
to bear the economic risk of Subscriber's investment pursuant to this Agreement
and that Subscriber is an "Accredited Investor" by virtue of the fact that
Subscriber meets the investor qualification standards set forth in Section 2.1
above. Subscriber has not been organized for the purpose of investing in
securities of the Company, although such investment is consistent with
Subscriber's purposes.
2.3 Exempt Offering Under Regulation D.
2.3.1 Investment; No Distribution. Subscriber is
acquiring the Securities to be issued and sold hereunder for his, her or its own
account (or a trust account if such Subscriber is a trustee) for investment and
not as a nominee and not with a present view to the distribution thereof.
Subscriber is aware that there are legal and practical limits on Subscriber's
ability to sell or dispose of the Securities and, therefore, that Subscriber
must bear the economic
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risk of the investment for an indefinite period of time and has adequate means
of providing for Subscriber's current needs and possible personal contingencies
and has need for only limited liquidity of this investment. Subscriber's
commitment to illiquid investments is reasonable in relation to Subscriber's net
worth. By making the representations in this Section 2.3.1, the Subscriber does
not agree to hold the Securities for any minimum or other specific term and
reserves the right to dispose of the Securities at any time in accordance with
or pursuant to a registration statement or an exemption from registration under
the Act, except as otherwise required in this Agreement or in the Registration
Rights Agreement. Subscriber has reached the age of majority (if an individual)
according to the laws of the state in which he resides.
2.3.2 No General Solicitation. The Securities were
not offered to Subscriber through, and Subscriber is not aware of, any form of
general solicitation or general advertising, including, without limitation, (i)
any advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio, and
(ii) any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising.
2.3.3 Restricted Securities. Subscriber understands
that the Preferred Stock and the Conversion Warrants issued at Closing are, and
the Conversion Shares and the Warrant Shares will be, characterized as
"restricted securities" under the federal securities laws inasmuch as they are
being acquired from the Company in a transaction not involving a public offering
and that under such laws and applicable regulations such securities may not be
transferred or resold without registration under the Act or pursuant to an
exemption therefrom. In this connection, Subscriber represents that Subscriber
is familiar with Rule 144 under the Act, as presently in effect, and understands
the resale limitations imposed thereby and by the Act.
2.3.4 Disposition. Without in any way limiting the
representations set forth above, Subscriber further agrees not to make any
disposition of all or any portion of the Securities unless and until:
(a) There is then in effect a registration
statement under the Act covering such proposed disposition and such disposition
is made in accordance with such registration statement; or
(b) (i) Subscriber shall have notified the
Company of the proposed disposition and shall have furnished the Company with a
detailed statement of the circumstances surrounding the proposed disposition,
and (ii) if reasonably requested by the Company, Subscriber shall have furnished
the Company with an opinion of counsel, reasonably satisfactory to the Company,
that such disposition will not require registration of the Securities under the
Act. It is agreed that the Company will not require opinions of counsel for
transactions made pursuant to Rule 144 except in unusual circumstances.
2.4 Due Authorization.
2.4.1 Authority. Subscriber, if executing this
Agreement in a representative or fiduciary capacity, has full power and
authority to execute and deliver this Agreement and each other document included
herein for which a signature is required in such capacity and on behalf of the
subscribing individual, partnership, trust, estate, corporation or other entity
for whom or which Subscriber is executing this Agreement.
2.4.2 Due Authorization. If Subscriber is a
corporation, Subscriber is duly and validly organized, validly existing and in
good tax and corporate standing as a corporation under the laws of the
jurisdiction of its incorporation with full power and authority to purchase the
Securities to be purchased by Subscriber and to execute and deliver this
Agreement.
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2.4.3 Partnerships. If Subscriber is a partnership,
the representations, warranties, agreements and understandings set forth above
are true with respect to all partners of Subscriber (and if any such partner is
itself a partnership, all persons holding an interest in such partnership,
directly or indirectly, including through one or more partnerships), and the
person executing this Agreement has made due inquiry to determine the
truthfulness of the representations and warranties made hereby.
2.4.4 Representatives. If Subscriber is purchasing in
a representative or fiduciary capacity, the representations and warranties shall
be deemed to have been made on behalf of the person or persons for whom
Subscriber is so purchasing.
2.4 Subscriber's Broker/Dealer Status. Subscriber is not a
licensed NASD broker-dealer and does not engage in the business of a
broker-dealer.
3. Acknowledgments Subscriber is aware that:
3.1 Risks of Investment. Subscriber recognizes that an
investment in the Company involves substantial risks, including the potential
loss of Subscriber's entire investment herein. Subscriber recognizes that this
Agreement and the exhibits hereto do not purport to contain all the information
which would be contained in a registration statement under the Act;
3.2 No Government Approval. No federal or state agency has
passed upon the Securities, recommended or endorsed the Offering, or made any
finding or determination as to the fairness of this transaction;
3.3 No Registration. The Securities and any component thereof
have not been registered under the Act or any applicable state securities laws
by reason of exemptions from the registration requirements of the Act and such
laws, and may not be sold, pledged, assigned or otherwise disposed of in the
absence of an effective registration of the Securities and any component thereof
under the Act or unless an exemption from such registration is available;
3.4 Restrictions on Transfer. Subscriber may not attempt to
sell, transfer, assign, pledge or otherwise dispose of all or any portion of the
Securities or any component thereof in the absence of either an effective
registration statement or an exemption from the registration requirements of the
Act and applicable state securities laws;
3.5 No Assurances of Registration. There can be no assurance
that any registration statement will become effective at the scheduled time.
Therefore, Subscriber may bear the economic risk of Subscriber's investment for
an indefinite period of time;
3.6 Exempt Transaction. Subscriber understands that the
Securities are being offered and sold in reliance on specific exemptions from
the registration requirements of federal and state law and that the
representations, warranties, agreements, acknowledgments and understandings set
forth herein are being relied upon by the Company in determining the
applicability of such exemptions and the suitability of Subscriber to acquire
such Securities;
3.7 Legends. It is understood that the certificates evidencing
the Preferred Stock, the Conversion Warrants, the Conversion Shares and the
Warrant Shares shall bear the following legend (the "Legend") (prior to
registration as provided in Section 5.3):
"The securities represented hereby have not been registered
under the Securities Act of 1933, as amended, or applicable
state securities laws, nor the securities laws of any other
jurisdiction. They may not be sold or transferred in the
absence of an
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effective registration statement under those securities laws
or pursuant to an exemption therefrom."
4. Representations and Warranties of the Company . The Company hereby
makes the following representations and warranties to Subscriber (which shall be
true at the signing of this Agreement, as of Closing, and as of any such later
date as contemplated hereunder) and agrees with Subscriber that:
4.1 Organization, Good Standing, and Qualification. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware USA and has all requisite corporate
power and authority to carry on its business as now conducted and as proposed to
be conducted. The Company is duly qualified to transact business and is in good
standing in each jurisdiction in which the failure to so qualify would have a
material adverse effect on the business or properties of the Company and its
subsidiaries taken as a whole. The Company is not the subject of any pending,
threatened or, to its knowledge, contemplated investigation or administrative or
legal proceeding by the Internal Revenue Service, the taxing authorities of any
state or local jurisdiction, or the Securities and Exchange Commission ("SEC"),
or any state securities commission, or any other governmental entity, which have
not been disclosed in the Disclosure Documents.
4.2 Corporate Condition. The Company's condition is, in all
material respects, as described in the Disclosure Documents, except for changes
in the ordinary course of business and normal year-end adjustments that are not,
in the aggregate, materially adverse to the Company. There have been no material
adverse changes to the Company's business, financial condition, or prospects
since the date of such Disclosure Documents. The financial statements contained
in the Disclosure Documents have been prepared in accordance with generally
accepted accounting principles, consistently applied (except as otherwise
permitted by Regulation S-X of the Exchange Act), and fairly present the
consolidated financial condition of the Company as of the dates of the balance
sheets included therein and the consolidated results of its operations and cash
flows for the periods then ended. Without limiting the foregoing, there are no
material liabilities, contingent or actual, that are not disclosed in the
Disclosure Documents (other than liabilities incurred by the Company in the
ordinary course of its business, consistent with its past practice, after the
period covered by the Disclosure Documents). The Company has paid all material
taxes which are due, except for taxes which it reasonably disputes. There is no
material claim, litigation, or administrative proceeding pending, or, to the
best of the Company's knowledge, threatened against the Company, except as
disclosed in the Disclosure Documents. This Agreement and the Disclosure
Documents do not contain any untrue statement of a material fact and do not omit
to state any material fact required to be stated therein or herein necessary to
make the statements contained therein or herein not misleading in the light of
the circumstances under which they were made. No event or circumstance exists
relating to the Company which, under applicable law, requires public disclosure
but which has not been so publicly announced or disclosed.
4.3 Authorization. Except for the filing of the Certificate of
Designation, all corporate action on the part of the Company by its officers,
directors and shareholders necessary for the authorization, execution and
delivery of this Agreement, the performance of all obligations of the Company
hereunder and the authorization, issuance and delivery of the Preferred Stock
being sold hereunder and the issuance (and/or the reservation for issuance) of
the Conversion Shares, the Conversion Warrants and the Warrant Shares have been
taken, and this Agreement, the Certificate of Designation, the Irrevocable
Instructions to Transfer Agent, the Escrow Agreement and the Registration Rights
Agreement constitute valid and legally binding obligations of the Company,
enforceable in accordance with their terms, except insofar as the enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, or other
similar laws affecting creditors' rights generally or by principles governing
the availability of equitable remedies. The
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Company has obtained all consents and approvals required for it to execute,
deliver and perform each agreement referenced in the previous sentence.
4.4 Valid Issuance of Preferred Stock and Common Stock. The
Preferred Stock and the Conversion Warrants are duly authorized and, when
issued, sold and delivered in accordance with the terms hereof, for the
consideration expressed herein, will be validly issued, fully paid and
nonassessable and, based in part upon the representations of Subscriber in this
Agreement, will be issued in compliance with all applicable U.S. federal and
state securities laws. The Conversion Shares and the Warrant Shares are duly
authorized and, when issued in accordance with the terms of the Certificate of
Designation or the Conversion Warrants, as applicable, shall be duly and validly
issued and outstanding, fully paid and nonassessable, and based in part on the
representations and warranties of Subscriber of the Preferred Stock, will be
issued in compliance with all applicable U.S. federal and state securities laws.
The Preferred Stock, the Conversion Shares, the Conversion Warrants and the
Warrant Shares will be issued free of any preemptive rights. The Company
currently has Two Million Eight Hundred Thousand (2,800,000) Conversion Shares
reserved for issuance upon conversion of the Preferred Stock, and upon exercise
of the Conversion Warrants.
4.5 Compliance with Other Instruments. The Company is not in
violation or default of any provisions of its Certificate of Incorporation or
Bylaws each as amended, and in effect on and as of the date of the Agreement or
of any material provision of any material instrument or material contract to
which it is a party or by which it is bound or, to its knowledge, of any
provision of any federal or state judgment, writ, decree, order, statute, rule
or governmental regulation applicable to the Company, which would have a
material adverse affect on the Company's business or prospects, except as
described in the Disclosure Documents. The execution, delivery and performance
of this Agreement and the other agreements entered into in conjunction with the
Offering and the consummation of the transactions contemplated hereby will not
result in any such violation or be in conflict with or constitute, with or
without the passage of time and giving of notice, either a default under any
such provision, instrument or contract or an event which results in the creation
of any lien, charge or encumbrance upon any assets of the Company.
4.6 Reporting Company. The Company is subject to the reporting
requirements of the Exchange Act, has a class of securities registered under
Section 12 of the Exchange Act, and has filed all reports required by the
Exchange Act since 1990. The Company undertakes to furnish Subscriber with
copies of such reports as may be reasonably requested by Subscriber prior to
consummation of this Offering and thereafter, to make such reports available, as
long as Subscriber holds the Securities. The Company is not in violation of the
listing requirements of the Nasdaq National Market System and does not
reasonably anticipate that the Common Stock will be delisted by the Nasdaq
National Market System for the foreseeable future. The Company has filed all
reports required under the Exchange Act. The Company has not furnished to the
Subscriber any material nonpublic information concerning the Company
4.7 Capitalization. The capitalization of the Company as of
December 31, 1997, is, and the capitalization as of the Closing, after taking
into account the offering of the Securities contemplated by this Agreement and
all other share issuances occurring prior to this Offering, will be, as set
forth in the Capitalization Schedule as set forth in Exhibit I. Except as
disclosed in the Capitalization Schedule and in the Company's Annual Report on
Form 10-K for the year ended June 30, 1997, as of the date of this Agreement,
(i) there are no outstanding options, warrants, scrip, rights to subscribe for,
calls or commitments of any character whatsoever relating to, or securities or
rights convertible into or exercisable or exchangeable for, any shares of
capital stock of 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,
and (ii) other than the current Registration Statement for the Company's
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Series F Preferred Stock and for certain Selling Security Holders underlying
warrants issued prior to 1996 or for shares of Common Stock underlying warrants
issued in connection with the Company's Preferred Stock Series as described in
the Company's Form 10-K Annual Report for the year ended June 30, 1997, there
are no agreements or arrangements under which the Company or any of its
subsidiaries is obligated to register the sale of any of its or their securities
under the Act (except the Registration Rights Agreement).
4.8 Intellectual Property. The Company has valid,
unrestricted and exclusive patents, trademarks, trademark registrations, trade
names, copyrights, know-how, technology and other intellectual property
necessary to the conduct of its business as set forth on Exhibit K-1. The
Company has granted such licenses or has assigned or otherwise transferred a
portion of (or all of) such valid, unrestricted and exclusive patents,
trademarks, trademark registrations, trade names, copyrights, know-how,
technology and other intellectual property necessary to the conduct of its
business as set forth on Exhibit K-2. The Company has been granted licenses,
know-how, technology and/or other intellectual property necessary to the conduct
of its business as set forth on Exhibit K-3. To the best of the Company's
knowledge, the Company is not infringing on the intellectual property rights of
any third party, nor is any third party infringing on the Company's intellectual
property rights. There are no restrictions in any agreements, licenses,
franchises, or other instruments which preclude the Company from engaging in its
business as presently conducted.
4.9 Use of Proceeds. As of the date hereof, the Company
expects to use the proceeds from this Offering (less fees and expenses) for the
purposes and in the approximate amounts set forth on the Use of Proceeds
Schedule set forth as Exhibit J hereto. These purposes and amounts are estimates
and are subject to change without notice to any Subscriber.
4.10 No Rights of Participation. No person or entity,
including, but not limited to, current or former shareholders of the Company,
underwriters, brokers, agents or other third parties, has any right of first
refusal, preemptive right, right of participation, or any similar right to
participate in the financing contemplated by this Agreement which has not been
waived.
4.11 Company Acknowledgment. The Company hereby acknowledges
that Subscriber may elect to hold the Securities for various periods of time, as
permitted by the terms of this Agreement, the Certificate of Designation, the
Conversion Warrants, and other agreements contemplated hereby, and the Company
further acknowledges that Subscriber and the Placement Agent have made no
representations or warranties, either written or oral, as to how long the
Securities will be held by Subscriber or regarding Subscriber's trading history
or investment strategies.
4.12 Termination Date of Offering. In no event shall any
Closing of a sale and purchase of the Preferred Stock and accompanying
Conversion Warrants occur later than April 30, 1998, which date can be extended
by up to ten (10) days upon written approval by the Company and the Placement
Agent.
4.13 Underwriter's Fees and Rights of First Refusal. The
Company is not obligated to pay any compensation or other fees, costs or related
expenditures in cash or securities to any underwriter, broker, agent or other
representative other than the Placement Agent in connection with this Offering.
4.14 Current Public Information. The Company is currently
eligible to register the resale of its Common Stock on a registration statement
on Form S-3 under the Act.
4.15 No Integrated Offering. Neither the Company, nor any of
its affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any of
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the Company's securities or solicited any offers to buy any security under
circumstances that would prevent the parties hereto from consummating the
transactions contemplated hereby pursuant to an exemption from registration
under the Act pursuant to the provisions of Regulation D. The Company has not
engaged in any form of general solicitation or advertising in connection with
the offering of Series I Preferred Stock.
4.16 Acknowledgment of Dilution. The number of Conversion
Shares issuable upon conversion of the Preferred Stock may increase
substantially in certain circumstances, including the circumstance wherein the
trading price of the Common Stock declines. The Company's executive officers and
directors have studied and fully understand the nature of the Securities being
sold hereunder and recognize that they have a potential dilutive effect. The
board of directors of the Company has concluded in its good faith business
judgment that such issuance is in the best interests of the Company. The Company
acknowledges that its obligation to issue Conversion Shares upon conversion of
the Preferred Stock is binding upon it and enforceable regardless of the
dilution that such issuance may have on the ownership interests of the other
stockholders.
4.17 Foreign Corrupt Practices. Neither the Company, nor any
of its subsidiaries, nor any director, officer, agent, employee or other person
acting on behalf of the Company or any subsidiary has, in the course of its
actions for, or on behalf of, the Company, used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses relating
to political activity; made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds;
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended; or made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment to any foreign or domestic
government official or employee.
4.18 Key Employees. Each Key Employee (as defined below) is
currently serving the Company in the capacity disclosed in Exhibit M. No Key
Employee, to the best knowledge of the Company and its subsidiaries, is, or is
now expected to be, in violation of any material term of any employment
contract, confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract or agreement or any restrictive
covenant, and the continued employment of each Key Employee does not subject the
Company or any of its subsidiaries to any liability with respect to any of the
foregoing matters. No Key Employee has, to the best knowledge of the Company and
its subsidiaries, any intention to terminate his employment with, or services
to, the Company or any of its subsidiaries. "Key Employee" means each of Gerald
Smith, Chairman & President, Robert H. Zeiger, CEO, Dr. Jay Sawardeker, COO,
Dennis H. Healey, CFO and Joseph P. Morris, Vice President of Research &
Development.
4.19 Representations Correct. The foregoing representations,
warranties and agreements are true, correct and complete in all material
respects, and shall survive the Closing and the issuance of the shares of
Preferred Stock.
4.20 Press Release Approval. Any press release or other
publicity concerning this transaction (not including the registration statement
that is required to be filed under the Registration Rights Agreement) and the
Subscribers shall be submitted to the Subscriber for comment and prior approval
at least one (1) business day prior to publishing.
5. Covenants of the Company
5.1 Independent Auditors. The Company shall, until at least
February 19, 2001, maintain as its independent auditors an accounting firm
authorized to practice before the SEC.
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5.2 Corporate Existence and Taxes. The Company shall, until at
least the later of (i) February 19, 2001 or (ii) the conversion or redemption of
all of the Preferred Stock purchased pursuant to this Agreement, and the
exercise of the Conversion Warrants, maintain its corporate existence in good
standing and remain a Reporting Company (provided, however, that the foregoing
covenant shall not prevent the Company from entering into any merger or
corporate reorganization as long as the surviving entity in such transaction, if
not the Company, assumes the Company's obligations with respect to the Preferred
Stock and has Common Stock listed for trading on a stock exchange or on Nasdaq
and is a "Reporting Issuer") and shall pay all its taxes when due except for
taxes which the Company disputes.
5.3 Registration Rights. The Company will enter into a
registration rights agreement covering the resale of the Conversion Shares and
the Warrant Shares substantially in the form of the Registration Rights
Agreement attached as Exhibit E.
5.4 Notification of Final Closing Date by Company. Within five
(5) business days after the last Closing of a sale and purchase of Series I
Preferred Stock, the Company shall notify Subscriber in writing that the last
Closing has occurred, the date of the last Closing, the dates that Subscriber is
entitled to convert Subscriber's Preferred Stock, and the name and telephone
number of an administrative contact person at the Company whom Subscriber may
contact regarding information related to conversion of the Preferred Stock as
contemplated by the Certificate of Designation.
5.5 Asset Transfers. The Company shall not transfer, sell,
convey or otherwise dispose of any of its material assets to any Subsidiary or
affiliate except for a cash or cash equivalent consideration and for a proper
business purpose, while any of the Series I Preferred Stock are outstanding,
except for (i) transfers or other dispositions to the Company's subsidiary,
Viragen USA, Inc., relating to research and development partnerships, and (ii)
licensing agreements in the ordinary course of business.
5.6 Capital Raising Limitations; Rights of First Refusal.
5.6.1 Capital Raising Limitations. The Company shall
not issue any debt or equity securities for cash in private capital raising
transactions ("Future Offerings") for a period beginning on the date hereof and
ending One Hundred and Eighty (180) days after February 19, 1998 without
obtaining the prior written approval of Subscribers holding a majority of the
purchase price of Preferred Stock then outstanding.
5.6.2 Right of First Offer. The Company agrees that,
during the period beginning on the date hereof and terminating on February 19,
1999, the Company will not, without the prior written consent of each Subscriber
(which shall be deemed given for the warrants to purchase Common Stock issued or
to be issued to the Placement Agent in consideration of its services in
connection with this Agreement and the transactions contemplated hereby) issue
or sell, or agree to issue or sell any equity or debt securities of the Company
or any of its subsidiaries (or any security convertible into or exercisable or
exchangeable, directly or indirectly, for equity or debt securities of the
Company or any of its subsidiaries) ("Future Offerings") unless the Company
shall have first delivered to each Subscriber at least thirty (30) days prior to
the closing of such Future Offering, written notice describing the proposed
Future Offering, including the terms and conditions thereof, and providing each
Subscriber and its affiliates an option during the twenty (20) day period
following delivery of such notice to purchase up to the full amount of the
securities being offered in the Future Offering on the same terms as
contemplated by such Future Offering (the limitations referred to in this
sentence are collectively referred to as the "Capital Raising Limitations").
Notwithstanding the foregoing, if any Subscriber chooses not to participate in
any Future Offering, then any debt or equity security issued as a result of said
Future Offering will be
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ineligible for resale and/or conversion, as the case may be, until the date
which is nine (9) months after February 19, 1998.
5.6.3 Amount of Subscriber's Right of First Refusal.
The amount of securities which a Subscriber is entitled to purchase in such a
Future Offering shall be a number obtained by multiplying the aggregate amount
of securities being offered in the Future Offering by a fraction, the numerator
of which is the purchase price of the Preferred Stock purchased by the
Subscriber pursuant to this Agreement and the denominator of which is the
aggregate dollar amount of Preferred Stock placed in this Offering.
5.6.4 Exceptions to the Capital Raising Limitation.
The Capital Raising Limitations shall not apply to any transaction involving
issuances of securities in connection with a merger, consolidation, acquisition
or sale of assets, or in connection with any strategic partnership or joint
venture (the primary purpose of which is not to raise equity capital), or in
connection with the disposition or acquisition of a business, product or license
by the Company or exercise of options by employees, consultants or directors.
The Capital Raising Limitations also shall not apply to (a) the issuance of
securities pursuant to an underwritten public offering, (b) the issuance of
securities upon exercise or conversion of the Company's options, warrants or
other convertible securities outstanding as of the date hereof, (c) the grant of
additional options or warrants, or the issuance of additional securities, under
any Company stock option or restricted stock plan for the benefit of the
Company's employees, directors or consultants, (d) the grant of options or
warrants, or the issuance of securities relating to any research and development
partnership with the Company's Subsidiary, Viragen USA, Inc., or (e) the grant
of options or warrants relating to any agreement with the American Red Cross and
similar blood collection and processing organizations in exchange for blood
products.
5.7 Financial 10-K Statements, Etc. and Current Reports on
Form 8-K. The Company shall make available to the Subscriber copies of its
annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports
on form 8-K for as long as the Preferred Stock may remain outstanding.
5.8 Opinion of Counsel. Subscribers shall, upon purchase of
the Preferred Stock and accompanying Conversion Warrants pursuant to this
Agreement, receive an opinion letter from Atlas, Pearlman, Trop & Borkson, PA,
New River Center, Suite 1900, 200 East Las Olas Blvd., Ft. Lauderdale, FL 33301
("Counsel"), counsel to the Company, in the form attached as Exhibit F.
5.9 Removal of Legend Upon Conversion. As contemplated by the
Certificate of Designation, upon conversion of the Preferred Stock, Subscriber
shall submit a Notice of Conversion and Resale, substantially in the form
attached hereto as Exhibit L. The Legend shall be removed and the Company shall
issue a certificate without such Legend to the holder of any Security upon which
it is stamped, and a certificate for a security shall be originally issued
without the Legend, if, unless otherwise required by state securities laws, (a)
the resale of such Security is registered under the Act, or (b) such holder
provides the Company with an opinion of counsel, in form, substance and scope
customary for opinions of counsel in comparable transactions (the reasonable
cost of which shall be borne by the Company), to the effect that a public sale
or transfer of such Security may be made without registration under the Act, or
(c) such holder provides the Company with reasonable assurances that such
Security can be sold pursuant to Rule 144. Each Subscriber agrees to sell all
Securities, including those represented by a certificate(s) from which the
Legend has been removed, or which were originally issued without the Legend,
pursuant to an effective registration statement and to deliver a prospectus in
connection with such sale or in compliance with an exemption from the
registration requirements of the Act. In the event the Legend is removed from
any Security or any Security is issued without the Legend and thereafter the
effectiveness of a registration statement covering the resale of such Security
is suspended or the Company determines that a supplement or amendment thereto is
required by applicable securities
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laws, then upon reasonable advance notice to Subscriber holding such Security,
the Company may require that the Legend be placed on any such Security that
cannot then be sold pursuant to an effective registration statement or Rule 144
or with respect to which the opinion referred to in clause (b) next above has
not been rendered, which Legend shall be removed when such Security may be sold
pursuant to an effective registration statement or Rule 144 or such holder
provides the opinion with respect thereto described in clause (b) next above.
5.10 Listing. Subject to the remainder of this Section 5.10,
the Company shall ensure that its shares of Common Stock (including all
Conversion Shares and Warrant Shares) are listed and available for trading on
the Nasdaq National Market ("NMS"). Thereafter, the Company shall (i) use its
best efforts to continue the listing and trading of its Common Stock on the NMS,
or on the Nasdaq Small Cap Market ("NASDAQ"), the New York Stock Exchange
("NYSE"), or the American Stock Exchange ("AMEX") or any other national exchange
or over-the-counter market system; (ii) take all action necessary to cause and
maintain the listing and trading of its Common Stock on the OTC Bulletin Board
at any time the Common Stock is not listed and traded on NASDAQ, NMS, NYSE or
AMEX; and (iii) comply in all respects with the Company's reporting, filing and
other obligations under the by-laws or rules of the National Association of
Securities Dealers ("NASD") and such exchanges, as applicable.
5.11 The Company's Instructions to Transfer Agent. The Company
will issue to its Transfer Agent the Irrevocable Instructions to Transfer Agent
substantially in the form of Exhibit G instructing the Transfer Agent to issue
certificates, registered in the name of each Subscriber or its nominee, for the
Conversion Shares and Warrant Shares in such amounts as specified from time to
time by such Subscriber to the Company upon conversion of the Preferred Stock
and exercise of the Conversion Warrants. Such certificates shall bear a Legend
only to the extent permitted by Section 5.9 hereof. The Company warrants that no
instruction, other than such instructions referred to in Section 5.9 hereof or
in this Section 5.11 and stop transfer instructions to give effect to Section
3.7 hereof in the case of Conversion Shares and Warrant Shares prior to
registration of the Conversion Shares and Warrant Shares under the Act, will be
given by the Company to its Transfer Agent and that the 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 each Subscriber's obligations
and agreement set forth in Sections 2.3.3 or 2.3.4 hereof to resell the
Securities pursuant to an effective registration statement and to deliver a
prospectus in connection with such sale or in compliance with an exemption from
the registration requirements of applicable securities laws. If (a) a Subscriber
provides the Company with an opinion of counsel, which opinion of counsel shall
be in form, substance and scope customary for opinions of counsel in comparable
transactions (the reasonable cost of which shall be borne by the Company), to
the effect that the Securities to be sold or transferred may be sold or
transferred pursuant to an exemption from registration or (b) a Subscriber
transfers Securities to an affiliate which is an accredited investor pursuant to
Rule 144, the Company shall permit the transfer, and, in the case of Conversion
Shares and Warrant Shares, promptly instruct its transfer agent to issue one or
more certificates in such name and in such denomination as specified by such
Subscriber. The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to a Subscriber by vitiating the intent
and purpose of the transaction contemplated hereby. Accordingly, the Company
acknowledges that the remedy at law for a breach of its obligations under this
Section 5.11 will be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this Section 5.11, that a
Subscriber shall be entitled, in addition to all other available remedies, to an
injunction restraining any breach and requiring immediate issuance and transfer,
without the necessity of showing economic loss and without any bond or other
security being required. The Company hereby agrees that it will not unilaterally
terminate its relationship with the Transfer Agent for any reason prior to the
date which is three (3) years after February 19, 1998 or one (1) month after the
first date that no Preferred Stock and no Conversion Warrants are outstanding,
whichever is earlier (the "Ending Date") or until such time
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that a successor transfer agent (i) is appointed by the Company, and (ii)
executes and agrees to be bound by the terms of the Irrevocable Instructions to
Transfer Agent.
6. Subscriber Covenant/Miscellaneous
6.1 Representations and Warranties Survive the Closing;
Severability. Subscriber's and the Company's representations and warranties
shall survive the Closing of the transactions contemplated by this Agreement
notwithstanding any due diligence investigation made by or on behalf of the
party seeking to rely thereon. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective if
it materially changes the economic benefit of this Agreement to any party.
6.2 Successors and Assigns. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement. Subscriber may assign Subscriber's rights hereunder, in
connection with any private sale of the Preferred Stock of such Subscriber, so
long as, as a condition precedent to such transfer, the transferee executes an
acknowledgment agreeing to be bound by the applicable provisions of this
Agreement.
6.3 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of Delaware without respect to conflict of
laws principles.
6.4 Execution in Counterparts Permitted. This Agreement may be
executed in any number of counterparts, each of which shall be enforceable
against the parties actually executing such counterparts, and all of which
together shall constitute one (1) instrument.
6.5 Titles and Subtitles; Gender. The titles and subtitles
used in this Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement. The use in this
Agreement of a masculine, feminine or neither pronoun shall be deemed to include
a reference to the others.
6.6 Written Notices, Etc. Any notice, demand or request
required or permitted to be given by the Company or Subscriber pursuant to the
terms of this Agreement shall be in writing and shall be deemed given when
delivered personally, or by facsimile (with a hard copy to follow by two (2) day
courier), addressed to the parties at the addresses and/or facsimile telephone
number of the parties set forth at the end of this Agreement or such other
address as a party may request by notifying the other in writing.
6.7 Expenses. Each of the Company and Subscriber shall pay all
costs and expenses that it respectively incurs, with respect to the negotiation,
execution, delivery and performance of this Agreement.
6.8 Entire Agreement; Written Amendments Required. This
Agreement, including the Exhibits attached hereto, the Certificate of
Designation, the Preferred Stock certificates, the Conversion Warrants, the
Registration Rights Agreement, the Escrow Agreement, the Irrevocable
Instructions to Transfer Agent and the other documents delivered pursuant hereto
constitute the full and entire understanding and agreement between the parties
with regard to the subjects hereof and thereof, and no party shall be liable or
bound to any other party in any manner by any warranties, representations or
covenants except as specifically set forth herein or therein. Except as
expressly
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provided herein, neither this Agreement nor any term hereof may be amended,
waived, discharged or terminated other than by a written instrument signed by
the party against whom enforcement of any such amendment, waiver, discharge or
termination is sought.
6.9 No Five Percent Holders. Notwithstanding anything to the
contrary contained herein, the Series I Preferred Stock shall not be convertible
by a Holder or at the Termination Date to the extent (but only to the extent)
that, if converted by such Holder or at the Termination Date, the Holder would
beneficially own in excess of 4.9% of the then outstanding shares of Common
Stock of the Company. To the extent this limitation applies, the determination
of whether Series I Preferred Stock shall be convertible (vis-a vis other
securities owned by such Holder) and of which Series I Preferred Stock shall be
converted shall be in the sole discretion of the Holder and submission of the
Series I Preferred Stock for conversion shall be deemed to be the Holder's
determination of whether such Series I Preferred Stock is convertible, subject
to such aggregate percentage limitations. No prior inability to convert Series I
Preferred Stock pursuant to this subparagraph shall have any effect on the
applicability of its provisions with respect to any subsequent determination of
convertibility. For the purposes of this subparagraph, beneficial ownership and
all calculations, including without limitation, with respect to calculations of
percentage ownership shall be determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended, and the Regulations thereunder.
Notwithstanding the foregoing, each Holder shall have the right to waive such
restriction or increase such percentage upon sixty one (61) days' prior notice
to the Company and to decrease any such percentage immediately upon written
notice to the Company. No transferee of Series I Preferred Stock shall be bound
by such restriction unless the transferee expressly so agrees. The provisions of
this subparagraph may be waived and/or implemented in a manner otherwise than in
strict conformity with the terms hereof with the approval of the Board of
Directors of the Company and the Holders of a majority in interest in the then
outstanding Series I Preferred Stock: (i) with respect to any matter to cure any
ambiguity herein, to correct this subparagraph (or any portion thereof) which
may be defective or inconsistent with the intended 4.9% beneficial ownership
limitation herein contained or to make changes or supplements necessary or
desirable to properly give effect to such 4.9% limitation; and (ii) with respect
to any other matter, with the further consent of the Holders of majority of the
then outstanding shares of Common Stock. The limitations contained in this
subparagraph shall apply to a successor Holder of Series I Preferred Stock if,
and to the extent, elected by such successor Holder concurrently with its
acquisition of such Series I Preferred Stock, such election to be promptly
confirmed in writing to the Company (provided no transfer or series of transfers
to a successor Holder or Holders shall be used by a Holder to evade the
limitations contained herein).
6.10 Arbitration. Any controversy or claim arising out of or
related to this Agreement or the breach thereof, shall be settled by binding
arbitration in Wilmington, Delaware in accordance with the Expedited Procedures
(Rules 53-57) of the Commercial Arbitration Rules of the American Arbitration
Association ("AAA"). A proceeding shall be commenced upon written demand by
Company or any Subscriber to the other. The arbitrator(s) shall enter a judgment
by default against any party which fails or refuses to appear in any properly
noticed arbitration proceeding. The proceeding shall be conducted by one (1)
arbitrator, unless the amount alleged to be in dispute exceeds two hundred fifty
thousand dollars ($250,000), in which case three (3) arbitrators shall preside.
The arbitrator(s) will be chosen by the parties from a list provided by the AAA,
and if they are unable to agree within ten (10) days, the AAA shall select the
arbitrator(s). The arbitrators must be experts in securities law and financial
transactions. The arbitrators shall assess costs and expenses of the
arbitration, including all attorneys' and experts' fees, as the arbitrators
believe is appropriate in light of the merits of the parties' respective
positions in the issues in dispute. Each party submits irrevocably to the
jurisdiction of any state court sitting in Wilmington, Delaware or to the United
States District Court sitting in Delaware for purposes of enforcement of any
discovery order, judgment or award in connection with such arbitration. The
award of the arbitrator(s) shall be final and binding upon the parties and may
be enforced in any
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court having jurisdiction. The arbitration shall be held in such place as set by
the arbitrator(s) in accordance with Rule 55.
6.11 Certain Trading Restrictions. The Subscriber agrees that
during the period from the date the Registration Statement is first declared
effective by the SEC to the date that all shares of Series I Preferred Stock
owned by the Subscriber are either converted in full or redeemed by the Company
or otherwise disposed of by the Subscriber, the Subscriber shall not engage in
short sales or other hedging transactions with respect to the Common Stock;
provided, however, that the Subscriber 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.
7. Subscription and Wiring Instructions; Irrevocability.
7.1 Subscription
(a) Wire transfer of Subscription Funds. Subscriber shall
send this signed Agreement by facsimile to the
Placement Agent at (770) 640-7150, and send the
subscription funds by wire transfer, to the Escrow
Agent as follows:
First Union National Bank
ABA # 053000219
Account # 465946
Account Name: Trust Ledger
Attn: Eddie Blee 404-827-7326
Reference: Viragen #3072237305
SWIFT Code: FUNBUS33
(b) Irrevocable Subscription. Subscriber hereby
acknowledges and agrees, subject to the provisions of
any applicable laws providing for the refund of
subscription amounts submitted by Subscriber, that
this Agreement is irrevocable and that Subscriber is
not entitled to cancel, terminate or revoke this
Agreement or any other agreements executed by such
Subscriber and delivered pursuant hereto, and that
this Agreement and such other agreements shall
survive the death or disability of such Subscriber
and shall be binding upon and inure to the benefit of
the parties and their heirs, executors,
administrators, successors, legal representatives and
assigns. If the Securities subscribed for are to be
owned by more than one person, the obligations of all
such owners under this Agreement shall be joint and
several, and the agreements, representations,
warranties and acknowledgments herein contained shall
be deemed to be made by and be binding upon each such
person and his heirs, executors, administrators,
successors, legal representatives and assigns.
Notwithstanding the foregoing, (i) if the conditions
to Closing are not satisfied or (ii) if the
Disclosure Documents are discovered prior to Closing
to contain statements which are materially
inaccurate, or omit statements of material fact,
Subscriber may revoke or cancel this Agreement.
(c) Company's Right to Reject Subscription. Subscriber
understands that this Agreement is not binding on the
Company until the Company accepts it. This Agreement
shall be accepted by the Company when the Company
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countersigns this Agreement. Subscriber hereby
confirms that the Company has full right in its sole
discretion to accept or reject the subscription of
Subscriber, in whole or in part, provided that, if
the Company decides to reject such subscription, the
Company must do so promptly and in writing. In the
case of rejection, the Company will promptly return
any rejected payments and (if rejected in whole)
copies of all executed subscription documents
(including without limitation this Agreement) to
Subscriber. In the event of rejection, no interest
will be payable by the Company to Subscriber on any
return of payment, provided however, that any such
interest accrued on such funds in the Escrow Account
shall be returned to the Subscriber by the Escrow
Agent.
7.2 Acceptance of Subscription. In the case of acceptance of
Subscriber's subscription, ownership of the number of securities being purchased
hereby will pass to Subscriber upon the Closing.
7.3 Subscriber to Forward Original Signed Subscription
Agreement to Company. Subscriber agrees to courier to Company his, her or its
original inked signed Subscription Agreement within two (2) days after faxing
said signed agreement to Placement Agent.
8. Indemnification.
The Company agrees to indemnify and hold harmless Subscriber and the
Placement Agent and each of their respective officers, directors, employees and
agents, and each person who controls Subscriber or the Placement Agent within
the meaning of the Act or the Exchange Act (each, a "Subscriber Indemnified
Party") against any losses, claims, damages or liabilities, joint or several, to
which it, they or any of them, may become subject and not otherwise reimbursed
arising from or due to any untrue statement of a material fact or the omission
to state any material fact required to be stated in order to make the statements
not misleading in any representation or warranty made by the Company contained
in this Agreement or in any statements contained in the Disclosure Documents.
Subscriber agrees to indemnify and hold harmless the Company and the
Placement Agent and each of their respective officers, directors, employees and
agents, and each person who controls Company or the Placement Agent within the
meaning of the Act or the Exchange Act (each, a "Company Indemnified Party") (a
Subscriber Indemnified Party or a Company Indemnified Party may be hereinafter
referred to singularly as "Indemnified Party") against any losses, claims,
damages or liabilities, joint or several, to which it, they or any of them, may
become subject and not otherwise reimbursed arising from or due to any untrue
statement of a material fact or the omission to state any material fact required
to be stated in order to make the statements not misleading in any
representation or warranty made by Subscriber contained in this Agreement.
Promptly after receipt by an Indemnified Party of notice of the
commencement of any action pursuant to which indemnification may be sought, such
Indemnified Party will, if a claim in respect thereof is to be made against the
other party (hereinafter "Indemnitor") under this Section 8, deliver to the
Indemnitor a written notice of the commencement thereof and the Indemnitor shall
have the right to participate in and to assume the defense thereof with counsel
reasonably selected by the Indemnitor, provided, however, that an Indemnified
Party shall have the right to retain its own counsel, with the reasonably
incurred fees and expenses of such counsel to be paid by the Indemnitor, if
representation of such Indemnified Party by the counsel retained by the
Indemnitor would be inappropriate due to actual or potential conflicts of
interest between such Indemnified Party and any other party represented by such
counsel in such proceeding. The failure to deliver
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written notice to the Indemnitor within a reasonable time of the commencement of
any such action, if prejudicial to the Indemnitor's ability to defend such
action, shall relieve the Indemnitor of any liability to the Indemnified Party
under this Section 8, but the omission to so deliver written notice to the
Indemnitor will not relieve it of any liability that it may have to any
Indemnified Party other than under this Section 8 to the extent it is
prejudicial.
9. Certain Additional Legends and Information.
FOR FLORIDA RESIDENTS:
THE SECURITIES REFERRED TO HEREIN WILL BE SOLD TO, AND
ACQUIRED BY, THE HOLDER IN A TRANSACTION EXEMPT UNDER SECTION 517.061 OF THE
FLORIDA SECURITIES ACT. THE SECURITIES HAVE NOT BEEN REGISTERED UNDER SAID ACT
IN THE STATE OF FLORIDA. IN ADDITION, ALL FLORIDA RESIDENTS SHALL HAVE THE
PRIVILEGE OF VOIDING THE PURCHASE WITHIN THREE (3) DAYS AFTER THE FIRST TENDER
OF CONSIDERATION IS MADE BY SUCH SUBSCRIBER TO THE ISSUER, AN AGENT OF THE
ISSUER, OR AN ESCROW AGENT OR WITHIN THREE DAYS AFTER THE AVAILABILITY OF THAT
PRIVILEGE IS COMMUNICATED TO SUCH SUBSCRIBER, WHICHEVER OCCURS LATER.
FOR MAINE RESIDENTS:
THESE SECURITIES ARE BEING SOLD PURSUANT TO AN EXEMPTION FROM
REGISTRATION WITH THE BANK SUPERINTENDENT OF THE STATE OF MAINE UNDER SECTION
10502(2)(R) OF TITLE 32 OF THE MAINE REVISED STATUTES. THESE SECURITIES MAY BE
DEEMED RESTRICTED SECURITIES AND AS SUCH THE HOLDER MAY NOT BE ABLE TO RESELL
THE SECURITIES UNLESS PURSUANT TO REGISTRATION UNDER STATE OR FEDERAL SECURITIES
LAWS OR UNLESS AN EXEMPTION UNDER SUCH LAWS EXISTS.
FOR PENNSYLVANIA RESIDENTS:
EACH PENNSYLVANIA RESIDENT WHO SUBSCRIBES FOR THE SECURITIES BEING
OFFERED HEREBY AGREES NOT TO SELL THESE SECURITIES FOR A PERIOD OF TWELVE MONTHS
AFTER THE DATE OF PURCHASE UNLESS SUCH SECURITIES HAVE BEEN REGISTERED FOR SALE.
UNDER PROVISION OF THE PENNSYLVANIA SECURITIES ACT OF 1972 (THE "1972 ACT"),
EACH PENNSYLVANIA RESIDENT SHALL HAVE THE RIGHT TO WITHDRAW HIS ACCEPTANCE
WITHOUT INCURRING ANY LIABILITY, TO THE SELLER, UNDERWRITER (IF ANY) OR ANY
PERSON, WITHIN TWO (2) BUSINESS DAYS FROM THE DATE OF RECEIPT BY THE ISSUER OF
HIS WRITTEN BINDING CONTRACT OF PURCHASE OR IN THE CASE OF A TRANSACTION IN
WHICH THERE IS NO WRITTEN BINDING CONTRACT OF PURCHASE, WITHIN TWO BUSINESS DAYS
AFTER HE MAKES THE INITIAL PAYMENT FOR THE SECURITIES BEING OFFERED. TO
ACCOMPLISH THIS WITHDRAWAL, A SUBSCRIBER NEED ONLY SEND A LETTER OR TELEGRAM TO
THE SELLING AGENT AT THE ADDRESS SET FORTH IN THE TEXT OF THE MEMORANDUM,
INDICATING HIS OR HER INTENTION TO WITHDRAW. SUCH LETTER OR TELEGRAM SHOULD BE
SENT AND POSTMARKED PRIOR TO THE END OF THE AFOREMENTIONED SECOND BUSINESS DAY.
IT IS PRUDENT TO SEND SUCH LETTER BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED,
TO ENSURE THAT IT IS RECEIVED AND ALSO TO EVIDENCE THE TIME WHEN IT WAS MAILED.
IF THE REQUEST IS MADE ORALLY (IN PERSON OR BY TELEPHONE, TO THE SELLING AGENT
AT THE NUMBER LISTED IN THE TEXT OF THE MEMORANDUM) A WRITTEN CONFIRMATION THAT
THE REQUEST HAS BEEN RECEIVED SHOULD BE REQUESTED.
FOR NEW HAMPSHIRE RESIDENTS:
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN
APPLICATION FOR A LICENSE HAS BEEN FILED WITH THE STATE OF NEW HAMPSHIRE
18
<PAGE> 19
NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED
IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE
THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING.
NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE
FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN
ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL
TO, ANY PERSON, SECURITY, OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE
MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANY REPRESENTATION
INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.
[INTENTIONALLY LEFT BLANK]
19
<PAGE> 20
10. Number of Shares and Purchase Price. Subscriber subscribes for
_________ shares of Preferred Stock (in the amount of $10,000 per Share) and the
accompanying Conversion Warrants against payment by wire transfer in the amount
of $___________________ ("Purchase Price").
11. Accredited Investor. Subscriber is an "accredited investor" because
(check all applicable boxes):
(a) [ ] it is an organization described in Section 501(c)(3) of
the Internal Revenue Code, or a corporation, business trust,
or partnership not formed for the specific purpose of
acquiring the securities offered, with total assets in excess
of $5,000,000.
(b) [ ] any trust, with total assets in excess of $5,000,000, not
formed for the specific purpose of acquiring the securities
offered, whose purchase is directed by a sophisticated person
who has such knowledge and experience in financial and
business matters that he is capable of evaluating the merits
and risks of the prospective investment.
(c) [ ] a natural person, who
[ ] is a director, executive officer or general partner of the
issuer of the securities being offered or sold or a director,
executive officer or general partner of a general partner of
that issuer.
[ ] has an individual net worth, or joint net worth with that
person's spouse, at the time of his purchase exceeding
$1,000,000.
[ ] had an individual income in excess of $200,000 in each of
the two most recent years or joint income with that person's
spouse in excess of $300,000 in each of those years and has a
reasonable expectation of reaching the same income level in
the current year.
(d) [ ] an entity each equity owner of which is an entity
described in a - b above or is an individual who could check
one (1) of the last three (3) boxes under subparagraph (c)
above.
(e) [ ] other [specify] ____________________________________________
The undersigned acknowledges that this Agreement and the subscription
represented hereby shall not be effective unless accepted by the Company as
indicated below.
IN WITNESS WHEREOF, the undersigned Subscriber does represent and
certify under penalty of perjury that the foregoing statements are true and
correct and that Subscriber by the following signature(s) executed this
Agreement.
Dated this _____ day of April, 1998.
<TABLE>
<S> <C>
- --------------------------------------------- --------------------------------------------------------------
Your Signature PRINT EXACT NAME IN WHICH YOU WANT
THE SECURITIES TO BE REGISTERED
DELIVERY INSTRUCTIONS:
- --------------------------------------------- ---------------------
Name: Please Print Please type or print address where your security
is to be delivered
ATTN.:
- --------------------------------------------- --------------------------------------------------------
Title/Representative Capacity (if applicable)
- --------------------------------------------- --------------------------------------------------------------
Name of Company You Represent (if applicable) Street Address
- --------------------------------------------- --------------------------------------------------------------
Place of Execution of this Agreement City, State or Province, Country, Offshore Postal Code
--------------------------------------------------------------
Phone Number (For Federal Express) and Fax Number (re: Notice)
</TABLE>
THIS AGREEMENT IS ACCEPTED BY THE COMPANY IN THE AMOUNT OF
$_________________ ON THE ____ DAY OF APRIL, 1998.
Viragen, Inc.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
20
<PAGE> 21
NOTICE OF CONVERSION [AND RESALE]
(To be Executed by the Registered Holder
in order to Convert the Preferred Stock)
The undersigned hereby irrevocably elects to convert _____________ shares of
Series I Preferred Stock, represented by stock certificate No(s).
________________ (the "Preferred Stock Certificates") into shares of common
stock ("Common Stock") of Viragen, Inc. (the "Company") according to the
conditions of the Certificate of Designation of Series I Preferred Stock, as of
the date written below [in connection with the resale of the underlying Common
Stock unless otherwise indicated below]. If shares are to be issued in the name
of a person other than the undersigned, the undersigned will pay all transfer
taxes payable with respect thereto and is delivering herewith such certificates.
No fee will be charged to the Holder for any conversion, except for transfer
taxes, if any. A copy of each of the Preferred Stock Certificates being
converted is attached hereto. The undersigned agrees to deliver a Prospectus in
connection with any sale made pursuant to the Registration Statement, as
provided in Section 5.10 of the Subscription Agreement.
____ Check here if this conversion is not being made in
connection with the resale of the Common Stock.
Date of Conversion:____________________
Applicable Conversion Price:___________
Number of Shares of
Common Stock to be Issued:_____________
Signature:_____________________________
Name:__________________________________
Address: ______________________________
* No shares of Common Stock will be issued until the original Series I Preferred
Stock Certificate(s) to be converted and the Notice of Conversion are received
by the Company or its Transfer Agent. The Holder shall (i) send via facsimile,
on or prior to 11:59 p.m., New York City time, on the date of conversion, a copy
of this completed and fully executed Notice of Conversion to the Company at the
office of the Company and its designated Transfer Agent for the Series I
Preferred Stock that the Holder elects to convert and (ii) surrender, to a
common courier for either overnight or two (2) day delivery to the office of the
Company or the Transfer Agent, the original Series I Preferred Stock
Certificate(s) representing the Series I Preferred Stock being converted, duly
endorsed for transfer. The Company or its Transfer Agent shall issue shares of
Common Stock and surrender them to a common courier for delivery to the
shareholder within two (2) business days following receipt of a facsimile of
this Notice of Conversion and receipt by the Company or its Transfer Agent of
the original Series I Preferred Stock Certificate(s) to be converted, all in
accordance with the terms of the Certificate of Designation and the Subscription
Agreement, and shall make payments for the number of business days such issuance
and delivery is late, pursuant to the terms of the Certificate of Designation.
21
<PAGE> 22
EXHIBIT L
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES I PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
"N" shares
"9 MONTH" WARRANT TO PURCHASE COMMON STOCK
OF
VIRAGEN, INC.
THIS CERTIFIES that ________________ or any subsequent holder hereof
("Holder"), has the right to purchase from VIRAGEN, INC., a Delaware corporation
(the "Company"), up to "N" fully paid and nonassessable shares, wherein "N" is
defined below, of the Company's common stock, $.01 par value per share ("Common
Stock"), subject to adjustment as provided herein, at a price equal to the
Exercise Price as defined in Section 3 below, at any time beginning on the Date
of Issuance (as defined below) and ending at 5:00 p.m., New York, New York time,
on February 17, 2003 (the "Exercise Period"); provided, that "N" shall equal ten
percent (10%) of the quotient obtained when (i) the principal amount of the
Series I Preferred Stock purchased by Holder minus the principal amount of any
Series I Share Disposition, as defined below, that occurs prior to the
expiration of the date which is nine (9) months from February 17, 1998 (the "9
Month Date"), is divided by (ii) the "9 Month Market Price", as defined below.
For purposes hereof, "Series I Share Disposition" shall mean a transaction
whereby the Holder either (i) transfers shares of the Series I Preferred Stock;
or (ii) converts shares of the Series I Preferred Stock pursuant to the terms of
the Company's Certificate of Designation of Series I Preferred Stock and "9
Month Market Price" shall mean the average of the lowest two (2) closing bid
prices during the twenty (20) trading days for the Common Stock prior to the 9
Month Date. Within ten (10) days of the 9 Month Date, the Company shall provide
written confirmation to the Holder of the number of shares of Common Stock, as
adjusted if applicable, which the Holder has the right to purchase hereunder.
Holder agrees with the Company that this Warrant to Purchase Common
Stock of Viragen, Inc. (this "Warrant") is issued and all rights hereunder shall
be held subject to all of the conditions, limitations and provisions set forth
herein.
<PAGE> 23
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES I PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
"N" shares
"9 Month" Warrant to Purchase Common Stock
of
VIRAGEN, INC.
THIS CERTIFIES that Chelverton Fund Ltd or any subsequent holder hereof
("Holder"), has the right to purchase from VIRAGEN, INC., a Delaware corporation
(the "Company"), up to "N" fully paid and nonassessable shares, wherein "N" is
defined below, of the Company's common stock, $.01 par value per share ("Common
Stock"), subject to adjustment as provided herein, at a price equal to the
Exercise Price as defined in Section 3 below, at any time beginning on the Date
of Issuance (as defined below) and ending at 5:00 p.m., New York, New York time,
on February 17, 2003 (the "Exercise Period"); provided, that "N" shall equal ten
percent (10%) of the quotient obtained when (i) the principal amount of the
Series I Preferred Stock purchased by Holder minus the principal amount of any
Series I Share Disposition, as defined below, that occurs prior to the
expiration of the date which is nine (9) months from February 17, 1998 (the "9
Month Date"), is divided by (ii) the "9 Month Market Price", as defined below.
For purposes hereof, "Series I Share Disposition" shall mean a transaction
whereby the Holder either (i) transfers shares of the Series I Preferred Stock;
or (ii) converts shares of the Series I Preferred Stock pursuant to the terms of
the Company's Certificate of Designation of Series I Preferred Stock and "9
Month Market Price" shall mean the average of the lowest two (2) closing bid
prices during the twenty (20) trading days for the Common Stock prior to the 9
Month Date. Within ten (10) days of the 9 Month Date, the Company shall provide
written confirmation to the Holder of the number of shares of Common Stock, as
adjusted if applicable, which the Holder has the right to purchase hereunder.
Holder agrees with the Company that this Warrant to Purchase Common
Stock of Viragen, Inc. (this "Warrant") is issued and all rights hereunder shall
be held subject to all of the conditions, limitations and provisions set forth
herein.
<PAGE> 24
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES I PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
"N" shares
"9 Month" Warrant to Purchase Common Stock
of
VIRAGEN, INC.
THIS CERTIFIES that Global Bermuda Limited Partnership or any
subsequent holder hereof ("Holder"), has the right to purchase from VIRAGEN,
INC., a Delaware corporation (the "Company"), up to "N" fully paid and
nonassessable shares, wherein "N" is defined below, of the Company's common
stock, $.01 par value per share ("Common Stock"), subject to adjustment as
provided herein, at a price equal to the Exercise Price as defined in Section 3
below, at any time beginning on the Date of Issuance (as defined below) and
ending at 5:00 p.m., New York, New York time, on February 17, 2003 (the
"Exercise Period"); provided, that "N" shall equal ten percent (10%) of the
quotient obtained when (i) the principal amount of the Series I Preferred Stock
purchased by Holder minus the principal amount of any Series I Share
Disposition, as defined below, that occurs prior to the expiration of the date
which is nine (9) months from February 17, 1998 (the "9 Month Date"), is divided
by (ii) the "9 Month Market Price", as defined below. For purposes hereof,
"Series I Share Disposition" shall mean a transaction whereby the Holder either
(i) transfers shares of the Series I Preferred Stock; or (ii) converts shares of
the Series I Preferred Stock pursuant to the terms of the Company's Certificate
of Designation of Series I Preferred Stock and "9 Month Market Price" shall mean
the average of the lowest two (2) closing bid prices during the twenty (20)
trading days for the Common Stock prior to the 9 Month Date. Within ten (10)
days of the 9 Month Date, the Company shall provide written confirmation to the
Holder of the number of shares of Common Stock, as adjusted if applicable, which
the Holder has the right to purchase hereunder.
Holder agrees with the Company that this Warrant to Purchase Common
Stock of Viragen, Inc. (this "Warrant") is issued and all rights hereunder shall
be held subject to all of the conditions, limitations and provisions set forth
herein.
<PAGE> 25
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES I PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
"N" shares
"9 Month" Warrant to Purchase Common Stock
of
VIRAGEN, INC.
THIS CERTIFIES that Lakeshore International, Ltd. or any subsequent
holder hereof ("Holder"), has the right to purchase from VIRAGEN, INC., a
Delaware corporation (the "Company"), up to "N" fully paid and nonassessable
shares, wherein "N" is defined below, of the Company's common stock, $.01 par
value per share ("Common Stock"), subject to adjustment as provided herein, at a
price equal to the Exercise Price as defined in Section 3 below, at any time
beginning on the Date of Issuance (as defined below) and ending at 5:00 p.m.,
New York, New York time, on February 17, 2003 (the "Exercise Period"); provided,
that "N" shall equal ten percent (10%) of the quotient obtained when (i) the
principal amount of the Series I Preferred Stock purchased by Holder minus the
principal amount of any Series I Share Disposition, as defined below, that
occurs prior to the expiration of the date which is nine (9) months from
February 17, 1998 (the "9 Month Date"), is divided by (ii) the "9 Month Market
Price", as defined below. For purposes hereof, "Series I Share Disposition"
shall mean a transaction whereby the Holder either (i) transfers shares of the
Series I Preferred Stock; or (ii) converts shares of the Series I Preferred
Stock pursuant to the terms of the Company's Certificate of Designation of
Series I Preferred Stock and "9 Month Market Price" shall mean the average of
the lowest two (2) closing bid prices during the twenty (20) trading days for
the Common Stock prior to the 9 Month Date. Within ten (10) days of the 9 Month
Date, the Company shall provide written confirmation to the Holder of the number
of shares of Common Stock, as adjusted if applicable, which the Holder has the
right to purchase hereunder.
Holder agrees with the Company that this Warrant to Purchase Common
Stock of Viragen, Inc. (this "Warrant") is issued and all rights hereunder shall
be held subject to all of the conditions, limitations and provisions set forth
herein.
<PAGE> 26
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES I PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
"N" shares
"9 Month" Warrant to Purchase Common Stock
of
VIRAGEN, INC.
THIS CERTIFIES that LaRocque Trading Group, LLC or any subsequent
holder hereof ("Holder"), has the right to purchase from VIRAGEN, INC., a
Delaware corporation (the "Company"), up to "N" fully paid and nonassessable
shares, wherein "N" is defined below, of the Company's common stock, $.01 par
value per share ("Common Stock"), subject to adjustment as provided herein, at a
price equal to the Exercise Price as defined in Section 3 below, at any time
beginning on the Date of Issuance (as defined below) and ending at 5:00 p.m.,
New York, New York time, on February 17, 2003 (the "Exercise Period"); provided,
that "N" shall equal ten percent (10%) of the quotient obtained when (i) the
principal amount of the Series I Preferred Stock purchased by Holder minus the
principal amount of any Series I Share Disposition, as defined below, that
occurs prior to the expiration of the date which is nine (9) months from
February 17, 1998 (the "9 Month Date"), is divided by (ii) the "9 Month Market
Price", as defined below. For purposes hereof, "Series I Share Disposition"
shall mean a transaction whereby the Holder either (i) transfers shares of the
Series I Preferred Stock; or (ii) converts shares of the Series I Preferred
Stock pursuant to the terms of the Company's Certificate of Designation of
Series I Preferred Stock and "9 Month Market Price" shall mean the average of
the lowest two (2) closing bid prices during the twenty (20) trading days for
the Common Stock prior to the 9 Month Date. Within ten (10) days of the 9 Month
Date, the Company shall provide written confirmation to the Holder of the number
of shares of Common Stock, as adjusted if applicable, which the Holder has the
right to purchase hereunder.
Holder agrees with the Company that this Warrant to Purchase Common
Stock of Viragen, Inc. (this "Warrant") is issued and all rights hereunder shall
be held subject to all of the conditions, limitations and provisions set forth
herein.
<PAGE> 27
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES I PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
"N" shares
"9 Month" Warrant to Purchase Common Stock
of
VIRAGEN, INC.
THIS CERTIFIES that The Tail Wind Fund Ltd. or any subsequent holder
hereof ("Holder"), has the right to purchase from VIRAGEN, INC., a Delaware
corporation (the "Company"), up to "N" fully paid and nonassessable shares,
wherein "N" is defined below, of the Company's common stock, $.01 par value per
share ("Common Stock"), subject to adjustment as provided herein, at a price
equal to the Exercise Price as defined in Section 3 below, at any time beginning
on the Date of Issuance (as defined below) and ending at 5:00 p.m., New York,
New York time, on February 17, 2003 (the "Exercise Period"); provided, that "N"
shall equal ten percent (10%) of the quotient obtained when (i) the principal
amount of the Series I Preferred Stock purchased by Holder minus the principal
amount of any Series I Share Disposition, as defined below, that occurs prior to
the expiration of the date which is nine (9) months from February 17, 1998 (the
"9 Month Date"), is divided by (ii) the "9 Month Market Price", as defined
below. For purposes hereof, "Series I Share Disposition" shall mean a
transaction whereby the Holder either (i) transfers shares of the Series I
Preferred Stock; or (ii) converts shares of the Series I Preferred Stock
pursuant to the terms of the Company's Certificate of Designation of Series I
Preferred Stock and "9 Month Market Price" shall mean the average of the lowest
two (2) closing bid prices during the twenty (20) trading days for the Common
Stock prior to the 9 Month Date. Within ten (10) days of the 9 Month Date, the
Company shall provide written confirmation to the Holder of the number of shares
of Common Stock, as adjusted if applicable, which the Holder has the right to
purchase hereunder.
Holder agrees with the Company that this Warrant to Purchase Common
Stock of Viragen, Inc. (this "Warrant") is issued and all rights hereunder shall
be held subject to all of the conditions, limitations and provisions set forth
herein.
<PAGE> 28
1. Date of Issuance.
This Warrant shall be deemed to be issued on April 2, 1998 ("Date of
Issuance").
2. Exercise.
(a) Manner of Exercise. During the Exercise Period, this Warrant may be
exercised as to all or any lesser number of full shares of Common Stock covered
hereby upon surrender of this Warrant, with the Exercise Form attached hereto as
Exhibit A (the "Exercise Form") duly completed and executed, together with the
full Exercise Price (as defined below) for each share of Common Stock as to
which this Warrant is exercised, at the office of the Company, 865 SW 78th
Avenue, Suite 100, Plantation, Florida, 33324 Telephone No. (954) 233-8746,
Facsimile No. (954) 233-1414 , or at such other office or agency as the Company
may designate in writing, by overnight mail, with an advance copy of the
Exercise Form sent to the Company and its Transfer Agent by facsimile (such
surrender and payment of the Exercise Price hereinafter called the "Exercise of
this Warrant").
(b) Date of Exercise. The "Date of Exercise" of the Warrant shall be
defined as the date that the advance copy of the completed and executed Exercise
Form is sent by facsimile to the Company, provided that the original Warrant and
Exercise Form are received by the Company as soon as practicable thereafter.
Alternatively, the Date of Exercise shall be defined as the date the original
Exercise Form is received by the Company, if Holder has not sent advance notice
by facsimile.
(c) Cancellation of Warrant. This Warrant shall be canceled upon the
Exercise of this Warrant, and, as soon as practical after the Date of Exercise,
Holder shall be entitled to receive Common Stock for the number of shares
purchased upon such Exercise of this Warrant, and if this Warrant is not
exercised in full, Holder shall be entitled to receive a new Warrant (containing
terms identical to this Warrant) representing any unexercised portion of this
Warrant in addition to such Common Stock.
(d) Holder of Record. Each person in whose name any Warrant for shares
of Common Stock is issued shall, for all purposes, be deemed to be the Holder of
record of such shares on the Date of Exercise of this Warrant, irrespective of
the date of delivery of the Common Stock purchased upon the Exercise of this
Warrant. Nothing in this Warrant shall be construed as conferring upon Holder
any rights as a stockholder of the Company.
3. Payment of Warrant Exercise Price.
The Exercise Price shall equal the 9 Month Market Price per share
("Exercise Price").
Payment of the Exercise Price may be made by either of the following,
or a combination thereof, at the election of Holder:
(a) Cash Exercise: cash, bank or cashiers check or wire transfer; or
(b) Cashless Exercise: subject to the last sentence of this Section 3,
surrender of this Warrant at the principal office of the Company together with
notice of cashless election, in which event the Company shall issue Holder a
number of shares of Common Stock computed using the following formula:
X = Y (A-B)/A
where: X = the number of shares of Common Stock to be issued to Holder.
2
<PAGE> 29
Y = the number of shares of Common Stock for which this Warrant
is being exercised.
A = the Market Price of one (1) share of Common Stock (for purposes of
this Section 3(b), the "Market Price" shall be defined as the average
closing bid price of the Common Stock for the five (5) trading days
prior to the Date of Exercise of this Warrant (the "Average Closing
Price"), as reported by the National Association of Securities Dealers
Automated Quotation System ("Nasdaq") National Market System, or if the
Common Stock is not traded on the Nasdaq National Market System, the
Average Closing Price on the Nasdaq Small Cap Market or in any other
over-the-counter market on which the Common Stock is traded. If the
Common Stock is/was not traded during the five (5) trading days prior to
the Date of Exercise, then the closing price for the last publicly
traded day shall be deemed to be the closing price for any and all (if
applicable) days during such five (5) trading day period.
B = the Exercise Price.
For purposes of Rule 144 and sub-section (d)(3)(ii) thereof, it is intended,
understood and acknowledged that the Common Stock issuable upon exercise of this
Warrant in a cashless exercise transaction shall be deemed to have been acquired
at the time this Warrant was issued. Moreover, it is intended, understood and
acknowledged that the holding period for the Common Stock issuable upon exercise
of this Warrant in a cashless exercise transaction shall be deemed to have
commenced on the date this Warrant was issued.
Notwithstanding anything to the contrary contained herein, this Warrant may not
be exercised in a cashless exercise transaction if, on the Date of Exercise, the
shares of Common Stock to be issued upon exercise of this Warrant would upon
such issuance (x) be immediately transferable in the United States free of any
restrictive legend, including without limitation under Rule 144; (y) be then
registered pursuant to an effective registration statement filed pursuant to
that certain Registration Rights Agreement dated on or about April 2, 1998 by
and among the Company and certain investors; or (z) otherwise be registered
under the Securities Act of 1933, as amended.
4. Transfer and Registration.
(a) Transfer Rights. Subject to the provisions of Section 8 of this
Warrant, this Warrant may be transferred on the books of the Company, in whole
or in part, in person or by attorney, upon surrender of this Warrant properly
completed and endorsed. This Warrant shall be canceled upon such surrender and,
as soon as practicable thereafter, the person to whom such transfer is made
shall be entitled to receive a new Warrant or Warrants as to the portion of this
Warrant transferred, and Holder shall be entitled to receive a new Warrant as to
the portion hereof retained.
(b) Registrable Securities. The Common Stock issuable upon the exercise
of this Warrant constitutes "Registrable Securities" under that certain
Registration Rights Agreement dated on or about April 2, 1998 between the
Company and certain investors and, accordingly, has the benefit of the
registration rights pursuant to that agreement.
5. Anti-Dilution Adjustments.
(a) Stock Dividend. If the Company shall at any time declare a dividend
payable in shares of Common Stock, then Holder, upon Exercise of this Warrant
after the
3
<PAGE> 30
record date for the determination of holders of Common Stock entitled to receive
such dividend, shall be entitled to receive upon Exercise of this Warrant, in
addition to the number of shares of Common Stock as to which this Warrant is
exercised, such additional shares of Common Stock as such Holder would have
received had this Warrant been exercised immediately prior to such record date
and the Exercise Price will be proportionately adjusted.
(b) Recapitalization or Reclassification. If the Company shall at any
time effect a recapitalization, reclassification or other similar transaction of
such character that the shares of Common Stock shall be changed into or become
exchangeable for a larger or smaller number of shares, then upon the effective
date thereof, the number of shares of Common Stock which Holder shall be
entitled to purchase upon Exercise of this Warrant shall be increased or
decreased, as the case may be, in direct proportion to the increase or decrease
in the number of shares of Common Stock by reason of such recapitalization,
reclassification or similar transaction, and the Exercise Price shall be, in the
case of an increase in the number of shares, proportionally decreased and, in
the case of decrease in the number of shares, proportionally increased. The
Company shall give Holder the same notice it provides to holders of Common Stock
of any transaction described in this Section 5(b).
(c) Distributions. If the Company shall at any time distribute for no
consideration to holders of Common Stock cash, evidences of indebtedness or
other securities or assets (other than cash dividends or distributions payable
out of earned surplus or net profits for the current or preceding year) then, in
any such case, Holder shall be entitled to receive, upon Exercise of this
Warrant, with respect to each share of Common Stock issuable upon such exercise,
the amount of cash or evidences of indebtedness or other securities or assets
which Holder would have been entitled to receive with respect to each such share
of Common Stock as a result of the happening of such event had this Warrant been
exercised immediately prior to the record date or other date fixing shareholders
to be affected by such event (the "Determination Date") or, in lieu thereof, if
the Board of Directors of the Company should so determine at the time of such
distribution, a reduced Exercise Price determined by multiplying the Exercise
Price on the Determination Date by a fraction, the numerator of which is the
result of such Exercise Price reduced by the value of such distribution
applicable to one share of Common Stock (such value to be determined by the
Board of Directors of the Company in its discretion) and the denominator of
which is such Exercise Price.
(d) Notice of Consolidation or Merger. In the event of a merger,
consolidation, exchange of shares, recapitalization, reorganization, or other
similar event, as a result of which shares of Common Stock shall be changed into
the same or a different number of shares of the same or another class or classes
of stock or securities or other assets of the Company or another entity or there
is a sale of all or substantially all the Company's assets (a "Corporate
Change"), then this Warrant shall be exerciseable into such class and type of
securities or other assets as Holder would have received had Holder exercised
this Warrant immediately prior to such Corporate Change; provided, however, that
Company may not affect any Corporate Change unless it first shall have given
thirty (30) days notice to Holder hereof of any Corporate Change.
(e) Exercise Price Adjusted. As used in this Warrant, the term
"Exercise Price" shall mean the purchase price per share specified in Section 3
of this Warrant, until the occurrence of an event stated in subsection (a), (b)
or (c) of this Section 5, and thereafter shall mean said price as adjusted from
time to time in accordance with the provisions of said subsection. No such
adjustment under this Section 5 shall be made unless such adjustment would
change the Exercise Price at the time by $.01 or more; provided, however, that
all adjustments not so made shall be deferred and made when the aggregate
4
<PAGE> 31
thereof would change the Exercise Price at the time by $.01 or more. No
adjustment made pursuant to any provision of this Section 5 shall have the net
effect of increasing the Exercise Price. The number of shares of Common Stock
subject hereto shall increase proportionately with each decrease in the Exercise
Price.
(f) Adjustments: Additional Shares, Securities or Assets. In the event
that at any time, as a result of an adjustment made pursuant to this Section 5,
Holder shall, upon Exercise of this Warrant, become entitled to receive shares
and/or other securities or assets (other than Common Stock) then, wherever
appropriate, all references herein to shares of Common Stock shall be deemed to
refer to and include such shares and/or other securities or assets; and
thereafter the number of such shares and/or other securities or assets shall be
subject to adjustment from time to time in a manner and upon terms as nearly
equivalent as practicable to the provisions of this Section 5.
6. Fractional Interests.
No fractional shares or scrip representing fractional shares
shall be issuable upon the Exercise of this Warrant, but on Exercise of this
Warrant, Holder may purchase only a whole number of shares of Common Stock. If,
on Exercise of this Warrant, Holder would be entitled to a fractional share of
Common Stock or a right to acquire a fractional share of Common Stock, such
fractional share shall be disregarded and the number of shares of Common Stock
issuable upon exercise shall be the next higher number of shares.
7. Reservation of Shares.
The Company shall at all times reserve for issuance such
number of authorized and unissued shares of Common Stock (or other securities
substituted therefor as herein above provided) as shall be sufficient for the
Exercise of this Warrant and payment of the Exercise Price. The Company
covenants and agrees that upon the Exercise of this Warrant, all shares of
Common Stock issuable upon such exercise shall be duly and validly issued, fully
paid, nonassessable and not subject to preemptive rights, rights of first
refusal or similar rights of any person or entity.
8. Restrictions on Transfer.
(a) Registration or Exemption Required. This Warrant has been
issued in a transaction exempt from the registration requirements of the Act by
virtue of Regulation D and exempt from state registration under applicable state
laws. The Warrant and the Common Stock issuable upon the Exercise of this
Warrant may not be pledged, transferred, sold or assigned except pursuant to an
effective registration statement or an exemption to the registration
requirements of the Act and applicable state laws.
(b) Assignment. If Holder can provide the Company with
reasonably satisfactory evidence that the conditions of (a) above regarding
registration or exemption have been satisfied, Holder may sell, transfer,
assign, pledge or otherwise dispose of this Warrant, in whole or in part. Holder
shall deliver a written notice to Company, substantially in the form of the
Assignment attached hereto as Exhibit B, indicating the person or persons to
whom the Warrant shall be assigned and the respective number of warrants to be
assigned to each assignee. The Company shall effect the assignment within ten
(10) days, and shall deliver to the assignee(s) designated by Holder a Warrant
or Warrants of like tenor and terms for the appropriate number of shares.
5
<PAGE> 32
9. Benefits of this Warrant.
Nothing in this Warrant shall be construed to confer upon any
person other than the Company and Holder any legal or equitable right, remedy or
claim under this Warrant and this Warrant shall be for the sole and exclusive
benefit of the Company and Holder.
10. Applicable Law.
This Warrant is issued under and shall for all purposes be
governed by and construed in accordance with the laws of the state of Delaware,
without giving effect to conflict of law provisions thereof.
11. Loss of Warrant.
Upon receipt by the Company of evidence of the loss, theft,
destruction or mutilation of this Warrant, and (in the case of loss, theft or
destruction) of indemnity or security reasonably satisfactory to the Company,
and upon surrender and cancellation of this Warrant, if mutilated, the Company
shall execute and deliver a new Warrant of like tenor and date.
12. Notice or Demands.
Notices or demands pursuant to this Warrant to be given or made by Holder to or
on the Company shall be sufficiently given or made if sent by certified or
registered mail, return receipt requested, postage prepaid, and addressed, until
another address is designated in writing by the Company, to Attention:
President, 865 SW 78th Avenue, Suite 100, Plantation, Florida, 33324 Telephone
No. (954) 233-8746, Facsimile No. (954) 233-1414 . Notices or demands pursuant
to this Warrant to be given or made by the Company to or on Holder shall be
sufficiently given or made if sent by certified or registered mail, return
receipt requested, postage prepaid, and addressed, to the address of Holder set
forth in the Company's records, until another address is designated in writing
by Holder.
IN WITNESS WHEREOF, the undersigned has executed this Warrant as of the
______ day of April, 1998.
VIRAGEN, INC.
By:
----------------------------
Dennis W. Healey
Title: Exec. Vice President/CFO
6
<PAGE> 33
EXHIBIT A
EXERCISE FORM
TO: VIRAGEN, INC.
The undersigned hereby irrevocably exercises the right to purchase
____________ of the shares of Common Stock (the "Common Stock") of VIRAGEN,
INC., a Delaware corporation (the "Company"), evidenced by the attached warrant
(the "Warrant"), and herewith makes payment of the exercise price with respect
to such shares in full, all in accordance with the conditions and provisions of
said Warrant.
1. The undersigned agrees not to offer, sell, transfer or otherwise dispose of
any of the Common Stock obtained on exercise of the Warrant, except in
accordance with the provisions of Section 8(a) of the Warrant.
2. The undersigned requests that stock certificates for such shares be issued
free of any restrictive legend, if appropriate, and a warrant representing any
unexercised portion hereof be issued, pursuant to the Warrant in the name of the
undersigned and delivered to the undersigned at the address set forth below:
Dated:
- --------------------------------------------------------------------------------
Signature
- --------------------------------------------------------------------------------
Print Name
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
NOTICE
The signature to the foregoing Exercise Form must correspond to the name as
written upon the face of the attached Warrant in every particular, without
alteration or enlargement or any change whatsoever.
- --------------------------------------------------------------------------------
7
<PAGE> 34
EXHIBIT B
ASSIGNMENT
(To be executed by the registered holder
desiring to transfer the Warrant)
FOR VALUE RECEIVED, the undersigned holder of the attached warrant (the
"Warrant") hereby sells, assigns and transfers unto the person or persons below
named the right to purchase _______ shares of the Common Stock of VIRAGEN, INC.,
evidenced by the attached Warrant and does hereby irrevocably constitute and
appoint _______________________ attorney to transfer the said Warrant on the
books of the Company, with full power of substitution in the premises.
Dated:
-----------------------------------
Signature
Fill in for new registration of Warrant:
- -----------------------------------------
Name
- -----------------------------------------
Address
- -----------------------------------------
Please print name and address of assignee
(including zip code number)
- --------------------------------------------------------------------------------
NOTICE
The signature to the foregoing Assignment must correspond to the name as written
upon the face of the attached Warrant in every particular, without alteration or
enlargement or any change whatsoever.
- --------------------------------------------------------------------------------
<PAGE> 35
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES I PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
"N" shares
"12 MONTH" WARRANT TO PURCHASE COMMON STOCK
OF
VIRAGEN, INC.
THIS CERTIFIES that ________________ or any subsequent holder hereof
("Holder"), has the right to purchase from VIRAGEN, INC., a Delaware corporation
(the "Company"), up to "N" fully paid and nonassessable shares, wherein "N" is
defined below, of the Company's common stock, $.01 par value per share ("Common
Stock"), subject to adjustment as provided herein, at a price equal to the
Exercise Price as defined in Section 3 below, at any time beginning on the Date
of Issuance (as defined below) and ending at 5:00 p.m., New York, New York time,
on February 17, 2003 (the "Exercise Period"); provided, that "N" shall equal
fifteen percent (15%) of the quotient obtained when (i) the principal amount of
the Series I Preferred Stock purchased by Holder minus the principal amount of
any Series I Share Disposition, as defined below, that occurs prior to the
expiration of the date which is nine (12) months from February 17, 1998 (the "12
Month Date"), is divided by (ii) the "12 Month Market Price", as defined below.
For purposes hereof, "Series I Share Disposition" shall mean a transaction
whereby the Holder either (i) transfers shares of the Series I Preferred Stock;
or (ii) converts shares of the Series I Preferred Stock pursuant to the terms of
the Company's Certificate of Designation of Series I Preferred Stock and "12
Month Market Price" shall mean the average of the lowest two (2) closing bid
prices during the twenty (20) trading days for the Common Stock prior to the 12
Month Date. Within ten (10) days of the 12 Month Date, the Company shall provide
written confirmation to the Holder of the number of shares of Common Stock, as
adjusted if applicable, which the Holder has the right to purchase hereunder.
Holder agrees with the Company that this Warrant to Purchase Common
Stock of Viragen, Inc. (this "Warrant") is issued and all rights hereunder shall
be held subject to all of the conditions, limitations and provisions set forth
herein.
<PAGE> 36
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES I PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
"N" shares
"12 MONTH" WARRANT TO PURCHASE COMMON STOCK
OF
VIRAGEN, INC.
THIS CERTIFIES that Chelverton Fund Ltd or any subsequent holder hereof
("Holder"), has the right to purchase from VIRAGEN, INC., a Delaware corporation
(the "Company"), up to "N" fully paid and nonassessable shares, wherein "N" is
defined below, of the Company's common stock, $.01 par value per share ("Common
Stock"), subject to adjustment as provided herein, at a price equal to the
Exercise Price as defined in Section 3 below, at any time beginning on the Date
of Issuance (as defined below) and ending at 5:00 p.m., New York, New York time,
on February 17, 2003 (the "Exercise Period"); provided, that "N" shall equal
fifteen percent (15%) of the quotient obtained when (i) the principal amount of
the Series I Preferred Stock purchased by Holder minus the principal amount of
any Series I Share Disposition, as defined below, that occurs prior to the
expiration of the date which is nine (12) months from February 17, 1998 (the "12
Month Date"), is divided by (ii) the "12 Month Market Price", as defined below.
For purposes hereof, "Series I Share Disposition" shall mean a transaction
whereby the Holder either (i) transfers shares of the Series I Preferred Stock;
or (ii) converts shares of the Series I Preferred Stock pursuant to the terms of
the Company's Certificate of Designation of Series I Preferred Stock and "12
Month Market Price" shall mean the average of the lowest two (2) closing bid
prices during the twenty (20) trading days for the Common Stock prior to the 12
Month Date. Within ten (10) days of the 12 Month Date, the Company shall provide
written confirmation to the Holder of the number of shares of Common Stock, as
adjusted if applicable, which the Holder has the right to purchase hereunder.
Holder agrees with the Company that this Warrant to Purchase Common
Stock of Viragen, Inc. (this "Warrant") is issued and all rights hereunder shall
be held subject to all of the conditions, limitations and provisions set forth
herein.
<PAGE> 37
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES I PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
"N" shares
"12 MONTH" WARRANT TO PURCHASE COMMON STOCK
OF
VIRAGEN, INC.
THIS CERTIFIES that Global Bermuda Limited Partnership or any
subsequent holder hereof ("Holder"), has the right to purchase from VIRAGEN,
INC., a Delaware corporation (the "Company"), up to "N" fully paid and
nonassessable shares, wherein "N" is defined below, of the Company's common
stock, $.01 par value per share ("Common Stock"), subject to adjustment as
provided herein, at a price equal to the Exercise Price as defined in Section 3
below, at any time beginning on the Date of Issuance (as defined below) and
ending at 5:00 p.m., New York, New York time, on February 17, 2003 (the
"Exercise Period"); provided, that "N" shall equal fifteen percent (15%) of the
quotient obtained when (i) the principal amount of the Series I Preferred Stock
purchased by Holder minus the principal amount of any Series I Share
Disposition, as defined below, that occurs prior to the expiration of the date
which is nine (12) months from February 17, 1998 (the "12 Month Date"), is
divided by (ii) the "12 Month Market Price", as defined below. For purposes
hereof, "Series I Share Disposition" shall mean a transaction whereby the Holder
either (i) transfers shares of the Series I Preferred Stock; or (ii) converts
shares of the Series I Preferred Stock pursuant to the terms of the Company's
Certificate of Designation of Series I Preferred Stock and "12 Month Market
Price" shall mean the average of the lowest two (2) closing bid prices during
the twenty (20) trading days for the Common Stock prior to the 12 Month Date.
Within ten (10) days of the 12 Month Date, the Company shall provide written
confirmation to the Holder of the number of shares of Common Stock, as adjusted
if applicable, which the Holder has the right to purchase hereunder.
Holder agrees with the Company that this Warrant to Purchase Common
Stock of Viragen, Inc. (this "Warrant") is issued and all rights hereunder shall
be held subject to all of the conditions, limitations and provisions set forth
herein.
<PAGE> 38
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES I PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
"N" shares
"12 MONTH" WARRANT TO PURCHASE COMMON STOCK
OF
VIRAGEN, INC.
THIS CERTIFIES that Lakeshore International, Ltd. or any subsequent
holder hereof ("Holder"), has the right to purchase from VIRAGEN, INC., a
Delaware corporation (the "Company"), up to "N" fully paid and nonassessable
shares, wherein "N" is defined below, of the Company's common stock, $.01 par
value per share ("Common Stock"), subject to adjustment as provided herein, at a
price equal to the Exercise Price as defined in Section 3 below, at any time
beginning on the Date of Issuance (as defined below) and ending at 5:00 p.m.,
New York, New York time, on February 17, 2003 (the "Exercise Period"); provided,
that "N" shall equal fifteen percent (15%) of the quotient obtained when (i) the
principal amount of the Series I Preferred Stock purchased by Holder minus the
principal amount of any Series I Share Disposition, as defined below, that
occurs prior to the expiration of the date which is nine (12) months from
February 17, 1998 (the "12 Month Date"), is divided by (ii) the "12 Month Market
Price", as defined below. For purposes hereof, "Series I Share Disposition"
shall mean a transaction whereby the Holder either (i) transfers shares of the
Series I Preferred Stock; or (ii) converts shares of the Series I Preferred
Stock pursuant to the terms of the Company's Certificate of Designation of
Series I Preferred Stock and "12 Month Market Price" shall mean the average of
the lowest two (2) closing bid prices during the twenty (20) trading days for
the Common Stock prior to the 12 Month Date. Within ten (10) days of the 12
Month Date, the Company shall provide written confirmation to the Holder of the
number of shares of Common Stock, as adjusted if applicable, which the Holder
has the right to purchase hereunder.
Holder agrees with the Company that this Warrant to Purchase Common
Stock of Viragen, Inc. (this "Warrant") is issued and all rights hereunder shall
be held subject to all of the conditions, limitations and provisions set forth
herein.
<PAGE> 39
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES I PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
"N" shares
"12 MONTH" WARRANT TO PURCHASE COMMON STOCK
OF
VIRAGEN, INC.
THIS CERTIFIES that LaRocque Trading Group, LLC or any subsequent
holder hereof ("Holder"), has the right to purchase from VIRAGEN, INC., a
Delaware corporation (the "Company"), up to "N" fully paid and nonassessable
shares, wherein "N" is defined below, of the Company's common stock, $.01 par
value per share ("Common Stock"), subject to adjustment as provided herein, at a
price equal to the Exercise Price as defined in Section 3 below, at any time
beginning on the Date of Issuance (as defined below) and ending at 5:00 p.m.,
New York, New York time, on February 17, 2003 (the "Exercise Period"); provided,
that "N" shall equal fifteen percent (15%) of the quotient obtained when (i) the
principal amount of the Series I Preferred Stock purchased by Holder minus the
principal amount of any Series I Share Disposition, as defined below, that
occurs prior to the expiration of the date which is nine (12) months from
February 17, 1998 (the "12 Month Date"), is divided by (ii) the "12 Month Market
Price", as defined below. For purposes hereof, "Series I Share Disposition"
shall mean a transaction whereby the Holder either (i) transfers shares of the
Series I Preferred Stock; or (ii) converts shares of the Series I Preferred
Stock pursuant to the terms of the Company's Certificate of Designation of
Series I Preferred Stock and "12 Month Market Price" shall mean the average of
the lowest two (2) closing bid prices during the twenty (20) trading days for
the Common Stock prior to the 12 Month Date. Within ten (10) days of the 12
Month Date, the Company shall provide written confirmation to the Holder of the
number of shares of Common Stock, as adjusted if applicable, which the Holder
has the right to purchase hereunder.
Holder agrees with the Company that this Warrant to Purchase Common
Stock of Viragen, Inc. (this "Warrant") is issued and all rights hereunder shall
be held subject to all of the conditions, limitations and provisions set forth
herein.
<PAGE> 40
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES I PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
"N" shares
"12 MONTH" WARRANT TO PURCHASE COMMON STOCK
OF
VIRAGEN, INC.
THIS CERTIFIES that The Tail Wind Fund Ltd. or any subsequent holder
hereof ("Holder"), has the right to purchase from VIRAGEN, INC., a Delaware
corporation (the "Company"), up to "N" fully paid and nonassessable shares,
wherein "N" is defined below, of the Company's common stock, $.01 par value per
share ("Common Stock"), subject to adjustment as provided herein, at a price
equal to the Exercise Price as defined in Section 3 below, at any time beginning
on the Date of Issuance (as defined below) and ending at 5:00 p.m., New York,
New York time, on February 17, 2003 (the "Exercise Period"); provided, that "N"
shall equal fifteen percent (15%) of the quotient obtained when (i) the
principal amount of the Series I Preferred Stock purchased by Holder minus the
principal amount of any Series I Share Disposition, as defined below, that
occurs prior to the expiration of the date which is nine (12) months from
February 17, 1998 (the "12 Month Date"), is divided by (ii) the "12 Month Market
Price", as defined below. For purposes hereof, "Series I Share Disposition"
shall mean a transaction whereby the Holder either (i) transfers shares of the
Series I Preferred Stock; or (ii) converts shares of the Series I Preferred
Stock pursuant to the terms of the Company's Certificate of Designation of
Series I Preferred Stock and "12 Month Market Price" shall mean the average of
the lowest two (2) closing bid prices during the twenty (20) trading days for
the Common Stock prior to the 12 Month Date. Within ten (10) days of the 12
Month Date, the Company shall provide written confirmation to the Holder of the
number of shares of Common Stock, as adjusted if applicable, which the Holder
has the right to purchase hereunder.
Holder agrees with the Company that this Warrant to Purchase Common
Stock of Viragen, Inc. (this "Warrant") is issued and all rights hereunder shall
be held subject to all of the conditions, limitations and provisions set forth
herein.
<PAGE> 41
1. Date of Issuance.
This Warrant shall be deemed to be issued on April 2, 1998 ("Date of
Issuance").
2. Exercise.
(a) Manner of Exercise. During the Exercise Period, this Warrant may be
exercised as to all or any lesser number of full shares of Common Stock covered
hereby upon surrender of this Warrant, with the Exercise Form attached hereto as
Exhibit A (the "Exercise Form") duly completed and executed, together with the
full Exercise Price (as defined below) for each share of Common Stock as to
which this Warrant is exercised, at the office of the Company, 865 SW 78th
Avenue, Suite 100, Plantation, Florida, 33324 Telephone No. (954) 233-8746,
Facsimile No. (954) 233-1414 , or at such other office or agency as the Company
may designate in writing, by overnight mail, with an advance copy of the
Exercise Form sent to the Company and its Transfer Agent by facsimile (such
surrender and payment of the Exercise Price hereinafter called the "Exercise of
this Warrant").
(b) Date of Exercise. The "Date of Exercise" of the Warrant shall be
defined as the date that the advance copy of the completed and executed Exercise
Form is sent by facsimile to the Company, provided that the original Warrant and
Exercise Form are received by the Company as soon as practicable thereafter.
Alternatively, the Date of Exercise shall be defined as the date the original
Exercise Form is received by the Company, if Holder has not sent advance notice
by facsimile.
(c) Cancellation of Warrant. This Warrant shall be canceled upon the
Exercise of this Warrant, and, as soon as practical after the Date of Exercise,
Holder shall be entitled to receive Common Stock for the number of shares
purchased upon such Exercise of this Warrant, and if this Warrant is not
exercised in full, Holder shall be entitled to receive a new Warrant (containing
terms identical to this Warrant) representing any unexercised portion of this
Warrant in addition to such Common Stock.
(d) Holder of Record. Each person in whose name any Warrant for shares
of Common Stock is issued shall, for all purposes, be deemed to be the Holder of
record of such shares on the Date of Exercise of this Warrant, irrespective of
the date of delivery of the Common Stock purchased upon the Exercise of this
Warrant. Nothing in this Warrant shall be construed as conferring upon Holder
any rights as a stockholder of the Company.
3. Payment of Warrant Exercise Price.
The Exercise Price shall equal the 12 Month Market Price per share
("Exercise Price").
Payment of the Exercise Price may be made by either of the following,
or a combination thereof, at the election of Holder:
(a) Cash Exercise: cash, bank or cashiers check or wire transfer; or
(b) Cashless Exercise: subject to the last sentence of this Section 3,
surrender of this Warrant at the principal office of the Company together with
notice of cashless election, in which event the Company shall issue Holder a
number of shares of Common Stock computed using the following formula:
X = Y (A-B)/A
where: X = the number of shares of Common Stock to be issued to Holder.
2
<PAGE> 42
Y = the number of shares of Common Stock for which this Warrant is
being exercised.
A = the Market Price of one (1) share of Common Stock (for purposes of
this Section 3(b), the "Market Price" shall be defined as the average
closing bid price of the Common Stock for the five (5) trading days
prior to the Date of Exercise of this Warrant (the "Average Closing
Price"), as reported by the National Association of Securities Dealers
Automated Quotation System ("Nasdaq") National Market System, or if the
Common Stock is not traded on the Nasdaq National Market System, the
Average Closing Price on the Nasdaq Small Cap Market or in any other
over-the-counter market on which the Common Stock is traded. If the
Common Stock is/was not traded during the five (5) trading days prior to
the Date of Exercise, then the closing price for the last publicly
traded day shall be deemed to be the closing price for any and all (if
applicable) days during such five (5) trading day period).
B = the Exercise Price.
For purposes of Rule 144 and sub-section (d)(3)(ii) thereof, it is intended,
understood and acknowledged that the Common Stock issuable upon exercise of this
Warrant in a cashless exercise transaction shall be deemed to have been acquired
at the time this Warrant was issued. Moreover, it is intended, understood and
acknowledged that the holding period for the Common Stock issuable upon exercise
of this Warrant in a cashless exercise transaction shall be deemed to have
commenced on the date this Warrant was issued.
Notwithstanding anything to the contrary contained herein, this Warrant may not
be exercised in a cashless exercise transaction if, on the Date of Exercise, the
shares of Common Stock to be issued upon exercise of this Warrant would upon
such issuance (x) be immediately transferable in the United States free of any
restrictive legend, including without limitation under Rule 144; (y) be then
registered pursuant to an effective registration statement filed pursuant to
that certain Registration Rights Agreement dated on or about April 2, 1998 by
and among the Company and certain investors; or (z) otherwise be registered
under the Securities Act of 1933, as amended.
4. Transfer and Registration.
(a) Transfer Rights. Subject to the provisions of Section 8 of this
Warrant, this Warrant may be transferred on the books of the Company, in whole
or in part, in person or by attorney, upon surrender of this Warrant properly
completed and endorsed. This Warrant shall be canceled upon such surrender and,
as soon as practicable thereafter, the person to whom such transfer is made
shall be entitled to receive a new Warrant or Warrants as to the portion of this
Warrant transferred, and Holder shall be entitled to receive a new Warrant as to
the portion hereof retained.
(b) Registrable Securities. The Common Stock issuable upon the exercise
of this Warrant constitutes "Registrable Securities" under that certain
Registration Rights Agreement dated on or about April 2, 1998 between the
Company and certain investors and, accordingly, has the benefit of the
registration rights pursuant to that agreement.
3
<PAGE> 43
5. Anti-Dilution Adjustments.
(a) Stock Dividend. If the Company shall at any time declare a dividend
payable in shares of Common Stock, then Holder, upon Exercise of this Warrant
after the record date for the determination of holders of Common Stock entitled
to receive such dividend, shall be entitled to receive upon Exercise of this
Warrant, in addition to the number of shares of Common Stock as to which this
Warrant is exercised, such additional shares of Common Stock as such Holder
would have received had this Warrant been exercised immediately prior to such
record date and the Exercise Price will be proportionately adjusted.
(b) Recapitalization or Reclassification. If the Company shall at any
time effect a recapitalization, reclassification or other similar transaction of
such character that the shares of Common Stock shall be changed into or become
exchangeable for a larger or smaller number of shares, then upon the effective
date thereof, the number of shares of Common Stock which Holder shall be
entitled to purchase upon Exercise of this Warrant shall be increased or
decreased, as the case may be, in direct proportion to the increase or decrease
in the number of shares of Common Stock by reason of such recapitalization,
reclassification or similar transaction, and the Exercise Price shall be, in the
case of an increase in the number of shares, proportionally decreased and, in
the case of decrease in the number of shares, proportionally increased. The
Company shall give Holder the same notice it provides to holders of Common Stock
of any transaction described in this Section 5(b).
(c) Distributions. If the Company shall at any time distribute for no
consideration to holders of Common Stock cash, evidences of indebtedness or
other securities or assets (other than cash dividends or distributions payable
out of earned surplus or net profits for the current or preceding year) then, in
any such case, Holder shall be entitled to receive, upon Exercise of this
Warrant, with respect to each share of Common Stock issuable upon such exercise,
the amount of cash or evidences of indebtedness or other securities or assets
which Holder would have been entitled to receive with respect to each such share
of Common Stock as a result of the happening of such event had this Warrant been
exercised immediately prior to the record date or other date fixing shareholders
to be affected by such event (the "Determination Date") or, in lieu thereof, if
the Board of Directors of the Company should so determine at the time of such
distribution, a reduced Exercise Price determined by multiplying the Exercise
Price on the Determination Date by a fraction, the numerator of which is the
result of such Exercise Price reduced by the value of such distribution
applicable to one share of Common Stock (such value to be determined by the
Board of Directors of the Company in its discretion) and the denominator of
which is such Exercise Price.
(d) Notice of Consolidation or Merger. In the event of a merger,
consolidation, exchange of shares, recapitalization, reorganization, or other
similar event, as a result of which shares of Common Stock shall be changed into
the same or a different number of shares of the same or another class or classes
of stock or securities or other assets of the Company or another entity or there
is a sale of all or substantially all the Company's assets (a "Corporate
Change"), then this Warrant shall be exerciseable into such class and type of
securities or other assets as Holder would have received had Holder exercised
this Warrant immediately prior to such Corporate Change; provided, however, that
Company may not affect any Corporate Change unless it first shall have given
thirty (30) days notice to Holder hereof of any Corporate Change.
(e) Exercise Price Adjusted. As used in this Warrant, the term
"Exercise Price" shall mean the purchase price per share specified in Section 3
of this Warrant, until the occurrence of an event stated in subsection (a), (b)
or (c) of this Section 5, and thereafter
4
<PAGE> 44
shall mean said price as adjusted from time to time in accordance with the
provisions of said subsection. No such adjustment under this Section 5 shall be
made unless such adjustment would change the Exercise Price at the time by $.01
or more; provided, however, that all adjustments not so made shall be deferred
and made when the aggregate thereof would change the Exercise Price at the time
by $.01 or more. No adjustment made pursuant to any provision of this Section 5
shall have the net effect of increasing the Exercise Price. The number of shares
of Common Stock subject hereto shall increase proportionately with each decrease
in the Exercise Price.
(f) Adjustments: Additional Shares, Securities or Assets. In the event
that at any time, as a result of an adjustment made pursuant to this Section 5,
Holder shall, upon Exercise of this Warrant, become entitled to receive shares
and/or other securities or assets (other than Common Stock) then, wherever
appropriate, all references herein to shares of Common Stock shall be deemed to
refer to and include such shares and/or other securities or assets; and
thereafter the number of such shares and/or other securities or assets shall be
subject to adjustment from time to time in a manner and upon terms as nearly
equivalent as practicable to the provisions of this Section 5.
6. Fractional Interests.
No fractional shares or scrip representing fractional shares
shall be issuable upon the Exercise of this Warrant, but on Exercise of this
Warrant, Holder may purchase only a whole number of shares of Common Stock. If,
on Exercise of this Warrant, Holder would be entitled to a fractional share of
Common Stock or a right to acquire a fractional share of Common Stock, such
fractional share shall be disregarded and the number of shares of Common Stock
issuable upon exercise shall be the next higher number of shares.
7. Reservation of Shares.
The Company shall at all times reserve for issuance such
number of authorized and unissued shares of Common Stock (or other securities
substituted therefor as herein above provided) as shall be sufficient for the
Exercise of this Warrant and payment of the Exercise Price. The Company
covenants and agrees that upon the Exercise of this Warrant, all shares of
Common Stock issuable upon such exercise shall be duly and validly issued, fully
paid, nonassessable and not subject to preemptive rights, rights of first
refusal or similar rights of any person or entity.
8. Restrictions on Transfer.
(a) Registration or Exemption Required. This Warrant has been
issued in a transaction exempt from the registration requirements of the Act by
virtue of Regulation D and exempt from state registration under applicable state
laws. The Warrant and the Common Stock issuable upon the Exercise of this
Warrant may not be pledged, transferred, sold or assigned except pursuant to an
effective registration statement or an exemption to the registration
requirements of the Act and applicable state laws.
(b) Assignment. If Holder can provide the Company with
reasonably satisfactory evidence that the conditions of (a) above regarding
registration or exemption have been satisfied, Holder may sell, transfer,
assign, pledge or otherwise dispose of this Warrant, in whole or in part. Holder
shall deliver a written notice to Company, substantially in the form of the
Assignment attached hereto as Exhibit B, indicating the person or persons to
whom the Warrant shall be assigned and the respective number of warrants to be
assigned to each assignee. The Company shall effect the assignment within ten
(10) days, and shall deliver to the assignee(s) designated by Holder a Warrant
or Warrants of like tenor and terms for the appropriate number of shares.
5
<PAGE> 45
9. Benefits of this Warrant.
Nothing in this Warrant shall be construed to confer upon any
person other than the Company and Holder any legal or equitable right, remedy or
claim under this Warrant and this Warrant shall be for the sole and exclusive
benefit of the Company and Holder.
10. Applicable Law.
This Warrant is issued under and shall for all purposes be
governed by and construed in accordance with the laws of the state of Delaware,
without giving effect to conflict of law provisions thereof.
11. Loss of Warrant.
Upon receipt by the Company of evidence of the loss, theft,
destruction or mutilation of this Warrant, and (in the case of loss, theft or
destruction) of indemnity or security reasonably satisfactory to the Company,
and upon surrender and cancellation of this Warrant, if mutilated, the Company
shall execute and deliver a new Warrant of like tenor and date.
12. Notice or Demands.
Notices or demands pursuant to this Warrant to be given or made by Holder to or
on the Company shall be sufficiently given or made if sent by certified or
registered mail, return receipt requested, postage prepaid, and addressed, until
another address is designated in writing by the Company, to Attention:
President, 865 SW 78th Avenue, Suite 100, Plantation, Florida, 33324 Telephone
No. (954) 233-8746, Facsimile No. (954) 233-1414 . Notices or demands pursuant
to this Warrant to be given or made by the Company to or on Holder shall be
sufficiently given or made if sent by certified or registered mail, return
receipt requested, postage prepaid, and addressed, to the address of Holder set
forth in the Company's records, until another address is designated in writing
by Holder.
IN WITNESS WHEREOF, the undersigned has executed this Warrant as of the
______ day of April, 1998.
VIRAGEN, INC.
By:
-----------------------------------
Dennis W. Healey
Title: Exec. Vice President/CFO
6
<PAGE> 46
EXHIBIT A
EXERCISE FORM
TO: VIRAGEN, INC.
The undersigned hereby irrevocably exercises the right to purchase
____________ of the shares of Common Stock (the "Common Stock") of VIRAGEN,
INC., a Delaware corporation (the "Company"), evidenced by the attached warrant
(the "Warrant"), and herewith makes payment of the exercise price with respect
to such shares in full, all in accordance with the conditions and provisions of
said Warrant.
1. The undersigned agrees not to offer, sell, transfer or otherwise dispose of
any of the Common Stock obtained on exercise of the Warrant, except in
accordance with the provisions of Section 8(a) of the Warrant.
2. The undersigned requests that stock certificates for such shares be issued
free of any restrictive legend, if appropriate, and a warrant representing any
unexercised portion hereof be issued, pursuant to the Warrant in the name of the
undersigned and delivered to the undersigned at the address set forth below:
Dated:
- --------------------------------------------------------------------------------
Signature
- --------------------------------------------------------------------------------
Print Name
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
NOTICE
The signature to the foregoing Exercise Form must correspond to the name as
written upon the face of the attached Warrant in every particular, without
alteration or enlargement or any change whatsoever.
- --------------------------------------------------------------------------------
7
<PAGE> 47
EXHIBIT B
ASSIGNMENT
(To be executed by the registered holder
desiring to transfer the Warrant)
FOR VALUE RECEIVED, the undersigned holder of the attached warrant (the
"Warrant") hereby sells, assigns and transfers unto the person or persons below
named the right to purchase _______ shares of the Common Stock of VIRAGEN, INC.,
evidenced by the attached Warrant and does hereby irrevocably constitute and
appoint _______________________ attorney to transfer the said Warrant on the
books of the Company, with full power of substitution in the premises.
Dated:
-----------------------------------
Signature
Fill in for new registration of Warrant:
- ------------------------------------------
Name
- ------------------------------------------
Address
- ------------------------------------------
Please print name and address of assignee
(including zip code number)
- --------------------------------------------------------------------------------
NOTICE
The signature to the foregoing Assignment must correspond to the name as written
upon the face of the attached Warrant in every particular, without alteration or
enlargement or any change whatsoever.
- --------------------------------------------------------------------------------
<PAGE> 48
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES H PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
"N" shares
- ----------
"15 Month" Warrant to Purchase Common Stock
of
VIRAGEN, INC.
THIS CERTIFIES that ________________ or any subsequent holder hereof
("Holder"), has the right to purchase from VIRAGEN, INC., a Delaware corporation
(the "Company"), up to "N" fully paid and nonassessable shares, wherein "N" is
defined below, of the Company's common stock, $.01 par value per share ("Common
Stock"), subject to adjustment as provided herein, at a price equal to the
Exercise Price as defined in Section 3 below, at any time beginning on the Date
of Issuance (as defined below) and ending at 5:00 p.m., New York, New York time,
on February 17, 2003 (the "Exercise Period"); provided, that "N" shall equal
twenty percent (20%) of the quotient obtained when (i) the principal amount of
the Series H Preferred Stock purchased by Holder minus the principal amount of
any Series H Share Disposition, as defined below, that occurs prior to the
expiration of the date which is nine (15) months from the Date of Issuance (the
"15 Month Date"), is divided by (ii) the "15 Month Market Price", as defined
below. For purposes hereof, "Series H Share Disposition" shall mean a
transaction whereby the Holder either (i) transfers shares of the Series H
Preferred Stock; or (ii) converts shares of the Series H Preferred Stock
pursuant to the terms of the Company's Certificate of Designation of Series H
Preferred Stock and "15 Month Market Price" shall mean the average of the lowest
two (2) closing bid prices for the Common Stock during the twenty (20) trading
days prior to the 15 Month Date. Within ten (10) days of the 15 Month Date, the
Company shall provide written confirmation to the Holder of the number of shares
of Common Stock, as adjusted if applicable, which the Holder has the right to
purchase hereunder.
Holder agrees with the Company that this Warrant to Purchase Common
Stock of Viragen, Inc. (this "Warrant") is issued and all rights hereunder shall
be held subject to all of the conditions, limitations and provisions set forth
herein.
<PAGE> 49
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES H PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
"N" shares
- ----------
"15 Month" Warrant to Purchase Common Stock
of
VIRAGEN, INC.
THIS CERTIFIES that Chelverton Fund Ltd or any subsequent holder hereof
("Holder"), has the right to purchase from VIRAGEN, INC., a Delaware corporation
(the "Company"), up to "N" fully paid and nonassessable shares, wherein "N" is
defined below, of the Company's common stock, $.01 par value per share ("Common
Stock"), subject to adjustment as provided herein, at a price equal to the
Exercise Price as defined in Section 3 below, at any time beginning on the Date
of Issuance (as defined below) and ending at 5:00 p.m., New York, New York time,
on February 17, 2003 (the "Exercise Period"); provided, that "N" shall equal
twenty percent (20%) of the quotient obtained when (i) the principal amount of
the Series H Preferred Stock purchased by Holder minus the principal amount of
any Series H Share Disposition, as defined below, that occurs prior to the
expiration of the date which is nine (15) months from the Date of Issuance (the
"15 Month Date"), is divided by (ii) the "15 Month Market Price", as defined
below. For purposes hereof, "Series H Share Disposition" shall mean a
transaction whereby the Holder either (i) transfers shares of the Series H
Preferred Stock; or (ii) converts shares of the Series H Preferred Stock
pursuant to the terms of the Company's Certificate of Designation of Series H
Preferred Stock and "15 Month Market Price" shall mean the average of the lowest
two (2) closing bid prices for the Common Stock during the twenty (20) trading
days prior to the 15 Month Date. Within ten (10) days of the 15 Month Date, the
Company shall provide written confirmation to the Holder of the number of shares
of Common Stock, as adjusted if applicable, which the Holder has the right to
purchase hereunder.
Holder agrees with the Company that this Warrant to Purchase Common
Stock of Viragen, Inc. (this "Warrant") is issued and all rights hereunder shall
be held subject to all of the conditions, limitations and provisions set forth
herein.
<PAGE> 50
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES H PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
"N" shares
- ----------
"15 Month" Warrant to Purchase Common Stock
of
VIRAGEN, INC.
THIS CERTIFIES that Global Bermuda Limited Partnership or any
subsequent holder hereof ("Holder"), has the right to purchase from VIRAGEN,
INC., a Delaware corporation (the "Company"), up to "N" fully paid and
nonassessable shares, wherein "N" is defined below, of the Company's common
stock, $.01 par value per share ("Common Stock"), subject to adjustment as
provided herein, at a price equal to the Exercise Price as defined in Section 3
below, at any time beginning on the Date of Issuance (as defined below) and
ending at 5:00 p.m., New York, New York time, on February 17, 2003 (the
"Exercise Period"); provided, that "N" shall equal twenty percent (20%) of the
quotient obtained when (i) the principal amount of the Series H Preferred Stock
purchased by Holder minus the principal amount of any Series H Share
Disposition, as defined below, that occurs prior to the expiration of the date
which is nine (15) months from the Date of Issuance (the "15 Month Date"), is
divided by (ii) the "15 Month Market Price", as defined below. For purposes
hereof, "Series H Share Disposition" shall mean a transaction whereby the Holder
either (i) transfers shares of the Series H Preferred Stock; or (ii) converts
shares of the Series H Preferred Stock pursuant to the terms of the Company's
Certificate of Designation of Series H Preferred Stock and "15 Month Market
Price" shall mean the average of the lowest two (2) closing bid prices for the
Common Stock during the twenty (20) trading days prior to the 15 Month Date.
Within ten (10) days of the 15 Month Date, the Company shall provide written
confirmation to the Holder of the number of shares of Common Stock, as adjusted
if applicable, which the Holder has the right to purchase hereunder.
Holder agrees with the Company that this Warrant to Purchase Common
Stock of Viragen, Inc. (this "Warrant") is issued and all rights hereunder shall
be held subject to all of the conditions, limitations and provisions set forth
herein.
<PAGE> 51
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES H PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
"N" shares
- ----------
"15 MONTH" WARRANT TO PURCHASE COMMON STOCK
OF
VIRAGEN, INC.
THIS CERTIFIES that Lakeshore International, Ltd. or any subsequent
holder hereof ("Holder"), has the right to purchase from VIRAGEN, INC., a
Delaware corporation (the "Company"), up to "N" fully paid and nonassessable
shares, wherein "N" is defined below, of the Company's common stock, $.01 par
value per share ("Common Stock"), subject to adjustment as provided herein, at a
price equal to the Exercise Price as defined in Section 3 below, at any time
beginning on the Date of Issuance (as defined below) and ending at 5:00 p.m.,
New York, New York time, on February 17, 2003 (the "Exercise Period"); provided,
that "N" shall equal twenty percent (20%) of the quotient obtained when (i) the
principal amount of the Series H Preferred Stock purchased by Holder minus the
principal amount of any Series H Share Disposition, as defined below, that
occurs prior to the expiration of the date which is nine (15) months from the
Date of Issuance (the "15 Month Date"), is divided by (ii) the "15 Month Market
Price", as defined below. For purposes hereof, "Series H Share Disposition"
shall mean a transaction whereby the Holder either (i) transfers shares of the
Series H Preferred Stock; or (ii) converts shares of the Series H Preferred
Stock pursuant to the terms of the Company's Certificate of Designation of
Series H Preferred Stock and "15 Month Market Price" shall mean the average of
the lowest two (2) closing bid prices for the Common Stock during the twenty
(20) trading days prior to the 15 Month Date. Within ten (10) days of the 15
Month Date, the Company shall provide written confirmation to the Holder of the
number of shares of Common Stock, as adjusted if applicable, which the Holder
has the right to purchase hereunder.
Holder agrees with the Company that this Warrant to Purchase Common
Stock of Viragen, Inc. (this "Warrant") is issued and all rights hereunder shall
be held subject to all of the conditions, limitations and provisions set forth
herein.
<PAGE> 52
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES H PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
"N" shares
- ----------
"15 Month" Warrant to Purchase Common Stock
of
VIRAGEN, INC.
THIS CERTIFIES that LaRocque Trading Group, LLC or any subsequent
holder hereof ("Holder"), has the right to purchase from VIRAGEN, INC., a
Delaware corporation (the "Company"), up to "N" fully paid and nonassessable
shares, wherein "N" is defined below, of the Company's common stock, $.01 par
value per share ("Common Stock"), subject to adjustment as provided herein, at a
price equal to the Exercise Price as defined in Section 3 below, at any time
beginning on the Date of Issuance (as defined below) and ending at 5:00 p.m.,
New York, New York time, on February 17, 2003 (the "Exercise Period"); provided,
that "N" shall equal twenty percent (20%) of the quotient obtained when (i) the
principal amount of the Series H Preferred Stock purchased by Holder minus the
principal amount of any Series H Share Disposition, as defined below, that
occurs prior to the expiration of the date which is nine (15) months from the
Date of Issuance (the "15 Month Date"), is divided by (ii) the "15 Month Market
Price", as defined below. For purposes hereof, "Series H Share Disposition"
shall mean a transaction whereby the Holder either (i) transfers shares of the
Series H Preferred Stock; or (ii) converts shares of the Series H Preferred
Stock pursuant to the terms of the Company's Certificate of Designation of
Series H Preferred Stock and "15 Month Market Price" shall mean the average of
the lowest two (2) closing bid prices for the Common Stock during the twenty
(20) trading days prior to the 15 Month Date. Within ten (10) days of the 15
Month Date, the Company shall provide written confirmation to the Holder of the
number of shares of Common Stock, as adjusted if applicable, which the Holder
has the right to purchase hereunder.
Holder agrees with the Company that this Warrant to Purchase Common
Stock of Viragen, Inc. (this "Warrant") is issued and all rights hereunder shall
be held subject to all of the conditions, limitations and provisions set forth
herein.
<PAGE> 53
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES H PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
"N" shares
- ----------
"15 MONTH" WARRANT TO PURCHASE COMMON STOCK
OF
VIRAGEN, INC.
THIS CERTIFIES that The Tail Wind Fund Ltd. or any subsequent holder
hereof ("Holder"), has the right to purchase from VIRAGEN, INC., a Delaware
corporation (the "Company"), up to "N" fully paid and nonassessable shares,
wherein "N" is defined below, of the Company's common stock, $.01 par value per
share ("Common Stock"), subject to adjustment as provided herein, at a price
equal to the Exercise Price as defined in Section 3 below, at any time beginning
on the Date of Issuance (as defined below) and ending at 5:00 p.m., New York,
New York time, on February 17, 2003 (the "Exercise Period"); provided, that "N"
shall equal twenty percent (20%) of the quotient obtained when (i) the principal
amount of the Series H Preferred Stock purchased by Holder minus the principal
amount of any Series H Share Disposition, as defined below, that occurs prior to
the expiration of the date which is nine (15) months from the Date of Issuance
(the "15 Month Date"), is divided by (ii) the "15 Month Market Price", as
defined below. For purposes hereof, "Series H Share Disposition" shall mean a
transaction whereby the Holder either (i) transfers shares of the Series H
Preferred Stock; or (ii) converts shares of the Series H Preferred Stock
pursuant to the terms of the Company's Certificate of Designation of Series H
Preferred Stock and "15 Month Market Price" shall mean the average of the lowest
two (2) closing bid prices for the Common Stock during the twenty (20) trading
days prior to the 15 Month Date. Within ten (10) days of the 15 Month Date, the
Company shall provide written confirmation to the Holder of the number of shares
of Common Stock, as adjusted if applicable, which the Holder has the right to
purchase hereunder.
Holder agrees with the Company that this Warrant to Purchase Common
Stock of Viragen, Inc. (this "Warrant") is issued and all rights hereunder shall
be held subject to all of the conditions, limitations and provisions set forth
herein.
<PAGE> 54
1. Date of Issuance.
This Warrant shall be deemed to be issued on February 17, 1998 ("Date
of Issuance").
2. Exercise.
(a) Manner of Exercise. During the Exercise Period, this Warrant may be
exercised as to all or any lesser number of full shares of Common Stock covered
hereby upon surrender of this Warrant, with the Exercise Form attached hereto as
Exhibit A (the "Exercise Form") duly completed and executed, together with the
full Exercise Price (as defined below) for each share of Common Stock as to
which this Warrant is exercised, at the office of the Company, 865 SW 78th
Avenue, Suite 100, Plantation, Florida, 33324 Telephone No. (954) 233-8746,
Facsimile No. (954) 233-1414 , or at such other office or agency as the Company
may designate in writing, by overnight mail, with an advance copy of the
Exercise Form sent to the Company and its Transfer Agent by facsimile (such
surrender and payment of the Exercise Price hereinafter called the "Exercise of
this Warrant").
(b) Date of Exercise. The "Date of Exercise" of the Warrant shall be
defined as the date that the advance copy of the completed and executed Exercise
Form is sent by facsimile to the Company, provided that the original Warrant and
Exercise Form are received by the Company as soon as practicable thereafter.
Alternatively, the Date of Exercise shall be defined as the date the original
Exercise Form is received by the Company, if Holder has not sent advance notice
by facsimile.
(c) Cancellation of Warrant. This Warrant shall be canceled upon the
Exercise of this Warrant, and, as soon as practical after the Date of Exercise,
Holder shall be entitled to receive Common Stock for the number of shares
purchased upon such Exercise of this Warrant, and if this Warrant is not
exercised in full, Holder shall be entitled to receive a new Warrant (containing
terms identical to this Warrant) representing any unexercised portion of this
Warrant in addition to such Common Stock.
(d) Holder of Record. Each person in whose name any Warrant for shares
of Common Stock is issued shall, for all purposes, be deemed to be the Holder of
record of such shares on the Date of Exercise of this Warrant, irrespective of
the date of delivery of the Common Stock purchased upon the Exercise of this
Warrant. Nothing in this Warrant shall be construed as conferring upon Holder
any rights as a stockholder of the Company.
3. Payment of Warrant Exercise Price.
The Exercise Price shall equal the 15 Month Market Price per share
("Exercise Price").
Payment of the Exercise Price may be made by either of the following,
or a combination thereof, at the election of Holder:
(a) Cash Exercise: cash, bank or cashiers check or wire transfer;
or
(b) Cashless Exercise: subject to the last sentence of this
Section 3, surrender of this Warrant at the principal office of the Company
together with notice of cashless election, in which event the Company shall
issue Holder a number of shares of Common Stock computed using the following
formula:
X = Y (A-B)/A
2
<PAGE> 55
where: X = the number of shares of Common Stock to be issued to Holder.
Y = the number of shares of Common Stock for which this Warrant
is being exercised.
A = the Market Price of one (1) share of Common Stock (for purposes of
this Section 3(b), the "Market Price" shall be defined as the average
closing bid price of the Common Stock for the five (5) trading days
prior to the Date of Exercise of this Warrant (the "Average Closing
Price"), as reported by the National Association of Securities Dealers
Automated Quotation System ("Nasdaq") National Market System, or if the
Common Stock is not traded on the Nasdaq National Market System, the
Average Closing Price on the Nasdaq Small Cap Market or in any other
over-the-counter market on which the Common Stock is traded. If the
Common Stock is/was not traded during the five (5) trading days prior to
the Date of Exercise, then the closing price for the last publicly
traded day shall be deemed to be the closing price for any and all (if
applicable) days during such five (5) trading day period).
B = the Exercise Price.
For purposes of Rule 144 and sub-section (d)(3)(ii) thereof, it is intended,
understood and acknowledged that the Common Stock issuable upon exercise of this
Warrant in a cashless exercise transaction shall be deemed to have been acquired
at the time this Warrant was issued. Moreover, it is intended, understood and
acknowledged that the holding period for the Common Stock issuable upon exercise
of this Warrant in a cashless exercise transaction shall be deemed to have
commenced on the date this Warrant was issued.
Notwithstanding anything to the contrary contained herein, this Warrant may not
be exercised in a cashless exercise transaction if, on the Date of Exercise, the
shares of Common Stock to be issued upon exercise of this Warrant would upon
such issuance (x) be immediately transferable in the United States free of any
restrictive legend, including without limitation under Rule 144; (y) be then
registered pursuant to an effective registration statement filed pursuant to
that certain Registration Rights Agreement dated on or about February 17, 1998
by and among the Company and certain investors; or (z) otherwise be registered
under the Securities Act of 1933, as amended.
4. Transfer and Registration.
(a) Transfer Rights. Subject to the provisions of Section 8 of this
Warrant, this Warrant may be transferred on the books of the Company, in whole
or in part, in person or by attorney, upon surrender of this Warrant properly
completed and endorsed. This Warrant shall be canceled upon such surrender and,
as soon as practicable thereafter, the person to whom such transfer is made
shall be entitled to receive a new Warrant or Warrants as to the portion of this
Warrant transferred, and Holder shall be entitled to receive a new Warrant as to
the portion hereof retained.
(b) Registrable Securities. The Common Stock issuable upon the exercise
of this Warrant constitutes "Registrable Securities" under that certain
Registration Rights Agreement dated on or about February 17, 1998 between the
Company and certain investors and, accordingly, has the benefit of the
registration rights pursuant to that agreement.
3
<PAGE> 56
5. Anti-Dilution Adjustments.
(a) Stock Dividend. If the Company shall at any time declare a
dividend payable in shares of Common Stock, then Holder, upon Exercise of this
Warrant after the record date for the determination of holders of Common Stock
entitled to receive such dividend, shall be entitled to receive upon Exercise of
this Warrant, in addition to the number of shares of Common Stock as to which
this Warrant is exercised, such additional shares of Common Stock as such Holder
would have received had this Warrant been exercised immediately prior to such
record date and the Exercise Price will be proportionately adjusted.
(b) Recapitalization or Reclassification. If the Company shall at
any time effect a recapitalization, reclassification or other similar
transaction of such character that the shares of Common Stock shall be changed
into or become exchangeable for a larger or smaller number of shares, then upon
the effective date thereof, the number of shares of Common Stock which Holder
shall be entitled to purchase upon Exercise of this Warrant shall be increased
or decreased, as the case may be, in direct proportion to the increase or
decrease in the number of shares of Common Stock by reason of such
recapitalization, reclassification or similar transaction, and the Exercise
Price shall be, in the case of an increase in the number of shares,
proportionally decreased and, in the case of decrease in the number of shares,
proportionally increased. The Company shall give Holder the same notice it
provides to holders of Common Stock of any transaction described in this Section
5(b).
(c) Distributions. If the Company shall at any time distribute for
no consideration to holders of Common Stock cash, evidences of indebtedness or
other securities or assets (other than cash dividends or distributions payable
out of earned surplus or net profits for the current or preceding year) then, in
any such case, Holder shall be entitled to receive, upon Exercise of this
Warrant, with respect to each share of Common Stock issuable upon such exercise,
the amount of cash or evidences of indebtedness or other securities or assets
which Holder would have been entitled to receive with respect to each such share
of Common Stock as a result of the happening of such event had this Warrant been
exercised immediately prior to the record date or other date fixing shareholders
to be affected by such event (the "Determination Date") or, in lieu thereof, if
the Board of Directors of the Company should so determine at the time of such
distribution, a reduced Exercise Price determined by multiplying the Exercise
Price on the Determination Date by a fraction, the numerator of which is the
result of such Exercise Price reduced by the value of such distribution
applicable to one share of Common Stock (such value to be determined by the
Board of Directors of the Company in its discretion) and the denominator of
which is such Exercise Price.
(d) Notice of Consolidation or Merger. In the event of a merger,
consolidation, exchange of shares, recapitalization, reorganization, or other
similar event, as a result of which shares of Common Stock shall be changed into
the same or a different number of shares of the same or another class or classes
of stock or securities or other assets of the Company or another entity or there
is a sale of all or substantially all the Company's assets (a "Corporate
Change"), then this Warrant shall be exerciseable into such class and type of
securities or other assets as Holder would have received had Holder exercised
this Warrant immediately prior to such Corporate Change; provided, however, that
Company may not affect any Corporate Change unless it first shall have given
thirty (30) days notice to Holder hereof of any Corporate Change.
(e) Exercise Price Adjusted. As used in this Warrant, the term
"Exercise Price" shall mean the purchase price per share specified in Section 3
of this Warrant, until the occurrence of an event stated in subsection (a), (b)
or (c) of this Section 5, and thereafter
4
<PAGE> 57
shall mean said price as adjusted from time to time in accordance with the
provisions of said subsection. No such adjustment under this Section 5 shall be
made unless such adjustment would change the Exercise Price at the time by $.01
or more; provided, however, that all adjustments not so made shall be deferred
and made when the aggregate thereof would change the Exercise Price at the time
by $.01 or more. No adjustment made pursuant to any provision of this Section 5
shall have the net effect of increasing the Exercise Price. The number of shares
of Common Stock subject hereto shall increase proportionately with each decrease
in the Exercise Price.
(f) Adjustments: Additional Shares, Securities or Assets. In the
event that at any time, as a result of an adjustment made pursuant to this
Section 5, Holder shall, upon Exercise of this Warrant, become entitled to
receive shares and/or other securities or assets (other than Common Stock) then,
wherever appropriate, all references herein to shares of Common Stock shall be
deemed to refer to and include such shares and/or other securities or assets;
and thereafter the number of such shares and/or other securities or assets shall
be subject to adjustment from time to time in a manner and upon terms as nearly
equivalent as practicable to the provisions of this Section 5.
6. Fractional Interests.
No fractional shares or scrip representing fractional shares
shall be issuable upon the Exercise of this Warrant, but on Exercise of this
Warrant, Holder may purchase only a whole number of shares of Common Stock. If,
on Exercise of this Warrant, Holder would be entitled to a fractional share of
Common Stock or a right to acquire a fractional share of Common Stock, such
fractional share shall be disregarded and the number of shares of Common Stock
issuable upon exercise shall be the next higher number of shares.
7. Reservation of Shares.
The Company shall at all times reserve for issuance such
number of authorized and unissued shares of Common Stock (or other securities
substituted therefor as herein above provided) as shall be sufficient for the
Exercise of this Warrant and payment of the Exercise Price. The Company
covenants and agrees that upon the Exercise of this Warrant, all shares of
Common Stock issuable upon such exercise shall be duly and validly issued, fully
paid, nonassessable and not subject to preemptive rights, rights of first
refusal or similar rights of any person or entity.
8. Restrictions on Transfer.
(a) Registration or Exemption Required. This Warrant has been
issued in a transaction exempt from the registration requirements of the Act by
virtue of Regulation D and exempt from state registration under applicable state
laws. The Warrant and the Common Stock issuable upon the Exercise of this
Warrant may not be pledged, transferred, sold or assigned except pursuant to an
effective registration statement or an exemption to the registration
requirements of the Act and applicable state laws.
(b) Assignment. If Holder can provide the Company with
reasonably satisfactory evidence that the conditions of (a) above regarding
registration or exemption have been satisfied, Holder may sell, transfer,
assign, pledge or otherwise dispose of this Warrant, in whole or in part. Holder
shall deliver a written notice to Company, substantially in the form of the
Assignment attached hereto as Exhibit B, indicating the person or persons to
whom the Warrant shall be assigned and the respective number of warrants to be
assigned to each assignee. The Company shall effect the assignment within ten
(10) days, and shall deliver to the assignee(s) designated by Holder a Warrant
or Warrants of like tenor and terms for the appropriate number of shares.
5
<PAGE> 58
9. Benefits of this Warrant.
Nothing in this Warrant shall be construed to confer upon any
person other than the Company and Holder any legal or equitable right, remedy or
claim under this Warrant and this Warrant shall be for the sole and exclusive
benefit of the Company and Holder.
10. Applicable Law.
This Warrant is issued under and shall for all purposes be
governed by and construed in accordance with the laws of the state of Delaware,
without giving effect to conflict of law provisions thereof.
11. Loss of Warrant.
Upon receipt by the Company of evidence of the loss, theft,
destruction or mutilation of this Warrant, and (in the case of loss, theft or
destruction) of indemnity or security reasonably satisfactory to the Company,
and upon surrender and cancellation of this Warrant, if mutilated, the Company
shall execute and deliver a new Warrant of like tenor and date.
12. Notice or Demands.
Notices or demands pursuant to this Warrant to be given or made by Holder to or
on the Company shall be sufficiently given or made if sent by certified or
registered mail, return receipt requested, postage prepaid, and addressed, until
another address is designated in writing by the Company, to Attention:
President, 865 SW 78th Avenue, Suite 100, Plantation, Florida, 33324 Telephone
No. (954) 233-8746, Facsimile No. (954) 233-1414 . Notices or demands pursuant
to this Warrant to be given or made by the Company to or on Holder shall be
sufficiently given or made if sent by certified or registered mail, return
receipt requested, postage prepaid, and addressed, to the address of Holder set
forth in the Company's records, until another address is designated in writing
by Holder.
IN WITNESS WHEREOF, the undersigned has executed this Warrant as of the
______ day of February, 1998.
VIRAGEN, INC.
By:
------------------------------------
Dennis W. Healey
Title: Exec. Vice President/CFO
6
<PAGE> 59
EXHIBIT A
EXERCISE FORM
TO: VIRAGEN, INC.
The undersigned hereby irrevocably exercises the right to purchase
____________ of the shares of Common Stock (the "Common Stock") of VIRAGEN,
INC., a Delaware corporation (the "Company"), evidenced by the attached warrant
(the "Warrant"), and herewith makes payment of the exercise price with respect
to such shares in full, all in accordance with the conditions and provisions of
said Warrant.
1. The undersigned agrees not to offer, sell, transfer or otherwise dispose of
any of the Common Stock obtained on exercise of the Warrant, except in
accordance with the provisions of Section 8(a) of the Warrant.
2. The undersigned requests that stock certificates for such shares be issued
free of any restrictive legend, if appropriate, and a warrant representing any
unexercised portion hereof be issued, pursuant to the Warrant in the name of the
undersigned and delivered to the undersigned at the address set forth below:
Dated:
- --------------------------------------------------------------------------------
Signature
- --------------------------------------------------------------------------------
Print Name
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
NOTICE
The signature to the foregoing Exercise Form must correspond to the name as
written upon the face of the attached Warrant in every particular, without
alteration or enlargement or any change whatsoever.
- --------------------------------------------------------------------------------
7
<PAGE> 60
EXHIBIT B
ASSIGNMENT
(To be executed by the registered holder
desiring to transfer the Warrant)
FOR VALUE RECEIVED, the undersigned holder of the attached warrant (the
"Warrant") hereby sells, assigns and transfers unto the person or persons below
named the right to purchase _______ shares of the Common Stock of VIRAGEN, INC.,
evidenced by the attached Warrant and does hereby irrevocably constitute and
appoint _______________________ attorney to transfer the said Warrant on the
books of the Company, with full power of substitution in the premises.
Dated:
-----------------------------------
Signature
Fill in for new registration of Warrant:
- ------------------------------------------
Name
- ------------------------------------------
Address
- ------------------------------------------
Please print name and address of assignee
(including zip code number)
- --------------------------------------------------------------------------------
NOTICE
The signature to the foregoing Assignment must correspond to the name as written
upon the face of the attached Warrant in every particular, without alteration or
enlargement or any change whatsoever.
- --------------------------------------------------------------------------------
<PAGE> 61
THIS WARRANT AND THE SECURITIES RECEIVABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (i) A REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME
EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION
WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES I PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
8,556 shares
WARRANT TO PURCHASE COMMON STOCK
OF
VIRAGEN, INC.
THIS CERTIFIES that Michael E. Stough or any subsequent ("Holder")
hereof, has the right to purchase from VIRAGEN, INC., a Delaware corporation
(the "Company"), not more than 8,556 fully paid and nonassessable shares of the
Company's Common Stock, $.01 par value ("Common Stock"), at a price equal to the
Exercise Price as defined in Section 3 below, subject to adjustment as provided
herein, at any time on or before 5:00 p.m., Atlanta, Georgia time, on February
17, 2003.
The Holder of this Warrant agrees with the Company that this Warrant is
issued and all rights hereunder shall be held subject to all of the conditions,
limitations and provisions set forth herein.
1. Date of Issuance.
This Warrant shall be deemed to be issued on April 2, 1998 ("Date of
Issuance").
2. Exercise.
(a) Manner of Exercise. This Warrant may be exercised as to all or any
lesser number of full shares of Common Stock covered hereby upon surrender of
this Warrant, with the Exercise Form attached hereto duly completed and
executed, together with the full Exercise Price (as defined in Section 3) for
each share of Common Stock as to which this Warrant is exercised, at the office
of the Company, Viragen, Inc., 865 SW 78th Avenue, Suite 100, Plantation, FL
33324, Attention: Dennis W. Healey, Executive Vice President/CFO, Telephone No.
(954) 233-8746, Telecopy No. (954) 233-1416, or at such other office or agency
as the Company may designate in writing, by overnight mail, with an advance copy
of the Exercise Form attached as Exhibit A ("Exercise Form") sent by
<PAGE> 62
THIS WARRANT AND THE SECURITIES RECEIVABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (i) A REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME
EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION
WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES I PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
4,308 shares
WARRANT TO PURCHASE COMMON STOCK
OF
VIRAGEN, INC.
THIS CERTIFIES that Charles B. Krusen or any subsequent ("Holder")
hereof, has the right to purchase from VIRAGEN, INC., a Delaware corporation
(the "Company"), not more than 4,308 fully paid and nonassessable shares of the
Company's Common Stock, $.01 par value ("Common Stock"), at a price equal to the
Exercise Price as defined in Section 3 below, subject to adjustment as provided
herein, at any time on or before 5:00 p.m., Atlanta, Georgia time, on February
17, 2003.
The Holder of this Warrant agrees with the Company that this Warrant is
issued and all rights hereunder shall be held subject to all of the conditions,
limitations and provisions set forth herein.
1. Date of Issuance.
This Warrant shall be deemed to be issued on April 2, 1998 ("Date of
Issuance").
2. Exercise.
(a) Manner of Exercise. This Warrant may be exercised as to all or any
lesser number of full shares of Common Stock covered hereby upon surrender of
this Warrant, with the Exercise Form attached hereto duly completed and
executed, together with the full Exercise Price (as defined in Section 3) for
each share of Common Stock as to which this Warrant is exercised, at the office
of the Company, Viragen, Inc., 865 SW 78th Avenue, Suite 100, Plantation, FL
33324, Attention: Dennis W. Healey, Executive Vice President/CFO, Telephone No.
(954) 233-8746, Telecopy No. (954) 233-1416, or at such other office or agency
as the Company may designate in writing, by overnight mail, with an advance copy
of the Exercise Form attached as Exhibit A ("Exercise Form") sent by
<PAGE> 63
THIS WARRANT AND THE SECURITIES RECEIVABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (i) A REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME
EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION
WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES I PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
250 shares
WARRANT TO PURCHASE COMMON STOCK
OF
VIRAGEN, INC.
THIS CERTIFIES that Dwight B. Bronnum or any subsequent ("Holder")
hereof, has the right to purchase from VIRAGEN, INC., a Delaware corporation
(the "Company"), not more than 250 fully paid and nonassessable shares of the
Company's Common Stock, $.01 par value ("Common Stock"), at a price equal to the
Exercise Price as defined in Section 3 below, subject to adjustment as provided
herein, at any time on or before 5:00 p.m., Atlanta, Georgia time, on February
17, 2003.
The Holder of this Warrant agrees with the Company that this Warrant is
issued and all rights hereunder shall be held subject to all of the conditions,
limitations and provisions set forth herein.
1. Date of Issuance.
This Warrant shall be deemed to be issued on April 2, 1998 ("Date of
Issuance").
2. Exercise.
(a) Manner of Exercise. This Warrant may be exercised as to all or any
lesser number of full shares of Common Stock covered hereby upon surrender of
this Warrant, with the Exercise Form attached hereto duly completed and
executed, together with the full Exercise Price (as defined in Section 3) for
each share of Common Stock as to which this Warrant is exercised, at the office
of the Company, Viragen, Inc., 865 SW 78th Avenue, Suite 100, Plantation, FL
33324, Attention: Dennis W. Healey, Executive Vice President/CFO, Telephone No.
(954) 233-8746, Telecopy No. (954) 233-1416, or at such other office or agency
as the Company may designate in writing, by overnight mail, with an advance copy
of the Exercise Form attached as Exhibit A ("Exercise Form") sent by
<PAGE> 64
THIS WARRANT AND THE SECURITIES RECEIVABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (i) A REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME
EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION
WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES I PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
250 shares
WARRANT TO PURCHASE COMMON STOCK
OF
VIRAGEN, INC.
THIS CERTIFIES that Robert L. Hopkins or any subsequent ("Holder")
hereof, has the right to purchase from VIRAGEN, INC., a Delaware corporation
(the "Company"), not more than 250 fully paid and nonassessable shares of the
Company's Common Stock, $.01 par value ("Common Stock"), at a price equal to the
Exercise Price as defined in Section 3 below, subject to adjustment as provided
herein, at any time on or before 5:00 p.m., Atlanta, Georgia time, on February
17, 2003.
The Holder of this Warrant agrees with the Company that this Warrant is
issued and all rights hereunder shall be held subject to all of the conditions,
limitations and provisions set forth herein.
1. Date of Issuance.
This Warrant shall be deemed to be issued on April 2, 1998 ("Date of
Issuance").
2. Exercise.
(a) Manner of Exercise. This Warrant may be exercised as to all or any
lesser number of full shares of Common Stock covered hereby upon surrender of
this Warrant, with the Exercise Form attached hereto duly completed and
executed, together with the full Exercise Price (as defined in Section 3) for
each share of Common Stock as to which this Warrant is exercised, at the office
of the Company, Viragen, Inc., 865 SW 78th Avenue, Suite 100, Plantation, FL
33324, Attention: Dennis W. Healey, Executive Vice President/CFO, Telephone No.
(954) 233-8746, Telecopy No. (954) 233-1416, or at such other office or agency
as the Company may designate in writing, by overnight mail, with an advance copy
of the Exercise Form attached as Exhibit A ("Exercise Form") sent by
<PAGE> 65
THIS WARRANT AND THE SECURITIES RECEIVABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (i) A REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME
EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION
WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES I PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
4,000 shares
WARRANT TO PURCHASE COMMON STOCK
OF
VIRAGEN, INC.
THIS CERTIFIES that Carlton M. Johnson, Jr. or any subsequent
("Holder") hereof, has the right to purchase from VIRAGEN, INC., a Delaware
corporation (the "Company"), not more than 4,000 fully paid and nonassessable
shares of the Company's Common Stock, $.01 par value ("Common Stock"), at a
price equal to the Exercise Price as defined in Section 3 below, subject to
adjustment as provided herein, at any time on or before 5:00 p.m., Atlanta,
Georgia time, on February 17, 2003.
The Holder of this Warrant agrees with the Company that this Warrant is
issued and all rights hereunder shall be held subject to all of the conditions,
limitations and provisions set forth herein.
1. Date of Issuance.
This Warrant shall be deemed to be issued on April 2, 1998 ("Date of
Issuance").
2. Exercise.
(a) Manner of Exercise. This Warrant may be exercised as to all or any
lesser number of full shares of Common Stock covered hereby upon surrender of
this Warrant, with the Exercise Form attached hereto duly completed and
executed, together with the full Exercise Price (as defined in Section 3) for
each share of Common Stock as to which this Warrant is exercised, at the office
of the Company, Viragen, Inc., 865 SW 78th Avenue, Suite 100, Plantation, FL
33324, Attention: Dennis W. Healey, Executive Vice President/CFO, Telephone No.
(954) 233-8746, Telecopy No. (954) 233-1416, or at such other office or agency
as the Company may designate in writing, by overnight mail, with an advance copy
of the Exercise Form attached as Exhibit A ("Exercise Form") sent by
<PAGE> 66
THIS WARRANT AND THE SECURITIES RECEIVABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (i) A REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME
EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION
WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES I PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
3,000 shares
WARRANT TO PURCHASE COMMON STOCK
OF
VIRAGEN, INC.
THIS CERTIFIES that Glenn R. Archer or any subsequent ("Holder")
hereof, has the right to purchase from VIRAGEN, INC., a Delaware corporation
(the "Company"), not more than 3,000 fully paid and nonassessable shares of the
Company's Common Stock, $.01 par value ("Common Stock"), at a price equal to the
Exercise Price as defined in Section 3 below, subject to adjustment as provided
herein, at any time on or before 5:00 p.m., Atlanta, Georgia time, on February
17, 2003.
The Holder of this Warrant agrees with the Company that this Warrant is
issued and all rights hereunder shall be held subject to all of the conditions,
limitations and provisions set forth herein.
1. Date of Issuance.
This Warrant shall be deemed to be issued on April 2, 1998 ("Date of
Issuance").
2. Exercise.
(a) Manner of Exercise. This Warrant may be exercised as to all or any
lesser number of full shares of Common Stock covered hereby upon surrender of
this Warrant, with the Exercise Form attached hereto duly completed and
executed, together with the full Exercise Price (as defined in Section 3) for
each share of Common Stock as to which this Warrant is exercised, at the office
of the Company, Viragen, Inc., 865 SW 78th Avenue, Suite 100, Plantation, FL
33324, Attention: Dennis W. Healey, Executive Vice President/CFO, Telephone No.
(954) 233-8746, Telecopy No. (954) 233-1416, or at such other office or agency
as the Company may designate in writing, by overnight mail, with an advance copy
of the Exercise Form attached as Exhibit A ("Exercise Form") sent by
<PAGE> 67
THIS WARRANT AND THE SECURITIES RECEIVABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (i) A REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME
EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION
WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES I PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
4,000 shares
WARRANT TO PURCHASE COMMON STOCK
OF
VIRAGEN, INC.
THIS CERTIFIES that Davis C. Holden or any subsequent ("Holder")
hereof, has the right to purchase from VIRAGEN, INC., a Delaware corporation
(the "Company"), not more than 4,000 fully paid and nonassessable shares of the
Company's Common Stock, $.01 par value ("Common Stock"), at a price equal to the
Exercise Price as defined in Section 3 below, subject to adjustment as provided
herein, at any time on or before 5:00 p.m., Atlanta, Georgia time, on February
17, 2003.
The Holder of this Warrant agrees with the Company that this Warrant is
issued and all rights hereunder shall be held subject to all of the conditions,
limitations and provisions set forth herein.
1. Date of Issuance.
This Warrant shall be deemed to be issued on April 2, 1998 ("Date of
Issuance").
2. Exercise.
(a) Manner of Exercise. This Warrant may be exercised as to all or any
lesser number of full shares of Common Stock covered hereby upon surrender of
this Warrant, with the Exercise Form attached hereto duly completed and
executed, together with the full Exercise Price (as defined in Section 3) for
each share of Common Stock as to which this Warrant is exercised, at the office
of the Company, Viragen, Inc., 865 SW 78th Avenue, Suite 100, Plantation, FL
33324, Attention: Dennis W. Healey, Executive Vice President/CFO, Telephone No.
(954) 233-8746, Telecopy No. (954) 233-1416, or at such other office or agency
as the Company may designate in writing, by overnight mail, with an advance copy
of the Exercise Form attached as Exhibit A ("Exercise Form") sent by
<PAGE> 68
THIS WARRANT AND THE SECURITIES RECEIVABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (i) A REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME
EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION
WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES I PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
3,000 shares
WARRANT TO PURCHASE COMMON STOCK
OF
VIRAGEN, INC.
THIS CERTIFIES that P. Bradford Hathorn or any subsequent ("Holder")
hereof, has the right to purchase from VIRAGEN, INC., a Delaware corporation
(the "Company"), not more than 3,000 fully paid and nonassessable shares of the
Company's Common Stock, $.01 par value ("Common Stock"), at a price equal to the
Exercise Price as defined in Section 3 below, subject to adjustment as provided
herein, at any time on or before 5:00 p.m., Atlanta, Georgia time, on February
17, 2003.
The Holder of this Warrant agrees with the Company that this Warrant is
issued and all rights hereunder shall be held subject to all of the conditions,
limitations and provisions set forth herein.
1. Date of Issuance.
This Warrant shall be deemed to be issued on April 2, 1998 ("Date of
Issuance").
2. Exercise.
(a) Manner of Exercise. This Warrant may be exercised as to all or any
lesser number of full shares of Common Stock covered hereby upon surrender of
this Warrant, with the Exercise Form attached hereto duly completed and
executed, together with the full Exercise Price (as defined in Section 3) for
each share of Common Stock as to which this Warrant is exercised, at the office
of the Company, Viragen, Inc., 865 SW 78th Avenue, Suite 100, Plantation, FL
33324, Attention: Dennis W. Healey, Executive Vice President/CFO, Telephone No.
(954) 233-8746, Telecopy No. (954) 233-1416, or at such other office or agency
as the Company may designate in writing, by overnight mail, with an advance copy
of the Exercise Form attached as Exhibit A ("Exercise Form") sent by
<PAGE> 69
THIS WARRANT AND THE SECURITIES RECEIVABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (i) A REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME
EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION
WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES I PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
43,254 shares
WARRANT TO PURCHASE COMMON STOCK
OF
VIRAGEN, INC.
THIS CERTIFIES that Kendrick Family Partnership, LP or any subsequent
("Holder") hereof, has the right to purchase from VIRAGEN, INC., a Delaware
corporation (the "Company"), not more than 43,254 fully paid and nonassessable
shares of the Company's Common Stock, $.01 par value ("Common Stock"), at a
price equal to the Exercise Price as defined in Section 3 below, subject to
adjustment as provided herein, at any time on or before 5:00 p.m., Atlanta,
Georgia time, on February 17, 2003.
The Holder of this Warrant agrees with the Company that this Warrant is
issued and all rights hereunder shall be held subject to all of the conditions,
limitations and provisions set forth herein.
1. Date of Issuance.
This Warrant shall be deemed to be issued on April 2, 1998 ("Date of
Issuance").
2. Exercise.
(a) Manner of Exercise. This Warrant may be exercised as to all or any
lesser number of full shares of Common Stock covered hereby upon surrender of
this Warrant, with the Exercise Form attached hereto duly completed and
executed, together with the full Exercise Price (as defined in Section 3) for
each share of Common Stock as to which this Warrant is exercised, at the office
of the Company, Viragen, Inc., 865 SW 78th Avenue, Suite 100, Plantation, FL
33324, Attention: Dennis W. Healey, Executive Vice President/CFO, Telephone No.
(954) 233-8746, Telecopy No. (954) 233-1416, or at such other office or agency
as the Company may designate in writing, by overnight mail, with an advance copy
of the Exercise Form attached as Exhibit A ("Exercise Form") sent by
<PAGE> 70
THIS WARRANT AND THE SECURITIES RECEIVABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (i) A REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME
EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION
WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES I PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
43,254 shares
WARRANT TO PURCHASE COMMON STOCK
OF
VIRAGEN, INC.
THIS CERTIFIES that Eric S. Swartz or any subsequent ("Holder") hereof,
has the right to purchase from VIRAGEN, INC., a Delaware corporation (the
"Company"), not more than 43,254 fully paid and nonassessable shares of the
Company's Common Stock, $.01 par value ("Common Stock"), at a price equal to the
Exercise Price as defined in Section 3 below, subject to adjustment as provided
herein, at any time on or before 5:00 p.m., Atlanta, Georgia time, on February
17, 2003.
The Holder of this Warrant agrees with the Company that this Warrant is
issued and all rights hereunder shall be held subject to all of the conditions,
limitations and provisions set forth herein.
1. Date of Issuance.
This Warrant shall be deemed to be issued on April 2, 1998 ("Date of
Issuance").
2. Exercise.
(a) Manner of Exercise. This Warrant may be exercised as to all or any
lesser number of full shares of Common Stock covered hereby upon surrender of
this Warrant, with the Exercise Form attached hereto duly completed and
executed, together with the full Exercise Price (as defined in Section 3) for
each share of Common Stock as to which this Warrant is exercised, at the office
of the Company, Viragen, Inc., 865 SW 78th Avenue, Suite 100, Plantation, FL
33324, Attention: Dennis W. Healey, Executive Vice President/CFO, Telephone No.
(954) 233-8746, Telecopy No. (954) 233-1416, or at such other office or agency
as the Company may designate in writing, by overnight mail, with an advance copy
of the Exercise Form attached as Exhibit A ("Exercise Form") sent by
<PAGE> 71
THIS WARRANT AND THE SECURITIES RECEIVABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (i) A REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME
EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION
WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES I PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
1,000 shares
WARRANT TO PURCHASE COMMON STOCK
OF
VIRAGEN, INC.
THIS CERTIFIES that H. Nelson Logan or any subsequent ("Holder")
hereof, has the right to purchase from VIRAGEN, INC., a Delaware corporation
(the "Company"), not more than 1,000 fully paid and nonassessable shares of the
Company's Common Stock, $.01 par value ("Common Stock"), at a price equal to the
Exercise Price as defined in Section 3 below, subject to adjustment as provided
herein, at any time on or before 5:00 p.m., Atlanta, Georgia time, on February
17, 2003.
The Holder of this Warrant agrees with the Company that this Warrant is
issued and all rights hereunder shall be held subject to all of the conditions,
limitations and provisions set forth herein.
1. Date of Issuance.
This Warrant shall be deemed to be issued on April 2, 1998 ("Date of
Issuance").
2. Exercise.
(a) Manner of Exercise. This Warrant may be exercised as to all or any
lesser number of full shares of Common Stock covered hereby upon surrender of
this Warrant, with the Exercise Form attached hereto duly completed and
executed, together with the full Exercise Price (as defined in Section 3) for
each share of Common Stock as to which this Warrant is exercised, at the office
of the Company, Viragen, Inc., 865 SW 78th Avenue, Suite 100, Plantation, FL
33324, Attention: Dennis W. Healey, Executive Vice President/CFO, Telephone No.
(954) 233-8746, Telecopy No. (954) 233-1416, or at such other office or agency
as the Company may designate in writing, by overnight mail, with an advance copy
of the Exercise Form attached as Exhibit A ("Exercise Form") sent by
<PAGE> 72
THIS WARRANT AND THE SECURITIES RECEIVABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (i) A REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME
EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION
WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF INVOLVES A HIGH DEGREE OF RISK. HOLDER MUST RELY ON HIS OWN ANALYSIS OF
THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET
FORTH IN THE DISCLOSURE DOCUMENTS UNDER THAT CERTAIN SUBSCRIPTION AGREEMENT FOR
SERIES I PREFERRED STOCK BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED
THEREIN AS EXHIBIT H.
Warrant to Purchase
114,871 shares
WARRANT TO PURCHASE COMMON STOCK
OF
VIRAGEN, INC.
THIS CERTIFIES that Swartz Investments, LLC or any subsequent
("Holder") hereof, has the right to purchase from VIRAGEN, INC., a Delaware
corporation (the "Company"), not more than 114,871 fully paid and nonassessable
shares of the Company's Common Stock, $.01 par value ("Common Stock"), at a
price equal to the Exercise Price as defined in Section 3 below, subject to
adjustment as provided herein, at any time on or before 5:00 p.m., Atlanta,
Georgia time, on February 17, 2003.
The Holder of this Warrant agrees with the Company that this Warrant is
issued and all rights hereunder shall be held subject to all of the conditions,
limitations and provisions set forth herein.
1. Date of Issuance.
This Warrant shall be deemed to be issued on April 2, 1998 ("Date of
Issuance").
2. Exercise.
(a) Manner of Exercise. This Warrant may be exercised as to all or any
lesser number of full shares of Common Stock covered hereby upon surrender of
this Warrant, with the Exercise Form attached hereto duly completed and
executed, together with the full Exercise Price (as defined in Section 3) for
each share of Common Stock as to which this Warrant is exercised, at the office
of the Company, Viragen, Inc., 865 SW 78th Avenue, Suite 100, Plantation, FL
33324, Attention: Dennis W. Healey, Executive Vice President/CFO, Telephone No.
(954) 233-8746, Telecopy No. (954) 233-1416, or at such other office or agency
as the Company may designate in writing, by overnight mail, with an advance copy
of the Exercise Form attached as Exhibit A ("Exercise Form") sent by
<PAGE> 73
facsimile to the Company and its Transfer Agent (such surrender and payment of
the Exercise Price hereinafter called the "Exercise of this Warrant").
(b) Date of Exercise. The "Date of Exercise" of the Warrant shall be
defined as the date that the advance copy of the completed and executed Exercise
Form is sent by facsimile to the Company and its Transfer Agent, provided that
the original Warrant and Exercise Form are received by the Company within five
(5) business days thereafter. The original Warrant and Exercise Form must be
received within five (5) business days of the Date of Exercise, or the exercise
may, at the Company's option, be considered void. Alternatively, the Date of
Exercise shall be defined as the date the original Exercise Form is received by
the Company, if Holder has not sent advance notice by facsimile.
(c) Cancellation of Warrant. This Warrant shall be canceled upon its
Exercise, and, as soon as practical after the Date of Exercise, the Holder
hereof shall be entitled to receive Common Stock for the number of shares
purchased upon such Exercise, and if this Warrant is not exercised in full, the
Holder shall be entitled to receive a new Warrant or Warrants (containing terms
identical to this Warrant) representing any unexercised portion of this Warrant
in addition to such Common Stock.
(d) Holder of Record. Each person in whose name any Warrant for shares
of Common Stock is issued shall, for all purposes, be deemed to have become the
Holder of record of such shares on the Date of Exercise of this Warrant,
irrespective of the date of delivery of such shares of Common Stock. Nothing in
this Warrant shall be construed as conferring upon the Holder hereof any rights
as a shareholder of the Company.
3. Payment of Warrant Exercise Price.
The Exercise Price ("Exercise Price") shall equal $ 1.684 ("Initial
Exercise Price") or, if the Date of Exercise is more than one (1) year after the
Date of Issuance, the lesser of (i) the Initial Exercise Price or (ii) the
"Lowest Reset Price", as that term is defined below. The Company shall calculate
a "Reset Price" on each anniversary date of the Date of Issuance which shall
equal one hundred percent (100%) of the average of the lowest two (2) Closing
Bid Prices of the Company's Common Stock for the twenty (20) trading days ending
on such anniversary date of the Date of Issuance. The "Lowest Reset Price" shall
equal the lowest Reset Price determined on an anniversary date of the Date of
Issuance preceding the Date of Exercise, taking into account, as appropriate,
any adjustments made pursuant to Section 5 hereof.
For purposes hereof, the term "Closing Bid Price" shall mean the
closing bid price on the National Association of Securities Dealers Automated
Quotation System ("Nasdaq") Small Cap Market or OTC Bulletin Board, or if no
longer traded on the Nasdaq Small Cap Market or OTC Bulletin Board, the closing
price on the principal national securities exchange or the over-the-counter
system on which the Common Stock is so traded and, if not available, the mean of
the high and low prices on the principal national securities exchange or the
National Securities Exchange on which the Common Stock is so traded.
Payment of the Exercise Price may be made by either of the following,
or a combination thereof, at the election of Holder:
(a) Cash Exercise: cash, bank or cashiers check or wire transfer;
or
(b) Cashless Exercise: surrender of this Warrant at the principal
office of the Company together with notice of cashless election, in which event
the Company shall issue Holder a number of shares of Common Stock computed using
the following formula:
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<PAGE> 74
X = Y (A-B)/A
where: X = the number of shares of Common Stock to be issued to Holder.
Y = the number of shares of Common Stock for which this Warrant
is being exercised.
A = the Market Price of one (1) share of Common Stock (for purposes of
this Section 3(b), the "Market Price" shall be defined as the average
closing price of the Common Stock for the five (5) trading days prior
to the Date of Exercise of this Warrant (the "Average Closing Price"),
as reported by Nasdaq or if the Common Stock is not traded on Nasdaq,
the Average Closing Price in the over-the-counter market on which the
Common Stock is traded. If the Common Stock is/was not traded during
the five (5) trading days prior to the Date of Exercise, then the
closing price for the last publicly traded day shall be deemed to be
the closing price for any and all (if applicable) days during such five
(5) trading day period.
B = the Exercise Price.
For purposes of Rule 144 and sub-section (d)(3)(ii) thereof, it is intended,
understood and acknowledged that the Common Stock issuable upon exercise of this
Warrant in a cashless exercise transaction shall be deemed to have been acquired
at the time this Warrant was issued. Moreover, it is intended, understood and
acknowledged that the holding period for the Common Stock issuable upon exercise
of this Warrant in a cashless exercise transaction shall be deemed to have
commenced on the date this Warrant was issued.
4. Transfer and Registration.
(a) Transfer Rights. Subject to the provisions of Section 8 of
this Warrant, this Warrant may be transferred on the books of the Company, in
whole or in part, in person or by attorney, upon surrender of this Warrant
properly completed and endorsed. This Warrant shall be canceled upon such
surrender and, as soon as practicable thereafter, the person to whom such
transfer is made shall be entitled to receive a new Warrant or Warrants as to
the portion of this Warrant transferred, and the Holder of this Warrant shall be
entitled to receive a new Warrant or Warrants as to the portion hereof retained.
(b) Registrable Securities. The Common Stock issuable upon the exercise
of this Warrant constitute "Registrable Securities" under that certain
Registration Rights Agreement dated on or about April 2, 1998 by and between the
Company and Swartz Investments, LLC and, accordingly, has the benefit of the
registration rights pursuant to that agreement.
5. Anti-Dilution Adjustments.
(a) Stock Dividend. If the Company shall at any time declare a
dividend payable in shares of Common Stock, then the Holder hereof, upon
Exercise of this Warrant after the record date for the determination of Holders
of Common Stock entitled to receive such dividend, shall be entitled to receive
upon Exercise of this Warrant, in addition to the number of shares of Common
Stock as to which this Warrant is Exercised, such additional shares of Common
Stock as such Holder would have received had this Warrant been Exercised
immediately prior to such record date and the Exercise Price will be
proportionately adjusted.
3
<PAGE> 75
(b) Recapitalization or Reclassification. If the Company shall at
any time effect a recapitalization, reclassification or other similar
transaction of such character that the shares of Common Stock shall be changed
into or become exchangeable for a larger or smaller number of shares, then upon
the effective date thereof, the number of shares of Common Stock which the
Holder hereof shall be entitled to purchase upon Exercise of this Warrant shall
be increased or decreased, as the case may be, in direct proportion to the
increase or decrease in the number of shares of Common Stock by reason of such
recapitalization, reclassification or similar transaction, and the Exercise
Price shall be, in the case of an increase in the number of shares,
proportionally decreased and, in the case of decrease in the number of shares,
proportionally increased. The Company shall give the Warrant Holder the same
notice it provides to holders of Common Stock of any transaction described in
this Section 5(b).
(c) Distributions. If the Company shall at any time distribute to
Holders of Common Stock cash, evidences of indebtedness or other securities or
assets (other than cash dividends or distributions payable out of earned surplus
or net profits for the current or preceding year) then, in any such case, the
Holder of this Warrant shall be entitled to receive, upon exercise of this
Warrant, with respect to each share of Common Stock issuable upon such Exercise,
the amount of cash or evidences of indebtedness or other securities or assets
which such Holder would have been entitled to receive with respect to each such
share of Common Stock as a result of the happening of such event had this
Warrant been Exercised immediately prior to the record date or other date fixing
shareholders to be affected by such event (the "Determination Date") or, in lieu
thereof, if the Board of Directors of the Company should so determine at the
time of such distribution, a reduced Exercise Price determined by multiplying
the Exercise Price on the Determination Date by a fraction, the numerator of
which is the result of such Exercise Price reduced by the value of such
distribution applicable to one share of Common Stock (such value to be
determined by the Board in its discretion) and the denominator of which is such
Exercise Price.
(d) Notice of Consolidation or Merger. In the event of a merger,
consolidation, exchange of shares, recapitalization, reorganization, or other
similar event, as a result of which shares of Common Stock of the Company shall
be changed into the same or a different number of shares of the same or another
class or classes of stock or securities or other assets of the Company or
another entity or there is a sale of all or substantially all the Company's
assets (a "Corporate Change"), then this Warrant shall be assumed by the
acquiring entity or any affiliate thereof and thereafter this Warrant shall be
exerciseable into such class and type of securities or other assets as the
Holder would have received had the Holder exercised this Warrant immediately
prior to such Corporate Change; provided, however, that Company may not affect
any Corporate Change unless it first shall have given thirty (30) days notice to
the Holder hereof of any Corporate Change.
(e) Exercise Price Adjusted. As used in this Warrant, the term
"Exercise Price" shall mean the purchase price per share specified in Section 3
of this Warrant, as it may be reset from time to time, until the occurrence of
an event stated in subsection (a), (b) or (c) of this Section 5 and thereafter
shall mean said price as adjusted from time to time in accordance with the
provisions of said subsection. No such adjustment under this Section 5 shall be
made unless such adjustment would change the Exercise Price at the time by $.01
or more; provided, however, that all adjustments not so made shall be deferred
and made when the aggregate thereof would change the Exercise Price at the time
by $.01 or more. No adjustment made pursuant to any provision of this Section 5
shall have the effect of increasing the total consideration payable upon
Exercise of this Warrant in respect of all the Common Stock as to which this
Warrant may be exercised. Notwithstanding anything to
4
<PAGE> 76
the contrary contained herein, the Exercise Price shall not be reduced to an
amount below the par value of the Common Stock.
(f) Adjustments: Additional Shares, Securities or Assets. In the
event that at any time, as a result of an adjustment made pursuant to this
Section 5, the Holder of this Warrant shall, upon Exercise of this Warrant,
become entitled to receive shares and/or other securities or assets (other than
Common Stock) then, wherever appropriate, all references herein to shares of
Common Stock shall be deemed to refer to and include such shares and/or other
securities or assets; and thereafter the number of such shares and/or other
securities or assets shall be subject to adjustment from time to time in a
manner and upon terms as nearly equivalent as practicable to the provisions of
this Section 5.
6. Fractional Interests.
No fractional shares or scrip representing fractional shares
shall be issuable upon the Exercise of this Warrant, but on Exercise of this
Warrant, the Holder hereof may purchase only a whole number of shares of Common
Stock. If, on Exercise of this Warrant, the Holder hereof would be entitled to a
fractional share of Common Stock or a right to acquire a fractional share of
Common Stock, such fractional share shall be disregarded and the number of
shares of Common Stock issuable upon conversion shall be the next higher number
of shares.
7. Reservation of Shares.
The Company shall at all times reserve for issuance such
number of authorized and unissued shares of Common Stock (or other securities
substituted therefor as herein above provided) as shall be sufficient for
Exercise and payment of the Exercise Price of this Warrant. The Company
covenants and agrees that upon Exercise of this Warrant, all shares of Common
Stock issuable upon such Exercise shall be duly and validly issued, fully paid,
nonassessable and not subject to preemptive rights, rights of first refusal or
similar rights of any person or entity.
8. Restrictions on Transfer.
(a) Registration or Exemption Required. This Warrant and the
Common Stock issuable on Exercise hereof have not been registered under the
Securities Act of 1933, as amended, and may not be sold, assigned, transferred,
pledged, hypothecated or otherwise disposed of in the absence of registration or
the availability of an exemption from registration under said Act. All shares of
Common Stock issued upon Exercise of this Warrant shall bear an appropriate
legend to such effect, if applicable.
(b) Assignment. Assuming the conditions of (a) above regarding
registration or exemption have been satisfied, the Holder may sell, transfer,
assign, pledge or otherwise dispose of this Warrant, in whole or in part. Holder
shall deliver a written notice to Company, substantially in the form of the
Assignment attached hereto as Exhibit B, indicating the person or persons to
whom the Warrant shall be assigned and the respective number of warrants to be
assigned to each assignee. The Company shall effect the assignment within ten
days, and shall deliver to the assignee(s) designated by Holder a Warrant or
Warrants of like tenor and terms for the appropriate number of shares.
(c) Investment Intent. The Warrant and Common Stock issuable
upon conversion are intended to be held for investment purposes and not with an
intent to distribution, as defined in the Act.
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<PAGE> 77
9. Benefits of this Warrant.
Nothing in this Warrant shall be construed to confer upon any
person other than the Company and the Holder of this Warrant any legal or
equitable right, remedy or claim under this Warrant and this Warrant shall be
for the sole and exclusive benefit of the Company and the Holder of this
Warrant.
10. Applicable Law.
This Warrant is issued under and shall for all purposes be
governed by and construed in accordance with the laws of the state of Georgia,
without giving effect to conflict of law provisions thereof.
11. Loss of Warrant.
Upon receipt by the Company of evidence of the loss, theft,
destruction or mutilation of this Warrant, and (in the case of loss, theft or
destruction) of indemnity or security reasonably satisfactory to the Company,
and upon surrender and cancellation of this Warrant, if mutilated, the Company
shall execute and deliver a new Warrant of like tenor and date.
12. Notice or Demands.
Notices or demands pursuant to this Warrant to be given or made by the Holder of
this Warrant to or on the Company shall be sufficiently given or made if sent by
certified or registered mail, return receipt requested, postage prepaid, and
addressed, until another address is designated in writing by the Company,
Viragen, Inc., 865 SW 78th Avenue, Suite 100, Plantation, FL 33324, Attention:
Dennis W. Healey, Executive Vice President/CFO, Telephone No. (954) 233-8746,
Telecopy No. (954) 233-1416. Notices or demands pursuant to this Warrant to be
given or made by the Company to or on the Holder of this Warrant shall be
sufficiently given or made if sent by certified or registered mail, return
receipt requested, postage prepaid, and addressed, Attn: Holder, address: c/o
Swartz Investments, LLC, 200 Roswell Summit, Suite 285, 1080 Holcomb Bridge
Road, Roswell, Georgia 30076, until another address is designated in writing by
Holder.
IN WITNESS WHEREOF, the undersigned has executed this Warrant as of the
____ day of April, 1998.
VIRAGEN, INC.
By:
------------------------------------
Print Name:
------------------------------------
Title:
------------------------------------
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<PAGE> 78
EXHIBIT A
EXERCISE FORM
TO: ___________________.
The undersigned hereby irrevocably exercises the right to purchase
____________ of the shares of Common Stock of VIRAGEN, INC., a Delaware
corporation, evidenced by the attached Warrant, and herewith makes payment of
the Exercise Price with respect to such shares in full, all in accordance with
the conditions and provisions of said Warrant.
The undersigned agrees not to offer, sell, transfer or otherwise
dispose of any of such Common Stock, except in accordance with the provisions of
Section 8 of the Warrant, and consents that the following legend may be affixed
to the stock certificates for the Common Stock hereby subscribed for, if such
legend is applicable:
"The securities represented hereby have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), or any
provincial or state securities law, and may not be sold, transferred,
pledged, hypothecated or otherwise disposed of until either (i) a
registration statement under the Securities Act and applicable
provincial or state securities laws shall have become effective with
regard thereto, or (ii) an exemption from registration under the
Securities Act or applicable provincial or state securities laws is
available in connection with such offer, sale or transfer."
The undersigned requests that stock certificates for such shares be
issued, and a warrant representing any unexercised portion hereof be issued,
pursuant to the Warrant in the name of the Registered Holder and delivered to
the undersigned at the address set forth below:
Dated:
- --------------------------------------------------------------------------------
Signature of Registered Holder
- --------------------------------------------------------------------------------
Name of Registered Holder (Print)
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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<PAGE> 79
EXHIBIT B
ASSIGNMENT
(To be executed by the registered Holder
desiring to transfer the Warrant)
FOR VALUE RECEIVED, the undersigned Holder of the attached Warrant hereby sells,
assigns and transfers unto the person or persons below named the right to
purchase _______ shares of the Common Stock of VIRAGEN, INC. evidenced by the
attached Warrant and does hereby irrevocably constitute and appoint
_______________________ attorney to transfer the said Warrant on the books of
the Company, with full power of substitution in the premises.
Dated:
----------------------------------
Signature
Fill in for new Registration of Warrant:
- ------------------------------------------
Name
- ------------------------------------------
Address
- ------------------------------------------
Please print name and address of assignee
(including zip code number)
- --------------------------------------------------------------------------------
NOTICE
The signature to the foregoing Exercise Form or Assignment must correspond to
the name as written upon the face of the attached Warrant in every particular,
without alteration or enlargement or any change whatsoever.
- --------------------------------------------------------------------------------
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<PAGE> 80
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") is entered into as of
April __, 1998, by and among Viragen, Inc., a corporation duly incorporated and
existing under the laws of the State of Delaware ("Company"), Swartz
Investments, LLC ("Swartz"), a Georgia limited liability company, and the
subscribers (hereinafter referred to as "Subscribers") to the Company's Offering
("Offering") of up to Two Million Dollars ($2,000,000) of Series I Preferred
Stock (the "Preferred Stock") pursuant to the Regulation D Subscription
Agreement between the Company and each of the Subscribers ("Subscription
Agreement").
1. DEFINITIONS. For purposes of this Agreement:
(a) The terms "register," "registered," and "registration"
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Securities Act of 1933 (the
"Act"), and pursuant to Rule 415 under the Act or any successor rule, and the
declaration or ordering of effectiveness of such registration statement or
document;
(b) For purposes hereof, the term "Registrable Securities"
means the shares of the Company's Common Stock together with any capital stock
issued in replacement of, in exchange for or otherwise in respect of such Common
Stock (the "Common Stock"), issuable or issued upon (i) conversion of the
Preferred Stock, (ii) exercise of the warrants to purchase Common Stock to be
issued to the Subscribers in connection with the Offering (the "Subscriber
Warrants") and (iii) exercise of the Warrant to purchase Common stock issued to
Swartz or to persons designated by Swartz in connection with the Offering (the
"Placement Agent Warrant", together with the Subscriber Warrants, collectively
referred to as the "Warrants"), by Swartz, its designees or any subsequent
Holder of the Warrant or portion thereof.
Notwithstanding the above:
1. Common Stock which would otherwise be deemed to be
Registrable Securities shall not constitute Registrable
Securities if and to the extent that those shares of Common
Stock may be resold in a public transaction without volume
limitations or other material restrictions without
registration under the Act, including without limitation,
pursuant to Rule 144 under the Act; and
2. any Registrable Securities resold in a public transaction
shall cease to constitute Registrable Securities.
(c) The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of shares of Common Stock which
have been issued or are issuable upon conversion of the Preferred Stock and
exercise of the then outstanding Warrants at the time of such determination;
(d) The term "Holder" means any person owning or having the
right to acquire Registrable Securities or any permitted assignee thereof;
(e) The term "Initiating Holders" means (i) one or more
holders of Registrable Securities obtained or obtainable upon conversion of at
least Fifty (50) shares of Preferred Stock; and
(f) The term "Filing Date" means April 19, 1998 and the term
"Due Date" means June 19, 1998.
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<PAGE> 81
EXHIBIT E
2. REQUIRED REGISTRATION.
(a) The Company shall file, by the Filing Date, a registration
statement ("Registration Statement") on Form S-3 (or other suitable form, at the
Company's discretion, but subject to the reasonable approval of Subscribers),
covering the resale of all shares of Registrable Securities then outstanding or
issuable upon conversion of all then outstanding Preferred Stock or upon
exercise of the Warrants. Such Registration Statement shall initially cover the
number of shares issuable upon exercise of the Placement Agent Warrant plus at
least Two Million Eight Hundred Thousand (2,800,000) shares of Common Stock and
(including SEC Rule 416), shall state such Registration Statement also covers
such indeterminate number of additional shares of Common Stock as may become
issuable upon conversion of the Preferred Stock and the exercise of the Warrants
(i) to prevent dilution resulting from stock splits, stock dividends or similar
transactions or (ii) by reason of changes in the Conversion Price of the
Preferred Stock or the Exercise Price of the Warrants in accordance with the
terms thereof, as the case may be. The Company shall use its best efforts to
have the Registration Statement declared effective as soon as possible. In the
event that the Company determines, which determination shall be made by the
Company within five (5) business days after the last business day of each month
after the Due Date or is notified at any time by a Holder, that the Registration
Statement does not cover a sufficient number of shares of Common Stock to effect
the resales of a number of shares of Common Stock equal to one hundred twenty
five percent (125%) of the number of shares of Common Stock issuable to each
Subscriber upon conversion of all outstanding Preferred Stock then eligible for
conversion, at the Conversion Price (as defined in the Certificate of
Designation of the Series A Preferred Stock) in effect on the last business day
of such month (the "Assumed Conversion Price"), and upon exercise of all the
outstanding Warrants (a "Registration Shortfall"), the Company shall, within
five (5) business days, amend the Registration Statement or file a new
Registration Statement (an "Amended" or "New" Registration Statement,
respectively), as appropriate, to add such number of additional shares as would
be necessary to effect the resales of a number of shares of Common Stock equal
to at least one hundred fifty percent (150%) of the number of shares of Common
Stock issuable to each Subscriber upon conversion of all outstanding Preferred
Stock then eligible for conversion, at the Assumed Conversion Price then in
effect and upon exercise of all the outstanding Warrants. If the Registration
Statement is not filed by the Filing Date, Company shall pay the Subscribers an
amount equal to two percent (2%) per month of the aggregate amount of
outstanding Preferred Stock held by Subscriber, accruing daily until the
Registration Statement is filed, payable in cash or Common Stock, at the
Subscriber's option, as set forth below ("Late Filing Payment"). If the
Registration Statement is not declared effective by the Due Date, or if any
Amended or New Registration Statement required to be filed hereunder is not
declared effective within two (2) calendar months of the date it is required to
be filed, the Company shall pay the Subscribers an amount equal to two percent
(2%) per month of the aggregate amount of outstanding Preferred Stock held by
Subscriber, accruing daily until the Registration Statement or a registration
statement filed pursuant to Section 3 of this Agreement is declared effective
(the "Late Registration Payment"). Any Late Filing Payment or Late Registration
Payment shall be payable in cash or Common Stock, at the Subscriber's option, as
follows: If Subscriber elects to be paid in cash, such late Filing Payment or
Late Registration Payment shall be paid to such Subscriber within five (5)
business days following the end of the month in which such Late Registration
Payment was accrued. If Subscriber elects to be paid in Common Stock, such
number of shares shall be determined as follows:
Upon conversion of each share of Preferred Stock, the Company shall
issue to the Subscriber the number of shares of Common Stock determined
as set forth in Section 5(a) of the Certificate of Designation, plus an
additional number of shares of Common Stock attributable to such share
of Preferred Stock (the "Additional Shares") determined as set forth
below:
Additional Shares = Late Registration Payment + Late Filing Payment
-----------------------------------------------
Conversion Price
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With respect to the Preferred Stock, "Conversion Price" has the definition
ascribed to it in the Certificate of Designation.
Such Additional Shares shall also be deemed "Registrable Securities" as defined
herein. The Company covenants to use its best efforts to use Form S-3 (or other
suitable form, at the Company's discretion, but subject to the reasonable
approval of the Subscribers) for the registration required by this Section
during all applicable times contemplated by this Agreement.
(b) The Registration Statement shall be prepared as a "shelf"
registration statement under Rule 415, and shall be maintained effective until
all Registrable Securities cease to exist.
(c) The Company represents that it is presently eligible to
effect the registration contemplated hereby on Form S-3 and will use its best
efforts to continue to take such actions as are necessary to maintain such
eligibility.
3. PIGGYBACK REGISTRATION. If the Registration Statement
described in Section 2 is not effective by the Due Date, and if (but without any
obligation to do so) the Company proposes to register (including for this
purpose a registration effected by the Company for shareholders other than the
Holders) any of its Common Stock under the Act in connection with the public
offering of such securities solely for cash (other than a registration relating
solely for the sale of securities to participants in a Company stock plan or a
registration on Form S-4 promulgated under the Act or any successor or similar
form registering stock issuable upon a reclassification, upon a business
combination involving an exchange of securities or upon an exchange offer for
securities of the issuer or another entity), the Company shall, at such time,
promptly give each Holder written notice of such registration (a "Piggyback
Registration Statement"). Upon the written request of each Holder given by fax
within ten (10) days after mailing of such notice by the Company, the Company
shall cause to be included in such registration statement under the Act all of
the Registrable Securities that each such Holder has requested to be registered
("Piggyback Registration") to the extent such inclusion does not violate the
registration rights of any other security holder of the company granted prior to
the date hereof; nothing herein shall prevent the Company from withdrawing or
abandoning the registration statement prior to its effectiveness. The election
of initiating Holders to participate in a Piggyback Registration Statement shall
not impact the amount payable to investors pursuant to Section 2(a) herein
except that the Late Registration Payment shall cease to accrue, as of the date
of effectiveness of the Piggyback Registration Statement, on a percentage of the
initiating Holders' Preferred Stock equal to the number of shares of Common
Stock included in the Piggyback Registration Statement divided by 2,800,000.
4. LIMITATION ON OBLIGATIONS TO REGISTER.
(a) In the case of a Piggyback Registration on an underwritten
public offering by the Company, if the managing underwriter determines and
advises in writing that the inclusion in the registration statement of all
Registrable Securities proposed to be included would interfere with the
successful marketing of the securities proposed to be registered by the Company,
then the number of such Registrable Securities to be included in the
registration statement, to the extent such Registrable Securities may be
included in such Piggyback Registration Statement shall be allocated among all
Holders who had requested Piggyback Registration pursuant to the terms hereof,
in the proportion that the number of Registrable Securities which each such
Holder, including Swartz, seeks to register bears to the total number of
Registrable Securities sought to be included by all Holders, including Swartz.
If required by the managing underwriter of such an underwritten public offering,
the Holders shall enter into a reasonable agreement limiting the number of
Registrable Securities to be included in such Piggyback Registration Statement
and the terms, if any, regarding the future sale of such Registrable Securities.
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(b) In the event the Company believes that shares sought to be
registered under Section 2 or Section 3 by Holders do not constitute
"Registrable Securities" by virtue of Section 1(b) of this Agreement, and the
status of those shares as Registrable Securities is disputed, the Company shall
provide, at its expense, an Opinion of Counsel, reasonably acceptable to the
Holders of the Securities at issue (and satisfactory to the Company's transfer
agent to permit the sale and transfer) that those securities may be sold
immediately, without volume limitation or other material restrictions, without
registration under the Act, by virtue of Rule 144 or similar provisions.
5. OBLIGATIONS OF THE COMPANY. Whenever required under this
Agreement to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:
(a) Prepare and file with the Securities and Exchange
Commission ("SEC") a registration statement with respect to such Registrable
Securities and use its best efforts to cause such registration statement to
become effective and to remain effective for the applicable period.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities covered
by such registration statement.
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders of the Registrable Securities covered by such registration statement,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) As promptly as practicable after becoming aware of such
event, notify each Holder of Registrable Securities 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 omits 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 subject to Section
6 use its best efforts promptly to prepare a supplement or amendment to the
registration statement to correct such untrue statement or omission, and deliver
a number of copies of such supplement or amendment to each Holder as such Holder
may reasonably request.
(g) Provide Holders with written notice of the date that a
registration statement registering the resale of the Registrable Securities is
declared effective by the SEC, and the date or dates when the Registration
Statement is no longer effective.
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(h) Provide Holders and their representatives the opportunity
to conduct a reasonable due diligence inquiry of Company's pertinent financial
and other records and make available its officers, directors and employees for
questions regarding such information as it relates to information contained in
the registration statement.
(i) Provide Holders and their representatives the opportunity
to review the registration statement and all amendments thereto a reasonable
period of time prior to their filing with the SEC if so requested by Holder in
writing and to consider reasonable comments from the Holders given within five
(5) business days of the date such statement was received by the Holder.
(j) Provide each Holder with prompt notice of the assurance by
the SEC or any state securities commission or agency of any stop order
suspending the effectiveness of the registration statement or the initiation of
any proceeding for such purpose. The Company shall use its best efforts to
prevent the issuance of any stop order, and, if any is issued to obtain the
removal thereof at the earliest possible date.
(k) Use its best efforts to list the Registrable Securities
covered by the registration statement with all securities exchanges or markets
on which the Common Stock is then listed and prepare and file any required
filing with the NASD or any such exchange or market.
6. BLACK OUT. In the event that, during the time that the
Registration Statement is effective, the Company reasonably determines, based
upon advice of counsel, that due to the existence of material non-public
information, disclosure of such material non-public information would be
required to make the statements contained in the Registration Statement not
misleading, and the Company has a bona fide business purpose for preserving as
confidential such material non-public information, the Company shall have the
right to suspend the effectiveness of the Registration Statement, and no Holder
shall be permitted to sell any Registrable Securities pursuant thereto, until
such time as such suspension is no longer advisable; provided, however, that
such time shall not exceed a period of sixty (60) days. If the Company attempts
to exceed such sixty (60) day limit, the Late Registration Payments shall
accrue. As soon as such suspension is no longer advisable, the Company shall, if
required, promptly, but in no event later than the date the Company files any
documents with the Securities and Exchange Commission ("SEC") referencing such
material information, file with the SEC an amendment to the Registration
Statement disclosing such information and use its best efforts to have such
amendment declared effective as soon as possible.
In the event the effectiveness of the Registration
Statement is suspended by the Company pursuant hereto, the Company shall
promptly notify all Holders whose securities are covered by the Registration
Statement of such suspension, and shall promptly notify each such Holder as soon
as the effectiveness of the Registration Statement has been resumed. The Company
shall be entitled to effect no more than one such suspension during the one (1)
year period following the Last Closing.
7. FURNISH INFORMATION. It shall be a condition precedent to
the obligations of the Company to take any action pursuant to this Agreement
with regard to each selling Holder that such selling Holder shall furnish to the
Company such information regarding Holder, the Registrable Securities held by
it, and the intended method of disposition of such securities as shall be
required to effect the registration of its Registrable Securities or to
determine that registration is not required pursuant to Rule 144 or other
applicable provision of the Act.
8. EXPENSES. All expenses other than underwriting discounts
and commissions and fees and expenses of counsel to the selling Holders incurred
in connection with registrations, filings or qualifications pursuant hereto,
including (without limitation) all registration, filing and qualification fees,
printers' and accounting fees, fees and disbursements of counsel for the
Company, shall be borne by the Company.
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9. INDEMNIFICATION. In the event any Registrable Securities
are included in a Registration Statement or a Piggyback Registration Statement
under this Agreement:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, the officers and directors of each Holder, any
underwriter (as defined in the Act) for such Holder and each person, if any, who
controls such Holder or underwriter within the meaning of the Act or the
Securities Exchange Act of 1934, as amended (the "1934 Act"), against any
losses, claims, damages, or liabilities (joint or several) to which they may
become subject under the Act, the 1934 Act or other federal or state law,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereof) arise out of or are based upon any of the following statements or
omissions: (i) any untrue statement or alleged untrue statement of a material
fact contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, or (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading, and the Company will reimburse each such Holder, officer
or director, underwriter or controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this subsection 9(a) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable in any such case
for any such loss, claim, damage, liability, or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by any such Holder, officer, director, underwriter or
controlling person.
(b) To the extent permitted by law, each selling Holder,
severally and not jointly, will indemnify and hold harmless the Company, each of
its directors, each of its officers who have signed the registration statement,
each person, if any, who controls the Company within the meaning of the Act, any
underwriter and any other Holder selling securities in such registration
statement or any of its directors or officers or any person who controls such
Holder, against any losses, claims, damages, or liabilities (joint or several)
to which the Company or any such director, officer, controlling person, or
underwriter or controlling person, or other such Holder or director, officer or
controlling person may become subject, under the Act, the 1934 Act or other
federal or state law, insofar as such losses, claims, damages, or liabilities
(or actions in respect thereto) arise out of or are based upon any statement or
omission in each case to the extent (and only to the extent) that such statement
or omission is made in reliance upon and in conformity with written information
furnished by such Holder expressly for use in connection with such registration
statement; and each such Holder will reimburse any legal or other expenses
reasonably incurred by the Company and any such director, officer, controlling
person, underwriter or controlling person, other Holder, officer, director, or
controlling person in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this subsection 9(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent shall
not be unreasonably withheld.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 9, 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 the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the reasonably incurred fees and
expenses
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of one such counsel to be paid by the indemnifying party, if representation of
such indemnified party by the counsel retained by the indemnifying party would
be inappropriate due to actual or potential conflicting interests between such
indemnified party and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action, if prejudicial
to its ability to defend such action, shall relieve such indemnifying party of
any liability to the indemnified party under this Section 9, but the omission so
to deliver written notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise than under this
Section 9.
(d) In the event that the indemnity provided in paragraph (a)
or (b) of this Section 9 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and each Holder agree to
contribute to the aggregate claims, losses, damages and liabilities (including
legal or other expenses reasonably incurred in connection with investigating or
defending same) (collectively "Losses") to which the Company and one or more of
the Holder may be subject in such proportion as is appropriate to reflect the
relative fault of the Company and the Holders in connection with the statements
or omissions which resulted in such Losses. Relative fault shall be determined
by reference to whether any alleged untrue statement or omission relates to
information provided by the Company or by the Holders. The Company and the
Holders agree that it would not be just and equitable if contribution were
determined by pro rata allocation or any other method of allocation which does
not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this paragraph (d), no person guilty of
fraudulent misrepresentation (within the meaning of Section 10(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section 9,
each person who controls a Holder of Registrable Securities within the meaning
of either the Securities Act or the Exchange Act and each director, officer,
partner, employee and agent of a Holder shall have the same rights to
contribution as such holder, and each person who controls the Company within the
meaning of either the Act or the Exchange Act and each director of the Company,
and each officer of the Company who has signed the registration statement, shall
have the same rights to contribution as the Company, subject in each case to the
applicable terms and conditions of this paragraph (d).
(e) The obligations of the Company and Holders under this
Section 9 shall survive the redemption and conversion, if any, of the Preferred
Stock, the completion of any offering of Registrable Securities in a
Registration Statement under this Agreement, and otherwise.
(f) If the Registration Statement or any Piggyback
Registration involves an underwritten offering, the Company shall enter into
such customary agreements for secondary offerings (including a customary
underwriting agreement with the underwriter or underwriters) and take all such
other reasonable actions reasonably requested by the Holders in connection
therewith in order to expedite or facilitate the disposition of such Registrable
Securities and in such connection:
(i) make such representations and warranties to the
Holders and the underwriter or underwriters in form, substance and scope as are
customarily made by issuers to underwriters in secondary offerings;
(ii) cause to be delivered to the sellers of
Registrable Securities and the underwriter or underwriters opinions of
independent counsel to Company on and dated as of the date of delivery of any
Registrable Securities sold pursuant to the Registration Statement, which
counsel and opinions (in form, scope and substance) shall be reasonably
satisfactory to the Holders and the underwriter(s) and their counsel and
covering, without limitation, such matters as the due authorization and issuance
of the securities being registered and compliance with securities laws by
Company in connection with the authorization, issuance and registration thereof
and other
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matters that are customarily given to underwriters in underwritten offerings,
addressed to the Holders and each underwriter;
(iii) if required by the underwriters, cause to be
delivered, immediately prior to the effectiveness of the Registration Statement
and at the time of delivery of any Registrable Securities sold pursuant thereto,
a "comfort" letter from Company's independent certified public accountants
addressed to the Holders and each underwriter stating that such accountants are
independent public accountants within the meaning of the Securities Act and the
applicable published rules and regulations thereunder, and otherwise in
customary form and covering such financial and accounting matters as are
customarily covered by letters of the independent certified public accountants
delivered in connection with secondary offerings;
(iv) the underwriting agreement shall include
customary indemnification and contribution provisions to and from the
underwriters and procedures for secondary underwritten offerings; and
(v) deliver such documents and certificates as may
be reasonably requested by the Holders of the Registrable Securities being sold
or the managing underwriter or underwriters to evidence compliance with clause
(i) above and with any customary conditions contained in the underwriting
agreement.
10. REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a view
to making available to the Holders the benefits of Rule 144 promulgated under
the Act and any other rule or regulation of the SEC that may at any time permit
a Holder to sell securities of the Company to the public without registration,
the Company agrees to:
(a) make and keep public information available, as those terms
are understood and defined in Rule 144;
(b) use its best efforts to file with the SEC in a timely
manner all reports and other documents required of the Company under the Act and
the 1934 Act; and
11. AMENDMENT OF REGISTRATION RIGHTS. Any provision 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 the Holders of
a majority of the Registrable Securities provided that the amendment treats all
Holders equally. Any amendment or waiver effected in accordance with this
paragraph shall be binding upon each Holder, each future Holder, and the
Company.
12. NOTICES. All notices required or permitted under this
Agreement shall be made in writing signed by the party making the same, shall
specify the section under this Agreement pursuant to which it is given, and
shall be addressed if to (i) the Company at: Viragen, Inc., 865 SW 78th Avenue,
Suite 100, Plantation, Florida, 33324 Telephone No. (954) 233-8746, Facsimile
No. (954) 233-1414 and (ii) the Holders at their respective last address as the
party as shown on the records of the Company. Any notice, except as otherwise
provided in this Agreement, shall be made by fax and shall be deemed given at
the time of transmission of the fax.
13. TERMINATION. This Agreement shall terminate on the date
all Registrable Securities cease to exist; but without prejudice to (i) the
parties' rights and obligations arising from breaches of this Agreement
occurring prior to such termination (ii) other indemnification obligations under
this Agreement.
14. ASSIGNMENT. No assignment, transfer or delegation, whether
by operation of law or otherwise, of any rights or obligations under this
Agreement by the Company
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or any Holder, respectively, shall be made without the prior written consent of
the majority in interest of the Holders or the Company, respectively; provided
that the rights of a Holder may be transferred to a subsequent holder of the
Holder's Registrable Securities (provided such transferee shall provide to the
Company, together with or prior to such transferee's request to have such
Registrable Securities included in a Piggyback Registration, a writing executed
by such transferee agreeing to be bound as a Holder by the terms of this
Agreement), and the Company hereby agrees to file a new registration statement
or an amended registration statement including such transferee or a selling
security holder thereunder; and provided further that the Company may transfer
its rights and obligations under this Agreement to a purchaser of all or a
substantial portion of its business if the obligations of the Company under this
Agreement are assumed in connection with such transfer, either by merger or
other operation of law (which may include without limitation a transaction
whereby the Registrable Securities are converted into securities of the
successor in interest) or by specific assumption executed by the transferee.
15. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
agreements made in and wholly to be performed in that jurisdiction, except for
matters arising under the Act or the Securities Exchange Act of 1934, which
matters shall be construed and interpreted in accordance with such laws.
16. EXECUTION IN COUNTERPARTS PERMITTED. This Agreement may be
executed in any number of counterparts, each of which shall be enforceable
against the parties actually executing such counterparts, and all of which
together shall constitute one (1) instrument.
17. SPECIFIC PERFORMANCE. The Holder shall be entitled to the
remedy of specific performance in the event of the Company's breach of this
Agreement, the parties agreeing that a remedy at law would be inadequate.
18. INDEMNITY. Each party shall indemnify each other party
against any and all claims, damages (including reasonable attorney's fees), and
expenses arising out of the first party's breach of any of the terms of this
Agreement.
19. ENTIRE AGREEMENT; WRITTEN AMENDMENTS REQUIRED. This
Agreement, including the Exhibits attached hereto, the Subscription Agreements,
the Certificates of Designation, the Preferred Stock certificates, the Escrow
Agreement, and the other documents delivered pursuant hereto constitute the full
and entire understanding and agreement between the parties with regard to the
subjects hereof and thereof, and no party shall be liable or bound to any other
party in any manner by any warranties, representations or covenants except as
specifically set forth herein or therein. Except as expressly provided herein,
neither this Agreement nor any
[INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
this ____ day of April, 1998.
VIRAGEN, INC.
By:
---------------------------------
Dennis W. Healey, Executive Vice
President/CFO
Address: Viragen, Inc.
865 SW 78th Avenue, Suite 100
Plantation, Florida 33324
Telephone No. (954) 233-8746
Facsimile No. (954) 233-1416
SWARTZ INVESTMENTS, LLC
By:
---------------------------------
Eric S. Swartz, President
Address: 1080 Holcomb Bridge Road
Bldg. 200, Suite 285
Roswell, GA 30076
Telephone: (770) 640-8130
Facsimile: (770) 640-7150
INVESTOR(S)
-----------------------------------
Investor's Name
By:
---------------------------------
(Signature)
Address:
------------------------------------
------------------------------------
------------------------------------
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EXHIBIT 23
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Viragen, Inc. for
the registration of 10,402,052 shares of its common stock and to the
incorporation by reference therein of our report dated September 25, 1997, with
respect to the consolidated financial statements of Viragen, Inc. included in
its Annual Report (Form 10-K) for the year ended June 30, 1997, filed with the
Securities and Exchange Commission.
/s/ Ernst & Young LLP
Miami, Florida
April 13, 1998
