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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 16, 1999.
Registration No. 333-75749
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
VIRAGEN, INC.
(Exact name of registrant as specified in its charter)
Delaware 59-2101668
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
865 S.W. 78th Avenue
Suite 100
Plantation, FL 33324
Telephone (954) 233-8746
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Copies to:
James M. Schneider, Esq.
Gerald Smith Robert J. Burnett, 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]
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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 issuable upon
the conversion of 8%
redeemable convertible
promissory notes 9,912,622(2) $0.52 $5,155,000 $1,562
Common stock issuable upon
exercise of common stock
purchase warrants 932,039(3) 0.52 485,000 147
Common stock issuable upon
exercise of common stock
purchase warrants 155,339(4) 0.52 81,000 25
---------- ---------- ------
Total 11,000,000 $5,721,000 $1,734
========== ========== ======
</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 based on the average of the high
and low sale price for our common stock, $.01 par value per share, as
reported on the Nasdaq National Market System at March 31, 1999.
(2) Includes up to an aggregate of 9,912,622 shares of our common
stock issuable upon the conversion of our 8% redeemable convertible
notes convertible at the lesser of $0.50 or the lowest closing bid
price of our common stock during the 10 consecutive trading days
immediately preceding each conversion date of the notes.
(3) Includes up to an aggregate of 932,039 shares of our common
stock issuable upon the exercise of warrants exercisable at the lower
of $0.50 or the lowest closing bid price of our common stock during
the 10 consecutive trading days immediately preceding each conversion
date of the notes.
(4) Includes an aggregate of up to 155,339 shares of our common
stock issuable upon the exercise of warrants exercisable at $.773.
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 notes and warrants but not as a result of
pure adjustments attributable to changes in market price.
Viragen, Inc. hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until Viragen 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 Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
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SUBJECT TO COMPLETION
____________, 1999
Selling Security Holder Offering Prospectus
VIRAGEN, INC.
11,000,000 shares of common stock
Viragen, Inc. is registering up to 11,000,000 shares of its
common stock issuable to the selling security holders upon
the conversion of promissory notes and the exercise of
warrants.
OTC Bulletin Board Symbol: VRGN
Recent Price: $0.65 at July 8, 1999
We will not receive any proceeds from the sale of common stock from the
accounts of the selling security holders. We may however receive proceeds from
the exercise of the warrants.
THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD PURCHASE SHARES ONLY
IF YOU CAN AFFORD A COMPLETE LOSS. SEE "HIGH RISK FACTORS" BEGINNING ON PAGE 3.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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TABLE OF CONTENTS
<TABLE>
<S> <C>
High Risk Factors......................................................................................... 3
Where You Can Find More Information....................................................................... 7
Incorporation of Certain Information by Reference......................................................... 7
The Company............................................................................................... 8
Selling Security Holders.................................................................................. 9
Plan of Distribution...................................................................................... 11
Description of Securities................................................................................. 12
Legal Matters............................................................................................. 13
Experts................................................................................................... 13
Indemnification........................................................................................... 13
</TABLE>
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HIGH RISK FACTORS
An investment in our common stock is very risky. You should be aware you could
lose the entire amount of your investment. Prior to making an investment
decision, you should carefully read this entire prospectus and consider the
following risk factors:
IF WE HAVE CONTINUING LOSSES AND A CONTINUING LACK OF REVENUES FROM OPERATIONS
SINCE WE HAVE NOT RECEIVED THE NECESSARY REGULATORY APPROVALS TO MARKET OUR
PRODUCT, IT MAY BE NECESSARY FOR US TO TERMINATE OPERATIONS
Since the organization of Viragen, Inc., we have incurred operating losses. The
net loss for our fiscal year ended June 30, 1998 was $7,856,136. As of March
31, 1999, our net loss for that nine month period was $7,490,642.
At March 31, 1999, we had a total deficit since organization of $47,357,982.
We presently produce a single product known as natural human leukocyte derived
alpha interferon. However, because the United States Food and Drug
Administration and the European Union regulatory authorities have not yet
approved our natural interferon product, we cannot sell this product.
Therefore, we have no current source of income from operations.
We will not be able to reduce our losses or operate profitably until we obtain
the necessary approvals to sell natural interferon. While we currently have a
10% interest in a separate product for the treatment of rheumatoid arthritis,
sales of natural interferon are expected to be our primary source of income.
Investors must understand that our natural interferon product may never receive
the necessary approvals from regulatory authorities. In addition, even if
approval is received, we may not be able to recover sufficient profit from the
sale of natural interferon. If we do not obtain the required approvals or
profit from the sale of natural interferon or other products, Viragen most
likely will be forced to terminate its operations. In that case, those who have
invested in Viragen will likely lose their entire investment.
VIRAGEN HAS RECENTLY BEEN DELISTED FROM NASDAQ. IF THE PENNY STOCK RULES BECOME
APPLICABLE TO OUR STOCK, IT MAY BECOME MORE DIFFICULT TO SELL OUR STOCK
On June 28, 1999, the Nasdaq Stock Market delisted our common stock because the
hearing review panel was concerned that we would not be able to maintain a
closing bid price for our common stock of at least $1.00, as well as continue
to meet Nasdaq's minimum $4 million net worth requirement. As a result, our
common stock is now traded on the OTC Bulletin Board, which is a more limited
market than the Nasdaq Stock Market. Stocks quoted in this market generally do
not have the same following as stocks traded on the Nasdaq Stock Market.
Compared to stocks included in the Nasdaq Stock Market, OTC Bulletin Board
stocks are generally not quoted in the stock market tables in local and
national newspapers. In addition, our common stock could become subject to the
penny stock rules under the Securities Exchange Act of 1934, if we do not
maintain a minimum tangible net worth of at least $2 million.
The penny stock rules require broker-dealers, prior to a transaction in a penny
stock which is not exempt from the rules, to deliver a standardized risk
disclosure document prepared by the Securities and Exchange Commission that
provides information about penny stocks and the risks in the penny stock
market. The broker-dealer also must provide the customer with current bid and
offer quotations for the penny stock, the compensation of the broker-dealer and
its salesperson in the transaction, and monthly account statements showing the
market value of each penny stock held in the customer's account. The bid and
offer quotations, and the broker dealer and salesperson compensation
information, must be given to the customer orally or in writing prior to
completing the transaction and must be given to the customer in writing before
or with the customer's confirmation.
In addition, the penny stock rules require that prior to a transaction in a
penny stock which is not exempt from the penny stock rules, the broker and/or
dealer must make a special written determination that the penny stock is a
suitable investment for the purchaser and receive the purchaser's written
agreement to the transaction. These disclosure requirements may have the effect
of reducing the level of purchases in our common stock and trading activity in
the secondary market for Viragen's common stock. If our common stock becomes
subject to the penny stock rules, it will be more difficult for you to sell the
common stock which may reduce the value of your investment.
COMPETITION IN PHARMACEUTICAL INDUSTRY IN PRODUCTS OFFERED AND FOR FUNDING MAY
FORCE US TO TERMINATE OPERATIONS
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Competition for investment capital and market share in the immunological and
pharmaceutical products industry is very strong . Our competitors, which
include major pharmaceutical companies, have more experience in research,
development and clinical testing of pharmaceutical and biomedical products. Our
competitors also have greater financial, marketing and human resources than
Viragen. Some of our competitors, such as Hoffman-La Roche, Inc.,
Schering-Plough Corporation, Glaxo-Wellcome, Biogen, Inc., Chiron Corp., and
Baxter Laboratories, already have approvals for their synthetic interferons and
since 1986 have been marketing their products. These companies have received
wide acceptance from the medical community and the patient population for their
products. This will make it more difficult for us once we are able to introduce
our product. Competition is only expected to increase in the future. In
addition, technological advances made by our competitors may make synthetic
products more effective, less costly and with less harmful side effects.
Viragen may not be able to keep pace with technological advances by others,
either because we do not have sufficient resources or because we cannot achieve
greater improvements in our technology. If we are unable to compete with our
larger, more experienced competitors, we may be forced to terminate operations.
Competition for funding in the pharmaceutical industry is also intense. As
explained above, we have no source of income and may not have sufficient
sources of income for a significant period of time, if ever. Additional funds
will be needed to conduct clinical trials so we can receive regulatory
approvals. We must obtain additional funding from outside sources to conduct
these trials. In the event we are unable to locate funding or obtain funding on
reasonable terms, we will most likely be required to terminate operations. In
that case, any investment in Viragen would be lost.
GOVERNMENT REGULATION MAY AFFECT VIRAGEN'S ABILITY TO DEVELOP AND DISTRIBUTE
NATURAL INTERFERON
All pharmaceutical manufacturers are subject to state and federal rules and
regulations. In particular, we must comply with the United States Food and Drug
Administration guidelines governing the productivity, testing and marketing.
European Union regulatory authorities also impose regulations. These rules and
regulations are constantly changing,could extend the period of clinical trials,
involve costly compliance measures and may restrict our ability to produce and
distribute our natural interferon product based on the results of testing. It
is possible that we may never receive these regulatory approvals for any
specific illness or for the range of illnesses that we are attempting to treat
with our natural interferon product.
WE MAY BE REQUIRED TO FOLLOW RESTRICTIVE TESTING PROCEDURES BY THE SCOTTISH
AUTHORITIES WHEN WE TEST OUR PRODUCTS ON HUMAN PATIENTS
Our ability to receive the approval of the European Union regulatory
authorities depends, in part, on our ability to test natural interferon on
human patients which could be limited, since it is a product manufactured from
human blood cells which could possibly infect human patients. We are awaiting
authorization from the Scottish regulatory authorities in order to go ahead
with human testing. We could be required to follow more extensive, protective
and expensive testing requirements since our product does involve the potential
to infect. We may not have the resources if the testing requires more
substantial protective requirements.
IF PATIENTS HAVE PROBLEMS RECEIVING THIRD PARTY REIMBURSEMENTS OF OUR PRODUCT,
IT WILL BE MORE DIFFICULT TO MARKET OUR PRODUCT. IN ADDITION, OUR MARKETING
COSTS WOULD INCREASE
Our ability to successfully market our products depends in part on the receipt
of reimbursements from government health administration authorities, private
health coverage insurers and other organizations. The pricing of products
similar to those we produce or the amount of reimbursement available from
governmental agencies or third party insurers may affect our ability to market
our product or market our product at a profit. This is so because limitations
on third party reimbursements could restrict the patient population that will
make use of our product. Difficulties in getting third party payors to allow
reimbursement for our product could also require us to increase our marketing
efforts which will involve greater expenses.
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OUR PROPRIETARY TECHNOLOGY AND ANY FUTURE PATENTS THAT WE RECEIVE MAY NOT
PROVIDE SUFFICIENT PROTECTION TO US
We intend to rely, in part, on our internally developed technology for the
efficient and safe production of natural interferon that was developed by
Viragen's scientists. We believe that this technology allows us to produce our
natural interferon more efficiently and with less possible contaminants making
it a more desirable and affordable product. Viragen recently filed two patent
applications relating to our Omniferon(TM) production technology. If in fact,
we are not successful in obtaining patents or demonstrating that our production
process is proprietary under trade secret law, we will have limited protection
from those who might copy our technology. In addition, we may be damaged if we
are accused of misappropriating a competitor's proprietary technology even if
these claims are untrue. We cannot assure you that our patent applications will
be approved, and if granted, that these patents or our other proprietary rights
will provide necessary protection to us.
TECHNOLOGY TRANSFERS BY VIRAGEN TO THIRD PARTIES MAY NOT RESULT IN REVENUE TO US
One of our proposed marketing strategies is to license the right to use our
technology and product manufacturing techniques to third parties, who will in
turn use them to produce natural human leukocyte alpha interferon outside the
United States. We cannot guarantee that we will be able to successfully market
the product or receive revenue from their efforts.
WE MAY BE EXPOSED TO PRODUCT LIABILITY CLAIMS AND OUR PRODUCT LIABILITY
INSURANCE MAY NOT BE SUFFICIENT TO COVER ALL CLAIMS OR CONTINUE TO BE AVAILABLE
TO US
We may be subject to claims for personal injuries or other damages resulting
from the use of our natural interferon. In order to protect Viragen against
these claims, we maintain product liability insurance in the amount of
$1,000,000 per occurrence and $2,000,000 in total. We cannot be sure that this
insurance will be adequate to cover any liabilities that may result from the
use of our natural interferon or that we will be able to afford this form of
insurance in the future.
OUR RELIANCE ON FOREIGN THIRD PARTY MANUFACTURER MAY DISRUPT OPERATIONS
Viragen (Scotland) Ltd., a wholly-owned subsidiary of Viragen (Europe) Ltd.,
our majority-owned subsidiary, entered into a manufacturing agreement with the
Common Services Agency of Scotland for the production of Omniferon(TM), our
natural interferon product. Under this agreement, Viragen (Scotland) Ltd. and
the Common Services Agency of Scotland will jointly manufacture Omniferon(TM).
Our decision to use an offshore manufacturer could expose Viragen (Scotland) to
risks involved with fluctuations in exchange rates of foreign currencies. In
addition, relying on the Common Services Agency of Scotland exposes us to all
the risks of dealing with a foreign manufacturing source. These include
governmental regulations, tariffs, import and export restrictions,
transportation, taxes and foreign health and safety regulations.
Foreign manufacturing arrangements will limit our control and may lead to the
disruption of our operations which could negatively affect our operations and
your investment in us.
WE ARE DEPENDENT ON CERTAIN KEY EXECUTIVES AND THEIR LOSS WOULD BE DAMAGING TO
VIRAGEN
Our day-to-day operations are managed by Mr. Gerald Smith, our Chairman of the
Board and President, Mr. Dennis W. Healey, our Executive Vice President,
Treasurer and Chief Financial Officer, and Dr. D. Magnus Nicolson, the Managing
Director of Viragen (Scotland) Ltd. We have employment agreements with Messrs.
Smith, Healey and Nicolson which restrict competitive activities by them during
the term of their agreements and for a two-year period thereafter. However, the
loss of their services would have a negative effect on our ability to conduct
business. Our future success will greatly depend on our ability to attract and
retain additional skilled personnel in various phases of our operations.
OUR TRANSACTION WITH SELLING SECURITY HOLDERS MAY CAUSE SUBSTANTIAL DILUTION TO
OUR SHAREHOLDERS
Based on the current market price of our common stock, we expect to issue
approximately 6,000,000 shares of our common stock (or 9.2% of the issued and
outstanding common stock as of March 31, 1999) to the selling security holders
in connection with the notes and warrants described in this prospectus. The
selling security holders may invest additional funds in Viragen on terms
virtually identical to those described in the "Selling Security Holders"
section of the prospectus for up to an additional $7,000,000, which will
include substantially the same conversion terms and penalty provisions.
However, neither we nor the selling security holders are obligated to sell or
purchase any securities in the future. Because the price the selling security
holders must pay for those shares is based on the market price of our common
stock on various dates and due to the large percentage of shares of our common
stock we may sell to the selling security holders, you may experience
substantial dilution of your investment in us. In addition, sales of our shares
by the selling security holders may depress the price of our stock in the
market. Future transactions with the selling security holders or any other
investors could further depress the price of our stock. We will require
additional funding to conduct operations. This funding may not be available and
will involve further dilution to investors.
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POSSIBLE ISSUANCE OF ADDITIONAL SHARES AND PAYMENT OF PENALTY FEES TO SELLING
SECURITY HOLDERS COULD CAUSE MORE DILUTION AND NEGATIVELY AFFECT OUR OPERATIONS
As described later on in the "Selling Security Holders" section of this
prospectus, we may be obligated to pay the selling security holders penalty
fees in excess of the amount of their investment and issue additional shares of
our common stock if we default on our obligations to the selling security
holders. Triggering events include default under the promissory notes,
inability to amend our certificate of incorporation to increase our authorized
common stock, failure to maintain effectiveness of our registration under the
Securities Act of 1933, delisting of our stock from Nasdaq (which has
occurred), and failure to have our registration statement become effective by
July 7, 1999 (which has occurred). These penalties involve payments of many
thousands of dollars or issuances of large numbers of our shares of common
stock which depends on the price of our common stock and the period that we are
in non-compliance. If we are required to pay any penalty fees, our ability to
finance our current and future operations could be negatively affected. If we
are required to issue additional shares of our common stock, your ownership
interest in us may be significantly diluted.
OUR OPERATIONS MAY SUFFER FROM COMPUTER PROBLEMS RELATING TO THE YEAR 2000
Many existing computer programs use only two digits to identify a year in the
date field. These programs were designed and developed without considering the
impact of the upcoming change in the year 2000. Some older computer systems
store dates with only a two-digit year with an assumed prefix of "19."
Consequently, this limits those systems to dates between 1900 and 1999. If not
corrected, many computer systems and applications could fail or create
erroneous results by or at the year 2000.
Because we will rely heavily on computers to conduct our business, we are
subject to all the risks associated with the year 2000. We have assessed the
scope of our risks related to problems these computer systems may have related
to the year 2000 and we believe these risks have been addressed. In addition,
we are in the process of questioning our vendors and business partners about
their progress in identifying and addressing problems related to the year 2000.
However, we cannot assure you that all of these third party systems or our
computer systems will be year 2000 compliant.
WE WILL REQUIRE ADDITIONAL FUNDING TO CONDUCT OPERATIONS. THE FUNDING MAY NOT
BE AVAILABLE AND WILL INVOLVE FURTHER DILUTION TO INVESTORS
Viragen will continue to require significant funding in the future to continue
its operations. In addition to the $2,000,000 received from the selling
security holders in the transaction described in this prospectus, the selling
security holders and Viragen may conclude similar arrangements for up to an
additional $7,000,000 in funding. However, neither the Company nor the selling
security holders have the obligation to complete the financing for the
additional $7,000,000 in funding. We cannot assume that this additional
financing or any additional financing will be available. Given the large amount
of funding required by Viragen in the future, any financing will involve the
issuance of millions of shares of capital stock of Viragen and substantial
dilution to our investors.
WE DO NOT EXPECT TO PAY DIVIDENDS IN THE FORESEEABLE FUTURE
We have never paid cash dividends on our common stock and do not expect to pay
cash dividends on our common stock any time in the near future. The future
payment of dividends directly depends upon our future earnings, capital
requirements, financial requirements and other factors to be determined by our
Board of Directors. For the foreseeable future, any earnings from operations
will be used to finance our growth and will not be paid to our common
stockholders in the form of dividends. Since we do not anticipate paying cash
dividends on our common stock, return on your investment will depend on an
increase in the market value of Viragen's common stock.
POSSIBLE RESALES OF SECURITIES BY CURRENT STOCKHOLDERS MAY HAVE A DEPRESSIVE
EFFECT ON THE MARKET VALUE OF OUR STOCK As of March 31, 1999, we had 4,361,177
shares of common stock outstanding which were "restricted securities" as that
term is defined by Rule 144 under the Securities Act of 1933. As of March 31,
1999, we had options and warrants outstanding which if exercised would result
in 12,039,011 additional shares of our common stock outstanding. The shares of
common stock outstanding do not include shares of common stock that may be
issued on conversion of various options and warrants. Under Rule 144, a person
who holds restricted securities for a period of one year may sell a limited
number of shares to the public in ordinary brokerage transactions. Sales under
Rule 144 and sales of common stock covered by registration statements filed by
us such as shares covered by this prospectus may reduce the market price of our
common stock and increase the number of our publicly held securities.
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USE OF PREFERRED STOCK COULD BE USED TO RESIST TAKEOVERS AND MAY ALSO CAUSE
POTENTIAL ADDITIONAL DILUTION Our Certificate of Incorporation authorizes
1,000,000 shares of preferred stock, of which at May 31, 1999, 2,650 shares of
Series A preferred stock and 11 shares of Series I preferred
stock were issued and outstanding. Our Certificate of Incorporation gives our
Board of Directors the authority to issue preferred stock without approval of
our stockholders. We may issue additional shares of preferred stock to raise
money to finance our operations. We may authorize issuance of the preferred
stock in one or more series. In addition, we may set the dividend and
liquidation preferences, voting rights, conversion privileges, redemption terms
and other privileges and rights of the shares of each authorized series. The
issuance of large blocks of preferred stock could possibly have a dilutive
effect to our existing stockholders and negatively impact our existing
stockholders' liquidation preferences. In addition, while we include preferred
stock in our capitalization to improve our financial flexibility, we could
possibly issue our preferred stock to friendly third parties to preserve
control by present management in the event we become subject to a hostile
takeover that could ultimately benefit Viragen and Viragen's stockholders.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
any document we file at the Securities and Exchange Commission's public
reference rooms in Washington, D.C., New York, New York and Chicago, Illinois.
Please call the Securities and Exchange Commission at 1-800-SEC-0330 for
further information on public reference rooms. Our Securities and Exchange
Commission filings are also available to the public from our web site at
www.viragen.com or at the Securities and Exchange Commission's web site at
http://www.sec.gov.
The Securities and Exchange Commission allows us to "incorporate by reference"
the information we file with them, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus, and
later information that we file with the Securities and Exchange Commission will
automatically update and replace this information. We incorporate by reference
the documents listed below and any future filings made with the Securities and
Exchange Commission under Sections 13(a), 13(c), 14, or 15(d) of the Securities
Exchange Act of 1934 until the selling security holder sells all the shares.
This prospectus is part of a registration statement we filed with the
Securities and Exchange Commission (Registration No. 333-75749).
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
- -- Annual Report on Form 10-K/A for the year ended June 30, 1998 (Commission
File No. 0-10252)
- -- Quarterly Report on Form 10-Q for the quarter ended September 30, 1998
(Commission File No. 0-10252)
- -- Quarterly Report on Form 10-Q for the quarter ended December 31, 1998
(Commission File No. 0-10252)
- -- Quarterly Report on Form 10-Q/A for the quarter ended March 31, 1999
(Commission File No. 0-10252)
- -- Future Filings
You may request a copy of these filings and their exhibits, at no cost, by
writing or telephoning us at the following address:
Corporate Secretary Viragen, Inc. 865 S.W. 78th Avenue, Suite 100 Plantation,
FL 33324 Telephone No.: (954) 233-8746
You should rely only on the information incorporated by reference or provided
in this prospectus or any supplement. We have not authorized anyone else to
provide you with different information. The selling security holders will not
make any offer of these shares in any state where the offer is not permitted.
You should not assume that the information in this prospectus or any supplement
is accurate as of any date other than the date on the front of those documents.
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THE COMPANY
Viragen, Inc. was organized in 1980 and is in the business of researching and
developing products which help the human immune system resist viral infections.
Our primary product is a natural interferon product named Omniferon(TM) which
is produced from human white blood cells. Natural interferon stimulates and
controls the human immune system. In addition, interferon may stem the growth
of various viruses including those involved with diseases such as hepatitis,
multiple sclerosis, cancer and HIV/AIDS.
Our product has not been approved by the United States Food and Drug
Administration or the European Union regulatory authorities. Viragen will seek
Food and Drug Administration and European Union regulatory authority approval
for various uses of its Omniferon(TM) product in the future. This approval
requires several years of clinical trials and substantial additional funds.
Until 1993, we did not operate actively because of limited funds. As a result
of funds previously raised by us as well as funds from the current transaction,
we are concentrating our efforts in obtaining approval for our Omniferon(TM)
product initially in the European Union and eventually from the Food and Drug
Administration for the United States.
Our affiliate, Viragen (Scotland) Ltd., entered into a license and
manufacturing agreement with the Common Services Agency of Scotland, and the
Scottish National Blood Transfusion Service. As a result of this agreement, the
Scottish National Blood Transfusion Service will help in the manufacture of
Viragen (Scotland)'s natural interferon product for exclusive distribution in
the European Union and on a non-exclusive basis worldwide. The Scottish
National Blood Transfusion Service will receive royalties and special access to
our Omniferon(TM) product. We have also recently entered into agreements with
the American Red Cross, America's Blood Centers and the German Red Cross for
supplies of white blood cells. These sources of white blood cells will enable
us to manufacture Omniferon(TM) in sufficient quantities to conduct planned
European Union and United States clinical trials and, subject to regulatory
approvals, also provide for commercial manufacturing in the future.
Our executive offices are at 865 S.W. 78th Avenue, Suite 100, Plantation, FL
33324. Our telephone number is (954) 233-8746; our facsimile number is (954)
233-1414.
EXCEPT FOR HISTORICAL INFORMATION CONTAINED IN THIS DOCUMENT, THE MATTERS
INCLUDED IN THIS PROSPECTUS ARE FORWARD LOOKING AND INVOLVE A NUMBER OF RISKS
AND UNCERTAINTIES. VIRAGEN'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
DESCRIBED FOR A VARIETY OF FACTORS. THESE FACTORS COULD INCLUDE, BUT ARE NOT
LIMITED TO, THOSE DISCUSSED IN "HIGH RISK FACTORS" AND "MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" IN VIRAGEN'S
FORM 10-K/A ANNUAL REPORT FILED FOR THE FISCAL YEAR ENDED JUNE 30, 1998,
VIRAGEN'S FORM 10-Q QUARTERLY REPORTS FOR THE QUARTERS ENDED SEPTEMBER 30,
1998, DECEMBER 31, 1998, AND MARCH 31, 1999, AS WELL AS THOSE DISCUSSED
ELSEWHERE IN OTHER PUBLIC FILINGS MADE BY VIRAGEN WITH THE SECURITIES AND
EXCHANGE COMMISSION. FORWARD LOOKING STATEMENTS INCLUDE VIRAGEN'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 VIRAGEN ON THE DATE OF THIS PROSPECTUS, AND
VIRAGEN ASSUMES NO OBLIGATION TO UPDATE ANY OF THESE FORWARD LOOKING STATEMENTS.
IT IS IMPORTANT TO NOTE THAT VIRAGEN'S ACTUAL RESULTS COULD DIFFER MATERIALLY
FROM THOSE IN THESE FORWARD LOOKING STATEMENTS.
8
<PAGE> 11
SELLING SECURITY HOLDERS
TRANSACTION OVERVIEW
On March 17, 1999, we entered into a purchase agreement with The Isosceles Fund
Limited and Cefeo Investments Limited. We signed an amended agreement to the
purchase agreement on June 16, 1999. This amendment reduced the conversion
price, waived first refusal rights for an interim financing and extended the
date for Viragen to complete the processing of its registration statement. The
purchase agreement:
- - describes the terms under which we issued Isosceles and Cefeo 8%
redeemable promissory notes in the aggregate principal amount of $2,000,000 and
warrants to purchase shares of our common stock;
- - requires us to indemnify Isosceles, Cefeo and their officers, directors
and affiliates from any damages they experience if we breach the purchase
agreement; and
- - gives Isosceles a right of first refusal to participate in private
equity financing we undertake prior to March 17, 2000.
At the same time we executed the purchase agreement, we entered into a
Memorandum of Agreement with Isosceles which gives us the opportunity to sell
Isosceles an aggregate of up to $7,000,000 of additional notes and warrants in
two tranches. Neither Viragen nor the selling security holders have an
obligation to complete the subsequent tranches.
THE NOTES
We issued Isosceles and Cefeo promissory notes in the aggregate principal
amount of $2,000,000 under the purchase agreement. The principal amount of the
notes accrues interest at a rate of 8% annually.
MANDATORY REDEMPTION. In connection with our annual meeting of shareholders we
have received authorization to reverse split our common stock or increase the
authorized common stock of Viragen. While we are in discussions, both
internally and with third parties such as the selling security holders, no
decision has been made at this point. The promissory note agreements provided
that if we do not obtain the approval of our stockholders to complete up to a 1
for 4 reverse stock split of our outstanding common stock by June 30, 1999, the
note holders may require us to redeem an amount of the notes, or any shares of
our common stock issued to the note holders upon conversion of the notes,
necessary to permit:
- conversion of the remaining note(s);
- re-sale of the shares of our common stock issuable upon
conversion of the notes;
- issuance of additional shares; and
- exercise of the warrants
Any redemption we would be required to make would be at a cash price equal to
the greater of 125% of the face amount of the notes or the aggregate conversion
price paid for the shares of our common stock issuable on conversion of the
notes being redeemed plus all other fees described below.
CONVERSION. One-half of the principal balance and accrued interest on the notes
automatically converted into 2,049,534 shares of our common stock on July 8,
1999. In addition, the remaining one-half of the principal balance and accrued
interest on the notes will automatically convert into shares of our common
stock on August 6, 1999. The conversion price per share is the lesser of $0.50
or the lowest closing bid price of our common stock during the ten consecutive
trading days immediately preceding each of the conversion dates. The number of
shares of our common stock that will be issued to each note holder on
conversion will be determined by dividing the principal balance and accrued
interest on the notes by the conversion price in effect on each conversion
date.
In addition to the shares issuable on conversion of the notes, the note holders
are entitled to receive additional shares of our common stock 30 days after each
one-half of the notes convert into shares of our common stock, as required by
the re-set provision. The purpose of this arrangement is to make sure that the
selling security holders have a return of at least 20% on the shares received on
the conversion of the first half of the notes and at least a 22% return on the
conversion on the remaining half of the notes.
9
<PAGE> 12
The number of additional shares to which the note holders are entitled is
calculated by dividing $0.644 by the lowest closing bid price of our common
stock during the ten consecutive trading days preceding each re-set date. The
quotient obtained is multiplied by 1.2 on the first re-set date and 1.22 on the
second re-set date. The resulting product is reduced by 1. The resulting number
is then multiplied by the shares issued on the first or second conversion
dates, as appropriate. A negative number results in zero additional shares. The
formula is as follows:
((applicable rate x $0.644/future price) -1) x (shares issued)
DELIVERY DEFAULTS. We will commit a delivery default if we do not deliver the
shares issuable on conversion of the notes and the additional shares to the
note holders within four business days after we receive proper notice from the
note holders. If we commit a delivery default we must pay each note holder a
late fee of $2,500 in cash for each day we do not deliver the shares issuable
on conversion of the notes or the additional shares. Any late fee may, at the
note holders' option, be added to the principal amount of the notes.
RESTRICTION. As long as the notes are outstanding, we may not pay any dividend,
redeem any of our outstanding securities, assume any liability for borrowed
money, lend money or guarantee any obligations, incur any obligations senior to
the notes, or sell or lease assets, except in the ordinary course of business,
without the prior written consent of the note holders.
DEFAULT. If we default on our obligations under the purchase agreement or the
notes, the note holders may require us to immediately pay no less than, and
possibly more than, 130% of the principal balance plus the accrued interest and
any other sums due the note holders under the notes. Under an alternative
default calculation, the payment could exceed 130% based on the valuation of
our common stock assuming the notes had been converted into shares of our
common stock. If we fail to make the payment within five business days of
written notice that the payment is due, the note holders may, in lieu of the
payment, require us to immediately issue a number of shares of our common stock
equal to the default payment amount divided by the conversion price for the
notes then in effect.
THE WARRANTS
The warrants entitle Isosceles and Cefeo to purchase an aggregate of 932,039
shares of our common stock. The warrants are exercisable until March 17, 2004.
The warrants are exercisable at the lower of $.50 or the lowest closing bid
price of our common stock during the ten consecutive trade days immediately
preceding the conversion dates of the notes. The warrants also contain a
cashless exercise provision which allows the selling security holders to use
the difference between the closing price of the common stock, at the time of
exercise, minus the exercise price as a currency to acquire the shares without
paying cash. By way of example, if 1,000 shares are being exercised when the
closing price is $1.00 and the exercise price is $.40, the selling shareholders
could use 400 shares with a market value of $400 to pay for the exercise of the
warrants. The holder would receive 600 shares net, as a result of the cashless
exercise.
We must reduce the exercise price of the warrants if we sell shares of our
common stock, grant options or adjust the exercise prices of options or issue
other securities convertible into our common stock at prices less than $.50. We
are required to pay the warrant holders a fee of up to $2,500 per day if we do
not deliver the shares issuable upon exercise of the warrants within three
trading days after the warrants are exercised.
REGISTRATION RIGHTS
The registration rights agreement we entered into with Isosceles and Cefeo
requires us to pay Isosceles and Cefeo a fee if any of the following events
occur:
- - We fail to have a registration statement registering the shares of
common stock issuable on the exercise or conversion of the notes and warrants
effective on or before July 7, 1999;
- - We fail to maintain the effectiveness of the registration statement
registering such shares; or
- - Our common stock is de-listed from trading on NASDAQ.
The amount of the fee for each separate default is two percent (2%) monthly of
the principal amount of the notes converted plus the exercise price paid for
warrants exercised plus the principal amount of outstanding unconverted notes.
We are also obligated to redeem for cash all notes, warrants and common stock
issued upon exercise or conversion of either, if beginning September 13, 1999,
the registration statement ceases to be effective for a period of 30
consecutive business days or 60 business days during any 12 month period. The
redemption price is equal to the greater of:
10
<PAGE> 13
- - the number of shares of our common stock issuable upon conversion of
the notes or exercise of the warrants (less the exercise price of the warrants)
by the selling security holders multiplied by the high trade price of our
common stock on the day we receive redemption notice from the selling security
holders; or
- - 115% of the principal amount of the notes, the aggregate exercise price
paid for the exercise of the warrants plus any other fees described above owed
to the selling security holder.
ADDITIONAL WARRANTS
We also issued warrants to purchase an aggregate of up to 155,339 shares of our
common stock at $.773 per share to Ballsbridge Finance Limited, Elliot Layne &
Associates, Inc. and Ven-Gua Capital Markets, Ltd. in consideration for
introducing Viragen to Isosceles and Cefeo. The warrants issued to Ballsbridge,
Elliot Layne and Ven-Gua are exercisable currently until March 17, 2004. As we
did not pre-pay the notes issued to Isosceles and Cefeo before July 7, 1999,
one-half of the warrants issued to Ballsbridge, Elliot Layne and Ven-Gua were
returned to Viragen. We entered into a registration rights agreement with
Ballsbridge, Elliot Layne & Associates and Ven-Gua similar to the one we
entered into with Isosceles and Cefeo.
The following table sets forth as of March 17, 1999 (1) the name of the selling
security holders, (2) the amount of common stock held directly or indirectly or
underlying the notes and the warrants to be offered by the selling security
holders and (3) the amount to be owned by the selling security holders
following the sale of such shares. As of June 30, 1999, there were outstanding
69,068,485 shares of Viragen's common stock.
The total of 11,000,000 potential shares allocated to the selling security
holders was a total amount agreed upon with the investors rather than derived
by a specific anticipated conversion price and reflects coverage of potential
additional shares sufficient to allow for contingency issuances under the
re-set provisions of the convertible notes.
<TABLE>
<CAPTION>
Percentage
of Shares Shares to be
Name of Selling Number of Owned Prior Owned After
Security Holders Shares Owned to Offering Offering
- ---------------- ------------ ----------- ------------
<S> <C> <C> <C>
The Isosceles Fund Limited (1) 8,133,496 12.5% 0
Cefeo Investments Limited (2) 2,711,165 4.2% 0
Ballsbridge Finance, Limited (3) 38,835 * 0
Elliott Layne & Associates, Inc. (3) 58,252 * 0
Ven-Gua Capital Markets Ltd. (3) 58,252 * 0
</TABLE>
- -------------
* Denotes less than 1%
(1) Assumes that (A) 7,434,467 shares will be acquired upon conversion of
notes and (B) 699,029 shares will be acquired upon the exercise of warrants. The
Isosceles Fund is beneficially owned by Linford Asset Management Ltd.
(2) Assumes that (A) 2,478,155 shares will be acquired upon conversion of
notes and (B) 233,010 shares will be acquired upon the exercise of warrants.
Cefeo Investments Limited is beneficially owned by Banca, Privata, Solari and
Blum, S.A.
(3) Issuable upon exercise of warrants exercisable at $.773 per share until
March 17, 2004.
Viragen agreed to pay for all costs and expenses in the issuance, offer, sale
and delivery of the shares of our common stock. These include, all expenses and
fees of preparing, filing and printing the registration statement and mailing
of these items. Viragen will not pay selling commissions and expenses for any
sales by the selling security holders. Viragen will indemnify the selling
security holders against civil liabilities including liabilities under the
Securities Act of 1933.
PLAN OF DISTRIBUTION
These shares of our common stock may be sold by the selling security holders,
or by other successors in interest. The sales may be made on one or more
exchanges or in the over-the-counter market or at prices related to the then
current market price, or in negotiated transactions.
The shares of our common stock may be sold by one or more of the following
methods, including, without limitation:
(1) a block trade in which the broker-dealer who is so engaged will
attempt to sell the shares of our common stock as agent, but may
position and resell a portion of the block as principal;
(2) purchases by a broker or dealer as principal and resale by such
broker or dealer;
(3) ordinary brokerage transactions and transactions in which the
broker solicits purchasers; and
(4) face-to-face or other direct transactions between the selling
security holders and purchasers without a broker-dealer or other
intermediary.
11
<PAGE> 14
In addition, the selling security holders may, subject to the restrictions
described below and previously under "Selling Security Holders", sell short the
common stock of Viragen. In these instances, this prospectus may be delivered
in connection with such short sale and the shares offered may be used to cover
this short sale. The selling security holders may be considered underwriters
within the meaning of the Securities Act of 1933, in connection with the sale
of the shares offered by this prospects. In making sales, broker-dealers or
agents used by the selling security holders may arrange for other
broker-dealers or agents to participate. These broker-dealers may receive
commissions or discounts from the selling security holders in amounts to be
negotiated immediately prior to the sale. These broker-dealers and agents and
any other participating broker-dealers or agents, as well as the selling
security holders and the placement agent, may be considered to be
"underwriters" within the meaning of the Securities Act of 1933. In addition,
any securities covered by this prospectus that qualify for sale under Rule 144
may be sold under Rule 144 rather than by this prospectus.
We informed the selling security holders that the anti-manipulative rules under
the Securities Exchange Act of 1934, including Regulation M, may apply to their
sales in the market. We have furnished the selling security holders with a copy
of these rules. We have also informed the selling security holders that they
must deliver a copy of this prospectus with any sale of their shares.
DESCRIPTION OF SECURITIES
Viragen is currently authorized to issue up to 75,000,000 shares of common
stock, par value $.01 per share, of which 69,068,485 shares were outstanding as
of June 30, 1999. Viragen 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 and 11 shares of Series I preferred stock were outstanding as
of June 30, 1999.
COMMON STOCK
Subject to the dividend rights of the holders of preferred stock, holders of
shares of common stock are entitled to share, on a proportionate basis, such
dividends as may be declared by the Board of Directors. Upon liquidation,
dissolution or winding up of Viragen, after payment to creditors and holders of
our outstanding preferred stock, Viragen's assets will be divided
proportionately on a per share basis among the holders of our common stock.
Each share of our common stock has one vote. Holders of our common stock do not
have cumulative voting rights, which means that the holders of a plurality of
the shares voting for the election of directors can elect all of the directors.
In that event, the holders of the remaining shares will not be able to elect
any directors. Viragen's By-Laws provide that a majority of the issued and
outstanding shares of our common stock are a quorum to transact business at a
stockholders' meeting. Our common stock has no preemptive, subscription or
conversion rights and is not redeemable.
PREFERRED STOCK
Viragen 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
Viragen's Board of Directors without any action of the stockholders. These
resolutions may authorize issuances of such preferred stock in one or more
series. In addition, they may fix and determine dividend and liquidation
preferences, voting rights, conversion privileges, redemption terms and other
privileges and rights of the shares of each authorized series.
While Viragen includes preferred stock in its capitalization to improve its
financial flexibility, preferred stock could possibly be used by Viragen to
preserve control by present management in the event of a potential hostile
takeover of Viragen. In addition, the issuance of large blocks of preferred
stock could also have a dilutive effect to existing holders of Viragen's common
stock.
SERIES A PREFERRED STOCK
Viragen established the Series A preferred stock in November 1986. Each share
of Series A preferred stock is immediately convertible into 4.26 shares of our
common stock. Dividends on the Series A preferred stock are cumulative, have
priority to our common stock and are payable in either cash or common stock, at
Viragen's option.
The Series A preferred stock has voting rights only if dividends are in arrears
for five annual dividends. Upon such occurrence, the voting is limited to the
election of two directors. Voting rights terminate upon payment of the
cumulative dividends. The Series A preferred stock is redeemable at the option
of Viragen at any time after expiration of ten consecutive business days during
which the bid or last sale price for our common stock is $6.00 per share or
higher. There is no mandatory redemption or sinking fund obligation for the
Series A preferred stock.
Owners of the Series A preferred stock are entitled to receive $10.00 per
share, plus accrued and unpaid dividends, upon liquidation, dissolution or
winding up of Viragen before any
distribution or payment is made to holders of the common stock or other stock
of Viragen junior to the Series A preferred stock.
12
<PAGE> 15
SERIES I PREFERRED STOCK
The Series I preferred stock have no dividends, although an 8% accretion factor
has been included for purposes of determining the liquidation and conversion
amounts. The Series I preferred stock carries no voting rights and has a stated
value of $10,000 per share.
The Series I preferred stock and the 8% accretion factor is convertible into
shares of our common stock at the lower of:
(1) $1.59; or
(2) the variable conversion price which will equal 82% of the
market price on the date of conversion.
The amount of the shares of our common stock a holder of the Series I preferred
stock may convert into is limited to a maximum of 15% of the aggregate
principal amount of the Series I preferred stock issued to a holder for each
monthly period. This is subject to a maximum of 25% per monthly period if the
holder has not elected to convert the permitted 15% amount for the series
during any previous monthly conversion period. In addition, this conversion
quota will not be applicable in the event Viragen completes a private offering
of its debt or equity securities.
At Viragen's option, any shares of Series I preferred stock which are
outstanding on August 19, 2000 will either be (1) automatically converted at
the conversion rate in effect at that time or (2) automatically redeemed at
$10,000 per preferred share plus any liquidated damages and any other cash
payments then due from Viragen.
Viragen also has the right to redeem all or any part of the Series I preferred
stock submitted for conversion if on the date of conversion the conversion
price of Viragen's common stock is less than $1.50. Under the right to redeem
option, if the closing bid price of the common stock on the date of conversion
is less than $1.50, the redemption price paid by Viragen to the holder will be
$11,200 per share of the Series I preferred stock. On the other hand, if the
closing bid price is greater than $1.50, the redemption price paid by Viragen
to the holder will be $11,750 per share of Series I preferred stock.
OVER-THE-COUNTER MARKET
Viragen's common stock is traded on the OTC Bulleting Board. In the event we do
not maintain a minimum net tangible worth of at least $2,000,000, our common
stock will 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 Viragen's securities. It also may affect the ability of
purchasers in this offering to sell their shares in the secondary market. See
the section of this prospectus entitled "High Risk Factors" for more
information on the topics discussed above.
TRANSFER AGENT
The transfer agent for the shares of our common stock is Chase Mellon
Shareholders Services, Overpeck Centre, 85 Challenger Road, Ridgefield Park,
New Jersey 07660-2108.
LEGAL MATTERS
The validity of the issuance of the shares of our common stock being offered
hereby will be passed upon by Atlas, Pearlman, Trop & Borkson, P.A., 200 East
Las Olas Boulevard, Suite 1900, Fort Lauderdale, Florida 33301. Members of that
firm or members of their family own a total of 37,000 shares of our common
stock.
EXPERTS
Ernst & Young LLP, independent certified public accountants, have audited our
consolidated financial statements included in our Annual Report on Form 10-K/A
for the year ended June 30, 1998, as amended, as set forth in their report,
which is incorporated by reference in this prospectus and elsewhere in the
registration statement. Our financial statements are incorporated by reference
in reliance on Ernst & Young LLP's report, given on their authority as experts
in accounting and auditing.
INDEMNIFICATION
Section 145 of the General Corporation Law of Delaware allows a corporation to
indemnify any person who was or is threatened to be made a party to any
threatened, pending or completed suit or proceeding. This applies whether the
matter is civil, criminal, administrative or investigative because he or she is
or was a director, officer, employee or agent of the corporation.
13
<PAGE> 16
A corporation may indemnify against expenses, including attorney's fees, and,
except for an action by or in the name of the corporation, against judgments,
fines and amounts paid in settlement as part of such suit or proceeding. This
applies only if the person indemnified acted in good faith and in a manner he
or she reasonably believed to be in the best interest of the corporation. In
addition, with respect to any criminal action or proceeding, the person had no
reasonable cause to believe his or her conduct was unlawful.
In the case of an action by or in the name of the corporation, no
indemnification of expenses may be made for any claim, as to which the person
has been found to be liable to the corporation. The exception is if the court
in which such action was brought determines that the person is reasonably
entitled to indemnity for expenses.
Section 145 of the General Corporation Law of Delaware further provides that if
a director, officer, employee or agent of the corporation has been successful
in the defense of any suit, claim or proceeding described above, he or she will
be indemnified for expenses, including attorneys' fees, actually and reasonably
incurred by him or her.
Insofar as indemnification for liabilities arising under the Act is permitted
as to directors, officers and controlling persons of Viragen, in the opinion of
the Securities and Exchange Commission, such indemnification is against public
policy and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities, other than the payment by Viragen in
the successful defense of any action, suit or proceeding, is asserted, Viragen
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. Viragen
will be governed by the final adjudication of such issue.
14
<PAGE> 17
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 Viragen, in connection with this offering.
<TABLE>
<S> <C>
Registration fee...................................... $ 1,734
Legal fees and expenses............................... 10,000*
Accounting fees and expenses.......................... 10,000*
Printing expenses..................................... 3,000*
Miscellaneous......................................... 2,266*
-------------- --------
Total.................................................. $27,000*
===== ========
</TABLE>
*Estimated
Item 15. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of Delaware allows a
corporation to indemnify any person who was or is, or is threatened to be made
a party to any threatened, pending or completed suit or proceeding. This
applies whether the matter is civil, criminal, administrative or investigative
because he or she is or was a director, officer, employee or agent of the
corporation.
A corporation may indemnify against expenses, including attorney's fees, and,
except for an action by or in the name of the corporation, against judgments,
fines and amounts paid in settlement as part of such suit or proceeding. This
applies only if the person indemnified acted in good faith and in a manner he
or she reasonably believed to be in the best interest of the corporation. In
addition, with respect to any criminal action or proceeding, the person had no
reasonable cause to believe his or her conduct was unlawful.
In the case of an action by or in the name of the corporation, no
indemnification of expenses may be made for any claim, as to which the person
has been found to be liable to the corporation. The exception is if the court
in which such action was brought determines that the person is reasonably
entitled to indemnity for expenses.
Section 145 of the General Corporation Law of Delaware further provides that if
a director, officer, employee or agent of the corporation has been successful
in the defense of any suit, claim or proceeding described above, he or she will
be indemnified for expenses, including attorneys' fees, actually and reasonably
incurred by him or her.
Insofar as indemnification for liabilities arising under the Act is permitted
as to directors, officers and controlling persons of Viragen, in the opinion of
the Securities and Exchange Commission, such indemnification is against public
policy and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities, other than the payment by Viragen in
the successful defense of any action, suit or proceeding, is asserted, Viragen
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. Viragen
will be governed by the final adjudication of such issue.
Item 16. Exhibits.
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
-----------
<S> <C>
(2) Plan of acquisition, reorganization, arrangement, liquidation
or succession (incorporated by reference to Viragen'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 Viragen'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 Viragen'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)
</TABLE>
II-1
<PAGE> 18
<TABLE>
<S> <C>
(4) Instruments defining the rights of security holders,
including indentures (incorporated by reference to April 1997
Form S-3, Item 16, (4))
(4)(i) Certificate of Designation for Series A Preferred Stock, as
amended (incorporated by reference to 1986 Form S-2, Part II,
Item 16, 4.4)
(4)(ii) Specimen Certificate for Unit (Series A Preferred Stock and
Class A Warrant) (incorporated by reference to 1986 Form S-2,
Part II, Item 16, 4.5)
(4)(iii) Omitted II-2
(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 Viragen'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 Viragen's Current Report on
Form 8-K dated November 17, 1993)
(4)(x) 1995 Stock Option Plan (incorporated by reference to the
Company's Registration Statement on Form S-8 filed June 9,
1995)
(4)(xi) Certificate of Designation for Series B Preferred Stock,
(incorporated by reference to Viragen'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 Viragen'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 Viragen'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
Viragen'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
Viragen's Current Report on Form 8-K dated September 22,
1997)
(4)(xvii) Certificate of Designations, Preferences and Rights for
Series G 10% Cumulative Convertible Preferred Stock
(incorporated by reference to Viragen's Current Report on
Form 8-K dated September 22, 1997)
(4)(xvii) Certificate of Designations, Preferences and Rights for
Series H Preferred Stock (incorporated by reference to
Viragen's Registration Statement on Form S-3 (File No.
333-65199))
(4)(xviii) Certificate of Designations, Preferences and Rights of Series
I Preferred Stock (incorporated by reference to Viragen's
Registration Statement on Form S-3 (File No. 333-65199))
(5) Opinion of Atlas, Pearlman, Trop & Borkson, P.A. as to the
validity of the securities being registered (incorporated by
reference to Viragen's Amendment #1 to Registration Statement
on Form S-3 filed on June 21, 1999, File No. 333-75749).
(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))
</TABLE>
II-2
<PAGE> 19
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
-----------
<S> <C>
(10)(iii) Omitted
(10)(iv) Royalty Agreement between Viragen 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 Viragen and Medicore,
Inc. dated November 21, 1989 (incorporated by reference to
Viragen's Current Report on Form 8-K dated December 6, 1989,
Item 7 (c)(i))
(10)(vi) Promissory Note from Viragen to Medicore, Inc. dated August
6, 1991 (incorporated by reference to Viragen's 1991 Form
10-K, Part IV, Item 10(a)(10)(xx))
(10)(vii) Loan Agreement between Viragen and Medicore, Inc. dated
January 31, 1991 (incorporated by reference to Viragen's
Current Report on Form 8-K dated February 26, 1991, Item
7(c)(ii))
(10)(viii) Amendment to Loan Agreement between Viragen and Medicore,
Inc. dated August 6, 1991 (incorporated by reference to
Viragen's 1991 Form 10-K, Part IV, Item 14(a)(10)(xxi))
(10)(ix) Florida Real Estate Mortgage and Security Agreement from
Viragen to Medicore, Inc. dated August 6, 1991 (incorporated
by reference to Viragen'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 Viragen'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 Viragen's
June, 1991 Form 10-Q, Part II, Item 6(a)(28)(ii))
(10)(xiv) Acquisition Agreement between Viragen and Medicore, Inc.
dated August 2, 1991 (incorporated by reference to Viragen's
1991 Form 10-K, Part IV, Item 14(a)(10)(xxiii))
(10)(xv) Lease between Viragen and Medicore, Inc. dated December 8,
1992 (incorporated by reference to Viragen'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 Viragen and Medicore, Inc. dated
January 15, 1993 (incorporated by reference to Viragen's
January 1993 Form 8-K, Item 7(c)(10)(ii))
(10)(xvii) Agreement for Sale of Stock between Viragen and Cytoferon
Corp. dated February 5, 1993 (incorporated by reference to
Viragen'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 Viragen
and Cytoferon Corp. dated May 4, 1993 (incorporated by
reference to Viragen'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 Viragen and
Medicore, Inc. dated May 11, 1993 (incorporated by reference
to Viragen's June 30, 1993 Form 10-K, Part IV, Item
14(a)(10)(xix))
(10)(xx) Note and Mortgage Modification Agreement between Viragen and
Medicore, Inc. dated August 18, 1993 (incorporated by
reference to Viragen's June 30, 1993 Form 10-K, Part IV, Item
14(a)(10)(xx))
(10)(xxi) Amendment No. 2 to the Loan Agreement between Viragen and
Medicore, Inc. dated August 18, 1993 (incorporated by
reference to Viragen's June 30, 1993 Form 10-K, Part IV, Item
14(a)(10)(xxi))
(10)(xxii) Amendment to Acquisition Agreement between Viragen and
Medicore, Inc. dated August 18, 1993 (incorporated by
reference to Viragen's June 30, 1993 Form 10-K, Part IV, Item
14(a)(10)(xxii))
(10)(xxiii) Marketing and Management Services Agreement between
Viragen and Cytoferon Corp. dated August 18, 1993
(incorporated by reference to Viragen's June 30, 1993 Form
10-K, Part IV, Item 14(a)(10)(xxiii))
(10)(xxiv) Agreement for Sale of Stock between Cytoferon and Viragen
dated November 19, 1993 (incorporated by reference to
Viragen's current report on Form 8-K, dated November 12,
1993)
</TABLE>
II-3
<PAGE> 20
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
-----------
<S> <C>
(10)(xxv) Employment Agreement between Gerald Smith and Viragen 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. (incorporated by reference to Viragen's 1995 Form SB-2,
Part II, Item 27(10)(xxv)
(10)(xxvi) Common Stock Purchase Warrant Agreement between Northlea
Partners Ltd. and Viragen dated January 6, 1994 (incorporated
by reference to Viragen's Current Report on Form 8- K, dated
November 17, 1993)
(10)(xxvii) Management Consulting Agreement between Viragen, Medvest,
Inc. and Dr. John Abeles dated January 6, 1994 (incorporated
by reference to Viragen's Current Report on Form 8-K, dated
November 17, 1993)
(10)(xxviii) Employment Agreement between Dennis W. Healey and Viragen
dated April 8, 1994 (incorporated by reference to
Viragen'sAnnual Report on Form 10-K for the year ended June
30, 1994) as amended by Modified Employment Agreement dated
December 15, 1994
(10)(xxix) Promissory Note between Viragen and Gerald Smith dated April
18, 1994 (incorporated by reference to Viragen's June 30,
1994 Form 10-K, Part IV, Item 14(a)(10)(xxviii))
(10)(xxx) Employment Agreement between Charles F. Fistel and Viragen
dated July 1, 1994 (incorporated by reference to Viragen'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
(incorporated by reference to the Company's 1995 Form SB-2,
Part II, Item 27(10)(xxxii)) (10)(xxxiii) Modified Sale of
Stock and Stock Option Agreement with Peter D. Fischbein(1)
(incorporated by reference to Viragen's 1995 Form SB-2, Part
II, Item 27(10)(xxxiii))
(10)(xxxiv) Agreement with Moty Hermon (incorporated by reference to
Viragen's 1995 Form SB-2, Part II, Item 27(10)(xxxiv))
(10)(xxxv) Agreement with University of Nebraska Medical
Center (incorporated by reference to Viragen'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 Viragen'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
Viragen'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
Viragen'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 Viragen's Current Report on Form 8-K dated June 7, 1996)
(10)(xl) Employment Agreement between Charles F. Fistel and Viragen
dated July 1, 1996 (incorporated by reference to Viragen's
Annual Report on Form 10-K for the year ended June 30, 1996)
(10)(xli) Stock Option Agreement between Viragen and Fred D.
Hirt dated August 2, 1996 (incorporated by reference to
Viragen's Annual Report on Form 10-K for the year ended June
30, 1996)
(10)(xlii) Form of Private Securities Subscription Agreement dated
November 27, 1996 and related Registration Rights Agreement
and Common Stock Purchase Warrant (incorporated by reference
to Viragen's Current Report on Form 8-K dated February 14,
1997)
(10)(xliii) Private Securities Subscription Agreement dated February 3,
1997 and related Regulation Rights Agreement, Common Stock
Purchase Warrant and related agreements (incorporated by
reference to Viragen's Current Report on Form 8-K dated
February 14, 1997)
(10)(xliv) Securities Purchase Agreement dated as of December 31, 1996
and related Registration Rights Agreement (incorporated by
reference to Viragen's Current Report on Form 8-K dated March
6, 1997)
(10)(xlv) Employment Agreement between Gerald Smith and Viragen dated
March 1, 1997 (incorporated by reference to the Company's
Annual Report on Form 10-K, dated June 30, 1997)
(10)(xlvi) Employment Agreement between Dennis W. Healey and Viragen
dated March 1, 1997 (incorporated by reference to the
Company's Annual Report on Form 10-K for the year ended June
30, 1997)
</TABLE>
II-4
<PAGE> 21
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
-----------
<S> <C>
(10)(xlvii) Employment Agreement between Robert C. Reeh and Viragen dated
May 19, 1997 (incorporated by reference to Viragen's Annual
Report on Form 10-K for the year ended June 30, 1997)
(10)(xlviii) 11 month 10% Promissory Note dated July 1, 1997
(incorporated by reference to Viragen's Current Report on
Form 8-K dated August 28, 1997)
(10)(xlix) Employment Agreement between Robert H. Zeiger and Viragen
dated August 1, 1997 (incorporated by reference to the
Company's Annual Report on Form 10-K for the year ended June
30, 1997)
(10)(l) Omitted
(10)(li) Omitted
(10)(lii) Stock Exchange Agreement (Series F Convertible Preferred
Stock Exchange Agreement) (incorporated by reference to the
Company's Current Report on Form 8-K dated September 22,
1997, Item 7(c) 4)
(10)(liii) Stock Exchange Agreement (Series G Convertible Preferred
Stock Exchange Agreement) (incorporated by reference to the
Company's Current Report on Form 8-K dated September 22,
1997, Item 7(c)5)
(10)(liv) 10% Promissory Note to Clearwater Fund IV, LTD. (incorporated
by reference to Viragen's Current Report on Form 8-K dated
September 22, 1997, Item 7(c)1)
(10)(lv) Cooperation and Supply Agreement between Viragen and the
German Red Cross dated May 19, 1998 (incorporated by
reference to Viragen's Annual Report on Form 10-K for the
year ended June 30, 1998)
(10)(lvi) Series H Convertible Preferred Stock, Form of Subscription
Agreement dated February 17, 1998 and related Registration
Rights Agreement and Common Stock Purchase Warrants
(incorporated by reference to Viragen's Registration
Statement on Form S-3 dated April 17, 1998)
(10)(lvii) Series I Convertible Preferred Stock, Form of Subscription
Agreement dated April 2, 1998 and related Registration Rights
Agreement and Common Stock Purchase Warrants (incorporated by
reference to Viragen's Registration Statement on Form S-3
dated April 17, 1998)
(10)(lviii) Cooperation and Supply Agreement between Viragen, Viragen
Deutschland GmbH and German Red Cross dated March 19, 1998
(Certain portions of this exhibit have been redacted pursuant
to a Confidentiality request submitted to the Securities and
Exchange Commission (incorporated by reference to the
Company's Annual Report on Form 10-K for the year ended June
30, 1998)
(10)(lix) Buffycoat Supply Agreement between American's Blood Centers
and Viragen dated July 15, 1998 (Certain portions of this
exhibit have been redacted pursuant to a Confidentiality
Request submitted to the Securities and Exchange Commission)
II-9 (incorporated by reference to Viragen's Annual Report on
Form 10-K for the year ended June 30, 1998) (10)(lx)
Agreement between Viragen the American Red Cross dated August
18, 1998 (incorporated by reference to Viragen's Annual
Report on Form 10-K for the year ended June 30, 1998)
(10)(lxi) Placement Agreement, Placement Agent Warrant and Investor
Warrant dated September 22, 1998 (incorporated by reference
to Viragen's Annual Report on Form 10-K for the year ended
June 30, 1998)
10(lxii) Purchase Agreement between the Registrant, the Isosceles Fund
and Cefeo Investments Limited dated March 17, 1999
(incorporated by reference to Viragen's Amemdment No. 1 to
Registration Statement on Form S-3 filed on June 21, 1999,
File No. 333-75749).
10(lxiii) 8% Redeemable Convertible Promissory Note to the Isosceles
Fund dated March 17, 1999. (incorporated by reference to
Viragen's Form S-3 registration statement filed April 6,
1999, File No. 333-75749)
10(lxiv) 8% Redeemable Convertible Promissory Note to Cefeo
Investments Limited dated March 17, 1999. (incorporated by
reference to Viragen's Form S-3 registration statement filed
April 6, 1999, File No. 333-75749)
10(lxv) Common Stock Purchase Warrant issued to the Isosceles Fund
dated March 17, 1999. (incorporated by reference to Viragen's
Form S-3 registration statement filed April 6, 1999, File No.
333-75749)
10(lxvi) Common Stock Purchase Warrant issued to Cefeo Investments
Limited dated March 17, 1999. (incorporated by reference to
Viragen's Form S-3 registration statement filed April 6,
1999, File No. 333-75749)
</TABLE>
II-5
<PAGE> 22
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
-----------
<S> <C>
10(lxvii) Common Stock Purchase Warrant issued to Ven-Gua Capital
Markets Ltd. dated March 17, 1999. (incorporated by reference
to Viragen's Form S-3 registration statement filed April 6,
1999, File No. 333-75749)
10(lxviii) Common Stock Purchase Warrant issued to Elliott, Lane &
Associates, Inc. dated March 17, 1999. (incorporated by
reference to Viragen's Form S-3 registration statement filed
April 6, 1999, File No. 333-75749)
10(lxix) Common Stock Purchase Warrant issued to Ballsbridge Finance
Ltd dated March 17, 1999. (incorporated by reference to
Viragen's Form S-3 registration statement filed April 6,
1999, File No.333-75749)
10(lxx) Registration Rights Agreement between the Registrant, The
Isosceles Fund and Cefeo Investments Limited dated March 17,
1999. (incorporated by reference to Viragen's Form S-3
registration statement filed April 6, 1999, File
No.333-75749)
10(lxxi) Registration Rights Agreement between the Registrant,
Ballsbridge Finance Limited, Elliot, Lane & Associates, Inc.
and Ven-Gua Capital Markets, Ltd. dated March 17,
1999.(incorporated by reference to Viragen's Form S-3
registration statement filed April 6, 1999, File No.
333-75749)
10(lxxii) Agreement of Consent, Waiver and Amendment between the
Registrant, the Isosceles Fund and Cefeo Investments Limited
dated June 16, 1999*
(11) Computation of Per Share Earnings (incorporated by reference
to Viragen's Quarterly Report on Form 10-Q/A for the
quarterly period ended March 31, 1999, Part II, Item 6 (11))
(21) Subsidiaries of the Registrant (incorporated by reference to
Viragen's June 30, 1998 Form 10-K/A)
(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;
(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.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Securities Act") may be
permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission (the
"Commission") such indemnification is against public policy
as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the
successful defense of any action, suit or preceding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the
Registrant 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 Securities Act and will be governed by the final
adjudication of such issue.
II-6
<PAGE> 23
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, Viragen
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment to its
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Plantation and the State of Florida, on the
14th day of July, 1999.
VIRAGEN, INC.
By: /s/ Gerald Smith
--------------------
Gerald Smith
Chairman of the Board of Directors
and President
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
----- ----
<S> <C> <C>
/s/ Gerald Smith Chairman of the July 14, 1999
- ---------------------------------- Board of Directors,
Gerald Smith President and Principal
Executive Officer
/s/ Dennis W. Healey Executive Vice President July 14, 1999
- ---------------------------------- Treasurer, Principal
Dennis W. Healey Financial Officer,
Director and Secretary
/s/ Jose I. Ortega Controller and Principal July 14, 1999
- ---------------------------------- Accounting Officer
Jose I. Ortega
/s/ Sidney Dworkin Director July 14, 1999
- ----------------------------------
Sidney Dworkin
/s/ Peter D. Fischbein Director July 14, 1999
- ----------------------------------
Peter D. Fischbein
/s/ Carl N. Singer Director July 14, 1999
- ----------------------------------
Carl N. Singer
/s/ Charles J. Simons Director July 14, 1999
- -----------------------------------
Charles J. Simons
/s/ Robert H. Zeiger Director July 14, 1999
- -----------------------------------
Robert H. Zeiger
/s/ Robert Salisbury Director July 14, 1999
- -----------------------------------
Robert Salisbury
</TABLE>
<PAGE> 1
EXHIBIT (23)(i)
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" in
Amendment No. 2 to the Registration Statement (Form S-3 No. 333-75749) and
related Prospectus of Viragen, Inc. for the registration of 11,000,000 shares
of its common stock and to the incorporation by reference therein of our report
dated September 18, 1998, with respect to the consolidated financial statements
of Viragen, Inc. included in its Annual Report (Form 10-K/A) for the year ended
June 30, 1998, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Miami, Florida
July 12, 1999
<PAGE> 1
Exhibit 10(lxxii)
AGREEMENT OF CONSENT, WAIVER and AMENDMENT
This Agreement of Consent, Waiver and Amendment (this
"AGREEMENT") is entered into as of June 16, 1999, by and among Viragen, Inc.
(the "COMPANY"), The Isosceles Fund ("ISOSCELES") and Cefeo Investments Limited
("CEFEO").
WHEREAS, Isosceles, Cefeo (together, the "SUBSCRIBERS") and
the Company entered into a Purchase Agreement dated as of March 17, 1999 (the
"PURCHASE AGREEMENT") and all definitions set forth herein but not otherwise
defined shall have the meanings set forth in the Purchase Agreement;
WHEREAS, pursuant to the Purchase Agreement, the Subscribers
purchased Notes and Warrants (each as defined in the Purchase Agreement);
WHEREAS, the Company has arranged two phases of financing
pursuant to private placements; phase one of the financing being a sale of
Common Stock (as defined in the Purchase Agreement) at $.50 per share to three
private investors for a total sale price of $1 million funded on or about May
11, 1999; and phase two being a sale of Common Stock to such investors at $.50
per share for a total sale price of $500,000 to such investors on or about July
15, 1999. (Phase one and phase two together being the "FINANCING"); and
WHEREAS, the execution of this Agreement is subject to the
review and approval by Isosceles and Cefeo of the terms of the Financing;
NOW THEREFORE, all on the terms and subject to the conditions
set forth herein, the Company, Isosceles and Cefeo hereby acknowledge and agree
as follows:
1. Pursuant to Section 4.1 of the Purchase Agreement, the
Subscribers hereby consent to the Financing as of the date of phase one of the
Financing.
2. As of the date of phase one of the Financing, Isosceles
hereby a) waives notice pursuant to Section 13.7 of the Purchase Agreement as it
relates to the Financing, and b) declines to exercise its right of first refusal
regarding the Common Stock issued pursuant to the Financing.
3. The Company and the Subscribers hereby agree to amend the
definition of "Conversion Price", as defined in Section 3.1 of the Notes issued
pursuant to the Purchase Agreement to read as follows:
The conversion price (the "Conversion Price") shall be the
least of: a) the average of the closing bid prices of the
Company's Common Stock during the five consecutive Trading Day
period preceding the Initial Purchase Date (the "Closing
Market Price"); b) the lowest closing bid price of the
Company's Common Stock during the ten consecutive Trading Day
period immediately preceding the applicable Conversion Date;
c) $.50; or d) any price at which Common Stock is issued
pursuant to the Financing as defined in this Agreement of
Consent, Waiver and Amendment.
<PAGE> 2
4. The Company and the Subscribers hereby agree to amend the
definition of "Exercise Price," as defined in the Warrants issued to the
Subscribers pursuant to the Purchase Agreement to read as follows:
"Exercise Price" as of the date hereof shall mean an exercise
price equal to the least of: a) the Exercise Price as
currently defined in the Warrant; b) $.50; or c) any price at
which Common Stock is issued pursuant to the Financing as
defined in this Agreement of Consent, Waiver and Amendment.
5. The Company and the Subscribers hereby agree that the
periods referred to in Section 1.20 of the Purchase Agreement, in Section 1.1 of
the Registration Rights Agreement, and references to such periods in any other
agreements or instruments made pursuant thereto, MUTATIS MUTANDI, shall be
changed to ". . . 112 days after the Initial Purchase Date if there are comments
from the SEC."
6. The Company and the Subscribers hereby agree that all other
provisions in the Notes and the Warrants, including without limitation the
anti-dilutive provisions continue to apply.
7. The Company hereby covenants: a) that the resale of any
Common Stock sold pursuant to the Financing will not be registered on
registration statement No. 333-75749 which will, upon the Effective Date (as
defined in the Purchase Agreement), register the resale of Common Stock issued
pursuant to the Notes and the Warrants (the "Isosceles Registration Statement");
b) that any registration statement used to register the resale of any Common
Stock pursuant to the Financing will not be filed until 90 days after the
Effective Date of the Isosceles Registration Statement; and c) that the Company
will pay Rogers & Wells LLP the legal fees for advice relating to this Agreement
described in an invoice which will be delivered to the Company within five days
of the date of this Agreement.
8. The Company and the Subscribers hereby acknowledge and
agree that for any obligations or liabilities arising under or in connection
with this Agreement, each of the Company's, Isosceles', and Cefeo's notice
addresses will be as set forth in the Purchase Agreement.
9. This Agreement may be executed in any number of
counterparts and all such counterparts taken together shall be deemed to
constitute one and the same instrument. Transmission by fax of an executed
counterpart of this Agreement shall be deemed to constitute due and sufficient
delivery of such counterpart.
10. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
2
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written by their respective
duly authorized officers.
Viragen, Inc.:
By: /s/ Dennis W. Healey
--------------------------
Name: Dennis W. Healey
Title: Executive Vice President
The Isosceles Fund:
By: /s/ Andy Dipkin /s/ Ruth Beneby
----------------------------- --------------------------------
Name: Andy Dipkin Ruth Beneby
Cefeo Investments Limited:
By: /s/ Walter Blum Gentilomo
-----------------------------
Name: Walter Blum Gentilomo
Title: Director
3
