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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON March 13, 2000
Registration No. 333- ___________
SECURITIES AND EXCHANGE COMMISSION
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
VIRAGEN, INC.
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation or organization)
59-2101668
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(I.R.S. Employer Identification No.)
865 S.W. 78th Avenue, Suite 100
Plantation, FL 33324
Telephone (954) 233-8746
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(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Copies to:
Gerald Smith James M. Schneider, Esq.
Chairman of the Board Atlas, Pearlman, Trop & Borkson, P.A.
Viragen, Inc. 350 East Las Olas Boulevard
865 SW 78th Avenue, Suite 100 Suite 1700
Plantation, Florida 33324 Fort Lauderdale, Florida 33301
(954) 233-8746 (954) 763-1200
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(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, please check the following box. [x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] __________
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ] __________
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box.[ ]
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed
Title of each class of maximum aggregate offering
securities to be registered price (1) Amount of registration fee
---------------------------------------------------------- --------------------------------- ------------------------------
<S> <C> <C>
Common stock, $.01 par value per share $ 60,000,000 $15,840
---------------------------------------------------------- --------------------------------- ------------------------------
</TABLE>
(1) The maximum aggregate offering price of the common stock
registered will not exceed $60,000,000. Pursuant to Rule 457(o)
under the Securities Act of 1933, the registration fee is
calculated on the aggregate maximum offering price of the common
stock. Also, the table does not specify information about the
amount of shares to be registered or the proposed maximum
offering price per share.
Viragen, Inc. will amend this registration statement on the 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 or until this registration statement shall become
effective on the date as the Securities and Exchange Commission,
acting pursuant to said Section 8(a), may determine.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT, OF WHICH THIS
PROSPECTUS IS PART, FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS
EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT
SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE
IS NOT PERMITTED.
Subject to Completion
Dated March __, 2000
Prospectus
VIRAGEN, INC.
$60,000,000
Common Stock
This prospectus is part of the registration statement we filed with the
Securities and Exchange Commission using a "shelf" registration process. This
means:
o We may issue up to $60,000,000 of our common stock or common shares
underlying warrants from time to time.
o We will circulate a prospectus supplement each time we plan to issue
our common stock.
o The prospectus supplement will inform you about the specific terms
of that offering and also may add, update or change information
contained in this prospectus.
o You should read this prospectus and any prospectus supplement
carefully before you invest.
Our common stock is listed on the OTC Bulletin Board, under the symbol
"VRGN". On March 3, 2000, the last reported sale price for our common stock was
$2.50 per share.
We have engaged Ladenburg Thalmann & Co., Inc. as our exclusive
placement agent for this offering on a best efforts basis.
THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD PURCHASE
SHARES ONLY IF YOU CAN AFFORD A COMPLETE LOSS. SEE "RISK FACTORS" BEGINNING AT
PAGE 5.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is March ____, 2000.
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TABLE OF CONTENTS
PAGE
----
About This Prospectus ................................................ 3
Where You Can Find More Information................................... 3
About Viragen ........................................................ 5
Risk Factors ......................................................... 6
Use of Proceeds.......................................................13
Dividend Policy.......................................................13
Plan of Distribution .................................................13
Legal Matters ........................................................14
Experts ..............................................................14
You should rely only on the information contained in this document or
to which we have referred you. We have not authorized anyone to provide you with
information that is different. This document may only be used where it is legal
to sell these securities. The information contained in this document may only be
accurate on the date of this document.
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ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with
the Securities and Exchange Commission using a "shelf" registration process.
Under this process, we may from time-to-time offer up to $60,000,000 in the
aggregate of shares of common stock, $0.01 par value of Viragen. The price to be
paid for the common shares will be determined at the time of sale. The common
stock may be referred to as "securities" in this prospectus and registration
statement.
Each time we offer securities, we will provide a supplement to this
prospectus detailing specific information about each proposed sale.
WHERE YOU CAN GET MORE INFORMATION
We have filed with the Securities and Exchange Commission a
registration statement on Form S-3. This prospectus is a part of the
registration statement. It does not contain all of the information set forth in
the registration statement. For further information about Viragen, Inc. and its
common stock, you should refer to the registration statement. Statements
contained in this prospectus as to the contents of any contract or other
document referred to in this prospectus are not necessarily complete. Where a
contract or other document is an exhibit to the registration statement, each of
you should review the provisions of the exhibit, to which reference is made. You
may obtain these exhibits from the Securities and Exchange Commission, as
discussed below.
We are required to file annual, quarterly, and current reports, proxy
statements and other information with the Securities and Exchange Commission.
You may read and copy these filings at the Securities and Exchange Commission
public reference rooms in Washington, D.C.; New York, NY; and Chicago, IL. You
may request copies of these documents by writing to the Securities and Exchange
Commission and paying a fee for copying costs. Please call the Securities and
Exchange Commission at 1-800-SEC-0330 for more information about the operation
of their public reference rooms. Copies of our filings are also available at the
Securities and Exchange Commission web site at HTTP://WWW.SEC.GOV or through our
web site at HTTP://WWW.VIRAGEN.COM.
The Securities and Exchange Commission allows us to "incorporate by
reference" information that 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 an important part of this prospectus,
and information that we file later with the Securities and Exchange Commission
will automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings we will make with
the Securities and Exchange Commission under Section 13(a), 14 or 15(d) of the
Securities Exchange Act of 1934:
o Quarterly report on Form 10-Q, for the quarterly period ended
December 31, 1999, filed February 14, 2000;
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o Quarterly report on Form 10-Q, for the quarterly period ended
September 30, 1999, filed November 15, 1999.
o Annual Report on Form 10-K/A for the fiscal year ended June 30,
1999, February 10, 2000;
o Registration statement on Form S-1/A (File No. 333-93425), filed
February 10, 2000;
o Registration statement on Form S-1/A (File No. 333-75749), filed
February 10, 2000; and
o Current report on Form 8-K, dated November 24, 1999, filed December
9, 1999;
You may obtain a copy of these filings at no cost by writing, telephoning,
faxing or visiting out website at the following address:
Dennis W. Healey
Viragen, Inc.
865 S.W. 78th Avenue, Suite 100
Plantation, FL 33324
Telephone No.: (954) 233-8746
Facsimile No.: (954) 233-1414
Web Site: http://www.viragen.com.
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ABOUT VIRAGEN
Viragen, Inc. is in the business of researching and developing products
which help the human immune system resist viral infections. We were organized in
1980. Our primary product is a natural interferon product named Omniferon(TM),
which we produce using 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 like hepatitis,
multiple sclerosis, cancer and HIV/AIDS.
Neither the United States Food and Drug Administration nor the
European Union regulatory authorities has approved our product. When we refer to
"product" later in this prospectus, we do not intend to imply that our product
has regulatory approvals that will allow it to be marketed currently. Viragen
will seek Food and Drug Administration and European Union regulatory authority
approval for various uses of its Omniferon product in the future. This approval
requires several years of clinical trials and substantial additional funds. We
are concentrating our efforts on obtaining the necessary regulatory approvals
for our Omniferon product so that we may market our product. This will be
initially in the European Union and eventually from the Food and Drug
Administration for the United States.
Our affiliate, Viragen (Scotland) Ltd., has 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 our
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 product. We
have also 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 in
sufficient quantities to conduct planned European Union and United States
clinical trials. Subject to regulatory approvals, these sources will also
provide sufficient quantities of white blood cells for commercial manufacturing
in the future.
Our executive offices are located at 865 SW 78th Avenue, Suite 100,
Plantation, FL 33324. Our telephone number is (954) 233-8746; our facsimile
number is (954) 233-1414.
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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.
WE HAVE A HISTORY OF LOSSES DUE TO LACK OF SALES AND REGULATORY APPROVALS. IF WE
DO NOT RECEIVE NECESSARY REGULATORY APPROVALS AND DEVELOP PROFITABLE OPERATIONS,
WE WILL NEED TO TERMINATE OUR OPERATIONS. AS A RESULT, INVESTORS MAY LOSE THEIR
ENTIRE INVESTMENT.
Since the organization of Viragen, we have incurred operating losses.
Losses have totaled:
o $5,372,099 for the six month period ended December 31, 1999,
o $10,650,832 for the fiscal year ended June 30, 1999,
o $7,856,136 for the fiscal year ended June 30, 1998, and
o $4,775,245 for the fiscal year ended June 30, 1997.
At December 31, 1999, we had a total deficit since organization of $55,897,150
and a working capital deficit of $2,786,876.
We presently produce a single product known as Omniferon(TM), a 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. As
a result, 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 company that is developing a product for the treatment
of rheumatoid arthritis, we expect sales of natural interferon 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 the product is approved, we may not be able to recover
sufficient profit from the sale of natural interferon. If we do not obtain the
required approvals or we do not profit from the sale of natural interferon or
other products, Viragen most likely will terminate its operations. In that case,
those who have invested in Viragen will likely lose their entire investment.
As a result of these conditions, our independent certified public
accountants included an explanatory paragraph in their report dated September
17, 1999. Their report indicated that these conditions raised substantial doubt
about our ability to continue as a going concern. As of March 3, 2000, our
financial condition has not improved.
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VIRAGEN'S COMMON STOCK IS TRADED ON THE OTC BULLETIN BOARD. IF THE PENNY STOCK
RULES BECOME APPLICABLE TO OUR STOCK, IT MAY BECOME MORE DIFFICULT TO SELL OUR
STOCK.
Our common stock is traded on the OTC Bulletin Board, which is a more
limited market than the NASDAQ Stock Market and the national and regional stock
exchanges. Stocks quoted in this market generally do not have the same following
as stocks traded on the NASDAQ Stock Market or the national and regional
exchanges. In general, local and national newspapers do not quote OTC Bulletin
Board stocks in the stock market tables. 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.
As of December 31, 1999, our tangible net worth totaled $3,236,067.
The penny stock rules require broker-dealers to deliver a standardized
risk disclosure document prepared by the Securities and Exchange Commission,
prior to a transaction in a penny stock. This document provides information
about penny stocks and the risks in the penny stock market. The broker-dealers
must also provide the customer the following:
o current bid and offer quotations for the penny stock,
o the compensation of the broker-dealer and its salesperson in the
transaction, and
o monthly account statements showing the market value of each penny
stock held in the customer's account.
The broker dealers must give the quotations and compensation
information to the customer, orally or in writing, prior to completing the
transaction. They must give this information 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, the broker and/or dealer must make a special written
determination that the penny stock is a suitable investment for the purchaser.
The broker and/or dealer must receive the purchaser's written agreement to the
transaction. These disclosure requirements may reduce 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. This may reduce the
value of your investment.
COMPETITIVE CONDITIONS IN THE PHARMACEUTICAL INDUSTRY MAY FORCE US TO TERMINATE
OPERATIONS.
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. We do not have, as yet, an immunological product that can be marketed.
Our competitors also have greater financial, marketing and human resources than
Viragen. Some of our competitors, including Hoffman-La Roche, Inc.,
Shering-Plough Corporation, Biogen, Inc., Chiron Corp., and Baxter Laboratories,
already have approvals for their synthetic interferons. They have been marketing
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their products, since 1986. 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 to introduce our product, if and when we receive
the necessary regulatory approval. We only expect competition 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 terminate operations.
Competition for funding in the pharmaceutical industry is also intense.
As explained above, we have no source of income, as yet. We may not have
sufficient sources of income or investment capital for a significant period of
time, if ever. We need additional funds to conduct clinical trials so we can
receive regulatory approvals. We must obtain additional funding from outside
sources to conduct these trials. If we are unable to locate funding or obtain
funding on reasonable terms, we will most likely terminate operations. In that
case, any investment in Viragen could 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 production, testing and marketing.
European Union regulatory authorities also impose similar regulations. These
rules and regulations are constantly changing. These changes 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 range of illnesses that we are
attempting to treat with our natural interferon product.
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 ours or the amount of reimbursement available to patients
may affect our ability to market our product at a profit. Third party
reimbursement limitations could restrict the patient population that will make
use of our product. If we have difficulty in getting third party payors to allow
reimbursement for our product, this could also require us to increase our
marketing efforts. This 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 technology developed by Viragen's
scientists for the efficient and safe production of natural interferon. We
believe that this technology allows us to produce our natural interferon more
efficiently and with less possible contaminants. Viragen recently filed two
patent applications relating to our Omniferon production technology. If we are
not successful in obtaining patents or demonstrating that our production process
is proprietary under trade secret law, we will have limited protection against
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. Even if granted, we cannot assure you that these patents or any future
patent applications 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 our
manufacturing technology to third parties. They, in turn, will use our
technology to produce natural human leukocyte alpha interferon outside the
United States. We cannot guarantee that these third parties will be able to
successfully market the product or that we will 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.
Persons, who claim to be injured from use of our natural interferon,
may file claims for personal injuries or other damages against us. 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. Also, we may not 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. Under
this agreement, Viragen (Scotland) and the Common Services Agency will jointly
manufacture Omniferon. Our decision to use an offshore manufacturer could expose
us to risks involved with fluctuations in exchange rates of foreign currencies.
In addition, relying on the Common Services Agency exposes us to all the risks
of dealing with a foreign manufacturing source. These risks include:
o local governmental regulations,
o tariffs,
o import and export restrictions,
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o transportation,
o taxes, and
o foreign health and safety regulations.
Foreign manufacturing arrangements will limit our control. For
instance, the Common Services Agency has limited our access to portions of their
facility, when introducing stimulating agents during production. This may lead
to the disruption of our operations. This could negatively affect our operations
and your investment in us.
WE ARE DEPENDENT ON KEY EXECUTIVES AND THEIR LOSS WOULD BE DAMAGING TO VIRAGEN.
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.,
manage our day-to-day operations. We have employment agreements with Messrs.
Smith, Healey and Nicolson which restrict competitive activities by them.
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.
WE WILL REQUIRE ADDITIONAL FUNDING TO CONDUCT OPERATIONS. THE FUNDING MAY NOT BE
AVAILABLE AND CAUSE US TO TERMINATE OUR OPERATIONS.
Viragen will continue to require significant funding in the future to
continue its operations. We estimate that we will require funding of
approximately $30 million, over the next three years. These funds would be used
to fund operations including clinical trials. We cannot assume that any
additional financing will be available. If financing is not available, we may
have to sell, suspend, or terminate our operations.
THE SALE OF OUR COMMON STOCK UNDER THIS SHELF REGISTRATION AND OTHER FINANCINGS
MAY CAUSE SUBSTANTIAL DILUTION TO OUR STOCKHOLDERS.
As described in the preceding risk factor, we will need additional
funding to continue to conduct operations. In December 1999, we retained the
investment banking firm of Ladenburg Thalmann & Co., Inc. to aid us in
identifying and developing financing sources. They will serve as the exclusive
placement agent for offerings under this shelf registration, and have agreed to
assist us in raising up to $60,000,000 through equity transactions. In order to
raise the amount of funding needed, we may have to issue millions of common
shares.
Also, during February 2000, Viragen issued short-term convertible notes
to two investors. The notes totaled $2,000,000 in principal. Interest on one
$1,000,000 note is payable at 8% and the second $1,000,000 note bears an
interest rate of 9.5%. The notes are convertible into a total of 2,000,000
common shares, which are not currently registered.
Future transactions with other investors could further depress the
price of our stock because of additional stockholder dilution.
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WE MAY HAVE VIOLATED SECTION 5 OF THE SECURITIES ACT OF 1933 AND MAY HAVE A
CONTINGENT LIABILITY TO INVESTORS
In March 1999, we issued 8% convertible promissory notes in the amount
of $2,000,000 to two investors. In June 1999, we modified our agreements with
these investors to lower the conversion price of their promissory notes. We did
this in order to obtain a waiver from the investors for an interim financing. We
did the interim financing in May 1999 when we received $1,375,000 from three
other investors through the sale of our common stock. Since we had a pending
registration statement at the time of the June 1999 modification and the May
1999 interim financing, the Securities and Exchange Commission informed us that
we may have violated Section 5 of the Securities Act of 1933. If this is so, we
may have a contingent liability to the 8% convertible promissory note investors
and the three investors in the interim financing, since they may have the right
to rescind their transactions.
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 rely heavily on computers to conduct our business, we are
subject to all the risks associated with the year 2000 condition. We have
assessed the scope of our risks related to problems these computer systems may
have experienced upon the arrival of the year 2000. We believe that we have
adequately addressed these risks. In addition, we have questioned 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 that our computer systems are fully year 2000
compliant.
WE DO NOT EXPECT TO PAY DIVIDENDS IN THE FORESEEABLE FUTURE.
We have never paid cash dividends on our common stock. We do not expect
to pay cash dividends on our common stock any time in the foreseeable future.
The future payment of dividends directly depends upon our future earnings,
capital requirements, financial requirements and other factors that our board of
directors will consider. For the foreseeable future, we will use earnings from
operations, if any, to finance our growth, and we will not pay dividends to our
common stockholders. Since we do not anticipate paying cash dividends on our
common stock, return on your investment, if any, will depend solely on an
increase in the market value of Viragen's common stock.
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POSSIBLE SALES OF SECURITIES BY CURRENT STOCKHOLDERS AND DEPRESSIVE EFFECT ON
MARKET VALUE OF OUR STOCK.
As of March 3, 2000, we had 7,172,120 shares of common stock
outstanding, which were "restricted securities," as defined by Rule 144 under
the Securities Act of 1933. Also, as of that date, we had short-term convertible
notes, convertible preferred stock, and common stock options and warrants
outstanding, which if converted or exercised, would result in 12,732,578
additional shares of our common stock outstanding. 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,
including shares covered by this prospectus, may reduce the market price of our
common stock and will increase the number of our publicly-held securities.
WE COULD USE PREFERRED STOCK 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 March 3, 2000, 2,650 shares of series A 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 the issuance of the preferred
stock in one or more series. In addition, we may set the following terms:
o dividend and liquidation preferences,
o voting rights,
o conversion privileges,
o redemption terms, and
o 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. It can also 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. This could occur if we become subject to a hostile
takeover that could ultimately benefit Viragen and Viragen's stockholders.
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USE OF PROCEEDS
Each time we sell our common stock, we will provide a prospectus
supplement that will contain information about how we intend to use the net
proceeds from each offering.
Unless otherwise indicated in the applicable prospectus supplement, we
intend to use the net proceeds from the sale of our common stock for general
corporate purposes including the funding of clinical trials of our Omniferon
product, capital expenditures and general working capital.
DIVIDEND POLICY
We have never paid any dividends on our common stock. We do not
anticipate paying any cash dividends in the foreseeable future because:
o we have experienced losses since inception,
o we have significant capital requirements in the future, and
o we presently intend to retain future earnings, if any, to finance
the expansion of our business.
Future dividend policy will depend on:
o our earnings, if any,
o capital requirements,
o expansion plans,
o financial condition, and
o other relevant factors.
PLAN OF DISTRIBUTION
We have engaged Ladenburg Thalmann & Co., Inc. as our exclusive
placement agent for this offering on a best efforts basis. Ladenburg Thalmann
has agreed with us that it will seek to identify institutional investors who may
wish to purchase our common stock from time to time on specific terms to be
negotiated between us and such institutional investors. Ladenburg Thalmann is
not committed to purchase any of our securities, regardless of whether Ladenburg
Thalmann does or does not successfully identify others to purchase our
securities. Also, Ladenburg Thalmann has advised us that they will not purchase
any of our securities for their own account or for any discretionary accounts
managed by them.
We have agreed to pay Ladenburg Thalmann a placement fee equal to 5% of
the gross proceeds to Viragen from each such sale. We have also agreed to issue
Ladenburg Thalmann common stock purchase warrants at the closing of each
placement equal in number to 7% of the gross proceeds from each such placement
13
<PAGE> 16
divided by the sale price per share to the public in such transaction. The
exercise price of each such warrant shall be 110% of the offering price of the
common stock in such particular placement.
We have also given Ladenburg Thalmann a $35,000 non-accountable expense
allowance and a right of first refusal for a period of one year from the
conclusion of this offering (or until December 31, 2002 if this offering
continues beyond December 31, 2001) to provide additional financing to us. We
have also agreed to give Ladenburg customary underwriter's indemnification
against liabilities under the Securities Act.
Any variance from those underwriting terms will be disclosed in a
prospectus supplement.
LEGAL MATTERS
Atlas, Pearlman, Trop & Borkson, P.A. will review the validity of the
issuance of the shares of our common stock being offered. They are located at
350 East Las Olas Boulevard, Suite 1700, 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, 1999, 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.
14
<PAGE> 17
Viragen, Inc.
Prospectus
March __, 2000
<PAGE> 18
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth expenses payable in connection with the
issuance and distribution of the common stock being registered, other than
underwriting discounts and commissions.
Securities and Exchange Commission
registration fee $ 15,840
Legal fees and expenses 10,000
Accounting fees and expenses 8,000
Blue sky fees and expenses 500
Printing expenses 1,200
Registrar and transfer agent's fee 1,500
Miscellaneous 3,960
-----------
Total $ 41,000
===========
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 this 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 this 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
II-1
<PAGE> 19
successful in the defense of any suit, claim or proceeding described above, he
or she will be indemnified for expenses, including attorney's fees, actually and
reasonably incurred by him or her.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling
Viragen pursuant to the foregoing provisions, Viragen has been informed that in
the opinion of the Securities and Exchange Commission, indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for indemnification against
these 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
indemnification by it is against public policy. Viragen will be governed by the
final adjudication of this issue.
ITEM 16. EXHIBITS
1. Underwriting agreement
1.1 Placement Agent Agreement with Ladenburg Thalmann & Co. Inc.
dated December 22, 1999.*
1.2 Amendment to Placement Agent Agreement with Ladenburg
Thalmann & Co. Inc. dated March 8, 2000.*
2. Plan of acquisition, reorganization, arrangement, liquidation or
succession
2.1 Plan of Merger between Florida Immunological Institute, Inc.
and Vira-Tech, Inc., dated September 30, 1986 (incorporated by
reference to the Company's registration statement on Form S-2,
dated October 24, 1986, as amended File No. 33-9714 ("1986
Form S-2"), Part II, Item 16, 2.1)
2.2 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)
4. Instruments defining the rights of security holders, including
indentures
4.1 Certificate of Designation for Series A Preferred Stock, as
amended (incorporated by reference to 1986 Form S-2, Part II,
Item 16, 4.4)
4.2 Specimen Certificate for Unit (Series A Preferred Stock and
Class A Warrant) (incorporated by reference to 1986 Form S-2,
Part II, Item 15, 4.5)
II-2
<PAGE> 20
4.3 1995 Stock Option Plan (incorporated by reference to the
Company's Registration Statement on Form S-8 filed June 9,
1995)
4.4 1997 Stock Option Plan (incorporated by reference to the
Company's Registration Statement on Form S-8 filed
April 17, 1998)
5. Opinion of Atlas, Pearlman, Trop & Borkson, P.A. as to the validity of
securities being registered.*
23. Consents of experts and counsel.
23.1 Consent of Independent Certified Public Accountants*
23.2 Consent of Atlas, Pearlman, Trop & Borkson, P.A. (included as
part of Exhibit (5)).
* Filed herewith
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement;
Provided, however, that paragraphs (1)(i) and (1)(ii) do not
apply if the registration statement is on Form S-3 or Form S-8, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
II-3
<PAGE> 21
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.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
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 section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 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.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, Viragen has
been advised that in the opinion of the Securities and Exchange Commission
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against liabilities (other than the payment by the registrant of
expenses incurred or paid by a director, officer or controlling person of
Viragen in the successful defense of any action, suit or proceeding) is asserted
by a director, officer or controlling person in connection with the securities
being registered, 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 of whether indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of this issue.
II-4
<PAGE> 22
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant 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 registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Plantation, State of Florida on March 8, 2000.
VIRAGEN, INC.
BY: /s/ GERALD SMITH
------------------------------------
Gerald Smith
Chairman of the Board of Directors
and President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ---------------------------------------------------- --------------
<S> <C> <C>
/s/ Gerald Smith Chairman of the Board Of Directors, President, And March 8, 2000
- ------------------------------------------ Principal Executive Officer
Gerald Smith
/s/ Robert H. Zeiger Vice Chairman of the Board March 8, 2000
- ------------------------------------------
Robert H. Zeiger
/s/ Carl N. Singer Director and Chairman of the Executive Committee March 8, 2000
- ------------------------------------------
Carl N. Singer
/s/ Dennis W. Healey Executive Vice President, Treasurer, Principal March 8, 2000
- ------------------------------------------ Financial Officer, Director and Secretary
Dennis W. Healey
/s/ Charles J. Simons Director March 8, 2000
- ------------------------------------------
Charles J. Simons
/s/ Peter D. Fischbein Director March 8, 2000
- ------------------------------------------
Peter D. Fischbein
/s/ Sidney Dworkin Director March 8, 2000
- ------------------------------------------
Sidney Dworkin
/s/ Robert C. Salisbury Director March 8, 2000
- ------------------------------------------
Robert C. Salisbury
/s/ Jose I. Ortega Controller and Principal Accounting Officer March 8, 2000
- ------------------------------------------
Jose I. Ortega
</TABLE>
II-5
<PAGE> 1
Exhibit 1.1
LADENBURG
THALMANN
ESTABLISHED 1876
December 22, 1999
Dennis Healey
Executive Vice President/Treasurer
Viragen, Inc.
865 SW 78th Avenue, Suite 100
Plantation, FL 33324
Dear Mr. Healey:
The purpose of this letter agreement (the "Agreement") is to set forth the terms
and conditions pursuant to which Ladenburg Thalmann & Co. Inc. ("LTCO") shall
serve as exclusive placement agent in connection with the proposed offering (the
"Offering") of equity securities (the "Securities") of Viragen, Inc. (the
"Company") pursuant to a registration statement. The gross proceeds from the
Offering will be up to $30,000,000. All references to dollars shall be to U.S.
dollars. The terms of such Offering and the Securities shall be as agreed to
between the Company, LTCO and the purchasers thereof immediately prior to the
effective date of such registration statement.
Upon the terms and subject to the conditions of this Agreement, the
parties hereto agree as follows:
1. Appointment. (a) Subject to the terms and conditions of this
Agreement hereinafter set forth, the Company hereby retains LTCO, and LTCO
hereby agrees to act as the Company's exclusive placement agent and financial
advisor in connection with the Offering, effective as of the date hereof. The
Company expressly acknowledges and agrees that LTCO's obligations hereunder are
on a reasonable best efforts basis only and that the execution of this Agreement
does not constitute a commitment by LTCO to purchase the Securities and does not
ensure the successful placement of the Securities or any portion thereof or the
success of LTCO with respect to securing any other financing on behalf of the
Company. LTCO shall not commence any selling efforts until the registration
statement has been declared effective by the SEC.
<PAGE> 2
(b) Except as set forth below in this Section 1, during the
effectiveness of this Agreement, neither the Company nor any of its subsidiaries
or affiliates shall, directly or indirectly, through any officer, director,
employee, agent or otherwise (including, without limitation, through any
placement agent, broker, investment banker, attorney or accountant retained by
the Company or any of its subsidiaries or affiliates), solicit, initiate or
encourage the submission of any proposal or offer (an "Investment Proposal")
from any person or entity (including any of such person's or entity's officers,
directors, employees, agents and other representatives) relating to any issuance
of the Company's or any of its subsidiaries' equity securities (including debt
securities with any equity feature) or relating to any other transaction having
a similar effect or result on the Company's or any of its subsidiaries'
capitalization, or participate in any discussions or negotiations regarding, or
furnish to any other person or entity any information with respect to, or
otherwise cooperate in any way with, or assist or participate in, facilitate or
encourage any effort or attempt by any other person or entity to do or seek to
do any of the foregoing. The Company shall immediately cease and cause to be
terminated any and all contacts, discussions and negotiations with third parties
regarding any Investment Proposal. The Company shall promptly notify LTCO if any
such Investment Proposal, or any inquiry or contact with any person or entity
with respect thereto, is made. The Company shall not provide or release any
information with respect to this Agreement or the Offering except as required by
law.
(c) Notwithstanding anything to the contrary contained herein, in the
event that LTCO shall not provide to the Company within five months after the
effective date of the registration statement one or more qualified institutional
investors willing to invest in the aggregate at least $5,000,000 in the Offering
on substantially the same terms as agreed to between the Company, LTCO and such
investors, the Company shall have the right to solicit and pursue other
Investment Proposals, provided that, any such Investment Proposal shall be
subject to LTCO's right of first refusal under Section 4 hereof.
2. Fees and Compensation. In consideration of the services rendered by
LTCO in connection with the Offering, the Company agrees to pay LTCO the
following fees and other compensation:
(a) A fee payable upon the initial and each subsequent closing
equal to 5% of the gross proceeds to the Company at each such
closing.
(b) $35,000 non-accountable expense allowance payable upon the
engagement of LTCO by the Company hereunder.
(c) 7% warrant coverage (LTCO shall receive warrants to purchase
the number of shares equal to the following: gross proceeds to
the Company * 7% / the offering price of the Company's Common
Stock; the strike price of the warrants shall be 110% of the
offering price of the Company's Common Stock).
(d) All fees payable hereunder shall be paid to LTCO out of an
attorney escrow account at the closing or by such other means
acceptable to LTCO.
2
<PAGE> 3
(e) Should LTCO provide a qualified institutional investor
acceptable to the Company and such investor is willing to
invest on substantially the same terms as agreed to between
the Company, LTCO and such investor hereunder, and the Company
were to terminate the Agreement after December 22, 1999 or
prior to December 31, 2001 (the "Termination Date"), for
reasons other than a breach of this Agreement by LTCO, the
Company will pay $150,000 to LTCO as a "break-up" fee.
3. Terms of Retention. (a) Unless extended or terminated in writing by
the parties hereto in accordance with the provisions hereof, this Agreement
shall remain in effect until the Termination Date of December 31, 2001.
(b) Notwithstanding anything herein to the contrary, the obligation to
pay the Fees and Compensation and Expenses described in Section 2, if any, and
paragraphs 2, 6, and 8 of Exhibit A and all of Exhibit B and Exhibit C attached
hereto, each of which exhibits is incorporated herein by reference, shall
survive any termination or expiration of the Agreement. It is expressly
understood and agreed by the parties hereto that any private financing of equity
or debt or other capital raising activity of the Company within 24 months of the
termination or expiration of this Agreement, with any investors to whom the
Company was introduced by LTCO or who was contacted by LTCO while this Agreement
was in effect and disclosed to the Company in writing, shall result in such fees
and compensation being due and payable by the Company to LTCO under the same
terms of Section 2 above.
4. Right of First Refusal. Upon completion of the Offering, LTCO shall
have an irrevocable right of first refusal for a period of one year to provide
all financing arrangements for the Company (other than conventional banking
arrangements, borrowing and commercial debt financing and discrete unrelated
transactions of not more than $250,000 where no investment banking fee is being
paid). LTCO shall exercise such right in writing within five (5) business days
of receipt of a written term sheet describing such proposed transaction in
reasonable detail.
5. Information. The Company recognizes and confirms that in completing
its engagement hereunder, LTCO will be using and relying on publicly available
information and on data, material and other information furnished to LTCO by the
Company or the Company's affiliates and agents. It is understood and agreed that
in performing under this engagement, LTCO will rely upon the accuracy and
completeness of, and is not assuming any responsibility for independent
verification of, such publicly available information and the other information
so furnished. Notwithstanding the foregoing, it is understood that LTCO will
conduct a due diligence investigation of the Company and the Company will
cooperate in all respects with such investigation as a condition of LTCO's
obligations hereunder.
3
<PAGE> 4
6. Registration. Promptly following execution of this Agreement, the
Company shall prepare and file with the SEC a registration statement. From time
to time in connection with any particular sale of Securities, the Company will,
at its own expense, obtain any registration or qualification required to sell
any Securities under the Blue Sky laws of any applicable jurisdictions, as
reasonably requested by LTCO.
7. No General Solicitation. The Securities will be off ered only by
approaching prospective purchasers on an individual basis. No general
solicitation or general advertising in any form will be used in connection with
the offering of the Securities. From and after the filing of the registration
statement, the Company shall pre-clear any proposed press release with LTCO.
8. Closing. The closing of the sale of the Securities shall be subject
to customary closing conditions, including the provision at closing by the
Company of officers' certificates, opinions of counsel and "cold comfort"
letters from the Company's auditors.
9. Miscellaneous. This Agreement together with the attached Exhibits A
through C constitutes the entire understanding and agreement between the parties
with respect to its subject matter and there are no agreements or understandings
with respect to the subject matter hereof which are not contained in this
Agreement. This Agreement may be modified only in writing signed by the party to
be charged hereunder.
4
<PAGE> 5
If the foregoing correctly sets forth our agreement, please confirm this by
signing and returning to us the duplicate copy of this letter.
We appreciate this opportunity to be of service and are looking forward
to working with you on this matter.
Very truly yours,
LADENBURG THALMANN & CO. INC.
By: /s/ Michael Vasinkovich
-------------------------------------
Name: Michael Vasinkovich
Title: Managing Director
Agreed to and accepted
as of the date first written above:
VIRAGEN, INC.
By: /s/ Dennis W. Healey
--------------------------------------
Name: Dennis W. Healey
Title: Exec. V.P./CFO
5
<PAGE> 6
EXHIBIT A
STANDARD TERMS AND CONDITIONS
1. The Company shall promptly provide LTCO with all relevant information
about the Company (to the extent available to the Company in the case
of parties other than the Company) that shall be reasonably requested
or required by LTCO, which information shall be accurate in all
material respects at the time furnished.
2. LTCO shall keep all information obtained from the Company strictly
confidential except: (a) information which is otherwise publicly
available, or previously known to, or obtained by LTCO independently of
the Company and without breach of LTCO's agreement with the Company;
(b) LTCO may disclose such information to its employees and attorneys,
and to its other advisors and financial sources on a need to know basis
only and shall ensure that all such employees, attorneys, advisors and
financial sources will keep such information strictly confidential; and
(c) pursuant to any order of a court of competent jurisdiction or other
governmental body or as may otherwise be required by law.
3. The Company recognizes that in order for LTCO to perform properly its
obligations in a professional manner, it is necessary that LTCO be
informed of and, to the extent practicable, participate in meetings and
discussions between the Company and any third party relating to the
matters covered by the terms of LTCO's engagement.
4. The Company agrees that any report or opinion, oral or written,
delivered to it by LTCO is prepared solely for its confidential use and
shall not be reproduced, summarized, or referred to in any public
document or given or otherwise divulged to any other person without
LTCO's prior written consent, except as may be required by applicable
law or regulation.
5. No fee payable to LTCO pursuant to any other agreement with the Company
or payable by the Company to any agent, lender or investor shall reduce
or otherwise affect any fee payable by the Company to LTCO hereunder.
6. The Company represents and warrants that: (a) it has full right, power
and authority to enter into this Agreement and to perform all of its
obligations hereunder; (b) this Agreement has been duly authorized and
executed and constitutes a valid and binding agreement of the Company
enforceable in accordance with its terms; and (c) the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby does not conflict with or result in a breach of (i)
the Company's certificate of incorporation or by-laws or (ii) any
agreement to which the Company is a party or by which any of its
property or assets is bound.
6
<PAGE> 7
EXHIBIT A (CONTINUED)
7. Nothing contained in this Agreement shall be construed to place LTCO
and the Company in the relationship of partners or joint venturers.
Neither LTCO nor the Company shall represent itself as the agent or
legal representative of the other for any purpose whatsoever nor shall
either have the power to obligate or bind the other in any manner
whatsoever. LTCO, in performing its services hereunder, shall at all
times be an independent contractor.
8. This Agreement has been and is made solely for the benefit of LTCO and
the Company and each of the persons, agents, employees, officers,
directors and controlling persons referred to in Exhibit B and their
respective heirs, executors, personal representatives, successors and
assigns, and nothing contained in this Agreement shall confer any
rights upon, nor shall this Agreement be construed to create any rights
in, any person who is not party to such Agreement, other than as set
forth in this paragraph.
9. The rights and obligations of either party under this Agreement may not
be assigned without the prior written consent of the other party hereto
and any other purported assignment shall be null and void.
10. All communications hereunder, except as may be otherwise specifically
provided herein, shall be in writing and shall be mailed, hand
delivered, or sent via facsimile and confirmed by letter, to the party
to whom it is addressed at the following addresses or such other
address as such party may advise the other in writing:
To the Company:
Dennis Healey
Viragen, Inc.
865 SW 78th Avenue, Suite 100
Plantation, FL 33324
Telephone: (954) 233-8746
Facsimile: (954) 233-1416
To LTCO:
Ladenburg Thalmann & Co. Inc.
590 Madison Avenue
New York, NY 10022
Attention: David B. Boris
Telephone: (212) 409-2000
Facsimile: (212) 409-2169
All notices hereunder shall be effective upon receipt by the party to which it
is addressed.
7
<PAGE> 8
EXHIBIT B
INDEMNIFICATION
The Company agrees that it shall indemnify and hold harmless, LTCO, its
stockholders, directors, officers, employees, agents, affiliates and controlling
persons within the meaning of Section 20 of the Securities Exchange Act of 1934
and Section 15 of the Securities Act of 1933, each as amended (any and all of
whom are referred to as an "Indemnified Party"), from and against any and all
losses, claims, damages, liabilities, or expenses, and all actions in respect
thereof (including, but not limited to, all legal or other expenses reasonably
incurred by an Indemnified Party in connection with the investigation,
preparation, defense or settlement of any claim, action or proceeding, whether
or not resulting in any liability), incurred by an Indemnified Party: (a)
arising out of, or in connection with, any actions taken or omitted to be taken
by the Company, its affiliates, employees or agents, or any untrue statement or
alleged untrue statement of a material fact contained in any of the financial or
other information contained in the registration statement and/or final
prospectus furnished to LTCO by or on behalf of the Company or the omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading; or (b) with respect to, caused by, or otherwise
arising out of any transaction contemplated by the Agreement or LTCO's
performing the services contemplated hereunder; provided, however, the Company
will not be liable under clause (b) hereof to the extent, and only to the
extent, that any loss, claim, damage, liability or expense is finally judicially
determined to have resulted primarily from LTCO's gross negligence or bad faith
in performing such services.
If the indemnification provided for herein is conclusively determined
(by an entry of final judgment by a court of competent jurisdiction and the
expiration of the time or denial of the right to appeal) to be unavailable or
insufficient to hold any Indemnified Party harmless in respect to any losses,
claims, damages, liabilities or expenses referred to therein, then the Company
shall contribute to the amounts paid or payable by such Indemnified Party in
such proportion as is appropriate and equitable under all circumstances taking
into account the relative benefits received by the Company on the one hand and
LTCO on the other, from the transaction or proposed transaction under the
Agreement or, if allocation on that basis is not permitted under applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
received by the Company on the one hand and LTCO on the other, but also the
relative fault of the Company and LTCO; provided, however, in no event shall the
aggregate contribution of LTCO and/or any Indemnified Party be in excess of net
compensation actually received by LTCO and/or such Indemnified Party pursuant to
this Agreement.
The Company shall not settle or compromise or consent to the entry of
any judgment in or otherwise seek to terminate any pending or threatened action,
claim, suit or proceeding in which any Indemnified Party is or could be a party
and as to which indemnification or contribution could have been sought by such
Indemnified Party hereunder (whether or not such Indemnified Party is a party
8
<PAGE> 9
thereto), unless such consent or termination includes an express unconditional
release of such Indemnified Party, reasonably satisfactory in form and substance
to such Indemnified Party, from all losses, claims, damages, liabilities or
expenses arising out of such action, claim, suit or proceeding.
The foregoing indemnification and contribution provisions are not in
lieu of, but in addition to, any rights which any Indemnified Party may have at
common law hereunder or otherwise, and shall remain in full force and effect
following the expiration or termination of LTCO's engagement and shall be
binding on any successors or assigns of the Company and successors or assigns to
all or substantially all of the Company's business or assets.
9
<PAGE> 10
EXHIBIT C
JURISDICTION
The Company hereby irrevocably: (a) submits to the jurisdiction of any
court of the State of New York or any federal court sitting in the State of New
York for the purposes of any suit, action or other proceeding arising out of the
Agreement between the Company and LTCO which is brought by or against the
Company or LTCO; (b) agrees that all claims in respect of any suit, action or
proceeding may be heard and determined in any such court; and (c) to the extent
that the Company has acquired, or hereafter may acquire, any immunity from
jurisdiction of any such court or from any legal process therein, the Company
hereby waives, to the fullest extent permitted by law, such immunity.
The Company waives, and the Company agrees not to assert in any such
suit, action or proceeding, in each case, to the fullest extent permitted by
applicable law, any claim that: (a) the Company is not personally subject to the
jurisdiction of any such court; (b) the Company is immune from any legal process
(whether through service or notice, attachment prior to judgment, attachment in
the aid of execution, execution or otherwise) with respect to it or its
property; (c) any such suit, action or proceeding is brought in an inconvenient
forum; (d) the venue of any such suit, action or proceeding is improper; or (e)
this Agreement may not be enforced in or by any such court.
Any process against the Company in, or in connection with, any suit,
action or proceeding filed in the United States District Court for the Southern
District of New York or any other court of the State of New York, arising out of
or relating to this Agreement or any transaction or agreement contemplated
hereby, may be served on the Company personally, or by first class mail or
overnight courier (with the same effect as though served upon the Company
personally) addressed to the Company at the address set forth in the Agreement
between the Company and LTCO.
Nothing in these provisions shall affect any party's right to serve
process in any manner permitted by law or limit its rights to bring a proceeding
in the competent courts of any jurisdiction or jurisdictions or to enforce in
any lawful manner a judgment obtained in one jurisdiction in any other
jurisdiction.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without regard to conflicts of law
principles.
10
<PAGE> 1
Exhibit 1.2
LADENBURG
THALMANN
ESTABLISHED 1876
March 8, 2000
Dennis Healey
Executive Vice President/Treasurer
Viragen, Inc.
865 SW 78th Avenue, Suite 100
Plantation, FL 33324
Dear Mr. Healey:
Reference is hereby made to the letter agreement dated December 22, 1999 (the
"Engagement Agreement") between Viragen, Inc. (the "Company") and Ladenburg
Thalmann & Co. Inc. ("LTCO").
The Company and LTCO hereby agree to amend the Engagement Agreement as follows:
1. The sentence "The gross proceeds from the Offering will be up to
$30,000,000." in the first paragraph of the Engagement Agreement is
hereby amended to read as follows:
The gross proceeds from the Offering will be up to $60,000,000.
Except as amended pursuant hereto, the terms and conditions of the Engagement
Agreement shall remain in full force and effect.
If the foregoing correctly sets forth our agreement, please confirm this by
signing and returning to us the duplicate copy of this letter.
Very truly yours,
LADENBURG THALMANN & CO. INC.
By: /s/ David Boris
----------------------------------
Name: David Boris
Title: Executive Vice President
Agreed to and accepted
As of the date first written above:
VIRAGEN, INC.
By: /s/ Dennis W. Healey
----------------------------------
Name: Dennis W. Healey
Title: Exec. V.P./CFO
<PAGE> 1
Exhibit 5
ATLAS, PEARLMAN, TROP & BORKSON, P.A.
350 EAST LAS OLAS BOULEVARD, SUITE 1700
FORT LAUDERDALE, FL 33301
March 13, 2000
Viragen, Inc.
865 S.W. 78th Avenue, Suite 100
Plantation, FL 33324
RE: REGISTRATION STATEMENT ON FORM S-3;
VIRAGEN, INC. (THE "COMPANY"), $60,000,000 AMOUNT OF
SHARES OF COMMON STOCK
Gentlemen:
This opinion is submitted pursuant to the applicable rules of the
Securities and Exchange Commission with respect to the registration by the
Company of shares of common stock or common stock underlying common stock
purchase warrants (collectively, the "Common Shares") which will not exceed
$60,000,000 in valuation. The Company's registration statement does not reflect
the actual number of Common Shares to be registered or the proposed maximum
offering price per Common Share, but the total number of Common Shares will not
exceed $60,000,000 in value at the time of issuance.
In our capacity as counsel to the Company, we have examined the
original, certified, conformed, photostat or other copies of the Company's
Certificate of Incorporation (as Amended), By-Laws, and exhibits and corporate
minutes provided to us by the Company. In all such examinations, we have assumed
the genuineness of all signatures on original documents, and the conformity to
originals or certified documents of all copies submitted to us as conformed,
photostat or other copies. In passing upon certain corporate records and
documents of the Company, we have necessarily assumed the correctness and
completeness of the statements made or included therein by the Company, and we
express no opinion thereon.
<PAGE> 2
Viragen, Inc.
March 13, 2000
Page 2
Based upon and in reliance on the foregoing, we are of the opinion that
the Common Shares to be issued to purchasers from time-to-time in accordance
with purchase agreements and commitments to be undertaken and consummated on a
periodic basis between the Company and such purchasers, when issued in
accordance with the terms of such purchase agreements and commitments, including
the receipt of the consideration to be provided therein, will be validly issued,
fully paid and non-assessable.
We hereby consent to the use of this opinion in the Registration
Statement on Form S-3 to be filed with the Commission.
Very truly yours,
ATLAS, PEARLMAN, TROP & BORKSON, P.A.
/s/ ATLAS, PEARLMAN, TROP & BORKSON, P.A
-----------------------------------------
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3 No. 333- ) and related Prospectus of
Viragen, Inc. for the registration of 000,000 shares of its common stock and
to the incorporation by reference therein of our report dated September 17,
1999, 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, 1999,
filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Miami, Florida
March 7, 2000
