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EXHIBIT 10(lxii)
PURCHASE AGREEMENT
BETWEEN
THE ISOSCELES FUND, CEFEO INVESTMENTS LIMITED
AND
VIRAGEN, INC.
DATED AS OF MARCH 17, 1999
This PURCHASE AGREEMENT (this "Agreement") is entered into as of the 17
day of March, 1999, by and between The Isosceles Fund, an entity organized and
existing under the laws of the Commonwealth of the Bahamas, Cefeo Investments
Limited, an entity organized and existing under the laws of Switzerland
(together, the "Subscribers") and Viragen, Inc., a corporation organized and
existing under the laws of the State of Delaware (the "Company").
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to the Subscribers
as provided herein, and the Subscribers shall purchase, an aggregate of
$2,000,000 principal amount of Redeemable Convertible Notes and Warrants (as
defined below); and
WHEREAS, such investments will be made in reliance upon the provisions
of Section 4(2) of and Regulation D under the United States Securities Act of
1933, as amended (the "Securities Act"), and/or upon such other exemption from
the registration requirements of the Securities Act as may be available with
respect to any or all of the investments to be made hereunder.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1 "CLOSING MARKET PRICE" shall mean the average of the
closing bid prices of the Company's Common Stock during the five consecutive
trading days preceding the Initial Purchase Date.
Section 1.2 "COMMON STOCK" shall mean the Company's common stock $.01
par value per share.
Section 1.3 "CONDITION SATISFACTION DATE" See Section 8.2.
Section 1.4 "DAMAGES" shall mean any loss, claim, damage, liability,
costs and expenses (including, without limitation, reasonable attorneys' fees
and disbursements and costs and expenses of expert witnesses and investigation).
Section 1.5 "EFFECTIVE DATE" shall mean the date on which the SEC first
declares effective a Registration Statement registering resale of the Registered
Shares as set forth in Section 7.3(a).
Section 1.6 "ENGAGEMENT PERIOD" shall having the meaning given in
Section 2.1(a).
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Section 1.7 "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended, and the regulations promulgated thereunder.
Section 1.8 "INITIAL CLOSING" shall mean the closing of the purchase
and sale of Notes and Warrants on the Initial Purchase Date.
Section 1.9 "INITIAL PURCHASE DATE" shall mean the date of the original
issuance of the Notes.
Section 1.10 "INVESTMENT AMOUNT" shall mean the amounts to be paid by
the Subscribers to the Company pursuant to Article II hereof.
Section 1.11 "LEGEND" See Section 9.1.
Section 1.12 "MATERIAL ADVERSE AFFECT" shall mean any effect on the
business, operations, properties, prospects, or financial condition of the
Company that is material and adverse to the Company or to the Company and such
other entities controlling or controlled by the Company, taken as a whole,
and/or any condition, circumstance, or situation that would prohibit or
otherwise interfere with the ability of the Company to enter into and perform
its obligations under any of (a) this Agreement and (b) the Registration Rights
Agreement.
Section 1.13 "NASD" shall mean the National Association of Securities
Dealers, Inc.
Section 1.14 "NOTES" shall mean the amount of Redeemable Convertible
Notes issued from time to time by the Company in an amount divisable by $25,000
with an interest rate of 8% per annum, and having substantially the terms and
condition set forth in Exhibit A hereto.
Section 1.15 "OUTSTANDING CAPITAL SHARES" shall mean, all issued and
outstanding shares of the Company, and shall include all such shares issuable in
respect of outstanding scrip or any certificates representing fractional
interests in such Shares; PROVIDED, HOWEVER, that "Outstanding Capital Shares"
shall not mean any such Shares then directly or indirectly owned or held by or
for the account of the Company.
Section 1.16 "PERSON" shall mean an individual, a corporation, a
partnership, an association, a trust or other entity or organization, including
a government or political subdivision or an agency or instrumentality thereof.
Section 1.17 "PRE-PAYMENT DEADLINE" shall mean the sooner of the end of
the applicable Registration Period or the Effective Date.
Section 1.18 "PRINCIPAL MARKET" shall mean the Nasdaq National Market,
the Nasdaq Small-Cap Market, the American Stock Exchange or the New York Stock
Exchange, whichever is at the time the principal trading exchange or market for
the Common Stock.
Section 1.19 "PROXY" shall mean the proxy to be filed with the SEC
pursuant to Section 7.2(d).
Section 1.20 "REGISTRATION PERIOD" shall mean 90 days after the Initial
Purchase Date if there are no comments from the SEC or 105 days after the
Initial Purchase Date if there are comments from the SEC.
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Section 1.21 "REGISTRATION RIGHTS AGREEMENT" shall mean the agreement
regarding the filing of the Registration Statement for the resale of the Common
Stock underlying the Notes and the Warrants, entered into between the Company
and the Subscribers as of the Subscription Date.
Section 1.22 "REGULATION D" shall mean Regulation D under the
Securities Act.
Section 1.23 "SEC" shall mean the Securities and Exchange Commission.
Section 1.24 "SECTION 4(2)" shall mean Section 4(2) of the Securities
Act.
Section 1.25 "SECURITIES ACT" shall have the meaning set forth in the
recitals of this Agreement.
Section 1.26 "SEC DOCUMENTS" shall mean the Company's latest Form 10-K
as of the time in question, all Forms 10-Q and 8-K filed thereafter, and the
Proxy Statement for its latest fiscal year as of the time in question until such
time the Company no longer has an obligation to maintain the effectiveness of a
Registration Statement as set forth in the Registration Rights Agreement.
Section 1.27 "SUBSCRIPTION DATE" shall mean the date of this Agreement.
Section 1.28 "TRADING DAY" shall mean any day during which the NASDAQ
shall be open for business.
Section 1.29 "WARRANTS" shall mean warrants to purchase Common Stock
substantially in the form set forth in Exhibit B hereto.
Section 1.30 "WARRANT AMOUNT" shall mean Common Stock equivalent to 30%
of the Investment Amount divided by the applicable Closing Market Price.
ARTICLE II
PURCHASE AND SALE OF REDEEMABLE CONVERTIBLE NOTES AND WARRANTS
Section 2.1 INVESTMENTS.
(a) Engagement Period. The Initial Closing shall occur prior
to 5 pm, New York time, March 17, 1999. The Initial Closing
shall be automatically extended for a reasonable period of
time, if the Initial Closing is not consummated due to delays
in the preparation of final documentation, such extensions
not to exceed 3 business days.
(b) Initial Purchase. On the Initial Purchase Date, The
Isosceles Fund shall purchase for $1,500,000 and Cefeo
Investment Limited shall purchase for $500,000 an equivalent
principal amount of Notes and Warrants in the Warrant Amount,
in the manner set forth in Section 2.2.
Section 2.2 CLOSING. On the Initial Closing Date, (i) the Company shall
deliver into escrow the Notes and the Warrants, to be purchased by the
Subscribers,
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registered in the name of the Subscribers, and (ii) the Subscribers shall
deliver into escrow the principal amount of the Notes. In addition, on or prior
to the Initial Closing Date each of the Company and the Subscribers shall
deliver all documents, instruments and writings required to be delivered or
reasonably requested by either of them pursuant to this Agreement in order to
implement and effect the transactions contemplated herein.
Payment of funds to the Company and delivery of the certificates to the
Subscribers shall occur out of escrow in accordance with the Escrow Agreement
between the parties hereto and Chase Manhattan Bank & Trust Co. dated as of
March 17, 1999 (the "Escrow Agreement") following (x) the Company's deposit into
escrow of the certificates representing the Notes and Warrants and (y) the
Subscribers' deposit into escrow of the relevant Investment Amount; PROVIDED,
HOWEVER, that the amount of $500,000 from the Investment Amount shall be
retained in escrow and released to the Company only upon both filing of the
Proxy with the SEC by March 16, 1999 and filing of the Registration Statement in
accordance with the Registration Rights Agreement and that if such conditions
are not met, such amount shall be returned to the Subscribers proportionately to
their Investment Amounts, and PROVIDED FURTHER that to the extent the Company
has not paid the fees, expenses and disbursements of the Subscribers' counsel in
accordance with Section 13.1, the amount of such fees, expenses and
disbursements shall be paid from the escrow account in immediately available
funds, at the direction of the Subscribers, to Subscribers' counsel with no
reduction in the number of Notes or Warrants issuable to the Subscribers on such
Closing Date.
Section 2.3 TERMINATION OF INVESTMENT OBLIGATION. The obligation of the
Subscribers to purchase Notes and Warrants shall terminate permanently in the
event that (i) the Initial Closing does not occur before the end of the
Engagement Period; (ii) the Registration Statement is not effective within 90
after the Initial Purchase Date if there are no comments from the SEC or 105
days after the Initial Purchase Date if there are comments from the SEC; (iii)
there shall occur any stop order or suspension of the effectiveness of the
Registration Statement for an aggregate of 30 Trading Days, for any reason other
than deferrals or suspension in accordance with Section 2.1(i) of the
Registration Rights Agreement, as a result of corporate developments subsequent
to the Subscription Date that would require such Registration Statement to be
amended to reflect such event in order to maintain its compliance with the
disclosure requirements of the Securities Act; or (iv) the Company shall at any
time fail to comply with the requirements of Article VI hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SUBSCRIBERS
Each Subscriber represents and warrants to the Company that:
Section 3.1 INTENT. The Subscriber is entering into this Agreement for
its own account and the Subscriber has no present arrangement (whether or not
legally binding) to sell the Notes or Common Stock obtained upon conversion of
Notes or exercise of the Warrants to or through any person or entity; provided,
however, that by making the representations herein, the Subscriber does not
agree to hold the Notes and Warrants for any minimum or other specific term and
reserves the right to dispose of the Notes and Warrants at any time in
accordance with federal and state securities laws applicable to such
disposition.
Section 3.2 SOPHISTICATED INVESTOR. The Subscriber is a sophisticated
investor (as described in Rule 506(b)(2)(ii) of Regulation D) and an Accredited
Investor (as defined in Rule 501 of Regulation D), and Subscriber has such
experience in business and financial matters that it is capable of evaluating
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the merits and risks of an investment in Common Stock. The Subscriber
acknowledges that an investment in the Common Stock is speculative and involves
a high degree of risk.
Section 3.3 AUTHORITY. This Agreement has been duly authorized and
validly executed and delivered by the Subscriber and is a valid and binding
agreement of the Subscriber enforceable against it in accordance with its terms,
subject to applicable bankruptcy, insolvency, or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application.
Section 3.4 NOT AN AFFILIATE. The Subscriber is not an officer,
director or "affiliate" (as that term is defined in Rule 405 promulgated under
the Securities Act) of the Company.
Section 3.5 ORGANIZATION AND STANDING. Subscriber is duly organized,
validly existing, and in good standing under the laws of the Bahamas or
Switzerland, as applicable.
Section 3.6 ABSENCE OF CONFLICTS. The execution and delivery of this
Agreement and any other document or instrument executed in connection herewith,
and the consummation of the transactions contemplated thereby, and compliance
with the requirements thereof, will not violate any law, rule, regulation,
order, writ, judgment, injunction, decree or award binding on Subscriber, or, to
the Subscriber's knowledge, (a) violate any provision of any indenture,
instrument or agreement to which Subscriber is a party or is subject, or by
which Subscriber or any of its assets is bound, (b) conflict with or constitute
a material default thereunder, (c) result in the creation or imposition of any
lien pursuant to the terms of any such indenture, instrument or agreement, or
constitute a breach of any fiduciary duty owed by Subscriber to any third party,
or (d) require the approval of any third party (which has not been obtained)
pursuant to any material contract, agreement, instrument, relationship or legal
obligation to which Subscriber is subject or to which any of its assets,
operations or management may be subject.
Section 3.7 DISCLOSURE; ACCESS TO INFORMATION. Subscriber has received
all documents, records, books and other information pertaining to Subscriber's
investment in the Company that have been requested by Subscriber. The Company is
subject to the periodic reporting requirements of the Exchange Act, and
Subscriber has reviewed or received copies of any such reports that have been
requested by it.
ARTICLE IV
CAPITAL RAISING LIMITATIONS
Section 4.1 LIMITATIONS. The Company will not, until 90 days after the
Pre-Payment Deadline (the "Limitation Period") offer for sale or sell any Common
Stock (or any security convertible into, or exercisable or exchangeable for,
Common Stock) without the written consent of the Subscribers. This restriction
will terminate on the earlier of (i) redemption or Pre-Payment by the Company or
(ii) the end of the Limitation Period.
Section 4.2 EXCEPTIONS. The provisions of this Article IV will not
apply to;
(a) the issuance of securities upon the exercise or conversion of the
Company's options, warrants or other convertible securities outstanding
as of the date hereof; or
(b) underwritten public offerings; or
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(c) the grant of additional options or warrants, or the issuance of
additional securities, under any Company stock option plan or
restricted stock option plan for the benefit of the Company's
employees, directors or consultants; or
(d) a loan from a commercial bank or an affiliate; or
(e) any transaction involving the Company's issuance of securities (i)
as consideration in a merger, or (ii) in connection with any strategic
partnership or joint venture (the primary purpose of which is not to
raise equity capital) or (iii) as consideration for any acquisition; or
(f) any equipment leasing financing facility.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Subscribers that:
Section 5.1 ORGANIZATION OF THE COMPANY. The Company is a corporation
duly organized and existing in good standing under the laws of the State of
Delaware and has all requisite corporate authority to own, lease and operate its
properties and to carry on its business as now being conducted. Except as set
forth in the SEC Documents, the Company does not have any subsidiaries. Except
as set forth in the SEC Documents, the Company does not own more than fifty
percent (50%) of or control any other business entity. The Company is duly
qualified as a foreign corporation to do business and is in good standing in
every jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary, other than those in which the
failure so to qualify would not have a Material Adverse Effect.
Section 5.2 AUTHORITY. (i) The Company has the requisite corporate
power and authority to enter into and perform its obligations under this
Agreement, the Escrow Agreement and the Registration Rights Agreement and to
issue the Notes and Warrants; (ii) the execution, issuance and delivery of this
Agreement and the Registration Rights Agreement and the consummation by the
Company of the transactions contemplated hereby have been duly authorized by all
necessary corporate action and no further consent or authorization of the
Company or its Board of Directors or stockholders is required; and (iii) this
Agreement and the Registration Rights Agreement have been duly executed and
delivered by the Company and constitute valid and binding obligations of the
Company enforceable against the Company in accordance with their terms, except
as such enforceability may be limited by applicable bankruptcy, insolvency, or
similar laws relating to, or affecting generally the enforcement of, creditors'
rights and remedies or by other equitable principles of general application.
Section 5.3 CAPITALIZATION. The authorized capital stock of the Company
consists of 75,000,000 shares of Common Stock, of which 60,720,815 shares were
issued and outstanding as of March 12. Except as disclosed in the financial
statements of the Company included in the report on Form 10-Q for the fiscal
quarter ended December 31, 1998, there are no options, warrants, or rights to
subscribe to, securities, rights or obligations convertible into or exchangeable
for or giving any right to subscribe for any shares of capital stock of the
Company. All of the outstanding shares of Common Stock of the Company have been
duly and validly authorized and issued and are fully paid and nonassessable and
subject to no preemptive rights. As of the effective date of this Agreement, (i)
there are no outstanding options, warrants, scrip, rights to subscribe for,
puts, calls, rights of first refusal, agreements, understandings, claims or
other commitments or rights of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for any shares of capital
stock of the Company or any
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of its Subsidiaries, or arrangements by which the Company or any of its
Subsidiaries is or may become bound to issue additional shares of capital stock
of the Company or any of its Subsidiaries except as set forth in the SEC
Documents, (ii) there are no agreements or arrangements under which the Company
or any of its Subsidiaries is obligated to register the sale of any of its or
their securities under the Securities Act (except the Registration Rights
Agreement) and (iii) there are no anti-dilution or price adjustment provisions
contained in any security issued by the Company (or in any agreement providing
rights to security holders) that will be triggered by the issuance of the Notes,
the Warrants, the Conversion Shares or Warrant Shares. The Company has furnished
to the Buyer true and correct copies of the Company's Certificate of
Incorporation as in effect on the date hereof, the Company's By-laws, as in
effect on the date hereof, and the terms of all securities convertible into or
exercisable for Common Stock of the Company and the material rights of the
holders thereof in respect thereto.
Section 5.4 COMMON STOCK. The Company has registered its Common Stock
pursuant to Section 12(b) or 12(g) of the Exchange Act and is in full compliance
with all reporting requirements of the Exchange Act, and the Company has
maintained all requirements for the continued listing or quotation of its Common
Stock except as set forth in the NASD's letter to the Company of December 16,
1998, and such Common Stock is currently listed or quoted on the Principal
Market. As of the date hereof, the Principal Market is the Nasdaq National
Market.
Section 5.5 SEC DOCUMENTS. The Company has delivered or made available
to the Subscribers true and complete copies of the SEC Documents (including,
without limitation, proxy information and solicitation materials). The Company
has not provided to the Subscribers any information that, according to
applicable law, rule or regulation, should have been disclosed publicly prior to
the date hereof by the Company, but which has not been so disclosed. As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
rules and regulations of the SEC promulgated thereunder and other federal, state
and local laws, rules and regulations applicable to such SEC Documents, and none
of the SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of the Company included
in the SEC Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC or
other applicable rules and regulations with respect thereto. Such financial
statements have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved (except (i)
as may be otherwise indicated in such financial statements or the notes thereto
or (ii) in the case of unaudited interim statements, to the extent they may not
include footnotes or may be condensed or summary statements) and fairly present
in all material respects the financial position of the Company as of the dates
thereof and the results of operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments).
Section 5.6 VALID ISSUANCES. The Notes, Warrants and Common Stock
issuable upon the conversion of the Notes or exercise of the Warrants have been
and will be properly issued pursuant to Rule 4(2), Regulation D and/or any
applicable state law. When issued, the shares of common stock underlying the
Notes and Warrants will be duly and validly issued, fully paid, and
nonassessable. Neither the sales of the Notes and Warrants pursuant to, nor the
Company's performance of its obligations under, this Agreement or the
Registration Rights Agreement will (i) result in the creation or imposition of
any liens, charges, claims or other encumbrances upon the Purchased Shares or
any of the assets of the Company, or (ii) entitle the holders of Outstanding
Capital Shares to preemptive or other rights to
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subscribe to or acquire the Capital Shares or other securities of the Company.
The Notes and Warrants shall not subject the Subscribers to personal liability
by reason of the ownership thereof.
Section 5.7 NO GENERAL SOLICITATION OR ADVERTISING IN REGARD TO THIS
TRANSACTION. Neither the Company nor any of its affiliates nor any distributor
or any person acting on its or their behalf (i) has conducted or will conduct
any general solicitation (as that term is used in Rule 502(c) of Regulation D)
or general advertising with respect to any of the Notes and Warrants, or (ii)
made any offers or sales of any security or solicited any offers to buy any
security under any circumstances that would require registration of the Notes or
Warrants or Common Stock issuable upon the conversion of the Notes or exercise
of the Warrants under the Securities Act.
Section 5.8 CORPORATE DOCUMENTS. The Company has furnished or made
available to the Subscribers true and correct copies of the Company's
Certificate of Incorporation, as amended and in effect on the date hereof, and
the Company's By-Laws, as amended and in effect on the date hereof (the
"By-Laws").
Section 5.9 NO CONFLICTS. The execution, delivery and performance of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby, including, without limitation, the issuance of
the Notes, Warrants, and Common Stock issuable upon the conversion of the Notes
or redemption of the Warrants do not and will not (i) result in a violation of
the Company's Certificate of Incorporation or By-Laws or (ii) conflict with, or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any material agreement, indenture,
instrument or any "lock-up" or similar provision of any underwriting or similar
agreement to which the Company is a party, or (iii) result in a violation of any
federal, state, local or foreign law, rule, regulation, order, judgment or
decree (including federal and state securities laws and regulations) applicable
to the Company or by which any property or asset of the Company is bound or
affected (except for such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect) nor is the Company otherwise in
violation of, conflict with or in default under any of the foregoing. The
business of the Company is not being conducted in violation of any law,
ordinance or regulation of any governmental entity, except for possible
violations that either singly or in the aggregate do not and will not have a
Material Adverse Effect. The Company is not required under federal, state or
local law, rule or regulation to obtain any consent, authorization or order of,
or make any filing or registration with, any court or governmental agency in
order for it to execute, deliver or perform any of its obligations under this
Agreement or issue and sell the Notes, Warrants or Common Stock in accordance
with the terms hereof (other than any SEC, NASD or state securities filings that
may be required to be made by the Company subsequent to any Closing, any
registration statement that may be filed pursuant hereto, and any shareholder
approval required by the rules applicable to companies whose common stock trades
on the Nasdaq National Market.
Section 5.10 NO MATERIAL ADVERSE CHANGE. Since December 31, 1998, no
Material Adverse Effect has occurred or exists with respect to the Company.
Section 5.11 NO UNDISCLOSED LIABILITIES. The Company has no liabilities
or obligations which are material, individually or in the aggregate, and are not
disclosed in the SEC Documents or otherwise publicly announced, other than those
incurred in the ordinary course of the Company's business since December 31,
1998 and which, individually or in the aggregate, do not or would not have a
Material Adverse Effect on the Company.
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Section 5.12 NO UNDISCLOSED EVENTS OR CIRCUMSTANCES. Since December 31,
1998, no event or circumstance has occurred or exists with respect to the or its
businesses, properties, prospects, operations or financial condition, that,
under applicable law, rule or regulation, requires public disclosure or
announcement prior to the date hereof by the Company but which has not been so
publicly announced or disclosed in the SEC Documents.
Section 5.13 NO INTEGRATED OFFERING. Neither the Company, nor any of
its affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, other than pursuant to this Agreement, under circumstances
that would require registration of the Common Stock under the Securities Act.
The Company has not engaged in any equity offerings or offerings of securities
of the same class as the Notes and the Warrants in the 180 days preceding the
date of this Agreement except the registration statement filed with the SEC and
withdrawn prior to the Subscription Date pursuant to Section 7.2(b).
Section 5.14 LITIGATION AND OTHER PROCEEDINGS. Except as may be set
forth in the SEC Documents, there are no lawsuits or proceedings pending or, to
the best knowledge of the Company threatened, against the Company, nor has the
Company received any written or oral notice of any such action, suit, proceeding
or investigation, which might have a Material Adverse Effect. Except as set
forth in the SEC Documents, no judgment, order, writ, injunction or decree or
award has been issued by or, so far as is known by the Company, requested of any
court, arbitrator or governmental agency which might result in a Material
Adverse Effect.
Section 5.15 NO MISLEADING OR UNTRUE COMMUNICATION. The Company, any
Person representing the Company, and, to the knowledge of the Company, any other
Person selling or offering to sell the Purchased Shares in connection with the
transactions contemplated by this Agreement, have not made, at any time, any
oral communication in connection with the offer or sale of the same which
contained any untrue statement of a material fact or omitted to state any
material fact necessary in order to make the statements, in the light of the
circumstances under which they were made, not misleading.
Section 5.16 NO MATERIAL NON-PUBLIC INFORMATION. The Company is not in
possession of, nor has the Company or its agents disclosed to the Subscribers,
any material non-public information that (i) if disclosed, would, or could
reasonably be expected to have, an effect on the price of the Common Stock or
(ii) according to applicable law, rule or regulation, should have been disclosed
publicly by the Company prior to the date hereof but which has not been so
disclosed.
Section 5.17 MANNER OF SALE. At no time was Subscribers presented with
or solicited by or through any leaflet, public promotional meeting, television
advertisement or any other form of general solicitation or advertising.
Section 5.18 ACKNOWLEDGMENT OF DILUTION. The Company understands and
acknowledges the potentially dilutive effect to the Common Stock upon the
issuance of the Conversion Shares and Warrant Shares upon conversion of the
Notes, or exercise of the Warrants. The Company further acknowledges that its
obligation to issue Conversion Shares and Warrant Shares upon conversion of the
Notes or exercise of the Warrants in accordance with this Agreement, the Notes
and the Warrants is absolute and unconditional regardless of the dilutive effect
that such issuance may have on the ownership interests of other stockholders of
the Company.
Section 5.19 PATENTS, COPYRIGHTS, ETC. The Company and each of its
Subsidiaries owns or possesses the requisite licenses or rights to use all
patents, patent applications, patent rights, inventions, know-how, trade
secrets, trademarks, trademark applications, service marks, service names, trade
names
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and copyrights ("Intellectual Property") necessary to enable it to conduct its
business as now operated (and to the best of the Company's knowledge, as
presently contemplated to be operated in the future); there is no claim or
action by any person pertaining to, or proceeding pending, or to the Company's
knowledge threatened, which challenges the right of the Company with respect to
any Intellectual Property necessary to enable it to conduct its business as now
operated (and to the best of the Company's knowledge, as presently contemplated
to be operated in the future); to the best of the Company's knowledge, the
Company's current and intended products, services and processes do not infringe
on any Intellectual Property or other rights held by any person; and the Company
is unaware of any facts or circumstances which might give rise to any of thc
foregoing. The Company has taken reasonable security measures to protect the
secrecy, confidentiality and value of their Intellectual Property.
Section 5.20 NO MATERIALLY ADVERSE CONTRACTS, ETC. Neither the Company
nor any of its Subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation which in the
judgment of the Company's officers has or is expected in the future to have a
Material Adverse Effect. Neither the Company nor any of its Subsidiaries is a
party to any contract or agreement which in the judgment of the Company's
officers has or is expected to have a Material Adverse Effect.
Section 5.21 TAX STATUS. The Company and each of its Subsidiaries has
made or filed all federal, state and foreign income and all other tax returns,
reports and declarations required by any jurisdiction to which it is subject
(unless and only to the extent that the Company and each of its Subsidiaries has
set aside on its books provisions reasonably adequate for the payment of all
unpaid and unreported taxes) and has paid all taxes and other governmental
assessments and charges that are material in amount, shown or determined to be
due on such returns, reports and declarations, except those being contested in
good faith and has set aside on its books provisions reasonably adequate for the
payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any jurisdiction,
and the officers of the Company know of no basis for any such claim. The Company
has not executed a waiver with respect to the statute of limitations relating to
the assessment or collection of any foreign, federal, state or local tax. None
of the Company's tax returns is presently being audited by any taxing authority.
Section 5.22 CERTAIN TRANSACTIONS. Except for arm's length transactions
pursuant to which the Company makes payments in the ordinary course of business
upon terms no less favorable than the Company could obtain from third parties,
none of the officers, directors, or employees of the Company is presently a
party to any transaction with the Company or any of its Subsidiaries (other than
for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any corporation, partnership, trust or other entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner.
Section 5.23 DISCLOSURE. All information relating to or concerning the
Company or any of its Subsidiaries set forth in this Agreement and provided to
the Buyers pursuant to Section 2(d) hereof and otherwise in connection with the
transactions contemplated hereby is true and correct in all material respects
and the Company has not omitted to state any material fact necessary in order to
make the statements made herein or therein, in light of the circumstances under
which they were made, not misleading. No event or circumstance has occurred or
exists with respect to the Company or any of its Subsidiaries or its or their
business, properties, prospects, operations or financial conditions, which,
under applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly announced or
disclosed (assuming for this purpose that the Company's reports
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filed under the Exchange Act are being incorporated into an effective
registration statement filed by the Company under the Securities Act).
Section 5.24 ACKNOWLEDGMENT REGARDING SUBSCRIBERS' PURCHASE. The
Company acknowledges and agrees that the Subscriber is acting solely in the
capacity of an arm's length purchaser with respect to this Agreement and the
transactions contemplated hereby. The Company further acknowledges that the
Subscribers are not acting as a financial advisor or fiduciary of the Company
(or in any similar capacity) with respect to this Agreement and the transactions
contemplated hereby and any statement made by the Subscribers or any of their
representatives or agents in connection with this Agreement and the transactions
contemplated hereby is not advice or a recommendation and is merely incidental
to the Subscriber's purchase of the Notes and Warrants hereunder. The Company
further represents to the Subscribers that the Company's decision to enter into
this Agreement has been based solely on the independent evaluation of the
Company and its representatives.
Section 5.25 NO BROKERS. The Company has taken no action which would
give rise to any claim by any person for brokerage commissions, finder's fees or
similar payments relating to this Agreement or the transactions contemplated
hereby, except for those Finders set forth in the Escrow Agreement.
Section 5.26 ENVIRONMENTAL MATTERS.
(i) There are, to the Company's knowledge, with respect to the
Company or any of its Subsidiaries or any predecessor of the Company, no past or
present violations of Environmental Laws (as defined below), releases of any
material into the environment, actions, activities, circumstances, conditions,
events, incidents, or contractual obligations which may give rise to any common
law environmental liability or any liability under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 or similar
federal, state, local or foreign laws and neither the Company nor any of its
Subsidiaries has received any notice with respect to any of the foregoing, nor
is any action pending or, to the Company's knowledge, threatened in connection
with any of the foregoing. The term "Environmental Laws" means all federal,
state, local or foreign laws relating to pollution or protection of human health
or the environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata), including, without limitation,
laws relating to emissions, discharges, releases or threatened releases of
chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes
(collectively, "Hazardous Materials") into the environment, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials, as well as all
authorizations, codes, decrees, demands or demand letters, injunctions,
judgments, licenses, notices or notice letters, orders, permits, plans or
regulations issued, entered, promulgated or approved thereunder.
(ii) Other than those that are or were stored, used or
disposed of in compliance with applicable law, no Hazardous Materials are
contained on or about any real property currently owned, leased or used by the
Company or any of its Subsidiaries, and no Hazardous Materials were released on
or about any real property previously owned, leased or used by the Company or
any of its Subsidiaries during the period the property was owned, leased or used
by the Company or any of its Subsidiaries, except in the normal course of the
Company's or any of its Subsidiaries' business.
(iii) There are no underground storage tanks on or under any
real property owned, leased or used by the Company or any of its Subsidiaries
that are not in compliance with applicable law.
Section 5.27 PERMITS: COMPLIANCE. The Company and each of its
Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exemptions, consents, certificates,
approvals and orders necessary to own, lease and operate its properties and to
carry on its
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business as it is now being conducted (collectively, the "Company Permits"), and
there is no action pending or, to the knowledge of the Company, threatened
regarding suspension or cancellation of any of the Company Permits. Neither the
Company nor any of its Subsidiaries is in conflict with, or in default or
violation of, any of the Company Permits, except for any such conflicts,
defaults or violations which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect. Since December 31,
1998, neither the Company nor any of its Subsidiaries has received any
notification with respect to possible conflicts, defaults or violations of
applicable laws, except for notices relating to possible conflicts, defaults or
violations, which conflicts, defaults or violations would not have a Material
Adverse Effect.
Section 5.28 TITLE TO PROPERTY. The Company and its Subsidiaries have
good and marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them which is material to the
business of the Company and its Subsidiaries, in each case free and clear of all
liens, encumbrances and defects except such as would not have a Material Adverse
Effect. Any real property and facilities held under lease by the Company and its
Subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as would not have a Material Adverse Effect.
Section 5.29 INSURANCE. The Company and each of its Subsidiaries are
insured by insurers of recognized financial responsibility against such losses
and risks and in such mounts as management of the Company believes to be prudent
and customary in the businesses in which the Company and its Subsidiaries are
engaged. Neither the Company nor any such Subsidiary has any reason to believe
that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that would not have a Material
Adverse Effect.
Section 5.30 INTERNAL ACCOUNTING CONTROLS. The Company and each of its
Subsidiaries maintain a system of internal accounting controls sufficient, in
the judgment of the Company's board of directors, to provide reasonable
assurance that (i) transactions are executed in accordance with management's
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
Section 5.31 FOREIGN CORRUPT PRACTICES. Neither the Company, nor any of
its Subsidiaries, nor any director, officer, agent, employee or other person
acting on behalf of the Company or any Subsidiary has, in the course of his
actions for, or on behalf of, the Company, used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses relating
to political activity; made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds;
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977; or made any bribe, rebate, payoff, influence payment,
kickback or other unlawful payment to any foreign or domestic government
official or employee.
Section 5.32 SOLVENCY. The Company (both before and after giving effect
to the transactions contemplated by this Agreement) is solvent (I.E., its assets
have a fair market value in excess of the amount required to pay its probable
liabilities on its existing debts as they become absolute and matured) and
currently the Company has no information that would lead it to reasonably
conclude that the Company would not have the ability to, nor does it intend to
take any action that would impair its ability to, pay its debts from time to
time incurred in connection therewith as such debts mature. The Company did not
receive a qualified opinion from its auditors with respect to its most recent
fiscal year end and does not anticipate or know of any basis upon which its
auditors might issue a qualified opinion in respect
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of its current fiscal year, assuming the Company received the financing
necessary to sustain operations for the forthcoming financial year.
ARTICLE VI
COVENANTS OF THE COMPANY
Section 6.1 REGISTRATION RIGHTS. The Company shall cause the
Registration Rights Agreement to remain in full force and effect and the Company
shall comply in all respects with the terms thereof.
Section 6.2 REGISTRATION OF COMMON STOCK. The Company shall maintain
the listing of the Common Stock (including the Common Stock issued upon
conversion of the Notes or exercise of the Warrants) on a Principal Market, and
as soon as possible but no later than 20 calendar days after the Closing Date,
shall file a registration with the SEC on Form S-3 registering for resale the
shares of the Company's Common Stock underlying the applicable Notes and
Warrants and the Re-Set Shares (collectively, the "Registered Shares"), as
described in the Registration Rights Agreement. The Company further shall, if
the Company applies to have the Common Stock traded on any other Principal
Market, include in such application the Registered Shares, and shall take such
other action as is necessary or desirable in the opinion of the Subscribers to
cause the Common Stock to be listed on such other Principal Market as promptly
as possible. The Company shall take all action necessary to continue the listing
and trading of its Common Stock on the Principal Market (including, without
limitation, maintaining sufficient net tangible assets) and will comply in all
respects with the Company's reporting, filing and other obligations under the
bylaws or rules of the NASD and the Principal Market.
Section 6.3 EXCHANGE ACT REGISTRATION. The Company shall cause its
Common Stock to continue to be registered under Section 12(g) or 12(b) of the
Exchange Act, will comply in all respects with its reporting and filing
obligations under said Act, and will not take any action or file any document
(whether or not permitted by said Act or the rules thereunder) to terminate or
suspend such registration or to terminate or suspend its reporting and filing
obligations under said Act. The Company will take all action to continue the
listing and trading of its Common Stock on the Principal Market and will comply
in all respects with the Company's reporting, filing and other obligations under
the bylaws or rules of the NASD and the Principal Market.
Section 6.4 LEGENDS. The certificates evidencing the Registered Shares
to be sold by the Subscribers pursuant to Section 2 shall be free of legends,
except as set forth in Article IX.
Section 6.5 CORPORATE EXISTENCE. The Company will take all steps
necessary to preserve and continue the corporate existence of the Company.
Section 6.6 ADDITIONAL SEC DOCUMENTS; OTHER DOCUMENTS. The Company will
deliver to the Subscribers, and when the originals thereof are submitted to the
SEC for filing, copies of all SEC Documents so furnished or submitted to the
SEC. The Company will further deliver copies of all press releases issued by the
Company and all communications to shareholders to the Subscribers.
Section 6.7 REGISTRATION STATEMENT. (a) The Company will immediately
notify the Subscribers upon the occurrence of any of the following events in
respect of a Registration Statement or related prospectus in respect of an
offering of Registrable Securities; (i) receipt of any request for additional
information by the SEC or any other federal or state governmental authority
during the period
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of effectiveness of the Registration Statement, or for amendments or supplements
to the Registration Statement or related prospectus; (ii) the issuance by the
SEC or any other federal or state governmental authority of any stop order
suspending the effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose; (iii) receipt of any notification with respect
to the suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; (iv) the happening of any event
that makes any statement made in such Registration Statement or related
prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires the making of any
changes in the Registration Statement, related prospectus or documents so that,
in the case of the Registration Statement, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
that in the case of the related prospectus, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and (v) the Company's
reasonable determination that a post-effective amendment to the registration
statement would be appropriate; and the Company will promptly make available to
the Subscribers any such supplement or amendment to the related prospectus.
Section 6.8 CONSOLIDATION; MERGER. The Company shall not, at any time
after the date hereof, effect any merger or consolidation of the Company with or
into, or a transfer of all or substantially all of the assets of the Company to,
another entity (a "Consolidation Event") unless the resulting successor or
acquiring entity (if not the Company) (a) assumes by written instrument the
obligation to deliver to the Subscribers such shares of Common Stock as the
Subscribers are entitled to receive pursuant to this Agreement and (b) is an
SEC-registered company whose common stock is listed on NASDAQ, AMEX or NYSE.
Section 6.9 NOTES AND WARRANTS. The sale and issuance of the Notes and
Warrants shall be made in accordance with the provisions and requirements of
Regulation D and any applicable state law.
Section 6.10 RESERVATION OF SHARES. The Company shall at all times have
authorized, and reserved for the purpose of issuance, a sufficient number of
shares of Common Stock to provide for the full conversion or exercise of the
outstanding Notes and Warrants and issuance of the Conversion Shares and Warrant
Shares in connection therewith (based on the Conversion Price of the Notes or
Exercise Price of the Warrants in effect from time to time). The Company shall
not reduce the number of shares of Common Stock reserved for issuance upon
conversion of Notes and exercise of the Warrants without the consent of the
Subscribers. The Company shall use its best efforts at all times to maintain the
number of shares of Common Stock so reserved for issuance at no less than 300%
of the number that is then actually issuable upon full conversion of the Notes
and 150% of the number issuable upon exercise of the Warrants (based on the
Conversion Price of the Notes or Exercise Price of the Warrants in effect from
time to time). If at any time the number of shares of Common Stock authorized
and reserved for issuance is below the number of Conversion Shares and Warrant
Shares issued and issuable upon conversion of the Notes and exercise of the
Warrants (based on the Conversion Price of the Notes or Exercise Price of the
Warrants then in effect), the Company will promptly take all corporate action
necessary to authorize and reserve a sufficient number of shares, including,
without limitation, calling a special meeting of shareholders to authorize
additional shares to meet the Company's obligations under this Section 6.10, in
the case of an insufficient number of authorized shares, and using its best
efforts to obtain shareholder approval of an increase in such authorized number
of shares.
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Section 6.11 NO INTEGRATION. The Company shall not make any offers or
sales of any other security under circumstances that would require registration
of the offer and sale of Notes and Warrants under the Securities Act or cause
such offering to be integrated with any other offering of securities by the
Company for the purpose of any stockholder approval provision applicable to the
Company or its securities.
Section 6.12 LEGAL OPINION ON SUBSCRIPTION DATE. The Company's
independent counsel shall deliver to the Subscribers on the Subscription Date an
opinion substantially in the form of Exhibit C.
ARTICLE VII
CONDITIONS TO CLOSING; CONDITIONS TO DELIVERY OF PURCHASE NOTICES
Section 7.1 SUBSCRIBER CONDITIONS APPLICABLE TO INITIAL CLOSING. The
obligation hereunder of the Company to issue and sell the Notes and Warrants to
each Subscriber incident to the Initial Closing is subject to the satisfaction,
at or before such closing, of each of the conditions set forth below.
(a) Accuracy of the Subscriber's Representation and
Warranties. The representations and warranties of each
Subscriber shall be true and correct in all material respects
as of the date of this Agreement and as of the date of the
closing as though made at each such time.
(b) Performance by the Subscriber. The Subscriber shall have
performed, satisfied and complied in all respects with all
covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the
Subscriber at or prior to closing.
Section 7.2 COMPANY CONDITIONS TO INITIAL CLOSING. In addition to the
conditions set forth in Section 7.1, the Initial Closing shall be subject to the
satisfaction, at or before the Initial Closing, the conditions set forth below.
(a) The Company and the Subscribers shall have mutually
agreed on definitive documentation.
(b) The Company shall have withdrawn from the SEC
registration statement No. 333-65119 and suspended the
transaction to which such registration statement relates
prior to the Initial Closing Date.
(c) The Company shall, prior to the Initial Closing Date,
disclose to the Subscribers the amount outstanding under its
Series H and I Preferred Stock and take such action with
respect thereto as may be agreed between the Company and the
Subscribers.
(d) The Company shall prepare for shareholder approval a
proxy to be filed with the SEC no later than March 16, 1999
authorizing a reverse stock split of at least 4:1 (provided
that the foregoing shall not be required in the event that
the requirements of the NASD in its letter to the Company
dated December 16, 1998 are met or withdrawn).
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(e) Senior management of the Company and other shareholders,
constituting approximately 15% or more of the holders of the
Company's voting shares, shall have executed a letter
agreeing to vote in favor of the Proxy.
(f) The Subscribers shall have received an opinion from the
Company's counsel in the form set out as Exhibit C hereto.
(g) The Subscribers shall have received a Certificate in the
form of Exhibit D hereto.
(h) The Company shall have notified the transfer agent of the
terms of this agreement, including each Conversion Date,
Re-Set Date and the deadline for filing of the Registration
Statement and the Effective Date. The Company shall instruct
the transfer agent to issue the respective common stock
certificates without restrictive legend in the name of the
Subscribers or such persons as may be designated by the
Subscribers representing the number of shares of the Issuer's
common stock issuable upon each respective Conversion Date,
Re-Set Date and Warrant Exercise Date, as applicable, and
deliver such shares to escrow within three trading days of
the respective Conversion Date, Re-Set Date and Warrant
Exercise Date. The Issuer represents that instructions to
impose a "stop transfer" will be given to the transfer agent
with respect to the share certificates until the Effective
Date and that thereafter the Issuer's common stock shall
otherwise be freely transferable on the books and records of
the Issuer. Prior to the Purchase Date the Issuer will cause
the transfer agent to execute and acknowledge in writing to
the Subscribers an irrevocable consent to the foregoing (the
"Transfer Agent Consent") in the form set out in Exhibit E
hereto. To the extent set forth in the terms of the Note,
delivery shall be electronically and the Company shall so
instruct the transfer agent.
ARTICLE VIII
DUE DILIGENCE REVIEW; NON-DISCLOSURE OF NON-PUBLIC INFORMATION
Section 8.1 DUE DILIGENCE REVIEW. The Company shall make available for
inspection and review by the Subscribers, advisors to and representatives of the
Subscribers (who may or may not be affiliated with the Subscribers and who are
reasonably acceptable to the Company), any underwriter participating in any
disposition of the Registrable Securities on behalf of the Subscribers pursuant
to the Registration Statement, any such registration statement or amendment or
supplement thereto or any blue sky, NASD or other filing, all financial and
other records, all SEC Documents and other filings with the SEC, and all other
corporate documents and properties of the Company as may be reasonably necessary
for the purpose of such review, and cause the Company's officers, directors and
employees to supply all such information reasonably requested by the Subscribers
or any such representative, advisor or underwriter in connection with such
Registration Statement (including, without limitation, in response to all
questions and other inquiries reasonably made or submitted by any of them),
prior to and from time to time after the filing and effectiveness of the
Registration Statement for the sole purpose of enabling the Subscribers and such
representatives, advisors and underwriters and their respective accountants and
attorneys to conduct initial and ongoing due diligence with respect to the
Company and the accuracy of the Registration Statement.
Section 8.2 NON-DISCLOSURE OF NON-PUBLIC INFORMATION. Each of the
Company, its officers, directors, employees and agents shall in no event
disclose non-public information to the
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Subscribers, advisors to or representatives of the Subscribers unless prior to
disclosure of such information the Company identifies such information as being
non-public information and provides the Subscribers, such advisors and
representatives with the opportunity to accept or refuse to accept such
non-public information for review.
ARTICLE IX
LEGENDS
Section 9.1 LEGENDS. Unless otherwise provided below, each certificate
representing Registrable Securities will bear the following legend (the
"Legend"):
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES
LAWS AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH
OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST
OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED, HYPOTHECATED OR OTHERWISE
DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO A
TRANSACTION THAT IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH
REGISTRATION. THE HOLDER OF THIS CERTIFICATE IS THE
BENEFICIARY OF CERTAIN OBLIGATIONS OF THE COMPANY SET FORTH IN
A PURCHASE AGREEMENT BETWEEN VIRAGEN, INC. AND ISOSCELES FUND
DATED MARCH __, 1999. A COPY OF THE PORTION OF THE AFORESAID
AGREEMENT EVIDENCING SUCH OBLIGATIONS MAY BE OBTAINED FROM THE
COMPANY'S EXECUTIVE OFFICES.
Section 9.2 NO OTHER LEGEND OR STOCK TRANSFER RESTRICTIONS. No legend
other than the one specified in Section 10.1 has been or shall be placed on the
certificates representing the Notes and Warrants and no instructions or stop
transfer orders, or other restrictions have been or shall be given to the
Company's transfer agent with respect thereto other than as expressly set forth
in this Article IX.
Section 9.3 REMOVAL OF LEGEND. Pursuant to the Registration Rights
Agreement, the legend specified in Section 9.1 shall be removed from all shares
sold in registered transactions pursuant to the Registration Statement.
Section 9.4 SUBSCRIBERS' COMPLIANCE. Nothing in this Article IX shall
affect in any way the Subscribers' obligations under any agreement to comply
with all applicable securities laws upon resale.
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ARTICLE X
CHOICE OF LAW
Section 10.1 CHOICE OF LAW. This Agreement shall be construed under the
laws of the State of New York.
ARTICLE XI
ASSIGNMENT; TERMINATION
Section 11.1 ASSIGNMENT. Neither this Agreement nor any rights of the
Subscribers or the Company hereunder may be assigned by either party to any
other person. Notwithstanding the foregoing, (a) the provisions of this
Agreement shall inure to the benefit of, and be enforceable by, any transferee
of any of the Common Stock purchased or acquired by the Subscribers hereunder
with respect to the Common Stock held by such person, and (b) the Subscribers'
interest in this Agreement may be assigned at any time, in whole or in part, to
any other person or entity (including any affiliate of the Subscribers) upon the
prior written consent of the Company, which consent shall not to be unreasonably
withheld.
Section 11.2 TERMINATION. This Agreement shall terminate at the end of
the Effective Period if the Initial Closing has not occurred; provided, however,
that the provisions of Articles V, VI, XII and XIII shall survive the
termination of this Agreement.
ARTICLE XII
NOTICES; INDEMNIFICATION
Section 12.1 NOTICES. All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall be in
writing and, unless otherwise specified herein, shall be (i) personally served,
(ii) deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur.
The addresses for such communications shall be:
If to Viragen, Inc.:
Xxxxxx X. Xxxxxx
Chief Financial Officer
Viragen, Inc.
000 XX 00xx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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with a copy to (which communication shall not constitute notice):
Xxxxx Xxxxxxxxx, Esq.
Atlas, Xxxxxxx, Trop & Borksoon
000 Xxxx Xxx Xxxx Xxxxxxxxx
Xxxxx 0000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Isosceles:
The Isosceles Fund Limited
c/o Citco Fund Services Ltd.
Bahamas Financial Centre, 3rd Floor
Xxxxxxx & Xxxxxxxxx Xxxxxx
X.X. Xxx XX 00000
Xxxxxx, Bahamas
Attention Xxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with copies to (which communication shall not constitute notice):
Xxxxxxxx Xxxxxx
c/o Manzur Associates, Ltd.
Witan Court, 000 Xxxxx Xxxx Xxxx
Xxxxxx Xxxxxx, XX0 0XX
Xxxxxx Xxxxxxx
Telephone: 000-00-0000-000-000
Facsimile: 011-44-1908-231-006
Xxxx Xxxxx, Esq.
Xxxxxx & Xxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Cefeo:
Cefeo Investments Limited
Xxx Xxxxxxx 0
0000 Xxxxxx
Xxxxxxxxxxx
Attention Xxxx Xxxxxxxxx
Telephone: + 00 00 000 0000
Facsimile: + 41 91 913 4502
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Either party hereto may from time to time change its address or
facsimile number for notices under this Section 13.1 by giving at least 10 days
prior written notice of such changed address or facsimile number to the other
party hereto.
Section 12.2 INDEMNIFICATION. The Company agrees to indemnify and hold
harmless each Subscriber, its partners, affiliates, officers, directors,
employees, and duly authorized agents, and each Person or entity, if any, who
controls the Subscriber within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act, together with the Controlling Persons (as
defined in the Registration Rights Agreement) from and against any Damages,
joint or several, and any action in respect thereof to which the Subscriber, its
partners, affiliates, officers, directors, employees, and duly authorized
agents, and any such Controlling Person becomes subject to, resulting from,
arising out of or relating to any misrepresentation, breach of warranty or
nonfulfillment of or failure to perform any covenant or agreement on the part of
Company contained in this Agreement.
Section 12.3 METHOD OF ASSERTING INDEMNIFICATION CLAIMS. All claims for
indemnification by any Indemnified Party (as defined below) under Section 13.2
will be asserted and resolved as follows:
(a) In the event any claim or demand in respect of which any
person claiming indemnification under any provision of Section
13.2 (an "Indemnified Party") might seek indemnity under
Section 13.2 is asserted against or sought to be collected
from such Indemnified Party by a person other than the
Company, the Subscriber or any affiliate of the Company or (a
"Third Party Claim"), the Indemnified Party shall deliver a
written notification, enclosing a copy of all papers served,
if any, and specifying the nature of and basis for such Third
Party Claim and for the Indemnified Party's claim for
indemnification that is being asserted under any provision of
Section 13.2 against any person (the "Indemnifying Party"),
together with the amount or, if not then reasonably
ascertainable, the estimated amount, determined in good faith,
of such Third Party Claim (a "Claim Notice") with reasonable
promptness to the Indemnifying Party. If the Indemnified Party
fails to provide the Claim Notice with reasonable promptness
after the Indemnified Party receives notice of such Third
Party Claim, the Indemnifying Party will not be obligated to
indemnify the Indemnified Party with respect to such Third
Party Claim to the extent that the Indemnifying Party's
ability to defend has been irreparably prejudiced by such
failure of the Indemnified Party. The Indemnifying Party will
notify the Indemnified Party as soon as practicable within the
period ending 30 calendar days following receipt by the
Indemnifying Party of either a Claim Notice or an Indemnity
Notice (as defined below) (the "Dispute Period") whether the
Indemnifying Party disputes its liability or the amount of its
liability to the Indemnified Party under Section 12.2 and
whether the Indemnifying Party desires, at its sole cost and
expense, to defend the Indemnified Party against such Third
Party Claim.
(i) If the Indemnifying Party notifies the
Indemnified Party within the Dispute Period that the
Indemnifying Party desires to defend the Indemnified
Party with respect to the Third Party Claim pursuant
to this Section 13.3(a), then the Indemnifying Party
will have the right to defend, with counsel
reasonably satisfactory to the Indemnified Party, at
the sole cost and expense of the Indemnifying Party,
such Third Party Claim by all appropriate
proceedings, which proceedings will be vigorously
and diligently prosecuted by the Indemnifying Party
to a final conclusion or will be settled at the
discretion of the Indemnifying Party (but only with
the consent of the Indemnified Party in the case of
any settlement that provides for any relief other
than the payment of
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monetary damages or that provides for the payment of
monetary damages as to which the Indemnified Party
will not be indemnified in full pursuant to Section
13.2). The Indemnifying Party will have full control
of such defense and proceedings, including any
compromise or settlement thereof; PROVIDED, HOWEVER,
that the Indemnified Party may, at the sole cost and
expense of the Indemnified Party, at any time prior
to the Indemnifying Party's delivery of the notice
referred to in the first sentence of this clause
(i), file any motion, answer or other pleadings or
take any other action that the Indemnified Party
reasonably believes to be necessary or appropriate
to protect its interests; and provided further, that
if requested by the Indemnifying Party, the
Indemnified Party will, at the sole cost and expense
of the Indemnifying Party, provide reasonable
cooperation to the Indemnifying Party in contesting
any Third Party Claim that the Indemnifying Party
elects to contest. The Indemnified Party may
participate in, but not control, any defense or
settlement of any Third Party Claim controlled by
the Indemnifying Party pursuant to this clause (i),
and except as provided in the preceding sentence,
the Indemnified Party will bear its own costs and
expenses with respect to such participation.
Notwithstanding the foregoing, the Indemnified Party
may take over the control of the defense or
settlement of a Third Party Claim at any time if it
irrevocably waives its right to indemnity under
Section 12.2 with respect to such Third Party Claim.
(ii) If the Indemnifying Party fails to notify the
Indemnified Party within the Dispute Period that the
Indemnifying Party desires to defend the Third Party
Claim pursuant to Section 13.3(a), or if the
Indemnifying Party gives such notice but fails to
prosecute vigorously and diligently or settle the
Third Party Claim, or if the Indemnifying Party
fails to give any notice whatsoever within the
Dispute Period, then the Indemnified Party will have
the right to defend, at the sole cost and expense of
the Indemnifying Party, the Third Party Claim by all
appropriate proceedings, which proceedings will be
prosecuted by the Indemnified Party in a reasonable
manner and in good faith or will be settled at the
discretion of the Indemnified Party (with the
consent of the Indemnifying Party, which consent
will not be unreasonably withheld). The Indemnified
Party will have full control of such defense and
proceedings, including any compromise or settlement
thereof; provided, however, that if requested by the
Indemnified Party, the Indemnifying Party will, at
the sole cost and expense of the Indemnifying Party,
provide reasonable cooperation to the Indemnified
Party and its counsel in contesting any Third Party
Claim which the Indemnified Party is contesting.
Notwithstanding the foregoing provisions of this
clause (ii), if the Indemnifying Party has notified
the Indemnified Party within the Dispute Period that
the Indemnifying Party disputes its liability or the
amount of its liability hereunder to the Indemnified
Party with respect to such Third Party Claim and if
such dispute is resolved in favor of the
Indemnifying Party in the manner provided in clause
(iii) below, the Indemnifying Party will not be
required to bear the costs and expenses of the
Indemnified Party's defense pursuant to this clause
(ii) or of the Indemnifying Party's participation
therein at the Indemnified Party's request, and the
Indemnified Party will reimburse the Indemnifying
Party in full for all reasonable costs and expenses
incurred by the Indemnifying Party in connection
with such litigation. The Indemnifying Party may
participate in, but not control, any defense or
settlement controlled by the
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Indemnified Party pursuant to this clause (ii), and
the Indemnifying Party will bear its own costs and
expenses with respect to such participation.
(iii) If the Indemnifying Party notifies the
Indemnified Party that it does not dispute its
liability or the amount of its liability to the
Indemnified Party with respect to the Third Party
Claim under Section 13.2 or fails to notify the
Indemnified Party within the Dispute Period whether
the Indemnifying Party disputes its liability or the
amount of its liability to the Indemnified Party
with respect to such Third Party Claim, the Loss in
the amount specified in the Claim Notice will be
conclusively deemed a liability of the Indemnifying
Party under Section 13.2 and the Indemnifying Party
shall pay the amount of such Loss to the Indemnified
Party on demand. If the Indemnifying Party has
timely disputed its liability or the amount of its
liability with respect to such claim, the
Indemnifying Party and the Indemnified Party will
proceed in good faith to negotiate a resolution of
such dispute, and if not resolved through
negotiations within the Resolution Period, such
dispute shall be resolved by arbitration in
accordance with paragraph (c) of this Section 13.3.
(b) In the event any Indemnified Party should have a claim
under Section 13.2 against the Indemnifying Party that does
not involve a Third Party Claim, the Indemnified Party shall
deliver a written notification of a claim for indemnity under
Section 13.2 specifying the nature of and basis for such
claim, together with the amount or, if not then reasonably
ascertainable, the estimated amount, determined in good faith,
of such claim (an "Indemnity Notice") with reasonable
promptness to the Indemnifying Party. The failure by any
Indemnified Party to give the Indemnity Notice shall not
impair such party's rights hereunder except to the extent that
the Indemnifying Party demonstrates that it has been
irreparably prejudiced thereby. If the Indemnifying Party
notifies the Indemnified Party that it does not dispute the
claim or the amount of the claim described in such Indemnity
Notice or fails to notify the Indemnified Party within the
Dispute Period whether the Indemnifying Party disputes the
claim or the amount of the claim described in such Indemnity
Notice, the Loss in the amount specified in the Indemnity
Notice will be conclusively deemed a liability of the
Indemnifying Party under Section 13.2 and the Indemnifying
Party shall pay the amount of such Loss to the Indemnified
Party on demand. If the Indemnifying Party has timely disputed
its liability or the amount of its liability with respect to
such claim, the Indemnifying Party and the Indemnified Party
will proceed in good faith to negotiate a resolution of such
dispute, and if not resolved through negotiations within the
Resolution Period, such dispute shall be resolved by
arbitration in accordance with paragraph (c) of this Section
13.3.
(c) Any dispute under this Agreement (including, without
limitation, in connection with this Section 13.3) or the
Registration Rights Agreement shall be submitted to
arbitration and shall be finally and conclusively determined
by the decision of a single arbitrator who shall have
experience in civil litigation involving interpretation of
stock purchase agreements (the "Arbitrator"). The arbitration
shall be governed by the United States Arbitration Act, 9
U.S.C. Sections 1-16, 201-208 and judgment upon the award
rendered by the Arbitrator may be entered by any United States
federal or state court in and of the State of New York, to the
non-exclusive jurisdiction of which each of the parties hereto
irrevocably submits. The parties agree to cooperate and use
their reasonable best efforts to cause the Arbitrator render a
decision in any dispute within 30 days following the
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commencement of proceedings with respect thereto and, to the
extent practicable, the decision of the Arbitrator shall be
rendered no more than 30 calendar days following such
commencement. The Arbitrator shall cause its written decision
to be delivered to the Indemnified Party and the Indemnifying
Party within 3 business days following such decision. Any
decision made by the Arbitrator (either prior to or after the
expiration of such 30 calendar-day period) shall be final,
binding and conclusive on the Indemnified Party and the
Indemnifying Party and shall be entitled to be enforced to the
fullest extent permitted by law and entered in any court of
competent jurisdiction. Each party to any arbitration shall
bear its own expense in relation thereto, including but not
limited to such party's attorneys' fees, if any, and the
expenses and fees of the Arbitrator shall be divided between
the Indemnifying Party and the Indemnified Party in the same
proportion as the portion of the related claim determined by
the Arbitrator to be payable to the Indemnified Party bears to
the portion of such claim determined not to be so payable.
ARTICLE XIII
MISCELLANEOUS
Section 13.1 FEES AND EXPENSES. The Company will be responsible for all
legal fees, travel, due diligence, escrow and other costs incurred in connection
with the transaction up to a maximum amount of $30,000.
Section 13.2 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which may be executed by less than all of the parties and
shall be deemed to be an original instrument which shall be enforceable against
the parties actually executing such counterparts and all of which together shall
constitute one and the same instrument.
Section 13.3 ENTIRE AGREEMENT. This Agreement, the Exhibits hereto and
the Registration Rights Agreement set forth the entire agreement and
understanding of the parties relating to the subject matter hereof and
supersedes all prior and contemporaneous agreements, negotiations and
understandings between the parties, both oral and written relating to the
subject matter hereof, including, without limitation, the term sheet dated
executed by the Company, The Isosceles Fund Limited and the Finder on February
11, 1999 and the amendment thereto executed on March 10, 1999. The terms and
conditions of all Exhibits to this Agreement are incorporated herein by this
reference and shall constitute part of this Agreement as if fully set forth
herein.
Section 13.4 SURVIVAL; SEVERABILITY. The representations, warranties,
covenants and agreements of the parties hereto shall survive each Closing
hereunder. In the event that any provision of this Agreement becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision; provided that such severability shall be ineffective if it materially
changes the economic benefit of this Agreement to any party.
Section 13.5 TITLES AND SUBTITLES. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
Section 13.6 REPORTING ENTITY FOR THE COMMON STOCK. The reporting
entity relied upon for the determination of the trading price or trading volume
of the Common Stock on any given Trading Day for
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the purposes of this Agreement shall be Bloomberg, L.P. or any successor
thereto. The written mutual consent of the Subscribers and the Company shall be
required to employ any other reporting entity.
Section 13.7 RIGHT OF FIRST REFUSAL. For a period of 360 days following
the Purchase Date, The Isosceles Fund Limited shall have a right of first
refusal, exercisable within 10 business days of notice, with respect to
participating in any equity financing proposed by the Company (except the
transactions set out in Section 4.2).
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IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase
Agreement to be executed by the undersigned, thereunto duly authorized, as of
the date first set forth above.
THE ISOSCELES FUND
By:
----------------------------------------
Name:
Title:
CEFEO INVESTMENTS LIMITED
By:
----------------------------------------
Name:
Title:
VIRAGEN, INC.
By:
----------------------------------------
Xxxxxx X. Xxxxx
Exec. VP/CFO/Treas./Secy
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EXHIBIT A
FORM OF NOTE
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EXHIBIT B
FORM OF WARRANT
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EXHIBIT C
FORM OF OPINION OF THE COMPANY'S INDEPENDENT COUNSEL
1. The Company is duly organized and validly existing under the laws of
the state of Delaware and has requisite power and authority to enter into the
Purchase Agreement, the Registration Rights Agreement, the Notes, the Warrants
and the Escrow Agreement (the "Agreements"); the execution and delivery of the
Agreements and the consummation by the Company of the transactions contemplated
thereby are duly authorized by all necessary corporate action and no further
consent or authorization of the Company or its Board of Directors or
Shareholders is required; and the Agreements have been duly executed and
delivered by the Company and constitute valid and binding obligations of the
Company enforceable against the Company in accordance with their terms, except
as such enforceability may be limited by applicable bankruptcy, insolvency or
similar laws relating to, or affecting generally the enforcement of, creditors'
rights and remedies or by other equitable principles of general application.
2. The Shares of Common Stock to be received upon exercise of the
Warrants or conversion of the Notes or issuance of the Re-Set Shares are validly
issued and outstanding, fully paid and non-assessable and subject to no
preemptive rights.
3. The number of authorized shares of the Company (75,000,000) will be
unaffected by a reverse stock split.
4. The sale of the Notes and the Warrants and the conversion or
exercise thereof is not required to be registered under the Securities Act of
1933.
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EXHIBIT D
COMPLIANCE CERTIFICATE
VIRAGEN, INC.
The undersigned hereby certifies, with respect to the Notes and
Warrants of Viragen, Inc. (the "Company") issuable pursuant to the Purchase
Agreement, dated March __, 1999, by and between the Company and the Isosceles
Fund (the "Agreement"), as follows:
The undersigned is the duly elected Executive Vice President and Chief
Financial Officer of the Company.
The representations and warranties of the Company set forth in Article
IV of the Agreement are true and correct in all material respects as though made
on and as of the date hereof.
The Company has performed in all material respects all covenants and
agreements to be performed by the Company on or prior to the Closing Date
pursuant to the Agreement and has complied in all material respects with all
obligations and conditions contained in Article VI of the Agreement.
The undersigned has executed this Certificate this ____ day of
________, 199_.
------------------------------------
Xxxxxx X. Xxxxxx
Executive Vice President
and Chief Financial Officer
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EXHIBIT E
FORM OF TRANSFER AGENT CONSENT
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