EXHIBIT 10.1

SUBSCRIPTION AGREEMENT

THIS SUBSCRIPTION AGREEMENT (this “Agreement”) dated as of April 11, 2007, by
and among VIRAGEN, INC., a Delaware corporation (the “Company”), and the
subscribers identified on the signature page hereto (each a “Subscriber” and
collectively “Subscribers”).

WHEREAS, the Company and the Subscribers are executing and delivering this
Agreement in reliance upon an exemption from securities registration afforded by
the provisions of Section 4(2), Section 4(6) and/or Regulation D (“Regulation
D”) as promulgated by the United States Securities and Exchange Commission (the
“Commission”) under the Securities Act of 1933, as amended (the “1933 Act”) or
Rule 903 of Regulation S under the 1933 Act.

WHEREAS, the parties desire that, upon the terms and subject to the conditions
contained herein, the Company shall issue and sell (the “offering”) to the
Subscribers, as provided herein, and the Subscribers, in the aggregate, shall
purchase up to Three Million Dollars ($3,000,000) of Units each Unit consisting
of one share of Series K 18% Cumulative Convertible Preferred Stock of the
Company (“Preferred Stock”) at a stated value of $100.00 per Unit (the “Purchase
Price”) which shall be convertible into shares of the Company’s common stock,
$.01 par value (the “Common Stock”) at a conversion price of $0.10 per share
subject to the rights and preferences described in the form of Certificate of
Designation, Preferences and Rights (“Certificate of Designation”), and common
stock purchase warrants (the “Warrants”) to purchase 500 shares of Common Stock
(the “Warrant Shares”) (the “Units”). The Preferred Stock, shares of Common
Stock issuable upon conversion of the Preferred Stock (the “Shares”), the
Warrants and the Warrant Shares are collectively referred to herein as the
“Securities.” The Company reserves the right to pay up to 3% of the gross
proceeds of the offering to one or more finders who introduced Subscribers to
the Company.

NOW, THEREFORE, in consideration of the mutual covenants and other agreements
contained in this Agreement the Company and the Subscribers hereby agree as
follows:

1. Purchase of Preferred Stock. Subject to the satisfaction or waiver of the
terms and conditions of this Agreement, on the “Closing Date” (as defined in
Section 2), each Subscriber shall purchase and the Company shall sell to each
Subscriber the Units having the Stated Value set forth on the signature page
hereto and the amount of Warrants determined pursuant to Section 5. The
aggregate stated value of the Units to be purchased by the Subscribers on the
Closing Date, in the aggregate, shall not exceed $3,000,000.

2. Closing. The consummation of the transactions contemplated herein shall take
place at the offices of Viragen, Inc., 865 SW 78th Avenue, Suite 100,
Plantation, Florida 33324, upon the satisfaction of all conditions to Closing
set forth in the Confidential Term Sheet (“Closing Date”). There may be one or
more Closing Dates.

3. Conditions of Closing. The Company acknowledges and agrees that the
obligations of the Subscriber hereunder are conditional on the accuracy of the
representations and warranties of the Company contained in this Agreement as of
the date of this Agreement, and as of the Closing Date as if made at and as of
the Closing Date, and the fulfillment of the following additional conditions as
soon as possible and in any event not later than the Closing Date:

(a) all covenants, agreements and conditions contained in this Agreement to be
performed by the Company on or prior to the Closing Date shall have been
performed or complied with in all material respects; and

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(b) the Company shall have delivered to the Subscriber’s counsel the following
items:

(i) a copy of the certificates representing the Securities purchased by the
Subscriber registered in the name of the Subscriber or its nominee;

(ii) a copy of this Agreement duly executed by the Company;

(iii) a copy of a certificate executed by the chief financial officer of the
Company, dated the Closing Date, in the form attached hereto as Exhibit A; and

(iv) such other documents relating to the transactions contemplated by this
Agreement as Subscriber or its counsel may reasonably request.

4. Method of Payment. The Subscriber shall pay the Purchase Price for the Units
by delivering good funds in United States Dollars by way of wire transfer of
funds for the benefit of the Company and concurrent with the execution and
delivery of this Agreement. Unless other arrangements acceptable to the Company
have been made, the aggregate purchase proceeds representing the Purchase Price
payable for the Units subscribed for hereunder have been paid by wire transfer
(in accordance with the wire instructions on Exhibit B attached hereto), the
Company is irrevocably directed to release certificates representing the
Preferred Stock and the Warrants purchased hereunder and such other
documentation as the Subscriber may reasonably request.

5. Warrants. On the Closing Date, the Company will issue and deliver to the
Subscribers 500 Warrants for each share of Preferred Stock purchased. The per
Warrant Share exercise price to acquire a Warrant Share upon exercise of a
Warrant shall be $0.10. The Warrants shall be exercisable until five years after
the Issue Date of the Warrants.

6. Subscriber’s Representations and Warranties. Each Subscriber hereby
represents and warrants to and agrees with the Company only as to such
Subscriber that:

(a) Organization and Standing of the Subscribers. If the Subscriber is an
entity, such Subscriber is a corporation, partnership or other entity duly
incorporated or organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or organization;

(b) Authorization and Power. Each Subscriber has the requisite power and
authority to enter into and perform this Agreement and to purchase the Units
being sold to it hereunder.

(c) No Conflicts. The execution, delivery and performance of this Agreement and
the consummation by each Subscriber of the transactions contemplated hereby or
relating hereto do not and will not (i) result in a violation of such
Subscriber’s charter documents or bylaws or other organizational documents or
(ii) conflict with, or constitute a default (or an event which 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 agreement,
indenture or instrument or obligation to which such Subscriber is a party or by
which its properties or assets are bound, or result in a violation of any law,
rule, or regulation, or any order, judgment or decree of any court or
governmental agency applicable to such Subscriber or its properties (except for
such conflicts, defaults and violations as would not, individually or in the
aggregate, have a material adverse effect on such Subscriber).

(d) Information on Company. The Subscriber has had access at the EDGAR Website
of the Commission to the Company’s

 

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Form 10-K for the year ended June 30, 2006 and all periodic and current reports
thereafter filed with the Commission (hereinafter referred to as the “Reports”).
In addition, Subscriber has received in writing from the Company such other
information concerning its operations, financial condition and other matters as
the Subscriber has requested in writing (such other information is collectively,
the “Other Written Information”), and considered all factors Subscriber deems
material in deciding on the advisability of investing in the Securities.

(e) Offshore Transaction. The Subscriber represents that it is not a U.S. Person
as defined in Rule 902(k) of Regulation S of the 1933 Act (a “U.S. Person”),
that at the time of the acquisition of the Securities it will not be a U.S.
Person, that the Subscriber is not, and at the time of the acquisition of the
Securities will not be, acquiring the Securities for the account or benefit of a
U.S. Person, and that the Subscriber is normally resident at the address
provided by the Subscriber on the signature page hereto.

(f) Hedging Transactions. The Subscriber acknowledges and agrees that all offers
and sales of the Securities, as applicable, by the Subscriber shall be made only
in accordance with the provisions of Regulation S, pursuant to registration of
the securities under the 1933 Act, or pursuant to an available exemption from
the registration requirements of the 1933 Act. The Subscriber acknowledges and
agrees that it cannot engage in hedging transactions with regard to the
Securities prior to the expiration of the one-year distribution compliance
period specified in paragraph (b)(3) in Rule 903 promulgated under the 1933 Act
unless in compliance with the 1933 Act.

(g) Outside United States. The Subscriber is outside the United States;
provided, that delivery of the Securities may be effected in the United States
through the Subscriber’s agent as long as the Subscriber is outside the United
States at the time of such delivery. The Subscriber has no present intention to
sell or otherwise transfer the Securities except in accordance with Regulation
S, pursuant to registration under the 1933 Act, or pursuant to an available
exemption from registration under the 1933 Act, in each case in accordance with
all applicable securities laws.

(h) NASD Affiliations. Subscriber is not registered, and is not required to be
registered, as a broker-dealer with the National Association of Securities
Dealers, Inc. (“NASD”), nor is Subscriber affiliated or associated with, or a
related person to, any NASD member.

(i) Compliance with Securities Act. The Subscriber understands that the Units
are “restricted securities” and have not been registered under the Securities
Act or any applicable state securities law and is acquiring the Units (including
the underlying securities) as principal for its own account for investment and
not with a view to, or for sale in connection with, any distribution of such
Units or any part thereof, has no present intention of distributing any of such
Units (including the underlying securities) and has no arrangement or
understanding with any other persons regarding the distribution of such Units
(including the underlying securities). The Subscriber is acquiring the Units
(including the underlying securities) hereunder in the ordinary course of its
business. The Subscriber does not have any agreement or understanding, directly
or indirectly, with any Person to distribute any of the Units (including the
underlying securities). The Subscriber is not purchasing the Units as a result
of any advertisement, article, notice or other communication regarding the Units
published in any newspaper, magazine or similar media or broadcast over
television or radio or presented at any seminar or any other general
solicitation or general advertisement.

(j) Shares Legend. The Shares and the Warrant Shares shall bear the following or
similar legend:

“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”) OR OTHER
APPLICABLE

 

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SECURITIES LAWS. THESE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A
VIEW TO DISTRIBUTION OR RESALE AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT (1) IN ACCORDANCE WITH THE
PROVISIONS OF REGULATION S, RULE 901 THROUGH RULE 905, AND PRELIMINARY NOTES
UNDER THE U.S. SECURITIES ACT OR (2) PURSUANT TO AN AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT OR (3) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT. HEDGING TRANSACTIONS INVOLVING THE SHARES MAY
NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE U.S. SECURITIES ACT.”

(k) Warrants Legend. The Warrants shall bear the following or similar legend:

“THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “U.S.
SECURITIES ACT”) OR ANY STATE SECURITIES LAWS. THIS WARRANT MAY NOT BE EXERCISED
IN THE UNITED STATES (AS DEFINED IN REGULATION S UNDER THE U.S. SECURITIES ACT)
, NOR MAY THIS WARRANT OR THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS
WARRANT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED, UNLESS THE
WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR UNLESS
AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE AND THE CORPORATION RECEIVES AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO IT TO SUCH EFFECT.”

(l) Preferred Stock Legend. The Preferred Stock shall bear the following or
similar legend:

“THIS PREFERRED STOCK AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS
PREFERRED STOCK HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “U.S. SECURITIES ACT”) OR OTHER APPLICABLE SECURITIES LAWS. THE
PREFERRED STOCK HAS BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO
DISTRIBUTION OR RESALE AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT (1) IN ACCORDANCE WITH THE
PROVISIONS OF REGULATION S, RULE 901 THROUGH RULE 905, AND PRELIMINARY NOTES
UNDER THE U.S. SECURITIES ACT OR (2) PURSUANT TO AN AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT OR (3) PURSUANT

 

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TO AN EFFECTIVE REGISTRATION STATEMENT. HEDGING TRANSACTIONS INVOLVING THE
PREFERRED STOCK MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE U.S.
SECURITIES ACT.”

(m) Restricted Securities. Subscriber understands that the Securities have not
been registered under the 1933 Act and such Subscriber will not sell, offer to
sell, assign, pledge, hypothecate or otherwise transfer any of the Securities
unless pursuant to an effective registration statement under the 1933 Act or
appropriate exemption thereunder. Notwithstanding anything to the contrary
contained in this Agreement, such Subscriber may transfer (without restriction
and without the need for an opinion of counsel) the Securities to a person
outside the United States in an off-shore transaction in accordance with
Regulation S of the 1933 Act or to its Affiliates (as defined below) provided
that each such Affiliate is an “accredited investor” under Regulation D and such
Affiliate agrees to be bound by the terms and conditions of this Agreement. For
the purposes of this Agreement, an “Affiliate” of any person or entity means any
other person or entity directly or indirectly controlling, controlled by or
under direct or indirect common control with such person or entity. Affiliate
includes each subsidiary of the Company. For purposes of this definition,
“control” means the power to direct the management and policies of such person
or firm, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise.

(n) No Governmental Review. Each Subscriber understands that no United States
federal or state agency or any other governmental or state agency has passed on
or made recommendations or endorsement of the Securities or the suitability of
the investment in the Securities nor have such authorities passed upon or
endorsed the merits of the offering of the Securities.

(o) Correctness of Representations. Each Subscriber represents as to such
Subscriber that the foregoing representations and warranties are true and
correct as of the date hereof and, unless a Subscriber otherwise notifies the
Company prior to the Closing Date shall be true and correct as of the Closing
Date.

7. Company Representations and Warranties. The Company represents and warrants
to and agrees with each Subscriber that except as set forth in the Reports and
as otherwise qualified in the Transaction Documents (as hereinafter defined):

(a) Due Incorporation. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the requisite corporate power to own its properties and to carry on its business
as disclosed in the Reports. The Company is duly qualified to do business and is
in good standing in each jurisdiction where the nature of the business conducted
or property owned by it makes such qualification necessary, other than those
jurisdictions in which the failure to so qualify would not have a Material
Adverse Effect. For purpose of this Agreement, a “Material Adverse Effect” shall
mean a material adverse effect on the financial condition, results of
operations, properties or business of the Company taken as a whole. All the
Company’s Subsidiaries as of the Closing Date are set forth in the Reports.

(b) Authority; Enforceability. This Agreement, the Preferred Stock, Certificate
of Designation, the Warrants and any other agreements delivered together with
this Agreement or in connection herewith (collectively “Transaction Documents”)
have been duly authorized, executed and delivered by the Company and are valid
and binding agreements enforceable in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors’ rights
generally and to general principles of equity. The Company has full corporate
power and authority necessary to enter into and deliver the Transaction
Documents and to perform its obligations thereunder.

 

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(c) Consents. No consent, approval, authorization or order of any court,
governmental agency or body or arbitrator having jurisdiction over the Company,
or any of its Affiliates, any Principal Market (as defined in Section 10(b) of
this Agreement), nor the Company’s stockholders is required for the execution by
the Company of the Transaction Documents and compliance and performance by the
Company of its obligations under the Transaction Documents, including, without
limitation, the issuance and sale of the Securities. The Offering and
Transaction Documents have been approved by the Company’s Board of Directors.

(d) No Violation or Conflict. Assuming the representations and warranties of the
Subscribers in Section 6 are true and correct, neither the issuance and sale of
the Securities nor the performance of the Company’s obligations under this
Agreement and all other agreements entered into by the Company relating thereto
by the Company will:

(i) violate, conflict with, result in a breach of, or constitute a default (or
an event which with the giving of notice or the lapse of time or both would be
reasonably likely to constitute a default in any material respect) of a material
nature under (A) the certificate of incorporation, charter or bylaws of the
Company, (B) to the Company’s knowledge, any decree, judgment, order, law,
treaty, rule, regulation or determination applicable to the Company of any
court, governmental agency or body, or arbitrator having jurisdiction over the
Company or over the properties or assets of the Company or any of its
Affiliates, (C) the terms of any bond, debenture, note or any other evidence of
indebtedness, or any agreement, stock option or other similar plan, indenture,
lease, mortgage, deed of trust or other instrument to which the Company or any
of its Affiliates is a party, by which the Company or any of its Affiliates is
bound, or to which any of the properties of the Company or any of its Affiliates
is subject, or (D) the terms of any “lock-up” or similar provision of any
underwriting or similar agreement to which the Company, or any of its Affiliates
is a party except the violation, conflict, breach, or default of which would not
have a Material Adverse Effect; or to the Company’s knowledge

(ii) result in the creation or imposition of any lien, charge or encumbrance
upon the Securities or any of the assets of the Company or any of its
Affiliates; or

(iii) result in the activation of any anti-dilution rights or a reset or
repricing of any debt or security instrument of any other creditor or equity
holder of the Company, nor result in the acceleration of the due date of any
obligation of the Company; or

(iv) result in the activation of any piggy-back registration rights of any
person or entity holding securities or debt of the Company or having the right
to receive securities of the Company.

(e) The Securities. The Securities upon issuance:

(i) are, or will be, free and clear of any security interests, liens, claims or
other encumbrances, subject to restrictions upon transfer under the 1933 Act and
any applicable state securities laws;

(ii) have been, or will be, duly and validly authorized and on the date of
issuance of the Shares upon conversion of the Preferred Stock and issuance of
the Warrant Shares upon exercise of the Warrants will be duly and validly
issued, fully paid and nonassessable or if registered pursuant to the 1933 Act,
and resold pursuant to an effective registration statement, will be free trading
and unrestricted);

 

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(iii) will not have been issued or sold in violation of any preemptive or other
similar rights of the holders of any securities of the Company;

(iv) will not subject the holders thereof to personal liability by reason of
being such holders, provided Subscriber’s representations herein are true and
accurate and Subscribers take no actions or fail to take any actions required
for their purchase of the Securities to be in compliance with all applicable
laws and regulations; and

(v) will not result in a violation of Section 5 under the 1933 Act.

(f) Reporting Company. The Company is a publicly-held company subject to
reporting obligations pursuant to Section 13(a) and 15(d) of the Securities
Exchange Act of 1934 (the “1934 Act”) and has a class of common shares
registered pursuant to Section 12(b) of the 1934 Act. The Company has filed all
reports and other materials required to be filed thereunder with the Commission
during the preceding twelve months.

(g) Information Concerning Company. The Reports, as amended, contain all
material information relating to the Company and its operations and financial
condition as of their respective dates and all the information required to be
disclosed therein. Since the last day of the fiscal year of the most recent
annual audited financial statements included in the Reports (“Latest Financial
Date”), and except as modified in the Other Written Information or in the
Schedules hereto, there has been no Material Adverse Event relating to the
Company’s business, financial condition or affairs not disclosed in the Reports.
The Reports do not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances when made.

(h) Stop Transfer. The Company will not issue any stop transfer order or other
order impeding the sale, resale or delivery of any of the Securities, except as
may be required by any applicable federal or state securities laws and unless
contemporaneous notice of such instruction is given to the Subscriber.

(i) Not an 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
under circumstances that would cause the offer of the Securities pursuant to
this Agreement to be integrated with prior offerings by the Company for purposes
of the 1933 Act or any applicable stockholder approval provisions, including,
without limitation, under the rules and regulations of the American Stock
Exchange (“AMEX”) any Principal Market [as defined in Section 10(b)] which would
impair the exemptions relied upon in this Offering or the Company’s ability to
timely comply with its obligations hereunder.

(j) No General Solicitation or Directed Selling Efforts. Neither the Company,
nor any of its Affiliates, nor to its knowledge, any person acting on its or
their behalf, has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D under the 1933 Act) or directed
selling efforts (within the meaning of Regulation S under the 1933 Act) in
connection with the offer or sale of the Securities.

 

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(k) Correctness of Representations. The Company represents that the foregoing
representations and warranties are true and correct as of the date hereof in all
material respects, and, unless the Company otherwise notifies the Subscribers
prior to the Closing Date, shall be true and correct in all material respects as
of the Closing Date.

(l) Survival. The foregoing representations and warranties shall survive until
three years after the Closing Date.

(m) Tax Returns and Audits. All required federal, state and local tax returns or
appropriate extension requests of the Company have been filed, and all federal,
state and local taxes required to be paid with respect to such returns have been
paid or provision for the payment thereof has been made. The Company is not
delinquent in the payment of any such tax or in the payment of any assessment or
governmental charge. The Company has not received notice of any tax deficiency
proposed or assessed against it, and it has not executed any waiver of any
statute of limitations on the assessment or collection of any tax. None of the
Company’s tax returns have been audited by governmental authorities in a manner
to bring such audits to the Company’s attention. The Company does not have any
tax liabilities except those incurred in the ordinary course of business since
the Latest Financial Date.

(n) Changes, Dividends, Etc. Since the Latest Financial Date, the Company has
not: (i) incurred any debts, obligations or liabilities, absolute, accrued or
contingent and whether due or to become due, except current liabilities incurred
in the ordinary course of business which will not materially and adversely
affect the business, properties or prospects of the Company; (ii) paid any
obligation or liability other than, or discharged or satisfied any liens or
encumbrances other than those securing, current liabilities, in each case in the
ordinary course of business; (iii) declared or made any payment to or
distribution to its shareholders as such, or purchased or redeemed any of its
shares of capital stock, or obligated itself to do so; (iv) mortgaged, pledged
or subjected to lien, charge, security interest or other encumbrance any of its
assets, tangible or intangible, except in the ordinary course of business;
(v) sold, transferred or leased any of its assets except in the ordinary course
of business; (vi) suffered any physical damage, destruction or loss (whether or
not covered by insurance) materially and adversely affecting the properties,
business or prospects of the Company; (vii) entered into any transaction other
than in the ordinary course of business; (viii) encountered any labor
difficulties or labor union organizing activities; (ix) issued or sold any
shares of capital stock or other securities or granted any options, warrants, or
other purchase rights with respect thereto other than pursuant to this
agreement; (x) made any acquisition or disposition of any material assets or
become involved in any other material transaction, other than for fair value in
the ordinary course of business; (xi) increased the compensation payable, or to
become payable, to any of its directors or employees, or made any bonus payment
or similar arrangement with any of its directors or employees or increased the
scope or nature of any fringe benefits provided for its directors or employees;
or (xii) agreed to do any of the foregoing other than pursuant hereto.

(o) Litigation; Governmental Proceedings. There are no legal actions, suits,
arbitrations or other legal, administrative or governmental proceedings or, to
the knowledge of the Company, threatened against the Company, or its properties
or business, and the Company is not aware of any pending investigations or facts
which are likely to result in or form the basis for any such action, suit or
other proceeding. The Company is not in default with respect to any judgment,
order or decree of any court or any governmental agency or instrumentality. The
Company has not been threatened with any action or proceeding under any business
or zoning ordinance, law or regulation.

 

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(p) Compliance With Applicable Laws and Other Instruments. The business and
operations of the Company have been and are being conducted in all material
respects in accordance with all applicable laws, rules and regulations of all
governmental authorities. Neither the execution nor delivery of, nor the
performance of or compliance with, this Agreement nor the consummation of the
transactions contemplated hereby will, with or without the giving of notice or
passage of time, result in any breach of, or constitute a default under, or
result in the imposition of any lien or encumbrance upon any asset or property
of the Company pursuant to, any agreement or other instrument to which the
Company is a party or by which it or any of its properties, assets or rights is
bound or affected, nor will such performance, compliance or consummation violate
the articles of incorporation or bylaws of the Company. The Company is not in
violation of its articles of incorporation or bylaws nor in material violation
of, or in material default under, any lien, indenture, mortgage, lease,
agreement, instrument, commitment or arrangement in any material respect. The
Company is not subject to any restriction which would prohibit it from entering
into or performing its obligations under this Agreement.

(q) Patents and Other Intangible Rights. The Company (i) owns or has the
exclusive right to use, free and clear of all material liens, claims and
restrictions, all patents, trademarks, service marks, trade names, copyrights,
licenses and rights with respect to the foregoing, used in the conduct of its
business as now conducted and contemplated to be conducted without infringing
upon or otherwise acting adversely to the right or claimed right of any person
under or with respect to any of the foregoing, (ii) is not obligated or under
any liability whatsoever to make any payments of a material nature by way of
royalties, fees or otherwise to any owner of, licensor of, or other claimant to,
any patent, trademark, trade name, copyright or other intangible asset, with
respect to the use thereof or in connection with the conduct of its business or
otherwise, (iii) owns or has the unrestricted right to use all trade secrets,
including know-how, customer lists, inventions, designs, processes, computer
programs and technical data necessary to develop operation and sale of all
products and services sold or proposed to be sold by it, free and clear of any
rights, liens, or claims of others, and (iv) is not using any confidential
information or trade secrets of others.

(r) Capital Stock. As of the date hereof, the authorized capital stock of the
Company is as set forth on Exhibit D attached hereto. Except as set forth in
this Section7(r) and Schedule D, there are no outstanding subscriptions,
options, warrants, calls, contracts, demands, commitments, convertible
securities or other agreements or arrangements of any character or nature
whatever, other than this Agreement, under which the Company is obligated to
issue any securities of any kind representing an ownership interest in the
Company. Neither the offer nor the issuance or sale of the Securities
constitutes an event, under any anti-dilution provisions of any securities
issued or issuable by the Company or any agreements with respect to the issuance
of securities by the Company, which will either increase the number of shares
issuable pursuant to such provisions or decrease the consideration per share to
be received by the Company pursuant to such provisions. No holder of any
security of the Company is entitled to any pre-emptive or similar rights to
purchase any securities of the Company from the Company; provided, however, that
nothing in this Section 7(r) shall affect, alter or diminish any right granted
to the Subscribers in this Agreement.

(s) Outstanding Debt. The Company does not have any material indebtedness
incurred as the result of a direct borrowing of money, including, but not
limited to, indebtedness with respect to trade accounts, except as set forth in
the audited financial statements included in the Reports. The Company is not in
default in the payment of the principal of or interest or premium on any such
indebtedness, and no event has occurred or is continuing under the provisions of
any instrument, document or agreement evidencing or relating to any such
indebtedness which with the lapse of time or the giving of notice, or both,
would constitute an event of default thereunder.

 

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(t) Licenses. The Company possesses from the appropriate agency, commission,
board and government body and authority, whether state, local or federal, all
licenses, permits, authorizations, approvals, franchises and rights which are
(i) necessary for it to engage in the business currently conducted or
contemplated to be conducted by it, or (ii) if not possessed by the Company
would have an adverse impact on the Company’s business. The Company has no
knowledge that would lead it to believe that it will not be able to obtain all
licenses, permits, authorizations, approvals, franchises and rights that may be
required for any business the Company proposes to conduct.

8. Offering Exemption. The offer and issuance of the Securities to the
Subscribers is being made pursuant to the exemption from the registration
provisions of the 1933 Act afforded by Section 4(2) or Section 4(6) of the 1933
Act and/or Rule 506 of Regulation D promulgated thereunder or Rule 903 of
Regulation S of the 1933 Act.

9. Concerning the Preferred Stock and Warrants.

(a) Conversion. Upon the conversion of any Preferred Stock, the Company shall,
at its own cost and expense, take all necessary action, including obtaining and
delivering, an opinion of counsel to assure that the Company’s transfer agent
shall issue stock certificates in the name of Subscribers (or its nominee) or
such other persons as designated by Subscribers and in such denominations to be
specified at conversion representing the number of shares of Common Stock
issuable upon such conversion.

(b) The Conversion Price, Warrant exercise price and amount of Shares issuable
upon conversion of the Preferred Stock and exercise of the Warrants shall be
equitably adjusted and as described in this Agreement, the Certificate of
Designation and Warrants.

(c) Redemption. The Preferred Stock and Warrants shall not be redeemable or
callable except as described in the Certificate of Designation or Warrants.

10. Covenants of the Company. The Company covenants and agrees with the
Subscribers use its best efforts in good faith as follows:

(a) Stop Orders. The Company will advise the Subscribers, within four hours
after the Company receives notice of issuance by the Commission, any state
securities commission or any other regulatory authority of any stop order or of
any order preventing or suspending any offering of any securities of the
Company, or of the suspension of the qualification of the Common Stock of the
Company for offering or sale in any jurisdiction, or the initiation of any
proceeding for any such purpose.

(b) Listing. The Company shall promptly secure the listing of the Shares and the
Warrant Shares upon each national securities exchange, or electronic or
automated quotation system upon which they are or become eligible for listing
and shall maintain such listing so long as any Preferred Stock or Warrants are
outstanding. The Company will use its reasonable best efforts to maintain the
listing of its Common Stock on the American Stock Exchange, Nasdaq SmallCap
Market, Nasdaq National Market System, Bulletin Board, or New York Stock
Exchange (whichever of the foregoing is at the time the principal trading
exchange or market for the Common Stock (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 Principal Market, as applicable. As
of the date of this Agreement, the AMEX is the Principal Market.

(c) Market Regulations. The Company shall notify the Commission, the Principal
Market and applicable state authorities, in accordance with their requirements,
of the transactions contemplated by this Agreement, and shall take all other
necessary action and proceedings as may be required and permitted by applicable
law, rule and regulation, for the legal and valid issuance of the Securities to
the Subscribers.

 

10

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(d) Filing Requirements. From the date of this Agreement and until the sooner of
(i) two (2) years after the Closing Date, or (ii) until all the Shares and
Warrant Shares have been resold or transferred by all the Subscribers pursuant
to the Registration Statement or pursuant to Rule 144, without regard to volume
limitations, the Company will (A) comply in all respects with its reporting and
filing obligations under the 1934 Act, (B) cause its Common Stock to continue to
be registered under Section 12(b) or 12(g) of the 1934 Act, and (C) comply with
all requirements related to any registration statement filed pursuant to this
Agreement. The Company agrees to timely file a Form D with respect to the
Securities if required under Regulation D.

(e) Use of Proceeds. The proceeds of the Offering will be employed by the
Company for the purposes set forth in the Confidential Term Sheet to which this
is annexed as Exhibit C attached hereto.

(f) Reservation. Prior to the Closing Date, the Company undertakes to reserve,
pro rata, on behalf of the Subscribers from its authorized but unissued common
stock, a number of common shares of common stock necessary to allow each
Subscriber to be able to convert all Preferred Stock issuable pursuant to this
Agreement and dividends thereon and reserve 100% of the amount of Warrant Shares
issuable upon exercise of the Warrants.

(g) Books and Records. From the date of this Agreement and until the sooner of
(i) two (2) years after the Closing Date, or (ii) until all the Shares and
Warrant Shares have been resold or transferred by all the Subscribers pursuant
to the Registration Statement or pursuant to Rule 144, without regard to volume
limitations, the Company will keep true records and books of account in which
full, true and correct entries will be made of all dealings or transactions in
relation to its business and affairs in accordance with generally accepted
accounting principles applied on a consistent basis.

(h) Governmental Authorities. From the date of this Agreement and until the
sooner of (i) two (2) years after the Closing Date, or (ii) until all the Shares
and Warrant Shares have been resold or transferred by all the Subscribers
pursuant to the Registration Statement or pursuant to Rule 144, without regard
to volume limitations, the Company shall duly observe and conform in all
material respects to all valid requirements of governmental authorities relating
to the conduct of its business or to its properties or assets.

(i) Non-Public Information. The Company covenants and agrees that neither it nor
any other person acting on its behalf will provide any Subscriber or its agents
or counsel with any information that the Company believes constitutes material
non-public information, unless prior thereto such Subscriber shall have agreed
in writing to receive such information. The Company understands and confirms
that each Subscriber shall be relying on the foregoing representations in
effecting transactions in securities of the Company.

11. Covenants of the Company and Subscribers Regarding Indemnification.

(a) The Company agrees to indemnify, hold harmless, reimburse and defend the
Subscribers, the Subscribers’ officers, directors, agents, Affiliates, control
persons, and principal shareholders, against any claim, cost, expense,
liability, obligation, loss or damage (including reasonable legal fees) of any
nature, incurred by or imposed upon the Subscriber or any such person which
results, arises out of or is based upon (i) any material misrepresentation by
Company or breach of any warranty by Company in this Agreement or in any
Exhibits or Schedules attached hereto, or other agreement delivered pursuant
hereto; or (ii) after any applicable

 

11

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notice and/or cure periods, any breach or default in performance by the Company
of any covenant or undertaking to be performed by the Company hereunder, or any
other agreement entered into by the Company and Subscriber relating hereto.

(b) Each Subscriber agrees to indemnify, hold harmless, reimburse and defend the
Company and each of the Company’s officers, directors, agents, Affiliates,
control persons against any claim, cost, expense, liability, obligation, loss or
damage (including reasonable legal fees) of any nature, incurred by or imposed
upon the Company or any such person which results, arises out of or is based
upon (i) any material misrepresentation by such Subscriber in this Agreement or
in any Exhibits or Schedules attached hereto, or other agreement delivered
pursuant hereto; or (ii) after any applicable notice and/or cure periods, any
breach or default in performance by such Subscriber of any covenant or
undertaking to be performed by such Subscriber hereunder, or any other agreement
entered into by the Company and Subscribers, relating hereto.

(c) The procedures set forth in Section 12.6 shall apply to the indemnification
set forth in Sections 11(a) and 11(b).

12. Registration Rights.

12.1. Registration Statement. The Company shall file with the Commission a Form
S-3 registration statement (or such other form that it is eligible to use) (the
“Registration Statement”) in order to register the Registrable Securities (as
hereinafter defined) for resale and distribution under the 1933 Act within forty
five (45) calendar days after the final Closing Date (the “Filing Date”), and
use its reasonable best efforts to cause such Registration Statement to be
declared effective not later than ninety (90) calendar days after the Filing
Date (the “Effective Date”). The Company will register not less than a number of
shares of common stock in the Registration Statement that is equal to 100% of
the Shares issuable upon conversion of all of the Preferred Stock issuable to
the Subscribers, and 100% of the Warrant Shares issuable pursuant to the
Warrants upon exercise of the Warrants (collectively the “Registrable
Securities”). The Registrable Securities shall be reserved and set aside
exclusively for the benefit of each Subscriber and Warrant holder, pro rata, and
not issued, employed or reserved for anyone other than each such Subscriber and
Warrant holder. The Registration Statement will immediately be amended or
additional registration statements will be immediately filed by the Company as
necessary to register additional shares of Common Stock to allow the public
resale of all Common Stock included in and issuable by virtue of the Registrable
Securities.

12.2. Registration Procedures. If and whenever the Company is required by the
provisions of this Section to effect the registration of any Registrable
Securities under the 1933 Act, the Company will, as expeditiously as possible:

(a) subject to the timelines provided in this Agreement, prepare and file with
the Commission a registration statement required by Section 10, with respect to
such securities and use its best efforts to cause such registration statement to
become and remain effective for the period of the distribution contemplated
thereby (determined as herein provided), promptly provide to the holders of the
Registrable Securities copies of all filings and Commission letters of comment
and notify Subscribers (by telecopier or by email ) on or before 6:00 PM EST not
later than the second business day after the Company receives notice that
(i) the Commission has no comments or no further comments on the Registration
Statement, and (ii) the registration statement has been declared effective;

 

12

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(b) prepare and file with the Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective until such registration
statement has been effective for a period of two (2) years, and comply with the
provisions of the 1933 Act with respect to the disposition of all of the
Registrable Securities covered by such registration statement in accordance with
the Sellers’ intended method of disposition set forth in such registration
statement for such period;

(c) furnish to the Sellers, at the Company’s expense, such number of copies of
the registration statement and the prospectus included therein (including each
preliminary prospectus) as such persons reasonably may request in order to
facilitate the public sale or their disposition of the securities covered by
such registration statement or make them electronically available;

(d) use its commercially reasonable best efforts to register or qualify the
Registrable Securities covered by such registration statement under the
securities or “blue sky” laws of such jurisdictions as the Sellers shall
reasonably request in writing, provided, however, that the Company shall not for
any such purpose be required to qualify generally to transact business as a
foreign corporation in any jurisdiction where it is not so qualified or to
consent to general service of process in any such jurisdiction;

(e) if applicable, list the Registrable Securities covered by such registration
statement with any securities exchange on which the Common Stock of the Company
is then listed; and

(f) notify the Subscribers of the Company’s becoming aware that a prospectus
relating thereto is required to be delivered under the 1933 Act, of the
happening of any event of which the Company has knowledge as a result of which
the prospectus contained in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing or which becomes
subject to a Commission, state or other governmental order suspending the
effectiveness of the registration statement covering any of the Shares.

12.3. Provision of Documents. In connection with each registration described in
this Section 12, each Seller will furnish to the Company in writing such
information and representation letters with respect to itself and the proposed
distribution by it as reasonably shall be necessary in order to assure
compliance with federal and applicable state securities laws. The Company’s
obligation to register each Subscriber’s Registrable Securities is subject to

12.4. Non-Registration Events. The Company and the Subscribers agree that the
Sellers will suffer damages if the Registration Statement is not filed by the
Filing Date and not declared effective by the Commission by the Effective Date,
and maintained in the manner and within the time periods contemplated by
Section 12 hereof, and it would not be feasible to ascertain the extent of such
damages with precision. Accordingly, if (A) the Registration Statement is not
filed on or before the Filing Date, (B) is not declared effective on or before
the Effective Date, or (C) the Registration Statement is filed and declared
effective but shall thereafter cease to be effective without being succeeded
within fifteen (15) business days by an effective replacement or amended
registration statement or for a period of time which shall exceed 30 days in the
aggregate per year (defined as a period of 365 days commencing on the Actual
Effective Date (each such event referred to in clauses (A) through (C) of this
Section 12.4 is referred to herein as a “Non-Registration Event”), then the
Company shall deliver to the holder of Registrable Securities, as Liquidated
Damages, an amount equal to one and one half percent (1.5%) for each thirty
(30) days or part thereof of the Purchase Price of the Preferred Stock remaining
unconverted and purchase price of Shares issued upon conversion of the
Obligation Amount (as defined in

 

13

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the Certificate of Designation) owned of record by such holder which are subject
to such Non-Registration Event. The Company must pay the Liquidated Damages in
cash. The Liquidated Damages must be paid within ten (10) days after the end of
each thirty (30) day period or shorter part thereof for which Liquidated Damages
are payable. Notwithstanding the foregoing, the Company shall not be liable to a
Subscriber under this Section 12.4 for any events or delays occurring as a
consequence of the acts or omissions of the Subscribers contrary to the
obligations undertaken by Subscribers in this Agreement. Liquidated Damages will
not accrue nor be payable pursuant to this Section 12.4 nor will a
Non-Registration Event be deemed to have occurred for times during which
Registrable Securities are transferable by the holder of Registrable Securities
pursuant to Rule 144(k) under the 1933 Act.

12.5. Expenses. All expenses incurred by the Company in complying with
Section 10, including, without limitation, all registration and filing fees,
printing expenses (if required), fees and disbursements of counsel and
independent public accountants for the Company, fees and expenses (including
reasonable counsel fees) incurred in connection with complying with state
securities or “blue sky” laws, fees of the National Association of Securities
Dealers, Inc., transfer taxes, and fees of transfer agents and registrars, are
called “Registration Expenses.” All selling commissions applicable to the sale
of Registrable Securities are called “Selling Expenses.” The Company will pay
all Registration Expenses in connection with the registration statement under
Section 12. The Sellers shall be responsible for Selling Expenses attributable
to the sale of their respective Securities.

12.6. Indemnification and Contribution.

(a) In the event of a registration of any Registrable Securities under the 1933
Act pursuant to Section 12, the Company will, to the extent permitted by law,
indemnify and hold harmless each Subscriber whose securities are included in the
Registration Statement (each, a “Seller”), each officer of the Seller, each
director of the Seller, each underwriter of such Registrable Securities
thereunder and each other person, if any, who controls such Seller or
underwriter within the meaning of the 1933 Act, against any losses, claims,
damages or liabilities, joint or several, to which the Seller, or such
underwriter or controlling person may become subject under the 1933 Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such Registrable Securities was registered under the 1933 Act
pursuant to Section 12, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading
in light of the circumstances when made, and will subject to the provisions of
Section 12.6(c) reimburse the Seller, each such underwriter and each such
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company shall not be liable to
the Seller to the extent that any such damages arise out of or are based upon an
untrue statement or omission made in any preliminary prospectus if (i) the
Seller failed to send or deliver a copy of the final prospectus delivered by the
Company to the Seller with or prior to the delivery of written confirmation of
the sale by the Seller to the person asserting the claim from which such damages
arise, (ii) the final prospectus would have corrected such untrue statement or
alleged untrue statement or such omission or alleged omission, or (iii) to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission so made in conformity with information furnished by any Seller, or any
such controlling person in writing specifically for use in such registration
statement or prospectus.

 

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(b) In the event of a registration of any of the Registrable Securities under
the 1933 Act pursuant to Section 12, each Seller severally but not jointly will,
to the extent permitted by law, indemnify and hold harmless the Company, and
each person, if any, who controls the Company within the meaning of the 1933
Act, each officer of the Company who signs the registration statement, each
director of the Company, each underwriter and each person who controls any
underwriter within the meaning of the 1933 Act, against all losses, damages or
liabilities, joint or several, to which the Company or such officer, director,
underwriter or controlling person may become subject under the 1933 Act or
otherwise, insofar as such losses, damages or liabilities arise out of or are
based upon any untrue statement or alleged untrue statement of any material fact
contained in the registration statement under which such Registrable Securities
were registered under the 1933 Act pursuant to Section 12, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereof, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse the Company and each
such officer, director, underwriter and controlling person after a
non-appealable judgment or determination for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, damage, liability or action, provided, however, that the Seller will
be liable hereunder in any such case if and only to the extent that any such
loss, damage or liability arises out of or is based solely upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with information pertaining to such Seller, as
such, furnished in writing to the Company by such Seller specifically for use in
such registration statement or prospectus, and provided, further, however, that
the liability of the Seller hereunder shall be limited to the net proceeds
actually received by the Seller from the sale of Registrable Securities covered
by such registration statement.

(c) Promptly after receipt by an indemnified party hereunder of notice of the
commencement of any action, such indemnified party shall, if a claim in respect
thereof is to be made against the indemnifying party hereunder, notify the
indemnifying party in writing thereof, but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
such indemnified party other than under this Section 12.6(c) and shall only
relieve it from any liability which it may have to such indemnified party under
this Section 12.6(c), except and only if and to the extent the indemnifying
party is prejudiced by such omission. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate in
and, to the extent it shall wish, to assume and undertake the defense thereof
with counsel reasonably satisfactory to such indemnified party, and, after
notice from the indemnifying party to such indemnified party of its election so
to assume and undertake the defense thereof, the indemnifying party shall not be
liable to such indemnified party under this Section 12.6(c) for any legal
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation and of liaison with
counsel so selected, provided, however, that, if the defendants in any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be reasonable
defenses available to it which are different from or additional to those
available to the indemnifying party or if the interests of the indemnified party
reasonably may be deemed to conflict with the interests of the indemnifying
party, the indemnified parties, as a group, shall have the right to select one
separate counsel and to assume such legal defenses and otherwise to participate
in the defense of such action, with the reasonable expenses and fees of such
separate counsel and other expenses related to such participation to be
reimbursed by the indemnifying party as incurred.

13. Prohibition Against Conversion Right. Notwithstanding anything to the
contrary in Section 7(b) of the Certificate of Designation, the Company agrees
and acknowledges that it shall not require the Subscriber or any assignee,
purchaser or other transferee of Preferred Stock to convert their Preferred
Stock into Common Stock in accordance with Section 7(b)(i) of the Certificate of
Designation. Any notice of or action to effect conversion of such Preferred
Stock pursuant to Section 7(b)(i) of the Certificate of Designation shall be
null and void.

 

15

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14. Miscellaneous.

(a) 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: (i) if to the Company, to: Viragen, Inc.,865 S.W.
78th Avenue, Suite 100, Plantation, Florida 33324, telecopier: (954) 233-1414,
and (ii) if to the Subscriber, to: the one or more addresses and telecopier
numbers indicated on the signature pages hereto. The Company may change its
address for notices but only to an address and fax number located in the United
States.

(b) Entire Agreement; Assignment. This Agreement and other documents delivered
in connection herewith represent the entire agreement between the parties hereto
with respect to the subject matter hereof and may be amended only by a writing
executed by both parties. Neither the Company nor the Subscribers have relied on
any representations not contained or referred to in this Agreement and the
documents delivered herewith. No right or obligation of the Company shall be
assigned without prior notice to and the written consent of the Subscribers.

(c) Counterparts/Execution. This Agreement may be executed in any number of
counterparts and by the different signatories hereto on separate counterparts,
each of which, when so executed, shall be deemed an original, but all such
counterparts shall constitute but one and the same instrument. This Agreement
may be executed by facsimile signature and delivered by facsimile transmission.

(d) Law Governing this Agreement. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida without regard to
conflicts of laws principles that would result in the application of the
substantive laws of another jurisdiction. Any action brought by either party
against the other concerning the transactions contemplated by this Agreement
shall be brought only in the civil or state courts of Florida or in the federal
courts located in Broward County, Florida. The parties and the individuals
executing this Agreement and other agreements referred to herein or delivered in
connection herewith on behalf of the Company agree to submit to the jurisdiction
of such courts and waive trial by jury. The prevailing party shall be entitled
to recover from the other party its reasonable attorney’s fees and costs. In the
event that any provision of this Agreement or any other agreement delivered in
connection herewith is invalid or unenforceable under any applicable statute or
rule of law, then such provision shall be deemed inoperative to the extent that
it may conflict therewith and shall be deemed modified to conform with such
statute or rule of law. Any such provision which may prove invalid or
unenforceable under any law shall not affect the validity or enforceability of
any other provision of any agreement.

 

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(e) Specific Enforcement, Consent to Jurisdiction. The Company and Subscriber
acknowledge and agree that irreparable damage may occur in the event that any of
the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to seek one or more preliminary and final injunctions
to prevent or cure breaches of the provisions of this Agreement and to enforce
specifically the terms and provisions hereof, this being in addition to any
other remedy to which any of them may be entitled by law or equity. Subject to
Section 14(d) hereof, each of the Company, Subscriber and any signatory hereto
in his personal capacity hereby waives, and agrees not to assert in any such
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction in Florida of such court, that the suit, action or proceeding is
brought in an inconvenient forum or that the venue of the suit, action or
proceeding is improper. Nothing in this Section shall affect or limit any right
to serve process in any other manner permitted by law.

(f) Independent Nature of Subscribers. The Company acknowledges that the
obligations of each Subscriber under the Transaction Documents are several and
not joint with the obligations of any other Subscriber, and no Subscriber shall
be responsible in any way for the performance of the obligations of any other
Subscriber under the Transaction Documents. The Company acknowledges that each
Subscriber has represented that the decision of each Subscriber to purchase
Securities has been made by such Subscriber independently of any other
Subscriber and independently of any information, materials, statements or
opinions as to the business, affairs, operations, assets, properties,
liabilities, results of operations, condition (financial or otherwise) or
prospects of the Company which may have been made or given by any other
Subscriber or by any agent or employee of any other Subscriber, and no
Subscriber or any of its agents or employees shall have any liability to any
Subscriber (or any other person) relating to or arising from any such
information, materials, statements or opinions. The Company acknowledges that
nothing contained in any Transaction Document, and no action taken by any
Subscriber pursuant hereto or thereto (including, but not limited to, the
(i) inclusion of a Subscriber in the Registration Statement and (ii) review by,
and consent to, such Registration Statement by a Subscriber) shall be deemed to
constitute the Subscribers as a partnership, an association, a joint venture or
any other kind of entity, or create a presumption that the Subscribers are in
any way acting in concert or as a group with respect to such obligations or the
transactions contemplated by the Transaction Documents. The Company acknowledges
that each Subscriber shall be entitled to independently protect and enforce its
rights, including without limitation, the rights arising out of the Transaction
Documents, and it shall not be necessary for any other Subscriber to be joined
as an additional party in any proceeding for such purpose. The Company
acknowledges that it has elected to provide all Subscribers with the same terms
and Transaction Documents for the convenience of the Company and not because
Company was required or requested to do so by the Subscribers. The Company
acknowledges that such procedure with respect to the Transaction Documents in no
way creates a presumption that the Subscribers are in any way acting in concert
or as a group with respect to the Transaction Documents or the transactions
contemplated thereby.

(g) As used in the Agreement, “consent of the Subscribers” or similar language
means the consent of holders of not less than 70% of the total of the Shares
issued and issuable upon conversion of outstanding Preferred Stock owned by
Subscribers on the date consent is requested.

(h) No consideration shall be offered or paid to any person to amend or consent
to a waiver or modification of any provision of the Transaction Documents unless
the same consideration is also offered to all the parties to the Transaction
Documents.

 

17

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SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT (A)

Please acknowledge your acceptance of the foregoing Subscription Agreement by
signing and returning a copy to the undersigned whereupon it shall become a
binding agreement between us.

 

VIRAGEN, INC.

a Delaware corporation By:  

/s/ Dennis W. Healey

Name:   Dennis W. Healey Title:   Executive Vice President/CFO Dated:   April
11, 2007  

 

SUBSCRIBER

   PURCHASE
PRICE AND
STATED
VALUE OF
PREFERRED
STOCK   WARRANTS RAB Special Situations (Master) Fund Limited by Jake Leavesley
and Fraser McGee    USD$3,000,000
(USD$100
per share)   15,000,000

 

Authorised signatories for RAB Capital plc for and on behalf of RAB Special
Situations (Master) Fund Limited

/s/ Jake Leavesley

(Signature)

/s/ Fraser McGee

(Signature)

RAB Special Situations (Master) Fund Limited

c/o RAB Capital plc

1 Adam Street London, United Kingdom WC2N 6LE

Fax: +44 20 7389 7057

--------------------------------------------------------------------------------

EXHIBIT A

Officer’s Certificate

 

TO: RAB SPECIAL SITUATIONS (MASTER) FUND LIMITED (the “Subscriber”)

This Officer’s Certificate (this “Certificate”) is required to be delivered to
the Subscriber at closing in connection with the purchase of the Units of
Viragen, Inc., a Delaware corporation (the “Company”), pursuant to the terms of
the Subscription Agreement, dated as of April 11, 2007 (the “Subscription
Agreement”), between the Company and the Subscriber.

Capitalized terms used in this Certificate but not defined shall have the
meanings ascribed to such terms in the Subscription Agreement.

A. The Closing Date shall be April 11, 2007 (the “Closing Date”).

B. I, Dennis W. Healey, Chief Financial Officer of the Company, hereby certify,
not in my personal capacity but as an officer of the Company, for and on behalf
of the Company as follows:

 

  1. As Chief Financial Officer of the Company, I am fully familiar with the
assets, liabilities, business and affairs of the Company and have conducted such
inquiries and verified such facts, as I have considered necessary for the
purposes of executing this Certificate.

 

  2. The Company has in all material respects performed or complied with all
covenants, agreements and conditions contained in the Subscription Agreement.

 

  3. The representations and warranties of the Company contained in the
Subscription Agreement (except for representations and warranties that speak of
a specific date) are true and correct as of the date of this Certificate.

 

  4. As of the Closing Date (and including the securities issued by the Company
in connection with the offering), the Company’s authorized capital (including
common stock, preferred stock, options, warrants, convertible debt and other
securities) is as set forth on Schedule A attached hereto.

DATED as of this 11th day of April, 2007.

 

VIRAGEN, INC. By:  

 

Name:   Dennis W. Healey Title:   Chief Financial Officer

--------------------------------------------------------------------------------

SCHEDULE A TO OFFICER’S CERTIFICATE

Capitalization of the Company

The following table reflects the Capitalization of the Company as of the Closing
Date, after giving effect to the sale of the Series K Preferred Stock and the
issuance of related warrants.

 

Class of Securities

  

Number of Shares
Authorized

  

Amount Outstanding

Common Stock, $.01 par value

   500,000,000    214,660,475

Series A Preferred Stock (convertible into common shares at $23.47 per share)

   375,000   

2,150

(convertible into 916 common shares)

Series K Preferred Stock (convertible into common shares at $0.10 per share)

   30,000   

30,000

(convertible into 30,000,000 common shares)

Undesignated Preferred Stock, $1.00 par value

   595,000    —  

Common Stock Purchase Warrants

   —      —  

March 31, 2003 Equity Line

(W.A.E.P. $0.10)

   364,480    364,480

June 2003 Replacements

(W.A.E.P. $0.10)

   1,007,328    1,007,328

June 27, 2003 Transaction

(W.A.E.P. $0.10)

   315,305    315,305

April 1, 2004 – June 18, 2004 Purchase Agreements

(W.A.E.P. $0.10)

   40,234,688    40,234,688

September 15, 2005 Purchase Agreements

(W.A.E.P. $0.10)

   10,714,276    10,714,276

March 2006 Preferred Stock, Series J Offering (W.A.E.P. $1.25)

   —      —  

Investor Warrants

   4,172,000    4,172,000

Placement Agent Warrants

   667,520    667,520

November 2006 Secondary Offering

(W.A.E.P. $0.31)

   72,004,951    72,004,951

April 2007 Subscription Agreement

(W.A.E.P. $0.10)

   15,000,000    15,000,000

Consultant Warrants (W.A.E.P. $3.05)

   5,000    5,000

Options

   4,250,200    1,093,200

Underwriter Purchase Option Shares (fully diluted including shares and warrants)

   8,040,000    —  

Convertible Debt (convertible into common shares at $0.10 per share)

   $1,550,000    $1,550,000

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EXHIBIT B

Wire Instructions

Viragen, Inc. – Wire Transfer Information into Sterling Bank:

Viragen, Inc.

865 SW 78th Avenue; Suite 100

Plantation, FL 33324

(954) 233-8746

 

Bank:    Sterling Bank    Address:    1189 Hypoluxo Road       Lantana, FL 33462
   Account Name:    Viragen, Inc. (Money Market Account.)    Routing #:   
*********    Account #:    ***-*******   

--------------------------------------------------------------------------------

EXHIBIT C

Confidential Term Sheet

VIRAGEN, INC.

CONFIDENTIAL TERM SHEET

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

Statements contained in this Confidential Term Sheet and its Exhibits that are
not based on historical fact are “forward-looking statements.” Forward-looking
statements may be identified by the use of forward-looking terminology such as
“may,” “expect,” “believe,” “estimate,” “anticipate,” “continue” or similar
terms, variations of those terms or the negative of those terms. These
forward-looking statements are based on information currently available to us,
and there are a number of risks, uncertainties and other factors that could
cause our actual results, performance, prospects or opportunities to differ
materially from those expressed in, or implied by, these forward-looking
statements. Investors should not attribute certainty to any forward-looking
statements. Except as otherwise may required by applicable law, we undertake no
obligation to update or revise any forward-looking statement, whether as a
result of new information, future events, changed circumstances, or any other
reason, after the date of this Confidential Term Sheet.

When used herein, the terms “Company,” “VRA,” “we,” “our” and “us” refers to
Viragen, Inc., a Delaware corporation. The information which appears on our Web
site is not part of this Memorandum.

TERMS OF THE OFFERING

 

Company:

   Viragen, Inc. (AMEX: VRA)    Viragen, Inc. is a Delaware corporation
organized in 1980. We are a biopharmaceutical company focused on the research,
development, manufacture and commercialization of innovative technologies and
products used to treat infectious diseases and cancers in humans. We are
pioneering the science of avian transgenics whereby we intend to produce high
quality proteins and antibodies in the egg whites of transgenic chickens.
Through collaborations with recognized experts, companies and institutions
worldwide we are developing leading-edge science to combat hepatitis, melanoma,
ovarian cancer, breast cancer and other cancers.    We are an international
company, with our development and manufacturing operations in Umeå, Sweden, our
research and development activities in Edinburgh, Scotland, and our headquarters
in Plantation, Florida.

--------------------------------------------------------------------------------

   Our product and technology portfolio includes:   

•     Multiferon®, leukocyte-derived multi-subtype interferon alpha, used in the
treatment of a number of viral diseases and cancer indications;

 

•     Avian Transgenics, whereby we intend to develop and use transgenic
chickens to produce therapeutic proteins and antibodies for human use in the
whites of eggs;

 

•     VG101, an antibody to the GD3 antigen, which is over-expressed on
malignant melanoma tumors, thereby preventing the body’s natural immune system
from stopping cancer cell growth and proliferation; and

 

•     VG 102, an antibody to the CD55 antigen, which is over-expressed on nearly
all solid cancerous tumors and which prevents the body’s natural immune system
from killing cancer cells.

   We operate through:   

•     Viragen, Inc. – parent company;

 

•     ViraGenics, Inc. – 100% owned by Viragen, Inc.;

 

•     Viragen International, Inc. – 77% majority owned by Viragen, Inc.

 

•     Viragen (Scotland) Ltd. – 100% owned by Viragen International, Inc.; and

 

•     ViraNative AB – 100% owned by Viragen International, Inc.

Securities Offered:    The Company is offering up to a maximum of $3,000,000
worth of securities. The Company will offer up to a maximum of 30,000 Units.
Each Unit shall consist of one share of Series K 18% Cumulative Convertible
Preferred Stock and Common Stock Purchase Warrants enabling the purchaser to
purchase 500 shares of Common Stock at an exercise price of $0.10 per share
(subject to customary adjustments in the event of stock splits, dividends,
recapitalizations and similar corporate events) expiring five years from date of
issuance. Price Per Unit:    $100.00 Maximum Offering:    30,000 Units of Series
K Preferred Stock ($3,000,000) Description of Shares:    The stated value of the
Series K Preferred Stock will be $100.00 per share. The par value is $1.00.
Dividend:    The holder of the Series K Preferred Stock shall be entitled to
receive a cumulative dividend of 18% per annum when, as and if, declared by the
Board of Directors of the Company. The dividend shall be payable on the earlier
of (i) quarterly in arrears commencing July 11, 2007 and quarterly thereafter in
cash or (ii) upon redemption. Conversion:    Conversion is at the Holder’s
Option. The Holders shall have the right to convert their Series K Preferred
Stock, and at their election, accrued and unpaid dividends, at a conversion
price of $0.10, subject to customary adjustments in the event of stock splits,
dividends, recapitalizations and similar corporate events,, into common shares
of the Company. Voting Rights:    The Series K Preferred Stock does not include
voting rights except as required under Delaware law and described in the
Certificate of Designations, Rights and Preferences.

--------------------------------------------------------------------------------

Redemption:    The Holder has the option at such time as the Company completes a
subsequent financing of debt or equity, or a combination of the two, in one or
more tranches, for gross proceeds of $6,000,000 or more, to have the Company
redeem all or a portion of their Series K Preferred Stock and any accrued and
unpaid dividends, rounded up to the quarter-end of the quarter of redemption,
plus an amount equal to two additional quarters’ dividends. In addition, the
Company has the right to redeem the Series K Preferred Stock in the event the
Volume Weighted Average Price (“VWAP”) of its common shares equals or exceeds
$0.25 or higher for a period of 15 consecutive trading days provided notice is
given within 10 days of the event. In the event that the Company serves notice
on the Holder that it wishes to redeem the notes then the Holder shall have the
right to serve a counter-notice enabling them to convert their Series K
Preferred Stock.   

Any conversion of the Series K Preferred Stock will be capped so that the Holder
shall not hold more than 9.9% of the shares in issue.

   The Company shall have the right to redeem all or a portion of the Series K
Preferred Stock and any accrued and unpaid dividends, rounded up to the
quarter-end of the quarter of redemption, plus an amount equal to two additional
quarters’ dividends, at any time after the third anniversary of initial issuance
the Series K Preferred Stock on not less than 14 days notice. In the event that
the Company serves notice on the Holder that it wishes to redeem the notes then
the Holder shall have the right to serve a counter-notice enabling them to
convert their Series K Preferred Stock.    All Series K Preferred Stock will be
immediately redeemable on an insolvency event, e.g. the Company filing for
bankruptcy.    The Company agrees that for so long as the Series K Preferred
Stock is outstanding, it will not consummate a financing of its Common Stock, in
one or more tranches, at a price of less than $0.10 per share (or a debt
financing, convertible into Common Stock at a conversion ratio of less than
$0.10 per share), for gross proceeds of less than $6,000,000, without the prior
written consent of Holder, which consent will not be unreasonably withheld.
Description of    Warrants:    For each Series K Preferred Stock purchased, an
investor will receive Warrants to purchase 500 shares of Common Stock.
Exercise Price:    $0.10 per share. Term:    Five years from date of issuance.
Additional Terms:    The Warrants include a cashless exercise provision. No
redemption is provided to either the Company or the investor.
Registration Rights:    The Company will file, at its sole expense, a
registration statement for the benefit of the holders of the Series K Preferred
Stock and Warrants, to permit the public resale of the common shares underlying
the Series K Preferred Stock and Warrants, within 45 days of the date of
completion of this financing, and cause the registration statement to be
declared effective within 90 days of the filing date of the registration
statement. The

--------------------------------------------------------------------------------

   Company will pay to the Investors liquidated damages in cash equal to 1.5% of
the stated value of the Series K Preferred Stock, per month (pro-rated for
partial calendar months), for any failure to timely file or obtain an effective
registration statement. Use of Proceeds:    Working capital AMEX Symbols:   
“VRA,” “VRA.U,” “VRA.WS” Subscription Documents:    The investment may only be
made pursuant to a Subscription Agreement that contains, among other matters,
certain representations and warranties by Viragen and each investor. A copy of
the Subscription Agreement is included as Exhibit A to this Memorandum. Investor
Qualifications:    Subscriptions for the Units will only be accepted from
Accredited Investors as that term is defined in Rule 501(a) of Regulation.
Restricted Transferability:    The securities offered hereby have not been
registered under the Securities Act, or registered or qualified under applicable
state securities laws, and are being offered in reliance upon the exemption from
registration specified in Rule 506 of Regulation D, promulgated under the
Securities Act and/or Section 4(2) of the Securities Act. Therefore, the
transferability of the securities and the underlying shares of common stock will
be restricted. Risk Factors:    The securities offered hereby are illiquid,
highly speculative and involve a high degree of risk and, therefore, should not
be purchased by anyone who cannot afford the loss of their entire investment.
Prospective investors should carefully review and consider the factors set forth
hereunder, as well as the other information contained herein, before subscribing
for any of the Shares.

--------------------------------------------------------------------------------

EXHIBIT D

Capitalization of the Company

The following table reflects the Capitalization of the Company as of the Closing
Date, after giving effect to the sale of the Series K Preferred Stock and the
issuance of related warrants.

 

Class of Securities

  

Number of Shares
Authorized

  

Amount Outstanding

Common Stock, $.01 par value

   500,000,000    214,660,475

Series A Preferred Stock (convertible into common shares at $23.47 per share)

   375,000   

2,150

(convertible into 916 common shares)

Series K Preferred Stock (convertible into common shares at $0.10 per share)

   30,000   

30,000

(convertible into 30,000,000 common shares)

Undesignated Preferred Stock, $1.00 par value

   595,000    —  

Common Stock Purchase Warrants

   —      —  

March 31, 2003 Equity Line

(W.A.E.P. $0.10)

   364,480    364,480

June 2003 Replacements

(W.A.E.P. $0.10)

   1,007,328    1,007,328

June 27, 2003 Transaction

(W.A.E.P. $0.10)

   315,305    315,305

April 1, 2004 – June 18, 2004 Purchase Agreements

(W.A.E.P. $0.10)

   40,234,688    40,234,688

September 15, 2005 Purchase Agreements

(W.A.E.P. $0.10)

   10,714,276    10,714,276

March 2006 Preferred Stock, Series J Offering (W.A.E.P. $1.25)

   —      —  

Investor Warrants

   4,172,000    4,172,000

Placement Agent Warrants

   667,520    667,520

November 2006 Secondary Offering

(W.A.E.P. $0.31)

   72,004,951    72,004,951

April 2007 Subscription Agreement

(W.A.E.P. $0.10)

   15,000,000    15,000,000

Consultant Warrants (W.A.E.P. $3.05)

   5,000    5,000

Options

   4,250,200    1,093,200

Underwriter Purchase Option Shares (fully diluted including shares and warrants)

   8,040,000    —  

Convertible Debt (convertible into common shares at $0.10 per share)

   $1,550,000    $1,550,000