ex10_1.htm


    Exhibit
10.1

     

    Debt
Restructuring Agreement

     

     

    DEBT
RESTRUCTURING AGREEMENT

     

    THIS AGREEMENT, dated this
fifth day of March 2008 (the “Agreement”), is made by and among VIRAL GENETICS, INC., a
Delaware corporation (the “Borrower”) and BEST INVESTMENTS, INC., a
California corporation (the “Lender”) for the purpose of amending and continuing
the obligations represented by the Notes referenced below.

    


    W
I T N E S S E T H:

    


    WHEREAS, pursuant to certain
promissory notes, (collectively the “Notes”) Borrower is indebted to Lender as
of March 5, 2008 in the amount of $__________ representing the principal and
accrued interest on the Notes as of such date (the “Loan
Obligation”);

     

    WHEREAS, the Notes are due on
March 31, 2008;

     

    WHEREAS, Borrower and Lender
desire to amend and exchange the Notes to extend the maturity date, make the
Borrower responsible for payment, allow Lender the option of exchanging the
resulting debt obligation for equity securities of the Borrower, and permit the
loan of additional funds by Lender from time to time;

     

    NOW, THEREFORE, in
consideration of the premises and the agreements, provisions and covenants
herein contained, the parties hereto agree as follows:

     

     

    ARTICLE
I

     

     

    The
Revolving Loan

     

    1.1.           Restructuring of
Debt.  The Notes are hereby tendered in exchange for and the
Loan Obligation is hereby restated as the “Secured Revolving Credit Note” and is
exchanged with Borrower effective March 5, 2008 as represented by the “Secured
Revolving Credit Note” in the form attached hereto as Exhibit A.  Upon
execution of this Agreement, Lender is delivering to Borrower the
Notes.

     

    1.2.           Manner of
Payment.

     

    (a)           Payment
of principal, interest, and any other amount required to be paid to the Lender
with respect to the Secured Revolving Credit Note, shall be made to the Lender
in U.S. dollars and in immediately available funds on the date such payment is
due.

    
       

      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

     

    (b)           The
Secured Revolving Credit Note may be prepaid in whole or in part by Borrower at
any time without penalty upon not less than 30 days nor more than 60 days
advance
written notice from Borrower to Lender specifying the date of prepayment (the
“Prepayment Date”).  Prior to the Prepayment Date the Lender may, at
its option, give written notice of exchange of the Secured Revolving Credit Note
for securities of the Borrower as provided in Section 1.3, below, in which event
payment shall be made by exchange pursuant to Section 1.3.

     

    (c)           In
the event that any payment hereunder or under the Secured Revolving Credit Note
becomes due and payable on a day other than a business day, then such due date
shall be extended to the next succeeding business day; provided that interest
shall continue to accrue during the period of any such
extension.  “Business day” means any day which is not a Saturday,
Sunday or a day on which banks in the state of California are authorized or
obligated by law, executive order or governmental decree to be
closed.

     

    1.3.           Exchange of Loan
Obligation.  All or any portion of the then outstanding
principal and accrued interest of the Secured Revolving Credit Note (“Exchanged
Amount”), may be exchanged for Units at the election of the Lender at any time
prior to the Maturity Date, as defined in the Secured Revolving Credit Note, by
Lender giving written notice to Borrower specifying the date of exchange (the
“Exchange Date”) not less than 30 days nor more than 60 days prior to Exchange
Date. In exchange for each $1 of the Exchanged Amount so exchanged, Lender shall
receive a number of Units equal to the Exchanged Amount divided by the Exchange
Price. The Exchange Price shall be equal to the volume-weighted average closing
price of the Borrower’s common stock for the 20 trading days immediately prior
to the Exchange Date as reported on the NASD OTCBB, Pinksheets, or other market
where Borrower’s common stock is then quoted for trading, provided that in the
event no such quoted market exists, the Exchange Price shall be determined
according to an independent appraisal ratified by the disinterested members of
the Borrower’s board of directors. Each Unit is composed of one share of
Borrower’s common stock and one warrant to purchase one share of Borrower’s
voting common stock in the form attached hereto as Exhibit B (“Warrant”). The
Warrant Price, as defined in the Warrant, shall be equal to the Exchange Price
multiplied by 1.5.  An election made by the Lender to exchange the
Loan Obligation for Units cannot be revoked by Lender without the written
consent of Borrower.

     

    (a)           On
an Exchange Date the Lender shall deliver to the Borrower the Notice of
Conversion in the form attached hereto as Annex A and the Borrower shall issue
and deliver to the Lender the Units. Should such Notice of Conversion represent
all of the remaining Loan Obligations, Lender shall deliver to Borrower the
Secured Revolving Credit Note and all other instruments evidencing the Loan
Obligation to the Borrower marked “paid in full.”

     

     

    ARTICLE
II

     

     

    Representations
and Warranties of Borrower

     

    The
Borrower represents and warrants that:

     

    2.1.           Organization and
Authority.

     

    
      
         


      

      
        2

        
          

        

      

      
         


      

    


    (a)           The
Borrower is a corporation duly organized and validly existing under the laws of
the jurisdiction of its formation;

     

    (b)           The
Borrower has the power and authority to execute, deliver and perform this
Agreement, the Secured Revolving Credit Note, the Security Agreement, and all
other associated documents; and

     

    (c)           Each
of this Agreement, the Security Agreement and Secured Revolving Credit Note is
and shall be the legal, valid and binding obligation or agreement of the
Borrower enforceable against the Borrower in accordance with its terms, subject
to the effect of any applicable bankruptcy, moratorium, insolvency,
reorganization or other similar law affecting the enforceability of creditors’
rights generally and to the effect of general principles of equity (whether
considered in a proceeding at law or in equity).

     

    2.2.           Loan
Documents.  The execution, delivery, (or, as the case may be,
reaffirmation) and performance by the Borrower of this Agreement, the Security
Agreement, and the Secured Revolving Credit Note:

     

    (a)           has
been duly authorized by the disinterested members of the Board of Directors of
the Borrower, and all other requisite corporate action of the Borrower required
for the lawful execution, delivery, reaffirmation and performance
thereof;

     

    (b)           do
not violate any provisions of (i) applicable law, rule or regulation, (ii) any
judgment, writ, order, determination, decree or arbitral award of any
governmental authority or arbitral authority binding on the Borrower or its
properties, or (iii) the certificate of incorporation or bylaws of the
Borrower;

     

    (c)           does
not and will not be in conflict with, result in a breach of or constitute an
event of default, or an event which, with notice or lapse of time or both, would
constitute an event of default, under any contract, indenture, agreement or
other instrument or document to which the Borrower is a party, or by which the
properties or assets of the Borrower are bound and such conflict, breach or
event of default could reasonably be expected to result in a material adverse
effect on the business, properties or financial condition of the Borrower;
and

     

    (d)           will
result in the creation or imposition of a lien upon substantially all of the
properties and assets of the Borrower.

     

    2.3.           Reports/ Untrue
Statement.  Borrower has delivered to Lender a copy of
Borrower’s annual report on Form 10-KSB for the year ended December 31, 2006,
quarterly report on Form 10-QSB for the quarter ended September 30, 2007, and
all reports of Form 8-K filed in the 12 months up to and including the date
affixed hereof (collectively the “Reports”).  Neither this Agreement
nor any of the Reports contains any misrepresentation or untrue statement of
material fact or omits to state a material fact necessary, in light of the
circumstances under which it was made, in order to make any such warranty,
representation or statement contained therein not misleading.

     

    
      
         


      

      
        3

        
          

        

      

      
         


      

    


    ARTICLE
III

     

     

    Representations
and Warranties of Lender

     

    The
Lender represents and warrants that:

     

    3.1.           Authority.

     

    (a)           The
Lender has the power and authority to execute, deliver and perform this
Agreement; and

     

    (b)           This
Agreement is and shall be the legal, valid and binding obligation or agreement
of the Lender enforceable against the Lender in accordance with its terms,
subject to the effect of any applicable bankruptcy, moratorium, insolvency,
reorganization or other similar law affecting the enforceability of creditors’
rights generally and to the effect of general principles of equity (whether
considered in a proceeding at law or in equity).

     

    3.2.           Loan
Documents.  The execution, delivery, (or, as the case may be,
reaffirmation) and performance by the Lender of this Agreement:

     

    (a)           does
not violate any provisions of (i) applicable law, rule or regulation, or (ii)
any judgment, writ, order, determination, decree or arbitral award of any
governmental authority or arbitral authority binding on the Lender or its
properties; and

     

    (b)           does
not and will not be in conflict with, result in a breach of or constitute an
event of default, or an event which, with notice or lapse of time or both, would
constitute an event of default, under any contract, indenture, agreement or
other instrument or document to which the Lender is a party, or by which the
properties or assets of the Lender are bound and such conflict, breach or event
of default could reasonably be expected to result in a material adverse effect
on the business, properties or financial condition of the Lender.

     

    3.3.           Accredited
Investor.  Lender is an “accredited investor” as that term is
defined in Rule 501 of regulation D promulgated under the Securities Act of
1933.

     

     

    ARTICLE
IV

     

     

    Events
of Default and Acceleration

     

    4.1.           Events of
Default.  If any one or more of the following events (herein
called “Events of Default”) shall occur for any reason whatsoever (and whether
such occurrence shall be voluntary or involuntary or come about or be effected
by operation of law or pursuant to or in compliance with any judgment, decree or
order of any court or any order, rule or regulation of any governmental
authority), that is to say:

     

    
      
         


      

      
        4

        
          

        

      

      
         


      

    

     

    
      (a)           if
default shall be made in the due and punctual payment of the principal or
interest of the Secured Revolving Credit Note, when and as the same shall be due
and payable at maturity, by acceleration or otherwise; or

    

     

    (b)           if
a default shall be made in the performance or observance of, or shall occur
under, any covenant, agreement or provision contained in this Agreement (other
than as described in clause (a) above) or any Borrower debt or obligation in
excess of $100,000 and such default shall continue for 30 or more days after the
earlier of receipt of notice of such default by the Borrower from the Lender;
or

     

    (c)           if
any representation, warranty or other statement of fact contained in this
Agreement or in any writing, certificate, report or statement at any time
furnished to the Lender by or on behalf of the Borrower shall be false or
misleading in any material respect when given; or

     

    (d)           if
the Borrower shall be unable to pay its debts generally as they become due,
admit in writing its inability to pay its debts generally as they become due,
file a petition to take advantage of any insolvency statute, make an assignment
for the benefit of its creditors, commence a proceeding for the appointment of a
receiver, trustee, liquidator or conservator of itself or of the whole or any
substantial part of its property, or file a petition or answer seeking
liquidation, reorganization or arrangement or similar relief under the federal
bankruptcy laws or any other applicable law or statute; or

     

    (e)           if
a court of competent jurisdiction shall enter an order, judgment or decree
appointing a custodian, receiver, trustee, liquidator or conservator of the
Borrower or of the whole or any substantial part of its properties and such
order, judgment or decree continues unstayed and in effect for a period of sixty
(60) days, or approve a petition filed against the Borrower seeking liquidation,
reorganization or arrangement or similar relief under the federal bankruptcy
laws or any other applicable law or statute of the United States of America or
any state, which petition is not dismissed within sixty (60) days; or if, under
the provisions of any other law for the relief or aid of debtors, a court of
competent jurisdiction shall assume custody or control of the Borrower or of the
whole or any substantial part of its properties, which control is not
relinquished within sixty (60) days; or if there is commenced against the
Borrower any proceeding or petition seeking reorganization, arrangement or
similar relief under the federal bankruptcy laws or any other applicable law or
statute of the United States of America or any state which proceeding or
petition remains undismissed for a period of sixty (60) days; or if the Borrower
takes any action to indicate its consent to or approval of any such proceeding
or petition; or

     

    (f)           if
(i) one or more judgments or orders where the amount not covered by insurance
(or the amount as to which the insurer denies liability) is in an aggregate
amount in excess of $1,000,000 is rendered against the Borrower, or (ii) there
is any attachment, injunction or execution against the Borrower’s properties for
any amount in excess of $1,000,000 in the aggregate; and such judgment,
attachment, injunction or execution remains unpaid, unstayed, undischarged,
unbonded or undismissed for a period of thirty (30) days; or

     

    
      
         


      

      
        5

        
          

        

      

      
         


      

    


    (g)           if
any “person” or “group” (each as used in Sections 13(d)(3) and 14(d)(2) of the
Securities Exchange Act of 1934), either (A) becomes the “beneficial owner” (as
defined in Rule 13d-3 of the Securities Exchange Act or 1934), directly or
indirectly, of voting stock of the Borrower (or securities convertible into or
exchangeable for such voting stock) representing 50% or more of the combined
voting power of all voting stock of the Borrower (on a fully diluted basis), or
(B) otherwise has the ability, directly or indirectly, to elect a majority of
the board of directors of the Borrower;

     

    then, and
in any such event and at any time thereafter, if such Event of Default or any
other Event of Default shall have not been waived,

     

    (x)           the
Lender, at its option, declare by notice to the Borrower the Secured Revolving
Credit Note to be immediately due and payable, and the same, including all
interest accrued thereon and all other obligations of the Borrower to the
Lender, shall forthwith become immediately due and payable without presentment,
demand, protest, notice or other formality of any kind, all of which are hereby
expressly waived, anything contained herein or in any instrument evidencing the
Secured Revolving Credit Note to the contrary notwithstanding; provided, however, that
notwithstanding the above, if there shall occur an Event of Default under clause
(d) or (e) above, then the Secured Revolving Credit Note shall be immediately
due and payable without the necessity of any action by the Lender;
and

     

    (y)           The
Lender shall have all of the rights and remedies available under this Agreement,
the Secured Revolving Credit Note or under any applicable law.

     

    4.2.           Cumulative
Rights.  No right or remedy herein conferred upon the Lender is
intended to be exclusive of any other rights or remedies contained herein, in
the Secured Revolving Credit Note or the Security Agreement, and every such
right or remedy shall be cumulative and shall be in addition to every other such
right or remedy contained herein and therein or now or hereafter existing at law
or in equity or by statute, or otherwise.

     

    4.3.           No
Waiver.  No course of dealing between the Borrower and any
Lender, or any failure or delay on the part of the Lender in exercising any
rights or remedies under this Agreement, the Security Agreement, the Secured
Revolving Credit Note or otherwise available to it shall operate as a waiver of
any rights or remedies and no single or partial exercise of any rights or
remedies shall operate as a waiver or preclude the exercise of any other rights
or remedies hereunder or of the same right or remedy on a future
occasion.

     

    ARTICLE
V

     

    Miscellaneous

     

    5.1.           Assignment.  The
Lender may assign to one or more persons all or a portion of its rights,
obligations or rights and obligations under this Agreement (including, without
limitation, all or a portion of its Secured Revolving Credit
Note).  Upon execution, delivery, and acceptance of such assignment,
the assignee thereunder shall be a party hereto and, to the extent of such
assignment, have the obligations, rights, and benefits of the Lender hereunder
and the assigning Lender shall, to the extent of such assignment, relinquish its
rights and be released from its obligations under this
Agreement.  Upon the consummation of any assignment pursuant to this
Section, the assignor and the Borrower shall make appropriate arrangements so
that, if required, new notes are issued to the assignor and the
assignee.  If the assignee is not incorporated under the laws of the
United States of America or a state thereof, it shall deliver to the Borrower
and the Agent certification as to exemption from deduction or withholding of
taxes that may be required by the Internal Revenue Code of 1986.

     

    
      
         


      

      
        6

        
          

        

      

      
         


      

    

     

    5.2.           Notices.  Any
notice shall be conclusively deemed to have been received by any party hereto
and be effective (i) on the day on which delivered (including hand delivery by
commercial courier service) to such party (against receipt therefor), (ii) on
the date of delivery to such telefacsimile number for such party, and the
receipt of such message is verified by the sender’s telefacsimile machine, or
(iii) on the fifth business day after the day on which mailed, if sent prepaid
by certified or registered mail, return receipt requested, in each case
delivered, transmitted or mailed, as the case may be, to the address or
telefacsimile number, as appropriate, set forth below or such other address or
number as such party shall specify by notice hereunder:

     

    
      	 	(a) 	if to the
      Borrower: 	 	Viral Genetics,
      Inc.
	 	 	 	 	1321 Mountain View
      Circle
	 	 	 	 	Azusa, California
      91702
	 	 	 	 	Telephone: 	(626)
    334-5310
	 	 	 	 	Fax:	(626)
    334-5324
	 	 	 	 	 	 
	 	(b)	if to the
      Lender: 	 	Best Investments,
      Inc.
	 	 	 	 	1321 Mountain View
      Circle
	 	 	 	 	Azusa, California
      91702
	 	 	 	 	Telephone: 	(626)
    334-5310
	 	 	 	 	Fax: 	(626)
    334-5324


    

     

    5.3.           Survival.  All
covenants, agreements, representations and warranties made herein shall survive
the making by the Lender of the Secured Revolving Credit Note and the execution
and delivery to the Lender of this Agreement and the Secured Revolving Credit
Note and shall continue in full force and effect so long as the Secured
Revolving Credit Note remain outstanding.

     

    5.4.           Amendments.  No
amendment, modification or waiver of any provision of this Agreement or the
Secured Revolving Credit Note and no consent by the Lender to any departure
there from by the Borrower shall be effective unless such amendment,
modification or waiver shall be in writing and signed by the Lender, and the
same shall then be effective only for the period and on the conditions and for
the specific instances and purposes specified in such writing.

     

    5.5.           Counterparts.  This
Agreement may be executed in any number of counterparts, each of which when so
executed and delivered shall be deemed an original, and it shall not be
necessary in making proof of this Agreement to produce or account for more than
one such fully-executed counterpart.

     

    
      
         


      

      
        7

        
          

        

      

      
         


      

    


    5.6.           Termination.  The
termination of this Agreement shall not affect any rights of the Borrower or
Lender, or any obligation of the Borrower or Lender arising prior to the
effective date of such termination, and the provisions hereof shall continue to
be fully operative until all transactions entered into or rights created or
obligations incurred prior to such termination have been fully disposed of,
concluded or liquidated and the obligations arising prior to or after such
termination have been irrevocably paid in full.

     

    5.7.           Severability.  If
any provision of this Agreement or the Secured Revolving Credit Note shall be
determined to be illegal or invalid as to one or more of the parties hereto,
then such provision shall remain in effect with respect to all parties, if any,
as to whom such provision is neither illegal nor invalid, and in any event all
other provisions hereof shall remain effective and binding on the parties
hereto.

     

    5.8.           Entire
Agreement.  This Agreement, together with the exhibits hereto,
constitutes the entire agreement among the parties with respect to the subject
matter hereof and supersedes all previous proposals, negotiations,
representations, commitments and other communications between or among the
parties, both oral and written, with respect thereto.

     

    5.9.           Governing Law; Waiver of
Jury Trial.

     

    (a)           THIS
AGREEMENT, THE SECURITY AGREEMENT, AND THE SECURED REVOLVING CREDIT NOTE SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
CALIFORNIA APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH
STATE NOTWITHSTANDING ITS EXECUTION AND DELIVERY OUTSIDE SUCH
STATE.

     

    (b)           THE
BORROWER HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND CONSENTS THAT ANY SUIT,
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED HEREIN MAY BE INSTITUTED IN ANY STATE OR FEDERAL COURT
SITTING IN THE STATE OF CALIFORNIA, UNITED STATES OF AMERICA AND, BY THE
EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER EXPRESSLY WAIVES ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE IN, OR TO THE
EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTY BY, ANY SUCH COURT IN ANY SUCH
SUIT, ACTION OR PROCEEDING, AND HEREBY IRREVOCABLY SUBMITS GENERALLY AND
UNCONDITIONALLY TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION
OR PROCEEDING.

     

    (c)           THE
BORROWER AGREES THAT SERVICE OF PROCESS MAY BE MADE BY PERSONAL SERVICE OF A
COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL PROCESS IN ANY SUCH SUIT,
ACTION OR PROCEEDING, OR BY REGISTERED OR CERTIFIED MAIL (POSTAGE PREPAID) TO
THE ADDRESS OF THE BORROWER PROVIDED IN SECTION 5.2 HEREIN,
OR BY ANY OTHER METHOD OF SERVICE PROVIDED FOR UNDER
THE APPLICABLE LAWS IN EFFECT IN THE STATE OF CALIFORNIA.

     

    
      
         


      

      
        8

        
          

        

      

      
         


      

    

     

    (D)           IN
ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER OR
RELATED TO THIS AGREEMENT OR THE SECURED REVOLVING CREDIT NOTE OR ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE BE
DELIVERED IN CONNECTION WITH THE FOREGOING, THE BORROWER AND THE LENDER HEREBY
AGREE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY AND HEREBY WAIVE,
TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PERSON MAY HAVE TO
TRIAL BY JURY IN ANY SUCH ACTION OR PROCEEDING.

    


    5.10.         Third Party
Beneficiaries.  No Person other than the parties hereto shall
be entitled to claim any right or benefit under this Agreement, including,
without limitation, the status of third-party beneficiary of this Agreement and
nothing in this Agreement, express or implied, is intended to confer upon any
other Person any rights or remedies of any nature whatsoever under or by reason
of this Agreement

     

    5.11.        
Rules of
Interpretation.

     

    (a)           The
headings and subheadings used herein are solely for convenience of reference and
shall not constitute a part of any such document or affect the meaning,
construction or effect of any provision thereof.

     

    (b)           Except
as otherwise expressly provided, references herein to articles, sections,
paragraphs, clauses, annexes, appendices, exhibits and schedules are references
to articles, sections, paragraphs, clauses, annexes, appendices, exhibits and
schedules in or to this Agreement.

     

    (c)           All
definitions set forth herein shall apply to the singular as well as the plural
form of such defined term, and all references to the masculine gender shall
include reference to the feminine or neuter gender, and vice versa, as the
context may require.

     

    (d)           When
used herein, words such as “hereunder”, “hereto”, “hereof” and “herein” and
other words of like import shall, unless the context clearly indicates to the
contrary, refer to the whole of this Agreement and not to any particular
article, section, subsection, paragraph or clause thereof.

     

    (e)           References
to “including” means including without limiting the generality of any
description preceding such term.

     

    [signature
page follows]

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    [signature
page to Debt Restructuring Agreement dated March 5, 2008]

     

    IN
WITNESS WHEREOF, the parties hereto have caused this instrument, made as of the
date affixed hereof, to be executed and delivered by a duly authorized
officer.

     

     

    
      
        	 	VIRAL
      GENETICS, INC.
	 	 	 
	 	 	 
	 	 	 
	 	By:	 
	 	 	Duly
      Authorized Officer


      

       

       

      
         

        
          
            	 	BEST
      INVESTMENTS, INC.
	 	 	 
	 	 	 
	 	 	 
	 	 
	 	 Haig
      Keledjian


          

           

          

            
              
                 


              

              
                10

                
                  

                

              

              
                 


              

            



        

      

    

    ANNEX
A

    


    NOTICE
OF CONVERSION

    


    


    The undersigned hereby elects to
convert principal of the Secured Revolving Credit Note pursuant to Section 1.3
of the Debt Restructuring Agreement to which this into shares and warrants to
acquire shares of common stock, par value $0.001 per share (the “Common Stock”), of
Viral Genetics, Inc., a Delaware corporation,  according to the
conditions hereof, as of the date written below.  If shares and
warrants are to be issued in the name of a person other than the undersigned,
the undersigned will pay all transfer taxes payable with respect thereto and is
delivering herewith such certificates and opinions as reasonably requested by
the Company in accordance therewith.  No fee will be charged to the
holder for any conversion, except for such transfer taxes, if any.

    


    Conversion
calculations:

    


    Date to
Effect Conversion:

    


    Principal
Amount of Note to be Converted:

    


    Number of
shares of Common Stock to be issued:

    


    Number of
warrants to acquire shares of Common Stock to be issued:

    


    


    Signature:

    


    Name:

    


    Address:

     

    
      
         


      

      
        11

        
          

        

      

      
         


      

    

     

    EXHIBIT
A

    


    SECURED
REVOLVING CREDIT NOTE

     

    FOR VALUE
RECEIVED, Viral Genetics, Inc., (“Borrower”), whose address is
1321 Mountain View Circle, Azusa, California, 91702, promises to pay to the
order of Best Investments, Inc. (“Lender”), and its successors
and assigns, whose address is c/o 1321 Mountain View Circle, Azusa, California,
91702, in lawful money of the United States of America, the principal sum of ---
DOLLARS ($_____) (the “Initial Principal”), together with (a) such additional
amounts as are added to the Initial Principal from the date hereof as provided
under Section 1(b) herein plus (b) interest at the Interest Rate as provided
herein and less (c) any payments of principal and accrued interest made as
provided herein prior to the Maturity Date including amounts exchanged for Units
under the terms of the Debt Restructuring Agreement to which this Secured
Revolving Credit Note is attached.  This Secured Revolving Credit Note
is issued in replacement of the Notes in favor of the Lender referred to in the
Debt Restructuring Agreement (the “Agreement”) between the parties of even date
herewith and does not constitute a novation of the indebtedness evidenced
thereby. This Secured Revolving Credit Note is issued pursuant to and entitled
to the benefits and security of the Agreement to which reference is hereby made
for a more complete statement of the terms and conditions upon which the Loan
Obligation evidenced hereby is made and is to be repaid.

     

    


    1.            
Payment and Advance
Terms.

     

    (a)           Borrower
shall pay to Lender the entire principal balance under this Secured Revolving
Credit Note and all interest accrued thereon on or before June 30, 2013 (the
“Maturity Date”), which may be amended as described herein.  Borrower
shall pay all amounts due under this Secured Revolving Credit Note in lawful
money of the United States of America and without set-off, deduction, demand or
notice.

     

    (b)           On
or before the Maturity Date, from time to time Lender may offer, and Borrower
may accept, additional advances in cash, in kind, via tender of other debts of
Borrower held by Lender, or other form. Any additional advances shall be added
to the then outstanding principal hereunder and interest shall accrue on such
advances from the date they are received by Borrower.

     

    2.            
Interest.  All
unpaid principle balances under this Secured Revolving Credit
Note  shall bear interest (the “Interest Rate”) at a rate
equal to five percent (5%) per annum.  Interest shall be computed on
the actual number of days elapsed (including the first day but excluding the
last day) on the basis of a three hundred sixty-five (365) day
year.  Interest shall be payable on the Maturity Date.

     

    3.            
Application of
Payments.  Payments will be applied first to any costs and
expenses (including reasonable attorneys' fees) incurred by Lender in connection
with the collection of amounts owing pursuant to this Secured Revolving Credit
Note , next to payment of accrued interest, and then to reduction of
principal.  All payments shall be made to Lender at the
above-specified address until receipt of notice from Lender to the
contrary.

     

    
      
         


      

      
        12

        
          

        

      

      
         


      

    

     

    4.            
Default
Rate.  Upon the occurrence of an Event of Default, Lender shall
be entitled to receive, and Borrower shall pay to Lender, interest on the
outstanding principal balance and any other advances or charges advanced by
Lender at a per annum rate equal to the lesser of (a) twelve percent (12%), or
(b) the maximum interest rate which Borrower may by law pay (the “Default Rate”).  The
Default Rate shall be computed from the occurrence of the Event of Default until
the earlier of the date upon which the Event of Default is cured or the date
upon which due an owing under this Secured Revolving Credit Note  are
paid in full.  Interest calculated at the Default Rate shall be
secured by the other Loan Documents (defined below).  The preceding
sentence, however, shall not be construed as an agreement or privilege to extend
the date of the any payment due hereunder, or as a waiver of any other right or
remedy accruing to Lender by reason of the occurrence of any Event of
Default.

     

    5.            
Prepayment.  Borrower
shall have the right to prepay this Secured Revolving Credit Note  in
whole or in part without the prior written consent of Lender at any time by
providing notice as provided for in the Debt Restructuring Agreement to which
this Secured Revolving Credit Note  is attached.

     

    6.            
Security
Interest.  This Secured Revolving Credit Note is secured by,
among other things, that certain Security Agreement of even date herewith
(“Security Agreement”)
encumbering all of the assets of Borrower.  Lender acknowledges that
their security interest is and shall be subordinate to the security interest
associated with Secured Convertible Debentures held by certain creditors of
Borrower until such obligations are satisfied by Borrower or liens are released
by such creditors. Except as otherwise provided herein, capitalized terms used
in this Secured Revolving Credit Note  shall have the same meanings as
are assigned to such terms in the Security Agreement.  This Secured
Revolving Credit Note, the Security Agreement and all other documents related
hereto are referred to herein sometimes collectively as the “Loan Documents.”

     

    7.            
Default.  Any
one of the following occurrences shall constitute an “Event of Default” under this
Secured Revolving Credit Note :

     

    (a)           The
failure of Borrower to repay all outstanding principal or accrued interest on or
before the Maturity Date;

     

    (b)           The
failure of Borrower to promptly perform any obligation of Borrower under or the
existence of an Event of Default as defined in any of the Loan Documents within
thirty (30) days of notice from Lender; or

     

    (c)           Borrower
becomes insolvent, bankrupt or generally fails to pay its debts as such debts
become due; is adjudicated insolvent or bankrupt; admits in writing its
inability to pay its debts; or shall suffer a custodian, receiver or trustee for
it or substantially all of its property to be appointed and if appointed without
its consent, not be discharged within sixty (60) consecutive days; makes an
assignment for the benefit of creditors; or suffers proceedings under any law
related to bankruptcy, insolvency, liquidation or the reorganization,
readjustment or the release
of debtors to be instituted against it and if contested by it not dismissed or
stayed within sixty (60) consecutive days; if proceedings under any law related
to bankruptcy, insolvency, liquidation, or the reorganization, readjustment or
the release of debtors is instituted or commenced by or against Borrower; if any
order for relief is entered relating to any of the foregoing proceedings; if
Borrower shall call a meeting of its creditors with a view to arranging a
composition or adjustment of its debts; or if Borrower shall by any act or
failure to act indicate its consent to, approval of or acquiescence in any of
the foregoing.

     


    
      
         


      

      
        13

        
          

        

      

      
         


      

    

     

    8.            
Remedies.  Upon the
happening and during the continuation of any Event of Default, (i) Lender may,
at its sole option, declare the entire principal and any unpaid accrued interest
immediately due and payable in full; (ii) interest shall accrue on all amounts
due hereunder at the Default Rate until paid in full or such Event of Default is
cured; and (iii) Lender shall have and may exercise any and all rights and
remedies available hereunder, at law and in equity, together with any and all
rights and remedies provided in any Loan Document.  The acceptance of
any installment or payment after the occurrence of an Event of Default or event
giving rise to the right of acceleration provided for herein shall not
constitute a waiver of such right of acceleration with respect to such Event of
Default or event or any subsequent Event of Default.  The remedies of
Lender, as provided herein or in any Loan Document, shall be cumulative and
concurrent, and may be pursued singularly, successively or together, at the sole
discretion of Lender, and may be exercised as often as occasion therefore shall
arise.  Any act, omission or commission of Lender, including,
specifically, any failure to exercise any right, remedy or recourse, shall be
released and be effected only through a written document executed by Lender and
then only to the extent specifically recited therein.  A waiver or
release with reference to any one event shall not be construed as continuing, as
a bar to, or as a waiver or release of, any subsequent right, remedy or recourse
as to a subsequent event.

     

    9.            
Collection
Costs.  If one or more Events of Default (or any event which
with notice or passage of time or both would constitute an Event of Default)
hereunder shall occur and continues, Borrower promises to pay all collection
costs, including but not limited to all reasonable attorneys' fees, court costs,
and expenses of every kind, incurred by Lender in connection with such
collection or the protection or enforcement of any or all of the security for
this Secured Revolving Credit Note , whether or not any lawsuit is filed with
respect thereto (including costs and reasonable attorneys’ fees on any appeals
or in any bankruptcy proceedings).

     

    10.           Miscellaneous.

     

    (a)           Successors and
Assigns.  This Secured Revolving Credit Note  inures
to the benefit of Lender and its successors or assigns, and binds Borrower, and
its respective permitted successors and assigns, and the words “Lender” and
“Borrower” whenever occurring herein shall be deemed and construed to include
such respective successors and assigns.

     

    (b)           Severability.  Any
term or provision of this Secured Revolving Credit Note  that is held
by a court of competent jurisdiction or other authority to be invalid, void or
unenforceable in any situation or in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions or the validity
or enforceability of the invalid, void or unenforceable term or provision in any
other situation or in any other jurisdiction.  If the final judgment
of a court of competent jurisdiction or other authority declares that any term
or provision of this Secured Revolving Credit Note  is invalid, void
or unenforceable, the parties agree that the court making such determination
shall have the power to and shall, subject to the discretion of such court,
reduce the scope, duration, area or applicability of the term or provision, to
delete specific words or phrases, or to replace any invalid, void or
unenforceable term or provision with a term or provision that is valid and
enforceable and that comes closest to expressing the intention of the invalid or
unenforceable term or provision.

     

    
      
         


      

      
        14

        
          

        

      

      
         


      

    

     

    (c)           Waiver.  To the
fullest extent permitted by law, Borrower hereby waives all valuation and
appraisement privileges, presentment and demand for payment, protest, notice of
protest and nonpayment, dishonor and notice of dishonor, bringing of suit, lack
of diligence or delays in collection or enforcement of this Secured Revolving
Credit Note  and notice of the intention to accelerate, the release of
any liable party, the release of any security for the indebtedness evidenced
hereby, and any other indulgence or forbearance, and is and shall be directly
and primarily liable for the amount of all sums owing and to be owed hereon, and
agrees that this Secured Revolving Credit Note  and any or all
payments coming due hereunder may be extended or renewed from time to time
without in any way affecting or diminishing Borrower's liability
hereunder.

     

    (d)           Notices.  All
notices required to be given to any of the parties hereunder shall be in writing
and shall be delivered (a) by personal delivery, with receipt acknowledged; (b)
by telecopier or electronic mail (with original copy to follow as set forth
herein); (c) by reputable overnight commercial courier service; or (d) by United
States registered or certified mail, return receipt requested, postage prepaid,
to the parties at the addresses as set forth at the first of this Secured
Revolving Credit Note  (subject to the right of a party to designate a
different address for itself by notice similarly given).  Any notice
so given by United States mail shall be deemed to have been given on the second
business day after the same is deposited in the United States mail as registered
or certified mail, addressed as above provided, with postage thereon fully
prepaid.  Any notice given personally, by telecopier or e-mail, or by
reputable overnight commercial courier service, shall be deemed to be given upon
receipt of the same by the party to whom the same is to be
given.  Whenever the giving of notice is required, the giving of such
notice may be waived in writing by the party entitled to receive such
notice.

     

    (e)           Entire
Agreement.  This Secured Revolving Credit
Note  (together with the Loan Documents) contains the entire agreement
between the parties with respect to the subject matter hereof and
thereof.

     

    (f)           
Modification of
Agreement.  This Secured Revolving Credit Note  may
not be modified, altered or amended, except by an agreement in writing signed by
both Borrower and Lender.

     

    (g)           Releases by
Borrower.  Borrower hereby releases Lender from all technical
and procedural errors, defects and imperfections whatsoever in enforcing the
remedies available to Lender upon a default by Borrower hereunder.

     

    (h)           Remedies Not
Exclusive.  No remedy herein conferred upon or reserved to
Lender is intended to be exclusive of any other remedy or remedies available to
Lender under this Secured Revolving Credit Note , at law, in equity or by
statute, and each and every such remedy shall be cumulative and in addition to
every other remedy given hereunder or now or hereafter existing at law, in
equity or by statute.

     

    
      
         


      

      
        15

        
          

        

      

      
         


      

    

     

    (i)           
Governing
Law.  This Secured Revolving Credit Note  shall be
governed by and construed under the laws of the State of California without
giving effect to the choice of law provisions thereof.

     

    (j)           
Consent to
Jurisdiction.  Borrower hereby consents that any action or
proceeding against it may be commenced and maintained in any Federal or state
court sitting in Los Angeles County, California, and that such courts shall have
jurisdiction with respect to the subject matter hereof and the person of
Borrower and the collateral securing Borrower’s obligations
hereunder.

     

    (k)           Time of
Essence.  Time is of the essence of this Secured Revolving
Credit Note  and all of the obligations hereunder.

     

    (l)            
Headings.  The
headings of the sections of this Secured Revolving Credit Note  are
inserted for convenience only and do not constitute a part of this Secured
Revolving Credit Note .

     

    (m)           Waiver of Jury
Trial.  BORROWER AND LENDER, TO THE FULL EXTENT PERMITTED BY
LAW, EACH HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY WAIVES, RELINQUISHES
AND FOREVER FORGOES HEREBY THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY TORT ACTION, BROUGHT BY EITHER OF
THEM AGAINST THE OTHER BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO OR
IN CONNECTION WITH THIS SECURED REVOLVING CREDIT NOTE , OR ANY COURSE OF
CONDUCT, ACT, OMISSION, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR
WRITTEN) OR ACTIONS OF ANY PERSON (INCLUDING, WITHOUT LIMITATION, SUCH PERSON’S
DIRECTORS, OFFICERS, PARTNERS, MEMBERS, EMPLOYEES, AGENTS OR ATTORNEYS, OR ANY
OTHER PERSONS AFFILIATED WITH SUCH PERSON), IN CONNECTION WITH THIS SECURED
REVOLVING CREDIT NOTE , INCLUDING, WITHOUT LIMITATION, IN ANY COUNTERCLAIM WHICH
BORROWER MAY BE PERMITTED TO ASSERT HEREUNDER OR WHICH MAY BE ASSERTED BY LENDER
OR ITS AGENTS AGAINST BORROWER, WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE.  THIS WAIVER BY BORROWER OF ITS RIGHT TO A JURY TRIAL IS A
MATERIAL INDUCEMENT FOR LENDER UNDER THIS SECURED REVOLVING CREDIT NOTE
..

     

    (n)           Secured Revolving Credit
Note  for Business or Commercial Purpose.  BORROWER
EXPRESSLY WARRANTS AND REPRESENTS TO LENDER THAT THIS SECURED REVOLVING CREDIT
NOTE  IS INTENDED FOR AND WILL BE USED FOR A BUSINESS OR COMMERCIAL
PURPOSE AND THAT THIS SECURED REVOLVING CREDIT NOTE  IS NOT INTENDED
FOR A CONSUMER, PERSONAL, FAMILY OR HOUSEHOLD PURPOSE.

      
        
           


        

        
          16

          
            

          

        

        
           


        

      



    (o)           Authority.  Borrower
(and the undersigned representative of Borrower, if any) represents and warrants
that it has full power and authority to execute and deliver this Secured
Revolving Credit Note , and the execution and delivery of this Secured Revolving
Credit Note  has been duly authorized and does not conflict with or
constitute a default under any law, judicial order or other agreement affecting
Borrower.

     

    IN
WITNESS WHEREOF, Borrower has executed and delivered this Secured Revolving
Credit Note  effective as of the date first above
written.

     

    
       

      
        
          	 	BORROWER:
	 	 
	 	VIRAL GENETICS,
      INC.
	 	 	 
	 	 	 
	 	 	 
	 	By	 
	 	 	Haig
      Keledjian, President and CEO


        

         

      

    

          

     

    
      
         


      

      
        17

        
          

        

      

      
         


      

    


    EXHIBIT
B

     

    Form of
Warrant

     

    VIRAL
GENETICS, INC.

    


    Warrant
for the Purchase of

    Shares
of Common Stock

     

    2
Par Value $0.0001

    


    WARRANT
AGREEMENT

    


    THE
HOLDER OF THIS WARRANT, BY ACCEPTANCE HEREOF, BOTH WITH RESPECT TO THE WARRANT
AND COMMON STOCK ISSUABLE UPON EXERCISE OF THE WARRANT, AGREES AND ACKNOWLEDGES
THAT THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER
THE SECURITIES LAWS OF ANY STATE.  THESE SECURITIES HAVE BEEN ACQUIRED
FOR INVESTMENT AND MAY NOT BE TRANSFERRED OR SOLD IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT OR OTHER COMPLIANCE UNDER THE SECURITIES ACT OR THE LAWS
OF THE APPLICABLE STATE OR A “NO ACTION” OR INTERPRETIVE LETTER FROM THE
SECURITIES AND EXCHANGE COMMISSION OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE ISSUER, AND ITS COUNSEL, TO THE EFFECT THAT THE SALE OR
TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT AND SUCH STATE
STATUTES.

    


    This is to certify that, for value
received, Best Investments, Inc. (the “Holder”) is entitled to purchase from
VIRAL GENETICS, INC., a
Delaware corporation (the “Company”), on the
terms and conditions hereinafter set forth, all or any part of [insert number of
Units] shares (“Warrant Shares”) of the Company’s common stock, par value
$0.0001 (the “Common Stock”), at a purchase price of [insert Exchange Price
multiplied by 1.5] per share (“Warrant Price”).  Upon exercise of this
warrant in whole or in part, a certificate for the Warrant Shares so purchased
shall be issued and delivered to the Holder.  If less than the total
warrant is exercised, a new warrant of similar tenor shall be issued for the
unexercised portion of this warrant.  By acceptance hereof, the Holder
agrees to be bound by the terms and conditions of this warrant.

    


    This warrant is granted subject to the
following further terms and conditions:

    


    1.           
This warrant shall vest and be exercisable immediately, and shall expire at 5:00
pm Pacific Time on the date that is five years from the date this warrant is
signed.  In order to exercise this warrant with respect to all or any
part of the Warrant Shares for which this warrant is at the time exercisable,
Holder must take the following actions:

    


    (a)           Deliver
to the Corporate Secretary of the Corporation an executed notice of exercise
in substantially the form of notice attached to this Agreement (the “Exercise
Notice”) in which there is specified the number of Warrant Shares that are to be
purchased under the exercised warrant.


    
      
         


      

      
        18

        
          

        

      

      
         


      

    

    


    (b)           Pay
the aggregate Warrant Price for the purchased shares through one or more of the
following alternatives:

    


    
      	
               
      

            	
              (i)

            	
              full
      payment in cash or by check made payable to the Corporation’s
      order;

            


    

    


    
      	
               
      

            	
              (ii)

            	
              full
      payment in shares of Common Stock valued at Fair Market Value on the
      Exercise Date (as such term is defined
below);

            


    

    


    
      	
               
      

            	
              (iii)

            	
              full
      payment through a combination of shares of Common Stock valued at Fair
      Market Value on the Exercise Date and cash or check payable to the
      Company’s order; or

            


    

    


    
      	
               
      

            	
              (iv)

            	
              full
      payment effected through a broker-dealer sale and remittance procedure
      pursuant to which Holder shall provide concurrent irrevocable written
      instructions (i) to a brokerage firm to effect the immediate sale of the
      purchased shares and remit to the Company, out of the sale proceeds
      available on the settlement date, sufficient funds to cover the aggregate
      Warrant Price payable for the purchased shares and (ii) to the Company to
      deliver the certificates for the purchased shares directly to such
      brokerage firm in order to complete the sale
  transaction.

            


    

    


    (c)           Furnish
to the Corporation appropriate documentation that the person or persons
exercising the warrant (if other than Holder) have the right to exercise this
warrant.

    


    (d)           For
purposes of this Agreement, the Exercise Date shall be the date on which the
executed Exercise Notice shall have been delivered to the
Company.  Except to the extent the sale and remittance procedure
specified above is utilized in connection with the warrant exercise, payment of
the Warrant Price for the purchased shares must accompany such Exercise
Notice.

    


    (e)           For
all valuation purposes under this Agreement, the Fair Market Value per share of
Common Stock on any relevant date shall be determined in accordance with the
following provisions:

    


    
      	
               
      

            	
              (i)

            	
              If
      the Common Stock is not at the time listed or admitted to trading on any
      national securities exchange but is traded on the Nasdaq National Market,
      the Fair Market Value shall be the mean between the highest "bid" and
      lowest "offered" quotations of a share of Common Stock on such date (or if
      none, on the most recent date on which there were bid and offered
      quotations of a share of Common Stock), as reported by the Nasdaq National
      Market or any successor system.

            


    


    
      
         


      

      
        19

        
          

        

      

      
         


      

    


    
      	
               
      

            	
              (ii)

            	
              If
      the Common Stock is at the time listed or admitted to trading on any
      national securities exchange, then the Fair Market Value shall be the
      closing selling price per share on the date in question on the securities
      exchange, as such price is officially quoted in the composite tape of
      transactions on such exchange.  If there is no reported sale of
      Common Stock on such exchange on the date in question, then the Fair
      Market Value shall be the closing selling price on the exchange on the
      last preceding date for which such quotation
  exists.

            


    

    


    
      	
               
      

            	
              (iii)

            	
              If
      the Common Stock is not listed on such date on any national securities
      exchange nor included in the Nasdaq National Market, but is traded in the
      over-the-counter market, the highest "bid" quotation of a share of Common
      Stock on such date (or if none, on the most recent date on which there
      were bid quotations of a share of Common Stock), as reported on the Nasdaq
      Smallcap Market or the NASD OTC Bulletin Board, as
    applicable.

            


    

    


    (f)           Upon
such exercise, the Company shall issue and cause to be delivered with all
reasonable dispatch (and in any event within three business days of such
exercise) to or upon the written order of the Holder at its address, and in the
name of the Holder, a certificate or certificates for the number of full Warrant
Shares issuable upon the exercise together with such other property (including
cash) and securities as may then be deliverable upon such
exercise.  Such certificate or certificates shall be deemed to have
been issued and the Holder shall be deemed to have become a holder of record of
such Warrant Shares as of the Exercise Date.

    


    2.           
The Warrant Shares have not and may not be registered as of the date of exercise
of this warrant under the Securities Act or the securities laws of any
state.  This warrant and the Warrant Shares issuable on exercise of
the warrant, when and if issued, are and may be “restricted securities” as
defined in Rule 144 promulgated by the Securities and Exchange Commission and
must be held indefinitely unless subsequently registered under the Securities
Act and any other applicable state registration requirements, or an exemption
from such registration requirements for resale is available.  The
Company is under no obligation to register the securities under the Securities
Act or under applicable state statutes.  In the absence of such a
registration or an available exemption from registration, sale of the Warrant
Shares will be prohibited.  The Holder shall confirm to the Company
the representations set forth above in connection with the exercise of all or
any portion of this warrant.

    


    3.           
The Company, during the term of this Agreement, will obtain from the appropriate
regulatory agencies any requisite authorization in order to issue and sell such
number of shares of its Common Stock as shall be sufficient to satisfy the
requirements of the Agreement.

    


    4.           
The number of Warrant Shares purchasable upon the exercise of this warrant and
the Warrant Price per share shall be subject to adjustment from time to time
subject to the following terms.  If the outstanding shares of Common
Stock of the Company are increased, decreased, changed into or exchanged for a
different number or kind of shares of the Company through reorganization,
recapitalization, reclassification, stock dividend, stock split or reverse stock
split, the Company or its successors and assigns shall make an appropriate and
proportionate adjustment in the number or kind of shares, and the per-share
Warrant Price thereof, which may be issued to the Holder under this Agreement
upon exercise of the warrants granted under this Agreement.  The
purchase rights represented by this warrant shall not be exercisable with
respect to a
fraction of a share of Common Stock.  Any fractional shares of Common
Stock arising from the dilution or other adjustment in the number of shares
subject to this warrant shall be rounded up to the nearest whole
share.


    
      
         


      

      
        20

        
          

        

      

      
         


      

    

    


    5.           
The Company covenants and agrees that all Warrant Shares which may be delivered
upon the exercise of this warrant will, upon delivery, be free from all taxes,
liens, and charges with respect to the purchase thereof; provided, that the
Company shall have no obligation with respect to any income tax liability of the
Holder.

    


    6.           
The Company agrees at all times to reserve or hold available a sufficient number
of shares of Common Stock to cover the number of Warrant Shares issuable upon
the exercise of this and all other warrants of like tenor and other convertible
securities then outstanding.

    


    7.           
This warrant shall not entitle the Holder hereof to any voting rights or other
rights as a shareholder of the Company, or to any other rights whatsoever,
except the rights herein expressed, and no dividends shall be payable or accrue
in respect of this warrant or the interest represented hereby or the Warrant
Shares purchasable hereunder until or unless, and except to the extent that,
this warrant shall be exercised.

    


    8.           
The Company may deem and treat the registered owner of this warrant as the
absolute owner hereof for all purposes and shall not be affected by any notice
to the contrary.

    


    9.            In
the event that any provision of this Agreement is found to be invalid or
otherwise unenforceable under any applicable law, such invalidity or
unenforceability shall not be construed as rendering any other provisions
contained herein invalid or unenforceable, and all such other provisions shall
be given full force and effect to the same extent as though the invalid or
unenforceable provision were not contained herein.

    


    10.           This
Agreement shall be governed by and construed in accordance with the internal
laws of the state of Delaware, without regard to the principles of conflicts of
law thereof.

    


    11.           In
case this warrant shall be mutilated, lost, stolen, or destroyed, the Company
may at its discretion issue and deliver in exchange and substitution for and on
cancellation of the mutilated warrant, or in lieu of and substitution for the
warrant lost, stolen, or destroyed, a new warrant of like tenor and representing
an equivalent right or interest; but only on receipt of evidence satisfactory to
the Company of such loss, theft, or destruction of this warrant and indemnity
satisfactory to the Company.  The Holder shall also comply with such
other reasonable regulations and pay such other reasonable charges as the
Company may prescribe.

     

    12.           This
Agreement shall be binding on and inure to the benefit of the Company and the
person to whom a warrant is granted hereunder, and such person’s heirs,
executors, administrators, legatees, personal representatives, assignees, and
transferees.

    


    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    IN
WITNESS WHEREOF, the Company has caused this warrant to be executed by the
signature of its duly authorized officer, effective this _____ day of
_______________________ 200__.

     

    
      
        
          	 	 	VIRAL
      GENETICS, INC.
	 	 	 	 
	 	 	 	 
	 	 	 	 
	
                   By  
      

                	 	 	 
	 	 	 	Duly
      Authorized Officer


        

        

          
            
               


            

            
              22

              
                

              

            

            
               


            

          

        

         

      

    

    Exercise
Notice

    (to
be signed only upon exercise of warrant)

    


    TO:         VIRAL GENETICS,
INC.

    


    The Holder of the attached warrant
hereby irrevocable elects to exercise the purchase rights represented by the
warrant for, and to purchase thereunder, ________________________________ shares
of common stock of Viral Genetics, Inc., and herewith makes payment therefor,
and requests that the certificate(s) for such shares be delivered to the Holder
at:

    


    __________________________________________________________________________________________________________________

     

    
      __________________________________________________________________________________________________________________

       

      
        __________________________________________________________________________________________________________________

      

    

    


    
    

    If acquired without registration under
the Securities Act of 1933, as amended (“Securities Act”), the Holder represents
that the Common Stock is being acquired without a view to, or for, resale in
connection with any distribution thereof without registration or other
compliance under the Securities Act and applicable state statutes, and that the
Holder has no direct or indirect participation in any such undertaking or in the
underwriting of such an undertaking.  The Holder understands that the
Common Stock has not been registered, but is being acquired by reason of a
specific exemption under the Securities Act as well as under certain state
statutes for transactions by an issuer not involving any public offering and
that any disposition of the Common Stock may, under certain circumstances, be
inconsistent with these exemptions. The Holder acknowledges that the Common
Stock must be held and may not be sold, transferred, or otherwise disposed of
for value unless subsequently registered under the Securities Act or an
exemption from such registration is available.  The Company is under
no obligation to register the Common Stock under the Securities Act, except as
provided in the Agreement for the warrant.  The certificates
representing the Common Stock will bear a legend restricting transfer, except in
compliance with applicable federal and state securities statutes.

    


    The Holder agrees and acknowledges that
this purported exercise of the warrant is conditioned on, and subject to, any
compliance with requirements of applicable federal and state securities laws
deemed necessary by the Company.

    


    DATED this ________ day of
________________________________, __________.

    


    


    


    _______________________________________

    Signature

     

    
      
         


      

      
        23

        
          

        

      

      
         


      

    


    Transfer
Form

    


    FOR VALUE RECEIVED,
_________________________________________________ hereby sell, assign, and
transfer  unto

    


    _____________________________________________________________________________________________________

    


    _____________________________________________________________________________________________________

    


    ____________________________________________________________________________________________________,

    


    warrants
to purchase shares of the Common Stock of Viral Genetics, Inc., represented by
the within instrument, and do hereby irrevocably constitute and
appoint:

    


    _____________________________________________________________________________________________________

    


    to
transfer said warrants stock on the books of the within named Corporation with
full power of substitution in the premises.

    


    Dated
__________________________________________________,
_______________.

    


    


    ________________________________________

    


    In
presence of

    


    _________________________________________

    
 

     

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