EX-10.11 Amended & Restated Series B Warrant



 





EXHIBIT 10.11




AMENDED AND RESTATED




WARRANT




THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL IN A FORM REASONABLY SATISFACTORY TO
THE ISSUER THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR
UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THIS WARRANT MAY
BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT.



ADVANCED VIRAL RESEARCH CORP.




Warrant To Purchase Common Stock




	 	 	 	 	 
	Warrant No.: ADVR-2-1B
	 	Number of Shares:	 	101,522,843
	 
	 	Warrant Exercise Price:	 	$0.0197
	 
	 	Expiration Date:	 	July 24, 2012






Original Date of Issuance: July 24, 2007

Date of Amendment and Restatement: December 3, 2007



Advanced Viral Research Corp., a Delaware corporation (the “Company”), hereby certifies
that, for good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, YA Global Investments, L.P. (f/k/a Cornell Capital Partners, LP) (the
“Holder”), the registered holder hereof or its permitted assigns, is entitled, subject to
the terms set forth below, to purchase from the Company upon surrender of this Warrant, at any time
or times on or after the date hereof, but not after 11:59 P.M. Eastern Time on the Expiration Date
(as defined herein) 101,522,843 fully paid and nonassessable shares of Common Stock (as defined
herein) of the Company (the “Warrant Shares”) at the exercise price per share provided in
Section 1(b) below or as subsequently adjusted; provided, however, that in no event shall the
holder be entitled to exercise this Warrant for a number of Warrant Shares in excess of that number
of Warrant Shares which, upon giving effect to such exercise, would cause the aggregate number of
shares of Common Stock beneficially owned by the holder and its affiliates to exceed 4.99% of the
outstanding shares of the Common Stock following such exercise, except within sixty (60) days of
the Expiration Date (however, such restriction may be waived by Holder (but only as to itself and
not to any other holder) upon not less than 65 days prior notice to the Company). For purposes of
the foregoing proviso, the aggregate number of shares of Common Stock beneficially owned by the
holder and its affiliates shall include the number of shares of



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Common Stock issuable upon exercise of this Warrant with respect to which the determination of such
proviso is being made, but shall exclude shares of Common Stock which would be issuable upon (i)
exercise of the remaining, unexercised Warrants beneficially owned by the holder and its affiliates
and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities
of the Company beneficially owned by the holder and its affiliates (including, without limitation,
any convertible notes or preferred stock) subject to a limitation on conversion or exercise
analogous to the limitation contained herein. Except as set forth in the preceding sentence, for
purposes of this paragraph, beneficial ownership shall be calculated in accordance with Section
13(d) of the Securities Exchange Act of 1934, as amended. For purposes of this Warrant, in
determining the number of outstanding shares of Common Stock a holder may rely on the number of
outstanding shares of Common Stock as reflected in (1) the Company’s most recent Form 10-Q or Form
10-K, as the case may be, (2) a more recent public announcement by the Company or (3) any other
notice by the Company or its transfer agent setting forth the number of shares of Common Stock
outstanding. Upon the written request of any holder, the Company shall promptly, but in no event
later than one (1) Business Day following the receipt of such notice, confirm in writing to any
such holder the number of shares of Common Stock then outstanding. In any case, the number of
outstanding shares of Common Stock shall be determined after giving effect to the exercise of
Warrants (as defined below) by such holder and its affiliates since the date as of which such
number of outstanding shares of Common Stock was reported.



     Section 1.



          (a) This Warrant is one of the warrants issued pursuant to Section 4(g) of the Securities
Purchase Agreement (“Securities Purchase Agreement”) dated July 24, 2007 between the
Company and the Buyers listed on Schedule I thereto or issued in exchange or substitution
thereafter or replacement thereof. Each Capitalized term used, and not otherwise defined herein,
shall have the meaning ascribed thereto in the Securities Purchase Agreement.



          (b) Definitions. The following words and terms as used in this Warrant shall have the
following meanings:



               (i) “Approved Stock Plan” means a stock option plan that has been approved by the
Board of Directors of the Company prior to the date of the Securities Purchase Agreement, pursuant
to which the Company’s securities may be issued only to any employee, officer or director for
services provided to the Company.



               (ii) “Business Day” means any day other than Saturday, Sunday or other day on which
commercial banks in the City of New York are authorized or required by law to remain closed.



               (iii) “Closing Bid Price” means the closing bid price of Common Stock as quoted on the
Principal Market (as reported by Bloomberg Financial Markets (“Bloomberg”) through its
“Volume at Price” function).



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               (iv) “Common Stock” means (i) the Company’s common stock, par value $0.00001 per
share, and (ii) any capital stock into which such Common Stock shall have been changed or any
capital stock resulting from a reclassification of such Common Stock.



               (v) “Event of Default” means an event of default under the Securities Purchase
Agreement or the Convertible Debentures issued in connection therewith.



               (vi) “Excluded Securities” means, (a) shares issued or deemed to have been issued by
the Company pursuant to an Approved Stock Plan or a stock option granted by the Board of Directors
of the Company disclose in schedule hereto, (b) shares of Common Stock issued or deemed to be
issued by the Company upon the conversion, exchange or exercise of any right, option, obligation or
security outstanding on the date prior to date of the Securities Purchase Agreement, provided that
the terms of such right, option, obligation or security are not amended or otherwise modified on or
after the date of the Securities Purchase Agreement, and provided that the conversion price,
exchange price, exercise price or other purchase price is not reduced, adjusted or otherwise
modified and the number of shares of Common Stock issued or issuable is not increased (whether by
operation of, or in accordance with, the relevant governing documents or otherwise) on or after the
date of the Securities Purchase Agreement, and (c) the shares of Common Stock issued or deemed to
be issued by the Company upon conversion of the Convertible Debentures or exercise of the Warrants.



               (vii) “Expiration Date” means July 24, 2012.



               (viii) “Issuance Date” means the date hereof.



               (ix) “Options” means any rights, warrants or options to subscribe for or purchase
Common Stock or Convertible Securities.



               (x) “Person” means an individual, a limited liability company, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a government or any department
or agency thereof.



               (xi) “Principal Market” means on any of (a) the American Stock Exchange, (b) New York
Stock Exchange, (c) the Nasdaq Global Market, (d) the Nasdaq Capital Market, or (e) the Nasdaq OTC
Bulletin Board (“OTCBB”)



               (xii) “Securities Act” means the Securities Act of 1933, as amended.



               (xiii) “Warrant” means this Warrant and all Warrants issued in exchange, transfer or
replacement thereof.



               (xiv) “Warrant Exercise Price” shall be $0.0197 or as subsequently adjusted as
provided in Section 8 hereof.



          (c) Other Definitional Provisions.



               (i) Except as otherwise specified herein, all references herein (A) to the Company shall be
deemed to include the Company’s successors and (B) to any applicable



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law defined or referred to herein shall be deemed references to such applicable law as the
same may have been or may be amended or supplemented from time to time.



               (ii) When used in this Warrant, the words “herein”, “hereof”, and
“hereunder” and words of similar import, shall refer to this Warrant as a whole and not to
any provision of this Warrant, and the words “Section”, “Schedule”, and
“Exhibit” shall refer to Sections of, and Schedules and Exhibits to, this Warrant unless
otherwise specified.



               (iii) Whenever the context so requires, the neuter gender includes the masculine or feminine,
and the singular number includes the plural, and vice versa.



     Section 2. Exercise of Warrant.



          (a) Subject to the terms and conditions hereof, this Warrant may be exercised by the holder
hereof then registered on the books of the Company, pro rata as hereinafter provided, at any time
on any Business Day on or after the opening of business on such Business Day, commencing with the
first day after the date hereof, and prior to 11:59 P.M. Eastern Time on the Expiration Date (i) by
delivery of a written notice, in the form of the subscription notice attached as Exhibit A
hereto (the “Exercise Notice”), of such holder’s election to exercise this Warrant, which
notice shall specify the number of Warrant Shares to be purchased, payment to the Company of an
amount equal to the Warrant Exercise Price(s) applicable to the Warrant Shares being purchased,
multiplied by the number of Warrant Shares (at the applicable Warrant Exercise Price) as to which
this Warrant is being exercised (plus any applicable issue or transfer taxes) (the “Aggregate
Exercise Price”) in cash or wire transfer of immediately available funds and the surrender of
this Warrant (or an indemnification undertaking with respect to this Warrant in the case of its
loss, theft or destruction) to a common carrier for overnight delivery to the Company as soon as
practicable following such date (“Cash Basis”) or (ii) if at the time of exercise, the
Warrant Shares are not subject to an effective registration statement or if an Event of Default has
occurred, by delivering an Exercise Notice and in lieu of making payment of the Aggregate Exercise
Price in cash or wire transfer, elect instead to receive upon such exercise the “Net Number” of
shares of Common Stock determined according to the following formula (the “Cashless
Exercise”):



	 	 	 	 	 
	Net Number =

	 	(A x B) – (A x C)
	 	 
	 

	 	B	 	 






For purposes of the foregoing formula:



A = the total number of Warrant Shares with respect to which this Warrant is then
being exercised.



B = the Closing Bid Price of the Common Stock on the date of exercise of the
Warrant.



C = the Warrant Exercise Price then in effect for the applicable Warrant Shares at
the time of such exercise.



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     In the event of any exercise of the rights represented by this Warrant in compliance with this
Section 2, the Company shall on or before the fifth (5th) Business Day following the date of
receipt of the Exercise Notice, the Aggregate Exercise Price and this Warrant (or an
indemnification undertaking with respect to this Warrant in the case of its loss, theft or
destruction) and the receipt of the representations of the holder specified in Section 6 hereof, if
requested by the Company (the “Exercise Delivery Documents”), and if the Common Stock is
DTC eligible, credit such aggregate number of shares of Common Stock to which the holder shall be
entitled to the holder’s or its designee’s balance account with The Depository Trust Company;
provided, however, if the holder who submitted the Exercise Notice requested physical delivery of
any or all of the Warrant Shares, or, if the Common Stock is not DTC eligible then the Company
shall, on or before the fifth (5th) Business Day following receipt of the Exercise
Delivery Documents, issue and surrender to a common carrier for overnight delivery to the address
specified in the Exercise Notice, a certificate, registered in the name of the holder, for the
number of shares of Common Stock to which the holder shall be entitled pursuant to such request.
Upon delivery of the Exercise Notice and Aggregate Exercise Price referred to in clause (i) or (ii)
above the holder of this Warrant shall be deemed for all corporate purposes to have become the
holder of record of the Warrant Shares with respect to which this Warrant has been exercised. In
the case of a dispute as to the determination of the Warrant Exercise Price, the Closing Bid Price
or the arithmetic calculation of the Warrant Shares, the Company shall promptly issue to the holder
the number of Warrant Shares that is not disputed and shall submit the disputed determinations or
arithmetic calculations to the holder via facsimile within one (1) Business Day of receipt of the
holder’s Exercise Notice.



          (b) If the holder and the Company are unable to agree upon the determination of the Warrant
Exercise Price or arithmetic calculation of the Warrant Shares within one (1) day of such disputed
determination or arithmetic calculation being submitted to the holder, then the Company shall
immediately submit via facsimile (i) the disputed determination of the Warrant Exercise Price or
the Closing Bid Price to an independent, reputable investment banking firm or (ii) the disputed
arithmetic calculation of the Warrant Shares to its independent, outside accountant. The Company
shall cause the investment banking firm or the accountant, as the case may be, to perform the
determinations or calculations and notify the Company and the holder of the results no later than
forty-eight (48) hours from the time it receives the disputed determinations or calculations. Such
investment banking firm’s or accountant’s determination or calculation, as the case may be, shall
be deemed conclusive absent manifest error.



          (c) Unless the rights represented by this Warrant shall have expired or shall have been fully
exercised, the Company shall, as soon as practicable and in no event later than five (5) Business
Days after any exercise and at its own expense, issue a new Warrant identical in all respects to
this Warrant exercised except it shall represent rights to purchase the number of Warrant Shares
purchasable immediately prior to such exercise under this Warrant exercised, less the number of
Warrant Shares with respect to which such Warrant is exercised.



          (d) No fractional Warrant Shares are to be issued upon any pro rata exercise of this Warrant,
but rather the number of Warrant Shares issued upon such exercise of this Warrant shall be rounded
up or down to the nearest whole number.



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          (e) If the Company or its Transfer Agent shall fail for any reason or for no reason to issue
to the holder within ten (10) days of receipt of the Exercise Delivery Documents, a certificate for
the number of Warrant Shares to which the holder is entitled or to credit the holder’s balance
account with The Depository Trust Company for such number of Warrant Shares to which the holder is
entitled upon the holder’s exercise of this Warrant, the Company shall, in addition to any other
remedies under this Warrant or otherwise available to such holder, pay as additional damages in
cash to such holder on each day the issuance of such certificate for Warrant Shares is not timely
effected an amount equal to 0.025% of the product of (A) the sum of the number of Warrant Shares
not issued to the holder on a timely basis and to which the holder is entitled, and (B) the Closing
Bid Price of the Common Stock for the trading day immediately preceding the last possible date
which the Company could have issued such Common Stock to the holder without violating this Section
2.



          (f) If within ten (10) days after the Company’s receipt of the Exercise Delivery Documents,
the Company fails to deliver a new Warrant to the holder for the number of Warrant Shares to which
such holder is entitled pursuant to Section 2 hereof, then, in addition to any other available
remedies under this Warrant, or otherwise available to such holder, the Company shall pay as
additional damages in cash to such holder on each day after such tenth (10th) day that
such delivery of such new Warrant is not timely effected in an amount equal to 0.25% of the product
of (A) the number of Warrant Shares represented by the portion of this Warrant which is not being
exercised and (B) the Closing Bid Price of the Common Stock for the trading day immediately
preceding the last possible date which the Company could have issued such Warrant to the holder
without violating this Section 2.



     Section 3. Covenants as to Common Stock. The Company hereby covenants and agrees as
follows:



          (a) This Warrant is, and any Warrants issued in substitution for or replacement of this
Warrant will upon issuance be, duly authorized and validly issued.



          (b) All Warrant Shares which may be issued upon the exercise of the rights represented by this
Warrant will, upon issuance, be validly issued, fully paid and nonassessable and free from all
taxes, liens and charges with respect to the issue thereof.



          (c) During the period within which the rights represented by this Warrant may be exercised,
the Company will at all times have authorized and reserved at least one hundred percent (100%) of
the number of shares of Common Stock needed to provide for the exercise of the rights then
represented by this Warrant and the par value of said shares will at all times be less than or
equal to the applicable Warrant Exercise Price. If at any time the Company does not have a
sufficient number of shares of Common Stock authorized and available, then the Company shall call
and hold a special meeting of its stockholders within sixty (60) days of that time for the sole
purpose of increasing the number of authorized shares of Common Stock.



          (d) If at any time after the date hereof the Company shall file a registration statement, the
Company shall include the Warrant Shares issuable to the holder, pursuant to the terms of this
Warrant and shall maintain, so long as any other shares of Common Stock shall be so listed, such
listing of all Warrant Shares from time to time issuable upon the exercise of this



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Warrant; and the Company shall so list on each national securities exchange or automated
quotation system, as the case may be, and shall maintain such listing of, any other shares of
capital stock of the Company issuable upon the exercise of this Warrant if and so long as any
shares of the same class shall be listed on such national securities exchange or automated
quotation system.



          (e) The Company will not, by amendment of its Articles of Incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of
securities, or any other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed by it hereunder, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the taking of all such
action as may reasonably be requested by the holder of this Warrant in order to protect the
exercise privilege of the holder of this Warrant against dilution or other impairment, consistent
with the tenor and purpose of this Warrant. The Company will not increase the par value of any
shares of Common Stock receivable upon the exercise of this Warrant above the Warrant Exercise
Price then in effect, and (ii) will take all such actions as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and nonassessable shares of Common
Stock upon the exercise of this Warrant.



          (f) This Warrant will be binding upon any entity succeeding to the Company by merger,
consolidation or acquisition of all or substantially all of the Company’s assets.



     Section 4. Taxes. The Company shall pay any and all taxes, except any applicable
withholding, which may be payable with respect to the issuance and delivery of Warrant Shares upon
exercise of this Warrant.



     Section 5. Warrant Holder Not Deemed a Stockholder. Except as otherwise specifically
provided herein, no holder, as such, of this Warrant shall be entitled to vote or receive dividends
or be deemed the holder of shares of capital stock of the Company for any purpose, nor shall
anything contained in this Warrant be construed to confer upon the holder hereof, as such, any of
the rights of a stockholder of the Company or any right to vote, give or withhold consent to any
corporate action (whether any reorganization, issue of stock, reclassification of stock,
consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or
subscription rights, or otherwise, prior to the issuance to the holder of this Warrant of the
Warrant Shares which he or she is then entitled to receive upon the due exercise of this Warrant.
In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on
such holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a
stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of
the Company. Notwithstanding this Section 5, the Company will provide the holder of this Warrant
with copies of the same notices and other information given to the stockholders of the Company
generally, contemporaneously with the giving thereof to the stockholders.



     Section 6. Representations of Holder. The holder of this Warrant, by the acceptance
hereof, represents that it is acquiring this Warrant and the Warrant Shares for its own account for
investment only and not with a view towards, or for resale in connection with, the public sale or
distribution of this Warrant or the Warrant Shares, except pursuant to sales registered or



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exempted under the Securities Act; provided, however, that by making the representations
herein, the holder does not agree to hold this Warrant or any of the Warrant Shares for any minimum
or other specific term and reserves the right to dispose of this Warrant and the Warrant Shares at
any time in accordance with or pursuant to a registration statement or an exemption under the
Securities Act. The holder of this Warrant further represents, by acceptance hereof, that, as of
this date, such holder is an “accredited investor” as such term is defined in Rule 501(a)(1) of
Regulation D promulgated by the Securities and Exchange Commission under the Securities Act (an
“Accredited Investor”). Upon exercise of this Warrant the holder shall, if requested by
the Company, confirm in writing, in a form satisfactory to the Company, that the Warrant Shares so
purchased are being acquired solely for the holder’s own account and not as a nominee for any other
party, for investment, and not with a view toward distribution or resale and that such holder is an
Accredited Investor. If such holder cannot make such representations because they would be
factually incorrect, it shall be a condition to such holder’s exercise of this Warrant that the
Company receive such other representations as the Company considers reasonably necessary to assure
the Company that the issuance of its securities upon exercise of this Warrant shall not violate any
United States or state securities laws.



     Section 7. Ownership and Transfer.



          (a) The Company shall maintain at its principal executive offices (or such other office or
agency of the Company as it may designate by notice to the holder hereof), a register for this
Warrant, in which the Company shall record the name and address of the person in whose name this
Warrant has been issued, as well as the name and address of each transferee. The Company may treat
the person in whose name any Warrant is registered on the register as the owner and holder thereof
for all purposes, notwithstanding any notice to the contrary, but in all events recognizing any
transfers made in accordance with the terms of this Warrant.



     Section 8. Adjustment of Warrant Exercise Price and Number of Shares. The Warrant
Exercise Price and the number of shares of Common Stock issuable upon exercise of this Warrant
shall be adjusted from time to time as follows:



          (a) Adjustment of Warrant Exercise Price and Number of Shares upon Issuance of Common
Stock. If and whenever on or after the Issuance Date of this Warrant, the Company issues or
sells, or is deemed to have issued or sold, any shares of Common Stock (other than Excluded
Securities) for a consideration per share less than a price (the “Applicable Price”) equal
to the Warrant Exercise Price in effect immediately prior to such issuance or sale, then
immediately after such issue or sale the Warrant Exercise Price then in effect shall be reduced to
an amount equal to such consideration per share. Upon each such adjustment of the Warrant Exercise
Price hereunder, the number of Warrant Shares issuable upon exercise of this Warrant shall be
adjusted to the number of shares determined by multiplying the Warrant Exercise Price in effect
immediately prior to such adjustment by the number of Warrant Shares issuable upon exercise of this
Warrant immediately prior to such adjustment and dividing the product thereof by the Warrant
Exercise Price resulting from such adjustment.



          (b) Effect on Warrant Exercise Price of Certain Events. For purposes of determining
the adjusted Warrant Exercise Price under Section 8(a) above, the following shall be applicable:



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               (i) Issuance of Options. If after the date hereof, the Company in any manner grants
any Options and the lowest price per share for which one share of Common Stock is issuable upon the
exercise of any such Option or upon conversion or exchange of any convertible securities issuable
upon exercise of any such Option is less than the Applicable Price, then such share of Common Stock
shall be deemed to be outstanding and to have been issued and sold by the Company at the time of
the granting or sale of such Option for such price per share. For purposes of this Section
8(b)(i), the lowest price per share for which one share of Common Stock is issuable upon exercise
of such Options or upon conversion or exchange of such Convertible Securities shall be equal to the
sum of the lowest amounts of consideration (if any) received or receivable by the Company with
respect to any one share of Common Stock upon the granting or sale of the Option, upon exercise of
the Option or upon conversion or exchange of any convertible security issuable upon exercise of
such Option. No further adjustment of the Warrant Exercise Price shall be made upon the actual
issuance of such Common Stock or of such convertible securities upon the exercise of such Options
or upon the actual issuance of such Common Stock upon conversion or exchange of such convertible
securities.



               (ii) Issuance of Convertible Securities. If the Company in any manner issues or sells
any convertible securities and the lowest price per share for which one share of Common Stock is
issuable upon the conversion or exchange thereof is less than the Applicable Price, then such share
of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company
at the time of the issuance or sale of such convertible securities for such price per share. For
the purposes of this Section 8(b)(ii), the lowest price per share for which one share of Common
Stock is issuable upon such conversion or exchange shall be equal to the sum of the lowest amounts
of consideration (if any) received or receivable by the Company with respect to one share of Common
Stock upon the issuance or sale of the convertible security and upon conversion or exchange of such
convertible security. No further adjustment of the Warrant Exercise Price shall be made upon the
actual issuance of such Common Stock upon conversion or exchange of such convertible securities,
and if any such issue or sale of such convertible securities is made upon exercise of any Options
for which adjustment of the Warrant Exercise Price had been or are to be made pursuant to other
provisions of this Section 8(b), no further adjustment of the Warrant Exercise Price shall be made
by reason of such issue or sale.



               (iii) Change in Option Price or Rate of Conversion. If the purchase price provided
for in any Options, the additional consideration, if any, payable upon the issue, conversion or
exchange of any convertible securities, or the rate at which any convertible securities are
convertible into or exchangeable for Common Stock changes at any time, the Warrant Exercise Price
in effect at the time of such change shall be adjusted to the Warrant Exercise Price which would
have been in effect at such time had such Options or convertible securities provided for such
changed purchase price, additional consideration or changed conversion rate, as the case may be, at
the time initially granted, issued or sold and the number of Warrant Shares issuable upon exercise
of this Warrant shall be correspondingly readjusted. For purposes of this Section 8(b)(iii), if
the terms of any Option or convertible security that was outstanding as of the Issuance Date of
this Warrant are changed in the manner described in the immediately preceding sentence, then such
Option or convertible security and the Common Stock deemed issuable upon exercise, conversion or
exchange thereof shall be deemed to have



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been issued as of the date of such change. No adjustment pursuant to this Section 8(b) shall
be made if such adjustment would result in an increase of the Warrant Exercise Price then in
effect.



               (iv) Calculation of Consideration Received. If any Common Stock, Options or
convertible securities are issued or sold or deemed to have been issued or sold for cash, the
consideration received therefore will be deemed to be the net amount received by the Company
therefore. If any Common Stock, Options or convertible securities are issued or sold for a
consideration other than cash, the amount of such consideration received by the Company will be the
fair value of such consideration, except where such consideration consists of marketable
securities, in which case the amount of consideration received by the Company will be the market
price of such securities on the date of receipt of such securities. If any Common Stock, Options
or convertible securities are issued to the owners of the non-surviving entity in connection with
any merger in which the Company is the surviving entity, the amount of consideration therefore will
be deemed to be the fair value of such portion of the net assets and business of the non-surviving
entity as is attributable to such Common Stock, Options or convertible securities, as the case may
be. The fair value of any consideration other than cash or securities will be determined jointly
by the Company and the holders of Warrants representing at least two-thirds (b) of the Warrant
Shares issuable upon exercise of the Warrants then outstanding. If such parties are unable to
reach agreement within ten (10) days after the occurrence of an event requiring valuation (the
“Valuation Event”), the fair value of such consideration will be determined within five (5)
Business Days after the tenth (10th) day following the Valuation Event by an
independent, reputable appraiser jointly selected by the Company and the holders of Warrants
representing at least two-thirds (b) of the Warrant Shares issuable upon exercise of the Warrants
then outstanding. The determination of such appraiser shall be final and binding upon all parties
and the fees and expenses of such appraiser shall be borne jointly by the Company and the holders
of Warrants.



               (v) Integrated Transactions. In case any Option is issued in connection with the
issue or sale of other securities of the Company, together comprising one integrated transaction in
which no specific consideration is allocated to such Options by the parties thereto, the Options
will be deemed to have been issued for a consideration of $.01.



               (vi) Treasury Shares. The number of shares of Common Stock outstanding at any given
time does not include shares owned or held by or for the account of the Company, and the
disposition of any shares so owned or held will be considered an issue or sale of Common Stock.



               (vii) Record Date. If the Company takes a record of the holders of Common Stock for
the purpose of entitling them (1) to receive a dividend or other distribution payable in Common
Stock, Options or in convertible securities or (2) to subscribe for or purchase Common Stock,
Options or convertible securities, then such record date will be deemed to be the date of the issue
or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of
such dividend or the making of such other distribution or the date of the granting of such right of
subscription or purchase, as the case may be.



          (c) Adjustment of Warrant Exercise Price upon Subdivision or Combination of Common
Stock. If the Company at any time after the date of issuance of this Warrant subdivides



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(by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its
outstanding shares of Common Stock into a greater number of shares, any Warrant Exercise Price in
effect immediately prior to such subdivision will be proportionately reduced and the number of
shares of Common Stock obtainable upon exercise of this Warrant will be proportionately increased.
If the Company at any time after the date of issuance of this Warrant combines (by combination,
reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock
into a smaller number of shares, any Warrant Exercise Price in effect immediately prior to such
combination will be proportionately increased and the number of Warrant Shares issuable upon
exercise of this Warrant will be proportionately decreased. Any adjustment under this Section 8(c)
shall become effective at the close of business on the date the subdivision or combination becomes
effective.



          (d) Distribution of Assets. If the Company shall declare or make any dividend or
other distribution of its assets (or rights to acquire its assets) to holders of Common Stock, by
way of return of capital or otherwise (including, without limitation, any distribution of cash,
stock or other securities, property or options by way of a dividend, spin off, reclassification,
corporate rearrangement or other similar transaction) (a “Distribution”), at any time after
the issuance of this Warrant, then, in each such case:



               (i) any Warrant Exercise Price in effect immediately prior to the close of business on the
record date fixed for the determination of holders of Common Stock entitled to receive the
Distribution shall be reduced, effective as of the close of business on such record date, to a
price determined by multiplying such Warrant Exercise Price by a fraction of which (A) the
numerator shall be the Closing Sale Price of the Common Stock on the trading day immediately
preceding such record date minus the value of the Distribution (as determined in good faith by the
Company’s Board of Directors) applicable to one share of Common Stock, and (B) the denominator
shall be the Closing Sale Price of the Common Stock on the trading day immediately preceding such
record date; and



               (ii) either (A) the number of Warrant Shares obtainable upon exercise of this Warrant shall be
increased to a number of shares equal to the number of shares of Common Stock obtainable
immediately prior to the close of business on the record date fixed for the determination of
holders of Common Stock entitled to receive the Distribution multiplied by the reciprocal of the
fraction set forth in the immediately preceding clause (i), or (B) in the event that the
Distribution is of common stock of a company whose common stock is traded on a national securities
exchange or a national automated quotation system, then the holder of this Warrant shall receive an
additional warrant to purchase Common Stock, the terms of which shall be identical to those of this
Warrant, except that such warrant shall be exercisable into the amount of the assets that would
have been payable to the holder of this Warrant pursuant to the Distribution had the holder
exercised this Warrant immediately prior to such record date and with an exercise price equal to
the amount by which the exercise price of this Warrant was decreased with respect to the
Distribution pursuant to the terms of the immediately preceding clause (i).



          (e) Certain Events. If any event occurs of the type contemplated by the provisions of
this Section 8 but not expressly provided for by such provisions (including, without limitation,
the granting of stock appreciation rights, phantom stock rights or other rights with



11









 





equity features), then the Company’s Board of Directors will make an appropriate adjustment in
the Warrant Exercise Price and the number of shares of Common Stock obtainable upon exercise of
this Warrant so as to protect the rights of the holders of the Warrants; provided, except as set
forth in section 8(c),that no such adjustment pursuant to this Section 8(e) will increase the
Warrant Exercise Price or decrease the number of shares of Common Stock obtainable as otherwise
determined pursuant to this Section 8.



          (f) Notices.



               (i) Immediately upon any adjustment of the Warrant Exercise Price, the Company will give
written notice thereof to the holder of this Warrant, setting forth in reasonable detail, and
certifying, the calculation of such adjustment.



               (ii) The Company will give written notice to the holder of this Warrant at least ten (10) days
prior to the date on which the Company closes its books or takes a record (A) with respect to any
dividend or distribution upon the Common Stock, (B) with respect to any pro rata subscription offer
to holders of Common Stock or (C) for determining rights to vote with respect to any Organic Change
(as defined below), dissolution or liquidation, provided that such information shall be made known
to the public prior to or in conjunction with such notice being provided to such holder.



               (iii) The Company will also give written notice to the holder of this Warrant at least ten
(10) days prior to the date on which any Organic Change, dissolution or liquidation will take
place, provided that such information shall be made known to the public prior to or in conjunction
with such notice being provided to such holder.



     Section 9. Purchase Rights; Reorganization, Reclassification, Consolidation, Merger or
Sale.



          (a) In addition to any adjustments pursuant to Section 8 above, if at any time the Company
grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants,
securities or other property pro rata to the record holders of any class of Common Stock (the
“Purchase Rights”), then the holder of this Warrant will be entitled to acquire, upon the
terms applicable to such Purchase Rights, the aggregate Purchase Rights which such holder could
have acquired if such holder had held the number of shares of Common Stock acquirable upon complete
exercise of this Warrant immediately before the date on which a record is taken for the grant,
issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the
record holders of Common Stock are to be determined for the grant, issue or sale of such Purchase
Rights.



          (b) Any recapitalization, reorganization, reclassification, consolidation, merger, sale of all
or substantially all of the Company’s assets to another Person or other transaction in each case
which is effected in such a way that holders of Common Stock are entitled to receive (either
directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange
for Common Stock is referred to herein as an “Organic Change.” Prior to the consummation
of any (i) sale of all or substantially all of the Company’s assets to an acquiring Person or (ii)
other Organic Change following which the Company is not a surviving entity, the



12









 





Company will secure from the Person purchasing such assets or the successor resulting from
such Organic Change (in each case, the “Acquiring Entity”) a written agreement (in form and
substance satisfactory to the holders of Warrants representing at least two-thirds (iii) of the
Warrant Shares issuable upon exercise of the Warrants then outstanding) to deliver to each holder
of Warrants in exchange for such Warrants, a security of the Acquiring Entity evidenced by a
written instrument substantially similar in form and substance to this Warrant and satisfactory to
the holders of the Warrants (including an adjusted warrant exercise price equal to the value for
the Common Stock reflected by the terms of such consolidation, merger or sale, and exercisable for
a corresponding number of shares of Common Stock acquirable and receivable upon exercise of the
Warrants without regard to any limitations on exercise, if the value so reflected is less than any
Applicable Warrant Exercise Price immediately prior to such consolidation, merger or sale). Prior
to the consummation of any other Organic Change, the Company shall make appropriate provision (in
form and substance satisfactory to the holders of Warrants representing a majority of the Warrant
Shares issuable upon exercise of the Warrants then outstanding) to insure that each of the holders
of the Warrants will thereafter have the right to acquire and receive in lieu of or in addition to
(as the case may be) the Warrant Shares immediately theretofore issuable and receivable upon the
exercise of such holder’s Warrants (without regard to any limitations on exercise), such shares of
stock, securities or assets that would have been issued or payable in such Organic Change with
respect to or in exchange for the number of Warrant Shares which would have been issuable and
receivable upon the exercise of such holder’s Warrant as of the date of such Organic Change
(without taking into account any limitations or restrictions on the exercisability of this
Warrant).



     Section 10. Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant is lost,
stolen, mutilated or destroyed, the Company shall promptly, on receipt of an indemnification
undertaking (or, in the case of a mutilated Warrant, the Warrant), issue a new Warrant of like
denomination and tenor as this Warrant so lost, stolen, mutilated or destroyed.



     Section 11. Notice. Any notices, consents, waivers or other communications required
or permitted to be given under the terms of this Warrant must be in writing and will be deemed to
have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by
facsimile (provided confirmation of receipt is received by the sending party transmission is
mechanically or electronically generated and kept on file by the sending party); or (iii) one
Business Day after deposit with a nationally recognized overnight delivery service, in each case
properly addressed to the party to receive the same. The addresses and facsimile numbers for such
communications shall be:



	 	 	 
	If to Holder:

	 	YA Global Investments, L.P.
	 

	 	101 Hudson Street — Suite 3700
	 

	 	Jersey City, NJ 07302
	 

	 	Attention: Mark A. Angelo
	 

	 	Telephone: (201) 985-8300
	 

	 	Facsimile: (201) 985-8266
	 
	 	 
	With Copy to:

	 	David Gonzalez, Esq.
	 

	 	101 Hudson Street — Suite 3700
	 

	 	Jersey City, NJ 07302
	 

	 	Telephone: (201) 985-8300
	 

	 	Facsimile: (201) 985-8266






13









 






	 	 	 
	If to the Company, to:

	 	Advanced Viral Research Corp.
	 

	 	200 Corporate Boulevard South
	 

	 	Yonkers, New York 10701
	 

	 	Attention: Stephen Elliston
	 

	 	Telephone: (914) 376-7383
	 

	 	Facsimile: (914) 845-8720
	 
	 	 
	With a copy to:

	 	Berman Rennert Vogel and Mandler, P.A.
	 

	 	29th Floor- Bank of America Tower
at International Place

100 S.E. Second Street

Miami, Florida 33131
	 

	 	Attention: Charles J. Rennert
	 

	 	Telephone: (305) 577-4171
	 

	 	Facsimile: (305) 373-6036






If to a holder of this Warrant, to it at the address and facsimile number set forth on Exhibit
C hereto, with copies to such holder’s representatives as set forth on Exhibit C, or at
such other address and facsimile as shall be delivered to the Company upon the issuance or transfer
of this Warrant. Each party shall provide five days’ prior written notice to the other party of
any change in address or facsimile number. Written confirmation of receipt (A) given by the
recipient of such notice, consent, facsimile, waiver or other communication, (or (B) provided by a
nationally recognized overnight delivery service shall be rebuttable evidence of personal service,
receipt by facsimile or receipt from a nationally recognized overnight delivery service in
accordance with clause (i), (ii) or (iii) above, respectively.



     Section 12. Date. The date of this Warrant is set forth on page 1 hereof. This
Warrant, in all events, shall be wholly void and of no effect after the close of business on the
Expiration Date, except that notwithstanding any other provisions hereof, the provisions of Section
8(b) shall continue in full force and effect after such date as to any Warrant Shares or other
securities issued upon the exercise of this Warrant.



     Section 13. Amendment and Waiver. Except as otherwise provided herein, the provisions
of the Warrants may be amended and the Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, only if the Company has obtained the written
consent of the holders of Warrants representing at least two-thirds of the Warrant Shares issuable
upon exercise of the Warrants then outstanding; provided that, except for Section 8(d), no such
action may increase the Warrant Exercise Price or decrease the number of shares or class of stock
obtainable upon exercise of any Warrant without the written consent of the holder of such Warrant.



     Section 14. Descriptive Headings; Governing Law. The descriptive headings of the
several sections and paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant. The corporate laws of the State of Delaware shall govern all
issues concerning the relative rights of the Company and its stockholders. All other questions



14









 





concerning the construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of New Jersey, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of New Jersey or any other
jurisdictions) that would cause the application of the laws of any jurisdictions other than the
State of New Jersey. Each party hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in Hudson County and the United States District Court for the
District of New Jersey, for the adjudication of any dispute hereunder or in connection herewith or
therewith, or with any transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.
Each party hereby irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such party at the
address for such notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing contained herein shall be
deemed to limit in any way any right to serve process in any manner permitted by law.



     Section 15. Waiver of Jury Trial. AS A MATERIAL INDUCEMENT FOR EACH PARTY HERETO TO
ENTER INTO THIS WARRANT, THE PARTIES HERETO HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING RELATED IN ANY WAY TO THIS WARRANT AND/OR ANY AND ALL OF THE OTHER DOCUMENTS ASSOCIATED
WITH THIS TRANSACTION.



REMAINDER OF PAGE INTENTIONALLY LEFT BLANK




15









 








     IN WITNESS WHEREOF, the Company has caused this Warrant to be signed as of the date first set
forth above.



	 	 	 	 	 
	 	ADVANCED VIRAL RESEARCH CORP. 

 	 
	 	By:  	/s/ Martin Bookman
 	 
	 	 	Name:  	Martin Bookman                	 
	 	 	Title:  	Chief Financial Officer 	 
	 




16









 








EXHIBIT A TO WARRANT




EXERCISE NOTICE




TO BE EXECUTED

BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT




ADVANCED VIRAL RESEARCH CORP.





     The undersigned holder hereby exercises the right to purchase                      of the shares of
Common Stock (“Warrant Shares”) of Advanced Viral Research Corp. (the “Company”),
evidenced by the attached Warrant (the “Warrant”). Capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in the Warrant.



Specify Method of exercise by check mark:




     1.       Cash Exercise




(a) Payment of Warrant Exercise Price. The holder shall pay the Aggregate
Exercise Price of $                     to the Company in accordance with the terms of the
Warrant.




(b) Delivery of Warrant Shares. The Company shall deliver to the holder
                     Warrant Shares in accordance with the terms of the Warrant.



     2.       Cashless Exercise




(a) Payment of Warrant Exercise Price. In lieu of making payment of the
Aggregate Exercise Price, the holder elects to receive upon such exercise the Net
Number of shares of Common Stock determined in accordance with the terms of the
Warrant.




(b) Delivery of Warrant Shares. The Company shall deliver to the holder
           Warrant Shares in accordance with the terms of the Warrant.



Date:                           ,           




Name of Registered Holder



By:                                            

Name:                                       

Title:                                         




 









 





EXHIBIT B TO WARRANT




FORM OF WARRANT POWER




     FOR VALUE RECEIVED, the undersigned does hereby assign and transfer to                               ,
Federal Identification No.
                    , a warrant to purchase                                shares of the capital
stock of Advanced Viral Research Corp. represented by warrant certificate no.           , standing in
the name of the undersigned on the books of said corporation. The undersigned does hereby
irrevocably constitute and appoint                               , attorney to transfer the warrants of said
corporation, with full power of substitution in the premises.






			
	Dated:	 	

 















 





By:  

Name:

Title:









 




 




     B-1