Unassociated Document


  
     

    IN
      THE UNITED STATES DISTRICT COURT

    FOR
      THE NORTHERN DISTRICT OF ILLINOIS

    EASTERN
      DIVISION

     

    
      	
              TIMOTHY
                & THOMAS LLC,

              an
                Illinois limited liability company,

               

              Plaintiff,

            	
               

              Case
                No.  06 C 1813

               

            
	
               

              v.

               

              VIRAL
                GENETICS, INC., a Delaware

              corporation,
                and HAIG KELEDJIAN, an

              individual
                and citizen of California,

               

              Defendants.

               

            	
              Honorable
                Blanche M. Manning


              Magistrate
                Judge Michael T. Mason

            
	
               

              VIRAL
                GENETICS, INC.,

               

              Counterclaim
                Plaintiff,

               

            	
               

              JURY
                TRIAL DEMANDED

            
	
               

              v.

               

              TIMOTHY
                & THOMAS LLC, TIMOTHY

              WRIGHT,
                THOMAS LITTLE and JOHN and

              JANE
                DOES 1 through 10,

               

              Counterclaim
                Defendants.

               

            	 


    

     

    DEFENDANTS’
      AMENDED ANSWER TO

    PLAINTIFF’S
      AMENDED COMPLAINT AND

    COUNTERCLAIM
      PLAINTIFF’S AMENDED COUNTERCLAIMS

    


    
      Defendant
        and Counterclaim Plaintiff
        Viral Genetics, Inc. (“VGI”) and Defendant Haig Keledjian (“Keledjian”)
        (collectively, “Defendants”), by their attorneys, Baker & McKenzie LLP, as
        and for their Amended Answer to the Amended Complaint dated December 12,
        2006
        (the “Amended Complaint”) and VGI’s Amended Counterclaims against Counterclaim
        Defendants Timothy & Thomas LLC (“T&T”), Timothy Wright (“Wright”),
        Thomas Little (“Little”) and John and Jane Does 1 through 10 (collectively,
“Counterclaim Defendants”), hereby state as follows:

    

    


    
      
        
                           

          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    1.           Defendants
      deny each and every allegation contained in Paragraph 1 of the Amended
      Complaint, except admit that VGI owns the international patent rights to an
      investigational drug which is being studied for the potential treatment of
      Human
      Immunodeficiency Virus (“HIV”) and the related condition of Acquired
      Immunodeficiency Syndrome (“Aids”), and that VGI and T&T entered into a
      Distribution Management Agreement (the “Distribution Management
      Agreement”).  The Court is respectfully referred to the Distribution
      Management Agreement for the terms thereof.

    2.           Defendants
      deny each and every allegation contained in Paragraph 2 of the Amended
      Complaint, except admit that, previously, VGI had granted certain distribution
      rights in certain African countries to VGI’s investigational drug to another
      company; however, such distribution rights were no longer in force or effect
      at
      the time of execution of the Distribution Management Agreement with
      Plaintiff.

    Section
      of the Amended Complaint Entitled
“The
      Parties”

    3.           Defendants
      deny knowledge and information sufficient to form a belief as to the truth
      of
      the allegations contained in Paragraph 3 of the Amended Complaint.

    4.           Defendants
      admit the allegations contained in Paragraph 4 of the Amended
      Complaint.

    5.           Defendants
      admit the allegations contained in Paragraph 5 of the Amended
      Complaint.

    


    
      
        
              

          
          

        

        
          -
            2 -

          
            

          

        

        
          
          

        

      

    

    


    Section
      of the Amended Complaint Entitled
“Jurisdiction
      and Venue”

    6.           Defendants
      admit the allegations contained in Paragraph 6 of the Amended
      Complaint.

    7.           Defendants
      deny each and every allegation contained in Paragraph 7 of the Amended
      Complaint.

    Section
      of the Amended Complaint Entitled
“Factual
      Background”

    8.           Defendants
      deny each and every allegation contained in Paragraph 8 of the Amended
      Complaint, except admit that VGI has made certain public securities filings
      and
      respectfully refers the Court thereto for the contents thereof.

    9.           Defendants
      deny each and every allegation contained in Paragraph 9 of the Amended
      Complaint, except admit that VGI has made certain public securities filings
      and
      respectfully refers the Court thereto for the contents thereof.

    10.           Defendants
      deny each and every allegation contained in Paragraph 10 of the Amended
      Complaint, except admit that a Phase III clinical trial of the safety and
      efficacy of VGV-1 has been conducted in the Republic of South
      Africa.

    Section
      of the Amended Complaint Entitled
“The
      Invention Of TNP Technology”

    11.           Defendants
      deny each and every allegation contained in Paragraph 11 of the Amended
      Complaint, except admit that Harry P. Zhabilov Sr. died in May, 2002 and that
      he
      was one of the inventors of the use of Thymus Nuclear Protein (“TNP”) as a
      treatment for HIV/AIDS, which is the subject of more than one patent application
      in the United States and/or worldwide.

    12.           Defendants
      deny each and every allegation contained in Paragraph 12 of the
      Amended Complaint, except admit that three continuation-in-part applications
      relating to the original patent application were filed with the
      USPTO.

    


    
      
        
              

          
          

        

        
          -
            3 -

          
            

          

        

        
          
          

        

      

    

    


    13.           Defendants
      deny each and every allegation contained in Paragraph 13 of the Amended
      Complaint, except admit that a patent application was filed in the Republic
      of
      South Africa with respect to the same invention described in the original United
      States patent application.

    14.           Defendants
      admit the allegations contained in Paragraph 14 of the Amended
      Complaint.

    15.           Defendants
      admit the allegations contained in Paragraph 15 of the Amended Complaint.

    16.           Defendants
      deny each and every allegation contained in Paragraph 13 of the Amended
      Complaint, except admit that Tomson USA Ltd. (“Tomson”) is no longer a
      corporation in good standing in the State of Nevada.

    Section
      of the Amended Complaint Entitled
“The
      Relationship Between VGI and T&T”

    17.           Defendants
      deny each and every allegation contained in Paragraph 17 of the Amended
      Complaint, except admit that Keledjian, Little and Wright met at the Ritz
      Carlton Hotel and Gibson’s Steak House in Chicago, Illinois on or about
      September 30, 2003.

    18.           Defendants
      deny each and every allegation contained in Paragraph 18 of the Amended
      Complaint.

    19.           Defendants
      deny each and every allegation contained in Paragraph 19 of the Amended
      Complaint, except admit that Little advanced $200,000 pursuant to a convertible
      debenture.

    


    
      
        
              

          
          

        

        
          -
            4 -

          
            

          

        

        
          
          

        

      

    

    


    20.           Defendants
      deny each and every allegation contained in Paragraph 20 of the Amended
      Complaint.

    21.           Defendants
      deny knowledge or information sufficient to form a belief as to the truth of
      the
      allegations contained in Paragraph 21 of the Amended Complaint, except admit
      that, as part of the process for approval to conduct a Phase III clinical trial
      in South Africa, VGI submitted documentation, including an “Investigator’s Drug
      Brochure.”

    22.           Defendants
      deny each and every allegation contained in Paragraph 22 of the Amended
      Complaint, except admit that Keledjian, Little and Wright met at the Ritz
      Carlton Hotel in Chicago, Illinois on or about April 11, 2004, and that the
      three of them met in the dining room and at the Atrium Lounge.

    23.           Defendants
      deny each and every allegation contained in Paragraph 23 of the Amended
      Complaint.

    24.           Defendants
      deny each and every allegation contained in Paragraph 24 of the Amended
      Complaint, except admit that VGI and T&T entered into an agreement entitled
“Africa Agreement between VGI and TT” dated May 21, 2004 (“Africa Agreement”)
      and respectfully refers the Court to the Africa Agreement for the terms
      thereof.

    25.           Defendants
      deny each and every allegation contained in Paragraph 25 of the Amended
      Complaint.

    26.           Defendants
      deny each and every allegation contained in Paragraph 26 of the Amended
      Complaint.

    27.           Defendants
      deny each and every allegation contained in Paragraph 27 of the Amended
      Complaint.

    


    
      
        
              

          
          

        

        
          -
            5 -

          
            

          

        

        
          
          

        

      

    

     

    28.           Defendants
      deny each and every allegation contained in Paragraph 28 of the Amended
      Complaint, except admit that VGI and T&T entered into the Distribution
      Management Agreement, and respectfully refers the Court to the Distribution
      Management Agreement for the terms thereof.

    29.           Defendants
      deny each and every allegation contained in Paragraph 29 of the Amended
      Complaint, and respectfully refer the Court to the Distribution Management
      Agreement for the terms thereof.

    30.           Defendants
      deny each and every allegation contained in Paragraph 30 of the Amended
      Complaint.

    Section
      of the Amended Complaint Entitled
“Performance
      Under The Agreement”

    31.           Defendants
      deny knowledge or information sufficient to form a belief as to the truth of
      the
      allegations contained in Paragraph 31 of the Amended Complaint, except deny
      that
      T&T has performed all of its obligations under the Distribution Management
      Agreement.

    32.           Defendants
      deny each and every allegation contained in Paragraph 32 of the Amended
      Complaint.

    Section
      of the Amended Complaint Entitled
“VGI's
      Misrepresentations”

    33.           Defendants
      deny each and every allegation contained in Paragraph 33 of the Amended
      Complaint.

    34.           Defendants
      deny each and every allegation contained in Paragraph 34 of the Amended
      Complaint, except admit that VGI obtained its rights from Therapeutic Genetic,
      Inc. (“TGI”), and that TGI and VGI were merged.

    


    
      
        
             

          
          

        

        
          -
            6 -

          
            

          

        

        
          
          

        

      

    

     

    35.           Defendants
      deny each and every allegation contained in Paragraph 35 of the Amended
      Complaint, except admit that TGI and Tomson entered into an assignment
      agreement.

    36.           Defendants
      deny each and every allegation contained in Paragraph 36 of the Amended
      Complaint.

    37.           Defendants
      deny each and every allegation contained in Paragraph 37 of the Amended
      Complaint.

    38.           Defendants
      deny each and every allegation contained in Paragraph 38 of the Amended
      Complaint.

    39.           Defendants
      deny each and every allegation contained in Paragraph 39 of the Amended
      Complaint.

    40.           Defendants
      deny each and every allegation contained in Paragraph 40 of the Amended
      Complaint, except admit that VGI entered into a limited distribution agreement
      with MTB Ltd. (Zambia) (“MTB Zambia”) on February 4, 2000, and that said
      agreement expired/was terminated  prior to the time VGI entered into
      any agreements with Plaintiff.

    41.           Defendants
      deny each and every allegation contained in Paragraph 41 of the Amended
      Complaint.

    42.           Defendants
      deny each and every allegation contained in Paragraph 42 of the Amended
      Complaint.

    


    
      
        
              

          
          

        

        
          -
            7 -

          
            

          

        

        
          
          

        

      

    

    


    RESPONSES
      TO COUNT I OF THE AMENDED COMPLAINT
(“Breach
      of Contract Against VGI”)

    43.           Defendants
      repeat and restate each and every response to the paragraphs referred to in
      Paragraph 43 of the Amended Complaint with the same force and effect as if
      fully
      set forth herein.

    44.           Defendants
      state that Paragraph 44 of the Amended Complaint contains legal assertions
      and
      conclusions to which no response is required.  To the extent a
      response is required, Defendants deny each and every allegation contained in
      Paragraph 44 of the Amended Complaint.

    45.           Defendants
      deny each and every allegation contained in Paragraph 45 of the Amended
      Complaint.

    46.           Defendants
      deny each and every allegation contained in Paragraph 46 of the Amended
      Complaint.

    47.           Defendants
      deny each and every allegation contained in Paragraph 47 of the Amended
      Complaint.

    RESPONSES
      TO COUNT II OF THE AMENDED COMPLAINT
 (“Fraud
      Against VGI and Keledjian”)

    48.           Defendants
      repeat and restate each and every response to the paragraphs referred to in
      Paragraph 48 of the Amended Complaint with the same force and effect as if
      fully
      set forth herein.

    49.           Defendants
      deny each and every allegation contained in paragraph 49 of the Amended
      Complaint.

    50.           Defendants
      deny each and every allegation contained in Paragraph 50 of the Amended
      Complaint.

    


    
      
        
              

          
          

        

        
          -
            8 -

          
            

          

        

        
          
          

        

      

    

    


    51.           Defendants
      deny each and every allegation contained in Paragraph 51 of the Amended
      Complaint.

    52.           Defendants
      deny each and every allegation contained in Paragraph 52 of the Amended
      Complaint.

    RESPONSES
      TO COUNT III OF THE AMENDED COMPLAINT
 (“Declaratory
      Judgment”)

    53.           Defendants
      repeat and restate each and every response to the paragraphs referred to in
      Paragraph 53 of the Amended Complaint with the same force and effect as if
      fully
      set forth herein.

    54.           Defendants
      deny each and every allegation contained in Paragraph 54 of the Amended
      Complaint, except admit that VGI owned the intellectual property and patent
      based rights to TNP in the Republic of South Africa (and elsewhere), and that
      VGI and T&T entered into the Distribution Management Agreement.

    55.           Defendants
      deny each and every allegation contained in Paragraph 55 of the Amended
      Complaint.

    56.           Defendants
      state that Paragraph 56 of the Amended Complaint contains legal assertions
      to
      which no response is required.  To the extent a response is required,
      Defendants deny each and every allegation contained in Paragraph 56 of the
      Amended Complaint.

    AFFIRMATIVE
      DEFENSES

    As
      separate affirmative defenses to the
      Amended Complaint, Defendants allege as follows:

    


    
      
        
              

          
          

        

        
          -
            9 -

          
            

          

        

        
          
          

        

      

    

    


    As
      and for a First Affirmative Defense

    57.           Defendants
      hereby incorporate their answers, denials and responses to each and every
      allegation contained in paragraphs 1 through 56 as if fully set forth
      herein.  Defendants additionally incorporate the allegations and
      averments contained in VGI’s Amended Counterclaims as if fully set forth
      herein.

    58.           Plaintiff
      has no ownership interests in any of Defendants’ intellectual
      property.  Plaintiff was not party to any of the transfers of patents
      based on TNP technology, and thus may not collaterally attack the validity
      of
      such transfers.  Any injury allegedly suffered by Plaintiff was not
      caused by an allegedly defective transfer of patents from Tomson to
      TGI.  Accordingly, Plaintiff’s Amended Complaint fails to state claims
      upon which relief may be granted for its first, second and third causes of
      action because Plaintiff has no standing to bring this action.

    As
      and for a Second Affirmative Defense

    59.           Defendants
      hereby incorporate their answers, denials and responses to each and every
      allegation contained in paragraphs 1 through 56 as if fully set forth
      herein.  Defendants additionally incorporate the allegations and
      averments contained in VGI’s Amended Counterclaims as if fully set forth
      herein.

    60.           Timothy
      Wright sat on VGI’s Board of Directors until shortly before VGI and T&T
      signed the Distribution Management Agreement.  T&T conducted full
      due diligence, including inquiries about VGI’s ownership of

    


    
      
        
              

          
          

        

        
          -
            10 -

          
            

          

        

        
          
          

        

      

    

    


    patents
      in TNP based drugs, of which Wright was fully informed and
      aware.  T&T thus had full knowledge of the status and chain of
      title regarding VGI’s ownership of the patents for TNP based drugs when T&T
      signed the Distribution Management Agreement.

    61.           T&T
      knew about VGI’s agreements with MTB Zambia and Mebory & K Enterprises
      (Pvt.) Ltd. (“Mebory”) at the time T&T entered the Distribution Management
      Agreement.  In fact, VGI introduced T&T to Borislav Boynoff, who
      is a principal of both MTB Zambia and Mebory, and T&T thus had the
      opportunity to question Boynoff and/or resolve any concerns at that
      time.  T&T further knew the status of VGI’s agreements with MTB
      Zambia and Mebory at that time.  In fact, VGI, at T&T’s request,
      agreed to give T&T a broad indemnification, which covers any dispute that
      would arise due to VGI’s former agreements with MTB Zambia and
      Mebory.  Despite having full and actual knowledge of all the facts
      contained in its Amended Complaint at the time T&T signed the Distribution
      Management Agreement, T&T is now claiming VGI committed fraud, which actions
      constitute bad faith on the part of T&T.  T&T’s sole intent in
      initiating this lawsuit is to extract economic concessions from
      VGI.  T&T has threatened in the past that, unless VGI grants
      certain concessions, which are unrelated to the allegations in its Amended
      Complaint, then T&T will institute legal action to economically punish
      VGI.  All of Plaintiff’s claims are thus barred by the doctrine of
      unclean hands.

    


    
      
        
              

          
          

        

        
          -
            11 -

          
            

          

        

        
          
          

        

      

    

    


    As
      and for a Third Affirmative Defense

    62.           Defendants
      hereby incorporate their answers, denials and responses to each and every
      allegation contained in paragraphs 1 through 56 as if fully set forth
      herein.  Defendants additionally incorporate the allegations and
      averments contained in VGI’s Amended Counterclaims as if fully set forth
      herein.

    63.           Plaintiff
      incurred and has continued to incur unauthorized expenses contrary to the terms
      of the Distribution Management Agreement, and Plaintiff has failed to
      substantiate its expenses as necessary, despite repeated requests to do
      so.  Plaintiff, though under a duty to do so, has thus failed and
      neglected to reasonably mitigate its alleged damages, to account to VGI and,
      therefore, cannot recover against. Defendants, whether as alleged, or otherwise
      under Count I of the Amended Complaint.

    As
      and for a Fourth Affirmative Defense

    64.           Defendants
      hereby incorporate their answers, denials and responses to each and every
      allegation contained in paragraphs 1 through 56 as if fully set forth
      herein.  Defendants additionally incorporate the allegations and
      averments contained in VGI’s Amended Counterclaims as if fully set forth
      herein.

    65.           Plaintiff’s
      claims are barred, in whole or in part, by the doctrines of laches, waiver
      and
      estoppel.

    


    
      
        
              

          
          

        

        
          -
            12 -

          
            

          

        

        
          
          

        

      

    

    


    As
      and for a Fifth Affirmative Defense

    66.           Defendants
      hereby incorporate their answers, denials and responses to each and every
      allegation contained in paragraphs 1 through 56 as if fully set forth
      herein.  Defendants additionally incorporate the allegations and
      averments contained in VGI’s Amended Counterclaims as if fully set forth
      herein.

    67.           T&T
      has limited discretion under the Distribution Management Agreement to incur
      costs to conduct the First-Stage Clinical Trials.  Nonetheless,
      T&T has sought reimbursement from VGI for costs and expenses that were not
      necessary to conduct the First-Stage Clinical Trials and has refused to provide
      VGI with documentation that would demonstrate its claimed expenses are
      legitimate and authorized.  T&T has also incurred numerous costs
      that violate the Distribution Management Agreement and has abused its authority
      to make expenditures under that agreement.  Count I of Plaintiff’s
      Amended Complaint is thus barred, in whole or in part, by virtue of Plaintiff’s
      breach of the implied covenant of good faith and fair dealing.

    As
      and for a Sixth Affirmative Defense

    68.           Defendants
      hereby incorporate their answers, denials and responses to each and every
      allegation contained in paragraphs 1 through 56 as if fully set forth
      herein.  Defendants additionally incorporate the allegations and
      averments contained in VGI’s Amended Counterclaims as if fully set forth
      herein.

    69.           On
      or about March 31, 2006, VGI paid T&T $465,111.28 in

    


    
      
        
              

          
          

        

        
          -
            13 -

          
            

          

        

        
          
          

        

      

    

    


    consideration
      for services T&T performed under the Distribution Management
      Agreement.  VGI paid this sum to T&T after negotiating with
      T&T regarding amounts due under the Distribution Management
      Agreement.  Both parties intended this amount to fully satisfy the
      balance due to T&T under the Distribution Management
      Agreement.  Accordingly, Plaintiff has suffered no
      damages.

    As
      and for a Seventh Affirmative Defense

    70.           Defendants
      hereby incorporate their answers, denials and responses to each and every
      allegation contained in paragraphs 1 through 56 as if fully set forth
      herein.  Defendants additionally incorporate the allegations and
      averments contained in VGI’s Amended Counterclaims as if fully set forth
      herein.

    71.           Plaintiff’s
      claims are barred by accord and satisfaction.

    As
      and for an Eighth Affirmative Defense

    72.           Nevada
      Revised Statute § 78.585 provides the statute of limitations applicable to
      Plaintiff’s claims based on the allegedly defective transfers between Tomson and
      TGI.  It bars all such claims.

    As
      and for a Ninth Affirmative Defense

    73.           Plaintiff’s
      claims contained in the Amended Complaint are barred because Plaintiff engaged
      in fraud.

    As
      and for a Tenth Affirmative Defense

    74.           Defendants
      reserve the right to raise additional affirmative defenses and to supplement
      those asserted herein upon discovery of further information regarding the claims
      asserted in the Amended Complaint.

    


    
      
        
              

          
          

        

        
          -
            14 -

          
            

          

        

        
          
          

        

      

    

     

    VGI’S
      AMENDED COUNTERCLAIMS

    75.           Counterclaim
      Plaintiff VGI hereby alleges and complains against Counterclaim Defendants
      T&T, Timothy Wright, Thomas Little and John and Jane Does 1 through 10 as
      follows:

    76.           This
      case involves a fraud perpetuated by the Counterclaim Defendants against
      VGI.

    77.           VGI
      seeks damages and punitive damages arising out of fraud, conspiracy to commit
      fraud and other unlawful conduct in connection with Counterclaim Defendants’
scheme to induce VGI to enter into certain agreements and to provide information
      and authority to Counterclaim Defendants to conduct clinical test trials and
      seek regulatory approval for VGI’s patented immune-based therapies for HIV and
      AIDS on the continent of Africa, as part of a well-orchestrated, sophisticated,
      and bad faith conspiracy to destroy VGI and take over VGI’s very valuable and
      promising technology for Counterclaim Defendants’ own benefit.

    78.           Counterclaim
      Defendants’ actions also constitute breach of contracts, breach of fiduciary
      duties, unfair business practices and interference with contract.

    THE
      PARTIES

    79.           VGI
      is a Delaware corporation with its principal place of business in Azusa,
      California.

    80.           Keledjian
      is a citizen and resident of California who is the President and Chief Executive
      and Financial Officer of VGI.

    81.           Upon
      information and belief, T&T is an Illinois limited liability company with
      its principal place of business in Chicago, Illinois.

    


    
      
        
              

          
          

        

        
          -
            15 -

          
            

          

        

        
          
          

        

      

    

    


    82.           Upon
      information and belief, Wright is a citizen and resident of Illinois, and is
      a
      former director of VGI and a current member of T&T.

    83.           Upon
      information and belief, Little is a citizen and resident of Illinois, and is
      a
      member of T&T.

    84.           Upon
      information and belief, “John and Jane Does 1 through 10” are individuals who
      acted jointly with Counterclaim Defendants and/or as their agents in connection
      with the wrongs perpetrated on VGI, and who are, therefore, jointly and
      severally liable with Counterclaim Defendants to VGI.  The individuals
      are herein named as John and Jane Does because insufficient information as
      to
      their identity has been obtained by VGI.  Upon discovery of the
      identity of any of the individuals herein named as John and Jane Does, VGI
      shall
      take appropriate action to identify them and serve them as named counterclaim
      defendants in this action.

    JURISDICTION
      AND VENUE

    85.           The
      Court has original jurisdiction over the subject matter of the Amended
      Counterclaims pursuant to 28 U.S.C. § 1332 because the matter in controversy
      exceeds $75,000, exclusive of interest and costs, and is between citizens of
      different states.  The Court also has supplemental jurisdiction
      pursuant to 28 U.S.C. § 1367 because the Amended Counterclaims are part of the
      same case or controversy contained in the Amended Complaint.

    86.           Venue
      properly lies in the United States District Court for the Northern District
      of
      Illinois under 28 U.S.C. § 1391 because a substantial part of the events and/or
      omissions giving rise to the Amended Counterclaims asserted herein occurred
      in
      this District.

    


    
      
        
              

          
          

        

        
          -
            16 -

          
            

          

        

        
          
          

        

      

    

     

    FACTUAL
      BACKGROUND

    A.           VGI
      and the Development of VGV-1

    87.           VGI
      is a biotechnology company engaged in the discovery and development of
      immune-based therapies for HIV and AIDS based on its investigative drug
      compounds containing its patented Thymus Nuclear Protein compound
      (“TNP”).

    88.           VGI
      holds several patents relating to TNP and is engaged in the development and
      manufacture of certain pharmaceutical products based on TNP which are intended
      for the treatment of HIV and AIDS, including, without limitation, an
      investigational pharmaceutical product called “VGV-1.”  In human
      clinical trials, VGV-1 has shown tremendous promise as an effective treatment
      for HIV and AIDS.

    89.           TNP
      proteins were originally studied as a means of early detection of certain
      cancers.  In a series of early pilot studies, it was learned that if
      the protein was introduced to an HIV-positive patient’s system along with
      adjuvant, over time an immuno-precipitation reaction gradually reappeared that
      was similar to an HIV-negative patient’s reaction.  This was the
      genesis of understanding the therapeutic potential of TNP and led directly
      to
      clinical development of VGV-1.

    90.           One
      of the early researchers of the use of TNP for HIV/AIDS treatment, was Dr.
      Harry
      Zhabilov Sr. (“Dr. Zhabilov Sr.”).  Dr. Zhabilov Sr. was a licensed
      medical doctor and scientist in Bulgaria prior to emigrating to the United
      States.  As a consequence of his research, Dr. Zhabilov Sr. was one of
      the inventors of TNP and VGV-1.  He was also a founder of
      VGI.

    91.           During
      the early development of TNP and VGV-1 as a treatment for

    


    
      
        
          
          

          
          

        

        
          -
            17 -

          
            

          

        

        
          
          

        

      

    

    


    HIV/AIDS,
      Dr. Zhabilov Sr. personally conducted the processes by which TNP was extracted
      from the thymus tissue for such research.  Dr. Zhabilov Sr. kept his
      proprietary process for TNP extraction to himself.  As set forth
      below, towards the end of his life (Dr. Zhabilov Sr. died in 2003), Dr. Zhabilov
      Sr. apparently taught his proprietary extraction methods to his son, Harry
      Zhabilov, Jr. (“Zhabilov Jr.”), a former employee, Director and shareholder of
      VGI, and urged VGI and Keledjian to hire Zhabilov Jr. to take the position
      as
      chief scientific officer previously occupied by Dr. Zhabilov Sr.
      himself.

    92.           As
      early as 1999, VGI initiated efforts to bring its research and investigative
      pharmaceutical compounds to Africa for research, testing and
      approval.  The reason that VGI targeted Africa was the epidemic-level
      presence of HIV and AIDS among the population, particularly in the southern
      part
      of the continent, where it was hoped that VGV-1’s promising treatment could
      greatly benefit the dire situation.  South Africa has been reported as
      having the highest prevalence of HIV and AIDS in the world.

    93.           Although
      VGI made efforts to bring TNP and VGV-1 to Africa in the late 1990’s, such early
      efforts were not successful.

    94.           Then,
      as a result of continued research and promising results, in early 2003, VGI
      renewed its efforts to perform clinical trials and to obtain regulatory
      approvals in Africa generally, and in South Africa in particular.

    B.           The
      Relationship between Zhabilov Jr. and VGI

    95.           After
      the death in May 2003 of Dr. Zhabilov Sr., and because Zhabilov Jr. now was
      the
      only person with knowledge of the processes developed by his late father for
      extracting TNP from thymus tissue, on or about June 1, 2003, VGI executed an
      Employment
      Agreement with Zhabilov Jr. (the “Zhabilov Employment
      Agreement”).

    


    
      
        
              

          
          

        

        
          -
            18 -

          
            

          

        

        
          
          

        

      

    

    


    96.           The
      Zhabilov Employment Agreement provides that VGI employed Zhabilov Jr. to serve
      as executive vice president of research and development of VGI.

    97.           The
      Zhabilov Employment Agreement contained a “Reasonable Best Efforts” clause
      pursuant to which Zhabilov Jr. agreed “that he [would] at all times faithfully,
      industriously, and to the reasonable best of his ability, experience, and
      talents, perform all of the duties that may be required of and from him pursuant
      to the express and explicit terms hereof.”

    98.           The
      Zhabilov Employment Agreement also included a “Non-Solicitation” clause which
      stated the following, in relevant part:

    Except
      as
      provided in paragraph 14 below, during the period of this Agreement, and for
      an
      additional period after termination or expiration of this Agreement of one
      year,
      Employee agrees that he will not, directly or indirectly ... solicit any person,
      governmental entity or agency, firm or business that was a supplier, customer
      or
      client of [VGI] or any subsidiary of [VGI] at any time during the two year
      period prior to the date of termination or expiration of this Agreement with
      respect to any product or technology developed, under development, or
      contemplated for development by [VGI] prior to or as of the date of termination
      or expiration.

    99.           The
      Zhabilov Employment Agreement additionally included a “Non-Disclosure of
      Information” clause which stated that Zhabilov Jr. agreed to the following, in
      relevant part:

    (a)           During
      the period of this Agreement, and the period following termination or expiration
      of this agreement, [Zhabilov Jr.] will not, directly or indirectly:

     

    (i)           use
      for his own benefit or give to any person not authorized by [VGI] to receive
      or
      use such information, except for the sole benefit of [VGI], any marketing plans,
      results, or product marketing information, which are proprietary to
      [VGI];

     

    


    
      
        
              

          
          

        

        
          -
            19 -

          
            

          

        

        
          
          

        

      

    

    


    (ii)           use
      for his own benefit or give to any person not authorized by [VGI] to receive
      it,
      any plans or specifications, scientific know-how, formulas, technical data
      or
      information, clinical study protocols or data, patient or biologic information,
      customer lists, data, study, table, report or the like owned by [VGI], or any
      copy thereof; or

     

    (iii)           use
      for his own benefit or give to any persons not authorized by [VGI] to receive
      it
      any information that is not generally known to anyone other than [VGI], or
      that
      is designated by [VGI] as “Limited”, “Private”, or “Confidential”, or similarly
      designated.

     

    100.           The
      Recitals to the Zhabilov Employment Agreement also state that “[VGI] desires to
      provide for the employment of [Zhabilov Jr.], to clearly set forth the
      relationship between the parties, and to restrict [Zhabilov Jr.] from using
      certain confidential information and from competing with [VGI] in the
      future.”

    101.           The
      Zhabilov Employment Agreement expired on or about May 31, 2006.

    C.           The
      Relationship Between Wright and VGI

    102.           As
      part of its renewed efforts to bring TNP and VGV-1 to Africa in 2003, VGI sought
      out additional consulting and financial assistance.

    103.           At
      this time, VGI was working with Don Kelly (“Kelly”), a Canadian citizen whose
      son was born HIV positive, to develop distribution of VGV-1 in
      Africa.  Kelly owned a license to the rights to VGV-1 and TNP in
      Africa at the time which was later terminated

    104.           In
      early 2003, VGI was introduced to Richard Dent (“Dent”), a former football
      player for the National Football League’s Chicago Bears.  Dent, in
      turn, introduced VGI and Kelly to his then-attorney, Wright.

    105.           Wright,
      who, upon information and belief, was a practicing attorney in the State of
      Illinois, claimed, among other things, to have widespread political and
      financial contacts in South Africa.

    
      106.           On
        or around April 8, 2003, VGI retained Wright as a “legal consultant” pursuant to
        a Consulting Engagement (the “Consulting Engagement”).

    

    


    
      
        
                

          
          

        

        
          -
            20 -

          
            

          

        

        
          
          

        

      

    

     

    107.           The
      Consulting Engagement required Wright to, among other things:

    (a)           Advise
      VGI “concerning various legal matters;”

    (b)           Advise
      VGI “with respect to its efforts to increase the depth and visibility of its
      executive management;”

    (c)           Advise
      VGI “with respect to its efforts to expand its Board of Directors to include
      members with the appropriate scientific background, experience and
      credentials;”

    (d)           Advise
      VGI “officers and directors in connection with the evaluation and origination of
      potential financing alternatives;”

    (e)           Advise
      VGI “in connection with the development of a public relations strategy, contact
      with media and celebrity personnel, and relationships with humanitarian
      foundations or other groups;”

    (f)           Advise
      VGI “in connection with the identification and development of its strategic
      goals;” and

    (g)           Advise
      VGI “in connection with the identification and establishment of relationships
      with potential strategic partners.”

    108.           The
      Consulting Engagement required VGI to “make its personnel and documentation
      available for inspection, evaluation, and due diligence by [Wright] ... [and to]
      cause its directors, officers and professional advisers to furnish information
      and copies of documents to, and to otherwise cooperate with, [Wright] in
      connection with [Wright]’s due diligence activities.”  Furthermore,
      VGI was to furnish Wright with “information
      and data concerning [VGI] that [Wright] deems reasonably necessary to the
      performance of [his] functions.”

    


    
      
        
              

          
          

        

        
          -
            21 -

          
            

          

        

        
          
          

        

      

    

    


    109.           In
      turn, “[e]xcept as agreed to by [VGI], or required by law, all information
      concerning [VGI] which is not publicly available will be kept confidential
      by
      [Wright].”

    110.           The
      Consulting Engagement expressly provided that “[t]he representations,
      warranties, and agreements of the parties contained in this Agreement will
      remain operative and in full force and effect and will survive any termination
      of this Agreement.”

    111.           At
      around this same time, through Wright’s influence and representations, Wright
      was made a member of the Board of Directors in or around September, 2003, at
      which time the Consulting Engagement was terminated.

    112.           From
      September 2003 until June 30, 2004, Wright was a member of the Board of
      Directors of VGI.

    113.           At
      all times from April 2003 until June 30, 2004 (at the time that the Distribution
      Management Agreement was being executed), as a consultant, then as a Director
      of
      VGI, and finally as a principal of Viral Genetics South Africa (Pty) Ltd. (as
      set forth below), Wright had complete access to VGI’s pre-clinical and clinical
      data and results regarding VGV-1, as well as information regarding VGI’s
      financial, business and manufacturing operations, including non-public
      confidential and proprietary information.

    114.           In
      2003, in addition to the fact that VGI had hired Wright as its legal advisor,
      Kelly hired Wright to assist Kelly in obtaining approvals in South Africa for
      a
      Phase III clinical trial of VGV-1 and in obtaining the necessary financing
      to do
      so.

    


    
      
        
          
          

          
          

        

        
          -
            22 -

          
            

          

        

        
          
          

        

      

    

    


    Ultimately,
      the Medical Control Council (“MCC”) of South Africa approved a Phase III
      clinical trial of VGV-1.  Kelly paid all of the expenses associated
      with obtaining approval from the MCC.  However, Kelly could not raise
      the necessary funding to actually perform the Phase III clinical trial
      itself.

    D.           The
      Relationship between T&T and VGI

    115.           In
      about June 2003, Keledjian, Kelly and Wright traveled to Africa to advance
      the
      development of VGV-1 in Africa.  During this trip, they met with
      various business and political leaders in attempts to obtain both financing
      and
      the necessary approvals for the clinical trials and ultimately, the distribution
      of VGV-1.  Among others, the group met with political leaders in South
      Africa and Botswana, and with the Mine Workers Union.

    116.           It
      was at this time that Wright introduced Keledjian and Kelly to Little, who
      was
      supposedly vacationing in South Africa with his family.  Little was a
      principal of Brandenburg Industrial Services Company, believed to be one of
      the
      United States’ largest demolition companies.  Notwithstanding his
      claim of being on vacation, Little spent several days with the Viral group,
      during which he became increasingly interested in the VGV-1
      project.

    117.           During
      this trip to Africa, Wright began to advise VGI against accepting much of the
      assistance (both financial and otherwise) being offered by the groups and
      companies they were meeting with in Africa.  For example, Wright
      counseled against accepting assistance proffered by AngloGold Ashanti (one
      of
      the leading gold producers in the world, headquartered in South Africa) to
      provide patients and monitors for the clinical trial, citing unspecified
“political reasons.”  Likewise, Wright opposed accepting

    


    
      
        
              

          
          

        

        
          -
            23 -

          
            

          

        

        
          
          

        

      

    

    


    assistance
      from the South African Mine Workers Union, again claiming “political reasons,”
including an assertion that the African National Conference was at odds with
      the
      Union.  In South Africa, Wright counseled against hiring Virtus (Pty)
      Ltd., a contract research organization headquartered in Cape Town, on racial
      grounds.

    118.           Upon
      information and belief, it was at or prior to this time that Wright and Little
      developed their plan to misappropriate the business of VGI for their own
      benefit.

    119.           Upon
      information and belief, Wright, in concert with Little, began systematically
      to
      misuse the trust confided in him by VGI to isolate VGI from individuals
      (including Kelly), companies, government officials and private groups who would
      or might offer assistance to VGI, in order to obtain control over the options
      available to VGI with a view of leaving VGI with only one option:
      T&T.

    120.           Shortly
      after these meetings in Africa, Wright arranged for VGI and Keledjian to meet
      with Little in Chicago, Illinois.  Upon information and belief, Wright
      had shared his knowledge of VGI’s confidential and proprietary information and
      financial, business and manufacturing operations with Little.

    121.           The
      meeting occurred on or about September 30, 2003.  Upon information and
      belief, Wright and Little sought to establish themselves as the only reasonably
      available option for VGI to obtain financing, creating greater and greater
      dependence by VGI on Wright and Little (and T&T) so that they could
      ultimately force VGI into such dire financial conditions that T&T could
      easily misappropriate VGI’s assets for close to nothing.

    122.           Shortly
      after the meeting in Chicago, Little agreed to invest $200,000 in VGI in the
      form of a convertible debenture.

    123.           Thereafter,
      as part of its efforts in South Africa, VGI established Viral Genetics South
      Africa (Pty) Ltd. (“VGSA”), for the purpose of performing the Phase III clinical
      trial and for promoting and distributing VGV-1 in South Africa.

    


    
      
        
                

          
          

        

        
          -
            24 -

          
            

          

        

        
          
          

        

      

    

     

    124.           On
      February 27, 2004, the MCC granted final approval to conduct a multi-center,
      randomized, double-blind, placebo-controlled human clinical trial of VGV-1,
      commonly known as a Phase III Clinical Trial (the “Phase III Clinical
      Trial”).  By this time, it was becoming more clear that Kelly would
      not be able to fund the Phase III Clinical Trial.

    125.           Taking
      advantage of this situation, on or around April 11, 2004, Wright and Little
      met
      again with Keledjian in Chicago to discuss the financing of the Phase III
      Clinical Trial of VGV-1 in South Africa.

    126.           Upon
      information and belief, as part of their plan, Little began to put pressure
      on
      VGI and Keledjian to repay the $200,000 investment in VGI, knowing that such
      pressure and the threat of legal action by Little created an extremely difficult
      financial situation for VGI during the critical period leading up to the
      impending South African Phase III Clinical Trial.

    127.           On
      or around May 14, 2004, even though Wright was still a Director of VGI, Wright
      and Little formed T&T, with the stated intention that T&T would finance
      the Phase III Clinical Trial of VGV-1 in South Africa, but, upon information
      and
      belief, with the intention that T&T would be used as a vehicle to carry out
      their fraudulent plan and conspiracy.

    128.           At
      this time, Wright, Little and T&T began a course of threatening legal action
      and a loss of opportunity in South Africa, while at the same time offering
      financial

    


    
      
        
              

          
          

        

        
          -
            25 -

          
            

          

        

        
          
          

        

      

    

    


    assistance.  Little
      threatened to sue with respect to the $200,000 investment while Wright continued
      to counsel that VGI must move forward immediately with South Africa or all
      of
      Africa would be “lost.”  Based upon this coercion, on or around May
      21, 2004, T&T and VGI entered into an “Africa Agreement Between VGI and TT”
(the “Africa Agreement”) in which the parties agreed that VGI would assign all
      of its ownership rights in VGSA to T&T.

    129.           Under
      the Africa Agreement, VGI granted T&T a license to distribute, and, in
      limited circumstances, to manufacture VGV-1 for sale and distribution throughout
      the continent of Africa.

    130.           In
      exchange for the assignment of the rights in VGSA to T&T and the license
      granted to T&T, the parties agreed that Little would assign his rights under
      the $200,000 convertible debenture to VGI and that T&T would pay VGI a sum
      of $650,000.  Furthermore, Wright relinquished his right to one
      million shares of VGI stock, and T&T agreed to allocate $2,000,000 to fund
      VGSA activities throughout Africa.  The parties agreed that $1,200,000
      of that $2,000,000 commitment was to be used to fund the Phase III Clinical
      Trial of VGV-1 in South Africa.

    131.           Following
      the execution of the Africa Agreement, the parties anticipated that it would
      be
      necessary for further contracts to be executed with third parties in Africa
      to
      facilitate the distribution of VGV-1.

    132.           Accordingly,
      on or around July 1, 2004, VGI and T&T executed a Distribution Management
      Agreement (the “Distribution Management Agreement”) pursuant to which VGI
      appointed T&T as the exclusive independent agent for VGI in the management
      of the distribution of [VGV-1] in [Africa].”

    


    
      
        
              

          
          

        

        
          -
            26 -

          
            

          

        

        
          
          

        

      

    

    


    133.           The
      parties acknowledged that VGI was to “manufacture pharmaceutical products, which
      are intended for treatment of HIV and the related condition known as AIDS,
      including, without limitation, a product based on thymus nuclear protein
      identified as ‘VGV-1’” and that T&T was to “obtain government approvals,
      licenses, and authorizations from certain governments of African nations for
      distribution of products imported from other countries ... and to manage and
      secure distribution capabilities in African nations through local sales
      channels, affiliated companies based in Africa, or strategic distribution
      arrangements with unrelated third parties.”

    134.           Under
      the Distribution Management Agreement, T&T agreed to pay $1,600,000 to
      complete the first stage of the Phase III Clinical Trial of VGV-1 in South
      Africa (the “First Stage Clinical Trials”).  VGI agreed to reimburse
      T&T in an amount equal to one half of any costs in excess of $1,600,000
      incurred to complete the First Stage Clinical Trial.

    135.           If
      additional tests, protocols, studies or clinical trials were required, T&T
      agreed to “pay all expenses for travel, meals, and lodging” in connection
      therewith.

    136.           Furthermore,
      the Distribution Management Agreement provided that “[i]n the event T&T
      concludes that it will be expedient or necessary, for the purpose of selling
      and
      distributing [VGV-1] in a significant part of the Territory, to retain the services
      of any
      third party to conduct part of or all of any future clinical trial services,
      the
      Parties hereto agree to share the cost of such third party services
      equally.”

    E.           Counterclaim
      Defendants’ Behavior Following the Execution of
      theDistribution Management
      Agreement

     

    137.           Almost
      immediately following the execution of the Distribution Management Agreement,
      each of the Counterclaim Defendants acted together in a well

    


    
      
        
              

          
          

        

        
          -
            27 -

          
            

          

        

        
          
          

        

      

    

    


    orchestrated,
      sophisticated and bad faith conspiracy to effectively to destroy VGI and take
      over VGI’s very valuable and promising technology for Counterclaim Defendants’
own benefit.

    138.           Counterclaim
      Defendants’ “strategy” was clear and specific:

    (a)           Set
      VGI and Keledjian up for a lawsuit based upon false allegations and assertions
      which, given its predicted (i.e., created by Counterclaim Defendants) scarce
      financial position, VGI and Keledjian would be unable to contest;

    (b)           “Secure
      T&T position as largest creditor” of VGI;

    (c)           “Secure
      legal representation to pursue bankruptcy in California venue;”

    (d)           “Prepare
      for VGI[’s forced] bankruptcy;”

    (e)           “Impugn
      [the] efficacy of TNP to deter 3rd party interest
      in
      any VGI assets;”

    (f)           “Secure
      T&T[’s] position to acquire any work product created by Zhabilov [Jr.]
      during his tenure with VGI;” and

    (g)           “Enter
      into employment contract with Zhabilov [Jr.];”

    139.           Upon
      information and belief, Counterclaim Defendants also compelled VGI to expend
      sums building a U.S.-based manufacturing facility that, based upon their plan,
      they knew VGI would never need or use, while at the same time discouraging
      potential investors from making investments in VGI.  The plan was to
      leave VGI without resources to fight Counterclaim Defendants’ planned future
      legal attack and without resources to continue to develop VGV-1 as a commercial
      product capable of creating revenue.  The end result, it was hoped and
      planned, would be the bankruptcy of VGI with T&T
      as the largest creditor able to take any and all assets without
      cost.

    


    
      
        
              

          
          

        

        
          -
            28 -

          
            

          

        

        
          
          

        

      

    

    


    140.           Upon
      information and belief, each of the Counterclaim Defendants agreed to and joined
      in the conspiracy and plan as outlined in these Counterclaims, and provided
      substantial assistance to effectuate same.  As a result, each is
      jointly and severally liable with the others to VGI for all damages sustained
      as
      a result thereof.

    F.           The
      Sabotage of the Clinical Trial

    


    141.           In
      March 2004, VGI hired Dr. Ronald Moss to head VGI’s Scientific Advisory Board.
      Dr. Moss was the former President of Immune Response Corporation. Immune
      Response had, to date, done one of the largest HIV trials in the
      world.

    142.           Based
      on Dr. Moss’s advice, Wright started a Scientific Advisory Board (“SAB”) in
      South Africa, with Dr. Moss being the initial chairman. Dr. Moss was compensated
      by Wright for his work, and, upon information and belief, Wright was able to
      use
      his relationship with Moss to control the direction and progress of VGV-1
      development in South Africa.

    143.           In
      December 2004, Dr. Moss reviewed and advised both Viral and VGSA on the Phase
      III Clinical Trial, including, importantly, the “endpoints,” i.e., the target
      sought as results for the Phase III Clinical Trial to be considered “a
      success.”  Moss wanted to set the primary endpoint on the Phase III
      Clinical Trial to be a reduction of viral load within the subjects of>.5
      log.

    144.           Although
      Wright at first objected to this primary endpoint, he made a showing of
      relenting and “agreed” to take necessary action to set this as the goal for the
      Phase III Clinical Trial.  However, after the Phase III Clinical
      Trial, Viral only later discovered that Wright had never actually made the
      filings necessary to change the stated primary endpoint from>1 log to>.5
      log.

    


    
      
        
              

          
          

        

        
          -
            29 -

          
            

          

        

        
          
          

        

      

    

    


    145.           Little
      began making demands that VGI not contact any service providers or others in
      South Africa, creating further isolation between VGI and those doing the Phase
      III Clinical Trial.

    146.           After
      the Phase III Clinical Trial was completed and T&T/Little had stopped
      funding VGSA or the follow up to the trial (the “TNP002 study”) in early 2006,
      Wright apparently made certain filings to state the primary endpoint as>.5
      log.  Upon information and belief, Wright and Little did not make the
      necessary regulatory filing to set the correct primary endpoint because
      Counterclaim Defendants wanted the perception that the Phase III Clinical Trial
      had “failed” as part of their plan to bankrupt VGI.  Then, once the
      filings were made, Wright accused VGI publicly of “changing the goalposts” such
      that the perception was one of failure and manipulating results as it relates
      to
      the supposed initial target.

    147.           Wright
      also failed to have the baseline data collected on a secondary test that was
      very important to the registration of this drug.  This failure, which,
      upon information and belief, was purposeful, is incredibly significant – VGI
      literally lost the data for several hundred thousand of dollars of studies
      that
      could have explained how VGV-1 worked in humans subjects.  VGI is now
      redoing much of that work in test tubes at added expense.  The cost
      was not only financial.  The loss of significant scientific clinical
      data also deprived VGI of information regarding how to improve VGV-1 and
      regarding what other diseases the drug may treat.

    148.           Wright
      also created such an untenable condition for Dr. Moss, such that in January
      2006, Dr. Moss resigned from VGSA’s SAB.

    149.           Upon
      information and belief, Wright and Little, during the period when the Phase
      III
      Clinical Trial results were finally completed, carried out an orchestrated
      and
      intentional plan to delay the results, knowing this would significantly hurt
      Viral – its stock price, its credibility, 

    


    
      
        
              

          
          

        

        
          -
            30 -

          
            

          

        

        
          
          

        

      

    

    


    and
      its
      morale.  Indeed, Wright, Little and T&T resisted the efforts to
      release the Phase III Clinical Trial data for months.  Because the
      Phase III Clinical Trial was so crucial to the business and future of VGI,
      the
      delay in release of the data caused by Wright, Little and T&T precipitated a
      drop in the stock price of VGI.

    150.           Indeed,
      VGI’s large institutional investors actually questioned whether VGI had
      conducted the Phase III Clinical Trial at all, causing significant reputational
      and financial damage to VGI.

    151.           In
      addition, Wright convened a VGSA Scientific Advisory Board meeting to discuss
      the Phase III Clinical Trial results, but, upon information and belief, Wright
      intentionally gave false information to VGI regarding the start time of the
      meeting in an effort to conduct a Politburo-style rubber stamping of his agenda
      without opposition. Wright later prepared minutes of the meeting in which he
      created a self-serving document designed to create false fodder against
      Keledjian and VGI for a lawsuit.   After the meeting, Wright
      tried to force VGI to accept his version of the minutes but VGI
      objected.  Thereafter, Wright characterized VGI negatively and ignored
      most of VGI’s suggested edits to the minutes in an attempt to falsify the
      record.

    F.           Wright,
      Little and T&T Co-opt Zhabilov Jr.

    152.           In
      late 2005, before the Phase III Clinical Trial was over, but after VGI had
      reviewed the very intriguing blinded data, Little asked for a closed-door,
      face
      to face meeting with Keledjian and Zhabilov Jr..  Little demanded the
      manufacturing rights to TNP
      in
      Africa and stated that if he did not receive such rights, he would terminate
      the
      Phase III Clinical Trial.  At the meeting, Little threatened and
      abused Keledjian and Zhabilov Jr. with personal lawsuits, bankruptcy, and the
      destruction of VGI, among other things.

    


    
      
        
              

          
          

        

        
          -
            31 -

          
            

          

        

        
          
          

        

      

    

    


    153.           Upon
      information and belief, at this time, Zhabilov Jr. joined Wright, Little and
      T&T in their conspiracy and plot to destroy VGI and take to themselves VGI’s
      business, intellectual property and value.

    154.           Given
      the threats and consequences, VGI agreed to negotiate with Little to attempt
      to
      reach a solution to the situation.  Little refused to be reasonable
      and to negotiate in good faith.  Discussions continued for over a
      month, in which time Little refused to give up on the most basic
      points.

    155.           Ultimately,
      VGI, having little choice given the pressures brought to bear by Little and
      T&T, agreed in principle to an arrangement which was very favorable to
      T&T and Little.  Accordingly, a meeting was set up to be conducted
      in Denver at which VGI and Little were to finalize a royalty agreement for
      T&T with respect to the manufacturing of VGV-1.

    156.           However,
      inexplicably (at the time), Zhabilov Jr. refused to proceed with any further
      negotiations.  VGI could not proceed with any further negotiations
      regarding a manufacturing arrangement since, as stated above, Zhabilov Jr.
      alone
      possessed knowledge of the process by which TNP is extracted from the thymus
      tissue.

    157.           VGI
      has only recently learned (through discovery in this matter) that Zhabilov
      Jr.
      had, as of this time, agreed with Wright, Little and T&T to bankrupt VGI and
      to move the intellectual property, as well as his own employment, to T&T
      and/or VGSA
      (both controlled and owned by Wright and Little).  For this reason,
      Zhabilov Jr., as an agent of the conspiracy, refused to allow any agreement
      to
      be finalized (as planned).

    


    
      
        
              

          
          

        

        
          -
            32 -

          
            

          

        

        
          
          

        

      

    

    


    158.           Around
      this same time, Wright, Little and T&T were in the process of offering to
      and negotiating with Zhabilov Jr. to leave VGI and join T&T together with
      all of VGI’s trade secrets and intellectual property as it concerned VGV-1 and
      TNP.

    159.           Upon
      information and belief, Zhabilov Jr., with the consent, advice and assistance
      of
      Wright, Little and T&T, and for their mutual benefit, began sabotaging VGI’s
      research and development of VGV-1.  Zhabilov Jr. had meetings with
      Wright and Little, both in California and in Chicago, in which he participated
      in their joint plan and provided to them confidential and proprietary
      information about VGI, without VGI’s knowledge or consent (and in breach of his
      employment agreement and his fiduciary duties to VGI).

    160.           Zhabilov
      Jr. refused to give information requested and demanded by VGI for purposes
      of
      obtaining the necessary regulatory approval of VGV-1 in South
      Africa.  Upon information and belief, this was done at Wright’s,
      Little’s and T&T’s direction with a promise by Zhabilov Jr. to give such
      information directly to his remaining co-conspirators after they had succeeded
      in destroying VGI.

    161.           To
      this end, at least as early as April 2006, Zhabilov Jr. hired legal counsel
      to
      negotiate an “association” with T&T whereby T&T would receive VGI’s
      intellectual property regarding TNP and VGV-1 and would employ Zhabilov
      Jr.  Little paid the retainer of $10,000 on behalf of Zhabilov
      Jr.  As of April 24, 2006, Zhabilov Jr. was waiting for the terms
      T&T would be offering, and was advised that “[h]opefully, they will
      be
      acceptable and [you] can finalize your arrangements with T&T in a
      satisfactory manner and you can leave [VGI] with a minimum of
      problems.”

    


    
      
        
              

          
          

        

        
          -
            33 -

          
            

          

        

        
          
          

        

      

    

     

    G.           Counterclaim
      Defendants’ Final Push to Bankrupt VGI

    162.           As
      part of their plan, Little and T&T cut off the funding of the Phase III
      Clinical Trial around January 2006.  Then, Counterclaim Defendants
      shut down operations at VGSA in South Africa in April 2006.  However,
      upon information and belief, Little and T&T did continue to fund efforts to
      hire Zhabilov Jr., and take TNP and VGV-1 from VGI.

    163.           In
      January 2006, Little and Wright began outlining their anticipated lawsuit
      against VGI and Keledjian, including discussions of what allegations would
      be
      made although both knew that the allegations being discussed were false and
      without basis.

    164.           At
      the same time, and while all the while negotiating with Zhabilov Jr. to secure
      his participation, Wright, Little and T&T outlined their plan to “[s]ustain
      VGSA throughout 2006” in order to have a vehicle ready and able to carry forward
      the misappropriated business of VGI.

    165.           Thereafter,
      as part of their plan to bankrupt VGI, Counterclaim Defendants attempted to
      prevent or frustrate VGI’s attempts to raise sorely needed
      capital.  For example, in August 2006, VGI appointed T. Joseph Natale
      (who was President of VGI Latin America) to the nascent Executive Task Force:
      Reorganization Committee, as co-chair with Zhabilov Jr.  The purpose
      of the Committee was to identify and implement a strategic plan for the growth
      and reorganization of VGI as a sustainable business entity.  However,
      Zhabilov Jr. immediately contacted Natale and began efforts to solicit Natale’s
      cooperation with the scheme being perpetrated by Counterclaim
      Defendants.  Specifically, Zhabilov Jr. disparaged VGI and Keledjian,
      and solicited

    


    
      
        
              

          
          

        

        
          -
            34 -

          
            

          

        

        
          
          

        

      

    

    


    Natale
      to
“join a new company” with Zhabilov Jr. and Counterclaim Defendants to exploit
      TNP’s potential commercial success.  Zhabilov Jr. set up several
      conference calls between Natale and Wright in which Wright likewise disparaged
      VGI and Keledjian and attempted to solicit Natale’s
      cooperation.   In addition, Zhabilov Jr. arranged a meeting
      between Wright and Natale at Los Angeles International
      Airport.  Moreover, Zhabilov Jr. also set up a meeting between Natale
      and Little at a restaurant in Santa Monica, California, for the same
      purposes.

    166.           During
      this entire time, Zhabilov Jr. urged Natale to keep these communications
      confidential and not to tell VGI or Keledjian about the discussions or about
      Zhabilov Jr. working with Counterclaim Defendants.  Zhabilov also
      urged Natale to form a separate company with him to take VGI’s intellectual
      property and assets away from VGI.

    167.           At
      around the same time,  in October 2006, Wright called Monica Ord, an
      employee of VGI tasked primarily with raising investments and capital for VGI,
      and told Ms. Ord that he (Wright) was in contact with Zhabilov Jr.  He
      told her that Keledjian was stealing money from VGI and that if she helped
      raise
      any additional capital for VGI, she would go to jail.  He repeatedly
      warned her not to raise any further money for VGI.  He told her
      Keledjian would be going to jail as well, and that Little had a “personal
      vendetta” against Keledjian and would destroy VGI “no matter what.”

     

    FIRST
      COUNTERCLAIM

     

    (Fraud
      and Conspiracy to Commit Fraud Against All Counterclaim Defendants)

    168.           Counterclaim
      Plaintiff repeats and realleges each and every allegation of the Amended
      Counterclaims contained in Paragraphs 1 through 167 as if fully set forth
      herein.

    


    
      
        
              

          
          

        

        
          -
            35 -

          
            

          

        

        
          
          

        

      

    

    


    169.           Counterclaim
      Defendants entered into the numerous agreements set forth above, to induce
      VGI
      to provide Counterclaim Defendants with the authority and information necessary
      to develop VGV-1 (and TNP) as an HIV and AIDS treatment on the continent of
      Africa.

    170.           Upon
      information and belief, Counterclaim Defendants did not intend to perform their
      obligations under these agreements at the time they were entered into, but
      instead intended to steal VGI’s business, good will, trade secrets and
      intellectual property for their own use and benefit.

    171.           In
      connection therewith, Counterclaim Defendants colluded to and did make false
      statements regarding their intent to perform such contracts and their future
      performance, all with the specific intent that VGI would rely upon such
      representations to its damage and detriment.

    172.           Upon
      information and belief, each of the Counterclaim Defendants knew or should
      have
      known that the representations regarding their current intent and their future
      conduct of the business and of the financial assistance being offered to VGI
      were false and that VGI would rely upon such representations to its
      detriment.

    173.           Specifically,
      Counterclaim Defendants used such representations to obtain confidential and
      propriety information about VGI, VGV-1 and TNP, and to put themselves in a
      position vis-à-vis VGI such that they could bankrupt and destroy VGI’s business
      and misappropriate VGI’s trade secrets, business, good will and intellectual
      property for their own benefit.

    174.           In
      reliance on the misrepresentations set forth above, VGI identified Counterclaim
      Defendants as their business partners, and provided authority to act
      with

    


    
      
        
              

          
          

        

        
          -
            36 -

          
            

          

        

        
          
          

        

      

    

    


    respect
      to the development of VGV-1 in Africa, financial assistance, confidential and
      proprietary information and placed in Counterclaim Defendants trust creating
      a
      vulnerability that Counterclaim Defendants have taken advantage of by unjust
      means.

    175.           All
      Counterclaim Defendants in association with one another for the purpose of
      defrauding VGI constitute an “enterprise,” which enterprise was engaged in and
      the activities of which affected interstate commerce beginning at least in
      2004
      and continuing through the present.

    176.           Each
      Counterclaim Defendant, individual or entity, was employed or otherwise
      associated with the enterprise and, beginning at least in 2004 and continuing
      through the present, did conduct or participate, directly or indirectly, in
      the
      conduct of affairs of the enterprise through a pattern of fraudulent and
      tortious activity.

    177.           Each
      of the Counterclaim Defendants committed and, in some instances, aided and
      abetted the commission, of acts in furtherance of the fraud.  These
      predicate acts of each Counterclaim Defendant were related because they involved
      the same method of commission, the same sending and receiving parties and they
      served the common purpose of inducing the VGI to rely upon the above-stated
      representations and take the above-stated action or omissions, to further the
      overall scheme to defraud VGI.

    178.           As
      a direct result of VGI’s reasonable reliance on Defendants’ misrepresentations
      known to each and every Counterclaim Defendant, VGI has suffered damages caused
      by each of Counterclaim Defendants in an amount to be proved at trial, but
      not
      less than US$3,500,000, plus interest.

    179.           In
      connection with the activities giving rise to this cause of action, Counterclaim
      Defendants acted with malice, insult, intent and knowledge and with
      a

    


    
      
        
              

          
          

        

        
          -
            37 -

          
            

          

        

        
          
          

        

      

    

    


    wanton
      disregard of the rights of VGI.  Counterclaim Defendants’
misrepresentations were intentional and willful and
      wanton.  Accordingly, VGI should be awarded punitive damages in an
      amount to be awarded at trial, but not less than US$10,000,000.

    SECOND
      COUNTERCLAIM

    (Breach
      of Contract Against T&T)

    180.           Counterclaim
      Plaintiff repeats and realleges each and every allegation of the Amended
      Counterclaims contained in Paragraphs 1 through 179 as if fully set forth
      herein.

    181.           The
      Distribution Management Agreement is a binding and enforceable
      contract.

    182.           VGI
      has fully performed, and continues to perform, its obligations under the
      Distribution Management Agreement, or is excused from such
      performance.

    183.           Upon
      information and belief, T&T has breached the Distribution Management
      Agreement by, among other things:

    a)           Failing
      to pay its contracted share of expenses and costs under the Distribution
      Management Agreement;

    b)           Demanding
      payment of certain costs and expenses from VGI not authorized or approved by
      VGI
      pursuant to the Distribution Management Agreement.

    184.           As
      a direct and proximate cause of T&T’s aforesaid breaches of the Distribution
      Management Agreement, VGI has been damaged in an amount not yet fully known,
      but
      believed to exceed $3,500,000.  VGI is also entitled to
      indemnification of all cost and damages suffered as a result of Counterclaim
      Defendants’ conduct herein.  In addition, VGI is entitled to its
      reasonable attorneys fees as per agreement.

    


    
      
        
              

          
          

        

        
          -
            38 -

          
            

          

        

        
          
          

        

      

    

     

    THIRD
      COUNTERCLAIM

    (Breach
      of Covenant of Good Faith and Fair Dealing Against T&T)

    185.           Counterclaim
      Plaintiff repeats and realleges each and every allegation of the Amended
      Counterclaims contained in Paragraphs 1 through 184 as if fully set forth
      herein.

    186.           The
      Distribution Management Agreement is a binding and enforceable
      contract.

    187.           VGI
      has fully performed, and continues to perform, its obligations under the
      Distribution Management Agreement, or is excused from such
      performance.

    188.           Under
      the Distribution Management Agreement, T&T owed to VGI an implied covenant
      of good faith and fair dealing.  Among other things, T&T was
      obligated to refrain from conduct that would result in injuring or infringing
      on
      VGI’s right to receive the benefits of the Distribution Management
      Agreement.

    189.           As
      a direct and proximate result of T&T’s aforesaid breach of the covenant of
      fair dealing, VGI has been damaged in an amount to be proven at trial, but
      reasonably believed to exceed $3,500,000.  In addition, VGI is
      entitled to its reasonable attorneys fees as per agreement.

    FOURTH
      COUNTERCLAIM

    (Breach
      of Contract Against Wright)

    190.           Counterclaim
      Plaintiff repeats and realleges each and every allegation of the Amended
      Counterclaims contained in Paragraphs 1 through 189 as if fully set forth
      herein.

    191.           The
      Consulting Engagement was a binding and enforceable contract.

    192.           The
      Consulting Engagement expressly provided that the representations, warranties,
      and agreements of the parties contained in the Consulting Engagement will remain
      operative and in full force and effect and will survive any termination of
      the
      Consulting Engagement.

    
      
        
        

      

      
        -
          39 -

        
          

        

      

      
        
        

      

    

    193.           VGI
      fully performed all its obligations under the Consulting
      Engagement.

    194.           Upon
      information and belief, Wright breached the Consulting Agreement by, among
      other
      things, disclosing or causing to be disclosed confidential, proprietary
      information of VGI without authorization of VGI to third parties, and by
      engaging in the conduct and conspiracy alleged herein.

    195.           As
      a direct and proximate cause of Wright’s aforesaid breaches of the Consulting
      Engagement, VGI has been damaged in an amount not yet fully known, but believed
      to exceed $3,500,000.

    FIFTH
      COUNTERCLAIM

    (Breach
      of Covenant of Good Faith and Fair Dealing Against Wright)

    196.           Counterclaim
      Plaintiff repeats and realleges each and every allegation of the Amended
      Counterclaims contained in Paragraphs 1 through 195 as if fully set forth
      herein.

    197.           The
      Consulting Engagement was a binding and enforceable contract .

    198.           The
      Consulting Engagement expressly provided that the representations, warranties,
      and agreements of the parties contained in the Consulting Engagement will remain
      operative and in full force and effect and will survive any termination of
      the
      Consulting Engagement.

    199.           VGI
      fully performed all its obligations under the Consulting
      Engagement.

    200.           Under
      the Consulting Agreement, Wright owed to VGI an implied covenant of good faith
      and fair dealing.  Among other things, Wright was obligated to refrain
      from conduct that would result
      in
      injuring or infringing on VGI’s right to receive the benefits of the Consulting
      Engagement.

    
      
        
        

      

      
        -
          40 -

        
          

        

      

      
        
        

      

    

    201.           As
      a direct and proximate result of Wright’s aforesaid breach of the covenant of
      fair dealing, VGI has been damaged in an amount to be proven at trial, but
      reasonably believed to exceed $3,500,000.

    SIXTH
      COUNTERCLAIM

    (Breach
      of Fiduciary Duty Against Wright)

    202.           Counterclaim
      Plaintiff repeats and realleges each and every allegation of the Amended
      Counterclaims contained in Paragraphs 1 through 201 as if fully set forth
      herein.

    203.           As
      set forth more fully above, pursuant to the Consulting Agreement, Wright agreed
      to provide legal and other consulting services to VGI.  In addition,
      from September 2003 until June 2004, Wright was a member of the Board of
      Directors of VGI.

    204.           During
      this entire period, a relationship of trust and fidelity arose between Wright
      and VGI as a matter of law, giving rise to fiduciary obligations on the part
      of
      Wright in favor of VGI.

    205.           Based
      upon these fiduciary obligations, Wright owed to VGI a duty of the highest
      fidelity and good faith.

    206.           Based
      upon his participation in the plan and conspiracy of Counterclaim Defendants
      as
      set forth herein, and based upon Wright’s acts and omissions, and usurpation of
      VGI’s corporate business opportunities, Wright breached his fiduciary
      obligations to VGI, causing harm to VGI as a direct result thereof.

    207.           As
      a direct and proximate cause of Wright’s aforesaid breaches of his fiduciary
      duties to VGI, VGI has been damaged in an amount not yet fully known, but
      believed to exceed $3,500,000.

    
      
        
        

      

      
        -
          41 -

        
          

        

      

      
        
        

      

    

    208.           The
      acts giving rise to Wright’s breach of fiduciary duty were purposeful, willful
      and wanton, and without regard to the rights of VGI.  As a result,
      Wright is also liable to VGI for punitive and exemplary damages in an amount
      to
      be awarded at trial, but not less than $10 million.

    SEVENTH
      COUNTERCLAIM

     (Aiding
      and Abetting Breach of Fiduciary Duty Against All Counterclaim
      Defendants)

     

    209.           Counterclaim
      Plaintiff repeats and realleges each and every allegation of the Amended
      Counterclaims contained in Paragraphs 1 through 208 as if fully set forth
      herein.

    210.           As
      a result of Zhabilov Jr.’s and Wright’s positions and agreements with VGI, both
      owed to VGI a fiduciary duty.

    211.           Zhabilov
      Jr. and Wright breached their fiduciary duties to VGI by misappropriating VGI’s
      business, goodwill, trade secrets, business opportunities and intellectual
      property and by defrauding VGI in collusion with the other Counterclaim
      Defendants.

    212.           Little
      and T&T knew or should have known that by engaging in their joint scheme to
      defraud, Zhabilov Jr. and Wright would breach their fiduciary duties to
      VGI.  Wright knew or should have known that by engaging in their joint
      scheme to defraud, Zhabilov Jr. would breach his fiduciary duties to
      VGI.

    213.           The
      participation in and acceptance of the benefits of the fraudulent scheme by
      Wright, Little and T&T constituted a knowing or reckless participation by
      Wright, Little and T&T in Zhabilov Jr.’s, and by Little and T&T in
      Wright’s, breach of their fiduciary duties to VGI.

     

    
      
        
        

      

      
        -
          42 -

        
          

        

      

      
        
        

      

    

    214.           Accordingly,
      Wright, Little and T&T aided and abetted Zhabilov Jr.’s and Little and
      T&T aided and abetted Wright’s breach of fiduciary duty to VGI.

    215.           As
      a result, VGI has suffered damages in an amount to be proved at trial, but
      not
      less than $3,500,000, plus interest.

    216.           Wright’s,
      Little’s and T&T’s actions were intentional and willful and
      wanton.  Accordingly, VGI should be awarded punitive damages in an
      amount to be awarded at trial, but not less than $10,000,000.

    EIGHTH
      COUNTERCLAIM

    (Tortious
      Interference With Contract Against All Counterclaim Defendants)

    217.           Counterclaim
      Plaintiff repeats and realleges each and every allegation of the Amended
      Counterclaims contained in Paragraphs 1 through 216 as if fully set forth
      herein.

    218.           The
      Zhabilov Employment Agreement was a binding and enforceable
      contract.

    219.           VGI
      fully performed, and continues to perform, its obligations under the Zhabilov
      Employment Agreement.

    220.           Upon
      information and belief, Wright, Little and T&T were aware of the existence
      of the Zhabilov Employment Agreement.

    221.           Upon
      information and belief, Wright, Little and T&T intentionally acted to induce
      Zhabilov Jr. to breach the Zhabilov Employment Agreement and/or to disrupt
      or
      interfere with the contractual relationship between VGI and Zhabilov
      Jr.

    222.           Upon
      information and belief, Zhabilov Jr. breached the Zhabilov Employment Agreement
      and/or the contractual relationship between VGI and Zhabilov was disrupted
      or
      interfered with due to Wright’s, Little’s and T&T’s intentional
      acts.

    
      
        
        

      

      
        -
          43 -

        
          

        

      

      
        
        

      

    

    223.           As
      a direct and proximate cause of Wright’s, Little’s and T&T’s aforesaid
      tortious interference with VGI and Zhabilov Jr.’s contractual relationship, VGI
      has been damaged in an amount not yet fully known, but believed to exceed
      $3,500,000.

    NINTH
      COUNTERCLAIM

     

    (Tortious
      Interference with Prospective Economic Advantage Against All Counterclaim
      Defendants)

     

    224.           Counterclaim
      Plaintiff repeats and realleges each and every allegation of the Amended
      Counterclaims contained in Paragraphs 1 through 223 as if fully set forth
      herein.

    225.           VGI
      and Zhabilov Jr. enjoyed an economic relationship with the probability of future
      economic benefit to VGI.

    226.           Upon
      information and belief, Wright, Little and T&T were aware of the economic
      relationship between VGI and Zhabilov Jr.

    227.           Upon
      information and belief, Wright, Little and T&T intentionally acted to
      disrupt and/or interfere with the economic relationship between VGI and Zhabilov
      Jr.

    228.           Upon
      information and belief, but for Wright’s, Little’s and T&T’s intentional
      disruption and/or interference with VGI and Zhabilov Jr.’s economic
      relationship, there was a probability of future economic benefit to VGI as
      a
      result of the economic relationship.

    229.           As
      a direct and proximate cause of Wright’s, Little’s and T&T’s aforesaid
      tortious interference with VGI and Zhabilov Jr.’s economic relationship, VGI has
      been damaged in an amount not yet fully known, but believed to exceed
      $3,500,000.

    TENTH
      COUNTERCLAIM

    (Trade
      Libel Against All Counterclaim Defendants)

    230.           Counterclaim
      Plaintiff repeats and realleges each and every allegation of the Amended
      Counterclaims contained in Paragraphs 1 through 229 as if fully set forth
      herein.

    
      
        
        

      

      
        -
          44 -

        
          

        

      

      
        
        

      

    

    231.           Upon
      information and belief, Counterclaim Defendants have published or have caused
      to
      be published on the internet through John and Jane Does 1 through 10, among
      other places, false and disparaging information of VGI and
      Keledjian.

    232.           
      Upon information and belief, Counterclaim Defendants knew these communications
      to be false or they were made with reckless disregard of the truth.

    233.           As
      a direct and proximate cause of Counterclaim Defendants’ aforesaid trade libel,
      VGI has been damaged in an amount not yet fully known, but believed to exceed
      $3,500,000.

    ELEVENTH
      COUNTERCLAIM

    (Unfair
      Business Practices Against All Counterclaim Defendants)

    234.           Counterclaim
      Plaintiffs repeats and realleges each and every allegation of the Amended
      Counterclaims contained in Paragraphs 1 through 233 as if fully set forth
      herein.

    235.           Under
      California law, unfair competition is any unlawful, unfair or fraudulent
      business act or practice.  Cal. Bus. & Prof. Code § 17200, et
      seq.

    236.           The
      acts and omissions of Counterclaim Defendants complained of herein constitutes
      unfair competition and violates California law.

    237.           As
      a direct and proximate cause of Counterclaim Defendants’ aforesaid unfair
      business practices, VGI has been damaged in an amount not yet fully known,
      but
      believed to exceed $3,500,000.

    238.           VGI
      is also entitled to recover from the Counterclaim Defendants treble damages
      and
      attorneys’ fees by statute.

    
      
        
        

      

      
        -
          45 -

        
          

        

      

      
        
        

      

    

    


    WHEREFORE,
      Defendant and Counterclaim
      Plaintiff VGI and Defendant Keledjian pray for the following
      relief:

    (1)           Dismissal
      of the Amended Complaint in its entirety;

    (2)           For
      damages on the Amended Counterclaims in an amount to be proven at trial, plus
      interest and costs;

    (3)           Reasonable
      attorneys’ fees; and

    (4)           For
      such other and further relief as this Court deems just and proper.

    JURY
      DEMAND


    Defendant
      and Counterclaim Plaintiff
      Viral Genetics, Inc. and Defendant Haig Keledjian hereby request a trial by
      jury
      on all claims, causes of action, issues, counterclaims, and affirmative defenses
      properly triable before a jury.

    


    Dated:    New
      York, New York

    September
      18,
      2007                                   
/s/ Richard A. De
      Palma                    


    Richard
      A. De Palma (pro hac
      vice)

    Kathryn
      M. Ryan (pro hac
      vice)

    Vasilis
      F.L. Pappas (pro hac
      vice)

    BAKER
&
McKENZIE
      LLP

    1114
      Avenue of the
      Americas

    New
      York, NY 10036

    (212)
      626-4100

    


    J.
      Patrick Herald

    Michael
      C. McCutcheon

    BAKER
      & McKENZIE LLP

    One
      Prudential Plaza, Suite 3500

    130
      East
      Randolph Drive

    Chicago,
      IL  60601

    (312)
      861-8000

    Firm
      I.D.
      #28

    


    Attorneys
      for CounterclaimPlaintiff
      Viral Genetics, Inc. and

    Defendant
      Haig Keledjian

    


    
      
        
              

          
          

        

        
          -
            46 -

          
            

          

        

        
          
          

        

      

    

    


    CERTIFICATE
      OF SERVICE

    


    I,
      Richard A. De Palma, one of the
      attorneys for Defendant and Counterclaim Plaintiff Viral Genetics, Inc. and
      Defendant Haig Keledjian, do hereby certify that I have this day caused a true
      and correct copy of the foregoing Defendants’ Amended Answer
      to

    Plaintiff’s
      Amended Complaint and Counterclaim Plaintiff’s Amended Counterclaims to be
      served upon the following according to ECF Rules in compliance with Fed. Rule
      Civ. P. 5(b)(2)(D):

    Mark
      S.
      Bernstein, Esq.

    David
      M.
      Wiese, Esq.

    Barack
      Ferrazzano Kirschbaum

    Perlman
      & Nagelberg LLP

    333
      West
      Wacker Drive, Suite 2700

    Chicago,
      Illinois 60606

    mark.bernstein@bfkpn.com

    david.wiese@bfkpn.com

    


    Attorneys
      for Plaintiff and Counterclaim Defendant

    Timothy
      & Thomas LLC

    


    


    September
      18,
      2007                                                                           /s/
      Richard A. De
      Palma