WARRANT TO PURCHASE
COMMON STOCK, PAR VALUE $.00001 PER SHARE
OF
ADVANCED VIRAL RESEARCH CORP.
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This Warrant has not been registered under the
Securities Act of 1933, as amended (the "Act"),
because the issuance thereof is believed to be
exempt from registration under various regulations
promulgated under such Act.
This certifies that, for value received, RBB Bank AG, or registered assigns
("Warrantholder"), is entitled to purchase from ADVANCED VIRAL RESEARCH CORP.
(the "Company"), subject to the provisions of this Warrant, at any time and from
time to time until 5:00 p.m. Eastern Standard Time on August 30, 2007, 600,000
shares of the Company's Common Stock, par value $.00001 per share ("Warrant
Shares"). The purchase price payable upon the exercise of this Warrant shall be
$0.20 per Warrant Share. The Warrant Price and the number of Warrant Shares
which the Warrantholder is entitled to purchase is subject to adjustment upon
the occurrence of the contingencies set forth in Section 3 of this Warrant, and
as adjusted from time to time, such purchase price is hereinafter referred to as
the "Warrant Price."
This Warrant is subject to the following terms and conditions:
1. Exercise of Warrant.
(a) This Warrant may be exercised in whole or in part but not for a
fractional share. Upon delivery of this Warrant at the offices of the Company or
at such other address as the Company may designate by notice in writing to the
registered holder hereof with the Subscription Form annexed hereto duly
executed, accompanied by payment of the Warrant Price for the number of Warrant
Shares purchased (in cash, by certified, cashier's or other check acceptable to
the Company, by Common Stock of the Company having a Market Value (as
hereinafter defined) equal to the aggregate Warrant Price for the Warrant Shares
to be purchased, or any combination of the foregoing), the registered holder of
this Warrant shall be entitled to receive a certificate or certificates for the
Warrant Shares so purchased. Such certificate or certificates shall be promptly
delivered to the Warrantholder. Upon any partial exercise of this Warrant, the
Company shall execute and deliver a new Warrant of like tenor for the balance of
the Warrant Shares purchasable hereunder.
(b) In lieu of exercising this Warrant pursuant to Section 1(a), the holder
may elect to receive shares of Common Stock equal to the value of this Warrant
determined in the manner described below (or any portion thereof remaining
unexercised) upon delivery of this Warrant at the offices of the Company or at
such other address as the Company may designate by notice in writing to the
registered holder hereof with the Notice of Cashless Exercise Form annexed
hereto duly executed. In such event the Company shall issue to the holder a
number of shares of the Company's Common Stock computed using the following
formula:
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X = Y (A-B)
-------
A
Where X = the number of shares of Common Stock to be issued to the holder.
Y = the number of shares of Common Stock purchasable under this
Warrant (at the date of such calculation).
A = the Market Value of the Company's Common Stock on the
business day immediately preceding the day on which the Notice
of Cashless Exercise is received by the Company.
B = Warrant Price (as adjusted to the date of such calculation).
(c) The Warrant Shares deliverable hereunder shall, upon issuance, be fully
paid and non-assessable and the Company agrees that at all times during the term
of this Warrant it shall cause to be reserved for issuance such number of shares
of its Common Stock as shall be required for issuance and delivery upon exercise
of this Warrant.
(d) For purposes of this Warrant, the Market Value of a share of Common
Stock on any date shall be equal to (i) the closing sale price per share as
published by a national securities exchange on which shares of Common Stock (or
other units of the security) are traded (an "Exchange") on such date or, if
there is no sale of Common Stock on such date, the average of the bid and asked
prices on such exchange at the close of trading on such date
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or, (ii) if shares of Common Stock are not listed on a national securities
exchange on such date, the closing price per share as published on the National
Association of Securities Dealers Automatic Quotation System ("NASDAQ") National
Market System if the shares are quoted on such system on such date, or (iii) the
average of the bid and asked prices in the over-the-counter market at the close
of trading on such date if the shares are not traded on an exchange or listed on
the NASDAQ National Market System, or (iv) if the Common Stock is not traded on
a national securities exchange or in the over-the-counter market, the fair
market value of a share of Common Stock on such date as determined in good faith
by the Board of Directors. If the holder disagrees with the determination of the
Market Value of any securities of the Company determined by the Board of
Directors under Section 1(d)(iv) the Market Value of such securities shall be
determined by an independent appraiser acceptable to the Company and the holder
(or, if they cannot agree on such an appraiser, by an independent appraiser
selected by each of them, and Market Value shall be the median of the appraisals
made by such appraisers). If there is one appraiser, the cost of the appraisal
shall be shared equally between the Company and the holder. If there are two
appraisers, each of the Company and the holder shall pay for its own appraisal.
2. Transfer or Assignment of Warrant.
(a) Any assignment or transfer of this Warrant shall be made by surrender
of this Warrant at the offices of the Company or at such other address as the
Company may designate in writing to the registered holder hereof with the
Assignment Form annexed hereto duly executed and accompanied by payment of any
requisite transfer taxes, and the Company shall, without charge, execute and
deliver a new Warrant of like tenor in the name of
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the assignee for the portion so assigned in case of only a partial assignment,
with a new Warrant of like tenor to the assignor for the balance of the Warrant
Shares purchasable.
(b) Prior to any assignment or transfer of this
Warrant, the holder thereof shall deliver an opinion of counsel to the Company
to the effect that the proposed transfer may be effected without registration
under the Act.
3. Adjustment of Warrant Price and Warrant Shares -- Anti-Dilution
Provisions.
A. (1) Except as hereinafter provided, in case the Company shall at any
time after the date hereof issue any shares of Common Stock (including shares
held in the Company's treasury) without consideration, then, and thereafter
successively upon each issuance, the Warrant Price in effect immediately prior
to each such issuance shall forthwith be reduced to a price determined by
multiplying the Warrant Price in effect immediately prior to such issuance by a
fraction:
(a) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to such issuance, and
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(b) the denominator of which shall be the total number of shares of
Common Stock outstanding immediately after such issuance.
For the purposes of any computation to be made in accordance
with the provisions of this clause (1), the following provisions shall be
applicable:
(i) Shares of Common Stock issuable by way of dividend or other
distribution on any stock of the Company shall be deemed to have been
issued and to be outstanding at the close of business on the record
date fixed for the determination of stockholders entitled to receive
such dividend or other distribution and shall be deemed to have been
issued without consideration. Shares of Common Stock issued otherwise
than as a dividend, shall be deemed to have been issued and to be
outstanding at the close of business on the date of issue.
(ii) The number of shares of Common Stock at any time outstanding
shall not include any shares
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then owned or held by or for the account of the Company.
(2) In case the Company shall at any time subdivide or combine the
outstanding shares of Common Stock, the Warrant Price shall forthwith be
proportionately decreased in the case of the subdivision or proportionately
increased in the case of combination to the nearest one cent. Any such
adjustment shall become effective at the close of business on the date that
such subdivision or combination shall become effective.
B. In the event that the number of outstanding shares of Common Stock is
increased by a stock dividend payable in shares of Common Stock or by a
subdivision of the outstanding shares of Common Stock, which may include a stock
split, then from and after the time at which the adjusted Warrant Price becomes
effective pursuant to the foregoing Subsection A of this Section by reason of
such dividend or subdivision, the number of shares issuable upon the exercise of
this Warrant shall be increased in proportion to such increase in outstanding
shares. In the event that the number of outstanding shares of Common Stock is
decreased by a combination of the outstanding shares of Common Stock, then, from
and after the time at which the adjusted Warrant Price becomes effective
pursuant to such Subsection A of this Section by reason of such
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combination, the number of shares issuable upon the exercise of this Warrant
shall be decreased in proportion to such decrease in outstanding shares.
C. In the event of an adjustment of the Warrant Price, the number of shares
of Common Stock (or reclassified stock) issuable upon exercise of this Warrant
after such adjustment shall be equal to the number determined by dividing:
(1) an amount equal to the product of (i) the number of shares of
Common Stock issuable upon exercise of this Warrant immediately prior to
such adjustment, and (ii) the Warrant Price immediately prior to such
adjustment, by
(2) the Warrant Price immediately after such adjustment.
D. In the case of any reorganization or reclassification of the outstanding
shares of Common Stock (other than a change in par value, or from par value to
no par value, or from no par value to par value, or as a result of a subdivision
or combination) or in the case of any consolidation of the Company with, or
merger of the Company with, another corporation, or in the case of any sale,
lease or conveyance of all, or substantially all, of the property, assets,
business and goodwill of the Company as an entity, the holder of this Warrant
shall thereafter have the right upon exercise to purchase the kind and amount of
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shares of stock and other securities and property receivable upon such
reorganization, reclassification, consolidation, merger or sale by a holder of
the number of shares of Common Stock which the holder of this Warrant would have
received had all Warrant Shares issuable upon exercise of this Warrant been
issued immediately prior to such reorganization, reclassification,
consolidation, merger or sale, at a price equal to the Warrant Price then in
effect pertaining to this Warrant (the kind, amount and price of such stock and
other securities to be subject to adjustment as herein provided).
E. In case the Company shall, at any time prior to the expiration of this
Warrant and prior to the exercise thereof, dissolve, liquidate or wind up its
affairs, the Warrantholder shall be entitled, upon the exercise thereof, to
receive, in lieu of the Warrant Shares of the Company which it would have been
entitled to receive, the same kind and amount of assets as would have been
issued, distributed or paid to it upon such Warrant Shares of the Company, had
it been the holder of record of shares of Common Stock receivable upon the
exercise of this Warrant on the record date for the determination of those
entitled to receive any such liquidating distribution. After any such
dissolution, liquidation or winding up which shall result in any distribution in
excess of the Warrant Price provided for by this Warrant, the Warrantholder may
at its option exercise the same without making payment of the aggregate Warrant
Price and in such case the Company shall upon the distribution to said
Warrantholder consider that the aggregate Warrant Price has been paid in full to
it and in making settlement to
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said Warrantholder, shall deduct from the amount payable to such Warrantholder
an amount equal to the aggregate Warrant Price.
F. In case the Company shall, at any time prior to the expiration of this
Warrant and prior to the exercise thereof make a distribution of assets (other
than cash) or securities of the Company to its stockholders (the "Distribution")
the Warrantholder shall be entitled, upon the exercise thereof, to receive, in
addition to the Warrant Shares it is entitled to receive, the same kind and
amount of assets or securities as would have been distributed to it in the
Distribution had it been the holder of record of shares of Common Stock
receivable upon exercise of this Warrant on the record date for determination of
those entitled to receive the Distribution.
G. Irrespective of any adjustments in the number of Warrant Shares and the
Warrant Price or the number or kind of shares purchasable upon exercise of this
Warrant, this Warrant may continue to express the same price and number and kind
of shares as originally issued.
4. Officer's Certificate. Whenever the number of Warrant Shares and the
Warrant Price shall be adjusted pursuant to the provisions hereof, the Company
shall forthwith file, at its principal executive office a statement, signed by
the Chairman of the Board, President, or one of the Vice Presidents of the
Company and by its Chief Financial Officer or one of its Treasurers or Assistant
Treasurers, stating the adjusted number of Warrant Shares and
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the new Warrant Price calculated to the nearest one hundredth and setting forth
in reasonable detail the method of calculation and the facts requiring such
adjustment and upon which such calculation is based. Each adjustment shall
remain in effect until a subsequent adjustment hereunder is required. A copy of
such statement shall be mailed to the Warrantholder.
5. Charges, Taxes and Expenses. The issuance of certificates for Warrant
Shares upon any exercise of this Warrant shall be made without charge to the
Warrantholder for any tax or other expense in respect to the issuance of such
certificates, all of which taxes and expenses shall be paid by the Company, and
such certificates shall be issued only in the name of the Warrantholder.
6. Miscellaneous.
(a) The terms of this Warrant shall be binding upon and shall inure to the
benefit of any successors or assigns of the Company and of the holder or holders
hereof and of the shares of Common Stock issued or issuable upon the exercise
hereof.
(b) No holder of this Warrant, as such, shall be entitled to vote or
receive dividends or be deemed to be a stockholder of the Company for any
purpose, nor shall anything contained in this Warrant be construed to confer
upon the holder of this Warrant, as such, any rights of a stockholder of the
Company or any right to vote, give or withhold consent to any corporate action,
receive notice of meetings, receive dividends or subscription rights, or
otherwise.
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(c) Receipt of this Warrant by the holder hereof shall constitute
acceptance of an agreement to the foregoing terms and conditions.
(d) The Warrant and the performance of the parties hereunder shall be
construed and interpreted in accordance with the laws of the State of New York
and the parties hereunder consent and agree that the State and Federal Courts
which sit in the State of New York and the County of New York shall have
exclusive jurisdiction with respect to all controversies and disputes arising
hereunder.
(e) Shares issued upon exercise of this Warrant shall be legended
substantially as follows:
"The shares evidenced by this certificate have not been
registered under the Securities Act of 1933, as amended, and
must be held indefinitely unless they are transferred pursuant
to an effective registration statement under that Act or after
receipt of an opinion of counsel satisfactory to the Company
that registration is not required."
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
duly authorized officer and its corporate seal to be affixed hereto.
Dated: September 26, 1997
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ADVANCED VIRAL RESEARCH CORP.
BY:
Shalom Hirschman, M.D.
President
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SUBSCRIPTION FORM
(TO BE EXECUTED BY THE REGISTERED HOLDER
IF HE DESIRES TO EXERCISE THE WARRANT)
To: ADVANCED VIRAL RESEARCH CORP.
The undersigned hereby exercises the right to purchase
_________ shares of Common Stock, par value $.00001 per share, covered by the
attached Warrant in accordance with the terms and conditions thereof, and
herewith makes payment of the Warrant Price for such shares in full.
SIGNATURE
ADDRESS
DATED:
NOTICE OF EXERCISE OF COMMON STOCK WARRANT
PURSUANT TO NET ISSUE ("CASHLESS") EXERCISE PROVISIONS
, 199
Advanced Viral Research Corp. Aggregate Price of $
a Delaware corporation of Warrant
200 Corporate Boulevard South
Yonkers, New York 10701 Aggregate Price Being
Exercised: $
Attention:
Warrant Price
(per share): $
Number of Shares of
Common Stock to be
Issued Under this
Notice:
CASHLESS EXERCISE
Gentlemen:
The undersigned, registered holder of the Warrant to Purchase
Common Stock delivered herewith ("Warrant") hereby irrevocably exercises such
Warrant for, and purchases thereunder, shares of the Common Stock of ADVANCED
VIRAL RESEARCH CORP., a Delaware corporation, as provided below. Capitalized
terms used herein, unless otherwise defined herein, shall have the meanings
given in the Warrant. The portion of the Aggregate Price (as hereinafter
defined) to be applied toward the purchase of Common Stock pursuant to this
Notice of Exercise is $ , thereby leaving a remainder Aggregate Price (if any)
equal to $ . Such exercise shall be pursuant to the net issue exercise
provisions of Section 1(b) of the Warrant; therefore, the holder makes no
payment with this Notice of Exercise. The number of shares to be issued pursuant
to this exercise shall be determined by reference to the formula in Section 1(b)
of the Warrant which requires the use of the Market Value (as defined in Section
1(d) of the Warrant) of the Company's Common Stock on the business day
immediately preceding the day on which this Notice is received by the Company.
To the extent the foregoing exercise is for less than the full Aggregate Price
of the Warrant, the remainder of the Warrant representing a number of Shares
equal to the quotient obtained by dividing the remainder of the Aggregate Price
by the Warrant Price (and otherwise of like form, tenor and effect) may be
exercised under Section 1(a) of the Warrant. For purposes of this
Notice the term "Aggregate Price" means the product obtained by multiplying the
number of shares of Common Stock for which the Warrant is exercisable times the
Warrant Price.
SIGNATURE
DATE:
ADDRESS
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ASSIGNMENT
(To be Executed by the Registered Holder
if he Desires to Transfer the Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto the right to purchase shares of Common Stock of ADVANCED VIRAL
RESEARCH CORP., evidenced by the within Warrant, and does hereby irrevocably
constitute and appoint Attorney to transfer the said Warrant on the books of the
Company, with full power of substitution.
SIGNATURE
ADDRESS
DATED:
IN THE PRESENCE OF: