ADVANCED VIRAL RESEARCH CORP
AGEEEMENT DATED OCTOBER 8, 2002
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>4
<FILENAME>g79389exv10w2.txt
<DESCRIPTION>AGEEEMENT DATED OCTOBER 8, 2002
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.2


                           GENERAL SERVICES AGREEMENT

         This General Services Agreement ("Agreement") is made between Advanced
Viral Research Corporation, Inc - ADVR, which has a place of business at 200
Corporate Boulevard South, Yonkers, New York 10701, USA (hereinafter "Sponsor"),
and Quintiles Israel Ltd. having its office at P.O.B 8567, Poleg Industrial Park
Netanya 42505, Israel (hereinafter "Quintiles"). When signed by both parties,
this Agreement will set forth the terms and conditions under which Quintiles
agrees to provide certain services to Sponsor as set forth herein.

                                    RECITALS:

         A. Sponsor is in the business of developing, manufacturing and/or
distributing pharmaceutical products, medical devices and/or biotechnology
products. Quintiles is in the business of providing clinical trial services,
research, and other services for the pharmaceutical, medical device and
biotechnology industries and has made significant, up-front investments in
technologies related to those industries, building on important inventions and
web-based technologies.

         B. Sponsor and Quintiles desire to enter into this Agreement whereby
Quintiles will perform services relating to ADVR's three projects:

         Phase I Clinical Trial of the Peptide Nucleic Acid Complex `Product R'
         in Patient with Advanced-Stage Acquired Immunodeficiency Syndrome

         Phase I Clinical Trial of the Peptide Nucleic Acid Complex `Product R'
         in Patient with Advanced-Stage Hematopoietic Neoplasms

         Phase I Clinical Trial of the Peptide Nucleic Acid Complex `Product R'
         in Patient with Advanced-Stage Cancer, Preceded by a Pre-Phase I single
         Injection Study (the "Project").

                                   AGREEMENT:

         1.0      SERVICES TO BE PROVIDED. The services to be performed
                  hereunder (the "Services") shall be specified in the Scope of
                  Work attached hereto as Attachment 1. Any responsibilities not
                  specifically transferred in this Agreement shall remain the
                  responsibility of Sponsor.

         2.0      PAYMENT OF FEES AND EXPENSES. Sponsor will pay Quintiles for
                  fees, expenses and pass-through costs in accordance with the
                  budget and payment schedule attached hereto as Attachment 2.
                  Sponsor agrees that the budget and payment schedule will be
                  structured in an effort to maintain cash neutrality for
                  Quintiles (with respect to the payment of professional fees,
                  pass-through costs and otherwise). As a minimum requirement in
                  this context, if requested by Quintiles, Sponsor agrees that
                  it shall provide an up-front payment equal to fifteen percent
                  (15%) of the budget, which up front payment shall be credited
                  to Sponsor on the




<PAGE>

                  final invoice. Quintiles will invoice Sponsor monthly for the
                  fees, expenses and pass-through costs incurred in performing
                  the Services, and Sponsor shall pay each invoice within thirty
                  (30) days of the date of the invoice. If any portion of an
                  invoice is disputed, then Sponsor shall pay the undisputed
                  amounts as set forth in the preceding sentence and the parties
                  shall use good faith efforts to reconcile the disputed amount
                  as soon as practicable. Sponsor shall pay Quintiles interest
                  in an amount equal to four percent (4%) above the LIBOR rate
                  per month of all undisputed amounts owing hereunder and not
                  paid when due (or the maximum lesser amount permitted by
                  applicable law). In the event that taxes or duties, of
                  whatever nature, are required to be withheld on payments made
                  pursuant to this Agreement by any state, federal, provincial
                  or foreign government, including, but not limited to, Value
                  Added Tax, Sponsor shall promptly pay said taxes and duties to
                  the appropriate taxing authority without any deduction to any
                  amount owed to Quintiles. Sponsor shall secure and deliver to
                  Quintiles any official receipt for any such taxes paid.
                  Quintiles shall send all invoices to the attention of Alan V.
                  Gallantar at the following address: 200 Corporate Boulevard
                  South, Yonkers, New York 10701, USA. Sponsor shall send all
                  payments to the following address: Quintiles Israel Ltd.
                  P.O.B. 8567, Poleg Industrial Park Netanya 42505, Israel.

         3.0      TERM. This Agreement shall commence on the date it has been
                  signed by all parties and shall continue until the Services
                  are completed or until terminated by either party in
                  accordance with Section 17 below.

         4.0      CHANGE ORDERS. Any change in the details of this Agreement or
                  the assumptions upon which this Agreement is based (including,
                  but not limited to, changes in an agreed starting date for the
                  Project or suspension of the Project by Sponsor) may require
                  changes in the budget and/or time lines, and shall require a
                  written amendment to the Agreement (a "Change Order"). Each
                  Change Order shall detail the requested changes to the
                  applicable task, responsibility, duty, budget, time line or
                  other matter. The Change Order will become effective upon the
                  execution of the Change Order by both parties, and Quintiles
                  will be given a reasonable period of time within which to
                  implement the changes. Both parties agree to act in good faith
                  and promptly when considering a Change Order requested by the
                  other party. Without limiting the foregoing, Sponsor agrees
                  that it will not unreasonably withhold approval of a Change
                  Order, even if it involves a fixed price contract, if the
                  proposed changes in budgets or time lines result from, among
                  other appropriate reasons, forces outside the reasonable
                  control of Quintiles or changes in the assumptions upon which
                  the initial budget or time lines were based, including, but
                  not limited to, the assumptions set forth in the budget or
                  timelines. Quintiles reserves the right to postpone effecting
                  material changes in the Project's scope until such time as the
                  parties agree to and execute the corresponding Change Order.
                  For any Change Order that affects the scope of the regulatory
                  obligations that have been transferred to Quintiles, Quintiles
                  and Sponsor shall execute a corresponding amendment to the
                  Transfer of Obligations Form. Sponsor shall file such
                  amendment where appropriate, or as required by law or
                  regulation.



                                       2
<PAGE>

5.0               CONFIDENTIALITY. It is understood that during the course of
                  this Agreement, Quintiles and its employees may be exposed to
                  data and information that are confidential and proprietary to
                  Sponsor. All such data and information (hereinafter "Sponsor
                  Confidential Information") written or verbal, tangible or
                  intangible, made available, disclosed, or otherwise made known
                  to Quintiles and its employees as a result of Services under
                  this Agreement shall be considered confidential and shall be
                  considered the sole property of Sponsor. All information
                  regarding Quintiles' operations, methods, and pricing and all
                  Quintiles' Property (as defined in Section 6.0 below),
                  disclosed by Quintiles to Sponsor in connection with this
                  Agreement is proprietary, confidential information belonging
                  to Quintiles (the "Quintiles Confidential Information", and
                  together with the Sponsor Confidential Information, the
                  "Confidential Information"). The Confidential Information
                  shall be used by the receiving party and its employees only
                  for purposes of performing the receiving party's obligations
                  hereunder. Each party agrees that it will not reveal, publish
                  or otherwise disclose the Confidential Information of the
                  other party to any third party without the prior written
                  consent of the disclosing party. Each party agrees that it
                  will not disclose the terms of this Agreement to any third
                  party without the written consent of the other party, which
                  shall not unreasonably be withheld. These obligations of
                  confidentiality and nondisclosure shall remain in effect for a
                  period of ten (10) years after the completion or termination
                  of the Agreement.

                  The foregoing obligations shall not apply to Confidential
                  Information to the extent that it: (a) is or becomes generally
                  available to the public other than as a result of a disclosure
                  by the receiving party; (b) becomes available to the receiving
                  party on a non-confidential basis from a source which is not
                  prohibited from disclosing such information; (c) was developed
                  independently of any disclosure by the disclosing party or was
                  known to the receiving party prior to its receipt from the
                  disclosing party, as shown by contemporaneous written
                  evidence; or, (d) is required by law or regulation to be
                  disclosed.

         6.0      OWNERSHIP AND INVENTIONS. All data and information generated
                  or derived by Quintiles as the result of services performed by
                  Quintiles under this Agreement shall be and remain the
                  exclusive property of Sponsor. Any inventions that may evolve
                  from the data and information described above or as the result
                  of services performed by Quintiles under this Agreement shall
                  belong to Sponsor and Quintiles agrees to assign its rights in
                  all such inventions and/or related patents to Sponsor.
                  Notwithstanding the foregoing, Sponsor acknowledges that
                  Quintiles possesses certain inventions, processes, know-how,
                  trade secrets, improvements, other intellectual properties and
                  other assets, including but not limited to analytical methods,
                  procedures and techniques, procedure manuals, personnel data,
                  financial information, computer technical expertise and
                  software, which have been independently developed by Quintiles
                  and which relate to its business or operations (collectively
                  "Quintiles' Property"). Sponsor and Quintiles agree that any
                  Quintiles' Property or improvements thereto which are used,
                  improved,




                                       3
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                  modified or developed by Quintiles under or during the term of
                  this Agreement are the sole and exclusive property of
                  Quintiles.

         7.0      RECORDS AND MATERIALS. At the completion of the Services by
                  Quintiles, all materials, information and all other data owned
                  by Sponsor, regardless of the method of storage or retrieval,
                  shall be delivered to Sponsor in such form as is then
                  currently in the possession of Quintiles, subject to the
                  payment obligations set forth in Section 2 herein.
                  Alternatively, at Sponsor' s written request, such materials
                  and data may be retained by Quintiles for Sponsor for an
                  agreed-upon time period, or disposed of pursuant to the
                  written directions of Sponsor. Sponsor shall pay the costs
                  associated with any of the above options and shall pay a
                  to-be-determined fee for storage by Quintiles of records and
                  materials after completion or termination of the Services.
                  Quintiles, however, reserves the right to retain, at its own
                  cost and subject to the confidentiality provisions herein,
                  copies of all materials that may be needed to satisfy
                  regulatory requirements or to resolve disputes regarding the
                  Services. Nothing in this Agreement shall be construed to
                  transfer from Sponsor to Quintiles any FDA or regulatory
                  record-keeping requirements unless such transfer is
                  specifically provided for in the applicable Transfer of
                  Obligations Form.

         8.0      INDEPENDENT CONTRACTOR RELATIONSHIP. For the purposes of this
                  Agreement, the parties hereto are independent contractors and
                  nothing contained in this Agreement shall be construed to
                  place them in the relationship of partners, principal and
                  agent, employer/employee or joint venturers. Neither party
                  shall have the power or right to bind or obligate the other
                  party, and neither party shall hold itself out as having such
                  authority. If, however, Sponsor desires to conduct clinical
                  trials in one or more countries that require a local sponsor
                  or representative, and Sponsor requests that Quintiles or its
                  affiliates serve as its agent for that purpose, then Quintiles
                  may serve as Sponsor's agent for the purpose of fulfilling
                  local sponsor or representative duties. Sponsor shall pay
                  Quintiles for such local representative services at Quintiles'
                  standard daily rates, unless otherwise specified in the
                  attached Budget.

         9.0      REGULATORY COMPLIANCE; INSPECTIONS. Quintiles agrees that its
                  Services will be conducted in compliance with all applicable
                  laws, rules and regulations, and with the standard of care
                  customary in the contract research organization industry. If
                  this study will be conducted under an FDA Investigational New
                  Drug Application ("IND") or Investigational Device Exemption
                  ("IDE"), or any other FDA application, Quintiles represents
                  that it has a compliance plan in place regarding the FDA's
                  electronic records and signatures regulation, 21 CFR Part 11
                  ("Part 11") and that it is working diligently to implement its
                  plan. Quintiles, however, is not responsible for the
                  compliance or non-compliance of applications or systems used
                  by third parties (including, but not limited to, investigative
                  sites or third party laboratories) unless such applications or
                  systems are owned by Quintiles. Quintiles shall process all
                  personal data in accordance with this Agreement or as
                  otherwise instructed by Sponsor or its affiliates in
                  compliance with the EU Data Protection Directive 95/46/EC and
                  any applicable national legislation enacted




                                       4
<PAGE>

                  thereunder ("Data Protection Legislation"). Sponsor represents
                  and affirms to Quintiles that Sponsor has complied with, and
                  will continue to comply with its obligations under the Data
                  Protection Legislation.

                  Quintiles' standard operating procedures will be used in
                  performance of the Services, unless otherwise specifically
                  stated in the Scope of Work. Quintiles certifies that it has
                  not been debarred under the Generic Drug Enforcement Act and
                  that it will not knowingly employ any person or entity that
                  has been so debarred to perform any Services under this
                  Agreement. Sponsor represents and certifies that it will not
                  require Quintiles to perform any assignments or tasks in a
                  manner that would violate any applicable law or regulation.
                  Sponsor further represents that it will cooperate with
                  Quintiles in taking any actions that Quintiles reasonably
                  believes are necessary to comply with the regulatory
                  obligations that have been transferred to Quintiles. If
                  Sponsor is transferring to Quintiles responsibility for any
                  regulatory obligations under United States laws or
                  regulations, Quintiles and Sponsor shall cooperate in the
                  completion of a Transfer of Obligations Form in conjunction
                  with this Agreement. Any such regulatory responsibilities not
                  specifically transferred in the Transfer of Obligations Form
                  shall remain the regulatory responsibility of Sponsor. The
                  Transfer of Obligations Form will be filed with the United
                  States Food and Drug Administration ("FDA") by Sponsor where
                  appropriate, or as required by law or regulation.

                  Each party acknowledges that the other party may respond
                  independently to any regulatory correspondence or inquiry in
                  which such party or its affiliates is named. Each party,
                  however, shall: a) notify the other party promptly of any
                  governmental or regulatory inspection or inquiry concerning
                  any study or Project of Sponsor in which Quintiles is
                  providing Services, including, but not limited to, inspections
                  of investigational sites or laboratories; b) forward to the
                  other party copies of any correspondence from any regulatory
                  or governmental agency relating to such a study or Project,
                  including, but not limited to, U.S. FDA Form 483 notices, and
                  any refusal to file, rejection or warning letters, even if
                  they do not specifically mention the other party; and, c)
                  obtain the written consent of the other party, which will not
                  unreasonably be withheld, before referring to the other party
                  or any of its affiliates in any regulatory correspondence.
                  Where reasonably practicable, each party will be given the
                  opportunity to have a representative present during any
                  regulatory inspection. Each party, however, acknowledges that
                  it may not direct the manner in which the other party fulfills
                  its obligations to permit inspection by governmental entities.

                  Each party agrees that, during an inspection by any regulatory
                  authority concerning any study or Project of Sponsor in which
                  Quintiles is providing Services, it will not disclose
                  information and materials that are not required to be
                  disclosed to such agency, without the prior consent of the
                  other party, which shall not unreasonably be withheld. Such
                  information and materials includes, but are not limited to,
                  the following: 1) financial data and pricing data (including,
                  but not limited to, the budget and payment schedule); 2) sales
                  data (other than shipment




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<PAGE>

                  data); and, 3) personnel data (other than data as to
                  qualification of technical and professional persons performing
                  functions subject to regulatory requirements).

                  During the term of this Agreement, Quintiles will permit
                  Sponsor's representatives (unless such representatives are
                  competitors of Quintiles) to examine or audit the work
                  performed hereunder and the facilities at which the work is
                  conducted upon reasonable advance notice during regular
                  business hours to determine that the Project assignment is
                  being conducted in accordance with the agreed task and that
                  the facilities are adequate. All information disclosed,
                  revealed to or ascertained by Sponsor in connection with any
                  such audit or examination or in connection with any
                  correspondence between Quintiles and any regulatory
                  authorities (including any FDA Form 483 notices) shall be
                  deemed to constitute Quintiles Confidential Information, for
                  purposes of this Agreement. Sponsor shall reimburse Quintiles
                  for its time and expenses (including reasonable attorney fees
                  and the costs of responding to findings) associated with any
                  inspection, audit or investigation relating to the Services
                  ("Inspection") instigated by Sponsor or by a governmental
                  authority, unless such Investigation finds that Quintiles
                  breached this Agreement or any applicable law or regulation.

         10.0     RELATIONSHIP WITH INVESTIGATORS. If Quintiles will be
                  obligated to contract with investigators or investigative
                  sites (collectively, "Investigators") then Quintiles will use
                  its standard Clinical Trial Agreement ("Global CTA") form, a
                  copy of which can be reviewed on request along with certain
                  local CTA forms ("Local CTAs") that have developed for use in
                  certain countries based on local requirements with the benefit
                  of local legal advice, which have been prepared in local
                  language and English language where applicable. Any applicable
                  Local CTAs will be made available for inspection by the
                  Sponsor upon request. If the Global CTA form or a Local CTA is
                  updated, Quintiles will use its then current Global CTA form
                  (or Local CTA as appropriate) as of the time of the agreement.
                  If Sponsor insists that any CTA form other than the Global CTA
                  and Local CTAs be used, then Sponsor shall pay all translation
                  costs and additional negotiation time may be required. If an
                  Investigator insists upon any material changes to any
                  provisions that directly affect Sponsor, then Quintiles shall
                  submit the proposed material change to Sponsor, and Sponsor
                  shall review, comment on and/or approve such proposed changes
                  within five (5) working days. If the Global CTA form (or Local
                  CTA, where applicable), or any changes approved by Sponsor,
                  differ from the terms of this Agreement (including, but not
                  limited to, provisions allowing an Investigator to publish
                  results or data that Quintiles is prohibited from revealing),
                  then Quintiles shall have no liability for any such approved
                  provisions or changes. Unless otherwise stated in the attached
                  Budget, the time incurred by Quintiles in negotiating CTA
                  changes proposed by sites shall be billed at Quintiles'
                  Standard Rates. The parties acknowledge and agree that
                  Investigators shall not be considered the employees, agents,
                  or subcontractors of Quintiles or Sponsor and that
                  Investigators shall exercise their own independent medical
                  judgment. Quintiles' responsibilities with respect to
                  Investigators shall be limited to those responsibilities
                  specifically set forth in this Agreement.



                                       6
<PAGE>

                  If Quintiles will be paying Investigators on behalf of
                  Sponsor, the parties will agree in the attached Payment
                  Schedule as to a schedule of amounts to be paid to
                  Investigators. Sponsor acknowledges and agrees Quintiles will
                  only pay Investigators from advances or pre-payments received
                  from Sponsor for Investigators' services, and that Quintiles
                  will not make payments to Investigators prior to receipt of
                  sufficient funds from Sponsor. Sponsor acknowledges and agrees
                  that Quintiles will not be responsible for delays in a study
                  or Project to the extent that such delays are caused by
                  Sponsor's failure to make adequate pre-payment for
                  Investigators' services. Sponsor further acknowledges and
                  agrees that payments for Investigators' services are
                  pass-through payments to third parties and are separate from
                  payments for Quintiles' Services. Sponsor agrees that it will
                  not withhold Investigator payments except to the extent that
                  it has reasonable questions about the services performed by a
                  particular Investigator. For the avoidance of doubt, nothing
                  contained in this clause, or elsewhere in this Agreement, is
                  intended to confer any right or benefit on any third party
                  including, but not limited to, any Investigator, whether under
                  the provisions of the Contracts (Rights of Third Parties) Act
                  1999 or otherwise.

         11.0     THIRD PARTY INDEMNIFICATIONS AND AGREEMENTS. If any
                  investigative sites or any other third parties, including, but
                  not limited to, Data Safety Monitoring Boards, independent
                  laboratories, Advisory Boards, or End Point Adjudication
                  Committees (collectively, "Third Parties"), request an
                  indemnification for loss or damage caused by the sponsor's
                  Project, then Sponsor shall provide such indemnification
                  directly to the Third Party. If Sponsor requests Quintiles'
                  assistance in negotiating the terms of such indemnities,
                  Quintiles shall provide such negotiation services at its
                  standard daily rates, unless otherwise agreed in the attached
                  Budget. Quintiles shall not sign such indemnifications on
                  Sponsor's behalf unless Sponsor has expressly authorized
                  Quintiles to act as its agent for such purpose or has given
                  Quintiles a written power of attorney to sign such
                  indemnifications. In countries in which local laws or local
                  ethics committees require that a local company must sign such
                  indemnifications and Sponsor has no local presence, Quintiles
                  will sign such indemnities only if the parties have entered
                  into an agreement regarding local representative duties. Such
                  agreement can be reviewed on request.

                  If Sponsor requests that Quintiles enter into agreements to
                  retain Third Parties to perform services regarding the
                  Project, such Third Parties shall be independent contractors
                  and shall not be considered the employees, agents, or
                  subcontractors of Quintiles or Sponsor. Sponsor shall pay
                  Quintiles for its reasonable time and expenses in negotiating
                  and administering any such Third Party Agreements.

         12.0     CONFLICT OF AGREEMENTS. Quintiles represents to Sponsor that
                  it is not a party to any agreement which would prevent it from
                  fulfilling its obligations under this Agreement and that
                  during the term of this Agreement, Quintiles agrees that it
                  will not enter into any agreement to provide services which
                  would in any way prevent it from providing the Services
                  contemplated under this Agreement.




                                       7
<PAGE>

                  Sponsor agrees that it will not enter into an agreement with a
                  third party that would alter or affect the regulatory
                  obligations delegated to Quintiles pursuant to this Agreement
                  without the written consent of Quintiles, which will not be
                  unreasonably withheld.

         13.0     PUBLICATION. Project results may not be published or referred
                  to, in whole or in part, by Quintiles or its affiliates
                  without the prior expressed written consent of Sponsor.
                  Neither party will use the other party's name in connection
                  with any publication or promotion without the other party's
                  prior, written consent.

         14.0     LIMITATION OF LIABILITY. Neither Quintiles, nor its
                  affiliates, nor any of Quintiles' or, its affiliate's
                  directors, officers, employees, subcontractors or agents shall
                  have any liability of any type to the extent that such
                  liabilities have not resulted from Quintiles' negligence or
                  intentional misconduct, for any loss of profits, opportunity
                  or goodwill, or any type of special, incidental, indirect or
                  consequential damage or loss in connection with or arising out
                  of this Agreement or the Services performed by Quintiles
                  hereunder.

         15.0     INDEMNIFICATION. Sponsor shall indemnify, defend and hold
                  harmless Quintiles and its affiliates, and its and their
                  directors, officers, employees and agents (each, a "Quintiles
                  Indemnified Party"), from and against any and all losses,
                  damages, liabilities, reasonable attorney fees, court costs,
                  and expenses (collectively "Losses"), joint or several,
                  resulting or arising from any third-party claims, actions,
                  proceedings, investigations or litigation relating to or
                  arising from or in connection with the Services furnished by
                  Quintiles under this Agreement (including, without limitation,
                  any Losses arising from or in connection with any study, test,
                  device, product or potential product to which this Agreement
                  relates), provided, however, that (1) Quintiles is shown to
                  have adhered to and complied with all applicable rules and
                  regulations, (2) that Sponsor is promptly notified in writing
                  of any such claim or suit, and (3) that Quintiles agrees to
                  fully cooperate in the handling of any such claim and in the
                  event of suit, to attend hearings and trials and assist in
                  securing and giving evidence and in obtaining the attendance
                  of necessary and proper witnesses. This agreement by Sponsor
                  to indemnify and to hold harmless shall not cover Losses that
                  are determined to have resulted solely from the negligence or
                  intentional misconduct of the Quintiles Indemnified Party
                  seeking indemnity hereunder.

         16.0     INDEMNIFICATION PROCEDURE. Quintiles shall give Sponsor prompt
                  notice of any such claim or lawsuit (including a copy thereof)
                  served upon it and shall fully cooperate with Sponsor and its
                  legal representatives in the investigation of any matter the
                  subject of indemnification. Quintiles shall not unreasonably
                  withhold its approval of the settlement of any claim,
                  liability, or action covered by this Indemnification
                  provision.

         17.0     TERMINATION. Sponsor or Quintiles may terminate this Agreement
                  without cause at any time during the term of the Agreement on
                  sixty (60) day's prior written notice




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<PAGE>

                  to Quintiles or Sponsor, as appropriate. Either party may
                  terminate this Agreement for material breach upon thirty (30)
                  days' written notice specifying the nature of the breach, if
                  such breach has not been substantially cured within the thirty
                  (30) day period. During the 30-day cure period for termination
                  due to breach, each party will continue to perform its
                  obligations under the Agreement. If the termination notice is
                  not due to a breach, or if the cure period has expired without
                  a substantial cure of the breach, then the parties shall
                  promptly meet to prepare a close-out schedule, and Quintiles
                  shall cease performing all work not necessary for the orderly
                  close-out of the Services or required by laws or regulations.
                  If Quintiles determines that its continued performance of the
                  Services contemplated by this Agreement would constitute a
                  potential or actual violation of regulatory or scientific
                  standards of integrity, then Quintiles may terminate this
                  Agreement by giving written notice stating the effective date
                  (which may be less than thirty days but at least fifteen days
                  from the notice date) of such termination and the basis for
                  such termination, provided that such violation will not result
                  from Quintiles' misconduct and there is a reasonable belief
                  that such violation is likely to occur. Either party may
                  terminate this Agreement immediately upon provision of written
                  notice if the other party becomes insolvent or files for
                  bankruptcy.

                  If this Agreement is terminated by Sponsor without cause or by
                  Quintiles for cause, Sponsor shall pay Quintiles for all
                  Services performed in accordance with the payment schedule
                  indicated in Attachment 2 of this Agreement and reimburse
                  Quintiles for all costs and expenses incurred in performing
                  those Services, including all non-cancelable costs incurred
                  prior to termination but paid after the termination date.
                  Under no circumstance the amount of the payment shall exceed
                  the cap specified in Attachment 2 of this Agreement.

         18.0     RELATIONSHIP WITH AFFILIATES. Sponsor agrees that Quintiles
                  may use the Services of its corporate affiliates to fulfill
                  Quintiles' obligations under this Agreement. Any affiliate so
                  used shall be subject to all of the terms and conditions
                  applicable to Quintiles under this Agreement and entitled to
                  all rights and protections afforded Quintiles under this
                  Agreement. The term "affiliate" shall mean all entities
                  controlling, controlled by or under common control with
                  Quintiles. The term "control" shall mean the ability to vote
                  fifty percent (50%) or more of the voting securities of any
                  entity or otherwise having the ability to influence and direct
                  the polices and direction of an entity.

         19.0     COOPERATION; SPONSOR DELAYS; DISCLOSURE OF HAZARDS. Sponsor
                  shall forward to Quintiles in a timely manner all documents,
                  materials and information in Sponsor's possession or control
                  necessary for Quintiles to conduct the Services. Quintiles
                  shall not be liable to Sponsor nor be deemed to have breached
                  this Agreement for errors, delays or other consequences
                  arising from Sponsor's failure to timely provide documents,
                  materials or information or to otherwise cooperate with
                  Quintiles in order for Quintiles to timely and properly
                  perform its obligations. If Sponsor delays a project from its
                  agreed starting date or suspends




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                  performance of the project for a period longer than 10 working
                  days, then either: a) Sponsor will pay the standard daily rate
                  of the Quintiles' personnel assigned to the project, based on
                  the percentage of their time allocated to the project, for the
                  period of the delay beginning on the eleventh working day, in
                  order to keep the current team members; or, b) Quintiles may
                  re-allocate the personnel at its discretion, and Sponsor will
                  pay the costs of re-training new personnel. In addition,
                  Sponsor will pay all non-cancelable costs and expenses
                  incurred by Quintiles due to the delay and will adjust all
                  timelines to reflect additional time required due to the
                  delay. In order for Quintiles to comply with the Health and
                  Safety at Work Act 1974 and any applicable regulation made
                  pursuant thereto it is a condition of Quintiles providing the
                  contract Services that Sponsor shall provide Quintiles with
                  all information available to it regarding known or potential
                  hazards associated with the use of any substances supplied to
                  Quintiles by Sponsor, and Sponsor shall comply with all
                  current legislation and regulations concerning the shipment of
                  substances by the land, sea or air.

         20.0     PERFORMANCE. Quintiles shall use reasonable efforts to perform
                  the Service in accordance with the terms and conditions of
                  this Agreement, and promptly report in writing to Sponsor upon
                  completion of each task listed in the Table of
                  Responsibilities of Attachment 1 of this Agreement.

         21.0     FORCE MAJEURE. In the event either party shall be delayed or
                  hindered in or prevented from the performance of any act
                  required hereunder by reasons of strike, lockouts, labor
                  troubles, inability to procure materials or services, failure
                  of power or restrictive government or judicial orders, or
                  decrees, riots, insurrection, war, Acts of God, inclement
                  weather or other reason or cause beyond that party's control,
                  then performance of such act (except for the payment of money

                  owed) shall be excused for the period of such delay.

         22.0     NOTICES AND DELIVERIES. Any notice required or permitted to be
                  given hereunder by either party hereunder shall be in writing
                  and shall be deemed given on the date received if delivered
                  personally or by a reputable overnight delivery service, or
                  three (3) days after the date postmarked if sent by registered
                  or certified mail, return receipt requested, postage prepaid
                  to the following addresses:

                  If to Quintiles: Hagit Nof

                  If to Sponsor: Dr. Shalom Z. Hirschman

                  If Sponsor delivers, ships, or mails materials or documents to
                  Quintiles, or requests that Quintiles deliver, ship, or mail
                  materials or documents to Sponsor or to third parties, then
                  the expense and risk of loss for such deliveries, shipments,
                  or mailings shall be borne by Sponsor. Quintiles disclaims any
                  liability for the actions or omissions of third-party delivery
                  services or carriers.

         23.0     INSURANCE. During the term of this Agreement to cover its
                  obligations hereunder, each party shall maintain insurance
                  coverage with a reputable insurance company. The insured party
                  will, upon specific written request, provide evidence in the
                  form



                                       10
<PAGE>

                  of a certificate of insurance that the other party is an
                  additional insured on the insured party's policy/policies as
                  their interests may appear.

         24.0     FOREIGN CURRENCY EXCHANGE. The currency to be used to invoice
                  and for payment shall be set forth in the Budget attached
                  hereto as part of Attachment 1 (the "Budget"). If Quintiles is
                  to perform services whereby it earns fees or incurs expenses
                  in a currency(ies) differing from the invoice and payment
                  currency (hereafter, "foreign currency(ies)"), the initial
                  foreign currency exchange rates used as a basis for
                  calculating the Budget shall be referred to as the "Budgeted
                  Rate". For this Agreement, the Budgeted Rate is as follows:
                  [INSERT RATE]. In addition the Budget will state for each
                  currency its percentage of the total fees (and expenses, if
                  applicable), after its conversion into the invoice and payment
                  currency, which will be applied to all invoices. If a currency
                  referenced within the Budget is replaced by the Euro or
                  otherwise ceases to become legal tender, the applicable
                  replacement currency will be substituted for such currency for
                  purposes of this provision at an established conversion rate.

                  Each end of month, an average actual foreign exchange rate
                  will be computed for each foreign currency exchange rate
                  indicated in the Budget. The actual foreign currency exchange
                  rate will be calculated based upon the foreign currency
                  exchange spot rates published at WWW.OANDA.COM on the last
                  business Friday of each month (the "Current Rates").

         25.0     INFLATION ADJUSTMENTS. If Services are provided by Quintiles
                  over multiple calendar years, Quintiles may increase its fees
                  at the beginning of each calendar year to reflect increases in
                  Quintiles' business costs on a prospective basis only.
                  Quintiles' overall costs may be increased for the next twelve
                  (12) month period using the greater of four percent (4%) or
                  the average percentage change in the wages/earnings survey as
                  published in the Economist (or as reported at
                  WWW.ECONOMIST.COM or the equivalent inflation index of the
                  country where services are performed, over the preceding
                  twelve (12) month period.

         26.0     BINDING AGREEMENT AND ASSIGNMENT. This Agreement shall be
                  binding upon and inure to the benefit of Sponsor and Quintiles
                  and their respective successors and permitted assigns. Except
                  as stated above in Section 18, neither party may assign any of
                  its rights or obligations under this Agreement to any party
                  without the express, written consent of the other party.

         27.0     CHOICE OF LAW, WAIVER AND ENFORCEABILITY. This Agreement shall
                  be construed, governed, interpreted, and applied in accordance
                  with the laws of Israel exclusive of its conflicts of law
                  provisions. The failure to enforce any right or provision
                  herein shall not constitute a waiver of that right or
                  provision. Any waiver of a breach of a provision shall not
                  constitute a waiver of any subsequent breach of that
                  provision. If any provisions herein are found to be
                  unenforceable on the grounds that they are overly broad or in
                  conflict with applicable laws, it is the intent of the parties
                  that such provisions be replaced, reformed or narrowed so that




                                       11
<PAGE>

                  their original business purpose can be accomplished to the
                  extent permitted by law, and that the remaining provisions
                  shall not in any way be affected or impaired thereby.

         28.0     SURVIVAL. The rights and obligations of Sponsor and Quintiles,
                  which by intent or meaning have validity beyond such
                  termination (including, but not limited to, rights with
                  respect to inventions, confidentiality, discoveries and
                  improvements, indemnification and liability limitations) shall
                  survive the termination of this Agreement.

         29.0     ARBITRATION. Any controversy or claim arising out of or
                  relating to this Agreement or the breach thereof shall be
                  settled by arbitration administered by the International
                  Chamber of Commerce ("ICC") under its International Rules of
                  Arbitration, and judgment on the award rendered by the
                  arbitrator shall be binding and may be entered in any court
                  having jurisdiction thereof. Such arbitration shall be filed
                  and conducted at the office of the ICC closest to the
                  Quintiles office having responsibility for the Project, and
                  shall be conducted in English by one arbitrator mutually
                  acceptable to the parties selected in accordance with ICC
                  Rules.

         30.0     ENTIRE AGREEMENT, HEADINGS AND MODIFICATION. This Agreement
                  contains the entire understandings of the parties with respect
                  to the subject matter herein, and supersedes all previous
                  agreements (oral and written), negotiations and discussions.
                  The descriptive headings of the sections of this Agreement are
                  inserted for convenience only and shall not control or affect
                  the meaning or construction of any provision hereof. Any
                  modifications to the provisions herein must be in writing and
                  signed by the parties.





                                       12
<PAGE>

IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto
through their duly authorized officers on the date(s) set forth below.



                  ACKNOWLEDGED, ACCEPTED AND AGREED TO:

                                          [INSERT SPONSOR'S FULL LEGAL NAME]
Quintiles Israel Ltd.                     Advanced Viral Research Corp.
ID - 051256654


By: /s/ EHUD SHOSHANI                     By: /s/ SHALOM Z. HIRSCHMAN, M.D.
    --------------------------------          --------------------------------

Print Name:  EHUD SHOSHANI                Print Name:  SHALOM Z. HIRSCHMAN
            ------------------------                  ------------------------

Title:  GENERAL MANAGER                   Title:  PRESIDENT AND CEO
       -----------------------------             -----------------------------

Date:  OCTOBER 8, 2002                    Date:  OCTOBER 4, 2002
      ------------------------------            ------------------------------



LIST OF ATTACHMENTS

ATTACHMENT 1 - SCOPE OF WORK (FINAL PROPOSAL)

ATTACHMENT 2 - PAYMENT SCHEDULE

ATTACHMENT 3 - QUINTILES ICH-GCP COMPLIANCE




                                       13

</TEXT>
</DOCUMENT>
