ADVANCED VIRAL RESEARCH CORP
AGREEMENT DATED MAY 1, 2002
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>3
<FILENAME>g79389exv10w1.txt
<DESCRIPTION>AGREEMENT DATED MAY 1, 2002
<TEXT>
<PAGE>

                                                                   EXHIBIT 10.1
                                    AGREEMENT

         THIS AGREEMENT made and entered into as of the 1st day of May, 2002 by
and between EnviroGene LLC, a company organized and existing under the laws of
the State of New Jersey and having a regular place of business at 750 Vassar
Avenue, Second Floor, Lakewood, NJ 08701-6007 (hereinafter Center) and Advanced
Viral Research Corporation (hereinafter "Company"), a company organized and
existing under the laws of the State of Delaware and having a regular place of
business at 200 Corporate Boulevard, South Yonkers, NY 10701, USA.

         WHEREAS:

         A. The Company has developed new formulations for the pharmaceutical
composition Product R, sometimes known under the registered trademark
Reticulose(R), and new uses thereof;

         B. The Center is well staffed with scientists and administrative
personnel and well connected with persons qualified to conduct clinical trials
and medical research throughout Israel, and is familiar with the governmental
requirements for organizing and conducting clinical trials and medical research
in the State of Israel;

         C. The Company is interested in having the Center organize, conduct and
evaluate a Company Project including studies including clinical trials
(study/trial) to evaluate the effects of Product R and products related to
Product R on various types of cancer, conditions associated with acquired
immunodeficiency and on other diseases;

         D. The Center declares that it has designed, organized and made
preparations for Phase I and Phase I/II clinical trials in Israel on behalf of
the Company during the period May 1st 2001




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and April 30th 2002 and that the Center has an interest in conducting and
evaluating such clinical trials and strive for their high scientific quality on
behalf of the Company.

         E. The Center therefore declares with regard to such Company Project,
including Phase I and Phase I/II clinical trials designed and organized during
the period May 1st 2001 and April 30th 2002, that it will make arrangements, on
behalf of the Company, to conduct, evaluate and maintain for high scientific
quality of three (3) clinical trials approved by Institutional Review Boards of
Medical Centers and the Ministry of Health in Israel as described below in
paragraph 1.2.

         NOW THEREFORE, in consideration of the mutual promises, covenants and
undertakings hereon, the parties hereby agree as follows:

I. PERFORMING THE PHASE I AND PHASE I/II CLINICAL TRIALS

         1.1 In consideration of the sums paid and to be paid to the Center by
the Company pursuant to Article II below and subject to the Company's provision
to the Center of GMP grade Product R for systemic use and data and information
relating to Product R as required for any clinical trial, the Center hereby
undertakes to prepare and perform said clinical trials in accordance with the
protocols and procedures developed by the Center and approved by the Company and
consultants of Globomax LLC and under the supervision of the Center's
scientists.

         1.2 The Phase I and Phase I/II clinical trials shall be directed
towards assessment of toxicity and safety of Product R and secondary outcome
variables as evaluation of effects of Product R in patients with cancer, by
conducting one clinical trial on patients with advanced stage solid tumors and
one clinical trial on patients with hematopoietic and lymphocytic neoplasms, and
a third trial to treat patients with advanced stage acquired immunodeficiency
syndrome. These trials shall be prepared and performed by the Center and
collaborating




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investigators during a period of twelve (12) months and fifteen (15) days shall
commencing on May 1st, 2002 and with regard to the actual commencement of the
field work such as recruitment, as close as possible to this date following
final approval by the Ministry of Health and approval of export license from the
USA and import license to Israel of Product R as investigational drug. Said
twelve (12) months and fifteen (15) days period will be divided into three
sub-periods as follows:

         1.2.1 a one (1) month and fifteen (15) days period during which period
the Center will finalize all Israeli governmental and hospital approval
documents, said period start on May 1st, 2002;

         1.2.2 a two (2) months period, said to commence on June 16th 2002 to
complete organization of the three (3) clinical trials including all the
necessary work for establishing a network of scientists to perform said
study/trial and to initiate recruitment of patients and secure the necessary
logistics;

         1.2.3 the ensuing nine (9) month period will be devoted to performing
the study/trial and evaluating the results thereof, said period is aimed to
commence on August 15th, 2002. Failure of the Center to obtain the necessary
minimum recruitment of patients up to 60 days after the target date of
commencement or to failure to demonstrate continuity of the trials to enable the
Center to commence said study/trial on August 15, 2002 shall be grounds for
cancellation of this contract by the Company.

         1.3 The Company agrees that Globomax LLC, a consultant of the Company
in the field of US FDA regulations, or any company that acts as FDA consultant
to Advanced Viral Research Corp., will advise the Center on an ongoing basis
related to the work that the Center performs on the study/trial so that the
Centers work product will be acceptable to the US FDA as


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Phase I and Phase I/II clinical trials. The Company further agrees that the
Center will have reasonable access to Globomax LLC for the purpose of seeking
Globomax's LLC advice on the Center's present and future course of action in
order to assist the Center in performing the study/trial in a manner that will
maximize likelihood of approval of said clinical trials by the US FDA possible.
Nothing herein is intended to be a warranty that if the Center follows
Globomax's LLC advice it will produce a work product acceptable to the US FDA.
Globomax LLC and the Company must both approve the protocols. However, if
GloboMax LLC determines that the protocol, the clinical study facilities,
medical personnel, patient study population, informed consent forms, monitoring
of patient compliance, patient data forms and method of study patient accrual or
any of them do not meet U.S.F.D.A. requirements for proper patient therapeutic
trials, that, by itself, will be deemed a reasonable ground for non-approval of
commencement of the second nine (9) month (beginning on August 15th, 2002)
period of said studies/trials. However, the Center will be given reasonable time
to amend any insufficiencies related to the issues stated above, which is
considered sixty (60) days.

         1.4 The Company and GloboMax LLC will have the right to dispatch
personnel to Israel to meet with appropriate members of the Center and in
coordination with the clinical centers, meet with personnel at clinical centers
participating in any clinical study pursuant to this Agreement to determine that
any planned or ongoing trial previously approved by GloboMax LLC is adhering to
the approved study parameters specified by the Center and approved by GloboMax
LLC, as set forth in paragraph 1.3 above, and to obtain additional information
(if any) and explanations, in order to discuss, in detail, the study/trial, its
results, procedures and any other matter deemed by Globomax LLC and/or the
Company necessary with the scientists and members of their team involved in the
study/trial, provided that such visits shall take place




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during normal business hours and shall not unreasonably interfere with the
conduct of the study/trial and any other work being carried out by the
scientists.

         1.5 Should, during the Contract period, any of the scientists (as
hereinafter identified in Article III) cease to be available for the design,
supervision, conduct and evaluation of said study/trial, such cessation shall
not by itself constitute a breach of this Agreement by the Center. The Center,
however, shall be obligated to immediately notify the Company in writing of the
loss of availability of any such scientist or scientists and shall undertake to
find a replacement scientist(s) of equal qualifications, but no substitution of
said scientists shall be permitted unless and until the name and the resume of
said substitute scientist is submitted to the Company for approval, which
approval shall not be unreasonably withheld. It is understood that during the
evaluation of a substitute scientist, the Company shall have the right to
interview such substitute entirely at the Company's expense and should the
substitute scientist refuse to submit to such an interview that, by itself,
shall constitute a reasonable basis for withholding the Company's approval of
such substitute scientist. Should no replacement scientist acceptable to the
Company be found within sixty (60) days of an original scientist(s) ceasing to
work on the study/trial, the Company shall be entitled, by written Notice to the
Center, to cancel the Agreement which cancellation shall become effective upon
delivery of the Notice of Cancellation to the Center. Upon such cancellation,
the Center shall arrange to gather the data (as such term is hereinafter
defined) in any and all media relating to the work done in the organization,
conduct and evaluation of said study/trial and deliver all such data to the
Company.

         1.6 The parties agree that the protocols prepared by the Center for
said clinical trials related to this Agreement, including CRF documents, shall
be considered intellectual properties of the Center, to the extent such
protocols were designed by the Center, but, to the extent that



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such protocols were designed or altered by the Company, the Company shall own
said intellectual property in whole or in proportional part with the Center as
determined by the parties.

         1.7 It is hereby agreed by the parties that nothing contained in this
Agreement shall be construed as a warrantee or obligation on the part of the
Center that the data, the information or any other results deriving from the
performance of the study are or will be of any commercial or practical value,
and the Center makes no warranties whatsoever in respect of such results.

         1.8 In the event that, for any reason of drug associated toxicity
and/or adverse effect, a medical center and/or investigator decide to
discontinue ongoing clinical trial, the Center shall not be held responsible for
such discontinuation. Cessation of a clinical trial for the said reason does not
constitute a basis for cancellation of the Agreement between the Center and the
Company. In the event of interruption of a clinical trial, the Center must be
given reasonable time, ninety (90) days from the notification of cessation by
the medical center or clinical investigator, to analyze and report on the
reasons for the discontinuation of the study, and, if medically acceptable, to
resume said clinical trial in its original form or in modified form agreed to by
both parties. If the said clinical trial is not resumed within ninety (90) days
of cessation, either the Company or the Center can, in its sole discretion,
terminate the clinical trial and cancel this Agreement upon said ninetieth day.

         1.9 The Center covenants and agrees that it will not make any other use
of Product R during the term of this Agreement and for five (5) years after the
termination or cancellation, thereof for any reason other than the study/trial,
and the Center further covenants and agrees not to manufacture or cause to be
manufactured Product R for any purpose, unless Product R is licensed to the
Center by the Company.



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         1.10 The Company and the Center agree that the Center will function as
the sole importer of Product R in Israel, if permitted by Israeli law, for
purposes of said studies/trials and sole distributor to investigators and
medical center during the period of the studies/trials and solely for the
purposes of said studies/trials. The Company intends to export to the Center GMP
grade Product R for systemic use and the gathering of data and information
relating to Product R as required for any clinical trial. Any delay in or all
three (3) of the Phase I and Phase I/II clinical trials resulting from a delay
in the exportation from the U.S. of GMP grade Product R, will be deemed to be
the Company's fault and will result in an extension of said nine (9) month
period by the same number of days as said delay, but will not be treated as
grounds for cancellation of this agreement nor as the basis for action against
the Company based on breach of contract, tort or any other legal theory. The
Center intends to obtain a permit to legally import Product R into Israel for
use in said three (3) clinical trials. If for legal reasons, the importer of
Product R as an investigational drug for said clinical trials must be an entity
other than the Center by law, such as the respective medical center, the Center
must notify the Company of such condition and the Center shall promptly make the
necessary arrangements for legal import of Product R into Israel and prepare any
contract and/or agreement regarding this issue between the Company and the
designated importer to be approved by the Company.

         1.11 Costs for shipping and fees associated with the importation of
Product R to Israel and its use in the proposed studies/trials, such as
registration and (temporary) licensing lees, will be paid by the Company. These
costs are in addition to the total amount to be paid to the Center according to
this Agreement.



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         1.12 Costs for obtaining approval of legal import of GMP Product R into
Israel, whether by the Center as importer or by any other person, firm or
corporation as importer (as provided in paragraph 1.11 above), shall be borne by
the Center.

II. FUNDING THE STUDY

         2.1 In addition to supplying the Center with Product R and data and
information relating to Product R, covering the costs charged by the medical
centers and insurance coverage, and costs of export and import of Product R, the
Company agrees and undertakes to pay in a sole payment to the Center for the
period defined in the paragraph 1.2.1, the amounts of U.S. dollar $127,820 (one
hundred twenty seven thousand eight hundred and twenty). Thereafter, the Company
agrees and undertakes to pay to the Center for the periods defined in the
paragraphs 1.2.2 and 1.2.3 the amounts of U.S. dollar $1,625,631 (one million
six hundreds twenty five thousands and six hundred thirty one) for the thee
c1inical trials as detailed in Schedules A, B and C.

         (a) Within 7 days after signing this contract, the Company will pay to
the Center the total amount of U.S. dollar $127,820 (one hundred twenty seven
thousand eight hundred and twenty) defined in the paragraph 1.2.1 for the period
May 1st, 2002 to June 16th, 2002.

         (b) On or before the twenty fifth (25th) day of each month during said
initial two (2) month period (July and August 2002), the Company will pay to the
Center a total equivalent of twenty five (25) percent (12.5 percent each month)
of the total amount as detailed in Schedules A, B and C;

         (c) If the Agreement is not cancelled prior to commencement of the nine
(9) month period, then at the commencement of said four and a half month period
(August 15th, 2002), the




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Company will pay the Center said ten (10) percent on or before September 25th,
2002, of the total amount as detailed in SCHEDULES A, B AND C;

         (d) On or before the twenty fifth (25th) day of each of said seven
month period commence on October 15th, 2002 and ended on April 15th, 2003, the
Company will pay the Center said each month seven (7) percent of the total
amount as detailed in SCHEDULES A, B AND C;

         (e) Promptly after completion of the second nine month period and
submission by the Center to the Company of a final report prepared as required
in paragraph 5.1 below, a final payment of, said sixteen (16) percent of the
total amount as detailed in SCHEDULES A, B AND C. Last payment will be no more
than thirty (30) days from date of the final report submitted by the Center to
the Company.

         (f) In the event that the trial is delayed or postponed with the
approval of the Company for any reason whatsoever (including but not limited to
the loss of a scientist) for more than fifteen (15) days, then payment will be
suspended during such delay but will be resumed on the above basis upon
resumption of the study/trial.

         (g) All payments pursuant to this Agreement shall be made by direct
wire transfer to the Center's bank account, the details of which the Center
shall notify the Company.

         (h) In the event that the Company does not fulfill the scheduled
payments according to item 2.1 (a-c), the Center shall not be responsible for
any delay in the time schedule of the clinical trials as described in SCHEDULE
D, resulting from said delay but such delay in time schedule may not exceed the
duration of the Company's delay.

         (i) In the event that the Company delayed the schedule payment
according to item 2.1 (a-d) in more than five (5) days, said the thirty (30) of
each month, the Company will pay to




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the Center the delayed payment amount by adding one (1) percent for each 30 days
of delay day, said starting from the twenty fifth (25) day. In this case the
Center is not responsible for any delay in the time schedule of the clinical
trials as described in SCHEDULE D, resulting from said delay but such delay in
time schedule may not exceed the duration of the Company's delay.

         (j) In the event that the Company delayed the schedule payment
according to item 2.1 (a-d) more than sixty (60) days, the Center may suspend or
cancel the clinical trials as detailed in paragraph 1.2. In the case of
suspension the Center is not responsible for any delay in the time schedule of
the clinical trials as described in SCHEDULE D, resulting from said delay but
such delay in time schedule may not exceed the duration of the Company's delay.

         2.2 In addition to the funding to the Center said by organizing,
conducting, evaluating and submit a reports of each of the three (3) clinical
trials with Product R, the Company has a direct contract a with each of the
participating Medical Centers in Israel as follow:

         (a) A proposed budget of expenses for each of the three (3) clinical
trials was submitted by the collaborating medical centers in Israel to the
Center. Such budget proposals that include Medical Center expenses, patient
evaluations and treatments were forwarded by the Center to the Company for
approval. The Company has notified the Center of the approval of the funding of
the three (3) clinical trials cost requested by the medical centers.

         (b) The parties agree that failure of such medical center to have
adequate liability coverage to protect itself from any and all liability in tort
or conduct or otherwise arising out of said study/trial should be a reasonable
basis for the Company to withhold approval of such medical center.



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         (c) The Company and the Center agree that any delay of the Company to
pay according to conditions stipulated in the contract with each Medical Center,
is the sole responsibility of the Company, that will not affect the funding
schedule agreed on item 2.1 (a-e).

         (d) The Company and the Center agree that such direct contracts between
the Company and each Medical Center shall be executed concurrently with said
direct contracts and failure of such execution by any Medical Center shall
constitute a failure of the execution of this Agreement by the Center.

III. CORE (SENIOR) SCIENTISTS

         3.1 The following scientists shall work on said studies/trials unless
substituted as set forth in paragraph 1.5 above:

         Dr. Alf Fischbein will devote at least 75% of his time to the ADVR
project set forth in Paragraphs C, D and E, during which time Dr. Fischbein will
work on the development and completion of CRF of the project, the assessment of
clinical and laboratory parameters as they become available, will interact
closely with the clinical team, i.e. physicians, nurses/interviewers and will
work with his co-workers Drs. Iscovich, Mark Levitt regarding the clinical
aspects of each trial, with Michael Davison, Ido Sadan MSc, and Professor
Laurence Freedman regarding CRF, database and statistical aspects of the project
and the procedures relating to data analysis and generation of reports. Dr.
Fischbein will also keep abreast of scientific-medical exchanges among all
principals participating in the study and will serve as liaison with the Company
on a continuous basis, together with Dr. Iscovich.

         Dr. Jose Iscovich will devote 75% of his time to the ADVR project set
forth in Paragraphs C, D and E. Dr. Iscovich, who together with Dr. Fischbein,
designed and developed the protocols for the 3 clinical trials, will work in the
organizational and management aspects of



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each trial in close collaboration with Dr. Fischbein and Dr. Mark Levitt. Dr.
Iscovich will be responsible and will supervise closely the operations of the
data communication system, both on-line and in-house, quality control procedures
and quality assurance, and will also act a liaison among participating
institutions and scientists, Government authorities and with the Company. In
addition, he will work with Michael Davison, Ido Sadan MSc and Professor
Laurence Freedman regarding CRF, database and statistical aspects of the project
and the procedures relating to data analysis and generation of reports.

         Dr. Mark Levitt will devote 50% of his time to the project set forth in
Paragraphs C, D and E. In his capacity as an eminent and experienced clinical
investigator, he will act as a `resident' Center clinical scientist at the
various medical centers in which the clinical trials are performed. Dr. Levitt
will have daily access to the operations of the clinical trial and be able to
interact with the clinical investigator and nurse(s). This will enable him to
perform close supervision of the progress of the trial. He will also be
available, as required, for interaction with the monitor and the individual
responsible for the logistics of the part of the clinical trial that is
performed off hospital campus, i.e. in the patients' home. Dr. Levitt will also
assist in the preparations of the CRF documents, data analysis and generation of
reports.

         A project coordinator/manager (to be named) with either a Ph.D. or a
MSc degree in pharmacology, biology or management science will devote (two-third
percentage time effort for each of the clinical trials) during the entire eleven
(11) months period of the Project. The coordinator will be responsible for the
coordination of all activities of the project both within the Center and
externally at the various medical centers and will also ascertain that the
coordination of activities required for the ongoing interaction between the
Center and the Company functions optimally.


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         A Senior Clinical Research Associate will be engaged as an independent
expert for monitoring activities of the three clinical trials. Their task will
include monitoring and quality assurance of activities both in the medical
centers and in the patients' residence. They will collect, review and approve
regulatory documents associated with the clinical trials. Their monitoring will
ensure strict compliance with applicable FDA and Israeli regulations and
protocols.

         An Assistant Statistician (to be named) with a Master of Science degree
in statistics is expected to devote 50% time efforts during the entire eleven
(11) month period. The Assistant Statistician will coordinate with Dr. Iscovich
and Professor Freedman (see below) and Dr. Fischbein the management and
provision of data on a continuous basis to those parties, who have been
determined to be receivers of such data including the Company.

         Professor Laurence Freedman, statistical consultant, will act as a
consultant for the organization of collected data, calculations, quality control
and data analysis.

IV. COMPANY INFORMATION AND CONFIDENTIALITY

         4.1 All information imparted to the Center by the Company as set forth
in Paragraph 1.1 and any and all other confidential information, trade secrets
and know-how imparted to the Center by the Company, whether in connection with
the study/trial or otherwise, shall be the sole and exclusive property of the
Company, shall be divulged to scientists of the Center only on a need to know
basis and subject to Paragraph 4.2 below, and shall not be used by (the) said
scientists for any purpose other than the performance of said study/trial nor
divulged to anyone outside of the Center without the prior written approval of


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the Company; provided, however, that any information divulged to the Center or
its scientists shall not be included in this paragraph, if such information:

         (i) is at the time of disclosure in the public domain;

         (ii) becomes part of the public domain thereafter other than through a
violation by the Center or its scientists of the obligation set forth in this
article;

         (iii) the scientists can prove, by written evidence submitted within 30
(thirty) days of the scientists receiving such information that (a) information
had previously been known to him/her prior to such disclosure; or (b) was
received from a third party not in violation of any confidentiality obligation
with the Company.

         4.2 The Center is permitted to disclose any such confidential
information to the scientists named in Article III above or their approved
substitutes, but only after such scientists execute an undertaking of
confidentiality in the form annexed hereto and such scientists shall be
permitted to divulge any such confidential information to its employees or
others who are engaged in the performance of the study provided such employees
or others execute an undertaking in the form attached hereto. The Center will
promptly forward such executed undertaking to the Company.

         4.3 Neither the Center nor anyone connected with the Center shall
publish any of the data or information developed or resulting from said
study/trial without first submitting said publication to the Company. If the
Company concludes that any such publication will adversely affect its
proprietary position in any way whatsoever, the Company has the right to object
to publication for up to a period of no more than one (1) year and said author
and/or the scientist and/or the Center shall not publish such data or
information during the period of said objection.

         4.4 Nothing in this Article IV shall be deemed to prevent the Center
from disclosing the Company's confidential information to a legally competent
authority legally requiring such disclosure, or for the purpose of this
Agreement. In such a case, the Center shall inform such




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authority of the confidential nature of the information and prior to making such
disclosure shall notify the Company of such a requirement.

         4.5 This article IV shall survive the cancellation or termination of
this Agreement.

V. REPORTING

         5.1 The Center shall procure the submission by the scientists of a
quarterly report containing a summary of the work performed by them and the
Center during said quarter, including a copy of any data developed and any and
all conclusions reached from said data. Said three-quarterly reports shall be
submitted within thirty (30) days of the close of the contract quarter (or, if
extended as provided in paragraph 2.1(e) above, then thirty (30) days after the
extended date of the close of the quarter), said within thirty (30) days from
September 30, 2002; December 31, 2002 and March 31, 2003. The final report shall
be submitted to the Company within sixty (60) days of the end of the nine-month
period (as defined in paragraph 1.2.3), from May 15, 2003. All quarterly reports
and the final report will present a detailed description of the work done during
the period covered, the data collected, any conclusions and recommendations
based on said data and any recommendations for future actions by the Center
and/or the Company.

VI. COMPANY'S OBLIGATION OF CONFIDENTIALITY

         6.1 Should the Company or any of its employees or representatives of
GloboMax, LLC receive from the Center or any of its scientists confidential
information developed by the Center prior to work performed by the Center
pursuant to this Agreement, then the Company agrees to hold such information
confidential and to not use it itself nor divulge it to others unless:

         (i) the information is at the time of the disclosure in the public
domain;



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         (ii) the information becomes part of the public domain thereafter
through other than a violation by the Company of its obligation of
confidentiality;

         (iii) the Company can prove by documentary evidence submitted to the
Center within thirty (30) days of receipt of such confidential information that
it was previously known to the Company and/or its employees; or

         (iv) after such confidential information is imparted by the Center to
the Company, the same information is received by the Company from a third party
who is not in violation of any confidentiality obligation to the Center.

         (v) no Medical Center nor any of its scientists shall use any
information which it/he/or she considers its/his/or her confidential information
in the performance of work relating to the Company's project without the prior
written consent of the Company and such use shall constitute a waiver of any
asserted right of confidentiality.

         6.2 Notwithstanding paragraph 6.1, the Company may disclose to its
employees and those of GloboMax LLC such confidential information received from
the Center necessary for the fulfillment of the undertakings of this Agreement
provided that the Company shall bind such employees in writing with the same
undertaking of confidentiality as annexed hereto. The Company will promptly
forward such executed undertakings to the Center.

         6.3 Nothing in this Article VI shall be deemed to prevent the Company
from disclosing the Center's confidential information to a legally competent
authority legally requiring such disclosure, or for the purpose of this
Agreement. In such a case, the Company shall inform such authority of the
confidential nature of the information and prior to making such disclosure shall
notify the Center of such a requirement.

         6.4 This Article VI shall survive the termination of this agreement.





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VII. OWNERSHIP

         7.1 All right, title and interest in and to the data developed by the
Center through said studies/trials or derived therefrom and all conclusions
derived therefrom shall be the sole and exclusive property of the Company.

         7.2 Any and all discoveries, ideas and inventions conceived in whole or
in part by the Center or its scientists or staff arising out of said study/trial
shall be the sole and exclusive property of the Company.

         7.3 This Article VII shall survive the cancellation or termination of
this Agreement.

VIII. INDEMNITY

         8.1 The Center will obtain prior to May 1, 2002 liability insurance in
its name and in the name of the Company in the amount of three million (US
$3,000,000) U.S. dollars against any claims, whether in tort or in contract or
otherwise, arising from the work of the Center in connection with said
studies/trials and for no other work or project being performed now or at any
time at or by the Center. The insurance policy in the name of the Company in
like amount that holds the Company harmless against and all claims arising in
contract or in tort or otherwise from said studies/trials must be valid prior to
commencement of the clinical trials. The Center may obtain said policies as two
separate policies or as one policy with the Center and the Company as named
co-insured, provided said one policy provides the same coverage to both the
Center and the Company as two separate policies.

         8.2 The Company agrees to bear the full cost of all insurance required
by this Article VIII provided, however, if the total premiums for such policy or
policies covering the Company and the Center exceed one hundred thousand (U.S.
$100,000) dollars, the Company will have the



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right to cancel this Agreement and such cancellation will not give rise to any
claims, cross-claims or counterclaims by either party against the other.

IX. GOVERNING LAW

         9.1 The parties agree that the manner in which the studies/trials are
performed shall in all respects be governed by Israeli law; and the parties
further agree that any disputes between the parties relating to their rights and
obligations to each under this Agreement will be resolved in accordance with the
law of the State of New York, U.S.A.

X. DISPUTES BETWEEN THE PARTIES

         10.1 In the event that a dispute arises between the parties that
requires judicial intervention for resolution, if the Center institutes an
action against the Company, that action must be commenced only in a U.S.
District Court or a New York State Court located in the City of New York or in
Westchester County, N.Y.; and if an action is instituted by the Company against
the Center, that action must be commenced only in Israel. Nothing herein,
however, shall prevent the defendant in any action between the parties from
filing a counterclaim after being sued in its own home jurisdiction by the
plaintiff.

XI. PAYMENTS

         11.1 All amounts paid pursuant to this Agreement do not include the US
State tax and VAT prescribed by US and Israeli law. The Company will pay US
State taxes and VAT if required by law.

XII. MISCELLANEOUS

         12.1 Neither party may assign in whole or in part any of its rights or
obligations under this Agreement without the prior written consent of the other.



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<PAGE>

         12.2 This Agreement, including any Exhibits, is the entire Agreement
between the parties as to the subject matter contained herein and supersedes all
other agreements and memoranda of understanding, both oral and written,
heretofore made between the parties. Any amendment hereto must be made in
writing and signed by an authorized representative of each of the parties.
Should any portion of this Agreement be held invalid or unlawful, the remainder
of this Agreement shall continue to remain in full force and effect as to both
parties.

         12.3 The Center and its scientists and employees are independent
contractors and are not the agents, employees, legal representatives of the
Company, and are not authorized to do business in the Company's name or to
obligate the Company in any way.

         12.4 Section titles and captions herein are for reference only and
shall not be considered in construing this Agreement.

         12.5 The waiver by either party of any material breach or alleged
material breach of any provision hereunder shall not be construed to be a
continuing waiver of any concurrent, prior or succeeding breach of said
provision or any other provision herein.

XIII. NOTICES

         13.1 Any notices to be given hereunder shall be served on a party by
prepaid First Class Mail or by Federal Express or DHL courier to the address set
forth in the beginning of this Agreement or to any other address as a party may
subsequently notify the other in writing, and any such notice so served shall be
deemed to have been served seven (7) days after the time at which it was sent.
Either party shall have the right, if it chooses, to give notice by facsimile in
which case it shall be deemed that the notice was served twenty-four (24) hours
after its actual transmission. Each party agrees to exchange facsimile numbers
with the other and if such number shall be changed, to inform the other in


                                       19
<PAGE>

writing of the new number. All telecopier notices shall be confirmed by a
standard confirmatory notice given as provided above, but the date said notice
takes effect will be 24 hours after the time of transmission of the facsimile
notice.

XIV. TERMINATION

         14.1 Unless sooner terminated or cancelled in accordance with this
Agreement, this Agreement shall terminate upon receipt and approval of the final
report required in paragraph 5.1 above, which approval shall not be unreasonably
withheld.

         14.2 In the event that either party shall determine that in its opinion
the other is breaching the Agreement or otherwise violating the terms thereof, a
written notice shall be forwarded to the allegedly breaching party setting forth
in detail the manner or manners in which such breach is occurring and the party
receiving notice shall have forty-five (45) days in which to cure said breach
and to notify in writing to the complaining party that said breach has been
cured. If such notice of cure is not sent or, if sent, the allegedly breaching
party takes no substantial action to cure the default or, if it takes such
action and the complaining party is dissatisfied with the nature of the cure,
then the termination or cancellation shall take effect thirty (30) days after
the allegedly breaching party received written notice from the other party of
such breach.

         14.3 The termination of this agreement for any reason shall not relieve
the parties of any obligations that shall have accrued prior to such
termination.

         IN WITNESS WHEREOF THE PARTIES HAVE EXECUTED THIS AGREEMENT AS OF THE
DATE FIRST ABOVE WRITTEN.



/s/ AUTHORIZED REPRESENTATIVE               /s/ SHALOM Z. HIRSCHMAN
-------------------------------             ----------------------------
    EnviroGene LLC                          Advanced Viral Research Corporation




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