ADVANCED VIRAL RESEARCH CORP
EX-10.2 REGISTRATION RIGHTS AGREEMENT
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<TYPE>EX-10.2
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<FILENAME>g87035exv10w2.txt
<DESCRIPTION>EX-10.2 REGISTRATION RIGHTS AGREEMENT
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EXHIBIT 10.2



                     INVESTOR REGISTRATION RIGHTS AGREEMENT

         THIS REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of
February 3, 2004, by and among ADVANCED VIRAL RESEARCH CORP., a Delaware
corporation, with its principal office located at 200 Corporate Boulevard South,
Yonkers, New York 10701 (the "COMPANY"), and JAMES F. DICKE II and JAMES F.
DICKE III (each of whom is hereinafter referred to as an "Investor" and all of
whom are referred to as "Investors").

                                    RECITALS

         A. In connection with the Securities Purchase Agreement by and among
the parties hereto of even date herewith (the "SECURITIES PURCHASE AGREEMENT"),
the Company has agreed, upon the terms and subject to the conditions of the
Securities Purchase Agreement, to issue and sell to the Investors an aggregate
of 120,000,000 shares of the Company's common stock, par value $0.00001 per
share (the "Shares"), and a warrant to purchase 15,000,000 shares of Common
Stock of the Company (the "Warrant") for an aggregate purchase price of Twelve
Million Dollars ($12,000,000). Capitalized terms not defined herein shall have
the meaning ascribed to them in the Securities Purchase Agreement.

         B. To induce the Investors to execute and deliver the Securities
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations there under, or any similar successor statute (collectively, the
"1933 ACT"), and applicable state securities laws.

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Investors hereby agree as follows:

1.       DEFINITIONS.

         As used in this Agreement, the following terms shall have the following
meanings:

         (a) "PERSON" means a corporation, a limited liability company, an
association, a partnership, an organization, a business, an individual, a
governmental or political subdivision thereof or a governmental agency.

         (b) "REGISTER," "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing one or more Registration
Statements (as defined below) in compliance with the 1933 Act and pursuant to
Rule 415 under the 1933 Act or any successor rule providing for offering
securities on a continuous or delayed basis ("RULE 415"), and the declaration or
ordering of effectiveness of such Registration Statement(s) by the United States
Securities and Exchange SEC (the "SEC").

         (c) "REGISTRABLE SECURITIES" means the shares of Common Stock issued
pursuant to the Securities Purchase Agreement and the shares of Common Stock
issuable to Investors upon the exercise of the Warrant.

         (d) "REGISTRATION STATEMENT" means a registration statement under the
1933 Act which covers the Registrable Securities.


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2.       DEMAND REGISTRATIONSD

         (a) REQUESTS FOR REGISTRATION. At any time after ninety (90) days from
the date hereof, the Investor may demand registration (a "Demand Registration")
under the Securities Act of 1933, as amended (the "1933 Act"), of all or a
portion of the Registrable Securities owned by the Investor. In order to
accomplish such demand, the Investor shall send written notice of the demand to
the Company, and such notice shall specify the number of Registrable Securities
sought to be registered. The Company shall only be required to effect two Demand
Registrations.

         (b) PRIORITY ON DEMAND REGISTRATION. If a Demand Registration is
underwritten and the managing underwriters advise the Company in writing that in
their opinion the number of Registrable Securities requested to be included
exceeds the number that can be sold in such offering, at a price reasonably
related to fair value, the Company will include in such Demand Registration (i)
first, the Registrable Securities requested to be included in such Demand
Registration by the Investor; (ii) second, any securities that the Company
desires to include on its own behalf; and (iii) third, any shares of Common
Stock held by any other stockholder of the Company to whom registration is
offered.


         (c) CONTEMPORANEOUS DEMAND. If any holder of the Company's securities
that is not a holder of Registrable Securities under this Agreement exercises
demand registration rights to have the Company register its securities under the
1933 Act (a "Non-Investor Registration") within a period of 30 days before or
after the time the Investor shall have requested a Demand Registration, then the
Investor's Demand Registration shall have priority over the Non-Investor
Registration.

3.       PIGGYBACK REGISTRATIONS.

         (a) RIGHT TO PIGGYBACK. Whenever the Company proposes to register any
of its securities under the 1933 Act for its account or for the account of
others (other than a Demand Registration, and the registration form to be used
may be used for the registration of Registrable Securities (a "Piggyback
Registration"), the Company will give prompt written notice to all holders of
Registrable Securities and will include in such Piggyback Registration, subject
to the allocation provisions below, all Registrable Securities with respect to
which the Company has received written requests for inclusion within 30 days
after the Company's mailing of such notice. The Company shall not select a form
of registration statement which imposes, for its use, limitations on the maximum
value or number of securities to be registered if these limitations would
preclude registration of the Registrable Securities that the Company has been
requested to include in such registration.

         (b) PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback Registration is
an underwritten primary registration on behalf of the Company, and the managing
underwriters advise the Company in writing that in their opinion the number of
securities requested to be included in such registration exceeds the number that
can be sold in such offering, at a price reasonably related to fair value, the
Company will allocate the securities to be included as follows: first, the
securities the Company proposes to sell on its own behalf; second, securities
requested to be included in such registration by the Investor and other
stockholders of the Company that hold registration rights as of the date hereof,
pro rata based on the number of shares that such person requested for inclusion
(it being understood that the Company will use its best efforts to obtain the
consent of the holders of such existing registration rights to treat the
Investor pari passu with such holders for the purposes of the underwriter
cutback provisions set forth above).

         (c) PRIORITY ON SECONDARY REGISTRATIONS. If a Piggyback Registration is
initiated as an underwritten secondary registration on behalf of holders of the
Company's securities (other than a Demand Registration pursuant to Section 2),
and the managing underwriters advise the Company in writing that in their
opinion the number of securities requested to be included in such registration
exceeds the number that can be sold in such offering, at a price reasonably
related to fair value, the Company will allocate the securities to be



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included as follows: first, the securities requested to be included by the
holders initiating such registration; and second, Registrable Securities
requested to be included in such registration by the Investor.

         (d) SELECTION OF UNDERWRITERS. If any Piggyback Registration is
underwritten, the selection of investment banker(s) and manager(s) and the other
decisions regarding the underwriting arrangements for the offering will be made
by the Company.

3.       REGISTRATION ON FORM S-3.

         The Company shall use its best efforts to qualify for registration on
Form S-3 or any comparable or successor form or forms; and to that end, the
Company shall register (whether or not required by law to do so) its Common
Stock under the Securities Exchange Act of 1934, as amended, in accordance with
the provisions of that Act as soon as possible following the effective date of
the first registration of any of the Company's securities under the 1933 Act.
After the Company has so qualified, in addition to the rights contained in the
foregoing provisions of this Registration Rights Agreement, each holder of
Registrable Securities shall have the right to require registration of its
Registrable Securities on Form S-3 at the Company's expense and such
registration shall not be deemed a Demand Registration, provided that (a) the
Registrable Securities to be registered shall have a market value of at least $1
million and (b) the Company shall not be obligated to effect more than one such
registration during any 12-month period. When the Company receives notice of any
holder's request for a registration on Form S-3, it shall send notice of such
proposed registration to all other holders of Registrable Securities.

4.       HOLDBACK AGREEMENTS.

         The Investor shall not effect any public sale or distribution of equity
securities of the Company or any securities convertible into or exchangeable or
exercisable for such securities during the seven days prior to and the 90 days
after any underwritten Demand Registration or underwritten Piggyback
Registration has become effective (except as part of such underwritten
registration).

5.       REGISTRATION PROCEDURES.

         Whenever the Investor has requested that any Registrable Securities be
registered pursuant to Section 2, 3 or 4 of this Agreement, the Company will, as
expeditiously as possible:


         (a) prepare and file with the Securities and Exchange Commission a
registration statement with respect to such Registrable Securities and use its
best efforts to cause such registration statement to become effective (provided
that before filing a registration statement or prospectus or any amendments or
supplements or term sheet thereto, the Company will furnish the Investor with
copies of all such documents proposed to be filed) as promptly as practical;

         (b) prepare and file with the Securities and Exchange Commission such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective for a period of not less than 120 days;

         (c) furnish to the Investor such number of copies of such registration
statement, each amendment and supplement thereto and the prospectus included in
such registration statement (including each preliminary prospectus and any term
sheet associated therewith), and such other documents as the Investor may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by the Investor;

         (d) use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such jurisdictions as
the managing underwriter(s) or the Investor may reasonably request;



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         (e) notify the Investor at any time when a prospectus relating thereto
is required to be delivered under the 1933 Act within the period that the
Company is required to keep the registration statement effective of the
happening of any event as a result of which the prospectus included in such
registration statement, together with any associated term sheet, contains an
untrue statement of a material fact or omits any fact necessary to make the
statement therein not misleading, and, at the request of the Investor, the
Company will prepare a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact or omit to
state any fact necessary to make the statement therein not misleading;

         (f) cause all such Registrable Securities to be listed or included on
securities exchanges on which similar securities issued by the Company are then
listed or included;

         (g) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;

         (h) enter into such customary agreements (including an underwriting
agreement in customary form) and take such other customary actions as may be
reasonably necessary to expedite or facilitate the disposition of such
Registrable Securities;

         (i) obtain a "comfort" letter addressed to the Company from its
independent public accountants in customary form and covering such matters of
the type customarily covered by "comfort" letters;

         (j) make available for inspection by the Investor, any underwriter
participating in any disposition pursuant to such registration statement, and
any attorney, accountant or other agent retained by Investor or any underwriter,
all financial and other records, pertinent corporate documents and properties of
the Company, and cause the Company's officers, directors and employees to supply
all information reasonably requested by Investor or any such underwriter,
attorney, accountant or agent in connection with such registration statement;

         (k) use its best efforts to cause the Registrable Securities to be
registered with or approved by such governmental agencies or authorities as may
be necessary by virtue of the business of the Company to enable Investor to
consummate the disposition of the Registrable Securities; and

         (l) furnish, on the date that the Registrable Securities are delivered
to the underwriters for sale, an opinion dated as of the such date of the
counsel representing the Company for the purpose of such registration in
customary form and covering such matters as is customarily given to underwriters
in an underwritten public offering.

6.       INDEMNIFICATION.

         (a) The Company hereby indemnifies, to the extent permitted by law, the
Investor and its officers, directors, employees and agents, and each person, if
any, who controls any of them within the meaning of the 1933 Act (each, an
"Indemnified Party") against all losses, claims, damages, liabilities and
expenses (including attorney fees) arising out of, resulting from, or related to
any violation or alleged violation by the Company of the 1933 Act, the 1934 Act,
any federal or state securities law, or any rule or regulation promulgated
thereunder, any untrue or alleged untrue statement of material fact contained in
any registration statement, prospectus or preliminary prospectus or associated
term sheet or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading except insofar as the same are caused by or contained in any
information furnished in writing to the Company by such Indemnified Party
expressly for use therein or by any Indemnified Party's failure to deliver a
copy of the registration statement or prospectus or any amendments or
supplements thereto after the



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Company has furnished such Indemnified Party with a sufficient number of copies
of the same. In connection with an underwritten offering, the Company will
indemnify the underwriters, their officers and directors, and each person who
controls such underwriters (within the meaning of the 1933 Act) to the same
extent as provided above with respect to the indemnification of any Indemnified
Party.

         (b) In connection with any registration statement in which the Investor
is participating, each such holder will furnish to the Company in writing such
information as is reasonably requested by the Company for use in any such
registration statement or prospectus and will indemnify, to the extent permitted
by law, the Company, its directors and officers and each person who controls the
Company (within the meaning of the 1933 Act) against any losses, claims,
damages, liabilities and expenses (including attorney fees) resulting from any
untrue or alleged untrue statement of material fact or any omission or alleged
omission of a material fact required to be stated in the registration statement
or prospectus or any amendment thereof or supplement thereto or necessary to
make the statements therein not misleading, but only to the extent that such
untrue statement or omission is contained in information so furnished in writing
by such holder specifically for use in preparing the registration statement.
Notwithstanding the foregoing, the liability of the Investor under this Section
7(b) shall be limited to an amount equal to the net proceeds actually received
by the Investor from the sale of Registrable Securities covered by the
registration statement.

         (c) Any person entitled to indemnification hereunder will (i) give
prompt notice to the indemnifying party of any claim with respect to which it
seeks indemnification and (ii) unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist with respect to such claim, permit such indemnifying party to
assume the defense of such claim with counsel reasonably satisfactory to the
indemnified party. Any failure to give prompt notice shall deprive a party of
its right to indemnification hereunder only to the extent that such failure
shall have adversely affected the indemnifying party. If the defense of any
claim is assumed, the indemnifying party will not be subject to any liability
for any settlement made without its consent (but such consent will not be
unreasonably withheld). An indemnifying party who is not entitled, or elects
not, to assume the defense of a claim will not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.

         (d) In order to provide for just and equitable contribution to joint
liability under the 1933 Act in any case in which either: (i) Investor, its
officers, directors, employees, agents or any controlling person of any of them,
makes a claim for indemnification pursuant to this Section 6 but it is
judicially determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the denial of the
last right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this Section 6 provides for indemnification in
such case, or (ii) contribution under the 1933 Act may be required on the part
of Investor, its officers, directors, employees, agents or any person
controlling them in circumstances for which indemnification is provided under
this Section 6; then, and in each such case, the Company and Investor will
contribute to the aggregate losses, claims, damages, liabilities or expenses to
which they may be subject (after contribution from others) as is appropriate to
reflect the relative fault of the Company and Investor in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as the relative benefit received by the Company
and Investor as a result of the offering in question, it being understood that
the parties acknowledge that the overriding equitable consideration to be given
effect in connection with this provision is the ability of one party or the
other to correct the statement or omission which resulted in such losses,
claims, damages or liabilities, and that it would not be just and equitable if
contribution pursuant hereto were to be determined by pro rata allocation or by
any other method of allocation that does not take into consideration the
foregoing equitable consideration; provided that, in any such case (A) Investor
will not be required to contribute any amount in excess of the public offering
price of all such Registrable Securities offered it pursuant to such
registration statement; and (B) no person or entity guilty of fraudulent




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misrepresentation (within the meaning of Section 11(f) of the 1933 Act will be
entitled to contribution from any person or entity who was not guilty of such
fraudulent misrepresentation.

7.       PARTICIPATION IN UNDERWRITTEN REGISTRATIONS.

         The Investor may not participate in any underwritten registration
hereunder unless such holder (a) agrees to sell such holder's securities on the
basis provided in any underwriting arrangements approved by the Company, and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.

8.       EXPENSES OF REGISTRATION.

         All expenses incurred in connection with registrations, filings or
qualifications pursuant to Sections 2, 3 and 4, including, without limitation,
all registration, listing and qualifications fees, printers, legal and
accounting fees shall be paid by the Company.

9.       MISCELLANEOUS.

(a) A Person is deemed to be a holder of Registrable Securities whenever such
Person owns or is deemed to own of record such Registrable Securities. If the
Company receives conflicting instructions, notices or elections from two (2) or
more Persons with respect to the same Registrable Securities, the Company shall
act upon the basis of instructions, notice or election received from the
registered owner of such Registrable Securities.

(b) Any notices, consents, waivers or other communications required or permitted
to be given under the terms of this Agreement must be in writing and will be
deemed to have been delivered: (i) upon receipt, when delivered personally; (ii)
upon receipt, when sent by facsimile (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party);
or (iii) one (1) business day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such communications
shall be:

If to the Company:              Advanced Viral Research Corp.
                                200 Corporate Boulevard South
                                Yonkers, New York 10701
                                Attention: Eli Wilner, Chief Executive Officer
                                Telephone:  (914) 376-7383
                                Facsimile: (914) 376-7638

With a copy to:                 Berman Rennert Vogel & Mandler, P.A.
                                100 SE Second Street, Suite 2900
                                Miami, Florida  33131
                                Attention:  Charles J. Rennert, Esq.
                                Telephone: (305) 577-4171
                                Facsimile:  (305) 347-6463

If to James F. Dicke II:        20 South Washington Street
                                New Bremen, Ohio 45869

If to James F. Dicke III:       30 South Washington Street
                                New Bremen, Ohio 45869



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With a copy to:                 Thompson Hine LLP
                                2000 Courthouse Plaza N.E.
                                Dayton, Ohio 45402
                                Attn: J. Michael Herr, Esq.


or to such other address and/or facsimile number and/or to the attention of such
other person as the recipient party has specified by written notice given to
each other party five (5) days prior to the effectiveness of such change.
Written confirmation of receipt (A) given by the recipient of such notice,
consent, waiver or other communication, (B) mechanically or electronically
generated by the sender's facsimile machine containing the time, date, recipient
facsimile number and an image of the first page of such transmission or (C)
provided by a courier or overnight courier service shall be rebuttable evidence
of personal service, receipt by facsimile or receipt from a nationally
recognized overnight delivery service in accordance with clause (i), (ii) or
(iii) above, respectively.

         (c) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.

         (d) The laws of the State of Delaware shall govern all issues
concerning the relative rights of the Company and the Investors as its
stockholders. All other questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by the
internal laws of the State of New York, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of New York or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of New York. Each party hereby irrevocably
submits to the non-exclusive jurisdiction of the Superior Courts of the State of
New York, sitting in Westchester County, New York and federal courts for the
District of New York covering Westchester County, New York, for the adjudication
of any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such suit, action
or proceeding is brought in an inconvenient forum or that the venue of such
suit, action or proceeding is improper. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof to such party at the
address for such notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. If any provision of this Agreement shall
be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.

         (e) This Agreement, the Securities Purchase Agreement and related
documents constitute the entire agreement among the parties hereto with respect
to the subject matter hereof and thereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein and
therein. This Agreement, the Securities Purchase Agreement and related documents
supersede all prior agreements and understandings among the parties hereto with
respect to the subject matter hereof and thereof.

         (f) This Agreement shall inure to the benefit of and be binding upon
the permitted successors and assigns of each of the parties hereto.



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         (g) The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.

         (h) This Agreement may be executed in identical counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same agreement. This Agreement, once executed by a party, may be delivered to
the other party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.

         (i) Each party shall do and perform, or cause to be done and performed,
all such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other party may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.

         (j) The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent and no rules of
strict construction will be applied against any party.

         (k) This Agreement is intended for the benefit of the parties hereto
and their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person.

         IN WITNESS WHEREOF, the parties have caused this Investor Registration
Rights Agreement to be duly executed as of day and year first above written.

                                       ADVANCED VIRAL RESEARCH CORP.


                                       By: /S/ ELI WILNER
                                       -----------------------------------------
                                       Name: Eli Wilner
                                       Title:  Chief Executive Officer


                                       INVESTORS:


                                       /s/ JAMES F. DICKE II
                                       -----------------------------------------
                                       James F. Dicke II


                                       /s/ JAMES F. DICKE III
                                       -----------------------------------------
                                       James F. Dicke III






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