Exhibit 10.145

 

SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase Agreement (this “Agreement”) is dated as of October 10,
2003, among The Immune Response Corporation, a Delaware corporation (the
“Company”), and the purchasers identified on the signature pages hereto (each a
“Purchaser” and collectively the “Purchasers”); and

 

WHEREAS, subject to the terms and conditions set forth in this Agreement and
pursuant to Section 4(2) of the Securities Act (as defined below), and Rule 506
promulgated thereunder, the Company desires to issue and sell to the Purchasers,
and the Purchasers, severally and not jointly, desire to purchase from the
Company in the aggregate, up to 5,940,595 shares of Common Stock and Warrants to
purchase up to 2,970,298 shares of Common Stock.

 

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser agrees
as follows:

 

ARTICLE I.

DEFINITIONS

 

1.1           Definitions.  In addition to the terms defined elsewhere in this
Agreement, for all purposes of this Agreement, the following terms have the
meanings indicated in this Section 1.1:

 

“Action” shall have the meaning ascribed to such term in Section 3.1(j).

 

“Affiliate” means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
Person as such terms are used in and construed under Rule 144.  With respect to
a Purchaser, any investment fund or managed account that is managed on a
discretionary basis by the same investment manager as such Purchaser will be
deemed to be an Affiliate of such Purchaser.

 

“Business Day” means any day except Saturday, Sunday and any day which shall be
a federal legal holiday or a day on which banking institutions in the State of
New York are authorized or required by law or other governmental action to
close.

 

“Closing” means a closing of the purchase and sale of the Common Stock and
Warrants pursuant to Section 2.1(a).

 

“Closing Date” means the date of a Closing.

 

“Closing Price” means on any particular date (a) the last reported closing bid
price per share of Common Stock on such date on the Trading Market (as reported
by Bloomberg L.P. at 4:15 PM (New York time) as the last reported closing bid
price for regular session trading on such day), or (b) if there is no such price
on such date, then the closing bid price on the Trading Market on the date
nearest preceding such date (as reported by Bloomberg L.P. at 4:15 PM (New York
time) as the closing bid price for regular session trading on such day), or (c) 
if the Common Stock is not then listed or

 

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quoted on the Trading Market and if prices for the Common Stock are then
reported in the “pink sheets” published by the National Quotation Bureau
Incorporated (or a similar organization or agency succeeding to its functions of
reporting prices), the most recent bid price per share of the Common Stock so
reported, or (d) if the shares of Common Stock are not then publicly traded the
fair market value of a share of Common Stock as determined by an appraiser
selected in good faith by the Purchasers of a majority in interest of the Shares
then outstanding and reasonably acceptable to the Company.

 

“Commission” means the Securities and Exchange Commission.

 

“Common Stock” means the common stock of the Company, $0.0025 par value per
share, and any securities into which such common stock may hereafter be
reclassified.

 

“Common Stock Equivalents” means any securities of the Company or the
Subsidiaries which would entitle the holder thereof to acquire at any time
Common Stock, including without limitation, any debt, preferred stock, rights,
options, warrants or other instrument that is at any time convertible into or
exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.

 

“Company Counsel” means Pillsbury Winthrop LLP.

 

“Disclosure Schedules” means the Disclosure Schedules concurrently delivered
herewith.

 

“Effective Date” means the date that the Registration Statement is first
declared effective by the Commission.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“FW” shall mean Feldman Weinstein LLP with offices at 420 Lexington Avenue, New
York, New York 10170-0002.

 

“Intellectual Property Rights” shall have the meaning ascribed to such term in
Section 3.1(o).

 

“Liens” means a lien, charge, security interest, encumbrance, right of first
refusal or other restriction.

 

“Material Adverse Effect” shall have the meaning ascribed to such term in
Section 3.1(b).

 

“Material Permits” shall have the meaning ascribed to such term in Section
3.1(m).

 

“Per Share Purchase Price” equals $2.02, subject to adjustment for reverse and
forward stock splits, stock dividends, stock combinations and other similar
transactions of the Common Stock that occur after the date of this Agreement.

 

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“Person” means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.

 

“Registration Statement” means a registration statement meeting the requirements
set forth in the Registration Rights Agreement and covering the resale by the
Purchasers of the Shares and the Warrant Shares.

 

“Registration Rights Agreement” means the Registration Rights Agreement, dated
as of the date of this Agreement, among the Company and each Purchaser, in the
form of Exhibit B hereto.

 

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

 

“SEC Reports” shall have the meaning ascribed to such term in Section 3.1(h).

 

“Securities” means the Shares, the Warrants and the Warrant Shares.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Shares” means the shares of Common Stock issued or issuable to each Purchaser
pursuant to this Agreement.

 

“Subscription Amount” means, as to each Purchaser and the Closing, the amounts
set forth below such Purchaser’s signature block on the signature page hereto,
in United States dollars and in immediately available funds.

 

“Subsidiary” shall have the meaning ascribed to such term in Section 3.1(a).

 

“Trading Day” means (i) a day on which the Common Stock is traded on a Trading
Market, or (ii) if the Common Stock is not listed on a Trading Market, a day on
which the Common Stock is traded on the over-the-counter market, as reported by
the OTC Bulletin Board, or (iii) if the Common Stock is not quoted on the OTC
Bulletin Board, a day on which the Common Stock is quoted in the
over-the-counter market as reported by the National Quotation Bureau
Incorporated (or any similar organization or agency succeeding to its functions
of reporting prices); provided, that in the event that the Common Stock is not
listed or quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day
shall mean a Business Day.

 

“Trading Market” means the following markets or exchanges on which the Common
Stock is listed or quoted for trading on the date in question: the American
Stock Exchange, the New York Stock Exchange, the Nasdaq National Market or the
Nasdaq SmallCap Market.

 

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“Transaction Documents” means this Agreement, the Registration Rights Agreement
and the Warrant executed in connection with the transactions contemplated
hereunder.

 

“Warrants” means the Common Stock Purchase Warrants, in the form of Exhibit C,
issuable to the Purchasers at Closing, which warrants shall be exercisable
immediately and have an exercise price equal to $3.32 and a term of exercise of
5 years.

 

“Warrant Shares” means the shares of Common Stock issuable upon exercise of the
Warrants.

 

ARTICLE II.

PURCHASE AND SALE

 

2.1           Closing.  At one or more Closings, the Purchasers shall purchase,
severally and not jointly, and the Company shall issue and sell, in the
aggregate, up to 5,940,595 shares of Common Stock and Warrants to purchase up to
2,970,298 shares of Common Stock on the Closing Date.  Each Purchaser shall
purchase from the Company, and the Company shall issue and sell to each
Purchaser, a number of Shares equal to such Purchaser’s Subscription Amount
divided by the Per Share Purchase Price.  Upon satisfaction of the conditions
set forth in Section 2.2, the Closings shall occur at the offices of FW, or such
other location as the parties shall mutually agree.

 

2.2           Closing Conditions.

 

(A)   AT EACH CLOSING (UNLESS OTHERWISE SPECIFIED BELOW) THE COMPANY SHALL
DELIVER OR CAUSE TO BE DELIVERED TO EACH PURCHASER THE FOLLOWING:

 

(I)    THIS AGREEMENT DULY EXECUTED BY THE COMPANY;

 

(II)   WITHIN 3 BUSINESS DAYS OF THE CLOSING DATE, A CERTIFICATE EVIDENCING A
NUMBER OF SHARES EQUAL TO SUCH PURCHASER’S SUBSCRIPTION AMOUNT DIVIDED BY THE
PER SHARE PURCHASE PRICE, REGISTERED IN THE NAME OF SUCH PURCHASER;

 

(III)  WITHIN 3 BUSINESS DAYS OF THE CLOSING DATE, A WARRANT, REGISTERED IN THE
NAME OF SUCH PURCHASER, PURSUANT TO WHICH SUCH PURCHASER SHALL HAVE THE RIGHT TO
ACQUIRE UP TO THE NUMBER OF SHARES OF COMMON STOCK EQUAL TO 50% OF THE SHARES TO
BE ISSUED TO SUCH PURCHASER AT SUCH CLOSING;

 

(IV)  THE REGISTRATION RIGHTS AGREEMENT DULY EXECUTED BY THE COMPANY; AND

 

(V)   A LEGAL OPINION OF COMPANY COUNSEL, IN THE FORM OF EXHIBIT A ATTACHED
HERETO.

 

(B)   AT A CLOSING, EACH PURCHASER SHALL DELIVER OR CAUSE TO BE DELIVERED TO THE
COMPANY THE FOLLOWING:

 

(I)    THIS AGREEMENT DULY EXECUTED BY SUCH PURCHASER;

 

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(II)   SUCH PURCHASER’S SUBSCRIPTION AMOUNT AS TO SUCH CLOSING BY WIRE TRANSFER
TO THE ACCOUNT OF THE COMPANY AS PROVIDED TO THE PURCHASERS IN WRITING PRIOR TO
THE CLOSING DATE; AND

 

(III)  THE REGISTRATION RIGHTS AGREEMENT DULY EXECUTED BY SUCH PURCHASER.

 

(C)   ALL REPRESENTATIONS AND WARRANTIES OF THE OTHER PARTY CONTAINED HEREIN
SHALL REMAIN TRUE AND CORRECT AS OF THE CLOSING DATE (EXCEPT FOR REPRESENTATIONS
AND WARRANTIES THAT SPEAK AS OF A SPECIFIC DATE, WHICH REPRESENTATIONS AND
WARRANTIES MUST BE CORRECT AS OF SUCH DATE).

 

(D)   AS OF THE CLOSING DATE, THERE SHALL HAVE BEEN NO MATERIAL ADVERSE EFFECT
WITH RESPECT TO THE COMPANY SINCE THE DATE HEREOF.

 

(E)   FROM THE DATE HEREOF TO THE CLOSING DATE, TRADING IN THE COMMON STOCK
SHALL NOT HAVE BEEN SUSPENDED BY THE COMMISSION (EXCEPT FOR ANY SUSPENSION OF
TRADING OF LIMITED DURATION AGREED TO BY THE COMPANY, WHICH SUSPENSION SHALL BE
TERMINATED PRIOR TO THE CLOSING), AND, AT ANY TIME PRIOR TO THE CLOSING DATE,
TRADING IN SECURITIES GENERALLY AS REPORTED BY BLOOMBERG FINANCIAL MARKETS SHALL
NOT HAVE BEEN SUSPENDED OR LIMITED, OR MINIMUM PRICES SHALL NOT HAVE BEEN
ESTABLISHED ON SECURITIES WHOSE TRADES ARE REPORTED BY SUCH SERVICE, OR ON ANY
TRADING MARKET, NOR SHALL A BANKING MORATORIUM HAVE BEEN DECLARED EITHER BY THE
UNITED STATES OR NEW YORK STATE AUTHORITIES.

 

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

 

3.1           Representations and Warranties of the Company.  Except as set
forth or incorporated by reference in (i) the SEC Reports, which qualify the
following representations and warranties in their entirety, or (ii) the
corresponding section of the Disclosure Schedules delivered concurrently
herewith, the Company hereby makes the following representations and warranties
as of the date hereof and as of the Closing Date to each Purchaser:

 

(A)   SUBSIDIARIES.  ALL SUBSIDIARIES OF THE COMPANY ARE LISTED ON EXHIBIT 21.1
OF THE COMPANY’S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2002
(EACH A “SUBSIDIARY”).  THE COMPANY OWNS, DIRECTLY OR INDIRECTLY, ALL OF THE
CAPITAL STOCK OF EACH SUBSIDIARY FREE AND CLEAR OF ANY LIENS, AND ALL THE ISSUED
AND OUTSTANDING SHARES OF CAPITAL STOCK OF EACH SUBSIDIARY ARE VALIDLY ISSUED
AND ARE FULLY PAID, NON-ASSESSABLE AND FREE OF PREEMPTIVE AND SIMILAR RIGHTS.

 

(B)   ORGANIZATION AND QUALIFICATION.  EACH OF THE COMPANY AND THE SUBSIDIARIES
IS AN ENTITY DULY INCORPORATED, VALIDLY EXISTING AND IN GOOD STANDING UNDER THE
LAWS OF THE JURISDICTION OF ITS INCORPORATION OR ORGANIZATION (AS APPLICABLE),
WITH THE REQUISITE CORPORATE POWER AND AUTHORITY TO OWN AND USE ITS PROPERTIES
AND ASSETS AND TO CARRY ON ITS BUSINESS AS CURRENTLY CONDUCTED.  NEITHER THE
COMPANY NOR ANY SUBSIDIARY IS IN VIOLATION OF ANY OF THE PROVISIONS OF ITS
RESPECTIVE CERTIFICATE OR ARTICLES OF INCORPORATION, BYLAWS OR OTHER
ORGANIZATIONAL OR CHARTER DOCUMENTS.  EACH OF THE COMPANY AND THE SUBSIDIARIES
IS DULY QUALIFIED TO CONDUCT BUSINESS AND IS IN GOOD STANDING AS A FOREIGN
CORPORATION OR OTHER ENTITY IN EACH JURISDICTION IN WHICH THE NATURE

 

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OF THE BUSINESS CONDUCTED OR PROPERTY OWNED BY IT MAKES SUCH QUALIFICATION
NECESSARY, EXCEPT WHERE THE FAILURE TO BE SO QUALIFIED OR IN GOOD STANDING, AS
THE CASE MAY BE, WOULD NOT HAVE OR REASONABLY BE EXPECTED TO RESULT IN (I) A
MATERIAL ADVERSE EFFECT ON THE LEGALITY, VALIDITY OR ENFORCEABILITY OF ANY
TRANSACTION DOCUMENT, (II) A MATERIAL ADVERSE EFFECT ON THE OPERATIONS, ASSETS,
BUSINESS OR FINANCIAL CONDITION OF THE COMPANY AND THE SUBSIDIARIES, TAKEN AS A
WHOLE, OR (III) A MATERIAL ADVERSE EFFECT ON THE COMPANY’S ABILITY TO PERFORM IN
ANY MATERIAL RESPECT ON A TIMELY BASIS ITS OBLIGATIONS UNDER ANY TRANSACTION
DOCUMENT (ANY OF (I), (II) OR (III), A “MATERIAL ADVERSE EFFECT”).

 

(C)   AUTHORIZATION; ENFORCEMENT.  THE COMPANY HAS THE REQUISITE CORPORATE POWER
AND AUTHORITY TO ENTER INTO AND TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY
EACH OF THE TRANSACTION DOCUMENTS AND OTHERWISE TO CARRY OUT ITS OBLIGATIONS
THEREUNDER.  THE EXECUTION AND DELIVERY OF EACH OF THE TRANSACTION DOCUMENTS BY
THE COMPANY AND THE CONSUMMATION BY IT OF THE TRANSACTIONS CONTEMPLATED THEREBY
HAVE BEEN DULY AUTHORIZED BY ALL NECESSARY ACTION ON THE PART OF THE COMPANY AND
NO FURTHER ACTION IS REQUIRED BY THE COMPANY IN CONNECTION THEREWITH.  EACH
TRANSACTION DOCUMENT HAS BEEN (OR UPON DELIVERY WILL HAVE BEEN) DULY EXECUTED BY
THE COMPANY AND, WHEN DELIVERED IN ACCORDANCE WITH THE TERMS HEREOF, ASSUMING
THE VALID EXECUTION AND DELIVERY THEREOF BY THE PURCHASERS, WILL CONSTITUTE THE
VALID AND BINDING OBLIGATION OF THE COMPANY ENFORCEABLE AGAINST THE COMPANY IN
ACCORDANCE WITH ITS TERMS EXCEPT (I) AS LIMITED BY APPLICABLE BANKRUPTCY,
INSOLVENCY, REORGANIZATION, MORATORIUM AND OTHER LAWS OF GENERAL APPLICATION
AFFECTING ENFORCEMENT OF CREDITORS’ AND CONTRACTING PARTIES RIGHTS GENERALLY AND
(II) AS LIMITED BY LAWS RELATING TO THE AVAILABILITY OF SPECIFIC PERFORMANCE,
INJUNCTIVE RELIEF OR OTHER EQUITABLE REMEDIES, AND (III) WITH RESPECT TO THE
INDEMNIFICATION PROVISIONS SET FORTH IN THIS AGREEMENT AND THE REGISTRATION
RIGHTS AGREEMENT, AS LIMITED BY PUBLIC POLICY, AND IN EACH CASE (I), (II) OR
(III) REGARDLESS OF WHETHER ENFORCEABILITY IS CONSIDERED IN A PROCEEDING IN
EQUITY OR AT LAW.

 

(D)   NO CONFLICTS.  THE EXECUTION, DELIVERY AND PERFORMANCE OF THE TRANSACTION
DOCUMENTS BY THE COMPANY AND THE CONSUMMATION BY THE COMPANY OF THE TRANSACTIONS
CONTEMPLATED THEREBY DO NOT AND WILL NOT (I) CONFLICT WITH OR VIOLATE ANY
PROVISION OF THE COMPANY’S OR ANY SUBSIDIARY’S CERTIFICATE OR ARTICLES OF
INCORPORATION, BYLAWS OR OTHER ORGANIZATIONAL OR CHARTER DOCUMENTS, OR (II)
CONFLICT WITH, OR CONSTITUTE A DEFAULT (OR AN EVENT THAT WITH NOTICE OR LAPSE OF
TIME OR BOTH WOULD BECOME A DEFAULT) UNDER, OR GIVE TO OTHERS ANY RIGHTS OF
TERMINATION, AMENDMENT, ACCELERATION OR CANCELLATION (WITH OR WITHOUT NOTICE,
LAPSE OF TIME OR BOTH) OF, ANY AGREEMENT, CREDIT FACILITY, DEBT OR OTHER
INSTRUMENT (EVIDENCING A COMPANY OR SUBSIDIARY DEBT) TO WHICH THE COMPANY OR ANY
SUBSIDIARY IS A PARTY OR BY WHICH ANY PROPERTY OR ASSET OF THE COMPANY OR ANY
SUBSIDIARY IS BOUND OR AFFECTED, OR (III) RESULT IN A VIOLATION OF ANY LAW,
RULE, REGULATION, ORDER, JUDGMENT, INJUNCTION, DECREE OR OTHER RESTRICTION OF
ANY COURT OR GOVERNMENTAL AUTHORITY TO WHICH THE COMPANY OR A SUBSIDIARY IS
SUBJECT (INCLUDING UNITED STATES FEDERAL AND STATE SECURITIES LAWS AND
REGULATIONS), OR BY WHICH ANY MATERIAL PROPERTY OR ASSET OF THE COMPANY OR A
SUBSIDIARY IS BOUND OR AFFECTED; EXCEPT IN THE CASE OF EACH OF CLAUSES (II) AND
(III), SUCH AS WOULD NOT HAVE OR REASONABLY BE EXPECTED TO RESULT IN A MATERIAL
ADVERSE EFFECT.

 

(E)   FILINGS, CONSENTS AND APPROVALS.  THE COMPANY IS NOT REQUIRED TO OBTAIN
ANY CONSENT, WAIVER, AUTHORIZATION OR ORDER OF, GIVE ANY NOTICE TO, OR MAKE ANY
FILING OR

 

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REGISTRATION WITH, ANY COURT OR OTHER FEDERAL, STATE, LOCAL OR OTHER
GOVERNMENTAL AUTHORITY OR OTHER PERSON IN CONNECTION WITH THE EXECUTION,
DELIVERY AND PERFORMANCE BY THE COMPANY OF THE TRANSACTION DOCUMENTS, OTHER THAN
(A) THE FILING WITH THE COMMISSION OF THE REGISTRATION STATEMENT, THE
APPLICATION(S) TO THE NASDAQ SMALLCAP MARKET FOR THE LISTING OF THE SHARES AND
WARRANT SHARES FOR TRADING THEREON, AND APPLICABLE BLUE SKY FILINGS, (B) SUCH AS
HAVE ALREADY BEEN OBTAINED OR SUCH EXEMPTIVE FILINGS AS ARE REQUIRED TO BE MADE
UNDER APPLICABLE SECURITIES LAWS, AND (C) SUCH OTHER FILINGS AS MAY BE REQUIRED
FOLLOWING THE CLOSING DATE UNDER THE SECURITIES ACT, THE EXCHANGE ACT AND
CORPORATE LAW.

 

(F)    ISSUANCE OF THE SECURITIES.  THE SECURITIES ARE DULY AUTHORIZED AND, THE
SHARES AND WARRANT SHARES, WHEN ISSUED AND PAID FOR IN ACCORDANCE WITH THE
TRANSACTION DOCUMENTS, WILL BE DULY AND VALIDLY ISSUED, FULLY PAID AND
NONASSESSABLE, FREE AND CLEAR OF ALL LIENS.  THE COMPANY HAS RESERVED FROM ITS
DULY AUTHORIZED CAPITAL STOCK THE MAXIMUM NUMBER OF SHARES OF COMMON STOCK
ISSUABLE PURSUANT TO THIS AGREEMENT AND THE WARRANTS.

 

(G)   CAPITALIZATION.  THE CAPITALIZATION OF THE COMPANY AS OF JUNE 30, 2003, IS
AS DESCRIBED IN THE COMPANY’S MOST RECENT PERIODIC REPORT FILED WITH THE
COMMISSION.  THE COMPANY HAS NOT ISSUED ANY CAPITAL STOCK SINCE SUCH FILING
OTHER THAN PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS UNDER THE
COMPANY’S STOCK OPTION PLANS, PURSUANT TO THE CONVERSION OR EXERCISE OF COMMON
STOCK EQUIVALENTS OUTSTANDING ON THE DATE HEREOF AND ISSUANCES IN THE COMPANY’S
ORDINARY COURSE OF BUSINESS.  NO PERSON HAS ANY RIGHT OF FIRST REFUSAL,
PREEMPTIVE RIGHT, RIGHT OF PARTICIPATION, OR ANY SIMILAR RIGHT TO PARTICIPATE IN
THE TRANSACTIONS CONTEMPLATED BY THE TRANSACTION DOCUMENTS, WHICH RIGHT HAS NOT
BEEN COMPLIED WITH OR WAIVED PRIOR TO THE CLOSING.  EXCEPT FOR (I) THE PURCHASE
AND SALE OF THE SECURITIES, (II) EMPLOYEE STOCK OPTIONS UNDER THE COMPANY’S
STOCK OPTION PLANS, (III) GRANTS MADE IN THE ORDINARY COURSE OF THE COMPANY’S
BUSINESS AND (IV) PREFERRED STOCK TO BE ISSUED TO CHESHIRE ASSOCIATES LLC IN
CONNECTION WITH THE CONVERSION OF THE OUTSTANDING PROMISSORY NOTES THE RIGHTS,
PREFERENCES AND PRIVILEGES OF WHICH HAVE NOT YET BEEN DESIGNATED, TO THE
COMPANY’S KNOWLEDGE THERE ARE NO OUTSTANDING OPTIONS, WARRANTS, CALLS, RELATING
TO, OR SECURITIES, RIGHTS OR OBLIGATIONS CONVERTIBLE INTO OR EXCHANGEABLE FOR,
OR GIVING ANY PERSON ANY RIGHT TO SUBSCRIBE FOR OR ACQUIRE FROM THE COMPANY, ANY
SHARES OF COMMON STOCK, OR CONTRACTS OR COMMITMENTS, UNDERSTANDINGS OR
ARRANGEMENTS BY WHICH THE COMPANY OR ANY SUBSIDIARY IS OR MAY BECOME BOUND TO
ISSUE ADDITIONAL SHARES OF COMMON STOCK, OR SECURITIES OR RIGHTS CONVERTIBLE OR
EXCHANGEABLE INTO SHARES OF COMMON STOCK.  THE ISSUE AND SALE OF THE SECURITIES
WILL NOT OBLIGATE THE COMPANY TO ISSUE SHARES OF COMMON STOCK OR OTHER
SECURITIES TO ANY PERSON (OTHER THAN THE PURCHASERS) AND WILL NOT RESULT IN A
RIGHT OF ANY HOLDER OF COMPANY SECURITIES TO ADJUST THE EXERCISE, CONVERSION,
EXCHANGE OR RESET PRICE UNDER SUCH SECURITIES.

 

(H)   SEC REPORTS; FINANCIAL STATEMENTS.  THE COMPANY HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY IT UNDER THE SECURITIES ACT AND THE EXCHANGE ACT,
INCLUDING PURSUANT TO SECTION 13(A) OR 15(D) OF THE EXCHANGE ACT, FOR THE TWO
YEARS PRECEDING THE DATE HEREOF (OR SUCH SHORTER PERIOD AS THE COMPANY WAS
REQUIRED BY LAW TO FILE SUCH MATERIAL) (THE FOREGOING MATERIALS, INCLUDING THE
EXHIBITS THERETO, BEING COLLECTIVELY REFERRED TO HEREIN AS THE “SEC REPORTS”
AND, TOGETHER WITH THE DISCLOSURE SCHEDULES TO THIS AGREEMENT, THE “DISCLOSURE
MATERIALS”) ON A TIMELY BASIS OR HAS RECEIVED A VALID

 

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EXTENSION OF SUCH TIME OF FILING AND HAS FILED ANY SUCH SEC REPORTS PRIOR TO THE
EXPIRATION OF ANY SUCH EXTENSION.  AS OF THEIR RESPECTIVE DATES, THE SEC REPORTS
COMPLIED IN ALL MATERIAL RESPECTS WITH THE REQUIREMENTS OF THE SECURITIES ACT
AND THE EXCHANGE ACT AND THE RULES AND REGULATIONS OF THE COMMISSION PROMULGATED
THEREUNDER, AS APPLICABLE, AND NONE OF THE SEC REPORTS, WHEN FILED, CONTAINED
ANY UNTRUE STATEMENT OF A MATERIAL FACT OR OMITTED TO STATE A MATERIAL FACT
REQUIRED TO BE STATED THEREIN OR NECESSARY IN ORDER TO MAKE THE STATEMENTS
THEREIN, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT
MISLEADING.  THE FINANCIAL STATEMENTS OF THE COMPANY INCLUDED IN THE SEC REPORTS
COMPLY IN ALL MATERIAL RESPECTS WITH APPLICABLE ACCOUNTING REQUIREMENTS AND THE
RULES AND REGULATIONS OF THE COMMISSION WITH RESPECT THERETO AS IN EFFECT AT THE
TIME OF FILING.  SUCH FINANCIAL STATEMENTS HAVE BEEN PREPARED IN ACCORDANCE WITH
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES APPLIED ON A CONSISTENT BASIS DURING
THE PERIODS INVOLVED (“GAAP”), EXCEPT AS MAY BE OTHERWISE SPECIFIED IN SUCH
FINANCIAL STATEMENTS OR THE NOTES THERETO AND EXCEPT THAT UNAUDITED FINANCIAL
STATEMENTS MAY NOT CONTAIN ALL FOOTNOTES REQUIRED BY GAAP, AND FAIRLY PRESENT IN
ALL MATERIAL RESPECTS THE FINANCIAL POSITION OF THE COMPANY AND ITS CONSOLIDATED
SUBSIDIARIES AS OF AND FOR THE DATES THEREOF AND THE RESULTS OF OPERATIONS AND
CASH FLOWS FOR THE PERIODS THEN ENDED, SUBJECT, IN THE CASE OF UNAUDITED
STATEMENTS, TO NORMAL, IMMATERIAL, YEAR-END AUDIT ADJUSTMENTS.

 

(I)    MATERIAL CHANGES.  SINCE JUNE 30, 2003, (I) THERE HAS BEEN NO EVENT,
OCCURRENCE OR DEVELOPMENT THAT HAS HAD OR THAT COULD REASONABLY BE EXPECTED TO
RESULT IN A MATERIAL ADVERSE EFFECT, (II) THE COMPANY HAS NOT INCURRED ANY
LIABILITIES (CONTINGENT OR OTHERWISE) OTHER THAN (A) TRADE PAYABLES AND ACCRUED
EXPENSES INCURRED IN THE ORDINARY COURSE OF BUSINESS CONSISTENT WITH PAST
PRACTICE AND (B) LIABILITIES NOT REQUIRED TO BE REFLECTED IN THE COMPANY’S
FINANCIAL STATEMENTS PURSUANT TO GAAP OR REQUIRED TO BE DISCLOSED IN FILINGS
MADE WITH THE COMMISSION, (III) THE COMPANY HAS NOT ALTERED ITS METHOD OF
ACCOUNTING, (IV) THE COMPANY HAS NOT DECLARED OR MADE ANY DIVIDEND OR
DISTRIBUTION OF CASH OR OTHER PROPERTY TO ITS STOCKHOLDERS OR PURCHASED,
REDEEMED OR MADE ANY AGREEMENTS TO PURCHASE OR REDEEM ANY SHARES OF ITS CAPITAL
STOCK AND (V) THE COMPANY HAS NOT ISSUED ANY EQUITY SECURITIES TO ANY OFFICER,
DIRECTOR OR AFFILIATE, EXCEPT PURSUANT TO EXISTING COMPANY STOCK OPTION PLANS;
PROVIDED, HOWEVER, THE PROMISSORY NOTES ISSUED TO CHESHIRE ASSOCIATES LLC WILL
BE CONVERTED INTO A SERIES OF PREFERRED STOCK OF THE COMPANY, THE RIGHTS,
PREFERENCES AND PRIVILEGES OF WHICH HAVE NOT YET BEEN DESIGNATED.  THE COMPANY
DOES NOT HAVE PENDING BEFORE THE COMMISSION ANY REQUEST FOR CONFIDENTIAL
TREATMENT OF INFORMATION.

 

(J)    LITIGATION.  THERE IS NO ACTION, SUIT, INQUIRY, NOTICE OF VIOLATION,
PROCEEDING OR INVESTIGATION PENDING OR, TO THE KNOWLEDGE OF THE COMPANY,
THREATENED AGAINST OR AFFECTING THE COMPANY, ANY SUBSIDIARY OR ANY OF THEIR
RESPECTIVE PROPERTIES BEFORE OR BY ANY COURT, ARBITRATOR, GOVERNMENTAL OR
ADMINISTRATIVE AGENCY OR REGULATORY AUTHORITY (FEDERAL, STATE, COUNTY, LOCAL OR
FOREIGN) (COLLECTIVELY, AN “ACTION”) WHICH (I) MATERIALLY AND ADVERSELY AFFECTS
OR CHALLENGES THE LEGALITY, VALIDITY OR ENFORCEABILITY OF ANY OF THE TRANSACTION
DOCUMENTS OR THE SECURITIES OR (II) COULD, IF THERE WERE AN UNFAVORABLE
DECISION, HAVE OR REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE
EFFECT.  NEITHER THE COMPANY NOR ANY SUBSIDIARY, NOR, TO THE KNOWLEDGE OF THE
COMPANY, ANY DIRECTOR OR OFFICER THEREOF, IS OR HAS BEEN THE SUBJECT OF ANY
ACTION INVOLVING A CLAIM OF VIOLATION OF OR LIABILITY UNDER FEDERAL OR STATE
SECURITIES LAWS OR A CLAIM OF BREACH OF FIDUCIARY DUTY.  THERE HAS NOT BEEN, AND
TO THE KNOWLEDGE OF THE COMPANY, THERE IS NOT PENDING OR

 

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CONTEMPLATED, ANY INVESTIGATION BY THE COMMISSION INVOLVING THE COMPANY OR ANY
CURRENT OR FORMER DIRECTOR OR OFFICER OF THE COMPANY.  THE COMMISSION HAS NOT
ISSUED ANY STOP ORDER OR OTHER ORDER SUSPENDING THE EFFECTIVENESS OF ANY
REGISTRATION STATEMENT FILED BY THE COMPANY OR ANY SUBSIDIARY UNDER THE EXCHANGE
ACT OR THE SECURITIES ACT.

 

(K)   LABOR RELATIONS.  NO MATERIAL LABOR DISPUTE EXISTS OR, TO THE KNOWLEDGE OF
THE COMPANY, IS IMMINENT WITH RESPECT TO ANY OF THE EMPLOYEES OF THE COMPANY
WHICH COULD REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT.

 

(L)    COMPLIANCE.  NEITHER THE COMPANY NOR ANY SUBSIDIARY (I) IS IN DEFAULT
UNDER OR IN VIOLATION OF (AND NO EVENT HAS OCCURRED THAT HAS NOT BEEN WAIVED
THAT, WITH NOTICE OR LAPSE OF TIME OR BOTH, WOULD RESULT IN A DEFAULT BY THE
COMPANY OR ANY SUBSIDIARY UNDER), NOR HAS THE COMPANY OR ANY SUBSIDIARY RECEIVED
NOTICE OF A CLAIM THAT IT IS IN DEFAULT UNDER OR THAT IT IS IN VIOLATION OF, ANY
INDENTURE, LOAN OR CREDIT AGREEMENT OR ANY OTHER AGREEMENT OR INSTRUMENT TO
WHICH IT IS A PARTY OR BY WHICH IT OR ANY OF ITS PROPERTIES IS BOUND (WHETHER OR
NOT SUCH DEFAULT OR VIOLATION HAS BEEN WAIVED), (II) IS IN VIOLATION OF ANY
ORDER OF ANY COURT, ARBITRATOR OR GOVERNMENTAL BODY, OR (III) IS IN VIOLATION OF
ANY STATUTE, RULE OR REGULATION OF ANY GOVERNMENTAL AUTHORITY, INCLUDING WITHOUT
LIMITATION ALL FOREIGN, FEDERAL, STATE AND LOCAL LAWS APPLICABLE TO ITS
BUSINESS, EXCEPT IN THE CASE OF CLAUSES (I), (II) AND (III) AS WOULD NOT HAVE OR
REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT.

 

(M)  REGULATORY PERMITS.  THE COMPANY AND THE SUBSIDIARIES POSSESS ALL
CERTIFICATES, AUTHORIZATIONS AND PERMITS ISSUED BY THE APPROPRIATE FEDERAL,
STATE, LOCAL OR FOREIGN REGULATORY AUTHORITIES NECESSARY TO CONDUCT THEIR
RESPECTIVE BUSINESSES AS DESCRIBED IN THE SEC REPORTS, EXCEPT WHERE THE FAILURE
TO POSSESS SUCH PERMITS WOULD NOT HAVE OR REASONABLY BE EXPECTED TO RESULT IN A
MATERIAL ADVERSE EFFECT (“MATERIAL PERMITS”), AND NEITHER THE COMPANY NOR ANY
SUBSIDIARY HAS RECEIVED ANY NOTICE OF PROCEEDINGS RELATING TO THE REVOCATION OR
MODIFICATION OF ANY MATERIAL PERMIT.

 

(N)   TITLE TO ASSETS.  THE COMPANY AND THE SUBSIDIARIES HAVE GOOD AND
MARKETABLE TITLE IN FEE SIMPLE TO ALL REAL PROPERTY OWNED BY THEM THAT IS
MATERIAL TO THE BUSINESS OF THE COMPANY AND THE SUBSIDIARIES, TAKEN AS A WHOLE,
AND GOOD AND MARKETABLE TITLE IN ALL PERSONAL PROPERTY OWNED BY THEM THAT IS
MATERIAL TO THE BUSINESS OF THE COMPANY AND THE SUBSIDIARIES, TAKEN AS A WHOLE,
IN EACH CASE FREE AND CLEAR OF ALL LIENS, EXCEPT FOR LIENS AS DO NOT MATERIALLY
AFFECT THE VALUE OF SUCH PROPERTY AND DO NOT MATERIALLY INTERFERE WITH THE USE
MADE AND PROPOSED TO BE MADE OF SUCH PROPERTY BY THE COMPANY AND THE
SUBSIDIARIES AND LIENS FOR THE PAYMENT OF FEDERAL, STATE OR OTHER TAXES, THE
PAYMENT OF WHICH IS NEITHER DELINQUENT NOR SUBJECT TO PENALTIES.  TO THE
KNOWLEDGE OF THE COMPANY, ANY REAL PROPERTY AND FACILITIES HELD UNDER LEASE BY
THE COMPANY AND THE SUBSIDIARIES ARE HELD BY THEM UNDER VALID, SUBSISTING AND
ENFORCEABLE LEASES WITH WHICH THE COMPANY AND THE SUBSIDIARIES ARE IN MATERIAL
COMPLIANCE.

 

(O)   PATENTS AND TRADEMARKS.  TO THE KNOWLEDGE OF THE COMPANY AND EACH
SUBSIDIARY, THE COMPANY AND THE SUBSIDIARIES HAVE, OR HAVE RIGHTS TO USE, ALL
PATENTS, PATENT APPLICATIONS, TRADEMARKS, TRADEMARK APPLICATIONS, SERVICE MARKS,
TRADE NAMES, COPYRIGHTS, LICENSES AND OTHER SIMILAR RIGHTS THAT ARE NECESSARY OR
MATERIAL FOR USE IN CONNECTION WITH THEIR RESPECTIVE BUSINESSES AS DESCRIBED IN
THE SEC REPORTS AND WHICH

 

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THE FAILURE TO SO HAVE COULD HAVE OR REASONABLY BE EXPECTED TO RESULT IN A
MATERIAL ADVERSE EFFECT, OTHER THAN INTELLECTUAL PROPERTY GENERALLY AVAILABLE ON
COMMERCIAL TERMS FROM OTHER SOURCES (COLLECTIVELY, THE “INTELLECTUAL PROPERTY
RIGHTS”).  THERE IS NOT PENDING OR, TO THE COMPANY’S KNOWLEDGE THREATENED, ANY
CLAIM OR ACTION ALLEGING THAT THE INTELLECTUAL PROPERTY RIGHTS USED BY THE
COMPANY OR ANY SUBSIDIARY VIOLATES OR INFRINGES THE RIGHTS OF ANY PERSON.  THE
COMPANY HAS TAKEN ALL STEPS REASONABLY REQUIRED IN ACCORDANCE WITH SOUND
BUSINESS PRACTICE AND BUSINESS JUDGMENT TO ESTABLISH AND PRESERVE ITS OWNERSHIP
OF SUCH INTELLECTUAL PROPERTY RIGHTS.

 

(P)   INTERNAL ACCOUNTING CONTROLS.  THE COMPANY AND EACH OF ITS SUBSIDIARIES
MAINTAINS A SYSTEM OF INTERNAL ACCOUNTING CONTROLS SUFFICIENT TO PROVIDE
REASONABLE ASSURANCE THAT (I) TRANSACTIONS ARE EXECUTED IN ACCORDANCE WITH
MANAGEMENT’S GENERAL OR SPECIFIC AUTHORIZATIONS, (II) TRANSACTIONS ARE RECORDED
AS NECESSARY TO PERMIT PREPARATION OF FINANCIAL STATEMENTS IN CONFORMITY WITH
GAAP AND TO MAINTAIN ASSET ACCOUNTABILITY, (III) ACCESS TO ASSETS IS PERMITTED
ONLY IN ACCORDANCE WITH MANAGEMENT’S GENERAL OR SPECIFIC AUTHORIZATION, AND (IV)
THE RECORDED ACCOUNTABILITY FOR ASSETS IS COMPARED WITH THE EXISTING ASSETS AT
REASONABLE INTERVALS AND APPROPRIATE ACTION IS TAKEN WITH RESPECT TO ANY
DIFFERENCES. THE COMPANY HAS ESTABLISHED DISCLOSURE CONTROLS AND PROCEDURES (AS
DEFINED IN EXCHANGE ACT RULES 13A-14 AND 15D-14) FOR THE COMPANY AND DESIGNED
SUCH DISCLOSURE CONTROLS AND PROCEDURES TO ENSURE THAT MATERIAL INFORMATION
RELATING TO THE COMPANY, INCLUDING ITS SUBSIDIARIES, IS MADE KNOWN TO THE
CERTIFYING OFFICERS BY OTHERS WITHIN THOSE ENTITIES, PARTICULARLY DURING THE
PERIOD IN WHICH THE COMPANY’S FORM 10-K OR 10-Q, AS THE CASE MAY BE, IS BEING
PREPARED.  THE COMPANY’S CERTIFYING OFFICERS HAVE EVALUATED THE EFFECTIVENESS OF
THE COMPANY’S CONTROLS AND PROCEDURES AS OF A DATE WITHIN 90 DAYS PRIOR TO THE
FILING DATE OF THE FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2003 (SUCH DATE, THE
“EVALUATION DATE”).  THE COMPANY PRESENTED IN ITS FORM 10-Q FOR THE QUARTER
ENDED JUNE 30, 2003 THE CONCLUSIONS OF THE CERTIFYING OFFICERS ABOUT THE
EFFECTIVENESS OF THE DISCLOSURE CONTROLS AND PROCEDURES BASED ON THEIR
EVALUATIONS AS OF THE EVALUATION DATE.  SINCE THE EVALUATION DATE, THERE HAVE
BEEN NO SIGNIFICANT CHANGES IN THE COMPANY’S INTERNAL CONTROLS (AS SUCH TERM IS
DEFINED IN ITEM 307(B) OF REGULATION S-K UNDER THE EXCHANGE ACT) OR, TO THE
COMPANY’S KNOWLEDGE, IN OTHER FACTORS THAT COULD SIGNIFICANTLY AFFECT THE
COMPANY’S INTERNAL CONTROLS.

 

(Q)   CERTAIN FEES.  EXCEPT AS DISCLOSED IN SECTION 3(Q) OF THE DISCLOSURE
SCHEDULE, NO BROKERAGE OR FINDER’S FEES OR COMMISSIONS ARE OR WILL BE PAYABLE BY
THE COMPANY TO ANY BROKER, FINANCIAL ADVISOR OR CONSULTANT, FINDER, PLACEMENT
AGENT, INVESTMENT BANKER, BANK OR OTHER PERSON WITH RESPECT TO THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT.  THE PURCHASERS SHALL HAVE NO OBLIGATION WITH
RESPECT TO ANY FEES OR WITH RESPECT TO ANY CLAIMS MADE BY OR ON BEHALF OF OTHER
PERSONS FOR FEES OF A TYPE CONTEMPLATED IN THIS SECTION THAT MAY BE DUE IN
CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

 

(R)    PRIVATE PLACEMENT. ASSUMING THE ACCURACY OF THE PURCHASERS
REPRESENTATIONS AND WARRANTIES SET FORTH IN SECTION 3.2, NO REGISTRATION UNDER
THE SECURITIES ACT IS REQUIRED FOR THE OFFER AND SALE OF THE SECURITIES BY THE
COMPANY TO THE PURCHASERS AS CONTEMPLATED HEREBY. THE ISSUANCE AND SALE OF THE
SECURITIES HEREUNDER DOES NOT CONTRAVENE THE RULES AND REGULATIONS OF THE
TRADING MARKET.

 

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(S)   INVESTMENT COMPANY. THE COMPANY IS NOT AN “INVESTMENT COMPANY” WITHIN THE
MEANING OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED.

 

(T)    FORM S-3 ELIGIBILITY.  THE COMPANY IS ELIGIBLE TO REGISTER THE RESALE OF
ITS COMMON STOCK BY THE PURCHASERS UNDER FORM S-3 PROMULGATED UNDER THE
SECURITIES ACT.

 

(U)   APPLICATION OF TAKEOVER PROTECTIONS.  THE COMPANY AND ITS BOARD OF
DIRECTORS HAVE TAKEN ALL NECESSARY ACTION, IF ANY, IN ORDER TO RENDER
INAPPLICABLE ANY CONTROL SHARE ACQUISITION, BUSINESS COMBINATION, POISON PILL
(INCLUDING ANY DISTRIBUTION UNDER A RIGHTS AGREEMENT) OR OTHER SIMILAR
ANTI-TAKEOVER PROVISION UNDER THE COMPANY’S CERTIFICATE OF INCORPORATION (OR
SIMILAR CHARTER DOCUMENTS) OR THE LAWS OF ITS STATE OF INCORPORATION THAT IS OR
COULD BECOME APPLICABLE TO THE PURCHASERS AS A RESULT OF THE PURCHASERS AND THE
COMPANY FULFILLING THEIR OBLIGATIONS OR EXERCISING THEIR RIGHTS UNDER THE
TRANSACTION DOCUMENTS, INCLUDING WITHOUT LIMITATION THE COMPANY’S ISSUANCE OF
THE SECURITIES AND THE PURCHASERS’ OWNERSHIP OF THE SECURITIES.

 

(V)   DISCLOSURE.  THE COMPANY CONFIRMS THAT THE COMPANY HAS NOT PROVIDED ANY OF
THE PURCHASERS OR COUNSEL WITH ANY INFORMATION THAT CONSTITUTES OR MIGHT
CONSTITUTE MATERIAL, NON-PUBLIC INFORMATION.   THE COMPANY UNDERSTANDS AND
CONFIRMS THAT THE PURCHASERS WILL RELY ON THE FOREGOING REPRESENTATIONS AND
COVENANTS IN EFFECTING ITS PURCHASE OF THE SECURITIES. ALL DISCLOSURE PROVIDED
TO THE PURCHASERS REGARDING THE COMPANY, ITS BUSINESS AND THE TRANSACTIONS
CONTEMPLATED HEREBY, INCLUDING THE DISCLOSURE SCHEDULES TO THIS AGREEMENT,
FURNISHED BY OR ON BEHALF OF THE COMPANY ARE TRUE AND CORRECT AND DO NOT CONTAIN
ANY UNTRUE STATEMENT OF A MATERIAL FACT OR OMIT TO STATE ANY MATERIAL FACT
NECESSARY IN ORDER TO MAKE THE STATEMENTS MADE THEREIN, IN LIGHT OF THE
CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT MISLEADING.

 

(W)  NO INTEGRATED OFFERING. NEITHER THE COMPANY, NOR ANY OF ITS AFFILIATES, NOR
ANY PERSON ACTING ON ITS OR THEIR BEHALF HAS, DIRECTLY OR INDIRECTLY, MADE ANY
OFFERS OR SALES OF ANY SECURITY OR SOLICITED ANY OFFERS TO BUY ANY SECURITY,
UNDER CIRCUMSTANCES THAT WOULD CAUSE THIS OFFERING OF THE SECURITIES TO FAIL TO
QUALIFY FOR AN EXEMPTION FROM REGISTRATION UNDER THE UNITED STATES FEDERAL
SECURITIES LAWS.

 

Each Purchaser acknowledges and agrees that the Company does not make or has not
made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section 3.1.

 

3.2           Representations and Warranties of the Purchasers.  Each Purchaser
hereby, for itself and for no other Purchaser, represents and warrants as of the
date hereof and as of the Closing Date to the Company as follows:

 

(A)           ORGANIZATION; AUTHORITY.  SUCH PURCHASER IS AN ENTITY DULY
ORGANIZED, VALIDLY EXISTING AND IN GOOD STANDING UNDER THE LAWS OF THE
JURISDICTION OF ITS ORGANIZATION WITH FULL RIGHT, CORPORATE OR PARTNERSHIP POWER
AND AUTHORITY TO ENTER INTO AND TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY
THE TRANSACTION DOCUMENTS AND OTHERWISE TO CARRY OUT ITS OBLIGATIONS THEREUNDER.
THE EXECUTION, DELIVERY AND PERFORMANCE BY SUCH PURCHASER OF THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT HAS BEEN DULY AUTHORIZED BY ALL NECESSARY
CORPORATE OR SIMILAR ACTION ON THE PART OF SUCH PURCHASER.  EACH TRANSACTION
DOCUMENT TO WHICH IT IS A PARTY HAS BEEN DULY EXECUTED BY SUCH PURCHASER, AND
WHEN

 

11

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DELIVERED BY SUCH PURCHASER IN ACCORDANCE WITH THE TERMS HEREOF, WILL CONSTITUTE
THE VALID AND LEGALLY BINDING OBLIGATION OF SUCH PURCHASER, ENFORCEABLE AGAINST
IT IN ACCORDANCE WITH ITS TERMS.

 

(B)           GENERAL SOLICITATION.  SUCH PURCHASER IS NOT PURCHASING THE
SECURITIES AS A RESULT OF ANY ADVERTISEMENT, ARTICLE, NOTICE OR OTHER
COMMUNICATION REGARDING THE SECURITIES PUBLISHED IN ANY NEWSPAPER, MAGAZINE OR
SIMILAR MEDIA OR BROADCAST OVER TELEVISION OR RADIO OR PRESENTED AT ANY SEMINAR
OR ANY OTHER GENERAL SOLICITATION OR GENERAL ADVERTISEMENT.

 

(c)           No Public Sale or Distribution.  Such Purchaser is (i) acquiring
the Shares and (ii) upon exercise of the Warrants will acquire the Warrant
Shares, for its own account and not with a view towards, or for resale in
connection with, the public sale or distribution thereof; provided, however,
that by making the representations herein, such Purchaser does not agree to hold
any of the Securities for any minimum or other specific term and reserves the
right to dispose of the Securities at any time in accordance with or pursuant to
a registration statement or an exemption under the Securities Act and the
provisions of this Agreement including, but not limited to, Section 4 hereof.
Such Purchaser is acquiring the Securities hereunder in the ordinary course of
its business. Such Purchaser does not have any agreement or understanding,
directly or indirectly, with any Person to distribute any of the Securities.

 

(d)           Accredited Investor Status.  Such Purchaser is an “accredited
investor” as that term is defined in Rule 501(a) of Regulation D.  Such
Purchaser is not required to be registered as a broker-dealer under Section 15
of the Exchange Act.

 

(e)           Reliance on Exemptions.  Such Purchaser understands that the
Securities are being offered and sold to it in reliance on specific exemptions
from the registration requirements of United States federal and state securities
laws and that the Company is relying in part upon the truth and accuracy of, and
such Purchaser’s compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Purchaser set forth herein in order
to determine the availability of such exemptions and the eligibility of such
Purchaser to acquire the Securities.

 

(f)            Information.  Such Purchaser and its advisors, if any, have been
furnished with all publicly available materials relating to the business,
finances and operations of the Company and such other publicly available
materials relating to the offer and sale of the Shares and Warrants as have been
requested by such Purchaser.  Such Purchaser and its advisors, if any, have been
afforded the opportunity to ask questions of the Company.  Neither such
inquiries nor any other due diligence investigations conducted by such Purchaser
or its advisors, if any, or its representatives shall modify, amend or affect
such Purchaser’s right to rely on the Company’s representations and warranties
contained herein.  Such Purchaser understands that its investment in the Shares
and Warrants involves a high degree of risk.  Each Purchaser is not relying on
the Company or any of its employees, representatives or agents with respect to
the legal, tax, economic and related considerations as to an investment in the
Securities.  Such Purchaser has sought such accounting, legal and tax advice
only from its own advisors as it has considered

 

12

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necessary to make an informed investment decision with respect to its
acquisition of the Shares and Warrants.

 

(g)           No Governmental Review.  Such Purchaser understands that no United
States federal or state agency or any other government or governmental agency
has passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.

 

(h)           Experience of Such Purchaser.  Such Purchaser, either alone or
together with its representatives, has such knowledge, sophistication and
experience in business and financial matters, including investing in
biotechnology companies, so as to be capable of evaluating the merits and risks
of the prospective investment in the Shares and Warrants, and has so evaluated
the merits and risks of such investment.  Such Purchaser is able to bear the
economic risk of an investment in the Shares and Warrants and, at the present
time, is able to afford a complete loss of such investment.

 

(i)            Residency.  Such Purchaser is a resident of (or, if an entity,
has its principal place of business in) the jurisdiction set forth beside such
Purchaser’s name on the signature pages hereto.

 

(j)            Investment Representations and Covenants.  Each Purchaser has
completed or caused to be completed the Stock Certificate Questionnaire attached
hereto as Exhibit D and the Registration Statement Questionnaire attached hereto
as Exhibit E for use in preparation of the Registration Statement and the
answers thereto are true and correct as of the date hereof and will be true and
correct as of the effective date of the Registration Statement and the
Purchasers will notify the Company immediately of any material change in any
such information provided in the Registration Statement Questionnaire occurring
prior to the sale by it of all of the Shares and/or the Warrant Shares, if any,
or until the Company is no longer required to keep the Registration Statement
effective.

 

(k)           Confidentiality.  Until the Company publicly announces that this
Agreement and the Transaction Documents have been entered into, each Purchaser
agrees with the Company to keep strictly confidential all information concerning
this Agreement, the Transaction Documents and the transactions contemplated
hereby and thereby.  Each Purchaser understands that the information contained
in the Transaction Documents is strictly confidential and proprietary to the
Company and has been prepared, in large part, from the Company’s publicly
available documents and other information and is being submitted to each
Purchaser solely for such Purchaser’s confidential use.  Each Purchaser hereby
acknowledges that it is prohibited from reproducing and/or distributing the
Transaction Documents, or any other offering materials or other information
provided by the Company in connection with such Purchaser’s consideration of its
investment in the Company, in whole or in part, or divulging or discussing any
of their contents to third parties.  Further, each Purchaser understands that
the existence and nature of all conversations and presentations, if any,
regarding the Company and the Transaction Documents must be kept strictly
confidential.  Each Purchaser understands that United States Federal and state
securities laws impose restrictions on trading based

 

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on information regarding the transactions contemplated by the Transaction
Documents.  In particular, each Purchaser hereby acknowledges that disclosure of
information regarding the transaction contemplated in the Transaction Documents
may cause the Company to violate Regulation FD and agrees not to engage in any
such unauthorized disclosure.  The restrictions in this subsection shall cease
upon the Company’s public announcement that the Transaction Documents have been
entered into.

 

(l)            Continued Listing.  Each Purchaser understands that there is no
assurance that the Company will satisfy the criteria for continued quotation of
the Common Stock on The Nasdaq SmallCap Market.

 

(m)          Requirements of Foreign Jurisdictions.  The Purchaser acknowledges,
represents and agrees that no action has been or will be taken in any
jurisdiction outside the United States by the Company or the Placement Agent
that would permit an offering of the Shares, or possession or distribution of
offering materials in connection with the issue of the Shares, in any
jurisdiction outside the United States where action for that purpose is
required.  Each Purchaser outside the United States will comply with all
applicable laws and regulations in each foreign jurisdiction in which it
purchases, offers, sells or delivers Shares or has in its possession or
distributes any offering material, in all cases at its own expense.  The
Placement Agent is not authorized to make any representation or use any
information in connection with the issue, placement, purchase and sale of the
Shares.

 

(n)           Such Purchaser is not an affiliate (as such term is defined in
Rule 12(b)(ii) under the Exchange Act) of any director or officer of the Company
for purposes of Rule 4350(i)(1)(A) of the NASD, Inc. Marketplace Rules.

 

The Company acknowledges and agrees that each Purchaser does not make or has not
made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section 3.2.

 

ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES

 

4.1           Transfer Restrictions.

 

(a)           The Securities may only be disposed of in compliance with state
and federal securities laws.  In connection with any transfer of Securities
other than pursuant to an effective registration statement, to the Company, to
an Affiliate of a Purchaser, in connection with a pledge as contemplated in
Section 4.1(b), or in connection with a sale pursuant to Rule 144, the Company
may require the transferor thereof to provide to the Company an opinion of
counsel selected by the transferor, the form and substance of which opinion
shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration of such transferred Securities under the
Securities Act.  As a condition of transfer, any such transferee shall agree in
writing to be bound by the terms of this Agreement and shall have the rights of
a Purchaser under this Agreement and the Registration Rights Agreement.

 

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(B)           THE PURCHASERS AGREE TO THE IMPRINTING, SO LONG AS IS REQUIRED BY
THIS SECTION 4.1(B), OF A LEGEND ON ANY OF THE SECURITIES IN THE FOLLOWING FORM:

 

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY.  THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A
FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a)
UNDER THE SECURITIES ACT.

 

The Company acknowledges and agrees that a Purchaser may from time to time
pledge pursuant to a bona fide margin agreement with a registered broker-dealer
or grant a security interest in some or all of the Securities to a financial
institution that is an “accredited investor” as defined in Rule 501(a) under the
Securities Act and, if required under the terms of such arrangement, such
Purchaser may transfer pledged or secured Securities to the pledgees or secured
parties.  Such a pledge or transfer would not be subject to approval of the
Company and no legal opinion of legal counsel of the pledgee, secured party or
pledgor shall be required in connection therewith; provided that the pledgee’s
or secured party’s further transfer of such Securities is registered by any
applicable securities laws.  Further, no notice shall be required of such
pledge.  At the appropriate Purchaser’s expense, the Company will execute and
deliver such reasonable documentation as a pledgee or secured party of
Securities may reasonably request in connection with a pledge or transfer of the
Securities, including the preparation and filing of any required prospectus
supplement under Rule 424(b)(3) under the Securities Act or other applicable
provision of the Securities Act to appropriately amend the list of Selling
Stockholders thereunder.

 

(C)           CERTIFICATES EVIDENCING THE SHARES AND WARRANT SHARES SHALL NOT
CONTAIN ANY LEGEND (INCLUDING THE LEGEND SET FORTH IN SECTION 4.1(B)), (I) WHILE
A REGISTRATION STATEMENT (INCLUDING THE REGISTRATION STATEMENT) COVERING THE
RESALE OF SUCH SECURITY IS EFFECTIVE UNDER THE SECURITIES ACT, OR (II) FOLLOWING
ANY SALE OF SUCH SHARES OR WARRANT SHARES PURSUANT TO RULE 144, OR (III) IF SUCH
SHARES OR WARRANT SHARES ARE ELIGIBLE FOR SALE UNDER RULE 144(K), OR (IV) IF
SUCH LEGEND IS NOT REQUIRED UNDER APPLICABLE REQUIREMENTS OF THE SECURITIES ACT
(INCLUDING JUDICIAL INTERPRETATIONS AND PRONOUNCEMENTS ISSUED BY THE STAFF OF
THE COMMISSION), IN WHICH EVENT THE COMPANY SHALL CAUSE THE COMPANY’S TRANSFER
AGENT TO EFFECT THE REMOVAL OF THE LEGEND HEREUNDER.  IF ALL OR ANY PORTION OF A

 

15

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WARRANT IS EXERCISED AT A TIME WHEN THERE IS AN EFFECTIVE REGISTRATION STATEMENT
TO COVER THE RESALE OF THE WARRANT SHARES, SUCH WARRANT SHARES SHALL BE ISSUED
FREE OF ALL LEGENDS.  THE COMPANY AGREES THAT FOLLOWING THE EFFECTIVE DATE OR AT
SUCH TIME AS SUCH LEGEND IS NO LONGER REQUIRED UNDER THIS SECTION 4.1(C), IT
WILL, NO LATER THAN THREE TRADING DAYS FOLLOWING THE DELIVERY BY A PURCHASER TO
THE COMPANY OR THE COMPANY’S TRANSFER AGENT OF A CERTIFICATE REPRESENTING SHARES
OR WARRANT SHARES, AS THE CASE MAY BE, ISSUED WITH A RESTRICTIVE LEGEND, DELIVER
OR CAUSE TO BE DELIVERED TO SUCH PURCHASER A CERTIFICATE REPRESENTING SUCH
SECURITIES THAT IS FREE FROM ALL RESTRICTIVE AND OTHER LEGENDS.  THE COMPANY MAY
NOT MAKE ANY NOTATION ON ITS RECORDS OR GIVE INSTRUCTIONS TO ANY TRANSFER AGENT
OF THE COMPANY THAT ENLARGE THE RESTRICTIONS ON TRANSFER SET FORTH IN THIS
SECTION.

 

(D)           IN ADDITION TO SUCH PURCHASER’S OTHER AVAILABLE REMEDIES, THE
COMPANY SHALL PAY TO A PURCHASER, IN CASH, AS LIQUIDATED DAMAGES AND NOT AS A
PENALTY, FOR EACH $1,000 OF SHARES OR WARRANT SHARES (BASED ON THE CLOSING PRICE
OF THE COMMON STOCK ON THE DATE SUCH SECURITIES ARE SUBMITTED TO THE COMPANY’S
TRANSFER AGENT) SUBJECT TO SECTION 4.1(C), $10 PER TRADING DAY (INCREASING TO
$20 PER TRADING DAY FIVE (5) TRADING DAYS AFTER SUCH DAMAGES HAVE BEGUN TO
ACCRUE) FOR EACH TRADING DAY AFTER SUCH THIRD TRADING DAY UNTIL SUCH CERTIFICATE
IS DELIVERED. NOTHING HEREIN SHALL LIMIT SUCH PURCHASER’S RIGHT TO PURSUE ACTUAL
DAMAGES FOR THE COMPANY’S FAILURE TO DELIVER CERTIFICATES REPRESENTING ANY
SECURITIES AS REQUIRED BY THE TRANSACTION DOCUMENTS, AND SUCH PURCHASER SHALL
HAVE THE RIGHT TO PURSUE ALL REMEDIES AVAILABLE TO IT AT LAW OR IN EQUITY
INCLUDING, WITHOUT LIMITATION, A DECREE OF SPECIFIC PERFORMANCE AND/OR
INJUNCTIVE RELIEF.

 

(E)           EACH PURCHASER, SEVERALLY AND NOT JOINTLY, AGREES THAT THE REMOVAL
OF THE RESTRICTIVE LEGEND FROM CERTIFICATES REPRESENTING SECURITIES AS SET FORTH
IN THIS SECTION 4.1 IS PREDICATED UPON THE COMPANY’S RELIANCE THAT THE PURCHASER
WILL SELL ANY SECURITIES PURSUANT TO EITHER (I) THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT, INCLUDING ANY APPLICABLE PROSPECTUS DELIVERY REQUIREMENTS,
WHICH PURCHASER HEREBY COVENANTS TO DO WHENEVER SO REQUIRED, OR (II) AN
EXEMPTION THEREFROM. PURCHASER FURTHER COVENANTS AND AGREES THAT IT IS FAMILIAR
WITH THE SEC’S MANUAL OF TELEPHONE INTERPRETATION ITEM A.65 RESPECTING THE
PURCHASER’S INABILITY TO DIRECTLY COVER ANY SHORT SALE MADE PRIOR TO THE
EFFECTIVE DATE WITH ANY REGISTRABLE SECURITIES, AND AGREES TO COMPLY WITH THE
SAME.

 

4.2           Furnishing of Information.  As long as any Purchaser owns
Securities, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the
Exchange Act.

 

4.3           Integration.  The Company shall not sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that would be integrated with the
offer or sale of the Securities in a manner that would require the registration
under the Securities Act of the sale of the Securities to the Purchasers or that
would be integrated with the offer or sale of the Securities for purposes of the
rules and regulations of any Trading Market.

 

4.4           Intentionally Omitted.

 

4.5           Securities Laws Disclosure; Publicity.  The Company shall, by 8:30
a.m. Eastern time on the Business Day following the Closing Date, file a Current
Report on Form 8-K,

 

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disclosing the closing of the transactions contemplated hereby and make such
other filings and notices in the manner and time required by the Commission. 
Each Purchaser shall consult with the Company before issuing any press releases
with respect to the transactions contemplated hereby, and a Purchaser shall not
issue any such press release or otherwise make any such public statement without
the prior consent of the Company, except if such disclosure is required by law,
in which case the Purchaser shall promptly provide the Company with prior notice
of such public statement or communication.  Notwithstanding the foregoing, the
Company shall not publicly disclose the name of any Purchaser, or include the
name of any Purchaser in any filing with the Commission or any regulatory agency
or Trading Market, without the prior written consent of such Purchaser, except
(i) as required by United States federal and state securities laws in connection
with the registration statement contemplated by the Registration Rights
Agreement and (ii) to the extent such disclosure is required by law or Trading
Market regulations, in which case the Company shall provide the Purchasers with
prior notice of such disclosure permitted under subclause (ii).

 

4.6           Shareholder Rights Plan.  No claim will be made or enforced by the
Company or any other Person that any Purchaser is an “Acquiring Person” under
any shareholders rights plan or similar plan or arrangement in effect or
hereafter adopted by the Company, or that any Purchaser could be deemed to
trigger the provisions of any such plan or arrangement, by virtue of receiving
Securities under the Transaction Documents or under any other agreement between
the Company and the Purchasers.

 

4.7           Non-Public Information.  The Company covenants and agrees that
neither it nor any other Person acting on its behalf will provide any Purchaser
or its agents or counsel with any information that the Company believes
constitutes material non-public information, unless prior thereto such Purchaser
shall have executed a written agreement regarding the confidentiality and use of
such information.  The Company understands and confirms that each Purchaser
shall be relying on the foregoing representations in effecting transactions in
securities of the Company.

 

4.8           Intentionally Omitted.

 

4.9           Intentionally Omitted.

 

4.10         Indemnification of Purchasers.   The Company will indemnify and
hold the Purchasers and their directors, officers, shareholders, partners,
employees and agents (each, a “Purchaser Party”) harmless from any and all
losses, liabilities, obligations, claims, contingencies, damages, costs and
expenses, including all judgments, amounts paid in settlements, court costs and
reasonable attorneys’ fees and costs of investigation (collectively, “Losses”)
that any such Purchaser Party may suffer or incur as a result of or relating to
any material misrepresentation, breach or inaccuracy of any of the
representations, warranties, covenants or agreements made by the Company in this
Agreement or in the other Transaction Documents; provided, however, that the
Company will not be liable in any such case to the extent such Losses arise out
of or is based upon (a) the failure of the Purchaser to comply with applicable
securities laws or the covenants and agreements contained in this Agreement
(including, without limitation Section 4.1 hereof) (unless such failure shall be
a result of the Company breaching any of its obligations to the Purchaser
hereunder) or the Registration Rights Agreement or to perform its obligations
under law or (b) the inaccuracy of any representation or warranty made by such
Purchaser in this Agreement in any material respect. The Company will

 

17

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reimburse such Purchaser for its reasonable legal and other expenses (including
the cost of any investigation, preparation and travel in connection therewith)
incurred in connection therewith.

 

4.11         Reservation of Common Stock.  The Company shall reserve and keep
available at all times, free of preemptive rights, a sufficient number of shares
of Common Stock for the purpose of enabling the Company to issue Shares pursuant
to this Agreement and Warrant Shares pursuant to the Warrants.

 

4.12         Listing of Common Stock.  The Company hereby agrees to use
commercially reasonable efforts to maintain the listing of the Common Stock on
the Trading Market on which the Shares are traded as of the date hereof, and as
soon as reasonably practicable following the Closing (but not later than the
earlier of the Effective Date and the first anniversary of the Closing Date) to
list the applicable Shares and Warrant Shares on such Trading Market. The
Company further agrees, if the Company applies to have the Common Stock traded
on any other Trading Market, it will include in such application the Shares and
the Warrant Shares, and will take such other action as is necessary or desirable
in the opinion of the Purchasers to cause the Shares and Warrant Shares to be
listed on such other Trading Market as promptly as possible.  The Company will
use reasonable efforts to comply in all respects with the Company’s reporting,
filing and other obligations under the bylaws or rules of the Trading Market.

 

4.13         Future Financings.  From the date hereof until 15 Trading Days
after the Effective Date, other than as contemplated by this Agreement, neither
the Company nor any Subsidiary shall issue or sell any Common Stock or Common
Stock Equivalents.  Notwithstanding anything herein to the contrary, the 15
Trading Day period set forth in this Section 4.13 shall be extended for the
number of Trading Days during such period in which (y) trading in the Common
Stock is suspended by any Trading Market, or (z) following the Effective Date,
the Registration Statement is not effective or the prospectus included in the
Registration Statement may not be used by the Purchasers for the resale of the
Shares and the Warrant Shares.  Notwithstanding anything to the contrary herein,
this Section 4.13 shall not apply to the following (a) the granting of options
or stock to employees, officers, directors and consultants of the Company
pursuant to a grant approved by a majority of the Board of Directors or pursuant
to any stock option plan duly adopted by a majority of the non-employee members
of the Board of Directors of the Company or a majority of the members of a
committee of non-employee directors established for such purpose, or (b) the
exercise of any security issued by the Company in connection with the offer and
sale of the Company’s securities pursuant to this Agreement, or (c) the exercise
of or conversion of any convertible securities, notes, options or warrants
issued and outstanding on the date hereof, provided such securities have not
been amended since the date hereof (unless, in the case of notes, the sole
purpose of such amendment is to extend the maturity date) or (d) commercial
transactions, collaborations, acquisitions or other strategic transactions or
investments, the primary purpose of which is not to raise capital.

 

4.14         Equal Treatment of Purchasers.  No consideration shall be offered
or paid to any person to amend or consent to a waiver or modification of any
provision of any of the Transaction Documents unless the same consideration is
also offered to all of the parties to the Transaction Documents.

 

18

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ARTICLE V.
MISCELLANEOUS

 

5.1           Fees and Expenses.  Each party shall pay the fees and expenses of
its advisers, counsel, accountants and other experts, if any, and all other
expenses incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement, except that the Company
shall pay a document preparation fee of $25,000 to FW, counsel for the placement
agent, at closing.  The Company shall pay all stamp and other taxes and duties
levied in connection with the sale of the Securities.

 

5.2           Entire Agreement.  The Transaction Documents, together with the
exhibits and schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.

 

5.3           Notices.  Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of (a) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified on the signature pages attached hereto prior to 6:30
p.m. (New York City time) on a Trading Day and electronic confirmation of
successful transmission is received, (b) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number on the signature pages attached hereto on a day that is not a
Trading Day or later than 6:30 p.m. (New York City time) on any Trading Day, (c)
the Trading Day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service, or (d) upon actual receipt by the party to
whom such notice is required to be given.  The address for such notices and
communications shall be as set forth on the signature pages attached hereto.

 

5.4           Amendments; Waivers.  No provision of this Agreement may be waived
or amended except in a written instrument signed, in the case of an amendment,
by the Company and by each Purchaser with respect to such Purchaser or, in the
case of a waiver, by the party against whom enforcement of any such waiver is
sought.  No waiver of any default with respect to any provision, condition or
requirement of this Agreement shall be deemed to be a continuing waiver in the
future or a waiver of any subsequent default or a waiver of any other provision,
condition or requirement hereof, nor shall any delay or omission of either party
to exercise any right hereunder in any manner impair the exercise of any such
right.

 

5.5           Construction.  The headings herein are for convenience only, do
not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.  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.

 

5.6           Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns. 
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of each Purchaser; provided, however, no
consent shall be required in connection with a merger, consolidation or sale of
substantially all of the Company’s assets.  Any Purchaser may assign any or all
of its rights under this Agreement to any Person, provided such transferee
agrees in writing

 

19

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to be bound, with respect to the transferred Securities, by the provisions
hereof that apply to the “Purchasers”.  Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
by this Agreement.

 

5.7           No Third-Party Beneficiaries.  This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.10.

 

5.8           Governing Law.  All questions concerning the construction,
validity, enforcement and interpretation of the Transaction Documents shall be
governed by and construed and enforced in accordance with the internal laws of
the State of New York, without regard to the principles of conflicts of law
thereof.  Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Agreement and any other Transaction Documents (whether brought against a
party hereto or its respective affiliates, directors, officers, shareholders,
employees or agents) shall be commenced exclusively in the state and federal
courts sitting in the City of New York.  Each party hereto hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in
the City of New York, New York for the adjudication of any dispute hereunder or
in connection herewith or with any transaction contemplated hereby or discussed
herein (including with respect to the enforcement of any of the Transaction
Documents), 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
improper.  Each party hereto hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by delivering a copy thereof via overnight delivery (with evidence of
delivery) to such party at the address in effect for 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.
Each party hereto (including its affiliates, agents, officers, directors and
employees) hereby irrevocably waives, to the fullest extent permitted by
applicable law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Agreement or the transactions contemplated
hereby. If either party shall commence an action or proceeding to enforce any
provisions of a Transaction Document, then the prevailing party in such action
or proceeding shall be reimbursed by the other party for its attorneys fees and
other costs and expenses incurred with the investigation, preparation and
prosecution of such action or proceeding.

 

5.9           Survival.  The representations, warranties, agreements and
covenants contained herein shall survive the Closing and delivery of the Shares
and exercise of the Warrants.

 

5.10         Execution.  This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart.  In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding

 

20

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obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.

 

5.11         Severability.  If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

 

5.12         Replacement of Securities.  If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested.  The applicants for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement Securities.

 

5.13         Remedies.  In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers and the Company will be entitled to specific performance under the
Transaction Documents.  The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in
any action for specific performance of any such obligation the defense that a
remedy at law would be adequate.

 

5.14         Intentionally Omitted.

 

5.15         Independent Nature of Purchasers’ Obligations and Rights.  The
obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document.  Nothing contained herein or in any
Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Document.  Each
Purchaser shall be entitled to independently protect and enforce its rights,
including without limitation, the rights arising out of this Agreement or out of
the other Transaction Documents, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such
purpose.  Each Purchaser has been represented by its own separate legal counsel
in their review and negotiation of the Transaction Documents.  For reasons of
administrative convenience only, Purchasers and their respective counsel have
chosen to communicate with the Company through FW.  FW does not represent any of
the Purchasers in this transaction but only the placement agent.  The Company
has elected to provide all Purchasers with the same terms and Transaction
Documents for the convenience of the Company and not because it was required or
requested to do so by the Purchasers.

 

(Signature Page Follows)

 

21

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IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

 

THE IMMUNE RESPONSE CORPORATION

Address for Notice

 

 

 

 

 

Attn:

By:

 /s/ John M. Bonfiglio

 

Tel:

 

Name: John M. Bonfiglio

Fax:

 

Title: Chief Executive Officer

 

 

With copy to (which shall not constitute notice):

 

Pillsbury Winthrop LLP

50 Fremont Street

San Francisco, CA 94105

Attn: Thomas E. Sparks, Jr., Esq.

Tel: (415) 983-1000

Fax: (415) 983-1200

[SIGNATURE PAGE CONTINUES]

 

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[PURCHASER SIGNATURE PAGES TO IMNR SECURITIES PURCHASE AGREEMENT]

 

Alpha Capital Aktiengesellschaft:

 

Address for Notice

 

 

 

 

 

 

By:

 /s/  Thomas Hackl

 

 

 

 

Name: Thomas Hackl

 

Attention: Arie Rabinowitz

 

Title: Director

 

Fax:

 

 

 

Subscription Amount:  $450,000

 

 

 

 

 

With a copy to:

 

 

 

23

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[PURCHASER SIGNATURE PAGES TO IMNR SECURITIES PURCHASE AGREEMENT]

 

BRISTOL INVESTMENT FUND, LTD.

 

Address for Notice

 

 

 

 

 

 

By:

 /s/  Paul Kessler

 

 

 

 

Name: Paul Kessler

 

Attention: Amy Wang, Esq.

 

Title: Director

 

Fax:

 

 

 

Subscription Amount:  $800,000

 

 

 

 

 

With a copy to:

 

 

 

24

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[PURCHASER SIGNATURE PAGES TO IMNR SECURITIES PURCHASE AGREEMENT]

 

Name of Investor Entity:

Address for Notice

Cohanzick Partners, L.P.

 

 

 

 

 

By:

 /s/  David K. Sherman

 

Attention: David K. Sherman

 

Name: David K. Sherman

Fax:

 

Title: Authorized Agent

 

 

 

Subscription Amount:  61,881 shares for $124,999.62

 

 

 

With a copy to:

 

 

25

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[PURCHASER SIGNATURE PAGES TO IMNR SECURITIES PURCHASE AGREEMENT]

 

Name of Investor Entity:

Address for Notice

Cranshire Capital L.P.

 

 

 

 

 

By:

 /s/  Keith Goodman

 

Attention: Mitchell P. Kupin

 

Name: Keith Goodman

Fax:

 

Title: CFO -  Downsview Capital, Inc.

 

 

THE GENERAL PARTNER

 

 

 

Subscription Amount:  $750,000.00

 

 

 

With a copy to:

 

 

26

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[PURCHASER SIGNATURE PAGES TO IMNR SECURITIES PURCHASE AGREEMENT]

 

CRESCENT INTERNATIONAL LTD.

Address for Notice:

 

 

 

 

 

Attention: Mel Craw/ Maxi Brezzi

By:

 /s/  Mel Craw Maxi Brezzi

 

Tel:

 

Name: Mel Craw Maxi Brezzi

 

 

Title: Authorized Signatories

Fax:

 

 

Subscription Amount:  $600,000

 

 

 

With a copy to:

 

 

27

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[PURCHASER SIGNATURE PAGES TO IMNR SECURITIES PURCHASE AGREEMENT]

 

Name of Investor Entity:

Address for Notice

 

Colbart Birnet L.P.

 

 

 

 

 

 

 

 

By:

 /s/  Ezra Birnbaum

 

Attention:

 

 

Name: Ezra Birnbaum

Fax:

 

 

Title: Member

 

 

 

 

 

Subscription Amount:  $100,000.00

 

 

 

 

 

With a copy to:

 

 

 

28

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[PURCHASER SIGNATURE PAGES TO IMNR SECURITIES PURCHASE AGREEMENT]

 

 

Name of Investor Entity:

Address for Notice

 

Ellis International.

 

 

 

 

 

 

 

 

By:

 /s/  John Cabot

 

Attention: Matt Drillman

 

 

Name: John Cabot

Fax:

 

 

Title: Officer

 

 

 

 

 

Subscription Amount:  $250,000

 

 

 

 

 

With a copy to:

 

 

 

29

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[PURCHASER SIGNATURE PAGES TO IMNR SECURITIES PURCHASE AGREEMENT]

 

Name of Investor Entity:

Address for Notice

 

ENABLE GROWTH PARTNERS LP

 

 

 

 

 

 

 

 

By:

 /s/ Mitchell Levine

 

Attention: Mitch Levine

 

 

Name: Mitchell Levine

Fax:

 

 

Title: Managing Partner

 

 

 

 

 

Subscription Amount:  $50,000

 

 

 

 

 

With a copy to:

 

 

 

30

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[PURCHASER SIGNATURE PAGES TO IMNR SECURITIES PURCHASE AGREEMENT]

 

Name of Investor Entity:

Address for Notice

 

Gabriel Capital, L.P.

 

 

 

 

 

 

 

 

By:

 /s/  David K. Sherman

 

Attention: David K. Sherman

 

 

Name: David K. Sherman

Fax:

 

 

Title: Authorized Agent

 

 

 

 

 

Subscription Amount:  $61,881 shares for $124,999.62

 

 

 

31

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[PURCHASER SIGNATURE PAGES TO IMNR SECURITIES PURCHASE AGREEMENT]

 

Gamma Opportunity Capital Partners, LP:

Address for Notice:

 

 

 

 

 

 

 

By:

 /s/  Christopher Rossman

 

Attention: Christopher Rossman

 

 

Name: Christopher Rossman

Fax:

 

 

Title: Managing Director

 

 

 

 

 

Subscription Amount:  $150,000

 

 

 

 

 

With a copy to:

 

 

 

32

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[PURCHASER SIGNATURE PAGES TO IMNR SECURITIES PURCHASE AGREEMENT]

 

GRYPHON MASTER FUND, LP

Address for Notice:

 

 

 

 

 

 

 

By:

 /s/  Michael Schulten

 

Attention: Ryan Wolters

 

 

Name: Michael Schulten

Fax:

 

 

Title: Authorized Agent

 

 

 

 

 

Subscription Amount:  $750,000

 

 

 

 

 

With a copy to:

 

 

 

33

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[PURCHASER SIGNATURE PAGES TO IMNR SECURITIES PURCHASE AGREEMENT]

 

LANGLEY PARTNERS, L.P.:

Address for Notice:

 

 

 

 

 

 

 

By:

 /s/  Jeffrey Thorp

 

Attention: Jeffrey Thorp

 

 

Name: Jeffrey Thorp

Fax:

 

 

Title: Managing Member of Langley Capital, LLC,
its General Partner

 

 

 

 

 

Subscription Amount:  $950,000

 

 

 

 

 

With a copy to:

 

 

 

34

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[PURCHASER SIGNATURE PAGES TO IMNR SECURITIES PURCHASE AGREEMENT]

 

Name of Investor Entity:

Address for Notice

 

Magellan International Ltd.

 

 

 

 

 

 

 

 

By:

 /s/  Anna Marie Lowe

 

Attention: Anna Marie Lowe

 

 

Name: Anna Marie Lowe

Fax:

 

 

Title:  Director

 

 

 

 

 

Subscription Amount:  $700,000.00

 

 

 

 

 

With a copy to:

 

 

 

35

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[PURCHASER SIGNATURE PAGES TO IMNR SECURITIES PURCHASE AGREEMENT]

 

Name of Investor Entity:

Address for Notice

OMICRON MASTER TRUST

 

By: Omicron Capital L.P., as advisor

 

By: Omicron Capital Inc., its general partner

 

 

 

 

 

 

Fax:

By:

 /s/  Olivier Morali

 

Attention: Brian Daly

 

Name: Olivier Morali

 

 

Title:  President

 

 

 

Subscription Amount:  $1,000,000.00

 

 

 

With a copy to:

 

 

36

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[PURCHASER SIGNATURE PAGES TO IMNR SECURITIES PURCHASE AGREEMENT]

 

Name of Investor Entity:

Address for Notice

 

PLATINUM PARTNERS VALUE

 

 

ARBITRAGE FUND LP

 

 

 

 

 

 

 

 

By:

 /s/  Mark Nordlicht

 

Attention:

 

 

Name: Mark Nordlicht

Fax:

 

 

Title:  Managing Member of GP

 

 

 

 

 

Subscription Amount:  $1,000,000

 

 

 

 

 

With a copy to:

 

 

 

37

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[PURCHASER SIGNATURE PAGES TO IMNR SECURITIES PURCHASE AGREEMENT]

 

PORTSIDE GROWTH AND OPPORTUNITY FUND

 

 

 

By:

/s/ Jeffrey Solomon

 

 

 

Name: Jeffrey Solomon

 

 

Title: Authorized Signatory

 

 

 

Subscription Amount:  $500,000

 

 

 

Address for Notice:

 

 

38

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[PURCHASER SIGNATURE PAGES TO IMNR SECURITIES PURCHASE AGREEMENT]

 

Name of Investor Entity:

Address for Notice

 

SF Capital Partners Ltd

 

 

 

 

 

 

 

 

By:

 /s/  Brian H. Davidson

 

Attention:

 

 

Name: Brian H. Davidson

Fax:

 

 

Title:

 

 

 

 

 

Subscription Amount:  $500,000.00

 

 

 

 

 

With a copy to:

 

 

 

39

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[PURCHASER SIGNATURE PAGES TO IMNR SECURITIES PURCHASE AGREEMENT]

 

 

Address for Notice

 

 

 

 

By:

 /s/  Murray Todd

 

Attention:

Silver Oak Investments, Inc.

Fax:

Name: Murray Todd

 

Title:  Board

 

 

 

Subscription Amount:  $200,000.00

 

 

 

With a copy to:

 

 

40

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[PURCHASER SIGNATURE PAGES TO IMNR SECURITIES PURCHASE AGREEMENT]

 

SMITHFIELD FIDUCIARY LLC

 

Address for Notice

 

 

 

 

 

 

By:

 /s/ Adam J. Chill

 

 

Attention: Ari J. Storch/ Adam J. Chill

 Name: Adam J. Chill

 

Fax:

 Title: Authorized Signatory

 

Tel:

 

 

 

Subscription Amount:  $250,000

 

 

 

41

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[PURCHASER SIGNATURE PAGES TO IMNR SECURITIES PURCHASE AGREEMENT]

 

Name of Investor Entity:

Address for Notice

 

Solomon Strategic Holdings, Inc.

 

 

 

 

 

 

 

 

By:

 /s/  A P MacKellar

 

Attention: A P MacKellar

 

 

Name: A P MacKellar

Fax:

 

 

Title: Director

 

 

 

 

 

Subscription Amount:  $250,000

 

 

 

42

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[PURCHASER SIGNATURE PAGES TO IMNR SECURITIES PURCHASE AGREEMENT]

 

Name of Investor Entity:

Address for Notice

 

Spectra Capital Management

 

 

 

 

 

 

 

 

By:

 /s/  Greg Porges

 

Attention: Ian M. Estepan

 

 

Name: Greg Porges

Fax:

 

 

Title:  Sole Member

 

 

 

 

 

Subscription Amount:  $500,000

 

 

 

 

 

With a copy to:

 

 

 

43

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[PURCHASER SIGNATURE PAGES TO IMNR SECURITIES PURCHASE AGREEMENT]

 

Name of Investor Entity:

Address for Notice

 

Stonestreet, L.P.

 

 

 

 

 

 

 

 

By:

 /s/  M. Finklestein

 

Attention:

 

 

Name: M. Finklestein

Fax:

 

 

Title: President

 

 

 

 

 

Subscription Amount:  $500,000

 

 

 

 

 

With a copy to:

 

 

 

44

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[PURCHASER SIGNATURE PAGES TO IMNR SECURITIES PURCHASE AGREEMENT]

 

Name of Investor Entity:

Address for Notice

THE TAIL WIND FUND LIMITED

 

By: Tail Wind Advisory & Management Ltd.

 

 

 

 

 

By:

 /s/  David Crook

 

 

 

Name: David Crook

 

 

Title: Chief Executive Officer

 

 

 

Subscription Amount:  $1,250,000

 

 

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[PURCHASER SIGNATURE PAGES TO IMNR SECURITIES PURCHASE AGREEMENT]

 

Name of Investor Entity:

Address for Notice

 

TCMP3

 

 

 

 

 

 

 

 

By:

 /s/  Steven Slawson

 

Attention:

 

 

Name: Steven Slawson

Fax:

 

 

Title: Principal

 

 

 

 

 

Subscription Amount:  $250,000.00

 

 

 

 

 

With a copy to:

 

 

 

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EXHIBIT C

 

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.  THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES

 

Warrant No. «Warrant No»

 

 

COMMON STOCK PURCHASE WARRANT

 

 

To Purchase «Shares» Shares of Common Stock of

 

The Immune Response Corporation

 

THIS COMMON STOCK PURCHASE WARRANT CERTIFIES that, for value received,
«Purchaser» (the “Holder”), is entitled, upon the terms and subject to the
limitations on exercise and the conditions hereinafter set forth, at any time on
or after October 10, 2003 (the “Initial Exercise Date”) and on or prior to the
close of business on October 10, 2008 (the “Termination Date”) but not
thereafter, to subscribe for and purchase from The Immune Response Corporation,
a corporation incorporated in the State of Delaware (the “Company”), up to
«Shares» shares (the “Warrant Shares”) of Common Stock, of the Company (the
“Common Stock”).  The purchase price of one share of Common Stock (the “Exercise
Price”) under this Warrant shall be $3.32, subject to adjustment hereunder.  The
Exercise Price and the number of Warrant Shares for which the Warrant is
exercisable shall be subject to adjustment as provided herein. Capitalized terms
used and not otherwise defined herein shall have the meanings set forth in that
certain Securities Purchase Agreement (the “Purchase Agreement”), dated October
10, 2003, between the Company and the purchasers signatory thereto.

 

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1.     Title to Warrant.  Prior to the Termination Date and subject to
compliance with applicable laws and Section 7 of this Warrant, this Warrant and
all rights hereunder are transferable, in whole or in part.

 

2.     Authorization of Shares.  The Company covenants that all Warrant Shares
which may be issued upon the exercise of the purchase rights represented by this
Warrant will, upon exercise of the purchase rights represented by this Warrant
in accordance with the terms and conditions hereof, be duly authorized, validly
issued, fully paid and nonassessable and free from all taxes, liens and charges
in respect of the issue thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issue).

 

3.     Exercise of Warrant.

 

(a)  Except as provided in Section 3(c) herein, exercise of the purchase rights
represented by this Warrant may be made at any time or times on or after the
Initial Exercise Date and on or before the Termination Date by the surrender of
this Warrant and the Notice of Exercise Form annexed hereto duly executed, at
the office of the Company (or such other office or agency of the Company as it
may designate by notice in writing to the registered Holder at the address of
such Holder appearing on the books of the Company) and upon payment of the
Exercise Price of the shares thereby purchased by wire transfer or cashier’s
check of immediately available funds drawn on a United States bank or by means
of a cashless exercise pursuant to Section 3(d), the Holder shall be entitled to
receive a certificate for the number of Warrant Shares so purchased. 
Certificates for shares purchased hereunder shall be delivered to the Holder
within five (5) Trading Days after the date on which this Warrant shall have
been exercised as aforesaid. This Warrant shall be deemed to have been exercised
and such certificate or certificates shall be deemed to have been issued, and
the Holder or any other person so designated to be named therein shall be deemed
to have become a holder of record of such shares for all purposes, as of the
date the Warrant has been exercised by payment to the Company of the Exercise
Price and all taxes required to be paid by the Holder, if any, pursuant to
Section 5 prior to the issuance of such shares, have been paid.  If the Company
fails to deliver to the Holder a certificate or certificates representing the
Warrant Shares pursuant to this Section 3(a) by the close of business on the
fifth Trading Day after the date of exercise, then the Holder will have the
right to rescind such exercise.  In addition to any other rights available to
the Holder, if the Company fails to deliver to the Holder a certificate or
certificates representing the Warrant Shares pursuant to an exercise by the
close of business on the fifth Trading Day after the date of exercise, and if
after such fifth Trading Day the Holder is required by its broker to purchase
(in an open market transaction or otherwise) shares of Common Stock to deliver
in satisfaction of a sale by the Holder of the Warrant Shares which the Holder
anticipated receiving upon such exercise (a “Buy-In”), then the Company shall
(1) pay in cash to the Holder the amount by which (x) the Holder’s total
purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the
number of Warrant Shares that the Company was required to deliver to the Holder
in connection with the exercise at issue times (B) the price at which the sell
order giving rise to such purchase obligation was executed, and (2) at the
option of the Holder, either reinstate the portion of the Warrant and equivalent
number of Warrant Shares for which such exercise was not honored or deliver to
the Holder the number of shares of Common Stock that would have been issued had
the

 

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Company timely complied with its exercise and delivery obligations hereunder. 
For example, if the Holder purchases Common Stock having a total purchase price
of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of
Common Stock with an aggregate sale price giving rise to such purchase
obligation of $10,000, under clause (1) of the immediately preceding sentence
the Company shall be required to pay the Holder $1,000. The Holder shall provide
the Company written notice indicating the amounts payable to the Holder in
respect of the Buy-In, together with applicable confirmations and other evidence
reasonably requested by the Company.  Nothing herein shall limit a Holder’s
right to pursue any other remedies available to it hereunder, at law or in
equity including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company’s failure to timely deliver
certificates representing shares of Common Stock upon exercise of the Warrant as
required pursuant to the terms hereof.

 

(b)   If this Warrant shall have been exercised in part, the Company shall, at
the time of delivery of the certificate or certificates representing Warrant
Shares, deliver to Holder a new Warrant evidencing the rights of Holder to
purchase the unpurchased Warrant Shares called for by this Warrant, which new
Warrant shall in all other respects be identical with this Warrant.

 

(c)   Notwithstanding anything herein to the contrary, in no event shall the
Holder be permitted to exercise this Warrant for Warrant Shares to the extent
that (i) the number of shares of Common Stock beneficially owned by such Holder,
together with any affiliate thereof (other than Warrant Shares issuable upon
exercise of this Warrant) plus (ii) the number of Warrant Shares issuable upon
exercise of this Warrant, would be equal to or exceed 4.999% of the number of
shares of Common Stock then issued and outstanding, including shares issuable
upon exercise of this Warrant held by such Holder after application of this
Section 3(c).  As used herein, beneficial ownership shall be determined in
accordance with Section 13(d) of the Exchange Act and the rules promulgated
thereunder.  To the extent that the limitation contained in this Section 3(c)
applies, the determination of whether this Warrant is exercisable (in relation
to other securities owned by the Holder) and of which a portion of this Warrant
is exercisable shall be in the sole discretion of such Holder, and the
submission of a Notice of Exercise shall be deemed to be such Holder’s
determination of whether this Warrant is exercisable (in relation to other
securities owned by such Holder) and of which portion of this Warrant is
exercisable, in each case subject to such aggregate percentage limitation, and
the Company shall have no obligation to verify or confirm the accuracy of such
determination.  Nothing contained herein shall be deemed to restrict the right
of a Holder to exercise this Warrant into Warrant Shares at such time as such
exercise will not violate the provisions of this Section 3(c).  The provisions
of this Section 3(c) may be waived by the Holder upon, at the election of the
Holder, not less than 61 days’ prior notice to the Company, and the provisions
of this Section 3(c) shall continue to apply until such 61st day (or such later
date, as determined by the Holder, as may be specified in such notice of
waiver).  No exercise of this Warrant in violation of this Section 3(c) but
otherwise in accordance with this Warrant shall affect the status of the Warrant
Shares as validly issued, fully-paid and nonassessable.

 

(d)   If, but only if, at any time after one year from the date of issuance of
this Warrant there is no effective Registration Statement registering the resale
of the Warrant Shares by the Holder, this Warrant may also be exercised at such
time by means of a “cashless exercise” in which the Holder shall be entitled to
receive a certificate for the

 

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number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)]
by (A), where:

 

(A) = the VWAP on the Trading Day preceding the date of such election;

 

(B) =  the Exercise Price of the Warrants, as adjusted; and

 

(X) = the number of Warrant Shares issuable upon exercise of the Warrants in
accordance with the terms of this Warrant.

 

As used herein, “VWAP” means, for any date, the price determined by the first of
the following clauses that applies: (a) if the Common Stock is then listed or
quoted on a Trading Market, the daily volume weighted average price of the
Common Stock for such date (or the nearest preceding date) on the Trading Market
on which the Common Stock is then listed or quoted as reported by Bloomberg
Financial L.P. (based on a Trading Day from 9:30 a.m. Eastern Time to 4:02 p.m.
Eastern Time); (b) if the Common Stock is not then listed or quoted on a Trading
Market and if prices for the Common Stock are then quoted on the OTC Bulletin
Board, the volume weighted average price of the Common Stock for such date (or
the nearest preceding date) on the OTC Bulletin Board; (c)  if the Common Stock
is not then listed or quoted on the OTC Bulletin Board and if prices for the
Common Stock are then reported in the “Pink Sheets” published by the National
Quotation Bureau Incorporated (or a similar organization or agency succeeding to
its functions of reporting prices), the most recent bid price per share of the
Common Stock so reported; or (d) in all other cases, the fair market value of a
share of Common Stock as determined by an independent appraiser selected in good
faith by the holders of a majority of the Shares then outstanding and reasonably
acceptable to the Company.

 

4.     No Fractional Shares or Scrip.  No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant.  As to any fraction of a share which Holder would otherwise be entitled
to purchase upon such exercise, the Company shall pay a cash adjustment in
respect of such final fraction in an amount equal to such fraction multiplied by
the Exercise Price.

 

5.     Charges, Taxes and Expenses.  Issuance of certificates for Warrant Shares
shall be made without charge to the Holder for any issue or transfer tax or
other incidental expense in respect of the issuance of such certificate, all of
which taxes and expenses shall be paid by the Company, and such certificates
shall be issued in the name of the Holder or in such name or names as may be
directed by the Holder; provided, however, that in the event certificates for
Warrant Shares are to be issued in a name other than the name of the Holder,
this Warrant when surrendered for exercise shall be accompanied by the
Assignment Form attached hereto duly executed by the Holder; and the Company may
require, as a condition thereto, the payment of a sum sufficient to reimburse it
for any transfer tax incidental thereto.

 

6.     Closing of Books.  The Company will not close its stockholder books or
records in any manner which prevents the timely exercise of this Warrant,
pursuant to the terms hereof.

 

7.     Transfer, Division and Combination.

 

(a)   Subject to compliance with any applicable securities laws and the
conditions set forth in Sections 1 and 7(e) hereof and to the provisions of
Section 4.1 of the

 

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Purchase Agreement, this Warrant and all rights hereunder are transferable, in
whole or in part, upon surrender of this Warrant, so long as the amount of
Warrant Shares transferred is equal to at least 25,000 shares (on an as
exercised basis) at the principal office of the Company, together with a written
assignment of this Warrant substantially in the form attached hereto duly
executed by the Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer.  Upon such surrender
and, if required, such payment, the Company shall execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees and in the
denomination or denominations specified in such instrument of assignment, and
shall issue to the assignor a new Warrant evidencing the portion of this Warrant
not so assigned, and this Warrant shall promptly be cancelled.  A Warrant, if
properly assigned, may be exercised by a new holder for the purchase of Warrant
Shares without having a new Warrant issued.

 

(b)   This Warrant may be divided or combined with other Warrants upon
presentation hereof at the aforesaid office of the Company, together with a
written notice specifying the names and denominations in which new Warrants are
to be issued, signed by the Holder or its agent or attorney.  Subject to
compliance with Section 7(a), as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.

 

(c)   The Company shall prepare, issue and deliver at its own expense (other
than transfer taxes) the new Warrant or Warrants under this Section 7.

 

(d)   The Company agrees to maintain, at its aforesaid office, books for the
registration and the registration of transfer of the Warrants.

 

(e)   If, at the time of the surrender of this Warrant in connection with any
transfer of this Warrant, the transfer of this Warrant shall not be registered
pursuant to an effective registration statement under the Securities Act and
under applicable state securities or blue sky laws, the Company may require, as
a condition of allowing such transfer (i) that the Holder or transferee of this
Warrant, as the case may be, furnish to the Company a written opinion of counsel
(which opinion shall be in form, substance and scope customary for opinions of
counsel in comparable transactions) to the effect that such transfer may be made
without registration under the Securities Act and under applicable state
securities or blue sky laws, (ii) that the holder or transferee execute and
deliver to the Company an investment letter in form and substance acceptable to
the Company and (iii) that the transferee be an “accredited investor” as defined
in Rule 501(a) promulgated under the Securities Act.

 

8.     No Rights as Shareholder until Exercise.  This Warrant does not entitle
the Holder to any voting rights or other rights as a shareholder of the Company
prior to the exercise hereof.  Upon the surrender of this Warrant and the
payment of the aggregate Exercise Price (or by means of a cashless exercise),
the Warrant Shares so purchased shall be and be deemed to be issued to such
Holder as the record owner of such shares as of the close of business on the
later of the date of such surrender or payment.

 

9.     Loss, Theft, Destruction or Mutilation of Warrant.  The Company covenants
that upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant or any stock
certificate relating to the Warrant Shares, and in case of

 

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loss, theft or destruction, of indemnity or security reasonably satisfactory to
it (which, in the case of the Warrant, shall not include the posting of any
bond), and upon surrender and cancellation of such Warrant or stock certificate,
if mutilated, the Company will make and deliver a new Warrant or stock
certificate of like tenor and dated as of such cancellation, in lieu of such
Warrant or stock certificate.

 

10.   Saturdays, Sundays, Holidays, etc.  If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein
shall be a Saturday, Sunday or a legal holiday, then such action may be taken or
such right may be exercised on the next succeeding day not a Saturday, Sunday or
legal holiday.

 

11.   Adjustments of Exercise Price and Number of Warrant Shares.  The number
and kind of securities purchasable upon the exercise of this Warrant and the
Exercise Price shall be subject to adjustment from time to time upon the
happening of any of the following.  In case the Company shall (i) pay a dividend
in shares of Common Stock or make a distribution in shares of Common Stock to
holders of its outstanding Common Stock, (ii) subdivide its outstanding shares
of Common Stock into a greater number of shares, (iii) combine its outstanding
shares of Common Stock into a smaller number of shares of Common Stock, or (iv)
issue any shares of its capital stock in a reclassification of the Common Stock,
then the number of Warrant Shares purchasable upon exercise of this Warrant
immediately prior thereto shall be adjusted so that the Holder shall be entitled
to receive the kind and number of Warrant Shares or other securities of the
Company which it would have owned or have been entitled to receive had such
Warrant been exercised in advance thereof.  Upon each such adjustment of the
kind and number of Warrant Shares or other securities of the Company which are
purchasable hereunder, the Holder shall thereafter be entitled to purchase the
number of Warrant Shares or other securities resulting from such adjustment at
an Exercise Price per Warrant Share or other security obtained by multiplying
the Exercise Price in effect immediately prior to such adjustment by the number
of Warrant Shares purchasable pursuant hereto immediately prior to such
adjustment and dividing by the number of Warrant Shares or other securities of
the Company resulting from such adjustment.  An adjustment made pursuant to this
paragraph shall become effective immediately after the effective date of such
event retroactive to the record date, if any, for such event.

 

12.   Reorganization, Reclassification, Merger, Consolidation or Disposition of
Assets.  In case the Company shall reorganize its capital, reclassify its
capital stock, consolidate or merge with or into another corporation (where the
Company is not the surviving corporation or where there is a change in or
distribution with respect to the Common Stock of the Company), or sell, transfer
or otherwise dispose of all or substantially all its property, assets or
business to another corporation (including by way of a spin-off) and, pursuant
to the terms of such reorganization, reclassification, merger, consolidation or
disposition of assets, shares of common stock of the successor or acquiring
corporation, or any cash, shares of stock or other securities or property of any
nature whatsoever (including warrants or other subscription or purchase rights)
in addition to or in lieu of common stock of the successor or acquiring
corporation (“Other Property”), are to be received by or distributed to the
holders of Common Stock of the Company, then the Holder shall have the right
thereafter to receive upon exercise of this Warrant, the number of shares of
Common Stock of the successor or acquiring corporation or of the Company, if it
is the surviving corporation, and Other Property receivable upon or as a result
of such reorganization, reclassification, merger, consolidation or disposition
of assets by a Holder of the number of shares of Common Stock for which this
Warrant is exercisable immediately prior to such event.  In case of any such
reorganization,

 

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reclassification, merger, consolidation or disposition of assets, the successor
or acquiring corporation (if other than the Company) shall expressly assume the
due and punctual observance and performance of each and every covenant and
condition of this Warrant to be performed and observed by the Company and all
the obligations and liabilities hereunder, subject to such modifications as may
be deemed appropriate (as determined in good faith by resolution of the Board of
Directors of the Company) in order to provide for adjustments of Warrant Shares
for which this Warrant is exercisable which shall be as nearly equivalent as
practicable to the adjustments provided for in this Section 12.  For purposes of
this Section 12, “common stock of the successor or acquiring corporation” shall
include stock of such corporation of any class which is not preferred as to
dividends or assets over any other class of stock of such corporation and which
is not subject to redemption and shall also include any evidences of
indebtedness, shares of stock or other securities which are convertible into or
exchangeable for any such stock, either immediately or upon the arrival of a
specified date or the happening of a specified event and any warrants or other
rights to subscribe for or purchase any such stock.  The foregoing provisions of
this Section 12 shall similarly apply to successive reorganizations,
reclassifications, mergers, consolidations or disposition of assets.

 

13.   Voluntary Adjustment by the Company.  The Company may at any time during
the term of this Warrant reduce the then current Exercise Price to any amount
and for any period of time deemed appropriate by the Board of Directors of the
Company.

 

14.   Notice of Adjustment.  Whenever the number of Warrant Shares or number or
kind of securities or other property purchasable upon the exercise of this
Warrant or the Exercise Price is adjusted, as herein provided, the Company shall
give notice thereof to the Holder, which notice shall state the number of
Warrant Shares (and other securities or property) purchasable upon the exercise
of this Warrant and the Exercise Price of such Warrant Shares (and other
securities or property) after such adjustment, setting forth a brief statement
of the facts requiring such adjustment and setting forth the computation by
which such adjustment was made.

 

15.   Notice of Corporate Action.  If at any time:

 

(a)           the Company shall take a record of the holders of its Common Stock
for the purpose of entitling them to receive a dividend or other distribution,
or any right to subscribe for or purchase any evidences of its indebtedness, any
shares of stock of any class or any other securities or property, or to receive
any other right, or

 

(b)           there shall be any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company or any
consolidation or merger of the Company with, or any sale, transfer or other
disposition of all or substantially all the property, assets or business of the
Company to, another corporation or,

 

(c)           there shall be a voluntary or involuntary dissolution, liquidation
or winding up of the Company;

 

then, in any one or more of such cases, the Company shall give to Holder (i) at
least 20 days’ prior written notice of the date or expected date on which a
record date shall be selected for such dividend, distribution or right or for
determining rights to vote in respect of any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
liquidation or winding up, and (ii) in the case of any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up, at least 20 days’ prior written notice
of the date

 

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when the same shall or is expected to take place.  Such notice in accordance
with the foregoing clause also shall specify (A) the date on which any such
record is to be taken for the purpose of such dividend, distribution or right,
the date on which the holders of Common Stock shall be entitled to any such
dividend, distribution or right, and the amount and character thereof, and (B)
the date on which any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up is expected to take place and the time, if any such time is to be fixed, as
of which the holders of Common Stock shall be entitled to exchange their Warrant
Shares for securities or other property deliverable upon such disposition,
dissolution, liquidation or winding up.  Each such written notice shall be
sufficiently given if addressed to Holder at the last address of Holder
appearing on the books of the Company and delivered in accordance with Section
18(d).  Failure to provide such notice shall not affect the validity of any
action taken in connection with such dividend, distribution, subscription or
purchase rights, or proposed reorganization, reclassification, recapitalization,
merger, consolidation, sale, transfer, disposition, conveyance, dissolution,
liquidation or winding up.

 

16.   Authorized Shares.  The Company covenants that during the period the
Warrant is outstanding, it will reserve from its authorized and unissued Common
Stock a sufficient number of shares to provide for the issuance of the Warrant
Shares upon the exercise of any purchase rights under this Warrant.  The Company
further covenants that its issuance of this Warrant shall constitute full
authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for the Warrant
Shares upon the exercise of the purchase rights under this Warrant.  The Company
will take all such reasonable action as may be necessary to assure that such
Warrant Shares may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of the Trading Market upon
which the Common Stock may be listed.

 

Except and to the extent as waived or consented to by the Holder, the Company
shall not by any action, including, without limitation, amending its certificate
of incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such actions as may be
necessary or appropriate to protect the rights of Holder as set forth in this
Warrant against impairment.  Without limiting the generality of the foregoing,
the Company will (a) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to such increase in
par value, (b) take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable
Warrant Shares upon the exercise of this Warrant, and (c) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof as may be necessary
to enable the Company to perform its obligations under this Warrant.

 

Before taking any action which would result in an adjustment in the number of
Warrant Shares for which this Warrant is exercisable or in the Exercise Price,
the Company shall obtain all such authorizations or exemptions thereof, or
consents thereto, as may be necessary from any public regulatory body or bodies
having jurisdiction thereof.

 

17.   Call.  At any time and from time to time following the Effective Date, the
Company shall have the right, upon 5 Business Days’ prior written notice to the
Holder (“Call Notice”), to call all or any portion of this Warrant at a price
equal to $.05 per Warrant at any time,

 

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provided that (i) the Warrant Shares have been registered for resale pursuant to
the Securities Act for at least the 10-Trading Day period preceding the Call
Notice, (ii) the VWAP of the Common Stock on a Trading Market is equal to or
greater than $8.00 per share (subject to adjustment to reflect forward or
reverse stock splits, stock dividends, recapitalizations and the like)(the
“Threshold Price”) for at least 20 consecutive Trading Days over any 30 Trading
Days, and (iii) the Call Notice is delivered within 3 Business Days’ of the most
recent day in the previous clause (ii) that the Common Stock reached the
Threshold Price.  At any time prior to the effective date of such call, the
Holder shall have the right to exercise this Warrant in accordance with its
terms.

 

18.   Miscellaneous.

 

(a)   Jurisdiction.  This Warrant shall constitute a contract under the laws of
New York, without regard to its conflict of law, principles or rules.

 

(b)   Restrictions.  The Holder acknowledges that the Warrant Shares acquired
upon the exercise of this Warrant, if not registered, will have restrictions
upon resale imposed by state and federal securities laws.

 

(c)   Nonwaiver and Expenses.  No course of dealing or any delay or failure to
exercise any right hereunder on the part of Holder shall operate as a waiver of
such right or otherwise prejudice Holder’s rights, powers or remedies,
notwithstanding all rights hereunder terminate on the Termination Date.  If the
Company willfully and knowingly fails to comply with any provision of this
Warrant, which results in any material damages to the Holder, the Company shall
pay to Holder such amounts as shall be sufficient to cover any costs and
expenses including, but not limited to, reasonable attorneys’ fees, including
those of appellate proceedings, incurred by Holder in collecting any amounts due
pursuant hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.

 

(d)   Notices.  Any notice, request or other document required or permitted to
be given or delivered to the Holder by the Company shall be delivered in
accordance with the notice provisions of the Purchase Agreement; provided upon
any permitted assignment of this Warrant, the assignee shall promptly provide
the Company with its contact information.

 

(e)   Limitation of Liability.  No provision hereof, in the absence of any
affirmative action by Holder to exercise this Warrant or purchase Warrant
Shares, and no enumeration herein of the rights or privileges of Holder, shall
give rise to any liability of Holder for the purchase price of any Common Stock
or as a stockholder of the Company, whether such liability is asserted by the
Company or by creditors of the Company.

 

(f)    Remedies.  Holder, in addition to being entitled to exercise all rights
granted by law, including recovery of damages, will be entitled to specific
performance of its rights under this Warrant.  The Company agrees that monetary
damages would not be adequate compensation for any loss incurred by reason of a
breach by it of the provisions of this Warrant and hereby agrees to waive the
defense in any action for specific performance that a remedy at law would be
adequate.

 

(g)   Successors and Assigns.  Subject to applicable securities laws, this
Warrant and the rights and obligations evidenced hereby shall inure to the
benefit of and be binding upon the successors of the Company and the successors
and permitted assigns of

 

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Holder.  The provisions of this Warrant are intended to be for the benefit of
all Holders from time to time of this Warrant and shall be enforceable by any
such Holder or holder of Warrant Shares.

 

(h)   Amendment.  This Warrant may be modified or amended or the provisions
hereof waived with the written consent of the Company and the Holder.

 

(i)    Severability.  Wherever possible, each provision of this Warrant shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Warrant shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provisions
or the remaining provisions of this Warrant.

 

(j)    Headings.  The headings used in this Warrant are for the convenience of
reference only and shall not, for any purpose, be deemed a part of this Warrant.

 

(k)   Entire Agreement. This Warrant, the Purchase Agreement and the
Registration Rights Agreement constitute the entire agreement between the
Company and the Holder with respect to this Warrant.

 

********************

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
officer thereunto duly authorized.

 

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Dated:  October 10, 2003

 

 

 

 

THE IMMUNE RESPONSE CORPORATION

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

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NOTICE OF EXERCISE

 

To:          The Immune Response Corporation

 

(1)   The undersigned hereby elects to purchase                      Warrant
Shares of The Immune Response Corporation pursuant to the terms of the attached
Warrant (only if exercised in full), and tenders herewith payment of the
exercise price in full, together with all applicable transfer taxes, if any.

 

(2)   Payment shall take the form of (check applicable box):

 

o in lawful money of the United States; or

 

o the cancellation of such number of Warrant Shares as is necessary, in
accordance with the formula set forth in subsection 3(d), to exercise this
Warrant with respect to the maximum number of Warrant Shares purchasable
pursuant to the cashless exercise procedure set forth in subsection 3(d).

 

(3)   Please issue a certificate or certificates representing said Warrant
Shares in the name of the undersigned or in such other name as is specified
below:

 

 

 

The Warrant Shares shall be delivered to the following:

 

 

 

 

 

(4)  Accredited Investor.  The undersigned is an “accredited investor” as
defined in Regulation D promulgated under the Securities Act of 1933, as
amended.

 

 

 

 

 

 

 

 

«Purchaser»

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

 

Name:

 

 

 

 

 

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dated:

 

 

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ASSIGNMENT FORM

 

(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)

 

 

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are
hereby assigned to

 

                                                                                                                                               whose
address is

 

                                                                                                                                                                              .

 

 

 

 

                                                                                                                                                      Dated: 
                ,              

 

 

 

Holder’s Signature:

 

 

 

 

 

 

 

Holder’s Address:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Signature Guaranteed:

 

 

 

 

 

NOTE:  The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company.  Officers
of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.

 

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EXHIBIT D

 

STOCK CERTIFICATE QUESTIONNAIRE

 

Pursuant to Section 3.2 of the Securities Stock Purchase Agreement, please
provide us with the following information:

 

1.             The exact name that your Shares are to be Registered in (this is
the name that will appear on your stock certificate(s)).  You may use a nominee
name if appropriate:

 

 

2.             The relationship between the Purchaser of the Shares and the
Registered Holder listed in response to item 1 above:

 

 

3.             The mailing address of the Registered Holder listed in response
to item 1 above:

 

 

4.             The Social Security Number or Tax Identification Number of the
Registered Holder listed in response to item 1 above:

 

 

 

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EXHIBIT E

 

REGISTRATION STATEMENT QUESTIONNAIRE

 

In connection with the preparation of the Registration Statement, please provide
us with the following information:

 

1.             Pursuant to the “Selling Stockholder” section of the Registration
Statement, please state your or your organization’s name exactly as it should
appear in the Registration Statement:

 

 

2.             Please provide the number of shares of The Immune Response
Corporation Common Stock that you or your organization will own immediately
after Closing, including those purchased by you or your organization pursuant to
this Agreement and those shares of Common Stock purchased by you or your
organization through other transactions:

 

 

3.             Have you or your organization had any position, office or other
material relationship within the past three years with the Company or its
affiliates?

 

Yes               No

 

If yes, please indicate the nature of any such relationships below:

 

 

 

 

 

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