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

















 


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

















 


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


 


13

















 


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.


 


14

















 


(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

















 


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,


 


16

















 


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

















 


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

















 


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

















 


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

















 


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

















 


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]


 


22

















 


[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

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
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23

















 


[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

















 


[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

















 


[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

  	
   

  
	
   

  	
   

  
	
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26

















 


[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:

  
	
   

  	
   

  
	
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  Amount:  $600,000

  	
   

  
	
   

  	
   

  
	
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27

















 


[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

















 


[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

















 


[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

















 


[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

















 


[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

















 


[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

















 


[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

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
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34

















 


[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

















 


[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

















 


[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

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
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37

















 


[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

















 


[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:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
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  Amount:  $500,000.00

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
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39

















 


[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

  	
   

  
	
   

  	
   

  
	
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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

















 


[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

  	
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  Subscription
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42

















 


[PURCHASER
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  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

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
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43

















 


[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:

  	
   

  
	
   

  	
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44

















 


[PURCHASER
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  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
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[PURCHASER
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  Name of Investor
  Entity:

  	
  Address for Notice

  	
   

  
	
  TCMP3

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   /s/  Steven Slawson

  	
   

  	
  Attention:

  	
   

  
	
   

  	
  Name: Steven Slawson

  	
  Fax:

  	
   

  
	
   

  	
  Title: Principal

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Subscription
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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.


 


47

















 


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


 


48

















 


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


 


49

















 


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


 


50

















 


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


 


51

















 


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,


 


52

















 


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


 


53

















 


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,


 


54

















 


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


 


55

















 


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.


 


56

















 


	
  Dated:  October 10, 2003

  	
   

  
	
   

  	
   

  
	
   

  	
  THE IMMUNE RESPONSE
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


57

















 


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:

  	
   

  
										



 


58

















 


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.


 


59

















 


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:


 


 


 


60

















 


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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