**Exhibit 10.30**

 

**REGISTRATION RIGHTS AGREEMENT**

 

This Registration Rights Agreement (this“Agreement”) is made and entered into as of February 25, 2003, among Hollis-Eden Pharmaceuticals, Inc., a Delaware corporation (the “Company”), and the purchasers signatory hereto (each such purchaser is a“Purchaser” and all such purchasers are, collectively, the “Purchasers”). 

 

This Agreement is made pursuant to the Securities Purchase Agreement, dated as of the date hereof among the Company and the Purchasers(the “Purchase Agreement”). 

 

TheCompany and the Purchasers hereby agree as follows: 

 

1.    Definitions

 

**Capitalized terms used and not otherwise defined herein that are defined in the Purchase Agreement shall have the meanings given such terms in the Purchase Agreement.** As used in this Agreement, the following terms shall havethe following meanings: 

 

“Effectiveness Date” means, with respect to the initial Registration Statement required to be filed hereunder, the 90th calendar day (120th calendar day in the event of a “fullreview” by the Commission) following the Closing Date, and, with respect to any additional Registration Statements which may be required pursuant to Section 3(c), the 90th calendar day following the date on which the Company firstknows, or reasonably should have known, that such additional Registration Statement is required hereunder; provided, however, in the event that the Company is notified by the Commission that one of the above Registration Statementswill not be reviewed or is no longer subject to further review and comments, the Effectiveness Date as to such Registration Statement shall be the seventh Trading Day following the date on which the Company is so notified if such date precedes thedates required above. 

 

“Effectiveness Period” shall have the meaning set forth in Section 2(a). 

 

“Filing Date” means, with respect to the initial Registration Statement required to be filed hereunder,the 45th day following the Closing Date and, with respect to any additional Registration Statements which may be required pursuant to Section 3(c), the 30th day following the date on which the Company first knows, or reasonablyshould have known that such additional Registration Statement is required hereunder 

 

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“Holder” or “Holders” means the holder or holders, as the case may be, from time to time of Registrable Securities. 

 

“Indemnified Party” shall have the meaning set forth in Section 5(c).

 

“IndemnifyingParty” shall have the meaning set forth in Section 5(c). 

 

“Prospectus” means the prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectusfiled as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of theRegistrable Securities covered by a Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in suchProspectus. 

 

“Registrable Securities” means all of the shares of Common Stock issued and issuable upon conversion in full of the Debentures, exercise in full of the Warrants, together with any securities issued or issuable inlieu of interest or upon any stock split, dividend or other distribution recapitalization or similar event with respect to the foregoing or pursuant to any anti-dilution provisions contained in the Debentures or the Warrants. 

 

“Registration Statement”means the registration statements required to be filed hereunder and any additional registration statements contemplated by Section 3(c), including (in each case) the Prospectus, amendments and supplements to such registration statement orProspectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in such registration statement. 

 

“Rule 415” means Rule 415promulgated 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 purpose and effect as such Rule.

 

“Rule 424”means Rule 424 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 purpose and effect assuch Rule. 

 

“SpecialCounsel” means one special counsel to the Holders, which shall be Purchasers’ Counsel unless other specified by a majority in interest of the Holders. Each Holder may have its own counsel as well. 

 

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“Warrants” shall mean the Common Stock purchase warrants issued to the Purchasers pursuant to the Purchase Agreement and the warrants issued to SG Cowen Securities Corporation in connection with this consummation ofthe Purchase Agreement pursuant to that certain Engagement Letter, dated November 22, 2002, between the Company and SG Cowen Securities Corp. 

 

2.    Shelf Registration

 

(a) On or prior to each Filing Date, the Company shall prepare and file with the Commission a“Shelf” Registration Statement covering the resale of all Registrable Securities on such Filing Date for an offering to be made on a continuous basis pursuant to Rule 415. The Registration Statement shall be on Form S-3 (unless the Companyis not then eligible to register for resale the Registrable Securities on Form S-3, in which case such registration shall be on another appropriate form in accordance herewith) and shall contain (unless otherwise directed by the Holders and exceptto the extent the Company determines that modifications thereto are required under applicable law) substantially the “Plan of Distribution” attached hereto as Annex A. Subject to the terms of this Agreement, the Company shall useits best efforts to cause the Registration Statement to be declared effective under the Securities Act as promptly as possible after the filing thereof, but in any event prior to the applicable Effectiveness Date, and shall use its best efforts tokeep such Registration Statement continuously effective under the Securities Act until the date which is two years after the date that such Registration Statement is declared effective by the Commission or such earlier date when all RegistrableSecurities covered by such Registration Statement have been sold or may be sold without volume restrictions pursuant to Rule 144(k) as determined by the counsel to the Company pursuant to a written opinion letter to such effect, addressed andacceptable to the Company’s transfer agent and the affected Holders (the “Effectiveness Period”). 

 

(b) [RESERVED] 

 

(c) If: (i) a Registration Statement is not filed on or prior to its Filing Date (if the Company files a Registration Statement withoutaffording the Holders the opportunity to review and comment on the same as required by Section 3(a), the Company shall not be deemed to have satisfied clause (i)), or (ii) the Company fails to file with the Commission a request for acceleration inaccordance with Rule 461 promulgated under the Securities Act, within five Trading Days of the date that the Company is notified (orally or in writing, whichever is earlier) by the Commission that a Registration Statement will not be“reviewed,” or not subject to further review, or (iii) prior to its Effectiveness Date, the Company fails to file a pre-effective amendment and otherwise respond in writing to comments made by the Commission in respect of such RegistrationStatement within 15 Trading Days after the receipt of comments by or notice from the Commission that such amendment is required in order for a Registration Statement to be declared effective, or (iv) a Registration Statement filed or required to befiled hereunder is not declared effective by the Commission by its Effectiveness Date, or (v) after the 

 

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Effectiveness Date, aRegistration Statement ceases for any reason to remain continuously effective as to all Registrable Securities for which it is required to be effective, or the Holders are not permitted to utilize the Prospectus therein to resell such RegistrableSecurities for 5 consecutive Trading Days or in any individual case an aggregate of 15 Trading Days during any 12 month period (which need not be consecutive Trading Days) (any such failure or breach being referred to as an “Event”, andfor purposes of clause (i) or (iv) the date on which such Event occurs, or for purposes of clause (ii) the date on which such five Trading Day period is exceeded, or for purposes of clause (iii) the date which such 15 Trading Day period is exceeded,or for purposes of clause (v) the date on which such 5 or 15 Trading Day period, as applicable, is exceeded being referred to as “Event Date”), then, on each such Event Date and every monthly anniversary thereof until the applicableEvent is cured, the Company shall pay to each Holder an amount in cash, as liquidated damages and not as a penalty, equal to 1.5% per month of the Subscription Amount paid by such Holder pursuant to the Purchase Agreement.****If the Companyfails to pay any liquidated damages pursuant to this Section in full within seven days after the date payable, the Company will pay interest thereon at a rate of 18% per annum (or such lesser maximum amount that is permitted to be paid by applicablelaw) to the Holder, accruing daily from the date such liquidated damages are due until such amounts, plus all such interest thereon, are paid in full. The liquidated damages pursuant to the terms hereof shall apply on a pro-rata basis for anyportion of a month prior to the cure of an Event and shall be in lieu of any and all of the penalties or liquidated damages that might otherwise arise by reason of such Event unless such Event constitutes an Event of Default under the Debentures.

 

3.    RegistrationProcedures

 

In connection with theCompany’s registration obligations hereunder, the Company shall: 

 

(a) Not less than four Trading Days prior to the filing of each Registration Statement or any related Prospectus or any amendment or supplement thereto (excluding any document that would be incorporated or deemedincorporated therein by reference and excluding in any case any information for which an order granting confidential treatment thereof is in effect or has been requested), the Company shall, (i) furnish to each Holder and their Special Counselcopies of all such documents proposed to be filed, which documents (other than those incorporated or deemed to be incorporated by reference, excluding in any case any information for which an order granting confidential treatment thereof is ineffect or has been requested) will be subject to the review of such Holders and their Special Counsel, and (ii) cause its officers and directors, counsel and independent certified public accountants to respond to such inquiries as shall benecessary, in the reasonable opinion of respective counsel to conduct a reasonable investigation within the meaning of the Securities Act. The Company shall not file the Registration Statement or any such Prospectus or any amendments or supplementsthereto to which the Holders of a majority of the Registrable Securities and their Special Counsel shall reasonably and in good faith object, provided, the Company is notified of 

 

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such objection in writing nolater than 3 Trading Days after the Holders have been so furnished copies of such documents. 

 

(b) (i) Prepare and file with the Commission such amendments, including post-effective amendments, to a Registration Statement and the Prospectus used in connection therewith as may be necessary tokeep a Registration Statement continuously effective as to the applicable Registrable Securities for the Effectiveness Period and prepare and file with the Commission such additional Registration Statements in order to register for resale under theSecurities Act all of the Registrable Securities; (ii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement (subject to the terms of this Agreement), and as so supplemented or amended to be filed pursuantto Rule 424; (iii) respond as promptly as reasonably possible, and in any event within 15 Trading Days, to any comments received from the Commission with respect to a Registration Statement or any amendment thereto and as promptly as reasonablypossible provide the Holders true and complete copies of all correspondence from and to the Commission relating to a Registration Statement; and (iv) comply in all material respects with the provisions of the Securities Act and the Exchange Act withrespect to the disposition of all Registrable Securities covered by a Registration Statement during the applicable period in accordance (subject to the terms of this Agreement) with the intended methods of disposition by the Holders thereof setforth in such Registration Statement as so amended or in such Prospectus as so supplemented. 

 

(c) If during the Effectiveness Period, the number of Registrable Securities at any time exceeds 85% of the number of shares of Common Stock then registered in a Registration Statement, then theCompany shall file as soon as reasonably practicable but in any case prior to the applicable Filing Date, an additional Registration Statement covering the resale of by the Holders of not less than 100% of the number of such Registrable Securities.

 

(d) Notify the Holders of Registrable Securitiesto be sold (which notice shall, pursuant to clauses (ii) through (vi) hereof shall be accompanied by an instruction to suspend the use of the Prospectus until the requisite changes have been made) and their Special Counsel as promptly as reasonablypossible (and, in the case of (i)(A) below, not less than five Trading Days prior to such filing) and (if requested by any such Person) confirm such notice in writing no later than one Trading Day following the day (i)(A) when a Prospectus or anyProspectus supplement or post-effective amendment to a Registration Statement is proposed to be filed; (B) when the Commission notifies the Company whether there will be a “review” of such Registration Statement and whenever the Commissioncomments in writing on such Registration Statement (the Company shall provide true and complete copies thereof and all written responses thereto to each of the Holders); and (C) with respect to a Registration Statement or any post-effectiveamendment, when the same has become effective; (ii) of any request by the Commission or any other Federal or state governmental authority for amendments or supplements to a Registration Statement or Prospectus or for additional information; (iii) ofthe issuance by the Commission of any stop order suspending the effectiveness of a Registration Statement covering any or all of the Registrable Securities or the initiation of any 

 

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Proceedings for that purpose;(iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of anyProceeding for such purpose; (v) of the occurrence of any event or passage of time that makes the financial statements included in a Registration Statement ineligible for inclusion therein or any statement made in a Registration Statement orProspectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to a Registration Statement, Prospectus or other documents so that, in the case of a RegistrationStatement or the Prospectus, as the case may be, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstancesunder which they were made, not misleading and (vi) the occurrence or existence of any pending corporate development with respect to the Company that the Company believes, in good faith, may be material and that, in the determination of the Company,makes it not in the best interests of the Company to allow continued availability or the Registration Statement or Prospectus 

 

(e) Promptly deliver to each Holder and their Special Counsel, without charge, as many copies of the Prospectus or Prospectuses (includingeach form of prospectus) and each amendment or supplement thereto as such Persons may reasonably request. Subject to the terms of this Agreement, the Company hereby consents to the use of such Prospectus and each amendment or supplement thereto byeach of the selling Holders in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto. 

 

(f) Use commercially reasonable efforts to register or qualify the resale of such Registrable Securities asrequired under applicable securities or Blue Sky laws of each State within the United States as any Holder requests in writing, to keep each such registration or qualification (or exemption therefrom) effective during the Effectiveness Period;provided, that the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified or subject the Company to any material tax in any such jurisdiction where it is not then so subject.

 

(g) Cooperate with the Holders to facilitate thetimely preparation and delivery of certificates representing Registrable Securities to be delivered to a transferee pursuant to a Registration Statement, which certificates shall be free, to the extent permitted by the Purchase Agreement, of allrestrictive legends, and to enable such Registrable Securities to be in such denominations and registered in such names as any such Holders may request. 

 

(h) Upon the occurrence of any event contemplated this Section 3, as promptly as reasonably possible, prepare a supplement or amendment,including a post-effective amendment, to a Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafterdelivered, neither a Registration Statement nor such Prospectus will contain an untrue statement of a material fact or omit to state a 

 

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material fact required to bestated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. If the Company notifies the Holders in accordance with clauses (ii) through (vi) of Section 3(d) above to suspendthe use of the use of any Prospectus until the requisite changes to such Prospectus have been made, then the Holders shall suspend use of such Prospectus. The Company will use its best efforts to ensure that the use of the Prospectus may be resumedas promptly as is practicable, except that in the case of suspension of the availability of a Registration Statement and Prospectus pursuant to clause (vi) of Section 3(d), the Company shall not be required to take such action until such time as itshall determine, in good faith, that the continued availability of the Registration Statement and Prospectus is no longer not in the best interests of the Company. The Company shall be entitled to exercise its right under this Section 3(h) tosuspend the availability of a Registration Statement and Prospectus, subject to the payment of liquidated damages pursuant to Section 2(c), for a period not to exceed 15 consecutive days or for multiple periods not to exceed 25 days in any 12 monthperiod. 

 

(i) Comply with all applicable rules andregulations of the Commission. 

 

(j) Use its bestefforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i) any order suspending the effectiveness of a Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the RegistrableSecurities for sale in any jurisdiction, at the earliest practicable moment. 

 

(k) The Company may require, at any time prior to the third Trading Day prior to the Filing Date, each Holder to furnish to the Company a statement as to the number of shares of Common Stockbeneficially owned by such Holder and, if requested by the Commission, the controlling person thereof, within three Trading Days of the Company’s request. During any periods that the Company is unable to meet its obligations hereunder withrespect to the registration of the Registrable Securities solely because any Holder fails to furnish such information within three Trading Days of the Company’s request, any liquidated damages that are accruing at such time shall be tolled andany Event of Default that may otherwise occur solely because of such delay shall be suspended, until such information is delivered to the Company. 

 

4.    Registration Expenses.    All fees and expenses incident to the performance of orcompliance with this Agreement by the Company shall be borne by the Company whether or not any Registrable Securities are sold pursuant to the Registration Statement. The fees and expenses referred to in the foregoing sentence shall include, withoutlimitation, (i) all registration and filing fees (including, without limitation, fees and expenses (A) with respect to filings required to be made with the Principal Market on which the Common Stock is then listed for trading, and (B) in compliancewith applicable state securities or Blue Sky laws (including, without limitation, fees and disbursements of counsel for the Company in connection with Blue Sky qualifications or exemptions of the Registrable Securities and determination of theeligibility of the Registrable Securities for investment under the laws of such jurisdictions as requested by the Holders )), (ii) printing expenses (including, without limitation, expenses of printing 

 

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certificates for RegistrableSecurities and of printing prospectuses requested by the Holders), (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company, and (v) fees and expenses of all other Persons retained by the Company inconnection with the consummation of the transactions contemplated by this Agreement. In addition, the Company shall be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by thisAgreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit and the fees and expenses incurred in connection with the listing of theRegistrable Securities on any securities exchange as required hereunder. In no event shall the Company be responsible for any broker or similar commissions or, except to the extent provided for in the Transaction Documents, any legal fees or othercosts of the Holders. 

 

5.    Indemnification

 

(a) *Indemnification by the Company*. The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Holder, the officers, directors, agents, brokers (including brokers who offer and sellRegistrable Securities as principal as a result of a pledge or any failure to perform under a margin call of Common Stock), investment advisors and employees of each of them, each Person who controls any such Holder (within the meaning of Section 15of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, agents and employees of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages,liabilities, costs (including, without limitation, costs of preparation and reasonable attorneys’ fees) and expenses (collectively, “Losses”), as incurred, arising out of or relating to any untrue or alleged untrue statement of amaterial fact contained in a Registration Statement, any Prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a materialfact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or form of prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading, except to theextent, but only to the extent, that (1) such untrue statements or omissions or alleged untrue statements or omissions are based upon information regarding such Holder furnished in writing to the Company by such Holder expressly for use therein, orto the extent that such information relates to such Holder or such Holder’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use in a RegistrationStatement, such Prospectus or such form of Prospectus or in any amendment or supplement thereto or (2) in the case of an occurrence of an event of the type specified in Section 3(d)(ii)-(vi), the use by such Holder of an outdated or defectiveProspectus after the Company has notified such Holder in writing that the Prospectus is outdated or defective and prior to the receipt by such Holder of the Advice contemplated in Section 6(e). The Company shall notify the Holders promptly of theinstitution, threat or assertion of any Proceeding arising from or in connection with the transactions contemplated by this Agreement of which the Company is aware. 

 

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(b)*Indemnification by Holders*. Each Holder shall, severally and not jointly, indemnify and hold harmless the Company, its directors, officers, agents and employees, each Person who controls the Company (within the meaning of Section 15 of theSecurities Act and Section 20 of the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, to the fullest extent permitted by applicable law, from and against all Losses (as determined by a court of competentjurisdiction in a final judgment not subject to appeal or review) arising out of or based upon any untrue statement of a material fact contained in any Registration Statement, any Prospectus, or any form of prospectus, or in any amendment orsupplement thereto, or arising out of or based upon: (i) such Holder’s failure to comply with the prospectus delivery requirements of the Securities Act provided that the Company has either provided the Holder with copies of such Prospectus ormade them available from an online source or (ii) any omission of a material fact required to be stated therein or necessary to make the statements therein not misleading to the extent, but only to the extent, that such untrue statement or omissionis contained in any information so furnished in writing by such Holder to the Company specifically for inclusion in such Registration Statement or such Prospectus or to the extent that (1) such untrue statements or omissions are based uponinformation regarding such Holder furnished in writing to the Company by such Holder expressly for use therein, or to the extent that such information relates to such Holder or such Holder’s proposed method of distribution of RegistrableSecurities and was reviewed and expressly approved in writing by such Holder expressly for use in the Registration Statement, such Prospectus or such form of Prospectus or in any amendment or supplement thereto or (2) in the case of an occurrence ofan event of the type specified in Section 3(d)(ii)-(vi), the use by such Holder of an outdated or defective Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated or defective and prior to the receipt bysuch Holder of the Advice contemplated in Section 6(e). In no event shall the liability of any selling Holder hereunder be greater in amount than the dollar amount of the net proceeds received by such Holder upon the sale of the RegistrableSecurities giving rise to such indemnification obligation. 

 

(c) *Conduct of Indemnification Proceedings*. If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such Indemnified Party shall promptlynotify the Person from whom indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying Party shall assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party andthe payment of all fees and expenses incurred in connection with defense thereof; provided, that the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to thisAgreement, except (and only) to the extent that such failure shall have prejudiced the Indemnifying Party. 

 

An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, butthe fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such fees and expenses; or (2) the Indemnifying Party shall have failed promptly toassume the defense of such Proceeding 

 

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and to employ counselreasonably satisfactory to such Indemnified Party in any such Proceeding; or (3) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and such Indemnified Partyshall have been advised by counsel that a material conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the IndemnifyingParty in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and the expense of one such counsel for each Holder shall be at theexpense of the Indemnifying Party). The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld. No Indemnifying Party shall, without theprior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from allliability on claims that are the subject matter of such Proceeding. 

 

Subject to the terms of this Agreement, all fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding ina manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within ten Trading Days of written notice thereof to the Indemnifying Party (regardless of whether it is ultimately determined that an IndemnifiedParty is not entitled to indemnification hereunder; provided, that the Indemnifying Party may require such Indemnified Party to undertake to reimburse all such fees and expenses to the extent it is finally judicially determined that such IndemnifiedParty is not entitled to indemnification hereunder). 

 

(d) *Contribution*. If a claim for indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified Party (by reason of public policy or otherwise), then each Indemnifying Party, in lieu of indemnifying suchIndemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connectionwith the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among otherthings, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Partyor Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemedto include, subject to the limitations set forth in Section 5(c), any reasonable attorneys’ or other reasonable fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified forsuch fees or expenses if the indemnification provided for in this Section was available to such party in accordance with its terms. 

 

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The partieshereto agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred toin the immediately preceding paragraph. Notwithstanding the provisions of this Section 5(d), no Holder shall be required to contribute, in the aggregate, any amount in excess of the amount by which the proceeds actually received by such Holder fromthe sale of the Registrable Securities subject to the Proceeding exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.

 

The indemnity and contribution agreementscontained in this Section are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties. 

 

6.    Miscellaneous

 

(a) *Amendments and Waivers*. The provisions of this Agreement, including the provisions of this sentence, may not be amended,modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing and signed by the Company and each Holder of then outstanding Registrable Securities. Notwithstandingthe foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of a Holder and that does not directly or indirectly affect the rights of other Holders may be given by anyHolder as to itself. 

 

(b) *No InconsistentAgreements*. Neither the Company nor any of its subsidiaries has entered, as of the date hereof, nor shall the Company or any of its subsidiaries, on or after the date of this Agreement, enter into any agreement with respect to its securities,that would have the effect of impairing the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. Except as and to the extent specified in the Disclosure Schedules, neither the Company nor any of itssubsidiaries has previously entered into any agreement granting any registration rights with respect to any of its securities to any Person that have not been satisfied in full. 

 

(c) *No Piggyback on Registrations*. Except as and to the extent specified in Schedule 6(c) hereto,neither the Company nor any of its security holders (other than the Holders in such capacity pursuant hereto) may include securities of the Company in the Registration Statement other than the Registrable Securities, and the Company shall not afterthe date hereof enter into any agreement providing any such right to any of its security holders. 

 

(d) *Compliance*. Each Holder covenants and agrees that it will comply with the prospectus delivery requirements of the SecuritiesAct as applicable to it in connection with sales of Registrable Securities pursuant to the Registration Statement provided that the Company has either provided the Holder with copies of such Prospectus or made them available from an online source.

 

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(e)*Discontinued Disposition*. Each Holder agrees by its acquisition of such Registrable Securities that, upon receipt of a notice from the Company of the occurrence of any event of the kind described in Section 3(d), such Holder will forthwithdiscontinue disposition of such Registrable Securities under a Registration Statement until such Holder’s receipt of the copies of the supplemented Prospectus and/or amended Registration Statement contemplated by Section 3(h), or until it isadvised in writing (the “Advice”) by the Company that the use of the applicable Prospectus may be resumed, and, in either case, has received copies of any additional or supplemental filings that are incorporated or deemed to beincorporated by reference in such Prospectus or Registration Statement. The Company may provide appropriate stop orders to enforce the provisions of this paragraph. 

 

(f) *Piggy-Back Registrations*. If at any time during the Effectiveness Period there is not an effectiveRegistration Statement covering all of the Registrable Securities and the Company shall determine to prepare and file with the Commission a registration statement relating to an offering for its own account or the account of others under theSecurities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of anyentity or business or equity securities issuable in connection with stock option or other employee benefit plans, then the Company shall send to each Holder written notice of such determination and, if within fifteen days after receipt of suchnotice, any such Holder shall so request in writing, the Company shall include in such registration statement all or any part of such Registrable Securities such holder requests to be registered; provided, that, the Company shall not be required toregister any Registrable Securities pursuant to this Section 6(f) that are eligible for resale pursuant to Rule 144(k) promulgated under the Securities Act. 

 

(g) *Notices*. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall bedelivered as set forth in the Purchase Agreement. 

 

(h) *Successors and Assigns*. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties and shall inure to the benefit of each Holder. The Company may not assignits rights or obligations hereunder without the prior written consent Holders of at least 75% of the then-outstanding Registrable Securities. Each Holder may assign their respective rights hereunder in the manner and to the Persons as permittedunder the Purchase Agreement. 

 

(i)*Counterparts*. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and, all of which taken together shall constitute one and the same Agreement. In the event that anysignature is delivered by facsimile transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signaturewere the original thereof. 

 

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(j)*Governing Law*. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regardto the principles of conflicts of law thereof. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, borough of Manhattan, for the adjudication of any dispute hereunderor in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction ofany such court, that such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party atthe 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 serveprocess in any manner permitted by law. Each party hereto 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 thetransactions contemplated hereby. If either party shall commence a Proceeding to enforce any provisions of this Agreement, then the prevailing party in such Proceeding shall be reimbursed by the other party for its attorneys fees and other costs andexpenses incurred with the investigation, preparation and prosecution of such Proceeding. 

 

(k) *Cumulative Remedies*. The remedies provided herein are cumulative and not exclusive of any remedies provided by law. 

 

(l) *Severability*. If any term, provision, covenant or restriction of this Agreement is held by a courtof competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired orinvalidated, and the parties hereto shall use their reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is herebystipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void orunenforceable. 

 

(m) *Headings*. The headingsin this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. 

 

(n) *Independent Nature of Purchasers’ Obligations and Rights*. The obligations of each Purchaser hereunder is several and notjoint with the obligations of any other Purchaser hereunder, and no Purchaser shall be responsible in any way for the performance of the obligations of any other Purchaser hereunder. Nothing contained herein or in any other agreement or documentdelivered at any closing, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the 

 

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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 with respect to such obligations or the transactions contemplated by this Agreement. Each Purchaser shall beentitled to protect and enforce its rights, including without limitation the rights arising out of this Agreement, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose. EachPurchaser was introduced to the Company by SG Cowen Securities Corporation, which has acted solely as agent for the Company and not for any Purchaser. Each Purchaser has been represented by its own separate legal counsel in their review andnegotiation of the Transaction Documents. For reasons of administrative convenience only, Purchasers and their respective counsel have chosen to communicate with the Company through Purchaser’s Counsel. Purchaser’s Counsel does notrepresent all of the Purchasers but only Midsummer Investment, Ltd. 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 doso by the Purchasers. 

 

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IN WITNESSWHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above. 

 

HOLLIS-EDEN PHARMACEUTICALS, INC.

By:
 
/s/    Eric J.Loumeau        
  
Name: Eric J. Loumeau
  
Title: Vice President, General Counsel

 

 

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**MIDSUMMER INVESTMENT, LTD.**

By:
 
/s/    Michel M.Amsalem        
  
Name: Michel M. Amsalem

Title: Director

 

**ISLANDIA, L.P.**

By:
 
/s/    RichardBerner        
  
Name: Richard Berner

Title: President of John Lang, Inc.,

General Partner

 

**PORTSIDE GROWTH AND OPPORTUNITY FUND**

By:
 
/s/    JeffSolomon        
  
Name: Jeff Solomon

Title: Authorized Signatory

**OMICRON MASTER TRUST**

**By: Omicron Capital L.P. as subadvisor**

**By: Omicron Capital Inc., its generalpartner**

By:
 
/s/    BruceBernstein        
  
Name: Bruce Bernstein

Title: President

 

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**MID CAP VALUE SERIES OFSECURITY EQUITY FUND**

 

By:
 
/s/    James P.Schier        
  
James P. Schier, Vice President

 

**SECURITY MID CAPGROWTH FUND**

 

By:
 
/s/    James P.Schier        
  
James P. Schier, Vice President

 

**SERIES J OF SBL FUND**

 

By:
 
/s/    James P.Schier        
  
James P. Schier, Vice President

 

**SERIES V OF SBL FUND**

 

By:
 
/s/    James P.Schier        
  
James P. Schier, Vice President

 

**CAPITAL VENTURESINTERNATIONAL**

By HEIGHTS CAPITAL MANGEMENT, its authorized agent 

 

By:
 
/s/    MartinKobinger        
  
Martin Kobinger

Investment Manager

 

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**Plan ofDistribution**

 

The Selling Stockholders andany of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of Common Stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. Thesesales may be at fixed or negotiated prices. The Selling Stockholders may use any one or more of the following methods when selling shares: 

 
 • ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; 
 
 • block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate thetransaction; 
 
 • purchases by a broker-dealer as principal and resale by the broker-dealer for its account; 
 
 • an exchange distribution in accordance with the rules of the applicable exchange; 
 
 • privately negotiated transactions; 
 
 • short sales 
 
 • broker-dealers may agree with the Selling Stockholders to sell a specified number of such shares at a stipulated price per share; 
 
 • a combination of any such methods of sale; and 
 
 • any other method permitted pursuant to applicable law. 
 

The Selling Stockholders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus.Broker-dealers engaged by the Selling Stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for thepurchaser of shares, from the purchaser) in amounts to be negotiated. The Selling Stockholders do not expect these commissions and discounts to exceed what is customary in the types of transactions involved. 

 

The selling stockholder may from time to time pledge or granta security interest in some or all of the Shares or common stock or Warrant owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock from timeto time under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933 amending the list of selling stockholders to 

 

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include the pledgee,transferee or other successors in interest as selling stockholders under this prospectus. 

 

The selling stockholders also may transfer the shares of common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficialowners for purposes of this prospectus. 

 

TheSelling Stockholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissionsreceived by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. The Selling Stockholders have informed the Company that noneof them have any agreement or understanding, directly or indirectly, with any person to distribute the Common Stock. 

 

The Company is required to pay all fees and expenses incurred by the Company incident to the registration of the shares. The Company hasagreed to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act. 

 

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