EX-10.177






 Exhibit 10.177



SECURITY AGREEMENT




THIS SECURITY AGREEMENT (the “Agreement”), is entered into and made effective as of
August 4, 2005, by and between THE IMMUNE RESPONSE CORPORATION, a Delaware corporation with its
principal place of business located at 5391 Darwin Court, Carlsbad, CA 92008 (the
“Company”), and the BUYER(S) listed on Schedule I attached to the Securities Purchase
Agreement dated the date hereof (the “Secured Party”).



WHEREAS, the Company shall issue and sell to the Secured Party, as provided in the Securities
Purchase Agreement of even date herewith between the Company and the Secured Party (the
“Securities Purchase Agreement”), and the Secured Party shall purchase up to Two Million
Dollars ($2,000,000) of secured convertible debentures (the “Convertible Debentures”),
which shall be convertible into shares of the Company’s common stock, par value $0.0025 (the
“Common Stock”) (as converted, the “Conversion Shares”) in the respective amounts
set forth opposite each Buyer(s) name on Schedule I attached to the Securities Purchase Agreement;



WHEREAS, to induce the Secured Party to enter into the transaction contemplated by the
Securities Purchase Agreement, the Convertible Debentures, the Investor Registration Rights
Agreement of even date herewith between the Company and the Secured Party (the “Investor
Registration Rights Agreement”), the Pledge and Escrow Agreement of even date herewith among
the Company, the Secured Party and David Gonzalez, Esq. (the “Pledge Agreement”), the
Escrow Agreement of even date herewith among the Company, the Secured Party, and David Gonzalez,
Esq. (the “Escrow Agreement”), and the Irrevocable Transfer Agent Instructions among the
Company, the Secured Party, Computershare Trust Company and David Gonzalez, Esq. (the “Transfer
Agent Instructions”) (collectively referred to as the “Transaction Documents”), the
Company hereby grants to the Secured Party a security interest in and to the pledged property
identified on Exhibit A hereto (collectively referred to as the “Pledged Property”)
until the satisfaction of the Obligations, as defined herein below.



NOW, THEREFORE, in consideration of the promises and the mutual covenants herein contained,
and for other good and valuable consideration, the adequacy and receipt of which are hereby
acknowledged, the parties hereto hereby agree as follows:



ARTICLE




DEFINITIONS AND INTERPRETATIONS





	 	 	 	Section Recitals.





The above recitals are true and correct and are incorporated herein, in their entirety, by
this reference.




	 	 	 	Section Interpretations.





Nothing herein expressed or implied is intended or shall be construed to confer upon any
person other than the Secured Party any right, remedy or claim under or by reason hereof.




	 	 	 	Section Obligations Secured.





The obligations secured hereby are any and all obligations of the Company now existing or
hereinafter incurred to the Secured Party under the Convertible Debentures (collectively, the
“Obligations”).



ARTICLE




PLEDGED PROPERTY, ADMINISTRATION OF COLLATERAL 




AND TERMINATION OF SECURITY INTEREST





	 	 	 	Section Pledged Property.





Company hereby pledges to the Secured Party, and creates in the Secured Party for its benefit,
a security interest for such time until the Obligations are paid in full, in and to all of the
property of the Company as set forth in Exhibit “A” attached hereto and the products
thereof and the proceeds of all such items (collectively, the “Pledged Property”):



Simultaneously with the execution and delivery of this Agreement, the Company shall make,
execute, acknowledge, file, record and deliver to the Secured Party any documents reasonably
requested by the Secured Party to perfect its security interest in the Pledged Property.
Simultaneously with the execution and delivery of this Agreement, the Company shall make, execute,
acknowledge and deliver to the Secured Party such documents and instruments, including, without
limitation, financing statements, certificates, affidavits and forms as may, in the Secured Party’s
reasonable judgment, be necessary to effectuate, complete or perfect, or to continue and preserve,
the security interest of the Secured Party in the Pledged Property, and the Secured Party shall
hold such documents and instruments as secured party, subject to the terms and conditions contained
herein.




	 	 	 	Section Rights; Interests; Etc.





So long as no Event of Default (as hereinafter defined) shall have occurred and be continuing:



the Company shall be entitled to exercise any and all rights pertaining to the Pledged
Property or any part thereof for any purpose not inconsistent with the terms hereof; and



the Company shall be entitled to receive and retain any and all payments paid or made in
respect of the Pledged Property.



Upon the occurrence and during the continuance of an Event of Default:



All rights of the Company to exercise the rights which it would otherwise be entitled to
exercise pursuant to Section 2.2(a)(i) hereof and to receive payments which it would otherwise be
authorized to receive and retain pursuant to Section 2.2(a)(ii) hereof shall be suspended, and all
such rights shall thereupon become vested in the Secured Party who shall thereupon have the sole
right to exercise such rights and to receive and hold as Pledged Property such payments; provided,
however, that if the Secured Party shall become entitled and shall elect to exercise its right to
realize on the Pledged Property pursuant to Article 5 hereof, then all cash sums received by the
Secured Party, or held by Company for the benefit of the Secured Party and paid over pursuant to
Section 2.2(b)(ii) hereof, shall be applied against any outstanding Obligations; and



All interest, dividends, income and other payments and distributions which are received by the
Company contrary to the provisions of Section 2.2(b)(i) hereof shall be received in trust for the
benefit of the Secured Party, shall be segregated from other property of the Company and shall be
forthwith paid over to the Secured Party; or



The Secured Party in its sole discretion shall be authorized to sell any or all of the Pledged
Property at public or private sale in order to recoup all of the outstanding principal plus accrued
interest owed pursuant to the Convertible Debenture as described herein



An “Event of Default” shall be deemed to have occurred under this Agreement upon an
Event of Default under the Convertible Debentures.



ARTICLE




ATTORNEY-IN-FACT; PERFORMANCE





	 	 	 	Section Secured Party Appointed Attorney-In-Fact.





Upon the occurrence of an Event of Default, the Company hereby appoints the Secured Party as
its attorney-in-fact, with full authority in the place and stead of the Company and in the name of
the Company or otherwise, from time to time in the Secured Party’s discretion to take any action
and to execute any instrument which the Secured Party may reasonably deem necessary to accomplish
the purposes of this Agreement, including, without limitation, to receive and collect all
instruments made payable to the Company representing any payments in respect of the Pledged
Property or any part thereof and to give full discharge for the same. The Secured Party may
demand, collect, receipt for, settle, compromise, adjust, sue for, foreclose, or realize on the
Pledged Property as and when the Secured Party may determine. To facilitate collection, the
Secured Party may notify account debtors and obligors on any Pledged Property to make payments
directly to the Secured Party.




	 	 	 	Section Secured Party May Perform.





If the Company fails to perform any agreement contained herein, the Secured Party, at its
option, may itself perform, or cause performance of, such agreement, and the expenses of the
Secured Party incurred in connection therewith shall be included in the Obligations secured hereby
and payable by the Company under Section 8.3.



ARTICLE




REPRESENTATIONS AND WARRANTIES





	 	 	 	Section Authorization; Enforceability.





Each of the parties hereto represents and warrants that it has taken all action necessary to
authorize the execution, delivery and performance of this Agreement and the transactions
contemplated hereby; and upon execution and delivery, this Agreement shall constitute a valid and
binding obligation of the respective party, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors’ rights or by the principles
governing the availability of equitable remedies.




	 	 	 	Section Ownership of Pledged Property.





The Company warrants and represents that it is the legal and beneficial owner of the Pledged
Property free and clear of any lien, security interest, option or other charge or encumbrance
except for the security interest created by this Agreement and other security interests disclosed
in its Securities Exchange Act reports.



ARTICLE




DEFAULT; REMEDIES; SUBSTITUTE COLLATERAL





	 	 	 	Section Default and Remedies.





If an Event of Default occurs, then in each such case the Secured Party may declare the
Obligations to be due and payable immediately, by a notice in writing to the Company, and upon any
such declaration, the Obligations shall become immediately due and payable.



Upon the occurrence of an Event of Default, the Secured Party shall: (i) be entitled to
receive all distributions with respect to the Pledged Property, (ii) to cause the Pledged Property
to be transferred into the name of the Secured Party or its nominee, (iii) to dispose of the
Pledged Property, and (iv) to realize upon any and all rights in the Pledged Property then held by
the Secured Party.




	 	 	 	Section Method of Realizing Upon the Pledged Property: Other Remedies.





Upon the occurrence of an Event of Default, in addition to any rights and remedies available
at law or in equity, the following provisions shall govern the Secured Party’s right to realize
upon the Pledged Property:



Any item of the Pledged Property may be sold for cash or other value in any number of lots at
brokers board, public auction or private sale and may be sold without demand, advertisement or
notice (except that the Secured Party shall give the Company ten (10) days’ prior written notice of
the time and place or of the time after which a private sale may be made (the “Sale
Notice”)), which notice period is hereby agreed to be commercially reasonable. At any sale or
sales of the Pledged Property, the Company may bid for and purchase the whole or any part of the
Pledged Property and, upon compliance with the terms of such sale, may hold, exploit and dispose of
the same without further accountability to the Secured Party. The Company will execute and
deliver, or cause to be executed and delivered, such instruments, documents, assignments, waivers,
certificates, and affidavits and supply or cause to be supplied such further information and take
such further action as the Secured Party reasonably shall require in connection with any such sale.



Any cash being held by the Secured Party as Pledged Property and all cash proceeds received by
the Secured Party in respect of, sale of, collection from, or other realization upon all or any
part of the Pledged Property shall be applied as follows:



to the payment of all amounts due the Secured Party for the expenses reimbursable to it
hereunder or owed to it pursuant to Section 8.3 hereof;



to the payment of the Obligations then due and unpaid.



the balance, if any, to the person or persons entitled thereto, including, without limitation,
the Company.



In addition to all of the rights and remedies which the Secured Party may have pursuant to
this Agreement, the Secured Party shall have all of the rights and remedies provided by law,
including, without limitation, those under the Uniform Commercial Code.



If the Company fails to pay such amounts due upon the occurrence of an Event of Default which
is continuing, then the Secured Party may institute a judicial proceeding for the collection of the
sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce
the same against the Company and collect the monies adjudged or decreed to be payable in the manner
provided by law out of the property of Company, wherever situated.



The Company agrees that it shall be liable for any reasonable fees, expenses and costs
incurred by the Secured Party in connection with enforcement, collection and preservation of the
Transaction Documents, including, without limitation, reasonable legal fees and expenses, and such
amounts shall be deemed included as Obligations secured hereby and payable as set forth in Section
8.3 hereof.




	 	 	 	Section Proofs of Claim.





In case of the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial proceeding relating to the
Company or the property of the Company or of such other obligor or its creditors, the Secured Party
(irrespective of whether the Obligations shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Secured Party shall have made any demand
on the Company for the payment of the Obligations), subject to the rights of Previous Security
Holders, shall be entitled and empowered, by intervention in such proceeding or otherwise:



to file and prove a claim for the whole amount of the Obligations and to file such other
papers or documents as may be necessary or advisable in order to have the claims of the Secured
Party (including any claim for the reasonable legal fees and expenses and other expenses paid or
incurred by the Secured Party permitted hereunder and of the Secured Party allowed in such judicial
proceeding), and



to collect and receive any monies or other property payable or deliverable on any such claims
and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator,
sequestrator or other similar official in any such judicial proceeding is hereby authorized by the
Secured Party to make such payments to the Secured Party and, in the event that the Secured Party
shall consent to the making of such payments directed to the Secured Party, to pay to the Secured
Party any amounts for expenses due it hereunder.




	 	 	 	Section Duties Regarding Pledged Property.





The Secured Party shall have no duty as to the collection or protection of the Pledged
Property or any income thereon or as to the preservation of any rights pertaining thereto, beyond
the safe custody and reasonable care of any of the Pledged Property actually in the Secured Party’s
possession.



ARTICLE




AFFIRMATIVE COVENANTS




The Company covenants and agrees that, from the date hereof and until the Obligations have
been fully paid and satisfied, unless the Secured Party shall consent otherwise in writing (as
provided in Section 8.4 hereof):




	 	 	 	Section Existence, Properties, Etc.





The Company shall do, or cause to be done, all things, or proceed with due diligence with any
actions or courses of action, that may be reasonably necessary (i) to maintain Company’s due
organization, valid existence and good standing under the laws of its state of incorporation, and
(ii) to preserve and keep in full force and effect all qualifications, licenses and registrations
in those jurisdictions in which the failure to do so could have a Material Adverse Effect (as
defined below); and (b) the Company shall not do, or cause to be done, any act impairing the
Company’s corporate power or authority (i) to carry on the Company’s business as now conducted, and
(ii) to execute or deliver this Agreement or any other document delivered in connection herewith,
including, without limitation, any UCC-1 Financing Statements required by the Secured Party to
which it is or will be a party, or perform any of its obligations hereunder or thereunder. For
purpose of this Agreement, the term “Material Adverse Effect” shall mean any material and
adverse affect as determined by Secured Party in its sole discretion, whether individually or in
the aggregate, upon (a) the Company’s assets, business, operations, properties or condition,
financial or otherwise; (b) the Company’s to make payment as and when due of all or any part of the
Obligations; or (c) the Pledged Property.




	 	 	 	Section Financial Statements and Reports.





The Company shall furnish to the Secured Party within a reasonable time such financial data as
the Secured Party may reasonably request, including, without limitation, the following:



(a) The balance sheet of the Company as of the close of each fiscal year, the statement of
earnings and retained earnings of the Company as of the close of such fiscal year, and statement of
cash flows for the Company for such fiscal year, all in reasonable detail, prepared in accordance
with generally accepted accounting principles consistently applied, certified by the chief
executive and chief financial officers of the Company as being true and correct and accompanied by
a certificate of the chief executive and chief financial officers of the Company, stating that the
Company has kept, observed, performed and fulfilled each covenant, term and condition of this
Agreement during such fiscal year and that no Event of Default hereunder has occurred and is
continuing, or if an Event of Default has occurred and is continuing, specifying the nature of
same, the period of existence of same and the action the Company proposes to take in connection
therewith; and



(b) Copies of all accountants’ reports and accompanying financial reports submitted to the
Company by independent accountants in connection with each annual examination of the Company.




	 	 	 	Section Accounts and Reports.





The Company shall maintain a standard system of accounting in accordance with generally
accepted accounting principles consistently applied and provide, at its sole expense, to the
Secured Party the following:



as soon as available, a copy of any notice or other communication alleging any nonpayment or
other material breach or default, or any foreclosure or other action respecting any material
portion of its assets and properties, received respecting any of the indebtedness of the Company in
excess of $15,000 (other than the Obligations), or any demand or other request for payment under
any guaranty, assumption, purchase agreement or similar agreement or arrangement respecting the
indebtedness or obligations of others in excess of $15,000, including any received from any person
acting on behalf of the Secured Party or beneficiary thereof; and



within fifteen (15) days after the making of each submission or filing, a copy of any report,
financial statement, notice or other document, whether periodic or otherwise, submitted to the
shareholders of the Company, or submitted to or filed by the Company with any governmental
authority involving or affecting (i) the Company that could have a Material Adverse Effect; (ii)
the Obligations; (iii) any part of the Pledged Property; or (iv) any of the transactions
contemplated in this Agreement or the Loan Instruments.




	 	 	 	Section Maintenance of Books and Records; Inspection.





The Company shall maintain its books, accounts and records in accordance with generally
accepted accounting principles consistently applied, and permit the Secured Party, its officers and
employees and any professionals designated by the Secured Party in writing, at any time to visit
and inspect any of its properties (including but not limited to the collateral security described
in the Transaction Documents and/or the Loan Instruments), corporate books and financial records,
and to discuss its accounts, affairs and finances with any employee, officer or director thereof.




	 	 	 	Section Maintenance and Insurance.





The Company shall maintain or cause to be maintained, at its own expense, all of its assets
and properties in good working order and condition, making all necessary repairs thereto and
renewals and replacements thereof.



The Company shall maintain or cause to be maintained, at its own expense, insurance in form,
substance and amounts (including deductibles), which the Company deems reasonably necessary to the
Company’s business, (i) adequate to insure all assets and properties of the Company, which assets
and properties are of a character usually insured by persons engaged in the same or similar
business against loss or damage resulting from fire or other risks included in an extended coverage
policy; (ii) against public liability and other tort claims that may be incurred by the Company;
(iii) as may be required by the Transaction Documents and/or applicable law and (iv) as may be
reasonably requested by Secured Party, all with adequate, financially sound and reputable insurers.




	 	 	 	Section Contracts and Other Collateral.





The Company shall perform all of its obligations under or with respect to each instrument,
receivable, contract and other intangible included in the Pledged Property to which the Company is
now or hereafter will be party on a timely basis and in the manner therein required, including,
without limitation, this Agreement.




	 	 	 	Section Defense of Collateral, Etc.





The Company shall defend and enforce its right, title and interest in and to any part of: (a)
the Pledged Property; and (b) if not included within the Pledged Property, those assets and
properties whose loss could have a Material Adverse Effect, the Company shall defend the Secured
Party’s right, title and interest in and to each and every part of the Pledged Property, each
against all manner of claims and demands on a timely basis to the full extent permitted by
applicable law.




	 	 	 	Section Payment of Debts, Taxes, Etc.





The Company shall pay, or cause to be paid, all of its indebtedness and other liabilities and
perform, or cause to be performed, all of its obligations in accordance with the respective terms
thereof, and pay and discharge, or cause to be paid or discharged, all taxes, assessments and other
governmental charges and levies imposed upon it, upon any of its assets and properties on or before
the last day on which the same may be paid without penalty, as well as pay all other lawful claims
(whether for services, labor, materials, supplies or otherwise) as and when due




	 	 	 	Section Taxes and Assessments; Tax Indemnity.





The Company shall (a) file all tax returns and appropriate schedules thereto that are required
to be filed under applicable law, prior to the date of delinquency, (b) pay and discharge all
taxes, assessments and governmental charges or levies imposed upon the Company, upon its income and
profits or upon any properties belonging to it, prior to the date on which penalties attach
thereto, and (c) pay all taxes, assessments and governmental charges or levies that, if unpaid,
might become a lien or charge upon any of its properties; provided, however, that the Company in
good faith may contest any such tax, assessment, governmental charge or levy described in the
foregoing clauses (b) and (c) so long as appropriate reserves are maintained with respect thereto.




	 	 	 	Section Compliance with Law and Other Agreements.





The Company shall maintain its business operations and property owned or used in connection
therewith in compliance with (a) all applicable federal, state and local laws, regulations and
ordinances governing such business operations and the use and ownership of such property, and (b)
all agreements, licenses, franchises, indentures and mortgages to which the Company is a party or
by which the Company or any of its properties is bound. Without limiting the foregoing, the
Company shall pay all of its indebtedness promptly in accordance with the terms thereof.




	 	 	 	Section Notice of Default.





The Company shall give written notice to the Secured Party of the occurrence of any default or
Event of Default under this Agreement, the Transaction Documents or any other Loan Instrument or
any other agreement of Company for the payment of money, promptly upon the occurrence thereof.




	 	 	 	Section Notice of Litigation.





The Company shall give notice, in writing, to the Secured Party of (a) any actions, suits or
proceedings wherein the amount at issue is in excess of $50,000, instituted by any persons against
the Company, or affecting any of the assets of the Company, and (b) any dispute, not resolved
within fifteen (15) days of the commencement thereof, between the Company on the one hand and any
governmental or regulatory body on the other hand, which might reasonably be expected to have a
Material Adverse Effect on the business operations or financial condition of the Company.



ARTICLE




NEGATIVE COVENANTS




The Company covenants and agrees that, from the date hereof until the Obligations have been
fully paid and satisfied, the Company shall not, unless the Secured Party shall consent otherwise
in writing:




	 	 	 	Section Indebtedness.





The Company shall not create, incur, assume or suffer to exist any additional indebtedness of
any description whatsoever in an aggregate amount in excess of $100,000 (excluding any indebtedness
of the Company to the Secured Party, trade accounts payable and accrued expenses incurred in the
ordinary course of business and the endorsement of negotiable instruments payable to the Company,
respectively for deposit or collection in the ordinary course of business), unless (i) any security
interest securing such indebtedness is junior to that of the Secured Party, and (ii) the Company
provides advanced written notice to the Secured Party.




	 	 	 	Section Liens and Encumbrances.





In each case except for liens junior to that of the Secured Party, the Company shall not
directly or indirectly make, create, incur, assume or permit to exist any assignment, transfer,
pledge, mortgage, security interest or other lien or encumbrance of any nature in, to or against
any part of the Pledged Property, or offer or agree to do so, or own or acquire or agree to acquire
any asset or property of any character subject to any of the foregoing encumbrances (including any
conditional sale contract or other title retention agreement), or assign, pledge or in any way
transfer or encumber its right to receive any income or other distribution or proceeds from any
part of the Pledged Property or the Company’s capital stock; or enter into any sale-leaseback
financing respecting any part of the Pledged Property as lessee, or cause or assist the inception
or continuation of any of the foregoing.




	 	 	 	Section Certificate of Incorporation, By-Laws, Mergers, Consolidations, Acquisitions and
Sales.





Without the prior express written consent of the Secured Party, which shall not be
unreasonably witheld, the Company shall not: (a) Amend its Certificate of Incorporation or
By-Laws; (b) be a party to any merger, consolidation or corporate reorganization, (c) purchase or
otherwise acquire all or substantially all of the assets or stock of, or any partnership or joint
venture interest in, any other person, firm or entity, (d) sell, transfer, convey, grant a security
interest in or lease all or any substantial part of its assets, in each case except for liens
junior to that of the Secured Party, nor (e) create any subsidiaries nor convey any of its assets
to any subsidiary.




	 	 	 	Section Management.





The Company shall not change both its Chief Executive Officer and Chief Financial Officer
without the prior written consent of the Secured Party. The senior management of the Company is a
material factors in the Secured Party’s willingness to institute and maintain a lending
relationship with the Company.




	 	 	 	Section Dividends, Etc.





The Company shall not declare or pay any dividend of any kind, in cash or in property, on any
class of its capital stock, nor purchase, redeem, retire or otherwise acquire for value any shares
of such stock, nor make any distribution of any kind in respect thereof, nor make any return of
capital to shareholders without the prior written consent of the Secured Party.




	 	 	 	Section Guaranties; Loans.





The Company shall not guarantee nor be liable in any manner, whether directly or indirectly,
or become contingently liable after the date of this Agreement in connection with the obligations
or indebtedness of any person or persons, except for (i) the indebtedness currently secured by the
liens identified on the Pledged Property identified on Exhibit A hereto and (ii) the endorsement of
negotiable instruments payable to the Company for deposit or collection in the ordinary course of
business. The Company shall not make any loan, advance or extension of credit to any person other
than in the normal course of its business.



	 	 	 
	Section

	 	INTENTIONALLY OMITTED.
	
 
	 	 
	 
	 	 
	Section

	 	Conduct of Business.
	
 
	 	 






The Company will continue to engage, in an efficient and economical manner, in a business of
the same general type as conducted by it on the date of this Agreement.




	 	 	 	Section Places of Business.





The location of the Company’s chief place of business is 5391 Darwin Court, Carlsbad, CA
92008. The Company shall not change the location of its chief place of business, chief executive
office or any place of business disclosed to the Secured Party or move any of the Pledged Property
from its current location without thirty (30) days’ prior written notice to the Secured Party in
each instance.



ARTICLE




MISCELLANEOUS





	 	 	 	Section Notices.





All notices or other communications required or permitted to be given pursuant to this
Agreement shall be in writing and shall be considered as duly given on: (a) the date of delivery,
if delivered in person, by nationally recognized overnight delivery service or (b) five (5) days
after mailing if mailed from within the continental United States by certified mail, return receipt
requested to the party entitled to receive the same:



	 	 	 
	If to the Secured Party:

	 	Cornell Capital Partners, LP
	 
	 	 
	
 
	 	101 Hudson Street-Suite 3700
	 
	 	 
	
 
	 	Jersey City, New Jersey 07302
	 
	 	 
	
 
	 	Attention: Mark Angelo
	 
	 	 
	
 
	 	Portfolio Manager
	 
	 	 
	
 
	 	Telephone: (201) 986-8300
	 
	 	 
	
 
	 	Facsimile: (201) 985-8266
	 
	 	 
	With a copy to:

	 	David Gonzalez, Esq.
	 
	 	 
	
 
	 	101 Hudson Street, Suite 3700
	 
	 	 
	
 
	 	Jersey City, NJ 07302
	 
	 	 
	
 
	 	Telephone: (201) 985-8300
	 
	 	 
	
 
	 	Facsimile: (201) 985-8266
	 
	 	 
	And if to the Company:

	 	The Immune Response Corporation
	 
	 	 
	
 
	 	5391 Darwin Court
	 
	 	 
	
 
	 	Carlsbad, CA 92008
	 
	 	 
	
 
	 	Attention: Michael K. Green
	 
	 	 
	
 
	 	Facsimile: (760) 431-8636
	 
	 	 
	With a copy to:

	 	Heller Ehrman LLP
	 
	 	 
	
 
	 	4530 La Jolla Village Drive, 7th Floor
	 
	 	 
	
 
	 	San Diego, CA 92122
	 
	 	 
	
 
	 	Attention: Hayden J. Trubitt, Esq.
	 
	 	 
	
 
	 	Facsimile: (858) 587-5903






Any party may change its address by giving notice to the other party stating its new address.
Commencing on the tenth (10th) day after the giving of such notice, such newly
designated address shall be such party’s address for the purpose of all notices or other
communications required or permitted to be given pursuant to this Agreement.




	 	 	 	Section Severability.





If any provision of this Agreement shall be held invalid or unenforceable, such invalidity or
unenforceability shall attach only to such provision and shall not in any manner affect or render
invalid or unenforceable any other severable provision of this Agreement, and this Agreement shall
be carried out as if any such invalid or unenforceable provision were not contained herein.




	 	 	 	Section Expenses.





In the event of an Event of Default, the Company will pay to the Secured Party the amount of
any and all reasonable expenses, including the reasonable fees and expenses of its counsel, which
the Secured Party may incur in connection with: (i) the custody or preservation of, or the sale,
collection from, or other realization upon, any of the Pledged Property; (ii) the exercise or
enforcement of any of the rights of the Secured Party hereunder or (iii) the failure by the Company
to perform or observe any of the provisions hereof.




	 	 	 	Section Waivers, Amendments, Etc.





The Secured Party’s delay or failure at any time or times hereafter to require strict
performance by Company of any undertakings, agreements or covenants shall not waiver, affect, or
diminish any right of the Secured Party under this Agreement to demand strict compliance and
performance herewith. Any waiver by the Secured Party of any Event of Default shall not waive or
affect any other Event of Default, whether such Event of Default is prior or subsequent thereto and
whether of the same or a different type. None of the undertakings, agreements and covenants of the
Company contained in this Agreement, and no Event of Default, shall be deemed to have been waived
by the Secured Party, nor may this Agreement be amended, changed or modified, unless such waiver,
amendment, change or modification is evidenced by an instrument in writing specifying such waiver,
amendment, change or modification and signed by the Secured Party.




	 	 	 	Section  Continuing Security Interest.





This Agreement shall create a continuing security interest in the Pledged Property and shall:
(i) remain in full force and effect until payment in full of the Obligations; and (ii) be binding
upon the Company and its successors and heirs and (iii) inure to the benefit of the Secured Party
and its successors and assigns. Upon the payment or satisfaction in full of the Obligations, the
Company shall be entitled to the return, at its expense, of such of the Pledged Property as shall
not have been sold in accordance with Section 5.2 hereof or otherwise applied pursuant to the terms
hereof.




	 	 	 	Section Independent Representation.





Each party hereto acknowledges and agrees that it has received or has had the opportunity to
receive independent legal counsel of its own choice and that it has been sufficiently apprised of
its rights and responsibilities with regard to the substance of this Agreement.




	 	 	 	Section Applicable Law: Jurisdiction.





This Agreement shall be governed by and interpreted in accordance with the laws of the State
of New Jersey without regard to the principles of conflict of laws. The parties further agree that
any action between them shall be heard in Hudson County, New Jersey, and expressly consent to the
jurisdiction and venue of the Superior Court of New Jersey, sitting in Hudson County and the United
States District Court for the District of New Jersey sitting in Newark, New Jersey for the
adjudication of any civil action asserted pursuant to this Paragraph.




	 	 	 	Section Waiver of Jury Trial.





AS A FURTHER INDUCEMENT FOR THE SECURED PARTY TO ENTER INTO THIS AGREEMENT AND TO MAKE THE
FINANCIAL ACCOMMODATIONS TO THE COMPANY, THE COMPANY HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING RELATED IN ANY WAY TO THIS AGREEMENT AND/OR ANY AND ALL OTHER DOCUMENTS
RELATED TO THIS TRANSACTION.




	 	 	 	Section Entire Agreement.





This Agreement constitutes the entire agreement among the parties and supersedes any prior
agreement or understanding among them with respect to the subject matter hereof.



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IN WITNESS WHEREOF, the parties hereto have executed this Security Agreement as of the date
first above written.



	 	 	 	 	 
	COMPANY:

	 

	THE IMMUNE RESPONSE CORPORATION







	 
	By:

	 

	Name:

	Title:

	 

	SECURED PARTY:

	 

	CORNELL CAPITAL PARTNERS, LP

	 

	By: Yorkville Advisors, LLC

	Its: General Partner

	By:

	 

	 

	Name: Mark Angelo

	 

	Title: Portfolio Manager







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EXHIBIT A




DEFINITION OF PLEDGED PROPERTY




For the purpose of securing prompt and complete payment and performance by the Company of all
of the Obligations, the Company unconditionally and irrevocably hereby grants to the Secured Party
a continuing security interest in and to, and lien upon, the following Pledged Property of the
Company:



all goods of the Company, including, without limitation, machinery, equipment, furniture,
furnishings, fixtures, signs, lights, tools, parts, supplies and motor vehicles of every kind and
description, now or hereafter owned by the Company or in which the Company may have or may
hereafter acquire any interest, and all replacements, additions, accessions, substitutions and
proceeds thereof, arising from the sale or disposition thereof, and where applicable, the proceeds
of insurance and of any tort claims involving any of the foregoing;



all inventory of the Company, including, but not limited to, all goods, wares, merchandise,
parts, supplies, finished products, other tangible personal property, including such inventory as
is temporarily out of Company’s custody or possession and including any returns upon any accounts
or other proceeds, including insurance proceeds, resulting from the sale or disposition of any of
the foregoing;



all contract rights and general intangibles of the Company, including, without limitation,
goodwill, trademarks, trade styles, trade names, leasehold interests, partnership or joint venture
interests, patents and patent applications, copyrights, deposit accounts whether now owned or
hereafter created;



all documents, warehouse receipts, instruments and chattel paper of the Company whether now
owned or hereafter created;



all accounts and other receivables, instruments or other forms of obligations and rights to
payment of the Company (herein collectively referred to as “Accounts”), together with the
proceeds thereof, all goods represented by such Accounts and all such goods that may be returned by
the Company’s customers, and all proceeds of any insurance thereon, and all guarantees, securities
and liens which the Company may hold for the payment of any such Accounts including, without
limitation, all rights of stoppage in transit, replevin and reclamation and as an unpaid vendor
and/or lienor, all of which the Company represents and warrants will be bona fide and existing
obligations of its respective customers, arising out of the sale of goods by the Company in the
ordinary course of business;



to the extent assignable, all of the Company’s rights under all present and future
authorizations, permits, licenses and franchises issued or granted in connection with the
operations of any of its facilities;



all products and proceeds (including, without limitation, insurance proceeds) from the
above-described Pledged Property.




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