**Exhibit10.139**

 

THE IMMUNE RESPONSECORPORATION8% CONVERTIBLE SECURED PROMISSORY NOTE

 
| $80,000 |   | New York, New York |
|---------|--------|--------------------|
|    |   | May 9, 2003        |

 

In consideration of the receipt of $80,000, theundersigned, The Immune Response Corporation, a Delaware corporation (the “Issuer”),hereby unconditionally promises to pay to the order of Cheshire Associates LLC(the “Purchaser”), at the office of the Purchaser located at 535 MadisonAvenue, 18th Floor, New York, New York 10022, or such other addressdesignated by the Purchaser, in lawful money of the United States of Americaand in immediately available funds, on May 9, 2004 (the “Note Maturity Date”)the principal amount of Eighty Thousand Dollars ($80,000) and accrued interestat the rate of eight (8%) percent per annum based on a 365-day year (“InterestRate”).

 

Interest (other than interest accruing as a result ofa failure by Issuer to pay any amount when due as set forth below) in respectof the Note shall accrue until all amounts remaining owed under such Note shallbe fully repaid, and shall be due and payable in full on the Note MaturityDate.  If all or a portion of theprincipal amount of the Note or any interest payable thereon shall not berepaid when due whether on the applicable repayment date, by acceleration or otherwise,such overdue amounts on such Note shall bear interest at a rate per annum thatis three (3%) percent above the Interest Rate (i.e., 11%) from the dateof such non-payment until such amount is paid in full (after as well as beforejudgment).  All payments to be made byIssuer hereunder or pursuant to the Notes shall be made in lawful money of theUnited States by certified check or wire transfer in immediately availablefunds. Any interest accruing on overdue amounts shall be payable on demand.

 

The obligation to make the payments provided for inthis Note are absolute and unconditional, and are not subject to any defense,set-off, counterclaim, rescission, recoupment or adjustment whatsoever.

 

The obligations under this Note shall be secured by thatcertain Intellectual Property Security Agreement, dated November 9, 2001, byand between the Issuer and Kevin Kimberlin Partners, L.P., a Delaware limitedpartnership (“KKP”), as amended by Amendment No. 1, dated February 26, 2002, byand between the Issuer, KKP and Oshkim Limited Partnership (“Oshkim”), and asfurther amended by Amendment No. 2, dated July 11, 2002, by and between theIssuer, KKP, Oshkim and The Kimberlin Family 1998 Irrevocable Trust (the“Kimberlin Trust”).

 

This Note (including all accrued and unpaid interest)shall be convertible, at the sole option of the Purchaser, in whole or in part,into shares of the Issuer’s common stock, par value $0.0025 per share (the“Common Stock”), at the closing price of the Common Stock on the date immediatelypreceding the date hereof (i.e., $1.35).

 

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Upon the occurrence of any one or more of the Eventsof Default specified on Exhibit A, attached hereto, all amounts thenremaining unpaid on this Note and all other promissory notes issued by the Issuerto Purchaser or to any related party of the Purchaser shall become, or may bedeclared by the Purchaser to be, immediately due and payable.

 

This Note is freely transferable and assignable, inwhole or in part, by the Purchaser, and such transferee or assignee shall havethe same rights hereunder as the Purchaser. The Issuer may not assign or delegate any of its obligations under thisNote without the prior written consent of the Purchaser (or its successor, transfereeor assignee).

 

All parties now and hereafter liable with respect tothis Note, whether maker, principal, surety, guarantor, endorser or otherwise,hereby waive presentment, demand, protest and all other notices of any kind.

 

The Issuer agrees to pay all of the Purchaser’sexpenses, including reasonable attorneys’ costs and fees, incurred incollecting sums due under this Note.

 

All or part of the Note may be prepaid by Issuer uponat least five (5) days’ prior written notice to the Purchaser thereof; provided,however, that any such prepayment on such Note shall be first applied toaccrued and unpaid interest of the outstanding Note and then against itsoutstanding principal.

 

This Note shall be governed by, and construed andinterpreted in accordance with, the laws of the State of New York.

 
|   | THE IMMUNE RESPONSE CORPORATION |
|--------|---------------------------------|
|   |                            |
|   |                            |   |
|   | By:                             |   |   |
|   |                            | Name: |   |   |
|   |                            | Title: |   |   |
|        |                                 |  |  |  |  |

 

2

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**ExhibitA**

 

**Eventsof Default**.

 

If any of the following events (each, an “Event ofDefault”) shall occur:

 

(i)                                     Issuershall fail to pay any principal or interest on the Note, or on any otherpromissory note issued by the Issuer to the Purchaser or to any related partyof the Purchaser, within three (3) business days after such payment becomes duein accordance with the terms thereof or hereof;

 

(ii)                                  Anyrepresentation or warranty made or deemed made by Issuer herein or in any otheragreement, certificate or instrument contemplated by the Note PurchaseAgreement, dated as of November 9, 2001, by and between the Issuer and KKP, asamended by Amendment No. 1, dated as of February 14, 2002 and Amendment No. 2,dated as of May 3, 2002, each by and between the Issuer, KKP, and Oshkim and asfurther amended by Amendment No. 3, dated as of July 11, 2002, by and betweenthe Issuer, KKP, Oshkim and the Kimberlin Trust (the “Agreement”) or that iscontained in any certificate, document or financial or other statementfurnished by Issuer at any time under or in connection with the Agreement shallhave been incorrect in any material respect on or as of the date made or deemedmade;

 

(iii)                               Issuer shall default, inany material respect, in the observance or performance of any other agreementcontained in the Agreement or any other agreement or instrument contemplated bythe Agreement (including the Notes, Warrant Agreements, and the IntellectualProperty Security Agreement, each as defined in the Agreement), and suchdefault shall continue unremedied for a period of ten (10) days after writtennotice to Issuer of such default;

 

(iv)                              (a)  Issuer shall commence any case, proceedingor other action (x) under any existing or future law of any jurisdiction,domestic or foreign, relating to bankruptcy, insolvency, reorganization,conservatorship or relief of debtors, seeking to have an order for relief enteredwith respect to it, or seeking to adjudicate it bankrupt or insolvent, orseeking reorganization, arrangement, adjustment, winding-up, liquidation,dissolution, composition or other relief with respect to it or its debts or (y)seeking appointment of a receiver, trustee, custodian, conservator or othersimilar official for it or for all or any substantial part of its assets, orIssuer shall make a general assignment for the benefit of its creditors; or (b)there shall be commenced against Issuer any case, proceeding or other action ofa nature referred to in clause (a) above that (A) results in the entry of anorder for relief of any such adjudication or appointment or (B) remainsundismissed, undischarged or unbonded for a period of sixty (60) days; or (c)there shall be commenced against Issuer any case, proceeding or other actionseeking issuance of a warrant of attachment, execution, distrait or similarprocess against all or any substantial part of its assets that results in theentry of an order for any such relief that shall not have been vacated,discharged, or stayed or bonded pending appeal within sixty (60) days from theentry thereof; or (d) Issuer shall take any action in furtherance of, orindicating its consent to, approval of, or acquiescence in, any of the acts setforth in clauses (a), (b) or (c) above; or (e) Issuer shall generally not, orshall be unable to, or shall admit in writing its inability to, pay its debtsas they become due;

 

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(v)Issuer shall default in the payment of principal on any indebtedness (to anyparty other than Purchaser) in excess of $200,000 beyond the period of grace,if any, provided in the instrument or agreement under which such indebtednesswas created; or

 

(vi)Issuer shall have been unable to obtain by June 28, 2003 stockholder approvalof the Next Issuer Offering and the Purchaser’sparticipation therein inaccordance with Rule 4350(i) of the National Association of Securities Dealers,Inc.;

 

then, and in any such event, (x) if such event is anEvent of Default specified in clause (iv) above of with respect to Issuer, theNote (with all accrued and unpaid interest thereon) and all other amounts owingunder the Agreement or under any of the promissory notes issued by the Issuerto the Purchaser or any related party of the Purchaser shall automatically andimmediately become due and payable and (y) if such event is any other Event ofDefault, Purchaser may, by written notice to Issuer, immediately declare theNote (with all accrued and unpaid interest thereon) and all other promissorynotes (with all accrued and unpaid interest thereon) issued by the Issuer tothe Purchaser or any related party of the Purchaser to be due and payableforthwith, whereupon the same shall immediately become due and payable.  Except as expressly provided above,presentation, demand, protest and all other notices of any kind are herebyexpressly waived by Issuer.

 

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