**Exhibit 10.145**

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**SECURITIES PURCHASE AGREEMENT**

 

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

 

WHEREAS, subject to the terms and conditions set forthin this Agreement and pursuant to Section 4(2) of the Securities Act (asdefined below), and Rule 506 promulgated thereunder, the Company desires toissue and sell to the Purchasers, and the Purchasers, severally and notjointly, desire to purchase from the Company in the aggregate, up to 5,940,595shares of Common Stock and Warrants to purchase up to 2,970,298 shares of CommonStock.

 

NOW, THEREFORE, IN CONSIDERATION of the mutualcovenants contained in this Agreement, and for other good and valuableconsideration the receipt and adequacy of which are hereby acknowledged, theCompany and each Purchaser agrees as follows:

 

# ARTICLE I.

# DEFINITIONS

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

 

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

 

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

 

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

 

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

 

“Closing Date” means the date of a Closing.

 

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

 

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

 

“Commission” means the Securities and ExchangeCommission.

 

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

 

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

 

“Company Counsel” means Pillsbury Winthrop LLP.

 

“Disclosure Schedules” means the Disclosure Schedulesconcurrently delivered herewith.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Registration Statement” means a registrationstatement meeting the requirements set forth in the Registration RightsAgreement and covering the resale by the Purchasers of the Shares and theWarrant Shares.

 

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

 

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

 

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

 

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

 

“Securities Act” means the Securities Act of1933, as amended.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

# ARTICLE II.

# PURCHASE AND SALE

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

 

2.2           Closing Conditions.

 

### (a)   At each Closing (unless otherwise specified below) theCompany shall deliver or cause to be delivered to each Purchaser the following:

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#### (i)    this Agreement duly executed by theCompany;

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#### (ii)   within 3 Business Days of the Closing Date, acertificate evidencing a number of Shares equal to such Purchaser’sSubscription Amount divided by the Per Share Purchase Price, registered in thename of such Purchaser;

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#### (iii)  within 3 Business Days of the Closing Date, a Warrant,registered in the name of such Purchaser, pursuant to which such Purchasershall have the right to acquire up to the number of shares of Common Stockequal to 50% of the Shares to be issued to such Purchaser at such Closing;

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#### (iv)  the Registration Rights Agreement duly executed by theCompany; and

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#### (v)   a legal opinion of Company Counsel, in the form of ExhibitA attached hereto.

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### (b)   At a Closing, each Purchaser shall deliver or cause tobe delivered to the Company the following:

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#### (i)    this Agreement duly executed by such Purchaser;

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#### (ii)   such Purchaser’s Subscription Amount as to suchClosing by wire transfer to the account of the Company as provided to thePurchasers in writing prior to the Closing Date; and

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#### (iii)  the Registration Rights Agreement duly executed bysuch Purchaser.

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### (c)   All representations and warranties of the other partycontained herein shall remain true and correct as of the Closing Date (exceptfor representations and warranties that speak as of a specific date, whichrepresentations and warranties must be correct as of such date).

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### (d)   As of the Closing Date, there shall have been noMaterial Adverse Effect with respect to the Company since the date hereof.

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### (e)   From the date hereof to the Closing Date, trading inthe Common Stock shall not have been suspended by the Commission (except forany suspension of trading of limited duration agreed to by the Company, whichsuspension shall be terminated prior to the Closing), and, at any time prior tothe Closing Date, trading in securities generally as reported by BloombergFinancial Markets shall not have been suspended or limited, or minimum pricesshall not have been established on securities whose trades are reported by suchservice, or on any Trading Market, nor shall a banking moratorium have beendeclared either by the United States or New York State authorities.

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# ARTICLE III.

# REPRESENTATIONS AND WARRANTIES

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

 

### (a)   Subsidiaries.  Allsubsidiaries of the Company are listed on Exhibit 21.1 of the Company’s AnnualReport on Form 10-K for the year ended December 31, 2002 (each a“Subsidiary”).  The Company owns,directly or indirectly, all of the capital stock of each Subsidiary free andclear of any Liens, and all the issued and outstanding shares of capital stockof each Subsidiary are validly issued and are fully paid, non-assessable andfree of preemptive and similar rights.

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### (b)   Organization and Qualification. Each of the Company and the Subsidiaries is an entity duly incorporated,validly existing and in good standing under the laws of the jurisdiction of itsincorporation or organization (as applicable), with the requisite corporatepower and authority to own and use its properties and assets and to carry onits business as currently conducted. Neither the Company nor any Subsidiary is in violation of any of theprovisions of its respective certificate or articles of incorporation, bylawsor other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conductbusiness and is in good standing as a foreign corporation or other entity ineach jurisdiction in which the nature

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### of the business conductedor property owned by it makes such qualification necessary, except where thefailure to be so qualified or in good standing, as the case may be, would nothave or reasonably be expected to result in (i) a material adverse effect onthe legality, validity or enforceability of any Transaction Document, (ii) amaterial adverse effect on the operations, assets, business or financialcondition of the Company and the Subsidiaries, taken as a whole, or (iii) amaterial adverse effect on the Company’s ability to perform in any materialrespect on a timely basis its obligations under any Transaction Document (anyof (i), (ii) or (iii), a “Material Adverse Effect”).

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### (c)   Authorization; Enforcement. The Company has the requisite corporate power and authority to enterinto and to consummate the transactions contemplated by each of the TransactionDocuments and otherwise to carry out its obligations thereunder.  The execution and delivery of each of theTransaction Documents by the Company and the consummation by it of the transactionscontemplated thereby have been duly authorized by all necessary action on thepart of the Company and no further action is required by the Company inconnection therewith.  Each TransactionDocument has been (or upon delivery will have been) duly executed by theCompany and, when delivered in accordance with the terms hereof, assuming thevalid execution and delivery thereof by the Purchasers, will constitute thevalid and binding obligation of the Company enforceable against the Company inaccordance with its terms except (i) as limited by applicable bankruptcy,insolvency, reorganization, moratorium and other laws of general applicationaffecting enforcement of creditors’ and contracting parties rights generallyand (ii) as limited by laws relating to the availability of specificperformance, injunctive relief or other equitable remedies, and (iii) withrespect to the indemnification provisions set forth in this Agreement and theRegistration Rights Agreement, as limited by public policy, and in each case(i), (ii) or (iii) regardless of whether enforceability is considered in aproceeding in equity or at law.

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### (d)   No Conflicts.  Theexecution, delivery and performance of the Transaction Documents by the Companyand the consummation by the Company of the transactions contemplated thereby donot and will not (i) conflict with or violate any provision of the Company’s orany Subsidiary’s certificate or articles of incorporation, bylaws or otherorganizational or charter documents, or (ii) conflict with, or constitute adefault (or an event that with notice or lapse of time or both would become adefault) under, or give to others any rights of termination, amendment,acceleration or cancellation (with or without notice, lapse of time or both)of, any agreement, credit facility, debt or other instrument (evidencing aCompany or Subsidiary debt) to which the Company or any Subsidiary is a partyor by which any property or asset of the Company or any Subsidiary is bound oraffected, or (iii) result in a violation of any law, rule, regulation, order,judgment, injunction, decree or other restriction of any court or governmentalauthority to which the Company or a Subsidiary is subject (including UnitedStates federal and state securities laws and regulations), or by which anymaterial property or asset of the Company or a Subsidiary is bound or affected;except in the case of each of clauses (ii) and (iii), such as would not have orreasonably be expected to result in a Material Adverse Effect.

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### (e)   Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorizationor order of, give any notice to, or make any filing or

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### registration with, anycourt or other federal, state, local or other governmental authority or otherPerson in connection with the execution, delivery and performance by theCompany of the Transaction Documents, other than (a) the filing with theCommission of the Registration Statement, the application(s) to the NasdaqSmallCap Market for the listing of the Shares and Warrant Shares for tradingthereon, and applicable Blue Sky filings, (b) such as have already beenobtained or such exemptive filings as are required to be made under applicablesecurities laws, and (c) such other filings as may be required following theClosing Date under the Securities Act, the Exchange Act and corporate law.

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### (f)    Issuance of the Securities. The Securities are duly authorized and, the Shares and Warrant Shares,when issued and paid for in accordance with the Transaction Documents, will beduly and validly issued, fully paid and nonassessable, free and clear of allLiens.  The Company has reserved fromits duly authorized capital stock the maximum number of shares of Common Stockissuable pursuant to this Agreement and the Warrants.

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### (g)   Capitalization.  Thecapitalization of the Company as of June 30, 2003, is as described in theCompany’s most recent periodic report filed with the Commission.  The Company has not issued any capital stocksince such filing other than pursuant to the exercise of employee stock optionsunder the Company’s stock option plans, pursuant to the conversion or exerciseof Common Stock Equivalents outstanding on the date hereof and issuances in theCompany’s ordinary course of business. No Person has any right of first refusal, preemptive right, right ofparticipation, or any similar right to participate in the transactionscontemplated by the Transaction Documents, which right has not been complied withor waived prior to the Closing.  Exceptfor (i) the purchase and sale of the Securities, (ii) employee stock optionsunder the Company’s stock option plans, (iii) grants made in the ordinarycourse of the Company’s business and (iv) preferred stock to be issued toCheshire Associates LLC in connection with the conversion of the outstandingpromissory notes the rights, preferences and privileges of which have not yetbeen designated, to the Company’s knowledge there are no outstanding options,warrants, calls, relating to, or securities, rights or obligations convertibleinto or exchangeable for, or giving any Person any right to subscribe for oracquire from the Company, any shares of Common Stock, or contracts orcommitments, understandings or arrangements by which the Company or anySubsidiary is or may become bound to issue additional shares of Common Stock,or securities or rights convertible or exchangeable into shares of CommonStock.  The issue and sale of theSecurities will not obligate the Company to issue shares of Common Stock orother securities to any Person (other than the Purchasers) and will not resultin a right of any holder of Company securities to adjust the exercise,conversion, exchange or reset price under such securities.

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### (h)   SEC Reports; Financial Statements. The Company has filed all reports required to be filed by it under theSecurities Act and the Exchange Act, including pursuant to Section 13(a) or15(d) of the Exchange Act, for the two years preceding the date hereof (or suchshorter period as the Company was required by law to file such material) (theforegoing materials, including the exhibits thereto, being collectivelyreferred to herein as the “SEC Reports” and, together with theDisclosure Schedules to this Agreement, the “Disclosure Materials”) on atimely basis or has received a valid

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### extension of such time offiling and has filed any such SEC Reports prior to the expiration of any suchextension.  As of their respectivedates, the SEC Reports complied in all material respects with the requirementsof the Securities Act and the Exchange Act and the rules and regulations of theCommission promulgated thereunder, as applicable, and none of the SEC Reports,when filed, contained any untrue statement of a material fact or omitted tostate a material fact required to be stated therein or necessary in order tomake the statements therein, in light of the circumstances under which theywere made, not misleading.  The financialstatements of the Company included in the SEC Reports comply in all materialrespects with applicable accounting requirements and the rules and regulationsof the Commission with respect thereto as in effect at the time of filing.  Such financial statements have been preparedin accordance with generally accepted accounting principles applied on aconsistent basis during the periods involved (“GAAP”), except as may beotherwise specified in such financial statements or the notes thereto andexcept that unaudited financial statements may not contain all footnotesrequired by GAAP, and fairly present in all material respects the financialposition of the Company and its consolidated subsidiaries as of and for thedates thereof and the results of operations and cash flows for the periods thenended, subject, in the case of unaudited statements, to normal, immaterial,year-end audit adjustments.

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### (i)    Material Changes.  Since June30, 2003, (i) there has been no event, occurrence or development that has hador that could reasonably be expected to result in a Material Adverse Effect,(ii) the Company has not incurred any liabilities (contingent or otherwise)other than (A) trade payables and accrued expenses incurred in the ordinarycourse of business consistent with past practice and (B) liabilities notrequired to be reflected in the Company’s financial statements pursuant to GAAPor required to be disclosed in filings made with the Commission, (iii) theCompany has not altered its method of accounting, (iv) the Company has notdeclared or made any dividend or distribution of cash or other property to itsstockholders or purchased, redeemed or made any agreements to purchase orredeem any shares of its capital stock and (v) the Company has not issued anyequity securities to any officer, director or Affiliate, except pursuant toexisting Company stock option plans; provided, however, the promissory notesissued to Cheshire Associates LLC will be converted into a series of preferredstock of the Company, the rights, preferences and privileges of which have notyet been designated.  The Company doesnot have pending before the Commission any request for confidential treatmentof information.

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### (j)    Litigation.  There is noaction, suit, inquiry, notice of violation, proceeding or investigation pendingor, to the knowledge of the Company, threatened against or affecting theCompany, any Subsidiary or any of their respective properties before or by anycourt, arbitrator, governmental or administrative agency or regulatory authority(federal, state, county, local or foreign) (collectively, an “Action”)which (i) materially and adversely affects or challenges the legality, validityor enforceability of any of the Transaction Documents or the Securities or (ii)could, if there were an unfavorable decision, have or reasonably be expected toresult in a Material Adverse Effect. Neither the Company nor any Subsidiary, nor, to the knowledge of theCompany, any director or officer thereof, is or has been the subject of anyAction involving a claim of violation of or liability under federal or statesecurities laws or a claim of breach of fiduciary duty.  There has not been, and to the knowledge ofthe Company, there is not pending or

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### contemplated, anyinvestigation by the Commission involving the Company or any current or formerdirector or officer of the Company.  TheCommission has not issued any stop order or other order suspending the effectivenessof any registration statement filed by the Company or any Subsidiary under theExchange Act or the Securities Act.

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### (k)   Labor Relations.  No materiallabor dispute exists or, to the knowledge of the Company, is imminent withrespect to any of the employees of the Company which could reasonably beexpected to result in a Material Adverse Effect.

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### (l)    Compliance.  Neither theCompany nor any Subsidiary (i) is in default under or in violation of (and noevent has occurred that has not been waived that, with notice or lapse of timeor both, would result in a default by the Company or any Subsidiary under), norhas the Company or any Subsidiary received notice of a claim that it is indefault under or that it is in violation of, any indenture, loan or creditagreement or any other agreement or instrument to which it is a party or bywhich it or any of its properties is bound (whether or not such default orviolation has been waived), (ii) is in violation of any order of any court,arbitrator or governmental body, or (iii) is in violation of any statute, ruleor regulation of any governmental authority, including without limitation allforeign, federal, state and local laws applicable to its business, except inthe case of clauses (i), (ii) and (iii) as would not have or reasonably beexpected to result in a Material Adverse Effect.

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### (m)  Regulatory Permits.  The Companyand the Subsidiaries possess all certificates, authorizations and permitsissued by the appropriate federal, state, local or foreign regulatoryauthorities necessary to conduct their respective businesses as described inthe SEC Reports, except where the failure to possess such permits would nothave or reasonably be expected to result in a Material Adverse Effect (“MaterialPermits”), and neither the Company nor any Subsidiary has received anynotice of proceedings relating to the revocation or modification of anyMaterial Permit.

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### (n)   Title to Assets.  The Companyand the Subsidiaries have good and marketable title in fee simple to all realproperty owned by them that is material to the business of the Company and theSubsidiaries, taken as a whole, and good and marketable title in all personalproperty owned by them that is material to the business of the Company and theSubsidiaries, taken as a whole, in each case free and clear of all Liens,except for Liens as do not materially affect the value of such property and donot materially interfere with the use made and proposed to be made of suchproperty by the Company and the Subsidiaries and Liens for the payment offederal, state or other taxes, the payment of which is neither delinquent norsubject to penalties.  To the knowledgeof the Company, any real property and facilities held under lease by theCompany and the Subsidiaries are held by them under valid, subsisting and enforceableleases with which the Company and the Subsidiaries are in material compliance.

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### (o)   Patents and Trademarks.  To theknowledge of the Company and each Subsidiary, the Company and the Subsidiarieshave, or have rights to use, all patents, patent applications, trademarks,trademark applications, service marks, trade names, copyrights, licenses andother similar rights that are necessary or material for use in connection withtheir respective businesses as described in the SEC Reports and which

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### the failure to so havecould have or reasonably be expected to result in a Material Adverse Effect,other than intellectual property generally available on commercial terms fromother sources (collectively, the “Intellectual Property Rights”).  There is not pending or, to the Company’sknowledge threatened, any claim or action alleging that the IntellectualProperty Rights used by the Company or any Subsidiary violates or infringes therights of any Person.  The Company hastaken all steps reasonably required in accordance with sound business practiceand business judgment to establish and preserve its ownership of suchIntellectual Property Rights.

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### (p)   Internal Accounting Controls. The Company and each of its subsidiaries maintains a system of internalaccounting controls sufficient to provide reasonable assurance that (i)transactions are executed in accordance with management’s general or specificauthorizations, (ii) transactions are recorded as necessary to permitpreparation of financial statements in conformity with GAAP and to maintainasset accountability, (iii) access to assets is permitted only in accordancewith management’s general or specific authorization, and (iv) the recordedaccountability for assets is compared with the existing assets at reasonableintervals and appropriate action is taken with respect to any differences. TheCompany has established disclosure controls and procedures (as defined inExchange Act Rules 13a-14 and 15d-14) for the Company and designed suchdisclosure controls and procedures to ensure that material information relatingto the Company, including its subsidiaries, is made known to the certifyingofficers by others within those entities, particularly during the period inwhich the Company’s Form 10-K or 10-Q, as the case may be, is beingprepared.  The Company’s certifyingofficers have evaluated the effectiveness of the Company’s controls andprocedures as of a date within 90 days prior to the filing date of the Form 10-Qfor the quarter ended June 30, 2003 (such date, the “Evaluation Date”).  The Company presented in its Form 10-Q forthe quarter ended June 30, 2003 the conclusions of the certifying officersabout the effectiveness of the disclosure controls and procedures based ontheir evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no significant changes in theCompany’s internal controls (as such term is defined in Item 307(b) ofRegulation S-K under the Exchange Act) or, to the Company’s knowledge, in otherfactors that could significantly affect the Company’s internal controls.

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### (q)   Certain Fees.  Except asdisclosed in Section 3(q) of the Disclosure Schedule, no brokerage or finder’sfees or commissions are or will be payable by the Company to any broker,financial advisor or consultant, finder, placement agent, investment banker,bank or other Person with respect to the transactions contemplated by thisAgreement.  The Purchasers shall have noobligation with respect to any fees or with respect to any claims made by or onbehalf of other Persons for fees of a type contemplated in this Section thatmay be due in connection with the transactions contemplated by this Agreement.

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### (r)    Private Placement. Assuming the accuracy of the Purchasersrepresentations and warranties set forth in Section 3.2, no registration underthe Securities Act is required for the offer and sale of the Securities by theCompany to the Purchasers as contemplated hereby. The issuance and sale of theSecurities hereunder does not contravene the rules and regulations of theTrading Market.

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### (s)   Investment Company. The Company is not an “investment company” within themeaning of the Investment Company Act of 1940, as amended.

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### (t)    Form S-3 Eligibility.  The Companyis eligible to register the resale of its Common Stock by the Purchasers underForm S-3 promulgated under the Securities Act.

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### (u)   Application of Takeover Protections. The Company and its Board of Directors have taken all necessary action,if any, in order to render inapplicable any control share acquisition, businesscombination, poison pill (including any distribution under a rights agreement)or other similar anti-takeover provision under the Company’s Certificate ofIncorporation (or similar charter documents) or the laws of its state ofincorporation that is or could become applicable to the Purchasers as a resultof the Purchasers and the Company fulfilling their obligations or exercisingtheir rights under the Transaction Documents, including without limitation theCompany’s issuance of the Securities and the Purchasers’ ownership of theSecurities.

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### (v)   Disclosure.  The Companyconfirms that the Company has not provided any of the Purchasers or counselwith any information that constitutes or might constitute material, non-publicinformation.   The Company understandsand confirms that the Purchasers will rely on the foregoing representations andcovenants in effecting its purchase of the Securities. All disclosure providedto the Purchasers regarding the Company, its business and the transactionscontemplated hereby, including the Disclosure Schedules to this Agreement,furnished by or on behalf of the Company are true and correct and do not containany untrue statement of a material fact or omit to state any material factnecessary in order to make the statements made therein, in light of thecircumstances under which they were made, not misleading.

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### (w)  No Integrated Offering. Neither the Company, nor any of its affiliates, norany Person acting on its or their behalf has, directly or indirectly, made anyoffers or sales of any security or solicited any offers to buy any security,under circumstances that would cause this offering of the Securities to fail toqualify for an exemption from registration under the United States Federalsecurities laws.

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Each Purchaser acknowledges and agrees that theCompany does not make or has not made any representations or warranties withrespect to the transactions contemplated hereby other than those specificallyset forth in this Section 3.1.

 

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

 

### (a)           Organization; Authority.  SuchPurchaser is an entity duly organized, validly existing and in good standingunder the laws of the jurisdiction of its organization with full right,corporate or partnership power and authority to enter into and to consummatethe transactions contemplated by the Transaction Documents and otherwise tocarry out its obligations thereunder. The execution, delivery and performanceby such Purchaser of the transactions contemplated by this Agreement has beenduly authorized by all necessary corporate or similar action on the part ofsuch Purchaser.  Each TransactionDocument to which it is a party has been duly executed by such Purchaser, andwhen

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### delivered by suchPurchaser in accordance with the terms hereof, will constitute the valid andlegally binding obligation of such Purchaser, enforceable against it inaccordance with its terms.

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### (b)           General Solicitation.  SuchPurchaser is not purchasing the Securities as a result of any advertisement,article, notice or other communication regarding the Securities published inany newspaper, magazine or similar media or broadcast over television or radioor presented at any seminar or any other general solicitation or generaladvertisement.

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

 

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

 

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

 

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

 

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

 

(g)           No Governmental Review.  Such Purchaser understands that no UnitedStates federal or state agency or any other government or governmental agencyhas passed on or made any recommendation or endorsement of the Securities orthe fairness or suitability of the investment in the Securities nor have suchauthorities passed upon or endorsed the merits of the offering of theSecurities.

 

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

 

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

 

(j)            Investment Representations and Covenants.  Each Purchaser has completed or caused to becompleted the Stock Certificate Questionnaire attached hereto as Exhibit Dand the Registration Statement Questionnaire attached hereto as Exhibit Efor use in preparation of the Registration Statement and the answers theretoare true and correct as of the date hereof and will be true and correct as ofthe effective date of the Registration Statement and the Purchasers will notifythe Company immediately of any material change in any such information providedin the Registration Statement Questionnaire occurring prior to the sale by itof all of the Shares and/or the Warrant Shares, if any, or until the Company isno longer required to keep the Registration Statement effective.

 

(k)           Confidentiality.  Until the Company publicly announces thatthis Agreement and the Transaction Documents have been entered into, eachPurchaser agrees with the Company to keep strictly confidential all informationconcerning this Agreement, the Transaction Documents and the transactionscontemplated hereby and thereby.  EachPurchaser understands that the information contained in the TransactionDocuments is strictly confidential and proprietary to the Company and has beenprepared, in large part, from the Company’s publicly available documents andother information and is being submitted to each Purchaser solely for suchPurchaser’s confidential use.  EachPurchaser hereby acknowledges that it is prohibited from reproducing and/ordistributing the Transaction Documents, or any other offering materials orother information provided by the Company in connection with such Purchaser’sconsideration of its investment in the Company, in whole or in part, ordivulging or discussing any of their contents to third parties.  Further, each Purchaser understands that theexistence and nature of all conversations and presentations, if any, regardingthe Company and the Transaction Documents must be kept strictlyconfidential.  Each Purchaserunderstands that United States Federal and state securities laws impose restrictionson trading based

 

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

 

(l)            Continued Listing.  Each Purchaser understands that there is noassurance that the Company will satisfy the criteria for continued quotation ofthe Common Stock on The Nasdaq SmallCap Market.

 

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

 

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

 

The Company acknowledges and agrees that eachPurchaser does not make or has not made any representations or warranties withrespect to the transactions contemplated hereby other than those specificallyset forth in this Section 3.2.

 

# ARTICLE IV.OTHER AGREEMENTS OF THE PARTIES

 

4.1           TransferRestrictions.

 

(a)           TheSecurities may only be disposed of in compliance with state and federalsecurities laws.  In connection with anytransfer of Securities other than pursuant to an effective registrationstatement, to the Company, to an Affiliate of a Purchaser, in connection with apledge as contemplated in Section 4.1(b), or in connection with a sale pursuantto Rule 144, the Company may require the transferor thereof to provide to theCompany an opinion of counsel selected by the transferor, the form andsubstance of which opinion shall be reasonably satisfactory to the Company, tothe effect that such transfer does not require registration of such transferredSecurities under the Securities Act.  Asa condition of transfer, any such transferee shall agree in writing to be boundby the terms of this Agreement and shall have the rights of a Purchaser underthis Agreement and the Registration Rights Agreement.

 

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### (b)           The Purchasers agree to the imprinting, so long as isrequired by this Section 4.1(b), of a legend on any of the Securities in thefollowing form:

###  

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

 

TheCompany acknowledges and agrees that a Purchaser may from time to time pledgepursuant to a bona fide margin agreement with a registered broker-dealer orgrant a security interest in some or all of the Securities to a financialinstitution that is an “accredited investor” as defined in Rule 501(a) underthe Securities Act and, if required under the terms of such arrangement, suchPurchaser may transfer pledged or secured Securities to the pledgees or securedparties.  Such a pledge or transferwould not be subject to approval of the Company and no legal opinion of legalcounsel of the pledgee, secured party or pledgor shall be required in connectiontherewith; provided that the pledgee’s or secured party’s further transfer ofsuch Securities is registered by any applicable securities laws.  Further, no notice shall be required of suchpledge.  At the appropriate Purchaser’sexpense, the Company will execute and deliver such reasonable documentation asa pledgee or secured party of Securities may reasonably request in connectionwith a pledge or transfer of the Securities, including the preparation andfiling of any required prospectus supplement under Rule 424(b)(3) under theSecurities Act or other applicable provision of the Securities Act toappropriately amend the list of Selling Stockholders thereunder.

 

### (c)           Certificates evidencing the Shares and Warrant Sharesshall not contain any legend (including the legend set forth in Section4.1(b)), (i) while a registration statement (including the RegistrationStatement) covering the resale of such security is effective under theSecurities Act, or (ii) following any sale of such Shares or Warrant Sharespursuant to Rule 144, or (iii) if such Shares or Warrant Shares are eligiblefor sale under Rule 144(k), or (iv) if such legend is not required underapplicable requirements of the Securities Act (including judicialinterpretations and pronouncements issued by the Staff of the Commission), inwhich event the Company shall cause the Company’s transfer agent to effect theremoval of the legend hereunder.  If allor any portion of a

 

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### Warrant is exercised at atime when there is an effective registration statement to cover the resale ofthe Warrant Shares, such Warrant Shares shall be issued free of alllegends.  The Company agrees thatfollowing the Effective Date or at such time as such legend is no longerrequired under this Section 4.1(c), it will, no later than three Trading Daysfollowing the delivery by a Purchaser to the Company or the Company’s transferagent of a certificate representing Shares or Warrant Shares, as the case maybe, issued with a restrictive legend, deliver or cause to be delivered to suchPurchaser a certificate representing such Securities that is free from allrestrictive and other legends.  TheCompany may not make any notation on its records or give instructions to anytransfer agent of the Company that enlarge the restrictions on transfer setforth in this Section.

###  

### (d)           In addition to such Purchaser’s other availableremedies, the Company shall pay to a Purchaser, in cash, as liquidated damagesand not as a penalty, for each $1,000 of Shares or Warrant Shares (based on theClosing Price of the Common Stock on the date such Securities are submitted tothe Company’s transfer agent) subject to Section 4.1(c), $10 per Trading Day(increasing to $20 per Trading Day five (5) Trading Days after such damageshave begun to accrue) for each Trading Day after such third Trading Day untilsuch certificate is delivered. Nothing herein shall limit such Purchaser’sright to pursue actual damages for the Company’s failure to deliver certificatesrepresenting any Securities as required by the Transaction Documents, and suchPurchaser shall have the right to pursue all remedies available to it at law orin equity including, without limitation, a decree of specific performanceand/or injunctive relief.

###  

### (e)           Each Purchaser, severally and not jointly, agrees thatthe removal of the restrictive legend from certificates representing Securitiesas set forth in this Section 4.1 is predicated upon the Company’s reliance thatthe Purchaser will sell any Securities pursuant to either (i) the registrationrequirements of the Securities Act, including any applicable prospectusdelivery requirements, which Purchaser hereby covenants to do whenever sorequired, or (ii) an exemption therefrom. Purchaser further covenants andagrees that it is familiar with the SEC’s Manual of Telephone Interpretationitem A.65 respecting the Purchaser’s inability to directly cover any short salemade prior to the Effective Date with any Registrable Securities, and agrees tocomply with the same.

###  

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

 

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

 

4.4           Intentionally Omitted.

 

4.5           Securities LawsDisclosure; Publicity.  The Companyshall, by 8:30 a.m. Eastern time on the Business Day following the ClosingDate, file a Current Report on Form 8-K,

 

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

 

4.6           Shareholder RightsPlan.  No claim will be made orenforced by the Company or any other Person that any Purchaser is an “AcquiringPerson” under any shareholders rights plan or similar plan or arrangement ineffect or hereafter adopted by the Company, or that any Purchaser could bedeemed to trigger the provisions of any such plan or arrangement, by virtue ofreceiving Securities under the Transaction Documents or under any otheragreement between the Company and the Purchasers.

 

4.7           Non-PublicInformation.  The Company covenantsand agrees that neither it nor any other Person acting on its behalf willprovide any Purchaser or its agents or counsel with any information that theCompany believes constitutes material non-public information, unless priorthereto such Purchaser shall have executed a written agreement regarding theconfidentiality and use of such information. The Company understands and confirms that each Purchaser shall be relyingon the foregoing representations in effecting transactions in securities of theCompany.

 

4.8           Intentionally Omitted.

 

4.9           Intentionally Omitted.

 

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

 

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reimburse such Purchaser forits reasonable legal and other expenses (including the cost of anyinvestigation, preparation and travel in connection therewith) incurred inconnection therewith.

 

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

 

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

 

4.13         Future Financings.  From the date hereof until 15 Trading Daysafter the Effective Date, other than as contemplated by this Agreement, neitherthe Company nor any Subsidiary shall issue or sell any Common Stock or CommonStock Equivalents.  Notwithstandinganything herein to the contrary, the 15 Trading Day period set forth in thisSection 4.13 shall be extended for the number of Trading Days during suchperiod in which (y) trading in the Common Stock is suspended by any TradingMarket, or (z) following the Effective Date, the Registration Statement is noteffective or the prospectus included in the Registration Statement may not beused by the Purchasers for the resale of the Shares and the WarrantShares.  Notwithstanding anything to thecontrary herein, this Section 4.13 shall not apply to the following (a) thegranting of options or stock to employees, officers, directors and consultantsof the Company pursuant to a grant approved by a majority of the Board ofDirectors or pursuant to any stock option plan duly adopted by a majority ofthe non-employee members of the Board of Directors of the Company or a majorityof the members of a committee of non-employee directors established for suchpurpose, or (b) the exercise of any security issued by the Company inconnection with the offer and sale of the Company’s securities pursuant to thisAgreement, or (c) the exercise of or conversion of any convertible securities,notes, options or warrants issued and outstanding on the date hereof, providedsuch securities have not been amended since the date hereof (unless, in thecase of notes, the sole purpose of such amendment is to extend the maturitydate) or (d) commercial transactions, collaborations, acquisitions or otherstrategic transactions or investments, the primary purpose of which is not toraise capital. 

 

4.14         Equal Treatment ofPurchasers.  No consideration shallbe offered or paid to any person to amend or consent to a waiver ormodification of any provision of any of the Transaction Documents unless thesame consideration is also offered to all of the parties to the TransactionDocuments.

 

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ARTICLE V.MISCELLANEOUS

 

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

 

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

 

5.3           Notices.  Any and all notices or other communicationsor deliveries required or permitted to be provided hereunder shall be inwriting and shall be deemed given and effective on the earliest of (a) the dateof transmission, if such notice or communication is delivered via facsimile atthe facsimile number specified on the signature pages attached hereto prior to6:30 p.m. (New York City time) on a Trading Day and electronic confirmation ofsuccessful transmission is received, (b) the next Trading Day after the date oftransmission, if such notice or communication is delivered via facsimile at thefacsimile number on the signature pages attached hereto on a day that is not aTrading Day or later than 6:30 p.m. (New York City time) on any Trading Day,(c) the Trading Day following the date of mailing, if sent by U.S. nationallyrecognized overnight courier service, or (d) upon actual receipt by the partyto whom such notice is required to be given. The address for such notices and communications shall be as set forth onthe signature pages attached hereto.

 

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

 

5.5           Construction.  The headings herein are for convenienceonly, do not constitute a part of this Agreement and shall not be deemed tolimit or affect any of the provisions hereof. The language used in this Agreement will be deemed to be the languagechosen by the parties to express their mutual intent, and no rules of strictconstruction will be applied against any party.

 

5.6           Successors and Assigns.  This Agreement shall be binding upon andinure to the benefit of the parties and their successors and permittedassigns.  The Company may not assignthis Agreement or any rights or obligations hereunder without the prior writtenconsent of each Purchaser; provided, however, no consent shall be required inconnection with a merger, consolidation or sale of substantially all of theCompany’s assets.  Any Purchaser mayassign any or all of its rights under this Agreement to any Person, providedsuch transferee agrees in writing

 

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

 

5.7           No Third-PartyBeneficiaries.  This Agreement isintended for the benefit of the parties hereto and their respective successorsand permitted assigns and is not for the benefit of, nor may any provisionhereof be enforced by, any other Person, except as otherwise set forth inSection 4.10.

 

5.8           Governing Law.  All questions concerning the construction,validity, enforcement and interpretation of the Transaction Documents shall begoverned by and construed and enforced in accordance with the internal laws ofthe State of New York, without regard to the principles of conflicts of lawthereof.  Each party agrees that alllegal proceedings concerning the interpretations, enforcement and defense ofthe transactions contemplated by this Agreement and any other TransactionDocuments (whether brought against a party hereto or its respective affiliates,directors, officers, shareholders, employees or agents) shall be commencedexclusively in the state and federal courts sitting in the City of NewYork.  Each party hereto herebyirrevocably submits to the exclusive jurisdiction of the state and federalcourts sitting in the City of New York, New York for the adjudication of anydispute hereunder or in connection herewith or with any transactioncontemplated hereby or discussed herein (including with respect to theenforcement of any of the Transaction Documents), and hereby irrevocably waives,and agrees not to assert in any suit, action or proceeding, any claim that itis not personally subject to the jurisdiction of any such court, that suchsuit, action or proceeding is improper. Each party hereto hereby irrevocably waives personal service of processand consents to process being served in any such suit, action or proceeding bydelivering a copy thereof via overnight delivery (with evidence of delivery) tosuch party at the address in effect for notices to it under this Agreement and agreesthat such service shall constitute good and sufficient service of process andnotice thereof.  Nothing containedherein shall be deemed to limit in any way any right to serve process in anymanner permitted by law. Each party hereto (including its affiliates, agents,officers, directors and employees) hereby irrevocably waives, to the fullestextent permitted by applicable law, any and all right to trial by jury in anylegal proceeding arising out of or relating to this Agreement or thetransactions contemplated hereby. If either party shall commence an action orproceeding to enforce any provisions of a Transaction Document, then theprevailing party in such action or proceeding shall be reimbursed by the otherparty for its attorneys fees and other costs and expenses incurred with theinvestigation, preparation and prosecution of such action or proceeding.

 

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

 

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

 

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

 

5.11         Severability.  If any provision of this Agreement is heldto be invalid or unenforceable in any respect, the validity and enforceabilityof the remaining terms and provisions of this Agreement shall not in any way beaffected or impaired thereby and the parties will attempt to agree upon a validand enforceable provision that is a reasonable substitute therefor, and upon soagreeing, shall incorporate such substitute provision in this Agreement.

 

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

 

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

 

5.14         Intentionally Omitted.

 

5.15         Independent Nature of Purchasers’Obligations and Rights.  Theobligations of each Purchaser under any Transaction Document are several andnot joint with the obligations of any other Purchaser, and no Purchaser shallbe responsible in any way for the performance of the obligations of any otherPurchaser under any Transaction Document. Nothing contained herein or in any Transaction Document, and no actiontaken by any Purchaser pursuant thereto, shall be deemed to constitute thePurchasers as a partnership, an association, a joint venture or any other kindof entity, or create a presumption that the Purchasers are in any way acting inconcert or as a group with respect to such obligations or the transactionscontemplated by the Transaction Document. Each Purchaser shall be entitled to independently protect and enforceits rights, including without limitation, the rights arising out of thisAgreement or out of the other Transaction Documents, and it shall not benecessary for any other Purchaser to be joined as an additional party in anyproceeding for such purpose.  EachPurchaser has been represented by its own separate legal counsel in theirreview and negotiation of the Transaction Documents.  For reasons of administrative convenience only, Purchasers andtheir respective counsel have chosen to communicate with the Company throughFW.  FW does not represent any of thePurchasers in this transaction but only the placement agent.  The Company has elected to provide allPurchasers with the same terms and Transaction Documents for the convenience ofthe Company and not because it was required or requested to do so by thePurchasers.

 

*(Signature Page Follows)*

 

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

 
| **THE  IMMUNE RESPONSE CORPORATION** | Address for Notice             |
|--------------------------------------|--------------------------------|
|                                 |                           |
|                                 |                           |
|                                 | Attn:                          |
| By:                                  |  /s/ John M.  Bonfiglio   |   | Tel: |
|                                 | Name: John M. Bonfiglio        | Fax: |
|                                 | Title: Chief Executive Officer |   |
|                                      |                                |  |  |

 

Withcopy to (which shall not constitute notice):

 

PillsburyWinthrop LLP

50Fremont Street

SanFrancisco, CA 94105

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

Tel:(415) 983-1000

Fax:(415) 983-1200

[SIGNATURE PAGE CONTINUES]

 

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[PURCHASERSIGNATURE PAGES TO IMNR SECURITIES PURCHASE AGREEMENT]

 
| Alpha Capital Aktiengesellschaft:    |                         | Address for Notice |
|--------------------------------------|------------------------------|--------------------|
|                                 |                         |               |
|                                 |                         |               |
| By:                                  |  /s/  Thomas Hackl |               |   |   |
|                                 | Name: Thomas Hackl           |               | Attention: Arie Rabinowitz |
|                                 | Title: Director              |               | Fax: |
|                                 |                         |               |
| Subscription  Amount:  $450,000 |                         |               |
|                                 |                         |               |
| With a copy to:                      |                         |               |
|                                      |                              |                    |  |  |

 

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[PURCHASERSIGNATURE PAGES TO IMNR SECURITIES PURCHASE AGREEMENT]

 
| BRISTOL INVESTMENT  FUND, LTD.       |                         | Address for Notice |
|--------------------------------------|------------------------------|--------------------|
|                                 |                         |               |
|                                 |                         |               |
| By:                                  |  /s/  Paul Kessler |               |   |   |
|                                 | Name: Paul Kessler           |               | Attention: Amy Wang, Esq. |
|                                 | Title: Director              |               | Fax: |
|                                 |                         |               |
| Subscription  Amount:  $800,000 |                         |               |
|                                 |                         |               |
| With a copy to:                      |                         |               |
|                                      |                              |                    |  |  |

 

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| Name of Investor  Entity:                                 | Address for Notice               |
|-----------------------------------------------------------|----------------------------------|
| Cohanzick  Partners, L.P.                                 |                             |
|                                                      |                             |
|                                                      |                             |
| By:                                                       |  /s/  David K. Sherman |   | Attention: David K. Sherman |
|                                                      | Name: David K. Sherman           | Fax: |
|                                                      | Title: Authorized Agent          |   |
|                                                      |                             |
| Subscription  Amount:  61,881 shares for $124,999.62 |                             |
|                                                      |                             |
| With a copy to:                                           |                             |
|                                                           |                                  |  |  |

 

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| Name of Investor  Entity:               | Address for Notice                          |
|-----------------------------------------|---------------------------------------------|
| Cranshire Capital L.P.                  |                                        |
|                                    |                                        |
|                                    |                                        |
| By:                                     |  /s/  Keith Goodman               |   | Attention: Mitchell P. Kupin |
|                                    | Name: Keith Goodman                         | Fax: |
|                                    | Title: CFO -   Downsview Capital, Inc. |   |
|                                    | THE GENERAL PARTNER                         |   |
|                                    |                                        |
| Subscription  Amount:  $750,000.00 |                                        |
|                                    |                                        |
| With a copy to:                         |                                        |
|                                         |                                             |  |  |

 

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| CRESCENT INTERNATIONAL  LTD.         | Address for Notice:                  |
|--------------------------------------|--------------------------------------|
|                                 |                                 |
|                                 |                                 |
|                                 | Attention: Mel Craw/ Maxi Brezzi     |
| By:                                  |  /s/  Mel Craw Maxi Brezzi |   | Tel: |
|                                 | Name: Mel Craw Maxi Brezzi           |   |
|                                 | Title: Authorized Signatories        | Fax: |
|                                 |                                 |
| Subscription  Amount:  $600,000 |                                 |
|                                 |                                 |
| With a copy to:                      |                                 |
|                                      |                                      |  |  |

 

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| Name of Investor  Entity:               | Address for Notice            |   |
|-----------------------------------------|-------------------------------|--------|
| Colbart  Birnet L.P.                    |                          |   |
|                                    |                          |   |
|                                    |                          |   |
| By:                                     |  /s/  Ezra Birnbaum |   | Attention: |   |
|                                    | Name: Ezra Birnbaum           | Fax:   |   |
|                                    | Title: Member                 |   |   |
|                                    |                          |   |
| Subscription  Amount:  $100,000.00 |                          |   |
|                                    |                          |   |
| With a copy to:                         |                          |   |
|                                         |                               |        |  |  |

 

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| Name of Investor  Entity:            | Address for Notice         |   |
|--------------------------------------|----------------------------|--------|
| Ellis  International.                |                       |   |
|                                 |                       |   |
|                                 |                       |   |
| By:                                  |  /s/  John Cabot |   | Attention: Matt Drillman |   |
|                                 | Name: John Cabot           | Fax:   |   |
|                                 | Title: Officer             |   |   |
|                                 |                       |   |
| Subscription  Amount:  $250,000 |                       |   |
|                                 |                       |   |
| With a copy to:                      |                       |   |
|                                      |                            |        |  |  |

 

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| Name of Investor  Entity:           | Address for Notice         |   |
|-------------------------------------|----------------------------|--------|
| ENABLE GROWTH PARTNERS  LP          |                       |   |
|                                |                       |   |
|                                |                       |   |
| By:                                 |  /s/ Mitchell  Levine |   | Attention: Mitch Levine |   |
|                                | Name: Mitchell Levine      | Fax:   |   |
|                                | Title: Managing Partner    |   |   |
|                                |                       |   |
| Subscription  Amount:  $50,000 |                       |   |
|                                |                       |   |
| With a copy to:                     |                       |   |
|                                     |                            |        |  |  |

 

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| Name of Investor  Entity:                                  | Address for Notice               |   |
|------------------------------------------------------------|----------------------------------|--------|
| Gabriel Capital, L.P.                                      |                             |   |
|                                                       |                             |   |
|                                                       |                             |   |
| By:                                                        |  /s/  David K. Sherman |   | Attention: David K. Sherman |   |
|                                                       | Name: David K. Sherman           | Fax:   |   |
|                                                       | Title: Authorized Agent          |   |   |
|                                                       |                             |   |
| Subscription  Amount:  $61,881 shares for $124,999.62 |                             |   |
|                                                            |                                  |        |  |  |

 

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[PURCHASER SIGNATURE PAGES TOIMNR SECURITIES PURCHASE AGREEMENT]

 
| Gamma Opportunity Capital  Partners, LP: | Address for Notice:                 |   |
|------------------------------------------|-------------------------------------|--------|
|                                     |                                |   |
|                                     |                                |   |
| By:                                      |  /s/  Christopher Rossman |   | Attention: Christopher Rossman |   |
|                                     | Name: Christopher Rossman           | Fax:   |   |
|                                     | Title: Managing Director            |   |   |
|                                     |                                |   |
| Subscription  Amount:  $150,000     |                                |   |
|                                     |                                |   |
| With a copy to:                          |                                |   |
|                                          |                                     |        |  |  |

 

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| GRYPHON MASTER FUND, LP              | Address for Notice:              |   |
|--------------------------------------|----------------------------------|--------|
|                                 |                             |   |
|                                 |                             |   |
| By:                                  |  /s/  Michael Schulten |   | Attention: Ryan Wolters |   |
|                                 | Name: Michael Schulten           | Fax:   |   |
|                                 | Title: Authorized Agent          |   |   |
|                                 |                             |   |
| Subscription  Amount:  $750,000 |                             |   |
|                                 |                             |   |
| With a copy to:                      |                             |   |
|                                      |                                  |        |  |  |

 

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[PURCHASERSIGNATURE PAGES TO IMNR SECURITIES PURCHASE AGREEMENT]

 
| LANGLEY PARTNERS, L.P.:              | Address for Notice:                                                   |   |
|--------------------------------------|-----------------------------------------------------------------------|--------|
|                                 |                                                                  |   |
|                                 |                                                                  |   |
| By:                                  |  /s/  Jeffrey Thorp                                         |   | Attention: Jeffrey Thorp |   |
|                                 | Name: Jeffrey Thorp                                                   | Fax:   |   |
|                                 | Title:  Managing Member of Langley Capital, LLC,  its General Partner |   |   |
|                                 |                                                                  |   |
| Subscription  Amount:  $950,000 |                                                                  |   |
|                                 |                                                                  |   |
| With a copy to:                      |                                                                  |   |
|                                      |                                                                       |        |  |  |

 

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| Name of Investor Entity:               | Address for Notice              |   |
|----------------------------------------|---------------------------------|--------|
| Magellan International Ltd.            |                            |   |
|                                   |                            |   |
|                                   |                            |   |
| By:                                    |  /s/  Anna Marie Lowe |   | Attention: Anna Marie Lowe |   |
|                                   | Name: Anna Marie Lowe           | Fax:   |   |
|                                   | Title:  Director           |   |   |
|                                   |                            |   |
| Subscription Amount:  $700,000.00 |                            |   |
|                                   |                            |   |
| With a copy to:                        |                            |   |
|                                        |                                 |        |  |  |

 

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[PURCHASERSIGNATURE PAGES TO IMNR SECURITIES PURCHASE AGREEMENT]

 
| Name of Investor  Entity:                      | Address for Notice             |
|------------------------------------------------|--------------------------------|
| OMICRON MASTER TRUST                           |                           |
| By: Omicron Capital  L.P., as advisor          |                           |
| By: Omicron Capital  Inc., its general partner |                           |
|                                           |                           |
|                                           |                           |
|                                           | Fax:                           |
| By:                                            |  /s/  Olivier Morali |   | Attention: Brian Daly |
|                                           | Name: Olivier Morali           |   |
|                                           | Title:   President        |   |
|                                           |                           |
| Subscription  Amount:  $1,000,000.00      |                           |
|                                           |                           |
| With a copy to:                                |                           |
|                                                |                                |  |  |

 

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| Name of Investor  Entity:              | Address for Notice                  |   |
|----------------------------------------|-------------------------------------|--------|
| PLATINUM PARTNERS VALUE                |                                |   |
| ARBITRAGE FUND LP                      |                                |   |
|                                   |                                |   |
|                                   |                                |   |
| By:                                    |  /s/  Mark Nordlicht      |   | Attention: |   |
|                                   | Name: Mark Nordlicht                | Fax:   |   |
|                                   | Title:   Managing Member of GP |   |   |
|                                   |                                |   |
| Subscription  Amount:  $1,000,000 |                                |   |
|                                   |                                |   |
| With a copy to:                        |                                |   |
|                                        |                                     |        |  |  |

 

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| PORTSIDE GROWTH AND  OPPORTUNITY FUND |                        |
|---------------------------------------|-----------------------------|
|                                  |                        |
| By:                                   | /s/ Jeffrey Solomon         |   |   |
|                                  | Name: Jeffrey Solomon       |   |
|                                  | Title: Authorized Signatory |   |
|                                  |                        |
| Subscription  Amount:  $500,000  |                        |
|                                  |                        |
| Address for  Notice:                  |                        |
|                                       |                             |  |  |

 

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[PURCHASERSIGNATURE PAGES TO IMNR SECURITIES PURCHASE AGREEMENT]

 
| Name of Investor  Entity:               | Address for Notice                |   |
|-----------------------------------------|-----------------------------------|--------|
| SF Capital Partners Ltd                 |                              |   |
|                                    |                              |   |
|                                    |                              |   |
| By:                                     |  /s/  Brian H. Davidson |   | Attention: |   |
|                                    | Name: Brian H. Davidson           | Fax:   |   |
|                                    | Title:                            |   |   |
|                                    |                              |   |
| Subscription  Amount:  $500,000.00 |                              |   |
|                                    |                              |   |
| With a copy to:                         |                              |   |
|                                         |                                   |        |  |  |

 

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[PURCHASERSIGNATURE PAGES TO IMNR SECURITIES PURCHASE AGREEMENT]

 
|                                    | Address for Notice          |
|-----------------------------------------|-----------------------------|
|                                    |                        |
|                                    |                        |
| By:                                     |  /s/  Murray Todd |   | Attention: |
| Silver Oak Investments,  Inc.           | Fax:                        |
| Name: Murray Todd                       |                        |
| Title:  Board                      |                        |
|                                    |                        |
| Subscription  Amount:  $200,000.00 |                        |
|                                    |                        |
| With a copy to:                         |                        |
|                                         |                             |  |  |

 

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[PURCHASERSIGNATURE PAGES TO IMNR SECURITIES PURCHASE AGREEMENT]

 
| SMITHFIELD FIDUCIARY  LLC            |                     | Address for Notice |
|--------------------------------------|--------------------------|--------------------|
|                                 |                     |               |
|                                 |                     |               |
| By:                                  |  /s/ Adam J.  Chill |               |   | Attention: Ari J. Storch/ Adam J. Chill |
|  Name: Adam J. Chill            |                     | Fax:               |
|  Title: Authorized Signatory    |                     | Tel:               |
|                                 |                     |               |
| Subscription  Amount:  $250,000 |                     |               |
|                                      |                          |                    |  |  |

 

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[PURCHASERSIGNATURE PAGES TO IMNR SECURITIES PURCHASE AGREEMENT]

 
| Name of Investor  Entity:            | Address for Notice            |   |
|--------------------------------------|-------------------------------|--------|
| Solomon Strategic  Holdings, Inc.    |                          |   |
|                                 |                          |   |
|                                 |                          |   |
| By:                                  |  /s/  A P MacKellar |   | Attention: A P MacKellar |   |
|                                 | Name: A P MacKellar           | Fax:   |   |
|                                 | Title: Director               |   |   |
|                                 |                          |   |
| Subscription  Amount:  $250,000 |                          |   |
|                                      |                               |        |  |  |

 

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[PURCHASERSIGNATURE PAGES TO IMNR SECURITIES PURCHASE AGREEMENT]

 
| Name of Investor  Entity:            | Address for Notice          |   |
|--------------------------------------|-----------------------------|--------|
| Spectra Capital  Management          |                        |   |
|                                 |                        |   |
|                                 |                        |   |
| By:                                  |  /s/  Greg Porges |   | Attention: Ian M. Estepan |   |
|                                 | Name: Greg Porges           | Fax:   |   |
|                                 | Title:  Sole  Member   |   |   |
|                                 |                        |   |
| Subscription  Amount:  $500,000 |                        |   |
|                                 |                        |   |
| With a copy to:                      |                        |   |
|                                      |                             |        |  |  |

 

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[PURCHASERSIGNATURE PAGES TO IMNR SECURITIES PURCHASE AGREEMENT]

 
| Name of Investor  Entity:            | Address for Notice             |   |
|--------------------------------------|--------------------------------|--------|
| Stonestreet, L.P.                    |                           |   |
|                                 |                           |   |
|                                 |                           |   |
| By:                                  |  /s/  M. Finklestein |   | Attention: |   |
|                                 | Name: M. Finklestein           | Fax:   |   |
|                                 | Title: President               |   |   |
|                                 |                           |   |
| Subscription  Amount:  $500,000 |                           |   |
|                                 |                           |   |
| With a copy to:                      |                           |   |
|                                      |                                |        |  |  |

 

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| Name of Investor  Entity:                     | Address for Notice             |
|-----------------------------------------------|--------------------------------|
| THE TAIL WIND FUND  LIMITED                   |                           |
| By: Tail Wind Advisory  & Management Ltd. |                           |
|                                          |                           |
|                                          |                           |
| By:                                           |  /s/  David Crook    |   |   |
|                                          | Name: David Crook              |   |
|                                          | Title: Chief Executive Officer |   |
|                                          |                           |
| Subscription  Amount:  $1,250,000        |                           |
|                                               |                                |  |  |

 

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[PURCHASERSIGNATURE PAGES TO IMNR SECURITIES PURCHASE AGREEMENT]

 
| Name of Investor  Entity:               | Address for Notice             |   |
|-----------------------------------------|--------------------------------|--------|
| TCMP3                                   |                           |   |
|                                    |                           |   |
|                                    |                           |   |
| By:                                     |  /s/  Steven Slawson |   | Attention: |   |
|                                    | Name: Steven Slawson           | Fax:   |   |
|                                    | Title: Principal               |   |   |
|                                    |                           |   |
| Subscription  Amount:  $250,000.00 |                           |   |
|                                    |                           |   |
| With a copy to:                         |                           |   |
|                                         |                                |        |  |  |

 

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**EXHIBIT C**

 

NEITHERTHIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVEBEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIESCOMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDERTHE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND,ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVEREGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLEEXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATIONREQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATESECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TOSUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THECOMPANY.  THIS SECURITY AND THESECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTIONWITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES

 

WarrantNo. «Warrant No»

 

 

**COMMON STOCK PURCHASE WARRANT**

 

 

To Purchase «Shares» Sharesof Common Stock of

 

**The Immune Response Corporation**

 

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

 

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

 

2.     Authorization of Shares.  TheCompany covenants that all Warrant Shares which may be issued upon the exerciseof the purchase rights represented by this Warrant will, upon exercise of thepurchase rights represented by this Warrant in accordance with the terms andconditions hereof, be duly authorized, validly issued, fully paid andnonassessable and free from all taxes, liens and charges in respect of theissue thereof (other than taxes in respect of any transfer occurringcontemporaneously with such issue).

 

3.     Exercise of Warrant.

 

(a)  Except as provided inSection 3(c) herein, exercise of the purchase rights represented by thisWarrant may be made at any time or times on or after the Initial Exercise Dateand on or before the Termination Date by the surrender of this Warrant and theNotice of Exercise Form annexed hereto duly executed, at the office of the Company(or such other office or agency of the Company as it may designate by notice inwriting to the registered Holder at the address of such Holder appearing on thebooks of the Company) and upon payment of the Exercise Price of the sharesthereby purchased by wire transfer or cashier’s check of immediately availablefunds drawn on a United States bank or by means of a cashless exercise pursuantto Section 3(d), the Holder shall be entitled to receive a certificate for thenumber of Warrant Shares so purchased. Certificates for shares purchased hereunder shall be delivered to theHolder within five (5) Trading Days after the date on which this Warrant shallhave been exercised as aforesaid. This Warrant shall be deemed to have beenexercised and such certificate or certificates shall be deemed to have beenissued, and the Holder or any other person so designated to be named thereinshall be deemed to have become a holder of record of such shares for allpurposes, as of the date the Warrant has been exercised by payment to theCompany of the Exercise Price and all taxes required to be paid by the Holder,if any, pursuant to Section 5 prior to the issuance of such shares, have beenpaid.  If the Company fails to deliver tothe Holder a certificate or certificates representing the Warrant Sharespursuant to this Section 3(a) by the close of business on the fifth Trading Dayafter the date of exercise, then the Holder will have the right to rescind suchexercise.  In addition to any otherrights available to the Holder, if the Company fails to deliver to the Holder acertificate or certificates representing the Warrant Shares pursuant to anexercise by the close of business on the fifth Trading Day after the date ofexercise, and if after such fifth Trading Day the Holder is required by itsbroker to purchase (in an open market transaction or otherwise) shares ofCommon Stock to deliver in satisfaction of a sale by the Holder of the WarrantShares which the Holder anticipated receiving upon such exercise (a “Buy-In”),then the Company shall (1) pay in cash to the Holder the amount by which (x)the Holder’s total purchase price (including brokerage commissions, if any) forthe shares of Common Stock so purchased exceeds (y) the amount obtained bymultiplying (A) the number of Warrant Shares that the Company was required todeliver to the Holder in connection with the exercise at issue times (B) theprice at which the sell order giving rise to such purchase obligation wasexecuted, and (2) at the option of the Holder, either reinstate the portion ofthe Warrant and equivalent number of Warrant Shares for which such exercise wasnot honored or deliver to the Holder the number of shares of Common Stock thatwould have been issued had the

 

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Company timely complied with its exercise and delivery obligationshereunder.  For example, if the Holderpurchases Common Stock having a total purchase price of $11,000 to cover aBuy-In with respect to an attempted exercise of shares of Common Stock with anaggregate sale price giving rise to such purchase obligation of $10,000, underclause (1) of the immediately preceding sentence the Company shall be requiredto pay the Holder $1,000. The Holder shall provide the Company written noticeindicating the amounts payable to the Holder in respect of the Buy-In, togetherwith applicable confirmations and other evidence reasonably requested by theCompany.  Nothing herein shall limit aHolder’s right to pursue any other remedies available to it hereunder, at lawor in equity including, without limitation, a decree of specific performanceand/or injunctive relief with respect to the Company’s failure to timelydeliver certificates representing shares of Common Stock upon exercise of theWarrant as required pursuant to the terms hereof.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Asused herein, “VWAP” means, for any date, the price determined by the first ofthe following clauses that applies: (a) if the Common Stock is then listed orquoted on a Trading Market, the daily volume weighted average price of theCommon Stock for such date (or the nearest preceding date) on the TradingMarket on which the Common Stock is then listed or quoted as reported byBloomberg Financial L.P. (based on a Trading Day from 9:30 a.m. Eastern Time to4:02 p.m. Eastern Time); (b) if the Common Stock is not then listed orquoted on a Trading Market and if prices for the Common Stock are then quotedon the OTC Bulletin Board, the volume weighted average price of the CommonStock for such date (or the nearest preceding date) on the OTC Bulletin Board;(c)  if the Common Stock is not then listed or quoted on the OTC BulletinBoard and if prices for the Common Stock are then reported in the “Pink Sheets”published by the National Quotation Bureau Incorporated (or a similarorganization or agency succeeding to its functions of reporting prices), themost recent bid price per share of the Common Stock so reported; or (d) inall other cases, the fair market value of a share of Common Stock as determinedby an independent appraiser selected in good faith by the holders of a majorityof the Shares then outstanding and reasonably acceptable to the Company.

 

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

 

5.     Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall be made without chargeto the Holder for any issue or transfer tax or other incidental expense inrespect of the issuance of such certificate, all of which taxes and expensesshall be paid by the Company, and such certificates shall be issued in the nameof the Holder or in such name or names as may be directed by the Holder; provided,however, that in the event certificates for Warrant Shares are to beissued in a name other than the name of the Holder, this Warrant whensurrendered for exercise shall be accompanied by the Assignment Form attachedhereto duly executed by the Holder; and the Company may require, as a conditionthereto, the payment of a sum sufficient to reimburse it for any transfer taxincidental thereto.

 

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

 

7.     Transfer, Division and Combination.

 

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

 

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Purchase Agreement, this Warrant and all rights hereunder aretransferable, in whole or in part, upon surrender of this Warrant, so long asthe amount of Warrant Shares transferred is equal to at least 25,000 shares (onan as exercised basis) at the principal office of the Company, together with awritten assignment of this Warrant substantially in the form attached heretoduly executed by the Holder or its agent or attorney and funds sufficient topay any transfer taxes payable upon the making of such transfer.  Upon such surrender and, if required, suchpayment, the Company shall execute and deliver a new Warrant or Warrants in thename of the assignee or assignees and in the denomination or denominationsspecified in such instrument of assignment, and shall issue to the assignor anew Warrant evidencing the portion of this Warrant not so assigned, and thisWarrant shall promptly be cancelled.  AWarrant, if properly assigned, may be exercised by a new holder for thepurchase of Warrant Shares without having a new Warrant issued.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

11.   Adjustments of Exercise Price and Number ofWarrant Shares.  The number and kind of securitiespurchasable upon the exercise of this Warrant and the Exercise Price shall besubject to adjustment from time to time upon the happening of any of thefollowing.  In case the Company shall(i) pay a dividend in shares of Common Stock or make a distribution in sharesof Common Stock to holders of its outstanding Common Stock, (ii) subdivide itsoutstanding shares of Common Stock into a greater number of shares, (iii)combine its outstanding shares of Common Stock into a smaller number of sharesof Common Stock, or (iv) issue any shares of its capital stock in areclassification of the Common Stock, then the number of Warrant Sharespurchasable upon exercise of this Warrant immediately prior thereto shall beadjusted so that the Holder shall be entitled to receive the kind and number ofWarrant Shares or other securities of the Company which it would have owned orhave been entitled to receive had such Warrant been exercised in advancethereof.  Upon each such adjustment ofthe kind and number of Warrant Shares or other securities of the Company whichare purchasable hereunder, the Holder shall thereafter be entitled to purchasethe number of Warrant Shares or other securities resulting from such adjustmentat an Exercise Price per Warrant Share or other security obtained bymultiplying the Exercise Price in effect immediately prior to such adjustmentby the number of Warrant Shares purchasable pursuant hereto immediately priorto such adjustment and dividing by the number of Warrant Shares or othersecurities of the Company resulting from such adjustment.  An adjustment made pursuant to thisparagraph shall become effective immediately after the effective date of suchevent retroactive to the record date, if any, for such event.

 

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

 

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reclassification, merger,consolidation or disposition of assets, the successor or acquiring corporation(if other than the Company) shall expressly assume the due and punctualobservance and performance of each and every covenant and condition of thisWarrant to be performed and observed by the Company and all the obligations andliabilities hereunder, subject to such modifications as may be deemedappropriate (as determined in good faith by resolution of the Board ofDirectors of the Company) in order to provide for adjustments of Warrant Sharesfor which this Warrant is exercisable which shall be as nearly equivalent aspracticable to the adjustments provided for in this Section 12.  For purposes of this Section 12, “commonstock of the successor or acquiring corporation” shall include stock of suchcorporation of any class which is not preferred as to dividends or assets overany other class of stock of such corporation and which is not subject to redemptionand shall also include any evidences of indebtedness, shares of stock or othersecurities which are convertible into or exchangeable for any such stock,either immediately or upon the arrival of a specified date or the happening ofa specified event and any warrants or other rights to subscribe for or purchaseany such stock.  The foregoingprovisions of this Section 12 shall similarly apply to successivereorganizations, reclassifications, mergers, consolidations or disposition ofassets.

 

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

 

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

 

15.   Notice of Corporate Action.  Ifat any time:

 

(a)           theCompany shall take a record of the holders of its Common Stock for the purposeof entitling them to receive a dividend or other distribution, or any right tosubscribe for or purchase any evidences of its indebtedness, any shares ofstock of any class or any other securities or property, or to receive any otherright, or

 

(b)           thereshall be any capital reorganization of the Company, any reclassification orrecapitalization of the capital stock of the Company or any consolidation ormerger of the Company with, or any sale, transfer or other disposition of allor substantially all the property, assets or business of the Company to,another corporation or,

 

(c)           thereshall be a voluntary or involuntary dissolution, liquidation or winding up ofthe Company;

 

then,in any one or more of such cases, the Company shall give to Holder (i) at least20 days’ prior written notice of the date or expected date on which a recorddate shall be selected for such dividend, distribution or right or fordetermining rights to vote in respect of any such reorganization,reclassification, merger, consolidation, sale, transfer, disposition,liquidation or winding up, and (ii) in the case of any such reorganization,reclassification, merger, consolidation, sale, transfer, disposition,dissolution, liquidation or winding up, at least 20 days’ prior written noticeof the date

 

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whenthe same shall or is expected to take place. Such notice in accordance with the foregoing clause also shall specify(A) the date on which any such record is to be taken for the purpose of suchdividend, distribution or right, the date on which the holders of Common Stockshall be entitled to any such dividend, distribution or right, and the amountand character thereof, and (B) the date on which any such reorganization,reclassification, merger, consolidation, sale, transfer, disposition,dissolution, liquidation or winding up is expected to take place and the time,if any such time is to be fixed, as of which the holders of Common Stock shallbe entitled to exchange their Warrant Shares for securities or other propertydeliverable upon such disposition, dissolution, liquidation or winding up.  Each such written notice shall besufficiently given if addressed to Holder at the last address of Holder appearingon the books of the Company and delivered in accordance with Section18(d).  Failure to provide such noticeshall not affect the validity of any action taken in connection with suchdividend, distribution, subscription or purchase rights, or proposedreorganization, reclassification, recapitalization, merger, consolidation,sale, transfer, disposition, conveyance, dissolution, liquidation or windingup.

 

16.   Authorized Shares.  TheCompany covenants that during the period the Warrant is outstanding, it willreserve from its authorized and unissued Common Stock a sufficient number ofshares to provide for the issuance of the Warrant Shares upon the exercise ofany purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shallconstitute full authority to its officers who are charged with the duty ofexecuting stock certificates to execute and issue the necessary certificatesfor the Warrant Shares upon the exercise of the purchase rights under thisWarrant.  The Company will take all suchreasonable action as may be necessary to assure that such Warrant Shares may beissued as provided herein without violation of any applicable law orregulation, or of any requirements of the Trading Market upon which the CommonStock may be listed.

 

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

 

Beforetaking any action which would result in an adjustment in the number of WarrantShares for which this Warrant is exercisable or in the Exercise Price, theCompany shall obtain all such authorizations or exemptions thereof, or consentsthereto, as may be necessary from any public regulatory body or bodies havingjurisdiction thereof.

 

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

 

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provided that (i) theWarrant Shares have been registered for resale pursuant to the Securities Actfor at least the 10-Trading Day period preceding the Call Notice, (ii) the VWAPof the Common Stock on a Trading Market is equal to or greater than $8.00 pershare (subject to adjustment to reflect forward or reverse stock splits, stockdividends, recapitalizations and the like)(the “Threshold Price”) for at least20 consecutive Trading Days over any 30 Trading Days, and (iii) the Call Noticeis delivered within 3 Business Days’ of the most recent day in the previousclause (ii) that the Common Stock reached the Threshold Price.  At any time prior to the effective date ofsuch call, the Holder shall have the right to exercise this Warrant inaccordance with its terms.

 

18.   Miscellaneous.

 

(a)   Jurisdiction.  This Warrant shall constitute a contractunder the laws of New York, without regard to its conflict of law, principlesor rules.

 

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

 

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

 

(d)   Notices.  Any notice, request or other documentrequired or permitted to be given or delivered to the Holder by the Companyshall be delivered in accordance with the notice provisions of the PurchaseAgreement; provided upon any permitted assignment of this Warrant, the assigneeshall promptly provide the Company with its contact information.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

INWITNESS WHEREOF, the Company has caused this Warrant to be executed by itsofficer thereunto duly authorized.

 

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| Dated:  October 10, 2003 |                                 |
|-------------------------------|--------------------------------------|
|                          |                                 |
|                          | **THE IMMUNE RESPONSE  CORPORATION** |
|                          |                                 |
|                          |                                 |
|                          | By:                                  |   |
|                          |                                 | Name: |
|                          |                                 | Title: |

 

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**NOTICE OF EXERCISE**

 

To:          The Immune Response Corporation

 

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

 

(2)   Payment shall take the form of (check applicablebox):

 

oin lawful money of the United States; or

 

othe cancellation of such number of Warrant Shares as is necessary, inaccordance with the formula set forth in subsection 3(d), to exercise thisWarrant with respect to the maximum number of Warrant Shares purchasablepursuant to the cashless exercise procedure set forth in subsection 3(d).

 

(3)   Please issue a certificate or certificatesrepresenting said Warrant Shares in the name of the undersigned or in suchother name as is specified below:

 

 

 

The Warrant Shares shall be delivered to the following:

 

 

 

 

 

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

 
|   |   |   |   |   |   |   | «Purchaser» |
|--------|--------|--------|--------|--------|--------|--------|-----------------------|
|   |   |   |   |   |   |   |                  |
|   |   |   |   |   |   |   |                  |
|   |   |   |   |   |   |   | By:                   |   |
|   |   |   |   |   |   |   |                  | Name: |
|   |   |   |   |   |   |   |                  | Title: |
|   |   |   |   |   |   |   |                  |
|   |   |   |   |   |   |   | Dated:                |   |
|        |        |        |        |        |        |        |                       |  |  |

 

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**ASSIGNMENT FORM**

 

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

 

 

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

 

                                                                                                                                               whoseaddress is

 

                                                                                                                                                                              .

 

 

 

 

                                                                                                                                                      Dated:                  ,             

 

 
|                  | Holder’s Signature: |   |   |
|-----------------------|--------------------------|--------|--------|
|                  |                     |   |   |
|                  | Holder’s Address:   |   |   |
|                  |                     |   |   |
|                  |                     |   |   |
|                  |                     |   |   |
| Signature Guaranteed: |                     |   |   |

 

 

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

 

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**EXHIBIT D**

 

STOCK CERTIFICATE QUESTIONNAIRE

 

Pursuantto Section 3.2 of the Securities Stock Purchase Agreement, please provide uswith the following information:

 

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

 

 

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

 

 

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

 

 

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

 

 

 

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**EXHIBITE**

 

REGISTRATION STATEMENT QUESTIONNAIRE

 

Inconnection with the preparation of the Registration Statement, please provideus with the following information:

 

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

 

 

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

 

 

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

 

Yes              No

 

If yes, please indicatethe nature of any such relationships below:

 

 

 

 

 

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