**Exhibit10.136**

 

THE IMMUNERESPONSE CORPORATION

8% CONVERTIBLE SECURED PROMISSORY NOTE
| $2,000,000 |   | New York, New York |
|------------|--------|--------------------|
|       |   | March 28, 2003     |

 

In consideration of thereceipt of $2,000,000, the undersigned, The Immune Response Corporation, aDelaware corporation (the “Issuer”), hereby unconditionally promises to pay tothe order of Cheshire Associates LLC (the “Purchaser”), at the office of thePurchaser located at 535 Madison Avenue, 18th Floor, New York, NewYork 10022, or such other address designated by the Purchaser, in lawful moneyof the United States of America and in immediately available funds, on March28, 2004 (the “Note Maturity Date”) the principal amount of Two Million Dollars($2,000,000) and accrued interest at the rate of eight (8%) percent per annumbased on a 365-day year (“Interest Rate”).

Interest (other thaninterest accruing as a result of a failure by Issuer to pay any amount when dueas set forth below) in respect of the Note shall accrue until all amountsremaining owed under such Note shall be fully repaid, and shall be due andpayable in full on the Note Maturity Date. If all or a portion of the principal amount of the Note or any interestpayable thereon shall not be repaid when due whether on the applicablerepayment date, by acceleration or otherwise, such overdue amounts on such Noteshall bear interest at a rate per annum that is three (3%) percent above theInterest Rate (i.e., 11%) from the date of such non-payment until suchamount is paid in full (after as well as before judgment).  All payments to be made by Issuer hereunderor pursuant to the Notes shall be made in lawful money of the United States bycertified check or wire transfer in immediately available funds. Any interestaccruing on overdue amounts shall be payable on demand.

The obligation to makethe payments provided for in this Note are absolute and unconditional, and arenot subject to any defense, set-off, counterclaim, rescission, recoupment oradjustment whatsoever.

The obligations underthis Note shall be secured by that certain Intellectual Property SecurityAgreement, dated November 9, 2001, by and between the Issuer and KevinKimberlin Partners, L.P., a Delaware limited partnership (“KKP”), as amended byAmendment No. 1, dated February 26, 2002, by and between the Issuer, KKP andOshkim Limited Partnership (“Oshkim”), and as further amended by Amendment No.2, dated July 11, 2002, by and between the Issuer, KKP, Oshkim and TheKimberlin Family 1998 Irrevocable Trust (the “Kimberlin Trust”).

In the event that theIssuer shall, at any time after the date hereof but prior to June 28, 2003, (i)issue securities inconnection with a private offering of securities through Spencer TraskVentures, Inc. (the “Next Issuer Offering”) and (ii) have obtained stockholderapproval of the Next Issuer Offering and the Purchaser’s participation therein in accordance with Rule 4350(i) of the National Association ofSecurities Dealers, Inc., this Note (includingall accrued and unpaid interest) shall, concurrently with such issue, automaticallyand immediately convert

 

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into units of thosesecurities issued in the Next Issuer Offering. In the event that either or both of the conditions set forth in thepreceding sentence shall not have been satisfied prior to June 28, 2003, this Note(including all accrued and unpaid interest) (x) shall be convertible, at thesole option of the Purchaser, in whole or in part, into shares of the Issuer’scommon stock, par value $0.0025 per share (the “Common Stock”), at the closingprice of the Common Stock on the date immediately preceding the date hereof (i.e.,$1.23) or (y) may be declared by the Purchaser to be immediately due andpayable; provided, that, notwithstanding anything in this Note tothe contrary, the Purchaser shall not be obligated at any time (A) after June28, 2003 to convert this Note or (B) after the date hereof to declare this Noteimmediately due and payable.

Upon the occurrence ofany one or more of the Events of Default specified on Exhibit A,attached hereto, all amounts then remaining unpaid on this Note and all otherpromissory notes issued by the Issuer to Purchaser or to any related party ofthe Purchaser shall become, or may be declared by the Purchaser to be,immediately due and payable.

This Note is freelytransferable and assignable, in whole or in part, by the Purchaser, and suchtransferee or assignee shall have the same rights hereunder as thePurchaser.  The Issuer may not assign ordelegate any of its obligations under this Note without the prior writtenconsent of the Purchaser (or its successor, transferee or assignee).

All parties now andhereafter liable with respect to this Note, whether maker, principal, surety,guarantor, endorser or otherwise, hereby waive presentment, demand, protest andall other notices of any kind.

The Issuer agrees to payall of the Purchaser’s expenses, including reasonable attorneys’ costs andfees, incurred in collecting sums due under this Note.

All or part of the Notemay be prepaid by Issuer upon at least five (5) days’ prior written notice tothe Purchaser thereof; provided, however, that any suchprepayment on such Note shall be first applied to accrued and unpaid interestof the outstanding Note and then against its outstanding principal.

This Note shall begoverned by, and construed and interpreted in accordance with, the laws of theState of New York.
|   | THE IMMUNE RESPONSE CORPORATION |
|--------|---------------------------------|
|   |                            |
|   |                            |
|   |                            |
|   | By:                             |   |
|   |                            | Name: |   |
|   |                            | Title: |   |

 

 

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**ExhibitA**

**Eventsof Default**.

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

(i)            Issuer shall fail to pay anyprincipal or interest on the Note, or on any other promissory note issued bythe Issuer to the Purchaser or to any related party of the Purchaser, withinthree (3) business days after such payment becomes due in accordance with theterms thereof or hereof;

(ii)           Any representation or warranty madeor deemed made by Issuer herein or in any other agreement, certificate orinstrument contemplated by the Note Purchase Agreement, dated as of November 9,2001, by and between the Issuer and KKP, as amended by Amendment No. 1, datedas of February 14, 2002 and Amendment No. 2, dated as of May 3, 2002, each byand between the Issuer, KKP, and Oshkim and as further amended by Amendment No.3, dated as of July 11, 2002, by and between the Issuer, KKP, Oshkim and theKimberlin Trust (the “Agreement”) or that is contained in any certificate,document or financial or other statement furnished by Issuer at any time underor in connection with the Agreement shall have been incorrect in any materialrespect on or as of the date made or deemed made;

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

(iv)          (a) Issuer shall commence any case, proceeding or other action (x) under anyexisting or future law of any jurisdiction, domestic or foreign, relating tobankruptcy, insolvency, reorganization, conservatorship or relief of debtors,seeking to have an order for relief entered with respect to it, or seeking toadjudicate it bankrupt or insolvent, or seeking reorganization, arrangement,adjustment, winding-up, liquidation, dissolution, composition or other reliefwith respect to it or its debts or (y) seeking appointment of a receiver,trustee, custodian, conservator or other similar official for it or for all orany substantial part of its assets, or Issuer shall make a general assignmentfor the benefit of its creditors; or (b) there shall be commenced againstIssuer any case, proceeding or other action of a nature referred to in clause(a) above that (A) results in the entry of an order for relief of any suchadjudication or appointment or (B) remains undismissed, undischarged orunbonded for a period of sixty (60) days; or (c) there shall be commencedagainst Issuer any case, proceeding or other action seeking issuance of awarrant of attachment, execution, distrait or similar process against all orany substantial part of its assets that results in the entry of an order forany such relief that shall not have been vacated, discharged, or stayed orbonded pending appeal within sixty (60) days from the entry thereof; or (d)Issuer shall take any action in furtherance of, or indicating its consent to,approval of, or acquiescence in, any of the acts set forth in clauses (a), (b)or (c) above; or (e) Issuer shall generally not, or shall be unable to, orshall admit in writing its inability to, pay its debts as they become due;

 

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(v) Issuer shall default inthe payment of principal on any indebtedness (to any party other thanPurchaser) in excess of $200,000 beyond the period of grace, if any, providedin the instrument or agreement under which such indebtedness was created; or

(vi) Issuer shall have beenunable to obtain by June 28, 2003 stockholder approval of the Next Issuer Offering and thePurchaser’s participation therein in accordancewith Rule 4350(i) of the National Association of Securities Dealers, Inc.;

then,and in any such event, (x) if such event is an Event of Default specified inclause (iv) above of with respect to Issuer, the Note (with all accrued andunpaid interest thereon) and all other amounts owing under the Agreement orunder any of the promissory notes issued by the Issuer to the Purchaser or anyrelated party of the Purchaser shall automatically and immediately become dueand payable and (y) if such event is any other Event of Default, Purchaser may,by written notice to Issuer, immediately declare the Note (with all accrued andunpaid interest thereon) and all other promissory notes (with all accrued andunpaid interest thereon) issued by the Issuer to the Purchaser or any relatedparty of the Purchaser to be due and payable forthwith, whereupon the sameshall immediately become due and payable. Except as expressly provided above, presentation, demand, protest andall other notices of any kind are hereby expressly waived by Issuer.

 

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